We have extracted a Statement from the 2020 half year report for Pretoria Portland Cement Co. Ltd (PPC.zw), listed on the Zimbabwe Stock Exchange:

Pretoria Portland Cement Co. Ltd (PPC.zw) HY2020 Presentation


  • Group revenue R4 948 million (Sept 2018: R5 597 million)
  • Group EBITDA R868 million (Sept 2018: R1 039 million)
  • Loss per share of 0,4 cents (Sept 2018: Earnings per share 21 cents)
  • Headline earnings per share 6 cents (Sept 2018: 21 cents)

Group results were adversely affected by the devaluation between the Zimbabwean Dollar (“ZWL”) and the South African Rand and the application of the provisions of IAS 29 – Financial Reporting in Hyperinflationary Economies. Excluding PPC Zimbabwe Group revenue declined 1% to R4 502 million and Group EBITDA decreased by 3% to R667 million.Roland Van Wijnen, CEO said: ”The positive operational results in Rwanda and the DRC have partially offset difficult and competitive market conditions in South Africa and Zimbabwe. PPC has continued its efforts to implement necessary price increases to lay the basis for a sustainable domestic cement industry in RSA. We remain focused on cost reductions and we have achieved cost savings of R65/tonne in South Africa as part of our R70 per tonne saving program announced in 2017. Whilst the profitability of the Group has declined, PPC continues to generate positive free cash flow.

Our focus in Zimbabwe remains to deliver our customers premium products and solutions at stable or improved EBITDA margins, as well as to ensure financial self-sufficiency of the business against the backdrop of a challenging macroeconomic environment. The PPC Zimbabwe team has delivered on both these strategic imperatives.”


Group revenue declined by 12% to R4 948 million (Sept 2018: R5 597 million) attributable to a 17% decline in overall cement volumes to 2,6 million tonnes.Southern Africa cement and PPC Zimbabwe were the main contributors to the decline.

Cost of sales reduced by 10% to R4 023 million (Sept 2018: R4 494 million) compared with the previous year. Overheads reduced by 4% to R555 million (Sept 2018: R580 million). Excluding once-off restructuring costs of R83 million incurred during the period, overheads reduced by 19%.

PPC reported cost savings of R60/tonne at the end of March 2019, and achieved additional cost savings of R5/tonne for the period towards PPC’s saving target of R70/tonne.

Group EBITDA declined by 17% to R868 million (Sept 2018: R1 039 million), resulting in an EBITDA margin of 17,5% (Sept 2018: 18,6%). Excluding the impact of the once-off restructuring costs EBITDA margin was 19,3%.

The Group results are impacted by the significant currency devaluation between the ZWL and the South African Rand (“ZAR”) and the application of the provisions of IAS 29 that complicates comparability at a Group level. PPC Zimbabwe has applied hyperinflationary accounting from 1 April 2019 to 30 September 2019. The results, net assets and cash flows were then translated from ZWL into rand at a closing rate of 1 ZWL to 0.99 ZAR compared to 1 ZWL to 4.80 ZAR at March 2019, which had a material impact on the results.

Excluding PPC Zimbabwe, Group revenue declined by 1% and cost of sales were maintained at R3 783 million. EBITDA declined by 3% to R668 million (Sept 2018: R687 million), with margins maintained at 15%. The application of IAS 29 resulted in a net monetary gain amounting to R543 million (before tax).

Included in the fair value adjustment loss of R270 million is an estimated credit loss of R307 million relating to Zimbabwe financial assets, R76 million of which was raised against the PPC Zimbabwe financial asset arising as a result of the PPC Zimbabwe debt being settled by the Reserve Bank of Zimbabwe on a 1:1 basis as legacy debt. The remainder of the expected credit loss provision was raised against the PPC Limited blocked funds held by the Reserve Bank of Zimbabwe and cash deposited in a non-resident account with Stanbic in Zimbabwe. The balance of the fair value adjustment relates to the translation into Rands of foreign assets and liabilities.

Finance costs decreased by 3% to R327 million (Sept 2018: R336 million). Southern Africa finance costs increased by 13% to R125 million (Sept 2018: R111 million) due to the application of IFRS 16 – Leases. International finance costs declined by 10% to R202 million (Sept 2018: R225 million).

Taxation expense of R186 million (Sept 2018: R9 million credit), resulted in an effective tax rate of 114%. Excluding the impact of provisions, expected credit losses, hyperinflation, the impairment and other non-deductible expenses, the effective tax rate is 33%.

The equity investment in the integrated cement plant in Ethiopia was fully impaired, resulting in an impairment loss of R93 million.

Basic earnings per share was reduced to a 0,4 cents loss (Sept 2018: Earnings per share 21 cents) and headline earnings per share was 6 cents (Sept 2018: 21 cents).

Cash available from operations decreased from R581 million to R223 million, mainly as a result of an increase in working capital absorption of R342 million, which is significantly higher than the comparative period at R110 million due to the manufacturing cycle in the DRC, cash preservation strategies in Zimbabwe, increasing inventory levels and accounts payable.

Capital investments in property, plant and equipment decreased by 40% to R225 million (Sept 2018: R377 million).

Gross debt increased marginally from R5 002 million in March 2019 to R5 131 million at the end of September 2019. The currency impact on the international debt is R193 million. On a constant currenc