JSE-listed cement manufacturer PPC has advised that the publication of its financial results for the year ended March 31 has been delayed to the end of September.

It had initially been scheduled for release by the end of August, but the impact of Covid-19 on the year-end audit process has been more severe than expected.

Additionally, the finalisation of the results might also be impacted by the achievement of some key milestones in the company’s restructuring and refinancing activities in the coming weeks.

Meanwhile, PPC reiterates that its cement operations managed to ramp up successfully in all the geographies that it operates in, with double-digit volume growth numbers witnessed during June and July in South Africa.

The company expects its earnings before interest, taxes, depreciation and amortisation (Ebitda) to decrease by between 15% and 20% for the year under review, compared with the Ebitda of R1.94-billion reported for the year ended March 31, 2019.

Further, PPC expects to report a loss a share of between 110c and 130c, which is more than 100% lower year-on-year, compared with restated earnings a share of 9c for the 2019 financial year.

Headline earnings per share (HEPS) are expected to be between 25c and 30c apiece, reflecting a decrease of between 8.7% and 30.4% on the restated HEPS of 23c for the prior year.

PPC explains that the difference between the basic earnings and headline earnings relates to an impairment of property, plant and equipment in South Africa Cement, PPC Barnet Democratic Republic of Congo (DRC) and Readymix, as well as the impairment of certain intangible assets and goodwill.

The audit process in respect of identified errors in the prior year's results was triggered by the JSE Proactive Monitoring process.

Habesha Cement Share Company is an Ethiopian equity accounted investment held by PPC; in the prior year, PPC concluded that no impairment of the investment was required.

The board is, however, of the opinion that the investment of R146-million should have been fully impaired in the prior year. It follows that the impairment of R93-million and the equity accounted losses of R54-million in the interim results for the six months ended September 30, 2019, will also be reversed following full impairment of the investment as at March 31, 2019.

Meanwhile, a PPC Zimbabwe financial asset arose when its US dollar denominated Zimbabwe loan was registered with the Reserve Bank of Zimbabwe (RBZ).

The loan qualifies as legacy debt and a Zimbabwe dollar amount equivalent to the US dollar loan balance was transferred to RBZ, which qualifies for the 1:1 conversion of US dollar to the Zimbabwe dollar.

The financial asset represents the difference between the prevailing exchange rate between the two currencies as at March 31 this year and the 1:1 rate approved by the Zimbabwe authorities for the settlement of the US dollar denominated loan.

PPC explains that no adjustment was applied for credit risk as at March 31, 2019.

Considering that PPC did raise an expected credit loss adjustment on the Zimbabwe government bonds as at that date, the board believes it would also have been appropriate to apply the same percentage fair value credit risk adjustment against the Zimbabwe financial asset as at that date.

As a result, the prior year's results will be restated to take into account a pre-tax fair value adjustment of R36.7-million. It follows that the pre-tax income statement impact of the fair value adjustment in the interim results dated September 30, 2019, will be reduced from R76-million to R39.3-million.

At March 31, 2019, PPC recognised exchange gains of R116-million that arose from translation of the DRC deficiency loan in the statement of profit or loss in its separate financial statements.

In the group consolidated annual financial statements, the exchange differences were accounted for in other comprehensive income and accumulated in the foreign currency translation reserve, as the group considered the exchange differences to have arisen from the net investment in the foreign operation.

The board now believes it was inappropriate to consider the loan as part of the net investment in the foreign operation and, accordingly, the pre-tax exchange gain of R116-million should have been recorded in the statement of profit or loss in the PPC consolidated financial statements in the prior year.

As a result, the prior year results will be restated to reflect the exchange gain. This adjustment has no impact on the September 30, 2019, interim results.

Moreover, the company says several smaller individually immaterial errors have been noted relating to reallocation of intangible assets, reallocation between reserves and reclassification of investments as treasury shares.

Cumulatively, these errors have no impact on earnings.

The cumulative after-tax impact of all the above-mentioned prior year restatements is a decrease in basic earnings a share from the previously stated 16c apiece to 9c apiece, and an increase in HEPS from the previously stated 20c apiece to 23c apiece.

Net asset value is decreased by R174-million .

Management has initiated, and will continue to implement, improvements to the internal control environment and related governance processes to ensure integrity of the information published.