Wrap Text
Unaudited Condensed Consolidated Financial Statements for six Months Ended 30 September 2017
PPC Limited
(Incorporated in the Republic of South Africa)
(Company registration number 1892/000667/06)
JSE code: PPC
JSE ISIN: ZAE 000170049
ZSE code: PPC
Unaudited condensed consolidated financial statements
for the six months ended 30 September 2017
- Group revenue increased by 1% to R5,2 billion
- Group EBITDA grew by 4% to R1,2 billion
- Strong performance from rest of Africa cement reflected 25% EBITDA growth
- Maintained southern Africa cement EBITDA margin in a tough environment
- Attributable net profit up 188% to R294 million
- Earnings per share up 54% to 20 cents
- Net debt declined from R4,7 billion in March 2017 to R4,4 billion
- Improved balance sheet with finance costs reduced by 44% post the rights issue
- Net cash flow from operating activities up 49%
COMMENTARY
Johan Claassen, CEO, said: "The half-year results are a testimony of PPC’s operational focus and market leadership
positioning. The period under review has been transformational for the group with our new investments in Zimbabwe
and Rwanda contributing positively to our growth. Domestically, the group has managed its cost of sales, overheads
and capex well to compensate for marginally declining revenues in a competitive and subdued market. We remained
disciplined in our approach to market prices across our businesses. The group has also made considerable progress
in negotiating its debt obligations in South Africa and the DRC which will result in an extended debt profile and
should be capable of being serviced from internal cash generation. The new investments in the DRC and Ethiopia
will be fully commissioned during the second half of the current financial year. Considerable focus has been
directed towards strategic and operational initiatives to ensure greater competitiveness and improved efficiencies
in a market exhibiting lower growth. Management’s focus is firmly on delivering improved profitability and liquidity
in the short term. We remain committed to unlocking long-term sustainable shareholder value."
Johan Claassen – Chief executive officer
GROUP PERFORMANCE
Group revenue rose by 1% to R5 188 million (2016: R5 156 million). Total cement volumes increased by 2% to
approximately 3 million tonnes. Cost of sales was well controlled and increased by 1% to R3 859 million
(2016: R3 838 million) compared with the previous year. Administration and other operating expenditure
contracted by 5% to R549 million (2016: R577 million). The reduction in operational costs is further evidence of
the group’s ability to achieve cost savings.
Group EBITDA grew by 4% to R1 193 million (2016: R1 146 million) while the EBITDA margin achieved was 23% (2016: 22%).
Corporate action and other non-recurring expenses amounted to R53 million, while the impact of a stronger exchange rate
reduced EBITDA by R43 million on a comparable basis. Excluding these impacts, EBITDA would have risen by 12%.
Finance costs reduced by 44% to R285 million, over last year’s R509 million. The decrease was due to the benefits
of the rights issue and the liquidity and guarantee facility agreement fees incurred in the previous reporting period.
Taxation was materially higher at R193 million in the period, however the effective taxation rate reduced from 53% to
39%. The lower effective taxation rate was attributable to non-recurring withholding taxation on dividends declared
from Zimbabwe in the prior period. Furthermore, the effective rate was positively impacted by lower non-deductible
finance costs and non-recurring IFRS 2 charges also incurred in the prior period. The current period’s effective
taxation rate was negatively impacted by a reassessment of the prior year’s taxation resulting in additional taxes in
Zimbabwe.
Net profit attributable to PPC shareholders increased by 188% to R294 million (2016: R102 million). Earnings per share
was 54% higher at 20 cents (2016: 13 cents) and headline earnings per share rose by 36% to 19 cents (2016: 14 cents).
Weighted average shares in issue increased from 758 million to 1 510 million shares for the period.
Net cash flow from operating activities increased by 49% to R870 million. Positive working capital movements amounted to
R59 million, while lower finance costs and taxation paid also contributed to improved cash generation. The group’s cash
conversion ratio was maintained at 1,1 times. Capital investments in property, plant and equipment decreased significantly
to R518 million (2016: R1 035 million). Group net debt has reduced from R4 746 million in March 2017 to R4 429 million.
Net debt to EBITDA improved from 2,3 times to 2,1 times.
UPDATE ON GROUP LIQUIDITY
The group has made significant progress in improving liquidity and smoothing the maturity profile of the business. This is
through the pending restructuring of southern Africa debt maturing in June 2018 to a more smoother payment profile of between
three to five years. Regarding the DRC funding agreements, significant progress has been made with the term sheet received
from the funders highlighting a two-year capital holiday, which will reduce the required deficiency funding from PPC group.
SOUTHERN AFRICA CEMENT
Revenue in southern Africa cement, which includes Botswana, was marginally down, with higher realised average selling prices
of 2,0%. PPC increased prices in February and August 2017. Volumes reduced by 1% to 4% for this segment, noting that the current
reporting period had two less trading days. The lower volumes in the inland region were offset by marginal growth in the coastal
region. The volume contraction was in line with estimated growth in overall cementitious demand in South Africa reducing by 1%
to 4% for the reporting period. Imports are at similar levels compared with the same period last year. This segment continues
to deliver sustainable cost savings, with variable delivered cost per tonne at similar levels to the previous period. Overheads
were also well controlled experiencing a low double-digit decline. EBITDA was maintained, with a slight improvement in the
corresponding margins to 25,6%.
REST OF AFRICA CEMENT
Revenue increased by 9%, supported by robust volume growth in Rwanda and Zimbabwe. Selling prices have remained fairly stable.
EBITDA grew by a robust 25% to R422 million, with EBITDA margins expanding from 30% to 34%. The rise in EBITDA is attributable
to our route to market strategies gaining momentum and cost containment.
Rwanda
Rwanda continued to deliver robust volume growth, with annualised capacity utilisation above 65%. Sales volumes grew by more
than 30% for the period. Realised cement prices increased marginally. Rwanda launched its bulk solution in August 2017 to
service the construction and construction product markets resulting in the improving market penetration.
Zimbabwe
PPC Zimbabwe grew volumes by more than 25% compared with last year, achieving new sales records in the process. The commissioning
of the Harare mill supported volume growth in the north of the country. Demand is being driven by housing and asset investments.
Average selling prices grew by 4% in US dollar terms compared with the previous period. The country continues to experience liquidity
constraints, which we are monitoring closely. The sales team continues to search for export opportunities.
DRC
Our new plant in the DRC has been completed and is in the process of being tested and commissioned, which process will likely be
fully completed by the end of the current financial year. During the period the limited production was sold into the market and all
revenue and expenses have been included in capital work in progress in compliance with IAS 16 and 23.
Ethiopia
Our new plant in Ethiopia has also been completed and is in the process of being tested and commissioned, which process will likely
be fully completed by the end of the current financial year. During the period the limited production was sold into the market and
all revenue and expenses have been included in capital work in progress in compliance with IAS 16 and 23. Accordingly, we have not
equity accounted for any profits in the period.
MATERIALS BUSINESS
Lime
The lime division recorded marginal revenue growth, with volumes and selling prices at similar levels to last year. Volumes
were constrained by key steel customer shutdowns and non-extension of the milk of lime contract. Lime’s EBITDA was impacted
by higher variable costs in relation to increased maintenance and raw material inputs.
Aggregates and readymix
Volumes and pricing were under pressure due to a significant contraction in construction industry activity as well as intense
competition in the Gauteng market. Aggregates’ volumes suffered due to the supply into the readymix market which contracted
during the period under review.
SLURRY KILN 9 (SK9)
The SK9 project is progressing well, on time and on budget and is approximately 80% complete. Commissioning remains on schedule
for the first calendar half of 2018. The new kiln will enhance our competitive position in the inland region through cost,
technical and environmental efficiencies.
UPDATE ON BROAD-BASED BLACK ECONOMIC EMPOWERMENT TRANSACTION
We continue to engage with the Department of Mineral Resources (DMR) on aspects of our proposed BEE III transaction. It is envisaged
that BEE III will be implemented in the first quarter of 2018.
GOVERNANCE
Board of directors and subcommittee changes
Following the company’s annual general meeting on the 16 October 2017, Mr T Moyo was reappointed as a member of the audit committee.
Ms N Gobodo was appointed as a member of the nominations committee and as a member and chairperson of the social, ethics and
transformation committee. Mr S Mhlarhi was elected as a member of the nominations committee.
PROSPECTS
PPC group has reviewed its priorities over the last five months and will continue to focus on these key priorities in the next
12 months. These key priorities are in optimising the financial, operational and human capital elements of the business. In executing
these priorities, PPC will ensure that the restructuring of the South African and DRC debt are finalised and implemented. Regarding the
operations, PPC will ensure implementation of the profit optimisation of R50 per tonne of cement in southern Africa cement, continue to
optimise its route to market strategies and plant operating efficiencies in the rest of Africa cement operations, while continuing to
grow and develop globally competent teams. In addition, PPC is in the process of introducing a value-based management system, that ensures
that business operations are aligned to the performance of the company in growing shareholder value.
RESULTS PRESENTATION
PPC will be hosting an analysts’ results presentation in Johannesburg at the JSE Auditorium, 1 Exchange Square, 2 Gwen Lane, Sandown.
The results presentation and a copy of this announcement will be available on the company’s website www.ppc.co.za.
On behalf of the board
PG Nelson
Chairman
JT Claassen
Chief executive officer
MMT Ramano
Chief financial officer
Sandton
22 November 2017
Unaudited condensed consolidated statement of comprehensive income
for the six months ended 30 September 2017
Six months Six months Twelve months
ended ended ended
30 September 30 September 31 March
2017 2016 2017
Unaudited Reviewed % Audited
Notes Rm Rm change Rm
Revenue 5 188 5 156 1 9 641
Cost of sales 3 859 3 838 1 7 359
Gross profit 1 329 1 318 1 2 282
Administrative and other operating expenditure 549 577 (5) 1 049
Operating profit before item listed below: 780 741 5 1 233
Empowerment transactions IFRS 2 charges(a) 17 17 206
Operating profit 763 724 5 1 027
Foreign exchange loss on foreign currency monetary items 2 1 87 124
Finance costs 3 285 509 741
Investment income 20 6 27
Profit before equity-accounted earnings 497 134 271 189
Earnings from equity accounted investments - - 1
Impairments 4 - (10) (10)
Profit before taxation 497 124 301 180
Taxation 5 193 66 192 153
Profit for the period 304 58 424 27
Attributable to:
Shareholders of PPC Ltd 294 102 93
Non-controlling interests 10 (44) (66)
Other comprehensive income/(loss), net of taxation
Items that will be reclassified to profit or loss 41 (310) (523)
Cash flow hedges - 45 (47)
Taxation on cash flow hedges - (13) 13
Translation of foreign operations 41 (342) (489)
Total comprehensive income/(loss) 345 (252) (496)
Attributable to:
Shareholders of PPC Ltd 335 (157) (295)
Non-controlling interests 10 (95) (201)
EARNINGS PER SHARE (CENTS) 6
Basic 20 13 54 8
Diluted 19 13 46 8
(a) Comprises BEE IFRS 2 charges.
Unaudited condensed consolidated statement of financial position
at 30 September 2017
30 September 30 September 31 March
2017 2016 2017
Unaudited Reviewed Audited
Notes Rm Rm Rm
ASSETS
Non-current assets 14 357 14 052 14 192
Property, plant and equipment 7 12 714 12 343 12 531
Goodwill 8 236 244 237
Other intangible assets 9 638 725 677
Equity accounted investments 271 197 225
Other non-current assets 10 312 480 380
Deferred taxation assets 16 186 63 142
Non-current assets held for sale 11 39 40 38
Current assets 3 662 3 094 3 805
Inventories 1 174 956 1 163
Trade and other receivables 12 1 485 1 490 1 652
Cash and cash equivalents 13 1 003 648 990
Total assets 18 058 17 186 18 035
EQUITY AND LIABILITIES
Capital and reserves
Stated capital 14 3 919 2 739 3 919
Other reserves 1 541 1 466 1 464
Retained profit 2 962 2 678 2 668
Equity attributable to shareholders of PPC Ltd 8 422 6 883 8 051
Non-controlling interests 344 440 334
Total equity 8 766 7 323 8 385
Non-current liabilities 5 277 5 462 5 626
Provisions 15 554 440 545
Deferred taxation liabilities 16 1 114 1 128 1 073
Long-term borrowings 17 3 165 3 449 3 555
Other non-current liabilities 18 444 445 453
Current liabilities 4 015 4 401 4 024
Short-term borrowings 17 2 267 2 465 2 181
Trade and other payables 19 1 748 1 936 1 843
Total equity and liabilities 18 058 17 186 18 035
Unaudited condensed consolidated statement of cash flows
for the six months ended 30 September 2017
Six months Six months Twelve months
ended ended ended
30 September 30 September 31 March
2017 2016 2017
Unaudited Reviewed Audited
Notes Rm Rm Rm
Cash flow from operating activities
Operating cash flows before movements
in working capital 1 211 1 145 2 101
Working capital movements 59 141 (230)
Cash generated from operations 1 270 1 286 1 871
Finance costs paid (248) (513) (743)
Investment income received 20 6 21
Taxation paid (172) (196) (296)
Cash available from operations 870 583 853
Dividends paid - - (8)
Net cash inflow from operating activities 870 583 845
Cash flow from investing activities
Acquisition of additional shares in equity
accounted investment (40) - -
Acquisition of additional shares in subsidiary - (18) (18)
Investments in intangible assets (4) (10) (19)
Investments in property, plant and equipment (518) (1 035) (2 058)
Movements in other investing activities 13 (4) -
Proceeds from the disposal of property, plant
and equipment - - 4
Net cash outflow from investing activities (549) (1 067) (2 091)
Cash flow from financing activities(a)
Net borrowings repaid before repayment of the notes (323) (1 453) (1 370)
Proceeds from the issuance of shares following rights
issue (net of transaction costs) - 3 706 3 722
Proceeds from the issuance of shares issued to strategic
black partners following the maturity of the company's
first BEE transaction 14 - - 1 041
Proceeds from the sale of nil paid letters by consolidated
BEE entities - 137 137
Purchase of PPC Ltd shares in terms of the FSP share
incentive scheme 14 - (74) (74)
Repayment of notes - (1 614) (1 614)
Net cash (outflow)/inflow from financing activities (323) 702 1 842
Net movement in cash and cash equivalents (2) 218 596
Cash and cash equivalents at the beginning of the period 990 460 460
Cash and cash equivalents acquired on acquisition of 3Q
Mahuma Concrete 20 - 4 4
Exchange rate movements on opening foreign
currency-denominated cash and cash equivalents 15 (34) (70)
Cash and cash equivalents at the end of the period 1 003 648 990
(a) During the period, the non-cash changes on borrowings amounted to R17 million arising from unfavourable, unrealised foreign
exchange differences.
Unaudited condensed statement of changes in equity
for the six months ended 30 September 2017
Other reserves
Foreign Available-
currency for-sale Equity
Stated translation financial Hedging compensation
capital reserve asset reserve reserve
Rm Rm Rm Rm Rm
Balance at 31 March 2016 (audited) (1 113) 1 245 14 34 265
Acquisition of 3Q, settled via the issue
of shares (refer note 20) 135 - - - -
IFRS 2 charges - - - - 30
Increase in stated capital from the issuance
of shares following the rights issue
(net of transaction costs) 3 791 - - - -
Proceeds from the sale of nil paid letters
by consolidated BEE entities - - - - 137
Shares purchased in terms of FSP incentive
scheme treated as treasury shares (74) - - - -
Total comprehensive (loss)/income - (291) - 32 -
Transactions with non-controlling shareholders
recognised directly in equity - - - - -
Balance at 30 September 2016 (reviewed) 2 739 954 14 66 432
Dividends declared - - - - -
IFRS 2 charges - - - - 215
Increase in stated capital from the issuance of
shares following rights issue (net of transaction costs) 14 - - - -
Sale of shares, treated as treasury shares, by consolidated
BEE entity 37 - - - -
Shares issued to strategic black partners following the
maturity of the company's first BEE transaction(a) 1 041 - - - -
Total comprehensive loss - (63) - (66) -
Transactions with non-controlling shareholders recognised
directly in equity - - - - -
Vesting of shares held by certain BEE 1 entities 88 - - - (88)
Balance at 31 March 2017 (audited) 3 919 891 14 - 559
IFRS 2 charges - - - - 36
Total comprehensive income - 41 - - -
Balance at 30 September 2017 (unaudited) 3 919 932 14 - 595
Unaudited condensed statement of changes in equity continued
for the six months ended 30 September 2017
Equity
attributable to Non-
Retained shareholders controlling Total
profit of PPC Ltd interests equity
Rm Rm Rm Rm
Balance at 31 March 2016 (audited) 2 583 3 028 535 3 563
Acquisition of 3Q, settled via the issue
of shares (refer note 20) - 135 - 135
IFRS 2 charges - 30 - 30
Increase in stated capital from the issuance
of shares following the rights issue
(net of transaction costs) - 3 791 - 3 791
Proceeds from the sale of nil paid letters
by consolidated BEE entities - 137 - 137
Shares purchased in terms of FSP incentive
scheme treated as treasury shares - (74) - (74)
Total comprehensive (loss)/income 102 (157) (95) (252)
Transactions with non-controlling shareholders
recognised directly in equity (7) (7) - (7)
Balance at 30 September 2016 (reviewed) 2 678 6 883 440 7 323
Dividends declared (8) (8) - (8)
IFRS 2 charges - 215 - 215
Increase in stated capital from the issuance of
shares following rights issue (net of transaction costs) - 14 - 14
Sale of shares, treated as treasury shares, by consolidated
BEE entity - 37 - 37
Shares issued to strategic black partners following the
maturity of the company's first BEE transaction(a) - 1 041 - 1 041
Total comprehensive loss (9) (138) (106) (244)
Transactions with non-controlling shareholders recognised
directly in equity 7 7 - 7
Vesting of shares held by certain BEE 1 entities - - - -
Balance at 31 March 2017 (audited) 2 668 8 051 334 8 385
IFRS 2 charges - 36 - 36
Total comprehensive income 294 335 10 345
Balance at 30 September 2017 (unaudited) 2 962 8 422 344 8 766
(a) In 2008, PPC announced its first broad-based black economic transaction for a period of eight years,
which resulted in an effective BEE ownership of 15,29%. In terms of the transaction agreements, the
48 557 982 PPC shares held by the strategic black partners (including community service groups)
(SBPs and CSGs) were repurchased by PPC at R0,10 per share and the SBPs and CSGs were required to
subscribe for new PPC shares at R66,84 per share, subject to their funding position. The SBPs and
CSGs subscribed for 15 571 174 new PPC ordinary shares in December 2016.
Segmental information
for the six months ended 30 September 2017
The group discloses its operating segments according to the business units which are reviewed by the group
executive committee. The key segments are southern Africa cement, rest of Africa cement, lime, aggregates
and readymix and group services and other. The reporting segments were reconsidered during March 2017 and
the results to September 2016 have been restated from that reported in the prior period following the
internal restructuring process that took place during April 2016.
Cement
Consolidated Southern Africa(a) Rest of Africa(b)
30 September 30 September 31 March 30 September 30 September 31 March 30 September 30 September 31 March
2017 2016 2017 2017 2016* 2017 2017 2016* 2017
Unaudited Reviewed Audited Unaudited Reviewed Audited Unaudited Reviewed Audited
Rm Rm Rm Rm Rm Rm Rm Rm Rm
Revenue
Gross revenue 5 319 5 279 9 878 3 004 3 056 5 712 1 259 1 152 2 119
Inter-segment revenue(d) (131) (123) (237) (111) (110) (205) - - -
Total revenue 5 188 5 156 9 641 2 893 2 946 5 507 1 259 1 152 2 119
Operating profit before item listed below 780 741 1 233 549 557 861 278 195 347
Empowerment transactions IFRS 2 charges 17 17 206 - - 16 1 1 2
Operating profit/(loss)(e) 763 724 1 027 549 557 845 277 194 345
Fair value loss/(gain) on foreign currency
monetary items 1 87 124 (4) (1) 5 29 88 153
Finance costs 285 509 741 123 99 214 101 78 168
Investment income 20 6 27 6 8 11 5 5 6
Profit before equity accounted earnings 497 134 189 436 467 637 152 33 30
Earnings from equity accounted investments - - 1 - - - - - -
Impairment - (10) (10) - - - - (10) (10)
Profit/(loss) before taxation 497 124 180 436 467 637 152 23 20
Taxation 193 66 153 119 131 192 69 14 21
Profit/(loss) for the period 304 58 27 317 336 445 83 9 (1)
Depreciation and amortisation 413 405 832 191 185 374 144 144 298
EBITDA(f) 1 193 1 146 2 065 740 742 1 235 422 339 645
EBITDA margin (%) 23,0 22,2 21,4 25,6 25,2 22,4 33,5 29,5 30,4
Assets
Non-current assets 14 357 14 052 14 192 4 227 4 287 4 184 8 294 8 572 8 113
Non-current assets held for sale 39 40 38 - - - 39 40 38
Current assets 3 662 3 094 3 805 1 468 1 468 1 468 1 642 1 190 1 334
Total assets 18 058 17 186 18 035 5 695 5 755 5 652 9 975 9 802 9 485
Investments in property, plant and equipment 523 1 305 2 234 233 584 939 232 640 1 181
Liabilities
Non-current liabilities 5 277 5 462 5 626 830 554 2 007 5 973 6 034 5 619
Current liabilities 4 015 4 401 4 024 2 293 2 227 792 1 685 1 360 1 382
Total liabilities 9 292 9 863 9 650 3 123 2 781 2 799 7 658 7 394 7 001
Capital commitments (refer note 21) 795 2 712 1 071 697 1 117 716 59 1 557 310
Segmental information continued
for the six months ended 30 September 2017
Materials business
Lime Aggregates and readymix
30 September 30 September 31 March 30 September 30 September 31 March
2017 2016* 2017 2017 2016* 2017
Unaudited Reviewed Audited Unaudited Reviewed Audited
Rm Rm Rm Rm Rm Rm
Revenue
Gross revenue 410 406 818 646 665 1 229
Inter-segment revenue(d) (20) (13) (32) - - -
Total revenue 390 393 786 646 665 1 229
Operating profit before item listed below 42 74 119 5 67 74
Empowerment transactions IFRS 2 charges - - 2 - - 1
Operating profit/(loss)(e) 42 74 117 5 67 73
Fair value loss/(gain) on foreign currency
monetary items - - - - - 1
Finance costs 2 2 4 2 5 3
Investment income 8 4 1 7 3 1
Profit before equity accounted earnings 48 76 114 10 65 70
Earnings from equity accounted investments - - - - - -
Impairment - - - - - -
Profit/(loss) before taxation 48 76 114 10 65 70
Taxation 11 21 29 2 18 6
Profit/(loss) for the period 37 55 85 8 47 64
Depreciation and amortisation 21 22 46 40 36 77
EBITDA(f) 63 96 165 45 103 151
EBITDA margin (%) 16,2 24,4 21,0 7,0 15,5 12,3
Assets
Non-current assets 318 423 319 724 751 726
Non-current assets held for sale - - - - - -
Current assets 173 160 210 349 331 315
Total assets 491 583 529 1 073 1 082 1 041
Investments in property, plant and equipment 24 12 26 34 32 57
Liabilities
Non-current liabilities 36 99 117 270 180 215
Current liabilities 50 72 86 179 222 176
Total liabilities 86 171 203 449 402 391
Capital commitments (refer note 21) 5 2 9 5 8 9
Segmental information continued
for the six months ended 30 September 2017
Group services and other(c)
30 September 30 September 31 March
2017 2016* 2017
Unaudited Reviewed Audited
Rm Rm Rm
Revenue
Gross revenue - - -
Inter-segment revenue(d) - - -
Total revenue - - -
Operating profit before item listed below (94) (152) (168)
Empowerment transactions IFRS 2 charges 16 16 185
Operating profit/(loss)(e) (110) (168) (353)
Fair value loss/(gain) on foreign currency
monetary items (24) - (35)
Finance costs 57 325 352
Investment income (6) (14) 8
Profit before equity accounted earnings (149) (507) (662)
Earnings from equity accounted investments - - 1
Impairment - - -
Profit/(loss) before taxation (149) (507) (661)
Taxation (8) (118) (96)
Profit/(loss) for the period (141) (389) (565)
Depreciation and amortisation 17 18 37
EBITDA(f) (77) (134) (131)
EBITDA margin (%)
Assets
Non-current assets 794 19 850
Non-current assets held for sale - - -
Current assets 30 (55) 478
Total assets 824 (36) 1 328
Investments in property, plant and equipment - 37 31
Liabilities
Non-current liabilities (1 832) (1 405) (2 332)
Current liabilities (192) 520 1 588
Total liabilities (2 024) (885) (744)
Capital commitments (refer note 21) 29 28 27
* The reporting segments were reconsidered during March 2017 and the results to September 2016 have been restated from that reported in
the prior period (refer note 25).
(a) Southern Africa comprises South Africa and Botswana.
(b) Rest of Africa comprises Zimbabwe, Rwanda, DRC, Mozambique and cross border sales from southern Africa.
(c) Group services and other comprises PPC Ltd, shared services, BEE and group eliminations.
(d) All sales are concluded at an arm's length.
(e) As noted in the company's year-end results announcement, the group was looking to refine inter-company operating charges. This has
now been finalised and the impact thereof is incorporated in the results for the six months to September 2017. No comparatives have
been restated following the refinements to inter-company charges
(f) EBITDA is defined as operating profit before empowerment transactions IFRS 2 charges and depreciation and amortisation.
No individual customer comprises more than 10% of group revenue.
Notes to the unaudited Condensed consolidated financial statements
1. BASIS OF PREPARATION
The unaudited condensed consolidated financial statements are prepared in accordance with the provisions of
the JSE Limited Listings Requirements for reports, and the requirements of the Companies Act applicable to
financial statements. The Listings Requirements require the condensed reports to be prepared in accordance
with the framework concepts and the measurement and recognition requirements of International Financial
Reporting Standards (IFRS) and the SAICA Financial Reporting Guides as issued by the Accounting Practices
Committee and Financial Pronouncements as issued by Financial Reporting Standards Council, and must also,
as a minimum contain the information required by IAS 34 Interim Financial Reporting, and a statement
confirming that it has been so prepared must be included in the report. The accounting policies applied in
the preparation of the condensed consolidated financial statements were derived in terms of IFRS. The group's
external auditors have not reviewed or reported on these results.
The accounting policies and methods of computation used are consistent with those used in the preparation of
the consolidated financial statements for year ended 31 March 2017, except for the revised accounting standards
and interpretations that became effective during the current period. The group adopted the following two
standards during the period:
- IAS 7 Statement of Cash Flows: amendment as a result of the disclosure initiative. Additional disclosure as
required by this amendment has been included in the statement of cash flows.
- IAS 12 Income Taxes: amendment regarding the recognition of deferred tax assets for unrealised losses. This
amendment did not have any impact on the reported results.
These unaudited condensed 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 22 November 2017.
Restatement of segmental information
Following the internal restructure of the group effective 1 April 2016, the group's segments were amended to
align to the new reporting structures and information presented to the group executive committee. As the change
in segmental reporting only became effective from March 2017, the previously reported segmental analysis for
the period ended September 2016 has been restated. Further details can be found in note 25.
Six months Six months Twelve months
ended ended ended
30 September 30 September 31 March
2017 2016 2017
Unaudited Reviewed Audited
Rm Rm Rm
2. FOREIGN EXCHANGE LOSS ON FOREIGN CURRENCY MONETARY ITEMS
Loss on ineffective portion of cash flow hedge - - 9
Loss/(gain) on unlisted collective investments 1 - (1)
Net loss on translation of foreign currency monetary items - 87 116
1 87 124
Included in loss on translation of foreign currency monetary items, is a loss of R26 million
(September 2016: R48 million; March 2017: R112 million) relating to the remeasurement of the
non-current VAT receivable in the DRC following the devaluation of the Congolese franc against
the US dollar. Furthermore, a remeasurement loss of R4 million (September 2016: R12 million;
March 2017: R53 million) has been recorded against the US dollar denominated project funding
in Rwanda. During the period R33 million (September 2016: Rnil; March 2017: Rnil) marked to
market adjustments were recorded on the put option liability (refer note 18).
Details on foreign exchange rates can be found in note 24.
Six months Six months Twelve months
ended ended ended
30 September 30 September 31 March
2017 2016 2017
Unaudited Reviewed Audited
Rm Rm Rm
3. FINANCE COSTS
Bank and other short-term borrowings(a) 113 277 474
Notes 5 49 80
Long-term loans 211 288 345
329 614 899
Capitalised to plant and equipment (82) (159) (241)
Finance costs before BEE transaction and time
value of money adjustments 247 455 658
BEE transaction - 36 37
Time value of money adjustments on rehabilitation
and decommissioning provisions and put option liabilities 38 18 46
285 509 741
Southern Africa 184 427 573
Rest of Africa 101 82 168
(a) Includes liquidity and guarantee facility raising fees of Rnil million (September 2016: R128 million,
March 2017: R128 million) which were amortised to finance costs.
The total finance costs excluding time value of money adjustments, relate to borrowings held at amortised
cost. For details of borrowings refer note 17.
4. IMPAIRMENTS
Impairment of property, plant and equipment - (10) (10)
Gross impairments - (10) (10)
Taxation impact - 3 3
Net impairments - (7) (7)
Six months Six months Twelve months
ended ended ended
30 September 30 September 31 March
2017 2016 2017
Unaudited Reviewed Audited
Rm Rm Rm
5. TAXATION
The taxation charge comprises:
Current taxation 196 74 284
Current period 166 74 271
Prior years 30 - 13
Deferred taxation (4) (29) (154)
Current period (4) (29) (177)
Prior years - - 23
Withholding taxation on dividends 1 21 23
193 66 153
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) 39 53 85
Prior years' taxation impact (6) - (20)
Profit before taxation, including prior years'
taxation adjustments 33 53 65
Adjustment due to the inclusion of dividend income - 1 -
Effective rate of taxation 33 54 65
Income taxation effect of: (5) (26) (37)
Disallowable charges, forex revaluations, permanent
differences and impairments (5) (3) (10)
Empowerment transactions and IFRS 2 charges not
taxation deductible (1) (4) (32)
Finance costs on BEE transaction not taxation deductible - (9) (9)
Foreign taxation rate differential 1 3 12
Profit on sale of BEE rights offer shares - 4 -
Recognition of deferred taxation on assessed losses not
previously recorded - - 15
Withholding taxation - (17) (13)
South African normal taxation rate 28 28 28
Six months Six months Twelve months
ended ended ended
30 September 30 September 31 March
2017 2016 2017
Unaudited Reviewed Audited
Cents Cents Cents
6. EARNINGS AND HEADLINE EARNINGS
Earnings per share
Basic 20 13 8
Diluted 19 13 8
Headline earnings per share
Basic 19 14 7
Diluted 19 14 7
Determination of headline earnings per share
Earnings per share 20 13 8
Adjusted for:
Proceeds from insurance claims (1) - (1)
Impairments - 1 -
Headline earnings per share 19 14 7
Headline earnings Rm Rm Rm
Profit for the period 304 58 27
Impairments - 10 10
Taxation on impairments - (3) (3)
Loss on sale of property, plant and equipment - - 10
Taxation on loss sale of property, plant and equipment - - (3)
Proceeds from insurance claims (4) - (27)
Taxation on proceeds from insurance claims 1 - 8
Headline earnings 301 65 22
Attributable to:
Shareholders of PPC Ltd 291 94 85
Non-controlling interests 10 (29) (63)
Cents Cents Cents
Net asset book value per share 580 485 533
Cash earnings per share(a) 58 77 75
Cash conversion ratio(b) 1,1 1,1 0,9
(a) 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.
(b) Cash conversion ratio is calculated using cash generated from operations divided by EBITDA as defined in
segmental information.
The difference between earnings and diluted earnings per share relates to shares held under the forfeitable
share incentive scheme that have not vested.
For the weighted average number of shares used in the calculation, refer note 14.
Six months Six months Twelve months
ended ended ended
30 September 30 September 31 March
2017 2016 2017
Unaudited Reviewed Audited
Rm Rm Rm
7. PROPERTY, PLANT AND EQUIPMENT
Net carrying value at the beginning of the period 12 531 11 716 11 716
Acquisition of subsidiary company (refer note 20) - 83 98
Additions 523 1 305 2 236
Depreciation (369) (361) (740)
Impairments (refer note 4) - (10) (10)
Other movements (24) 34 84
Translation differences 53 (424) (853)
Net carrying value at the end of the period 12 714 12 343 12 531
Comprising:
Freehold and leasehold land, buildings and mineral rights 978 737 742
Decommissioning assets 260 150 164
Plant, vehicles, furniture and equipment 11 475 11 455 11 624
Capitalised leased plant 1 1 1
12 714 12 343 12 531
Assets pledged as security:
DRC 3 409 1 812 3 269
Rwanda 1 627 1 965 2 072
Zimbabwe 1 977 1 996 1 963
7 013 5 773 7 304
Capital work in progress included in plant, vehicles,
furniture and equipment:
DRC 3 669 3 042 3 322
Rwanda - - 12
Zimbabwe 123 921 13
Slurry 1 195 833 1 111
Other 207 151 26
5 194 4 947 4 484
For details on capital commitments, refer note 21.
Impairment assessments
DRC
In the year-end results to March 2017, PPC noted that the DRC market was facing uncertainty driven by political instability,
imports from Angola which were impacting on cement demand and subdued selling prices. Furthermore, the competitive landscape
had become challenging due to imports and new capacity in the market. As a result of these factors, management undertook an
impairment assessment based on the fair value less cost to sell methodology and post this review, it was believed that there
were no impairments required at 31 March 2017. Management however noted that if impairment indicators were evident at the next
reporting period, being September 2017, that a further impairment exercise would be performed.
The plant in the DRC has been completed and is in the process of being tested and commissioned, which process will likely
be fully completed by the end of the current financial year. During the period, limited production was sold into the market
and all revenue and expenses have been included in capital work in progress in compliance with IAS 16 and 23.
During the current reporting period there has been increase in political uncertainty in the DRC. The country was supposed
to hold general elections in December 2017, but these have subsequently been postponed to December 2018. The pending
elections have created uncertainty in the economy and most of the infrastructural projects have been put on hold. Given
that IAS 36.33 (a) require "projections to be based on reasonable and supportable assumptions", the economic and political
uncertainty makes it difficult to make reliable long-term forecasts.
IAS 36 provides two options for assessing recoverable amounts and states that the recoverable amount is the higher of
fair value less costs to sell or value in use. IAS 36 further, states that impairment has to be permanent. The assessment by
management has taken these issues into account and past practices demonstrate that short-term cyclical environments
cannot be a determinant of future sustainable performance.
Replacement cost of the plant is deemed to approximate fair value and the recoverable amount and as a result, management
does not believe that an impairment of the DRC property, plant and equipment is required for the period ended September
2017 as the determined fair value is higher than the carrying amount of the work in progress account.
Ongoing impairment assessment will continue during the current financial year and will be reported on as part of
March 2018 results.
Rwanda
Given that the CIMERWA plant has an estimated useful life of 20 years while its deposits (limestone reserves) are estimated
at 13 years, there is concern that the CIMERWA plant may have suffered an impairment, when viewed in relation to some
of the factors identified by IAS 36.
In performing the impairment assessment, a value-in-use methodology was applied. Cash flow projections were based on
financial forecasts approved by management.
Following the impairment assessment, the recoverable amount of CIMERWA was calculated to be higher than its carrying
amount resulting in no impairment. The valuation achieved reflects headroom of 29% (March 2017: 3%) against the
current net asset value of CIMERWA with the increase in headroom as a result of improved profitability of the business.
Zimbabwe
As a result of the current economic environment and liquidity challenges being experienced in Zimbabwe, an impairment
assessment was undertaken, in line with the assessment performed for the year ended March 2017.
In performing the impairment assessment, a value in use methodology was applied. Cash flow projections were based on
financial forecasts approved by management applying a 13% (March 2017: 13%) US dollar discount rate. The cash flow
projections during the forecast period are based on similar pricing and margins to those currently being achieved by the
business. The values used reflect past experiences, while the economic growth rates of approximately 1% (March 2017: 1%)
per annum, are management’s best estimates that have been prepared using leading financial institutions’ forecasts.
Following the impairment assessment, the recoverable amount of PPC Zimbabwe was calculated to be higher than its
carrying amount resulting in no impairment. The valuation achieved reflects a 25% (March 2017: 10%) headroom against
the current net asset value of PPC Zimbabwe. The ongoing implications of foreign currency shortages will be continually
monitored and the potential implications on the business forecasts reviewed.
Six months Six months Twelve months
ended ended ended
30 September 30 September 31 March
2017 2016 2017
Unaudited Reviewed Audited
Rm Rm Rm
8. GOODWILL
Net carrying value at the beginning of the period 237 255 255
Translation differences (1) (11) (18)
Net carrying value at the end of the period 236 244 237
Goodwill, net of impairments, is allocated to the
following cash-generating units:
CIMERWA Limited (rest of Africa cement segment) 31 39 32
Safika Cement Holdings
Proprietary Limited (southern Africa cement segment) 78 78 78
Pronto Holdings
Proprietary Limited (aggregates and readymix segment) 127 127 127
236 244 237
Six months Six months Twelve months
ended ended ended
30 September 30 September 31 March
2017 2016 2017
Unaudited Reviewed Audited
Rm Rm Rm
9. OTHER INTANGIBLE ASSETS
Balance at the beginning of the period 677 766 766
Acquisition of subsidiary company (refer note 20) - - 10
Additions 4 10 19
Amortisation (44) (44) (92)
Translation differences 1 (7) (26)
Balance at the end of the period 638 725 677
Comprising:
Right of use of mineral assets 202 194 203
ERP development and other software 97 108 126
Brand and trademarks and customer relationships 339 423 348
638 725 677
10. OTHER NON-CURRENT ASSETS
Unlisted collective investment(a) 129 122 124
VAT receivable(b) 178 279 210
307 401 334
Advance payments for plant and equipment(c) - 71 38
Investment in government bonds(d) 5 8 8
312 480 380
(a) Comprises an investment by the PPC Environmental Trust in local unit trusts. These investments are
held to fund PPC's South African environmental obligations.
(b) During the year ended March 2017, a letter was received from the DRC Finance Ministry which indicated
that the VAT due to PPC Barnet DRC needed to be refunded to the company on condition that the refunds
are utilised for local suppliers and local salaries. The letter did not however state when the full
receivable will be settled. As a result of the uncertainty of timing of the refunds, the receivable
has been classified as non-current. To date US$1 million has been received.
(c) In terms of the construction agreements with the suppliers of the new cement plant in DRC, a portion
of the full contract price was required to be paid in advance of the plant construction. The advance
payments will be recycled to property, plant and equipment as the plant is constructed, and are secured
by advance payment bonds.
(d) Represents government of Zimbabwe treasury bills carried at fair value.
Six months Six months Twelve months
ended ended ended
30 September 30 September 31 March
2017 2016 2017
Unaudited Reviewed Audited
Rm Rm Rm
11. NON-CURRENT ASSETS HELD FOR SALE
Property, plant and equipment 39 40 38
In September 2015, the PPC Zimbabwe board approved the disposal of houses at its Colleen Bawn and
Bulawayo factories which was anticipated to be finalised in 12 months. The disposal was delayed due
to regulatory approval but it is now anticipated to be completed before the end of the 2018 financial
year. No impairment loss was recognised on the initial reclassification as management concluded that
the fair value (estimated based on market prices of similar properties) less costs to sell was higher
than the current carrying amount. PPC Zimbabwe is included under the rest of Africa cement segment in
the segmental analysis. The underlying assets are US dollar denominated and the year on year movement
follows the fluctuation of the rand against the US dollar.
12. TRADE AND OTHER RECEIVABLES
Trade receivables 1 079 1 083 1 041
Allowance for doubtful debts (70) (77) (46)
Net trade receivables 1 009 1 006 995
Mark to market cash flow hedge - 3 -
Mark to market fair value hedge 24 14 27
Proceeds due from the rights issue shares listed
on the Zimbabwe stock exchange(a) 80 85 86
Proceeds from the sale of shares - - 37
Other financial receivables 115 82 179
Trade and other financial receivables 1 228 1 190 1 324
Prepayments 137 134 105
VAT receivable 62 1 99
Taxation receivable 58 165 124
1 485 1 490 1 652
(a) Due to the liquidity constraints in Zimbabwe, the proceeds from the rights issue on the Zimbabwe
Stock Exchange have not been remitted to PPC.
Six months Six months Twelve months
ended ended ended
30 September 30 September 31 March
2017 2016 2017
Unaudited Reviewed Audited
Rm Rm Rm
13. CASH AND CASH EQUIVALENTS
Balance at the end of the period 1 003 648 990
Currency analysis:
Botswana pula 62 31 32
Mozambican metical 5 5 10
Rwandan franc 96 230 54
South African rand 106 86 422
United States dollar 734 297 472
1 003 648 990
Amounts denominated in foreign currencies have been translated
at ruling exchange rates at period end (refer note 24).
Cash restricted for use relating to:
PPC Environmental Trust 8 7 8
Consolidated BEE entities 1 1 -
Zimbabwe(a) 564 247 289
573 255 297
(a) Due to the current liquidity constraints in Zimbabwe, the ability to remit funds beyond the
country has become more difficult and as a result the full amount of cash within Zimbabwe
has been reflected as restricted cash. Also included in the PPC Zimbabwe cash and cash
equivalents are bond notes. Bond notes are debt instruments which have been disclosed under
cash and cash equivalents since it meets the definition of cash and cash equivalents and are
pegged at 1:1 with the US dollar.
Cash and cash equivalents include cash on hand and cash on deposit, net of outstanding bank
overdrafts, where there is a right of set-off.
Six months Six months Twelve months
ended ended ended
30 September 30 September 31 March
2017 2016 2017
Unaudited Reviewed Audited
Shares (000) Shares (000) Shares (000)
14. STATED CAPITAL
Authorised shares
Ordinary shares 10 000 000 10 000 000 10 000 000
Preference shares 20 000 20 000 20 000
Number of ordinary shares and weighted average
number of shares
Total shares in issue at the beginning of the period 1 591 760 607 181 607 181
Shares issued for the acquisition of 3Q (refer note 20) - 17 566 17 566
Shares issued in terms of the rights issue - 1 000 000 1 000 000
Shares bought back from the SBPs and CSGs and cancelled
in terms of the BEE agreements - - (48 558)
Shares issued to the SBPs and CSGs following the maturity
of the company's first BEE transaction - - 15 571
Total shares in issue before adjustments for shares
deemed to be treasury shares 1 591 760 1 624 747 1 591 760
Shares issued in terms of the second BEE transaction
treated as treasury shares (37 382) (37 382) (37 382)
Shares held by consolidated BEE trusts and trust funding
SPVs treated as treasury shares (28 929) (34 477) (28 929)
Shares held by consolidated Porthold Trust (Private)
Limited treated as treasury shares (1 285) (1 285) (1 285)
Shares purchased in terms of the FSP share incentive scheme
treated as treasury shares (14 013) (14 013) (14 013)
Total shares in issue (net of shares deemed to be treasury
shares) 1 510 151 1 537 590 1 510 151
Weighted average number of shares, used for:
Earnings and headline earnings per share 1 510 151 757 943 1 137 338
Dilutive earnings and headline earnings per share 1 524 165 764 565 1 148 753
Cash earnings per share 1 510 151 757 943 1 137 338
Shares are weighted for the period in which they are entitled to participate in the profits of the group.
Shares held by consolidated participants of the second BEE transaction
These are shares issued in terms of the second BEE transaction, which was facilitated by means of a
notional vendor funding (NVF) mechanism, with the transaction concluding in September 2019. These shares
participate in 20% of the dividends declared by PPC during the NVF period. 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.
Shares held by consolidated BEE trusts and trust funding SPVs
In terms of IFRS 10 Consolidated Financial Statements, certain of the BEE trusts and trust funding
SPVs from PPC's first BEE transaction are consolidated, and as a result, shares owned by these
entities are carried as treasury shares on consolidation.
Shares held by consolidated Porthold Trust (Private) Limited
Shares owned by a Zimbabwe employee trust company.
FSP incentive scheme
In terms of the forfeitable share plan (FSP) incentive scheme, 14 013 429 (September 2016: 14 013 429,
March 2017: 14 013 429) shares are held in total for participants of this long-term incentive scheme.
These shares are treated as treasury shares during the vesting periods of the awards. During the period,
no shares (September 2016: no shares; March 2017: no shares) vested.
Six months Six months Twelve months
ended ended ended
30 September 30 September 31 March
2017 2016 2017
Unaudited Reviewed Audited
Rm Rm Rm
Stated capital
Balance at the beginning of the period 3 919 (1 113) (1 113)
Acquisition of 3Q Mahuma Concrete, settled via the issue
of shares (refer note 20) - 135 135
Increase in stated capital from the issuance of shares following
the rights issue (net of transaction costs) - 3 791 3 805
Sale of shares, treated as treasury shares, by consolidated
BEE entity - - 37
Shares issued to strategic black partners following the maturity
of the company's first BEE transaction - - 1 041
Shares purchased in terms of FSP incentive scheme treated as
treasury shares - (74) (74)
Vesting of shares held by certain BEE 1 entities - - 88
Balance at the end of the period 3 919 2 739 3 919
Six months Six months Twelve months
ended ended ended
30 September 30 September 31 March
2017 2016 2017
Unaudited Reviewed Audited
Rm Rm Rm
15. PROVISIONS
Decommissioning and rehabilitation 524 409 509
Post-retirement healthcare benefits 30 31 36
554 440 545
Decommissioning and rehabilitation
Group companies are required to restore mining and processing sites at the end of their productive
lives to an acceptable condition consistent with local regulations, and in line with group policy.
PPC has set up an environmental trust in South Africa to administer the local funding requirements
of its decommissioning and rehabilitation obligations. Currently, there are no such regulations in
other jurisdictions in which the group operates for the creation of a rehabilitation trust fund;
however, in the DRC bank guarantees are required. The investments in the trust fund are carried at
fair value through profit or loss and amount to R129 million (September 2016: R122 million;
March 2017: R124 million) (refer note 10).
Post-retirement healthcare benefits
Historically, qualifying employees were granted certain post-retirement healthcare benefits. The
obligation for the employer to pay medical aid contributions after retirement is no longer part of
the conditions of employment for new employees. A number of pensioners remain entitled to this
benefit, the cost of which has been fully provided.
Six months Six months Twelve months
ended ended ended
30 September 30 September 31 March
2017 2016 2017
Unaudited Reviewed Audited
Rm Rm Rm
16. DEFERRED TAXATION
Net liability at the end of the period comprises: 928 1 065 931
Deferred taxation asset 186 63 142
Deferred taxation liability 1 114 1 128 1 073
Analysis of deferred taxation
Property, plant and equipment 1 305 1 309 1 416
Other non-current assets 124 182 120
Current assets 3 (6) 14
Non-current liabilities (100) (70) (113)
Current liabilities (78) (48) (66)
Reserves 14 53 (83)
Taxation losses (340) (355) (357)
928 1 065 931
Included in the net deferred taxation balance is a deferred taxation asset of R230 million
(September 2016: R355 million; March 2017: R262 million) relating to CIMERWA's taxation losses.
In terms of local legislation, taxation losses need to be utilised within five years from the
initial year of assessment. This assessment involves significant judgement as it requires
management to project available taxable profits over a five year period. Management have relied
on the same projections used in assessing impairment of property, plant and equipment. These
projections indicate that the CIMERWA will be in a position to generate sufficient taxable profits
to fully utilise the taxation losses.
Six months Six months Twelve months
ended ended ended
30 September 30 September 31 March
2017 2016 2017
Unaudited Reviewed Audited
Rm Rm Rm
17. LONG-TERM BORROWINGS
Terms Security Interest rate
Notes(a) Various, refer below Unsecured Various, refer below 131 136 131
Long-term loan Interest was payable Unsecured Fixed 10.86% - 1 041 -
biannually with a bullet
capital repayment in
December 2016
Long-term loan(b) Interest is payable Unsecured Variable rates at 1 586 511 1 565
quarterly with a bullet 585 basis points
capital repayment in above JIBAR
June 2018
Long-term loan Interest was payable Unsecured Variable rates at - 50 -
monthly with a bullet 125 basis points
capital repayable 18 above JIBAR
months after notice
period
Project funding 3 597 3 660 3 685
Long-term loan US dollar-denominated, Secured by CIMERWA's Variable at 725 basis 525 698 569
repayable in monthly property, plant and points above one-month
instalments over a equipment US dollar LIBOR
10-year period,
starting March 2016
Long-term loan Rwanda franc-denominated, Secured by CIMERWA's Fixed rate of 16% 413 490 435
repayable in monthly property, plant and
instalments over a 10-year equipment
period, starting March 2016
Long-term loan US dollar-denominated, Secured by PPC Six-month US dollar 598 599 638
interest payable Zimbabwe's property, LIBOR plus 700 basis
biannually. Biannual plant and equipment points
repayments in equal
instalments over five
years starting December
2016
Long-term loan(c) US dollar-denominated, Secured by PPC Barnet Six-month US dollar 2 061 1 873 2 043
capital and interest DRC's property, plant LIBOR plus 725 basis
payable biannually and equipment points
starting July 2017
ending January 2025
Long-term borrowings 5 314 5 398 5 381
Less: short-term portion of long-term borrowings (2 149) (1 949) (1 826)
3 165 3 449 3 555
Add: Short-term borrowings, bank overdrafts and short-term portion of long-term borrowings 2 267 2 465 2 181
Total borrowings 5 432 5 914 5 736
Notes (a), (b) and (c) continued on following page.
Six months Six months Twelve months
ended ended ended
30 September 30 September 31 March
2017 2016 2017
Unaudited Reviewed Audited
Rm Rm Rm
LONG-TERM BORROWINGS continued
Maturity analysis of total borrowings:
One year 2 267 2 465 2 181
Two years 584 355 570
Three years 684 392 669
Four years 583 497 568
Five and more years 1 314 2 205 1 748
5 432 5 914 5 736
Assets encumbered are as follows:
Property, plant and equipment (refer note 7) 7 013 5 773 7 304
(a)Notes
Comprise unsecured notes, issued under the company's
R6 billion domestic medium-term note programme, and
are recognised net of capitalised transaction costs:
Note number, term and interest rate Issue date
PPC 002: five years; three-month JIBAR plus 1,5% December 2013 20 20 20
PPC 003: five years; three-month JIBAR plus 1,48% July 2014 111 116 111
131 136 131
(b)Long-term loan
The loan is reflected net of transaction costs of Rnil (September 2016: R23 million,
March 2017: R12 million) which are being amortised over the 18-month period of the loan.
During the period, the company refinanced the facility with a maturity date of June 2018.
The company is working with two leading South African banks to optimally restructure the
capital structure of the business and is far progressed.
(c)Long-term loan
At the date of this report, the company is in the process of renegotiating its debt in the
DRC business in order to defer capital repayments for a further 24 months.
Six months Six months Twelve months
ended ended ended
30 September 30 September 31 March
2017 2016 2017
Unaudited Reviewed Audited
Rm Rm Rm
18. OTHER NON-CURRENT LIABILITIES
Cash-settled share-based payment liability 1 3 1
Finance lease liabilities(a) 3 8 5
Liability to non-controlling shareholder in subsidiary company(b) 17 17 16
DRC put option liability(c) 424 424 434
445 452 456
Less: Short-term portion of other non-current liabilities (1) (7) (3)
444 445 453
(a) Finance lease obligations acquired via the acquisition of 3Q Mahuma Concrete and are
secured by vehicles (refer note 20).
(b) Relates to US dollar-denominated interest payable on initial equity contribution into
the DRC group of companies by a non-controlling shareholder. The accruing of interest
ceased in September 2015 and the amount payable will be repaid once the external funding
of the DRC has been settled.
(c) The International Finance Corporation (IFC) was issued a put option in September 2015 in
terms of which PPC is required to purchase all or part of the 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 value of the put option is
determined on a defined formula that comprises EBITDA and net debt of the DRC business during
the option period. This formula has been utilised in determining the value of the potential
value of the put option liability applying the closing US dollar exchange rate and applying
an EBITDA multiple using publically available information of comparable cement businesses.
Forecast EBITDA is based on financial forecasts approved by management. The present value of
the put option was calculated at R424 million (September 2016: R424 million ; March 2017:
R434 million). Movement on the liability is included in note 22, while further details on the
DRC are contained in note 7.
19. TRADE AND OTHER PAYABLES
Accrued finance charges 5 31 -
Cash-settled share-based payment liability (short-term portion) 1 3 1
Capital expenditure payables 15 262 171
Finance lease liabilities (short-term portion) (refer note 18) 1 4 2
Other financial payables 9 11 49
Retentions held for plant and equipment 302 330 297
Trade payables and accruals 1 197 987 944
Trade and other financial payables 1 530 1 628 1 464
Payroll accruals 115 273 227
VAT payable 37 - 46
Taxation payable 66 35 106
1 748 1 936 1 843
Trade and other payables, payroll accruals and regulatory obligations are payable within a 30
to 60-day period.
Six months Twelve months
ended ended
30 September 31 March
2016 2017
Reviewed Audited
Rm Rm
20. ACQUISITION OF SUBSIDIARY COMPANY
Fair value of assets and liabilities acquired at date of acquisition:
Property, plant and equipment, intangible assets and other non-current assets 113 111
Cash and cash equivalents 4 4
Other current assets 104 102
Other non-current liabilities (9) (6)
Current liabilities (77) (76)
Net fair value of assets and liabilities acquired 135 135
3Q Mahuma Concrete
The fair values presented in September 2016 were provisional and were finalised by March 2017,
with no material changes identified between reporting periods.
The acquisition was settled via the issuance of 17 565 872 new PPC shares. The fair value of the
shares for asset acquisition, using the ruling share price of R7,68 on the effective date of the
transaction, amounted to R135 million.
The commercial rationale for the transaction was to progress the company's channel management strategy
that serves as a complementary platform for cement growth in South Africa. PPC's strategic intention is
to be a provider of materials and solutions into the basic services sector. Cementitious distribution
channels, including readymix, is increasingly being utilised as conduit to grow and sustain cement sales
volumes. The acquisition provides PPC with a further complementary platform to grow its service offering
in this market segment. The South African market is evolving towards a concrete delivery model, which
requires complementary building materials including cement, aggregates and readymix. Controlling cement
distribution channels is vital, with customers and end users requiring integrated solutions.
3Q contributed R162 million (September 2016: R80 million, March 2017: R248 million) to revenue.
Fair value of intangible assets was valued by an independent specialist and amounted to R10 million in
the prior period, the significant portion thereof relating to the 3Q brand. These intangible assets will
be amortised over a five-year period. The fair value adjustments to property, plant and equipment amounted
to R10 million and relates to vehicles and these were valued using insurable replacement values.
Six months Six months Twelve months
ended ended ended
30 September 30 September 31 March
2017 2016 2017
Unaudited Reviewed Audited
Rm Rm Rm
21. COMMITMENTS
Contracted capital commitments 378 1 411 549
Approved capital commitments 417 1 301 522
Capital commitments 795 2 712 1 071
Operating lease commitments 80 115 115
875 2 827 1 186
Capital commitments
Southern Africa 736 1 155 760
Rest of Africa 59 1 557 311
795 2 712 1 071
Capital commitments are anticipated to be incurred:
- Within one year 318 1 871 1 046
- Between one and two years 477 841 8
- Beyond two years - - 17
795 2 712 1 071
Capital expenditure commitments 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.
22. FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES
The financial assets and liabilities carried at fair value are classified into three categories as reflected below:
Six months Six months Twelve months
ended ended ended
30 September 30 September 31 March
2017 2016 2017
Unaudited Reviewed Audited
Note Level * Rm Rm Rm
Financial assets
Loans and receivables
Mark to market hedges 12 1 24 17 27
At fair value through profit and loss
Unlisted collective investments at fair
value (held for trading) 10 2 129 122 124
Total financial assets 153 139 151
Level 1 24 17 27
Level 2 129 122 124
Financial liabilities
At fair value through profit and loss
Cash-settled share-based liability 18 2 1 3 1
Put option liabilities 18 3 424 424 434
Derivatives
Derivative financial instruments 19 2 - - 1
Total financial liabilities 425 427 436
Level 2 1 3 2
Level 3 424 424 434
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.
This note has been refined from that reported in September 2016 to only include financial instruments
held at fair value.
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 value of the put option is determined on a defined formula that comprises EBITDA and net debt of the
DRC business during the option period. This formula has been utilised in determining the value of the
potential value of the put option liability applying the closing US dollar exchange rate and applying an
EBITDA multiple using publically available information of comparable cement businesses. Forecasted EBITDA
is based on financial forecasts approved by management.
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 Increase/
Valuation Main decrease
technique assumptions (Rm)
Put option liabilities Earnings multiple EBITDA and net debt 74
If the EBITDA multiple applied in the valuation was one multiple higher/lower while all
other variables were held constant, carrying amount of the DRC put option liabilities
would decrease/increase by R74 million.
Six months Six months Twelve months
ended ended ended
30 September 30 September 31 March
2017 2016 2017
Unaudited Reviewed Audited
Rm Rm Rm
Movements in level 3 financial instruments
Financial liabilities
Balance at the beginning of the period 434 415 415
Remeasurements (included under foreign exchange movements
on foreign currency monetary items) (33) - -
Time value of money adjustments 23 9 19
Balance at the end of the period 424 424 434
23. EVENTS AFTER THE REPORTING DATE
There are no events that occurred after the reporting date that may have a material impact
on the consolidated financial position at 30 September 2017.
24. CURRENCY CONVERSION GUIDE
Approximate value of key foreign currencies to the rand:
Average Closing
Six months Six months Twelve months Six months Six months Twelve months
ended ended ended ended ended ended
30 September 30 September 31 March 30 September 30 September 31 March
2017 2016 2017 2017 2016 2017
Unaudited Reviewed Audited Unaudited Reviewed Audited
Botswana pula 1,28 1,35 1,32 1,30 1,28 1,26
US dollar 13,17 14,50 14,08 13,56 13,90 13,43
Rwandan franc 0,02 0,02 0,02 0,02 0,02 0,02
Mozambican metical 0,22 0,27 0,28 0,22 0,18 0,19
25. RESTATEMENT
As disclosed in the basis of preparation note, following the internal restructure effective
1 April 2016, the group's segments have been amended to align to the current reporting structures
and information presented to the group executive committee. The segments were updated for the year
ended March 2017 and have been restated in these condensed consolidated financial statements for
the period ended September 2016.
The restatement had no impact on the group's financial position or results and there is therefore
no requirement to present additional statement of financial positions.
Profit before
Revenue EBITDA taxation
Rm Rm Rm
Cement
Cement southern Africa 2 946 742 467
Cement rest of Africa 1 152 339 23
Group services and other reclassified to lime, aggregates and readymix (61) - 1
Group services and other reclassified to other segments - (134) (471)
Inter-segment revenue elimination 94 - -
Total as originally reported in September 2016 4 131 947 20
Group services and other
Group services and other reclassified from other segments - (134) (471)
As originally reported in September 2016 - - (36)
Total as reported now for group services and other - (134) (507)
Total assets Total liabilities
Rm Rm
25. RESTATEMENT
Cement
Cement southern Africa 5 755 2 781
Cement rest of Africa 9 802 7 394
Group services and other reclassified to other segments (37) (886)
Group services and other reclassified from lime, aggregates and readymix 76 83
Total as originally reported in September 2016 15 596 9 372
Group services and other
Group services and other reclassified from other segments (37) (886)
As originally reported in September 2016 1 1
Total as reported now for group services and other (36) (885)
Administration
Directors
Executive: JT Claassen (interim chief executive officer)
MMT Ramano (chief financial officer)
Non-executive: PG Nelson (chairman)
S Dakile-Hlongwane, N Gobodo, N Goldin,
TJ Leaf-Wright, SK Mhlarhi, T Moyo*, CH Naude, TDA Ross
*Zimbabwean
Registered office
148 Katherine Street, Sandton, South Africa
(PO Box 787416, Sandton 2146, South Africa)
Transfer secretaries
Computershare Investor Services Pty Limited
Rosebank Towers
15 Biermann Avenue, Rosebank, 2196, South Africa
(PO Box 61051, Marshalltown, 2107, South Africa)
Transfer secretaries Zimbabwe
Corpserve Registrars Private Limited
2nd Floor, ZB Centre, Kwame Nkrumah Avenue, Harare Zimbabwe
(PO Box 2208, Harare, Zimbabwe)
Company secretary
JHDLR Snyman
148 Katherine Street, Sandton, South Africa
(PO Box 787416, Sandton 2146, South Africa)
Sponsor
Merrill Lynch South Africa Pty Limited
The Place, 1 Sandton Drive, Sandton, South Africa
(PO Box 651987, Benmore 2010, South Africa)
External auditors
Deloitte & Touche
Deloitte Place, Building 1, The Woodlands
20 Woodlands Drive, Woodmead, 2052
South Africa
(Private Bag X6, Gallo Manor 2052, South Africa)
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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