HOW TO READ OUR INTEGRATED REPORT. Framework

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1 Integrated report

2 Who we are For 123 years, PPC has tracked the growth and development of South Africa and Zimbabwe, producing cement for many iconic landmarks, including the Union Buildings, Gariep Dam and Van Staden s River Bridge, Kariba Dam, the Gautrain, new Cape Town Stadium, Medupi power station and much of southern Africa s infrastructure. Over the recent years PPC has extended its reach to play a role in infrastructure development in several African countries. HOW TO READ OUR INTEGRATED REPORT Our integrated report provides extensive crossreferences, using these icons: Related information in this report Our focus extends beyond our group to the broader industry. As a leader in this industry, PPC has actively invested in technology to reduce air emissions, minimise waste production, recover and recycle raw materials, enhance energy efficiency and conserve natural resources, while producing a reliable and affordable supply of building materials to support the economies of countries where we operate. PPC is a truly African success story a focused business that reflects the strengths of its people, products and services. As we expand into the rest of Africa, we will deploy our sustainable business model one built to last for all stakeholders. More information on Glossary on page 152 The following frameworks have been applied in preparing this report: Framework The framework of the International Integrated Reporting Council (IIRC) on accepted best practice in annual reporting. In determining the content that would present a complete view, we followed the committee s guiding principles: strategic focus and future orientation; connectivity of information; stakeholder relationships; materiality, conciseness, reliability and completeness; and consistency and comparability. Guidelines of the Global Reporting Initiative on sustainability disclosure (GRI G3.1). PPC will report against the latest guidelines (G4) in the new financial year. International Financial Reporting Standards (IFRS) South African Companies Act JSE Limited (JSE) listings requirements King III recommendations. Annual financial statements and summarised annual financial statements. For details of our AGM please refer to our notice of AGM

3 VISION A world-class provider of materials and solutions into the basic services sector, taking a strategic approach to more than doubling our business every ten years. STRATEGIC ASPIRATION 2015 at a glance Our business Exceeding the expectations of all our stakeholders on a sustainable basis. Achieving this strategic aspiration requires fundamentally changing our corporate culture while excelling at the five pillars of our strategy: See page 32. World-class excellence in all we do Innovation culture Taking a strategic approach Provider of materials and solutions Doubling our business every ten years Appendices Financial Sustainability Governance Strategic and operational PPC Ltd Integrated report

4 CONTENTS 2015 at a glance Performance highlights 4 Performance 5 6 profile of our business 8 Sustainability People 90 Social 102 Environmental 112 Limited assurance report Our footprint 11 Our business Chairman s report 14 Material issues 17 Business model 18 Stakeholder engagement 20 Leadership 22 Strategic and operational Chief executive officer s report 28 Financial Independent auditors report 124 Summarised annual financial statements 125 Appendices Mining charter scorecard 147 Human resource development and dti BBBEE status 149 PPC shareholder analysis 150 Financial calendar 151 Glossary 152 GRI 153 PPC profit improvement programme 31 Corporate information IBC Our new strategy 32 Chief financial officer s report 34 Value added statement 37 Seven-year financial 38 Operations 40 Supplementary information In addition to this integrated report, please see supplementary reports on our website: Governance Corporate governance 52 Committee reports, including Risk report to shareholders 66 Compliance report to shareholders 68 PPC remuneration report 70 Information technology 87 2 PPC Ltd Integrated report 2015

5 ABOUT THIS REPORT Report profile This integrated report covers PPC s financial and non-financial performance between 1 October 2014 and 30 September It follows a similar report produced for the financial year to 30 September 2014 and has been primarily compiled for providers of capital, but will be of interest to all stakeholders. This report should be read in conjunction with the supplemental information and complete audited annual financial statements on our website. We welcome your feedback on our full suite of reports. This should investor relations, tel +27 (11) , fax +27 (11) , For further details on sustainability matters, please contact environment, tel +27 (11) , fax +27 (11) , group company secretary are on the inside back cover. Reporting principles and approach PPC s integrated report clarifies the link between our financial and non-financial performance (environmental, social and governance), contextualises our risks and opportunities and summarises our engagement with stakeholders. These were key inputs in refining entails a number of new performance measures, year-on-year progress is not always comparable but we report on our performance against strategic objectives where possible. Report boundary and batching facilities (cement, lime, readymix and ash), PPC has expansion projects under way. We have also included an analysis of external factors that may have a significant effect on PPC s ability to create value (page 17). Report scope and materiality The scope of this report includes the most material financial and comprehensive process that combines risk identification and assessment with strategic objectives, stakeholder feedback, market conditions and our own performance to prioritise issues that are key to our sustainability now and in the near future. Where relevant, we detail material issues at project or business unit level. For the reporting period, our key material issues at group level (page 17) were: Negative movement of cement selling prices and sales volumes Serious health and safety incidents at operations and during PPC s capitals In line with the IIRC framework, we have considered the resources and relationships used and affected by PPC. These are referred to collectively as the capitals and encompass financial, intellectual, human, natural, manufactured, social and relationship. How we interact with our external environment and these capitals underpins our ability to create value over the short, medium and long term. Please see our business model on page 18 for details. Significant changes in the period officer and executive director and six new non-executive directors effective January The PPC board also approved the change of year-end from September to March. Assurance preparing its annual financial statements. These were audited by (page 119). Board approval The board acknowledges its responsibility to ensure the integrity of the integrated report. Board members have applied their collective mind to the preparation and presentation of this report and believe it is presented in accordance with the IIRC framework. sustainability disclosure to the audit committee, which recommended that the board approve this report. Bheki Sibiya Chairman Darryll Castle Chief executive officer 2015 at a glance Our business Appendices Financial Sustainability Governance Strategic and operational PPC Ltd Integrated report

6 PERFORMANCE HIGHLIGHTS ENVIRONMENT FINANCIAL 114% cash conversion ratio achieved 10% reduction in absolute carbon emissions of finished cement Revenue R9,2 billion (2014: R9 billion) Slurry factory granted authorisation by the to construct a new kiln line which will improve environmental impact PEOPLE Over R58 million in dividends paid to employees 44 housing transactions completed in the PPC staff housing initiative to date Headline earnings per share 145 cents (2014: 179 cents) Over R2 billion spent on expansion projects in this year result in 15% thermal heat replacement OPERATIONAL tpa plant in Rwanda successfully commissioned in 2015 SOCIAL 87% of total procurement (R4,5 billion) spent with BBBEE suppliers Profit improvement programme delivered R212 million for PPC Ltd Integrated report 2015

7 PERFORMANCE REVIEW Here we summarise our progress against key strategic objectives in the period. Our new strategy is detailed on page 32. Key targets related to the new strategy will be disclosed in our next integrated report. Enhance our industry leadership in southern Africa 2015 at a glance Our business OBJECTIVE PROGRESS Improve sales, marketing, customer focus and overall value Repositioned PPC Surebuild s price premium to activate the proposition inherent brand equity strength Variable delivered cost of sales per tonne declined 2% in the and logistical efficiencies and good corporate governance increased by 2% Review or upgrade equipment, especially in relation to environment or efficiency To ensure increased reliability and improved energy efficiency, we kiln 1 Ensure cash flow returns that support sustainable investment in Strong cash generation ability R2,7 billion of cash generated current and new markets from operations and achieved a cash conversion ratio of 114% Expand our operational footprint into other parts of Africa OBJECTIVE PROGRESS by 2017 Target countries with high potential for infrastructure Successfully commissioned the tonne per annum plant development, low per-capita cement consumption and current in Rwanda cement shortages 50% complete Appendices Financial Sustainability Governance Strategic and operational PPC Ltd Integrated report

8 KEY MILESTONES 1892 PPC Ltd established Cement Fabrieken Beperkt, in Hercules, Pretoria 1902 Changed its name to The First Portland Cement Factory Limited 1908 Name changed to Pretoria Portland Cement Company Limited Maiden dividend starts a tradition unbroken for over a century 1910 PPC listed on the JSE 1992 Centenary first 100 years 1994 Nelson Mandela black president 1996 Surebuild brand launched Botswana blending plant commissioned 2001 Holdings in Entered aggregates market by acquiring Mooiplaas dolomite quarry 6 PPC Ltd Integrated report 2015

9 1916 PPC Slurry produced its first cement 1921 built in Western Cape 1927 Cement factory built in Port 1937 PPC Jupiter started up in Germiston, just outside Johannesburg 2008 R3,9 billion broadbased black economic empowerment transactions 2010 PPC cement used in multi-billion rand projects including Gautrain, soccer stadiums, Medupi stations PPC listed on JSE for 100 years 2012 stake in Habesha Cement, Ethiopia Name changes to PPC Ltd 1956 Construction of PPC Riebeeck in the Western Cape 1977 Entered lime industry by acquiring Northern Lime Company 1984 PPC built and mothballed in economic recession; recommissioned the plant in Construction started on new cement plant Cement centenary 2014 Readymix Construction of mill in 2015 New tpa plant commissioned in Rwanda Commenced construction of Slurry kiln at a glance Our business Appendices Financial Sustainability Governance Strategic and operational PPC Ltd Integrated report

10 A PROFILE OF OUR BUSINESS PPC now supplies from nine cement factories, four milling plants, five blending facilities and nine readymix batching plants after acquiring Safika Cement and Pronto Readymix (including Ulula Ash) in PPC also produces aggregates, metallurgical-grade lime, burnt dolomite and limestone. Our Mooiplaas aggregates quarry in Gauteng has the largest aggregate production capacity in South Africa. half a million tonnes of fly ash. EXCELLENCE IN ALL WE DO We are professional and do things properly. We at PPC set the standard. We lead. We set challenging goals and are performancedriven. We are flexible and agile and we seek to continuously improve. Yesterday s stretch becomes today s standard. INTEGRITY IS NON-NEGOTIABLE We meet our commitments. We do what we say. We are honest and obey the law. EXCELLENCE INTEGRITY GREAT PLACE TO WORK We work in teams. Everyone has an important role to play and we want to maintain a non-discriminatory, safe and healthy work environment. We respect the dignity of every individual we engage with. We embrace transformation and diversity. EMPLOYEE SATISFACTION LEGITIMACY PPC VALUES STAKEHOLDER VALUE CUSTOMERS CUSTOMER-FOCUSED Our customers are the reason for our existence and all our efforts are focused on good relationships, understanding and meeting their needs consistently. LEGITIMACY We are seen by our stakeholders as caring and adding value. We are seen as long-term contributors and not short-term takers. We care for the environment and the communities in which we operate. CREATING A BETTER LIFE FOR STAKEHOLDERS Everyone s contribution creates the value. All stakeholders share in the value and success we create. 8 PPC Ltd Integrated report 2015

11 Managing our business Responsibility and integrity underpin our approach to managing our business. Key developments during the year were focused on strengthening this approach. ETHICS Founded in our corporate value that states integrity is non-negotiable, and supported by a code of conduct enforced across our operating territories. RISK COMPLIANCE Risk and compliance is monitored by a board committee. The main objective of risk management at PPC is to ensure sustainable growth in all our businesses and promote a proactive approach in evaluating, resolving and reporting risks associated with our businesses. GOVERNANCE Robust governance standards are monitored by a strong and experienced board of directors. REMUNERATION To ensure we create value for shareholders, including our own people, greater emphasis is now placed on reward for performance at senior levels, and the overall reward for semiskilled employees is being increased. SALIENT FEATURES IN 2015 Completed ethics training across the group. Enhanced communication efforts and increased profile of anonymous tip offs line. SALIENT FEATURES IN 2015 During the period, a risk management software solution was implemented for the group. In December 2014, all site champions and risk managers were trained on the new system, with all risk registers loaded into the system by the end of February Workshops were facilitated for all of the group functions and South African business to develop risk registers. These registers together with the PPC International register were then used by the Exco in a workshop to develop the PPC group risk register. This was considered by the board and the material issues are included in the integrated report. SALIENT FEATURES IN 2015 Governance, risk and compliance standards further enhanced. SALIENT FEATURES IN 2015 In complementing the performance culture across the business, the short-term incentive parameters have been ed and now include strategic nonfinancial elements that are strongly aligned with PPC s expansion strategies and shareholders interests at a glance Our business Appendices Financial Sustainability Governance Strategic and operational PPC Ltd Integrated report

12 AWARDS South Africa PMR supplier 2015 Standard Bank smarties award Mail & Guardian top 200 young South Africans CFO, was listed in the business and law category Zimbabwe Zimra (Zimbabwe Revenue Authority): PPC won the first prize for Region 2 in VAT and income tax. We also won the second prize in Pay as You Earn (PAYE) Concrete Society of Southern Africa s 2015 Fulton awards in the category innovation in concrete From Zimbabwe National Chamber of Commerce we won the following: Zimbabwe national annual quality awards Annual Business Day BASA awards, partnered by Hollard (South Africa s most prestigious awards recognising business arts partnerships) PPC public bench project Steinbuild awards Botswana Trust for PPC s contribution EY excellence in integrated reporting 2014: excellent ranking Other awards PMR Africa diamond arrow award of cement Most influential woman in business and governance Standard Bank top women awards relations) young achiever of the year business woman of the year gender empowered company: engineering Nkonki Top 100 Integrated Reporting awards PPC Ltd Integrated report 2015

13 OUR FOOTPRINT DEMOCRATIC REPUBLIC OF THE CONGO 2015 at a glance ETHIOPIA ZIMBABWE Our business ETHIOPIA SOUTH AFRICA Population (m) 54,9 Urbanisation (%) 64, Cement consumption/capita (kg) 230 1,8 Retail cement price per ) Current national cement production capacity (mtpa) RWANDA Population (m) 11,4 Urbanisation (%) Cement consumption/capita (kg) 45 7,1 Retail cement price per ) Current national cement production capacity (mtpa) BOTSWANA SOUTH AFRICA Source: International Monetary Fund ,7 ZIMBABWE Population (m) 13,4 Urbanisation (%) Cement consumption/capita (kg) 77 2,5 Retail cement price per ) Current national cement production capacity (mtpa) DEMOCRATIC REPUBLIC OF THE CONGO Population (m) 81,7 Urbanisation (%) 42,5 478 Cement consumption/capita (kg) 34 7,2 Retail cement price per ) Current national cement production capacity (mtpa) DEMOCRATIC REPUBLIC OF THE CONGO ZAMBIA BOTSWANA SOUTH AFRICA ZIMBABWE RWANDA BURUNDI , ,4 (in use) MALAWI MOZAMBIQUE BOTSWANA Population (m) 2,1 Urbanisation (%) Cement consumption/capita (kg) 302 3,3 Retail cement price per ) Current national cement production capacity (mtpa) ETHIOPIA Population (m) 89,8 Urbanisation (%) 19,5 702 Cement consumption/capita (kg) 61 8,0 Retail cement price per ) RWANDA Current operation Current operation and current project Current project and export market Export markets Current project Current national cement production capacity (mtpa) , Appendices Financial Sustainability Governance Strategic and operational PPC Ltd Integrated report

14 WORLD-CLASS EXCELLENCE IN ALL THAT WE DO We will ensure a sustainable competitive advantage by committing to world-class standards in all that we do We strive for technical excellence that will manifest itself in a cost leadership philosophy Constantly monitoring global best practices and solutions Constantly measuring and monitoring our business 12 PPC Ltd

15 Appendices Financial Sustainability Governance Strategic and operational Our business 2015 at a glance PPC Ltd 13

16 CHAIRMAN S REPORT FINANCIAL Final dividend of 33 cents Overview Changes to the board and board issues Against the backdrop of a turbulent world economy, increasing cement capacity and falling cement selling prices across the African continent, PPC is focused on disciplined cost management, innovation and the efficient delivery of large projects. Bheki Sibiya Chairman Strategy 14 PPC Ltd

17 Macro-environment Africa South Africa Macro-economic projections 2014 to estimate 1,5 1,2 Real GDP growth 1,5 GDP at current prices (R billion) ,8 (4,1) Source: Reserve Bank and National Treasury Performance 2015 at a glance Our business Strategic and operational Governance Sustainability Financial Appendices PPC Ltd 15

18 CHAIRMAN S REPORT CONTINUED Remuneration Compliance and regulatory Dividends Outlook Appreciation Bheki Sibiya Chairman Approach to sustainable development 16 PPC Ltd

19 MATERIAL ISSUES Evaluating our strategic objectives, stakeholder engagement and comprehensive risk assessments, we have identified the material issues our stakeholders need to consider at a glance MATERIAL ISSUES Negative movement of cement selling prices and sales volumes RESPONSE STRATEGY Our business Strategic Stagnant SADC economy A major investment not achieving expected business case returns The negative impact of the collapse in the steel industry Strategic and operational Governance Inability to access capital markets Undervalued share price: Inherent value of PPC not reflected in current valuations Sustainability Dumping of cement in PPC markets Financial Operational Serious health and safety incidents Loss of electricity supply to major operations Appendices PPC Ltd 17

20 BUSINESS MODEL BUSINESS ACTIVITIES AND PROCESSES INPUTS Financial capital Human capital Intellectual capital Natural capital Manufactured capital Social capital BUSINESS SUPPORT FUNCTIONS STRATEGY DEVELOPMENT GOVERNANCE HUMAN RESOURCES LEGAL INFORMATION TECHNOLOGY 18 PPC Ltd

21 EXPLORATION PROCUREMENT MINING MANUFACTURING DISTRIBUTION SALES MARKETING OUTPUTS Cement revenue = Lime revenue = Aggregates and readymix revenue = OUTCOMES Financial capital Human capital Intellectual capital Natural capital Manufactured capital Social capital 2015 at a glance Our business Strategic and operational Governance Sustainability Financial TECHNICAL SERVICES PROJECT MANAGEMENT FINANCE AND TAX BUSINESS DEVELOPMENT STAKEHOLDER RELATIONS INTERNAL AND EXTERNAL COMMUNICATIONS Appendices PPC Ltd 19

22 STAKEHOLDER ENGAGEMENT CUSTOMERS EMPLOYEES SHAREHOLDERS/INVESTORS COMMUNITIES AND NGOS WHY WE ENGAGE WHY WE ENGAGE WHY WE ENGAGE WHY WE ENGAGE WHO IS INCLUDED HOW WE ENGAGE ISSUES RAISED ACTIONS WHO IS INCLUDED Employees from: HOW WE ENGAGE ISSUES RAISED ACTIONS WHO IS INCLUDED HOW WE ENGAGE ISSUES RAISED ACTIONS NEXT STEPS WHO IS INCLUDED HOW WE ENGAGE ISSUES RAISED ACTIONS NEXT STEPS NEXT STEPS NEXT STEPS 20 PPC Ltd

23 GOVERNMENT AND REGULATORS INDUSTRY ASSOCIATIONS AND ACADEMIC INSTITUTIONS SUPPLIERS MEDIA 2015 at a glance WHY WE ENGAGE WHO IS INCLUDED HOW WE ENGAGE ISSUES RAISED ACTIONS NEXT STEPS WHY WE ENGAGE WHO IS INCLUDED Industry forums: HOW WE ENGAGE PPC supports or sponsors a number of universities: ISSUES RAISED ACTIONS NEXT STEPS WHY WE ENGAGE WHO IS INCLUDED HOW WE ENGAGE ISSUES RAISED ACTIONS NEXT STEPS Focus on: PPC Ltd 21 WHY WE ENGAGE WHO IS INCLUDED HOW WE ENGAGE ISSUES RAISED ACTIONS NEXT STEPS Our business Strategic and operational Governance Sustainability Financial Appendices

24 LEADERSHIP Our board 1 Bheki Lindinkosi Sibiya (58) Chairman (independent nonexecutive director) Board committees: remuneration, nominations (chair) and investment Appointed November 2008 MBA (University of Western Michigan, USA) 2 Darryll John Castle (47) Chief executive officer Board committees: risk and compliance Appointed January 2015 BSc (civil), BCom, MBA, CFA 3 Mmakeaya Magoro Tryphosa Ramano (44) Chief financial officer Appointed August 2011 CA(SA) 4 Zibusiso Janice Kganyago (49) Independent non-executive director Board committees: alternate director to the chairman Appointed October 2007 BCom (University of Natal), management programmes (Wharton School of Business, Pennsylvania and University of Nevada, Reno) 5 Timothy Dacre Aird Ross (71) Independent non-executive director Board committees: audit (chair), risk and compliance and investment Appointed July 2008 CA(SA) 6 Sydney Knox Mhlarhi (42) Non-executive director Board committees: remuneration and investment Appointed March 2012 BCom, BAcc (University of the Witwatersrand), CA(SA) 7 Mangalani Peter Malungani (57) Non-executive director Board committees: social, ethics and transformation, and investment (chair) Appointed February 2009 BCom (Unisa), management programmes (Wits Business School, Wharton University, USA) 22 PPC Ltd

25 8 Bridgette Modise (48) Independent non-executive director Board committees: risk and compliance (chair) and audit Appointed December 2010 BCompt (hons), CTA, CA(SA), CIMA, management development programmes 9 Todd Moyo (57) Independent non-executive director Board committee: audit and nominations Appointed November 2013 BAcc (hons) (University of Zimbabwe), CA(Z), CA(SA), RPA(Z), MCSZ 10 Nicky Goldin (45) Independent non-executive director Board committees: remuneration and investment Appointed January 2015 BCom (hons) University of the Witwatersrand, MBA (University of Illinois) 11 Timothy Leaf-Wright (62) Independent non-executive director Board committees: risk and compliance, social, ethics and transformation, and investment Appointed January 2015 Chartered Institute of Secretaries (Natal Technikon) 12 Charles Naude (60) Independent non-executive director Board committees: remuneration and risk and compliance Appointed January 2015 BSc (hons geology, chemistry) (University of Pretoria), certificate production management (Wits Technikon), MBL (Unisa) 13 Peter Gill Nelson (61) Independent non-executive director Board committee: remuneration (chair) and audit Appointed January 2015 BCom (Rhodes), BCompt (hons) (Unisa), CA(SA) 14 Tito Mboweni (56) Independent non-executive director Board committees: social, ethics and transformation (chair), and nomination Appointed January 2015 BA (National University of Lesotho), MA, development economics (University of East Anglia), Diploma in international business diplomacy (Georgetown University), CD(SA) Appendices Financial Sustainability Governance Strategic and Our business 2015 at a glance operational PPC Ltd 23

26 LEADERSHIP CONTINUED Group executive committee 1 Darryll John Castle (47) Chief executive officer See page Mmakeaya Magoro Tryphosa Ramano (44) Chief financial officer See page Pieter Lasenius Booysen (53) Executive: technical BEng (mining) (University of Pretoria), 4 Jacobus Johannes Taljaard (57) Executive head: business development (international) (joint) BEng (mech) (University of Stellenbosch), GDE (minerals economy) (University of the Witwatersrand), MDP (Unisa School of Business Leadership) 5 Azola Cubekile Lowan (35) Executive: strategy and investor relations MBusSci (UCT), CFA 6 Klaas Paulus Pieter Meijer (55)* Managing director, PPC International BEng (mech eng), BB&A (hons), MBA (University of Stellenbosch) * He leaves PPC effective 30 November Happy-Girl Nonhlanhla Buthelezi (42) Executive head: business development (international) (joint) BCom (University of Natal), MBA (UCT Graduate School of Business), diploma in tax (ICIE), postgraduate in management accounting (University of Natal) 24 PPC Ltd

27 8 Johannes Theodorus Claassen (56) Managing director, PPC Cement RSA BEng (University of Stellenbosch), EDP (Wits Business School) 9 Jacobus Hendrik De La Rey Snyman (48) Executive: secretarial and legal, PPC company secretary BA, LLB, LLM (University of Johannesburg), MBA (University of the North West) 10 Kgomotso Molefe (43) Chief information officer BSc computer science (hons) University of the Witwatersrand 11 Tirelo Sibisi (47) Group human resources executive* BSocSci (hons) (North West University), MBA (Henley Business School), advanced HR executive development programme (Michigan University) * She resigned from PPC effective 15 December Rob Rein (39) Executive: sales and marketing BCom Accounting (University of Pretoria) 13 Phuti Semenya (39) Chief audit executive* CA(SA), CIA, certified control self-assessor (CCSA), certificate in advanced banking law (cum laude) * Attends as observer only Appendices Financial Sustainability Governance Strategic and Our business 2015 at a glance operational PPC Ltd 25

28 PROVIDER OF MATERIALS AND SOLUTIONS In manufacturing cement we have the ingredients and intellectual property to provide products and solutions to a wider clientèle without taking the focus off our core cement making business Cement is an intermediate physical product. We have IP and expertise relevant to our customers that differentiate us and enable us to offer solutions Adjacent and transformational businesses related to our inputs, processes and products are important growth factors to ensure against changes in our industry 26 PPC Ltd Integrated report 2015

29 Appendices Financial Sustainability Governance Strategic and operational Our business 2015 at a glance PPC Ltd Integrated report

30 CHIEF EXECUTIVE OFFICER S REPORT It has been a privilege to be part of an organisation over the past nine months with a rich heritage, history and diversity. A company that has been a household institution in South Africa for over a century is now reinventing itself for the next 100 years. This new strategy is supported by five pillars: World-class excellence in all that we do Provider of materials and solutions Innovation culture Taking a strategic approach Doubling our business every ten years A new business in the making since 2010, PPC has focused on its two-pronged strategy of keeping the home fires burning and expanding into the rest of Africa. We have made significant progress with the latter and our target of generating 40% of revenue from the rest of the continent by 2017 is within reach. To ensure we achieve these goals, PPC embarked on a group-wide change programme, #IGNITE. This programme will ensure we develop and embed our new strategy, that the appropriate leadership and management practices are in place; and that our profitability and performance is improved. The profit improvement programme delivered R212 million which led to our group EBITDA of R2,36 billion ending marginally above last year. In June 2015, 70 of our most senior managers interrogated whether our strategy was still appropriate and, after robust discussion and engagement, we launched our new vision and strategy internally on 1 October We aim to become a world-class provider of materials and solutions into the basic services sector, taking a strategic approach to more than doubling our business every ten years. We will consider ourselves successful if we can exceed the expectations of all our stakeholders on a sustainable basis. Embedded in this is a requirement for our corporate culture to match our ambitions. Although still in its infancy, #IGNITE is already yielding positive results. Our strategy and plans are taking shape, with our management practices and processes improving. Our profit improvement programme (PIP) has delivered an impressive set of numbers, evidence that our initiatives are gaining traction. Satisfactory performance in a challenging climate in 2015 Results for the 12 months to 30 September 2015 reflect disciplined cost management, strong cash generation and a group-wide strategic intent of transforming the business to becoming a provider of material solutions. Darryll Castle Chief executive officer 28 PPC Ltd Integrated report 2015

31 Highlights PPC s revenue exceeded R9,2 billion, up 2,0% on last year, in a challenging African projects progressing well: Rwanda commissioned 2015 at a glance FINANCIAL Profit improvement programme delivered R212 million for 2015 operating climate, where both pricing and volumes were under pressure. A difficult domestic market was offset by the consolidation of our new businesses, including Safika and Pronto. Due to improved efficiencies, cost of sales decreased by 7% in the second half. This, coupled with more stringent cost optimisation, resulted in PPC maintaining In August 2015, we officially opened our new tpa plant at CIMERWA in Rwanda. This high-profile event was presided over by the right honourable prime minister of Rwanda, Mr Anastase Murekezi. The US$170 million project was concluded within the allocated budget and is expected to receive the provisional acceptance certificate shortly. Our new Our business FINANCIAL Cash conversion rate of 114% achieved FINANCIAL an EBITDA of R2,36 billion for the reporting period. Earnings for the year declined 17%, notwithstanding a much-improved secondhalf performance. A highlight of 2015 was our excellent cash generation of R2 716 million (2014: R2 583 million), translating to a cashconversion rate of 114% (2014: 108%). Cash conversion in tough economic times is a key measure of the overall health of a business and our high ratio reflects a business with strong controls and a quality debtors book. plant is performing as planned with the product being well received in the local market and neighbouring countries. Achieving this significant milestone is evidence of PPC s ability to deliver large projects within budget. DRC and Zimbabwe on track Our projects in the Democratic Republic of the Congo (DRC) and Zimbabwe are on schedule and we expect both to be commissioned towards the end of The US$280 million DRC project is 55% complete while the US$85 million Strategic and operational Governance Significantly improved second half financial performance OPERATIONAL Covenants Discussions with our lenders have ensured that our covenants are better aligned with our expansion imperatives. Covenants established in 2008, before PPC initiated its expansion programme, limited debt to EBITDA to 3,0 times. These needed to be realigned to better match the nature of our current business. Consequently, our funders have agreed to exclude non-recourse Zimbabwean expansion is 50% complete. Ethiopia Last year, we announced our plan to increase our shareholding in Habesha Cement of Ethiopia from 31% to 51%. Given that further work was needed to confirm the capital costs and timeframe, we maintained our shareholding at 31%. We can now confirm that the 1,4mtpa Sustainability project finance from the definition of PPC s plant in Ethiopia will be completed at a Rwandan project delivered within budget indebtedness and relax the debt to EBITDA covenant from 3,0 to 3,3 times. R400 million PIP In March, we introduced our profit capital cost of between US$170 million and US$180 million and will be commissioned in the second calendar quarter of We believe this capital cost is relatively low considering that, on Financial improvement programme (PIP) to investors. the continent, companies can expect to pay This initiative aims to generate up to US$300 million for a 1mtpa plant. OPERATIONAL Plans for additional capacity in South Africa under way R400 million over the next three years, focused on revenue optimisation, cost efficiencies and strategic cost reductions. In the six months to September 2015, PIP delivered an impressive R212 million which led to our group EBITDA of R2,36 billion ending marginally above last year. Operational performance New entrants in the South African cement market will continue to apply pressure on existing producers. We are focused on strengthening the various attributes of our value proposition to clients which include consistently supplying quality cement, Appendices PPC Ltd Integrated report

32 CHIEF EXECUTIVE OFFICER S REPORT CONTINUED ensuring reliability of our deliveries and backing this up with strong technical support. Our sales force has significantly improved its responsiveness to clients and strategic marketing efforts, such as acquiring the naming rights of the iconic Newlands cricket stadium in Cape Town, are beginning to bear fruit. Import duties for cement originating from Pakistan were implemented in May 2015, varying from 14% to 77%. These duties have reduced imports from that country by 30% between September 2014 and September The number of vessels landing in South Africa with imported cement has also declined. The cement industry continues to engage with the authorities to align dumping duties across Pakistani producers. Safety and sustainability Regrettably, we recorded a contractor fatality at the Habesha project in Ethiopia during the year. It is always a challenge to instil our high safety standards where we do not have management control, although we do our utmost to influence the process through board structures and engaging onsite management. Sadly, we recorded a fatality at our Slurry factory. We extend our deepest condolences to the family and friends affected by this incident. The group s remuneration policy now includes non-financial measures, such as safety, transformation and environmental compliance in the scorecard, and we have successfully aligned staff to our key sustainability measures. For 2015, we retained our level 2 rating under the Department of Trade and Industry s broad-based black economic empowerment (BBBEE) codes of good practice. This certificate expires in December From 2016, the revised codes will apply and our level 2 rating will translate to a level 7 rating. Executive management has agreed on a roadmap to achieve a more desirable BBBEE score in future and will implement this in PPC is also investigating a solution to unwind its 2008 BBBEE transaction during The solution will seek to restructure those aspects of the balance sheet associated with the transaction in an optimal way, to meet PPC s growth aspirations and reduce refinance risk. We are pleased that our Slurry factory was granted authorisation by the Department of Environmental Affairs to construct a new kiln 9 project. This R1,5 billion to R1,7 billion project will add 1mtpa cement capacity to Slurry from 2018, preparing PPC for growth in the domestic market. Tangible progress with our alternative thermal energy strategy has been made by introducing tyre burning at our De Hoek factory in the Western Cape. De Hoek kiln 6 is expected to have a coprocessing capacity of about tonnes of recycled tyres per year, resulting in thermal heat replacement of about 15%. The manual feed system was completed at a cost of under R10 million. The draft carbon tax bill was released for comment in November Salient features include the promulgation of the Carbon Tax Act 2017, which will come into operation on 1 January The proposed headline carbon tax of R120 per tonne of carbon dioxide equivalent (CO 2 e) has been maintained, but some adjustments have been made to allowances. Previously, we estimated that the impact of carbon taxes on PPC would be around R150 million. With the latest draft bill, this value is now expected to be just below R120 million. An employee housing support scheme was introduced in 2012 to assist over 300 PPC employees to improve their living conditions. To date, 471 South African employees have enrolled in the programme and are being assisted to become homeowners. Forty-four employees have moved into their new homes, upgraded an existing home or are awaiting title deeds before moving into their homes. We will introduce a similar housing initiative for our Zimbabwean operations in the 2016 financial year. The PPC Women s Forum, established in 2011, focuses on attracting, nurturing and advancing female talent to lead PPC. Against the forum s 2016 objective of 30% female representation across all levels at PPC, this has increased to 23% in The forum s excellent work is reflected in PPC receiving a number of awards in 2015 (page 10). Looking ahead to 2016 PPC is under no illusion about the challenging domestic market conditions we expect to encounter in These include a competitive landscape and difficult economic climate. However, we are better equipped to manage these effectively. Our change management programme is expected to deliver additional financial and non-financial benefits. We are also confident of delivering our remaining projects on time and within budget. Continued emphasis on our cash conversion ability and sustainable profit improvement will position PPC well in coming years to benefit from any substantial improvement in domestic market conditions. I thank my fellow board members, the executive committee, and team PPC for their continued focus and energy during the year. I wish both Tirelo Sibisi and Pepe Meijer all of the best as they move on from PPC. Their hard work and contribution is most appreciated. Our customers, shareholders and other stakeholders remain critical to our success and we are grateful for their support. Darryll Castle Chief executive officer 17 November PPC Ltd Integrated report 2015

33 PPC PROFIT IMPROVEMENT PROGRAMME As part of its change management programme, #IGNITE, PPC embarked on a programme to sustainably add value to shareholders by implementing innovative business initiatives. These were formalised into a group-wide profit improvement programme (PIP) which aims to increase revenue, reduce costs and improve efficiencies. A PIP team comprising PPC employees from various parts of the business was established to manage the process. While this concept is not unique to PPC, the decision to include employees as implementers has been helpful as the programme is seen not only as a profitability improvement plan but also a culture change tool. PPC believes this is key to the sustainability of the programme. PIP value propositions The programme is designed to: Deliver short-term reliable results Drive cultural and behavioural change Support strategic positioning of businesses in the group Deliver sustainable solutions for long-term value creation PIP financial targets: deliver R400 million over a three-year period At PPC s interim results, we communicated that PIP would deliver R400 million in sustainable savings over a three-year period. The programme is divided into three major streams, including revenue optimisation of R130 million, cost efficiencies of R150 million and strategic cost reductions of R120 million. Stream 1: Revenue optimisation key activities and deliverables Review pricing strategies using analytics Strengthen channel management strategy by better leveraging our subsidiaries Regain sustainable market share Stream 2: Cost efficiencies key activities and deliverables Optimise supply chain and logistics Improve procurement processes and procedures Optimise energy use and efficiency Stream 3: Strategic cost reduction key activities and deliverables Identify and reduce head office costs Optimise operational fixed costs PIP implementation executive support is crucial Given the challenging requirements and complexity of the task, the PIP team completed a detailed financial analysis of the business and identified key areas with the potential to deliver worthwhile and sustainable savings. Specific targets and key performance measures were then agreed with responsible executive management. A detailed schedule and plan set out immediate, medium-term and longer-term measures. We noted early on that the success of PIP would require continuous monitoring against benchmarks and measurements. Monthly meetings and report-backs were therefore instituted to track progress, identify shortcomings and provide a platform to drive additional benefits. Progress since inception R212 million in savings in six months The PIP has delivered R212 million in sustainable measurable savings in its first six months. These consisted of 18 initiatives which, combined, delivered pleasing results quickly all aligned to our value propositions. We envisage that these initiatives will evolve over time, potentially realising additional savings. Recognition and incentives To recognise contributions made by PPC employees to the programme, a monthly non-financial reward system has been instituted from the start while related KPIs are reflected in all employee performance scorecards, to ensure alignment between our employee and group targets at a glance Our business Strategic and operational Governance Sustainability PROFIT IMPROVEMENT PROGRAMME CONSISTS OF 3 PILLARS Financial REVENUE OPTIMISATION COST EFFICIENCIES STRATEGIC COST REDUCTION PROFIT IMPROVEMENT PROGRAMME UP TO R130 MILLION Pricing strategy Regain market share Geographic segmentation Channel management UP TO R150 MILLION Logistics optimisation Supply chain optimisation Increase use of alternative energy Raw material optimisation UP TO R120 MILLION Innovation Operating architecture Refine role of head office Operational fixed costs UP TO R400 MILLION IMPROVEMENT IN THREE YEARS Appendices PPC Ltd Integrated report

34 OUR NEW STRATEGY VISION A world-class provider of materials and solutions into the basic services sector, taking a strategic approach to more than doubling our business every ten years. OUR STRATEGIC INTENT OUR PURPOSE OUR AMBITION OUR LONG-TERM GOALS, MATERIAL ISSUES AND STRATEGY Why we exist Becoming a major player in Africa then globally LONG-TERM GOALS For our people and communities, and therefore PPC Energy security of supply, cost Water quality and reliable supply Waste turning suitable waste into energy Atmospheric greenhouse gases minimising emissions Labour force equitable employment Good health through proactive healthcare Safety through constant attention Education developing the full potential of every stakeholder MATERIAL ISSUES expected business case returns DC economy 32 PPC Ltd Integrated report 2015

35 2015 at a glance Our strategic aspiration Our business ENTER DEFEND GROW CONTROL MONITOR Strategic and operational WORLD-CLASS EXCELLENCE IN ALL THAT WE DO PROVIDER OF MATERIALS AND SOLUTIONS OUR STRATEGY WORLD-CLASS EXCELLENCE IN ALL THAT WE DO We will ensure a sustainable competitive advantage by committing to world-class standards in all that we do We strive for technical excellence that will manifest itself in a cost leadership philosophy Constantly monitoring global best practices and solutions Constantly measuring and monitoring our business Governance INNOVATION CULTURE TAKING A STRATEGIC APPROACH PROVIDER OF MATERIALS AND SOLUTIONS In manufacturing cement we have the ingredients and Intellectual property (IP) to provide products and solutions to a wider clientele without taking the focus off our core cement making business Cement is an intermediate physical product. We have IP and expertise relevant to our customers that differentiate us and enable us to offer solutions Adjacent and transformational businesses related to our inputs, processes and products are important growth vectors to ensure against changes in our industry Sustainability DOUBLING OUR BUSINESS EVERY TEN YEARS INNOVATION CULTURE We recognise that innovation is more than just ideas In order to harness the benefits of innovation ideas we will create an innovation process We will create an innovation culture as the core driver of the business TAKING A STRATEGIC APPROACH We will understand the drivers, risks and trends in each of our regions and businesses, especially in the longer term and act accordingly Defensive strategies are as important as offensive strategies Financial DOUBLING OUR BUSINESS EVERY TEN YEARS Recognising that Africa presents a unique growth opportunity in our time we will ensure that we at least maintain our market share We will have a deep understanding of the locations, owners and influencers of all relevant inputs, businesses and markets, and will leverage our position in order to maintain and extend our influence Ultimately we will utilise our strength to become a major global cement player Appendices PPC Ltd Integrated report

36 CHIEF FINANCIAL OFFICER S REPORT Overview In last year s CFO s report I noted that we were cautious about the level of economic activity in South Africa, which is now evident in our 2015 results where South African cement volumes recorded a decline of 1%. The strategy of securing the channel to market has benefited the group with strong performances achieved at Safika Cement and Pronto Readymix. The integration of these businesses continues with further synergies having been achieved during the year and our increased product offering has secured the group additional projects. Revenue ended 2% higher than last year at R9 227 million (2014: R9 039 million) as revenue growth from Zimbabwe and Botswana together with the full year impact of Safika Cement and Pronto Readymix helped negate the decline in local cement revenue. Revenue from our rest of Africa portfolio showed year-on-year growth of 8%, ending the year at R2 624 million (2014: R2 432 million) and now comprises 28% of group revenue, in part favourably impacted by the devaluation of the rand against the US dollar and pula. The securing of new customers in the lime business helped the division record revenue growth This organisational structure change will see the streamlining of our legal structure, simplifying our holding company from that of an operating and holding company into a traditional holding company and align the company structure with that of group strategy. Tryphosa Ramano Chief financial officer Offsetting the lower economic growth in South Africa and Zimbabwe has been a really strong team performance to be cost conscious and look for innovative ways to perform tasks and reduce unnecessary expenditure. Our PIP programme has been at the forefront of this initiative, with R212 million saved against our original budget, a remarkable performance considering that the programme was only launched during the latter part of the second quarter of this financial year. Income statement Revenue (Rm) Revenue earned from the rest of Africa (%) EBITDA (Rm) Headline earnings per share (cents) Normalised headline earnings per share (cents) of 7%, while aggregates revenue was flat on last year. On a like-for-like basis, group revenue would be 3% below last year at R8 320 million (2014: R8 561 million). The increase in cost of sales marginally exceeded revenue growth, ending the year 3% above last year at R6 437 million (2014: R6 266 million). Our intensified cost focus has resulted in South African cement variable delivered cost of sales ending 2% below last year while fixed costs, in absolute terms, recorded growth of 2% over last year. Cost of sales within the group have been well controlled with lime and Botswana cost of sales per tonne ending lower than last year while Zimbabwe and aggregates recorded increases below internal inflationary increases. 34 PPC Ltd Integrated report 2015

37 FINANCIAL Revenue from our rest of Africa portfolio grew 8% to R2,6 billion Administration and other operating expenditure increased by 10% to R1 130 million (2014: R1 030 million). A large portion of the higher expenditure can be ascribed to an increased bad debt provision of R40 million, originating from Zimbabwe, while in our lime business a key customer applied for business rescue. Bad debt provision as a percentage of revenue still remains within acceptable levels of below 1%. The further overhead increase follows the full year impact of the Pronto acquisition which was effective from 1 July 2014 and is inclusive of amortisation charges on fair value adjustments recorded in terms of IFRS 3 Business Combinations. Excluding the impact of the increased doubtful debt provision and the Pronto consolidation effect, administration and other operating expenditure would have recorded a 2% year-on-year decline. The reduced revenue impact from Cement RSA has somewhat detracted from a strong cost management performance throughout the group, improved profitability at lime and benefits from our channel management strategy. EBITDA ended marginally up on last year at R2 362 million (2014: R2 358 million) with EBITDA margin ending at 25,6% (2014: 26,1%). The group once again looked at rightsizing some of its operations, with R8 million (2014: R16 million) of restructuring costs being incurred in South Africa, while non-core vacancies are generally not filled. The expansions in the DRC, Rwanda and Zimbabwe are the key factors of finance costs increasing by 6% to R496 million (2014: R467 million). Interest and foreign exchange losses of R196 million (2014: R36 million) were capitalised to property, plant and equipment on the CIMERWA and DRC projects. Time value of money adjustments on the environmental provisions and put option liabilities amounted to R48 million (2014: R47 million). Net exceptional items charged to the income statement of R81 million (2014: R110 million) comprises impairments against goodwill of R22 million recorded on the Pronto transaction and plant and equipment of R43 million as the Algeria expansion project is not expected to continue and doubt exists as to the future use of a limestone quarry in Zimbabwe. Impairments of R14 million was recorded on items on the old plant at CIMERWA that would not be used post-commissioning of the new plant. The group s effective tax rate was 36,6% (2014: 30,1%) with a total tax charge of R391 million (2014: R356 million), noting the prior year overprovision of current tax of R70 million. Net profit attributable to PPC shareholders was R698 million (2014: R840 million) and the 17% decline against last year can be ascribed to the lower revenue and resultant profit from our South African cement operations, together with increased overheads and tax charge, partly offset by the full year impact from Safika Cement and Pronto Readymix and good cost control. Non-controlling shareholders shared in the net losses from the DRC and CIMERWA, which had a favourable impact on the profit attributable to PPC shareholders. The weighted average number of shares in issue remained materially the same as last year, with earnings per share following the same trend as noted in the net profit paragraph above and earnings per share and headline earnings per share ended the year 17% and 19% below last year respectively. Statement of financial position 2015 Rm 2014 Rm Property, plant and equipment Goodwill and other intangible assets Net working capital Property, plant and equipment increased by a net R3 425 million to end the year at R million (2014: R7 223 million), with the increase following capital additions of R3 269 million (2014: R1 908 million) and translation adjustments of R1 002 million on the back of the 22% year-on-year devaluation in the rand against the US dollar. At year-end, property, plant and equipment of R6 443 million (2014: R3 196 million) related to our rest of Africa operations. In the prior year we noted that initial contribution of land and the mining rights from the Barnet Group into the DRC group of companies which was recorded in full under property, plant and equipment, needed to be split between the land and mining rights. The allocation was completed this year which resulted in R115 million being transferred to intangible assets. Capital commitments at year-end amounted to R4 643 million (2014: R3 896 million), with the majority of the amount committed being linked to the DRC and Slurry kiln upgrades, with R2 758 million and R1 518 million anticipated to be incurred in the 2016 and 2017 financial years respectively (based on a September financial year-end) at a glance Our business Strategic and operational Governance Sustainability Financial Appendices PPC Ltd Integrated report

38 CHIEF FINANCIAL OFFICER S REPORT CONTINUED Except for the impairment of the goodwill at Pronto, the ongoing amortisation of other intangibles and transfer of mining rights from property, plant and equipment, there have not been any material movements in goodwill and other intangible assets. The balance, however, remains significant on a group level at R1 026 million (2014: R949 million). During the year, the board approved the disposal of the company s investments in Afripack and Ciments du Bourbon for a combined purchase price of R150 million. These transactions are anticipated to be completed by the first quarter of the 2016 calendar year. As a result of the decision to dispose, Afripack has been disclosed as a non-current asset held for sale. Net working capital, excluding capital prepayments, put option liabilities and retentions of R831 million (2014: R1 086 million), was favourably impacted by the reduction in trade receivables and increase in trade payables and accruals, partly offset by an increase in inventories in part driven by the devaluation of the rand and stock build at CIMERWA. Borrowings Total borrowings (Rm) Debt to EBITDA (%) 3,48 2,58 As noted earlier in this report, the group has invested significantly in new capital projects, with a resultant increase in borrowings. At year-end, 68%, 27% and 5% of long-term borrowings were denominated in rand, US dollar and Rwanda franc. In terms of the group s risk management profile, 48% (2014: 70%) of long-term borrowings are linked to variable interest rates. The company s covenants, initially put in place in 2008 for our first BBBEE transaction, have been renegotiated, providing the group with additional headroom and now aligns with our growth strategy. Nonrecourse project finance has been excluded from the definition of our indebtedness and the group debt to EBITDA covenant has been relaxed from 3,0 times to 3,3 times. In light of the position in our growth phase, Standard & Poor s Ratings Services lowered its long-term South Africa national scale rating for PPC to zaa from zaa+, but affirmed the zaa-2 short-term South Africa national scale rating on PPC. In terms of the debt maturity profile, the company s first bond of R650 million falls due for repayment in March 2016, while R2 958 million mainly relating to our first BBBEE transaction, before compulsory subscriptions owing to PPC and availability of the shares used as security, becomes due in our 2017 financial year. A new bond issuance is being planned for the later part of this calendar year while solutions are currently being explored to restructure the first BBBEE transaction, which will require shareholders approval, currently forecast for first quarter of the 2016 calendar year. Cash flow Cash generated from operations before working capital movements (Rm) Net working capital movement (Rm) Cash generated from operations after working capital movements (Rm) Cash conversion ratio 1,14 1,10 The continued focus on working capital management has once again provided the group with a cash conversion ratio (being cash generated from operations over EBITDA) above one. Net working capital movements have been favourably impacted by the reduction in accounts receivable and converse increase in trade payables. Dividends A final dividend of 33 cents per share has been declared, bringing the full year dividend to 57 cents per share (2014: 114 cents per share), achieving a divided cover of 2,3 times (2014: 1,5 times). Looking ahead This September year-end will be our last year-end at this time as the board has approved the change in the company s year-end to March, effective from The March year-end is better aligned to the group s expansion ambitions. With this in mind, we will focus on the change in the financial year-end to ensure the process is seamless for all our stakeholders. At the same time as our financial year-end change, the group will embark on a change in organisational structure. This organisational structure change will see the streamlining of our legal structure, simplifying our holding company from that of an operating and holding company into a traditional holding company and align the company structure with that of group strategy. As noted under borrowings, we will explore options to restructure our first BBBEE transaction. This restructure will reduce our borrowing position, providing further headroom against our funding commitments. In addition to the BBBEE restructure, the company will explore the merits of capital raising to further support the growth and expansion strategy. It will remain a focus item for the team to deliver on our financial and operating targets for CIMERWA post the successful commissioning of the plant in We will continue to explore opportunities to enhance our service offering and support the channel management strategy and are hopeful that a transaction will be announced in the next six months. In conclusion, the next financial period will be a short year but the objectives set for this period will strengthen the group s position and support the growth strategy. MMT Ramano Chief financial officer 17 November PPC Ltd Integrated report 2015

39 VALUE ADDED STATEMENT A measure of the wealth created by the group is the amount of value added to the cost of raw materials, products and services purchased. This statement shows the total wealth created and how it was distributed. Notes 2015 Rm 2014 Rm 2015 at a glance Our business Revenue Paid to suppliers for materials and services (5 463) Value added Empowerment transactions IFRS 2 charges (43) (38) Impairments (81) (110) Income from investments^ Total wealth created Wealth distribution: Salaries, wages and other benefits Providers of capital Finance costs (net of fair value adjustments on financial instruments) Dividends Governments Reinvested in the group to maintain and develop operations Depreciation and amortisation Retained profit/(loss) 102 (31) Deferred taxation (60) Value added ratios Number of employees (30 September) Revenue per employee (R000) Wealth created per employee (R000) NOTES 1 Paid to suppliers for materials and services Barloworld Logistics is the only supplier of services exceeding 10% of total amounts paid. 2 Salaries, wages and other benefits Salaries, wages, overtime payments, commissions, bonuses and Employer contributions (retirement funding, medical and insurance) Governments Normal taxation Withholding taxation Rates and taxes paid to local authorities Customs duties, import surcharges and excise taxes Skills development levy 6 10 Cash grants and subsidies received from the government (4) (3) ^ Includes interest received, dividend income and share of associate s retained Includes restructuring costs of R8 million (2014: R16 million), and share incentive schemes charges of R10 million (2014: R5 million). Strategic and operational Governance Sustainability Financial Appendices PPC Ltd Integrated report

40 SEVEN-YEAR FINANCIAL REVIEW for the year ended 30 September 2015 Total assets (Rm) Net working capital (Rm)^ 831 Total equity (Rm) Gross borrowings (Rm) EBITDA interest cover (times) 4,56 Gross debt to EBITDA (times) 3,48 Number of years to repay interest-bearing borrowings 4,45 Revenue (Rm) Normalised EBITDA* EBITDA* margin (%) 26,27 Effective rate of taxation (%) 36,61 Normalised EPS (cents per share) 148 Normalised HEPS (cents per share) 149 Dividends per share (cents per share) 57 Dividend cover (times) 2,33 Cash generated from operations Cash conversion ratio 1,14 Dividends paid (Rm) 559 Cash flow investment in property, plant and equipment and intangible assets Investments in subsidiaries and equity accounted investments 108 Weighted average number of ordinary shares in issue during the year (000)^ Market capitalisation ^ Net working capital is calculated as follows: inventory and trade and other receivables (comprising net trade receivables, other financial receivables and prepayments) less trade and other payables (comprising trade payables and accruals and other financial payables) * Normalised EBITDA calculated by adjusting EBITDA for restructuring costs and corporate action 38 PPC Ltd Integrated report 2015

41 at a glance ,67 6,04 6,22 5,93 6,78 7,66 2,58 1,66 1,54 1,64 1,42 1,24 3,56 1,91 2,17 2,45 2,08 1, ,26 30,11 31,68 31,44 36,48 40,29 30,10 35,80 39,90 37,96 36,04 39,18 Our business ,50 1,14 1,10 1,26 1,21 1, ,10 1,18 0,98 0,98 0,98 0, Appendices Financial Strategic and operational Governance Sustainability PPC Ltd Integrated report

42 OPERATIONS REVIEW PPC group PPC s revenue from South Africa remained at R6,6 billion while revenue from operations outside South Africa has risen by 8% to R2,6 billion. We successfully commissioned the tpa plant in Rwanda but the benefits of this will be reaped in Revenue split 2015 SA Rest of Africa SA Rest of Africa Revenue (Rm) Employees Cement PPC Cement has a successful track record spanning over 120 years as the leading supplier of cement in South Africa, Botswana, Zimbabwe and Rwanda. Our unique combination of quality products and good geographic footprint allows us to meet most customer requirements in parts of these countries. 81% 11% 9% 72% 28% South Africa Botswana Zimbabwe Mozambique DRC Rwanda Ethiopia Group cement 2015 % 2014 Revenue (Rm) (3) EBITDA* (Rm) (5) EBITDA margin* (%) 26,9 27,7 Operating profit* (Rm) (10) Operating margin* (%) 19,1 20,7 Assets (Rm) * Excluding BBBEE IFRS 2 charges, Zimbabwe indigenisation costs and restructuring costs Cement Lime Aggregates and readymix When looking at the cement division as a whole, revenue dropped 3% to R7,5 billion. Good cost control led to EBITDA falling 5% to R2,0 billion while the EBITDA margin reduced to 27%. SOUTH AFRICA South Africa Cement Demand Domestic cementitious volumes for the industry, including imported cement, rose 4,6% for the first nine months of calendar Over this period, PPC s South African cement sales volumes, which now include Safika Cement, were marginally positive. However, for the full financial year to September 2015, PPC s South African cement volumes were down 1,2%. With increased competitor activity in the Gauteng and other inland provinces, PPC experienced cement volume declines in all of these regions. The Mpumalanga province was the hardest hit, where double-digit volume declines were experienced. The North West region, though also under pressure, showed some resilience. Within the Gauteng area, the construction and industrial segments showed a relatively better performance than the highly contested retail space. PPC continues to supply a number of high-profile projects including Mall of Africa, Menlyn Maine, the new Sasol head office and Mutual Place, Old Mutual s head office. In the latter part of the reporting period, the coastal regions began to perform better on the back of reduced imports into Port Elizabeth and revised pricing in the Western Cape. Volumes in the Eastern Cape continued their upward trajectory in this financial year; however, those in the Western Cape were marginally negative for the full year. A number of wind farm projects were completed during the year; however, we continue to supply key projects like the expansion of the Cape Town International Convention Centre. In May 2015, the International Trade Administration Commission recommended the implementation of anti-dumping duties of between 14% and 77% on cement imported from Pakistan. Since the imposition of dumping duties, imports from Pakistan have declined in KwaZulu-Natal and the Eastern Cape, but continue to 40 PPC Ltd Integrated report 2015

43 grow in the Western Cape. The continued weakening of the rand is being offset by dramatic reductions in shipping rates. The local cement industry continues to engage with the authorities in order to align dumping duties across Pakistani producers. IMPORTED CEMENT VOLUMES BY PORT ENTRY (TONNES) at a glance Our business Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Durban Port Elizabeth and East London Cape Town Source: South African Revenue Service Growth in real gross fixed capital formation lost further momentum, decelerating from an annualised rate of 1,8% in the first quarter of 2015 to 1,0% in the second quarter. The South African Reserve Bank s September 2015 quarterly bulletin notes that the pace of increase in capital outlays by private business enterprises which comprises 60% of total investment slowed significantly which is in line with subdued business confidence levels. By contrast, capital investment by public corporations, which contracted in the first quarter of 2015, ticked higher in the second quarter, while growth in real fixed capital spending by general government maintained its momentum. Real capital outlays by Eskom and the Umgeni Water Board, in particular, increased firmly over the period, neutralising a contraction in such spending by public corporations in transport, manufacturing and mining subsectors. The bulk capital outlay by central and local government centred over energy, water, transport and education. REAL GROSS FIXED CAPITAL FORMATION (%) (5) (10) (15) (20) Q Q Q Q Q Q Private business enterprises Public corporations General government Total Strategic and operational Governance Sustainability Source: South African Reserve Bank Selling prices Increased local competition has weighed on retail cement prices. Margins have come under pressure as rising input costs have not been offset by higher selling prices. During the year, we have repositioned PPC Surebuild s price premium, thereby activating the inherent brand equity strength. The pricing environment does, however, remain highly volatile across the various regions. Average selling prices in the core South African business declined by 2%. Customers The retail sector remains the largest channel for cement in South Africa. It is estimated that around 60% of the cement consumed in the country moves through the retail sector. Retailers draw their supply of cement from manufacturers, cement blenders and importers. The continued consolidation of the retail environment poses both challenges and opportunities for the industry. During the year PPC has continued to draw on the advantages of our strong brand, our key account managers, national footprint and the use of our recently acquired IDM brand. As with the retail channel, the readymix concrete, construction and concrete product manufacturing channels are becoming increasingly competitive. PPC is continually having to use its range of products, consistency in quality and industry-leading delivery service to ensure we retain and grow our customer base. Our highly respected technical support team, a key for this sophisticated channel, has also helped us to differentiate our products. In certain segments within this channel we have introduced new pricing and valueadding strategies. Operations Variable delivered cost of sales per tonne declined 2% while fixed costs increased by 2%. Cost savings were realised from coal, refractories, fuel and packaging, but offset by cost increases in power and maintenance. To ensure increased reliability and improved energy efficiency of Dwaalboom kiln 1 (DK1), we invested R66 million to replace the grate cooler. Having resolved teething issues on the cooler, we have now observed record performance from DK1 in terms of reliability Financial Appendices PPC Ltd Integrated report

44 OPERATIONS REVIEW CONTINUED and heat consumption. We are also pleased to have commenced tyre burning as an alternative form of thermal energy at our De Hoek factory in the Western Cape. The manual feed system was completed at a cost of about R10 million in August The 1mtpa Slurry kiln 9 project commenced during the second half of the reporting period. This six-stage pre-heater design with fourth generation clinker cooler technology will cost R1,5 billion to R1,7 billion and will be ramped up in This modern plant s operating and control system will result in decreased production cost as well as ensure that dust emissions fall within legislative limits. Safety Eleven lost time injuries were recorded across the South African sites, leading to a lost time injury frequency rate (LTIFR) of Outlook Projections for economic growth in South Africa have disappointed. Recently, the International Monetary Fund (IMF) has cut its growth forecast for 2015 to 1,4% from 2%. The IMF s forecast for 2016 is even lower, at 1,3%. The Bureau for Economic Research forecasts that, for the period 2016 to 2020, cement demand growth will continue to outpace GDP. Over this period, an additional almost 2 million tonnes of cement will be required to meet forecast demand. Lime Overview PPC Lime has grown from small operations in 1907 producing lime for the burgeoning gold mining industry into one of the largest lime producers in the southern hemisphere. It is the leading supplier of metallurgical-grade lime, burnt dolomite and related products in southern Africa. Cement product range South Africa PPC s product range includes the premier specialist brand OPC in the 52,5N strength category, the market leading 42,5N Surebuild general-purpose cement, and the SureRoad brand for exclusive use in road construction. With the recent acquisition of Safika Cement Holdings, 32,5N cement under three brands IDM Best Build, Castle and the Spar Build-It house brand has extended our product offering. SOUTH AFRICA Cape Town 12 South Africa 11 1 Jupiter 8 Laezonia quarry Cement plant 2 Hercules 9 Mooiplaas quarry Milling depot 3 Slurry 10 Saldanha Aggregate quarry 4 Dwaalboom 11 George Lime plant 5 Riebeeck 12 Lime Acres Sales depots 6 De Hoek 13 Montague Gardens 7 Port Elizabeth PPC Lime s products are used in key local industries such as steel and alloys, food manufacturing, gold, uranium and copper mining, as well as water purification. The greatest use of lime is in steel manufacturing as a flux to remove impurities. Lime used in the steel industry must meet exacting physical and chemical properties, which PPC Lime is able to manufacture. Lime is also essential in producing non-ferrous metals. For example, it is used to beneficiate copper ore, make alumina and magnesia for use in aluminium and magnesium manufacture, extract uranium, and recover gold and silver % 2014 Revenue (Rm) EBITDA* (Rm) EBITDA margin* (%) 20,4 18,0 Operating profit* (Rm) Operating margin* (%) 15,3 13,1 Assets (Rm) 495 (1) 502 * Excluding BBBEE IFRS 2 charges and restructuring costs Johannesburg 8 1 Durban 42 PPC Ltd Integrated report 2015

45 Review of 2015 Lime revenue was 7% higher after burnt product sales increased by 7%, and higher prices were realised for value-added products. We successfully introduced milk-of-lime as a niche product with potential tangible benefits for customers that use a lime slurry in their production process. The local steel industry is by far the largest consumer of lime in the South African market. PPC Lime s sales volumes are directly tied to steel production, and current difficult conditions in the local industry have affected full-year results. Cost of sales (rand per tonne) were flat year on year, reflecting savings on fuel, coal and maintenance, as well as the rightsizing exercise in 2014 that reduced total labour costs. Capital expenditure of R45 million in 2015 focused on mobile equipment replacement, upgrades and kiln improvements. Outlook The South African iron and steel market is expected to remain under pressure in 2016, and burnt product sales are forecast to decrease slightly. The implementation of carbon tax has a potentially large impact on both PPC Lime s customer base and the company itself, and our group continues to interact with the main stakeholders to achieve the right balance between reducing carbon emissions and ensuring South African industry remains competitive in the long term. We will continue to focus on capitalising on growth and diversification opportunities, reducing fixed cost and optimising production operations in Aggregates RSA Overview PPC Aggregates supplies quality construction aggregates to the civil construction sector and products for the chemical, metallurgical and agricultural industries. PPC has two aggregate quarries in Gauteng (Mooiplaas and Laezonia). Aggregates and readymix* 2015 % 2014 Revenue (Rm) EBITDA (Rm) EBITDA margin (%) 16,1 15,7 Operating profit (Rm) Operating margin (%) 10,0 10,0 * Pronto was consolidated on 1 July Review of 2015 Sales volumes were 6% down on last year, mainly due to lower sales of concrete stone to the readymix concrete and concrete manufacturer segments. This was partially offset by supply to commercial and road construction projects. Significant volumes were supplied to the Mall of Africa development and the N14 road construction projects that started towards the end of the financial year. Above-inflation increases for power, explosives, labour and certain maintenance spares were partially offset by cost-saving initiatives and efficiency improvements. This resulted in cost of sales rising 9% compared to last year. Transport costs reduced by 12%, reflecting lower delivery volumes and shorter distances travelled. Outlook The outlook for 2016 is comparable with 2015 as some major projects will continue well into the new financial year. A potential replacement project for the Mall of Africa, which is nearing completion, has been identified. Increased competition in the base course (road construction) market may affect volume and pricing as well as the metallurgical dolomite market due to the decline in the steel industry. Pronto Readymix Concrete Overview Pronto (100% owned by PPC since July 2014) is a leading supplier of quality readymix concrete and mortars with ten batch plants in the greater Gauteng area supplying key commercial and industrial projects. Daily concrete orders are scheduled from each plant for efficient deliveries in 6 and 8-cubic metre trucks. It is the only company in Gauteng using truck-mounted conveyor belts designed to transport the concrete from the truck to the point of use where direct discharge is not possible at 60% of the cost of a concrete pump. Examples include suspended concrete floor slabs and retaining walls requiring up to 30m 3 of concrete. Review of 2015 Sales volumes were flat on last year mainly due to the delay of the Steyn City Centre project and aggressive price cutting by competitors to existing customers to gain market share. Outlook While the company was gearing up its plant and equipment and upgrading its fleet to expedite fast-track orders efficiently, the building industry slowed unexpectedly in the third quarter of 2015, hurt by labour concerns. With a muted outlook for economic growth in 2016, demand for new construction work is poor. While many projects are now ending, fewer new projects are coming on stream. This, together with new entrants into the readymix industry, will present challenges in both volumes and pricing. Larger projects, such as infrastructural developments, will be required to absorb excess capacity and restore pricing. Ulula Ash Overview Ulula supplies fly ash to the southern African market from its beneficiation plant at Eskom s power station in Kriel, Mpumalanga. Producing both classified and unclassified fly ash, the plant is designed and operated to facilitate excellent turnaround times for tankers collecting loads. In recent years, Ulula Ash has penetrated various markets in supplying cement, concrete, readymix, civil, building, blenders, tile adhesives, mining and ash sand operations. Supported by good service, and a recently upgraded plant, volumes increased by 8%. Review of 2015 Volumes have increased by 8% for the year, supported by increased demand for fly ash as well as improved service levels by Ulula Ash staff. Outlook The company s key focus for 2016 is optimising production, securing customers in large civil construction projects and to continue its drive to expand the use of fly ash in new markets at a glance Our business Strategic and operational Governance Sustainability Financial Appendices PPC Ltd Integrated report

46 OPERATIONS REVIEW CONTINUED CRUSHING LIMESTONE PREBLENDING OF RAW MATERIALS QUARRYING LIMESTONE RAW MATERIAL HOMOGENISATION RAW MILL KILN PREHEATING COAL MILLING CEMENT PROCESS TECHNOLOGY CLINKER STORAGE CALCINATION BURNING RAW MATERIAL TO CLINKER COOLING GYPSUM AND EXTENDERS CEMENT DESPATCH BAGS CEMENT MILL CEMENT STORAGE BULK RAIL BULK ROAD/ BAGS 44 PPC Ltd Integrated report 2015

47 2015 at a glance BOTSWANA Company overview PPC s business structure in Botswana comprises the following wholly owned subsidiaries: PPC Botswana Pty Limited Kgale Quarries Pty Limited PPC Aggregate Quarries Botswana Pty Limited PPC Botswana has a milling, packaging and dispatch operation in Gaborone, supporting a national distribution network, and the aggregates business operates two quarries in Gaborone and Francistown. Review of 2015 The political landscape in Botswana remains stable while the country has improved its position on the Global Competitiveness ranking, moving from 79 (2014) to 74 out of 144 countries. The economy remains dependent on revenue generated by the diamond industry. Debswana has maintained rough diamond prices amid softening demand growth in key jewellery consumer markets and liquidity constraints in the diamond financing chain. This, together with the strong dollar and weak rand, has had a positive impact on the government s accounts, with projected budget surpluses. In addition, the government s pula fund continues to recover after the global economic recession, making funds more readily available for projects earmarked in the national development plan 10. Cement We recorded strong volume growth during the year, mainly in the retail and industrial segments. The construction segment was fairly flat as new projects replaced those coming to an end. We have supplied key projects in the country including the Kasane Airport, the Zambezi Towers and West Gate Mall. The increase in cement capacity and competitiveness in the southern African region has affected pricing, particularly in the retail segment. Business strategies remained focused on operational efficiencies and cost competitiveness, with savings realised by sharing resources with our aggregates business. There is ongoing engagement with the government of Botswana to align our strategies to achieving broader national objectives. Our cement operation completed a commendable record injuryfree days by the end of September Cement product range Botswana The popular 32,5R Botcem product, manufactured at the Gaborone milling depot, is complemented by the OPC and Surebuild brands which are also available in Botswana. BOTSWANA Aggregates The aggregate trading environment remains tough. Our strategic response of consolidating our operations is bearing fruit, with improved volume and profitability from positioning our business as a major supplier of construction aggregates in the greater Gaborone and Francistown markets. In the final step of the consolidation process, the two legal entities will be combined in The LTIFR for our aggregates operations was 0,49. 3 Botswana 1 2 Milling depot Aggregate quarry 1 Gaborone 2 Kgale quarry 3 Francistown quarry Outlook We remain optimistic about growth in cement demand, driven by government infrastructure development, especially for water, electricity and roads. The caveat for the timely execution of these construction projects remains a continuous supply of electricity and water. The national strategy office has been tasked to develop and implement a national monitoring and evaluation system for project execution that should assist with construction projects being completed on time and within budget. While our cement operation remains well placed to participate in the expected growth in local demand, we anticipate increased volume and pricing pressure, particularly from the very competitive South African cement industry. The aggregates industry is expected to remain very competitive, but we expect an improved performance from the restructured business and optimised support services. Participation by this business in construction activity will depend on our regional footprint relative to the location of these projects. Our business Strategic and operational Governance Sustainability Financial Appendices PPC Ltd Integrated report

48 OPERATIONS REVIEW CONTINUED ZIMBABWE Company and project overview PPC Zimbabwe is a 70%-owned subsidiary of PPC, with a clinker manufacturing operation at Colleen Bawn and a grinding and packaging plant in Bulawayo. It is the largest cement manufacturer in Zimbabwe, with market-leader status and a well-established brand. With a current installed capacity of just over 1mtpa, we are the only supplier in Zimbabwe capable of offering palletised cement, which has reduced cost and customer turnaround times. The company has also recently invested in technical upgrades at both plants, while construction of a tpa grinding and dispatch plant in Harare is progressing well. Review of 2015 PPC Zimbabwe enjoyed a sixth consecutive year of increased domestic cement demand, albeit on a slower growth trajectory than prior years. However, 2015 cement exports declined significantly on the back of a strengthening US dollar against regional currencies and increased competition. This was partly offset by higher clinker exports. The central positioning of Zimbabwe facilitates export opportunities for the business, especially to Zambia, Mozambique and Malawi, but it also makes Zimbabwe more susceptible to cement imports from the same regional countries. The benefits of recent investments to modernise our plants are being realised. Our Colleen Bawn clinker plant improved both reliability and rated output during the year, with average daily production above tonnes achieved for the first time in July 2015, at a reliability factor of over 90%. The ongoing focus on cost efficiencies has contributed to higher margins. This, together with improved logistics efficiencies, has made the company more competitive in the border and northern regions. PPC Zimbabwe s current capacity is just over 1mtpa, produced in Bulawayo. After commissioning the Harare plant, we plan to retire two of our smaller inefficient cement mills, resulting in a combined national capacity of 1,4mtpa. Construction of the US$85 million mill in Harare is proceeding well, with the project around 50% complete in September 2015, and the rail siding contract 32% complete. The Sinoma EPC contract is progressing against plan with design work 95% complete, 95% of equipment manufactured and 65% delivered to site, and civil construction 40% complete. Roads to the site, water, sewage infrastructure and power supply from the national power utility are complete. All equipment has either been delivered to site or en route. Plant commissioning is expected towards the end of calendar 2016, and will enable the company to improve the use of its existing labour force as key staff members for the factory will be drawn from staff at our Bulawayo and Colleen Bawn operations. Cement product range Zimbabwe OPC, Surebuild PMC and Unicem, trusted 32,5N multipurpose cement, are produced and distributed from the Bulawayo factory. ZIMBABWE Zimbabwe Cement plant Milling depot 1 Colleen Bawn 2 Bulawayo 3 Harare (under construction) Commendably, both our operations and the Harare mill project maintained their zero LTIFR status, with Colleen Bawn at injury-free days, Bulawayo at 835 days and Harare at 335 days. Mozambique PPC Mozambique SA is a wholly owned, locally registered business established in Our business was successfully relocated to Tete and is managed by the PPC Zimbabwe team, in line with our regional outlook. The Tete economic environment has deteriorated significantly, in line with the international resources segment, specifically coal, and political sensitivities in central Mozambique. Our volume supplied to Tete decreased over the prior year, while we continue to supply into southern Mozambique through a distributor. Our operation has maintained its zero LTIFR status for days. Outlook The slowdown in Zimbabwe s economic growth, caused by ongoing liquidity problems and high external debt levels, will continue in 2016 and challenge the objective to grow domestic sales. With increased competition in the region and Zimbabwe s deflationary environment, the outlook for pricing remains muted. PPC will continue its strategy to defend and grow its domestic and export market by investing in marketing and sales initiatives and remaining customer-focused. Production may be affected by the poor domestic and regional power supply outlook, but the company has maintained sound relations with the relevant power utilities and continues to benefit from a tariff structure that supports continued supply. Commissioning of the Harare plant by the end of calendar 2016 will ensure the company is positioned for the expected economic upturn in the medium term and the anticipated associated infrastructural development and investment. In Mozambique, consensus continues to project a favourable longterm outlook for economic growth. For our materials handling facility in Tete this does, however, hinge on the recovery of the international resources segment and the country s ability to unlock significant investments made in developing the Tete coal reserves. 46 PPC Ltd Integrated report 2015

49 2015 at a glance RWANDA Company and project overview In January 2013, PPC acquired a 51% equity stake in CIMERWA Limited, the only integrated cement producer in Rwanda. Our new tpa plant was commissioned in the second half of 2015, and inaugurated by the Rwanda Right Honourable Prime Minister Anastase Murekezi in August The new plant incorporates the latest technology and was supplied on a turnkey basis by China National Aero-Technology International Engineering Corporation Limited, with mechanical and electrical equipment supplied and erected by Jiangsu Pengfei. CIMERWA s engineering and management representatives are Holtec of India. Some US$94 million in debt financing was secured from a consortium of regional banks to part-finance the project. Review of 2015 We continued to improve the efficiency of the old plant, with a c.14% improvement in output achieved over the corresponding period last year. The old plant was partly mothballed in July Construction of the new plant was completed within the budget of US$170 million. Provisional acceptance testing is well advanced, with outstanding testing on the raw mill, kiln and cement mills to be completed shortly. The provisional acceptance certificate is expected in the last quarter of calendar RWANDA Rwanda Cement plant 1 CIMERWA Limited Our business Strategic and operational Governance Power for the plant was secured with the government of Rwanda providing generators on site until the connection to the main grid is achieved. As part of the new plant investment, the surrounding community continues to benefit directly from the upgrade of the 11,6km road to the town of Bugarama. CIMERWA has spent a total of US$4,2 million on this upgrade. The plant uses a five-stage pre-calciner kiln with a grate cooler. This advanced technology keeps particulate emissions significantly below 50mg/Nm 3. We are therefore pleased with the early performance of the new plant. The product from the new plant was well accepted in the market and we have achieved a satisfactory ramp-up in the three months from July In September 2015, the plant produced at around 60% of full capacity. Gradual ramp-up to full production is expected over the next two years. Initiatives to develop the local transport industry continue, with the introduction of a contracted fleet. A wide range of empowerment-focused corporate social responsibility initiatives have been launched. In line with the group s people philosophy, recruitment for critical positions is complete and we have a programme of shadowing and transferring skills to local teams. Extensive support was received from the PPC group during commissioning and performance testing, and broad support will continue. Cement product range Rwanda CIMERWA produces a 42,5N Portland Pozzolana cement and a 32,5N Portland Pozzolana cement. 1 CIMERWA s operational LTIFR at the end of September 2015 was 0,36, with 145 days since the last safety incident. On completion of the construction of the new plant, the LTIFR for the project was 0,49. Outlook The plant is well located to supply cement to the Rwanda, eastern DRC and Burundi regions. The medium-term economic outlook for Rwanda and the region remains positive, with the main Rwanda market expected to continue expanding at 7% to 8% in a stable inflation environment. Aligned with the government s national development plans of Rwanda Vision 2020, Economic Development and Poverty Reduction Strategy 2 and a rapidly growing middle class, cement demand in Rwanda is expected to grow steadily over the medium term. The percentage of the population living in urban settlements is now about 15%, and expected to rise to 35% by More urban settlements will need to be developed, as well as secondary cities in combination with Kigali. An estimated dwellings are required in Kigali (at an average 10 tonnes of cement per dwelling). Political turmoil in Burundi after the July 2015 election will affect our ability to export to that market. Exports to the region remain a key focus as a strategic response to our foreign currency exposure. Sustainability Financial Appendices PPC Ltd Integrated report

50 OPERATIONS REVIEW CONTINUED DEMOCRATIC REPUBLIC OF THE CONGO (DRC) Company and project overview PPC, in partnership with the Barnet Group and International Finance Corporation (IFC), is building a 1mtpa integrated cement plant for around US$280 million. The plant is near Kimpese in the Kongo Central province in western DRC, 230km south-west of the capital Kinshasa. Ercom Engineering is the technical consultant and Sinoma is the EPC contractor. The new plant is 60% project debt funded with the IFC and PTA Bank as joint lead arrangers. DRC The PPC Barnet DRC Company is 69% owned by PPC, with 21% held by our local partner, the Barnet Group, and 10% held by the IFC. Review of 2015 Construction is on schedule with the major civil works completed by the end of September The cement silos slides are complete and construction of the packing plant and loading area is under way. Structural steel and mechanical erection began in August. Overall construction is 55% complete. 2 Democratic Republic of the Congo 1 Kinshasa Sales depots Cement plant 1 Kinshasa 2 Kimpese (under construction) In tandem with mine planning, the quarry was opened towards the end of the period and the haul road is being constructed. PPC Barnet in conjunction with the country s utility company, Société Nationale d Electricité (SNEL), will be constructing a 13km overhead transmission line to supply power to the cement plant as a publicprivate partnership. Key agreements on financing, construction and power supply have been signed with SNEL. The target is to complete the bulk power project and have permanent power at the site by end-june The company has been awarded key investment incentives by the country s investment promotion agency, ANAPI. Government engagement is ongoing to finalise the award of exemption for VAT and other tax incentives. Our cement trading business continues to import and trade ownmanufactured PPC branded cement into Kinshasa and Matadi. This has allowed us to establish the PPC brand in the market and the management team continues to develop a good understanding of the country and business environment. During the year, selling prices Cement product range DRC PPC currently exports a 32,5N and 42,5N class cement manufactured at PPC s South African facilities to DRC. deteriorated as imports from the Far East and recently from neighbouring Angola increased. Engagement with government for local industry protection continues. We opened a technical training facility to develop technical skills in villages surrounding the plant. The first intake, including youth and women, successfully completed their training course during the year. Stakeholder engagement continues at all levels to ensure we continue building our brand, relationships and a strong local cement industry as a responsible corporate citizen. In particular, we have engaged current and future local cement producers to establish an association that will engage with industry stakeholders in the DRC. The operational readiness programme is on track and the evaluation of key raw material and logistics supply arrangements is well advanced. Recruitment of critical skills has started and retention will be supported by a comprehensive programme at our training facility and other PPC operations. The project LTIFR is 0,19 with 256 days since the last lost-time injury. Outlook GDP growth in the DRC of around 7% is expected in the medium term with a steady reduction of the infrastructure deficit and expanding investment due to continuing government reforms. This will support a continued increase in cement demand, and we are well located to serve the Kinshasa, Matadi and interior markets. With additional capacity under construction in the region, our targeted commissioning date of end calendar 2016 will give us a first-mover advantage. We remain cognisant of the presidential election scheduled for 2016, as this could coincide with the scheduled cement plant commissioning. 48 PPC Ltd Integrated report 2015

51 2015 at a glance ETHIOPIA Company and project overview In 2012, PPC and South Africa s Industrial Development Corporation (IDC) respectively acquired a 27% and 20% equity stake in Ethiopia s Habesha Cement Share Company (Habesha). In 2014, PPC increased its stake to 31%, while the transaction to acquire the IDC s 20% stake was not concluded. Habesha is the first cement share company in Ethiopia, with over local shareholders. The modern plant is designed for an annual cement capacity of 1,4 million tonnes, and well positioned to serve the Addis Ababa market as it is 35km north-west of the capital. The plant is being supplied and built by China s Northern Heavy Industries Group (NHI) which has built over 100 cement plants in China, and supplied and erected a plant for Ethiopia s National Cement in Dire Dawa. TATA Consulting Engineers is the engineering and management representative. The project is funded by a combination of equity and debt financing by Development Bank of Ethiopia and PTA Bank. Execution was initially delayed mainly due to a lack of funding. After a thorough of the project, the full project costs are now anticipated to be between US$170 million and US$180 million. This will be funded from additional equity and debt. We are completing our due diligence and business case, which will inform our participation in this capital raising. Review of 2015 Construction is well under way, with overall project progress at 52%, civil construction 45% complete and mechanical erection started. The plant design is 95% complete, 90% of equipment manufactured and 70% already delivered to site. The main plant power agreement is in place with the Ethiopian power authorities to allow for construction of the 14km single-circuit transmission line to site. Outlook Construction activity in Ethiopia is brisk and our outlook for cement demand in the country remains strong. The government s growth and transformation plan (2010) focuses on infrastructure development, industrialisation and housing to improve the country s economy and raise GDP. This will underscore future cement demand. The plant is expected to be commissioned in the second quarter of calendar Future development plans include the opportunity to double production capacity. ETHIOPIA Ethiopia 1 Cement plant 1 Habesha Cement (under construction) Our business Strategic and operational Governance Sustainability In 2015, PPC conducted safety visits to the construction site and is working with the Habesha senior team to improve construction safety systems and standards. The Habesha safety engineer visited our DRC project to gain construction safety experience and identify suitable construction safety systems and standards. Habesha recorded two safety incidents in 2015, which regrettably resulted in one fatality. The project s LTIFR ended at 0,99. PPC is working closely with the Habesha senior leaders to identify and develop appropriate operational safety and health management systems and standards to be included in the Habesha operational readiness plan. Financial Appendices PPC Ltd Integrated report

52 INNOVATION CULTURE We recognise that innovation is more than just ideas In order to harness the benefits of innovation ideas we will create an innovation process We will create an innovation culture as the core driver of the business 50 PPC Ltd Integrated report 2015

53 Appendices Financial Sustainability Governance Strategic and operational Our business 2015 at a glance PPC Ltd Integrated report

54 CORPORATE GOVERNANCE REVIEW GOVERNANCE Our governance report is structured in two parts in line with the latest practice in governance reporting. The first part tells the governance story of PPC, while the second focuses on compliance with applicable governance and regulatory standards. PART 1 High level overview of governance in the PPC group Chairman Key objectives: Board leadership and performance, custodian of the corporate governance processes. More on page 53. The PPC board Key objectives: Strategic planning, setting objectives, appointing CEO, monitoring implementation of board plans and strategies. More on page 54. Audit committee Key objectives: Provide governance and compliance oversight over the financial results, performance of internal and external audit and the group s system of internal control. See page 57 for more details. Risk and compliance committee Key objectives: Oversee implementation of an effective policy and plan for risk management and disclosure on risk that is comprehensive and relevant. See page 58 for more details. Nominations committee Key objectives: Ensure appropriate board composition induction and training of directors and succession plans. See page 59 for more details. Remuneration committee Key objectives: Establish a remuneration policy, monitor executive remuneration and ensure the mix of salary and incentives supports achieving PPC s targets. See page 59 for more details. Social, ethics and transformation committee Key objectives: Monitor company activities on social, transformation and economic development, stakeholder relationships, good corporate citizenship, environment, labour and employment. The investment committee Key objectives: Evaluation investment in or divestment from other enterprises for purposes of enhancing the sustainable income of the group. See page 61 for more details. See page 60 for more details. 52 PPC Ltd Integrated report 2015

55 The chairman of our board is Bheki Sibiya who has been annually reappointed since He was an independent non-executive director for most of the period. As chairman, he is responsible for board leadership and board governance, assisted by the company secretary. Together, they are responsible for the board s annual work plan and ensuring the performance of the board is annually ed against performance standards. In executing his responsibilities and those of the board, Bheki is assisted by a very capable team of directors. On 17 November 2015, 13 directors served on the group board. The majority were nonexecutive directors, with an independent majority when classified against JSE listings requirements. More information on board composition and activities follows in this report. Most notable was the appointment of a new CEO, Darryll Castle, in January 2015 and the appointment of six new non-executive directors at the AGM in January The board also confirmed the appointed of Tim Ross as lead independent director. During the year the following resignations were received: Joe Shibambo (January 2015) Ntombi Langa-Royds (January 2015) Dr Daniel Ufitikirezi (September 2015) Key roles and responsibilities Key roles in the corporate governance of PPC lie mainly in the responsibilities of three functionaries: The chairman: Bheki Sibiya The role of the chairman is set out in a document approved by the board: Lead the board, not the company Safeguard the integrity of corporate governance processes and actions as determined collectively by the board Be the link between the board and management, particularly the CEO Be the main link between the board and shareholders, and the public at large The CEO: Darryll Castle The role of the CEO is determined by the board, formalised in the board charter and managed through his annual scorecard: The CEO leads the company and the management team. He is responsible for the day-to-day operations of the company and is its principal spokesperson, while the chairman is the leader of the board The company secretary: Jaco Snyman The role of the company secretary is largely determined in section 88 the Companies Act 2008 (the Act): Guiding PPC s directors collectively and individually on their duties, responsibilities and powers Making directors aware of any law affecting the company Reporting to the board any failure by the company or a director to comply with the memorandum of incorporation, rules of the company or the Act Ensuring minutes of all shareholders meetings, board meetings and the meetings of any committees of the directors are properly recorded Certifying in the annual financial statements whether the company has filed required returns and notices in terms of this Act, and whether all returns and notices appear to be true, correct and up to date Ensuring a copy of the company s annual financial statements is sent to every person who is entitled to it The group company secretary provides the board as a whole and directors individually with guidance on discharging their responsibilities. He is a central source of information and advice to the board and in the company on matters of ethics and good governance. He also ensures the proceedings and affairs of the board, its committees, the company itself and, where appropriate, owners of securities in the company are properly administered in line with pertinent laws. Details of his qualifications and experience appear on page 24. The board evaluates the company secretary s performance as part of its annual board evaluation. He is responsible for compliance with the rules and listings requirements of the JSE and the Zimbabwe Stock Exchange on which the company s securities are listed and administers the statutory requirements of the company and its subsidiaries in South Africa. The company secretary is satisfied that he is able to effectively perform the role as gatekeeper of good governance in the company and to carry out his role and responsibilities as company secretary at a glance Our business Strategic and operational Governance Sustainability Financial Appendices PPC Ltd Integrated report

56 CORPORATE GOVERNANCE REVIEW CONTINUED How the board operates The members of our board are shown below: Executive directors Non-executive directors Independent non-executive directors BALANCE BETWEEN EXECUTIVES AND NON-EXECUTIVES Tryphosa Ramano Darryll Castle Bheki Sibiya 6 3 Sydney Mhlarhi Tim Ross Executive directors Non-executive directors Peter Malungani Bridgette Modise Gender balance At PPC, 23% of board members are women, and the chairperson of the risk committee is female. Todd Moyo GENDER BALANCE Peter Nelson Tito Mboweni Charles Naude Nicky Goldin Tim Leaf- Wright The nominations committee annually evaluates whether the board s size, diversity and demographics make it effective. A number of studies have shown that the composition of the board can have a significant impact on company performance. Early studies on board composition focused on factors such as independence of directors, with the impact of cognitive diversity in decision-making gaining recognition only in recent years. Recent diversity studies have focused on gender diversity with interesting, but mixed, results. At year-end, the board comprised an independent non-executive chairman, two executives and 11 non-executive directors. At its meeting in November 2015, the nominations committee evaluated the independence of non-executive directors and concluded that the following directors are independent as defined in King III (the code) and the JSE listings requirement directors: The board has made notable progress in transformation and compliance with the code as reflected in the following graphs Women Men Racial balance At 17 November 2015, 53% of directors were black. RACIAL BALANCE Balance between executives and non-executives During the period, the balance on the PPC board between executive and non-executive directors moved further in favour of non-executive directors after the appointment of additional non-executives while the number of executives remained at two Black directors White directors Age analysis Age diversity is considered when the nominations committee evaluates board composition. The average age of directors is PPC Ltd Integrated report 2015

57 Board tenure All major ratings agencies include an assessment of board tenure as one of their criteria for evaluating board effectiveness, with longer tenure potentially leading to lower scores. The average tenure on our board is three years. BOARD TENURE 5 4,54 Directors are appointed through a formal process and the nominations committee assists in identifying suitable candidates to propose to shareholders. This process is detailed in the company s selection and appointment policy. The primary objective of this policy is to provide a transparent framework and set standards for the selection and appointment of high-calibre executive directors and non-executive directors with the capacity and ability to lead the company towards sustainable value creation and long-term growth. The nominations committee oversees this policy at a glance Our business ,64 3, A formal induction programme is in place for new directors, and directors with less experience are developed through training programmes. For continuing development, PPC encourages directors to attend the professional development programmes of the Institute of Directors in Southern Africa (IoDSA). While no limitations are imposed by the board charter, or otherwise, on the number of other appointments directors can have, approval must be obtained from the chairman prior to accepting additional commitments that may affect the time directors can devote to the group. The table below indicates the attendance of directors at scheduled meetings from 17 November 2014 to 17 November 2015: SOCIAL, BOARD MEMBERS* BOARD STRATEGY SESSION BOARD AGM AUDIT RISK AND COM- PLIANCE NOMI- NATIONS REMUNE- RATION ETHICS AND TRANSFOR- MATION INVEST- MENT ATTEND- ANCE BL Sibiya (chair) 1/1 5/5 1 2/2 4/4 3/3 16/16 DJ Castle 1/1 5/5 1 4/4 3/3 2/2 4/4 2/2 3/3 25/25 N 1/1 4/4 4/4 3/3 12/12 NB Langa-Royds^ 1/1 1 2/2 T 1/1 3/4 3/3 2/2 3/3 12/13 MP Malungani 1/1 4/5 1 2/2 3/3 11/12 T 1/1 3/4 2/2 2/2 8/9 SK Mhlarhi 1/1 5/5 1 4/4 3/3 14/14 B Modise 0/1 5/5 1 4/4 3/3 13/14 T Moyo 1/1 5/5 1 4/4 2/2 13/13 C 1/1 4/4 3/3 4/4 12/12 PG 1/1 4/4 4/4 4/4 13/13 T Ramano 1/1 5/5 1 4/4 3/3 0/2 2/4 2/2 3/3 21/25 TDA Ross 1/1 5/5 1 4/4 3/3 3/3 17/17 J Shibambo^ 1/1 1 2/2 D Ufitikirezi #@ 0/1 2/4 0/2 2/7 ^ Resigned da at 2015 Appointed at 2015 AGM. # Resigned on 22 September * ZJ Kganyago is an alternate director. Strategic and operational Governance Sustainability Financial Appendices PPC Ltd Integrated report

58 CORPORATE GOVERNANCE REVIEW CONTINUED Annual board evaluation The code requires annual board performance evaluations by the chairman or an independent service provider and that the results of these evaluations should identify training needs for directors. This year, the nominations committee appointed the IoDSA to conduct the annual evaluation. Key findings included: Board members would appreciate more interaction with line management The board was of the view that succession planning must be made a priority in future. The experience with the last CEO left PPC exposed Board members believed there was not enough flow of information from management to the board between board meetings Round-robin resolutions are circulated with insufficient information More can be done to keep stakeholders informed of major issues as they arise The late delivery of certain sections of board packs was also mentioned How board committees operate The board has six standing committees through which it operates. Committees play an important role in enhancing good corporate governance, improving internal controls and thus the sustainable performance of the company. The current board committees and their chairpersons are: Peter Malungani BOARD COMMITTEE: Investment Bheki Sibiya Board committees BOARD COMMITTEE: Nominations Tim Ross BOARD COMMITTEE: Audit The findings of this assessment have been shared with both the 2014 and current board members at two separate events. As a result, most findings have been addressed by the CEO, chairman and company secretary. Peter Nelson BOARD COMMITTEE: Remuneration Bridgette Modise Strategic planning As a key performance area of the board, group strategy is mapped by the board in consultation with PPC s executive committee (exco). The board appreciates the fact that strategy, risk, performance and sustainability are inseparable and annually s the strategy at its meeting in July. Tito Mboweni BOARD COMMITTEE: Social, ethics and transformation BOARD COMMITTEE: Risk and compliance Internal control Reporting in the company is structured so that key issues are escalated through the management team and ultimately to the board, if appropriate. The board has delegated to the audit committee responsibility for ing, in detail, the effectiveness of the company s system of internal controls. After completing these s, the committee reports to the board on its findings so that the board can take a view on this matter. This has been subject to regular over a number of years, resulting in several refinements. Delegation The board delegates certain functions to committees and management, without abdicating its own responsibilities. Delegation is formal and involves: Approved and documented terms of reference for each committee of the board Terms of reference are ed once a year The committees are appropriately constituted with due regard to the skills required The board has a framework for delegating authority to management The chairpersons of these committees are independent nonexecutive directors, except for the investment committee. Although Peter Malungani is not an independent director, the board has appointed him as chairperson based on his experience and skills. In the interest of free information flow and good oversight, full or summary minutes of all committee meetings are included in document packs for board meetings. In addition, each chairperson is required to present an annual report on the activities of that committee at the board s meeting in November. Based on these reports and minutes of the committees, their performance and conformance to terms of reference are annually evaluated by the board. At its meeting in November 2015, the board concluded that all committees had executed their responsibilities within the scope of their respective terms of reference in the period. All the committees may obtain, at PPC s expense, independent professional advice on any matters covered by its terms of reference. 56 PPC Ltd Integrated report 2015

59 About the audit committee The current members of the audit committee are: NAME QUALIFICATION STATUS TDA Ross (chair) CA(SA) Independent B Modise CA(SA) Independent T Moyo CA(Z), CA(SA) Independent PG Nelson CA(SA) Independent All members are independent, as required by the code and the Act. Todd Moyo and Peter Nelson were appointed to the committee in February Darryll Castle resigned as a member of the committee on his appointment as CEO. Tim Ross has chaired the committee since He was a partner with Deloitte for 36 years and retired in May Tim is a member of the South African Institute of Chartered Accountants. Members of the executive team, including the CEO and CFO, attend committee meetings by invitation. Similarly, external and internal auditors attend meetings by invitation and have no voting rights. The chairperson reports to the board on the committee s activities and recommendations. The chief audit executive reports to the chairperson of the committee and to the CEO on day-to-day matters. The latest minutes of committee meetings are included in board packs. The audit committee has adopted formal terms of reference that have been approved by the board, and has executed its duties in the past financial year in line with these terms of reference. Among others, the committee s terms of reference include the following responsibilities: Financial statements The committee s the annual financial statements, interim and preliminary announcements, accompanying reports to shareholders and any other announcements on the company s results or other financial information to be made public, prior to submission and approval by the board. Integrated reporting The committee oversees integrated reporting, particularly: All factors and risks that may affect the integrity of the integrated report, including factors that may predispose management to present a misleading picture, significant judgements and reporting decisions made, monitoring or enforcement actions by a regulatory body, any evidence that brings into question previously published information, forward-looking statements or information Reviews the annual financial statements, interim reports, preliminary or provisional result announcements, summarised integrated information, any other intended release of pricesensitive information and prospectuses, trading statements and similar documents Comments in the annual financial statements on the financial statements, accounting practices and effectiveness of internal financial controls Reviews disclosure of sustainability issues in the integrated report to ensure this is reliable and does not conflict with the financial information Recommends to the board whether or not to engage an external assurance provider on material sustainability issues Reviews the content of summarised information for whether it provides a balanced view Engages the external auditors to provide assurance on summarised financial information Prepares a report for inclusion in the integrated report and annual financial statements for the financial year (page 64): Describing how the audit committee carried out its functions Stating whether the committee is satisfied that the auditor was independent of the company Commenting in any way it considers appropriate on the financial statements, accounting practices and the internal financial control of the company Recommends the integrated report for approval by the board Internal audit The committee is responsible for overseeing the internal audit function, in particular: The appointment, performance assessment and/or dismissal of the chief audit executive Reviewing the internal audit charter The appointment, performance assessment and/or dismissal of any outsourced/company s internal audit service provider Approving the internal audit plan and any significant changes, and satisfying itself that this plan will effectively address critical risk areas of the business Ensuring the internal audit function is subject to an independent quality, as the committee determines it appropriate Reviewing internal audit s compliance with its charter as approved by the audit committee and considering whether the internal audit function has the necessary resources, budget and standing in PPC to enable it to discharge its functions Risk management The committee is an integral component of the risk management process. Specifically, the committee must oversee: Financial risk Financial reporting risks Internal financial controls Fraud risks as these relate to financial reporting IT governance and risks as these relate to financial reporting 2015 at a glance Our business Strategic and operational Governance Sustainability Financial Appendices PPC Ltd Integrated report

60 CORPORATE GOVERNANCE REVIEW CONTINUED External audit The committee is responsible for recommending the appointment of the external auditor and overseeing the external audit process. In this regard, the committee must: Nominate an independent external auditor for appointment by shareholders Determine the fees to be paid and terms of engagement of the auditor Ensure the appointment of the auditor complies with the Act and other relevant legislation Monitor and report on the independence of the external auditor in the annual financial statements Define a policy for non-audit services provided by the external auditor Pre-approve contracts for non-audit services to be rendered by the external auditor Ensure there is a process for the committee to be informed of any reportable irregularities (as identified in the Auditing Profession Act 2005) identified and reported by the external auditor Review the quality and effectiveness of the external audit process Financial director The audit committee must annually consider and satisfy itself of the appropriateness of the expertise and experience of the financial director and must confirm this to shareholders in its annual report. Financial function The committee s the expertise, resources and experience of the company s finance function, and discloses the results in the integrated report and to shareholders. Internal controls The chief audit executive has completed a report to the board on the effectiveness of controls and risk management, which was tabled at the board meeting in November In this report, he concluded that he is satisfied that the governance, risk management and internal controls are adequate to identify any breakdowns that would result in material loss to the group. He confirmed that nothing has come to his attention to cause him to believe that PPC s system of internal control is not generally effective to sufficiently mitigate key risks. He also concluded that he was not aware of anything that would cause him to believe that controls over financial processes do not provide a sound basis for preparing reliable financial statements. IT governance In recent years, PPC has made appropriate investments to ensure its information technology (IT) systems and governance processes comply with the recommendations of King III. This is detailed in the King III application table on our website. Specific developments during the year included: The IT charter, framework and policy documents were ed and approved by the audit committee, and implemented The IT strategy was approved by the board and is aligned to the business strategy and objectives by focusing on robust infrastructure, an enabling platform and solid governance processes Initiating an information security management system to ensure the integrity, confidentiality and availability of information About the risk and compliance committee The members of the committee are: NAME QUALIFICATION STATUS B Modise (chair) CA(SA) Independent DJ Castle BSc, BCom, MBA, Executive CFA T Leaf-Wright Chartered Institute of Independent Secretaries C Naude BSc hons, MBL Independent TDA Ross CA(SA) Independent The CEO, Darryll Castle, was appointed to the committee to align it with the best practice recommendations of the code during the year. All other members of the committee are non-executive directors. Members of the executive team responsible for risk and compliance management attend committee meetings by invitation. Similarly, external and internal auditors attend meetings by invitation but have no voting rights. The chairperson reports to the board on activities and recommendations made by the committee and the latest minutes of committee meetings are included in board packs. The committee has its own terms of reference approved by the board, to assist its members to understand their roles and enable them to add value in discharging their duties. The committee s terms of reference are ed annually. Among other issues, the committee s terms of reference include responsibility to: Oversee the development and annual of a policy and plan for risk management to recommend for approval to the board Monitor implementation of the policy and plan for risk management through related systems and processes Make recommendations to the board on the levels of risk tolerance and appetite, and monitor that risks are managed within these levels as approved by the board Approve the company s compliance policy and oversee that the policy is disseminated through the company Oversee that the risk management plan is disseminated throughout the company and integrated in its day-to-day activities Ensure risk assessments are performed continuously Ensure compliance management assessments are continuously performed Ensure frameworks and methodologies are implemented to increase the possibility of anticipating unpredictable risks 58 PPC Ltd Integrated report 2015

61 Ensure management considers and implements appropriate risk responses Ensure continuous risk monitoring by management takes place Liaise closely with the audit committee and other board committees to exchange information relevant to risk Express a formal opinion to the board on the effectiveness of the system and process of risk management Review reporting on risk management and compliance in the integrated report in terms of being timely, comprehensive and relevant For a more detailed on risk, refer to page 66. The report on compliance appears on page 68. The committee reported on its activities for the period at the board meeting in November At this meeting, the board confirmed that the committee has complied with its terms of reference. About the nominations committee The members of the nominations committee are: NAME QUALIFICATION STATUS BL Sibiya (chair) MBA Independent T Mboweni BA, MA, CD(SA) Independent T Moyo CA(Z), CA(SA) Independent Mr Ross (lead independent d director) stepped down as chairman and member of the committee after Mr Castle was appointed as CEO in January 2015 and Mr Sibiya could step down as executive chairman of PPC. Mr Mboweni and Dr Ufitikirezi were appointed as new members of this committee in February Dr Ufitikirezi resigned as a director of the board during the year and was not replaced on the nominations committee. The committee normally asks the CEO to attend its meetings, but he has no voting rights. The committee has its own terms of reference, approved by the board, which are ed annually. The chairperson reports to the board on activities and recommendations made by the committee and the latest minutes of committee meetings are included in board packs. The committee performs all the functions necessary to fulfil its role as stated in its terms of reference including: Ensuring the establishment of a formal process for appointing directors, including: Identifying suitable members for the board Performing reference and background checks of candidates prior to nomination Formalising the appointment of directors through an agreement between the company and the director Overseeing the development of a formal induction programme for new directors Ensuring inexperienced directors are developed through a mentorship programme Overseeing the development and implementation of continuing professional development programmes for directors Ensuring directors receive regular briefings on changes in risks, laws and the environment in which the company operates Considering the performance of directors and taking steps to remove directors who do not make an appropriate contribution Finding and recommending to the board a replacement for the CEO when necessary Ensuring formal succession plans for the board, CEO and senior management appointments are developed and implemented Providing input on senior management appointments as proposed by the CEO The committee reported on its activities for the period at the board meeting in November At this meeting, the board confirmed that the committee has complied with its terms of reference. About the remuneration committee The members of the remuneration committee are: NAME QUALIFICATION STATUS PG Nelson (chair) CA(SA) Independent N Goldin BCom, MBA Independent SK Mhlarhi CA(SA) Non-executive C Naude BSc hons, MBL Independent BL Sibiya MBA Independent During the year, Mr Nelson was appointed as chairman of this committee. Ms Goldin, Mr Naude and Mr Sibiya were appointed as new members. All members are non-executive directors. PwC, appointed by the company, acted as remuneration advisers to the committee and provided detailed information on market trends and the competitive positioning of remuneration at a glance Our business Strategic and operational Governance Sustainability Financial Appendices PPC Ltd Integrated report

62 CORPORATE GOVERNANCE REVIEW CONTINUED The committee normally asks the CEO to attend its meetings but he has no voting rights. He does not participate in discussions on his own remuneration, which is set by the committee. The committee performs all functions necessary to fulfil the role stated in its terms of reference, including: Overseeing the establishment of a remuneration policy that will promote achieving strategic objectives and encourage individual performance Ensuring the remuneration policy is put to a non-binding advisory vote at the general meeting of shareholders once every year Reviewing the outcomes of implementing the remuneration policy against set objectives Ensuring the mix of fixed and variable pay, in cash, shares and other elements, meets the company s needs and strategic objectives Satisfying itself on the accuracy of recorded performance measures that govern the vesting of incentives Ensuring all benefits, including retirement benefits and other financial arrangements, are justified and correctly valued Considering the results of the performance evaluation of the CEO and other executive directors, both as directors and as executives in determining remuneration Selecting an appropriate comparative group when comparing remuneration levels Regularly ing incentive and retention schemes to ensure continued contribution to shareholder value and that these are administered in terms of the rules Considering the appropriateness of early vesting of share-based schemes at the end of employment Advising on the remuneration of non-executive directors Overseeing the preparation of the remuneration report and recommending to the board this be included in the integrated report The remuneration policy of the company is annually presented to shareholders. PPC s remuneration policy appears on page 70 and shareholders will be requested to pass a non-binding advisory to indicate support for this policy at the annual general meeting. About the social, ethics and transformation committee The members of the social, ethics and transformation committee are: NAME QUALIFICATION STATUS T Mboweni BA, MA, CD(SA) Independent (chair) MP Malungani BCom Non-executive T Leaf-Wright Chartered Institute of Secretaries Independent During the year Mr Mboweni was appointed as the chairman of this committee and Mr Leaf-Wright as a new member. All members are non-executive directors. The committee has its own terms of reference approved by the board and ed annually. The chairperson reports to the board on activities and recommendations made by the committee and the latest minutes of committee meetings are included in board packs. In line with its terms of reference, the committee s objectives are to assist the board in monitoring PPC s activities against relevant legislation, other legal requirements or prevailing codes of best practice on matters relating to: Social and economic development Corporate citizenship Transformation The environment Health and public safety Stakeholder relationships Labour and employment The committee reported on its activities for the period at the board meeting in November At this meeting, the board confirmed that the committee has complied with its terms of reference. The committee has ed group remuneration policies to ensure these are aligned with the company s strategy and linked to individual performance. 60 PPC Ltd Integrated report 2015

63 About the investment committee During the year, the board established the investment committee. This replaces the ad hoc deal committee and has an extended responsibility. See the details below. The members of the Investment committee are: NAME QUALIFICATION STATUS MP Malungani BCom Non-executive (chair) N Goldin BCom, MBA Independent T Leaf-Wright Chartered Institute Independent of Secretaries SK Mhlarhi CA(SA) Non-executive TDA Ross CA(SA) Independent BL Sibiya MBA Independent During the year, Mr Leaf-Wright and Ms Golding were appointed as new members. The committee has its own terms of reference approved by the board and performs all functions necessary to fulfil the role stated in its terms of reference, including: Strategic investments (to enhance long-term sustainable income) Consider prospective acquisitions for their ability to enhance the long-term sustainable income of the group Evaluate the merits of investment proposals within strategic guidelines, potential financial returns and risk of the investment Evaluate/monitor the performance of strategic investments included in the strategic investment portfolio, relative to the original business plan Approve proposed divestments from identified investments and the terms of divestment transactions Strategic alliances (to position PPC strategically for future markets/ benefits) Consider prospective strategic alliances Evaluate the merits of alliance proposals to consider the benefits that could derive from the proposed positioning relative to the imposed risks (especially reputation risk) Evaluate/monitor the performance of strategic alliances relative to original objectives Approval to exit strategic alliances as well as associated conditions for divestment Operational investments (business unit growth objectives) Approve investment decisions above threshold levels Consider and evaluate the merits of investment proposals, impact of the proposal on operational strategy and the likelihood of achieving the targeted return from that investment Monitor the performance of the group relative to the investment objectives of management Approve proposed divestments of assets in the operational portfolio, terms of divestment transactions to be considered and exit strategies Other initiatives (improve efficiencies in a cost-effective way) Approve initiatives with a total cost above threshold (total cost will include all cost elements and should be calculated over the total project lifespan) Consider the strategic impact of the proposed initiative Evaluate the financial merits in initiative business cases PART II Corporate governance compliance This section deals with disclosure on compliance with relevant and prescribed corporate governance principles. For the convenience of shareholders, all King III disclosures are made in one place to give the reader a complete picture. Compliance with King III on corporate governance In the year ended 30 September 2015 and to the date of this document, we complied with the practices and applied the principles of the King Report on Corporate Governance known as King III (the code) unless indicated otherwise. The full is available on the company s website at report-on-the-application-of-the-king-iii-principles-vers-4.pdf. We describe how we have applied those principles in this report, notably, in the following section, together with the sections on risk management, IT governance and directors remuneration at a glance Our business Strategic and operational Governance Sustainability Financial Appendices PPC Ltd Integrated report

64 CORPORATE GOVERNANCE REVIEW CONTINUED Compliance with mandatory principles for JSE main board issuers Paragraph 3.84 of the JSE listings requirements stipulates that issuers must comply with specific requirements on corporate governance and issuers do not have the option of explaining any non-compliance. PPC has complied with all mandatory principles to the extent indicated below. PARAGRAPH REQUIRED PRACTICE COMPLIANCE 3.84(a) 3.84(b) 3.84(c) 3.84(d) 3.84(e) 3.84(f) 3.84(g) 3.84(h) There must be a policy detailing procedures for appointment to the board of directors. Such appointments must be formal and transparent and a matter for the board of directors as a whole, assisted where appropriate by a nominations committee. The nominations committee must constitute only non-executive directors, of whom the majority must be independent (as defined in paragraph 3.84(f)(iii)), and should be chaired by the chairman of the board of directors. There must be a policy evidencing a clear balance of power and authority at board of directors level, to ensure that no one director has unfettered powers of decisionmaking. The issuer must have an appointed chief executive officer and a chairman and these positions must not be held by the same person. The chairman must either be an independent director, or the issuer must appoint a lead independent director, in accordance with the King Code. All issuers must, in compliance with the King Code, appoint an audit committee and a remuneration committee and if required, given the nature of the business and composition of the board of directors, a risk and nominations committee. The composition of such committees, a brief description of their mandates, the number of meetings held and other relevant information must be disclosed in the integrated report. A brief CV of each director standing for election or re-election at a general meeting or the annual general meeting (which election or re-election may not take place at a meeting contemplated in section 60 of the Act) should accompany the notice of the general meeting or annual general meeting. The capacity of each director must be categorised as executive, non-executive or independent, using the prescribed guidelines. All issuers must have an executive financial director. The JSE may, at its discretion, when requested to do so by the issuer and due to special circumstances, allow the financial director to be employed on a part-time basis only. This request must be accompanied by a detailed motivation by the issuer and the audit committee. The audit committee must annually consider and satisfy itself of the appropriateness of the expertise and experience of the financial director. The issuer must confirm this by reporting to shareholders in its integrated report that the audit committee has executed this responsibility. The PPC board has appointed a nominations committee with a formal mandate that includes the obligation to ensure that directors are appointed through a formal process. In this regard, the committee has a formal policy in place. The board charter specifies the different roles of members to maintain a balance of power. The roles of the chairman and CEO are clearly defined to avoid role confusion. In addition, a guideline is in place that specifies the role of the chairman. See above. In addition, Mr Ross was appointed lead independent director. The board has appointed an audit committee, remuneration committee, nominations committee, risk and compliance committee and social, ethics and transformation committee. Details are disclosed in the corporate governance. The current directors standing for re-election are included in the notice of AGM together with their CVs. The nominations committee annually evaluates the independence of all directors. Ms Ramano has been appointed as the CFO of PPC and she is in the full-time employment of the company. The audit committee has assessed the appropriateness of the expertise and experience of the CFO. Please refer to the report of the audit committee on page PPC Ltd Integrated report 2015

65 PARAGRAPH REQUIRED PRACTICE COMPLIANCE 3.84(i) The board of directors must annually consider and satisfy itself on the competence, qualifications and experience of the company secretary. The issuer must confirm this by reporting to shareholders in its integrated report that the The board annually assess the competence qualifications and experience of the company secretary. Please refer to the corporate governance report on page 53. board of directors has executed this responsibility. This communication must specifically include details of the steps which the board of directors took to make this annual assessment and provide information that demonstrates the actual competence, qualifications and experience of the company secretary. 3.84(j) The recommended practice of the King Report on Governance for South Africa highlights, inter alia, that the company secretary should maintain an arm s length relationship with the board of directors and should ideally not be a director. The company secretary is not a director of PPC and the board has confirmed that he has maintained an arm s length relationship with the board. Compliance with non-mandatory principles Paragraph 8.63(a) of the listings requirements deal with principles of the code that are not mandatory, and the King committee issued a practice note on reporting in terms of this paragraph in The King committee recommends that this assessment be documented and reported in the form of a register. The register should cover all 75 King III principles and include detail on how each principle is applied. This register should be a living document and be continually updated. The King committee, after consulting with the JSE, has recommended that JSE issuers publish their complete King III application register on their websites. The company s register is published on its website at a glance Our business Strategic and operational Governance Appendices Financial Sustainability PPC Ltd Integrated report

66 COMMITTEE REPORTS AUDIT COMMITTEE REPORT Report to shareholders on the activities of the audit committee for the year ended 30 September 2015 The audit committee is a committee of the board of directors and in addition to having specific statutory responsibilities to shareholders in terms of the Companies Act, it assists the board by advising and making submissions on financial reporting, oversight of the risk management process and internal financial controls, external and internal audit functions and statutory and regulatory compliance of the company. Terms of reference The audit committee has adopted formal terms of reference that were updated during the year and approved by the board of directors, and has executed its duties in the past financial year in line with these terms of reference. Composition The committee consists of four independent non-executive directors: NAME QUALIFICATION TDA Ross (chairman) CA(SA) 7 B Modise CA(SA) 4 T Moyo CA(Z), CA(SA) 1 PG Nelson CA(SA) 1 PERIOD SERVED (YEARS) The CEO, CFO, chief audit executive, senior financial executives of the group and representatives from the external and internal auditors attend committee meetings. The internal and external auditors have unrestricted access to the audit committee. Meetings The audit committee held four* scheduled meetings during the year, with attendance shown below: 31 March 2015 All present 11 May 2015 All present 2 October 2015 All present 9 November 2015 All present Statutory duties In executing its statutory duties in the 2015 financial year, the audit committee: Nominated Mr Nyembe, from the audit firm, Deloitte & Touche (Deloitte), for appointment. In the opinion of the committee, Mr Nyembe was independent of the company Determined Deloitte s terms of engagement Believes that the appointment of Deloitte complies with the relevant provisions of the Companies Act, JSE listings requirements and King III Developed and implemented a policy setting out the extent of any non-audit services the external auditors may provide to the company or which the external auditors may not provide Pre-approved all non-audit service contracts with Deloitte Received no complaints on the accounting practices and internal audit of the company, the auditing of its financial statements, internal financial controls, or other related matters; however, a letter was received from the JSE in terms of its proactive monitoring process whereby it requested information around disclosures in the 2014 annual financial statements. The query was satisfactorily addressed Delegated duties In executing its delegated duties and making its assessments (as reflected in its terms of reference), the audit committee obtained feedback from external and internal audit, and based on the processes and assurances obtained, believes the accounting practices are effective. Accordingly, the committee fulfilled all its obligations including: Financial statements The committee ed the annual financial statements, summarised annual financial statements, interim and preliminary announcements, accompanying reports to shareholders and other announcements on the company s 2015 results to the public. Integrated reporting Recommended to the board to engage an external assurance provider on material sustainability issues Reviewed the disclosure of sustainability issues in the integrated report to ensure it is reliable and does not conflict with the financial information Recommended the integrated report for approval by the board * A meeting was planned for 27 November to approve the integrated report 64 PPC Ltd Integrated report 2015

67 Internal audit Took responsibility for the performance assessment of Mr Semenya, chief audit executive Approved the internal audit plan and changes to the plan and satisfied itself that the audit plan makes provision for effectively addressing the critical risk areas of the business Reviewed internal audit s compliance with its charter (which was updated during the year and approved by the committee) and considered whether the internal audit function has the necessary resources, budget and standing within PPC to enable it to discharge its functions Risk management The committee is an integral component of the risk management process and specifically ed: Financial risks Financial reporting risks Internal financial controls Fraud risks as they relate to financial reporting IT governance External audit Evaluated and reported on the independence of the external auditor Reviewed the quality and effectiveness of the external audit process Based on our satisfaction with the results of activities outlined above, recommended to the board that Deloitte should be reappointed for 2015, with Mr Nyembe nominated as the registered auditor Determined the fees to be paid and the terms of engagement of the auditor Ensured the appointment of the auditor complies with the Companies Act and other relevant legislation Financial function The committee has ed the expertise, resources and experience of the company s finance function, and confirms this to shareholders In making these assessments, we have obtained feedback from both external and internal audit Based on the processes and assurances obtained, we believe the accounting practices are effective Oversight of risk management The committee engages with the risk and compliance committee to ensure adequate understanding of risk management processes. Internal financial controls Reviewed the effectiveness of the company s system of internal financial controls, including receiving assurance from management and internal audit Reviewed material issues raised by the internal and external audit process Based on the processes and assurances obtained, we believe material internal financial controls are effective Combined assurance During the year, further progress has been made to align the combined assurance model with the enhanced risk framework of the group. This will only be completed in Regulatory compliance The audit committee has complied with all applicable legal and regulatory responsibilities. On behalf of the audit committee 2015 at a glance Our business Strategic and operational Governance Sustainability Financial director The committee has satisfied itself of the appropriateness of the expertise and experience of Ms Ramano, the financial director, and confirms this to shareholders. Tim Ross (chairman) 17 November 2015 Financial Appendices PPC Ltd Integrated report

68 COMMITTEE REPORTS CONTINUED RISK REPORT TO SHAREHOLDERS Introduction The main objective of risk management at PPC is to ensure sustainable growth in all our businesses and promote a proactive approach in evaluating, resolving and reporting risks associated with our businesses. To achieve the main objective, management has established a structured and disciplined approach to risk management, articulated in the policy statement: To ensure protection of shareholder value through the establishment of an integrated risk management framework/system for identifying, assessing, mitigating, monitoring, evaluating and reporting risks. This policy statement was developed in 2014 in the context of the growth strategy, current business profile and new business endeavours, and is meant to ensure continuity of business and protecting the interests of investors. Therefore it covers all activities in the PPC group and events outside the company that have a bearing on the group s businesses. Responsibilities The board is accountable to shareholders for the governance of risk and ensuring the company s strategy and business plans have properly considered and evaluated associated risks. The board has delegated responsibility to evaluate the risk management process, effectiveness of risk management activities, key risks facing the company and appropriate responses to its risk and compliance committee. The responsibility to design, implement and monitor the risk management plan has been delegated to management. The risk management plan aims to ensure that the associated policy is implemented and that risk management processes are embedded in all the organisation s practices and business procedures. The risk management process includes five activities: MONITOR AND REVIEW RISK MITIGATION COMMUNICATION AND CONSULTATION RISK ASSESSMENT ESTABLISHING CONTEXT Management monitors risk management through continuous measurement and reporting of the company s risk management performance to the risk and compliance committee. It also ensures resources are available to assist those accountable for managing risk. Control assurance focuses on continuously improving the underlying quality and sustainability of the company s business activities. RESPONSIBILITIES AND REPORTING BOARD Risk and compliance committee EXECUTIVE COMMITTEE Functional and operational executives BUSINESS UNIT General managers, country managers and project managers RISK GOVERNANCE Approve risk policy Approve risk framework Approve annual risk management plans Monitor progress on risk Review effectiveness of risk assessments RISK MANAGEMENT Develop annual risk plans Consolidate the business and functional risk registers Review the corporate risk exposure Monitor risk management UNIT-SPECIFIC RISK Develop business unit risk registers and profiles Monitor risk responses General risk awareness 66 PPC Ltd Integrated report 2015

69 PPC s risk management maturity journey PPC s historical approach to risk management has been ed in recent years within the context of its expansion strategy. Following this revision, enterprise risk management (ERM) maturity can be tracked from implementation of the revised risk management processes in 2014 to an optimised risk management process, fully aligned to business strategy. This is a long-term process that requires much management time and effort to move between each ERM maturity stage. Management, under the leadership of the chief executive officer, is committed to reaching the state of optimised by the end of Achieving this level of ERM maturity will require that all business units in the PPC group should reach the same maturity level for risk assessment and response management by the target date. The maturity tracking model is shown below at a glance Our business INITIAL management strategy standards, tools and techniques INFORMAL risk-specific integration an event with negative consequences techniques without formal application of standards between risks and hazards Achievements in 2015 During the period, a risk management software solution (SAP GRC) was implemented for the group. In December 2014, all site champions and risk managers were trained on the new system. The user environment was tested and went live later that month, with all risk registers loaded into the system by the end of February. PPC internal audit commissioned an audit on the implementation of phase 1 of the project, which found that project implementation had been without flaws and objectives had been achieved. The time devoted to this implementation is paying off. Risk awareness has improved substantially, driven by the CEO who has assisted group risk in its work. Risk assessment activities for the year included: Monthly updates of expansion project risk registers, mostly in group risk facilitated workshops Quarterly site updates facilitated by risk managers. The operations of lime, Zimbabwe, CIMERWA and aggregates were facilitated by group risk annually while other s were managed locally MATURITY MODEL GOVERNANCE- DRIVEN framework, programme statement and policy assessments all risk types not approached uniformly CURRENT INTEGRATED AND CHANGE-DRIVEN management approach to risk management across all units managed in a uniform system uncertainty and linked to objectives performancebased standards 2016 TARGET INTELLIGENT AND OPTIMISED approach and informed decision-making systems integrated embedded in culture understanding of standards, tools and techniques Group functional risk sessions were facilitated by group risk An SA business risk register was compiled with the local business team and the PPC executive risk workshop facilitated in October Follow-up meetings have been scheduled to progress this work Activities in general risk management included: The risk policy and framework were extensively updated and submitted to the November 2014 risk and compliance committee meeting for approval, which was given. The risk management plan was approved for 2015 Insurance underwriting surveys at all PPC sites were facilitated in the first half of 2015 as part of the insurance renewal programme The annual rail safety permit submission was compiled and sent to the regulator in December 2014, with the permit issued in February An audit on the PPC human factor management system was conducted by the regulator at group level and no major findings were logged The risk self-assessment programme was planned, all audit files ed, updated and distributed to the sites. The audit programme was managed and the audits conducted The DRC management team was assisted in compiling an emergency evacuation plan Strategic and operational Governance Sustainability Financial Appendices PPC Ltd Integrated report

70 COMMITTEE REPORTS CONTINUED COMPLIANCE REPORT TO SHAREHOLDERS As a governance principle, the board ensures PPC complies with applicable laws and considers non-binding rules, codes and standards. In the group, this responsibility has been delegated to the risk management and compliance committee. This committee s responsibilities include monitoring compliance issues, approving the compliance policy, ensuring it is observed and that compliance risk is reported (refer to the corporate governance report for more detail). Management is responsible for implementing the compliance policy and the day-to-day management of compliance risks. This includes responsibility for ensuring appropriate remedial or disciplinary action is taken if breaches are identified. PPC CODE OF ETHICS, POLICIES, GUIDELINES AND GOVERNANCE PREVENTION board compliance officers compliance short-term incentive scheme of the group DETECTION compliance risks procedures random audits both internal and external RESPONSE findings compliance performance COMMUNICATION AND REPORTING The compliance framework has been established by management (closely related to the ethics and risk management functions) to manage compliance risk in the PPC group. In executing this responsibility, it relies on the assistance of management teams from all subsidiaries and business units and designated unit compliance officers. PPC s universe of legislation South Africa With the assistance of the compliance and legal department, a register of legislation applicable to PPC or a specific business unit was identified. The register also indicates: Regulators responsible for enforcing the legislation Basic content and scope of the legislation Analysis of the impact of legislation Details of penalties for non-compliance To our regulatory universe for updates, amendments and repeals to South African legislation, we appointed a reputable firm of attorneys. In recent months, we have started using online application software that automatically updates our universe of legislation and sends out regulatory alerts of significance to all unit compliance officers. Rest of Africa Similarly external firms have been appointed to update our regulatory universes for our operations in Zimbabwe, Botswana, Rwanda and the DRC. This process is backed by training from the group and centred around formalising processes and compliance. 68 PPC Ltd Integrated report 2015

71 Legislation watchlist CURRENT WATCHLIST OF PPC SA The National Water Amendment Act has been promulgated and came into operation on 2 September 2014, the same date as the National Environmental Laws Amendment Act The National Environmental Management Laws Amendment Act 25 of 2014 was signed by the president. The Act seeks to amend various sections of the National Environmental Management Act 1998; National Environmental Management: Waste Act 2008; and National Environmental Management Amendment Act Draft National Environmental Laws Amendment Bill Draft National Pollution Prevention Plans published in terms of the National Environmental Management: Air Quality Act 39 of Draft National Greenhouse Gas Emission Reporting Regulations at a glance Our business Strategic and operational Carbon Budgets and Desired Emission Reduction Objective (Deros). Employment Equity Amendment Act. Draft Carbon Tax bill. The speed of change in environmental legislation has been a challenge for the cement industry. PPC continues to engage extensively on legislation that could affect our business. Current engagements have focused on air quality, water issues at national and local level, climate change and waste issues including definitions of waste. The following compliance initiatives are worth mentioning: PoPI compliance tracker The long-awaited Protection of Personal Information (PoPI) Act was finally signed into law by the president toward the end of last year. Since we have a responsibility to comply with the eight processing conditions of the Act, a number of staff members from human resources, procurement, finance, governance, legal and IT attended a full-day workshop. We are currently working with IT to ensure all policies and data systems are updated and aligned to ensure compliance. Weighbridge compliance With the axle-weighting legislation in place, we have implemented new software at all sites, excluding Port Elizabeth. The plan is to complete the project which will include a post-implementation at some sites and complete the Port Elizabeth installation by 30 November Competition law training Since the introduction of an enhanced online competition law training system, we have reached all sites with great success. The online programme is focused on giving our employees sufficient knowledge to identify and avoid competition law concerns that may arise. The training covers Competition Commission investigations, creating a competition law manual, employee policy directive and competition law updates. Case studies and assessment tests enable participants to understand the issues and engage with the relevant legal provisions. At the end of each module, participants complete multiple choice questions. Centralised policy system As part of our ongoing compliance projects, we are centralising and standardising all company policies. This will ensure all employees in the PPC group have ready access to well-developed and understandable policies. Bridgette Modise Chairman of the risk and compliance committee 17 November 2015 Governance Sustainability Financial Appendices PPC Ltd Integrated report

72 COMMITTEE REPORTS CONTINUED PPC REMUNERATION REPORT Dear shareholder I am pleased to present the remuneration committee s report for the year ended September 2015, highlighting some of the key issues and amendments which the remuneration committee considered during the year. This report addresses in more detail the company s overall remuneration policy and particularly executive remuneration, both fixed and variable elements, as well as fees paid to nonexecutive directors. The year has been challenging for the company and indeed the construction industry. Market growth was subdued with a limited number of major infrastructure projects while market supply and competition increased significantly due to a combination of new entrants and the importing of cement. The company also underwent a number of robust corporate challenges resulting in changes to the board and management. Given these challenges, it was important for the remuneration committee to reflect on shareholder views, the delivery of sustained value and the attraction and retention of key skills at all levels within the organisation. The short-term incentive structures were also ed with the aim of widening the performance criteria to include additional financial and non-financial drivers integral to the creation of sustained long-term value. The long-term incentive structures were also ed to include share appreciation rights to leverage the value of these incentives and drive performance, particularly with regard for the need to deliver the pipeline of new projects. With this in mind, depending on grade, up to 75% of the long-term share awards in 2015 constituted share appreciation rights with performance criteria. The CEO was granted additional long-term incentives in 2015 in recognition of his role in delivering on future business plans and strategy and also serves as a retention incentive. The remuneration committee believes that the remuneration policy is appropriate for the company having regard to the operating environment and opportunities. The remuneration committee, however, remains alert to views and developments which strive to improve alignment and increase long-term performance and sustainability. The remuneration committee has been mindful of the general investor calls for clear reporting on the alignment between the group s strategy and incentive performance conditions and overall performance relative to the set performance conditions. The remuneration committee has refined its reporting in response to investor feedback and believes that the changes set out in the report are appropriate. We have also considered the concerns and queries raised by our shareholders, and we provide the remuneration committee s responses at the end of this report (page 81). The report this year is again presented in two parts, with the first part setting out the company s remuneration philosophy and policy, and the second part detailing the implementation of the policy in the 2015 financial year. The remuneration committee is satisfied that the principles laid down by the King Code of Corporate Governance for South Africa (King III) and the Companies Act 2008 (the Act) have been adhered to, unless otherwise stated in this report. Peter Nelson Chairman of the remuneration committee 17 November PPC Ltd Integrated report 2015

73 PART 1: REMUNERATION POLICY Governance and the remuneration committee Role of the remuneration committee As a committee of the board, the remuneration committee assists in setting the company s remuneration policy and directors and prescribed officers remuneration. The remuneration committee operates according to its terms of reference, which are published on the company s website. Members of remuneration committee Members are non-executive directors, and the majority are independent as defined by King III. The committee held four meetings in 2015, with attendance shown on page 55. OUR REMUNERATION POLICY The chief executive, chief financial officer and head of human resources attend meetings by invitation, to assist the committee in executing its mandate. Other members of executive management can be invited when appropriate. No executives participate in the vote process or are present at committee meetings when their own remuneration is discussed or considered. The remuneration committee uses the services of PwC as standing independent advisers. Remuneration committee terms of reference Please refer to page 60 for the remuneration committee s terms of reference 2015 at a glance Our business Strategic and operational Ensure employees are rewarded fairly and appropriately Attract, retain and motivate individuals with the necessary calibre and behaviour FIXED PAY Appropriate to recruit and retain, but no in-built premium for performance SHORT-TERM INCENTIVES Aligned to financial performance and strategic priorities LONG-TERM INCENTIVES Aligned to shareholder returns MAXIMUM REWARDS ARE ACHIEVED ONLY FOR HIGH PERFORMANCE AND HIGH SHAREHOLDER RETURNS Governance Sustainability Key principles of the remuneration policy PPC recognises that one of its competitive sources of value is its employees, and believes that in order to meet business objectives, the remuneration and reward policies and practices must be based on the following principles: Encourage organisational, team and individual performance Designed to drive a high-performance culture Based on the premise that employees should share in the success of the company Be designed to attract and retain high-calibre individuals with the optimum mixture of competencies Takes into account industry benchmarks and practices of comparable companies of a similar size Financial The policy conforms to King III and is based on the following principles: Remuneration practices are aligned with corporate strategy Total rewards are set at levels that are competitive in the relevant market Incentive-based rewards are earned by achieving demanding performance conditions consistent with shareholder interests over the short, medium and long term Incentive plans, performance measures and targets are structured to operate effectively throughout the business cycle The design of long-term incentives is prudent and does not expose shareholders to unreasonable financial risk Appendices PPC Ltd Integrated report

74 COMMITTEE REPORTS CONTINUED Remuneration of executive directors and prescribed officers Elements of remuneration ELEMENT DEFINITION Fixed Variable Total guaranteed pay (TGP) Short-term incentives (STIs) Long-term incentives (LTIs) The fixed element of remuneration is referred to as total guaranteed pay and includes salary, car allowance, retirement, life insurance and medical aid contributions. An annual short-term incentive is paid in cash and provides executive directors and prescribed officers with an incentive to achieve the company s short and medium-term goals, with payment levels based on both company and individual performance. Long-term incentives comprise instruments, awarded under two plans: Share appreciation rights (SARs) awarded under the PPC share appreciation right scheme (SAR scheme) Forfeitable shares awarded under the PPC forfeitable share plan (FSP) A mix of these instruments is awarded and where used for performance, the vesting is subject to company performance vesting conditions and where used for retention, continued employment is used as a vesting condition. Previously, the company also awarded instruments under a restricted share unit scheme (RSU), which was a cash settled performance-linked share scheme. The total remuneration for the CEO, CFO and other prescribed officers (on average) in three different performance scenarios is depicted in the graphs below. A graph of the actual remuneration outcomes for the year appears on page 78 of Part 2 of this report. BELOW EXPECTED PERFORMANCE (R000) AT EXPECTED PERFORMANCE (R000) Prescribed officers Chief financial officer Chief executive officer TGP STI LTI* * Indicative expected value of retention FSPs on grant date Prescribed officers Chief financial officer Chief executive officer TGP STI* LTI** * Based on an expected 65% personal score. **Indicative expected value on grant date. MAXIMUM PERFORMANCE (R000) Prescribed officers Chief financial officer Chief executive officer TGP STI LTI* * Indicative expected value on grant date assuming full vesting. 72 PPC Ltd Integrated report 2015

75 Total guaranteed pay (TGP) The company generally pays fixed remuneration at the median. Monthly pay and benefits are targeted to be competitive for comparable roles in companies of similar complexity and size, taking cognisance of the performance of the employee concerned. Market data is used to benchmark salary and benefits and to inform decisions on salary adjustments. Salary increases are not guaranteed and are adjusted annually at financial year-end based on market benchmarks, market inflation, and company affordability, performance and to address market anomalies. Professional advisers appointed by the remuneration committee provide benchmark information. In the reporting period, a new listed comparator group was selected to benchmark executive remuneration. The grouping was based on the basic materials, industrials and consumer goods sectors on the JSE. In addition, market capitalisation and companies with an African and international reach were also considered. The selected peer group selected comprises: Omnia Holdings Limited, Lonmin plc, Short-term incentives (STIs) Purpose Participation Operation STI limit percentage Company performance measures and percentages AECI Limited, KAP Industrial Limited, RCI Foods Limited, Tongaat Hulett Limited, Sibanye Gold Limited, African Rainbow Minerals Limited, Northam Platinum Limited, Barloworld Limited, Sappi Limited, Nampak Limited, AVI Limited, Gold Fields Limited and Exxaro Resources Limited. Benefits The following benefits are provided as part of TGP: Participation in the PPC Retirement Fund is compulsory for all permanent employees. The fund is an in-house defined contribution fund and also provides risk cover for death and disability All employees are required to belong to a choice of companysponsored external medical aids or to be a member of their spouse/life partner s medical aid All employees are covered for death, medical and disability expenses as a result of an accident Employees who need to use their motor vehicle in their duties can elect to allocate an appropriate portion of their TGP as a car allowance To reward employees for contributing in the delivery of the company s financial and strategic objectives. The STI scheme has been designed to be easy to understand, and to pay out fairly, and be differentiated according to personal performance, while being linked to PPC s overall financial performance. Employees participate in the STI and levels of participation and minimum qualifying targets (thresholds) vary according to employee grades, with higher financial thresholds for senior executives. The STI scheme is measured over a one-year period, using the following formula: Annual TGP x STI limit % x company performance % x personal performance %. The remuneration committee retains the right to vary the terms of the STI in special circumstances. The STI limit varies according to grade such that in the case of executive directors and prescribed officers the STI is capped at 140% of TGP. A combination of financial (70%) and non-financial (30%) business drivers is used. The financial drivers include EBITDA, normalised HEPS and the cash-conversion ratio. The non-financial drivers relate to transformation, sustainability and safety. Targets and thresholds are set annually for each of the drivers with the aim of delivering the overall business plan and essential elements of long-term sustainability. The company performance is measured relative to the above targets can range from 0% (threshold performance) to 150% (stretch performance) at a glance Our business Strategic and operational Governance Sustainability Financial Personal performance measures and percentages No bonus is payable below threshold performance. Personal performance is measured through personal scorecards which contain objective and subjective measures, including financial and non-financial objectives, and cover all aspects of the individual s role that are important to the creation of value and sustainability. Changes for 2016 Personal performance ranges from 50% (threshold performance) to 120% (stretch performance). A personal performance factor of less than 50% will result in no bonus being payable, irrespective of the company performance outcome. The sustainability measures are likely to be supplemented and the maximum levels of participation for executives will be ed in line with industry standards. Appendices PPC Ltd Integrated report

76 COMMITTEE REPORTS CONTINUED Long-term incentives (LTIs) The company introduced the forfeitable share plan (FSP) in 2011/2012 with awards to executive directors comprising both performance shares (75%) and retention shares (25%). Prior to that, the company operated a cash settled share appreciation right (SAR) scheme, under which SARs were granted. As leveraged instruments, the SARs provided employees with the right to receive the appreciation in the share price between grant and exercise price. The company ed its LTIs during the course of 2014/2015. The outcome of the indicated that the FSP in isolation did not provide adequate incentive or leverage to participants, and it was consequently decided to use an equity settled SAR scheme alongside the FSP. This revised approach recognises the company s robust business plans and growth opportunities and the importance of delivering on these plans for the long-term benefits of all shareholders. The policy applicable to both instruments is explained below. Purpose Operation and instruments Performance versus retention instruments To align participants with shareholders over the long term by making performance awards, the vesting of which is subject to company performance conditions and continued employment, and to act as a retention tool by making retention awards, the vesting of which is subject to continued employment. Annual awards are made, using a combination of: Share appreciation rights these are rights given to employees to the extent of the appreciation in the share price between the grant date and exercise date Forfeitable shares these are free shares with full voting and dividend rights from the award date The policy for executive directors and prescribed officers is that at least 75% and 50% respectively of the total LTI award should be performance based. In the case of executive directors and prescribed officers, the SAR scheme is currently used to incentivise performance, whilst the FSP is used to address retention. The mix between FSP and SAR awards is as follows: PERFORMANCE % (SARs) RETENTION % (FSPs) Executive directors Prescribed officers Performance measurement Vesting periods Dilution Changes for 2016 Appropriately stretched performance conditions are set by the remuneration committee each time an award is made, measured over a three-year performance period. In line with best practice, vesting is applied on a sliding scale as follows: 30% vesting occurs at threshold performance 100% vesting occurs at target performance Linear vesting is applied between threshold and target with no vesting below threshold Awards of forfeitable shares will vest in year three, subject to continued employment from the date of award. SAR awards will vest in year three to the extent that the performance conditions have been satisfied, and will lapse if not exercised by the sixth anniversary of the award date. SARs are also subject to continued employment from the date of award until exercised. The LTIs are not dilutive as they can only be settled by purchasing shares on the market. No changes are being considered to the framework; however, performance measures are subject to at the time of making new awards. 74 PPC Ltd Integrated report 2015

77 BEE schemes South African employees participated in a BBBEE scheme in 2008 and a second scheme in Certain directors and prescribed officers also participated in these schemes as detailed on page 81. Employment contracts executive directors The remuneration committee, subject to circumstances, will maintain the following policy for executive directors employment contracts: All agreements should contain a restraint of trade clause Contracts should not commit the company to pay on termination arising from the director s failure to perform agreed duties Employment contracts should not contain balloon payments If a director is dismissed because of a disciplinary procedure, a shorter notice period should apply without entitlement for compensation for the shorter notice period Contracts should not compensate directors for severance because of change of control. The newly appointed CEO is an exception having an optional six-month compensation in the event that he decides to resign post the change in control Appointment of non-executive directors Non-executive directors appointed during the year are subject to election by shareholders at the first annual general meeting following their appointment, after which they must retire according to the board rotation plan. Non-executive director fees The chief executive officer recommends the non-executive director fee structures to the remuneration committee for onward approval by the board, after obtaining input from its independent advisers regarding benchmark studies based on the same comparator group used for executive directors remuneration. As suggested by King III, board fees comprise both a base fee and an attendance fee which, in the remuneration committee s view, are sufficient to attract board members with the appropriate level of skill and expertise. Fees are not automatically increased, but as a principle, are aimed at the median of the selected comparator group. Non-binding advisory vote The remuneration policy contained in Part 1 will be subject to a nonbinding, advisory vote at the annual general meeting to be held in January The remuneration policy is ed annually as the company strives to achieve the highest levels of alignment and performance and accordingly shareholder views are central to these s. Summary of main changes to the remuneration policy In 2015, the following material changes were made to the remuneration policy: STI parameters have been updated to improve alignment to shareholders, and now include strategic non-financial elements The LTI was ed in detail and an equity settled SAR scheme introduced to be used alongside the FSP LTI performance conditions were ed and now include a combination of earnings, cash, return and strategic measures The company is moving to the Paterson grading system and the process is expected to be completed by December 2016 PART 2: IMPLEMENTATION OF POLICIES FOR THE REVIEW PERIOD during the year The main issues considered and approved by the remuneration committee for 2015 were: Review of the remuneration policy Approval of the remuneration committee work plan for 2015 Review of best practice relating to executive remuneration Approval of the remuneration report Review of shareholder feedback following the annual general meeting Annual salary and job grading for executive directors and prescribed officers and ratification of the overall salary increase percentage for other staff Approval of the short-term incentive targets for executive directors and prescribed officers and all other staff Approval of the short-term incentive outcomes for 2015 In-depth of the LT LTI award for the incoming CEO Approval of the 2015 LTI awards for all participants and performance conditions to ensure shareholder alignment Review of benefits offered to all employees Review of executive employment agreements Review of fees payable to non-executive directors 2015 total guaranteed pay (TGP) adjustments Executive directors and prescribed officers received on average a 6% adjustment to TGP. This compares to an increase percentage range of between 6% and 7% for all other employees at a glance Our business Strategic and operational Governance Sustainability Financial Appendices PPC Ltd Integrated report

78 COMMITTEE REPORTS CONTINUED 2015 STI outcomes The STI outcomes for executive directors and prescribed officers have been calculated as follows: PERFORMANCE MEASURE WEIGHTING ACHIEVEMENT DJ CASTLE OUTCOME MMT RAMANO PRESCRIBED OFFICERS 1 Financial performance targets: EBITDA 25% Normalised HEPS 25% Cash conversion ratio 20% 150% 30% 30% 30% Non-financial performance targets: Transformation (BEE level) 10% 100% 10% 10% 10% Sustainability (dust emissions) 10% 150% 15% 15% 15% Safety (LTIFR) 10% Company performance 55% 55% 55% x x x Personal performance 70% 66% 61% Total (% of maximum STI opportunity) 39% 36% 34% x x x Maximum STI opportunity (% of TGP) 140% 140% 140% x x x Board discretionary factor 2 86% 86% 86% x x x Annual TGP (R000) STI (R000) Prescribed rib ed officers shown as an average. age Personal performance e scores ranged from 57% to 65%. 2 Based on an assessment of the quantum of the STI giving due consideration to company performance, previous STIs and other relevant factors. 3 Annual TGP of R pro rated. Executive directors and prescribed officers received the following STI for the period: STI R000 PERCENTAGE OF TGP Executive directors DJ Castle MMT Ramano Prescribed officers PL Booysen HN Buthelezi JT Claassen AC Lowan KPP Meijer FK Molefe T Sibisi JHDLR Snyman JJ Taljaard PPC Ltd Integrated report 2015

79 2015 LTIs awarded In 2015 the company granted a combination of SARs and FSP shares to executive directors and prescribed officers. The FSP shares were granted as retention awards with continued employment as the vesting criteria, while the SARs were granted as performance awards, subject to company performance conditions and continued employment. The usual vesting period of three years was reduced by three months in recognition of the delays in issuing awards which arose when the company was under a JSE cautionary due to corporate action and was not able to make the awards. The SAR awards were subject to the following performance conditions: CONDITION WEIGHTING % THRESHOLD (30% VESTING) TARGET (100% VESTING) Growth in normalised basic HEPS 37,5 CPI CPI + GDP ROIC 37,5 Real WACC Real WACC + 2,5% Growth in cash available from operations 5 CPI CPI + GDP Execution of SA business plan 10 85% achievement 100% achievement Execution of international business plan 10 85% achievement 100% achievement The company is facing many challenges and opportunities and has several major local and international investments to bring on stream. The successful delivery of these key strategic initiatives is important to both the long-term success and value of the company. The CEO is the driver of these strategies and integral to success thereof. The remuneration committee was of the view that it would be beneficial to further incentivise and secure the retention of the newly appointed CEO by way of granting additional SARs and FSP shares with a combined value of R6 million, split 75%, 25% respectively. These awards are subject to the same performance and vesting conditions as the 2015 SAR and FSP awards. In 2015, executive directors and prescribed officers received a combination of SAR and FSP awards as indicated below: BASIS OF AWARD (EXPECTED VALUE AS A % OF TGP) PERFORMANCE AWARDS % (SARs) 1 RETENTION AWARDS% (FSPs) 1 NUMBER OF PERFORMANCE AWARDS (SAR) NUMBER OF RETENTION AWARDS (FSP) INDICATIVE EXPECTED VALUE ON GRANT DATE R000 Executive directors DJ Castle DJ Castle 3 75% 75% 25% MMT Ramano 3 60% 75% 25% MMT Ramano Prescribed officers PL Booysen 35% 50% 50% HN Buthelezi 35% 50% 50% JT Claassen 35% 50% 50% AC Lowan 35% 50% 50% KPP Meijer 35% 50% 50% FK Molefe 35% 50% 50% T Sibisi 35% 50% 50% JHDLR Snyman 35% 50% 50% JJ Taljaard 35% 50% 50% The split tb between een SAR and FSP is based on the ei indicative ive expected value at date of grant. 2 CEO additional allocation as explained above. 3 Annual allocation. 4 CFO additional allocation per employment contract at a glance Our business Strategic and operational Governance Sustainability Financial Appendices PPC Ltd Integrated report

80 COMMITTEE REPORTS CONTINUED Vesting of 2012 FSPs The FSP awards granted during 2012 comprised performance shares and retention shares. The performance condition required growth in HEPS from 2011 to 2014 to exceed growth in CPI over the three years by at least three percentage points. CPI grew by 18%, but HEPS only grew by 7%, with the result that none of the performance awards have vested. The retention awards have vested. Total remuneration outcomes The actual remuneration outcomes for 2015 are illustrated alongside. ACTUAL PERFORMANCE Prescribed officers* Chief financial officer Chief executive officer** TGP STI LTI*** * Average TGP. ** Appointed 12 January *** Realised value of awards made in prior years. Remuneration paid to executive directors and prescribed officers in 2015 SALARY R000 RETIRE- MENT AND MEDICAL CONTRI- BUTIONS R000 CAR ALLOW- ANCE R000 STI R000 LTI REALISED R000 OTHER R000 TOTAL R000 Executive directors DJ Castle MMT Ramano BL Sibiya Prescribed officers PL Booysen HN Buthelezi JT Claassen AC Lowan KPP Meijer FK Molefe RM Rein T Sibisi JHDLR Snyman JJ Taljaard RS Tomes Appointed pointe 12 January ary Vesting of restricted share units granted in Reimbursement to permanent employer while performing the role of executive chairman for three months. 4 Vesting of FSP with no performance conditions, granted in Restraint of trade payment. 6 Restraint of trade payment and relieving allowance. 7 Seconded from Safika Cement from March 2015, Other comprises secondment allowance. 8 Resigned in October 2014; Other comprises leave pay. 78 PPC Ltd Integrated report 2015

81 Remuneration paid to executive directors and prescribed officers in 2014 The executive directors and prescribed officers remuneration for the year ended 30 September 2014 was as follows: 2015 at a glance SALARY R000 TGP RETIRE- MENT AND MEDICAL CONTRI- BUTIONS R000 CAR ALLOW- ANCE R000 STI R000 LTI REALISED VALUE R000 1 OTHER R000 DISCRE- TIONARY BONUS R000 TOTAL R000 Our business Executive directors MMT Ramano BL Sibiya 2 Prescribed officers PL Booysen HN Buthelezi JT Claassen AC Lowan KPP Meijer FK Molefe T Sibisi JHDLR Snyman JJ Taljaard RS Tomes A Wadee Past directors P Esterhuysen KM Gordhan Arising i gf from the e RSU award, the 2011 FSP with no performance conditions, ions, the final third of the RSU award ard andf FSP awards thatt vested ed early for participants who terminated their services. 2 Following the resignation of Mr K Gordhan on 22 September 2014, Mr B Sibiya assumed an executive role in the company. Remuneration for services as an executive director started from 1 October. 3 Other payments include a relocation allowance (R ) and a payment in lieu of transfer costs (R ). 4 Employed for nine months of the financial year. 5 Employed for nine months of the financial year. 6 Employed for seven months of the financial year. Other payments included annual leave (R ), severance pay (R ), 13th cheque (R28 000) and Masakhane share units (R ). 7 Employed for one month of the financial year. Other payments include severance pay (R ), annual leave (R ) and Masakhane shares (R ). 8 Employed for 12 months of the financial year, but resigned in the last week of September Strategic and operational Governance Sustainability Appendices Financial PPC Ltd Integrated report

82 COMMITTEE REPORTS CONTINUED Increase in non-executive director fees Non-executive directors fees are as approved by the previous annual general meeting and valid from that date until the next AGM. Following a benchmarking exercise, the board recommended a 6% increase. Please refer to the Notice of AGM for the approval of non-executive director fees. Total emoluments to non-executive directors for the year ending 30 September 2015 were: COMMITTEE BOARD FEES R000 CHAIR- MAN FEES R000 NOMI- NATIONS R000 AUDIT R000 RISK AND COM- PLIANCE R000 REMU- NERATION R000 SOCIAL, ETHICS AND TRANSFOR- MATION R000 INVEST- MENT R000 SPECIAL MEETINGS R000 TOTAL R000 DJ Castle N Goldin ZJ Kganyago NB Langa Royds TJ Leaf-Wright MP Malungani T Mboweni SK Mhlarhi B Modise T Moyo CH Naude PG Nelson TDA Ross J Shibambo BL Sibiya D Ufitikirezi Served as non-executive nexec director for three months sb before becoming the CEO. 2 Alternate director toblsibiya. 3 Retired January Retired January Resigned September Total emoluments to non-executive directors for the year ended 30 September 2014 were: COMMITTEE BOARD FEES R000 CHAIR- MAN FEES R000 NOMIN- ATIONS R000 AUDIT R000 RISK AND COM- PLIANCE R000 REMUNE- RATION R000 SOCIAL, ETHICS AND TRANSFOR- MATION R000 SPECIAL MEETINGS R000 INVEST- MENT R000 OTHER 4 R000 TOTAL R000 ZJ Kganyago NB Langa-Royds AJ Lamprecht MP Malungani SK Mhlarhi B Modise T Moyo TDA Ross J Shibambo BL Sibiya Retired dj January ary Appointed November Subsequently appointed as executive chairperson on 22 September Three meetings of the PPC Bafati Investment Trust. 80 PPC Ltd Integrated report 2015

83 Interests of executive directors and prescribed officers in share capital The aggregate direct beneficial holdings of directors and their immediate families (none of whom has a holding of over 1%) in the issued ordinary shares of the company are detailed below. There are no indirect holdings by directors and their immediate families. There have been no material changes in these shareholdings since that date. NAME NUMBER OF SHARES AS AT 30 SEPTEMBER 2015 NUMBER OF SHARES AS AT 30 SEPTEMBER 2014 Current directors MMT Ramano ZJ Kganyago Prescribed officers JHDLR Snyman Interests of directors and prescribed officers in BBBEE schemes In 2008, in terms of the company s first BBBEE transaction, certain executive directors and prescribed officers were granted participation rights in the loan-funded Black Managers Trust which owns shares that are subject to vesting conditions and a lock-in period restricting transferability which expires on 15 December In addition, during the 2012 financial year, they each received rights to shares in a trust owning donated shares which were subject to a lock-in expiring on 15 December Certain non-executive Shareholder engagement CONCERNS AND QUERIES RAISED BY SHAREHOLDERS PPC did not have a return on capital measure for any of its incentive schemes directors received vested rights in 2008 in a trust owning donated shares which were subject to vesting conditions and a lock-in expiring annually in thirds from 15 December 2012 and expiring on 15 December During the 2013 financial year, following the implementation of the company s second BBBEE transaction, executive directors and prescribed officers were included among the South African employees granted participation rights in a notional loan-funded trust owning shares that are subject to vesting conditions and a lockin period restricting transferability which expires in September PARTICIPATION RIGHTS BEE 1 BEE 2 Executive directors MMT Ramano Prescribed officers PL Booysen HN Buthelezi JT Claassen AC Lowan KPP Meijer FK Molefe T Sibisi* JHDLR Snyman JJ Taljaard *Rights will be forfeited f on nd date of resignation ion RESPONSES AND ACTIONS TAKEN BY THE COMMITTEE PPC has now adopted the ROIC measure in the long-term incentive structure 2015 at a glance Our business Strategic and operational Governance Sustainability Previously PPC had no sustainability targets linked to incentives PPC has now added a sustainability component to the short-term incentives The remuneration report should reflect the full terms of reference of the remuneration committee The existence of a CEO discretionary bonus pool was questioned by shareholders The full terms of reference of the remuneration committee is included in the report via a link on the PPC website The CEO s discretionary bonus pool has been discontinued Financial No changes to the remuneration policy are listed The material changes are dealt with in the chairman s introductory letter and explained elsewhere Appendices PPC Ltd Integrated report

84 COMMITTEE REPORTS CONTINUED Value of long-term incentives AWARD DATE NUMBER ALLOCATED IN PRIOR YEARS NUMBER ALLOCATED IN CURRENT YEAR NUMBER VESTED IN CURRENT YEAR NUMBER FORFEITED IN CURRENT YEAR CLOSING NUMBER GRANT PRICE (R) PRICE ON EXERCISE VESTING PRICE (R) VESTING GAIN (R000) CURRENT UNIT VALUE (R)* VALUE AT YEAR- END (R000) Executive directors DJ Castle Share appreciation rights 2015/05/ ,71 4, Forfeitable shares no performance conditions 2015/05/ , Total MMT Ramano Share appreciation rights 2012/09/28 cash settled , /09/30 cash settled , /05/ ,71 4, Forfeitable shares with performance conditions 2012/09/ /03/ /02/ , Forfeitable shares no performance conditions 2015/05/ , Total Prescribed officers PL Booysen Share appreciation rights 2007/08/08 cash settled ,00 0, /09/17 cash settled ,80 0, /09/25 cash settled ,35 0, /05/ ,71 4, Forfeitable shares no performance conditions 2012/02/ , /03/ , /02/ , /05/ , Forfeitable shares with performance conditions 2012/02/ /03/ /02/ , Total All instruments nts are equity settled, tled, unless otherwise ei indicated. d * Instruments subject to a future performance condition i have been reflected as if the performance condition i will be fully satisfied, although lh hcircumstances may result in a different outcome. 82 PPC Ltd Integrated report 2015

85 AWARD DATE NUMBER ALLOCATED IN PRIOR YEARS NUMBER ALLOCATED IN CURRENT YEAR NUMBER VESTED IN CURRENT YEAR NUMBER FORFEITED IN CURRENT YEAR CLOSING NUMBER GRANT PRICE (R) PRICE ON EXERCISE VESTING PRICE (R) VESTING GAIN (R000) PPC Ltd Integrated report CURRENT UNIT VALUE (R)* VALUE AT YEAR- END (R000) Prescribed officers continued HN Buthelezi Share appreciation rights 2015/05/ ,71 4, Forfeitable shares no performance conditions 2014/02/ , /05/ , Forfeitable shares with performance conditions 2014/02/ , Total JT Claassen Share appreciation rights 2007/08/08 cash settled ,00 0, /09/17 cash settled ,80 0, /09/25 cash settled ,35 0, /05/ ,71 4, Forfeitable shares no performance conditions 2012/02/ , /03/ , /02/ , /05/ , Forfeitable shares with performance conditions 2012/02/ /03/ /02/ , Total AC Lowan Share appreciation rights 2015/05/ ,71 4, Forfeitable shares no performance conditions 2013/03/ , /02/ , /05/ , Forfeitable shares with performance conditions 2013/03/ /02/ , Total All instruments nts are equity settled, tled, unless otherwise ei indicated. d * Instruments subject toa future performance condition have been reflected as if the performance condition will be fully satisfied, although circumstances may result in a different outcome at a glance Our business Strategic and operational Governance Sustainability Financial Appendices

86 COMMITTEE REPORTS CONTINUED AWARD DATE NUMBER ALLOCATED IN PRIOR YEARS NUMBER ALLOCATED IN CURRENT YEAR NUMBER VESTED IN CURRENT YEAR NUMBER FORFEITED IN CURRENT YEAR CLOSING NUMBER GRANT PRICE (R) PRICE ON EXERCISE VESTING PRICE (R) VESTING GAIN (R000) CURRENT UNIT VALUE (R)* VALUE AT YEAR- END (R000) Prescribed officers continued KPP Meijer (leaves Share appreciation rights 2015/05/ ,71 4, Forfeitable shares no performance conditions 2012/02/ , /03/ , /02/ , /05/ , Forfeitable shares with performance conditions 2012/02/ /03/ /02/ , Total FK Molefe Share appreciation rights 2015/05/ ,71 4, Forfeitable shares no performance conditions 2014/02/ , /05/ , Forfeitable shares with performance conditions 2014/02/ , Total All instruments nts are equity settled, tled, unless otherwise ei indicated. d * Instruments subject to a future performance condition have been reflected as if the performance condition will be fully satisfied, although circumstances may result in a different outcome. 84 PPC Ltd Integrated report 2015

87 AWARD DATE NUMBER ALLOCATED IN PRIOR YEARS NUMBER ALLOCATED IN CURRENT YEAR NUMBER VESTED IN CURRENT YEAR NUMBER FORFEITED IN CURRENT YEAR CLOSING NUMBER GRANT PRICE (R) PRICE ON EXERCISE VESTING PRICE (R) VESTING GAIN (R000) CURRENT UNIT VALUE (R)* VALUE AT YEAR- END (R000) Prescribed officers continued TR Sibisi (resigned Share appreciation rights 2015/05/ ,71 4, Forfeitable shares no performance conditions 2014/02/ , /05/ , Forfeitable shares with performance conditions 2014/02/ , Total JHDLR Snyman Share appreciation rights 2007/08/08 cash settled ,36 0, /09/17 cash settled ,80 0, /09/25 cash settled ,35 0, /05/ ,71 4, Forfeitable shares no performance conditions 2012/02/ , /03/ , /02/ , /05/ , Forfeitable shares with performance conditions 2012/02/ /03/ /02/ , Total All instruments nts are equity settled, tled, unless otherwise e indicated. * Instruments subject to a future performance condition have been reflected as if the performance condition will be fully satisfied, although circumstances may result in a different outcome. ** Instruments subsequently forfeited on date of resignation at a glance Our business Strategic and operational Governance Sustainability Financial Appendices PPC Ltd Integrated report

88 COMMITTEE REPORTS CONTINUED AWARD DATE NUMBER ALLOCATED IN PRIOR YEARS NUMBER ALLOCATED IN CURRENT YEAR NUMBER VESTED IN CURRENT YEAR NUMBER FORFEITED IN CURRENT YEAR CLOSING NUMBER GRANT PRICE (R) PRICE ON EXERCISE VESTING PRICE (R) VESTING GAIN (R 000) CURRENT UNIT VALUE (R)* VALUE AT YEAR- END (R000) Prescribed officers continued JJ Taljaard Share appreciation rights 2015/05/ ,71 4, Forfeitable shares no performance conditions 2012/02/ , /03/ , /02/ , /05/ , Forfeitable shares with performance conditions 2012/02/ /03/ /02/ , Total RS Tomes (resigned Share appreciation rights 2007/08/08 cash settled ,00 Forfeitable shares no performance conditions 2012/02/ /03/ /02/ Forfeitable shares with performance conditions 2012/02/ /03/ /02/ Total Retired directors SG Helepi (resigned 14 February 2013) Share appreciation rights 2007/08/08 cash settled ,00 0,09 2 Total 2 All instruments nts are equity settled, tled, unless otherwise ei indicated. d * Instruments t subject to a future performance condition have been reflected as if the performance condition will be fully satisfied, although h circumstances may result in a different outcome. 86 PPC Ltd Integrated report 2015

89 INFORMATION TECHNOLOGY The group information technology (IT) team s main focus is to facilitate PPC s strategy and provide the platforms to exploit related technology developments that can enhance the value to the business. One of the key areas of focus is to ensure that IT risks are managed to ensure the long-term sustainability of the business. The IT team is responsible for ensuring PPC s information assets are protected amid rising security threats in the operating environment. The group IT strategy has been revised to align with the corporate strategy, and is based on five pillars: Doing business easier ensuring all stakeholders (customers, business partners, shareholders, employees, and communities where we operate) find it easier to do business with PPC. As such, we explore new technology platforms like mobility and social media to ensure PPC reaches its stakeholders in the manner they prefer. World-class connectivity and infrastructure as PPC grows into other geographies, group IT will ensure the necessary infrastructure and connectivity is in place to support the business in achieving its growth requirements. We continue to monitor connectivity initiatives and technology developments throughout the regions in which we operate to establish how best to position PPC to take advantage of developments. Fit for purpose given the current global operating environment, it is imperative that the group is more prudent in deploying its resources. IT is no exception. We choose simplicity over complexity while ensuring that business requirements are met accordingly. The demand side is managed closely through the IT steering committee where prioritisation and the business fit are determined. Realising value is managed through different executive committees. Monetising the data to deliver value to our stakeholders, it is imperative to understand the business environment in which we operate. Analytics have been identified as a key area to unlock value from data owned by PPC. Integration of IT and operations technology technology developments have blurred the lines between IT and operating technology. In capitalising on new trends such as smart metering, radio frequency identification (RFI), and others, it is important that these two environments are integrated to achieve a factory floor to corporate floor view of the business. IT governance The IT environment is governed according to King III. The board has delegated authority to ensure implementation of the IT governance framework to the audit committee. The IT governance framework is supported by COBIT 5 processes. The audit committee receives regular updates (at least quarterly) from the management team on the status of material IT projects. Group internal audit together with the external auditors provide assurance on IT general controls and internal financial controls affected by IT projects. Findings and updates on remedial actions are reported to the executive committee and the audit committee. The design, implementation and execution of the IT governance framework have been assigned to the group chief information officer, who reports to the chief executive. The group finance executive committee a sub-committee of the group executive committee provides oversight on IT governance, with support from the IT steering committee and other management committees. The IT steering committee is responsible for ensuring alignment between IT initiatives and the group s strategic objectives. It is also responsible for prioritising projects and allocating appropriate resources to execute these. IT is an integral part of PPC s risk management. The group compliance division ensures that enterprise IT risks are properly understood and effective mitigation strategies are in place to reduce the impact. IT complies with the group enterprise risk management framework and is intimately involved in risk management processes. The board, through the risk committee and audit committee, receives reports on any IT risks from the compliance division and internal audit. The IT team is the custodian of PPC s information assets and responsible for ensuring compliance. As the group expands to other geographies, IT ensures compliance with in-country telecommunications laws and other regulations at a glance Our business Strategic and operational Governance Sustainability Financial Appendices PPC Ltd Integrated report

90 TAKING A STRATEGIC APPROACH We will understand the drivers, risks and trends in each of our regions and businesses, especially in the longer term and act accordingly Defensive strategies are as important as offensive strategies 88 PPC Ltd Abridged integrated report 2015

91 Appendices Financial Sustainability Governance Strategic and operational Our business 2015 at a glance PPC Ltd Integrated report

92 PEOPLE REVIEW HEALTH AND SAFETY Highlights Training included safety fundamentals, accident investigation and risk assessments Introduced predeployment health requirements for expatriate workers Continued roll out of PPC Alive as planned in Botswana Lowlights 18 lost-time injuries in 2015 One fatality at Habesha construction site One fatality at Slurry factory (October 2015) PPC health and safety Health and safety are core values in PPC and we continuously strive for excellent safety and health performance in all areas of our operations. Our abiding aim is to have everyone leave work at the end of the day in the same state as they arrived in the morning. Our strategy is underpinned by the following: Our people are our greatest asset Good health and workplace safety is our most important priority Together we are responsible for health and safety Workplace injury and illness are preventable and managed through sound safety and health risk management principles Safety statistics PPC uses management control as the guiding principle to determine whether safety statistics are reported as part of group figures or separately: Where PPC has a majority share in the business and consolidates it financially, these safety statistics form part of group statistics Where PPC does not consolidate the financials (ie does not have the majority shareholding) and has limited management control through a signed agreement, statistics are excluded Under this definition: Safika (91%) and Pronto (100%) health and safety data will be included from 2016 once systems and definitions have been aligned Habesha (31%) is excluded From 2016, Safika (five sites) (IDM) and Pronto (nine sites) will be included in group safety data. We are conducting a readiness exercise with both organisations in preparation for including their data as part of group statistics. Figures for 2015 therefore exclude Safika and Pronto. Generally, off-site incidents (public roads or client sites) are not recorded in our safety statistics but, in Pronto s case, due to the nature of its work, off-site incidents will be included. During the reporting period, Pronto recorded six off-site incidents where employees were injured to the extent they were booked off work for more than one day. PPC is in an exciting phase with the new CIMERWA factory becoming operational in 2015, and three projects (in DRC, Zimbabwe and Slurry) in the construction phase. As directly managed projects, this safety data has been consolidated into group safety statistics. The construction site at Habesha (Ethiopia) has been reported separately as PPC does not have management control. Regrettably, a contractor employee died and two others were seriously injured after an incident in September PPC group safety statistics TARGET 2016 ACTUAL ACTUAL (EXCLUDING (EXCLUDING SAFIKA, SAFIKA PRONTO, DRC, AND CIMERWA AND PRONTO) MOZAMBIQUE) ACTUAL (PPC ONLY) 2014 ACTUAL (PPC ONLY) 2013 ACTUAL (PPC ONLY) 2012 Fatalities 0 0 * FFR 1 per hours worked ,02 0 Number of LTIs 2 No target set LTIFR 3 per hours worked (12-month window) 0,27 5 0, ,25 0,28 0,23 Days lost to LTIs No target set Significant administrative notices 4 (number) No target set Fatality yf frequency rate 2 Lost-time time injury 3 Lost-time injury frequency rate 4 Section 54 (DMR) target will include Safika, Pronto, DRC, CIMERWA and Mozambique (actual for 2015 was 0,31) *Fatality recorded at Habesha and Slurry. 90 PPC Ltd Integrated report 2015

93 The group LTIFR decreased from 0,25 to 0,24 in the period, while the number of LTIs rose from 16 to 18. PPC investigates all incidents to understand the causes, and this is shared across the group. Sadly, in October 2015 we recorded a fatality at our Slurry factory. TYPE OF LTI Operational LTIs 2015 Authority visits 3 4 Project LTIs PPC employees injured 5 8 PPC contractors injured SA operations LTIs 4 7 International holdings LTIs Number of visits by authorities Section 54 (SA work stop) 4 2 Section 55 (SA notice to rectify) 16 2 Other (non-sa) 2 7 For the period, PPC received 20 notices from the Department of Mineral Resources (DMR) and zero from the Department of Labour (DoL) on health and safety issues. The reason for the increase is the DMR s focus on mining operations and stringent application of legal requirements. Occupational health PPC introduced predeployment health requirements for expatriate workers (covering all employees and contractors travelling for international assignments). These include medical assessments, fitness to work and/or travel, individual travel health assessments, vaccination requirements and malaria prophylaxis. All of PPC s manufacturing sites remain certified to the OHSAS standard. PPC remains active in the Chamber of Mines structures to interact, obtain information and add value on complying with various elements of the mining charter. The mining charter scorecard for all sites was completed and submitted. Outlook For existing and well-established PPC operations (South Africa, Zimbabwe and Botswana), our main focus for the year ahead is to provide refresher training at all levels based on individual roles and responsibilities (eg safety fundamentals, risk assessment and accident investigation). In addition, we will ensure health and safety systems are standardised throughout the group and, where necessary, appropriate software tools are provided to effectively manage health and safety matters. We are also concentrating on management and reporting processes for occupational health. The safety statistics for 2015 show that our construction projects and operations in Africa require a new approach and much focus as PPC has not traditionally operated in these areas. We will need to carefully evaluate issues such as availability of competent health and safety resources, language, lack of infrastructure, cultural differences, in-country legislation, availability of quality equipment, remoteness of sites and fit-for-purpose health and safety standards to ensure that project health and safety plans accommodate these aspects. We are developing fit-for-purpose occupational health and safety management systems for both our projects and operations in Africa (Rwanda, DRC and Ethiopia). Focus areas for 2016 Roll out of PPC Alive and training in safety fundamentals, accident investigation and risk assessments Detailed health and safety feedback per site as part of quarterly operational s Introduce quarterly health and safety s Senior management involvement in lost-time injury investigations Implement a health and safety data tool, with supporting management information system Baseline risk assessments 2015 at a glance Our business Strategic and operational Governance Sustainability Financial Under the mining charter scorecard, PPC reports on HIV/Aids and tuberculosis programmes, which are run by clinics at group operations. Prevalence is low for both diseases. No cases of silicosis were reported during the year. Appendices PPC Ltd Integrated report

94 PEOPLE REVIEW CONTINUED WORKFORCE Highlights Launched cross-functional talent sessions 44 housing transactions were completed for employees participating in the PPC housing initiative to date Commenced with new employee grading system Developed and implemented a new independent approach to Climate Survey New people management system in place New performance management system introduced Lowlights Resignation of senior executives Managing our people Underpinning PPC s long history of success is a hard working, diligent and dedicated team of employees across our operations. We believe that better business decisions and stronger performance are driven by competent, high-calibre individuals operating in a diverse environment with the right skills, experience and passion. Their determination continues to drive our progress in executing our strategy. The changing competitive landscape has led to a change in our business approach to achieve our strategic aspiration of sustainable competitive returns for all our stakeholders by focusing on five key business pillars: World-class excellence in all we do Provider of materials and solutions Creating an innovative culture Taking a strategic approach Doubling our business every ten years Our Kambuku philosophy has been an integral part of our people processes for many years. The changing competitive landscape and company strategy required refocusing and aligning our approach to people management. These changes necessitated a robust change management approach that focuses on delivering results and driving a high-performance culture. During the year, we introduced the #IGNITE change initiative which will lay the foundation for the development of a ONE TEAM PPC culture that will enable our strategy of innovation, being world class and delivering results. This change programme will focus on the following five broad elements: Leadership effectiveness Aligning the business behind the strategy Head office effectiveness and value add Development of One Team PPC culture Talent management Various initiatives within the different streams are being developed and implemented. Key roleplayers, who will act as change igniters, have been identified across the business to drive and support the change initiatives. Delivering business success through high performance For PPC to achieve its objectives, all employees must be aligned to the strategic direction of the company (page 32). This is cascaded throughout the organisation to create alignment and drive functional, team and individual performance. Performance management and development are therefore important steps to enable staff to contribute to the success of PPC. The process is fair and robust, with employees identifying and agreeing personal development plans. The performance management process comprises: Scorecard alignment and agreement on key performance areas Both objective and subjective measures Ensures both parties are clear on expectations/delivery Progress s and performance coaching Short-term bonus payments and salary increases are linked to performance against agreed scorecards. They are calculated on a combination of individual achievement and company performance. Our people management system Aligned to our business and HR functional strategies, we have implemented people management systems. This approach forms an integrated link between strategy, performance management, remuneration and succession planning. 92 PPC Ltd Integrated report 2015

95 PEOPLE MANAGEMENT SYSTEM 2015 at a glance PPC strategy CEO scorecard Talent board s (2pa) Performance management conversations IDP SEPT: 5 } Year end OCT: 1 final Finalise individual scorecard for new FY IDP IDP 4 DEC: 2 JUNE: Quarterly Continuous informal s s process Quarterly informal Succession management (1pa) Salary increases (1pa) Our business Strategic and operational Functional strategy Individual scorecard IDP MARCH: Mid year formal 3 Scorecard and BTB (3pa) Development and mentorship Governance Talent s and succession management The objective of our succession management process is to safeguard critical business positions by effectively managing vacancy risks, particularly at leadership level and in positions identified as critical to the success of our business. The aim is to identify, develop and retain highly talented and diverse individuals to ensure a continuous supply of potential successors for key leadership and critical positions. During this year, we introduced cross-functional talent board s across the business. The aim of the s is to identify key people who will take the business to the next level while effectively supporting and managing line employees. Feedback from these s is used as input to succession management. A great place to work the PPC housing initiative The PPC employee housing support scheme was introduced in The objective for the next few years is to assist over 300 employees to improve their living conditions. Most eligible candidates do not qualify for a state-funded RDP house or a mortgage, and fall in the so-called gap market, making it virtually impossible for them to become homeowners without support. To date, 471 South African employees have enrolled in the housing programme and are being assisted to become homeowners. So far, 44 employees have moved into their new homes, upgraded an existing home or are awaiting title deeds before moving into their homes. This year, we introduced a similar housing initiative for our Zimbabwe operations. The scheme will give lower-grade employees the opportunity to purchase a low-cost house through the sale of around 700 high-density homes at the Colleen Bawn and Bulawayo factories. Low-density homes are being retained for critical and skilled staff at PPC Zimbabwe. Sustainability Financial Appendices PPC Ltd Integrated report

96 PEOPLE REVIEW CONTINUED Handover of houses to PPC housing initiative recipient, Ernest Mmolaatlou and Joel Morakanele from PPC Slurry Empowering people PPC s relevant, empowered, actualised and lasting (REAL) transformation philosophy concentrates on maintaining a strong foundation to grow and empower employees. As part of this approach, the second phase of our BBBEE transaction in 2012 resulted in effective black ownership of PPC s South African operations increasing to 26%. This transaction supported the conversion of our mining rights, and placed around 7% of the holding company s ownership in the hands of South African employees. In 2014, R100 million in shares from the 2008 BBBEE 1 transaction vested in the hands of employees. Allied to this transaction, the PPC Masakhane Employee Share Trust was created to allow all eligible employees to become shareholders of PPC. Since the launch of the PPC trust, employee shareholders have received over 26 million shares and over R21 million in dividends. For the reporting period, an additional shares were transferred to new employee shareholders. Employee participation and engagement A fundamental principle of PPC s culture is participation and engagement. We believe positive results are easily achieved when all employees are engaged, empowered and accountable. Active involvement and communication therefore occur frequently across PPC through established systems and processes, including: CEO breakfast The CEO held a series of breakfasts with groups of ten to 12 head office employees over the course of the year. Entitled How are you? the breakfasts are designed to give employees an opportunity to engage with Darryll directly on any topic of their choosing. Feedback from attendees has been overwhelmingly positive. The CEO hosted nine breakfast sessions between March and September. Ask Darryll A portal, under the banner Ask Darryll was created on the PPC intranet as a platform for employees across the group to submit questions to the CEO. Answers to the questions are posted on the webpage to the benefit of all employees. Over 100 questions were submitted by employees within the first six months of the site going live. Key leader summits Regular team meetings at plant or site level, and across the business, involve all appointed, elected and informal leaders. The aim is to inform employees about plant, site or business performance, strategic initiatives, challenges and opportunities. Robust and constructive communication takes place in an environment of mutual trust and cooperation, and the outcomes of each summit are communicated clearly and promptly to shop-floor level. Through this process, we maintain a clear purpose and common vision and direction throughout the company. CEO town hall sessions Monthly feedback on business performance and strategic issues. These sessions are facilitated by the CEO and broadcast across all PPC sites by video link or recording. Employees can post questions or give feedback on the PPC intranet. Invocoms Daily structured team-based discussions take place at shop-floor level, weekly at sectional supervisory level, and monthly at departmental level. There are around 365 active and effective Invocoms operating across PPC. Through these Invocom engagement 94 PPC Ltd Integrated report 2015

97 sessions, we communicate elements of PPC s vision and objectives, evaluate team performance, analyse obstacles affecting performance, develop appropriate action plans, and ensure targets are achieved. Behavioural safety, educational topics and development are also discussed in these forums. In 2015, we implemented a new climate survey approach which was conducted independently across PPC to assess morale and identify improvement areas. This survey was conducted across all PPC operations in South Africa and international for which an average score of 75% was achieved. The results of this year s survey will serve as a baseline for future assessments. Initiatives from this climate survey will be executed in the new fiscal year. Recognition The prestigious Diamond Awards recognise individuals and teams whose performance has been extraordinary throughout the year, as nominated by their colleagues. These awards are intended to inspire and encourage employees to achieve excellence and entrench a high-performance culture. This year the categories were amended: rising talent, customer service excellence (internal and external), sales, production excellence, business support and safety. An additional category recognises the #IGNITE initiative, the current PPC change management initiative focused on cost optimisation, effective leadership, talent management, strategy alignment and culture change. This last category is a CEO discretionary award. There are three finalists in each category, with an overall winner taking the Diamond Award in each category at a glance Our business Strategic and operational Safety Luke Satho Forklift driver Bulawayo, Zimbabwe Rising talent Dakalo Mudau Mining shift foreman Hercules Customer service excellence Peter Max Sales consultant Montague Gardens Governance Sustainability The winners for the 2015 Diamond Awards are: Business support Ernest Kgopa Sales Faiza Surtie Financial Energy specialist Sandton Production excellence Sales consultant Gauteng construction Meshack Ndaba Graduate production Port Elizabeth Appendices PPC Ltd Integrated report

98 PEOPLE REVIEW CONTINUED PPC s total workforce for 2015 is compared to in The overall workforce increased by 270, as we now include employees from our subsidiary operations (Pronto and Safika). Workforce analysis: South Africa* AFRICAN COLOURED INDIAN EE LEVELS FEMALE MALE TOTAL FEMALE MALE TOTAL FEMALE MALE TOTAL Top management (CEO) Senior management Professional Skilled workers Semi-skilled Unskilled Learners Total permanent Learners Fixed term contracts Total fixed term contracts Grand total * Levels as defined d by the Employment Equity Act WORKFORCE ANALYSIS: INTERNATIONAL Expatriates per country PPC SA permanent employees have been seconded to its subsidiaries aligned with the talent board and succession management process. Three years MD PPC Zimbabwe Seven years General manager Botswana Cement Botswana Male Female Zimbabwe Rwanda Mozambique DRC months CEO CIMERWA Rwanda One year MD PPC Barnet DRC Workforce demographics PPC s workforce is well balanced by age. Young and upcoming talent (under 30) represents 18% of the workforce while the age group normally associated with greater career stability represents 60%. The risk of losing intellectual capital and institutional experience is well managed, with only 21% of our employees aged 50 and above. 96 PPC Ltd Integrated report 2015

99 2015 at a glance WHITE SA NATIONALS FOREIGN FEMALE MALE TOTAL FEMALE MALE TOTAL FEMALE MALE TOTAL GRAND TOTAL Our business Employees for South Africa including our subsidiaries (Pronto and Safika) Strategic and operational Governance FEMALE (%) Sustainability 0 African Coloured Foreign Indian White Total 30 to 50 years old Over 50 years old MALE (%) African Under 30 years old Coloured Foreign Indian White Total Financial Appendices 30 to 50 years old Over 50 years old Under 30 years old PPC Ltd Integrated report

100 PEOPLE REVIEW CONTINUED Workforce turnover The nature and purpose of fixed term contracts for employees are limited duration for relief of duty and short-term project requirements. These numbers are not a true reflection of avoidable exits, and we have therefore excluded them. The annual turnover rate (calculated using GRI methods) for 2015 is 7,8% in South Africa, 3,4% in Zimbabwe and 5,8% in Botswana operations. We have recorded an overall decrease in labour turnover due to the voluntary retrenchments at our Riebeeck and Lime operations as well as Zimbabwe and Botswana in Permanent turnover for South Africa, Botswana and Zimbabwe REGION AGE GROUP BOTSWANA SOUTH AFRICA ZIMBABWE FEMALE MALE TOTAL FEMALE MALE TOTAL FEMALE MALE TOTAL GRAND TOTAL 2015 GRAND TOTAL to 50 years old 12% 4% 5% 9% 6% 7% 0% 4% 3% 6% 8% Over 50 years old 0% 3% 3% 14% 12% 12% 0% 4% 4% 10% 17% Under 30 years old 33% 13% 18% 5% 7% 6% 0% 5% 4% 6% 9% Grand total 13% 4% 6% 9% 7% 8% 0% 4% 3% 7% 10% Absenteeism rate (excludes Pronto and Safika) We have now included the absenteeism rate of our Zimbabwe operation. FEMALE MALE TOTAL REGION Botswana 1,3% 1,1% 0,6% 0,5% 0,7% 0,6% Zimbabwe 1,0% 0,8% 0,8% South Africa 2,0% 1,9% 2,0% 1,9% 2,0% 1,9% Grand total (including sick leave) 1,9% 1,9% 1,7% 1,8% 1,7% 1,9% Labour relations In South Africa (excluding Pronto and Safika), 32,5% of employees are members of a recognised trade union, 57,2% in Botswana and 66,3% in Zimbabwe. PPC supports freedom of association and relevant agreements between the company and various unions are in place. People development The development and growth of globally competitive people is a key principle of our HR strategy and culture. We believe in enriching our team members by ensuring they have the right skills, knowledge and competencies to reach their potential. Training programmes are designed to produce substantial benefits for both PPC and its employees. 98 PPC Ltd Integrated report 2015

101 The following training hours were recorded for 2015: Training hours per employment category: South Africa* EMPLOYMENT CATEGORY 2015 TOTAL TRAINING HOURS 2015 TOTAL EMPLOYEES 2015 AVERAGE HOURS PER EMPLOYEE 2014 TOTAL TRAINING HOURS 2014 TOTAL EMPLOYEES 2014 AVERAGE HOURS PER EMPLOYEE Top management Senior management Professional Skilled workers Semi-skilled Learners Total * Table excludes ss South ha Africa subsidiary sidiar iary workforce totals t andt training i gh hours Training hours per country: international COUNTRY 2015 TOTAL TRAINING HOURS 2015 TOTAL EMPLOYEES 2015 AVERAGE HOURS PER EMPLOYEE Zimbabwe ,6 Rwanda ,4 Botswana ,6 Mozambique No formal training recorded for 2015 DRC Not yet recorded 2015 at a glance Our business Strategic and operational Governance Skills and development expenditure for 2015 was as follows: Training expenditure as a percentage of wage bill: by race and gender for 2015 COUNTRY ANNUAL WAGE BILL TRAINING EXPENDITURE FOR 2015 TRAINING EXPENDITURE AS PERCENTAGE OF ANNUAL WAGE BILL Sustainability SA (rand) ,50 Zimbabwe (US dollar) ,24 Botswana (pula) ,03 Rwanda (Rwandan franc) ,08 Mozambique (metical)* DRC (Congolese franc)* * No formal training ing was recorded d for r in the ed DRC due to not tb being gi in commission ion and dm Mozambique due to size of operation Financial Appendices PPC Ltd Integrated report

102 PEOPLE REVIEW CONTINUED Training expenditure by race and gender: South Africa (R000) AFRICAN COLOURED INDIAN WHITE TOTAL TRAINING MALE FEMALE MALE FEMALE MALE FEMALE MALE FEMALE EXPENDITURE MALE (R000) FEMALE (R000) African Coloured Indian White African Coloured Indian White In 2015, PPC spent R42,7 million or 4,5% of payroll (ie leviable amount) on skills development for employees compared to R38,1 million or 4,2% in Over 80% of this benefited previously disadvantaged employees. PPC technical skills academy (TSA) The PPC TSA provides training and trade tests as a decentralised trade test centre and is fully accredited by Merseta (sector education and training authority for manufacturing, engineering and related services). TSA again retained its Mining Qualifications Authority (MQA) accreditation and ISO 9001:2008 certification in the period. Since 2002, TSA has successfully trained 221 engineering learners. Employed and unemployed learners currently enrolled for engineering learnerships at TSA are shown below: LEARNERSHIP PROGRAMME AFRICAN INDIAN COLOURED WHITE MALE FEMALE MALE FEMALE MALE FEMALE MALE FEMALE TOTAL Electrical Fitter and turner Plater-welder Diesel mechanic Total TSA is also accredited for learnerships in carbonate materials manufacturing processes and mining and surface excavations, both accredited by the MQA and registered with the South African Qualifications Authority (SAQA). Participation on these programmes is as follows: Carbonate materials manufacturing processes NQF level 4 learnership: To date, 87 employees have successfully completed this programme and two learners are due for completion before December Rock-breaking: surface excavations NQF level 3 learnership: To date, 49 employees have successfully completed the programme with three learners due for completion before December No additional learners were enrolled on these programmes in 2015 due to a fully trained target population. 100 PPC Ltd Integrated report 2015

103 PPC leadership talent development programme As part of our strategy and approach to establish values-based leadership in the organisation, we have initiated a leadership talent development programme in partnership with the Gordon Institute of Business (GIBS). The aim is to develop globally competitive leaders in support of our business and HR strategy by focusing on carefully selected desired outcomes, including: A style of leadership that will underpin a multinational, multicultural and high-performance company Providing a forum for strategic decision-making so that socially grounded leadership is a default approach rather than a legislatively driven strategy A leadership approach that acknowledges and incorporates the tenets of African leadership to reorientate a South Africadominated PPC into a truly international organisation Provide a self-governing framework that transcends individuals and is driven by the collective leadership of PPC The first intake of 24 potential leaders in PPC completed the programme in December Candidates represented our businesses across Africa, with delegates from South Africa, Rwanda, Botswana, Democratic Republic of the Congo and Zimbabwe. A second group of 24 candidates was identified and nominated through the talent board process. This programme started in August 2015 and will be completed in November As part of this year s delegation, we have included candidates from our South African subsidiaries, Pronto and Safika. The participation of women for this intake is 42% compared to 21% in the first intake. Graduate development programme The graduate development programme was implemented in 2008 to give our Dinaledi bursars the opportunity to gain two years relevant work experience and exposure. To date, 36 graduates have successfully completed the programme, with 22 candidates permanently employed at our operations at a glance Our business Strategic and operational Current graduate development programme students The current breakdown is shown below: Four African males Six African females Two coloured males Governance Dinaledi bursary scheme Our Dinaledi bursary scheme was introduced in 2006 to support the development of children mostly from previously disadvantaged communities. To date, we have assisted 35 students in obtaining tertiary qualifications. Currently, 11 students are participating in this bursary scheme. One African male One African female Mining engineering One white male Mechanical engineering Two African males One African female Electrical engineering Two African males Two coloured males One coloured female Other qualifications Study assistance As part of our strategy to grow globally competitive people, we annually support team members in obtaining and furthering their qualifications. During 2015, we supported 99 employees with study assistance of which ten were postgraduate degrees. Three of these employees are studying towards their MBA degrees. Study assistance is granted in line with approved individual development plans. In 2014, 67 employees received study assistance. Sustainability Financial Appendices PPC Ltd Integrated report

104 SOCIAL REVIEW EMPOWERED OWNERSHIP Highlights Effective 26% black ownership (which is made up of broad-based trusts, employees and strategic business partners) of South African operations in line with mining charter requirements at transaction value of around R3,8 billion More than R1 billion of dividends have been paid to black economic empowerment (BEE) structures to date, of which some 90% was used to service the debt In 2015, over R58 million in dividends was paid to employees Net value of shares totalling R108 million have been transferred to PPC employees and PPC black nonexecutive directors PPC employees hold over 6% of PPC shares allocated to them in terms of broad-based black economic empowerment (BBBEE) and more than 3% owned by broad-based trusts Over R100 million in dividends paid to employees and BBBEE beneficiaries since inception PPC s level 2 BBBEE rating maintained R294 million advanced to the broad-based trusts to assist with funding obligations Challenges Maintain level 2 BBBEE rating against new targets in revised codes of good practice Empowered ownership BBBEE status level 2 PPC continues to advance BBBEE in South Africa, recognising the importance of meaningful mainstream economic participation by black people in meeting the country s socio-economic objectives. The total transaction value of the combined BEE is approximately R3,8 billion effected in two phases, being BEE 1 and BEE 2. After our initial R2,7 billion BBBEE transaction seven years ago, the R1,1 billion second phase was introduced in Black beneficiaries in broadbased shareholder groupings, including employees and communities, now hold an effective 26% of PPC s South African operations, meeting mining charter requirements. During the period, we continued to engage with national and provincial government departments to align our broad-based socioeconomic transformation objectives. Progress is guided by our relevant, empowering, actualised and lasting (REAL) transformation philosophy, the heart of all our social performance initiatives. PPC external broad-based trusts The broad-based trusts combined have an ownership of more than 3% allocated to them in terms of BBBEE. In the past, the PPC Education Trust, which is a beneficiary of the BEE broad-based trust, completed its mathematics and science project at high schools near our operations. With a total investment of some R1,4 million, close to 250 pupils benefited from this much-needed initiative. This trust also ensured the successful completion of the artisan programme, with all graduating learners employed in the group. To date, the broad-based trusts have received some R26 million in dividends since PPC internal staff trusts In December 2013 and 2014, shares belonging to four employee trusts and the black non-executive directors trust vested. This facilitated the transfer of 3,5 million shares, valued at R108 million, directly to beneficiaries. This is in addition to dividends of over R36,4 million received by beneficiaries since Under the PPC Masakhane Employee Share Trust, our second employee scheme, existing staff beneficiaries have received R21,5 million in dividends. For the reporting period, 97% of the 26,7 million shares allotted to the trust have been allocated to beneficiaries. The PPC Bafati Investment Trust, launched as part of our BBBEE 2 structure, has been operationalised. Its mandate is to contribute in meaningful and sustainable ways to enhancing the standard of living and improving the well-being of previously disadvantaged people, especially black women, in areas in which we operate. It also aims to assist in their development and empowerment and to advance BBBEE in line with the spirit and purpose of the BEE Act, mining charter and codes. The trustees have shortlisted potential beneficiaries and are in the final stages of their appointment as beneficiaries. The trust has 1,9 million shares to allocate across 100 women beneficiaries from communities in PPC s operations. PPC Botswana share scheme The staff scheme (Sesigo) for permanent team members of PPC Botswana and Kgale quarries was introduced four years ago. Under the scheme, team members share in the profits and growth of PPC by receiving the same dividends as PPC shares listed on the JSE in South Africa. As Botswana s requirements for localisation (or BEE) have not yet been defined, we could not award employees in Botswana shares in PPC Botswana Pty Limited in their own names. Until this legislation is finalised, Botswana employees will enjoy the same financial benefits as their South African colleagues. To date, 111 employee beneficiaries have received P in cash payments. 102 PPC Ltd Integrated report 2015

105 SOCIAL AND LABOUR PLANS Socio-economic development PPC continues to address social challenges facing South Africa and the communities in which we operate. In line with our social and labour plans for 2014 to 2018, we are implementing community development projects and contributing to much-needed social development initiatives. PPC continues to interact with communities and municipalities in various regions to identify development priorities and contribute to the funding and implementation of socio-economic initiatives. Six of eleven sites concluded development programmes through local community engagement. Social and labour plan highlights for 2015 Infrastructure development: roads and electrical network Northern Cape Sports and recreation: sports courts Northern Cape Upgrade of the Riebeeck valley waste water treatment works Western Cape Opening of the Vaalboschsloot community hall North West Reconstructing roads in Kgatelopele municipality Lime Acres This is a collaborative project between PPC Lime and Idwala in the Northern Cape. Over R was spent in 2015 against PPC Lime Acres social and labour plan commitments to assist the municipality with the backlog of infrastructure, especially maintenance of roads and sidewalks by paving access roads in the communities. This promotes sustainable community development by creating employment opportunities (some 40 people at the start of the project), encourages community involvement, imparts technical skills to unskilled and semi-skilled members of the community and retains funds expended on the project in the community as far as possible. In 2016, a further construction will benefit about household in Daniëlskuil/Lime Acres village with PPC contributing a total of R2 million to complete the project. Paved road at intersection Daniëlskuil Electrical network refurbishment Kgatelopele Lime Acres In 2015, PPC contributed R towards upgrading electrical systems and networks to provide electricity to households in the communities of Kgatelopele, in line with the municipal electrical master plan. The project will be phased over five years and PPC will contribute a total of R2,3 million as part of its social and labour plan commitments. Project in progress Financial 2015 at a glance Our business Strategic and operational Governance Sustainability Paved road at intersection Daniëlskuil Appendices Project in progress PPC Ltd Integrated report

106 SOCIAL REVIEW CONTINUED Multi-purpose sports court Daniëlskuil PPC contributed R towards constructing a multi-purpose sports facility at the Daniëlskuil Intermediate School as part of the collaborative projects in the Kgatelopele integrated development plan. This is the first phase and the facility will be extended with a full athletics track over the remaining four years with PPC contributing an additional R /14 financial year, R1,5 million in 2014 and another R1,5 million in 2015 as PPC s total contribution of R5 million towards the total cost of approximately R73 million. Construction is complete and the plant is currently operational. DMR audit and project site visit Riebeeck valley waste water treatment plant Sports court Daniëlskuil Intermediate School Sports court Daniëlskuil Intermediate School The premier of Bokone Bophirima province hands over the PPC-funded community hall in Vaalboschsloot On 13 March 2015, the premier of Bokone Bophirima province, Supra Obakeng Ramoeletsi Mahumapelo, and executive mayor of Madibeng local municipality councillor Jostina Mothibe handed over the community hall which was constructed by PPC for the community of Vaalboschsloot. This 340-seater hall will provide the community with a dignified space to house community events and meetings as well as SASSA pay days, mobile clinic and other community services provided by the municipality. The total value of the hall is R4,8 million. Upgrade of the Riebeeck valley waste water treatment works Western Cape In 2013 PPC entered into a legacy agreement with the Swartland municipality to assist with the upgrade of the Riebeeck valley waste water treatment works. The water treatment plants at PPC Ongegund and Riebeeck valley were aged and utilised to full capacity. Therefore, a modern and state-of-the-art wastewater treatment plant was designed to serve the entire Riebeeck valley and future expansions. The Swartland municipality received R2 million from PPC in its Beestekraal community hall 104 PPC Ltd Integrated report 2015

107 CORPORATE SOCIAL INVESTMENT Highlights The CEO hosted directors and executives at Time for Change for the PPC CEO Sleepout event Carpenters were successfully trained and now manufacture office furniture for new CIMERWA offices Rural women were trained to make turf blocks for CIMERWA factory Contributed cement to build a dormitory to house 100 students at the African Leadership Academy in Honeydew Lowlights Need to move to a more structured approach to managing CSI Social responsibility initiatives across the continent at an early phase in line with the various project phases Introduction PPC believes that being a responsible and caring corporate citizen is a key component of true business leadership. Our group social policy covers all operations, highlighting our strategic commitment to sustainable development and specifying PPC s relationships with other organisations as part of the wider social, economic and political environment. As a socially grounded business, PPC strives to: Create employment and income-generating initiatives through an inclusive business approach where people at the base of the supply pyramid provide goods, services and livelihoods on a commercially viable basis to make them part of our value chain of suppliers, distributors, retailers or customers Evaluate the risks and impacts to the health and safety of community members and establish preventive and control measures Minimise displacement, provide compensation for loss of assets, improve the livelihoods of displaced people Respect the human rights, dignity, aspirations and culture of indigenous peoples Protect cultural heritage from the adverse impacts of project activities Philosophy Our corporate social investment (CSI) is a cornerstone of PPC s transformation process and good governance programmes. As such, PPC is committed to playing a role in developing an environment that is characterised by sustainable development and underpinned by our REAL transformation philosophy: Relevant add value to all stakeholders Empower make a difference; bridge the socio-economic gap Actualise part of the DNA of doing business; a way of life Lasting be sustainable, visible and have an emotional impact Approach to CSI Parameters that define the way in which our CSI initiatives are selected and implemented include: The CSI programme is strategically designed to align to our core business, drawing on internal resource and competencies, working with external stakeholders to leverage the impact of involvement Projects will be selected proactively, with PPC shaping guidelines for project objectives, methodology and evaluation procedures Implementation leverages on strategic partnerships, including non-profit organisations with a credible social development and governance track record We continue to pursue opportunities to make sustainable investments in communities where we operate. In South Africa, R7,17 million (2014: R7,04 million) was invested in community projects aligned to our CSI pillars across the country. EXPENDITURE BY CATEGORY Welfare HIV/Aids 6% 3% 8% Other sport Arts and culture 18% Job creation Community training Education Infrastructure 7% 1% 4% 52% 2015 at a glance Our business Strategic and operational Governance Sustainability Financial Appendices PPC Ltd Integrated report

108 SOCIAL REVIEW CONTINUED Key projects are summarised below. Welfare and charity support In all countries where PPC operates, we continue to support initiatives aligned to the Millennium Development Goals as well as the Women Empowerment Principles and will endeavour to align to the newly defined sustainable development goals. Income generation and poverty alleviation Time for Change (TFC) PPC continues to partner with TFC, an NGO caring for abused and abandoned children as well as young men and women who have lived on the streets. TFC has grown steadily, and is now running three small businesses in baking, sewing and food gardens. The most popular items are PPC shopping bags and work suits from the sewing room, as well as scones, muffins and cakes from the bakery. Vegetables are grown for both own consumption and for selling to street vendors, and commercial establishments, such as hotels. A portion of the profits from the PPC shopping bag project has been invested in implementing a class for slower learners at the centre, with significant benefits for those children. The Love of Christ Ministries (TLC) Over the last four years, in line with TLC s goal of becoming a selfsustainable entity, PPC has supported it in establishing a free-range poultry farming project. This now contributes to TLC s food needs and the profits from product sold to a restaurant provide a small income to cover costs. This project also offers children at the centre the opportunity of acquiring employable skills. Infrastructure development Given the nature of our business, housing is a natural fit for a socially grounded business. Our target is to facilitate 12 houses a year one each month. In 2015, PPC partnered with the Tshwane and Johannesburg municipalities, and one house was built for the elderly in Ivory Park, Johannesburg. We are working closely with the City of Johannesburg and Tshwane to deliver the other 11 houses. To support 16 Days of Activism for No Violence Against Women and Children, we invested in constructing four houses for destitute families at the Nelmapius project in Mamelodi, Pretoria. As a result, PPC was recognised as the best community builder for participation in the CSI 16 Days campaign by the Tshwane municipality. Our Port Elizabeth operation repaired the caretaker s house at Jarvis Gqamlana School that had been destroyed in a fire. Restorations exceeded the original condition. PPC also contributed cement to construct: A dormitory to house 100 students at the African Leadership Academy in Honeydew The Johannesburg Youth Orchestra building at the University of Johannesburg A wall and wide pavement to keep away snakes around the Orange Farm Children s Clinic Four classrooms at Mkhanyo Primary School at KwaMhlanga Arts and culture PPC continues to support the Field Band Foundation, specifically the Daniëlskuil Band in Lime Acres, Cullinan Band in Pretoria and the Grahamstown band. These bands also perform at PPC events. Humana People to People Over the last three years, PPC has invested in the installation of a ferro-cement tank to harvest rainwater and resuscitated two green houses at the Doornkop Soweto project. Due to the success of this project, funds were allocated to training the broader community, with ten community gardens involving 100 households established in Learn to Earn PPC s sales and marketing office in Cape Town partnered with Learn to Earn and invested in training women in sewing and baking skills. A number of these women are now self-employed and supporting their families. Field Band sponsored by PPC 106 PPC Ltd Integrated report 2015

109 Education Afrika Tikkun Phuthaditjaba Alexandra ECD programme Investing in early childhood development (ECD) recognises that the protection and development of children safeguards their well-being and is the best guarantee of future peace, security and prosperity for the community at large. PPC continued its partnership with Afrika Tikkun, which includes adopting two ECD classrooms in Alexandra. The ECD programme in Alexandra has recorded great success during the year. Key achievements include: The preparation and assessments of 64 grade R children to ensure they are school ready by November 2015 Recent assessments indicate that over 70% of developmental milestones among ECD children have improved 62 families of the most vulnerable children receive family support and food parcels, enabling them to more easily provide for their children s food security, health and well-being Nine teachers retained their jobs and developed their ECD skills Christel House South Africa Christel House pupils are from surrounding settlements in the cape flats region, characterised by abject poverty. Many are affected by social issues such as violence, gangsterism, abuse and drugs, but still attend school every day highlighting their determination to succeed despite their environments. For the past 13 years, Christel House has taken children from South Africa s poorest, most troubled communities and, using its holistic education model, achieved phenomenal success measured by academic performance, employment achievements and the number of citizens actively giving back to their communities and country. PPC currently supports eight girls at R per year. PPC also supports African Leadership Academy, Thandulwazi, QuadPara Association of South Africa and others. Our factories, especially Dwaalboom and Lime Acres, continue to invest significantly in subsidising teachers salaries and children s education respectively at a glance Our business Strategic and operational Forest Town ipad project Forest Town School for children with complex disabilities is very committed to giving every child the best opportunities to engage in their education, using innovative solutions that cater for individual disabilities. PPC invested a further 40 ipads after the pilot programme in 2014 (20 ipads) proved most beneficial to learners. The ipad learning centre has brought 21st century technology to Forest Town learners. It has trained Forest Town educators to be technologically literate, and introduced specifically designed programmes for special needs learners, transforming their perception of education and making learning fun through interactive applications (apps). Employee volunteerism There has been a noticeable increase in employee volunteerism. All PPC sites, including head office and Zimbabwe, took part in Mandela Day in July. Initiatives included baking pancakes for the elderly, and food parcels for communities around PPC factories. During the year, a number of employees participated in marathons, walks, cycling and other initiatives to raise funds for various charities. Governance Sustainability PPC Slurry women s forum collected groceries from staff and donated to local charity Financial Learner at Forest Town demonstrating the use of ipad Appendices PPC Ltd Integrated report

110 SOCIAL REVIEW CONTINUED CSI beyond South African borders Botswana PPC Botswana s CSI objectives are aligned with the country s broader national objectives and focused on education, especially early childhood development, as well as women and youth empowerment projects, in partnership with government, which are aimed at creating employment and reducing poverty. PPC De Hoek painted an early childhood development centre CEO sleepout Darryll Castle, PPC s CEO, hosted some directors and executives at Time for Change in July The sleepout served as a teambuilding event for PPC executives, giving them an opportunity to experience and appreciate what PPC is doing for marginalised people in our society. Molopolole project PPC Botswana partnered with the Ministry of Trade and Infrastructure and Department of Gender Equality to construct a building that will house a knitting workshop. Government would like this initiative to supply large tenders for knitwear in both the public and private sectors. PPC also contributed towards workshops aimed at improving the participants business and financial skills needed to run a sustainable operation. Mokolodi Crèche The crèche is in a disadvantaged community close to the PPC Aggregates Mokolodi quarry. PPC funded the crèche s electricity connection and invested in equipment and learning materials to stimulate young minds. Lady Khama Charity Trust PPC continues to support the Lady Khama Charity Trust, a national body that distributes funds to deserving small charities throughout Botswana. PPC pledged significant annual contributions for a threeyear period, starting in CEO sleepout at Time for Change The evening started with executives interacting with youth from the streets and hearing their stories about hardships on the streets and how they treasure the opportunity of being housed at TFC. After only three hours sleep, the team tackled chores at the centre. These included baking scones before sunrise, making PPC shopping bags, selling scones on the busy streets of Johannesburg and planting vegetables on the roof-top boxes. Mookane Junior Secondary School PPC was the main sponsor of the school s 2014 awards function, recognising academic, sport and behavioural excellence. The school is in the area where PPC explored extensively for limestone deposits. Zimbabwe United Bulawayo Hospital (UBH) and Mater Dei PPC Zimbabwe invested in refurbishing the hospital s maternity wing and assisted Mater Dei, a private Catholic hospital to repair the roof gutted by fire. PPC Zimbabwe s women s forum gave a memorable Christmas cheer to a most desperate group of handicapped children at Francis Home, which also received 12 wheelchairs. Some 150 towels sponsored by head office staff and 120 pairs of sheets made by Time for Change were handed over to the Lady Rodwell Maternity Hospital in Bulawayo. CEO sleepout at Time for Change Education PPC Zimbabwe is supporting holiday schools where O-level students are mentored in maths and science ahead of final exams. 108 PPC Ltd Integrated report 2015

111 CIMERWA Rwanda The CIMERWA leadership sees much potential in the Western Province, starting with its home territory in Bugarama in Muganza District. Bugarama has potential to supply basmati rice to Africa, fruit juices to the nation, household furniture, chickens and eggs for local consumption and export, school uniforms and protective clothing for companies in the province. Community upliftment CIMERWA is building strong partnerships with leaders and members of the local community. It currently supports nursery and primary schools, medical clinic and provides the community with clean, piped water. CIMERWA school This school opened in 2003, offering nursery and primary school education to 64 children of employees and the local community. Today, the school has 453 students, 14 teachers and a principal. able to refine their concept and received seed capital from CIMERWA staff and management. This went towards buying egg-laying chickens and constructing the fowl run. Carpentry project This project stemmed from the immediate need for furniture in the company and to make better use of the well-equipped carpentry workshop. It also created an opportunity to hire and train local carpenters. A number of volunteers, who formed a cooperative, have been trained as carpenters and acquired the skills to produce furniture for CIMERWA and the local community. The cooperative is currently manufacturing all office furniture for the new CIMERWA offices. Jobs have been created in the process, as the instructor now trains apprentices full-time while trainees receive a monthly salary at a glance Our business Strategic and operational CIMERWA Clinic The clinic includes a pharmacy, 13-bed hospital and laboratory. It has grown, over time, through new services like family planning, HIV care, and immunisation with vaccines provided by the government. The CIMERWA clinic currently has 11 staff members, including a physician, two lab technicians, seven nurses and a cashier. Socio-economic development After several stakeholder and community engagement meetings in 2014, a number of enterprise development projects were identified and have now been implemented. Knitting project CIMERWA management contributed some of the initial capital to purchase wool and knitting needles in August Membership has risen to over 20 girls who have either graduated or are completing high school. The group meets during its free time under the coordination and mentorship of CIMERWA school teachers and some parents. Their main product is ponchos, which are most popular in Rwanda, and profits now support over 20 children s school fees. Tailoring project CIMERWA recognised a need for personal protective clothing in the plant and partnered with local tailors to produce the overalls in the community. For the company s 30th anniversary celebrations in October 2014, local tailors were commissioned to produce 128 graduation gowns for students of the CIMERWA school. Poultry project A group of 20 young graduates from Bugarama were motivated to start their own business and approached CIMERWA management with their idea. In consulting with the CIMERWA team, they were Manufacturing of office furniture for new CIMERWA offices Turf blocks Due to the undulating terrain in Rwanda, it is important to find a way of controlling soil erosion on sloping and steep land. With support from CIMERWA, women from the community have been trained to make turf blocks. They have formed a cooperative, manufacturing hundreds of blocks every day, selling these blocks to CIMERWA and constructing the slopes. Turf block manufacturing for the CIMERWA plant Governance Sustainability Financial Appendices PPC Ltd Integrated report

112 SOCIAL REVIEW CONTINUED PREFERENTIAL PROCUREMENT PPC seeks to maximise purchases from black-owned and black women-owned companies to promote entrepreneurship and enterprise development in local communities at regional, provincial and national level. To create an enabling environment for these businesses, PPC provides access to mainstream procurement opportunities through a dedicated portal ( For the period, total spend was R4,97 billion (2014: R4,9 billion); R3,5 billion was the measured spend of which 88% (R3,1 billion) constituted weighted BEE procurement/recognised spend under the dti s revised codes of good practice (see table below). Spend with suppliers who have valid BEE certificates issued prior to the effective date of the revised codes, will be recognised. Furthermore, PPC expects to meet the compliance target of 80%. In terms of preferential spend against the mining charter, we met or exceeded all targets, except for multinational contributions. We await the Department of Mineral Resources revised mining charter for 2015 to SPEND CATEGORY TARGET 2015 % ACTUAL 2015 % ACTUAL 2014 % ACTUAL 2013 % Capital goods Consumable goods Services Supplier engagement To ensure continuity in delivery, pricing and quality throughout the value chain, PPC continues to evaluate the performance and progress of its supply base in implementing transformation programmes. Aspirant suppliers have the opportunity to engage PPC through our innovative web-based procurement portal to assist with: Easy access to information for supplier selection and rotation Early identification of enterprise and supplier development opportunities Improving data integrity and security Electronic tenders (e-tendering) Supplier assessments PPC annually assesses its key suppliers via a structured questionnaire that measures the health of the supplier s business in the areas of: Commercial Engineering and technical Environmental Finance Preferential procurement and empowerment status Health and safety Human resources Quality and business continuity This process assists PPC to mitigate risk and ensures that, in addition to price and quality, the overall value proposition from suppliers is realised. Enterprise and supplier development We view enterprise and supplier development as integral to expanding the small, medium and micro-enterprise (SMME) sector in South Africa. We actively support the national agenda to promote SMME sustainability, poverty reduction and employment creation, and shared economic growth. Our aim is to migrate procurement from non-transformed companies and bring new participants into mainstream procurement opportunities without affecting our established value for money principles. Procurement practices The weighted BEE procurement spend constitutes 88% (R3,1 billion) of the total measured procurement spend. The spend with suppliers in different BBBEE levels are listed below: Weighted BEE procurement per level BBBEE LEVEL VALUE (EXCLUDING VAT (RM)) RECOG- NITION % WEIGHTED BEE PROCURE- MENT (RM) % Level Level Level Level Level Level Level Level Non-compliant Grand total PPC Ltd Integrated report 2015

113 PREFERENTIAL PROCUREMENT SPEND WITH SUPPLIERS CLASSIFIED TO THEIR BBBEE STATUS Level 1 Level 3 Level 5 Level 7 5% 5% 2% Non-compliant 3% Level 2 Level 4 Level 6 Level 8 16% 2% 32% 19% 16% Suppliers that secure PPC tenders are required to submit a transformation plan, which becomes a material element to the contract. For the period under, PPC s verification audit is under way but the group expects to meet the preferential procurement priority pillar target of 40%: BBBEE PROCUREMENT SPEND CATEGORY REVISED CODES TARGET 2015 % TARGET POINTS All empowering suppliers 80 5 Empowering qualifying small enterprises 15 3 Exempt micro-enterprises 15 4 Suppliers that are 51% black-owned 40 9 Suppliers that are 30% black womenowned 12 4 Total at a glance Our business Strategic and operational The revised codes of good practice demand a fresh approach to preferential procurement, given that the allotted 25 points can only be earned if PPC procures from empowering suppliers irrespective of their BEE status and spends a large portion of its procurement budget with companies with high levels of black and black women ownership. To assist our suppliers to clearly understand the impact of the revised codes, full-day workshops were held with key suppliers in Gauteng and the Western Cape. Governance Sustainability Appendices Financial PPC Ltd Integrated report

114 ENVIRONMENTAL REVIEW THE ENVIRONMENT Highlights PPC Slurry was granted authorisation by the Department of Environmental Affairs to construct a new kiln line (see lowlights). Slurry s kiln 9 project granted a tax incentive by the Department of Trade and Industry for its broader socio-economic benefits PPC De Hoek, Port Elizabeth, Dwaalboom and Slurry was granted an extension of their compliance timeframes PPC De Hoek made progress with alternative energy sources, through its tyre coprocessing project PPC Slurry and De Hoek received their water use licences, with only Dwaalboom licence pending 10% reduction in absolute carbon emissions of finished cement Lowlights The appeal against authorisation granted to PPC Slurry has resulted in a delay to the start of the construction Public complaint on fugitive emissions at Hercules facility Excessive emissions from PPC Dwaalboom kiln 1 during commissioning of cooler upgrade which was communicated to the authorities PPC environmental vision and policy PPC Ltd believes in operating a sustainable business and we are committed to reducing the environmental impact of our operations while continually improving environmental performance. We ensure that sustainability forms an integral part of our business strategy while we strive to minimise or eliminate negative impacts and maximise positive impacts. We encourage all our customers, suppliers and business associates to meet similar environmental goals. PPC is committed to: Integrating environmental management into management practices throughout the group Implementing our environmental best practices to reduce adverse environmental impacts of our operations and, where practical, prevent pollution Achieve continual environmental improvement by identifying significant environmental aspects and setting objectives and targets while ing environmental performance of our workplace and surrounding environment Ensure compliance to environmental legislation and other requirements to which PPC subscribes Responsible stewardship by managing natural resources through efficient energy strategies and implementing waste reduction and recycling where possible Achieve effective and transparent communication with our stakeholders through internal communiqués and environmental management stakeholder forums Train and educate our employees in environmental responsibilities and build capacity among our stakeholders to identify, report and act on opportunities to minimise environmental impacts Manage our land through concurrent rehabilitation and maintaining biodiversity Employees and contractors working on PPC operations play a fundamental role in achieving environmental objectives through: Taking ownership of, and participating in, environmental management programmes and initiatives Integrating environmental concerns into everyday practice Our group energy policy acknowledges that PPC is an energyintensive business. We are committed to developing energy and carbon management programmes throughout the organisation, considering lifecycle costs in procurement and design, and setting energy-efficiency targets. PPC aims to source 10% of its energy requirements from renewable or alternative energy sources by PPC Ltd Integrated report 2015

115 Material environmental issues Based on stakeholder engagement, internal and external factors that affect the company as well as legal obligations, PPC has identified its material environmental issues for 2016, summarised below: Compliance 2015 at a glance Our business MATERIAL ISSUES Challenging and changing environmental framework. RESPONSE PPC is committed to environmental legal compliance and where we have non-conformances we respond appropriately. We try and ensure that proposed legislation promotes sustainable business practices. Environment MATERIAL ISSUES Carbon footprint Due to the chemistry and energy requirements of the cement manufacturing process, significant quantities of carbon dioxide (CO 2 ) are generated. The proposed implementation of a CO 2 tax will have financial implications for industry as a whole RESPONSE PPC has committed to reducing CO 2 emissions, with significant progress over the past decade. We continue to improve energy and process efficiencies to continually reduce our CO 2 emissions, carbon footprint and improve our reporting systems. We are also actively participating in the consultative processes with government to ensure decision-makers have a clear perspective on issues, including carbon offset, carbon tax, carbon budgets, desired emission reduction outcomes and pollution prevention plans. Operational MATERIAL ISSUES Energy (electricity, coal and diesel) The cement industry needs significant thermal and electrical energy. Given the power challenges in South Africa, the price, quality, sustainable supply and use optimisation of both energy types are key to successful operation. RESPONSE PPC has projects to improve electrical and thermal efficiency and to evaluate alternative forms of energy supply. These include coprocessing waste materials instead of coal. Water management MATERIAL ISSUES Efficient and responsible use of water resources. RESPONSE We are in the process of implementing comprehensive water management programmes aligned to our integrated water use licence commitments. Strategic and operational Governance Sustainability Financial Waste MATERIAL ISSUES Our waste-to-energy programme. RESPONSE PPC will continue to identify alternative raw materials such as used tyres and other alternative sources to replace our non-renewable energy sources. We will continue to classify our waste at our operations to ensure that waste recycling is enhanced. Appendices PPC Ltd Integrated report

116 ENVIRONMENTAL REVIEW CONTINUED Compliance The changing legislative framework and carbon tax The regulatory environment on climate change mitigation is evolving in South Africa. The government is developing a carbon tax, allocating carbon budgets and implementing other measures in an attempt to transition to a lower-carbon economy. A process is under way to allocate appropriate carbon budgets for companies, which will be expected to develop mitigation plans to meet this budget. The carbon-budget approach being implemented by the Department of Environmental Affairs is expected to align with the carbon tax being developed by National Treasury. The implications are potentially significant to PPC and the economy. PPC therefore initiated a process to prepare for the requirements and engaged proactively. We complied with the Department of Environmental Affairs request for industries classified under the carbon budget to submit their greenhouse gas data. At our Zimbabwe Msasa project, PPC was issued with an order on fugitive emissions from cement supply silos during the construction phase. The order is subject to withdrawal pending representation to the environmental management agency. PPC submitted evidence after addressing the said issues to REMA and we are now awaiting response. There were no fines incurred for non-compliance at any PPC operations. Operational Energy Energy remains one of our material issues. The cost of energy accounts for 24% of our total operating cost. In terms of electrical energy, PPC actively participates in load-shifting programmes administered by power utility Eskom to improve security of supply to the country. The operating environment at some of our South African plants has become more challenging due to supply shortages. We assessed possible short, medium and long-term options to mitigate greenhouse gas emissions and their associated costs across our South African operations. This has been distilled into a full set of feasible fuel, electricity and process-related emission-reduction options for each major site. Compliance management In line with our environmental policy, PPC is committed to environmental compliance across the group. To ensure this, we use a combination of targeted internal audits, legal registers, external legal auditing and external permit compliance audits. Our environmental management systems ISO help us in implementing and monitoring compliance. All our South African cement plants and lime operations are certified under ISO Industry forum response The Association of Cementitious Material Producers (ACMP) still plays a pivotal role in the engagement process and ensures that cement industry issues are addressed through law reform processes, for example, carbon tax, desired emission reduction outcomes, carbon budgets, greenhouse gas emissions reporting and pollution prevention plans. Environmental management inspectorate In total, PPC has had four audits by the environmental management inspectorate, with two feedback reports received to date. One report commended PPC Dwaalboom on its environmental performance. PPC Hercules received a number of findings including a precompliance notice and intention to issue a directive on fugitive management of dust, especially at conveyance systems, annual performance audit including emergency plan and submission of emergency plan to City of Tshwane. These were addressed to the satisfaction of the inspectors. No directives were issued to PPC. PPC integrated demand management programme PPC continued to benefit from the tightly controlled load-shifting programme during the challenging power supply period. However, of the five sites that participate in this programme, ironically some could not achieve desired results because of interrupted power supplies. Due to Eskom demand for load reduction to stabilise the power constrain on the grid, our Dwaalboom plant could not realise the planned load-shifting programme. Energy performance 1 GJ Direct Indirect SA operations including ing aggregates, gregates, lime, cement and Safika The year-on-year direct and indirect energy consumption is 4% and 6% up respectively. Energy performance has reduced mainly as a result of the upgrade of Dwaalboom kiln 1 and the need to run an old plant in order to satisfy the demand for cement. Environment Carbon footprint PPC is expanding the scope of reporting on indicators to include recently acquired businesses and other regions in Africa. Accordingly, the 2015 carbon performance includes Safika Holding under SA cement performance. In 2016, there will be a focused programme to build capacity across the business and expand assurance processes for carbon and energy to all business units that contribute materially to our environmental footprint. 114 PPC Ltd Integrated report 2015

117 CO CO Absolute carbon emissions for the divisions with a material impact on PPC s carbon footprint are shown below: CO 2 emissions (tonnes) TOTAL DIRECT INDIRECT Cement, lime and dolomite Cement SA Cement Zimbabwe Includes Safika, lime and cement operations s( (assured) 3 Includes Safika and cement operations (assured) The performance of Cement SA operations has improved significantly. This is mainly due to the inclusion of Safika, which produces highly extended cements with very low carbon intensities. CEMENT SA /t clinker 2 /t cement The increase in overall municipal water consumption is as a result of PPC Dwaalboom supply line being split to the neighbouring Holfontein community. The metering has not been realigned to exclude Holfontein. Overall the consumption should have been down on a year-on-year basis due to the kiln 1 line not running for four months. Integrated water use licensing progress PPC continues to engage with relevant authorities to facilitate the licensing process and various amendments associated with licences. PPC De Hoek and PPC Slurry were issued with water use licences in 2015 and we are still awaiting the licence for our Dwaalboom operation. PPC Colleen Bawn reusing treated wastewater case study PPC Colleen Bawn is in Matabeleland South, the dry lowveld part of Zimbabwe characterised by low rainfall and lengthy periods of drought. The clinker plant uses water supplied by Zimbabwe National Water Agency (ZINWA). Erratic supply creates huge shortages that affect plant operation and a sustainable supply to the community: plant water shortages affect the conditioning of exhaust gas and result in elevated emissions. The village population at Colleen Bawn also uses water supplied by ZINWA and 70% of this water goes to the sewerage works and is eventually collected and stored in the shale dam close to the sewerage plant. PPC Colleen Bawn has embarked on a project to recover treated effluent for use in the conditioning towers. This will ensure reduced demand on ZINWA to provide raw water and contribute to conserving natural resources and ensuring water security. The project will assure compliance with regulatory requirements. State-of-the-art equipment and testing will ensure we expeditiously correct any deviations and non-conformances at a glance Our business Strategic and operational Governance Sustainability Absolute carbon emissions finished cement has reduced to 757kg CO 2 /tonne, a 9,7% decrease year on year. Efficient and responsible use of water resources South Africa is a water-stressed country and although the cement industry is not water-intensive, PPC has a number of water management programmes in place, including: awareness programmes; monitoring and water balances; stormwater management; and water use licensing processes. Municipal water consumption m m m 3 Financial Appendices PPC Ltd Integrated report

118 ENVIRONMENTAL REVIEW CONTINUED Waste Alternative fuels to energy As part of our drive to diversify our energy sources, PPC plans to introduce a wide range of alternative fuels. This will ensure we become part of the solution to environmental challenges by coprocessing waste material instead of sending it to landfill. Some of these fuels could also reduce our carbon footprint. GENERAL WASTE (%) Case study PPC De Hoek kiln 6 has started coprocessing tyres with an envisaged rate of tonnes/annum. Tyres have a calorific value of around 31MJ/kg, which makes it an ideal alternative energy source for a cement kiln and preserves non-renewable natural resources. When coprocessing tyres, the cement kiln achieves total destruction and the ash is incorporated in the product, resulting in no by-product. Kiln 6 is expected to have a coprocessing capacity that results in a 10% to 15% thermal substitution rate. Disposed Recycled 60 HAZARDOUS WASTE (%) Disposed Recycled In terms of waste management, PPC s South African facilities increased recycled waste by 6% for both general and hazardous waste to 40% and 25% respectively. Our commitment to environmental management systems As part of our policy commitment, PPC operations use the environmental management systems approach to identify operational risks and manage these to ensure continual improvement and environmental compliance. All our South African cement operations are ISO certified by an independent certification body, SABS, our lime facility is certified by Dekra and our aggregates management systems are certified by the Aggregate and Sand Producer Association of South Africa (ASPASA). 116 PPC Ltd Integrated report 2015

119 To track and maintain environmental compliance, we have developed environmental legal registers linked to environmental management systems and these are audited every two years. Case study PPC Aggregate Quarries (Mooiplaas and Laezonia) is a member of ASPASA and therefore subject to an environmental performance audit every two years. The audit is aligned to the ISO standard and focuses on measuring environmental performance. PPC Mooiplaas and Laezonia achieved scores of 98,91% and 97,86% respectively, which positions Mooiplaas as the number one quarry in the country and Laezonia among the top ten. Air quality management Point sources Cement manufacturing releases air emissions such as dust, sulphur dioxide (SO 2 ), and oxides of nitrogen (NO x ). In our South African operations, all point sources are monitored continuously for these emissions, except for Port Elizabeth where kiln gases are monitored with a portable analyser. Our objective is to ensure that all operations, including international, are continuously monitored by Given the age of some of our plants, not all point sources meet minimum emission standards under the regulated timeframe of 1 April PPC applied to the national air quality officer to postpone compliance to this timeframe at the following operations: PPC Slurry kiln 7, PPC Dwaalboom kiln 1, PPC De Hoek finishing mill 6, Port Elizabeth kiln 4, and finishing mill 2016 and 2018 respectively. PPC was granted postponement for all point sources as per its application at a glance Our business Strategic and operational The performance of our South African cement kilns are monitored on a year-on-year basis in line with our programme to comply with minimum emission standards. The performance is as follows: Governance FY DUST NO X SO Tonnes Fugitive emissions As part of our atmospheric emission licences, PPC formalised and submitted fugitive emission plans for all South African operations to the regulator. Potential fugitive emission sources from the cement process include: Mining opencast mine where limestone is blasted and transported on haul roads Crushing limestone is crushed and screened in primary and secondary crushers, then transported and blended on material stockpiles Raw material handling raw materials received by road are stockpiled with limestone Raw material grinding all raw materials are proportionally extracted and mixed. Mixed raw materials are ground and stored in silos Hercules case study As part of its fugitive management plan and to reduce fugitive dust emissions from conveying systems, PPC Hercules installed fit-for-purpose dust collectors on transfer points to collect fine dust generated while transporting clinker. The upgrades have significantly reduced fugitive missions. Sustainability Financial Appendices PPC Ltd Integrated report

120 ENVIRONMENTAL REVIEW CONTINUED Upgrade projects PPC Slurry granted authorisation for kiln 9 PPC Slurry applied for environmental authorisation to construct a new kiln line (Slurry kiln 9 or SK9) in In addition to the new line, the project will include associated infrastructure and an undercover material storage facility for corrective material. The kiln will use alternative fuel and resources, reducing use of conventional fuels. Bag filters will be fitted to ensure compliance with 2020 emissions standards and other applicable environmental legislation. The upgrade process of the PPC Slurry facility is aimed at improving the energy efficiency of the overall plant, with key components including: Constructing a modern six-stage pre-heater with in-line calciner associated with SK9 (which is more energy and water efficient) The new grate cooler for SK9 will reduce overall thermal energy lost during the plant s operation Energy-efficient motors and fans specified in the design phase All relevant major motors in the plants will be equipped with variable speed drives for flow control, as these are more efficient than typical fixed-speed motors Some 600 temporary employment opportunities will be created during the peak of the construction phase of this development. Although most of these jobs will be skilled foreign labour, there will be a significant component of local semi-skilled and unskilled labour. There will also be entrepreneurial opportunities through services provided to the project. The Department of Environmental Affairs granted the authorisation in June 2015, but following an appeal, the authorisation was revoked by the minister, delaying the project start. The issue has now been resolved and the project can proceed. PPC successfully applied for the 12i tax incentive programme, which means that: PPC qualifies for additional allowances of R350 million and R8,9 million in support of capital investment and training respectively Slurry upgrade project achieved preferred status based on the seven points awarded to it in terms of innovation, improved energy efficiency, SMME procurement and skills development Postponement upgrades As part of our postponement compliance timeframes agreement with the government, PPC De Hoek initiated the upgrade of a finishing mill, which will ensure it meets 2020 compliance timeframes by January PPC Dwaalboom completed the cooler upgrade which led to significant reduction in dust emissions. PPC Colleen Bawn After receiving authorisation, PPC Colleen Bawn initiated the construction of a state-of-the-art landfilling facility to replace the current communal landfill, becoming the first company in Zimbabwe to implement new stringent legal requirements. The new facility will prevent the contamination of underground water. Stakeholder engagement PPC is committed to interacting with environmental stakeholders through various channels of communication. We meet our stakeholders at least twice a year to update them on projects, emissions and address any issues. PPC received 17 environmental complaints in 2015 covering water pollution, dust eradication, blasting activity, noise and disclosure. Some were addressed with the stakeholder concerned and others are being addressed. One of these complaints was submitted by the Centre for Environmental Rights relating to insufficient disclosure of environmental non-compliances in the annual reports for 2007 and PPC submitted its response to the centre, which was published as part of the full disclosure report. Mine rehabilitation PPC s mine rehabilitation remains on track with 95% of disturbed land restored. Areas with high potential for agriculture are leased to local farmers for commercial farming. The wind farm at Grassridge, owned by Innowind, provides for innovative sustainable end use of our mining property. PPC CONCURRENT REHABILITATION PERFORMANCE (%) Sept 2003 Sept 2004 Sept 2005 Sept 2006 Sept 2007 Sept 2008 Sept 2009 Sept 2010 Sept 2011 Sept 2012 Sept 2013 Sept 2014 PPC actual Concurrent rehabilitation objective 118 PPC Ltd Integrated report 2015

121 LIMITED ASSURANCE REPORT OF THE INDEPENDENT AUDITOR, DELOITTE & TOUCHE, TO THE DIRECTORS OF PPC LIMITED We have undertaken a limited assurance engagement on the PPC Ltd (PPC) Global Reporting Initiative 3.1 Guidelines application level and selected non-financial key performance indicator (KPI) disclosures to be published in the PPC integrated report for the year ended 30 September Subject matter The subject matter comprises the following, prepared in accordance with the Global Reporting Initiative 3.1 guidelines (GRI 3.1) supported by management s internal basis of preparation (the criteria): NON-FINANCIAL KEY PERFORMANCE INDICATOR (KPI) SCOPE 2015 at a glance Our business Total workforce by employee type, employment contract, and region, broken down by gender Total number and rate of new employee hires and employee turnover by age group, gender, and region Percentage of employees covered by collective bargaining agreements Average hours of training per employee by gender, and by employee category Rates of injury, occupational diseases, lost days, and total number of work-related fatalities, by region and by gender (including Botswana and Zimbabwe) Absenteeism (including Botswana) South Africa, Botswana and Zimbabwe South Africa, Botswana and Zimbabwe South Africa excludes Safika and Pronto, Botswana Zimbabwe South Africa excludes Safika and Pronto, Botswana, Zimbabwe South Africa excludes Safika and Pronto, Botswana, Zimbabwe South Africa excludes Safika and Pronto, Botswana Strategic and operational Governance Composition of governance bodies and breakdown of employees per employee category according to gender, age group, and minority group membership Group Percentage of operations with implemented local community engagement, impact assessments and development programmes Monetary value of significant fines and total number of non-monetary sanctions for non-compliance with laws and regulations (Rm) Direct economic value generated and distributed (Rm) South Africa excludes Safika and Pronto South Africa excludes Safika and Pronto, Botswana, Zimbabwe Group Sustainability Direct energy consumption by primary energy source (GJ) South Africa Indirect energy consumptions by primary source (GJ) Total direct and indirect greenhouse gas emissions by weight (tco 2 e) Monetary value of significant fines and total number of non-monetary sanctions for noncompliance with environmental laws and regulations (Rm) South Africa South Africa South Africa excludes Safika and Pronto, Botswana, Zimbabwe Financial Appendices PPC Ltd Integrated report

122 Directors responsibility The directors, and where appropriate, those charged with governance, are responsible for the selection, preparation and presentation of the subject matter in accordance with the criteria. This responsibility includes the identification of stakeholders and stakeholder requirements, material matters, for commitments with respect to sustainability performance and for the design, implementation and maintenance of internal control relevant to the preparation of the report that is free from material misstatement, whether due to fraud or error. Our independence and quality control We have complied with the Code of Ethics for Professional Accountants issued by the International Ethics Standards Board for Accountants, which includes independence and other requirements founded on the fundamental principles of integrity, objectivity, professional competence and due care, confidentiality and professional behaviour. In accordance with International Standard on Quality Control 1, Deloitte & Touche maintains a comprehensive system of quality control including documented policies and procedures regarding compliance with ethical requirements, professional standards and applicable legal and regulatory requirements. Auditors responsibility Our responsibility is to express a limited assurance conclusion on the selected subject matter based on the procedures we have performed and the evidence we have obtained. We conducted our limited assurance engagement in accordance with the International Standard on Assurance Engagements (ISAE) 3000, Assurance Engagements other than Audits or Reviews of Historical Financial Information, issued by the International Auditing and Assurance Standards Board. That standard requires us to comply with ethical requirements and to plan and perform our limited assurance engagement to obtain sufficient appropriate evidence about whether the selected subject matter is free from material misstatement. Summary of work performed A limited assurance engagement undertaken in accordance with ISAE 3000 involves assessing the suitability in the circumstances of the entity s use of GRI 3.1 guidelines, supported by management s internal basis of preparation as the criteria for preparing the selected subject matter, assessing the risks of material misstatement of the selected subject matter whether due to fraud or error, responding to the assessed risks as necessary in the circumstances, and evaluating the overall presentation of the selected subject matter. A limited assurance engagement is substantially less in scope than a reasonable assurance engagement in relation to evidence gathering and risk assessment procedures, including an understanding of internal control, and the procedures performed in response to the assessed risks. Consequently, less assurance is provided. The procedures we performed were based on our professional judgement and included inquiries, observation of processes performed, inspection of documents, analytical procedures, evaluating the appropriateness of quantification methods and reporting policies, and agreeing or reconciling with underlying records. Accordingly, we do not express a reasonable assurance opinion about whether the entity s selected subject matter have been prepared, in all material respects, in accordance with the criteria. Our evaluation mirrored the company s own compilation process and included: Interviewing management and senior executives to obtain an understanding of the internal control environment, risk assessment process and information systems relevant to the sustainability reporting process for the selected subject matter Testing the systems and processes to generate, collate, aggregate, validate and monitor the source data used to prepare the selected subject matter for disclosure in the report Our limited assurance engagement does not constitute an audit or of any of the underlying information in accordance with International Standards on Auditing or International Standards on Review Engagements and accordingly, we do not express an audit opinion or conclusion. We do not accept any responsibility for any reports previously given by us on any financial information used in relation to the subject matter beyond that owed to those to whom those reports were addressed by us at the dates of their issue. We believe that the evidence obtained is sufficient and appropriate to provide a basis for our limited assurance conclusion. 120 PPC Ltd Integrated report 2015

123 Conclusion Based on the procedures we have performed and the evidence we have obtained, nothing has come to our attention that causes us to believe that the selected non-financial key performance indicator as set out in the subject matter paragraph (of the audit report) for the year ended 30 September 2015 is materially misstated or not prepared, in all material respects, in accordance with GRI G3.1 supported by management s internally developed methodology. Based on the procedures performed and evidence obtained, nothing has come to our attention that causes us to believe that management s declaration of an application level in accordance with GRI G3.1 is materially misstated or not prepared, in all material respects. Other matters Our report does not extend to any disclosures or assertions relating to future performance plans and/or strategies disclosed in the report at a glance Our business Strategic and operational The maintenance and integrity of the entity s website is the responsibility of management. Our procedures did not involve consideration of these matters and, accordingly, we accept no responsibility for any changes to either the information in the report or our independent assurance report that may have occurred since the initial date of presentation. Governance Restriction on use and distribution Our work has been undertaken to enable us to express a limited assurance conclusion on the selected subject matter to the directors of PPC Ltd in accordance with the terms of our engagement, and for no other purpose. We do not accept or assume liability to any party other than the entity, for our work, for this report, or for the conclusion we have reached. Sustainability Deloitte & Touche Registered Auditors, 20 Woodlands Drive, Woodmead, 2052 Per AN le Riche Partner 2 December 2015 Financial National executive: LL Bam* chief executive; AE Swiegers* chief operating officer; GM Pinnock* audit; N Singh risk advisory; NB Kader* tax; TP Pillay consulting; S Gwala managed services; K Black* clients and industries; JK Mazzocco* talent and transformation; MJ Jarvis* finance; M Jordan* strategy; TJ Brown* chairman of the board; MJ Comber* deputy chairman of the board. Appendices A full list of partners is available on request. *Partner and registered auditor. PPC Ltd Integrated report

124 DOUBLING OUR BUSINESS EVERY TEN YEARS Recognising that Africa presents a unique growth opportunity in our time we will ensure that we at least maintain our market share We will have a deep understanding of the locations, owners and influencers of all relevant inputs, businesses and markets, and will leverage our position in order to maintain and extend our influence Ultimately we will utilise our strength to become a major global cement player 122 PPC Ltd

125 Appendices Financial Sustainability Governance Strategic and operational Our business 2015 at a glance PPC Ltd 123

126 INDEPENDENT AUDITORS REPORT TO THE SHAREHOLDERS OF PPC LTD ON THE SUMMARISED CONSOLIDATED FINANCIAL STATEMENTS DIRECTORS RESPONSIBILITY FOR THE SUMMARISED CONSOLIDATED FINANCIAL STATEMENTS AUDITORS RESPONSIBILITY OPINION OTHER REPORTS REQUIRED BY THE COMPANIES ACT Deloitte & Touche Partner 124 PPC Ltd

127 SUMMARISED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME 2015 Audited Rm 2015 at a glance Revenue Gross profit Operating profit before item listed below: Operating profit Profit before equity accounted earnings and exceptional adjustments (16) (81) Profit before taxation Profit for the year (37) Other comprehensive income, net of taxation 775 Items that will be reclassified to profit or loss (11) 752 (7) 3 Total comprehensive income EARNINGS PER SHARE (CENTS) Our business Appendices Strategic and operational Governance Sustainability Financial PPC Ltd 125

128 SUMMARISED CONSOLIDATED STATEMENT OF FINANCIAL POSITION 2015 Audited Rm ASSETS Non-current assets Non-current assets held for sale 76 Current assets Total assets EQUITY AND LIABILITIES Capital and reserves (1 165) Equity attributable to shareholders of PPC Ltd Total equity Non-current liabilities Current liabilities Total equity and liabilities Net asset book value per share (cents) PPC Ltd

129 SUMMARISED CONSOLIDATED STATEMENT OF CASH FLOWS for the year ended 30 September Audited Rm 2015 at a glance Cash flow from operating activities Cash generated from operations (408) 28 (489) Cash available from operations (559) Net cash inflow from operating activities (108) (2 892) 5 Net cash outflow from investing activities (2 995) (24) Net cash inflow from financing activities Net movement in cash and cash equivalents Cash and cash equivalents at end of the year 718 Cash earnings per share (cents)* 351 Cash conversion ratio^ 1,1 Our business Appendices Financial Strategic and operational Governance Sustainability PPC Ltd 127

130 SUMMARISED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY for the year ended 30 September 2015 Stated capital Rm Unrealised surplus on reclassification of plant Rm Other Foreign currency translation reserve Rm Balance at September 2013 Balance at September 2014 (1 173) (24) 9 23 Balance at September 2015 (1 165) PPC Ltd

131 reserves Availablefor-sale financial asset Rm Hedging reserve Rm Equity compensation reserve Rm Retained profit Rm Equity attributable to shareholders of PPC Ltd Rm Noncontrolling interests Rm Total equity Rm (540) (540) (19) (559) (422) (422) (3) (7) (7) 7 (24) (24) (9) (23) Appendices Financial 2015 at a glance Our business Strategic and operational Governance Sustainability PPC Ltd 129

132 SEGMENTAL INFORMATION for the year ended 30 September 2015 Consolidated 2015 Rm Revenue (192) Total revenue Operating profit before item listed below Operating profit Profit before earnings from equity accounted investments and exceptional adjustments (16) (81) Profit before taxation Profit for the year ,6 Assets Liabilities PPC Ltd

133 2015 at a glance 2015 Rm Cement Lime Aggregates and readymix# Other^ 2015 Rm 2015 Rm 2015 Rm Our business (1) 34 (12) (103) (16) (59) (22) (103) (103) ,9 20,4 16, Strategic and operational Governance Sustainability Financial Appendices PPC Ltd 131

134 NOTES TO THE SUMMARISED CONSOLIDATED FINANCIAL STATEMENTS for the year ended 30 September BASIS OF PREPARATION 2015 Audited Rm 2. FINANCE COSTS (INCLUDING FAIR VALUE ADJUSTMENTS ON FINANCIAL INSTRUMENTS) (196) (22) PPC Ltd

135 2015 Audited Rm 2015 at a glance 3. IMPAIRMENTS AND OTHER EXCEPTIONAL ADJUSTMENTS (22) (1) (1) (57) (81) Impairment of property, plant and equipment 4. TAXATION % 36,6 2,7 39,3 0,3 39,6 (11,6) (8,9) (1,1) (2,1) 1,6 (1,1) 28,0 Our business Appendices Financial Strategic and operational Governance Sustainability PPC Ltd 133

136 NOTES TO THE SUMMARISED CONSOLIDATED FINANCIAL STATEMENTS CONTINUED for the year ended 30 September Audited Cents 5. EARNINGS AND HEADLINE EARNINGS (3) 145 Rm (15) (32) (32) 134 PPC Ltd

137 2015 Audited Rm 2015 at a glance 6. PROPERTY, PLANT AND EQUIPMENT (612) (22) (57) (115) (40) Assets pledged as security 7. GOODWILL 268 (22) Our business Strategic and operational Appendices Governance Sustainability Financial PPC Ltd 135

138 NOTES TO THE SUMMARISED CONSOLIDATED FINANCIAL STATEMENTS CONTINUED for the year ended 30 September Audited Rm 8. OTHER INTANGIBLE ASSETS (90) EQUITY ACCOUNTED INVESTMENTS 126 (1) PPC Ltd

139 2015 Audited Rm 2015 at a glance 10. OTHER NON-CURRENT ASSETS NON-CURRENT ASSETS HELD FOR SALE Our business Appendices Financial Strategic and operational Governance Sustainability PPC Ltd 137

140 NOTES TO THE SUMMARISED CONSOLIDATED FINANCIAL STATEMENTS CONTINUED for the year ended 30 September Audited Rm 12. TRADE AND OTHER RECEIVABLES 931 (70) Shares (000) 13. STATED CAPITAL Number of ordinary shares and weighted average number of shares & (37 382) (34 478) (1 285) (6 343) & Consolidated Financial Statements Consolidated Financial Statements 138 PPC Ltd

141 2015 Audited Rm 2015 at a glance 13. STATED CAPITAL (1 173) (24) 9 23 (1 165) 14. BORROWINGS ^ 421 $ Our business Appendices Strategic and operational Governance Sustainability Financial PPC Ltd 139

142 NOTES TO THE SUMMARISED CONSOLIDATED FINANCIAL STATEMENTS CONTINUED for the year ended 30 September Audited Rm 14. BORROWINGS Maturity profile of borrowings: Bond number, term and interest rate Issue date Less (2) Less (650) PPC Ltd

143 2015 Audited Rm 2015 at a glance 15. OTHER NON-CURRENT LIABILITIES Less (47) 643 Put option liabilities PPC Barnet DRC Holdings Safika Cement Our business Appendices Financial Strategic and operational Governance Sustainability PPC Ltd 141

144 NOTES TO THE SUMMARISED CONSOLIDATED FINANCIAL STATEMENTS CONTINUED for the year ended 30 September Audited Rm 16. TRADE AND OTHER PAYABLES INVESTMENT IN PROPERTY, PLANT AND EQUIPMENT AND INTANGIBLE ASSETS PPC Ltd

145 18. ACQUISITIONS OF SUBSIDIARY COMPANIES Safika Cement Holdings (Pty) Ltd (Safika Cement) Pronto Holdings (Pty) Ltd (Pronto) Quarries of Botswana 2015 at a glance Our business Appendices Financial Strategic and operational Governance Sustainability PPC Ltd 143

146 NOTES TO THE SUMMARISED CONSOLIDATED FINANCIAL STATEMENTS CONTINUED for the year ended 30 September Audited Rm 19. COMMITMENTS PPC Ltd

147 20. FAIR VALUES OF FINANCIAL ASSETS AND LIABILITIES 2015 Audited Rm Financial assets Available-for-sale 82 Loans and receivables At fair value through profit and loss Total financial assets Financial liabilities At amortised cost At fair value through profit and loss Derivatives at a glance Appendices Our business Strategic and operational Governance Sustainability Financial PPC Ltd 145

148 NOTES TO THE SUMMARISED CONSOLIDATED FINANCIAL STATEMENTS CONTINUED for the year ended 30 September FAIR VALUES OF FINANCIAL ASSETS AND LIABILITIES continued Methods and assumptions used by the group in determining fair values: * Level 1 financial assets and liabilities that are valued accordingly to unadjusted market prices for similar assets and liabilities. Market prices in this instance are readily available and the price represents regularly occurring transactions which have been concluded on an arm s length transaction. * Level 2 financial assets and liabilities are valued using observable inputs, other than the market prices noted in the level 1 methodology, and make reference to pricing of similar assets and liabilities in an active market or by utilising observable prices and marketrelated data. * Level 3 financial assets and liabilities that are valued using unobservable data, and requires management judgement in determining the fair value. Refer note 15 for quantitative information and significant assumptions on the unobservable inputs used to determine fair value liabilities. The estimated fair value of financial instruments is determined, at discrete points in time, by reference to the mid-price in an active market wherever possible. Where no such active market exists for the particular asset or liability, the group uses valuation techniques to arrive at fair value, including the use of prices obtained in recent arm s length transactions, discounted cash flow analysis and other valuation techniques commonly used by market participants. The fair value of the unlisted investment has been valued based on the purchase agreement following the decision to dispose of the investment, while unlisted collective investment is valued using the closing unit price at period end. Investment in government bonds is valued using the discounted face value of the bills. Further details are disclosed in note 10. The fair value of loans receivable and payable is based on the market rates of the loan and the recoverability. The fair value of cash and cash equivalents, trade and other financial receivables and trade and other financial payables approximate their respective carrying amounts of these financial instruments because of the short period to maturity. Put option liabilities have been calculated using EBITDA forecasts prepared by management and discounted to present value. Further details are disclosed in note 15. The fair value of derivative financial instruments relating to cash settled share appreciation rights is determined with reference to valuation performed by third-party financial institutions at reporting date, using an actuarial binomial pricing model. Level 3 sensitivity analysis Financial instrument Put option liabilities Valuation technique Earnings multiple Key assumptions Carrying value Decrease (Rm) Increase (Rm) EBITDA and net debt If the key unobservable inputs to the valuation model, being estimated EBITDA and net debt, were 1% higher/lower while all other variables were held constant, carrying amount of the put option liabilities would decrease/increase by R20 million. The sensitivities are only based on the DRC put option as any movement on the remainder of the Safika put options are not deemed material. Movements in level 3 financial instruments 2015 Rm 2014 Rm Financial assets Balance at beginning of the year Remeasurements (13) 58 Transfer to level 2 (82) Balance at end of the year 95 Financial liabilities Balance at beginning of the year 145 Exercised during the year (108) Put options issued Remeasurements (14) (8) Time value of money adjustments Balance at end of the year EVENTS AFTER THE REPORTING DATE There are no events that occurred after the reporting date that may have a material impact on the group s reported financial position at 30 September PPC Ltd Integrated report 2015

149 MINING CHARTER SCORECARD ELEMENT DESCRIPTION MEASURE COMPLIANCE TARGET 2015 PROGRESS 2015 at a glance Reporting Ownership Reporting level of compliance with charter for calendar year Minimum target for effective HDSA ownership Documentary proof of receipt from DMR Meaningful economic participation Annual Employment equity and social and labour plans submitted 26% 26% target achieved in 2012 Our business Housing and living conditions Procurement and enterprise development Employment equity Converting and upgrading hostels to attain occupancy rate of one person per room Converting and upgrading hostels into family units Procurement spend from BEE entity Multinational suppliers contribution to social fund Diversification of workplace to reflect the country s demographics to attain competitiveness Full shareholder rights 26% R58 million in dividends paid to employee shareholders in 2015 (2014: R30 million) Percentage reduction of 100% Company housing is provided occupancy rate towards at most remote locations. We 2015 target also promote home ownership through the PPC homeowners support programme: 44 employees and their families have been supported to date. Over 200 employees are currently at various stages of becoming home owners through this programme Percentage conversion of 100% 100%. Upgrade at Lime hostels into family Acres, PPC s only hostel, is accommodation complete 80% PPC has met the dti s revised compliance target of 80%: 87% (R4,5 billion) of discretionary spending was with BEE empowering companies Actual Actual Capital goods 40% 41% 43% Services 70% 70% 70% Consumable goods 50% 55% 61% Annual spend on 0,5% of The DMR is formulating a procurement from procurement model to implement this multinational suppliers value contribution to social development Top management (board) 40% 54% Senior management (exco) 40% 50% Middle management 40% 48% Junior management 40% 63% Core skills 40% 84% Appendices Financial Sustainability Governance Strategic and operational PPC Ltd Integrated report

150 MINING CHARTER SCORECARD CONTINUED ELEMENT DESCRIPTION MEASURE COMPLIANCE TARGET 2015 PROGRESS Human resources development (detailed table on page ) Mine community development Sustainable development and growth Beneficiation Health and safety Develop requisite skills, including support for South Africa-based R&D initiatives intended to develop solutions in exploration, mining, processing, technology efficiency (energy and water use in mining), beneficiation, environmental conservation and rehabilitation Conduct ethnographic community consultative and collaborative processes to delineate community needs analysis Improvement of industry s environmental management Improvement of industry s mine health and safety performance Use of South Africa-based research facilities for analysing samples across mining value chain Contribution towards beneficiation (effective from 2012) Implementation of culture transformation framework Percentage of employees embarking on occupational health and safety training Percentage of leading practices from MHSC investigated for implementation Percentage of research findings from MOSH learning hub investigated for implementation Health: percentage of mandatory occupational health reports submitted Health: adherence to HIV/Aids and TB guidelines HRD expenditure as percentage of total annual payroll (excluding mandatory skills development levy) 5% 4,5% spent on skills development (R42,7 million) Implement approved Up-to-date R11 million was spent on community projects project community development implementation in 2015 Implementation of approved EMPs 100% All plants have approved EMPs Implementation of tripartite 100% Dedicated group safety and action plan on health and health manager. External safety company training safety and health representatives Percentage of samples in SA 100% 100% of samples are facilities processed in South African facilities Added production volume Section 26 No detail on how to measure contributory to local value of MRPDA but raw limestone is addition beyond the baseline (percentage beneficiated into cement and above baseline) lime products in South Africa. Aggregates are fully beneficiated in South Africa Percentage versus gap analysis 100% 100% 2% per annum 8% 8% All investigated for 100% 100% 100% All investigated for 100% 100% 100% Four required for 100% 100% 100% Yes/no Yes On target 148 PPC Ltd Integrated report 2015

151 Human resource development 2015 A C I W DESCRIPTION MEASURES CATEGORY M F M F M F M F TOTAL Develop requisite skills, including support for SA-based R&D initiatives intended to develop solutions in mining, processing and exploration technology efficiency (energy and water use in mining), beneficiation, environmental conservation and rehabilitation HRD expenditure as percentage of total annual payroll (excluding mandatory skills development levy) Learnerships and bursaries (of core and critical skills) Artisans ABET training (level I, II, III, IV and NQF 1) Other training (school support 108 employees are being assisted with post-matric qualifications 12 students on graduate development programme and post-matric programmes) Support for 100% of R&D expenditure directed at SA-based companies SA-based R&D initiatives dti BBBEE status* PPC s BBBEE status as at September 2015 was audited and verified by rating agency EmpowerLogic. In terms of the dti codes of good practice, PPC is classified as a level 2 BBBEE contributor with a procurement recognition of 125%. This enables our customers to claim back 125% of their spending with our group for their own preferential procurement points. The certificate expires on 2 December BBBEE STATUS VERIFIED LEVEL POINTS Elements obtained Equity ownership 22 Black ownership Value-adding vendor Management composition 11 Employment equity 5,05 Skills development 8,34 Preferential procurement 19,54 Enterprise development 15 Socio-economic development 5 32,68% black ownership 10,72% black women ownership Yes BEE procurement recognition 125% 2015 at a glance Our business Appendices Financial Sustainability Governance Strategic and operational * Due to the nature of cementent manufacture, acture PPC s PC se empowerment ment credentials ential are measured ed against both the South African mining charter scorecard card and the South African dti s revised codes of good practice. PPC reports on both in this section. PPC Ltd Integrated report

152 PPC SHAREHOLDER ANALYSIS SHAREHOLDER SPREAD Number of shareholders % Number of shares % shares , , shares , , shares 877 6, , shares 243 1, , shares and over 78 0, ,00 Total DISTRIBUTION OF SHAREHOLDERS Banks 94 0, ,44 Broad-based black ownership 17 0, ,01 Brokers 74 0, ,97 Close corporations 119 0, ,11 Endowment funds 45 0, ,21 Individuals , ,40 Insurance companies 82 0, ,92 Investment companies 16 0, ,13 Medical aid schemes 10 0, ,04 Mutual funds 214 1, ,17 Nominees and trusts , ,97 Other corporations 72 0, ,14 Pension funds 177 1, ,52 Private companies 270 2, ,68 Sovereign wealth fund 2 0, ,28 Total PUBLIC/NON-PUBLIC SHAREHOLDERS Non-public shareholders 21 0, ,40 Directors holdings 3 0, ,03 Broad-based black ownership 17 0, ,01 Strategic holdings (10% or more) 1 0, ,36 Public shareholders , ,60 Total BENEFICIAL SHAREHOLDERS HOLDING 3% OR MORE OF THE ISSUED SHARE CAPITAL Number of shares in September 2015 % September 2015 Government Employees Pension Fund ,36 PPC SBP Consortium Funding SPV Pty Limited ,61 PPC Masakhane Employee Share (Est) Trust , PPC Ltd Integrated report 2015

153 FINANCIAL CALENDAR Financial year-end 30 September* Annual general meeting 25 January at a glance REPORTS Preliminary announcement of annual results Published June Interim results for half year to September Published November Annual financial statements Published July DIVIDENDS Our business Interim If declared November Paid January Final If declared June Paid August *The company has changed its year-end to March with effect from the 2016 financial year. Appendices Financial Sustainability Governance Strategic and operational PPC Ltd Integrated report

154 GLOSSARY ABET Adult basic education and training ACMP Association of Cementitious Material Producers ASPASA Aggregate and Sand Producers Association of South Africa BBBEE or BEE Broad-based black economic empowerment CDP Carbon Disclosure Project CGT Capital gains tax CSI Corporate social investment DEA Department of Environmental Affairs (South Africa) DMR Department of Mineral Resources (South Africa) DoE Department of Energy (South Africa) dti Department of Trade and Industry (South Africa) EBITDA Earnings before interest, tax, depreciation and amortisation EIA Environmental impact assessment EIUG Energy-intensive users group EMP Environmental management plan FSP Forfeitable share plan GRI Global Reporting Initiative HDSA Historically disadvantaged South African IFRS International Financial Reporting Standards ISO International Standards Organisation King III King Report on Corporate Governance for South Africa LED Local economic development (South Africa) LTIFR Lost-time injury frequency rate MOI Memorandum of incorporation MPRDA Mineral and Petroleum Resources Development Act (South Africa) MQA Mining Qualifications Authority NQF National Qualifications Framework OHSAS Occupational Health and Safety Assessment Series OPC Ordinary Portland cement (CEM I) PMC Portland Masonry cement SANS South African National Standards SLP Social and labour plan (South Africa) SMME Small, medium and micro-enterprise STC Secondary tax on companies (South Africa) STIS Short-term incentive scheme TCTC Total cost to company VCT Voluntary counselling and testing 152 PPC Ltd Integrated report 2015

155 GRI INDEX TO GLOBAL REPORTING INITIATIVE INDICATORS (G3.1) 2015 at a glance GRI TOPIC PAGE/LINK STRATEGY AND ANALYSIS 1.1 Statement from chairman 3, Key impacts, risks and opportunities 4, 17, 18, 20 ORGANISATIONAL PROFILE Our business General organisational details IFC, 6, 8, Awards 10 REPORT PARAMETERS Report profile Report scope and boundary GRI index 153, Website 3.13 Assurance 3, 119 GOVERNANCE, COMMITMENTS AND ENGAGEMENT Governance issues Commitment to external initiatives 20 21; Stakeholder engagement ECONOMIC PERFORMANCE EC1 Economic value generated and distributed 37 EC2 EC4 Implications of climate change, defined benefit plan obligations, assistance from government EC5 EC7 Market presence IFC,11, EC8 Infrastructure investments EC9 Indirect economic impacts ENVIRONMENTAL PERFORMANCE EN1 EN2 Materials used and recycling 18, EN3 EN7 Energy EN8 EN10 Water EN11 EN15 Biodiversity 118 EN16 EN25 Emissions, effluents and waste EN26 EN27 Products and services N/R EN28 Compliance 113 EN29 EN30 Transport N/R Appendices Financial Sustainability Governance Strategic and operational PPC Ltd Integrated report

156 GRI CONTINUED GRI TOPIC PAGE/LINK SOCIAL PERFORMANCE HR1 HR4 Human rights and non-discrimination HR5 HR11 Freedom of association, security practices, indigenous rights 98 LA1 LA5, LA15 Workforce breakdown, turnover, labour relations LA6 LA9 Occupational health and safety LA10 LA12 Training and education LA13 LA14 Diversity and equal opportunity SOCIETY SO1, SO9, SO10 Community SO2 SO4 Corruption SO5 SO8 Public policy and anti-competitive behaviour PR1 PR9 Customer health and safety N/R 154 PPC Ltd Integrated report 2015

157 CORPORATE INFORMATION PPC LTD (Incorporated in the Republic of South Africa) Company registration number: 1892/000667/06 JSE code: PPC JSE ISIN code: ZAE ZSE code: PPC DIRECTORS Executive: DJ Castle (chief executive officer), MMT Ramano (chief financial officer) Non-executive: BL Sibiya (chairman), N Goldin, ZJ Kganyagi, TJ Leaf-Wright, MP Malungani, T Mboweni, SK Mhlarhi, B Modise, T Mayo*, CH Naude, PE Nelson, TDA Ross *Zimbabwean AUDITORS Deloitte & Touche Deloitte Place The Woodlands Woodlands Drive Woodmead, Sandton Private Bag X6 Gallo Manor, 2052, South Africa Telephone Telefax SECRETARY AND REGISTERED OFFICE JHDLR Snyman 148 Katherine Street, Sandton, South Africa PO Box Sandton, 2146, South Africa Telephone Telefax jaco.snyman@ppc.co.za SPONSOR: SOUTH AFRICA Merrill Lynch SA (Pty) Ltd 138 West Street Sandown, Sandton PO Box Benmore, 2010, South Africa Telephone Telefax TRANSFER SECRETARIES: SOUTH AFRICA Computershare Services (Pty) Ltd 70 Marshall Street Marshalltown Johannesburg 2001 PO Box Marshalltown, 2107, South Africa Telephone Telefax web.queries@computershare.co.za TRANSFER SECRETARIES: ZIMBABWE Corpserve Pvt Limited 4th Floor, Intermarket Centre Corner First Street and Kwame Nkrumah Avenue Harare, Zimbabwe PO Box 2208 Harare, Zimbabwe Telephone / Telefax SPONSOR: ZIMBABWE Imara Edwards Securities Pvt Limited Block 2, Tendeseka Office Park Samora Machel Avenue Harare, Zimbabwe PO Box 1475 Harare, Zimbabwe Telephone Telefax FORWARD-LOOKING STATEMENTS This report, including statements on the demand outlook, PPC s expansion projects and its capital resources and expenditure, contains certain forward-looking views. By their nature, forward-looking statements involve risk and uncertainty and although PPC believes the expectations reflected in these statements are reasonable, no assurance can be given that these expectations will prove correct. Accordingly, results could differ materially from those set out in the forward-looking statements as a result of, among other factors, changes in economic and market conditions, success of business and operating initiatives, changes in the regulatory environment, other government action and business and operational risk management. While PPC takes reasonable care to ensure the accuracy of information presented, we accept no responsibility for any damages be they consequential, indirect, special or incidental, whether foreseeable or unforeseeable based on claims arising out of misrepresentation or negligence in connection with a forward-looking statement. This document is not intended to contain any profit forecasts or profit estimates, and some information in this document may be unaudited at a glance Our business Strategic and operational Governance Sustainability Financial Appendices BASTION GRAPHICS

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