| Wed 9 Nov 2005, 12:35 | | PPC Audited preliminary report for the year ended |
|
PPC Audited preliminary report for the year ended 30 September 2005
Pretoria Portland Cement Company Limited
(Incorporated in the Republic of South Africa)
(Company registration number 1892/000667/06)
JSE code: PPC & ISIN: ZAE000005559
PPC Audited preliminary report for the year ended 30 September 2005
These results and other information are available on the PPC website
www.ppc.co.za
Financial highlights
* strong growth in cement volumes continues
* headline earnings per share up 19%
* cash generated from operations up 29%
* R1,5 billion investment in capacity expansion commenced
* special dividend of 800 cents per share declared
Consolidated income statement
Year ended
30 Sept 30 Sept
2005 2004
Audited Audited
Restated
Rm Rm
Revenue 3 973,6 3 440,1
Operating profit 1 511,9 1 172,8
Fair value (losses)/gains on financial (6,9) 0,2
instruments
Finance costs 63,6 58,5
Income from investments 84,0 100,6
Profit before exceptional items 1 525,4 1 215,1
Exceptional items 12,5 (0,3)
Share of associates" retained profit 1,4 10,9
Profit before tax 1 539,3 1 225,7
Tax 432,1 352,3
STC on dividends paid 150,3 86,0
Net profit 956,9 787,4
Attributable to:
Outside shareholders" interest 13,4 3,8
PPC Company Limited shareholders 943,5 783,6
956,9 787,4
Net profit per share (cents)
- basic and fully diluted 1 755 1 458
Headline earnings per share (cents)
- basic and fully diluted 1 730 1 458
Ordinary shares of R1 each fully paid 53 761 53 750
in issue (000)
Weighted average number of shares in 53 761 53 745
issue during the period (000)
Fully diluted weighted average number 53 761 53 750
of shares (000)
Dividends per share (cents)
- special 800 1 400
- final 840 700
- interim 260 220
1 900 2 320
Determination of headline earnings per
share
Net profit per share (cents) 1 755 1 458
Adjusted for (after tax):
Profit on disposal of property, plant (2) (5)
and equipment and intangible assets
Impairment of intangibles - 5
Goodwill and other impairments (8) -
Profit on disposal of investments (15) -
Headline earnings per share (cents) 1 730 1 458
Consolidated balance sheet
30 Sept 30 Sept
2005 2004
Audited Audited
Restated
Rm Rm
ASSETS
Non-current assets 1 793,3 1 938,9
Property, plant and equipment 1 246,9 1 224,8
Intangible assets 14,1 15,2
Negative goodwill - (1,0)
Investment in non-consolidated 294,5 315,2
subsidiary
Other non-current assets 214,2 358,2
Investment in associates - 7,8
Deferred tax assets 23,6 18,7
Current assets 1 461,4 1 610,7
Short-term investment 147,1 -
Inventories and receivables 722,8 662,7
Cash and cash equivalents 591,5 948,0
Total assets 3 254,7 3 549,6
EQUITY AND LIABILITIES
Capital and reserves
Share capital and premium 867,6 866,5
Non-distributable reserves 47,0 50,9
Retained profit 1 091,3 1 413,2
Interest of shareholders of PPC 2 005,9 2 330,6
Outside shareholders" interest 21,0 7,6
Interest of all shareholders 2 026,9 2 338,2
Non-current liabilities 481,8 691,9
Deferred tax liabilities 181,7 180,7
Interest-bearing 197,1 393,3
Non-interest-bearing 103,0 117,9
Current liabilities 746,0 519,5
Short-term borrowings 160,1 21,3
Accounts payable and provisions 585,9 498,2
Total equity and liabilities 3 254,7 3 549,6
Net asset value per share (cents) 3 731,1 4 336,0
Statement of changes in shareholders" interest
Year ended
30 Sept 30 Sept
2005 2004
Audited Audited
Restated
Rm Rm
Interest of all shareholders
Balance at beginning of year 2 338,2 2 130,2*
Net movements not recognised through 0,4 157,2
the income statement
Revaluation of investments (net of 10,2 4,7
deferred tax)
Issue of share capital 1,1 0,7
Outside shareholders movement on part - 3,7
disposal of subsidiary company
Foreign currency translation reserve (10,9) 148,1
and other movements
Net movements recognised through the (311,7) 50,8
income statement
Net profit for the year 956,9 787,4
Dividends paid (1 268,6) (736,6)
Balance at end of year 2 026,9 2 338,2
* Restated per note 11
Consolidated abridged cash flow statement
Year ended
30 Sept 30 Sept
2005 2004
Audited Audited
Restated
Rm Rm
Cash flow from operating activities
Operating cash flows before movements 1 644,9 1 342,1
in working capital
Net decrease/(increase) in working 23,0 (48,5)
capital
Cash generated from operations 1 667,9 1 293,6
Finance costs, investment income and 13,9 42,3
realised fair value adjustments on
financial instruments
Tax paid (587,1) (528,6)
Cash available from operations 1 094,7 807,3
Dividends paid (1 268,6) (736,6)
Net cash (utilised)/retained from (173,9) 70,7
operating activities
Net cash applied to investing (128,8) (43,5)
activities
Net cash (outflow)/inflow from (64,9) 33,5
financing activities
Net (decrease)/increase in cash and (367,6) 60,7
cash equivalents
Cash and cash equivalents at beginning 948,0 903,6
of year
Effects of exchange rates on opening 11,1 (5,2)
cash position
Effects of deconsolidation of Porthold - (11,1)
Cash and cash equivalents at end of 591,5 948,0
year
Notes
Year ended
30 Sept 30 Sept
2005 2004
Audited Audited
Restated
Rm Rm
1. PROFIT BEFORE TAX
Included in profit before tax are:
Cost of sales 2 175,2 2 001,0
Depreciation 155,0 153,2
2. FINANCE COSTS
Finance costs comprise:
Bank and other borrowings 8,2 3,0
Financial lease interest 46,6 48,1
Unwinding of discount on 8,8 7,4
rehabilitation provisions
63,6 58,5
3. HEADLINE EARNINGS
Net profit attributable to 943,5 783,6
shareholders of PPC
Profit on disposal of properties, (9,4) (2,7)
plant and equipment, investments and
intangibles
Impairment of plant and equipment and 2,5 2,8
intangibles
Reversal of impairment of financial (5,4) -
assets
Reversal of negative goodwill (1,0) -
Amortisation of negative goodwill - (0,1)
Tax on exceptional items (0,3) -
Headline earnings 929,9 783,6
4. Investments
Listed and unlisted investments at 277,6 265,4
fair value
Unlisted associates including loan at - 7,8
carrying value
277,6 273,2
Directors" valuation of unlisted 277,6 265,4
investments
5. BORROWINGS 357,2 414,6
The company"s borrowing powers are not restricted.
6. COMMITMENTS
Capital commitments 1 479,4 52,2
- contracted 46,0 21,1
- approved 1 433,4 31,1
Operating lease commitments 29,8 34,5
1 509,2 86,7
These commitments will be met from existing cash resources
and borrowing facilities available to the Group.
7. CONTINGENT LIABILITIES
Guarantees for loans, banking 7,1 6,9
facilities and other obligations to
third parties
8. NON-CONSOLIDATION OF PORTLAND HOLDINGS LIMITED (PORTHOLD)
The results of Porthold, a wholly owned Zimbabwean subsidiary have in terms of
the exclusions contained in IAS 27 (Consolidated Financial Statements and
Accounting for Investments in Subsidiaries) not been consolidated at 30
September 2004 and 30 September 2005.
The circumstances in Zimbabwe are such that there are severe restrictions placed
on PPC"s ability to access foreign currency and remit funds. In view of these
circumstances, the results of Porthold have continued to be excluded from the
Group results in the current year and have been accounted for on a fair value
investment basis. The summarised results of Porthold, adjusted for
hyperinflation and converted back to Rands, were:
2005 2004*
Rm Rm
Revenue 120,9 98,3
Operating loss (5,2) (3,1)
Loss before tax (6,9) (1,3)
Tax 4,9 3,1
Loss after tax (11,8) (4,4)
Total assets 408,8 438,6
Total liabilities 137,8 143,8
* Restated in terms of appropriate exchange rates in Zimbabwe.
The effect of not consolidating Porthold was to increase headline earnings per
share by 22 cents (2004: increase by 14 cents) from 1 708 cents to 1 730 cents.
9. BASIS OF PREPARATION
This preliminary report has been extracted from the audited Group annual
financial statements, which have been prepared in accordance with International
Financial Reporting Standards (IFRS) on a basis consistent with the prior year,
except as disclosed in note 11.
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 Group has adopted the following new or revised IFRS in the current period,
which, except for those disclosed in note 11 below, did not have a material
impact on the reported results:
IAS 16 (Revised) (Property, Plant and Equipment); IAS 36 (Revised) (Impairment
of Assets); IAS 38 (Revised) (Intangible Assets); IFRS 3 (Business
Combinations); IFRS 4 (Insurance Contracts) and IFRIC Interpretation 1 (Changes
in Existing Decommissioning, Restoration and Similar Liabilities).
10. JSE LIMITED REQUIREMENTS
The final announcement has been prepared in accordance with the listings
requirements of the JSE Limited.
11. COMPARATIVE INFORMATION
The Group has restated the comparative information for the effects of adopting
IAS 16 (Revised) (Property, Plant and Equipment) and IFRIC Interpretation 1
(Changes in Existing Decommissioning, Restoration and Similar Liabilities).
The aggregate effect of the above restatements is as follows:
Previously Adjustment Restated
stated
Rm Rm Rm
For the year ended 30
September 2004
Profit before tax 1 229,8 (4,1) 1 225,7
Tax 439,6 (1,3) 438,3
Net profit 790,2 (2,8) 787,4
Interest of all 2 348,0 (9,8) 2 338,2
shareholders
Property, plant and 1 239,7 (14,9) 1 224,8
equipment
Deferred tax liabilities 184,9 (4,2) 180,7
Non-interest-bearing non- 118,8 (0,9) 117,9
current liabilities
The effect thereof was to reduce headline earnings per share by five cents from
1 463 cents to 1 458 cents.
12. Auditors" report
The auditors, Deloitte & Touche, has issued its opinion on the Group"s financial
statements for the year ended 30 September 2005. A copy of their unqualified
report is available for inspection at the company"s registered office.
Segmental analysis of the group"s operations
Year ended
30 Sept 30 Sept
2005 2004
Audited Audited
Restated
Revenue
Rm
Cement 3 367,4 2 801,5
Lime 460,1 459,5
Packaging 254,9 282,6
4 082,4 3 543,6
Less: Inter-segment revenue 108,8 103,5
3 973,6 3 440,1
Year ended
30 Sept 30 Sept
2005 2004
Audited Audited
Restated
Operating profit
Rm
Cement 1 375,0 1 041,1
Lime 103,1 101,9
Packaging 33,8 29,8
1 511,9 1 172,8
Comment
The growth in the South African economy and continued high demand in both the
residential and non-residential building sectors boosted cement volumes to
record levels. This, together with improved operational efficiencies, tight cost
control and some price realisation has resulted in a very good performance by
the Group for the year.
Group revenue increased 16% to R4,0 billion while operating profit rose 29% to
R1,5 billion on the back of record domestic cement demand. The Lime and
Packaging divisions also improved profitability.
The ability to access foreign currency and remit funds from Zimbabwe remains
severely restricted and the results of Porthold have again not been
consolidated.
Investment income decreased due to both lower cash balances and interest rates,
whilst finance costs were higher, arising from increased borrowings during the
year.
Exceptional items includes the profit on disposal of the company"s 33% stake in
Slagment (Pty) Limited.
The effective normal tax rate has reduced in line with the decrease in the
company statutory tax rate from 30% to 29% announced at the beginning of the
year. The STC charge includes R94,1 million (2004: R43,7 million) arising from
the 1 400 cents per share special dividend paid in January 2005.
Headline earnings per share increased 19% to 1 730 cents, this after the STC
charge of 175 cents per share (2004: 81 cents per share) on the special
dividend.
Capital expenditure amounted to R180,6 million (2004: R82,5 million) with major
expenditure being on quarrying equipment for both the cement and aggregate
mining operations.
In view of the company"s good results and strong cash position, the directors
have declared an increased final dividend of 840 cents per share (2004: 700
cents per share) and a special dividend of 800 cents per share (2004: 1 400
cents per share).
After two top-ten finishes, PPC was voted this year"s overall winner in the
Deloitte/Financial Mail "Best Company to Work For - 2005" survey. This
achievement reflects the success of the Kambuku Value Based Management
initiative implemented by the company since 2000.
CEMENT
PPC"s domestic cement sales remained buoyant with volume growth of 14%
experienced for the year and all provinces reflected significant growth with the
exception of the Eastern Cape, where volumes decreased due to the completion of
the Ngqura harbour project. Reduced economic growth resulted in a contraction in
cement demand in Botswana.
Operating profit increased by 32% from R1 041,1 million to R1 375,0 million on
the revenue increase of 20%.
Porthold in Zimbabwe continued to experience very difficult operating and
trading conditions, with continuous shortages of transport and production inputs
leading to plant stoppages, impacting on our ability to supply customers.
Despite these constraints, the company remained cash positive for the year.
The PPC Board approved the R1 360 million Batsweledi project which will increase
PPC"s cement capacity by over 1 million tons per annum, in what will be South
Africa"s first new cement kiln in 20 years. R1 230 million will be invested in
the installation of a new kiln line and related infrastructure at the existing
Dwaalboom cement factory. A further R130 million will be spent on
recommissioning and upgrading the existing cement milling and dispatch
facilities at the Jupiter factory situated in Germiston.
The R48 million project to re-commission the 550 000 ton Jupiter kiln, is
currently well advanced and will provide security of cement supply to the market
over the two and a half year construction and commissioning period of the new
expansion project. Production is anticipated to commence early in the new
calendar year.
The capital expenditure will be financed by a combination of operating cash
flows and borrowings spread over three financial years from 2006, with
expenditure peaking in 2007.
LIME
Revenue remained at prior year levels as demand from the steel sector softened
in the last quarter due to reduced steel export demand.
Operating profit in the period improved marginally to R103,1 million due to
further operating efficiency improvements and cost reductions.
PACKAGING
The division experienced strong demand for cement sacks but overall revenue
reduced slightly due to increased competition in other market sectors.
However, tight cost control, combined with gains in production efficiencies and
improved working capital management, resulted in operating profit increasing 13%
to end the year at R33,8 million.
ASSOCIATES
Share of associates" retained income of R1.4 million was realised in the month
prior to the sale of the company"s one third interest in Slagment (Pty) Limited,
which was finally completed in November 2004.
BOARD AND MANAGEMENT
Dr O Fenn, previously Managing Director of the Cement Division, was appointed
Chief Operating Officer of PPC Company Limited effective 5 May 2005.
Mr S Abdul Kader was appointed to the board on 5 May 2005, having previously
been alternate director to Mr RJ Burn who resigned from the board effective 5
May 2005.
Mr J Shibambo was appointed to the board on 5 May 2005 as an independent non-
executive director.
PROSPECTS
Government"s target to increase gross fixed capital formation (GFCF) levels to
the emerging market norm of approximately 25% of gross domestic product (GDP),
lends support to the company"s investment in further capacity in order to ensure
the continuity of cement supply into the future. The company"s investment is
itself an important part of private sector component of GFCF and demonstrates
the company"s confidence in the country"s growth prospects.
The positive announcements on infrastructural investment together with increased
tender award activity bode well for future cement demand, which the company
estimates could grow by 8% in the year ahead. This should enable the company to
report improved performance and strong operating cash flows in the ensuing year.
It is estimated that expenditure of R400 million will be incurred on the
Batsweledi project during 2006, which will be funded out of cash flow and
possible borrowings.
On behalf of the Board
AJ Phillips JE Gomersall
Chairman Chief Executive Officer
8 November 2005
Dividend announcement
Notice is hereby given that the following dividends have been declared in
respect of the year ended 30 September 2005.
- number 201 (final dividend) of 840 cents per share
- number 202 (special dividend) of 800 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, 6 January 2006. The last date to trade to participate in the
dividends is Thursday, 29 December 2005. Shares will commence trading ex-
dividends from Friday, 30 December 2005.
The important dates pertaining to these dividends for shareholders trading on
the JSE Limited are as follows:
Last day to trade "CUM" dividends Thursday, 29 December 2005
Shares trade "EX" dividends Friday, 30 December 2005
Record date Friday, 6 January 2006
Payment date Monday, 9 January 2006
Share certificates may not be dematerialised or rematerialised between Friday,
30 December 2005 and Friday, 6 January 2006, 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 dividends Thursday, 29 December 2005
Shares trade "EX" dividends Friday, 30 December 2005
Currency conversion date* Friday, 6 January 2006
Payment date Monday, 9 January 2006
The register of members in Zimbabwe will be closed from Friday, 30 December 2005
to Friday, 6 January 2006, 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 at the prevailing exchange rate of the SA Rand against the
Zimbabwe Dollar at or about 11:00 am on Friday, 6 January 2006.
By order of the Board
Barloworld Trust Company Limited
Secretaries
Per AR Holt
8 November 2005
Directors:
AJ Phillips* (Chairman), JE Gomersall* (Chief Executive Officer), O Fenn* (Chief
Operating Officer), S Abdul Kader, WAM Clewlow, RH Dent, P Esterhuysen, AJ
Lamprecht, MJ Shaw, J Shibambo, EP Theron, CB Thomson *British
Registered office:
180 Katherine Street, Sandton
South Africa
(PO Box 782248, Sandton, 2146
South Africa)
Transfer secretaries:
Ultra Registrars (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)
Sponsor: J.P.Morgan Equities Limited
Date: 09/11/2005 12:35:47 PM Produced by the JSE SENS Department
