PPC cements over cracks in its accounts


PPC cements over cracks in its accounts


Published Date: 2020-08-19 | Source: Stephen Gunnion | Author: Stephen Gunnion

PPC cements over cracks in its accounts

The cement producer has delayed the release of its annual results due to disruptions caused by Covid-19 and after restating its 2019 numbers.

PPC has again delayed the release of its annual results after it picked up errors in its 2019 accounts and due to disruptions caused by Covid-19. The cement producer says a restructuring and refinancing of its capital structure are also behind the further postponement in the publication of its results, from the end of this month to the end of September.

The group said its R146 million investment in Ethiopia's Habesha Cement should have been fully impaired last year, while the results from PPC Zimbabwe would be restated to account for a pre-tax fair value adjustment of R36.7 million. Foreign exchange gains related to its operations in the Democratic Republic of Congo (DRC) had also been wrongly accounted for.

Last week, PPC said it may consider a rights issue as part of a restructuring and refinancing of its operations as it negotiates more favourable terms for debt at its PPC Barnet business in the DRC. The cement producer said the need to refinance had been exacerbated by the economic impact of the Covid-19 pandemic and that it expected to reach certain key milestones in the coming weeks, which would have an impact on the finalisation of its results.

In a trading statement, it said consideration was also given to Covid-19 as it impaired its investments in a number of its businesses, resulting in an expected loss for the year to end-March of between 110c and 130c per share. However, headline earnings per share would be 8.7% to 30.4% higher than last year's restated 23c, including a net monetary gain of between R625 million and R675 million after it adopted hyperinflation accounting in Zimbabwe. For the year, revenue was expected to be less than 5% lower than the R10.4 billion reported in 2019, while earnings before interest, tax, depreciation and amortisation (EBITDA) would be down by 15-20%.

Following restrictions on its operations during the lockdown in March and April, PPC said its cement operations ramped up in May and it recorded double-digit year-on-year growth in cement volumes in June and July, helped by a reduction in imports. Its international operations, particularly Zimbabwe and Rwanda, also reported a strong recovery in sales.

PPC's shares rose 2.6% to 80c yesterday.


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