DELIVERY AGAINST STRATEGIC PRIORITIES, WHILE DRAWING ON EFFICIENCIES UNDERPIN THE ANNUAL PERFORMANCE

• HEPS up 33% to 20 cents and EPS up 60% at 16 cents
• Group EBITDA increased by 4% to R1.9 billion with DRC contributing R108 million
• EBITDA cash conversion ratio of 1.0x
• Realised R60/tonne of R70/tonne savings initiatives
• 10% volume growth in Rest of Africa operations

PPC Ltd. today announced its
financial results for the twelve months ended 31 March 2019.

Johan Claassen, PPC CEO
commented: “We have produced a solid set of results, despite a number of once-off
impacts and having to navigate through challenging trading conditions across
markets. The successful implementation of the FOH – FOUR strategic priorities realised
significant cost savings and these actions position the group well for the
future.”

Group revenue rose by 1% to R10.4
billion with total cement volumes having increased 1% to 5.9 million tonnes. Higher
cost of sales in DRC, southern Africa cement, and the materials division
resulted in a 6% increase in the group’s cost of sales to R8.4 billion. Group
overhead costs were significantly reduced by 19% or R260 million, benefitting
from head office restructuring and the R70/tonne cost savings initiatives in southern
Africa. Group EBITDA ended the period up 4% at R1,9 billion.

Net movement in cash and cash
equivalents saw an inflow of R126 million compared with an outflow of R59
million in FY18; aided by improved working capital management which resulted in
the release of R63 million, and a R151 million reduction in cash taxation paid.
Impacted by rand weakness, the Gross debt increased 6% to R5 billion. Finance
costs rose marginally by 1% to R681 million as lower finance charges in South
Africa were offset by higher finance costs in Rest of Africa.

Tryphosa Ramano, PPC CFO
commented: “Positive free cashflow was used to repay debt obligations, which
remained within targeted levels. Our liquidity position was well managed with a
smoother debt maturity profile.”

The southern African cement division,
which includes Botswana, contributed slightly less revenue of R5,4 billion. Volumes
declined by 2% to 3% with both the consumer and the construction industry
customer segments experiencing market pressure. This was compounded by
increased competition from imports which rose 84% for the 2018 calendar year,
and higher levels of blended product production. Average selling price
increases of 1% to 2% were realised during the period. Cost of sales however rose
by 6%, driven primarily by a 10% increase in distribution costs on a per tonne
basis. This was as a result of a 30% increase in fuel prices for the period
under review. All other production costs were well controlled within the 5% to 7%
range. The commissioning of SK9 and unplanned Dwaalboom shutdown had a once-off
negative impact of R78 million on EBITDA which ended the period down at R957
million.

“We have made good progress
in terms of the R70/tonne saving initiatives. Cumulatively, we have achieved
R60/tonne in savings since October 2017. We will continue to drive operational
cost efficiencies in order to achieve targeted savings,” added Claassen.   

The Materials business comprising
of the Aggregates and ready-mix, and Lime divisions, delivered revenue growth
of 7% and contributed R140 million to group EBITDA. This business forms an
integral part of the cement route to market strategy.

“Our
Rest of Africa operations delivered a pleasing performance having grown volumes
by 10%; increased revenues by 2% to R2.8 billion; and achieved 10% growth in EBITDA
to R810 million. Volumes were supported by the ramp up of DRC and a positive
contribution from Rwanda post the debottlenecking in the first half of the
financial year,”
remarked Claassen.

Despite the successful
implementation of the route to market strategy, PPC Zimbabwe experienced a
weaker cement market, clinker shortages, and a depreciation in the functional
currency in the second half of the financial year which resulted in a
contraction of revenue to R1,4 billion and a decline in volumes of 5%. EBITDA accordingly
reduced to R461 million. “PPC Zimbabwe is operationally self-sufficient and is
driving local procurement and exports to reduce forex requirements. Debt
obligations continue to be serviced using in-country cash resources, while
management has implemented contingency measures to mitigate the impact of the
liquidity challenges,” added
Claassen.

In Rwanda, CIMERWA achieved
revenue growth of 10% to R885 million on the back of a 5% increase in volumes. Revenues
were additionally supported by higher realised cement prices in US dollar.
EBITDA however declined to R246 million owing to the planned shutdown for debottlenecking
and clinker imports during the shutdown period, which amounted to a
non-recurring EBITDA impact of around R100 million.

In DRC, PPC Barnet’s production
ramp up bolstered revenue to R494 million from R144 million. Entrenchment of route
to market initiatives supported the business to achieve market share of between
25% to 30%, and EBITDA of R108 million, boosted by stringent cost control.

Habesha in Ethiopia, although
still in ramp up phase, achieved volumes of more than 500 000 tonnes. An action
plan is being implemented to resolve the operational challenges including sub-optimal
plant performance and pricing which resulted in an equity accounted loss of R67
million.

“We
are committed to achieving sustainable price increases, optimising operational
efficiencies, and reducing financial leverage to counter the challenging
operating environment in South Africa, which is expected to continue. We’ll also
continue to focus on achieving our R70/tonne profitability initiatives, assess
opportunities to refine our network and optimise our support structure.

“Our
Rest of Africa operations are well-positioned to take advantage of growth
supported by stable political environments. PPC Zimbabwe continues to focus on
cash preservation, self-sufficiency and optimising operations while CIMERWA is
expected to capitalise on expanded production capacity and output. We’ll
continue to ramp up our DRC operation with a focus on maximising EBITDA,” concluded Claassen.

ENDS

Financial
Communications Advisor:

Instinctif
Partners

About PPC Ltd

A
leading supplier of cement, lime and related products in southern Africa, PPC
has 11 cement factories and a lime manufacturing facility in six African
countries including South Africa, Botswana, DRC, Ethiopia, Rwanda and Zimbabwe.
The recent commissioning of PPC’s milling depot, located in Harare, Zimbabwe and
new plants in the DRC and Ethiopia bring PPC’s capacity to around eleven and a
half million tonnes of cement products each year, compared to 8 million tonnes
in 2015.

As
part of its strategy and long-term vision, PPC is expanding its operations in
South Africa with the modernisation of its PPC Slurry complex outside Mafikeng
in the North West province.

PPC’s
Materials business, comprising of Pronto Holdings (including Pronto Building
Materials, Ulula Ash and 3Q Mahuma Concrete), forms part of the company’s
channel management strategy for southern Africa. PPC’s footprint in the
readymix sector has grown to include 29 batching plants across South Africa and
Mozambique and also has the capacity to produce half a million tonnes of fly
ash.  PPC also produces aggregates in
South Africa and Botswana.

PPC
Lime, one of the largest lime producers in the southern hemisphere, produces
metallurgical-grade calcitic and dolomitic lime and sinter stone used mainly in
the steel and related industries.

Follow PPC on Twitter @PPC_Africa, like us on www.facebook.com/PPC.Cement and visit us at www.ppc.co.za.