Roy Cokayne
SHARES in PPC slumped to a long-term low yesterday after the listed cement and lime producer issued a profit warning while six new board directors were elected.
The company said headline earnings a share for the six months to March were expected to be between 25 percent and 45 percent lower than in the previous corresponding period.
PPC’s shares fell as much as 8.6 percent to a low of R21.65, the lowest level going back to at least 1995, before recovering to close 6.29 percent lower at R22.20 yesterday.
Six new non-executive directors, including former SA Reserve Bank governor and labour minister Tito Mboweni, were appointed at the general meeting yesterday.
Chairman Bheki Sibiya confirmed that PPC would be looking at recouping the consulting fees paid to former chief executive Ketso Gordhan as part of the R21.7 million severance package it had agreed to pay him when he resigned last year.
Trading update
In a trading update, Sibiya said despite the weaker trading environment, the main contributors to the decline in headline earnings were a once-off tax credit in the prior reporting year and an increase in finance costs in the current year.
He said positive group cement sales volumes were achieved in the first quarter, supported by the consolidation of Safika Cement and growth achieved in Zimbabwe and Botswana. But on a like-for-like basis, excluding Safika Cement, group cement volumes would have recorded single digit declines against the comparable period last year.
“The operating environment in South Africa remains tough on the back of weak economic growth, which has been exacerbated by power shortages, and increased competitor activity.”
Gordhan
Sibiya said the consulting portion of Gordhan’s severance package deal was included at the request of the international business development team. But Gordhan had written to the company “specifically indicating that he had unilaterally decided not to tender his services for consulting”.
“Work is therefore being done by our legal department in consultation with the company’s lawyers to recoup that portion of the payment that has got to do with the consulting, because the services he was paid for have not been tendered and indications are that they will not be tendered,” he said.
Attempts to obtain comment from Gordhan were unsuccessful.
Gordhan resigned last year when PPC’s board prevented him from dismissing the company’s chief financial officer, Tryphosa Ramano, but shortly thereafter he attempted to get the board to allow him to retract his resignation and reinstate him, which was refused.
Gordhan then ran a campaign to be reinstated as chief executive, resulting in Foord Asset Management, supported by Visio Capital Management and Nedbank Private Wealth, submitting a request to PPC’s board to call a general meeting about the proposed removal of the current board.
This request was withdrawn in December after agreement was reached on reconstituting PPC’s board at the general meeting, with four board members stepping down to be replaced by six new directors.
Sibiya confirmed some of the nominees by Foord, Visio Capital and Nedbank Private Wealth were elected to the board, but declined to identify them, stressing that the elected directors were accountable to the company and linking them with the nominating shareholders “may perpetuate the situation”.