This is our story of resilience in the pursuit of ... · 25% EBITDA growth Maintained southern...

This is our story of resilience

in the pursuit of shareholder value

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2017

HIGHLIGHTS

Group revenue increased by 1%

to R5,2 billionGroup EBITDA grew by 4% to

R1,2 billion

Strong performance from rest of Africa cement reflected

25% EBITDA growth

Maintained southern Africa cement EBITDA margin in a tough environment

Attributable net profit up 188%

to R294 millionEarnings per share up 54%

to 20 cents

Net debt declined from

R4,7 billion in March 2017 to R4,4 billion

Improved balance sheet with

finance costs reduced by 44% post the rights issue

Net cash flow from operating

activities up 49% These results and other information are available on the PPC website: www.ppc.co.za

PPC Ltd Unaudited condensed consolidated financial statementsfor the six months ended 30 September 2017

GROUP PERFORMANCEGroup revenue rose by 1% to R5 188 million (2016:

R5 156 million). Total cement volumes increased

by 2% to approximately 3 million tonnes. Cost of

sales was well controlled and increased by 1% to

R3 859 million (2016: R3 838 million) compared with

the previous year. Administration and other operating

expenditure contracted by 5% to R549 million

COMMENTARY Johan Claassen, CEO, said: ”The half-year results are a testimony of PPC’s operational focus and market leadership positioning. The period under review has been transformational for the group with our new investments in Zimbabwe and Rwanda contributing positively to our growth. Domestically, the group has managed its cost of sales, overheads and capex well to compensate for marginally declining

revenues in a competitive and subdued market. We remained disciplined in our approach to market prices across our businesses. The group has also made considerable progress in negotiating its debt obligations in South Africa and the DRC which will result in an extended debt profile and should be capable of being serviced from internal cash generation. The new investments in the DRC and Ethiopia will be fully commissioned during the second half of the current financial year. Considerable focus has been directed towards strategic and operational initiatives to ensure greater competitiveness and improved efficiencies in a market exhibiting lower growth. Management’s focus is firmly on delivering improved profitability and liquidity in the short term. We remain

committed to unlocking long-term sustainable shareholder value.”

Johan Claassen – Chief executive officer

(2016: R577 million). The reduction in operational

costs is further evidence of the group’s ability to

achieve cost savings.

Group EBITDA grew by 4% to R1 193 million (2016:

R1 146 million) while the EBITDA margin achieved

was 23% (2016: 22%). Corporate action and other

non-recurring expenses amounted to R53 million,

COMMENTARY (CONTINUED)

while the impact of a stronger exchange rate

reduced EBITDA by R43 million on a comparable

basis. Excluding these impacts, EBITDA would have

risen by 12%.

Finance costs reduced by 44% to R285 million, over

last year’s R509 million. The decrease was due to

the benefits of the rights issue and the liquidity and

guarantee facility agreement fees incurred in the

previous reporting period.

Taxation was materially higher at R193 million in the

period, however the effective taxation rate reduced

from 53% to 39%. The lower effective taxation

rate was attributable to non-recurring withholding

taxation on dividends declared from Zimbabwe

in the prior period. Furthermore, the effective rate

was positively impacted by lower non-deductible

finance costs and non-recurring IFRS 2 charges also

incurred in the prior period. The current period’s

effective taxation rate was negatively impacted by a

reassessment of the prior year’s taxation resulting in

additional taxes in Zimbabwe.

Net profit attributable to PPC shareholders increased

by 188% to R294 million (2016: R102 million).

Earnings per share was 54% higher at 20 cents

(2016: 13 cents) and headline earnings per share

rose by 36% to 19 cents (2016: 14 cents). Weighted

average shares in issue increased from 758 million to

1 510 million shares for the period.

Net cash flow from operating activities increased

by 49% to R870 million. Positive working capital

movements amounted to R59 million, while lower

finance costs and taxation paid also contributed

to improved cash generation. The group’s cash

conversion ratio was maintained at 1,1 times.

Capital investments in property, plant and

equipment decreased significantly to R518 million

(2016: R1 035 million). Group net debt has reduced

from R4 746 million in March 2017 to R4 429 million.

Net debt to EBITDA improved from 2,3 times to

2,1 times.

UPDATE ON GROUP LIQUIDITYThe group has made significant progress in improving

liquidity and smoothing the maturity profile of the

business. This is through the pending restructuring

of southern Africa debt maturing in June 2018 to a

more smoother payment profile of between three to

five years. Regarding the DRC funding agreements,

significant progress has been made with the term

sheet received from the funders highlighting a two-

year capital holiday, which will reduce the required

deficiency funding from PPC group.

SOUTHERN AFRICA CEMENTRevenue in southern Africa cement, which includes

Botswana, was marginally down, with higher realised

average selling prices of 2,0%. PPC increased prices

in February and August 2017. Volumes reduced by

1% to 4% for this segment, noting that the current

reporting period had two less trading days. The lower

volumes in the inland region were offset by marginal

growth in the coastal region. The volume contraction

was in line with estimated growth in overall

cementitious demand in South Africa reducing by 1%

to 4% for the reporting period. Imports are at similar

levels compared with the same period last year. This

segment continues to deliver sustainable cost savings,

with variable delivered cost per tonne at similar levels

to the previous period. Overheads were also well

controlled experiencing a low double-digit decline.

EBITDA was maintained, with a slight improvement in

the corresponding margins to 25,6%.


REST OF AFRICA CEMENTRevenue increased by 9%, supported by robust

volume growth in Rwanda and Zimbabwe. Selling

prices have remained fairly stable. EBITDA grew by

a robust 25% to R422 million, with EBITDA margins

expanding from 30% to 34%. The rise in EBITDA is

attributable to our route to market strategies gaining

momentum and cost containment.

Rwanda Rwanda continued to deliver robust volume growth,

with annualised capacity utilisation above 65%. Sales

volumes grew by more than 30% for the period.

Realised cement prices increased marginally. Rwanda

launched its bulk solution in August 2017 to service

the construction and construction product markets

resulting in the improving market penetration.

ZimbabwePPC Zimbabwe grew volumes by more than 25%

compared with last year, achieving new sales records

in the process. The commissioning of the Harare

mill supported volume growth in the north of the

country. Demand is being driven by housing and

asset investments. Average selling prices grew by

4% in US dollar terms compared with the previous

period. The country continues to experience liquidity

constraints, which we are monitoring closely.

The sales team continues to search for export

opportunities.

DRC Our new plant in the DRC has been completed and

is in the process of being tested and commissioned,

which process will likely be fully completed by the end

of the current financial year. During the period the

limited production was sold into the market and all

revenue and expenses have been included in capital

work in progress in compliance with IAS 16 and 23.

Ethiopia

Our new plant in Ethiopia has also been completed and

is in the process of being tested and commissioned,

which process will likely be fully completed by the end

of the current financial year. During the period the

limited production was sold into the market and all

revenue and expenses have been included in capital

work in progress in compliance with IAS 16 and 23.

Accordingly, we have not equity accounted for any

profits in the period.

MATERIALS BUSINESSLime

The lime division recorded marginal revenue growth,

with volumes and selling prices at similar levels to last

year. Volumes were constrained by key steel customer

shutdowns and non-extension of the milk of lime

contract. Lime’s EBITDA was impacted by higher

variable costs in relation to increased maintenance

and raw material inputs.

Aggregates and readymix

Volumes and pricing were under pressure due to

a significant contraction in construction industry

activity as well as intense competition in the Gauteng

market. Aggregates’ volumes suffered due to the

supply into the readymix market which contracted

during the period under review.

SLURRY KILN 9 (SK9) The SK9 project is progressing well, on time and

on budget and is approximately 80% complete.

Commissioning remains on schedule for the first

calendar half of 2018. The new kiln will enhance our

competitive position in the inland region through

cost, technical and environmental efficiencies.

COMMENTARY (CONTINUED)

UPDATE ON BROAD-BASED BLACK ECONOMIC EMPOWERMENT TRANSACTIONWe continue to engage with the Department of

Mineral Resources (DMR) on aspects of our proposed

BEE III transaction. It is envisaged that BEE III will be

implemented in the first quarter of 2018.

GOVERNANCEBoard of directors and subcommittee changes

Following the company’s annual general meeting on

the 16 October 2017, Mr T Moyo was reappointed

as a member of the audit committee. Ms N Gobodo

was appointed as a member of the nominations

committee and as a member and chairperson of

the social, ethics and transformation committee.

Mr S Mhlarhi was elected as a member of the

nominations committee.

PROSPECTSPPC group has reviewed its priorities over the last

five months and will continue to focus on these key

priorities in the next 12 months. These key priorities

are in optimising the financial, operational and

human capital elements of the business. In executing

these priorities, PPC will ensure that the restructuring

of the South African and DRC debt are finalised and

implemented. Regarding the operations, PPC will

ensure implementation of the profit optimisation of

R50 per tonne of cement in southern Africa cement,

continue to optimise its route to market strategies

and plant operating efficiencies in the rest of Africa

cement operations, while continuing to grow and

develop globally competent teams. In addition,

PPC is in the process of introducing a value-based

management system, that ensures that business

operations are aligned to the performance of the

company in growing shareholder value.

On behalf of the board

PG Nelson

Chairman

JT Claassen

Chief executive officer

MMT Ramano

Chief financial officer

Sandton

22 November 2017


UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOMEfor the six months ended 30 September 2017

Notes

Six months ended

30 September2017

UnauditedRm

Six months ended

30 September2016

Reviewed Rm

% change

Twelve months ended

31 March 2017

Audited Rm

Revenue 5 188 5 156 1 9 641 Cost of sales 3 859 3 838 1 7 359

Gross profit 1 329 1 318 1 2 282 Administrative and other operating expenditure 549 577 (5) 1 049

Operating profit before item listed below: 780 741 5 1 233 Empowerment transactions IFRS 2 charges(a) 17 17 206

Operating profit 763 724 5 1 027 Foreign exchange loss on foreign currency monetary items 2 1 87 124 Finance costs 3 285 509 741 Investment income 20 6 27

Profit before equity-accounted earnings 497 134 271 189 Earnings from equity accounted investments – – 1 Impairments 4 – (10) (10)

Profit before taxation 497 124 301 180 Taxation 5 193 66 192 153

Profit for the period 304 58 424 27 Attributable to:

Shareholders of PPC Ltd 294 102 93 Non-controlling interests 10 (44) (66)

Other comprehensive income/(loss), net of taxationItems that will be reclassified to profit or loss 41 (310) (523)

Cash flow hedges – 45 (47)Taxation on cash flow hedges – (13) 13 Translation of foreign operations 41 (342) (489)

Total comprehensive income/(loss) 345 (252) (496)Attributable to:

Shareholders of PPC Ltd 335 (157) (295)Non-controlling interests 10 (95) (201)

EARNINGS PER SHARE (CENTS) 6Basic 20 13 54 8 Diluted 19 13 46 8 (a) Comprises BEE IFRS 2 charges.

UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITIONat 30 September 2017

Notes

30 September2017

UnauditedRm

30 September2016

ReviewedRm

31 March2017

AuditedRm

ASSETS

Non-current assets 14 357 14 052 14 192

Property, plant and equipment 7 12 714 12 343 12 531

Goodwill 8 236 244 237

Other intangible assets 9 638 725 677

Equity accounted investments 271 197 225

Other non-current assets 10 312 480 380

Deferred taxation assets 16 186 63 142

Non-current assets held for sale 11 39 40 38

Current assets 3 662 3 094 3 805

Inventories 1 174 956 1 163

Trade and other receivables 12 1 485 1 490 1 652

Cash and cash equivalents 13 1 003 648 990

Total assets 18 058 17 186 18 035

EQUITY AND LIABILITIES

Capital and reserves

Stated capital 14 3 919 2 739 3 919

Other reserves 1 541 1 466 1 464

Retained profit 2 962 2 678 2 668

Equity attributable to shareholders of PPC Ltd 8 422 6 883 8 051

Non-controlling interests 344 440 334

Total equity 8 766 7 323 8 385

Non-current liabilities 5 277 5 462 5 626

Provisions 15 554 440 545

Deferred taxation liabilities 16 1 114 1 128 1 073

Long-term borrowings 17 3 165 3 449 3 555

Other non-current liabilities 18 444 445 453

Current liabilities 4 015 4 401 4 024

Short-term borrowings 17 2 267 2 465 2 181

Trade and other payables 19 1 748 1 936 1 843

Total equity and liabilities 18 058 17 186 18 035


UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS for the six months ended 30 September 2017

Notes

Six months ended

30 September2017

UnauditedRm

Six months ended

30 September2016

Reviewed Rm

Twelve months ended

31 March 2017

Audited Rm

Cash flow from operating activitiesOperating cash flows before movements in working capital 1 211 1 145 2 101 Working capital movements 59 141 (230)Cash generated from operations 1 270 1 286 1 871 Finance costs paid (248) (513) (743)Investment income received 20 6 21 Taxation paid (172) (196) (296)Cash available from operations 870 583 853 Dividends paid – – (8)Net cash inflow from operating activities 870 583 845 Cash flow from investing activitiesAcquisition of additional shares in equity accounted investment (40) – –Acquisition of additional shares in subsidiary – (18) (18)Investments in intangible assets (4) (10) (19)Investments in property, plant and equipment (518) (1 035) (2 058)Movements in other investing activities 13 (4) –Proceeds from the disposal of property, plant and equipment – – 4 Net cash outflow from investing activities (549) (1 067) (2 091)Cash flow from financing activities(a)

Net borrowings repaid before repayment of the notes (323) (1 453) (1 370)Proceeds from the issuance of shares following rights issue (net of transaction costs) – 3 706 3 722 Proceeds from the issuance of shares issued to strategic black partners following the maturity of the company’s first BEE transaction 14 – – 1 041 Proceeds from the sale of nil paid letters by consolidated BEE entities – 137 137 Purchase of PPC Ltd shares in terms of the FSP share incentive scheme 14 – (74) (74)Repayment of notes – (1 614) (1 614)Net cash (outflow)/inflow from financing activities (323) 702 1 842 Net movement in cash and cash equivalents (2) 218 596 Cash and cash equivalents at the beginning of the period 990 460 460 Cash and cash equivalents acquired on acquisition of 3Q Mahuma Concrete 20 – 4 4 Exchange rate movements on opening foreign currency-denominated cash and cash equivalents 15 (34) (70)Cash and cash equivalents at the end of the period 1 003 648 990(a) During the period, the non-cash changes on borrowings amounted to R17 million arising from unfavourable, unrealised foreign

exchange differences.

UNAUDITED CONDENSED STATEMENT OF CHANGES IN EQUITYfor the six months ended 30 September 2017

Other reserves

Statedcapital

Rm

Foreigncurrency

translationreserve

Rm

Available- for-sale

financialasset

Rm

Hedgingreserve

Rm

Equity compensation

reserveRm

Retainedprofit

Rm

Equity attributable to

shareholdersof PPC Ltd

Rm

Non- controlling

interestsRm

Totalequity

Rm

Balance at 31 March 2016 (audited) (1 113) 1 245 14 34 265 2 583 3 028 535 3 563

Acquisition of 3Q, settled via the issue of shares (refer note 20) 135 – – – – – 135 – 135

IFRS 2 charges – – – – 30 – 30 – 30

Increase in stated capital from the issuance of shares following the rights issue (net of transaction costs) 3 791 – – – – – 3 791 – 3 791

Proceeds from the sale of nil paid letters by consolidated BEE entities – – – – 137 – 137 – 137

Shares purchased in terms of FSP incentive scheme treated as treasury shares (74) – – – – – (74) – (74)

Total comprehensive (loss)/income – (291) – 32 – 102 (157) (95) (252)

Transactions with non-controlling shareholders recognised directly in equity – – – – – (7) (7) – (7)

Balance at 30 September 2016 (reviewed) 2 739 954 14 66 432 2 678 6 883 440 7 323

Dividends declared – – – – – (8) (8) – (8)

IFRS 2 charges – – – – 215 – 215 – 215

Increase in stated capital from the issuance of shares following rights issue (net of transaction costs) 14 – – – – – 14 – 14

Sale of shares, treated as treasury shares, by consolidated BEE entity 37 – – – – – 37 – 37

Shares issued to strategic black partners following the maturity of the company’s first BEE transaction(a) 1 041 – – – – – 1 041 – 1 041

Total comprehensive loss – (63) – (66) – (9) (138) (106) (244)

Transactions with non-controlling shareholders recognised directly in equity – – – – – 7 7 – 7

Vesting of shares held by certain BEE 1 entities 88 – – – (88) – – – –

Balance at 31 March 2017 (audited) 3 919 891 14 – 559 2 668 8 051 334 8 385

IFRS 2 charges – – – – 36 – 36 – 36

Total comprehensive income – 41 – – – 294 335 10 345

Balance at 30 September 2017 (unaudited) 3 919 932 14 – 595 2 962 8 422 344 8 766 (a) In 2008, PPC announced its first broad-based black economic transaction for a period of eight years, which resulted in an effective

BEE ownership of 15,29%. In terms of the transaction agreements, the 48 557 982 PPC shares held by the strategic black partners (including community service groups) (SBPs and CSGs) were repurchased by PPC at R0,10 per share and the SBPs and CSGs were required to subscribe for new PPC shares at R66,84 per share, subject to their funding position. The SBPs and CSGs subscribed for 15 571 174 new PPC ordinary shares in December 2016.


Other reserves

Statedcapital

Rm

Foreigncurrency

translationreserve

Rm

Available- for-sale

financialasset

Rm

Hedgingreserve

Rm

Equity compensation

reserveRm

Retainedprofit

Rm

Equity attributable to

shareholdersof PPC Ltd

Rm

Non- controlling

interestsRm

Totalequity

Rm

Balance at 31 March 2016 (audited) (1 113) 1 245 14 34 265 2 583 3 028 535 3 563

Acquisition of 3Q, settled via the issue of shares (refer note 20) 135 – – – – – 135 – 135

IFRS 2 charges – – – – 30 – 30 – 30

Increase in stated capital from the issuance of shares following the rights issue (net of transaction costs) 3 791 – – – – – 3 791 – 3 791

Proceeds from the sale of nil paid letters by consolidated BEE entities – – – – 137 – 137 – 137

Shares purchased in terms of FSP incentive scheme treated as treasury shares (74) – – – – – (74) – (74)

Total comprehensive (loss)/income – (291) – 32 – 102 (157) (95) (252)

Transactions with non-controlling shareholders recognised directly in equity – – – – – (7) (7) – (7)

Balance at 30 September 2016 (reviewed) 2 739 954 14 66 432 2 678 6 883 440 7 323

Dividends declared – – – – – (8) (8) – (8)

IFRS 2 charges – – – – 215 – 215 – 215

Increase in stated capital from the issuance of shares following rights issue (net of transaction costs) 14 – – – – – 14 – 14

Sale of shares, treated as treasury shares, by consolidated BEE entity 37 – – – – – 37 – 37

Shares issued to strategic black partners following the maturity of the company’s first BEE transaction(a) 1 041 – – – – – 1 041 – 1 041

Total comprehensive loss – (63) – (66) – (9) (138) (106) (244)

Transactions with non-controlling shareholders recognised directly in equity – – – – – 7 7 – 7

Vesting of shares held by certain BEE 1 entities 88 – – – (88) – – – –

Balance at 31 March 2017 (audited) 3 919 891 14 – 559 2 668 8 051 334 8 385

IFRS 2 charges – – – – 36 – 36 – 36

Total comprehensive income – 41 – – – 294 335 10 345

Balance at 30 September 2017 (unaudited) 3 919 932 14 – 595 2 962 8 422 344 8 766 (a) In 2008, PPC announced its first broad-based black economic transaction for a period of eight years, which resulted in an effective

BEE ownership of 15,29%. In terms of the transaction agreements, the 48 557 982 PPC shares held by the strategic black partners (including community service groups) (SBPs and CSGs) were repurchased by PPC at R0,10 per share and the SBPs and CSGs were required to subscribe for new PPC shares at R66,84 per share, subject to their funding position. The SBPs and CSGs subscribed for 15 571 174 new PPC ordinary shares in December 2016.

SEGMENTAL INFORMATIONfor the six months ended 30 September 2017

The group discloses its operating segments according to the business units which are reviewed by the group executive committee. The key segments are southern Africa cement, rest of Africa cement, lime, aggregates and readymix and group services and other. The reporting segments were reconsidered during March 2017 and the results to September 2016 have been restated from that reported in the prior period following the internal restructuring process that took place during April 2016.

Cement Materials business

Consolidated Southern Africa(a) Rest of Africa(b) Lime Aggregates and readymix Group services and other(c)

30 September2017

UnauditedRm

30 September2016

ReviewedRm

31 March2017

AuditedRm

30 September2017

UnauditedRm

30 September2016*

ReviewedRm

31 March2017

AuditedRm

30 September2017

UnauditedRm

30 September2016*

ReviewedRm

31 March2017

AuditedRm

30 September2017

UnauditedRm

30 September2016*

ReviewedRm

31 March2017

AuditedRm

30 September2017

UnauditedRm

30 September2016*

ReviewedRm

31 March2017

AuditedRm

30 September2017

UnauditedRm

30 September2016*

ReviewedRm

31 March2017

AuditedRm

RevenueGross revenue 5 319 5 279 9 878 3 004 3 056 5 712 1 259 1 152 2 119 410 406 818 646 665 1 229 — — — Inter-segment revenue(d) (131) (123) (237) (111) (110) (205) — — — (20) (13) (32) — — — — — —Total revenue 5 188 5 156 9 641 2 893 2 946 5 507 1 259 1 152 2 119 390 393 786 646 665 1 229 — — —Operating profit before item listed below 780 741 1 233 549 557 861 278 195 347 42 74 119 5 67 74 (94) (152) (168)Empowerment transactions IFRS 2 charges 17 17 206 — — 16 1 1 2 — — 2 — — 1 16 16 185 Operating profit/(loss)(e) 763 724 1 027 549 557 845 277 194 345 42 74 117 5 67 73 (110) (168) (353)Fair value loss/(gain) on foreign currency monetary items 1 87 124 (4) (1) 5 29 88 153 — — — — — 1 (24) — (35)Finance costs 285 509 741 123 99 214 101 78 168 2 2 4 2 5 3 57 325 352 Investment income 20 6 27 6 8 11 5 5 6 8 4 1 7 3 1 (6) (14) 8 Profit before equity accounted earnings 497 134 189 436 467 637 152 33 30 48 76 114 10 65 70 (149) (507) (662)Earnings from equity accounted investments — — 1 — — — — — — — — — — — — — — 1 Impairment — (10) (10) — — — — (10) (10) — — — — — — — — —Profit/(loss) before taxation 497 124 180 436 467 637 152 23 20 48 76 114 10 65 70 (149) (507) (661)Taxation 193 66 153 119 131 192 69 14 21 11 21 29 2 18 6 (8) (118) (96)Profit/(loss) for the period 304 58 27 317 336 445 83 9 (1) 37 55 85 8 47 64 (141) (389) (565)Depreciation and amortisation 413 405 832 191 185 374 144 144 298 21 22 46 40 36 77 17 18 37 EBITDA(f) 1 193 1 146 2 065 740 742 1 235 422 339 645 63 96 165 45 103 151 (77) (134) (131)EBITDA margin (%) 23,0 22,2 21,4 25,6 25,2 22,4 33,5 29,5 30,4 16,2 24,4 21,0 7,0 15,5 12,3Assets

Non-current assets 14 357 14 052 14 192 4 227 4 287 4 184 8 294 8 572 8 113 318 423 319 724 751 726 794 19 850Non-current assets held for sale 39 40 38 — — — 39 40 38 — — — — — — — — —Current assets 3 662 3 094 3 805 1 468 1 468 1 468 1 642 1 190 1 334 173 160 210 349 331 315 30 (55) 478

Total assets 18 058 17 186 18 035 5 695 5 755 5 652 9 975 9 802 9 485 491 583 529 1 073 1 082 1 041 824 (36) 1 328 Investments in property, plant and equipment 523 1 305 2 234 233 584 939 232 640 1 181 24 12 26 34 32 57 — 37 31

LiabilitiesNon-current liabilities 5 277 5 462 5 626 830 554 2 007 5 973 6 034 5 619 36 99 117 270 180 215 (1 832) (1 405) (2 332)Current liabilities 4 015 4 401 4 024 2 293 2 227 792 1 685 1 360 1 382 50 72 86 179 222 176 (192) 520 1 588

Total liabilities 9 292 9 863 9 650 3 123 2 781 2 799 7 658 7 394 7 001 86 171 203 449 402 391 (2 024) (885) (744)Capital commitments (refer note 21) 795 2 712 1 071 697 1 117 716 59 1 557 310 5 2 9 5 8 9 29 28 27 * The reporting segments were reconsidered during March 2017 and the results to September 2016 have been restated from that

reported in the prior period, refer note 25.(a) Southern Africa comprises South Africa and Botswana.(b) Rest of Africa comprises Zimbabwe, Rwanda, DRC, Mozambique and cross border sales from southern Africa.(c) Group services and other comprises PPC Ltd, shared services, BEE and group eliminations.(d) All sales are concluded at an arm’s length.(e) As noted in the company’s year-end results announcement, the group was looking to refine inter-company operating charges.

This has now been finalised and the impact thereof is incorporated in the results for the six months to September 2017. No comparatives have been restated following the refinements to inter-company charges

(f) EBITDA is defined as operating profit before empowerment transactions IFRS 2 charges and depreciation and amortisation.

No individual customer comprises more than 10% of group revenue.


The group discloses its operating segments according to the business units which are reviewed by the group executive committee. The key segments are southern Africa cement, rest of Africa cement, lime, aggregates and readymix and group services and other. The reporting segments were reconsidered during March 2017 and the results to September 2016 have been restated from that reported in the prior period following the internal restructuring process that took place during April 2016.

Cement Materials business

Consolidated Southern Africa(a) Rest of Africa(b) Lime Aggregates and readymix Group services and other(c)

30 September2017

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30 September2016

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31 March2017

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31 March2017

AuditedRm

30 September2017

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30 September2016*

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31 March2017

AuditedRm

30 September2017

UnauditedRm

30 September2016*

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31 March2017

AuditedRm

30 September2017

UnauditedRm

30 September2016*

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31 March2017

AuditedRm

30 September2017

UnauditedRm

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31 March2017

AuditedRm

RevenueGross revenue 5 319 5 279 9 878 3 004 3 056 5 712 1 259 1 152 2 119 410 406 818 646 665 1 229 — — — Inter-segment revenue(d) (131) (123) (237) (111) (110) (205) — — — (20) (13) (32) — — — — — —Total revenue 5 188 5 156 9 641 2 893 2 946 5 507 1 259 1 152 2 119 390 393 786 646 665 1 229 — — —Operating profit before item listed below 780 741 1 233 549 557 861 278 195 347 42 74 119 5 67 74 (94) (152) (168)Empowerment transactions IFRS 2 charges 17 17 206 — — 16 1 1 2 — — 2 — — 1 16 16 185 Operating profit/(loss)(e) 763 724 1 027 549 557 845 277 194 345 42 74 117 5 67 73 (110) (168) (353)Fair value loss/(gain) on foreign currency monetary items 1 87 124 (4) (1) 5 29 88 153 — — — — — 1 (24) — (35)Finance costs 285 509 741 123 99 214 101 78 168 2 2 4 2 5 3 57 325 352 Investment income 20 6 27 6 8 11 5 5 6 8 4 1 7 3 1 (6) (14) 8 Profit before equity accounted earnings 497 134 189 436 467 637 152 33 30 48 76 114 10 65 70 (149) (507) (662)Earnings from equity accounted investments — — 1 — — — — — — — — — — — — — — 1 Impairment — (10) (10) — — — — (10) (10) — — — — — — — — —Profit/(loss) before taxation 497 124 180 436 467 637 152 23 20 48 76 114 10 65 70 (149) (507) (661)Taxation 193 66 153 119 131 192 69 14 21 11 21 29 2 18 6 (8) (118) (96)Profit/(loss) for the period 304 58 27 317 336 445 83 9 (1) 37 55 85 8 47 64 (141) (389) (565)Depreciation and amortisation 413 405 832 191 185 374 144 144 298 21 22 46 40 36 77 17 18 37 EBITDA(f) 1 193 1 146 2 065 740 742 1 235 422 339 645 63 96 165 45 103 151 (77) (134) (131)EBITDA margin (%) 23,0 22,2 21,4 25,6 25,2 22,4 33,5 29,5 30,4 16,2 24,4 21,0 7,0 15,5 12,3Assets

Non-current assets 14 357 14 052 14 192 4 227 4 287 4 184 8 294 8 572 8 113 318 423 319 724 751 726 794 19 850Non-current assets held for sale 39 40 38 — — — 39 40 38 — — — — — — — — —Current assets 3 662 3 094 3 805 1 468 1 468 1 468 1 642 1 190 1 334 173 160 210 349 331 315 30 (55) 478

Total assets 18 058 17 186 18 035 5 695 5 755 5 652 9 975 9 802 9 485 491 583 529 1 073 1 082 1 041 824 (36) 1 328 Investments in property, plant and equipment 523 1 305 2 234 233 584 939 232 640 1 181 24 12 26 34 32 57 — 37 31

LiabilitiesNon-current liabilities 5 277 5 462 5 626 830 554 2 007 5 973 6 034 5 619 36 99 117 270 180 215 (1 832) (1 405) (2 332)Current liabilities 4 015 4 401 4 024 2 293 2 227 792 1 685 1 360 1 382 50 72 86 179 222 176 (192) 520 1 588

Total liabilities 9 292 9 863 9 650 3 123 2 781 2 799 7 658 7 394 7 001 86 171 203 449 402 391 (2 024) (885) (744)Capital commitments (refer note 21) 795 2 712 1 071 697 1 117 716 59 1 557 310 5 2 9 5 8 9 29 28 27 * The reporting segments were reconsidered during March 2017 and the results to September 2016 have been restated from that

reported in the prior period, refer note 25.(a) Southern Africa comprises South Africa and Botswana.(b) Rest of Africa comprises Zimbabwe, Rwanda, DRC, Mozambique and cross border sales from southern Africa.(c) Group services and other comprises PPC Ltd, shared services, BEE and group eliminations.(d) All sales are concluded at an arm’s length.(e) As noted in the company’s year-end results announcement, the group was looking to refine inter-company operating charges.

This has now been finalised and the impact thereof is incorporated in the results for the six months to September 2017. No comparatives have been restated following the refinements to inter-company charges

(f) EBITDA is defined as operating profit before empowerment transactions IFRS 2 charges and depreciation and amortisation.

No individual customer comprises more than 10% of group revenue.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. BASIS OF PREPARATION

The unaudited condensed consolidated financial statements are prepared in accordance with the provisions of the JSE Limited Listings Requirements for reports, and the requirements of the Companies Act applicable to financial statements. The Listings Requirements require the condensed reports to be prepared in accordance with the framework concepts and the measurement and recognition requirements of International Financial Reporting Standards (IFRS) and the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and Financial Pronouncements as issued by Financial Reporting Standards Council, and must also, as a minimum contain the information required by IAS 34 Interim Financial Reporting, and a statement confirming that it has been so prepared must be included in the report. The accounting policies applied in the preparation of the condensed consolidated financial statements were derived in terms of IFRS. The group’s external auditors have not reviewed or reported on these results.

The accounting policies and methods of computation used are consistent with those used in the preparation of the consolidated financial statements for year ended 31 March 2017, except for the revised accounting standards and interpretations that became effective during the current period. The group adopted the following two standards during the period:• IAS 7 Statement of Cash Flows: amendment as a result of the disclosure initiative. Additional disclosure as required by this

amendment has been included in the statement of cash flows.• IAS 12 Income Taxes: amendment regarding the recognition of deferred tax assets for unrealised losses. This amendment

did not have any impact on the reported results.

These unaudited condensed consolidated financial statements have been prepared under the supervision of MMT Ramano CA(SA), chief financial officer, and were approved by the board of directors on 22 November 2017.

Restatement of segmental informationFollowing the internal restructure of the group effective 1 April 2016, the group’s segments were amended to align to the new reporting structures and information presented to the group executive committee. As the change in segmental reporting only became effective from March 2017, the previously reported segmental analysis for the period ended September 2016 has been restated. Further details can be found in note 25.

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2. FOREIGN EXCHANGE LOSS ON FOREIGN CURRENCY MONETARY ITEMSLoss on ineffective portion of cash flow hedge – – 9 Loss/(gain) on unlisted collective investments 1 – (1)Net loss on translation of foreign currency monetary items – 87 116

1 87 124

Included in loss on translation of foreign currency monetary items, is a loss of R26 million (September 2016: R48 million; March 2017: R112 million) relating to the remeasurement of the non-current VAT receivable in the DRC following the devaluation of the Congolese franc against the US dollar. Furthermore, a remeasurement loss of R4 million (September 2016: R12 million; March 2017: R53 million) has been recorded against the US dollar denominated project funding in Rwanda. During the period R33 million (September 2016: Rnil; March 2017: Rnil) marked to market adjustments were recorded on the put option liability (refer note 18).

Details on foreign exchange rates can be found in note 24.


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3. FINANCE COSTS

Bank and other short-term borrowings(a) 113 277 474

Notes 5 49 80

Long-term loans 211 288 345

329 614 899

Capitalised to plant and equipment (82) (159) (241)

Finance costs before BEE transaction and time value of money adjustments 247 455 658

BEE transaction – 36 37

Time value of money adjustments on rehabilitation and decommissioning provisions and put option liabilities 38 18 46

285 509 741

Southern Africa 184 427 573

Rest of Africa 101 82 168

(a) Includes liquidity and guarantee facility raising fees of Rnil million (September 2016: R128 million, March 2017: R128 million) which were amortised to finance costs.

The total finance costs excluding time value of money adjustments, relate to borrowings held at amortised cost. For details of borrowings refer note 17.

4. IMPAIRMENTS

Impairment of property, plant and equipment – (10) (10)

Gross impairments – (10) (10)

Taxation impact – 3 3

Net impairments – (7) (7)

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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5. TAXATION

The taxation charge comprises:

Current taxation 196 74 284

Current period 166 74 271

Prior years 30 – 13

Deferred taxation (4) (29) (154)

Current period (4) (29) (177)

Prior years – – 23

Withholding taxation on dividends 1 21 23

193 66 153

Taxation rate reconciliation % % %

A reconciliation of the standard South African normal taxation rate is shown below:

Profit before taxation (excluding earnings from equity accounted investments) 39 53 85

Prior years’ taxation impact (6) – (20)

Profit before taxation, including prior years’ taxation adjustments 33 53 65

Adjustment due to the inclusion of dividend income – 1 –

Effective rate of taxation 33 54 65

Income taxation effect of: (5) (26) (37)

Disallowable charges, forex revaluations, permanent differences and impairments (5) (3) (10)

Empowerment transactions and IFRS 2 charges not taxation deductible (1) (4) (32)

Finance costs on BEE transaction not taxation deductible – (9) (9)

Foreign taxation rate differential 1 3 12

Profit on sale of BEE rights offer shares – 4 –

Recognition of deferred taxation on assessed losses not previously recorded – – 15

Withholding taxation – (17) (13)

South African normal taxation rate 28 28 28


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6. EARNINGS AND HEADLINE EARNINGSEarnings per share

Basic 20 13 8 Diluted 19 13 8

Headline earnings per shareBasic 19 14 7 Diluted 19 14 7

Determination of headline earnings per shareEarnings per share 20 13 8 Adjusted for:Proceeds from insurance claims (1) – (1)Impairments – 1 –

Headline earnings per share 19 14 7

Headline earnings Rm Rm Rm

Profit for the period 304 58 27 Impairments – 10 10 Taxation on impairments – (3) (3)Loss on sale of property, plant and equipment – – 10 Taxation on loss sale of property, plant and equipment – – (3)Proceeds from insurance claims (4) – (27)Taxation on proceeds from insurance claims 1 – 8

Headline earnings 301 65 22

Attributable to:

Shareholders of PPC Ltd 291 94 85

Non-controlling interests 10 (29) (63)

Cents Cents Cents

Net asset book value per share 580 485 533 Cash earnings per share(a) 58 77 75 Cash conversion ratio(b) 1,1 1,1 0,9

(a) Cash earnings per share is calculated using cash available from operations divided by the total weighted average number of shares in issue for the period.

(b) Cash conversion ratio is calculated using cash generated from operations divided by EBITDA as defined in segmental information.

The difference between earnings and diluted earnings per share relates to shares held under the forfeitable share incentive scheme that have not vested.

For the weighted average number of shares used in the calculation, refer note 14.


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7. PROPERTY, PLANT AND EQUIPMENT

Net carrying value at the beginning of the period 12 531 11 716 11 716

Acquisition of subsidiary company (refer note 20) – 83 98

Additions 523 1 305 2 236

Depreciation (369) (361) (740)

Impairments (refer note 4) – (10) (10)

Other movements (24) 34 84

Translation differences 53 (424) (853)

Net carrying value at the end of the period 12 714 12 343 12 531

Comprising:

Freehold and leasehold land, buildings and mineral rights 978 737 742

Decommissioning assets 260 150 164

Plant, vehicles, furniture and equipment 11 475 11 455 11 624

Capitalised leased plant 1 1 1

12 714 12 343 12 531

Assets pledged as security:

DRC 3 409 1 812 3 269

Rwanda 1 627 1 965 2 072

Zimbabwe 1 977 1 996 1 963

7 013 5 773 7 304

Capital work in progress included in plant, vehicles, furniture and equipment:

DRC 3 669 3 042 3 322

Rwanda – – 12

Zimbabwe 123 921 13

Slurry 1 195 833 1 111

Other 207 151 26

5 194 4 947 4 484

For details on capital commitments, refer note 21.


7. PROPERTY, PLANT AND EQUIPMENT continuedImpairment assessmentsDRCIn the year-end results to March 2017, PPC noted that the DRC market was facing uncertainty driven by political instability, imports from Angola which were impacting on cement demand and subdued selling prices. Furthermore, the competitive landscape had become challenging due to imports and new capacity in the market. As a result of these factors, management undertook an impairment assessment based on the fair value less cost to sell methodology and post this review, it was believed that there were no impairments required at 31 March 2017. Management however noted that if impairment indicators were evident at the next reporting period, being September 2017, that a further impairment exercise would be performed.

The plant in the DRC has been completed and is in the process of being tested and commissioned, which process will likely be fully completed by the end of the current financial year. During the period, limited production was sold into the market and all revenue and expenses have been included in capital work in progress in compliance with IAS 16 and 23.

During the current reporting period there has been increase in political uncertainty in the DRC. The country was supposed to hold general elections in December 2017, but these have subsequently been postponed to December 2018. The pending elections have created uncertainty in the economy and most of the infrastructural projects have been put on hold. Given that IAS 36.33 (a) require “projections to be based on reasonable and supportable assumptions”, the economic and political uncertainty makes it difficult to make reliable long-term forecasts.

IAS 36 provides two options for assessing recoverable amounts and states that the recoverable amount is the higher of fair value less costs to sell or value in use. IAS 36 further, states that impairment has to be permanent. The assessment by management has taken these issues into account and past practices demonstrate that short-term cyclical environments cannot be a determinant of future sustainable performance.

Replacement cost of the plant is deemed to approximate fair value and the recoverable amount and as a result, management does not believe that an impairment of the DRC property, plant and equipment is required for the period ended September 2017 as the determined fair value is higher than the carrying amount of the work in progress account.

Ongoing impairment assessment will continue during the current financial year and will be reported on as part of March 2018 results.

RwandaGiven that the CIMERWA plant has an estimated useful life of 20 years while its deposits (limestone reserves) are estimated at 13 years, there is concern that the CIMERWA plant may have suffered an impairment, when viewed in relation to some of the factors identified by IAS 36.

In performing the impairment assessment, a value-in-use methodology was applied. Cash flow projections were based on financial forecasts approved by management.

Following the impairment assessment, the recoverable amount of CIMERWA was calculated to be higher than its carrying amount resulting in no impairment. The valuation achieved reflects headroom of 29% (March 2017: 3%) against the current net asset value of CIMERWA with the increase in headroom as a result of improved profitability of the business.


7. PROPERTY, PLANT AND EQUIPMENT continuedImpairment assessments continued

ZimbabweAs a result of the current economic environment and liquidity challenges being experienced in Zimbabwe, an impairment assessment was undertaken, in line with the assessment performed for the year ended March 2017.

In performing the impairment assessment, a value in use methodology was applied. Cash flow projections were based on financial forecasts approved by management applying a 13% (March 2017: 13%) US dollar discount rate. The cash flow projections during the forecast period are based on similar pricing and margins to those currently being achieved by the business. The values used reflect past experiences, while the economic growth rates of approximately 1% (March 2017: 1%) per annum, are management’s best estimates that have been prepared using leading financial institutions’ forecasts.

Following the impairment assessment, the recoverable amount of PPC Zimbabwe was calculated to be higher than its carrying amount resulting in no impairment. The valuation achieved reflects a 25% (March 2017: 10%) headroom against the current net asset value of PPC Zimbabwe. The ongoing implications of foreign currency shortages will be continually monitored and the potential implications on the business forecasts reviewed.

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8. GOODWILL

Net carrying value at the beginning of the period 237 255 255

Translation differences (1) (11) (18)

Net carrying value at the end of the period 236 244 237

Goodwill, net of impairments, is allocated to the following cash-generating units:CIMERWA Limited (rest of Africa

cement segment) 31 39 32 Safika Cement Holdings Proprietary Limited (southern Africa

cement segment) 78 78 78 Pronto Holdings Proprietary Limited (aggregates and

readymix segment) 127 127 127

236 244 237


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9. OTHER INTANGIBLE ASSETS

Balance at the beginning of the period 677 766 766

Acquisition of subsidiary company (refer note 20) – – 10

Additions 4 10 19

Amortisation (44) (44) (92)

Translation differences 1 (7) (26)

Balance at the end of the period 638 725 677

Comprising:

Right of use of mineral assets 202 194 203

ERP development and other software 97 108 126

Brand and trademarks and customer relationships 339 423 348

638 725 677

10. OTHER NON-CURRENT ASSETS

Unlisted collective investment(a) 129 122 124

VAT receivable(b) 178 279 210

307 401 334

Advance payments for plant and equipment(c) – 71 38

Investment in government bonds(d) 5 8 8

312 480 380

(a) Comprises an investment by the PPC Environmental Trust in local unit trusts. These investments are held to fund PPC’s South African environmental obligations.

(b) During the year ended March 2017, a letter was received from the DRC Finance Ministry which indicated that the VAT due to PPC Barnet DRC needed to be refunded to the company on condition that the refunds are utilised for local suppliers and local salaries. The letter did not however state when the full receivable will be settled. As a result of the uncertainty of timing of the refunds, the receivable has been classified as non-current. To date US$1 million has been received.

(c) In terms of the construction agreements with the suppliers of the new cement plant in DRC, a portion of the full contract price was required to be paid in advance of the plant construction. The advance payments will be recycled to property, plant and equipment as the plant is constructed, and are secured by advance payment bonds.

(d) Represents government of Zimbabwe treasury bills carried at fair value.


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11. NON-CURRENT ASSETS HELD FOR SALE

Property, plant and equipment 39 40 38

In September 2015, the PPC Zimbabwe board approved the disposal of houses at its Colleen Bawn and Bulawayo factories which was anticipated to be finalised in 12 months. The disposal was delayed due to regulatory approval but it is now anticipated to be completed before the end of the 2018 financial year. No impairment loss was recognised on the initial reclassification as management concluded that the fair value (estimated based on market prices of similar properties) less costs to sell was higher than the current carrying amount. PPC Zimbabwe is included under the rest of Africa cement segment in the segmental analysis. The underlying assets are US dollar denominated and the year on year movement follows the fluctuation of the rand against the US dollar.

12. TRADE AND OTHER RECEIVABLES

Trade receivables 1 079 1 083 1 041

Allowance for doubtful debts (70) (77) (46)

Net trade receivables 1 009 1 006 995

Mark to market cash flow hedge – 3 –

Mark to market fair value hedge 24 14 27

Proceeds due from the rights issue shares listed on the Zimbabwe stock exchange(a) 80 85 86

Proceeds from the sale of shares – – 37

Other financial receivables 115 82 179

Trade and other financial receivables 1 228 1 190 1 324

Prepayments 137 134 105

VAT receivable 62 1 99

Taxation receivable 58 165 124

1 485 1 490 1 652 (a) Due to the liquidity constraints in Zimbabwe, the proceeds from the rights issue on the Zimbabwe Stock Exchange have

not been remitted to PPC.


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13. CASH AND CASH EQUIVALENTS

Balance at the end of the period 1 003 648 990

Currency analysis:

Botswana pula 62 31 32

Mozambican metical 5 5 10

Rwandan franc 96 230 54

South African rand 106 86 422

United States dollar 734 297 472

1 003 648 990

Amounts denominated in foreign currencies have been translated at ruling exchange rates at period end (refer note 24).

Cash restricted for use relating to:

PPC Environmental Trust 8 7 8

Consolidated BEE entities 1 1 –

Zimbabwe(a) 564 247 289

573 255 297(a) Due to the current liquidity constraints in Zimbabwe, the ability to remit funds beyond the country has become more

difficult and as a result the full amount of cash within Zimbabwe has been reflected as restricted cash. Also included in the PPC Zimbabwe cash and cash equivalents are bond notes. Bond notes are debt instruments which have been disclosed under cash and cash equivalents since it meets the definition of cash and cash equivalents and are pegged at 1:1 with the US dollar.

Cash and cash equivalents include cash on hand and cash on deposit, net of outstanding bank overdrafts, where there is a right of set-off.


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14. STATED CAPITAL

Authorised shares

Ordinary shares 10 000 000 10 000 000 10 000 000

Preference shares 20 000 20 000 20 000

Number of ordinary shares and weighted average number of shares

Total shares in issue at the beginning of the period 1 591 760 607 181 607 181

Shares issued for the acquisition of 3Q (refer note 20) – 17 566 17 566

Shares issued in terms of the rights issue – 1 000 000 1 000 000

Shares bought back from the SBPs and CSGs and cancelled in terms of the BEE agreements – – (48 558)

Shares issued to the SBPs and CSGs following the maturity of the company’s first BEE transaction – – 15 571

Total shares in issue before adjustments for shares deemed to be treasury shares 1 591 760 1 624 747 1 591 760

Shares issued in terms of the second BEE transaction treated as treasury shares (37 382) (37 382) (37 382)

Shares held by consolidated BEE trusts and trust funding SPVs treated as treasury shares (28 929) (34 477) (28 929)

Shares held by consolidated Porthold Trust (Private) Limited treated as treasury shares (1 285) (1 285) (1 285)

Shares purchased in terms of the FSP share incentive scheme treated as treasury shares (14 013) (14 013) (14 013)

Total shares in issue (net of shares deemed to be treasury shares) 1 510 151 1 537 590 1 510 151

Weighted average number of shares, used for:

Earnings and headline earnings per share 1 510 151 757 943 1 137 338

Dilutive earnings and headline earnings per share 1 524 165 764 565 1 148 753

Cash earnings per share 1 510 151 757 943 1 137 338

Shares are weighted for the period in which they are entitled to participate in the profits of the group.


14. STATED CAPITAL continued

Shares held by consolidated participants of the second BEE transaction

These are shares issued in terms of the second BEE transaction, which was facilitated by means of a notional vendor funding (NVF) mechanism, with the transaction concluding in September 2019. These shares participate in 20% of the dividends declared by PPC during the NVF period. With the exception of the Bafati Investment Trust, entities participating in this transaction are consolidated into the PPC group in terms of IFRS 10 Consolidated Financial Statements during the transaction term.

Shares held by consolidated BEE trusts and trust funding SPVs

In terms of IFRS 10 Consolidated Financial Statements, certain of the BEE trusts and trust funding SPVs from PPC’s first BEE transaction are consolidated, and as a result, shares owned by these entities are carried as treasury shares on consolidation.

Shares held by consolidated Porthold Trust (Private) Limited

Shares owned by a Zimbabwe employee trust company.

FSP incentive scheme

In terms of the forfeitable share plan (FSP) incentive scheme, 14 013 429 (September 2016: 14 013 429, March 2017: 14 013 429) shares are held in total for participants of this long-term incentive scheme. These shares are treated as treasury shares during the vesting periods of the awards. During the period, no shares (September 2016: no shares; March 2017: no shares) vested.

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Stated capital

Balance at the beginning of the period 3 919 (1 113) (1 113)

Acquisition of 3Q Mahuma Concrete, settled via the issue of shares (refer note 20) – 135 135

Increase in stated capital from the issuance of shares following the rights issue (net of transaction costs) – 3 791 3 805

Sale of shares, treated as treasury shares, by consolidated BEE entity – – 37

Shares issued to strategic black partners following the maturity of the company’s first BEE transaction – – 1 041

Shares purchased in terms of FSP incentive scheme treated as treasury shares – (74) (74)

Vesting of shares held by certain BEE 1 entities – – 88

Balance at the end of the period 3 919 2 739 3 919


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15. PROVISIONS

Decommissioning and rehabilitation 524 409 509

Post-retirement healthcare benefits 30 31 36

554 440 545

Decommissioning and rehabilitation Group companies are required to restore mining and processing sites at the end of their productive lives to an acceptable condition consistent with local regulations, and in line with group policy. PPC has set up an environmental trust in South Africa to administer the local funding requirements of its decommissioning and rehabilitation obligations. Currently, there are no such regulations in other jurisdictions in which the group operates for the creation of a rehabilitation trust fund; however, in the DRC bank guarantees are required. The investments in the trust fund are carried at fair value through profit or loss and amount to R129 million (September 2016: R122 million; March 2017: R124 million) (refer note 10).

Post-retirement healthcare benefitsHistorically, qualifying employees were granted certain post-retirement healthcare benefits. The obligation for the employer to pay medical aid contributions after retirement is no longer part of the conditions of employment for new employees. A number of pensioners remain entitled to this benefit, the cost of which has been fully provided.


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16. DEFERRED TAXATION

Net liability at the end of the period comprises: 928 1 065 931

Deferred taxation asset 186 63 142

Deferred taxation liability 1 114 1 128 1 073

Analysis of deferred taxation

Property, plant and equipment 1 305 1 309 1 416

Other non-current assets 124 182 120

Current assets 3 (6) 14

Non-current liabilities (100) (70) (113)

Current liabilities (78) (48) (66)

Reserves 14 53 (83)

Taxation losses (340) (355) (357)

928 1 065 931

Included in the net deferred taxation balance is a deferred taxation asset of R230 million (September 2016: R355 million; March 2017: R262 million) relating to CIMERWA’s taxation losses. In terms of local legislation, taxation losses need to be utilised within five years from the initial year of assessment. This assessment involves significant judgement as it requires management to project available taxable profits over a five year period. Management have relied on the same projections used in assessing impairment of property, plant and equipment. These projections indicate that the CIMERWA will be in a position to generate sufficient taxable profits to fully utilise the taxation losses.


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17. LONG-TERM BORROWINGS

Terms Security Interest rate

Notes(a) Various, refer below Unsecured Various, refer below 131 136 131

Long-term loan Interest was payable biannually with a bullet capital repayment in December 2016 Unsecured Fixed 10.86% – 1 041 –

Long-term loan(b) Interest is payable quarterly with a bullet capital repayment in June 2018 Unsecured

Variable rates at 585 basis points above JIBAR 1 586 511 1 565

Long-term loan Interest was payable monthly with a bullet capital repayable 18 months after notice period Unsecured

Variable rates at 125 basis points above JIBAR – 50 –

Project funding 3 597 3 660 3 685

Long-term loan US dollar-denominated, repayable in monthly instalments over a 10-year period, starting March 2016

Secured by CIMERWA’s property, plant and equipment

Variable at 725 basis points above one-month US dollar LIBOR 525 698 569

Long-term loan Rwanda franc-denominated, repayable in monthly instalments over a 10-year period, starting March 2016

Secured by CIMERWA’s property, plant and equipment Fixed rate of 16% 413 490 435

Long-term loan US dollar-denominated, interest payable biannually. Biannual repayments in equal instalments over five years starting December 2016

Secured by PPC Zimbabwe’s property, plant and equipment

Six-month US dollar LIBOR plus 700 basis points

598 599 638

Long-term loan(c) US dollar-denominated, capital and interest payable biannually starting July 2017 ending January 2025

Secured by PPC Barnet DRC’s property, plant and equipment

Six-month US dollar LIBOR plus 725 basis points 2 061 1 873 2 043

Long-term borrowings 5 314 5 398 5 381

Less: short-term portion of long-term borrowings (2 149) (1 949) (1 826)

3 165 3 449 3 555

Add: Short-term borrowings, bank overdrafts and short-term portion of long-term borrowings 2 267 2 465 2 181

Total borrowings 5 432 5 914 5 736

Notes (a), (b) and (c) continued on following page.


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17. LONG-TERM BORROWINGS continued

Maturity analysis of total borrowings:

One year 2 267 2 465 2 181

Two years 584 355 570

Three years 684 392 669

Four years 583 497 568

Five and more years 1 314 2 205 1 748

5 432 5 914 5 736

Assets encumbered are as follows:

Property, plant and equipment (refer note 7) 7 013 5 773 7 304 (a)Notes

Comprise unsecured notes, issued under the company’s R6 billion domestic medium-term note programme, and are recognised net of capitalised transaction costs:

Note number, term and interest rate Issue date

PPC 002: five years; three-month JIBAR plus 1,5% December 2013 20 20 20

PPC 003: five years; three-month JIBAR plus 1,48% July 2014 111 116 111

131 136 131

(b)Long-term loan

The loan is reflected net of transaction costs of Rnil (September 2016: R23 million; March 2017: R12 million) which are being amortised over the 18-month period of the loan. During the period, the company refinanced the facility with a maturity date of June 2018. The company is working with two leading South African banks to optimally restructure the capital structure of the business and is far progressed.

(c)Long-term loan

At the date of this report, the company is in the process of renegotiating its debt in the DRC business in order to defer capital repayments for a further 24 months.


Six months ended

30 September 2017

Unaudited Rm

Six months ended

30 September 2016

Reviewed Rm

Twelve months ended

31 March 2017

Audited Rm

18. OTHER NON-CURRENT LIABILITIES

Cash-settled share-based payment liability 1 3 1

Finance lease liabilities(a) 3 8 5

Liability to non-controlling shareholder in subsidiary company(b) 17 17 16

DRC put option liability(c) 424 424 434

445 452 456

Less: Short-term portion of other non-current liabilities (1) (7) (3)

444 445 453

(a) Finance lease obligations acquired via the acquisition of 3Q Mahuma Concrete and are secured by vehicles (refer note 20). (b) Relates to US dollar-denominated interest payable on initial equity contribution into the DRC group of companies by a

non-controlling shareholder. The accruing of interest ceased in September 2015 and the amount payable will be repaid once the external funding of the DRC has been settled.

(c) The International Finance Corporation (IFC) was issued a put option in September 2015 in terms of which PPC is required to purchase all or part of the shares held by the IFC in PPC Barnet DRC Holdings. The put option may be exercised after six years from when the IFC subscribed for the shares but only for a five-year period. The value of the put option is determined on a defined formula that comprises EBITDA and net debt of the DRC business during the option period. This formula has been utilised in determining the value of the potential value of the put option liability applying the closing US dollar exchange rate and applying an EBITDA multiple using publically available information of comparable cement businesses. Forecast EBITDA is based on financial forecasts approved by management. The present value of the put option was calculated at R424 million (September 2016: R424 million ; March 2017: R434 million). Movement on the liability is included in note 22, while further details on the DRC are contained in note 7.

19. TRADE AND OTHER PAYABLESAccrued finance charges 5 31 –Cash-settled share-based payment liability (short-term portion) 1 3 1 Capital expenditure payables 15 262 171 Finance lease liabilities (short-term portion) (refer note 18) 1 4 2 Other financial payables 9 11 49 Retentions held for plant and equipment 302 330 297 Trade payables and accruals 1 197 987 944

Trade and other financial payables 1 530 1 628 1 464 Payroll accruals 115 273 227 VAT payable 37 – 46 Taxation payable 66 35 106

1 748 1 936 1 843

Trade and other payables, payroll accruals and regulatory obligations are payable within a 30 to 60-day period.


Six months ended

30 September 2016

Reviewed Rm

Twelve months ended

31 March 2017

Audited Rm

20. ACQUISITION OF SUBSIDIARY COMPANY

Fair value of assets and liabilities acquired at date of acquisition:

Property, plant and equipment, intangible assets and other non-current assets 113 111

Cash and cash equivalents 4 4

Other current assets 104 102

Other non-current liabilities (9) (6)

Current liabilities (77) (76)

Net fair value of assets and liabilities acquired 135 135

3Q Mahuma Concrete

The fair values presented in September 2016 were provisional and were finalised by March 2017, with no material changes identified between reporting periods.

The acquisition was settled via the issuance of 17 565 872 new PPC shares. The fair value of the shares for asset acquisition, using the ruling share price of R7,68 on the effective date of the transaction, amounted to R135 million.

The commercial rationale for the transaction was to progress the company’s channel management strategy that serves as a complementary platform for cement growth in South Africa. PPC’s strategic intention is to be a provider of materials and solutions into the basic services sector. Cementitious distribution channels, including readymix, is increasingly being utilised as conduit to grow and sustain cement sales volumes. The acquisition provides PPC with a further complementary platform to grow its service offering in this market segment. The South African market is evolving towards a concrete delivery model, which requires complementary building materials including cement, aggregates and readymix. Controlling cement distribution channels is vital, with customers and end users requiring integrated solutions.

3Q contributed R162 million (September 2016: R80 million, March 2017: R248 million) to revenue.

Fair value of intangible assets was valued by an independent specialist and amounted to R10 million in the prior period, the significant portion thereof relating to the 3Q brand. These intangible assets will be amortised over a five-year period. The fair value adjustments to property, plant and equipment amounted to R10 million and relates to vehicles and these were valued using insurable replacement values.


Six months ended

30 September 2017

Unaudited Rm

Six months ended

30 September 2016

Reviewed Rm

Twelve months ended

31 March 2017

Audited Rm

21. COMMITMENTS

Contracted capital commitments 378 1 411 549

Approved capital commitments 417 1 301 522

Capital commitments 795 2 712 1 071

Operating lease commitments 80 115 115

875 2 827 1 186

Capital commitments

Southern Africa 736 1 155 760

Rest of Africa 59 1 557 311

795 2 712 1 071

Capital commitments are anticipated to be incurred:

– Within one year 318 1 871 1 046

– Between one and two years 477 841 8

– Beyond two years – – 17

795 2 712 1 071

Capital expenditure commitments are stated in current values which, together with expected price escalations, will be financed from surplus cash generated and borrowing facilities available to the group.


22. FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES

The financial assets and liabilities carried at fair value are classified into three categories as reflected below:

Note Level *

Six months ended

30 September 2017

Unaudited Rm

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Reviewed Rm

Twelve months ended

31 March 2017

Audited Rm

Financial assets

Loans and receivables

Mark to market hedges 12 1 24 17 27

At fair value through profit and loss

Unlisted collective investments at fair value (held for trading) 10 2 129 122 124

Total financial assets 153 139 151

Level 1 24 17 27

Level 2 129 122 124

Financial liabilities

At fair value through profit and loss

Cash-settled share-based liability 18 2 1 3 1

Put option liabilities 18 3 424 424 434

Derivatives

Derivative financial instruments 19 2 – – 1

Total financial liabilities 425 427 436

Level 2 1 3 2

Level 3 424 424 434

Methods and assumptions used by the group in determining fair values: *Level 1 – financial assets and liabilities that are valued accordingly to unadjusted market prices for similar assets and

liabilities. Market prices in this instance are readily available and the price represents regularly occurring transactions which have been concluded on an arm’s length transaction.

*Level 2 – financial assets and liabilities are valued using observable inputs, other than the market prices noted in the level 1 methodology, and make reference to pricing of similar assets and liabilities in an active market or by utilising observable prices and market-related data.

*Level 3 – financial assets and liabilities that are valued using unobservable data, and requires management judgement in determining the fair value.


22. FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES continued

This note has been refined from that reported in September 2016 to only include financial instruments held at fair value.

The estimated fair value of financial instruments is determined, at discrete points in time, by reference to the mid-price in an active market wherever possible. Where no such active market exists for the particular asset or liability, the group uses valuation techniques to arrive at fair value, including the use of prices obtained in recent arm’s length transactions, discounted cash flow analysis and other valuation techniques commonly used by market participants.

The value of the put option is determined on a defined formula that comprises EBITDA and net debt of the DRC business during the option period. This formula has been utilised in determining the value of the potential value of the put option liability applying the closing US dollar exchange rate and applying an EBITDA multiple using publically available information of comparable cement businesses. Forecasted EBITDA is based on financial forecasts approved by management.

The fair value of derivative financial instruments relating to cash-settled share appreciation rights is determined with reference to valuation performed by third-party financial institutions at reporting date, using an actuarial binomial pricing model.

Level 3 sensitivity analysis

Financial instrumentValuation technique

Main assumptions

Increase/ decrease

(Rm)

Put option liabilities Earnings multipleEBITDA and

net debt 74

If the EBITDA multiple applied in the valuation was one multiple higher/lower while all other variables were held constant, carrying amount of the DRC put option liabilities would decrease/increase by R74 million.

Six months ended

30 September 2017

Unaudited Rm

Six months ended

30 September 2016

Reviewed Rm

Twelve months ended

31 March 2017

Audited Rm

Movements in level 3 financial instruments

Financial liabilities

Balance at the beginning of the period 434 415 415

Remeasurements (included under foreign exchange movements on foreign currency monetary items) (33) – –

Time value of money adjustments 23 9 19

Balance at the end of the period 424 424 434

23. EVENTS AFTER THE REPORTING DATE

There are no events that occurred after the reporting date that may have a material impact on the consolidated financial position at 30 September 2017.


24. CURRENCY CONVERSION GUIDE

Approximate value of key foreign currencies to the rand:

Average Closing

Six months ended

30 September 2017

Unaudited

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30 September 2016

Reviewed

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31 March 2017

Audited

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30 September 2017

Unaudited

Six months ended

30 September 2016

Reviewed

Twelve months ended

31 March 2017

Audited

Botswana pula 1,28 1,35 1,32 1,30 1,28 1,26

US dollar 13,17 14,50 14,08 13,56 13,90 13,43

Rwandan franc 0,02 0,02 0,02 0,02 0,02 0,02

Mozambican metical 0,22 0,27 0,28 0,22 0,18 0,19

25. RESTATEMENT

As disclosed in the basis of preparation note, following the internal restructure effective 1 April 2016, the group’s segments have been amended to align to the current reporting structures and information presented to the group executive committee. The segments were updated for the year ended March 2017 and have been restated in these condensed consolidated financial statements for the period ended September 2016.

The restatement had no impact on the group’s financial position or results and there is therefore no requirement to present additional statement of financial positions.

RevenueRm

EBITDARm

Profit before taxation

Rm

Cement

Cement southern Africa 2 946 742 467

Cement rest of Africa 1 152 339 23

Group services and other reclassified to lime, aggregates and readymix (61) – 1

Group services and other reclassified to other segments – (134) (471)

Inter-segment revenue elimination 94 – –

Total as originally reported in September 2016 4 131 947 20

Group services and other

Group services and other reclassified from other segments – (134) (471)

As originally reported in September 2016 – – (36)

Total as reported now for group services and other – (134) (507)


Total assets Rm

Total liabilities Rm

25. RESTATEMENT continued

Cement

Cement southern Africa 5 755 2 781

Cement rest of Africa 9 802 7 394

Group services and other reclassified to other segments (37) (886)

Group services and other reclassified from lime, aggregates and readymix 76 83

Total as originally reported in September 2016 15 596 9 372

Group services and other

Group services and other reclassified from other segments (37) (886)

As originally reported in September 2016 1 1

Total as reported now for group services and other (36) (885)

ADMINISTRATION

PPC LTD(Incorporated in the Republic of South Africa)(Company registration number 1892/000667/06)JSE code: PPC JSE ISIN: ZAE 000170049 ZSE code: PPC

DIRECTORSExecutive: JT Claassen (interim chief executive officer)MMT Ramano (chief financial officer)Non-executive: PG Nelson (chairman) S Dakile-Hlongwane, N Gobodo, N Goldin, TJ Leaf-Wright, SK Mhlarhi, T Moyo*, CH Naude, TDA Ross*Zimbabwean

REGISTERED OFFICE148 Katherine Street, Sandton, South Africa(PO Box 787416, Sandton 2146, South Africa)

TRANSFER SECRETARIESComputershare Investor Services Pty LimitedRosebank Towers15 Biermann Avenue, Rosebank, 2196, South Africa (PO Box 61051, Marshalltown, 2107, South Africa)

TRANSFER SECRETARIES ZIMBABWECorpserve Registrars Private Limited2nd Floor, ZB CentreKwame Nkrumah Avenue, Harare Zimbabwe(PO Box 2208, Harare, Zimbabwe)

COMPANY SECRETARYJHDLR Snyman148 Katherine Street, Sandton, South Africa(PO Box 787416, Sandton 2146, South Africa)

SPONSORMerrill Lynch South Africa Pty LimitedThe Place, 1 Sandton Drive, Sandton, South Africa(PO Box 651987, Benmore 2010, South Africa)

EXTERNAL AUDITORSDeloitte & ToucheDeloitte Place, Building 1, The Woodlands20 Woodlands Drive, Woodmead, 2052South Africa(Private Bag X6, Gallo Manor 2052, South Africa)


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 historical information published in this report has been audited.

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