Wrap Text
Audited Provisional Summarised Consolidated Financial Statements for the year ended 31 March 2018
PPC Ltd
(Incorporated in the Republic of South Africa)
Company registration number: 1892/000667/06
JSE/ZSE code: PPC JSE ISIN: ZAE000170049
JSE code: PPC002 JSE ISIN: ZAG000111212
JSE code: PPC003 JSE ISIN: ZAG000117524
(PPC or company or group)
Audited provisional summarised consolidated financial statements for the year ended 31 March 2018
FINANCIAL HIGHLIGHTS
- Cash generated from operations after working capital up 23% to R2,3 billion
- Net operating cash flow after investment activities improved by R1,8 billion
- Group EBITDA excluding non-recurring costs up 2%, like-for-like up 4% and 17% higher than reported
- Group revenue increased 7% to R10,3 billion
- Group reported EBITDA declined 9% to R1,9 billion, due to non-recurring costs and inclusion of
DRC for the first time
- Strong performance from rest of Africa cement operations, reflected in 14% EBITDA growth with
the DRC detracting from the performance
- Maintained southern Africa cement EBITDA margin at 22% in a tough environment
- Basic earnings per share up 25% to 10 cents
- Headline earnings per share increased 114% to 15 cents
- Net debt down R900 million to R3,8 billion, net debt/EBITDA 2,0x which improved financial position
- Finance costs reduced by 9%, like-for-like down 32%
- Impairment of R165 million to DRC plant detracted from the performance
COMMENTARY
Johan Claassen, CEO, said: "The group has achieved key milestones in delivering on its FOH-FOUR strategic priorities.
Our performance has been resilient against the backdrop of challenging economic and political environments in markets
in which we operate. While our rest of Africa operations, particularly Zimbabwe and Rwanda, achieved good results, our
materials division faced reduced demand and increased competition. Our results have also been impacted by a number of
significant abnormal items: corporate action, impairment of Democratic Republic of the Congo (DRC) operations and
restructuring costs. In 2017, we concentrated on getting back to basics and refocusing by introducing the FOH-FOUR
strategic priorities: optimising the financial, operational and human capital of the group. Addressing these
priorities has laid an important foundation that will enable the group to create long-term sustainable value
for stakeholders in future."
MAJOR ACHIEVEMENTS IN THE PERIOD
- Announced BEE III transaction terms to comply with regulations
- Restructured DRC funding agreements, including two-year capital holiday
- Implemented R2 billion debt-funding package in South Africa (RSA)
- Implemented value-based management system
- Launched R50/tonne savings initiatives in RSA
- Reduced capital expenditure by R1,1 billion
- Commissioned DRC and Ethiopian plants
- Group safety - lost-time injury frequency rate down from 0,40 to 0,25
GROUP PERFORMANCE
The group's attributable headline earnings and headline earnings per share for the year increased by 172% and 114% to
R231 million (2017: R85 million) and 15 cents (2017: 7 cents) respectively. Group revenue rose 7% to R10 271 million
(2017: R9 641 million), impacted by the strengthening of average rand exchange rates against most foreign currencies.
Group gross profit rose 3% on the strong performance of the Zimbabwe and Rwanda operations. On a constant-currency
basis, revenue grew by 14%, accounting for the 7% strengthening in the rand against the US dollar to an average rate
for the year of 13,06 (2017: 14,08). Excluding DRC sales, which were included for the first time for five months,
like-for-like growth was 5%. Total cement volumes increased 6% to 5,9 million tonnes.
Group cost of sales rose 8% to R7 924 million (2017: R7 359 million). Excluding the impact of DRC, like-for-like
growth was 6%, in line with growth in the producer price index (PPI). Operational efficiencies and introducing
the R50/tonne savings initiatives in South Africa contributed to good cost control.
Administration and other operating expenditure rose 28% to R1 343 million (2017: R1 049 million), with the DRC
accounting for R146 million (2017: R35 million) of the cost. Administration costs were further impacted by corporate
action, restructuring, separation costs and other non-recurring costs totalling R145 million. Like-for-like
administration costs, excluding the impact of non-recurring costs and DRC, would have risen 4%. The head office
workforce was restructured, which is expected to generate future savings of some R20 million per annum.
Group EBITDA declined 9% to R1 880 million (2017: R2 065 million) while the EBITDA margin was 18,3% (2017: 21,4%).
The DRC operation contributed an EBITDA loss of R105 million (2017: R39 million loss). Excluding the impact of
once-off costs and exchange rates, EBITDA would have risen 2%, with corresponding EBITDA margin of 19,7%. In
addition, excluding the impact of the DRC, like-for-like EBITDA would have risen 4%, and corresponding margins
maintained compared with last year.
Finance costs reduced 9% to R675 million (2017: R741 million), reflecting the benefits of the rights issue as well as
liquidity and guarantee facility agreement fees incurred in the prior period. Additionally, finance costs for the DRC
were expensed post-commissioning. On a like-for-like basis, excluding the impact of the DRC, finance costs would have
reduced by 32%. Optimisation of the capital structure and liquidity management are yielding positive results, with
average cost of finance in RSA reducing from 13 to 14% to 10 to 11%.
In the results to March 2018, the DRC market continued to face uncertainty driven by political instability, lower
cement demand and subdued selling prices. Furthermore, the competitive landscape remains challenging due to production
capacity that is higher than market demand. The delayed elections have created uncertainty in the economy and most of the
infrastructural projects have been put on hold or they are slow. As a result of these factors, management undertook an
impairment assessment. Following the impairment assessment review, the recoverable amount of the DRC operation was
considered lower than the current carrying value and an impairment of R165 million (US$14 million) was charged
against property, plant and equipment for the year ended March 2018.
Taxation was 34% higher at R205 million (2017: R153 million) on increased profitability. However, the effective
taxation rate reduced from 85% to 68%, excluding the impact of equity-accounted earnings. The high tax rate was
mainly due to the non-deductibility of certain abnormal costs (including impairments) and Zimbabwe tax penalties.
The sustainable tax rate for the group in future should range between 30% and 35%. Cash tax increased by only 11%.
Net profit attributable to PPC shareholders rose 60% to R149 million (2017: R93 million). Ethiopia, accounted for
as an associate, contributed a net loss of R61 million due to foreign currency devaluation and finance costs being
expensed to the income statement for three months. The DRC contributed an attributable net loss of R264 million
(2017: R107 million loss). Basic earnings per share was 25% higher at 10 cents (2017: 8 cents) and headline earnings
per share rose 114% to 15 cents (2017: 7 cents). On a like-for-like basis, EPS and HEPS increased to 33 cents and
37 cents respectively. Weighted average shares in issue increased from 1 137 million to 1 510 million for the period.
Net cash flow from operating activities increased 69% to R1 430 million (2017: R845 million). Positive working capital
movements totalled R411 million and, coupled with lower finance costs and a lower effective taxation paid rate,
contributed to improved cash generation. The focus on liquidity and capital management is paying off as PPC is
refocusing to improve free cash flow generation.
Capital expenditure on property, plant and equipment decreased significantly to R921 million (2017: R2 058 million).
The peak of the capex cycle was in 2017 and, in future, group capex will be concentrated on maintenance and efficiency
improvements. Group net debt declined from R4 746 million in March 2017 to R3 846 million, while net debt to EBITDA
improved from 2,3x to 2,0x. This is in line with our revised long-term gearing targets and covenants with lenders.
There is significant headroom in the balance sheet.
The group has made significant progress in improving its liquidity and strengthening the balance sheet. Restructuring
South African debt to a maturity profile of between three and four years, coupled with reduced effective interest rate
costs of 10 to 11%, and the two-year capital holiday negotiated with lenders for the DRC project funding debt, will
enable the group to achieve its optimal capital structure. The group made deficiency funding payments to the DRC
totalling US$42 million (R556 million) in the period to deal with shortfalls in capital costs, interest cost and
other working capital. This deficiency was reduced significantly by the renegotiated capital holiday.
SOUTHERN AFRICA CEMENT
Revenue from southern Africa cement, which includes Botswana, was marginally down, with realised average selling
prices rising 2,5% although volumes declined 2 to 3%. Higher selling prices were achieved by implementing our focused
route-to-market strategy. We estimate that volume performance was better than the overall market, despite a particularly
depressed first quarter in 2018, where all regions recorded a slowdown. Total imports rose 32% compared with the same
period last year, although off a low base. Import volumes into the Western Cape increased marginally by 6,5%. In Botswana,
the market remained subdued with a marginal decline in volume demand. However, the region continues to deliver sustainable
cost savings, with variable delivered cost per tonne marginally below the previous period. EBITDA declined 2,9%, with a
slight decline in corresponding margins to 21,8%. In terms of the R50/tonne savings initiatives, PPC implemented price
increases of 3 to 5% in January 2018. Restructuring initiatives for head office and operations are progressing well, as
is the integration of Safika Cement. Together with modernising the Slurry complex, these initiatives are expected to
deliver further cost benefits, in line with the three mega plant strategy.
REST OF AFRICA CEMENT
Revenue increased 30% to R2 762 million (2017: R2 119 million), while total volumes rose over 50% supported by robust
volume growth in Rwanda and Zimbabwe. Selling prices were fairly stable. EBITDA grew by a robust 14,1% to R736 million,
with EBITDA margins contracting from 30,4% to 26,7%. Zimbabwe and Rwanda contributed to the growth in profitability,
while the DRC detracted from the performance as it is in ramp-up phase. Like-for-like EBITDA, excluding the impact of
DRC, would have risen 23%, with corresponding margins marginally lower at 32,1%. In achieving these results, PPC
continued to focus on its FOH-FOUR strategic priorities by optimising operations and route-to-market strategies,
while managing liquidity in-country.
Zimbabwe
Revenue grew by 34% to R1 813 million (2017: R1 352 million), supported by volumes increasing over 45% from last year,
setting new sales records. A successful tobacco, cotton and grain harvest injected additional disposable income into
the economy, with a late rainy season extending the period of construction activity. There was also an upsurge in
construction activity as citizens converted monetary investments to property amid liquidity constraints. Average US dollar
selling prices rose 3% from the prior period. EBITDA grew 31% to R572 million (2017: R438 million), with margins maintained
at 32%. To mitigate current liquidity constraints, we significantly reduced our forex requirements by settling a power
tariff account for our clinker-producing facility in-country.
Rwanda
CIMERWA continued to deliver robust volume growth of 20%, with annualised capacity utilisation above 65%. Revenue
increased 10% to R804 million (2017: R733 million), although sales were constrained towards the end of the period by a
planned maintenance shutdown. Realised cement prices were similar to last year. Costs were well controlled, with EBITDA
margins maintained at 34%. The economic outlook remains positive, with major planned infrastructure projects expected to
boost volumes.
DRC
The PPC Barnet factory was commissioned from November 2017. A R165 million impairment of the plant was recognised in
the period. This was due to the plant not operating as expected given the country's prevailing economic and political
climate. The DRC market remains challenging given the subdued economic climate. Volumes sold totalled 168 000 tonnes for
the period, with a steady monthly improvement in achieving a market share of between 20% and 30% at the end of the
reporting period. Revenue grew from R24 million in 2017 to R144 million for the period. Cost of sales amounting to
R173 million (2017: R41 million) and overheads of R146 million (2017: R35 million) were recorded in the period.
The business made an EBITDA loss of R105 million (2017: R39 million loss) for the period. Finance costs incurred rose
to R117 million from R9 million in 2017. Route-to-market initiatives are steadily yielding positive results and
volumes are expected to improve as we continue to ramp up.
Ethiopia
For accounting purposes, the commissioning date for the Habesha plant was 1 January 2018, and it was equity-accounted
for three months in the reporting period. The business delivered about 300 000 tonnes for the period, with some
120 000 tonnes accounted for in the income statement and the remainder in the balance sheet. A net loss of R61 million
was realised, mainly due to foreign currency translation losses and finance costs. Business performance for the review
period was affected by instability in the country causing several operational disruptions. The economic outlook remains
positive, which bodes well for cement demand.
MATERIALS BUSINESS
Lime
The lime division increased revenue 2% to R801 million, with volumes and selling prices similar to last year. Volumes
were constrained by key steel-customer shutdowns and non-extension of a significant contract. Lime's EBITDA contracted
18% after higher variable costs for maintenance and raw material inputs.
Aggregates and readymix
Revenue declined marginally from last year, and EBITDA contracted materially. Readymix volumes and pricing were under
pressure from significantly lower activity in the construction industry and intense competition in the Gauteng market.
Aggregates' volumes contracted in line with the muted readymix market.
BLACK ECONOMIC EMPOWERMENT TRANSACTION
As a good corporate citizen we remain committed to transformation principles and improving the lives of all our
stakeholders. In March 2018, we announced the terms of our top-up black economic empowerment (BEE) transaction.
This transaction will allow PPC to comply with the Department of Mineral Resources (DMR) and the Department of
Trade and Industry (DTI) in terms of ownership requirements and enables the company to compete on an equivalent
BEE equity level with industry peers. The transaction will be implemented in the coming financial year.
GOVERNANCE
Board changes
Resignations
Mr Peter Nelson resigned as chairman of the board and non-executive director of PPC on 2 March 2018. Mr Nelson
successfully led the company through a period of headwinds and achieved a number of significant milestones since his
appointment to the board in January 2015. In addition, Mr Sydney Mhlarhi, Mrs Dawn Earp and Mr Tim Ross resigned as
non-executive directors of PPC.
The board thanks these directors for their valuable contributions, professionalism and dedication to PPC and wishes
them well in their future endeavours.
Appointments
In February 2018, Mr Johan Claassen, with 29 years' experience in the business, was appointed as chief executive
officer, Mr Jabu Moleketi as chairman of the board, and Mr Anthony Ball and Ms Noluvuyo Mkhondo as non-executive
directors. In April 2018, the board also appointed Mr Ignatius Sehoole and Advocate Mojankunyane Gumbi as non-
executive directors. Collectively, these directors add significantly to the depth of skills on the board.
All appointments will be presented for confirmation by shareholders at the company's next annual general meeting.
PROSPECTS
The South African landscape remains an economically challenging trading environment, with minimal gross domestic
product (GDP) growth projected for the next 12 months. The regulatory regime is increasingly adding to compliance
costs in the RSA cement sector. The outlook for our materials division is also muted, as it is linked to
infrastructure investment growth, with the lime division mainly exposed to the steel industry, and readymix and
aggregates relying on construction projects. To mitigate this, management will implement the BEE III transaction
to strategically position the business from a commercial and regulatory standpoint. The cement business, with
its focused R50/tonne savings initiatives, will continue its disciplined approach to growing price and volume,
and driving operational efficiencies. The business will continue to defend and maintain its leading position
and competitive advantage from the perspectives of footprint, scale and efficiency.
In the rest of Africa, strong demand is expected to continue, driven by Zimbabwe and Rwanda businesses, while we ramp
up in the DRC and Ethiopia. The political landscape is improving in Zimbabwe, with elections scheduled for July 2018.
The CIMERWA plant has been modified to improve efficiencies to operate at optimal capacity and efficiency. Continued good
growth in Rwanda's GDP should sustain demand, which currently appears to be exceeding supply. In the DRC, elections are
scheduled for December 2018. We continue to ramp up in that country, despite being constrained by overcapacity and muted
demand. In Ethiopia, the political landscape is expected to improve, with forecast strong growth in GDP of 7 to 8%
supporting cement demand in the country.
PPC will continue to execute its FOH-FOUR strategic priorities over the next 12 to 18 months. The group will optimise
capital allocation based on the value-based management system implemented, in pursuit of achieving an optimal capital
structure through the cycle. The group will also continue to look at options with regard to PPC Barnet in the DRC, to
further mitigate the group's risk exposure. We have completed our major capex investments and, in the process, enhanced
and modernised our plants. Reduced capex, coupled with significantly lower interest rate charges, is expected to
improve free cash flow going forward. The group remains well positioned to benefit from growth in the regions in
which it operates.
On behalf of the board
PJ Moleketi
Chairman
JT Claassen
Chief executive officer
MMT Ramano
Chief financial officer
Sandton
15 June 2018
RESULTS PRESENTATION
PPC will host an analysts’ results presentation on 18 June 2018 at 10:00, in Johannesburg at the JSE Auditorium,
1 Exchange Square, 2 Gwen Lane, Sandown. The presentation and a copy of this announcement will also be available
on the company’s website, www.ppc.co.za.
AUDITED SUMMARISED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 March 2018
Year ended Year ended
31 March 31 March
2018 2017
Audited Audited %
Notes Rm Rm change
Revenue 10 271 9 641 7
Cost of sales 7 924 7 359 8
Gross profit 2 347 2 282 3
Administrative and other operating expenditure 1 343 1 049 28
Operating profit before item listed below: 1 004 1 233 (19)
Empowerment transactions IFRS 2 charges 48 206
Operating profit 956 1 027 (7)
Fair value and foreign exchange gains/(losses) 2 143 (124)
Finance costs 3 675 741 (9)
Investment income 52 27
Profit before equity-accounted earnings 476 189 152
(Loss)/earnings from equity-accounted investments (60) 1
Impairments and other exceptional items 4 (174) (10)
Profit before taxation 242 180 34
Taxation 5 205 153 34
Profit for the year 37 27 37
Attributable to:
Shareholders of PPC Ltd 149 93 60
Non-controlling interests (112) (66)
Other comprehensive loss, net of taxation
Items that will be reclassified to profit or loss (598) (523)
Cash flow hedges - (47)
Taxation on cash flow hedges - 13
Translation of foreign operations (598) (489)
Total comprehensive loss (561) (496)
Attributable to:
Shareholders of PPC Ltd (347) (295)
Non-controlling interests (214) (201)
EARNINGS PER SHARE (CENTS) 6
Basic 10 8 25
Diluted 10 8 25
AUDITED SUMMARISED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
at 31 March 2018
31 March 31 March
2018 2017
Audited Audited
Notes Rm Rm
ASSETS
Non-current assets 12 910 14 192
Property, plant and equipment 7 11 393 12 531
Goodwill 8 230 237
Other intangible assets 9 557 677
Equity-accounted investments 182 225
Other non-current assets 10 303 380
Deferred taxation assets 16 245 142
Non-current assets held for sale 11 34 38
Current assets 3 262 3 805
Inventories 1 182 1 163
Trade and other receivables 12 1 244 1 652
Cash and cash equivalents 13 836 990
Total assets 16 206 18 035
EQUITY AND LIABILITIES
Capital and reserves
Stated capital 14 3 984 3 919
Other reserves 967 1 464
Retained profit 2 817 2 668
Equity attributable to shareholders of PPC Ltd 7 768 8 051
Non-controlling interests 120 334
Total equity 7 888 8 385
Non-current liabilities 5 909 5 626
Provisions 15 526 545
Deferred taxation liabilities 16 1 042 1 073
Long-term borrowings 17 4 079 3 555
Other non-current liabilities 18 262 453
Current liabilities 2 409 4 024
Short-term borrowings 17 603 2 181
Trade and other payables 19 1 806 1 843
Total equity and liabilities 16 206 18 035
Net asset book value per share (cents) 513 533
AUDITED SUMMARISED CONSOLIDATED STATEMENT OF CASH FLOWS
for the year ended 31 March 2018
Year ended Year ended
2018 2017
Audited Audited
Notes Rm Rm
Cash flow from operating activities
Operating cash flows before movements in
working capital 1 889 2 101
Working capital movements 411 (230)
Cash generated from operations 2 300 1 871
Finance costs paid (592) (743)
Investment income received 52 21
Taxation paid (330) (296)
Cash available from operations 1 430 853
Dividends paid - (8)
Net cash inflow from operating activities 1 430 845
Cash flow from investing activities
Acquisition of additional shares in an
equity-accounted investment (42) -
Acquisition of additional shares in subsidiary - (18)
Investments in intangible assets (6) (19)
Investments in property, plant and equipment (921) (2 058)
Proceeds from disposal of property, plant
and equipment 29 4
Other investing activities 28 -
Net cash outflow from investing activities (912) (2 091)
Cash flow from financing activities(a)
Net borrowings repaid before repayment of the notes 17 (597) (1 370)
Proceeds from the issuance of shares following
rights issue (net of transaction costs) - 3 722
Proceeds from the issuance of shares to strategic
black partners in terms of the company's first
BBBEE transaction 14 - 1 041
Proceeds from the sale of shares and nil paid letters
by consolidated BBBEE entities - 137
Proceeds from the sale of shares held by
consolidated BBBEE entity 36 -
Purchase of PPC Ltd shares in terms of the
FSP share incentive scheme 14 (16) (74)
Repayment of notes 17 - (1 614)
Net cash (outflow)/inflow from financing activities (577) 1 842
Net movement in cash and cash equivalents (59) 596
Cash and cash equivalents at the beginning of the year 990 460
Cash and cash equivalents acquired on acquisition
of 3Q Mahuma Concrete 20 - 4
Exchange rate movements on opening cash and
cash equivalents (95) (70)
Cash and cash equivalents at the end of the year 836 990
(a) During the year, the non-cash changes on borrowings amounted to R457 million arising from favourable,
unrealised foreign exchange differences.
AUDITED SUMMARISED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 March 2018
Other reserves
Equity
Foreign Available- attributable
currency for-sale Equity to Non-
Stated translation financial Hedging compensation Retained shareholders controlling Total
capital reserve asset reserve reserve profit of PPC Ltd interests equity
Rm Rm Rm Rm Rm Rm Rm Rm Rm
Balance at 31 March 2016 (audited) (1 113) 1 245 14 34 265 2 583 3 028 535 3 563
Acquisition of 3Q, settled
via the issue of shares
(refer note 20) 135 - - - - - 135 - 135
Dividends declared - - - - - (8) (8) - (8)
IFRS 2 charges - - - - 245 - 245 - 245
Increase in stated capital from
issuance of shares following the
rights issue (net of
transaction costs) 3 805 - - - - - 3 805 - 3 805
Proceeds from sale of nil
paid letters by consolidated
BBBEE entities - - - - 137 - 137 - 137
Sale of shares, treated as
treasury shares, by consolidated
BBBEE entity 37 - - - - - 37 - 37
Shares issued to strategic black
partners through the maturity
of the company's first
BBBEE transaction 1 041 - - - - - 1 041 - 1 041
Shares purchased in terms of
FSP share incentive scheme
treated as treasury shares (74) - - - - - (74) - (74)
Total comprehensive (loss)/income - (354) - (34) - 93 (295) (201) (496)
Vesting of shares held by certain
BBBEE 1 entities 88 - - - (88) - - - -
Balance at 31 March 2017 (audited) 3 919 891 14 - 559 2 668 8 051 334 8 385
IFRS 2 charges - - - 72 - 72 - 72
Sale of shares, treated as
treasury shares, by consolidated
BBBEE entity 64 - - - - - 64 - 64
Shares purchased in terms of
FSP share incentive scheme treated
as treasury shares (72) - - - - - (72) - (72)
Total comprehensive (loss)/income - (496) - - - 149 (347) (214) (561)
Vesting of shares held in terms
of FSP share incentive scheme 73 - - - (73) - - - -
Balance at 31 March 2018 (audited) 3 984 395 14 - 558 2 817 7 768 120 7 888
(a) In 2008 PPC announced its first broad-based black economic transaction for a period of eight years, which resulted
in an effective BBBEE ownership of 15,29%. In terms of the transaction agreements, the 48 557 982 PPC shares held
by the strategic black partners (SBPs) (including community service groups (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 year ended 31 March 2018
The group discloses its operating segments according to the business units which are reviewed by the group executive
committee. The operating segments are initially identified based on the products produced and sold and then per
geographical location. The key operating segments are southern Africa cement, rest of Africa cement, lime, aggregates
and readymix and group shared services.
Cement Cement
Consolidated Southern Africa(a) Rest of Africa(b)
2018 2017 2018 2017 2018 2017
Audited Audited Audited Audited Audited Audited
Rm Rm Rm Rm Rm Rm
Revenue
Gross revenue 10 524 9 878 5 704 5 712 2 762 2 119
Inter-segment revenue(d) (253) (237) (205) (205) - -
Total revenue(e) 10 271 9 641 5 499 5 507 2 762 2 119
Operating profit before item listed below 1 004 1 233 827 861 389 347
Empowerment transactions IFRS 2 charges 48 206 - 16 2 2
Operating profit 956 1 027 827 845 387 345
Fair value and foreign exchange gains/(losses) 143 (124) (19) (5) (69) (153)
Finance costs 675 741 265 214 338 168
Investment income 52 27 42 11 18 6
Profit before equity-accounted earnings 476 189 585 637 (2) 30
Earnings from equity-accounted investments (60) 1 - - (61) -
Impairments and other exceptional items (174) (10) 11 - (168) (10)
Profit/(loss) before taxation 242 180 596 637 (231) 20
Taxation 205 153 202 192 34 21
Profit/(loss) for the year 37 27 394 445 (265) (1)
Attributable to:
Shareholders of PPC Ltd 149 93 394 445 (153) 65
Non-controlling interests (112) (66) - - (112) (66)
37 27 394 445 (265) (1)
Basic earnings per share (cents) 10 8 26 39 (10) 6
Depreciation and amortisation 876 832 373 374 347 298
EBITDA(f) 1 880 2 065 1 200 1 235 736 645
EBITDA margin (%) 18,3 21,4 21,8 22,4 26,7 30,4
Assets
Non-current assets 12 910 14 192 4 272 4 184 6 817 8 113
Non-current assets held for sale 34 38 - - 34 38
Current assets 3 262 3 805 1 235 1 468 1 375 1 334
Total assets 16 206 18 035 5 507 5 652 8 226 9 485
Investments in property, plant and equipment 801 2 234 460 939 235 1 181
Liabilities
Non-current liabilities 5 909 5 626 2 181 2 007 5 608 5 619
Current liabilities 2 409 4 024 796 792 1 186 1 382
Total liabilities 8 318 9 650 2 977 2 799 6 794 7 001
Capital commitments (refer note 21) 596 1 071 482 716 49 310
(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) Shared services and other comprises group shared services, BEE and group eliminations.
(d) All sales are concluded at an arm's length. Segments are disclosed net of inter-segment revenue.
(e) Revenue from external customers generated by the group's material foreign operations is as follows:
Botswana R438 million (2017: R427 million), DRC R144 million (2017: R24 million), Rwanda R804 million
(2017: R733 million), and Zimbabwe R1 813 million (2017: R1 352 million).
(f) EBITDA is defined as operating profit before empowerment transactions IFRS 2 charges, depreciation,
amortisation, financial charges and taxation.
SEGMENTAL INFORMATION
for the year ended 31 March 2018 (continued)
Materials business
Lime Aggregates and readymix Group services and other(c)
2018 2017 2018 2017 2018 2017
Audited Audited Audited Audited Audited Audited
Rm Rm Rm Rm Rm Rm
Revenue
Gross revenue 849 818 1 209 1 229 - -
Inter-segment revenue(d) (48) (32) - - - -
Total revenue(e) 801 786 1 209 1 229 - -
Operating profit before item listed below 95 119 (22) 74 (285) (168)
Empowerment transactions IFRS 2 charges - 2 - 1 46 185
Operating profit 95 117 (22) 73 (331) (353)
Fair value and foreign exchange gains/(losses) 1 - (1) (1) 231 35
Finance costs 24 4 20 3 28 352
Investment income 18 1 15 1 (41) 8
Profit before equity-accounted earnings 90 114 (28) 70 (169) (662)
Earnings from equity-accounted investments - - - - 1 1
Impairments and other exceptional items - - (17) - - -
Profit/(loss) before taxation 90 114 (45) 70 (168) (661)
Taxation 24 29 18 6 (73) (96)
Profit/(loss) for the year 66 85 (63) 64 (95) (565)
Attributable to:
Shareholders of PPC Ltd 66 85 (63) 64 (95) (565)
Non-controlling interests - - - - - -
66 85 (63) 64 (95) (565)
Basic earnings per share (cents) 4 7 (4) 6 (6) (50)
Depreciation and amortisation 40 46 79 77 37 37
EBITDA(f) 135 165 57 151 (248) (131)
EBITDA margin (%) 16,8 21,0 4,7 12,3
Assets
Non-current assets 309 319 672 726 840 850
Non-current assets held for sale - - - - -
Current assets 214 210 327 315 111 478
Total assets 523 529 999 1 041 951 1 328
Investments in property, plant and equipment 41 26 48 57 17 31
Liabilities
Non-current liabilities 32 117 264 215 (2 176) (2 332)
Current liabilities 83 86 170 176 174 1 588
Total liabilities 115 203 434 391 (2 002) (744)
Capital commitments (refer note 21) 2 9 38 9 25 27
(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) Shared services and other comprises group shared services, BEE and group eliminations.
(d) All sales are concluded at an arm's length. Segments are disclosed net of inter-segment revenue.
(e) Revenue from external customers generated by the group's material foreign operations is as follows:
Botswana R438 million (2017: R427 million), DRC R144 million (2017: R24 million), Rwanda R804 million
(2017: R733 million), and Zimbabwe R1 813 million (2017: R1 352 million).
(f) EBITDA is defined as operating profit before empowerment transactions IFRS 2 charges, depreciation,
amortisation, financial charges and taxation.
NOTES TO THE AUDITED SUMMARISED CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 March 2018
1. BASIS OF PREPARATION
The audited provisional summarised consolidated financial statements are prepared in accordance with the
provisions of the JSE Limited Listings Requirements for provisional reports, and the requirements of the
Companies Act applicable to the summarised financial statements. The Listings Requirements require
provisional 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. The accounting policies applied in the preparation of the audited
provisional summarised consolidated financial statements were derived in terms of IFRS. These audited
provisional summarised consolidated financial statements do not include all the information required
for the full consolidated annual financial statements and should be read in conjunction with the
consolidated annual financial statements as at and for the year ended 31 March 2018.
The accounting policies and methods of computation used are consistent with those used in the preparation
of the consolidated annual financial statements for the year ended 31 March 2017, except for the revised
accounting standards that became effective during the current year, and which did not have a material
impact on the reported results.
The group adopted the following two standards during the year:
- IAS 7 Statement of Cash Flows: amendments as a result of the disclosure initiative
IAS 12 Income Taxes: amendment regarding the recognition of deferred tax assets for unrealised losses
These audited provisional summarised consolidated financial statements and the full set of consolidated
annual 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 15 June 2018. The directors take full responsibility
for the preparation of these provisional summarised consolidated financial statements and that the financial
information has been correctly extracted from the underlying consolidated annual financial statements.
A copy of the consolidated financial statements from which these audited provisional summarised consolidated
financial statements were derived will be available on the company's website, www.ppc.co.za, in due course.
A copy of the consolidated financial statements is available for inspection at the company's registered office.
Auditor's opinion
These provisional summarised consolidated financial statements for the year ended 31 March 2018 have been
audited by Deloitte & Touche, who expressed an unmodified opinion thereon. The auditors also expressed an
unmodified opinion on the consolidated financial statements from which these provisional summarised
consolidated financial statements were derived. Copies of the auditor's report on the provisional
summarised consolidated financial statements and consolidated 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 auditors.
Year ended Year ended
2018 2017
Audited Audited
Rm Rm
2. FAIR VALUE AND FOREIGN EXCHANGE gains/(losses)
Loss on ineffective portion of cash flow hedge - (9)
Gain on remeasurement of put option liability (refer note 22) 238 -
Gain on unlisted collective investments 5 1
Loss on translation of foreign currency denominated monetary items (100) (116)
143 (124)
Included in loss on translation of foreign currency denominated monetary items is a loss of R80 million
(2017: R112 million) comprising the remeasurement following devaluations of the Congolese franc against
the US dollar and a fair value adjustment relating to the discounting of the non-current VAT receivable
in the DRC. Furthermore, a remeasurement loss of R12 million (2017: R53 million) has been recorded against
the US dollar denominated project funding in Rwanda. Also included in the loss on translation of foreign
currency monetary items are profit and losses made on open forward exchange contracts held for capital
purchases and working capital requirements.
Details on foreign exchange rates can be found in note 24.
3. FINANCE COSTS
Bank and other short-term borrowings 305 474
Notes 8 80
Long-term loans 303 345
616 899
Capitalised to plant and equipment (23) (241)
Finance costs before BBBEE transaction and time value
of money adjustments 593 658
BBBEE transaction - 37
Time value of money adjustments on rehabilitation and
decommissioning provisions and put option liability 82 46
675 741
Southern Africa 337 573
Rest of Africa 338 168
Included in bank and other short-term borrowings in 2017 is R128 million which was incurred for the liquidity
and guarantee facility raising fees.
The total finance costs, excluding time value of money adjustments, relate to borrowings held at amortised
cost. For details of borrowings refer note 17.
Year ended Year ended
2018 2017
Audited Audited
Rm Rm
4. IMPAIRMENTS AND OTHER EXCEPTIONAL ITEMS
Impairment of property, plant, equipment and intangible assets (182) (10)
Impairment of the VAT receivable in the DRC (3) -
Profit on disposal of property, plant and equipment 11 -
Gross impairments and other exceptional items (174) (10)
Taxation impact 56 3
Net impairments and other exceptional items (118) (7)
Impairment
As a result of the economic and political uncertainty in the DRC, an impairment assessment was performed.
The recoverable amount was calculated based on the fair value less cost to sell methodology and assessed to
be lower than the carrying value with an impairment of R165 million recorded. In addition, an impairment
of R17 million was recognised on the intangible assets relating to one of the aggregate quarries in Botswana.
In the prior year, CIMERWA recognised an impairment of R10 million relating to machinery that will no longer
be utilised in the bagging and packing process.
Profit on disposal of property, plant and equipment
In the current year, PPC Botswana Cement (Pty) Ltd disposed of land resulting in a profit of R11 million.
5. TAXATION
The taxation charge comprises:
Current taxation 332 284
Current year 345 271
Prior years (15) 13
Capital gains taxation 2 -
Deferred taxation (127) (154)
Current year (119) (177)
Prior years (8) 23
Withholding taxation on dividends - 23
205 153
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) 68 85
Prior years' taxation impact (7) (20)
Profit before taxation, including prior years' taxation adjustments 61 65
Effective rate of taxation
Income taxation effect of: (33) (37)
Disallowable charges, forex revaluations, permanent differences and impairments (42) (10)
Empowerment transactions and IFRS 2 charges not taxation deductible (3) (32)
Fair value adjustments on financial instruments not subject to taxation 22 -
Finance costs on BBBEE transaction not taxation deductible - (9)
Foreign taxation rate differential 16 12
Deferred taxation (not raised)/previously not recognised (23) 15
Withholding taxation (3) (13)
South African normal taxation rate 28 28
Year ended Year ended
2018 2017
Audited Audited
Cents Cents
6. EARNINGS AND HEADLINE EARNINGS
Earnings per share
Basic 10 8
Diluted 10 8
Headline earnings per share
Basic 15 7
Diluted 15 7
Determination of headline earnings per share
Earnings per share 10 8
Adjusted for items below, net of taxation:
Impairment of property, plant, equipment and intangible assets 6 -
Proceeds from insurance claim, net of taxation - (1)
Profit on sale of property, plant and equipment (1) -
Headline earnings per share 15 7
Rm Rm
Headline earnings
Profit for the year 37 27
Impairments 182 10
Taxation on impairments (58) (3)
(Profit)/loss on sale of property, plant and equipment (11) 10
Taxation on profit/(loss) sale of property, plant and equipment 2 (3)
Proceeds from insurance claim - (27)
Taxation on proceeds from insurance - 8
Headline earnings 152 22
Attributable to:
Shareholders of PPC Ltd 231 85
Non-controlling interests (79) (63)
Year ended Year ended
2018 2017
Audited Audited
Rm Rm
6. EARNINGS AND HEADLINE EARNINGS continued
Cash earnings per share (cents) 95 75
Cash earnings per share are calculated using cash available
from operations divided by the total weighted average
number of shares in issue for the year.
Cash conversion ratio 1,2 0,9
Cash conversion ratio is calculated using cash generated
from operations divided by EBITDA.
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.
Year ended Year ended
2018 2017
Audited Audited
Rm Rm
7. PROPERTY, PLANT AND EQUIPMENT
Net carrying value at the beginning of the year 12 531 11 716
Acquisition of subsidiary company (refer note 20) - 98
Additions 795 2 236
Depreciation (798) (740)
Disposals (18) (15)
Other movements (24) 99
Impairments (refer note 4) (165) (10)
Translation differences (928) (853)
Net carrying value at the end of the year 11 393 12 531
Comprising:
Freehold and leasehold land, buildings and mineral rights 1 567 742
Decommissioning assets 133 164
Plant, vehicles, furniture and equipment 9 693 11 624
Capitalised leased plant - 1
11 393 12 531
Assets pledged as security:
DRC 3 111 3 269
Rwanda 1 321 2 072
Zimbabwe 2 028 1 963
6 460 7 304
Included in plant, vehicles, furniture and equipment are vehicles with a carrying value of R4 million
(2017: R11 million) that have been used as security for finance lease obligations of R3 million
(2017: R5 million).
Impairment assessment - DRC
PPC, in partnership with the Barnet Group and International Finance Corporation (IFC), completed the
construction of a 1,2 million tonnes per annum integrated cement plant for approximately US$300 million
in the DRC, near Kimpese in Kongo Central province in western DRC, 230km south-west of the capital Kinshasa.
In the year-end results to March 2018, the DRC market continued to face uncertainty driven by political
instability, lower cement demand and subdued selling prices. Furthermore, the competitive landscape remains
challenging due production capacity that is higher than market demand. General elections were anticipated to
be held in December 2017, but these have subsequently been postponed to December 2018. The delayed elections
have created uncertainty in the economy and most of the infrastructural projects have been put on hold or are
slow and as a result the current monthly sales performance is not deemed to be a true indicator of the
business's long-term performance. As a result of these factors, management undertook an impairment assessment.
IAS 36 Impairment of Assets provides two options for assessing recoverable amounts and states that the
recoverable amount is the higher of the fair value less cost to sell or value in use.
In performing the impairment review, a fair value less cost to sell methodology was applied. IFRS 13.61 states
that "an entity shall use valuation techniques that are appropriate in the circumstances and for which sufficient
data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use
of unobservable inputs". Taking the current political, environmental and economic circumstances into account,
management believes that the valuation technique applied is the most appropriate method as it maximises the
use of relevant observable inputs.
In performing the fair value less costs to sell valuation for the current reporting, the following key inputs
were used:
- Fair value of the plant was calculated using the installed capacity of PPC's DRC plant of 1,2 million tonnes
per annum and applying a construction cost per tonne of US$233. The construction cost per tonne was based on
recent cement plants' construction costs in similar markets by independent cement producers, using information
available in the public domain. The estimated replacement value was then reduced for annual wear and tear for
one year applying a 30-year weighted average useful life, noting that the plant was only commissioned during
this reporting period.
- An economic obsolescence provision was then applied to the fair value of the estimated plant replacement cost
net of wear and tear. IFRS 13 requires that the replacement cost be adjusted for physical deterioration,
technological/functional changes and economic or external obsolescence. The DRC plant, being fairly new,
has not suffered any physical deterioration and management also concluded that the technology is not
obsolete. Economic environment obsolescence has, however, been determined by adjusting the plant construction
benchmark of US$233 per tonne by a country risk premium of 8,4% against the installed capacity of the plant.
- Management estimate that the only costs to sell will be legal and valuation costs. Based on PPC's recent legal
transactions in both the DRC and South Africa, management estimates costs sell to be no more than US$5 million.
Following the impairment assessment review, the recoverable amount of the DRC operation of US$265 million
was considered lower than the current carrying value and an impairment of R165 million (US$14 million) was
charged against property, plant and equipment for the year ended March 2018.
Other valuation methodologies were applied to determine potential sensitivities. These valuation methodologies
provided potential impairment ranges varying from US$6 million to US$22 million.
Year ended Year ended
2018 2017
Audited Audited
Rm Rm
8. GOODWILL
Net carrying value at the beginning of the year 237 255
Translation differences (7) (18)
Net carrying value at the end of the year 230 237
Goodwill, net of impairments, is allocated to the following cash-generating units:
CIMERWA Limitada (Rest of Africa cement segment) 25 32
Safika Cement Holdings (Pty) Ltd (Southern Africa cement segment) 78 78
Pronto Holdings (Pty) Ltd (Aggregates and readymix segment) 127 127
230 237
9. OTHER INTANGIBLE ASSETS
Balance at the beginning of the year 677 766
Acquisition of subsidiary company (refer note 20) - 10
Additions 6 19
Amortisation (78) (92)
Impairments (refer note 4) (17) -
Translation differences (31) (26)
Balance at the end of the year 557 677
Comprising:
Right of use of mineral assets 166 203
ERP development and other software 105 126
Brand, trademarks and customer relationships 286 348
557 677
10. OTHER NON-CURRENT ASSETS
Unlisted collective investment 134 124
VAT receivable 104 210
Advance payments for plant and equipment - 38
Investment in government bonds 6 8
Long-term receivable 59 -
303 380
Unlisted collective investment
Comprises an investment by the PPC Environmental Trust in local unit trusts. These investments are held to fund
PPC's South African environmental obligations.
VAT receivable
The group incurred VAT during the construction of the plant in the DRC. During the prior reporting period,
management received a letter from the DRC Finance Department which indicates that the VAT needs to be paid to
PPC Barnet DRC on condition that the money is utilised for discharge of local suppliers and local salary
obligations. The letter did not, however, state when the payments will be initiated. As a result of the
uncertainty around the timing of receipt of the funds, the VAT receivable has been classified as non-current.
During the year, a loss of R80 million (2017: R112 million) comprising the remeasurement following devaluations
of the Congolese franc against the US dollar and a fair value adjustment relating to the discounting of the
non-current VAT receivable were recorded and are reflected as fair value and foreign exchange adjustments in
the income statement (refer note 2). Refunds amounting to R11 million were received during the year.
Advance payments for plant and equipment
In terms of the construction agreements with the suppliers of the new cement plants in rest of Africa, a portion
of the full contract price was required to be paid in advance of the plant construction. The advance payments
were recycled to property, plant and equipment as the plants are constructed, and were secured by advance
payment bonds.
Investment in government bonds
Represents government of Zimbabwe treasury bills carried at fair value. The initial face value of the treasury
bills was US$706 831 (R8 million), repayable in three equal annual instalments from June 2017 to June 2019.
In the current year, a first instalment of US$188 613 (R2 million) was received. Due to current liquidity
constraints in Zimbabwe and uncertainty around receipt of the remaining instalments, the remaining value
is still recognised as non-current.
Long-term receivable
When the plant in the DRC was being constructed, PPC Barnet DRC entered into an agreement whereby PPC and
the local power corporation would build the necessary power facility to supply electricity. In terms of this
agreement, the portion initially contributed by PPC would be repaid through electrical usage of the plant.
When PPC pays the power corporation, a portion of the amount owing is withheld and offset against this
non-current asset.
Year ended Year ended
2018 2017
Audited Audited
Rm Rm
11. NON-CURRENT ASSETS HELD FOR SALE
Assets classified as held for sale 34 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 has been delayed due to the government processing
of the sectional title deeds and is now anticipated to be completed during the
2019 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 cement
rest of Africa segment in the segmental analysis. The underlying assets are
US dollar denominated and the year-on-year reduction follows the strengthen
of the rand against the US dollar.
12. TRADE AND OTHER RECEIVABLES
Trade receivables 958 1 041
Allowance for doubtful debts (58) (46)
Net trade receivables 900 995
Mark to market fair value hedge 1 27
Other financial receivables 115 179
Proceeds due from the rights offer for PPC shares listed
on the Zimbabwe Stock Exchange - 86
Proceeds due from the sale of PPC shares held by consolidated BBBEE entities 7 37
Trade and other financial receivables 1 023 1 324
Prepayments 115 105
Taxation receivable 93 124
VAT receivable 13 99
1 244 1 652
Year ended Year ended
2018 2017
Audited Audited
Rm Rm
12. TRADE AND OTHER RECEIVABLES continued
Proceeds due from the rights offer for PPC shares listed on the Zimbabwe Stock Exchange
Relates to the rights issue proceeds (concluded in September 2016) from the PPC shares listed on the Zimbabwe
Stock Exchange. The amount receivable has been reclassified to cash and cash equivalents in the current year
as the funds are considered freely available to PPC (refer note 13).
Net trade receivables comprise 900 995
Trade receivables that are neither past due nor impaired 704 816
Trade receivables that would otherwise be impaired whose
terms have been renegotiated - 2
Trade receivables that are past due but not impaired 196 177
Refer note 22 for fair value of trade and other receivables.
13. CASH AND CASH EQUIVALENTS
Balance at the end of the year 836 990
Currency analysis:
Botswana pula 51 32
Mozambican metical 7 10
Rwandan franc 45 54
South African rand 124 422
United States dollar 609 472
836 990
Included in cash and cash equivalents, under South African rand, is R82 million due from the rights issue
(concluded in September 2016) for PPC shares listed on the Zimbabwe Stock Exchange. The amount receivable
has been reclassified to cash and cash equivalents in the current year as the funds are considered freely
available to PPC. The current liquidity issues in Zimbabwe have not allowed our Zimbabwe sponsors to
facilitate the transfer of funds to South Africa. In light of the liquidity issues in Zimbabwe, the
company continues to explore the most beneficial use of the funds while transfer to South Africa is
not possible.
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. Amounts denominated in foreign currencies have been translated at
ruling exchange rates at year-end (refer note 24).
Year ended Year ended
2018 2017
Audited Audited
Rm Rm
13. CASH AND CASH EQUIVALENTS continued
Included in cash and cash equivalents is restricted cash:
PPC Environmental Trust 8 8
PPC Zimbabwe 49 51
57 59
Cash and cash equivalents held by the PPC Environmental Trust can only be utilised for environmental obligations
in South Africa and are therefore not freely available.
In the prior year, PPC Zimbabwe's full cash and cash equivalents of R289 million were reflected as restricted.
After due consideration in the current period, the prior year number has been restated to only reflect the funds
included in the escrow account at March 2017 rather than PPC Zimbabwe's full cash and cash equivalents as
restricted cash and cash equivalents. There has been no change to the overall cash and cash equivalent
position as recorded in the prior year. In accordance with the requirements of lenders to PPC Zimbabwe,
PPC Zimbabwe is required to deposit funds in an escrow account which can only be used for the purposes
of making capital and interest repayments on the loan. The section below covers the position on PPC Zimbabwe's
cash and cash equivalents.
PPC Zimbabwe
PPC Zimbabwe has cash and cash equivalents, net of restricted cash, of R466 million (2017: R237 million).
The funds are freely available for use in Zimbabwe but due to the current economic environment, the transfer
of funds outside of the country is limited. During the year, the Zimbabwe Central Bank through Exchange Control
Operational Guide 8 (ECOGAD 8) introduced a foreign payments priority list that has to be followed when making
foreign payments. Any foreign payment that is made is ranked based on the Central Bank prioritisation criteria
and paid subject to the bank having adequate funds with its foreign correspondent banks. This has resulted in
the delayed processing of payments of foreign telegraphic transfers. The delayed payments have resulted in an
increase in the cash and cash equivalents balance and the foreign creditor balances compared to the prior year.
Included in PPC Zimbabwe's cash and cash equivalents are bond notes. Bond notes are debt instruments which have
been disclosed under cash and cash equivalents as it meets the definition of cash and cash equivalents. These
notes are pegged at 1:1 with the US dollar and is considered legal tender in Zimbabwe.
Year ended Year ended
2018 2017
Audited Audited
Shares Shares
000 000
14. STATED CAPITAL
Authorised shares
Ordinary shares 10 000 000 10 000 000
Preference shares 20 000 20 000
Number of ordinary shares and weighted average number of shares
Total shares in issue at the beginning of the year 1 591 760 607 181
Shares issued for the acquisition of 3Q (refer note 20) - 17 566
Shares issued in terms of the rights issue - 1 000 000
Shares issued to the SBPs and CSGs following the maturity
of the company's first BBBEE transaction - 15 571
Shares purchased from the SBPs and CSGs following the
maturity of the company's first BBBEE transaction - (48 558)
Total shares in issue before adjustments for treasury shares 1 591 760 1 591 760
Shares issued in terms of the second BBBEE transaction (37 382) (37 382)
Shares held by consolidated BBBEE trusts and trust funding SPVs (20 144) (28 929)
Shares held by consolidated Porthold Trust (Pvt) Ltd (1 285) (1 285)
Shares purchased in terms of the FSP share incentive scheme (19 955) (14 013)
Total shares in issue (net of treasury shares) 1 512 994 1 510 151
Weighted average number of shares, used for:
Earnings and headline earnings per share 1 510 163 1 137 338
Dilutive earnings and headline earnings per share 1 531 802 1 148 753
Cash earnings per share 1 510 163 1 137 338
14. STATED CAPITAL continued
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 BBBEE transaction
Shares issued in terms of the second BBBEE transaction which was facilitated by means of a notional vendor
funding (NVF) mechanism, with the transaction concluding on 30 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.
Shares held by consolidated BBBEE trusts and trust funding SPVs
In terms of IFRS 10 Consolidated Financial Statements, certain of the BBBEE trusts and trust funding SPVs from
PPC's first BBBEE transaction are consolidated, and as a result, shares owned by these entities are carried as
treasury shares on consolidation.
Shares held by consolidated Porthold Trust (Pvt) Ltd
Shares owned by a Zimbabwe employee trust company are treated as treasury shares.
FSP share incentive scheme
In terms of the forfeitable share plan (FSP) long-term incentive scheme, 19 955 207 shares (2017: 14 013 429 shares)
are held in total 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, 3 832 250 shares (2017: nil shares) vested.
In terms of IFRS requirements, 5% (March 2017: 5%) of the total shares in issue are treated as treasury shares
following the consolidation of the various BBBEE entities, employee trusts and incentive share schemes.
Year ended Year ended
2018 2017
Audited Audited
Rm Rm
14. STATED CAPITAL continued
Stated capital
Balance at the beginning of the year 3 919 (1 113)
Acquisition of 3Q Mahuma Concrete, settled via the issue
of shares (refer note 20) - 135
Increase in stated capital from issuance of shares following rights
issue (net of transaction costs) - 3 805
Sale of shares, treated as treasury shares, by
consolidated BBBEE entity 62 37
Shares issued to SBPs following the maturity of the
company's first BBBEE transaction - 1 041
Shares purchased in terms of FSP share incentive
scheme treated as treasury shares (72) (74)
Vesting of shares held by certain BBBEE 1 entities 2 88
Vesting of shares held in terms of the FSP share incentive scheme 73 -
Balance at the end of the year 3 984 3 919
15. PROVISIONS
Decommissioning and rehabilitation 495 509
Post-retirement healthcare benefits 31 36
526 545
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 the other jurisdictions in which the
group operates for the creation of a rehabilitation trust fund. The investments in the trust fund are carried
at fair value through profit or loss and amount to R134 million (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.
Year ended Year ended
2018 2017
Audited Audited
Rm Rm
16. DEFERRED TAXATION
Net liability at the end of the year comprises: 797 931
Deferred taxation asset 245 142
Deferred taxation liability 1 042 1 073
Analysis of deferred taxation
Property, plant, equipment and intangible assets 1 189 1 416
Other non-current assets 134 120
Current assets (10) 14
Non-current liabilities (124) (113)
Current liabilities (75) (66)
Reserves 1 (83)
Taxation losses (318) (357)
797 931
Included in the net deferred taxation balance is an assessed loss of R242 million (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 has relied on the same
projections used in assessing impairments. At year-end, and based on the approved business plans, the company
considered it probable that these taxation losses will be offset against future taxable profits.
Following the assessment of the future recoverability of deferred taxation assets, the deferred taxation assets
were fully impaired at PPC Barnet DRC Trading and 3Q Mahuma Concrete totalling R54 million. Furthermore, an
impairment of R6 million was recorded against PPC Aggregate Quarries Botswana.
Year Year
ended ended
2018 2017
Audited Audited
Rm Rm
17. LONG-TERM BORROWINGS
Terms Security Interest rate
Notes
PPC 002 Unsecured notes, Unsecured Three-month JIBAR plus 20 20
issued under the 1,5%
PPC 003 company's R6 billion Unsecured Three-month JIBAR plus 111 111
domestic medium-term 1,48%
note programme,
and are recognised
net of capitalised
transaction costs
South Interest is payable Unsecured Variable rates at 585 - 1 565
Africa bi-annually with a basis points above JIBAR
long-term bullet capital
funding repayment in June
2018. Loan was settled
in March 2018 through
long-term loans
secured as noted
below
R700 million amortising Unsecured Variable rates at 696 -
loan facility, maturing 270 basis points above
in 2021 with capital three-month JIBAR
repayments of
R175 million in 2019
and 2020 and
R350 million in 2021
R800 million general Unsecured Variable rates at 305 696 -
banking facility basis points above
expiring in 2022 three-month JIBAR
Terms Security Interest rate
Project
funding 2 889 3 685
US dollar denominated, Secured by Variable at 725 basis 347 569
repayable in monthly CIMERWA's points above six-month
instalments over a property, US dollar LIBOR
10-year period, plant and
starting March 2016 equipment
Rwanda franc denominated, Secured by Fixed rate of 16% 300 435
repayable in monthly CIMERWA's
instalments over a property,
10-year period, plant and
starting March 2016 equipment
US dollar denominated, Secured by Six-month US dollar 1 763 2 043
capital and interest PPC Barnet LIBOR plus 975
payable bi-annually DRC's basis points
starting July 2016 property,
ending January 2025 plant and
equipment
US dollar denominated, Secured by Six-month US dollar LIBOR 479 638
interest payable PPC Zimbabwe's plus 700 basis points
biannually. Biannual property,
repayments in equal plant,
instalments over five equipment,
years starting inventory,
December 2016 trade and
other
receivables
Year Year
ended ended
2018 2017
Audited Audited
Rm Rm
17. LONG-TERM BORROWINGS continued
Total long-term borrowings 4 412 5 381
Less: Short-term portion of long-term borrowings (333) (1 826)
Long-term borrowings 4 079 3 555
Add: Short-term borrowings, bank overdrafts and short-term
portion of long-term borrowings 603 2 181
Total borrowings 4 682 5 736
Maturity analysis of total borrowings:
One year 603 2 181
Two years 764 570
Three years 836 669
Four years 1 192 568
Five and more years 1 287 1 748
4 682 5 736
Assets encumbered are as follows:
Plant and equipment (refer note 7) 6 460 7 304
Year Year
ended ended
2018 2017
Audited Audited
Rm Rm
18. OTHER NON-CURRENT LIABILITIES
Cash-settled share-based payment liability 2 1
Put option liability 245 434
Finance lease liabilities 5 5
Liability to non-controlling shareholder in subsidiary company 14 16
266 456
Less: Short-term portion of other non-current liabilities (4) (3)
262 453
Put option liability
The International Finance Corporation (IFC) was issued a put option in September 2015 in terms of which PPC Ltd
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 in the DRC, but only for
a five-year period. The put option value is based on a predefined formula using PPC Barnet DRC's forecast
EBITDA applying an EBITDA multiple and then adjusting for 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, albeit lower than in the prior year, while selling prices
and costs are forecast to increase at local inflation projections and extrapolated using local GDP growth
rates averaging 5% per annum taking cognisance of the plant production ramp-up and adjusted for the impact
of competitor activity and political environment within the country and neighbouring countries. An EBITDA
multiple of 7 times (2017: 8 times) was determined using comparison of publicly available information on
other cement businesses operating in similar territories. The present value of the put option was calculated
at R245 million (2017: R434 million).
The decline in the liability follows the reduction in the EBITDA multiple applied, market dynamics putting
pressure on volumes and selling prices and exchange rate.
Liability to non-controlling shareholder in subsidiary company
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.
Year ended Year ended
2018 2017
Audited Audited
Rm Rm
19. TRADE AND OTHER PAYABLES
Accrued finance charges 8 7
Cash-settled share-based payment liability (short-term portion) 2 1
Capital expenditure payables 45 171
Finance lease liabilities 1 2
Other financial payables 156 42
Retentions held for plant and equipment 259 297
Trade payables and accruals 991 944
Trade and other financial payables 1 462 1 464
Payroll accruals 248 227
VAT payable 25 46
Taxation payable 71 106
1 806 1 843
Trade and other payables, payroll accruals and regulatory obligations are payable within a 30 to 60-day period.
Year ended Year ended
2018 2017
Audited Audited
Rm Rm
20. ACQUISITION OF SUBSIDIARY COMPANY
Fair value of assets and liabilities acquired at date of acquisition:
Property, plant and equipment 98
Intangible assets 10
Other non-current assets 3
Cash and cash equivalents 4
Other current assets 102
Other non-current liabilities (6)
Current liabilities (76)
Net fair value of assets and liabilities acquired 135
3Q Mahuma Concrete
In the prior financial year, all the transaction terms to acquire 100% of 3Q Mahuma Concrete (Pty) Ltd (3Q) were
achieved and 3Q became a wholly owned group subsidiary. 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.
Fair values of intangible assets were valued by an independent specialist and amounted to R11 million, 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 R11 million
and relate to trucks and these were valued using insurable replacement values.
Year ended Year ended
2018 2017
Audited Audited
Rm Rm
21. COMMITMENTS
Contracted capital commitments 339 549
Approved capital commitments 257 522
Capital commitments 596 1 071
Operating lease commitments 128 115
724 1 186
Capital commitments
Southern Africa 546 760
Rest of Africa 50 311
596 1 071
Capital commitments are anticipated to be incurred:
- Within one year 500 1 046
- Between one and two years 96 8
- Beyond two years - 17
596 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:
Year ended Year ended
2018 2017
Audited Audited
Notes Level* Rm Rm
Financial assets
Loans and receivables
Mark to market hedges 12 1 1 27
At fair value through profit and loss
Unlisted collective investments at fair value
(held for trading) 10 2 134 124
Total financial assets 135 151
Level 1 1 27
Level 2 134 124
Financial liabilities
At fair value through profit and loss
Cash-settled share-based liability 18 2 2 1
Put option liability 18 3 245 434
Derivatives
Derivative financial instruments 2 - 1
Total financial liabilities 247 436
Level 2 2 2
Level 3 245 434
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.
The estimated fair value of financial instruments is determined, at discrete points in time, by reference to
the mid price in an active market wherever possible. Where no such active market exists for the particular
asset or liability, the group uses valuation techniques to arrive at fair value, including the use of prices
obtained in recent arm's length transactions, discounted cash flow analysis and other valuation techniques
commonly used by market participants.
The fair value of cash and cash equivalents, trade and other financial receivables and trade and other
financial payables approximate their respective carrying amounts of these financial instruments because
of the short period to maturity. Where the short period to maturity is extended, the company then discounts
the current carrying using the latest available borrowing rates against the expected maturity period.
The put option liability has been calculated using EBITDA forecasts prepared by management and discounted
to present value.
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
Increase/
Valuation Main decrease
Financial instrument technique assumptions Rm
Put option liability Earnings EBITDA and
multiple net debt 29
If the key unobservable inputs to the valuation model, being estimated EBITDA and net debt, were 10% higher/
lower while all the other variables were held constant, the carrying amount of the put option liabilities
would decrease/increase by R29 million.
Year ended Year ended
2018 2017
Audited Audited
Rm Rm
22. FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES continued
Movements in level 3 financial instruments
Financial liability
Balance at the beginning of the year 434 415
Fair value adjustments (238) -
Time value of money adjustments 49 19
Balance at the end of the year 245 434
Remeasurements are recorded in fair value adjustments on financial instruments in the income statement.
23. 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 31 March 2018.
Average Closing
2018 2017 2018 2017
24. CURRENCY CONVERSION GUIDE
Approximate value of foreign currencies to the rand:
Botswana pula 1,28 1,32 1,22 1,26
US dollar 13,06 14,08 11,82 13,43
Rwandan franc 0,02 0,02 0,01 0,02
ADMINISTRATION
Directors
PJ Moleketi (Chairman), JT Claassen (CEO), AC Ball, S Dakile-Hlongwane, N Gobodo, N Goldin, MF Gumbi,
TJ Leaf-Wright, NL Mkhondo, T Moyo*, CH Naude, MMT Ramano, IS Sehoole
* Zimbabwean
Registered office
148 Katherine Street, Sandton, South Africa
(PO Box 787416, Sandton 2146, South Africa)
Transfer secretaries
Computershare Investor Services (Pty) Ltd
Rosebank Towers, 15 Biermann Avenue, Rosebank,
(PO Box 61051, Marshalltown, 2107, South Africa)
Transfer secretaries Zimbabwe
Corpserve (Pvt) Ltd
4th Floor, Intermarket Centre, Corner 1st Street/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) Ltd
The Place, 1 Sandton Drive, Sandton, South Africa
(PO Box 651987, Benmore 2010, 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
Date: 18/06/2018 07:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
Sharenet Sites 
