FINAL RESULTS FOR THE PERIOD ENDING 31 MARCH 2016

Transcription

1 FINAL RESULTS FOR THE PERIOD ENDING 31 MARCH June 2016 Darryll Castle - CEO Tryphosa Ramano - CFO

2 AGENDA Group Results Projects Update Context Divisional Overview Appendix 2

3 CONTEXT

4 HIGHLIGHTS Restructure of PPC S capital structure underway, to be supported by a capital raise of R3 billion to R4 billion Orderly capital raise process interrupted by sudden and severe ratings action Liquidity and leverage constraints over-shadow what is inherently a strong and profitable operating base Group EBITDA up 2% to R1,1 billion with group EBITDA margin also rising to 25% (up 0,7%) Net profit attributable to shareholders rose by 35% to R369 million (2015:R274 million), supported by the sale of non-core assets Costs well managed in a tough operating environment - group cost of sales up only 2% while administration and overhead costs down 12% R178 million achieved through the Profit Improvement Programme bringing total contribution to R390 million PPC increasingly evolving into a diverse pan-african player Achieved sales volumes of tons from our recently commissioned CIMERWA plant in Rwanda at an EBITDA margin of 30% - 35% Projects in the DRC, Zimbabwe and Ethiopia are all at advanced stages and will be commissioned in the next 12 months The DRC project is on schedule, but due to high contingency utilisation, the capital estimate could rise and we have identified other potential start up funding requirements 4

5 CAPITAL STRUCTURE PPC was in advanced stages of announcing a capital raise on 14 th June, however events related to PPC s credit rating accelerated the announcement These events also increased the planned quantum of the capital raise as the subsequent obligation to Noteholders needed to be met (R1,75 billion plus accrued interest) In order to have the appropriate liquidity for PPC to remain a going concern, we need to finalise a liquidity and guarantee facility as well as complete a capital raise PPC was planning an orderly capital raise process, however the following unexpected events occurred: Standard & Poor's initiated an event-driven rating review before release of results The ratings action was significantly more severe than anticipated Onerous bond redemption process offer to redeem bonds to be made within 3 days of sub-investment grade rating However, PPC was well aware of the following: The need to raise capital - identified in latter half of calendar 2015 The need to receive capital raise proceeds by the end of calendar 2016 That the capital raise requirement was largely to satisfy the ratings agency approach as opposed to banking covenants That the balance sheet would need to be restructured post the 2016 capital raise; to optimise the maturity profile and ease the near-term liquidity constraints Accelerated terms of the bond programme at the heart of the issue 5

6 Aggregate Lime Pronto Safika Botswana Context Group Results Divisional Overview Projects Update Appendix PPC GROUP DEBT VIEW (as at 31 March 2016) In production, by end of calendar 2016 DEBT EBITDA RATIO PPC Centre R5,7bn R1,8bn 3.1x ZIMBABWE ($85m) Debt: $75m facility with $39m drawn Covenant Group ETHIOPIA (~$175m) Target debt $114m (65%) Target equity $61m (35%) R6,2bn R2,3bn 2,7x Group R9,2bn R2,4bn 3,8x Two step capital raise & debt funding underway In production April / May 17 PPC may increase equity stake Equity $10m: Internally funded Debt : R5,7bn PPC receives dividends & management & technical fees CENTRE EBITDA : R1,8bn Possible start up capital requirement Pays management & technical fees Debt ring-fenced post Financial completion DRC ($280m) Debt: $168m facility with $111m drawn Equity $112m: Fully subscribed In production Jan / Feb 17 Rwanda has cash for working capital commissioning Pays management & technical fees RWANDA ($165m) Debt: $88m facility fully drawn down Equity $77m: Fully subscribed Ring-fenced debt 1 st year of production 6

7 CAPITAL STRUCTURE Gross debt at Centre Debt maturity profile per rating agency Bonds BBBEE funding Deemed short term due capital raising clauses Deemed short term due to redemption clauses Long-term borrowings Other Short term- borrowings BBBEE Bonds Loans Other ST Facilities Debt maturity profile per PPC view Capital Raise and restructure debt profile Banking facility to fund R590m bond repayment Current debt maturity profile Post capital raise at least R3bn debt will be repaid. Remainder will be restructured to longer duration BBBEE Bonds Loans Other ST Facilities BBBEE Bonds Loans Other ST Facilities 7

8 CAPITAL RAISE DEBT EBITDA (6months) Annualised EBITDA RATIO* Theoretical Debt Capacity Indication (3x EBITDA) Post Capital Raise Debt Additional Debt Capacity post Capital Raise PPC Centre R5,7bn R843m R1,8bn 3.1x R5,4bn R2,7bn R2,4bn Covenant Group R6,2bn R1,04bn R2,3bn 2.7x R6,9bn R3,2bn R3,9bn Group R9,2bn R1,1bn R2,4bn 3.8x PPC has mandated a syndicate of banks to lead the rights offer process We continue to engage potential underwriters on the proposed rights issue Proceeds to be used to repay debt funders for: Guarantee extended to PPC bond holders (~R1,75 billion) Other debt facilities (~R1,25 billion) that redeemed PPC001 in March 2016 and will redeem BEE I debt maturing in December 2016 Costs of the transactions *Calculated on a rolling twelve month period Significant de-gearing positions PPC well for the future: Can absorb any further weakness in the operating environment Proposed Timeline 14 June 2016 c.28 June 2016 c.27 July 2016 September Gives rise to the ability to pursue the corporate strategy 1 Results announcement / rights offer update 2 EGM circular 3 EGM meeting 4 Rights issue completion 8

9 CHANGES: STRUCTURES, PROCESSES & CONTROLS Operating architecture of the company has been fundamentally changed post-january 2015 Monthly exco meetings supported by four sub-exco meetings Matrix structure breaks down the independent silo approach Improved transparency, reporting and performance management Quarterly business reviews to assess operational health of each business A three tier risk system introduced focusing on the operations, business functions and group Robust strategic and business planning processes introduced New board committee Investment committee constituted and operational Key structural changes have already been made to align with the new operating architecture Current crisis would not recur as: A multidisciplinary team would be involved in all work streams Final product would have been signed off at Exco after risks and sensitivities, as well as unintended consequences, had been noted Once identified, the risks would be tracked, monitored and fully understood Post stabilisation, further changes likely to be made to strengthen the company and ensure nonrecurrence of similar events Increased board vigilance New operating architecture would have identified risks in the bond programme 9

10 GROUP RESULTS SUMMARY Liquidity and leverage constraints over-shadow a strong & profitable business Six months ended March 2016 Year-End Results Overview Volumes Variance Movement Cement (kt) % Aggregates (kt) % Readymix (km3) % Lime (kt) % Income Statement (Rm) Variance Movement Revenue % EBITDA % EBITDA margin 25,4% 24,7% 0,7% Operating Income % Earnings (Rm) Variance Movement Net Profit Attributable to PPC Shareholders % Earnings Per Share % Headline Earnings Per Share % Normalised HEPS % Statement of Cashflow (Rm) Variance Movement Cashflow Generated from Operations % Total Investments (Capex + Acquisitions) % Balance Sheet (Rm) Variance Movement Gross Debt % Debt/EBITDA* 3,85 2,98 *Calculated on a rolling twelve month period 10

11 KEY METRICS Revenue (Rm) +9% -1% % -1% -4% months to March 6 months to September 12 months rolling to March Revenue (Rm) Revenue for the 6 month period ending 31 March 2016 fell 1% to R4,5 billion The increasingly competitive and weaker economic environment in Southern Africa led to lower group revenues The recently commissioned plant in Rwanda, however, added almost R200 million to revenue In the absence of Rwanda s contribution, group revenue would have declined by 5% Reflects the importance of an increasingly diverse operating base months to Mar-15 RSA ROA Like-for-like CIMERWA 6 months to Mar-16 11

12 KEY METRICS Cost of Sales (Rm) +16% -3% % +2% -7% months to March 6 months to September 12 months rolling to March Cost of Sales (Rm) Cost of sales for the 6 month period ending 31 March 2016 rose only 2% to R3,2 billion On a like-for-like basis, excluding the ramp-up in Rwanda, costs in the existing operations actually declined 2% On a rolling 12 month basis, cost of sales declined 3% to R6,5 billion The focus on optimising costs and efficiencies is expected to continue in the period ahead 0 6 months to Mar-15 RSA ROA Like-for-like CIMERWA 6 months to Mar-16 12

13 KEY METRICS EBITDA (Rm) -10% +3% % +2% +5% months to March 6 months to September 12 months rolling to March EBITDA (Rm) EBITDA for the 6 month period ending 31 March 2016 rose 2% to R1,14 billion The recently commissioned plant in Rwanda, added over R100 million to group EBITDA In the absence of Rwanda s contribution, group EBITDA would have declined by 8% On a rolling 12 month basis, EBITDA rose 3% to R2,4 billion 0 6 months to Mar-15 RSA ROA Like-for-like CIMERWA 6 months to Mar-16 13

14 KEY METRICS % +35% Net Profit (Rm) % months to March September 2014 and September % +28% months rolling to March Net profit for the 6 month period ending 31 March 2016 rose 35% to R369 million Profits from the sale of noncore assets contributed almost R100 million In the absence of these asset sales, net profit would have declined marginally Net Profit (Rm) On a rolling 12 month basis, net profit has risen 28% to R793 million months to Mar-15 RSA ROA Like-for-like Proceeds from disposal of non-core assets 6 months to Mar-16 14

15 KEY METRICS % 480 Overheads (Rm) +16% -4% % -12% months to March 6 months to September 12 months rolling to March Headline earnings per share (cents) -33% +2% 209 Overheads for the 6 month period ending 31 March 2016 fell 12% to R489 million This reflects improved cost efficiencies, largely on the back of the profit improvement programme Headline earnings per share declined 12% to 53 cents over the reporting period However, on a rolling 12 month basis they improved marginally to 144 cents % -12% +2% months to March 6 months to September 12 months rolling to March

16 PROFIT IMPROVEMENT PROGRAMME Progress Report Revenue optimisation Cost efficiencies Strategic cost reduction PIP Up to R130m in 3 years Up to R150m in 3 years Up to R120m in 3 years Achieved R390 million in under 12 months F2016 achieved R13 million Achieved through improved channel management initiatives F2016 achieved R138 million Achieved through materials, procurement and logistics efficiencies F2016 achieved R27 million Benefits achieved from head office savings and manufacturing F2016 achieved R178 million 16

17 GROUP RESULTS

18 F2016 SUMMARY INCOME STATEMENT Six months ended 2016 R million Six months ended 2015 R million % Change Revenue (1) Cost of sales Gross profit (7) Administration and other operating expenditure (12) Operating profit before item listed below (4) Empowerment transactions IFRS 2 charges Operating profit (3) Net finance costs Exceptional items 112 (43) Earnings from equity accounted investments - (3) Profit before taxation Taxation (4) Profit for the year Non-controlling interest share of profits/(loss) Profit attributable to PPC shareholders (7) EPS (cents) HEPS (cents) (12) Normalised EPS (cents) # (8) Normalised HEPS (cents) # (8) Success of PIP has contributed to cost savings Timing of CIMERWA commissioning (Sept 15) Profit on sale of Afripack and Ciments du Bourbon Impact of the profit on exceptional items # Excluding empowerment transaction IFRS 2 charges, exceptional items, prior year tax adjustments and restructuring costs DPS (cents) - 24 # Excluding empowerment transaction IFRS 2 charges, exceptional items, prior year tax adjustments and restructuring costs 18

19 F2016 REVENUE CONTRIBUTION Group revenue contribution Revenue (Rm) 80% 70% 60% 50% 40% 30% 20% 10% 0% 70% 72% 30% 28% Mar -16 Mar Cement Lime Aggregates & Readymix Total RSA ROA Mar-16 Mar % Volumes % -15.0% % Cement (kt) Lime (kt) Aggregates (kt) Pronto (Km3)* Mar - 16 Mar

20 F2016 SUMMARY BALANCE SHEET March 2016 R million March 2015 R million ASSETS Non-current assets Property, plant and equipment Intangibles Other non-current assets Non-current assets held for sale 42 - Current assets Inventories Trade and other receivables Cash and cash equivalents TOTAL ASSETS EQUITY AND LIABILITIES Capital and reserves Non-controlling interests Non-current liabilities Deferred taxation Long-term borrowings Provisions and other non-current liabilities Current liabilities Short-term borrowings Trade and other payables TOTAL EQUITY AND LIABILITIES Asset base increased by ~R3,7bn due to expansion capex and exchange rate movements Impact of foreign currency translations Increased by ~R2,4bn due to drawdowns on project finance debt, reduced by bond and BEE borrowings classified as short term # Excluding Increased empowerment due to put transaction option IFRS liability 2 charges, of exceptional R415m items, included prior year tax subsequent adjustments to and NCI subscription restructuring in costs the DRC in Sept 15 20

21 F2016 DEBT PROFILE Debt evolution (Rm) 4,0 3,5 Limited movement in the RSA debt Project finance debt up R1 billion to R3,5 billion ,0 2,5 2,0 1,5 1,0 0,5 Increase in project finance debt due to: Almost R150 million relates to currency movements Over R500 million drawn down from pre-arranged facility in the DRC Balance relates to drawdowns in Rwanda and Zimbabwe BEE debt Rest of SA debt DRC Rwanda Zimbabwe Debt/EBITDA (RHS) - PPC s covenant group debt to EBITDA ratio of 2,7 times well within 3,3 times limit Average cost of debt F2015 ~8.9% F2016 ~9.0% 21

22 CAPEX GUIDANCE Capex guidance F2017 F2018 F2019 RSA R900m R1bn R900m R1bn R500m R700m ROA R1bn R1.5bn R100m R200m R100m R250m Total R1.9bn R2.5bn* R1bn R1.2bn* R600m R950m* *Excludes Ethiopia ~R350 million has been spent to date on Slurry kiln 9 (SK9) RSA F2017 F2019: bulk of capex for Slurry kiln 9 F2019: other expansion capex will be spent at Dwaalboom and De Hoek F2017: rest of Africa capex to complete remaining projects F2018 F2020: rest of Africa capex mainly for maintenance as projects will be substantively complete Maintenance capex SK9 expansion DRC F2016 (Six months to March 2016) Rolling Twelve months to March Rwanda - Zimbabwe Total

23 F2016 SUMMARY CASH FLOW STATEMENT Cash flow from operating activities Six months ended 2016 Rm Six months ended 2015 Rm Operating cash flows before movement in working capital Inventory build-up as well as movement in accounts payable Net investment in working capital (324) (31) Cash generated from operations Finance costs paid (292) (252) Investment income received 8 11 Taxation paid (195) (252) Cash available from operations Dividends paid (185) (423) Net cash inflow from operating activities Capital investment in PPE and intangible assets (1 188) (1 008) 1 2 Execution of rest of Africa expansion strategy Proceeds from sale of Afripack and Ciments du Bourbon Proceeds on sale of equity accounted investment and available-for-sale financial asset Additional investment in Habesha Acquisition of additional shares in equity accounted investment (75) - Movement in other non-current assets (181) - Other investing activities 8 9 Net funding raised Net cash movement for the period (285) (143) 4 5 # Excluding empowerment transaction IFRS 2 charges, exceptional items, prior year tax adjustments Delayed VAT and restructuring costs repayments in the DRC reclassified to noncurrent assets 23

24 F2016 TAXATION Tax rate reconciliation (%) Effective taxation rate Tax refund BBBEE and IFRS 2 (1.0) (2.1) Finance costs on BBBEE funding (1.8) (4.0) Permanent differences, other costs and impairments (1.1) (6.4) Capital gains differential on sale of noncore assets Withholding tax (4.1) (2.0) SA corporate tax rate Maturity of BBBEE I will result in >2% decline in taxation rate 24

25 DIVISIONAL OVERVIEW

26 SA OPERATING ENVIRONMENT Cement demand and Gross Fixed Capital Formation (%) -4 Gross Fixed Capital Formation: Low Road (BER) Cement Demand: Low Road (BER) Gross Fixed Capital Formation: High Road (NT) Cement Demand: High Road (BMI) Source: National Treasury, Bureau for Economic Research, BMI Strategic Research Calendar 2016 Calendar 2017 Calendar 2018 In 2015, gross fixed capital formation rose 1,4% (recovering from a -0,4% in 2015) In contrast to this, cement demand (inclusive of exports) rose almost 8% in 2015 Key drivers of cement demand include unrecorded transactions as well as the investment in low cost housing Headwinds to demand include the subdued local economy coupled with rising inflation and interest rates Competitive Economy Imports PPC Performance landscape 26

27 SA OPERATING ENVIRONMENT Source: South African Revenue Services Imported cement volumes by port of entry (tons) Q1-12 Q2-12 Q3-12 Q4-12 Q1-13 Q2-13 Q3-13 Q4-13 Q1-14 Q2-14 Q3-14 Q4-14 Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 In the 6m to March 2016 imports fell 72% 6m to March 2016 = tons vs. 6m to March 2015 = tons In the Western Cape, a 55% decline was recorded Similarly in the first calendar quarter of 2016 imports fell by 84% from 295k tons to 47k tons Shipping rates have been steadily declining however this trend seems to be reversing Durban PE & EL Cape Town Exchange rate continues to be a headwind for importers Baltic Dry Index Competitive Economy Imports PPC Performance landscape Calendar Quarters 27

28 SA OPERATING ENVIRONMENT PPC s cement pricing on Rand per ton basis (based to 100) Increased industry capacity has put pressure on selling prices PPC s SA Cement average selling price has fallen by 4% for the reporting period but the pricing environment seems to be stabilising Economy Imports Competitive landscape PPC Performance 28

29 PPC SA CEMENT PERFORMANCE Cement revenue declined by 4% despite sales volumes improving by 0,5% Stellar double digit growth recorded in the Eastern and Western Cape Reflection of lower import activity and supply to local infrastructural projects Lower sales volumes in Gauteng and other inland provinces Reflection of increased competitor activity The North West province and Gauteng construction and industrial segments were however more resilient Cost of sales have declined by 3% for the reporting period Fixed costs fell by 11% while variable delivered costs rose by 2% Consequently, SA cement EBITDA fell 9% to R624 million reflecting the sensitivity to selling price movements Key cost components Proportion of cost of sales Distribution 25% Other 18% Salaries 12% Electricity 10% Depreciation 9% Material consumables 8% Maintenance 6% Coal 8% Packaging 4% The EBITDA margin has thus fallen to 26,5% Economy Imports Competitive landscape PPC Performance 29

30 ZIMBABWE, BOTSWANA & RWANDA Zimbabwe MM Comment Volumes Overall volumes declined 22% due to poor agricultural harvest, tighter market liquidity, increased local competition and lower disposable income Lower volumes were however offset by improved operational efficiencies Pricing Selling prices in US dollars declined by 3% Botswana MM Comment Volumes Pricing Rwanda MM Comment Volumes Pricing EBITDA margins contracted by 4% Volumes declined by 15% due to increased cement capacity and competiveness in the southern African region EBITDA margins dropped 8% however we maintained our market leadership by focusing on brand, operational efficiencies and cost competiveness Since commissioning, the new plant has sold tons of cement with product well received and market share rising in line with improved output Our volume performance is below our expectations mainly due to the political environment in Burundi that has restricted our ability to export to this key market Our gradual ramp-up has ensured minimal disruption to prevailing market prices 30

31 MATERIALS BUSINESS Lime MM Comment Volumes Pricing Revenue down 12% on the back of continued pressure in the steel industry Sales volumes of burnt product to major clients declined by 19% EBITDA of R96 million rose by 23% due better cost management and the non-recurrence of bad debts Aggregates & Readymix Volumes Pricing MM Comment Revenue up 9% due to improved sales volumes in SA aggregates and Pronto Readymix divisions Major projects supplied include Mall of Africa, the N14 and Cedar Road construction as well as the Steyn City development EBITDA rose 33% from R57 million to R76 million 31

32 PROJECTS UPDATE

33 CIMERWA Ltd, RWANDA tpa plant successfully completed within budget of US$170 million: final project cost ~$165 million Sales volumes of tons achieved within the expected margin guidance of 30% - 35% Volume performance below expectations mainly due to inability to export to neighbouring Burundi However, market share has risen in line with the improved output and scope for further growth: Rwandan cement market grew by 10% to tpa in 2015 with market prices remaining fairly stable Gradual ramp-up has ensured minimal price disruption; ramp-up to full capacity expected over next two years Recently introduced contracted fleet and will continue to optimise in- & outbound logistics First principal instalment paid at the end of March 2016 New tpa plant 33

34 DEMOCRATIC REPUBLIC OF THE CONGO Construction of the US$280 million, 1 million ton per annum plant is approximately 83% complete Contingency utilisation is high in relation to the construction programme - could result in a 4%-6% increase in the capital estimate Construction slightly ahead of schedule with cold commissioning using generator power under way Société Nationale d Electricité (SNEL) power likely to be later than scheduled, however hot commissioning remains on track for end calendar 2016 and first cement sales still expected early in calendar 2017 We have identified potential start up funding requirements and PPC might have to contribute between US$20 and US$50 million these will be reimbursed to PPC as inflows from operating profits These payments may arise because of: Delayed VAT repayments as VAT exemption was only received in January 2016 Settling of bank facilities relating to cement trading losses incurred ahead of commissioning, and Pre-funding of future debt repayments; specifically relating to the Debt Service Reserve Account 34

35 DEMOCRATIC REPUBLIC OF THE CONGO Selling prices continued to deteriorate as low cost imports from Angola have increased markedly on the back of local exchange rate variations Local cement producers association is engaging government on protecting the local industry against imports Since 2015, pricing has declined by between 8% and 13% This will negatively impact our margin guidance of 30% 40% Operational readiness is on track to secure key raw materials and recruit qualified and skilled staff Skills transfer is also underway with new recruits at PPC s Technical Skills Academy at Slurry New 1mtpa plant 35

36 ZIMBABWE Construction of US$85 million tpa mill in Harare is ~70% complete: rail siding contract 82% complete 95% of equipment manufactured and delivered to site Civil and structural works are 68% complete Roads to the site, water, sewerage infrastructure and power supply from the national power utility are complete Operational readiness activities are underway with staffing skills transfer, material and equipment plans being implemented against ramp-up plan Plant commissioning is expected towards the end of calendar 2016 Margin guidance of 30% - 35%, however given economic headwinds, likely to be at the low end Moreover exchange rate effects have resulted in some imports at the border areas Consequently, market pricing has reduced by about 10% to $160 - $240 New tpa plant 36

37 ETHIOPIA The US$170 million to US$180 million, 1.4 million tpa plant is scheduled for commissioning in the second calendar quarter of 2017 Both PPC and IDC have followed their rights in the first capital raising, with PPC investing a further US$5,1 million in March 2016 PPC s shareholding has risen to 35% because some shareholders did not follow their rights Construction is progressing well, with overall project progress completion at 71% Plant design is 99% complete with 95% of equipment manufactured and delivered to site Main plant power agreement is in place with the Ethiopian power authorities The contract for supply and construction of a 14km single circuit 132KV transmission line has been awarded Route to market strategy has been developed (collect, delivered and distributors) and export opportunities are being explored Cement to be sold in bulk, bags and, in future, readymix Margin guidance of 30% - 35% New 1.4 mtpa plant 37

38 SLURRY SK9 Work on the new R1,5 billion R1,7 billion, 1 million tpa kiln at Slurry (SK9) is on schedule Leading technology features have been incorporated into the SK9 plant design to optimise production, reduce heat and electrical energy consumption, and increase plant availability Manufacturing, quality inspections and delivery to site of major key equipment are on schedule All site-preparation work is complete Issuing work permits to the EPC contractors workforce has been delayed; consequently, the contractor has partnered with local contractors to begin the main earthworks Upgrade of the Slurry Eskom substation is in progress and will be commissioned in July 2017 SK9 to be commissioned in calendar 2018 New 1 mtpa kiln line 38

39 QUESTIONS? 39

40 DISCLAIMER This document including, without limitation, those statements concerning the demand outlook, PPC s expansion projects and its capital resources and expenditure, contain certain forwardlooking statements and views. By their nature, forward-looking statements involve risk and uncertainty and although PPC believes that the expectations reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations will prove to be correct. Accordingly, results could differ materially from those set out in the forward-looking statements as a result of, among other factors, changes in economic and market conditions, success of business and operating initiatives, changes in the regulatory environment, other government action and business and operational risk management. Whilst PPC takes reasonable care to ensure the accuracy of the information presented, PPC accepts no responsibility for any damages, be they consequential, indirect, special or incidental, whether foreseeable or unforeseeable, based on claims arising out of misrepresentation or negligence arising in connection with a forward-looking statement. This document is not intended to contain any profit forecasts or profit estimates, and the information published in this document is unaudited. 40

41 APPENDIX

42 CIMERWA Ltd, RWANDA About Rwanda 2016 Population (m) 11.6 Urbanisation (%) 29 GDP per capita (US$) 732 Cement consumption/capita (kg) 50 Real GDP growth (16-19E) (%) 6.7 Cement retail price per ton (US$) (inclusive of VAT) Current national cement production capacity (tpa) Limestone reserves (years) 13 Employees 252 Source: IMF, Cement and PPC research New tpa plant 42

43 DEMOCRATIC REPUBLIC OF THE CONGO About DRC 2016 Population (m) 84.1 Urbanisation (%) 42.5 GDP per capita (US$) 490 Cement consumption/capita (kg) 24 Real GDP growth (16-19E) (%) 5.5 Cement retail price per ton (US$) (inclusive of VAT) Current national cement production capacity (tpa) (in use) Limestone reserves (years) 54 Employees 63 Source: IMF, Cement and PPC research New 1mtpa plant 43

44 ZIMBABWE About Zimbabwe 2016 Population (m) 13.6 Urbanisation (%) 32 GDP per capita (US$) Cement consumption/capita (kg) 75 Real GDP growth (16-19E) (%) 3.4 Cement retail price per ton (US$) (inclusive of VAT) Current national cement production capacity (tpa) m Limestone reserves (years) 41 Employees 470 Source: IMF, Cemnet and PPC research New tpa plant 44

45 ETHIOPIA About Ethiopia 2016 Population (m) 91.2 Urbanisation (%) 19.5 GDP per capita (US$) 735 Cement consumption/capita (kg) 65 Real GDP growth (16-19E) (%) 6.6 Cement retail price per ton (US$) (inclusive of VAT) Current national cement production capacity (tpa) 11m Limestone reserves (years) 25 Employees 110 Source: IMF, Cemnet and PPC research New 1.4 mtpa plant 45

46 EBITDA PROFITABILITY MATRIX EBITDA profitability matrix RSA Cement* Lime Aggregates & Readymix RSA Total Mar-16 Mar-15 Change Mar-16 Mar-15 Change Mar-16 Mar-15 Change Mar-16 Mar-15 Change EBITDA (Rm) % % % % Contribution to group 55% 61% -11% 8% 7% 21% 6% 5% 24% 69% 73% -4% EBITDA Margin 26% 27% -1% 25% 18% 7% 16% 14% 2% 25% 24% 0% ROA Cement Lime Aggregates & Readymix ROA Total Mar-16 Mar-15 Change Mar-16 Mar-15 Change Mar-16 Mar-15 Change Mar-16 Mar-15 Change EBITDA (Rm) % % Contribution to group 30% 27% 13% 31% 27% 4% EBITDA Margin 26% 25% 2% 26% 24% 2% Total Cement Lime Aggregates & Readymix Group Mar-16 Mar-15 Change Mar-16 Mar-15 Change Mar-16 Mar-15 Change Mar-16 Mar-15 Change EBITDA (Rm) % % % % Contribution to group 85% 88% -3% 8% 7% 21% 7% 5% 30% 100% 100% - EBITDA Margin 26% 26% 0% 25% 18% 7% 15% 12% 3% 25,4% 24,7% 0,7% Note: EBITDA margins are calculated before inter-segment eliminations *Cement includes head office activities and eliminations 46

47 OVERVIEW OF PPC OPERATIONS DEMOCRATIC REPUBLIC OF THE CONGO 1mtpa Limestone reserves 76 Mt; 54 years Project cost: US$280 million Commissioning end CY % subsidiary of PPC Ltd ZIMBABWE 1mtpa Limestone reserves 43 Mt; 41 years Constructing a tpa mill for US$85 million Commissioning end of CY % subsidiary of PPC Ltd BOTSWANA Milling operation Kgale quarries and Aggregates Botswana 100% subsidiary of PPC Ltd SOUTH AFRICA 7mtpa Limestone reserves 759 Mt; 240 years 7 cement plants Aggregates quarries and Lime factory Subsidiaries: Pronto Ready-mix, Ulula Ash and Safika Cement DEMOCRATIC REPUBLIC OF THE CONGO ZAMBIA DEMOCRATIC MOZAMBIQUE REPUBLIC OF THE CONGO BURUNDI ZIMBABWE BOTSWANA SOUTH AFRICA ZAMBIA BOTSWANA SOUTH AFRICA ETHIOPIA RWANDA BURUNDI MOZAMBIQUE ZIMBABWE ETHIOPIA RWANDA 373 years of limestone reserves ETHIOPIA 1.4mtpa Limestone reserves 27 Mt; 25 years Project cost: US$170 US$180 million Commissioning second quarter of CY % associate of PPC Ltd RWANDA tpa Limestone reserves 7 Mt; 13 years Project cost: US$165 million Commissioned August % subsidiary of PPC Ltd 47

48 GOING CONCERN CONSIDERATIONS In order to have the appropriate liquidity for PPC to remain a going concern, a series of events have to be concluded: 1. The S&P ratings downgrade, triggering a bond redemption process, has meant that the group needs to finalise a facility (the Liquidity and Guarantee Facility) with local financial institutions to provide a guarantee to the DMTN Noteholders and therefore to ensure that the company will be able to meet its obligations once they become due as a result of the redemption clause (Clause 11) of the Programme Memorandum. 2. The company must complete a capital raise which is planned to take place via an underwritten rights offer The group is well advanced with all aspects of the steps required to obtaining the Liquidity Facility and completing the equity capital raise In this regard a Term Sheet for the facility has been agreed and work is ongoing to convert this to an unconditional, executed agreement It is expected that the process to achieve it being unconditional is achievable in the required time period The company believes it is likely to meet the conditions precedent to the Liquidity and Guarantee Facility Absa Bank Limited, FirstRand Bank Limited, Nedbank Limited, and The Standard Bank of South Africa Limited have been mandated to lead the proposed rights offer The company has received indications of support from major shareholders to vote in favour of the capital raise as well as in certain cases to support in terms of following their rights The company needs to finalise a liquidity and guarantee facility and complete the capital raise in order to remain a going concern, but it believes that the achievement thereof is likely 48

49 GOING CONCERN CONSIDERATIONS Audit status Deloitte & Touche have performed a review on condensed provisional consolidated financial statements They reported that, at the date of the auditor s report, management s plans on both the Liquidity and Guarantee Facility and the capital raise were not sufficiently advanced to allow the external auditors to draw a review conclusion on the group s ability to continue as a going concern Therefore due to the significance of the going concern issue, they have not been able to obtain sufficient appropriate audit evidence to provide a basis for an opinion Accordingly they do not express an opinion on the condensed provisional consolidated financial statements It is anticipated that the audited financial results will be finalised before the end of September 2016 in accordance with the requirements of the Companies Act and upon the resolution of the necessary going concern issues 49

50 INVESTOR CONTACTS Azola Lowan Vuyo Nombila Investor Relations Investor Relations Tel