| Thu 6 Nov 2003, 11:02 | | Pretoria Portland Cement Company Limited - Audited |
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Pretoria Portland Cement Company Limited - Audited Preliminary Report For The
Release Date: 06/11/2003 07:00:04 Code(s): PPC
PRETORIA PORTLAND CEMENT COMPANY LIMITED - AUDITED PRELIMINARY REPORT FOR THE
year ended 30 September 2003
Pretoria Portland Cement Company Limited
("PPC" or "the company")
(Registration number 1892/000667/06)
JSE code: PPC ISIN code: ZAE 000005559
Audited Preliminary Report for the year ended 30 September 2003
* cement sales exceed 4 million tons
* 40% growth in operating profit
* 38% growth in headline earnings per share
* 38% growth in final dividend
* special dividend of R6.50 per share
Consolidated Income Statement
Year ended
30 Sept. 30 Sept.
2003 2002
Audited Audited
Restated %
Rm Rm Change
Revenue 3,015.9 2,505.4 20
Operating profit 866.2 616.8 40
Fair value adjustments on financial 6.5 18.4 (65)
instruments
Finance costs 56.1 73.9 24
Income from investments 126.4 91.4 38
Amortisation of goodwill (0.1) 3.1
Profit before exceptional items 943.1 649.6 45
Exceptional items 4.1 158.9
Profit before tax 947.2 808.5 17
Tax 256.9 174.7 (47)
STC on dividends paid 69.1 55.6 (24)
Net profit after tax 621.2 578.2 7
Share of associates" retained 5.9 26.8 (78)
profit
Net profit attributable to 627.1 605.0 4
shareholders
-
Net profit per share (cents)
- basic 1,166.9 1,129.8 3
- fully diluted 1,166.8 1,129.8 3
Earnings per share before
exceptional items (cents)
- basic 1,159.4 833.2 39
- fully diluted 1,159.3 833.2 39
Headline earnings per share
(cents)*
- basic 1,154.0 838.3 38
- fully diluted 1,153.9 838.3 38
Ordinary shares of R1 each fully 53,744 53,744
paid in issue (000)
Weighted average number of shares 53,744 53,551
in issue during the year (000)
Increase in number of shares as a 2 -
result of unexercised options (000)
Fully diluted weighted average 53,746 53,551
number of shares (000)
Dividends per share (cents)
- special 650 600 8
- final 550 400 38
- interim 175 135 30
1,375 1,135 21
Determination of headline earnings
per share
Net profit per share (cents) 1,166.9 1,129.8
Adjusted for (after tax):
Profit on disposal of associate
companies and
property, plant and equipment (12.6) (511.8)
Impairment of goodwill and property - 214.4
Amortisation of goodwill (0.3) 5.9
Headline earnings per share (cents) 1,154.0 838.3
* Refer notes 3 and 4 for a reconciliation of net profit attributable to
shareholders to headline earnings.
Consolidated Balance Sheet
30 Sept. 30 Sept.
2003 2002
Audited Audited
Restated
Rm Rm
ASSETS
Non-current assets 1,935.4 1,968.1
Property, plant and equipment, investments 1,818.5 1,844.1
and loans
Intangible assets 10.4 11.4
Negative goodwill (1.1) (1.2)
Deferred tax assets 16.0 12.1
Long-term loan 91.6 101.7
Current assets 1,551.3 1,464.9
Investment in associate company subject to 6.0 -
sale
Inventories and receivables 641.7 603.9
Cash and cash equivalents 903.6 861.0
Total assets 3,486.7 3,433.0
EQUITY AND LIABILITIES
Capital and reserves
Share capital and premium 865.8 865.8
Non-distributable reserves (98.3) (84.5)
Retained profit 1,369.6 1,339.8
Interest of shareholders of PPC 2,137.1 2,121.1
Minority interest 0.1 0.1
Interest of all shareholders 2,137.2 2,121.2
Non-current liabilities 751.2 778.7
Interest-bearing 366.6 387.5
Non-interest-bearing 118.5 116.7
Deferred tax liabilities 266.1 274.5
Current liabilities 598.3 533.1
Short-term borrowings 12.7 13.0
Accounts payable and provisions 585.6 520.1
Total equity and liabilities 3,486.7 3,433.0
Net asset value per share (cents) 3,998.1 3,946.7
Abridged Statement of Changes in Shareholders" Interest
Year ended
30 Sept. 30 Sept.
2003 2002
Audited Audited
Restated
Rm Rm
Interest of shareholders of PPC
Balance at beginning of year 2,121.1 1,939.2
Net movements not recognised through the (10.2) 100.8
income statement
Increase in share capital and premium - 250.9
Revaluation of investments (net of deferred 0.8 11.8
tax)
Foreign Currency Translation Reserve and (11.0) (161.9)
other movements
Net movements recognised through the income 26.2 81.1
statement
Net profit attributable to shareholders 627.1 605.0
Dividends paid (600.9) (523.9)
Balance at end of year 2,137.1 2,121.1
Consolidated Abridged Cash Flow Statement
Year ended
30 Sept. 30 Sept.
2003 2002
Audited Audited
Restated
Rm Rm
Profit before exceptional items 943.1 649.6
Depreciation and other non cash items 181.6 165.1
Net increase in working capital (52.2) (7.2)
1,072.5 807.5
Tax paid (261.6) (178.3)
Dividends paid (600.9) (523.9)
- ordinary (278.4) (255.2)
- special (322.5) (268.7)
Net cash inflow from operating activities 210.0 105.3
Replacement capital expenditure (152.1) (108.3)
Investment in future operations (17.1) -
Acquisition of subsidiary - (183.1)
Proceeds from the disposal of Logistics - 168.7
division
Proceeds from the disposal of associate - 324.4
companies
Movements in investments and loans 12.6 21.0
Proceeds from the disposal of property, 9.2 20.2
plant and equipment
Receipt of instalment on long-term loan 10.2 10.2
Net cash (outflow)/inflow from investing (137.2) 253.1
activities
Net cash outflow from financing activities (21.2) (10.1)
Effects of exchange rates on opening cash (9.0) 5.5
position
Net increase in cash and cash equivalents 42.6 353.8
Notes
Year ended
30 Sept. 30 Sept.
2003 2002
Audited Audited
Restated
Rm Rm
1. Profit before tax
Included in profit before tax are:
Cost of sales 1,907.8 1,651.2
Depreciation 170.0 163.6
Fair value adjustments on financial 6.5 18.4
instruments
- translation of foreign currency monetary 9.1 2.6
items
- other instruments (2.6) 15.8
2. Finance costs
Finance costs comprise:
Bank and other borrowings 2.8 4.8
Financial lease interest 41.2 57.0
Monetary loss on hyperinflation 9.5 2.1
Unwinding of discount on rehabilitation 2.6 10.0
provisions
56.1 73.9
3. Net profit before exceptional items
Net profit attributable to shareholders 627.1 605.0
Goodwill impairment of Porthold - 101.9
Profit on disposal of associate companies - (263.3)
Profit on disposal of properties (4.1) (10.4)
Property impairment - 12.9
Tax on exceptional items 0.1 0.1
Net profit before exceptional items 623.1 446.2
4. Headline earnings
Net profit before exceptional items 623.1 446.2
Profit on disposal of plant and equipment (2.8) (0.4)
(after tax)
Amortisation of goodwill (0.1) 3.1
Headline earnings 620.2 448.9
5. Investments
At fair value 259.9 259.1
Unlisted associates including loan at 16.4 22.2
carrying value
276.3 281.3
Directors" valuation of investments 287.9 281.3
6. Borrowings 379.3 400.5
The company"s borrowing powers are not
restricted.
7. Commitments
Capital commitments 24.5 86.1
- contracted 18.4 48.7
- approved 6.1 37.4
Operating lease commitments 6.4 9.6
30.9 95.7
These commitments will be met from
available resources.
8. Contingent liabilities
Guarantees for loans, banking facilities 6.7 9.2
and other obligations to third parties
9. Prior year restatement
The results 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 during the year has been 534%, while the Zimbabwe Dollar has moved from
Z$68 : ZAR1 to Z$770 : ZAR1. The restatement facilitates a higher degree of
comparability to the current reporting period.
The impact was to increase net profit attributable to PPC shareholders for 2002
by R4.7 million from R600.3 million to R605.0 million and, to increase headline
earnings per share by 8.8 cents from 829.5 to 838.3.
10. Basis of preparation
The annual 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. This report has been extracted from the audited annual
financial statements.
11. JSE Securities Exchange requirements
The final announcement has been prepared in accordance with the listing
requirements of the JSE Securities Exchange South Africa.
12. Audit opinion
The auditors, Deloitte & Touche, have issued their opinion on the group"s
financial statements for the year ended 30 September 2003. A copy of their
unqualified report is available for inspection at the company"s registered
office.
Segmental Analysis of the Group"s Operations
Revenue
Year ended
30 Sept. 30 Sept.
2003 2002
Audited Audited
Restated %
Rm Rm Change
Cement 2,417.8 2,000.1 21
Lime 462.6 389.4 19
Packaging 239.5 189.9 26
3,119.9 2,579.4 21
Less: Inter-segment revenue 104.0 74.0 41
3,015.9 2,505.4 20
Operating profit
Year ended
30 Sept. 30 Sept.
2003 2002
Audited Audited
Restated %
Rm Rm Change
Cement 740.5 532.4 39
Lime 98.8 66.8 48
Packaging 26.9 17.6 53
866.2 616.8 40
Operating margin
Year ended
30 Sept. 30 Sept.
2003 2002
Audited Audited
Restated
% %
Cement 30.6 26.6
Lime 21.4 17.2
Packaging 11.2 9.3
28.7* 24.6*
* Net of inter-segment revenue
Comment
The pleasing results for the year are largely attributable to the stronger than
anticipated growth in retail and infrastructure spending in South Africa and our
ongoing Value Based Management (Kambuku) initiatives.
Group revenues increased by 20% following the abovementioned growth in local
cement volumes and improved price realisations. While overall export volumes
increased, the stronger Rand eroded revenues and margins particularly in the
second half.
Operating profits increased by 40% with all our businesses reporting increased
operating margins and profitability. Notably, Portland Holdings Limited of
Zimbabwe ("Porthold") reported a small operating profit in the current year
under the increasingly difficult socio-economic conditions prevailing in
Zimbabwe.
Income from investments increased by 38% to R126.4 million reflecting the
benefit of interest earned as a result of strong cash generation and working
capital management.
Exceptional items include the profit on sale of company owned houses to
employees in line with company policy and on the disposal of other surplus
properties.
The STC charge includes R40.3 million arising from the special dividend paid in
January 2003 (2002: R33.6 million).
Headline earnings per share increased 38% to 1 154 cents.
Capital expenditure amounted to R169.2 million (2002: R108.3 million). Major
items include the purchase of several new quarry vehicles, the acquisition of
land and mineral rights and the modernisation of coating and printing equipment
at Afripack.
Taking into account the low level of capital expenditure required and the
company"s strong cash position, the directors have declared an increased final
dividend of 550 cents per share (2002: 400 cents per share) and a special
dividend of 650 cents per share (2002: 600 cents per share).
CEMENT
Local cement sales increased by 8% in the first half of the year and 6% in the
second half. The main areas of growth were Gauteng, Western Cape, Southern Cape
and the Eastern Cape where the Coega Harbour Development project is in full
swing.
Local sales in Zimbabwe declined as the Zimbabwe economy struggled under
hyperinflationary conditions and from shortage of foreign exchange. Exports from
Zimbabwe declined mainly due to the temporary closure of the Zambian market and
a shortage of railway rolling stock. Importantly however, Porthold remained cash
flow positive and returned a small operating profit.
The Kambuku process continues to yield impressive performances in every area of
our operations. All major production units ran well with Dwaalboom, De Hoek and
Riebeeck improving on their previous best kiln production records. The Port
Elizabeth factory operated at full capacity to meet the demand of the Coega
Harbour Development.
The cement distribution logistics optimisation project has been rolled out
countrywide and has yielded pleasing results in terms of cost savings and better
customer service levels.
Operating margins increased to 30.6% (2002: 26.6%). Operating profit increased
by 39% from R532.4 million to R740.5 million.
LIME
Overall demand from customers in the steel sector declined.
During the year a number of long-term agreements were successfully renegotiated
at increased prices with a resultant improvement in revenues and margins. In
addition, the contribution from PPC Saldanha increased to planned levels.
The Kambuku process has focused on lasting Value Based Management initiatives
including those which address energy consumption, productivity and overheads.
Operating margins increased to 21.4% (2002: 17.2%). Operating profit increased
by 48% from R66.8 million to R98.8 million.
PACKAGING
Strong volumes on the local and export markets and focused attention on reducing
waste and improving efficiencies yielded benefits in the year. The modernisation
programme was finalised with R38 million being incurred on modernising the
coating and printing capabilities.
Operating margins increased to 11.2% (2002: 9.3%). Operating profit increased by
53% from R17.6 million to R26.9 million.
Negotiations with regard to the sale of 75% of Afripack to a BEE consortium is
being progressed and should be completed in the next few months.
ASSOCIATE COMPANIES
The one-third interest in Slagment (Pty) Limited has been sold for R15 million,
subject to conditions precedent, which conditions were not concluded by year
end.
BOARD OF MANAGEMENT
Mr Des Arnold retired as a director with effect from 31 March 2003. He made a
valuable contribution to the group.
Mr Peter Nelson has resigned from the company effective 31 December 2003. Much
of the success of the company in recent years is due to his stewardship and
guidance in matters financial and in the overall management of the company. We
would like to extend our sincere thanks and appreciation to him for his
contribution to the company.
Mr Peter Esterhuysen has been appointed Director: Finance and Administration
with effect from 1 December 2003 and we welcome him to the board.
PROSPECTS
Local cement demand is expected to show growth of 4% to 5% and PPC should
maintain its market share at current levels. No growth is expected in lime and
burnt dolomite sales as customers in the steel industry are expected to face
difficult market conditions. Cement export revenues and export margins are
likely to be lower following the recovery of the Rand.
Porthold Zimbabwe is unlikely to meaningfully contribute to earnings in 2004 as
hyperinflation, a shortage of railway rolling stock and the lack of foreign
exchange are expected to continue for some time yet. In the medium term this
business remains well positioned to benefit from any economic improvement in
Zimbabwe and exports.
Notably the group"s input costs are increasing at levels above those currently
reported for the year-on-year Producer Price Index. In particular, there is an
indication from Spoornet of their intention to increase cement and lime
transport prices by more than 40%. At the same time, the relatively stronger
Rand and the continued prospects for lower inflation are likely to limit selling
price increases with resultant pressure on margins.
The declining interest rates will affect the level of investment income earned
on surplus cash deposits.
Notwithstanding these developments, improved operating profits are expected
although net profit to shareholders will be impacted by increased tax charges.
The group remains well positioned to benefit from any opportunities that may
arise. The strong cash flows are expected to continue and no major capital
expenditure is planned in 2004.
On behalf of the Board
WAM Clewlow JE Gomersall
Chairman Chief Executive Officer
5 November 2003
Dividend announcement
Notice is hereby given that the following dividends have been declared in
respect of the year ended 30 September 2003:
- number 195 (final dividend) of 550 cents per share
- number 196 (special dividend) of 650 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, 9 January 2004. The last date to trade to participate in
the dividends is Friday, 2 January 2004. Shares will commence trading ex-
dividends from Monday, 5 January 2004.
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, 2 January 2004
Shares trade "EX" dividends Monday, 5 January 2004
Record date Friday, 9 January 2004
Payment date Monday, 12 January 2004
Share certificates may not be dematerialised or rematerialised between Monday, 5
January 2004 and Friday, 9 January 2004, both days inclusive.
Zimbabwe
The important dates pertaining to these dividends for shareholders trading on
the Zimbabwe Stock Exchange are as follows:
Currency conversion date* Monday, 5 January 2004
Shares trade "EX" dividends Monday, 5 January 2004
Last day to register to receive the Friday, 9 January 2004
dividends
Payment date Monday, 12 January 2004
The register of members in Zimbabwe will be closed from Monday, 5 January 2004
to Friday, 9 January 2004, 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, 5 January 2004 or the first
business day thereafter on which foreign currency dealings are transacted.
By order of the Board
Barloworld Trust Company Limited
Secretaries
Per AR Holt
5 November 2003
Directors:
W A M Clewlow (Chairman), J E Gomersall* (Chief Executive Officer), P J
Blackbeard (Chief Operating Officer), 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 Limited
70 Marshall Street,
Johannesburg, South Africa
(P.O. Box 61051, Marshalltown 2107, South Africa)
Transfer Secretaries Zimbabwe:
Corpserve (Private) Limited
4th Floor, Intermarket Centre, Corner 1st Street/Kwame Nkrumah Avenue, Harare,
Zimbabwe
(P.O. Box 2208, Harare, Zimbabwe)
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
