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Cape Town - South Africa's biggest cement maker PPC [JSE:PPC] reported an 11.7% decline in half-year profit for the six months to end-March, with auditor Deloitte & Touche adding a disclaimer in the results statement.
PPC's headline earnings per share (EPS) was 53 cents compared with 60c a year earlier.
PPC´s total cement sales volumes for the six-month reporting period were 1% below last year. Group revenue also declined 1% to R4 501m from R4 541m in 2015.
"PPC´s group revenue and cement sales both decreased marginally by 1% on weaker performances in most operating regions," said PPC CEO Darryll Castle.
He added that the newly commissioned plant in Rwanda contributed to group revenue after achieving cement sales volumes of 124 000 tonnes at the expected margin.
"The Profit Improvement Programme, which generated R212m by September 2015, contributed an additional R178m in sustainable profit improvement in this period - thereby contributing R390m in less than 12 months. This programme, as well as the sale of some non-core assets, contributed to earnings per share rising a pleasing 35% to 70c."
Castle said the group's projects in the DRC, Zimbabwe and Ethiopia are all at advanced stages and will be commissioned in the next 12 months, ensuring to offer shareholders a diversified portfolio of businesses in different geographies.
"The company is also advancing its plans to raise between R3bn to R4bn to overcome its near-term liquidity constraints."
PPC further announced that it is negotiating a R2bn bridging guarantee facility “to settle the outstanding note obligations and provide the company with the appropriate funding requirements until the conclusion of the proposed capital raise”.
PPC is being forced to raise funds after S&P cut its long- and short-term corporate-credit ratings seven levels to below investment grade and placed its long-term rating on negative watch.
However, the results statement also included a disclaimer from auditor Deloitte & Touche.
Although PPC announced plans for the bridging facility and capital-raising to meet its obligations to note holders, the auditors could not draw a conclusion on PPC’s ability to continue as a going concern.
"Subsequent to year-end, Standard & Poor’s released its report in which the credit rating of PPC was lowered to below investment grade. As a result of this downgrade, domestic medium-term notes to the value of R1.75bn became due and payable in the short term as per clause 11 of the domestic medium-term note programme memorandum, thus creating a liquidity challenge," Deloitte said.
