PPC delays results for third time as it continues to fix accounting errors

The cement maker will now publish its full-year financial results in the week of 5 October.

PPC has delayed the release of its full-year earnings for a third time as it continues to fix accounting errors, and aims to finalise a refinancing plan. According to a statement by the company, the cement maker will now publish its financial results in the week of 5 October.

The company said that it has been making adjustments to valuations of assets in Ethiopia and the Democratic Republic of Congo (DRC), while a deal with South African lenders is expected to be reached next month.

According to the statement, PPC previously advised shareholders that the equity accounted investment in Habesha, Ethiopia, of R146 million should have been fully impaired in the prior year. The company stated however, that it recently discovered that Habesha restated its FY19 financial statements due to the first-time adoption of IFRS in Ethiopia, highlighting the fact that PPC should have adjusted its share of losses in previous years to comply with IFRS, which it did not do.

As part of the project financing arrangements for the development of PPC’s DRC operations, the company entered into a put option agreement with an international development finance institution in terms of which can put its investment, or part of it, in PPC Barnet DRC Holdings. This is determined by way of a formula stipulated in the agreement, which, in previous years, PPC applied incorrectly in determining the carrying value of the put option.

The group further stated that, in finalising its annual financial statements, further prior year errors relating to non-controlling interests have come to light that require additional investigation and conclusion. “While the required adjustments are not expected to impact the financial loss for the period ended 31 March 2020, these adjustments are important in ensuring the financial statements present fairly, in all material respects, the financial position of the group at the respective balance sheet dates.”

Finally, the company said that it is undertaking a restructuring and refinancing project with the objective of implementing a sustainable capital structure. PPC “continues to make positive progress” on the project with finalisation of revised facilities documentation with its South African lenders expected in October 2020 and standstill documentation with its DRC lenders in November 2020.

PPC has struggled this year as a lengthy recession and Covid-19 lockdown depressed demand in its home market. However, the company has seen a resurgence of activity since South Africa eased its hard lockdown, recording a double-digit growth in cement volumes in June and July, with a continued high rate in August and September.