| Tue 30 Apr 2002, 0:00 | | Pretoria Portland Cement Company Limited - Interim |
|
31 March 2002
PRETORIA PORTLAND CEMENT COMPANY LIMITED ("PPC")
(Incorporated in the Republic of South Africa)
(Company Registration number 1892/000667/06)
JSE Code : PPC
ISIN Code : ZAE 000005559
Interim report for the half-year ended 31 March 2002
* 52% increase in exports from SA
* Further efficiency improvements
* 33% increase in operating profit
* 6% increase in Headline earnings per share
* 13% increase in dividend
Consolidated Income Statement
Six months ended Year ended
31 March 31 March 30 Sept.
2002 2001 2001
Unaudited Unaudited Audited
Restated %
Rm Rm Change Rm
Revenue 1,175.8 954.7 23 2,071.2
- continuing
operations 1,175.8 947.8 24 2,047.9
- discontinuing
operation - 6.9 23.3
Operating profit 247.5 185.9 33 458.5
- continuing operations 247.5 181.8 36 446.0
- discontinuing
operation - 4.1 12.5
Finance costs 21.2 27.1 22 51.4
Income from investments 32.4 28.6 13 64.4
Goodwill amortisation 2.6 - -
Profit before
exceptional items 256.1 187.4 37 471.5
Exceptional items (14.8) 0.8 57.7
Profit before tax 241.3 188.2 28 529.2
Tax 68.3 48.9 (40) 118.0
STC 51.4 12.6 16.6
Net profit after tax 121.6 126.7 (4) 394.6
Share of associate
companies'
retained profit 9.9 5.0 98 18.6
Net profit attributable
to shareholders 131.5 131.7 - 413.2
Earnings per share
before exceptional
items (cents)
- basic 272.9 262.2 4 711.8
- fully diluted 272.8 262.1 4 711.8
Earnings per share after
exceptional items (cents)
- basic 246.2 263.3 (6) 826.3
- fully diluted 246.1 263.3 (7) 826.2
Headline earnings
per share (cents)* 278.4 261.9 6 709.7
Ordinary shares of R1
each fully paid
in issue (000) 53,733 50,013 50,013
Weighted average
number of shares in
issue during the
period (000) 53,365 50,010 50,011
Dividends per
share (cents)
- interim 135 120 13 120
- final - - 340
- special - - 500
135 120 960
* Refer notes 2 and 3 for a reconciliation of net profit attributable to
shareholders to Headline earnings.
Consolidated Balance Sheet
31 March 31 March 30 Sept.
2002 2001 2001
Unaudited Unaudited Audited
Restated
Rm Rm Rm
Non-current assets 2,187.3 1,871.7 1,748.6
Property, plant and equipment,
investments and loans 2,072.4 1,856.9 1,734.1
Goodwill and intangible assets 102.7 2.0 2.2
Deferred tax assets 12.2 12.8 12.3
Current assets 789.6 700.8 1,186.1
Investments in associate
companies subject to sale 52.2 - -
Inventories and receivables 602.1 530.9 510.2
Proceeds receivable -
discontinuing operation - - 168.7
Cash and cash equivalents 135.3 169.9 507.2
Total assets 2,976.9 2,572.5 2,934.7
Capital and reserves
Share capital and premium 865.4 614.9 614.9
Non-distributable reserves
and retained profit 999.2 1,081.2 1,324.3
Shareholders' interest 1,864.6 1,696.1 1,939.2
Non-current liabilities 763.4 619.0 615.9
Interest-bearing 288.0 277.4 287.6
Non-interest-bearing 129.9 110.9 120.1
Deferred tax liabilities 345.5 230.7 208.2
Current liabilities 348.9 257.4 379.6
Short-term borrowings 11.3 - -
Accounts payable and provisions 337.6 257.4 379.6
Total equity and liabilities 2,976.9 2,572.5 2,934.7
Statement of Changes in Shareholders' Interest
Six months ended Year ended
31 March 31 March 30 Sept.
2002 2001 2001
Unaudited Unaudited Audited
Restated
Rm Rm Rm
Shareholders' interest
at beginning of period 1,939.2 1,676.7 1,676.7
Increase in share
capital and premium 250.5 0.3 0.1
Non-distributable
reserve movements (5.2) - 21.7
Net profit attributable
to shareholders 131.5 131.7 413.2
Dividends (451.4) (112.6) (172.5)
Shareholders' interest
at end of period 1,864.6 1,696.1 1,939.2
Consolidated Abridged Cash Flow Statement
Six months ended Year ended
31 March 31 March 30 Sept.
2002 2001 2001
Unaudited Unaudited Audited
Restated
Rm Rm Rm
Profit before
exceptional items 256.1 187.4 471.5
Add depreciation and other 101.1 82.4 175.2
Net increase in working
capital (89.5) (68.8) (5.6)
Tax paid (151.4) (9.2) (9.2)
Dividends paid (451.4) (112.6) (172.5)
Net cash (outflow)/inflow
from operating activities (335.1) 79.2 459.4
Replacement capital
expenditure (35.1) (34.5) (80.6)
Investment in future
operations - (0.9) (10.0)
Acquisition of subsidiary (184.4) (25.0) (24.1)
Proceeds received /
(cash surrendered) on
disposal of subsidiary 168.7 - (23.7)
Proceeds on disposal of
property, plant
and equipment 6.7 2.8 16.8
Investments and loans 13.7 8.6 19.3
Net cash outflow from
investing activities (30.4) (49.0) (102.3)
Net cash outflow from
financing activities (6.4) (17.4) (8.4)
Effects of exchange rates on
cash - - 1.4
Net (decrease)/increase
in cash and cash
equivalents (371.9) 12.8 350.1
Notes
Six months ended Year ended
31 March 31 March 30 Sept.
2002 2001 2001
Unaudited Unaudited Audited
Restated
Rm Rm Rm
1. Profit before tax
Included in profit
before tax are:
Cost of sales 809.8 641.0 1,345.9
Depreciation 89.1 82.6 165.0
2. Net profit before
exceptional items
Net profit attributable
to shareholders 131.5 131.7 413.2
Profit on disposal
of subsidiary - - (56.4)
Profit on disposal
of properties (0.3) (0.8) (1.7)
Impairment loss 15.1 - 0.4
Tax on exceptional items (0.6) 0.2 0.5
Net profit before
exceptional items 145.7 131.1 356.0
3. Headline earnings
Net profit before
exceptional items 145.7 131.1 356.0
Profit on disposal of plant and
equipment net of tax - (0.4) (1.6)
Amortisation of goodwill
and intangible assets 2.9 0.2 0.5
Headline earnings 148.6 130.9 354.9
4. Investments
Unlisted at cost 246.9 246.9 246.9
Unlisted associate
companies including
loans at carrying value 73.2 58.6 74.7
- non-current 21.0 58.6 74.7
- current 52.2 - -
Directors' valuation
of investments
- unlisted 256.0 256.0 256.0
- unlisted associate
companies including loans 340.5 173.1 227.2
5. Borrowings 299.3 277.4 287.6
The Company's borrowing
powers are not restricted
6. Commitments
Capital commitments 33.6 50.5 444.5
Acquisition of Portland
Holdings Limited
Zimbabwe - - 432.4
Contracted 27.8 35.2 11.9
Approved 5.8 15.3 0.2
Lease commitments 9.6 10.2 15.0
43.2 60.7 459.5
7. Contingent liabilities
There are contingent liabilities
in respect of guarantees covering
loans, banking facilities and
other obligations of
subsidiaries and other third
parties limited to 5.1 5.3 5.1
8. Prior year restatement
During the 2001 year it was established that the Group had further
constructive obligations in respect of plant closure decommissioning costs
and certain employee related costs at retirement. These obligations were
provided for in the September 2001 year-end accounts. Prior year results for
the March 2001 half-year have been restated accordingly.
The effect of the above restatements resulted in a decrease in the net
profit attributable to shareholders for the half-year ended 31 March 2001 of
R3.8 million (7.6 cents per share).
9. Hyperinflationary reporting
A subsidiary company, Portland Holdings Limited Zimbabwe, applies IAS 29,
Financial Reporting in Hyperinflationary Economies. Where appropriate, the
inflated value of property, plant and equipment is adjusted so as not to
exceed its fair market value.
10. These financial statements have been prepared in accordance with
International Accounting Standards (IAS) and with South African Statements
of Generally Accepted Accounting Practice and on a basis consistent with
previous financial statements.
Declaration of Dividend No. 191
Notice is hereby given that interim ordinary dividend No. 191 of 135 cents
per share has been declared in respect of the six months ended 31 March
2002. This dividend will be paid out of profits as determined by the
directors, to shareholders recorded as such in the register at the close of
business on the record date, Friday, 5 July 2002. The last date to trade to
participate in the dividend is Friday, 28 June 2002. Shares will commence
trading ex-dividend from Monday, 1 July 2002.
The important dates pertaining to this dividend for shareholders trading on
the JSE Securities Exchange South Africa are as follows:
Last day to trade "CUM" dividend Friday, 28 June 2002
Shares trade "EX" dividend Monday, 1 July 2002
Record date Friday, 5 July 2002
Payment date Monday, 8 July 2002
Share certificates may not be dematerialised or rematerialised between
Monday, 24 June 2002 and Friday, 5 July 2002, 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, 28 June 2002
Currency conversion date* Monday, 1 July 2002
Shares trade "EX" dividend Monday, 1 July 2002
Payment date Monday, 8 July 2002
The register of members in Zimbabwe will be closed from Friday, 28 June 2002
to Monday, 1 July 2002, both days inclusive, for the purpose of determining
those shareholders to whom the dividends will be paid.
* The dividends will be paid in Zimbabwe Dollars at the rate quoted by
Stanbic Bank Zimbabwe Limited as the official market buying rate of the SA
Rand against the Zimbabwe Dollar at or about 11:00 am on Monday, 1 July 2002
or the first business day thereafter on which foreign currency dealings are
transacted.
By order of the Board
Barloworld Trust Company Limited
Secretaries 30 April 2002
COMMENT
Group revenues increased by 23% following significantly increased exports
and the consolidation of Portland Holdings Limited (Porthold) for the first
time.
The Value Based Management (VBM) initiative and the Kambuku people process
continue to deliver improved customer service and operating efficiencies in
all divisions.
Operating profit increased by 33% to R247.5 million with all divisions
reporting increased operating margins and profits for the half.
Headline earnings per share, which include a 62.9 cent STC charge relating
to the special dividend paid in January 2002, increased by 6% to 278.4
cents. These are pleasing results considering that 3 718 399 additional
shares were in issue following the acquisition of Porthold.
Investment income increased by 13% reflecting the continued benefit of
strong operating cash flows and interest earned on the cash deposits. The
proceeds from the sale of PPC Logistics (Pty) Limited to Barloworld Limited,
amounting to R168.7 million were received during the period.
Finance costs include additional provisions relating to quarrying
rehabilitation and plant decommissioning amounting to R7.1 million (2001:
R5.1 million) which are accounted for on a discounted basis.
The goodwill amortisation of R2.6 million relates to the consolidation of
Porthold.
The STC charge includes R33.6 million arising from the special dividend paid
in January 2002.
Exceptional items include an impairment of R15.1 million relating to the
Laezonia quarry which is unlikely to report profits until such time as there
is a significant improvement in demand.
Capital expenditure amounted to R 35.1 million (2001: R 35.4 million).
Pursuant to the acquisition of Porthold, 3 718 399 PPC ordinary shares were
issued at R67.35, amounting to R250.4 million and R184.4 million was paid in
cash in the half.
CEMENT
Export volumes increased significantly however domestic volumes declined
marginally. The weaker Rand favourably affected export margins. All major
production units ran satisfactorily with kilns at Hercules and De Hoek
setting new weekly production records. The focus on processing efficiencies,
energy costs, logistics costs, customer service and quality, continues to
contribute to improved margins and profitability.
Porthold's cement sales volumes including exports increased by 11% off a low
base, which resulted in a small operating profit in the half.
Factors such as the high inflation levels, negative GDP growth , a lack of
foreign currency and the severe drought, have together with the disruptions
around the recent elections, deepened the economic crisis in Zimbabwe. In
addition, the imposition of price controls at unrealistically low levels,
and the delays in reviewing these, is putting cement producers in Zimbabwe
under severe pressure, and is effectively restricting Porthold to the
Bulawayo regional markets.
Operating profit including Porthold and associate companies increased by 36%
from R160.9 million to R218.4 million.
LIME
Higher levels of burnt dolomite sales, improved lime prices on long term
contracts renewed in the latter part of 2001, continued focus on
efficiencies, and higher levels of activity at the PPC Saldanha material
handling facility, contributed to an improved performance for the half.
Operating profit increased by 38% from R26.0 million to R35.9 million.
PACKAGING
Improvements in volumes and gains in operating efficiencies, resulted in a
better performance. Operating profit increased by 91% from R3.4 million to
R6.5 million.
ASSOCIATE COMPANIES
The share of associate companies' profits improved as a result of stronger
performances from Natal Portland Cement Co. Limited ("NPC") and Slagment
(Pty) Limited.
STRATEGIC DEVELOPMENTS
As indicated in our Preliminary Results Announcement at the end of last
year, the company has reviewed its strategy with regard to associate
companies in South Africa, and decided to dispose of these interests.
Accordingly, the company has concluded agreements for the sale of:
its 32.8% interest in NPC, to Cimpor-Cimentos de Portugal SPGS, S.A. for
R328.9 million subject to adjustment for debt at the effective date; and
its 25% interest in Ash Resources (Pty) Limited, to Lafarge South Africa for
R7.5 million.
Both of these disposals will only become effective in the forthcoming half
year once the respective conditions precedent have been met.
PROSPECTS
Domestic cement demand has declined slightly in the first half but should
show modest growth for the remainder of the year provided that interest
rates are not increased further. Cost increases as a result of the weaker
Rand will impact on operating profits in the second half. The improvement in
cement export volumes and margins should offset some of these cost
increases.
Porthold is unlikely to meaningfully contribute to earnings if the economic
crisis in Zimbabwe continues.
Demand for lime and burnt dolomite will decline slightly in the second half
due to the planned Corex plant shutdown at Saldanha Steel.
The Packaging division should maintain its improving trend.
The disposal of the company's interests in NPC and Ash Resources will not
have a material effect on earnings, but will augment the company's cash
position.
The company is expecting to report increased operating profits and cash
flows for the full year, but the rate of increase is likely to be lower than
that achieved in the first half. The company will benefit from any
improvement in market conditions and opportunities that may arise.
W A M Clewlow J E Gomersall
Chairman Chief Executive Officer
30 April 2002
Directors:
W A M Clewlow (Chairman), J E Gomersall* (Chief Executive Officer),
D C Arnold, P J Blackbeard, R J Burn,
R K J Chambers, R H Dent, A J Lamprecht, P G Nelson, A J Phillips*, P
Stuiver+ , M J Shaw, E P Theron
*British +Dutch
Registered Office:
180 Katherine Street, Sandton,
South Africa
(P.O. Box 782248, Sandton 2146, South Africa)
Transfer Secretaries:
Mercantile Registrars Limited
11 Diagonal Street,
Johannesburg 2001, South Africa
(P.O. Box 1053, Johannesburg 2000, South Africa)
Transfer Secretaries Zimbabwe:
Corpserve (Private)Limited
4th Floor, Intermarket Centre, Corner 1st Street/Union Avenue Harare,
Zimbabwe
(P.O.Box 2208 Harare, Zimbabwe)
Segmental Analysis of the Group's continuing operations
Revenue
Six months ended Year ended
31 March 31 March 30 Sept.
2002 2001 2001
Unaudited Unaudited Audited
Restated %
Rm Rm Change Rm
Cement 937.3 727.1 29 1,593.8
Lime 192.5 181.0 6 368.2
Packaging 81.7 78.7 4 161.6
1,211.5 986.8 23 2,123.6
Less: Inter-group
sales 35.7 39.0 (8) 75.7
1,175.8 947.8 24 2,047.9
Operating profit
including income from
associate companies
Six months ended Year ended
31 March 31 March 30 Sept.
2002 2001 2001
Unaudited Unaudited Audited
Restated %
Rm Rm Change Rm
Cement 218.4 160.9 36 399.8
Lime 35.9 26.0 38 59.0
Packaging 6.5 3.4 91 10.8
260.8 190.3 37 469.6
Operating margin
Six months ended Year ended
31 March 31 March 30 Sept.
2002 2001 2001
Unaudited Unaudited Audited
Restated
% % %
Cement 23.3 22.1 25.1
Lime 18.6 14.4 16.0
Packaging 8.0 4.3 6.7
22.2* 20.1* 22.9*
* Based on revenue net of inter-group sales
Net operating assets
31 March 31 March 30 Sept.
2002 2001 2001
Unaudited Unaudited Audited
Restated %
Rm Rm Change Rm
Cement 1,617.2 1,170.4 38 1,008.7
Lime 353.4 364.3 (3) 364.8
Packaging 49.4 61.6 (20) 31.6
Proceeds receivable -
discontinuing operation - - 168.7
2,020.0 1,596.3 27 1,573.8
Operating profit including income from associate companies is arrived at as
follows:
Six months ended Year ended
31 March 31 March 30 Sept.
2002 2001 2001
Unaudited Unaudited Audited
Restated %
Rm Rm Change Rm
Operating profit
from continuing
operations 247.5 181.8 36 446.0
Dividends from
associate companies 3.4 3.5 (3) 5.0
Share of associate
companies' retained profit 9.9 5.0 98 18.6
260.8 190.3 37 469.6
These results and other information are available on the PPC Internet
website www.ppc.co.za
