| Wed 11 Nov 2009, 7:05 | | PPC - Pretoria Portland Cement Company Limited - Audited Preliminary Report for |
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PPC
PPC
PPC - Pretoria Portland Cement Company Limited - Audited Preliminary Report for
the Year Ended 30 September 2009
Pretoria Portland Cement Company Limited
(Incorporated in the Republic of South Africa)
(Company registration number: 1892/000667/06)
JSE Code: PPC
ISIN: ZAE000125886
AUDITED PRELIMINARY REPORT FOR THE YEAR ENDED 30 SEPTEMBER 2009
- REVENUES UP 9% TO R6,8 BILLION
- OPERATING CASH FLOW UP 7% TO R2,7 BILLION
- CASH EARNINGS PER SHARE UP 6% TO 329 CENTS
- FINAL DIVIDEND OF 155 CENTS PER SHARE
- RECENTLY ACCREDITED BBBEE LEVEL 3
Paul Stuiver, CEO said "A good performance considering the challenging economic
climate. Cash flow remained strong despite a decrease in demand and pressure
from input costs. The company is well positioned and will benefit significantly
from an economic recovery."
COMMENTARY
Regional cement industry demand declined by 11% for the period under review.
Demand in the construction sector grew by 11%, reflecting the positive impact
from the many infrastructure projects but this was offset by lower demand from
residential sectors which declined significantly in the larger metropolitan
areas.
Group revenue increased 9% to R6,8 billion. The accounting treatment of the
BBBEE transaction (IFRS 2 charge of R490 million) and the consolidation of
Portland Holdings Limited (Porthold) in Zimbabwe (R213 million gain) resulted in
group operating profit reducing by 8% to R2,1 billion (2008: R2,3 billion) and
net profit by 25% to R1,1 billion (2008: R1,5 billion).
On a comparable basis, excluding the impact of the BBBEE transaction and
Porthold, group operating profit rose 4% to R2,4 billion and net profit declined
8% to R1,4 billion.
Administration and other operating expenditure of R468 million (2008: R378
million) reflect a number of initiatives to improve the future positioning and
effectiveness of the company. These include Corporate Social Investment and
Social and Labour Plans to convert old-order mining licences, significant
upgrading of IT systems and infrastructure and an increased focus on sales and
marketing activities.
Capital expenditure amounted to R921 million (2008: R797 million) with R370
million spent on the Hercules mill project and R126 million on finalising the
Dwaalboom kiln project. The balance related to replacement and environmental
improvement projects.
Following from the BBBEE transaction in December 2008, short-term debt of R1,5
billion was converted to long-term debt and R1,1 billion, relating to 38 million
shares held as treasury shares, was consolidated. This, combined with capital
expenditure and working capital funding requirements increased total borrowings
from R1,7 billion to R3,4 billion. Higher borrowings resulted in increased
finance costs of R357 million (2008: R157 million) of which R91 million related
to the consolidated BBBEE transaction debt.
Headline earnings per share including the BBBEE transaction decreased by 40% to
170 cents per share (2008: 283 cents per share). Excluding the BBBEE
transaction, headline earnings per share reduced by 9% to 257 cents per share.
The directors have declared a final dividend of 155 cents per share (2008: 180
cents per share). Dividends declared for the year total 200 cents per share
(2008: 225 cents per share).
CEMENT
PPC`s regional cement sales declined by 10% compared to the previous year.
Demand in the Western and Eastern Cape provinces reduced significantly due to
lower demand from the residential sector whilst demand in the inland market was
cushioned by increased construction activity. Demand in Botswana improved mainly
due to increased infrastructure projects.
Lower demand enabled PPC to cease the import of cement into the local market and
to begin exporting to other African countries.
There was some relief on input costs during the second half of the year with
softer fuel prices and the ability to stop older, less efficient plant. The new
Dwaalboom kiln 2 has run exceptionally well.
The Hercules mill project is progressing within budget but commissioning has
been delayed till the first quarter of the 2010 calendar year. The delay will
not hamper PPC`s ability to supply the market in the current demand environment.
The Riebeeck West expansion project in the Western Cape continues to be delayed
by the environmental impact assessment and the regulatory approval process.
PORTHOLD
Zimbabwe`s move to a US dollar and rand based economy earlier this year
eliminated many of the distortions that existed in the Zimbabwean cement
industry with regard to shortages of manufacturing inputs, cement prices,
exchange rates and hyperinflation.
The company now considers that it has effective control over Porthold and
accordingly Porthold was consolidated from 30 September 2009. The carrying value
of the investment in Porthold at the effective date was R260 million and the
fair value of Porthold was determined to be R473 million. The resultant take-on
gain of R213 million was recognised in the income statement but excluded from
headline earnings.
Both Porthold facilities near Bulawayo are in good condition, fully staffed and
utilisation levels have improved significantly from below 10% in the first part
of the calendar year to between 35% and 45% currently. Local cement selling
prices have come in line with regional cement prices.
LIME AND AGGREGATES
Lime operating profit and margins were affected by the impact of the economic
downturn on the local steel and alloy industries and significant increases in
the cost of coal and electricity compared to previous years. Volumes decreased
by 30% compared to the previous year. However, the ability to run its most
efficient production units resulted in record-low energy consumption.
Aggregate and metallurgical dolomite sales in South Africa reduced by 12% as a
result of lower economic activity. This was partially offset by improved demand
relating to the government road investment program in Botswana.
BOARD CHANGES
During the year under review the following board changes occurred:
Mr BL Sibiya was appointed as a non-executive director to the PPC board on 10
November 2008 and assumed the role of chairman with effect from
17 November 2008 when Mr MJ Shaw retired. Messrs MP Malungani and JS Vilakazi
were appointed as non-executive directors with effect from
27 February 2009.
Mr JE Gomersall retired from the board and as chief executive officer on 30 June
2009. His successor, Mr P Stuiver, was appointed to the board on
1 June 2009 and assumed the role of chief executive officer from 1 July 2009.
Dr. O Fenn, chief operating officer, resigned from the board on
5 August 2009.
COMPETITION COMMISSION
On 25 June 2009 PPC advised that the Competition Commission (the Commission) had
conducted search and seizure operations at all cement producers and that PPC was
co-operating with the Commission.
PPC immediately appointed legal advisors to conduct its own investigation under
the supervision of a board sub-committee consisting of non-executive directors
which revealed market-sharing arrangements with other cement producers in the
late 1990s. These were introduced into the organisation under the guise of being
autonomous behaviour by a few former employees who knew about the arrangements
and made ongoing arrangements to disclose detailed sales information through the
Cement and Concrete Institute. PPC will stop the submission of this information
with immediate effect.
In the result PPC cooperated fully with the Commission and has now concluded a
conditional leniency agreement with the Commission in terms of which PPC will
have immunity from prosecution, conditional on ongoing co-operation with the
Commission.
OUTLOOK
Indications that the world economy is showing signs of recovery are encouraging,
especially if seen against recent statements by the South African Treasury which
indicate that the government remains committed to job creation, rural
development, social services and infrastructure development. The effects of the
500 basis point reduction in interest rates over the past 18 months should
improve activity in the formal residential sector. Demand from government
infrastructure projects should continue through 2010 and beyond.
Improvements in regional demand should result from a recovery in demand from the
residential sector but this is difficult to predict and therefore creates some
uncertainty for the outlook on cement demand during 2010.
The situation in Zimbabwe is still transient and difficult to forecast with
certainty. Should utilisation levels remain as they are currently, we look
forward to a positive contribution from the Porthold operations.
There are indications that the steel and alloy industries are moving out of the
economic downturn which could result in improved demand for lime. After
softening during most of 2009, local and international fuel prices are beginning
to trend upwards and this will be aggravated by the extraordinary electricity
price increases that are being proposed. Such cost increases will be offset to
some extent by increased efficiencies in our operations. We expect that we will
continue to recover net increases in input costs and maintain strong operating
cash flows in the year ahead.
On behalf of the board
BL Sibiya P Stuiver
Chairman Chief executive officer
11 November 2009
DIVIDEND ANNOUNCEMENT
Notice is hereby given that final ordinary dividend No. 212 of 155 cents per
share has been declared in respect of the year ended 30 September 2009.
This dividend will be paid out of profits as determined by the directors.
The important dates pertaining to this dividend for shareholders trading on the
JSE Limited are as follows:
Last day to trade "CUM" dividend Friday, 8 January 2010
Shares trade "EX" dividend Monday, 11 January 2010
Record date Friday, 15 January 2010
Payment date Monday, 18 January 2010
Share certificates may not be dematerialised or rematerialised between Monday,
11 January 2010 and Friday, 15 January 2010, both days inclusive.
ZIMBABWE
The important dates pertaining to this dividend for shareholders trading on the
Zimbabwe Stock Exchange are as follows:
Last day to register to receive the dividend Friday, 8 January 2010
Shares trade "EX" dividend Monday, 11 January 2010
Payment date Monday, 18 January 2010
The register of members in Zimbabwe will be closed from Monday, 11 January 2010
to Friday, 15 January 2010, both days inclusive, for the purpose of determining
those shareholders to whom the dividend will be paid.
The dividend payable to shareholders registered in Zimbabwe will be paid in SA
rand.
By order of the board
JHDLR Snyman
Group company secretary
10 November 2009
DIRECTORS: BL Sibiya (Chairman), P Stuiver* (Chief executive officer),
S Abdul Kader, RH Dent, P Esterhuysen, ZJ Kganyago, AJ Lamprecht,
NB Langa-Royds, MP Malungani, TDA Ross, J Shibambo, JS Vilakazi *Dutch
REGISTERED OFFICE: 180 Katherine Street, Sandton, South Africa (PO Box 787416,
Sandton, 2146, South Africa)
TRANSFER SECRETARIES: Link Market Services SA (Pty) Limited, 11 Diagonal Street,
Johannesburg, South Africa
(PO Box 4844, Johannesburg, 2000, South Africa)
TRANSFER SECRETARIES ZIMBABWE: Corpserve (Private) Limited, 4th Floor,
Intermarket Centre, Corner 1st Street/Kwame Nkrumah Avenue, Harare, Zimbabwe (PO
Box 2208, Harare, Zimbabwe)
DISCLAIMER
This document including, without limitation, those statements concerning the
demand outlook, PPC`s expansion projects and its capital resources and
expenditure, contain certain forward-looking views. By their nature, forward-
looking statements involve risk and uncertainty and although PPC believes that
the expectations reflected in such forward-looking statements are reasonable, no
assurance can be given that such expectations will prove to have been correct.
Accordingly, results could differ materially from those set out in the forward-
looking statements as a result of, among other factors, changes in economic and
market conditions, success of business and operating initiatives, changes in the
regulatory environment and other government action and business and operational
risk management. While PPC takes reasonable care to ensure the accuracy of the
information presented, PPC accepts no responsibility for any consequential,
indirect, special or incidental damages, whether foreseeable or unforeseeable,
based on claims arising out of misrepresentation or negligence arising in
connection with a forward-looking statement. This document is not intended to
contain any profit forecasts or profit estimates. The information published in
this report has been audited.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Year ended
30 Sept 30 Sept
2009 2008
Audited Audited* %
Rm Rm Change
Revenue 6 783 6 248 9
Cost of sales 3 897 3 547 (10)
Gross profit 2 886 2 701 7
Administration and net operating 468 378 (24)
expenditure
Operating profit before items 2 418 2 323 4
listed below
BBBEE IFRS 2 charges (490) -
Take-on gain arising from 213 -
consolidation of Porthold
Operating profit 2 141 2 323 (8)
Fair value (losses)/gains on (6) 4
financial instruments
Finance costs 357 157 (127)
Investment income 65 84 (23)
Profit before exceptional items 1 843 2 254 (18)
Exceptional items - 2
Share of associate`s retained 7 10
profit
Profit before taxation 1 850 2 266 (18)
Taxation 722 767 6
Profit for the year 1 128 1 499 (25)
Attributable to:
Ordinary shareholders 1 024 1 499 (32)
Other shareholders (refer note 5) 104 -
1 128 1 499 (25)
Profit for the year 1 128 1 499
Other comprehensive income, net of (18) 17
taxation
Effect of translation of foreign (14) 5
operations
Effect of cash flow hedges (7) 4
Revaluation of investment in non- 213 -
consolidated subsidiary (refer
note 10)
Take-on gain arising from (213) -
consolidation of Porthold
Revaluation of available-for-sale 2 10
financial investments
Taxation on other comprehensive 1 (2)
income
Total comprehensive income 1 110 1 516 (27)
Earnings per share (cents)
- basic 210,1 283,5 (26)
- diluted 209,1 283,5 (26)
*Reclassified for the disclosure impact of IAS 1 (revised): Presentation of
Financial Statements
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
30 Sept 30 Sept
2009 2008
Audited Audited
Rm Rm
ASSETS
Non-current assets 4 195 3 196
Property, plant and equipment 3 941 2 813
Intangible assets 53 19
Investment in non-consolidated subsidiary - 260
Other non-current financial assets 135 90
Investment in associates 66 14
Current assets 1 624 1 338
Inventories 557 363
Trade and other receivables 819 751
Cash and cash equivalents 248 224
Total assets 5 819 4 534
EQUITY AND LIABILITIES
Capital and reserves
Share capital and premium (1 088) 115
Other reserves 150 57
Retained profit 1 853 1 541
Total equity 915 1 713
Non-current liabilities 3 366 511
Deferred taxation liabilities 469 299
Long-term borrowings 2 628 55
Provisions and other non-current liabilities 269 157
Current liabilities 1 538 2 310
Short-term borrowings 764 1 619
Trade and other payables and provisions 774 691
Total equity and liabilities 5 819 4 534
Net asset value per share (cents) 174 331
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Year ended
30 Sept 30 Sept
2009 2008
Audited Audited*
Rm Rm
Total equity
Balance at beginning of the year 1 713 2 349
Total comprehensive income 1 110 1 516
Equity-settled share incentive scheme refund - 2
Dividends paid (1 195) (1 401)
Treasury shares purchased and held by group - (753)
subsidiary company
Treasury shares on consolidation of Porthold (18) -
(refer note 8)
1 610 1 713
BBBEE transaction impact as below:
Issue of PPC Company Limited shares 5 -
Treasury shares held by the BBBEE trusts and (1 190) -
funding SPVs (refer note 8)
BBBEE IFRS 2 charges 490 -
Balance at end of the year 915 1 713
*Reclassified for the disclosure impact of IAS 1 (revised): Presentation of
Financial Statements
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Year ended
30 Sept 30 Sept
2009 2008
Audited Audited
Rm Rm
Cash flow from operating activities
Operating cash flows before movements in 2 735 2 563
working capital
Net increase in working capital (133) (17)
Cash generated from operations 2 602 2 546
Net finance costs paid (229) (102)
Taxation paid (645) (800)
Cash available from operations 1 728 1 644
Dividends paid (1 195) (1 401)
Equity-settled share incentive scheme receipt - 2
Net cash inflow from operating activities 533 245
Acquisition of property, plant and equipment (1 018) (809)
and other movements
Consolidated treasury shares held by the BBBEE (1 190) -
trusts and funding SPVs
Acquisition of treasury shares by group - (753)
subsidiary company
Net cash outflow from investing activities (2 208) (1 562)
Net cash inflow from financing activities 1 656 240
Net decrease in cash and cash equivalents (19) (1 077)
Cash and cash equivalents at beginning of the 224 1 301
year
Cash acquired on consolidation of Porthold 43 -
Cash and cash equivalents at end of the year 248 224
Cash earnings per share (cents) 328,6 310,9
NOTES
1. BASIS OF PREPARATION
The condensed group annual financial statements have been prepared using
accounting policies compliant with International Financial Reporting
Standards (IFRS), and are in compliance with IAS 34: Interim Financial
Reporting, the JSE Limited`s listing requirements and the South African
Companies Act.
For a better understanding of the group`s financial position, the results
of its operations and cash flows for the year, this summarised preliminary
report of annual results should be read in conjunction with the annual
financial statements from which this summarised preliminary announcement of
annual results was derived. The accounting policies and methods of
computation used are consistent with those applied in the preparation of
the annual financial statements for the year ended 30 September 2009.
The group has adopted the following revised accounting standards,
amendments, interpretations and circular, in the current year, which did
not have a material impact on the reported results:
IAS 1 (revised): Presentation of Financial Statements
IFRS 1 and IAS 27 (revised): Cost of an Investment in Subsidiary, Jointly
Controlled Entity or Associate
IFRS 7 (amendment): Financial Instruments: Disclosures - Fair value and
Liquidity Risk Enhancements
IFRIC 17: Distributions of Non-cash Assets to Owners
IFRIC 18: Transfer of Assets from Customers
IAS 32 (amendment) and IAS 1 (amendment): Puttable Financial Instruments
and Obligations Arising on Liquidation
IAS 39 (amendment): Eligible Hedged Items
IAS 39 and IFRS 7 (amendment): Reclassification of Financial Assets
Improvements to International Financial Reporting Standards 2008
Circular 3/2009 Headline Earnings
The following standards have been adopted and have made an impact on the
group`s reported results:
IFRS 3 (revised): Business Combinations and IAS 27 (revised): Consolidated
and Separate Financial Statements
IAS 38 (amendment): Intangible Assets (measuring the fair value of
intangible assets acquired in a business combination)
30 Sept 30 Sept
2009 2008
Audited Audited
Rm Rm
2. Profit before taxation
Included in profit before taxation are:
Amortisation of intangible assets 6 4
Depreciation 309 214
BBBEE consultation fees expensed 9 20
Dividends paid to BBBEE trusts treated as 7 -
an expense
3. Finance costs
Bank borrowings 264 182
Dividends on redeemable preference shares 51 -
Long-term borrowings 40 -
Finance lease interest 8 10
Unwinding of discount on rehabilitation 11 9
provisions
374 201
Interest capitalised to plant and equipment (17) (44)
357 157
4. Earnings per share and headline earnings
per share
Earnings per share (cents) (excluding BBBEE
IFRS 2 charges and take-on gain arising
from consolidation of Porthold)
- basic 257,3 283,5
- diluted 256,1 283,5
Headline earnings per share (cents)
- basic 169,9 282,6
- diluted 169,1 282,6
Headline earnings per share (cents)
(excluding BBBEE IFRS 2 charges)
- basic 256,8 282,6
- diluted 255,6 282,6
Determination of headline earnings per
share (cents)
Earnings per share 210,1 283,5
Adjusted for:
- Profit on disposal of property, plant and (0,9) (0,9)
equipment and intangible assets
- Taxation on profit on disposal of 0,2 -
property, plant and equipment and
intangible assets
- Take-on gain arising from consolidation (39,5) -
of Porthold
Headline earnings per share 169,9 282,6
BBBEE IFRS 2 charges 91,1 -
Taxation on BBBEE IFRS 2 charges (4,2) -
Headline earnings per share (excluding 256,8 282,6
BBBEE IFRS 2 charges)
Headline earnings (Rm)
Profit for the year attributable to 1 024 1 499
ordinary shareholders
Profit on disposal of property, plant and (4) (4)
equipment and intangible assets
Taxation on profit on disposal of property, 1 -
plant and equipment and intangible assets
Take-on gain arising from consolidation of (193) -
Porthold (attributable to ordinary
shareholders)
Headline earnings 828 1 495
BBBEE IFRS 2 charges (attributable to 444 -
ordinary shareholders)
Taxation on BBBEE IFRS 2 charges (21) -
(attributable to ordinary shareholders)
Headline earnings (excluding BBBEE IFRS 2 1 251 1 495
charges)
5. Reconciliation of weighted average number
of ordinary shares in issue (000)
Number of shares in issue 537 612 537 612
Less: Weighted average impact of share buy- (20 140) (8 562)
back completed in 2008
Less: Weighted average number of shares (30 185) -
held by consolidated BBBEE trusts and trust
funding SPVs
Add: Weighted average number of shares 38 580 -
issued to the BBBEE CSG and SBP funding
SPVs
Weighted average number of shares used for 525 867 529 050
cash earnings per share
Less: Weighted average number of shares (38 580) -
issued to the BBBEE CSG and SBP funding
SPVs*
Weighted average number of shares used for 487 287 529 050
basic earnings per share calculation
Add: Dilutive adjustment for potential 2 342 -
ordinary shares
Weighted average number of shares used for 489 629 529 050
dilutive earnings per share calculation
For additional information refer note 8.
* Treated as a separate class of shares for earnings per share calculations
as these shares have restrictions on transferability, and are subject to a
call option by PPC to purchase these shares at par on 15 December 2016.
Relates to share-based payment grants made to BBBEE trusts and trust
funding SPVs which is treated in a manner similar to an option.
CSG: Community Service Groups; SBP: Strategic Black Partners; Also refer
notes 8 and 11.
6. Dividend per share (cents)
- final 155 180
- interim 45 45
200 225
7. Cash earnings per share (cents)
- basic 328,6 310,9
Cash earnings per share is calculated using
cash available from operations divided by
the weighted average number of shares in
issue for the year.
8. Share capital and premium
Issued share capital
517 471 989 (2008: 537 612 390) ordinary 52 54
shares in issue at beginning of the year
Nil (2008: 20 140 401) ordinary shares - (2)
bought back during the year
37 991 204 treasury shares held by the (4) -
consolidated BBBEE trusts and trust funding
SPVs*
1 149 256 treasury shares held by Porthold - -
Trust (Private) Limited
478 331 529 (2008: 517 471 989) ordinary 48 52
shares in issue at end of the year
48 557 982 other shares issued to the BBBEE 5 -
CSG and SBP funding SPVs
526 889 511 (2008: 517 471 989) shares in 53 52
issue at end of the year
Share premium (1 141) 63
Balance at beginning of the year 63 814
Utilised for purchase of treasury shares by - (751)
consolidated subsidiary company
Adjustment for treasury shares held in (1 186) -
respect of the BBBEE transaction*
Treasury shares held by consolidated (18) -
Porthold Trust (Private) Limited
Total issued share capital and premium (1 088) 115
Net of treasury shares
* In terms of IFRS SIC Interpretation 12 (Consolidation - Special Purpose
Entities), The PPC Black Managers Trust, The Current PPC Team Trust, The
Future PPC Team Trust, The PPC Black Independent Non-executive Directors
Trust and the trust funding SPVs are consolidated, and as a result, shares
owned by the entities are carried as treasury shares on consolidation.
Following PPC gaining effective control of Porthold with effect from 30
September 2009, the PPC shares owned by Porthold Trust (Private) Limited
have been carried as treasury shares on consolidation.
9. Group segment analysis
Revenue
Cement 5 948 5 368
Lime 544 599
Aggregates 296 281
6 788 6 248
Less: Inter-segment revenue (5) -
Total revenue 6 783 6 248
EBITDA
Cement 2 536 2 281
Lime 121 167
Aggregates 84 93
BBBEE trusts and trust funding SPVs (8) -
EBITDA (excluding BBBEE IFRS 2 charges and 2 733 2 541
take-on gain arising from consolidation of
Porthold)
Operating profit
Cement 2 263 2 100
Lime 91 141
Aggregates 72 82
BBBEE trusts and trust funding SPVs (8) -
Operating profit (excluding BBBEE IFRS 2 2 418 2 323
charges and take-on gain arising from
consolidation of Porthold)
BBBEE IFRS 2 charges (490) -
Take-on gain arising from consolidation of 213 -
Porthold
Operating profit 2 141 2 323
Assets
Cement 5 227 3 944
Lime 392 404
Aggregates 196 186
BBBEE trusts and trust funding SPVs 4 -
Total assets 5 819 4 534
Porthold total assets of R675 million are
included in Cement for segmental analysis
10. Consolidation of Portland Holdings Limited
(Porthold)
Property, plant and equipment and 510 -
intangibles
Investment in PPC shares listed on Zimbabwe 18 -
Stock Exchange
Current assets 165 -
Long-term provisions and deferred taxation (181) -
Trade and other payables (39) -
473 -
Carrying value before consolidation 260 -
Take-on gain arising from consolidation of 213 -
Porthold
Due to the improvement in the Zimbabwean macroeconomic conditions following
the significant changes announced by the Zimbabwean government, the
directors of PPC are of the opinion that the requirements for effective
control over Porthold, in terms of the definition and requirements of IAS
27 (Consolidated and Separate Financial Statements) have been met, and
accordingly Porthold was consolidated from 30 September 2009, the effective
date. The changes made removed many of the distortions that existed in the
Zimbabwean economy, which included unrealistic local market cement price
realisations, not receiving the full benefit of export proceeds, exchange
rate uncertainty and foreign currency restrictions, shortage of inputs and
the effects of extreme hyperinflation.
The carrying value of the investment in Porthold at the effective date was
R260 million. In terms of International Financial Reporting Standards (IFRS
3 (revised 2008), Business Combinations) the effective date fair value of
Porthold was determined at R473 million, and the appropriate balance sheet
values of Porthold was included in the PPC consolidated balance sheet from
the effective date. The resultant take-on gain of R213 million was
recognised in the income statement and has been excluded from headline
earnings.
11. Borrowings
- Long-term* 1 517 -
- Finance lease liability 42 55
- Preference shares 143 -
1 702 55
BBBEE funding transaction
926 -
Long-term borrowings 2 628 55
Short-term borrowings and short-term 764 1 619
portion of long-term borrowings
Total borrowings 3 392 1 674
* Comprises a bullet loan advanced by the BBBEE CSG and SBP funding SPVs,
bearing interest at a fixed rate of 10,86% p.a. This loan is repayable on
15 December 2016, with interest payable semi-annually.
Redeemable preference shares bearing semi-annual dividends, with variable
interest rates linked to prime and fixed rates between 8,34% and 9,37% p.a.
and repayment dates varying between 5 - 8 years.
Redeemable preference shares bearing semi-annual dividends, with variable
interest rates linked to prime and fixed rates between 8,91% and 9,62% p.a.
and repayment dates varying between 5 - 8 years, and loans bearing
interest, after giving effect to fixed-for-variable interest rates swaps,
at a rate of 11,20% p.a., with interest and capital repayable on 15
December 2013.
In terms of IFRS, these long-term borrowings have been consolidated as PPC
has provided guarantees for funding that had an outstanding balance of R879
million as at 30 September 2009.
The impact of the additional borrowings was a reduction to both earnings
per share and headline earnings per share of 25 cents per share.
The company`s borrowing powers are not restricted.
12. Commitments
- Contracted capital commitments 189 378
- Approved capital commitments 250 427
Capital commitments 439 805
Operating lease commitments 29 31
468 836
Commitments for capital expenditure are stated in current values which, together
with expected price escalations, will be financed from surplus cash generated
from operations and borrowing facilities available to the group.
13. Post-balance sheet events
There are no post-balance sheet events that may have an impact on the
group`s reported financial position at 30 September 2009.
14. Auditors` review
The auditors, Deloitte & Touche, have issued their opinion on the group`s
financial statements for the year ended 30 September 2009.
A copy of their unmodified report is available for inspection at the
company`s registered office.
These results and other information are available on our website: www.ppc.co.za
Date: 11/11/2009 07:05:14 Produced by the JSE SENS Department.
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