PPC has ‘sub­stan­tially agreed’ a new BEE deal

The Star Early Edition - - COMPANIES - Roy Cokayne

PPC, the listed ce­ment and lime pro­ducer, has “sub­stan­tially agreed” the struc­ture and how it would be im­ple­ment­ing a new broad-based black eco­nomic em­pow­er­ment (BBBEE) trans­ac­tion but is wait­ing for the re­lease of the new min­ing char­ter be­fore pro­ceed­ing with the trans­ac­tion.

PPC chief ex­ec­u­tive Dar­ryll Cas­tle ad­mit­ted this week there were some un­cer­tain­ties re­lated to the pro­posed BBBEE trans­ac­tion, one of which was the min­ing char­ter.

“So we think it’s pru­dent to wait and see how that looks to see if what we have planned gels with that. If changes are re­quired be­cause of it (the char­ter), we will re­pro­cess and change what we have got, which might mean it comes some time af­ter that,” he said.

Cas­tle said PPC also had the pro­posed merger with Afrisam trans­ac­tion “go­ing on in the back­ground” and would have to as­sess the im­pact of the Afrisam trans­ac­tion on the com­pany’s new BBBEE trans­ac­tion.

He ex­pected “in the next while” to know what PPC’s new BBBEE trans­ac­tion would look like.

Min­eral Re­sources Min­is­ter Mosebenzi Zwane said this week at the re­open­ing of the Highveld struc­tural mill in Emalahleni that the new min­ing char­ter would be gazetted next week. In terms of the pre­vi­ous char­ter, the gov­ern­ment re­quired 26 per­cent of mines should be in black hands.

Cas­tle said the tim­ing of PPC’s BBBEE trans­ac­tion was not ab­so­lutely de­pen­dent on the re­lease of the min­ing char­ter.

He added PPC had an obli­ga­tion to meet the cur­rent min­ing char­ter re­quire­ments but the com­pany was un­der rep­re­sented in its BBBEE scheme be­cause of di­lu­tion caused by its R4 bil­lion rights is­sue last year and the un­wind­ing of its first BBBEE trans­ac­tion.

Cas­tle said there was not an im­me­di­ate im­pact be­cause PPC’s BBBEE rat­ing was be­low the re­quired thresh­old but the com­pany was well aware it needed to put a new BBBEE trans­ac­tion in place to get to the ap­pro­pri­ate level.

He said it would be­come an is­sue but at the elec­tion of the author­i­ties, there was a rea­son­able pe­riod in which com­pa­nies had to com­ply.

PPC this week re­ported a 93 per­cent slump in head­line earn­ings a share to 7c for the year to March from 107c in the pre­vi­ous year.

Earn­ings be­fore in­ter­est, tax, de­pre­ci­a­tion and amor­ti­sa­tion (Ebitda) de­clined by 13 per­cent to R2.06bn from R2.38bn.

Cas­tle said the lower Ebitda re­flected a tougher op­er­at­ing en­vi­ron­ment, par­tic­u­larly in South Africa but there were a whole raft of is­sues be­low Ebitda in PPC’s in­come state­ment that re­sulted in the dra­matic drop in earn­ings.

They in­cluded the cost of PPC un­wind­ing its first BBBEE scheme, which re­sulted in a cash in­flow but also a cor­re­spond­ing in­ter­na­tional fi­nan­cial re­port­ing stan­dards charge of more than R200m.

PPC shares yes­ter­day fell 0.96 per­cent on the JSE to close at R5.15.

There are some hur­dles, one of which is the min­ing char­ter, the ce­ment and lime pro­ducer ad­mits

PHOTO: SUP­PLIED

PPC is poised to ce­ment a new broad-based back eco­nomic trans­for­ma­tion trans­ac­tion.

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