Wrap Text
Unaudited Condensed Consolidated Financial Statements for the six months ended 30 September 2018
PPC LTD
(Incorporated in the Republic of South Africa)
Company registration number: 1892/000667/06
JSE ISIN: ZAE000170049
JSE code: PPC
ZSE code: PPC
JSE code: PPC002
JSE ISIN: ZAG000111212
JSE code: PPC003
JSE ISIN: ZAG000117524
JSE code: PPC005
JSE ISIN: ZAG000117532
("PPC" or "Company" or "Group")
UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
for the six months ended 30 September 2018
FINANCIAL HIGHLIGHTS
- Group revenue increased 8% to R5,6 billion
- Group reported EBITDA reduced by 13%, rest of Africa (RoA) +18%
- Headline earnings per share increased 11% to 21 cents
- Basic earnings per share up 5% to 21 cents
- DRC contributed positive EBITDA of R60 million
- Capex decreased by 27%
- Cash on hand up 50% to R1,26 billion (March 2018: R836 million)
- Cash tax reduced by 49%
- Net movement in cash up significantly to R272 million (September 2017: outflow of R2 million)
COMMENTARY
Johan Claassen, CEO, said: "PPC has produced resilient results against a challenging South African environment. Our
diversified portfolio has enabled the group to offset the weaker South African performance with robust growth in our
rest of Africa (RoA) segment. In South Africa, a subdued consumer environment, a depressed construction market and higher
fuel costs negatively impacted our cement and materials results for the period. We will implement price increases to
achieve sustainable returns in excess of the group's cost of capital. In RoA, Zimbabwe delivered improved profitability
against the backdrop of liquidity constraints. The DRC business contributed to both revenue and EBITDA in a market with
muted growth and overcapacity. In Rwanda, we saw the benefits of the planned plant upgrade in the second quarter of the
period, with record volumes being achieved in September 2018. Pleasingly, we continue to generate positive free cash flow,
with debt and liquidity positions within targeted levels, albeit higher due to rand dollar exchange rate weakness. We
continue to execute on our strategic priorities, in order to drive operational efficiencies and maintain our sustainable
competitive advantage in the markets that we operate in. In addition, PPC has been successful in executing on its FOH -
FOUR strategic priorities, with key focus areas being financial, operational and human capital. In particular, the company
achieved R22/tonne in cost savings towards our initial R50/tonne profitability improvement target in SA cement.
Furthermore, RSA debt was restructured together with renegotiating of funding agreements in Rwanda. The company
also completed the first phase of head office restructuring".
MAJOR ACHIEVEMENTS IN THE PERIOD
- SK9 commissioned for accounting purposes on 30 June 2018
- Launched new product range in August 2018
- First phase of Cimerwa (Rwanda) plant upgrade successfully completed
- Positive free cash flow of R202 million achieved
- DRC contributed positive EBITDA of R60 million
- Net debt R4 billion (March 2018: R3,8 billion)
GROUP PERFORMANCE
Group revenue rose by 8% to R5 597 million (September 2017: R5 188 million), supported by total cement volumes
increasing by 4% to approximately 3,1 million tonnes.
Cost of sales increased by 16% to R4 494 million (September 2017: R3 859 million) compared with the previous year.
The higher cost of sales was due to the DRC being fully accounted for in the period, which contributed R226 million and
additional clinker imports and maintenance costs during the Cimerwa plant upgrade period of R33 million. Cost of sales
was further impacted by additional expenditure related to phasing of kiln shutdowns and unplanned downtime in South Africa
of R26 million and previously capitalised expenditure related to SK9 commissioning of R19 million. On a like-for-like
basis, cost of sales was up 9%.
Group overheads increased by 6%, mainly due to the DRC which contributed R47 million (September 2017: R13 million).
On a like-for-like basis overheads were flat. Furthermore, overheads in cement southern Africa were down 1% due to
head office restructuring.
Group EBITDA reduced by 13% to R1 039 million (Sept 2017: R1 193 million) at an EBITDA margin of 19% (September 2017:
23%) largely due to a decreased contribution from the South African operations. Accounting for non-recurring items
totalling R150 million (SK9 commissioning and downtime at South African plants of R78 million and Cimerwa R72 million),
EBITDA would have been R1 189 million.
Finance costs increased by 18% to R336 million (September 2017: R285 million). The DRC contributed R143 million to
finance costs in the period - on a like-for-like basis finance costs reduced by 31%. The restructuring of RSA debt, at a
lower effective interest rate of 9,5% (September 2017: 11,8%), contributed to the decrease in the like-for-like interest
charge. Taxation contributed positively to the bottom line, with a credit of R9 million in the period (September 2017:
R193 million expense).
Cash and cash equivalents increased by R272 million (September 2017: outflow of R2 million), excluding positive
movement in exchange rate of R149 million. An absorption in working capital of R110 million was offset by cash taxation
paid reducing by 49% to R88 million (September 2017: R172 million) and capital investments in property, plant and equipment
decreasing by 27% to R377 million (September 2017: R518 million). This resulted in positive free cash flow of R202 million
achieved for the period.
Group net debt has increased from R3 846 million in March 2018 to R3 979 million at the end of September 2018. This
was due to the impact of rand dollar closing rates moving from R11,82 at the end of March 2018 to R14,15 at the end of
September 2018. On a constant currency basis net debt reduced for the period. Net debt to EBITDA was 2,3x (March 2018:
2,0x) and is within targeted levels.
CEMENT SOUTHERN AFRICA
As part of the R50/tonne profitability initiatives, PPC introduced the "SURERANGE" in August 2018. The "SURERANGE" is
a fit for purpose range of cement that broadens PPC's product offering and has been well received by the market.
In southern Africa (including Botswana), cement volumes were down 3%. Volume declines were experienced in South
Africa, against the backdrop of a challenging market - where both the consumer segment and construction industry came
under severe pressure. Cement imports increased by 71% (albeit off a low base), with the majority of imported product
received via Durban, and to a lesser extent Cape Town. Increased blender activity contributed to a competitive
inland market.
Realised average selling prices for southern Africa increased by 1% to 2%, as the business continued with its drive
of increasing cement prices to recover operational costs. Overall, revenue for Cement Southern Africa reduced by 4%.
We note that current period revenue excludes R74 million in income generated at SK9 during the testing phase, which
is not recognised as revenue for accounting purposes.
Cost of sales in Cement Southern Africa rose by 5%, which was due to phasing of kiln shutdowns and unplanned downtime
at one of our major plants in the inland region which amounted to R26 million. Furthermore, cost of sales also included
R19 million of previously capitalised costs related to SK9 commissioning. Variable delivered cost of sales rose by 4% on
a rand/tonne basis. Distribution costs, which are the single largest contributor to variable costs, increased by 13% on
a rand per tonne basis due to a significant rise in fuel prices. Fixed costs were well controlled in the period. The
R22/tonne in profitability savings has enabled costs to be contained below inflation.
The combination of a reduction in revenue and an increase in costs resulted in EBITDA margins contracting from 26% to
17%. The total impact of non-recurring items amounted to R78 million. After taking into account non-recurring items the
like-for-like EBITDA margins are 19%.
The R50/tonne profitability initiatives which have been increased to R70/tonne, the commissioning of SK9 on
30 June 2018 and the integration of Safika are expected to reduce operational costs going forward. Furthermore,
a price increase was implemented in October 2018, in order to recoup increased operational costs.
MATERIALS BUSINESS
The materials business positions PPC as a leading materials solutions provider. The materials business delivered
revenue growth of 7% to R1 107 million (September 2017: R1 036 million) and EBITDA of R100 million (September 2017:
R108 million).
Lime
The lime division grew revenue by 5% to R409 million (September 2017: R390 million), with higher prices in certain
products compensating for lower volumes. Lime has significant exposure to the steel and allied sectors, where volumes
remain constrained. Lime's EBITDA contracted by 5% to R60 million (September 2017: R63 million), due to higher variable
costs relating to maintenance and raw material inputs.
Aggregates, ready-mix and fly ash
This segment is a key cement channel to market, and delivered improved revenue growth of 8% to R698 million (September
2017: R646 million), supported by improved volumes in the aggregates and fly ash segments. EBITDA was however affected
by pricing pressure (due to a competitive market), depressed construction industry demand and higher fuel costs. The
ready-mix segment was most affected by these factors. Consequently, EBITDA reduced by 11% to R40 million (September 2017:
R45 million).
REST OF AFRICA CEMENT
Revenue increased 36% to R1 718 million (September 2017: R1 259 million) on volume growth of over 34% (supported by
robust volume growth in Zimbabwe and the positive contribution made by the DRC). Selling prices remained fairly stable.
EBITDA grew by 18% to R499 million (September 2017: R422 million), and EBITDA margins contracted from 34% to 29%. Taking
into account non-recurring items due to Cimerwa, EBITDA margins are within the guided range.
Zimbabwe
PPC Zimbabwe grew revenue by 31% to R1 077 million (September 2017: R820 million) on the back of strong volume growth
of 28%. Successful implementation of our route to market strategy has enabled PPC to benefit from the upsurge in
construction activity as consumers convert their monetary investments into fixed assets and growing government
infrastructure expenditure.
EBITDA grew 42% to R352 million (September 2017: R248 million), with corresponding margins improving from 30% to
33%. Acute forex shortages as well as liquidity constraints continue to hamper economic activity. PPC Zimbabwe is
operationally self-sufficient and continues to drive local procurement and exports to reduce forex requirements.
Furthermore, the company is continually looking to capitalise on sustainable acquisition opportunities in the
value chain in country.
Rwanda
The Cimerwa results were impacted by the planned upgrade to debottleneck the plant and increase production output.
Realised cement prices were at similar levels to last year. Cimerwa achieved revenue of R402 million (September 2017:
R433 million) on the back of a 7% reduction in volumes, and EBITDA of R92 million (September 2017: R168 million),
which was impacted by the cost of maintenance and clinker imports during the shutdown period. The benefits of
phase 1 of the upgrade were seen towards the second quarter of the financial year - record volumes were achieved
in September 2018.
The outlook remains positive. The country is forecast to achieve GDP growth of at least 7% in 2018, supported by
growth in the agriculture sector of the economy. Cimerwa remains well positioned to benefit from growth in the region,
as evidenced by the company supplying to the flagship Bugesera airport project.
DRC
PPC Barnet continues to encounter challenging market conditions, characterised by overcapacity and muted cement
demand due to political uncertainty. Route to market initiatives supported the company in achieving market share
ranging between 25% and 30% for the period. Revenue of R240 million was achieved in the period, despite pricing
remaining under pressure due to the competitive nature of the market. The benefits of right sizing the business
and stringent cost control resulted in the business delivering EBITDA of R60 million (September 2017: R8 million)
for the period, at a margin of 25%. Elections in the DRC are scheduled for December 2018. In the interim the
country has projected GDP growth of 4,1%, primarily supported by mining activity.
Ethiopia
Despite being in ramp-up phase, Habesha delivered more than 300 000 tonnes for the period under review. The business
performance was constrained by the political environment and heavy rainfall in the second quarter of the financial
year resulting in a net loss of R19 million for the period.
PPC remains optimistic about the prospects for Habesha given the economic outlook which remains positive. GDP growth
is expected to average between 7% to 8% and is a good proxy for cement demand. Politically, the environment has
stabilised with the appointment of a new prime minister.
OUTLOOK
The difficult trading conditions in South Africa are expected to persist in the second half of the financial year.
The industry requires real cement price increases to recover operational cost increases. PPC will remain focused on
implementing price increases to achieve sustainable returns in excess of the group's cost of capital, executing cost
savings initiatives and ramping-up SK9 to drive efficiencies.
In the DRC, the elections scheduled for December 2018 are a key milestone to unlock latent infrastructure demand, and
PPC Barnet remains well positioned to take advantage of growth in that market. In Rwanda, Cimerwa is expected to
produce an improved performance in the second half of the financial year, on the back of increased production
output. Zimbabwe is expected to deliver a steady performance, supported by robust demand and an improved political
environment. The political situation in Ethiopia, has also stabilised, with continued growth in cement demand.
UPDATE ON GOVERNANCE AND LEADERSHIP MATTERS
Following an evaluation of the leadership of the company, there have been several changes to the composition of the
board to balance the need for change, while ensuring board and company stability going forward.
Board composition
While the skills, experience and demography of the board are reasonably balanced, the board anticipates making some
adjustments in the near future to deepen the cement expertise on the non-executive bench.
Sub-committees and composition
The board has six standing committees through which it operates. Following the company's annual general meeting on
30 August 2018, the board decided to implement changes to improve the effectiveness of the sub-committees. The
audit and risk and compliance committees were combined and the following non-executive directors were appointed
to the committee: Mr Sehoole (Chairman), Ms Gobodo, Mr Naude and Ms Mkhondo. Furthermore, Advocate Gumbi was
appointed as a member of the social ethics and transformation as well as the remuneration committees, and
Ms Mkhondo as member of the investment committee.
Strategy and succession planning
Following the restructuring of the board, it became apparent that the company faced a set of near-term challenges
and opportunities.
To this end, the board has conducted a detailed evaluation of the executive bench, individual and collective skills
of the leadership body and developed succession plans to align the leadership with the strategic needs of the firm
going forward. During the period under review, the executive committee was restructured to achieve accountability
geographically, and enhance the effectiveness of group services.
In the course of this exercise, Johan Claassen expressed an interest to take early retirement. The company's policy
makes provision for such circumstances, and accordingly the company has agreed to accommodate this request. The board
has therefore initiated a process to find a new CEO. Johan is fully committed to the role of CEO until such time as
a new CEO is found.
The board would like to thank Johan for his commitment, hard work, and loyalty to PPC, its shareholders, employees and
customers. Under Johan's leadership, PPC has built a strong customer-focused organisation. His industry expertise and
relationships have been invaluable resources and he has served the company with courage during a challenging period.
This was demonstrated by the delivery of its FOH - FOUR strategic priorities.
The board will work closely with Johan to ensure a smooth transition, regardless of the length of time it takes to
find a suitable replacement that will ensure long-term sustainability and value creation following a period of
expansion in the rest of Africa.
RESULTS PRESENTATION
PPC will be hosting an analyst's results presentation today in Johannesburg at the JSE Auditorium,
1 Exchange Square, 2 Gwen Lane, Sandown at 10:00 SAST. The presentation will be webcast live and can be accessed
via http://www.corpcam.com/PPC23112018. The results presentation and a copy of this announcement will be
available on the company's website www.ppc.co.za.
Sandton
23 November 2018
Sponsor
Merrill Lynch South Africa (Pty) Limited
PPC
Anashrin Pillay
Head investor relations
Tel: +27 (0) 11 386 9000
Financial communications adviser
Instinctif Partners
Gift Dlamini
Mobile: +27 11 050 7536
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the six months ended 30 September 2018
Six months Six months Twelve months
ended ended ended
30 September 30 September 31 March
2018 2017 2018
Unaudited Unaudited % Audited
Notes Rm Rm change Rm
Revenue 2 5 597 5 188 8 10 271
Cost of sales 4 494 3 859 16 7 924
Gross profit 1 103 1 329 (17) 2 347
Administrative and other operating expenditure 580 549 6 1 343
Operating profit before item listed below: 523 780 (33) 1 004
Empowerment transactions IFRS 2 charges 16 17 48
Operating profit 507 763 (34) 956
Fair value and foreign exchange gains/(losses) 3 38 (1) 143
Finance costs 4 336 285 18 675
Investment income 62 20 52
Profit before equity-accounted earnings 271 497 (45) 476
Loss from equity-accounted investments (19) - (60)
Impairments and other exceptional items 5 (1) - (174)
Profit before taxation 251 497 (49) 242
Taxation 6 (9) 193 (105) 205
Profit for the period 260 304 (14) 37
Attributable to:
Shareholders of PPC Ltd 312 294 6 149
Non-controlling interests (52) 10 (112)
Other comprehensive income/(loss) net of taxation
Items that will be reclassified to profit or loss 779 41 (598)
Translation of foreign operations 779 41 (598)
Total comprehensive income 1 039 345 (561)
Attributable to:
Shareholders of PPC Ltd 997 335 (347)
Non-controlling interests 42 10 (214)
EARNINGS PER SHARE (CENTS) 7
Basic 21 20 5 10
Headline 21 19 11 15
Unaudited CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
at 30 September 2018
30 September 30 September 31 March
2018 2017 2018
Unaudited Unaudited Audited
Notes Rm Rm Rm
ASSETS
Non-current assets 14 000 14 357 12 910
Property, plant and equipment 8 12 403 12 714 11 393
Goodwill 9 236 236 230
Other intangible assets 10 566 638 557
Equity-accounted investments 196 271 182
Other non-current assets 11 323 312 303
Deferred taxation assets 17 276 186 245
Non-current assets held for sale 12 41 39 34
Current assets 3 917 3 662 3 262
Inventories 1 255 1 174 1 182
Trade and other receivables 13 1 405 1 485 1 244
Cash and cash equivalents 14 1 257 1 003 836
Total assets 17 958 18 058 16 206
EQUITY AND LIABILITIES
Capital and reserves
Stated capital 15 3 984 3 919 3 984
Other reserves 1 686 1 541 967
Retained profit 3 112 2 962 2 817
Equity attributable to shareholders of PPC Ltd 8 782 8 422 7 768
Non-controlling interests 162 344 120
Total equity 8 944 8 766 7 888
Non-current liabilities 6 552 5 277 5 909
Provisions 16 533 554 526
Deferred taxation liabilities 17 1 149 1 114 1 042
Long-term borrowings 18 4 595 3 165 4 079
Other non-current liabilities 19 275 444 262
Current liabilities 2 462 4 015 2 409
Short-term borrowings 18 641 2 267 603
Trade and other payables 20 1 821 1 748 1 806
Total equity and liabilities 17 958 18 058 16 206
Net asset book value per share (cents) 580 580 513
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
for the six months ended 30 September 2018
Six months Six months Twelve months
ended ended ended
30 September 30 September 31 March
2018 2017 2018
Unaudited Unaudited Audited
Notes Rm Rm Rm
Cash flow from operating activities
Operating cash flows before movements
in working capital 1 069 1 211 1 889
Working capital movements (110) 59 411
Cash generated from operations 959 1 270 2 300
Finance costs paid (312) (248) (592)
Investment income received 22 20 52
Taxation paid (88) (172) (330)
Cash available from operations 581 870 1 430
Dividends paid - - -
Net cash inflow from operating activities 581 870 1 430
Cash flow from investing activities
Acquisition of additional shares in
an equity-accounted investment - (40) (42)
Investments in intangible assets (3) (4) (6)
Investments in property, plant and equipment (377) (518) (921)
Proceeds from disposal of property, plant and equipment 1 - 29
Other investing activities 15 13 28
Net cash outflow from investing activities (364) (549) (912)
Cash flow from financing activities(a)
Net borrowings repaid before repayment of the notes 18 48 (323) (597)
Proceeds from the sale of shares held by
consolidated BBBEE entity 7 - 36
Purchase of PPC Ltd shares in terms of
the FSP share incentive scheme 15 - - (16)
Net cash inflow/(outflow) from financing activities 55 (323) (577)
Net movement in cash and cash equivalents 272 (2) (59)
Cash and cash equivalents at the beginning of the period 836 990 990
Exchange rate movements on opening cash and cash equivalents 149 15 (95)
Cash and cash equivalents at the end of the period 1 257 1 003 836
Cash earnings per share (cents) 38 58 95
(a) During the period, the unfavourable non-cash changes on borrowings amounted to R588 million
(September 2017: R17 million) arising from unrealised foreign exchange differences.
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the six months ended 30 September 2018
Other Reserves
Foreign Available-
currency for- Equity
Stated translation sale financial compensation Retained
capital reserve asset reserve profit
Rm Rm Rm Rm Rm
Balance at 31 March 2017 (audited) 3 919 891 14 559 2 668
IFRS 2 charges - - - 36 -
Total comprehensive income/(loss) - 41 - - 294
Balance at 30 September 2017 (unaudited) 3 919 932 14 595 2 962
IFRS 2 charges - - - 36 -
Sale of shares, treated as treasury
shares, by consolidated BBBEE entity 64 - - - -
Shares purchased in terms of FSP
incentive scheme treated as treasury shares (72) - - - -
Total comprehensive loss - (537) - - (145)
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
IFRS 2 charges - - - 34 -
Restatement as a result of new standards
adopted during the period (refer note 22) - - - - (17)
Total comprehensive income/(loss) - 685 - - 312
Balance at 30 September 2018 (unaudited) 3 984 1 080 14 592 3 112
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the six months ended 30 September 2018 (continued)
Equity
attributable to Non-
shareholders controlling Total
of PPC Ltd interests equity
Rm Rm Rm
Balance at 31 March 2017 (audited) 8 051 334 8 385
IFRS 2 charges 36 - 36
Total comprehensive income/(loss) 335 10 345
Balance at 30 September 2017 (unaudited) 8 422 344 8 766
IFRS 2 charges 36 - 36
Sale of shares, treated as treasury
shares, by consolidated BBBEE entity 64 - 64
Shares purchased in terms of FSP
incentive scheme treated as treasury shares (72) - (72)
Total comprehensive loss (682) (224) (906)
Vesting of shares held in terms of
FSP share incentive scheme - - -
Balance at 31 March 2018 (audited) 7 768 120 7 888
IFRS 2 charges 34 - 34
Restatement as a result of new standards
adopted during the period (refer note 22) (17) - (17)
Total comprehensive income/(loss) 997 42 1 039
Balance at 30 September 2018 (unaudited) 8 782 162 8 944
SEGMENTAL INFORMATION
for the six months ended 30 September 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
Consolidated Southern Africa(a)
30 September 30 September 31 March 30 September 30 September 31 March
2018 2017 2018 2018 2017 2018
Unaudited Unaudited Audited Unaudited Unaudited Audited
Rm Rm Rm Rm Rm Rm
Revenue
Gross revenue 5 748 5 319 10 524 2 893 3 004 5 704
Inter-segment revenue(d) (151) (131) (253) (121) (111) (205)
Total revenue(e) 5 597 5 188 10 271 2 772 2 893 5 499
Operating profit/(loss) before item listed below 523 780 1 004 282 549 827
Empowerment transactions IFRS 2 charges 16 17 48 - - -
Operating profit/(loss) 507 763 956 282 549 827
Fair value and foreign exchange gains/(losses) 38 1 143 10 (4) (19)
Finance costs 336 285 675 109 123 265
Investment income 62 20 52 28 6 42
Profit/(loss) before equity-accounted earnings 271 497 476 211 436 585
Loss from equity-accounted investments (19) - (60) - - -
Impairments and other exceptional items (1) - (174) - - 11
Profit/(loss) before taxation 251 497 242 211 436 596
Taxation (9) 193 205 (50) 119 202
Profit/(loss) for the period 260 304 37 261 317 394
Attributable to:
Shareholders of PPC Ltd 312 294 149 261 317 394
Non-controlling interests (52) 10 (112) - - -
260 304 37 261 317 394
Basic earnings per share (cents) 21 20 10 17 21 26
Headline earnings per share (cents) 21 19 15 17 20 25
Depreciation and amortisation 516 413 876 199 191 373
EBITDA(f) 1 039 1 193 1 880 481 740 1 200
EBITDA margin (%) 18,6 23,0 18,3 17,4 25,6 21,8
Assets
Non-current assets 14 000 14 357 12 910 4 276 4 227 4 272
Non-current assets held for sale 41 39 34 - - -
Current assets 3 917 3 662 3 262 1 355 1 468 1 235
Total assets 17 958 18 058 16 206 5 631 5 695 5 507
Investments in property, plant and equipment 361 523 801 224 233 460
Liabilities
Non-current liabilities 6 552 5 277 5 909 2 245 830 2 181
Current liabilities 2 462 4 015 2 409 796 2 293 796
Total liabilities 9 014 9 292 8 318 3 041 3 123 2 977
Capital commitments (refer note 21) 564 795 596 501 697 482
SEGMENTAL INFORMATION
for the six months ended 30 September 2018 (continued)
Cement
Rest of Africa(b) Lime
30 September 30 September 31 March 30 September 30 September 31 March
2018 2017 2018 2018 2017 2018
Unaudited Unaudited Audited Unaudited Unaudited Audited
Rm Rm Rm Rm Rm Rm
Revenue
Gross revenue 1 718 1 259 2 762 439 410 849
Inter-segment revenue(d) - - - (30) (20) (48)
Total revenue(e) 1 718 1 259 2 762 409 390 801
Operating profit/(loss) before item listed below 263 278 389 40 42 95
Empowerment transactions IFRS 2 charges - 1 2 - - -
Operating profit/(loss) 263 277 387 40 42 95
Fair value and foreign exchange gains/(losses) 4 29 (69) - - 1
Finance costs 225 101 338 17 2 24
Investment income 48 5 18 10 8 18
Profit/(loss) before equity-accounted earnings 90 152 (2) 33 48 90
Loss from equity-accounted investments (19) - (61) - - -
Impairments and other exceptional items (1) - (168) - - -
Profit/(loss) before taxation 70 152 (231) 33 48 90
Taxation 11 69 34 10 11 24
Profit/(loss) for the period 59 83 (265) 23 37 66
Attributable to:
Shareholders of PPC Ltd 111 73 (153) 23 37 66
Non-controlling interests (52) 10 (112) - - -
59 83 (265) 23 37 66
Basic earnings per share (cents) 7 5 (10) 2 2 4
Headline earnings per share (cents) 7 5 (5) 2 2 4
Depreciation and amortisation 236 144 347 20 21 40
EBITDA(f) 499 422 736 60 63 135
EBITDA margin (%) 29,0 33,5 26,7 14,7 16,2 16,8
Assets
Non-current assets 7 958 8 294 6 817 308 318 309
Non-current assets held for sale 41 39 34 - - -
Current assets 1 900 1 642 1 375 193 173 214
Total assets 9 899 9 975 8 226 501 491 523
Investments in property, plant and equipment 98 232 235 19 24 41
Liabilities
Non-current liabilities 6 332 5 973 5 608 10 36 32
Current liabilities 1 470 1 685 1 186 88 50 83
Total liabilities 7 802 7 658 6 794 98 86 115
Capital commitments (refer note 21) 5 59 49 8 5 2
SEGMENTAL INFORMATION
for the six months ended 30 September 2018 (continued)
Materials business
Aggregates and readymix Group services and other(c)
30 September 30 September 31 March 30 September 30 September 31 March
2018 2017 2018 2018 2017 2018
Unaudited Unaudited Audited Unaudited Unaudited Audited
Rm Rm Rm Rm Rm Rm
Revenue
Gross revenue 698 646 1 209 - - -
Inter-segment revenue(d) - - - - - -
Total revenue(e) 698 646 1 209 - - -
Operating profit/(loss) before item listed below (2) 5 (22) (60) (94) (285)
Empowerment transactions IFRS 2 charges - - - 16 16 46
Operating profit/(loss) (2) 5 (22) (76) (110) (331)
Fair value and foreign exchange gains/(losses) 1 - (1) 23 (24) 231
Finance costs 11 2 20 (26) 57 28
Investment income 8 7 15 (32) (6) (41)
Profit/(loss) before equity-accounted earnings (4) 10 (28) (59) (149) (169)
Loss from equity-accounted investments - - - - - 1
Impairments and other exceptional items - - (17) - - -
Profit/(loss) before taxation (4) 10 (45) (59) (149) (168)
Taxation (2) 2 18 22 (8) (73)
Profit/(loss) for the period (2) 8 (63) (81) (141) (95)
Attributable to:
Shareholders of PPC Ltd (2) 8 (63) (81) (141) (95)
Non-controlling interests - - - - - -
(2) 8 (63) (81) (141) (95)
Basic earnings per share (cents) - 1 (4) (5) (9) (6)
Headline earnings per share (cents) - 1 (3) (5) (9) (6)
Depreciation and amortisation 42 40 79 19 17 37
EBITDA(f) 40 45 57 (41) (77) (248)
EBITDA margin (%) 5,7 7,0 4,7
Assets
Non-current assets 654 724 672 804 794 840
Non-current assets held for sale - - - - - -
Current assets 372 349 327 97 30 111
Total assets 1 026 1 073 999 901 824 951
Investments in property, plant and equipment 16 34 48 4 - 17
Liabilities
Non-current liabilities 351 270 264 (2 386) (1 832) (2 176)
Current liabilities 172 179 170 (64) (192) 174
Total liabilities 523 449 434 (2 450) (2 024) (2 002)
Capital commitments (refer note 21) 23 5 38 27 29 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 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 R264 million (September 2017: R218 million; March 2018: R438 million)
DRC R240 million (September 2017: Rnil; March 2018: R144 million)
Rwanda R402 million (September 2017: R433 million; March 2018: R804 million)
Zimbabwe R1 076 million (September 2017: R825 million; March 2018: R1 813 million)
(f) EBITDA is defined as operating profit before empowerment transactions IFRS 2 charges, depreciation,
amortisation, financial charges and taxation.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
at 30 September 2018
1. BASIS OF PREPARATION
The unaudited condensed consolidated financial statements are prepared in accordance with the provisions
of the JSE Limited Listings Requirements for interim reports, and the requirements of the Companies Act
of South Africa applicable to the interim financial results. The Listings Requirements require the
condensed reports to be prepared in accordance with the framework concepts and the measurement and
recognition requirements of 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 contain the information required by IAS 34: Interim Financial Reporting. The accounting policies
applied in the preparation of the condensed consolidated financial statements were derived in terms of
International Financial Reporting Standards (IFRS).
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 2018. The directors take full responsibility for the preparation of these condensed
consolidated financial statements.
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 2018, except where the group
has adopted new or revised accounting standards, amendments and interpretations, including the
consequential amendment of those standards to other standards, which became effective during the
period under review.
New standards, amendments to standards and interpretations
The group has adopted the following standards during the period:
IFRS 9 Financial Instruments (refer note 22).
IFRS 15 Revenue from Contracts with Customers (refer note 2).
Six months Six months Twelve months
ended ended ended
30 September 30 September 31 March
2018 2017 2018
Unaudited Unaudited Audited
Rm Rm Rm
2. REVENUE
Adoption of IFRS 15: Revenue from Contracts with Customers
IFRS 15 replaces IAS 11: Construction Contracts and IAS 18 Revenue. The standard requires entities to
identify the separate performance obligations and allocate the transaction price to the performance
obligations in the contract by reference to their relative standalone selling prices. The group's
primary revenue is derived from the sale of cementitious goods and as a result the group also earns
incidental transport revenue from delivering these goods to customers. The incidental transport
revenue has always been included as part of revenue earned, however due to the adoption of IFRS 15,
the aforementioned streams of revenue are two separate performance obligations, which are always
met at the same time.
The group has the following revenue streams, which is
all recognised at a point in time:
Revenue from the sale of cementitious goods(a) 4 886 4 603 9 095
Revenue from transportation services 711 585 1 176
Total revenue 5 597 5 188 10 271
Major goods and services per primary geographical markets
Cementitious goods 4 886 4 603 9 095
Southern Africa 3 271 3 400 6 462
Rest of Africa 1 615 1 203 2 633
Transport revenue 711 585 1 176
Southern Africa 608 529 1 047
Rest of Africa 103 56 129
Timing of revenue recognition
Revenue from the sale of cementitious goods and transport is recognised at the same time, upon delivery,
as management considers it as the point the control of the goods is transferred to the customers and the
delivery obligation is fulfilled. Payment of the transaction price is also payable immediately at
this point.
The impact of adopting IFRS 15, particularly with regard to the performance of the service obligations,
resulted in revenue for the current period being overstated by R5 million (September 2017: R2 million;
March 2018: Rnil). Due to this amount being insignificant in relation to the reported revenue of
R5 597 million (September 2017: R5 188 million; March 2018: R10 271 million), management opted not
to restate the prior reported results.
(a) Cementitious goods include the sale of cement, readymix, limestone, clinker, ash and aggregates.
Six months Six months Twelve months
ended ended ended
30 September 30 September 31 March
2018 2017 2018
Unaudited Unaudited Audited
Rm Rm Rm
3. FAIR VALUE AND FOREIGN EXCHANGE GAINS/(LOSSES)
Gain on premeasurement of put option
liability (refer note 22) - - 238
(Loss)/gain on unlisted collective investments (1) (1) 5
Gain/(loss) on translation of foreign
currency-denominated monetary items 39 - (100)
38 (1) 143
Included in gain/(loss) on translation of foreign currency-denominated monetary items, is a loss of R3 million
(September 2017: R26 million; March 2018: R80 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 R6 million (September 2017:
R4 million; March 2018: R12 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 or 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.
4. FINANCE COSTS
Bank and other short-term borrowings 7 113 305
Notes 5 5 8
Long-term loans 297 211 303
309 329 616
Capitalised to plant and equipment - (82) (23)
Finance costs before time value of money adjustments 309 247 593
Time value of money adjustments on rehabilitation
and decommissioning provisions and put option liability 27 38 82
336 285 675
Southern Africa 111 184 337
Rest of Africa 225 101 338
The total finance costs excluding time value of money adjustments, relate to borrowings held at amortised
cost. For details of borrowings refer note 18.
Six months Six months Twelve months
ended ended ended
30 September 30 September 31 March
2018 2017 2018
Unaudited Unaudited Audited
Rm Rm Rm
5. IMPAIRMENTS AND OTHER EXCEPTIONAL ITEMS
Impairment of property, plant and equipment
and intangible assets (1) - (182)
Impairment of the VAT receivable in the DRC - - (3)
Profit on disposal of property, plant and equipment - - 11
Gross impairments and other exceptional items (1) - (174)
Taxation impact - - 56
Net impairments and other exceptional items (1) - (118)
In the current period
Impairment of property, plant and equipment and intangible assets
An impairment of R1 million relating to the previously capitalised exploration costs was recognised in
PPC Zimbabwe.
Refer note 8 for the DRC impairment review.
In March 2018
Impairment of property, plant and equipment and intangible assets
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.
Profit on disposal of property, plant and equipment (PPE)
In the period ended March 2018, PPC Botswana Cement (Pty) Ltd disposed of land resulting in a profit of
R11 million.
Six months Six months Twelve months
ended ended ended
30 September 30 September 31 March
2018 2017 2018
Unaudited Unaudited Audited
Rm Rm Rm
6. TAXATION
The taxation charge comprises:
Current taxation (57) 196 332
Current period (34) 166 345
Prior years (23) 30 (15)
Capital gains taxation - - 2
Deferred taxation 43 (4) (127)
Current period 32 (4) (119)
Prior years 11 - (8)
Withholding taxation on dividends 5 1 -
(9) 193 205
Taxation rate reconciliation
A reconciliation of the standard South African
normal taxation rate is shown below: % % %
Profit before taxation (excluding loss
from equity-accounted investments) (3) 39 68
Prior years' taxation impact (4) (6) (7)
Profit before taxation, including prior years'
taxation adjustments (7) 33 61
Effective rate of taxation
Income taxation effect of: 35 (5) (33)
Disallowable charges, forex revaluations, permanent
differences and impairments (6) (5) (42)
Empowerment transactions and IFRS 2 charges not
taxation deductible (2) (1) (3)
Fair value adjustments on financial instruments
not subject to taxation (1) - 22
Impact of income tax incentives 39 - -
Foreign taxation rate differential 8 1 16
Deferred taxation (not raised)/previously
not recognised (1) - (23)
Withholding taxation (2) - (3)
South African normal taxation rate 28 28 28
Six months Six months Twelve months
ended ended ended
30 September 30 September 31 March
2018 2017 2018
Unaudited Unaudited Audited
cents cents cents
7. EARNINGS AND HEADLINE EARNINGS
Earnings per share
Basic 21 20 10
Diluted 21 19 10
Headline earnings per share
Basic 21 19 15
Diluted 21 19 15
Determination of headline earnings per share
Earnings per share 21 20 10
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 21 19 15
Headline earnings Rm Rm Rm
Profit for the period 260 304 37
Impairments 1 - 182
Taxation on impairments - - (58)
Loss/(profit) on sale of property, plant
and equipment 12 - (11)
Taxation on (loss)/profit on sale of
property, plant and equipment (4) - 2
Proceeds from insurance claim - (4) -
Taxation on proceeds from insurance - 1 -
Headline earnings 269 301 152
Attributable to:
Shareholders of PPC Ltd 321 291 231
Non-controlling interests (52) 10 (79)
Cash earnings per share (cents)(a) 38 58 95
Cash conversion ratio(b) 0,9 1,1 1,2
(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.
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 15.
Six months Six months Twelve months
ended ended ended
30 September 30 September 31 March
2018 2017 2018
Unaudited Unaudited Audited
Rm Rm Rm
8. PROPERTY, PLANT AND EQUIPMENT
Net carrying value at the beginning of the period 11 393 12 531 12 531
Additions 357 523 795
Depreciation (484) (369) (798)
Disposals (13) - (18)
Other movements (26) (24) (24)
Impairments (refer note 5) (1) - (165)
Translation differences 1 177 53 (928)
Net carrying value at the end of the period 12 403 12 714 11 393
Comprising:
Freehold and leasehold land, buildings and
mineral rights 1 012 978 1 567
Decommissioning assets 134 260 133
Plant, vehicles, furniture and equipment 11 257 11 475 9 693
Capitalised leased plant - 1 -
12 403 12 714 11 393
Property, plant and equipment pledged as security:
DRC 3 602 3 409 3 111
Rwanda 1 561 1 627 1 321
Zimbabwe 1 999 1 977 2 028
7 162 7 013 6 460
Included in plant, vehicles, furniture and equipment are vehicles used in the readymix operations with a
carrying value of R3 million (September 2017: R4 million; March 2018: R4 million) that have been used as
security for finance lease obligations of R2 million ( September 2017: R3 million; March 2018: R3 million).
For details on capital commitments, refer note 21.
In accordance with the requirements of IAS 36 Impairment of Assets, an impairment review was performed
for all cash-generating units (CGUs) which showed indicators of potential impairment. Following this
review, no impairment was recognised as the value in use of all these CGUs was greater than the
carrying amount
DRC impairment review
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.
Over the past two years, there has been an increase in political uncertainty. The country planned to
hold general elections in December 2017, but these have subsequently been rescheduled 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) requires "projections to be based on reasonable and
supportable assumptions", the economic and political uncertainty makes it difficult to make reliable
long-term forecasts.
The current carrying amount of the plant is deemed to approximate the recoverable value and as a
result, management does not believe that a further impairment against the DRC property, plant and
equipment is required for the period ended September 2018. IAS 36.9 requires an entity to assess,
at the end of each reporting date, whether there is an indication that an asset (property, plant
and equipment) may be impaired. An impairment indicator assessment and calculation of recoverable
amount will also be performed at the next reporting date, 31 March 2019.
Six months Six months Twelve months
ended ended ended
30 September 30 September 31 March
2018 2017 2018
Unaudited Unaudited Audited
Rm Rm Rm
9. GOODWILL
Net carrying value at the beginning of the period 230 237 237
Translation differences 6 (1) (7)
Net carrying value at the end of the period 236 236 230
Goodwill, net of impairments, is allocated
to the following cash-generating units:
CIMERWA Limitada (Rest of Africa
cement segment) 31 31 25
Safika Cement Holdings (Pty) Ltd (Southern Africa
cement segment) 78 78 78
Pronto Holdings (Pty) Ltd Aggregates and
readymix segment) 127 127 127
236 236 230
10. OTHER INTANGIBLE ASSETS
Balance at the beginning of the period 557 677 677
Additions 3 4 6
Amortisation (32) (44) (78)
Impairments (refer note 5) - - (17)
Translation differences 38 1 (31)
Balance at the end of the period 566 638 557
Comprising:
Right of use of mineral assets 189 202 166
ERP development and other software 78 97 105
Brand and trademarks and customer relationships 299 339 286
566 638 557
Six months Six months Twelve months
ended ended ended
30 September 30 September 31 March
2018 2017 2018
Unaudited Unaudited Audited
Rm Rm Rm
11. OTHER NON-CURRENT ASSETS
Unlisted collective investment 137 129 134
VAT receivable (refer note 3) 108 178 104
Investment in government bonds 2 5 6
Long-term receivable 76 - 59
323 312 303
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 period, a loss of R3 million (September 2017: R26 million; March 2018: R80 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 was
recorded and is reflected in fair value and foreign exchange gains/(losses) in the income statement
(refer note 3). Refunds amounting to R12 million were received during the period.
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 period an instalment of US$326 609 (September 2017: US$nil; March 2018:
US$188 613) was received. Due to current liquidity constraints in Zimbabwe and uncertainty around
receipt of the remaining instalment, 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.
Six months Six months Twelve months
ended ended ended
30 September 30 September 31 March
2018 2017 2018
Unaudited Unaudited Audited
Rm Rm Rm
12. NON-CURRENT ASSETS HELD FOR SALE
Assets classified as held for sale 41 39 34
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 second half of the 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 increase follows the weakening of the rand against the US dollar.
13. TRADE AND OTHER RECEIVABLES
Trade receivables 1 111 1 079 958
Allowance for doubtful debts (93) (70) (58)
Net trade receivables 1 018 1 009 900
Mark to market fair value hedge - 24 1
Other financial receivables 68 115 115
Proceeds due from the rights offer for PPC
shares listed on the Zimbabwe Stock Exchange - 80 -
Proceeds due from the sale of PPC shares
held by consolidated BBBEE entities - - 7
Trade and other financial receivables 1 086 1 228 1 023
Prepayments 89 137 115
Taxation receivable 230 58 93
VAT receivable - 62 13
1 405 1 485 1 244
Six months Six months Twelve months
ended ended ended
30 September 30 September 31 March
2018 2017 2018
Unaudited Unaudited Audited
Rm Rm Rm
13. 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
March 2018 as the funds are considered freely available to PPC.
Net trade receivables comprise 1 018 1 009 900
Trade receivables that are neither past due nor impaired 848 952 704
Trade receivables that would otherwise be impaired
whose terms have been renegotiated 16 3 -
Trade receivables that are past due but not impaired 154 54 196
Refer note 22 for fair value of trade and other receivables.
Six months Six months Twelve months
ended ended ended
30 September 30 September 31 March
2018 2017 2018
Unaudited Unaudited Audited
Rm Rm Rm
14. CASH AND CASH EQUIVALENTS
Balance at the end of the period 1 257 1 003 836
Currency analysis:
Botswana pula 43 62 51
Mozambican metical 4 5 7
Rwandan franc 124 96 45
South African rand 120 106 124
United States dollar 966 734 609
1 257 1 003 836
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).
Six months Six months Twelve months
ended ended ended
30 September 30 September 31 March
2018 2017 2018
Unaudited Unaudited Audited
Rm Rm Rm
14. CASH AND CASH EQUIVALENTS continued
Included in cash and cash equivalents is
restricted cash:
PPC Environmental Trust 8 8 8
Consolidated BEE entities - 1 -
PPC Zimbabwe 57 54 49
65 63 57
Cash and cash equivalents held by the PPC Environmental Trust can only be utilised for environmental
obligations in South Africa and is therefore not freely available.
In the prior comparable period, PPC Zimbabwe's full cash and cash equivalents of R564 million were reflected
as restricted. After due consideration, the prior period number has been restated to only reflect the funds
included in the escrow account at September 2017 rather than the 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.
PPC Zimbabwe
PPC Zimbabwe has cash and cash equivalents, net of restricted cash, of R896 million (September 2017:
R510 million; March 2018: R466 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. In 2016,
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 period.
Furthermore, 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. In October 2018, the government of Zimbabwe indicated that all cash held
in the bank will be converted to real-time gross settlement (RTGS). These RTGSs will only be usable
in-country and are pegged at 1:1 with the US dollar.
Also held in a form of RTGSs is R82 million due from the rights issue (concluded in September 2016)
for PPC shares listed on the Zimbabwe Stock Exchange. The amount receivable is reflected in cash and
cash equivalents as it is considered freely available to PPC for use within Zimbabwe. 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.
Six months Six months Twelve months
ended ended ended
30 September 30 September 31 March
2018 2017 2018
Unaudited Unaudited Audited
Shares Shares Shares
(000) (000) (000)
15. 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 1 591 760 1 591 760
Shares issued during the period 1 354 - -
Total shares in issue before
adjustments for treasury shares 1 593 114 1 591 760 1 591 760
Shares issued in terms of the second
BBBEE transaction (37 382) (37 382) (37 382)
Shares held by consolidated BBBEE trusts
and trust funding SPVs (20 144) (28 929) (20 144)
Shares held by consolidated Porthold
Trust (Private) Limited (1 285) (1 285) (1 285)
Shares purchased in terms of the FSP
share incentive scheme (19 955) (14 013) (19 955)
Shares held by the consolidated
Safika Key Management Trust (1 354) - -
Total shares in issue (net of treasury shares) 1 512 994 1 510 151 1 512 994
Weighted average number of shares, used for:
Earnings and headline earnings per share 1 512 994 1 510 151 1 510 163
Dilutive earnings and headline earnings per share 1 532 949 1 524 165 1 531 802
Cash earnings per share 1 512 994 1 510 151 1 510 163
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 Limited
Shares owned by a Zimbabwean employee trust company are treated as treasury shares.
FSP incentive scheme
In terms of the forfeitable share plan (FSP) long-term incentive scheme, 19 955 207 shares (September 2017:
14 013 429 shares; March 2018: 19 955 207) 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
current period, nil shares (September 2017: nil shares; March 2018: 3 832 250 shares) vested.
In terms of IFRS requirements, 5% (September 2017: 5%; March 2018: 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.
Shares held by the consolidated Safika Key Management Trust
Shares issued during the period in order to retain and incentivise the Safika key management employees.
This transaction was also facilitated through a NVF mechanism.
Six months Six months Twelve months
ended ended ended
30 September 30 September 31 March
2018 2017 2018
Unaudited Unaudited Audited
Rm Rm Rm
Stated capital
Balance at the beginning of the period 3 984 3 919 3 919
Sale of shares, treated as treasury shares,
by consolidated BBBEE entity - - 62
Shares purchased in terms of FSP incentive
scheme treated as treasury shares - - (72)
Vesting of shares held by certain BBBEE 1 entities - - 2
Vesting of shares held in terms of the
FSP share incentive scheme - - 73
Balance at the end of the period 3 984 3 919 3 984
Six months Six months Twelve months
ended ended ended
30 September 30 September 31 March
2018 2017 2018
Unaudited Unaudited Audited
Rm Rm Rm
16. PROVISIONS
Decommissioning and rehabilitation 508 524 495
Post-retirement healthcare benefits 25 30 31
533 554 526
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 R137 million
(September 2017: R129 million; March 2018: R134 million) (refer note 11).
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
2018 2017 2018
Unaudited Unaudited Audited
Rm Rm Rm
17. DEFERRED TAXATION
Net liability at the end of the period comprises: 873 928 797
Deferred taxation asset 276 186 245
Deferred taxation liability 1 149 1 114 1 042
Analysis of deferred taxation
Property, plant and equipment and intangible assets 1 446 1 305 1 189
Other non-current assets 11 124 134
Current assets 27 3 (10)
Non-current liabilities (54) (100) (124)
Current liabilities (89) (78) (75)
Reserves (45) 14 1
Taxation losses (423) (340) (318)
873 928 797
Included in the net deferred taxation balance is a deferred taxation asset of R214 million (September 2017:
R230 million; March 2018: R242 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 period
end, and based on the approved business plans, the company considered it probable that these taxation
losses will be offset against future taxable profits.
In the current period, the assessment of the future recoverability of deferred taxation assets resulted in
the deferred taxation asset not being impaired as the entities are expected to make taxable profits in
the future.
In March 2018, the assessment of the future recoverability of deferred taxation assets resulted in the
deferred taxation assets being fully impaired at PPC Barnet DRC Trading and 3Q Mahuma Concrete totalling
R54 million. Furthermore, in March 2018, an impairment of R6 million was recorded against PPC Aggregate
Quarries Botswana.
18. LONG-TERM BORROWINGS
Twelve
Six months Six months months
ended ended ended
30 September 30 September 31 March
2018 2017 2018
Unaudited Unaudited Audited
Terms Security Interest rate Rm Rm Rm
Notes
PPC 002 Unsecured notes, issued Unsecured Three-month 20 20 20
under the company's JIBAR plus 1,5%
R6 billion domestic
medium-term note
programme, and are
recognised net of
capitalised transaction
costs
PPC 003 Unsecured Three-month JIBAR 111 111 111
plus 1,48%
South Africa Interest is payable Unsecured Variable rates at - 1 586 -
long-term bi-annually with a 585 basis points
funding bullet capital above JIBAR
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 697 - 696
loan facility, maturing 270 basis points
in 2021 with capital above three-month
repayments of JIBAR
R175 million in 2019
and 2020 and R350 million
in 2021
R800 million general Unsecured Variable rates at 796 - 696
banking facility 305 basis points
expiring in 2022 above three-month
JIBAR
Project funding 3 439 3 597 2 889
US dollar denominated, Secured by Variable at 404 525 347
repayable in monthly CIMERWA's 725 basis points
instalments over a property, plant above six-month
10-year period, and equipment US dollar LIBOR
starting March 2016
Rwanda franc denominated, Secured by Fixed rate of 16% 430 413 300
repayable in monthly CIMERWA's
instalments over a property, plant
10-year period, and equipment
starting March 2016
US dollar denominated, Secured by PPC Six-month US dollar 2 113 2 061 1 763
capital and interest Barnet DRC's LIBOR plus 975
payable bi-annually property, plant basis points
starting July 2017 and equipment
ending January 2027,
with a capital
repayment holiday
until 2021
US dollar denominated, Secured by PPC Six-month US dollar 492 598 479
interest payable Zimbabwe's LIBOR plus 700
biannually. Bi-annual property, plant basis points
repayments in equal and equipment,
instalments over inventory and
five years starting trade and other
December 2016 receivables
5 063 5 314 4 412
Less: Short-term
portion of
long-term borrowings (468) (2 149) (333)
Long-term borrowings 4 595 3 165 4 079
Add: Short-term
borrowings, bank
overdrafts and short-
term portion of long-
term borrowings 641 2 267 603
Total borrowings 5 236 5 432 4 682
Maturity analysis
of total borrowings:
One year 641 2 267 603
Two years 872 584 764
Three years 943 684 836
Four years 1 339 583 1 192
Five and more years 1 441 1 314 1 287
5 236 5 432 4 682
Assets encumbered
are as follows:
Plant and equipment
(refer note 8) 7 162 7 013 6 460
Six months Six months Twelve months
ended ended ended
30 September 30 September 31 March
2018 2017 2018
Unaudited Unaudited Audited
Rm Rm Rm
19. OTHER NON-CURRENT LIABILITIES
Cash-settled share-based payment liability 1 1 2
Put option liability 256 424 245
Finance lease liabilities 2 3 5
Liability to non-controlling shareholder
in subsidiary company 17 17 14
276 445 266
Less: Short-term portion of other
non-current liabilities (1) (1) (4)
275 444 262
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 seven 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 R256 million (September 2017: R424 million; March 2018:
R245 million).
The increase in the liability during the period is due to the time value of money adjustment.
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.
Six months Six months Twelve months
ended ended ended
30 September 30 September 31 March
2018 2017 2018
Unaudited Unaudited Audited
Rm Rm Rm
20. TRADE AND OTHER PAYABLES
Accrued finance charges 4 5 8
Cash-settled share-based payment liability
(short-term portion) 1 1 2
Capital expenditure payables 10 15 45
Finance lease liabilities - 1 1
Other financial payables 4 9 156
Retentions held for plant and equipment 311 302 259
Trade payables and accruals 1 387 1 197 991
Trade and other financial payables 1 717 1 530 1 462
Payroll accruals 68 115 248
VAT payable 18 37 25
Taxation payable 18 66 71
1 821 1 748 1 806
Trade and other payables, payroll accruals and regulatory obligations are payable within a 30 to
60-day period.
21. COMMITMENTS
Contracted capital commitments 300 378 339
Approved capital commitments 263 417 257
Capital commitments 563 795 596
Operating lease commitments 81 80 128
644 875 724
Capital commitments
Southern Africa 558 736 546
Rest of Africa 5 59 50
563 795 596
Capital commitments are anticipated to be incurred:
- Within one year 428 318 500
- Between one and two years 135 477 96
563 795 596
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. FINANCIAL INSTRUMENTS
Adoption of IFRS 9: Financial Instruments
IFRS 9 was issued in 2014 and replaces IAS 39 Financial Instruments: Recognition and Measurement. IFRS 9 sets
out new requirements for classification and measurement of financial instruments, which are driven by the
business model objective and the contractual cash flow of the financial assets. While IAS 39 had different
models of impairment for different financial instruments - IFRS 9 applies a single impairment model to all
financial instruments. Impairment losses are recognised on initial recognition, and at each subsequent
reporting period, even if the loss has not yet been incurred. The standard also provides new guidance
for hedge accounting that is more aligned to the business's risk management.
Transition
The standard (IFRS 9) was effective from 1 January 2018, and was adopted by the group at the beginning of
the period on 1 April 2018. The group has decided to adjust opening retained income for the impact of
IFRS 9. This is in accordance with the transitional requirements of the standard. The transition resulted
in a R17 million decrease in the opening retained income.
Prior to IFRS 9, the group classified financial assets as: held-to-maturity investments, financial
assets at fair value through profit or loss, loans and receivables and available-for-sale financial
assets. That will now be classified either as financial assets at amortised cost, financial assets
at fair value through profit or loss and/or financial assets at fair value through other comprehensive
income. The classification of financial liabilities shall remain the same.
The table below illustrates the transitional impact to the classification (and consequently measurement)
of the financial instruments:
Financial assets IAS 39 Classification IFRS 9 Financial Instruments
Trade receivables Loans and receivables Amortised cost
Mark to market fair value hedge Fair value through profit or loss Fair value through profit or loss
Long-term receivables Loans and receivables Amortised cost
Unlisted collective investment Fair value through profit or loss Fair value through profit or loss
Investment in government bonds Loans and receivables Amortised cost
Cash and cash equivalents Loans and receivables Amortised cost
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
2018 2017 2018
Unaudited Unaudited Audited
Note Level * Rm Rm Rm
Financial assets
At amortised cost
Mark to market hedges 13 1 - 24 1
At fair value through
profit or loss
Unlisted collective investments
at fair value (held for trading) 11 2 137 129 134
Total financial assets 137 153 135
Level 1 - 24 1
Level 2 137 129 134
Financial liabilities
At fair value through
profit or loss
Cash-settled share-based
liability 19 2 1 1 2
Put option liabilities 19 3 256 424 245
Total financial liabilities 257 425 247
Level 2 1 1 2
Level 3 256 424 245
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 amounts 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
Financial instrument Increase/
Valuation Main decrease
technique assumptions Rm
Put option liabilities 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.
Six months Six months Twelve months
ended ended ended
30 September 30 September 31 March
2018 2017 2018
Unaudited Unaudited Audited
Rm Rm Rm
Movements in level 3 financial instruments
Financial liability
Balance at the beginning of the period 245 434 434
Fair value adjustments - (33) (238)
Time value of money adjustments 11 23 49
Balance at the end of the period 256 424 245
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 30 September 2018.
24. CURRENCY CONVERSION GUIDE
Approximate value of foreign currencies to the rand:
Average Closing
September September March September September March
2018 2017 2018 2018 2017 2018
Botswana pula 1,31 1,28 1,28 1,34 1,30 1,22
US dollar 13,42 13,17 13,06 14,15 13,56 11,82
Rwandan franc 0,02 0,02 0,02 0,02 0,02 0,01
ADMINISTRATION
Directors
PJ Moleketi (Chairman), JT Claassen (CEO), AC Ball, N Gobodo, MF Gumbi, 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: 23/11/2018 07:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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