Soweto businessman Richard Maponya plans to invest just over R1.1 billion within two years in building another mall and a motor dealership network.

Tuesday, 29 January 2008 02:00

PPC chairman grilled over multiple posts

PRETORIA Portland Cement (PPC) yesterday came under fierce criticism over its corporate governance and the fact that it has not disclosed its total level of carbon dioxide emissions.

john gomersallIn July, PPC was spun out of Barloworld, which owned 71% of the cement company.

At its annual general meeting yesterday, shareholder activist Theo Botha grilled PPC chairman Martin Shaw over the company’s governance and environmental practices.

Botha asked Shaw how he could state that “corporate governance continued to be a top priority” when he chaired the company, as well as PPC’s audit and remuneration committees.

“I think this must be a first for good corporate governance; you must be the only director of a listed company who is a member of every committee and the chairman of the group,” Botha said.

The second King code of corporate governance says that the chairman of the group should not be a member of the audit committee at all , as one of the checks and balances to ensure proper governance throughout the chain.

Shaw conceded the position was “far from ideal, but the best (arrangement) for the time being”. He blamed it on PPC’s empowerment deal having been delayed for so long.

The empowerment deal has been long in coming, but Shaw said there was “nothing sinister” in the delays, it was just that the deal was “so complicated”.

PPC revealed details of the deal, saying it would involve the sale of 15% of the company to new black partners.

“The reason for me continuing (on all these committees) was simply to provide continuity,” Shaw said. Once the empowerment deal was put to bed, he would step down.

CEO John Gomersal said the situation was “exacerbated by the somewhat unexpected timing of the unbundling”, as four of the nonexecutive directors, all directors of Barloworld, resigned.

Botha also asked what PPC’s level of carbon dioxide emissions actually were.

PPC did not reveal what its total emissions were, though the company agreed that “maybe we’ll do that” in future.

PPC released a trading update at the meeting, showing that first quarter sales had slowed as heavy rains had halted some building projects.

Shaw said revenue last month alone declined 1,5% compared with a year earlier, although PPC expected “improved earnings and continued strong cash flows”.

Full-year demand would continue to grow, but at a slower pace than in previous years.

Shaw said “the implications of the recent power-generation problems were cause for concern”. This was especially so as PPC was building new plants to create extra capacity.

Gomersall’s pay rose 18% to R7,2m in the year to September, from R6,1m a year earlier, according to the annual report. That excludes R3,3m in share options granted by Barloworld, compared with R10,24m the previous year.

PPC fell nearly 7%, or R2,78, on the JSE yesterday, to close at R37,10.

 

Friday, 13 July 2007 02:00

Enough to go round

The new National Credit Act may be having a dampening effect on the rampant demand for cement in the country, according to PPC CEO John Gomersall.

john gomersall"Demand from residential developers is slowing, the banks' conditions are tighter they're not giving 100% bonds anymore," he says, adding that PPC anticipated last year that this could precipitate a slowdown in cement demand.

This, he says, has reduced to some extent the necessity for PPC to import cement to keep its customers supplied.

Gomersall is visibly annoyed by suggestions that the country is experiencing cement shortages and claims that those who voice opinions on looming cement shortages are speaking from ignorance.

He says large projects such as the Gautrain and Eskom power stations will not use as much cement as everyone believes, and that the quantity needed will be spread over a number of years, while cement production will be growing incrementally.

"I still think cement demand will grow at a compound 6%/year until at least 2014, but I am not sure there will be an equivalent 6% growth in skills over that same period," says Gomersall.

"I'm talking about the managerial and engineering skills needed to design, tender, contract and manage projects."

Asked about an investigation into building material prices alluded to by President Thabo Mbeki in a TV interview last week, Gomersall says he has not heard of any such investigation.

He says cement is a cyclical commodity, and it's important in the up-cycle that those who take the risk and invest large sums of money in new capital equipment should be rewarded.

He says the reason PPC's accounts look so good is that the group's assets are depreciated to a value of about R2 billion on the balance sheet but the insurance value of these assets is closer to R16 billion.

In the six months to March the group reflected an operating margin of 38% on revenue of R2,6 billion, one percentage point lower than the previous year.

"The retailers say they would love margins that look like that, but they can't have them because they haven't made the capital investments," he says.

Cement demand grew 12% last year, outstripping the 8% projection and exceeding forecasts for a third year in a row.

But the feeling at PPC is that it is unlikely to be as high this year. Chief operating officer Orrie Fenn says demand in Cape Town has dropped steeply.

The group hopes to have its R4bn empowerment transaction completed by September, "broad-based with staff participation", says Gomersall.

A 15% equity stake will be transferred.

Earlier this month, Barloworld said that for every one share held in Barloworld, shareholders would get the equivalent of 1,8555 PPC shares in the unbundling of PPC.

On Monday the PPC shares also started trading after a 10-for-one split, part of the restructuring exercise and meant to encourage liquidity.

Gomersall says he does not expect the split to create much change in the two share registers - though there there may be some shorting of the shares.

PPC closed up 90c at R52 after its first day after the unbundling.

 

Thursday, 17 November 2005 02:00

Turning cement into cash

It should be almost inevitable, considering the broad trends in the economy and government's aspirations to lift growth further, but the trend is becoming more apparent

Thursday, 07 July 2005 02:00

Infrastructure boom for SA?

Major capex projects to be good for listed companies

Tuesday, 18 January 2005 02:00

Firm December sales ahead of PPC forecast

Domestic cement sales grew ahead of expectation in the December quarter, despite signs of strain in the building sector, SA's largest cement producer

CEMENT producers have been caught off-guard by rapid growth in demand over the past year and SA may face a shortage of cement by 2007.

Thursday, 19 February 2004 02:00

Building sector puzzled by R100bn hole'

Construction companies concerned about the absence of a mention of promised infrastructure in the budget

Tuesday, 25 February 2003 10:01

Stanlib keen on construction

Stanlib Asset Management is bullish on the SA construction sector with the bulk of its funds substantially overweight in this area.

Construction IndustryThe fund manager has taken a strong view on companies such as Aveng, Murray & Roberts and Barloworld due to substantial investment in SA infrastructure.

The Stanlib quarterly market overview blamed the underperformance of its flagship Liberty Wealthbuilder fund on the funds mandate. Wealthbuilder has higher exposure to international companies than its peers and less exposure to medium and small cap companies, a sector which outperformed the market by 30% over the past year. International equities lost 28% over the same period.

Imtiaz Ahmed, the funds manager and head of multi manager clients at Stanlib asset management, said: 'The fund has underperformed, but has remained true to its benchmark. It does not subscribe to the latest investment fads. Other general equity funds have performed well because of their mid and small cap holdings, but there is greater risk involved with this strategy.' He said there would be 'two or three' interest rate cuts this year, and predicted that SA equities would outperform SA bonds over the year.

Paul Hansen, director of Stanlib retail investments, said it was unrealistic to expect the rand to stay at current levels through the year. 'For 14 consecutive years the rand lost value against the US dollar,' he said. 'The law of averages says this can't be sustained although the rand is an extremely difficult currency to make a call on.'

The Stanlib house forecast is for the rand to be at R10,75/ by the end of the year, which Hansen conceded looked a little unrealistic at present. 'The balance of probability is that the rand will be weaker this year,' he said.

Stanlib also outlined the time scale for the continued integration of Standard and Liberty businesses for this year. The group expected to complete its rationalisation phase this year, a stage which would include the unit trust conversion process and business process alignment, the fund manager announced.

 

 

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