SEGMENTAL INFORMATION

for the 12 months ended 31 March 2017

The group discloses its operating segments according to the business units which are reviewed by the group executive committee. The key segments are southern Africa cement, rest of Africa cement, lime, aggregates and readymix and group services. The reporting segments have been reconsidered during the current reporting period and have been amended from that shown in the prior period following the internal restructuring process that took place during April 2016. The prior period comparisons have been amended from that previously reported.

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  Cement
  Consolidated Southern Africa(a) Rest of Africa(b)
  31 March 
2017 
Audited 
Rm 
31 March   
2016   
Unaudited(d)
Rm   
31 March 
2017 
Audited 
Rm 
31 March   
2016   
Unaudited(d)
Rm   
31 March 
2017 
Audited 
Rm 
31 March   
2016   
Unaudited(d)
Rm   
Revenue            
Gross revenue 9 878  9 424  5 712  5 659  2 118  1 946 
Inter-segment revenue(e) (237) (237) –  –  –  – 
Total revenue 9 641  9 187  5 712  5 659  2 118  1 946 
Operating profit before items listed below 1 233  1 630  861  1 138  347  318 
Empowerment transactions IFRS 2 charges 206  36  16 
Operating profit(f) 1 027  1 594  845  1 137  345 316 
Fair value (loss)/gain on foreign currency monetary items (124) (5) 10  (153) (29)
Finance costs 741  572  214  25  168  194 
Investment income 27  29  11 
Profit before equity-accounted earnings 189  1 054  637  1 130  30  100 
Earnings from equity-accounted investments (13) –  –  –  – 
Impairments and profit on sale of non-core assets (10) 74  –  –  (10) (34)
Profit before taxation 180  1 115  637  1 130  20  66 
Taxation 153  384  192  318  21  55 
Profit/(loss) for the year 27  731  445  812  (1) 11 
Depreciation and amortisation 832  755  374  386  298  222 
EBITDA(g) 2 065  2 385  1 235  1 524  645  540 
EBITDA margin (%) 21,4  26,0  21,6  26,9  30,5  27,7 
Assets            
Non-current assets 14 192  13 579  4 184  3 506  8 113  8 298 
Non-current assets held for sale 38  42  –  –  38  42 
Current assets 3 805  2 768  1 468  1 484  1 334  1 116 
Total assets 18 035  16 389  5 652  4 990  9 485  9 456 
Investments in property, plant and equipment 2 234  3 378  939  689  1 181  2 452 
Liabilities            
Non-current liabilities 5 626  6 729  2 007  1 310  5 916  5 713 
Current liabilities 4 024  6 097  792  510  1 382  945 
Total liabilities 9 650  12 826  2 799  1 820  7 298  6 658 
Capital commitments (refer note 21) 1 071  3 283  716  1 409  310  1 730 

  Materials business
  Lime Aggregates and readymix Group services and other(c)
  31 March 
2017 
Audited 
Rm 
31 March   
2016   
Unaudited(d)
Rm   
31 March 
2017 
Audited 
Rm 
31 March   
2016   
Unaudited(d)
Rm   
31 March 
2017 
Audited 
Rm 
31 March   
2016   
Unaudited(d)
Rm   
Revenue            
Gross revenue 818  817  1 230  1 002  –  – 
Inter-segment revenue(e) –  –  –  –  (237) (237)
Total revenue 818  817  1 230  1 002  (237) (237)
Operating profit before items listed below 119  152  74  122  (168) (100)
Empowerment transactions IFRS 2 charges –  –  185  33 
Operating profit(f) 117  152  73  122  (353) (133)
Fair value (loss)/gain on foreign currency monetary items –  –  (1) (15) 35  37 
Finance costs 352  348 
Investment income 12 
Profit before equity-accounted earnings 114  150  70  106  (662) (432)
Earnings from equity-accounted investments –  –  –  –  (13)
Impairments and profit on sale of non-core assets –  –  –  –  –  108 
Profit before taxation 114  150  70  106  (661) (337)
Taxation 29  41  36  (96) (66)
Profit/(loss) for the year 85  109  64  70  (565) (271)
Depreciation and amortisation 46  44  77  65  37  38 
EBITDA(g) 165  196  151  187  (131) (62)
EBITDA margin (%) 20,2  24,0  12,3  18,7  –  – 
Assets            
Non-current assets 319  415  726  680  850  680 
Non-current assets held for sale –  –  –  –  –  – 
Current assets 210  187  315  237  478  (256)
Total assets 529  602  1 041  917  1 328  424 
Investments in property, plant and equipment 26  70  57  64  31  103 
Liabilities            
Non-current liabilities  117  103  215  237  (2 629) (634)
Current liabilities 86  90  176  125  1 588  4 427 
Total liabilities 203  193  391  362  (1 041) 3 793 
Capital commitments (refer note 21) 59  27  80 
(a) Southern Africa comprises South Africa and Botswana.
(b) Rest of Africa comprises Zimbabwe, Rwanda, DRC and Mozambique.
(c) Group services and other comprises group, PPC Ltd, group services, BEE and group eliminations.
(d) Refer note 1, change in financial year-end.
(e) All sales are concluded at an arm’s length.
(f) The recent implementation of the internal restructure of the group has resulted in some incomparable intercompany operating charges, which will be refined in the subsequent year as the restructuring matures. These have been adjusted for between the differing segments. There has been no impact on consolidated operating profit, as presented above.
(g) EBITDA is defined as operating profit before empowerment transactions IFRS 2 charges and depreciation and amortisation.
  No individual customer comprises more than 10% of group revenue.

Key considerations pertaining to the significant individual geographies within the rest of Africa cement segment

Zimbabwe

Market consensus expects the economy to contract by 1,7% in 2017 before expanding by 0,5% in 2018. As a significant portion of the Zimbabwe economy is driven by tobacco, stronger tobacco harvests will see the start of a recovery in 2017. The country’s fiscus will, however, remain under intense pressure as recessionary conditions constrain revenues. Predominant use of the strong US dollar is expected to continue affecting export competitiveness and remittances, while stimulating appetite for imports. The deteriorating economic environment and resultant liquidity issues have resulted in challenges being faced with processing of foreign payments by the banks in Zimbabwe. During the year, both volume and selling price declines were experienced.

Rwanda

According to the Africa Development Bank Group, Rwandan GDP growth for 2017 is expected to average 7,2% and recover strongly in 2018 and beyond. Cement growth is expected to follow a similar trend. The gradual ramp up of operations and optimisation will continue and the PPC plant should reach full capacity in the next two years, benefiting from its location to supply cement to Rwanda, eastern DRC and Burundi. Aligned with the government’s national development plans and a growing middle class, cement demand is expected to grow steadily over the medium term. The percentage of the population living in urban settlements is expected to rise from 17% at present to 35% by 2020. This bodes well for cement demand in the country.

DRC

After four years at 7,9% pa GDP growth, this index has since declined to 6,9% in 2015 and is estimated at 2,8% and 4,1% for 2016 and 2017 respectively. This has significantly affected government spending. The exchange rate is deteriorating rapidly against the US dollar and CPI is forecast at 33,5% for 2017. Political agreement was reached between major parties in December 2016 but has not been implemented against the agreed timeframe. If the political environment stabilises, in conjunction with a recovery in commodity prices, and the local economy improves, cement demand should increase.