PPC Annual financial statements 2015 Annual financial statements

112 Pages·2015·1.54 MB·English

Annual financial
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CONTENTS
Annual financial statements
1 Approval of the financial statements
2 Certificate by company secretary
2 Preparer of the annual financial statements
3 Independent auditors’ report
4 Report to shareholders on the activities of the
audit committee
6 Directors’ report
9 Chief financial officer’s report
12 Accounting policies
23 Judgements made by management
26 Consolidated statement of financial position
27 Consolidated income statement
28 Consolidated statement of comprehensive income
29 Consolidated statement of changes in equity
31 Consolidated statement of cash flows
32 Segmental information
34 Notes to the consolidated financial statements
74 Subsidiaries and non-controlling interest
77 Company statement of financial position
78 Company income statement
79 Company statement of comprehensive income
80 Company statement of changes in equity
81 Company statement of cash flows
82 Notes to the company financial statements
99 Abridged remuneration report
108 PPC shareholder analysis
IBC Corporate information
These consolidated and company annual financial statements were published on 21 December 2015.
APPROVAL OF the ANNUAL
FINANCIAL StAteMeNtS
for the year ended 30 September 2015
The directors of the company are responsible for the integrity and objectivity of the annual financial statements and other information contained
in this annual report, which have been prepared in accordance with International Financial Reporting Standards (IFRS) and interpretations
adopted by the International Accounting Standards Board (IASB) in issue and effective for the group at 30 September 2015 and the SAICA
Financial Reporting Guides as issued by the Accounting Practices Committee and Financial Reporting Pronouncements as issued by the Financial
Reporting Standards Council and the Companies Act of South Africa.

In discharging this responsibility, the group maintains suitable internal control systems designed to provide reasonable assurance that assets are
safeguarded and that transactions are executed and recorded in accordance with group policies, noting that internal control systems only
provide reasonable, but not absolute, assurance against material loss or misstatement.
The directors, supported by the audit committee, are satisfied that such controls, systems and procedures are in place to minimise the possibility
of material loss or misstatement. The directors are satisfied that such control systems have been maintained during the year.
Following operational and cash forecast reviews, the directors believe that the group has adequate resources to continue in operation for
the foreseeable future and the annual financial statements appearing on pages 12 to 98 have, therefore, been prepared on a
going-concern basis.
The annual financial statements have been audited by the external auditing firm, Deloitte & Touche, who have been given unrestricted access
to all financial records and other related data, including minutes of all meetings of the board of directors, committees of the board and
executives. The directors believe that all representations made to the independent auditors during the audit were valid and appropriate. Deloitte
& Touche’s unmodified report is presented on page 3 of these annual financial statements.
The consolidated and company annual financial statements were approved by the board of directors on 17 November 2015 and are signed on
its behalf by:
BL Sibiya DJ Castle MMt Ramano
Chairman Chief executive officer Chief financial officer
17 November 2015
Sandton

PPC Ltd Annual financial statements 2015 1
CeRtIFICAte By
COMPANy SeCRetARy
for the year ended 30 September 2015
In terms of section 88(2)(e) of the Companies Act 71 of 2008, as amended, I certify that PPC Ltd has lodged with the Companies and
Intellectual Property Commission all such returns as are required of a public company in terms of this Act and that such returns are true, correct
and up to date.
JhDLR Snyman
Group company secretary
17 November 2015
PRePAReR OF the ANNUAL
FINANCIAL StAteMeNtS
for the year ended 30 September 2015
These consolidated and company annual financial statements have been prepared under the supervision of the chief financial officer,
MMT Ramano CA(SA).
MMt Ramano
Chief financial officer
17 November 2015
2 PPC Ltd Annual financial statements 2015
INDePeNDeNt
AUDItORS’ RePORt
tO the ShARehOLDeRS OF PPC LIMIteD Opinion
We have audited the consolidated and separate annual financial In our opinion, the annual financial statements present fairly, in all
statements of PPC Limited set out on pages 12 to 98, which comprise material respects, the financial position of PPC Limited as at
the statement of financial position as at 30 September 2015, and 30 September 2015, and its financial performance and its cash flows
the statement of comprehensive income, statement of changes in for the year then ended in accordance with International Financial
equity and statement of cash flows for the year then ended, and the Reporting Standards and the requirements of the Companies Act of
notes, comprising a summary of significant accounting policies and South Africa.
other explanatory information.
Other reports required by the Companies Act
Directors’ responsibility for the annual financial statements As part of our audit of the financial statements for the year ended
The company’s directors are responsible for the preparation and fair 30 September 2015, we have read the directors’ report, the audit
presentation of these annual financial statements in accordance with committee’s report and the company secretary’s certificate for the
International Financial Reporting Standards and the requirements of purpose of identifying whether there are material inconsistencies
the Companies Act of South Africa, and for such internal control as between these reports and the audited financial statements.
the directors determine is necessary to enable the preparation of
financial statements that are free from material misstatement, These reports are the responsibility of the respective preparers. Based
whether due to fraud or error. on reading these reports we have not identified material
inconsistencies between these reports and the audited financial
Auditors’ responsibility statements. However, we have not audited these reports and
Our responsibility is to express an opinion on these annual financial accordingly do not express an opinion on these reports.
statements based on our audit. We conducted our audit in
accordance with International Standards on Auditing. Those Report on other legal and regulatory requirements
standards require that we comply with ethical requirements and plan As part of our audit of the consolidated and separate annual financial
and perform the audit to obtain reasonable assurance about whether statements for the year ended 30 September 2015, we have read
the annual financial statements are free from material misstatement. the directors’ report, the audit committee’s report, the remuneration
report and the company secretary’s certificate for the purpose of
An audit involves performing procedures to obtain audit evidence identifying whether there are material inconsistencies between these
about the amounts and disclosures in the annual financial statements. reports and the audited annual financial statements.
The procedures selected depend on the auditor’s judgement,
including the assessment of the risks of material misstatement of the These reports are the responsibility of the respective preparers. Based
annual financial statements, whether due to fraud or error. In making on reading these reports we have not identified material
those risk assessments, the auditor considers internal control relevant inconsistencies between these reports and the audited consolidated
to the entity’s preparation and fair presentation of the annual and separate annual financial statements. However, we have not
financial statements in order to design audit procedures that are audited these reports and accordingly do not express an opinion on
appropriate in the circumstances, but not for the purpose of these reports.
expressing an opinion on the effectiveness of the entity’s internal
control. An audit also includes evaluating the appropriateness of
accounting policies used and the reasonableness of accounting
estimates made by management, as well as evaluating the overall Deloitte & touche
presentation of the annual financial statements. Registered auditor
Per: B Nyembe
We believe that the audit evidence we have obtained is sufficient Partner
and appropriate to provide a basis for our audit opinion. 17 November 2015
National executive: LL Bam* chief executive; AE Swiegers* chief operating officer; GM Pinnock* Audit; N Sing risk advisory; NB Kader* tax;
TP Pillay consulting; S Gwala; B Paas; K Black* clients and industries; JK Mazzacco* talent and transformation; M Jordan* strategy;
MJ Comber* reputation and risk; TJ Brown chairman of the board.
*Partner and registered auditor.
A full list of partners and directors is available on request.
BBBEE rating: Level 2 contribution in terms of the Chartered Accountancy Profession Sector Code.
Member of Deloitte Touche Tohmatsu Limited.
PPC Ltd Annual financial statements 2015 3
RePORt tO ShARehOLDeRS
ON the ACtIVItIeS OF the AUDIt COMMIttee
for the year ended 30 September 2015
The audit committee is a committee of the board of directors and in StAtUtORy DUtIeS
addition to having specific statutory responsibilities to shareholders In executing its statutory duties in the 2015 financial year, the audit
in terms of the Companies Act, it assists the board by advising and committee:
making submissions on financial reporting, oversight of the risk • Nominated Mr Nyembe, from the audit firm, Deloitte & Touche
management process and internal financial controls, external and (Deloitte), for appointment. In the opinion of the committee,
internal audit functions and statutory and regulatory compliance of Mr Nyembe was independent of the company
the company. • Determined Deloitte’s terms of engagement
• Believes that the appointment of Deloitte complies with the
teRMS OF ReFeReNCe relevant provisions of the Companies Act, JSE listings requirements
The audit committee has adopted formal terms of reference that and King III
were updated during the year and approved by the board of • Developed and implemented a policy setting out the extent of any
directors, and has executed its duties in the past financial year in line non-audit services the external auditors may provide to the
with these terms of reference. company or which the external auditors may not provide
• Pre-approved all non-audit service contracts with Deloitte
COMPOSItION • Received no complaints on the accounting practices and internal
The committee consists of four independent non-executive directors: audit of the company, the auditing of its financial statements,
internal financial controls, or other related matters; however, a
PeRIOD
letter was received from the JSE in terms of its proactive monitoring
NAMe QUALIFICAtION SeRVeD
process whereby it requested information around disclosures in
Tim Ross (chairman) CA(SA) 7 the 2014 annual financial statements. This query was satisfactorily
addressed.
Bridgette Modise CA(SA) 4
Todd Moyo CA(ZIM)(SA) 1
DeLegAteD DUtIeS
Peter Nelson CA(SA) 1 In executing its delegated duties and making its assessments (as
reflected in its terms of reference), the audit committee obtained
The CEO, CFO, chief audit executive, senior financial executives of feedback from external and internal audit, and based on the
the group and representatives from the external and internal auditors processes and assurances obtained, believes the accounting practices
attend committee meetings. The internal and external auditors have are effective. Accordingly, the committee fulfilled all its obligations
unrestricted access to the audit committee. including:
MeetINgS Financial statements
The audit committee held five scheduled meetings during the year, The committee reviewed the annual financial statements,
with attendance shown below: summarised annual financial statements, interim and preliminary
announcements, accompanying reports to shareholders and other
31 March 2015 All present
announcements on the company’s 2015 results to the public.
11 May 2015 All present
2 October 2015 All present Integrated reporting
9 November 2015 All present • Recommended to the board to engage an external assurance
provider on material sustainability issues
27 November 2015 All present
• Reviewed the disclosure of sustainability issues in the integrated
report to ensure it is reliable and does not conflict with the
financial information
• Recommended the integrated report for approval by the board.
4 PPC Ltd Annual financial statements 2015
Internal audit Financial function
• Took responsibility for the performance assessment of • The committee has reviewed the expertise, resources and
Mr Semenya, chief audit executive experience of the company’s finance function, and confirms this
• Approved the internal audit plan and changes to the plan and to shareholders
satisfied itself that the audit plan makes provision for effectively • In making these assessments, we have obtained feedback from
addressing the critical risk areas of the business both external and internal audit
• Reviewed internal audit’s compliance with its charter (which was • Based on the processes and assurances obtained, we believe the
updated during the year and approved by the committee) and accounting practices are effective.
considered whether the internal audit function has the necessary
resources, budget and standing within PPC to enable it to Oversight of risk management
discharge its functions. The committee engages with the risk and compliance committee to
ensure adequate understanding of risk management processes.
Risk management
The committee is an integral component of the risk management Internal financial controls
process and specifically reviewed: • Reviewed the effectiveness of the company’s system of internal
• Financial risks financial controls, including receiving assurance from management
• Financial reporting risks and internal audit
• Internal financial controls • Reviewed material issues raised by the internal and external audit
• Fraud risks as it relates to financial reporting process
• IT governance. • Based on the processes and assurances obtained, we believe
material internal financial controls are effective.
external audit
• Evaluated and reported on the independence of the external Combined assurance
auditor During the year, further progress has been made to align the
• Reviewed the quality and effectiveness of the external audit combined assurance model with the enhanced risk framework of
process the group. This review will only be completed in 2016.
• Based on our satisfaction with the results of activities outlined
above, recommended to the board that Deloitte should be Regulatory compliance
reappointed for 2015, with Mr Nyembe nominated as the The audit committee has complied with all applicable legal and
registered auditor regulatory responsibilities.
• Determined the fees to be paid and the terms of engagement of
the auditor On behalf of the audit committee
• Ensured the appointment of the auditor complies with the
Companies Act and other relevant legislation.
Financial director
The committee has satisfied itself of the appropriateness of the
expertise and experience of Ms Ramano, the financial director, and
confirms this to shareholders. tim Ross
Chairman
17 November 2015
PPC Ltd Annual financial statements 2015 5
DIReCtORS’
RePORt
for the year ended 30 September 2015
The directors have pleasure in presenting their report on the annual Details relating to the beneficial shareholders owning more than 5%
financial statements of the company and of the group for the year of the issued share capital of the company appear in the “PPC
ended 30 September 2015. Shareholder Analysis” section on page 108.
BUSINeSS ACtIVItIeS DIReCtORS’ INteReStS IN the ISSUeD ShARe CAPItAL OF
PPC Ltd, its subsidiaries, joint ventures and associates, operate in the gROUP
Africa as producers of cementitious, aggregates, readymix, lime and Details of the beneficial holdings of directors of the company and
limestone, fly ash and packaging materials. their families in the ordinary share capital of the company are given
in the remuneration report included in these annual financial
The principal activities of the company and its subsidiaries remain statements.
unchanged from the previous year.
Certain directors and non-executive directors have indirect
ReVIeW OF OPeRAtIONS shareholding in the company following the completion of the
A comprehensive review of operations is detailed in the attached BBBEE transactions completed in 2008 and 2012. Details thereof
annual report. are also provided in the abridged remuneration report on page 99.
StAteD CAPItAL There has been no change in the directors’ interests since year-end.
The issued share capital of the company at 30 September 2015 was
605 379 648 shares of no par value (2014: 605 379 648 shares of SUBSIDIARy COMPANIeS
no par value). When Safika Cement was purchased in December 2013, put options
were concluded with the non-controlling shareholders whereby their
In terms of the group’s long-term employee incentive scheme, shareholding would be sold to PPC at prescribed dates. In July 2015,
R24 million (2014: R53 million) of shares were purchased on the PPC purchased one of the non-controlling shareholder’s 21,1%
open market in terms of the current year’s allocation and are treated shareholding for R108 million. Post the acquisition of these shares,
as treasury shares during the vesting period of the award. The 2012 PPC now owns 85,4% of the shares in Safika Cement. For details
awards of R23 million or 531 179 shares (2011 awards: R16 million on the outstanding put options, refer note 14 in the consolidated
or 619 457 shares) vested during the year and are no longer treated financial statements.
as treasury shares.
As noted in our 2015 interim commentary, our local partner in the
A portion of shares from PPC’s first broad-based black economic DRC, Barnet Group SARL (Barnet), completed its subscription
empowerment (BBBEE) transaction of R9 million (287 361 shares) into PPC Barnet DRC Holdings (DRC HoldCo), the holding company
(2014: R100 million; 3 202 770 shares) vested to the respective for our DRC-based operating entities. In September 2015,
beneficiaries and are no longer treated as treasury shares. the International Finance Corporation (IFC) subscribed for 10% of
the shareholding in DRC HoldCo for US$11 million. Post Barnet and
At year-end, the stated capital balance amounted to debit the IFC’s subscription, PPC now holds 69% of DRC HoldCo.
R1 165 million (2014: debit R1 173 million).
Details of the group’s subsidiaries can be found on page 74 in the
Details of shares authorised, issued and unissued at 30 September consolidated financial statements.
2015 are disclosed in note 10 to the consolidated financial
statements. eQUIty ACCOUNteD INVeStMeNtS
PPC is in the process of selling its 25% shareholding in Afripack
Except for the long-term share incentive scheme purchases, the Limited, and as a result this investment has been reclassified from
company did not purchase any of its own shares during the year equity accounted investments to non-current assets held for sale. It
under review. is anticipated that the transaction will be finalised during the first
half of the 2016 calendar year.
RegISteR OF MeMBeRS
The register of members of the company is open for inspection to Further details can be obtained in notes 4 and 6 in the consolidated
members and the public, during normal office hours, at the financial statements.
offices of the company’s transfer secretaries, Computershare Services
(Pty) Limited, or at Corpserve Pvt Limited (Zimbabwe).
Details of the transfer secretaries can be found in the corporate
information section.
6 PPC Ltd Annual financial statements 2015
SPeCIAL ReSOLUtIONS
At the annual general meeting held on 26 January 2015 the following special resolutions were approved:
• Granting approval for the company to enter into intercompany loans with subsidiaries and other related entities within the group
• The pre-approval of the remuneration of non-executive directors
• General authority to repurchase own shares or acquisition of the company’s shares by a subsidiary company.
SPeCIAL ReSOLUtIONS PASSeD By SUBSIDIARy COMPANIeS
No special resolutions were passed by subsidiaries of the company.

DIVIDeNDS
Cents per share
Number Description Declaration date Record date Payment date 2015 2014
224 Final 17 November 2015 8 January 2016 11 January 2016 33 76
223 Interim 18 May 2015 12 June 2015 15 June 2015 24 38
The full year dividend of 57 cents per share represented a 2,3 times BORROWINgS
cover, which is at the upper band of the company’s dividend policy At 30 September 2015 total group borrowings amounted to
of 1,8 to 2,5 times cover. R8 221 million (2014: R6 091 million) with the increase in borrowings
being driven by the group’s African expansion strategy, with non-
In future, the company’s dividend policy will take into account its South African borrowings amounting to R2 357 million
growth considerations as well as prudency regarding its capital (2014: R653 million).
structure, and will therefore have a flexible dividend policy with
regard to the quantum and form of dividends instead of a cash The company’s covenants, imposed in 2008 for our first BBBEE
dividend policy based on a stated dividend cover. transaction, have been renegotiated. The new covenant levels now
aligns with the group’s African growth strategy, as the funders have
PROPeRty, PLANt AND eQUIPMeNt agreed to exclude non-recourse project finance from the definition
At 30 September 2015 the group’s net investment in property, plant of PPC’s indebtedness.
and equipment amounted to R10 648 million (2014: R7 223 million),
details of which are set out in note 1 to the consolidated financial During the year, Standard & Poor’s Ratings Services lowered its long-
statements. Significant investments have been made to increase our term South Africa national scale rating for PPC to zaA from zaA+,
footprint beyond South Africa resulting in R1 709 million, but affirmed its “zaA-2” short-term South Africa national
R311 million and R478 million being spent in DRC, Rwanda and scale rating, as the funders have agreed to exclude non-recourse
Zimbabwe respectively. Included in property, plant and equipment is project finance from the definition on PPC’s indebtedness.
capital work in progress of R2 814 million (2014: R1 248 million)
relating to the projects in the DRC, Zimbabwe and South Africa. The company is in the process of restructuring its first BBBEE
transaction, which is anticipated to have a favourable impact on the
There has been no change in the nature of the property, plant and overall borrowing position of the group. Details of the restructure
equipment or to the policies relating to the use thereof during will be communicated to shareholders during the first half of the
the year. 2016 calendar year.
Certain of the company’s properties remain the subject of land Details on the group’s borrowings can be found in note 13 to the
claims. The company continues discussions with the Land Claims consolidated financial statements.
Commissioner and is awaiting the outcome of claims referred to the
Land Claims Court. The claims are not expected to have a material
impact on the company’s operations.
Details of the group’s commitments of R4 814 million (2014:
R4 034 million) can be found in note 31 to the consolidated financial
statements.
PPC Ltd Annual financial statements 2015 7
DIReCtORS’
RePORt
Continued
for the year ended 30 September 2015
eVeNtS AFteR RePORtINg DAte COMPANy SeCRetARy
There are no events that occurred after the reporting date that may The company secretary of PPC Ltd is Mr JHDLR Snyman. His business
have a material impact on the group’s reported financial position at and postal addresses appear in the corporate information section.
30 September 2015.
AUDIt COMMIttee
gOINg CONCeRN The directors confirm that the audit committee has addressed
The directors consider that the company has adequate resources to specific responsibilities required in terms of section 94(7) of the
continue operating for the foreseeable future and that it is therefore Companies Act 71 of 2008, as amended. Further details are
appropriate to adopt the going-concern basis in preparing the contained within the audit committee report.
company’s financial statements. The directors have satisfied
themselves that the company is in a sound financial position and COMPetItION COMMISSION
that it has access to sufficient borrowing facilities to meet its In terms of the conditional leniency agreement with the Competition
foreseeable cash requirements. Commission, PPC continues to cooperate with their investigation
and from our perspective there have been no significant new
DIReCtORS developments.
The directors in office at the date of this report in the corporate
information section. AUDItORS
Deloitte & Touche were reappointed as auditors to the company at
At the annual general meeting (AGM) held on 26 January 2015, the annual general meeting held on 26 January 2015.
Ms N Goldin and Messrs TJ Leaf-Wright, T Mboweni, CH Naude,
PG Nelson and D Ufitikirezi were elected as directors of the company yeAR-eND
while Mr DJ Castle was re-elected as a director. Mr J Shibambo and The board has approved the change in financial year-end
Ms NB Langa-Royds retired from the board with effect from from September to March, with the first March year-end being
conclusion of the AGM. March 2016. The change was necessitated by the growth in the
business and increasing complexity.
With effect from 22 September 2015, Dr D Ufitikirezi resigned as
a director.
The following directors are required to retire by rotation in terms of
the memorandum of incorporation. Being eligible Messrs TDA Ross
and SK Mhlarhi offer themselves for re-election and the nominations
committee has recommended their re-election:
• TDA Ross
• MP Malungani
• SK Mhlarhi
• BL Sibiya.
8 PPC Ltd Annual financial statements 2015