| Thu 7 Nov 2002, 15:34 | | Pretoria Portland Cement Company Limited - Audited |
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Pretoria Portland Cement Company Limited - Audited Preliminary Report For The
Release Date: 07/11/2002 07:00:02 Code(s): PPC
Pretoria Portland Cement Company Limited - Audited preliminary report for the
year ended 30 September 2002
Pretoria Portland Cement Company Limited
(Incorporated in the Republic of South Africa)
(Company Registration number 1892/000667/06)
JSE Code: PPC
ISIN: ZAE000005559
Audited preliminary report for the year ended 30 September 2002
- 5% growth in local cement volumes
- 35% growth in regional cement export volumes
- 39% growth in operating profit
- 17% growth in headline earnings per share
- 18% growth in final dividend
- special dividend of R6.00 per share
Consolidated Income Statement
Year ended
30 Sept. 30 Sept.
2002 2001
Audited Audited
Restated %
Rm Rm Change
Revenue 2,570.2 2,071.2 24
- continuing operations 2,570.2 2,047.9 26
- discontinued operation 23.3
Operating profit 612.2 453.6 35
- continuing operations 612.2 441.1 39
- discontinued operation - 12.5
Finance costs 57.4 67.3 15
Income from investments 92.2 85.3 8
Goodwill amortisation 3.1 0.1
Profit before exceptional items 643.9 471.5 37
Exceptional items 158.9 57.7
Profit before tax 802.8 529.2 52
Tax 173.6 118.0 (47)
STC on dividends paid 55.6 16.6
Net profit after tax 573.6 394.6 45
Share of associate companies` 26.8 18.6 44
retained profit
Minority interest 0.1 -
Net profit attributable to 600.3 413.2 45
shareholders
Earnings per share before
exceptional items (cents)
- basic 824.5 711.8 16
- fully diluted 824.5 711.8 16
Net profit per share (cents)
- basic 1,121.1 826.3 36
- fully diluted 1,121.1 826.2 36
Headline earnings per share (cents)*
- basic 829.5 709.7 17
- fully diluted 829.5 709.6 17
Ordinary shares of R1 each fully 53,744 50,013
paid in issue (000)
Weighted average number of shares in 53,551 50,011
issue during the year (000)
Dividends per share (cents)
- special 600 500 20
- final 400 340 18
- interim 135 120 13
1,135 960 18
Determination of headline earnings
per share
Net profit per share (cents) 1,121.1 826.3
Adjusted for (after tax)
Profit on disposal of subsidiary, (511.9) (117.3)
associate companies and property,
plant and equipment
Impairment of goodwill and property 214.4 0.7
Amortisation of goodwill 5.9 -
Headline earnings per share (cents) 829.5 709.7
* Refer notes 2 and 3 for a reconciliation of net profit attributable
to shareholders to headline earnings.
Consolidated Balance Sheet
30 Sept. 30 Sept.
2002 2001
Audited Audited
Restated
Rm Rm
Assets
Non-current assets 2,224.5 1,860.5
Property, plant and equipment, investments 2,212.4 1,848.2
and loans, goodwill and intangible assets
Deferred tax assets 12.1 12.3
Current assets 1,489.4 1,186.1
Inventories and receivables 617.8 510.2
Proceeds receivable - discontinued operation - 168.7
Cash and cash equivalents 871.6 507.2
Total assets 3,713.9 3,046.6
Equity and liabilities
Capital and reserves
Share capital and premium 865.8 614.9
Non-distributable reserves 109.8 69.4
Retained profit 1,335.1 1,254.9
Interest of shareholders of PPC 2,310.7 1,939.2
Minority interest 0.1 -
Interest of all shareholders 2,310.8 1,939.2
Non-current liabilities 859.6 727.8
Deferred tax liabilities 352.7 208.2
Interest-bearing 387.5 399.5
Non-interest-bearing 119.4 120.1
Current liabilities 543.5 379.6
Short-term borrowings 14.2 -
Accounts payable and provisions 529.3 379.6
Total equity and liabilities 3,713.9 3,046.6
Net asset value per share (cents) 4,299.9 3,877.5
Statement of Changes in Shareholders` Interest
Year ended
30 Sept. 30 Sept.
2002 2001
Audited Audited
Restated
Rm Rm
Shareholders` interest at beginning of year 1,939.2 1,676.7
Net movements not recognised through the 295.1 21.8
income statement
Increase in share capital and premium 250.9 0.1
Opening adjustment - revaluation of 9.1 -
investment
Foreign Currency Translation Reserve and 35.1 21.7
other movements
Net movements recognised through the income 76.4 240.7
statement
Net profit attributable to shareholders 600.3 413.2
Dividends (523.9) (172.5)
Shareholders` interest at end of year 2,310.7 1,939.2
Consolidated Abridged Cash Flow Statement
Year ended
30 Sept. 30 Sept.
2002 2001
Audited Audited
Restated
Rm Rm
Profit before exceptional items 643.9 471.5
Add depreciation and other 184.5 175.2
Net increase in working capital (11.2) (5.6)
Tax paid (179.2) (9.2)
Dividends paid (523.9) (172.5)
Net cash inflow from operating activities 114.1 459.4
Replacement capital expenditure (109.8) (80.6)
Investment in future operations - (10.0)
Acquisition of subsidiary (183.1) (24.1)
Proceeds received/(cash surrendered) on
disposal of Logistics division 168.7 (23.7)
Proceeds on disposal of associate companies 324.4 -
Investments and loans 31.2 29.5
Proceeds on disposal of property, plant and 20.2 16.8
equipment
Net cash inflow/(outflow) from investing 251.6 (92.1)
activities
Net cash outflow from financing activities (6.8) (18.6)
Effects of exchange rates on cash 5.5 1.4
Net increase in cash and cash equivalents 364.4 350.1
Notes
Year ended
30 Sept. 30 Sept.
2002 2001
Audited Audited
Restated
Rm Rm
1. Profit before tax
Included in profit before tax are:
Cost of sales 1,717.3 1,349.1
Depreciation 188.1 165.0
2. Net profit before exceptional items
Net profit attributable to shareholders 600.3 413.2
Profit on disposal of associate companies (263.3) -
Profit on disposal of property (10.4) (1.7)
Property impairment 12.9 0.4
Goodwill impairment of Porthold 101.9 -
Profit on disposal of Logistics division - (56.4)
Tax on exceptional items 0.1 0.5
Net profit before exceptional items 441.5 356.0
3. Headline earnings
Net profit before exceptional items 441.5 356.0
Profit on disposal of plant and equipment (0.4) (1.1)
net of tax
Goodwill amortisation 3.1 -
Headline earnings 444.2 354.9
4. Investments
Unlisted at fair value 259.1 247.0
Unlisted associate companies including 22.2 74.7
loans at carrying value
Directors` valuation of investments
- unlisted 259.1 256.0
- unlisted associate companies including 22.2 227.2
loans
5. Borrowings 401.7 399.5
The Company`s borrowing powers are not
restricted
6. Commitments
Capital commitments 86.1 444.5
Contracted 48.7 11.9
Approved 37.4 0.2
Acquisition of Porthold - 432.4
Lease commitments 162.2 167.6
248.3 612.1
7. Contingent liabilities
There are contingent liabilities in respect 9.2 5.1
of guarantees covering loans, banking
facilities and other obligations of
subsidiaries limited to
8. Prior year restatement
The financial statements have been restated to reflect the long-term loan made
by the PPC group to Saldanha Steel (Pty) Limited separately from the capitalised
lease liability relating to leased facilities at Saldanha. Previously the loan
and the liability were subject to set-off with only the net liability being
disclosed. The effect of the 2001 restatement resulted in an increase in non-
current assets of R111.9 million and a corresponding increase in non-current
liabilities. Interest paid and interest received have been restated accordingly.
The restatement achieves a higher level of reporting and there is no impact on
any reported earnings per share.
9. Hyperinflationary reporting
The financial statements of Porthold, a wholly owned Zimbabwean subsidiary, have
been restated for the decrease in the general purchasing power of the Zimbabwe
Dollar, using the current cost approach in accordance with IAS 29 (Financial
Reporting in Hyperinflationary Economies). The change in the producer price
index in the year has been 143%.
10. Accounting policies
These financial statements have been prepared in accordance with International
Financial Reporting Standards and with South African Statements of Generally
Accepted Accounting Practice on a basis consistent with previous financial
statements, except for the adoption of IAS 39 (Financial Instruments:
Recognition and Measurement), applied for the first time during the year under
review. There has been no material impact on earnings in the current year
arising from the adoption of this standard.
11. Audit opinion
The auditors, Deloitte & Touche, have issued their opinion on the group`s
financial statements for the year ended 30 September 2002. A copy of their
unqualified report is available for inspection at the company`s registered
office.
Dividend announcement
Notice is hereby given that the following dividends have been declared in
respect of the year ended 30 September 2002:
- number 192 (final dividend) of 400 cents per share
- number 193 (special dividend) of 600 cents per share
These dividends 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, 10 January 2003. The last date to trade to participate in
the dividends is Friday, 3 January 2003. Shares will commence trading ex-
dividends from Monday, 6 January 2003.
The important dates pertaining to these dividends for shareholders trading on
the JSE Securities Exchange South Africa are as follows:
Last day to trade "CUM" dividends Friday, 3 January 2003
Shares trade "EX" dividends Monday, 6 January 2003
Record date Friday, 10 January 2003
Payment date Monday, 13 January 2003
Share certificates may not be dematerialised or rematerialised between Monday, 6
January 2003 and Friday, 10 January 2003, both days inclusive.
Zimbabwe
The important dates pertaining to these dividends for shareholders trading on
the Zimbabwe Stock Exchange are as follows:
Last day to register to receive the Friday, 3 January 2003
dividends
Currency conversion date* Monday, 6 January 2003
Shares trade `EX` dividends Monday, 6 January 2003
Payment date Monday, 13 January 2003
The register of members in Zimbabwe will be closed from Friday, 3 January 2003
to Monday, 6 January 2003, 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 11:00am on Monday, 6 January 2003 or the first
business day thereafter on which foreign currency dealings are transacted.
By order of the Board
Barloworld Trust Company Limited
Secretaries 6 November 2002
Comment
The pleasing results achieved for the year by all our divisions are largely
attributable to the benefits of increased infrastructural spending in South
Africa and Value Based Management (VBM) initiatives.
Group revenues from continuing operations increased by 26% boosted by higher
levels of domestic and export cement sales and the consolidation of Porthold for
the first time.
The VBM and Kambuku people process continues to deliver benefits in both value
and improved customer service. Operating profit from continuing operations
increased by 39% with all divisions reporting increased operating margins and
profits.
Despite significant savings in variable production costs and strong levels of
domestic and export sales from Zimbabwe, Porthold has struggled to breakeven
since cement prices were regulated in November 2001. The position has been
exacerbated by hyperinflationary (143%) cost pressures. Under difficult
circumstances Porthold reported an operating loss of R8.7 million.
While Porthold generated positive cash flows, these were lower than anticipated
and accordingly PPC has revised the carrying value of Porthold by impairing the
remaining goodwill of R101.9 million. Notwithstanding these extraordinary
circumstances, the expansion of our market presence continues to have
significant medium to long term value for PPC.
Finance costs declined by 15% mainly as a result of foreign exchange gains
relating to exports.
Income from investments increased by 8% reflecting the interest earned on higher
levels of cash deposits following continued strong operating cash flows, strong
working capital management, the receipt of the proceeds from the sales of PPC
Logistics (Pty) Limited, Natal Portland Cement Co. (Pty) Limited (NPC) and Ash
Resources (Pty) Limited (Ash Resources). Dividends received from associate
companies were higher than in the previous year.
Exceptional items include:
- a profit of R262.7 million and R0.6 million respectively on the sale of the
company`s interests in associate companies NPC and Ash Resources;
- the impairment of R101.9 million relating to the goodwill arising on the
acquisition of Porthold;
- an impairment of R12.9 million relating to the Laezonia quarry which is
unlikely to report profits until such time as there is an improvement in our
sales of aggregate; and
- a profit of R10.2 million on the sale of houses surplus to company
requirements.
Headline earnings per share increased by 17% to 829.5 cents per share (2001:
709.7 cents) despite a 62.5 cent STC charge relating to the special dividend
paid in January 2002.
Capital expenditure amounted to R109.8 million (2001: R90.6 million). Pursuant
to the acquisition of Porthold, 3 719 327 PPC ordinary shares were issued at
R67.35 amounting to R250.5 million, in addition to which R183.1 million was paid
in cash.
CEMENT
Local volumes increased strongly in the second half. PPC volumes ended the year
5% up against an industry increase of 4.3% over last year. The main areas of
growth were Botswana, Namibia, and the North West, Gauteng, Western and Eastern
Cape provinces. Export volumes also increased and the weaker Rand boosted
competitiveness in the early part of the year. Suremix, the dry mortar mix
product launched last year, has shown steady growth.
In Zimbabwe domestic sales rose by over 10% to 929 000 tons and export sales
also increased sharply. Despite the entrance of a new slag-blending competitor
in Zimbabwe, Porthold retained its market leadership. The application of PPC`s
best operating practices, and the continued emphasis on managing production
efficiencies and costs, yielded further benefits in the year.
The Kambuku way of life has been adopted throughout the division and continues
to yield impressive improvements in customer service, environmental performance,
efficiencies and cost savings. All major production units ran satisfactorily.
Certain kilns at De Hoek, Hercules and Dwaalboom set new production records and
are now capable of performing above design specifications. All our RSA factories
are accredited to ISO 14001 for environmental performance. A logistics
optimisation project has been introduced in the Western and Eastern Cape and is
showing benefits in both customer service and cost reductions.
Operating margins increased to 27.2% (2001: 25.3%). Operating profit including
income from associate companies increased by 39% from R404.0 million to R561.4
million.
LIME
While the steel sector, which is the largest user of lime in South Africa,
experienced a strengthening in steel output, this did not flow through to PPC.
This was due to a combination of the planned Corex plant shut down at Saldanha
Steel and lower lime consumption by customers who either experienced production
problems or improved efficiencies.
A number of long term sales contracts were re-negotiated at improved prices
during the year. The strong VBM focus on cost efficiencies continued through
the year. Pleasingly, the Lime Acres factory in the Northern Cape achieved the
lowest ever level of energy consumption per ton through the burning of waste and
the improved utilisation of energy efficient kilns.
Lime capacity was reduced from 1.8 million tons to 1.5 million tons through the
retirement of an older and less efficient rotary kiln.
Operating margins increased to 17.2% (2001: 13.6%). Operating profit including
income from associate companies increased by 34% from R49.9 million to R66.8
million.
PACKAGING
Business conditions improved markedly during the second half resulting in a
strong increase in volumes and revenues. The weaker Rand further improved our
export competitiveness. Export revenues doubled.
Operating margins increased to 9.3% (2001: 6.7%). Operating profit increased by
63% from R10.8 million to R17.6 million.
ASSOCIATE COMPANIES
The 32.8% interest in NPC was sold to Cimpor-Cimentos de Portugal SPGS, S.A. for
R328.0 million. The 25% interest in Ash Resources was sold to Lafarge South
Africa for R7.6 million. The effective date of both transactions was 31 August
2002. In concluding these sales PPC has led an industry restructure and
facilitated the entry of a fourth player into the South African cement industry.
The share of associate companies` profits improved as a result of stronger
performances from NPC and Slagment (Pty) Limited.
DIVIDENDS
Following another period of strong cash flows and the sale of NPC and Ash
Resources, PPC has substantial cash reserves in excess of its requirements.
Consequently the directors have declared a final dividend of R4.00, and a
special dividend of R6.00 per share.
PROSPECTS
Increasing trends in gross fixed capital formation (GFCF) are evident in all
sectors of the South African economy and consequently the company is expecting
continued growth in cement sales volumes in the year ahead. Lime and burnt
dolomite sales should also reflect growth. Our packaging business will benefit
from increased sales and higher capacity utilisation.
Porthold Zimbabwe is unlikely to meaningfully contribute to earnings in 2003 as
hyperinflation, price controls and the shortage of foreign currency are expected
to continue for some time. In the medium term, this business remains well
positioned to benefit from any economic improvement in Zimbabwe and from
exports.
The share of associate companies` profits will fall in 2003 following the sale
of NPC and Ash Resources. Operating costs will be negatively affected by the
full impact of the weaker Rand and higher producer inflation.
Notwithstanding these developments, improved operating profits are expected and
the group remains well poised to benefit from any opportunities that may arise.
The strong cash flows should continue and no major capital expenditure is
planned in 2003.
On behalf of the Board
W A M Clewlow J E Gomersall
Chairman Chief Executive Officer
6 November 2002
Directors:
W A M Clewlow (Chairman), J E Gomersall* (Chief Executive Officer),
P J Blackbeard (Chief Operating Officer), D C Arnold, R J Burn,
R K J Chambers, R H Dent, A J Lamprecht, P G Nelson, A J Phillips*,
M J Shaw, E P Theron *British
Registered Office:
180 Katherine Street, Sandton, South Africa
(P.O. Box 782248, Sandton 2146, South Africa)
Transfer Secretaries:
Computershare Investor Services Limited
70 Marshall Street,
Johannesburg 2001, South Africa
(P.O. Box 61051, Marshalltown 2001, 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
Year ended
30 Sept. 30 Sept.
2002 2001
Audited Audited
Restated %
Rm Rm Change
Cement 2,064.9 1,593.8 30
Lime 389.4 368.2 6
Packaging 189.9 161.6 18
2,644.2 2,123.6 25
Less: Inter-segment revenue 74.0 75.7 (2)
2,570.2 2,047.9 26
Net operating assets
Year ended
30 Sept. 30 Sept.
2002 2001
Audited Audited
Restated %
Rm Rm Change
Cement 1,407.7 1,037.2 36
Lime 434.7 448.2 (3)
Packaging 39.8 31.6 26
Proceeds receivable - discontinued - 168.7
operation
1,882.2 1,685.7 12
Operating profit including income from associate companies
Year ended
30 Sept. 30 Sept.
2002 2001
Audited Audited
Restated %
Rm Rm Change
Cement 561.4 404.0 39
Lime 66.8 49.9 34
Packaging 17.6 10.8 63
645.8 464.7 39
Operating margin
Year ended
30 Sept. 30 Sept.
2002 2001
Audited Audited
Restated
% %
Cement 27.2 25.3
Lime 17.2 13.6
Packaging 9.3 6.7
25.1* 22.7*
* Net of inter-segment revenue
Operating profit including income from associate companies is arrived at as
follows:
Year ended
30 Sept. 30 Sept.
2002 2001
Audited Audited
Restated %
Rm Rm Change
Operating profit 612.2 441.1 39
Dividends from associate companies 6.8 5.0 36
Share of associate companies` retained 26.8 18.6 44
profit
645.8 464.7 39
Pretoria Portland Cement Company Limited
(Incorporated in the Republic of South Africa)
(Company Registration number 1892/000667/06)
JSE Code: PPC ISIN: ZAE 000005559
Barloworld Leading brands
These results and other information are available on the PPC Internet website
www.ppc.co.za
Date: 07/11/2002 07:00:01 AM Produced by the JSE SENS Department
