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PPC Annual financial statements 2015 Annual financial statements PDF

112 Pages·2015·1.54 MB·English
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Annual financial statements P P C A n n u a l fi n a n c i a l s t a t e m e n t s 2 0 1 5 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

Description:
These consolidated and company annual financial statements were published on 21 . material respects, the financial position of PPC Limited as at.
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