STRENGTH BEYOND THE BAG

Transcription

1 STRENGTH BEYOND THE BAG

2 Strength beyond the bag Giving strength to Africa s dreams... Commentary Overview of PPC 2013 at a glance ii Profile 2 Vision 2 Investment proposition 2 Values 3 Strategy 4 Operations and geography 5 Key milestones 6 Approach to sustainable development 7 Stakeholder engagement 8 Value added 11 Material issues 12 Leadership 14 Forward-looking statements This report including, without limitation, those statements concerning the demand outlook, PPC s expansion projects and its capital resources and expenditure, contain certain forward-looking views. By their nature, forward-looking statements involve risk and uncertainty and although PPC believes the expectations reflected in such 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. Chairman s report 20 Chief executive officer s report 22 Chief financial officer s report performance review Summary of integrated performance 34 Seven-year financial review 36 Operations review 38 People review 42 Social review 53 Environmental review 62 Awards in Mining charter scorecard dti BBBEE status 71 Corporate governance review 72 Remuneration review 86 Risk and compliance review 103 Independent assurance report 107 Index to Global Reporting Initiative indicators (G3.1) 108 Summarised annual financial statements Basis for preparation 112 Independent auditors report on the audited summarised annual financial statements 113 Consolidated statement of financial position 115 Consolidated income statement 116 Consolidated statement of comprehensive income 117 Consolidated statement of changes in equity 118 Consolidated statement of cash flows 119 Segmental information 120 Notes to the summarised annual financial statements 122 Administration PPC shareholder analysis 128 Corporate information 129 Financial calendar 129 Notice of annual general meeting 130 Form of proxy and explanatory notes 137 Annexure Glossary 140

3 PPC Ltd i About this report PPC s 2012 Integrated Report was voted as the overall winner at the Nkonki Top 100 SA Integrated Reporting Awards. { Follow us Like us Watch us Scope and boundary of report This integrated report and the supplemental information on our website cover PPC s financial and non-financial performance between 1 October 2012 and 30 September This report has been primarily compiled for providers of capital, but will be of interest to all stakeholders. The scope of this report covers all PPC s manufacturing facilities (cement and lime), aggregate quarries and depots in South Africa, Botswana, Zimbabwe, Mozambique and Rwanda. Our annual financial statements were prepared in accordance with International Financial Reporting Standards (IFRS), requirements of the South African Companies Act, regulations of JSE Limited (JSE) and recommendations of King III. In compiling this report, PPC has also considered the latest Global Reporting Initiative sustainability reporting guidelines, known as GRI G3.1. The GRI classification for our report is application level C+, which is self-declared and requires the group to report on at least 10 GRI indicators across economic, social and environmental performance. Certain indicators have been externally assured by Deloitte & Touche (report on page 107). We have also included areas we believe will enhance understanding of our processes, achievements, challenges and progress for the year. Some of these may be material issues for PPC determining materiality is a comprehensive process that combines risk identification and assessment with strategic objectives, stakeholder feedback, market conditions and our own performance to prioritise those issues that are key to our sustainability now and in the near future. Details for obtaining copies of the integrated report from the PPC group company secretary appear on page 129. For further details on sustainability matters, please contact: Ms Tshilidzi Dlamini, PPC group manager, sustainability and environment, tel +27(11) , fax +27(11) , Tshilidzi.Dlamini@ppc.co.za. Reporting approach This is our fourth integrated report a style of reporting that allows us to emphasise the fundamental link between our financial and non-financial performance (environmental, social and governance), contextualise the risks and opportunities the group faces, and how these influence our business strategy. The JSE requires listed companies to produce integrated reports, in line with the recommendations of King III, although the actual framework for integrated reporting remains the subject of international debate. Accordingly, we have been guided by discussion papers from the International Integrated Reporting Committee on accepted best practice in annual reporting and the transition to GRI G4 reporting guidelines. For quick access on your smart phone to the PPC website scan the barcode above. Board approval The board accepts responsibility for the integrity of the company s integrated report. As per King III, the board has delegated the responsibility to evaluate sustainability disclosure to the audit committee, which recommended that the board approve this report. Where this icon appears, it is an indication of further information on our website Bheki Sibiya Chairman Ketso Gordhan Chief executive officer

4 ii PPC Ltd 2013 at a glance +13% R8,3 billion +8% R2,5 billion +16% 214 cents per share +26% R2,9 billion Revenue Normalised EBITDA* Normalised earnings per share* Cash generated from operations 2012: R7,3 billion 2012: 185 cents 2012: R2,3 billion 2012: R2,3 billion per share * Calculated before the impact of BBBEE IFRS 2 charges, Zimbabwe indigenisation and restructuring costs. Financial Normalised earnings per share increased by 16% Annual dividends increased 7% to 156 cents per share Cash generated by operations up 26% PPC issued its inaugural bond in 2013, which was 4,6 times oversubscribed See page 26 for further information. People Women now comprise 21,7% of PPC s workforce Invested 5,3% of payroll in skills development (R44,3 million) Over R33 million in dividends paid to employee share owners See page 42 for further information. Governance and risk Compliant with King III Compliant with mining charter scorecard Continuous improvement in integrated reporting acknowledged in awards See page 72 for further information. Social Under new social and labour plans (2013 to 2017), PPC has committed R50 million across ten mining sites in South Africa 89% of total procurement (R4,1 billion) spent with BBBEE suppliers See page 53 for further information. Environmental Major upgrades further reduce air emissions and improve energy performance ISO accreditation for all certified operations maintained Renewable energy: construction on first wind farm on PPC site under way See page 62 for further information. PPC s total cement sales volumes up 7%

5 PPC Ltd % change 2012 Financials (R million) Revenue Operating profit* Property, plant and equipment Total assets Cash generated from operations Ordinary share analysis Headline earnings per share (cents)* Earnings per share (cents)* Dividends per share (cents) Number of employees * Calculated before the impact of BBBEE IFRS 2 charges, Zimbabwe indigenisation and restructuring costs. PPC recorded good volume growth in its South African and Zimbabwean cement operations, and made significant progress in its strategy on African expansion. Construction of a tonne per annum (tpa) plant is under way in Rwanda, and construction to start in 2014 on projects in Ethiopia and the Democratic Republic of the Congo (DRC). >40% of all structures in southern Africa would have been built with PPC cement R18,3 billion Market capitalisation Six-month daily average shares traded

6 2 PPC Ltd Profile Last year, PPC celebrated 12 decades of innovation as the leading cement producer in southern Africa. For over a century, PPC has tracked the growth and development of South Africa and Zimbabwe, producing cement for many of the countries iconic landmarks, including the Union Buildings, Gariep Dam and Van Staden s River Bridge, the Gautrain, Medupi power station, new Cape Town Stadium, Kariba Dam and much of southern Africa s infrastructure. Today, PPC supplies from nine cement manufacturing facilities and three milling plants in South Africa, Botswana, Zimbabwe and Rwanda that can produce around eight million tonnes of cement products each year. PPC also produces aggregates, metallurgical-grade lime, burnt dolomite and limestone. Our Mooiplaas aggregates quarry in Gauteng has the largest production capacity in South Africa. 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, recycle and recover 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 by going beyond the bag. Vision To grow PPC into a leading emergingmarket business. PPC operates in emerging markets, where 70% of the world s cement is produced. These markets are largely characterised by higher growth in populations, GDP and cement demand. Collectively, they offer new opportunities and deliver higher returns for producers of cement and related products. Investment proposition Cash generative Excellent dividend yield and history Leading producer in southern Africa with best geographic spread Strong financial position Financial strength to explore expansion opportunities Experienced management team

7 PPC Ltd 3 Values 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. 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 performance-driven. We are flexible and agile and we seek to continuously improve. Yesterday s stretch becomes today s standard. Integrity is non-negotiable Great place to work We work in teams. Everyone has an important role to play and we want to create a non-discriminatory, safe and healthy work environment. We respect the dignity of every individual we engage with. We embrace transformation and diversity. 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. We meet our commitments. We do what we say. We are honest and obey the law. Creating a better life for all stakeholders Everyone s contribution creates the value. All stakeholders share in the value and success we create.

8 4 PPC Ltd Strategy Our aim is to grow into a leading emerging-market business. As we expand into the rest of Africa, it is crucial that we maintain our focus on our performance in our historical markets. As such, two key strategies support our vision: Enhance our industry leadership in southern Africa Expand our operational footprint into other parts of Africa Enhance our industry leadership in southern Africa Internally we refer to this as keeping the home fires burning. The key drivers of this strategy and our progress are shown below: Key driver Improve our sales, marketing, customer focus and overall value proposition Achieve global competitiveness by retaining our focus on operational and logistical efficiencies, and good corporate governance Renew or upgrade equipment, especially relating to environment or efficiency Acquire businesses with a good strategic fit Ensure cash flow returns that support sustainable investment in current and new markets Progress New products address both customer needs and value 2013 South African cement production costs per tonne up 6% Governance structures continually enhanced Over R2 billion invested in operating efficiencies Environmental performance in line with regional and international benchmarks Acquisition of Pronto Ready Mix in progress; awaiting regulatory approval of Safika Cement acquisition 2013 cash flow generated from operations up 26% Expand our operational footprint into other parts of Africa In this strategy, internally referred to as our rest of Africa strategy, we are on track to achieve our initial target to grow revenue earned outside of South Africa from 20% to over 40% by Key drivers and progress are shown below: Key driver Target countries with high potential for infrastructure development, low per capita cement consumption and current cement shortages Progress Increased stake to 30% in Habesha Cement, Ethiopia with construction of 1,4 million tonnes per annum (mtpa) plant due to commence in 2014 Acquired 51% stake in CIMERWA, Rwanda, with construction of tpa plant under way Construction of 1 mtpa plant in the Democratic Republic of the Congo imminent Concluding feasibility study to construct cement facilities to service northern Zimbabwe and Mozambique (Tete) Stringent criteria govern our expansion strategy and are regularly reviewed: Identify suitable markets Locate limestone (quality and quantity) Identify local partner/government support Identify equipment supplier (EPC or engineer, procure, construct) Select project managers Secure appropriate funding Ensure skilled staffing is in place

9 PPC Ltd 5 Operations and geography Expanding our operational footprint into rest of Africa 1 Jupiter 2 Hercules 3 Slurry 4 Dwaalboom 5 Riebeeck 6 De Hoek 7 Port Elizabeth 8 Colleen Bawn 9 Bulawayo 10 Lime Acres 11 Laezonia quarry 12 Mooiplaas quarry 13 Kgale quarry 14 Gaborone 15 Saldanha 16 Quarries of Botswana 17 George 18 Maputo 19 Habesha 20 CIMERWA 21 Democratic Republic of Congo Ethiopia 19 Addis Ababa Kinshasa 21 Democratic Republic of the Congo 20 Rwanda Cement plant Milling depot Aggregate quarry Lime plant Sales depots Project Current operations Current project Current operations and current project 15 6 Cape Town 5 Botswana 16 Bulawayo Gaborone Johannesburg South Africa 17 7 Port Elizabeth Mozambique Zimbabwe Durban 18 Maputo

10 6 PPC Ltd Key milestones 1892 PPC established as De Eerste Cement Fabrieken Beperkt 1908 Name changed to Pretoria Portland Cement Company Limited, maiden dividend starts a tradition unbroken for over a century 1910 Listed on JSE 1916 Slurry produces first cement 1921 De Hoek factory built 1927 Port Elizabeth factory built 1937 Jupiter produces its first cement 1960 Riebeeck factory commissioned 1977 PPC enters lime industry and becomes Barlow subsidiary 1984 Dwaalboom completed but mothballed in economic recession until Botswana blending plant commissioned, SureBuild launched 2001 PPC enters Zimbabwe by acquiring Portland Holdings, enters aggregates market 2003 PPC is included in the FTSE/JSE Top 40 index 2007 Unbundled from Barloworld 2008 R3,9 billion broad-based black economic empowerment transactions 2010 Centenary as company listed on the JSE 2012 The company changes its name to PPC Ltd and expands its footprint into Ethiopia and Rwanda 2013 African expansion gathers momentum as PPC enters DRC Case study Product innovation: the sure way to make more concrete PPC Ltd has been South Africa s leading cement supplier since 1892, and has become a trusted brand among contractors and consumers alike. Continuous innovation to ensure the superior performance of its cement products has entrenched this reputation. PPC produces a premium range of products that guarantees strength performance and ensures the right cement is available for specific applications. PPC led the cement revolution in South Africa when it introduced higher-strength products to the market. The premium 52.5 Portland cement is the highest strength class available, meeting the most demanding performance requirements for a broad range of applications in the construction, building, ready-mix, precast and concrete product manufacturing industries. Surebuild is a tried and tested product that has been engineered for consistent and appropriate performance. Surebuild 42.5 has introduced new concrete, screed and mortar mixes, offering up to 33% more yield for concrete, screed and mortar, compared to previous industry mixes for 32.5 general-purpose cement products. This translates directly into more value for money. SureRoad, the latest addition to PPC s product range, was launched after extensive research and development to meet technical requirements for road stabilisation. The CEM II Portland-composite cements are ideal for constructing cement-stabilised substrate layers for roads, and our performance testing has shown excellent results across a range of soil types and different road classes.

11 PPC Ltd 7 Approach to sustainable development Sustainable development is inherent to our business because it underpins the sustainability of PPC as a going concern. Strength beyond the bag epitomises our approach and understanding that PPC is part of its communities and environments; that everything we do has an impact (detailed in our stakeholder engagement section). Our aim is to ensure this impact is positive for all stakeholders. PPC understands that managing a sustainable business requires the balanced integration of performance, corporate governance, social, economic and environmental factors into the strategy and operation of the business. Equally, we understand that this is dynamic and requires an ongoing review process. To formulate our strategy and identify our material issues, PPC uses a wide range of criteria, processes and stakeholder engagements, summarised below: Internal factors Group s vision, mission, key values, policies, strategies, operational management systems, objectives and targets. Expectations and concerns of stakeholders, including employees, customers, shareholders, governments, suppliers and communities. Underlying risks to PPC as defined by internal integrated risk methodologies. Innovation, including product development and the manner in which PPC could potentially influence suppliers and customers in terms of sustainable development. External factors Challenges and emerging issues for the cement sector, for example global industry consolidation. Relevant laws, regulations and changes to legislation that affect PPC and its stakeholders Companies Act, skills development, employment equity, waste management, air quality, and local bylaws. Changes involving sustainability issues, impacts, risks or opportunities (eg climate change, energy efficiency) identified through published global research and development. Advice received through external experts in the business strategy, risk and sustainability fields.

12 8 PPC Ltd Stakeholder engagement In terms of PPC s inclusive process, we engage with all stakeholder groups. Employees Customers Shareholders and investment community Suppliers Banks, funders and insurance companies PPC engages with all stakeholder groups, understanding that their input is critical to developing our strategy and operating a truly sustainable business. We use many avenues to facilitate this engagement (detailed on our website), particularly formal stakeholder forums at corporate and operational level. National, provincial and local government, and regulatory bodies Industry associations Academic institutions and professional organisations Media Non-governmental and community organisations Trade unions

13 PPC Ltd 9 Stakeholder Type of engagement Issues raised Action taken Employees In-house publications, intranet, roadshows, factory Invocoms and key leader meetings, performance and one-on-one meetings, factory safety and environmental meetings All PPC leaders drive various forums, from the CEO down Employee benefits including salaries Company performance Safe working environment Understanding transformation strategy and plans Individual performance and development Succession planning Through the revitalised Kambuku philosophy, there is ongoing dialogue with all employees to address issues raised. In the review period, salaries and benefits were improved, and an investigation is under way on housing conditions for specific staff members. Organisational climate Environmental awareness Trade unions Regular meetings as per respective recognition agreements, key leader meetings with all employee representatives at each operation Cost-of-living salary adjustments and other employee benefits Negotiated annual salary adjustments. Academic institutions and professional organisations Meetings Conferences Site forums Stack emissions and dust fallout Emission levels recorded in the integrated report. Industry associations Meetings Conferences Working groups Proposed CO 2 tax PPC provides environmental inputs on projects and legislation in various industry associations and other forums. PPC established an industry news service on its website after the closure of the Concrete and Cement Institute. National, provincial and local government regulatory bodies Municipalities SARS Meetings Conferences Working groups Factory inspections Air quality and waste management Financial provisioning for rehabilitation Integrated water use licences and water quality Social and labour plan implementation Western Cape expansion plan Mining charter scorecard Environmental authorisation applications Financial provisions are made for factory decommissioning and quarry rehabilitation (see annual financial statements). 70% of water licences granted. Social and labour plans for 2013 to 2017 submitted. All health and safety elements reviewed and complied with.

14 10 PPC Ltd PPC stakeholder engagement continued Stakeholder Type of engagement Issues raised Action taken Customers Customer visits Factory visits Industry conferences Industry associations Hospitality events Independent customer satisfaction surveys In-store visits and promotions Technical support and education Advertising Price, service, product range, quality Managing cement waste (used bags and spillage) Empowerment status PPC communicates price increases in writing in advance. A technical marketing function evaluates quality and product range feedback. Empowerment status certificate available to all stakeholders. Appointed key account managers. PPC s new mobile application or app allows contractors and DIYers to accurately calculate quantities, check weather conditions along with a host of other useful functions. Suppliers Site visits (including suppliers suppliers) Meetings Supplier audits Tender briefing sessions Product development Alignment to customer strategy Environmental status of supply chain Health and safety for contractors Increased focus and capital approved for material handling where necessary. Standard practice is for all contractors entering a site to receive safety induction training. Media Press releases Interviews Meetings Industry outlook Financial results Carbon footprint Products PPC has a specific engagement plan and specific media interactions were held during the year. People Shareholders, investors, banks, funders and insurance companies Annual and interim results Website Integrated reports Investor roadshows Meetings Conferences Cement demand and pricing outlook Financial performance Implementation of strategy Competitor activity Carbon footprint Written reporting and responses given at the various engagements. PPC s inaugural bond issue was almost five times oversubscribed, underscoring the market s confidence in our balance sheet management capabilities. Communities including nongovernmental and community organisations Public forums Meetings Internet PPC Community Trust (community engagement forum meetings) Operational environmental performance Employment Projects to support community upliftment submitted to trustees from beneficiary communities See social and environmental reports. Where possible employees are sourced from the communities in which we operate. Trustees approve funding allocations and community projects for implementation.

15 PPC Ltd 11 Value added Value added statement for the year ended 30 September 2013 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. Rm Notes Revenue Paid to suppliers for materials and services 1, 4 (4 645) (3 917) Value added BBBEE IFRS 2 charges (48) (123) Zimbabwe indigenisation costs (93) Exceptional items (1) Income from investments^ Total wealth created Wealth distribution: Salaries, wages and other benefits Providers of capital Finance costs Dividends Ordinary dividends Dividends paid to external BBBEE trusts by consolidated SPVs 4 Government Reinvested in the group to maintain and develop operations Depreciation and amortisation Retained profit Deferred taxation 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 Transnet Freight Rail and Barloworld Logistics are the only suppliers of services exceeding 10% of total amounts paid. All contracts are paid in accordance with agreed terms. 2. Salaries, wages and other benefits Salaries, wages, overtime payments, commissions, bonuses and Employer contributions ~ Government Taxation normal, CGT and STC Rates and taxes paid to local authorities 5 4 Customs duties, import surcharges and excise taxes 9 6 Skills development levy 9 8 Cash grants and subsidies received from the government (6) (4) Included in Paid to suppliers for materials and services is: Donations and social labour plan expenditure Dividends paid to BBBEE transaction beneficiaries ^ Includes interest received, dividend income and share of associate s retained Includes restructuring costs of R64 million (2012: Rnil million). ~ In respect of pension funds, retirement annuities, provident funds, medical aid and insurance.

16 12 PPC Ltd Material issues Based on our approach to managing a sustainable business, our strategic objectives, stakeholder engagement and comprehensive risk management, we have identified material issues our stakeholders need to consider. Where a material issue is addressed in this report or on our website, it is cross referenced. 1 3 Markets Macro factors beyond our control but essential in developing our strategy. Political and regulatory Maintaining the competitiveness of our products is an ongoing challenge. Strategic The pillars of PPC s sustainable growth for the benefit of all stakeholders. Human capital The skills and commitment of team PPC are the cornerstone of our growth. 2 4 Material issues Response strategy Status Markets Weak demand and overcapacity in South Africa and Botswana New entrant in South African market despite existing overcapacity. 1 Increase revenue generated in other countries by expanding PPC s footprint into developing/emerging market economies. Rationalise production capacity to improve utilisation and efficiency across all PPC sites. Reduce manufacturing costs. Increased focus on customer needs, marketing and product enhancement. 30% stake in Habesha Cement, Ethiopia. 51% stake secured in CIMERWA, Rwanda. Additional projects announced in Zimbabwe and the Democratic Republic of the Congo. Older less-efficient equipment remains on care and maintenance, pending changes in market demand. Continue to ensure most efficient allocation of resources and strong customer focus. See page 22 Imported cement into South Africa and Mozambique Cement imports have risen to around 7,6% of South African demand, despite fluctuations in the exchange rate. Imports into Mozambique have affected prices. Ensure PPC is competitive in cost, quality and customer service. Lobbying industry bodies, government departments and customers to understand the threat of unstable supply, quality breaches and local manufacturing job losses. Continuous focus on efficiency, quality and customer service. Engaging with relevant industry bodies and supporting legal action to ensure fair application of quality standards has to date been unsuccessful. See page 38 Political and regulatory Increasingly onerous policy and regulatory environment in South Africa The complexity of legislation, and pace of change, is making manufacturing in South Africa uncompetitive. 2 Ensure an effective compliance function is in place. Improve relationships with government to better understand policy direction. Lobby industry and state bodies to ensure regulatory environment congruent with a competitive manufacturing industry. PPC has a compliance function in place and group-wide compliance to legislation is monitored. Engaging with relevant industry and state bodies on: developing an appropriate carbon tax strategy, waste handling and air emission legislation. See page 105

17 PPC Ltd 13 Material issues Response strategy Status Strategic Failure of a major investment in the rest of Africa Investments into the rest of Africa carry sovereign and operational risks. We are making progress with our rest of Africa strategy. 3 Thoroughly assess each investment opportunity by ensuring the appropriate resources are in place, including industry and country experts, to ensure compliance with PPC s risk appetite. Consult with relevant government authorities. Promote equity participation by local partners. Use opportunities from development funding institutions as these projects have broad development implications and therefore fall within their mandates. Apply lessons learnt from deals concluded. Conduct comprehensive due diligence. Dedicated business development team in place. A board deal committee assesses each opportunity. Appropriate risk assessments per opportunity. See page 4 Human capital Lack of critical skills In all countries where PPC operates, there is competition for skills to operate a sustainable manufacturing business. This can affect business performance, and cause costs to spiral to keep remuneration and retention schemes market-related, especially with new entrants to the industry. 4 PPC continues to empower, motivate and develop employees. Fixed and performance-based remuneration and retention schemes are market-related. Develop existing employees at accredited PPC academies. Maintain current succession planning employee turnover has declined in South Africa and Zimbabwe but risen in Botswana. PPC academies continue to develop team members in leadership, sales and marketing, vocational training and bridging programmes. New management structure in place. See page 45 Labour/social unrest in South Africa Violent strike action and labour unrest in a number of industries. Respond to the dynamic economic environment in an agile and efficient manner. Current business interruption plans in place. Increased emphasis on the PPC Kambuku people philosophy. Maintain PPC employees freedom of association with labour unions and ensure relevant agreements are in place between the company and recognised unions. Kambuku revitalisation programme rolled out in First-line management training under way. Salary sacrifice of senior employees has meant double-digit wage growth for those earning R per month and lower. Investigation under way to understand the housing needs of PPC staff. See page 45 Safety The number of lost-time injuries remains unacceptable. Safety remains the top priority for PPC. We continually strive to improve standards, develop a healthy work environment and safety-aware workforce. The group s LTIFR increased from 0,23 to 0,28 in 2013 and a fatality was recorded at Slurry. Rollout of PPC Alive! programme under way. See page 42

18 14 PPC Ltd Leadership Board 1 Bheki Lindinkosi Sibiya (56) Chairman (independent non-executive director) Appointed November 2008 MBA (University of Western Michigan, USA) Bheki is chief executive of the Chamber of Mines. He has worked in a number of South African blue-chip companies including Ford Motor Company (human resources), SA Breweries (procurement, logistics and human resources), Tongaat Hulett Sugar (director: human resources) and Transnet (director: human resources). Bheki was a founding chief executive of Business Unity South Africa, the most authoritative voice of business in the country, and has served on a number of significant national policy-formulating structures, such as the anti-corruption forum, president s working group with business and Africa peer review mechanism council. 2 Ketan Manecklal Gordhan (52) Chief executive officer Appointed November 2012 BA (political studies and sociology) (University of KwaZulu-Natal), MPhil (development studies) (University of Sussex, UK) Most recently, Ketso was with the presidency for the government of South Africa, after almost 10 years as head of private equity at FirstRand Financial Services Group, where he gained valuable experience of the manufacturing environment. Other successful roles in the public sector include the turnaround of the City of Johannesburg s financial performance as city manager (1999 to 2000) and in-depth knowledge of the transport sector gained as director-general of that national department (1994 to 1999). Ketso was a visiting fellow in finance at the University of Pennsylvania, Wharton, USA. 3 Mmakeaya Magoro Tryphosa Ramano (42) Chief financial officer Appointed August 2011 CA(SA) Tryphosa was CEO of WIP International (a subsidiary of WIPHOLD focused on African expansion). She also served as CFO of SAA, and prior to that, she was requested to join National Treasury, where she set up a business unit with financial oversight of state-owned entities. As chief director of this unit, she was instrumental in listing Telkom on the Johannesburg and New York stock exchanges. Her diverse professional development includes financial and strategic planning, corporate governance reform, industry analysis and corporate restructuring. She currently serves on the boards of Airports Company of SA and Land Bank of SA as a nonexecutive director. 4 Nomalizo Beryl Langa-Royds (51) Independent non-executive director Appointed October 2007 BA (Law), LLB degree (National University of Lesotho) Ntombi owns Nthake Consulting, a human resources consultancy specialising in human resources management and allied services. She has over 26 years experience in the human resources environment, gained as director of human resources at Independent Newspapers Holdings Limited, SABC and the Bevcan division of Nampak Limited. Ntombi is a non-executive director of African Bank Limited (ABIL) Mpact Limited, and Murray and Roberts Holdings. 5 Zibusiso Janice Kganyago (47) Independent non-executive director Appointed October 2007 BCom (University of Natal), postgraduate diploma in property planning, development and management, management development programmes (Wharton School of Business and University of Nevada, Reno) Zibusiso is executive director of development for Tsogo Sun Gaming. With 19 years property experience, she has served as non-executive director of the Johannesburg Property Company and member of the Land Affairs Board. 6 Timothy Dacre Aird Ross (69) Independent non-executive director Appointed July 2008 CA(SA) Tim was a partner with Deloitte & Touche for 36 years, retiring in He led the Johannesburg audit practice and served on the executive as client service director as well as the board and remuneration committees. Tim was the lead/advisory partner for a number of multinational clients and headed the Deloitte & Touche World Cup 2010 initiative. He is a director of Liberty Group, Eqstra Holdings, Adcorp and Mpact, chairing the audit and actuarial committee of Liberty and the audit committees of Eqstra, Adcorp and Mpact. He is also a member of the risk committees of Liberty, Eqstra and Mpact and the directors affairs committee at Liberty.

19 PPC Ltd 15 PPC understands that diversity, empowerment and development at every level can only be achieved through effective, transparent and accountable leadership André Jacobus Lamprecht (61) Independent non-executive director Appointed November 1997 BCom, LLB, PED-IMD André is a director of Business Leadership South Africa and a member of its executive and chairman of its task group on infrastructure. He is retired after a long career as a director and later CEO of a listed company and chairman of industrial groups in Botswana and Namibia. During his career he also had wide exposure to construction and mining-related industries. He served on numerous public bodies, including as chairman of Business South Africa and Business Unity South Africa, and as trustee of the Business Trust. 8 Sydney Knox Mhlarhi (40) Non-executive director Appointed March 2012 CA(SA) Sydney serves on the board as a representative of the PPC consortium of strategic black partners. He is a founder and director of Tamela Holdings (Pty) Limited and has over 15 years experience in investment banking. Sydney completed his articles at Ernst & Young in 1997 and is a member of the South African Institute of Chartered Accountants education and examinations committee. He was a member of the Securities Regulation Panel from 2004 to Mangalani Peter Malungani (55) Non-executive director Appointed February 2009 BCom (Unisa), management programmes (Wits Business School, Wharton University (USA)) Peter is executive chairman and founder of the Peu Group. After an early accounting career with Philips (SA), he started his own business management consultancy in 1984 and investment group Peu in He is chairman of Phumelela Gaming and Leisure, a director of Investec Limited, Investec plc and certain Peu subsidiaries. Peter has also held advisory positions in government and directorships in stateowned enterprises. 10 Bridgette Modise (46) Independent non-executive director Appointed December 2010 BCompt (Hons), CTA, CA(SA), CIMA, management development programmes Bridgette was director at KPMG for 10 years until She is currently the CEO of the retail business Sugarberry Trading and chairperson of Kutira Capital, an investment holding company. She is a non-executive director in, among others, Sun International, Nestlife Assurance Limited, Tellabs South Africa (Pty) Limited and Kanhym Estates (Pty) Limited. She is a member of various board committees (audit, risk, social and ethics and remuneration). 11 Joe Shibambo (65) Independent non-executive director Appointed May 2005 Diplomas in business economics, business administration and engineering Joe is managing director of Hlamalane Projects (Pty) Limited and has been in the construction industry for 32 years. He has extensive knowledge and experience of construction management, project management, property development, rail construction and maintenance. Through his organisation, he also assists the youth to acquire basic skills and management principles for the construction industry. He was one of the first property developers and the first contractor to develop and build a shopping centre in Soweto. Joe is a member of the Construction Industry Development Board and the South African Institute of Black Property Professionals. Todd Moyo (56) Independent non-executive director Appointed November 2013 BAcc (Hons) (University of Zimbabwe), CA(Z), CA(SA), RPA(Z), MCSZ Todd is chairman of PPC Zimbabwe Limited. He is a member of both the Institute of Chartered Accountants in Zimbabwe and the South African Institute of Chartered Accountants. His experience in other disciplines includes sales, marketing and information technology and he has attended a number of executive development programmes. Todd is chairman and CEO of healthcare company Datlabs (Private) Limited and chairman of National Foods Holdings Limited, both based in Zimbabwe. He is also a director of other listed and unlisted companies. In his personal capacity, he is a board member and trustee of institutions in the education and health sectors and has supported several universities fund-raising activities, and served on the local authority of Bulawayo s valuation board and development committees.

20 16 PPC Ltd Leadership continued Group executive committee 1 Ketan Manecklal Gordhan (52) Chief executive officer See page 14 2 Mmakeaya Magoro Tryphosa Ramano (42) Chief financial officer See page 14 3 Richard Samuel Tomes (44) Managing director PPC Cement RSA (joint) HND (civil eng), MBA (University of Stellenbosch) Richard is a concrete technologist and acknowledged specialist in the industry. He started his career with Concor Construction as a bursary student, gaining construction and concrete experience on projects such as the Katse Dam, Ben Schoeman Highway and the New Road interchange. He joined PPC as a technical consultant in 1998 and has held numerous positions, including as technical manager of PPC s ready-mix concrete and aggregate businesses. He joined the sales and marketing team in 2003, becoming the executive of that function before assuming his current role. 4 Pieter Lasenius Booysen (51) Executive, technical BEng (mining) (University of Pretoria) Piet has served as group mining manager, general manager and mining manager since joining PPC in He started his career as a mining engineer with Anglo Coal, progressing to underground manager. 5 Jacobus Johannes Taljaard (55) Executive head: business development (international) BEng (mech) (University of Stellenbosch), GDE (minerals economy) (University of the Witwatersrand), MDP (Unisa School of Business Leadership) Koos is a professional engineer who worked in the mining industry for 23 years, holding various operational and senior project positions in Anglo American. He moved to PPC in 2005 as executive: projects and is currently responsible for PPC s expansion programmes. 6 Azola Cubekile Lowan (33) Executive: strategy and investor relations MBusSci (UCT), CFA Azola has experience in investment management as well as economics, having headed economic strategy and research units at various asset management and actuarial consulting firms. Her most recent position was in the financial analytics team at Absa. 7 Klaas Paulus Pieter Meijer (53) Managing director, international operations BEng (mech eng), BB&A (Hons), MBA (University of Stellenbosch) Pepe previously held the positions of executive group services, executive cement operations and various other senior and general management roles across the cement and lime divisions since joining PPC in Prior to that, he worked in the gold mining industry, with the last appointment being as section engineer, and in the fishing/processing/frozen-food industry as group projects manager.

21 PPC Ltd 17 Our people are integral to our success Happy-Girl Nonhlanhla Buthelezi (40) 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) Happy-Girl was appointed joint head of international business development at PPC in October Prior to that she was with the MTN group as country manager of MTN Ethiopia, where she led the operational set-up and secured the operating licences. Before joining MTN, she ran her own engineering services business in Nigeria, with MTN as the key customer. She has over 13 years experience in conducting business in other African countries with Vodacom, Telkom SA, MTN and PwC, spanning mergers and acquisitions, licences/greenfield operations, privatisations, public-private partnerships, and project finance in ICT and other infrastructure industries. 9 Johannes Theodorus Claassen (54) Managing director PPC Cement RSA (joint) BEng (University of Stellenbosch), EDP (Wits Business School) Johan is a professional engineer who joined PPC in 1989 and has served as executive: cement operations, executive: lime and other senior and general management roles across the cement and lime divisions. He was previously employed by the Department of Water Affairs, progressing to regional engineer. 10 Jacobus Hendrik De La Rey Snyman (46) Executive, secretarial and legal, PPC company secretary BA, LLB, LLM (University of Johannesburg), MBA (University of the North West) Jaco is an attorney of the High Court of South Africa. He started his career as an attorney but, after a short stint as lecturer at a university, was appointed as group legal adviser by Absa. He was responsible for corporate governance in the Absa group prior to joining PPC. 11 Phuti Semenya (37) Chief audit executive* CA(SA), CIA, certified control selfassessor (CCSA), certificate in advanced banking law (cum laude) Phuti started as a trainee with a major audit firm, and spent four years in external audit management before assuming an executive finance role with a medium-sized printing company. He then moved into internal audit and covered two leading financial institutions before entering the forensic audit field. Phuti is currently studying towards a master s degree in international accounting. *Attends as observer only

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23 Case study INSIGHT BEYOND THE BAG Continual innovation ensures we keep developing the products our diverse markets need from products with higher strength that offer greater value for money, to products with specific purposes such as road building. Technical innovation: under the microscope PPC s technical ability has grown significantly in recent years. In 2013, we opened a new, world-class microscopy facility at Group Laboratory Services at Jupiter, allowing us to compete with the top cement and concrete research and development centres in the world. This facility is certainly the most advanced in the industry in South Africa, and probably in Africa, enabling PPC to become a leader in new, innovative cements at optimised costs. It will also boost our strategy of customer focus through technical know-how. The new facility will help PPC factories with designing new raw mixes to optimise the clinkering process, design cement with specific properties for its customers, and resolve complex issues relating to customer products. Please see case studies on our website.

24 20 PPC Ltd Chairman s report Team PPC has made great strides towards the 2017 strategic goal of generating 40% of our revenue from the rest of Africa. Performance The group has recorded a strong performance in the 2013 financial year with normalised earnings per share rising by 16%, boosted by strong revenue growth of 13%. The business remains a financially sound, cash-generating entity with sufficient balance sheet capacity to realise our ambitions to expand into the rest of Africa. The board declared total dividends of 156 cents per share (2012: 146 cents), translating to a dividend cover of 1,3 times which remains well within our stated dividend policy cover range. Our Zimbabwe team delivered another pleasing performance of double-digit volume growth. The South African cement business also made a valuable contribution to group revenues as volumes rose 7% from the previous financial year. Revenue from countries outside South Africa have now reached 24% of total group revenues. Economic environment Calendar 2013 has proven to be a challenging period for the South African economy, with growth expected to slow from the 2,5% level achieved in Household expenditure, which contributes almost two-thirds of our gross domestic product, is under pressure from rising unemployment and elevated household debt, hampering growth in demand. The slowdown in the unsecured lending market has also contributed to muted household expenditure. Gross fixed capital formation is a good reflection of our operating environment. Unfortunately, this expenditure has reduced relative to 2012 due to a slowdown in outlays by public corporations. The South African Reserve Bank s September 2013 quarterly bulletin attributes this to unplanned delays on current projects and sluggish approval of new projects. Specifically expenditure by state power utility, Eskom, picked up, but was offset by restrained growth in other leading public entities like Transnet (transport) and Sanral (roads infrastructure). What is pleasing is that private-sector expenditure rose as capital spending on residential and nonresidential buildings improved. The labour unrest in our country remains of great concern. Good working relations between government, labour and business remain critical; getting this right would go a long way towards boosting this country s growth trajectory. I commend the initiative shown by PPC s CEO and his management team who sacrificed portions of their own salaries to redistribute to our leastadvantaged staff members. One of the material risks we highlighted last year was the possibility of political or civil instability in Zimbabwe due to the 2013 national elections. There was limited disruption and cement sales volumes in this country continue to rise. In Botswana, weak diamond demand is still hampering economic growth, translating into a slowdown in the construction sector.

25 PPC Ltd 21 The PPC team under the leadership of our CEO, Ketso Gordhan, has delivered a strong operating performance and announced developments on exciting new projects in the rest of the African continent. Strategic update Our strategic objective to keep the home fires burning was given further impetus this year by the decision to acquire a majority stake of Safika Cement Holdings. Safika, with its well-known brand name IDM, is a blended cement producer manufacturing over 20 million bags of cement per annum. This transaction is still subject to approval by the regulatory authorities. Last year, in support of our rest of Africa strategy, team PPC invested in Ethiopia s Habesha Cement Company. We have now increased our stake in Habesha from 27% to 30% for an additional R16 million. We have also announced additional projects. We bought a majority stake in Ciments de Rwanda (CIMERWA) Limited, which has a tonne-perannum cement-producing plant, and construction of a tonne cementproducing facility is well advanced. Construction on new projects in the Democratic Republic of the Congo and Ethiopia will begin in In March 2013, PPC issued its inaugural bond in the debt capital markets. This R650 million domestic bond was 4,6 times oversubscribed, reflecting the level of investor confidence in our balance sheet management capabilities and PPC s strong cash-generating ability. Standard & Poor s rating agency assigned PPC with a zaa+ long-term credit rating. Board Several changes were made to the board and its committees during the year. There were three executive departures from the PPC board: Messrs Sello Helepi, Salim Abdul Kader and Peter Esterhuysen have resigned to pursue interests outside of PPC. We thank them for their valuable contributions while in office. There was one non-executive appointment to the board. Mr Todd Moyo has been appointed to the PPC board as a non-executive director. Todd, a chartered accountant, is currently chairman of PPC Zimbabwe. He is also chief executive officer of Datlabs Limited, a healthcare company based in Zimbabwe, and chairman of National Foods Holdings Limited. I am pleased to welcome such an accomplished director to our board. Mr André Lamprecht retires at the AGM and has decided not to make himself available for re-election. The board sincerely thanks him for his contribution over the years and wishes him well on his future endeavours. Compliance and regulatory The leniency agreement between PPC and the Competition Commission concluded in 2009 remains intact and we continue to cooperate fully with the commission. Governance The five standing committees of the board continue to play an important role in enhancing good corporate governance practices. Notably, the remuneration committee has, with executive management, made some progressive changes to the existing policy. For 2013, a new qualifying metric group cash conversion ratio was added to enhance the short-term incentive scheme (STIS). This reflects the importance of effectively managing cash flow and better aligns management efforts to achieve this goal. For the 2014 financial year, the STIS has been personalised for certain management groups. For example, major project leaders, who are responsible for executing our rest of Africa strategy, will now be incentivised on the successful timely completion of major projects, where no bonus is payable before project completion. The ad hoc deal committee also plays a pivotal role in assisting the company to execute its strategy. Specifically, this committee considers strategic options and recommendations presented by management, and provides guidance and support to ensure the company delivers on its rest of Africa expansion strategy. A rich heritage This year, PPC celebrated 100 years in production at two factories, namely Zimbabwe and Slurry. Portland Holdings Limited has been an integral part of Zimbabwe s infrastructure development with Unicem, its core cement brand, found in virtually every key structure in the region including Harare International Airport and the mighty walls of Kariba Dam. Our South African operation at Slurry began after purchasing Rietvallei farm, near Mahikeng, 100 years ago. Today, Slurry is one of our top-performing factories and boasts stateof-the-art facilities at the Technical Skills Academy. The academy is fully accredited and regularly produces top electricians, fitters and turners, welders and mechanics. Prospects Growth and confidence in the South African economy is critical to ensure improved demand for our products. Due to modest growth, the domestic trading environment remains tough and highly competitive. We believe our strategies have positioned PPC well in a challenging market. We remain confident about prospects for strong growth in the rest of Africa. We believe we are on track to meet our strategic objective of generating 40% of our revenues from the rest of the continent by I thank my fellow board members as well as team PPC for their continued focus and energy during the year. Our customers, shareholders and other stakeholders remain critical pillars for the success of this business and we are most grateful for their invaluable support. Bheki Sibiya Chairman 18 November 2013

26 22 PPC Ltd Chief executive officer s report Key events: Significant headway on rest of Africa projects Concluded acquisition in Rwanda Increased stake in Ethiopia Feasibility study under way in Zimbabwe Entered Democratic Republic of the Congo Our expansion strategy into the rest of the African continent has gained significant momentum, with identified projects progressing well in a number of countries. Growing in challenging environments For the financial year to 30 September 2013, PPC recorded good volume growth in our South African and Zimbabwean cement operations, despite weak economic growth in South Africa, ongoing challenges from rising input costs, competitive pricing and excess production capacity. In the final quarter, volumes came under some pressure due to strike activity in the South African construction sector. Our Zimbabwean operations performed well even as the nation went to the polls. The strong performance in these cement divisions was offset by poorer performance in Botswana as well as our lime and aggregates divisions. The construction sector in Botswana remains constrained due to subdued government expenditure. Intense competitor pricing in the retail market is also putting margins under pressure.

27 PPC Ltd 23 For the 2013 financial year, group revenue rose by 13% to R8,3 billion with normalised EBITDA rising by 8% and normalised earnings grew by 16%. While our South African operations continue to account for the majority of our group revenues (76%), we are pleased to have added our tonne cement production facility in Rwanda to the group. Working with the team in Rwanda, we have turned a loss-making entity into one that contributed to EBITDA for the year. For the review period, group revenue rose by 13% to R8,3 billion with normalised EBITDA rising by 8% and normalised earnings grew by 16%. Dividends for the year have also increased by 7% to 156 cents per share. We also successfully entered the debt capital markets during the year, underscoring our ability to diversify our funding sources. This is detailed in the report of our chief financial officer. Strategic pillar: keep the home fires burning In the second half of the period, we announced our agreement to purchase a majority shareholding in Safika Cement for some R350 million. This is yet another complementary business to PPC, and follows our earlier acquisition of Pronto Holdings. We now hold 50% of Pronto and expect to acquire the balance at the end of May PPC continues to focus on maximising cost efficiencies. During the first quarter of the year, however, a technical issue at our Dwaalboom factory resulted in lowerthan-planned production output. To meet customer demand, we had to source the cement product from other sites at increased cost. These technical issues have now been resolved and the factory is operating well. Production costs for cement in South Africa rose by 6%. Cost management remains a critical lever to maintain margins in a highly competitive environment. In South Africa, we were able to increase selling prices by 4% but only a marginal price increase was achieved in Botswana with flat prices in Zimbabwe. Our new marketing campaign, Strength beyond the bag, reflects PPC s contribution that goes beyond the cement manufacturing process to touching the lives of our suppliers, customers and the communities we help to build. Our fullservice offering that includes technical advice and support remains our key competitive advantage. Last year, we reported on the successful completion of the first phase of our Western Cape modernisation programme, a R280 million upgrade to De Hoek factory. This investment has significantly improved stack emissions, and generated a 5% improvement in heat consumption and clinker production rate. The second phase of this modernisation included replacing two ageing cement kilns at our Riebeeck plant. In light of current cement market demand and the resultant capacity utilisation in this region, we cannot at this stage justify the required R1,3 billion investment. The environmental authorisation we received towards the end of 2012 is in place for five years. One of our major capital expenditure projects in South Africa was the R100 million investment in Slurry finishing mill 4 (FM4). FM4 was commissioned in 1974 and is the largest ball mill in the PPC group, but the mill separator and associated electrical components had reached the end of their life cycles. This project has improved mill reliability and production output, while reducing dust emissions. In addition, energy consumption has dropped by around 15%. Regrettably, we recorded a fatal accident during the year when a contractor lost his life during an offloading operation. This matter is still under investigation by the relevant authorities. Our lost-time injury frequency rate rose from 0,23 in 2012 to 0,28 this year. Our PPC Alive! campaign is focused on changing safety behaviour to ensure we reach our objective of beyond zero harm. In the 2013 budget speech, South Africa s finance minister announced that carbon taxes would begin in January 2015, calculated at R120 per tonne carbon dioxide emitted. At this rate, PPC s carbon emissions tax burden would be around R150 million. This additional tax burden puts local manufacturing industries at a further disadvantage relative to imported products. It is worth noting that the Australian government is in the process of repealing its carbon tax regime. I am pleased to report that construction of the Grassridge wind energy facility in Nelson Mandela Bay began in October This 60 MW facility will, when commissioned, supply energy into the national grid as part of the renewable energy procurement programme of the Department of Energy. A second phase, which would supply 10% of PPC s electrical energy requirements is currently under development. This year, our Kambuku philosophy was revived by the rolling out of the I Care PPC Cares programme, which has had an enduring impact on PPC staff. Senior managers sacrificed their 2013 salary increases to invest in lifting the salaries of employees earning less than R per month. This has led to employees in the lower bands receiving double-digit wage growth for In December 2013, most PPC employees will take ownership of the shares allocated to them as part of our 2008 black economic empowerment transaction. Employee shareholders received R33 million in dividends during the year. Further strides have been made by the PPC Women s Forum established in 2011, with numerous opportunities for mentoring, coaching and learning afforded to women across the group. Key objectives have been set for 2016 which include achieving a 30% female representation across all levels at PPC.

28 24 PPC Ltd Chief executive officer s report continued Per capita cement consumption (kg) DRC Rwanda Ethiopia Zimbabwe South Africa Per capita cement consumption (kg) Source: Cemnet, 2013 Strategic pillar: rest of Africa Progress with our expansion strategy has gathered great momentum in this financial year. Our expansion projects are now bearing much fruit in Ethiopia, Rwanda, the Democratic Republic of the Congo as well as in Zimbabwe. The graph above highlights why we see such great opportunity in these countries. In South Africa, the per capita cement consumption is 222 kg whereas in the countries where we want to invest, levels are well below 75 kg per capita. The growth trajectory in these countries remains very positive and we believe we are well placed to benefit our shareholders in these regions. The funding delays with our investment in Habesha Cement of Ethiopia have now been resolved and construction of the 1,4 mtpa facility is imminent. The project cost remains favourable at US$130 million. The factory site is well located, just 35 km from the dynamic city of Addis Ababa. At the end of 2012, we announced that we had acquired a 51% equity stake in CIMERWA of Rwanda for US$69,4 million. In addition to CIMERWA s tpa plant, construction on the new tpa facility is under way and commissioning is expected in the next 12 months. In contrast to the existing smaller plant, which uses old technology (wet process) and expensive heavy fuel oils, the new facility will have modern technology and will use peat (decomposed forestry material) as an energy source. Its proximity to the borders of Burundi and eastern DRC means the factory will be able to supply cement to Rwanda and to these neighbouring countries. During the period, we also announced our intention to build a cement-production facility in the DRC and our progress with a feasibility study into building a second factory in Zimbabwe. Our existing operations in Zimbabwe are in the south of the country; the proposed new facility would be in the northern regions, enabling PPC to effectively service the Harare and Mozambique markets.

29 PPC Ltd 25 New tpa factory for CIMERWA. The feasibility study is investigating the possibility of constructing a clinker production facility close to the Zimbabwe border with two additional grinding facilities in Harare and Tete. The combined output of these facilities would be 1,2 mtpa. We recently signed a memorandum of understanding with our local partner, the DRC s Barnet Group sprl. We intend to construct a 1 mtpa plant 20 km from Kimpese in western DRC at an estimated cost of US$260 million. I am confident construction will begin shortly, with commissioning in Approach to sustainable development At PPC, we understand that a sustainable business requires the balanced integration of performance, corporate governance, social, economic and environmental factors into our strategy and the way we operate our business. Equally we understand that PPC never operates in isolation everything we do affects someone or something around us. Hence, the theme of this report is Beyond the bag examining these impacts and relationships as part of a dynamic process, with ongoing review to ensure our contribution is a positive, lasting one. Outlook Cement sales volumes in South Africa are growing but much more needs to be achieved in a market with significant overcapacity. In line with my recent media comments on the concept of creating an infrastructure negotiating body similar to the Convention for a Democratic South Africa (Codesa) as a critical step to kickstart implementation of much-needed infrastructure development in South Africa, I firmly believe leaders in the private and public sector must come together to work out ways in which we can streamline the roll-out of infrastructure delivery in this country. South African industry cement sales volumes to June 2013 showed demand growing by 4,2% compared to With a surge in infrastructure spending, we believe a much higher growth rate can be achieved. Sales in Zimbabwe continue to grow at a pleasing pace and we believe this is sustainable. We await a turnaround in government investment in Botswana to boost cement sales volumes. We remain focused on maintaining our strong presence in our home markets of southern Africa and look forward to giving all our stakeholders regular updates on our progress in the rest of the African continent. Ketso Gordhan Chief executive officer 18 November 2013

30 26 PPC Ltd Chief financial officer s report +13% Revenue +8% EBITDA* +26% Cash generated from operations +16% Normalised earnings per share* The PPC team delivered a solid financial performance during the year, sustained the momentum being made on our rest of Africa growth strategy, concluded our Zimbabwe indigenisation transaction and successfully launched our domestic medium-term note (DMTN) programme. Cash generation continues to be strong with cash generated from operations ending just below R3 billion for the year. This, together with our strong balance sheet and borrowings potential, favourably positions the group for its vision of attaining revenue from the rest of Africa at 40% of group revenue. The table below summarises the key financial indicators that we monitor to assess our group financial performance % change 2012 Revenue (Rm) Cost of sales (Rm) EBITDA (Rm) Normalised EBITDA (Rm)* Headline earnings per share (cents) Normalised headline earnings per share (cents)* Cash generated from operations (Rm) Cash conversion ratio (times) 1,1 12 1,0 Total borrowings (Rm) Net debt to EBITDA (times) 1,5 1,4 EBITDA interest cover (times) 6,0 6,2 Dividend cover (times) 1,3 1,3 Revenue earned from the rest of Africa (%) * Calculated before the impact of BBBEE IFRS 2 charges, Zimbabwe indigenisation and restructuring costs.

31 PPC Ltd 27 Income statement Revenue Revenue ended 13% higher than last year at R8 316 million (2012: R7 346 million). The increase is attributable to growth in our cement business where revenue increased by 16% to R7 219 million (2012: R6 246 million) following strong volume growth in South Africa and Zimbabwe offset by lower demand in Botswana and Mozambique. Low single-digit selling price increases were achieved in our main trading territories. The depreciation of the rand against both the US dollar and Botswana pula further contributed 2% to revenue growth in rand terms. The consolidation of CIMERWA, with effect from February 2013, accounted for 2% of the year-on-year revenue growth. Lime revenue of R798 million (2012: R838 million) was negatively impacted by reduced exports and lower offtake from customers due to their operational issues and production requirements. Aggregates revenue grew 12% to R335 million (2012: R299 million) as a result of total volumes being marginally above last year, with volume growth in Botswana partly offset by marginally lower volumes in South Africa. Changes in product mix and an increase in delivered sales further contributed to revenue growth. Cost of sales and operating expenses Cost of sales increased marginally above the revenue increase to end the year 15% higher than last year at R5 546 million (2012: R4 809 million). South African cement cost of production increased below official inflation rates on a rand/tonne basis, with above-inflationary increases noted in power and depreciation. Local costs were well managed in spite of earlier production issues at our Dwaalboom operation and the impact of sub-optimal sourcing as we upgraded the main finishing mill at our Slurry factory and needed to supply product from our other factories. Zimbabwe cost of sales, on a per tonne basis, ended below 2012 levels mainly as a result of improved fixed-cost absorption and no clinker transferred from South Africa as was done in the previous year following a transformer failure in February Lime s cost of sales was negatively impacted by higher power and fuel costs combined with lower absorption of their fixed costs on reduced volumes. Administration and other operating expenditure increased by 27% to R853 million (2012: R671 million) with 7% of the increase relating to the provision for restructuring costs in Zimbabwe. The balance of the increase is attributable to business development costs, including competition filing fees and consulting costs, the consolidation of CIMERWA and costs related to supporting the expanding business and regulatory compliance in our various operating jurisdictions. The group undertook restructuring programmes during the second half of the year which added R64 million to total costs as we provided for voluntary retrenchment packages at our Zimbabwe operations and Riebeeck factory in the Western Cape. The costs are anticipated to be paid during the first quarter of our 2014 financial year and should result in savings of approximately R24 million on an annualised basis. EBITDA EBITDA for the year was R2 440 million (2012: R2 327 million) reflecting a year-onyear improvement of 5%. On a normalised basis, EBITDA at R2 504 million, is 8% higher than last year. CIMERWA positively impacted group EBITDA by R7 million. Empowerment transactions In 2012 the IFRS 2 charge relating to the Strategic Black Partners and Bafati Empowerment Trust, participants of the company s second BBBEE transaction, of R112 million was charged in full to the income statement as there were no vesting conditions assigned to their allocation. In contrast, the IFRS 2 charge of R239 million on the Employee Share Trust is charged to the income statement over the seven-year vesting period and amounted to R31 million in the current year. The balance of the current year charge relates to the company s first BBBEE transaction. As communicated in our half-year results, our Zimbabwe subsidiary successfully received its indigenisation certificate. The total cost of this transaction amounted to R93 million, of which R4 million related to consulting fees, R27 million for donations made to the Community Trust to further support development of the communities where we operate and the balance to the underlying IFRS 2 charges on the transaction. The full IFRS 2 charge on this transaction has been expensed to the income statement in the current year.

32 28 PPC Ltd Chief financial officer s report continued Finance costs Finance costs of R379 million (2012: R377 million) were 1% above last year as a result of the increased net borrowing levels within the group. Interest of R4 million (2012: R6 million) was capitalised to property, plant and equipment on the CIMERWA plant expansion. Included in finance costs were fair value gains of R25 million (2012: loss R3 million) on financial instruments and foreign currency denominated balances. Exceptional items Net exceptional items charged to the income statement of R1 million follows an impairment of goodwill and plant and equipment of R12 million at our aggregates business in Botswana and a further writedown of R1 million against one of the loans we advanced under our enterprise development initiatives. These charges were partly offset by a capital profit of R11 million following the sale of land and a gain of R1 million on the disposal of a portion of the group s net investment in an equity-accounted investment. Taxation The total taxation charge for the year was R507 million (2012: R557 million) and the effective rate of taxation, excluding secondary tax on companies (STC), was 35,3% (2012: 35,8%). In 2012, the taxation charge included STC of R53 million which did not repeat in the current year following the introduction of the dividends tax effective 1 April The effective rate of taxation was impacted by the non-deductibility of funding costs on the company s first BBBEE transaction, the IFRS 2 charges on the BBBEE and Zimbabwe indigenisation transactions, costs incurred on our African growth strategy and withholding taxes on dividends received from our foreign operations. Headline earnings per share Headline earnings per share of 179 cents was 10% above 2012 with the main movements against 2012 reflected in the graph below: 240 Headline earnings per share (cents per share) (2) (2) (12) (25) Sept 12 Trading profits STC Net finance costs Taxation impact Restructuring costs Overheads Sept 13

33 PPC Ltd 29 Excluding the impact of the BBBEE IFRS 2 charges, Zimbabwe indigenisation costs and restructuring costs, headline earnings per share is 215 cents per share, being 16% above the corresponding 185 cents per share recorded in Exchange rate impact The devaluation of the rand against the US dollar and Botswana pula in the current year had a favourable impact of R23 million on net profit when our foreign currency denominated earnings were translated into rand. Statement of financial position Non-current assets Property, plant and equipment (PPE) ended the year at R5 522 million (2012: R4 483 million) following the consolidation of CIMERWA s PPE of R433 million at the effective take-on date, additions of R964 million and the devaluation of the rand increasing foreign currency denominated PPE by R148 million. Depreciation was R488 million (2012: R439 million) following commissioning of the R280 million De Hoek kiln 6 upgrade late 2012 and commissioning of the R100 million Slurry finishing mill upgrade. Following the consolidation of CIMERWA, identifiable intangible assets were valued at R124 million and will be amortised over the life of the current limestone reserve. Goodwill of R100 million arose from the transaction. More details can be found in note 2 to the group annual financial statements. Equity-accounted investments increased by R143 million to end the year at R410 million (2012: R267 million) following the further investment of R110 million in Pronto Holdings (Pty) Limited, R16 million invested for an additional 3% in our Ethiopian cement associate company and PPC s share of the profit of its equity investments of R20 million (2012: R7 million). Net working capital Net working capital of R681 million (2012: R807 million) was favourably impacted by the restructuring provision of R64 million still being payable at year-end, the derivative liability on the interest rate swaps of R112 million reflected under short-term payables, previously recorded under other non-current liabilities, as the amount is due for payment in December Inventory increased over the last year following the consolidation of CIMERWA and translation impacts of our foreign currency-denominated inventory balances. Included in other receivables are prepayments of R133 million, with the majority of the balance relating to an advance payment which was made by CIMERWA on its plant expansion. Working capital continues to be well managed with impairment of trade receivables approximating only 2% (2012: 3%) of gross debtors. Inventory levels are continually monitored to ensure we have the optimal balance to still meet customer expectations and demand. Equity In contrast to 2012, we now have noncontrolling interests recorded on the consolidated statement of financial position. This is attributable to the consolidation of our 51% shareholding of CIMERWA and a portion of the Zimbabwe indigenisation costs being allocated to non-controlling interests. Borrowings During the year we successfully launched our R6 billion domestic medium-term note programme and were assigned South African national scale long-term and short-term credit ratings of zaa+ and zaa-2 respectively from Standard & Poor s. Our inaugural variable rate bond of R650 million was issued at competitive rates. The consolidated debt from our first BBBEE transaction maturing partly in December 2013 has been extended at a variable interest rate of prime plus 285 basis points. At year-end, total borrowings were R4 046 million (2012: R3 585 million) and net debt to EBITDA was 1,5 (2012: 1,4). No covenants were breached during the year.

34 30 PPC Ltd Chief financial officer s report continued Cash flow Cash generated from operations before working capital movements amounted to R2 486 million (2012: R2 317 million), an increase of 7%. The analysis of cash generation and utilisation is indicated below: Movement in net cash and cash equivalents (Rm) (56) (126) (136) (247) (525) (770) (970) Sept 12 Operating cash flows Net working capital movement Movement in net funding position Other Cash acquired on business combination Purchase of shares in terms of FSP scheme Equityaccounted investments Acquisition of CIMERWA Net finance costs paid Taxation paid Dividends paid Acquisition of PPE and intangibles Sept 13 The group s cash conversion ratio, being cash generated from operations over EBITDA, improved to end the year at 1,14 times (2012: 0,98 times). Commitments Group capital and operating lease commitments, excluding business acquisition commitments, amount to R1 283 million (2012: R336 million) at year-end, inclusive of capital commitments of R825 million on the CIMERWA plant expansion project which is anticipated to be commissioned in our 2015 financial year. Operating lease commitments include the 10-year lease agreement signed for our new head office. As the business continues to execute its strategy of expanding its current footprint, commitments relating to this growth are discussed in more detail in note 30 in the group annual financial statements. Dividends A final dividend of 118 cents per share has been declared, bringing the full-year dividend to 156 cents per share (2012: 146 cents per share) with a dividend cover of 1,3 times (2012: 1,26 times). Our current dividend range of 1,2 to 1,5 times remains the group s stated target but we anticipate a gradual move to the upper end of the range, taking cognisance of our business expansion commitments and estimated borrowing levels. Financial risk management Financial risks relating to funding, interest, counterparty, liquidity and foreign currency risks are monitored and managed by the group s financial risk sub-committee and funding committee on a quarterly basis. The committees monitor the maturity profile of all borrowings to ensure that there is an optimal mix of both long- and short-term facilities, with staggered maturity dates. The split between variable and fixed interest rates is monitored and assessed against expected changes in economic indicators. Accounting policies During the year, the group adopted three new accounting standards and revisions, further details of which can be found in note 34 to the group annual financial statements. The new standards and revisions adopted did not have a material impact on the group s results. We will finalise our assessment of IFRIC 20 (Stripping Costs in the Production Phase of a Surface Mine), for adoption in the 2014 financial year, over the next quarter but this is not expected to have a material impact on our results.

35 PPC Ltd 31 Acquisitions and expansions are setting a solid base for sustainable growth in our selected markets, guided by robust risk management processes. Zimbabwe indigenisation transaction As part of the Zimbabwe indigenisation transaction, new shares were issued by Porthold, amounting to 29% of the increased share capital and funded mainly via a notional vendor funding (NVF) mechanism. During the NVF term, the new shareholders in Porthold will participate in 20% of the dividend with the balance being used to offset the NVF balance. A non-controlling interest of R65 million was recorded in the consolidated statement of financial position. PPC will continue to consolidate 100% of Porthold s earnings, with the 20% dividend being reflected under movements in non-controlling interests, during the NVF term. Acquisitions In January 2013, PPC acquired a 51% shareholding in a Rwandan cement company, CIMERWA, for a transaction value of US$69,4 million (R629 million). As CIMERWA is consolidated into the group, only the R136 million portion payable to previous shareholders of the business is reflected as an investment in a subsidiary company on the cash flow statement, with the balance of the purchase consideration being used to subscribe for equity in CIMERWA. For further details of net assets and liabilities acquired, refer to note 27 in the group annual financial statements. In May 2013, the company acquired a further 25% stake in Pronto Holdings (Pty) Limited for R110 million. The purchase consideration was determined using an EBITDA multiple adjusted for net debt. The remaining 50% of the business that PPC does not own will be purchased on the second anniversary of the transaction. The group subscribed for a further 3% in Habesha Cement Share Company, incorporated in Ethiopia, for R16 million, taking our shareholding to just over 30%. The investment continues to be equity accounted. We continue to investigate business opportunities in South Africa and the rest of Africa. The group has signed a memorandum of understanding for the construction of a new cement plant in the DRC. The total cost of the project is US$260 million and it is estimated that PPC will have a 69% shareholding in the project. Commercial terms, including funding facilities, are being finalised. We will continue to advise shareholders as the transaction progresses. The company has also entered into an agreement to purchase a controlling stake in Safika Cement Holdings (Pty) Limited, a local cement blender, for a cash consideration of R350 million. The transaction is awaiting regulatory approval. Looking ahead For the year ahead, we will continue our focus on cost control and working capital management to maximise cash generation. The funding committee will continue to identify ways to optimally fund our growth, taking cognisance of covenant levels. As we expand into new territories, we will determine the appropriate levels of governance and internal controls of our new business units while ensuring compliance with local regulatory requirements. Focus will also be given to the integration of businesses acquired to ensure we maximise returns and synergies anticipated. Tryphosa Ramano Chief financial officer 18 November 2013

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37 Case study SUSTAINABLE BEYOND THE BAG At PPC, we understand fully that we do not operate in isolation. In and around every one of our operations are the people who contribute to our success, and their communities. Our sustainability as a company depends on the growth and development of those communities. We focus on identifying the most pressing needs in those communities, working closely with community members and regional authorities to ensure our impact is both positive and lasting. In Matabeleland North province, Zimbabwe, the benefits of a community share ownership scheme are unfolding. The community of Umguza district used the US$1 million received as proceeds from its 10% share in PPC s operation to buy borehole drilling equipment and an eight-tonne truck. The equipment and funds will support development projects from drilling boreholes to constructing schools, clinics, roads and bridges. Please see case studies on our website.

38 34 PPC Ltd Summary of integrated performance Section In 2012 we said we would Progress Target 2014 Financial Maintain 1,2 to 1,5 times dividend cover. Dividends declared in 2013 represent cover of 1,3 times. 1,2 to 1,5 times dividend cover. Capital expenditure estimated to be between R550 million and R650 million. Actual capital expenditure was R964 million. Capital expenditure estimated at R2,7 billion. Gross debt: EBITDA <3. Gross debt: EBITDA = 1,5. Gross debt: EBITDA <3. Sustainability reporting Expand the scope of some existing assured indicators to other countries in which we operate. Rwanda incorporated into group safety data. Ongoing improvement with assurance on non-financial indicators. Continue to improve disclosure on Zimbabwe report includes some additional information on Zimbabwe and Mozambique. Ongoing improvement with assurance on non-financial indicators. Stakeholder engagement Ensure further progress on formal stakeholder engagement systems cover all key stakeholders. Some improvement in formal stakeholder engagement systems during the year. Continue to improve stakeholder engagement. Effective PPC environmental stakeholder forums functioning at all South African sites, with at least quarterly stakeholder meetings. Stakeholder engagements continue to support site-specific programmes. Monitor and maintain forums. Risk Embed risk management in the organisation. Updated risk management policy approved and implemented. Ensure roll-out to territories into which we are expanding. Compliance Better compliance reports from unit compliance officers and improved web-based support on compliance issues. Renewed emphasis on IT governance with a steering committee that reports to the board s audit committee now in place Continue to enhance people development performance. Mining charter New five-year social and labour plan engagements were submitted to DMR in June New five-year social and labour plans finalised and all mining charter requirements fulfilled. R50 million commitment across five years for 10 PPC sites.

39 PPC Ltd 35 Section In 2012 we said we would Progress Target 2014 Our people Maintain current people development performance. Training accounts for 5,3% of total payroll spend (leviable payroll). Rolled out firstline management training as part of our Kambuku revitalisation initiative. Continue to enhance people development performance. Increase black female representation at management and technical levels. A 10% increase in black females employed in senior management, professional and skilled levels achieved in Continue to focus on a development of black females. Communities Ensure that all PPC s CSI spend is in line with our REAL philosophy. PPC spent R9,75 million on projects that changed people s lives and generated income. Identify additional projects that have the potential to be selfsustaining. Enterprise development Continue developing and mentoring viable black-owned businesses that have benefited from PPC Ntsika Fund s investment. The fund has invested R55 million in six black-owned businesses. PPC achieved 100% for enterprise development on dti s codes of good practice BBBEE scorecard. Greater emphasis on projects with increased potential to become sustainable going concerns. Preferential procurement Meet mining charter targets and dti codes of good practice. 89% or R4,65 billion (2012: R3,5 billion). For 2013, we met mining charter targets, except for contributions by multinationals. The DMR is formulating a model to implement multinationals 0,5% contribution to social development. Safety and health Zero fatalities LTIFR = 0 (long-term target). LTIFR = <0,18 (2013). One fatality 2013 LTIFR = 0,28. Zero fatalities LTIFR = 0 (long-term target) LTIFR = <0,15 (2014). Roll out PPC Alive! throughout organisation. PPC Alive! rolled out to a number of sites. Accelerate the momentum of PPC Alive! Environment Energy management systems to be rolled out to all PPC cement and lime operations by December Successfully implemented at De Hoek and Lime Acres. Continue to pursue renewable and alternative energy initiatives, eg wind farm and co-processing of tyres. Continue with assurance on scope 1 and 2 CO 2 emissions. Processes are maturing and emissions trend is downwards. Continued improvement. Upgrades to reduce environmental impacts of PPC operations. All completed upgrades delivering expected reductions in environmental impact. Support and monitor implementation of improvement projects to deliver environmental benefits for all projects and operations.

40 36 PPC Ltd Seven-year financial review Total assets (Rm) Net working capital (Rm) Total equity (Rm) Total borrowings (Rm) EBITDA interest cover (times) 6,2 6,2 Net debt to EBITDA (times) 1,2 1,4 Number of years to repay interest-bearing borrowings (years) 1,9 1,5 Revenue (Rm) Normalised EBITDA^ (Rm) Normalised EBITDA margin (%)^ 30,1 31,7 Effective taxation rate (%) 31,9 33,3 Normalised EPS (cents per share)^ Normalised HEPS (cents per share)^ Dividends per share (cents per share) Dividend cover (times) 1,3 1,3 Cash generated from operations (Rm) Cash conversion ratio 1,1 1,0 Dividends paid (Rm) Investment in property, plant and equipment and intangible assets (Rm) Investments in subsidiaries and equity accounted investments (Rm) Weighted average number of ordinary shares in issue during the year (000) Market capitalisation (Rm) ^ Calculated before the impact of BBBEE IFRS 2 charges, Zimbabwe indigenisation costs and restructuring costs.

41 PPC Ltd ,9 6,6 7,3 12,6 25,9 1,5 1,3 1,2 0,6 0,1 2,4 2,1 2,1 2,0 1, ,4 36,5 40,3 40,7 42,6 30,7 29,8 29,3 28,0 28, ,3 1,3 1,3 1,3 1, ,0 1,0 1,0 1,0 0,

42 38 PPC Ltd Operations review PPC Group Rm SA Rest of Africa SA Rest of Africa Revenue Employees PPC s revenue from South Africa has risen by 10% to R6,4 billion while revenue from operations outside South Africa has risen by an impressive 26% to R1,9 billion. Our cement operations, particularly those in Zimbabwe, have made a significant contribution to this growth. Cement PPC Cement not only has a proud and successful track record spanning over 120 years, but can also lay claim to being 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. 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 new SureRoad brand for exclusive use in road construction. Zimbabwe Surebuild, Unicem, a trusted 32.5N multipurpose cement, and PMC are distributed from the Bulawayo factory while OPC from South Africa is also available on request. 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. Mozambique PPC s 42.5N Surebuild is distributed as the Força brand and the 32.5N Obras product was introduced during Rwanda CIMERWA produces a 42.5N Portland Pozzolana Cement and a 32.5N Portland Composite Cement. Group Cement 2013 % 2012 Revenue (Rm) Normalised EBITDA* (Rm) EBITDA margin (%)* 32,0 33,4 Operating profit (Rm) Operating margin (%)* 25,6 26,9 Assets (Rm) * Calculated before the impact of BBBEE IFRS 2 charges, Zimbabwe indigenisation and restructuring costs. When looking at the cement division as a whole, revenues rose 16% to R7,2 billion. However, given rising costs, normalised operating profits have only increased 10% to R1,85 billion and cement s normalised EBITDA margin has contracted by 1% to end the financial year at 32%. South Africa Demand Cement industry sales volumes grew by 4,2% for the nine months 1 from October 2012 to June PPC s South African cement sales volumes for the financial year rose by 7%; a marked improvement from the 1% decline in volumes in the previous financial year. Strong volume growth was reported in the Gauteng and inland region, despite increased industrial action. A number of commercial property developments are under way in Gauteng, including the construction of Cradlestone Mall in the West Rand, new office buildings in Sandton and phase one of Steyn City near Lanseria. Strong volume growth in North West province reflects the construction of residential structures, retail complexes and some civil construction in the Colesberg area. Volumes in coastal regions also recorded growth, despite rising imports and a particularly wet winter season. Cement sales volumes in these regions have been boosted by growing demand from various wind-farm projects. 1 Due to Competition Commission requirements issued in March 2012, all South African cement sales volumes statistics can only be disseminated as a national, quarterly figure delayed by three months Gross fixed capital formation (% change) 2002/ / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / /02 Source: Reserve Bank

43 PPC Ltd 39 Imported cement volumes by port of entry tonnes Q1-11 Q2-11 Q3-11 Q4-11 Q1-12 Q2-12 Q3-12 Q4-12 Q1-13 Q2-13 Q3-13 Durban Port Elizabeth/East London Cape Town Source: South African Revenue Service Imported cement, which is not subject to import duties and is excluded from national statistics, accounted for an estimated 7,6% of national demand to June The bulk of imports continue to originate from Pakistan and enter mainly through the port of Durban as shown in the graph above. Inland markets remain protected by virtue of transport distances and associated logistics costs. The finance minister s recent medium-term budget policy statement paints a bleak picture of economic growth in South Africa. The ministry downgraded its 2013 growth forecast to 2,1%, rising to 3,0% in In the context of a constrained economy, industry cement sales volumes are estimated to grow between 3% and 5% in 2013 and Public and private-sector investments remain muted as growth in real gross fixed capital formation slowed to 4,1% in the first half of However, the treasury s 2014 forecast for gross fixed capital formation improved to 5%.The graph on the left shows that, over the last five years, investment growth has been unsatisfactory. The finance minister also highlighted that, under the oversight of the presidential infrastructure coordinating commission, the rate of public investment would gather momentum in 2014 and beyond. Three key projects due to begin soon include a new dam in the Eastern Cape, rehabilitation of the main roadway between the Eastern Cape and KwaZulu-Natal as well as a new coal-fired power station. Selling prices Rising imports and unsatisfactory capacity utilisation levels in the local cement industry have constrained growth in selling prices. We have retained our strategy of producing higher-quality, premium products and our sales efforts are focused on educating customers on the potential savings from using higher-quality cement. This value proposition has enabled our volumes to grow faster than industry averages. Customers Retailers are the country s largest customer segment, drawing over 60% of all cement sold. Other customer segments include cement blenders, concrete product manufacturers, ready-mix concrete suppliers and construction companies. By introducing key account managers for our major retail clients, we have improved responsiveness to customer needs and our ability to ensure customised solutions. Products Our 52.5N OPC and 42.5N Surebuild brands have set the standard for premium products in South Africa, while allowing our cement to be represented in the competitive 32.5N class through blenders and a retail private label. Our SureRoad product, launched at the end of last year specifically for the road-building market, has gained widespread acceptance and is now seen as the stabilising cement of choice among most road-builders and geotechnical engineers. Operations For the review period, costs of production rose by 6% for our South African cement operations. Favourable movements in the cost of coal, maintenance and packaging assisted in containing cost growth. The technical issue that reduced production output at our Dwaalboom factory has now been resolved. To produce most efficiently, the three mega-plant strategy has been adopted. This means we will prioritise the production of clinker at our most advanced and energy-efficient plants Dwaalboom, Slurry and De Hoek. This will allow us to compete effectively in the South African market. The impact of this has meant right-sizing our Riebeeck operation and deferring our plans to modernise it until market conditions justify the R1,3 billion investment required. The right-sizing process is under way and about 30 people will be affected. Zimbabwe Cement demand in Zimbabwe has continued to grow since the country adopted the US dollar in Regional sales volumes from our PPC Zimbabwe operation increased by double digits on last year, as did domestic sales volumes. The retail sector remains the key

44 40 PPC Ltd Operations review continued driver of local demand given limited expenditure on infrastructure. Our export initiatives are beginning to bear fruit and continue to assist in optimising our operations. Due to increased competitor activity in our main target market, marginal cement price increases were implemented for the period under review. Our operations performed well during the year, improving both output and quality of product manufactured. Increased output had a positive impact on the cost of production, and we expect further improvements from initiatives currently under way. The Colleen Bawn factory achieved 579 days without a lost-time injury, while the Bulawayo factory achieved 135 days. The company successfully implemented its indigenisation transaction and is fully compliant with local requirements. We have begun a voluntary separation process that will reduce the number of contractors and employees at our operations. This is aligned to our modernisation initiative and continued focus on efficiency and cost. The process is expected to be complete by the end of calendar The commissioning of our palletiser project remains on target, also set for the end of calendar Outlook We expect the Zimbabwe economy to face challenges in the short term, arising from growing liquidity problems, but anticipate further growth in local cement demand for the year ahead. There are a number of large projects under discussion at government level, primarily in the energy, water and transport sectors, and we remain positive about the long-term outlook for Zimbabwe. Botswana Although the Botswana economy has recorded real growth in the past two quarters, it remains heavily dependent on the diamond mining industry. As part of its response to recent international economic challenges, the Botswana government has scaled back on infrastructure projects and changed focus to maintaining existing infrastructure. This had an adverse impact on the construction industry, and therefore the cement and aggregates market. Privately funded developments in the new central business centre of Gaborone continue, with increased tender activity and the release of small- to medium-scale road projects in Gaborone and surrounding areas towards the end of our financial year. Cement Cement sales volumes contracted for the year, with reduced construction and industrial demand partly offset by increased demand in the highly competitive retail segment. PPC Botswana achieved an increase in average selling prices during the year. The pricing environment is, however, becoming increasingly competitive, with increased focus from South African competitors. Outlook The recovery of cement demand in Botswana will depend on the release of various infrastructure projects by government. The retail segment of our cement business will become increasingly competitive as new capacity in South Africa comes on line. Mozambique The Mozambique economy recorded another year of significant growth, driven primarily by the development of coal resources in Tete province and commercialisation of recent large discoveries of natural gas off the northern Mozambique coast. Cement demand continues to grow, with the majority of product imported as either cement or clinker from Pakistan, South Africa, China and the UAE. The southern region remains heavily contested, with new capacity commissioned and aggressive pricing from imported product. Given the logistical challenges after flood damage to the rail line between South Africa and Maputo, our export volumes into this market reduced for the year under review. In contrast, the supply of product into the Tete region of Mozambique from Zimbabwe has improved significantly from the previous year. The imminent completion of the bulk handling facility will further enhance efficiency. Outlook A number of major construction projects are either under way or due to begin in the near future, significantly in the northern region of Mozambique. PPC s quality-assured products and technical support capabilities are well suited to the contractor segment, which will be the future area of focus for our Mozambique operation. Rwanda After acquiring a 51% stake in CIMERWA in December 2012, PPC has been closely involved in optimising the current cement operation and construction of the new tpa plant. We were pleased with the improved performance of the existing operation, with its tpa capacity, and the positive contribution it has made to group EBITDA for The new project remains on track with commissioning expected during the final quarter of Outlook The regional cement demand outlook remains strong. With a significant operational performance improvement expected for 2014 and the strong CIMERWA brand, we are positive about the enhanced contribution CIMERWA will make in the next financial year. Production at the Gaborone milling operations improved significantly, with a record 850 injury-free days worked at the end of September. Initiatives to further improve operational efficiencies and input costs continue.

45 PPC Ltd 41 Lime 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 and the leading supplier of metallurgical-grade lime, burnt dolomite and related products in southern Africa. Lime products Unslaked lime, hydrated lime and limestone and burnt dolomite. Aggregates PPC Aggregates supplies quality construction aggregates to the civil construction sector and products for the chemical, metallurgical and agricultural industries. PPC has aggregate quarries in Gauteng (Mooiplaas and Laezonia) and in Botswana (Kgale, Selebi Phikwe, Mokolodi and Francistown). Aggregate products Concrete stone, road stone, crusher sand, river sand, building sand, plaster sand, natural base, sub-base, fill material, dolomite and agricultural lime % 2012 Revenue (Rm) 798 (5) 838 EBITDA (Rm) 162 (14) 188 EBITDA margin (%) 20,4 22,5 Operating profit (Rm) 126 (17) 151 Operating margin (%) 15,8 18,1 Assets (Rm) % 2012 Revenue (Rm) EBITDA (Rm) 46 (18) 56 EBITDA margin (%) 13,7 18,7 Operating profit (Rm) 25 (32) 37 Operating margin (%) 7,5 12,3 Assets (Rm) 283 (1) 285 PPC Lime s products are used in a number of 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, where it serves 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, lime is used to beneficiate copper ore, to make alumina and magnesia for use in aluminium and magnesium manufacture, to extract uranium, and to recover gold and silver was a difficult year for PPC Lime, with major customers encountering operational interruptions. This resulted in a drop in burnt product sales of 8% from last year, with limestone sales reduced by 15%. Revenue was affected by lower sales volumes and the unfavourable customer mix compared to last year. Despite volume pressures, variable cost of sales was contained to a 7% increase on a rand-per-tonne basis, and total fixed cost to a 2% increase. Plant and mining operations performed well during the year. Volumes recovered in the second half of the period, and are expected to improve slightly to Aggregates South Africa Sales volumes were flat for our South African operations. This was mainly due to lower metallurgical dolomite sales to steel manufacturers, caused by significant breakdowns, and slower sales of concrete stone and sand after the liquidation of some major customers in the ready-mix concrete and concrete product manufacturer (CPM) segments. The completion of a major road project and timing of new projects also affected sales of base coarse material. However, this was largely countered by increased sales to new ready-mix concrete customers and the onset of road projects late in the review period. Key new projects, which will primarily benefit the new financial year, include Steyn City and Mall of Africa ( m 3 of concrete supplied via our ready-mix customers) as well as two road construction sites in the area (over tonnes of base coarse material). Variable costs rose 16% from last year mainly due to high diesel, power and explosive increases as well as aboveinflation increases on labour and certain maintenance spares. Transport costs rose 25%, reflecting greater delivery volumes and distances travelled. The reduction of stock, specifically at Mooiplaas, benefited cash flow. Aggregates Botswana Despite achieving a 5% increase in total sales volume, our aggregates business in Botswana faced a challenging year. Operations were impacted by breakdowns, power constraints and reduced construction activity. This necessitated a complete restructuring of the business, which was completed during the review period. The consolidation of production locations will be completed by the end of calendar Demand increased towards the end of the financial year as supply to the Tonota road project began and small- to medium-scale road projects were released in Gaborone and surrounding areas.

46 42 PPC Ltd People review Safety and health We will work to create a safety environment at PPC in which all employees are actively caring for and committed to their own, and each other s, well-being (safety and health). We will drive a high level of compassion and encourage employees to raise safety concerns openly and honestly, without fear of retribution. Our behaviours and beliefs will demonstrate that safety is a core value on which we are not willing to compromise. Being safe is the PPC way of doing things around here. PPC Alive! Highlights PPC Alive! programme has generated some early successes, supported by leadership at all levels across the group A number of PPC sites have not recorded any losttime injuries Lowlights One fatality at Slurry in November lost-time injuries in this review period Outlook In the new financial year, the safety focus will be on accelerating the momentum of PPC Alive! to achieve our ultimate aim of returning every worker home safely each day Creating a sustainable culture of safety in PPC Safety is a core value in PPC and we continuously strive for excellent safety 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. In December 2011, following a review of our historical safety performance and extensive research to identify best practice, we rolled out an initiative focused on a zero-harm culture in PPC, known as PPC Alive!. The name embodies growth, empowerment, vitality, sustainability, wellness and many other concepts that support our vision. This beyond-zero culture means safety is always foremost in our team members minds. Safety is not a number that we use to achieve a target, normally the elusive zero; it is a way of life. At PPC we use Nomakanjani which literally translates to come what may and used in context means being safe is the way we do things around here. Safety is about the things we do all day, every day, in an ever-changing work environment. Our process focuses on our people becoming collectively mindful, and our mindset concentrates on the workplace with the assumption that equipment is unsafe and it is only the actions of people that can make this environment safe by being adaptable and flexible. Our PPC Alive! journey is about a proper safety culture, based on our safety values of care, respect, positive intent, reliability and empathy. PPC Alive! focuses mainly on the human aspects of safety which, for many years, have been largely misunderstood or ignored. We will maintain our safety systems and processes, but we recognise that to reach excellence in safety performance, we need to do things a little differently. PPC Alive! therefore focuses on entrenching the right behaviour by our people through engagement, empowerment and enactment into our safety strategy to improve our safety culture and performance. A significant change in our approach has been the recognition that our focus on safety in our operations can be improved. As such, PPC has approved a new blueprint that allows each factory to better focus on the safety function. This change was initiated at Sandton where, in the past, the group risk manager function included health and safety; the health and safety function has now been separated from other risk functions, and a group safety and health manager appointed. In addition, each operation will establish its risk, safety and health structures as part of the PPC Alive! rollout, but aligned to its specific activities. Occupational safety PPC recorded one fatality in the review period (2012: zero). The group lost-time injury frequency rate (LTIFR) increased from 0,23 in 2012 to 0,28 at 30 September This is still an improvement over our 2011 performance (0,34), despite adding new operations. PPC reported 18 lost-time injuries in 2013, compared to 14 in Our operations in Rwanda (both CIMERWA factory and project) are now included in our safety reporting statistics. As a Chamber of Mines member, PPC is a signatory to the tripartite agreement between government, labour and the mining companies to significantly improve safety performance. The key objective of this agreement is that every mine worker returns home unharmed every day. To achieve this milestone, several critical elements have been identified: Strengthening the industry s culture of health and safety by implementing the culture transformation framework Enhancing awareness among our people by training health and safety representatives Lessons from pockets of excellence and research adopting leading practices from the mining occupational safety and health (MOSH) learning hub and research findings from the Mine Health and Safety Council. Four adoption teams are driving these processes and, where applicable, PPC has representatives on these teams: Falls of ground Transportation and machinery Noise Dust All sites completed their mining charter scorecards and these were submitted to regional Department of Mineral Resources offices as required. Service providers have been sourced to train safety representatives on our operating sites to the standard required (MQA accredited, minimum two weeks) by the tripartite agreement.

47 PPC Ltd 43 PPC group key safety indicators Target 2 Target Actual Actual Number of fatalities Fatality frequency rate per hours worked ,02 0,001 Number of LTIs <10 < LTIFR per hours worked (12-month window*) 3 <0,15 <0,18 0,28 0,23 Days lost to LTIs < Significant administrative fines (number) Notes 1 Fatality frequency increased to 0,02 in November Target derived from individual site targets based on hours worked and specific performance criteria. 3 LTIFR includes one for CIMERWA (Rwanda), which was not included in target setting as it was established subsequent to the process. 4 PPC had three injuries which resulted in three months lost due to their nature. We also had three injuries which resulted in six months lost due to their severity. Commendably, several sites and departments recorded zero LTIs in the review period: Montague Gardens, George, De Hoek, Riebeeck, Port Elizabeth, Sandton (including Group Laboratory Services), Sales and Marketing. PPC group days off due to lost-time injuries October 2012 to September 2013 Days Males Females Total per region South Africa Botswana Mozambique Zimbabwe Rwanda Group All manufacturing sites remain certified to the OHSAS standard. Occupational health Under the mining charter reporting guidelines, PPC reports on HIV/AIDS and tuberculosis programmes, which are run by clinics at group factories. Tuberculosis (TB) Although TB is not common at PPC sites, it is treated as required according to national protocols. All PPC sites have reported zero TB cases except for: Riebeeck = 1 Lime Acres = 3 Colleen Bawn (Zimbabwe) = 1 HIV and AIDS HIV and AIDS are well managed in the group in line with the South African National Standard, SANS 16001:2007. We maintained our focus on access to antiretroviral medicines and other assistance to ensure continued employee wellness. At present, 156 employees are on the treatment programme. HIV/AIDS awareness and treatment programmes are well established. Prevalence levels are low in South Africa but higher at operations in Botswana (where the government provides treatment) and Zimbabwe (PPC provides counselling and antiretroviral drugs). Clinics provide voluntary counselling and testing (VCT) as part of annual medical examinations if employees elect. Some sites arranged VCT days as part of their ongoing management of the disease. Slurry has engaged the services of an NGO to conduct VCT monthly. Generally, current uptake at all sites is low as most PPC team members have undergone VCT a number of times in recent years; they know their status and therefore some do not attend further testing initiatives. Treatment support structures are in place for those living with HIV/AIDS. In Botswana, these initiatives are conducted by the state and treatment is supplied by state clinics. Various sites are involved with community initiatives on HIV and AIDS. At Lime Acres, clinic sisters assist with ongoing training for home-based caregivers and awareness programmes for truck drivers visiting the site.

48 44 PPC Ltd People review continued Safety and health Medical surveillance PPC s workforce undergoes annual medical examinations, including audiometric screening, lung function and vision testing, as well as primary healthcare examinations. No cases of silicosis were reported during the year. PPC reports according to revised requirements for noise-induced hearing loss (NIHL): If the hearing loss is between 5% and 10%, it is reported to the Department of Mineral Resources (DMR) If hearing loss is greater than 10%, it must be reported to the DMR and Workman s Compensation Commissioner (WCC) There were no new cases of NIHL in There were six identified instances of deterioration in hearing that were below the threshold. All factory clinics have been externally audited, with results confirming that the occupational health infrastructure and competency of occupational health personnel are of extremely high standard. Safety and health legal compliance Notices from authorities Number of visits by authorities MHS Act section 54 (notice to stop operation) 3 4 MHS Act section 55 (notice to take action) 5 5 OHS Act section 30 (notice to take action) 1 0 For the review period, PPC received nine notices (2012: nine) from the DMR and Department of Labour (DOL) on health and safety issues. Encouragingly, while there have been many visits, they have been more of an advisory nature, underscoring overall compliance by PPC operations. Section 54 notices These notices require a mine to halt operations in the identified section or activity, and to formulate a plan of action acceptable to the regional chief inspector before operations may resume: Slurry, November 2012 following fatality, all operations involving trackless mobile machinery (TMM) stopped Lime Acres, March 2013 tyre management and TMM operation (procedures to be followed in the event of engine failure, brake failure, steering loss) Laezonia, July 2013 missing guard on conveyor rectified same day Section 55 notices Five notices were received from the DMR and one from DOL, These require a mine or factory to formulate a plan of action acceptable to the regional chief inspector to comply with an identified deviation. These findings were cleared without significant interruption to operations and lessons were distributed throughout the business.

49 PPC Ltd 45 Workforce Highlights Extensive Kambuku revitalisation initiative Most senior employees voluntarily sacrificed their 2013 increase to lift salaries of employees earning less than R by R875 Minimum wage increased to R6 500 Extensive housing survey launched to address housing conditions for staff Programme to improve effectiveness of relationships between first-line managers and team members rolled out Fast-track talent initiative launched with 17 participants Representation of women in the workforce up from 18,5% in 2011 to 21,7% in 2013 Lowlights 48 employees retrenched at PPC s Quarries of Botswana Underpinning PPC s long history of success is a hard-working, committed and dedicated team of employees. Their determination continues to drive our progress towards creating a better life for all. Kambuku Our people are integral to maintaining the Kambuku philosophy (a Tsonga word meaning great tusker, referring to an elephant bull, whose characteristics of tenacity and loyalty sum up PPC s valuebased management philosophy). This PPC way of life creates a healthy, rewarding and satisfying working environment where everyone has the opportunity to contribute to our success, their own development, and to be recognised for excellence. Kambuku revitalisation In 2013, the CEO initiated a process to assess the effectiveness of our Kambuku employee value initiatives during which he and senior managers engaged in conversations across PPC. During these rounds of engagements, discussions were held with over employees across all levels and sites in PPC. The feedback was summarised for site-specific initiatives and group initiatives. Specific initiatives have been introduced to address high-level trends identified during the Kambuku revitalisation conversations, including: Disparity between the cost of living and salaries of lower-level employees Substandard housing and access to housing for some employees Effectiveness of first-line managers and team members Individual development plans and organisational climate initiatives Improving the perception of employees in terms of job satisfaction One of the outcomes from this process was that most senior managers elected to waive their 2013 salary increases in favour of redistribution among employees earning less than R per month. These employees received 6,5% annual wage increase and an additional R875 payment, resulting in a double-digit wage increase for PPC also raised its entry salary to R6 500 per month. I Care, PPC cares The ability to create and maintain an inspiring climate is essential to the Kambuku culture in PPC. Equally, to be cared for and listened to are essential elements of the PPC culture. A specific I Care, PPC cares drive was initiated to support the Kambuku revitalisation process. As part of this drive, a first-line manager development programme was designed to improve the effectiveness of interpersonal relationships.

50 46 PPC Ltd People review continued Workforce Empowering people Our Kambuku philosophy concentrates on maintaining a strong foundation to continuously grow and empower employees in support of PPC s REAL (relevant, empowered, actualised and lasting) transformation philosophy. As part of this approach, PPC announced the second phase of its BBBEE transaction in 2012, which 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 company s ownership in the hands of South African employees. Allied to this transaction, the PPC Masakhane Employee Share Trust was created to allow all eligible employees to become shareholders of PPC. During a roadshow earlier this year, employees received allocation letters confirming their participation in the trust. Creating lasting value for our people The processes and principles of Kambuku have helped PPC develop a world-class operation, founded on passion, commitment, innovation and teamwork. As part of this process, our organisational performance model sets the benchmark for internal standards, systems and processes that facilitate employee engagement and participation. The effectiveness of each element in the model is measured annually. The vital elements of a performing organisation Clear purpose Vision strategy Communication Understood Journey maps Alignment Value drivers, structure job model Purpose Scorecard Competencies Inspiring climate Fairness, order, rules of the game Communication, information, influence Management style Recognition Code of conduct Effective HR administration Safety and environment Transformation Invocom Communication Reviewing progress Stretching targets Solving problems Education Learning for growth Career development Skills development Succession planning NQF alignment Performance improvement Organisational/individual Role and function clarity Accountability scorecards, targets and action plans Performance measurement Performance review: Recognition Action plans for underperformance Continuous performance improvement CREATE ENERGY STRUCTURE/HARNESS ENERGY DIRECT/FOCUS ENERGY RELEASE ENERGY/REWARD

51 PPC Ltd 47 Employee participation and engagement A fundamental principle of the Kambuku process is that 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: Key leader summits: Regular team meetings at plant or site level and across the company involve all appointed, elected and informal leaders. The aim is to inform employees about plant, site or corporate office 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. Invocoms: Daily structured team-based discussions at shop-floor level, weekly at sectional supervisory level, and monthly at departmental level. There are 365 active and effective Invocoms operating across PPC. Importantly, the group average for Invocom team forums has been maintained at a healthy level of above four on a five-scale standard and the organisational benchmark standards at above three on a fourscale standard. Through these Invocom engagement 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 Invocoms. Plant and site-level Invocoms are designed to spread communication both upwards and downwards through the company to: Facilitate transparent problem resolution and employee participation Regularly encourage teams to stretch outputs and targets by reviewing and assessing their performance Capture innovations and suggestions to enhance cost savings, process improvement, efficiency and safety Communicate positive recognition Capture best practices on a centralised database Manage the PPC climate through the adherence of team members to the company code of conduct Talent management Succession planning is an integral part of our talent management strategy, ensuring that competent people are continuously available to assume key positions in PPC. In line with this, succession planning discussions are held biannually at group and site levels, and development plans include mentorship and coaching. The strategy is closely aligned to PPC s employment equity targets and plans, and emphasises key technical skills an industry-wide challenge. Recognition A critical part of our Kambuku process is recognising PPC team members who go beyond the call of duty. The pinnacle of our recognition programme is the annual PPC CEO Diamond Awards a gala event for our identified top performers, PPC s executive team and senior managers. Diamond award categories Safety Newcomer of the year Rising star Customer service excellence Business support Excellence in production Leadership Jeremy Nichols Boitumelo Mnisi Clive Moses Andre Farrell Andrea Meyer Hannes Swart Adriaan Stander Risk manager: Jupiter Process engineer: Slurry Mechanical foreman: Jupiter Sales consultant: Gauteng Digital PR specialist: MG/Sandton Technician: Saldanha Production manager: Dwaalboom 2013 category winners

52 48 PPC Ltd People review continued Workforce Balanced workforce PPC s total workforce for 2013 is compared to in The workforce numbers for South Africa increased by seven, while those for Botswana dropped by 41 mainly due to the restructuring of Quarries of Botswana, and Zimbabwe numbers decreased by six. We now include nine employees in Mozambique and 138 employees at CIMERWA in Rwanda in the total workforce. Workforce analysis: South Africa* Employment African Coloured Indian White SA national Foreign Grand equity levels** Female Male Total Female Male Total Female Male Total Female Male Total Female Male Total Female Male total Top management (CEO) Senior management Professional Skilled Semi-skilled Learners Total permanent Learners Fixed-term contractors Total fixed-term contractors Grand total * September ** Levels as defined by the Employment Equity Act. Workforce analysis: Botswana* SA Botswana nationals nationals Female Male Male Total Professional Skilled Semi-skilled Total permanent Fixed-term contractors Total fixed-term contractors Grand total * September Workforce analysis: Zimbabwe* Female Male Total Senior management Middle management Junior management Skilled Unskilled and semi-skilled Learners Total permanent Fixed-term contractors Grand total * September 2013.

53 PPC Ltd 49 Workforce demographics PPC s workforce is well balanced by age. Young and upcoming talent represents over 19% of the workforce while the age group normally associated with greater career stability represents 59%. The risk of losing intellectual capital and institutional experience is also manageable, with only 22% of our employees aged 50 and above. Employees for South Africa and Botswana per gender, age group and race Age group African % Female Coloured % Indian % White % Female total % African % Coloured % Male Indian % White % Male total % Grand total % ,9 63,1 77,8 60,5 60,0 56,8 67,1 80,0 53,3 58,6 58,9 Over 50 4,4 7,8 3,7 29,0 10,8 25,3 11,0 10,0 39,1 24,8 21,8 Under 30 38,7 29,1 18,5 10,5 29,2 17,9 21,9 10,0 7,7 16,6 19,3 As noted in prior reports, PPC continues to increase the range of data being externally assured in terms of GRI. We have not yet included Zimbabwe or Mozambique in the scope of externally assured data. Workforce turnover The annual turnover rate (calculated as per GRI methods) for 2013 is 8,5% in South Africa, 37,2% in Botswana and 9,4% in Zimbabwe. We have recorded a pleasing decline in the labour turnover rate in South Africa compared to This reflects a number of factors such as the slowdown in the economy and its effect on labour supply and demand. The benefit of the Kambuku revitalisation initiative is also evident in lower turnover, as well as the decrease in our absenteeism rate from 2,3% in 2012 to 1,9% in Total turnover Age group Female % Botswana Male % Botswana total % Region Grand total South Africa Female % Male % SA total % ,8 28,7 28,6 6,7 6,4 6,5 8,2 11,1 Over 50 16,7 88,0 74,2 9,8 8,8 8,9 12,7 15,4 Under 30 16,7 33,3 28,6 14,2 13,7 13,9 14,5 18,7 Grand total 23,3 40,3 37,2 9,2 8,3 8,5 10,4 13,7 1 October to 30 September against total workforce at year-end. Permanent employee turnover Age group Female % Botswana Male % 2013 % Region Grand total South Africa Total % Female % ,2 27,2 26,4 6,8 4,8 5,2 6,9 9,2 Over 50 16,7 91,3 75,9 8,0 6,4 6,5 10,3 12,2 Under 30 16,7 38,5 31,6 7,1 7,0 7,0 8,2 10,5 Grand total 20,0 39,8 36,1 7,0 5,5 5,9 7,9 10,2 1 October to 30 September against permanent workforce at year-end. Turnover of permanent employees is less than total workforce turnover as the influence of fixed-term employees is removed. The South African turnover number excluding these fixed-term employees is 5,9%. As 48 people were retrenched in Quarries of Botswana, turnover increased. New employee turnover* Age group Female % Botswana Male % Male % Total % 2013 % Region Grand total South Africa Total % Female % ,6 0,0 0,9 0,0 1,3 1,0 1,0 1,1 Over 50 0,0 0,0 0,0 2,0 1,8 1,8 1,7 1,7 Under 30 0,0 0,0 0,0 4,1 4,2 4,2 4,0 4,2 Grand total 3,3 0,0 0,6 1,4 1,9 1,8 1,7 1,9 1 October to 30 September against total workforce at year-end. * Employees who left within one year of joining. Male % Total % 2013 % 2012 % 2012 % 2012 %

54 50 PPC Ltd People review continued Workforce Absenteeism rate per region Region 2013 % Female Male Total Botswana 1,85 1,2 1,24 1,1 1,35 1,1 South Africa 1,97 2,5 1,95 2,4 1,95 2,4 Total (including sick leave) 1,96 2,4 1,90 2,3 1,91 2,3 Labour relations In South Africa, 33% of employees are recognised as members of a trade union, 48% in Botswana and 74% in Zimbabwe. PPC acknowledges freedom of association and relevant agreements between the company and various unions are in place. People development The principle of learning for growth and our Kambuku philosophy underpin our sustainability. 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. Employment equity category Training hours Employees Average training hours per level Top management 9,00 1 9,00 Senior management 894, ,87 Professional 9 914, ,90 Skilled , ,68 Semi-skilled , ,14 Learners , ,35 Total , , % 2013 % 2012 % 2013 % 2012 % Investment in training (RSA only) (R000) Male R000 Skills spend 2013 African Coloured Indian White Female R000 Male R000 Female R000 Male R000 Female R000 Male R000 Female R In 2013, PPC spent R44,3 million or 5,29% of payroll (ie leviable amount) on skills development for employees. Around 81% of this was spent on previously disadvantaged employees. Through the PPC academies, we are sustaining skills and remaining globally competitive. PPC operations academy The PPC operations academy has turned out many successful graduates since its inception in We have 20 learners currently in the programme. This academy offers the further education and training certificate in carbonate materials manufacturing process on NQF level 4. PPC is the only cement manufacturing company offering this programme, which is accredited by the Mining Qualifications Authority (MQA) and registered with the South African Qualifications Authority (SAQA). PPC mining academy To date, 41 learners have joined this academy, and we currently have 11 learners at various stages of completing the NQF level 3 qualification of rock-breaking: opencast quarrying qualification which is aligned with new explosives regulations. Two qualified in the review period. PPC bridging programme The accredited bridging skills programme helps learners obtain the relevant entry requirements for the various academy programmes. To date, 89 learners have successfully completed the skills programme, with 28 current learners.

55 PPC Ltd 51 PPC leadership academy The PPC leadership academy s third successful intake of 19 senior managers finished their final block in September The aim of this academy is to develop the ideal balance of leadership and management skills to produce globally competitive leaders who can meet our business requirements. PPC academies Programme African Coloured Indian White M F M F M F M F Total Total graduated Operations academy Mining academy Bridging skills programme Leadership Any discrepancies between the sum of current and graduated and total column reflect a change of role or employees who have left the company. PPC technical skills academy (TSA) The PPC technical skills academy 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 MQA accreditation and ISO 9001:2008 certification during the review period. Since 2002, TSA has successfully trained 198 engineering learners. Engineering learnership programme African Coloured Indian White M F M F M F M F Total Total graduated Electrical Fitter and turner Plater welder Diesel mechanic Total Graduate development programme As the PPC graduate development programme enters its sixth year, it has integrated 13 graduates successfully into the business, with 12 currently on the programme. In 2014, six new graduates will enter the programme. Programme African Coloured Indian White M F M F M F M F Total Total graduated Graduate development programme Any discrepancies between the sum of current and graduated and total column reflect a change of role or employees who have left the company. Entrenching customer service In addition to the sales and marketing academy, PPC launched a major customer service training initiative in 2012, known as PPC School of Magic building people, delivering customer value and creating magic. The intention of this ongoing initiative is to develop people with relevant skills, build custodians of the PPC brand, and develop a culture across PPC that is customer focused. We understand that customer service depends on our people, so delivering customer value implicitly supports PPC s sustainability and a better life for all our stakeholders. During the review period, the PPC School of Magic delivered a series of workshops comprising essential negotiation skills, customer relationship management and the personal leadership paradox. These sessions were attended by 110 people from across sales and operations.

56 52 PPC Ltd People review continued Workforce Iziko Talent Iziko is part of an integrated talent management process, aimed at attracting, developing, empowering and retaining talent in PPC. An elite group of talented people has been selected to be part of Iziko Talent, giving this group an exciting opportunity to expand and develop in the company. Iziko Talent will be the vehicle to transfer knowledge and tradition to ensure continuity in PPC, focusing on the unique developmental needs of each candidate to achieve specific objectives: Develop managerial and PPC-relevant technical and specialist competencies Facilitate the transition to a senior management or specialist role Develop a unique and structured career pathway for each individual, culminating in a specific outcome that will realise their potential Provide tailored learning intervention that supports their growth Expose them to the implementation of strategic projects throughout PPC Assign a variety of coaches to guide them through this integrated developmental phase on the path to their future Roleplayers in this process will include the candidates, their managers and the assigned functional and executive coaches. Currently, 17 succession candidates are enrolled on this initiative. Case study Building knowledge: research and development at tertiary institutions PPC is committed to supporting higher learning, skills development and research and development in the fields of construction and building materials. This year we committed partnerships and funding with a number of universities and related activities: Concrete Materials and Structural Integrity Research Unit at the University of Cape Town. The three-year Technology and Human Resources for Industry Programme (THRIP) funding includes postgraduate bursary awards. A three-year THRIP partnership was also established with the Centre for Development of Sustainable Infrastructure at the University of Stellenbosch, which trains and develops postgraduate engineers, and performs high-level research. A joint research programme on self-compacting concrete was initiated with the Cape Peninsula University of Technology in the form of postgraduate scholarships and research grants. PPC s concrete-testing laboratory facilities at Montague Gardens are also used by research students. PPC also supports the civil engineering faculty at the University of Johannesburg. The University of Pretoria recently completed its new engineering building, using cement sponsored by PPC, and we sponsored a number of activities at Nelson Mandela Metropolitan University. PPC sponsored the seventh Built Environment Conference hosted by the Association of Schools of Construction of Southern Africa, and held in association with the International Council for Research and Innovation in Building and Construction. We also sponsored the publication of free copies of an issue of the Journal of Construction. In addition to financial assistance, PPC s technical team delivered lectures to postgraduate students at UCT and conducted workshops in concrete application to various faculties in design, construction and fine arts. We also donated cement to universities for R&D projects. PPC s group chief chemist co-presented a course in modern X-ray fluorescence spectrometry at the University of Western Ontario in Canada.

57 PPC Ltd 53 Social review Empowered ownership Highlights An effective 26% black ownership of South African operations in line with the mining charter requirements Over 26 million shares issued to employees under the PPC Masakhane Employee Share Trust Over R33 million in dividends paid to employee share owners Some P paid to Botswana share scheme members PPC s level 2 BBBEE rating maintained Challenges Maintain level 2 BBBEE rating against the new targets of the gazetted Revised Codes of Good Practice in 2014/2015 PPC continues on its journey to advance broad-based black economic empowerment (BBBEE) in South Africa, understanding the importance of meaningful mainstream economic participation by black people in meeting the country s socio-economic objectives. After our initial R2,7 billion BBBEE transaction five years ago, the R1,1 billion second phase was introduced in October Black beneficiaries in broad-based shareholder groupings, including employees and communities, now hold an effective 26% of PPC s South African operations, meeting mining charter requirements in advance of the 2014 target. During the period, we continued to engage with national and provincial government departments to align our broad-based socio-economic transformation objectives with theirs. Progress is guided by our REAL (relevant, empowering, actualised and lasting) transformation philosophy, the heart of all our social performance initiatives. PPC external broad-based trusts The PPC Education 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 muchneeded initiative. This trust also ensured the successful completion of the artisan programme, with some graduating learners employed in the group while others were employed in other sectors. Ongoing training projects for beneficiaries linked to the PPC Construction Industry Associations Trust have seen around beneficiaries participating in accredited training initiatives since inception. The PPC Community Trust completed its food gardens for the Atteridgeville community near Pretoria and the Madibeng community in North West province. These communities have committed to the maintenance and sustainability of these projects for their future food security. PPC internal staff trusts The PPC Team Benefit Trust (Registration number IT 1036/08) Launched in June 2009, the initial focus of this trust was on the identified need for financial literacy among shop-floor employees. In the review period, the trust focused on estate planning and the importance of having a will, with group workshops across the business being well received by employees. Since launching our internal BEE1 staff trusts, some existing staff beneficiaries have received R28,3 million in dividends. The Current and Future PPC Team Trust and the PPC Mkhulu Trust are conducting roadshows for all beneficiaries as shares vest in the beneficiaries names at the end of this year. Beneficiaries are being taken through the various options available to them. The Black Managers Trust is currently 61% allocated, with 6,3 million shares passed on to beneficiaries. Dividends of R85 million were paid to the trust s loan funders on behalf of the remaining 145 beneficiaries. Since launching our internal BEE2 staff trust, the PPC Masakhane Employee Share Trust, existing staff beneficiaries have received R4,8 million in dividends in year one. 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 BEE2 structure, is being operationalised and trustee appointments finalised. The mandate of this trust 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 the areas in which PPC operates. It also aims to assist in their development and empowerment and to further broad-based black economic empowerment in line with the spirit and purpose of the BEE Act, the mining charter and the codes. PPC Botswana share scheme The staff scheme (Sesigo) for permanent team members of PPC Botswana and Kgale Quarries was introduced two years ago. Under the Sesigo 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.

58 54 PPC Ltd Social review continued Socio-economic development Highlights Atteridgeville construction sector incubator completed Diepsloot water buy-back centre completed Community centre being constructed in Lutzville Upgrade of overloaded Riebeeck Valley waste water treatment works under way R5,9 million spent on projects in 2013 Challenges Completing our targeted social and labour plan projects by 2012 Funding projects in a protracted construction sector downturn Outlook Under new social and labour plans (2013 to 2017), R1 million per annum committed to socio-economic development projects for each PPC mining operation Social and labour plan projects In 2012, PPC completed a five-year cycle of social and labour plans in which we committed to investing R60 million over that period on local economic development (LED) projects in our communities. This involved 10 separate social and labour plans covering 28 projects in 12 communities, and partnering with municipalities in six provinces across the country. By the end of the period, we had spent R38 million of the planned R60 million (please refer to the five-year summary). Social and labour plans are in addition to the group s own corporate social investment (CSI) projects. PPC continues to engage with all its communities in identifying and implementing sustainable projects. Our community investment areas remain focused on infrastructure development, poverty alleviation and job-creation projects. Key social and labour plan projects during the year are summarised below: Atteridgeville construction incubator completed To date, PPC has invested over R5 million in developing a construction incubator in the Tshwane (Pretoria) municipal area of Atteridgeville. The incubator is aimed at improving the capacity of small-scale entrepreneurs through a dedicated training and capacity-building programme to improve competitiveness in the construction industry. Stakeholders include the City of Tshwane and the SEDA Construction incubator. Business incubation has become one of the most viable mechanisms to develop previously disadvantaged small to medium enterprises in South Africa, and all stakeholders agree it is important for government to include private-sector partnerships, as this will underpin success. In the review period, 32 emerging contractors were selected for a three-year training and mentorship initiative to improve their CIDB* grading by at least one level each year above their entry point on the national contractor development programme. Training includes the technical contractor development framework and business administration skills. The primary aim is to improve the capacity of emerging contractors to operate viable and competitive construction businesses. The incubator has employed a full-time receptionist and a business development officer and is filling the branch mentor position. A full-time security company has also been deployed to the centre. The programme started on 1 October, and PPC will officially hand over the centre in November 2013 and exit the project. * The Construction Industry Development Board is mandated by the government of South Africa to promote a regulatory and developmental framework that builds a local construction industry that delivers to globally competitive standards and is capable of supporting the country s social and economic growth. Diepsloot waste buy-back centre completed Diepsloot is a densely populated Gauteng community, with over households in formal and informal settlements. PPC Laezonia s quarry is some 6 km from Diepsloot and sources labour mainly from that community. After the City of Johannesburg identified a serious shortage of waste management facilities in this community, a proposal to sustainably manage daily waste resulted in a buy-back centre that would address an inherent need in the community to turn waste into wealth. PPC Cement invested R3 million towards design, construction and operational equipment for the centre, while regional authorities will be responsible for its management and operation through a sub-contractor. The construction project was completed in July 2012, creating 60 temporary jobs, and the official handover was in November A local NGO was selected to run the centre, which currently employs seven local community members permanently. It also assists around 100 members of the community to generate income by collecting and selling waste materials to the centre. Lutzville community centre in progress In line with the mining right for PPC s Van Rhynsdorp Gypsum mine, which was granted in June 2012, PPC has committed R to support the socio-economic development plan of the Matzikama Municipality in Vredendal. PPC will participate in this collaborative project with the local municipality and businesses in the area. The project entails building Thusong Centre, a multi-purpose resource centre, in Lutzville, to address the dire need of local communities to have a variety of services on one premises. Apart from addressing community needs, the project is directly aligned with some of the desired national outcomes adopted by government in 2010.

59 PPC Ltd 55 Near Vredendal and Van Rhynsdorp in the Western Cape, the Lutzville community is a source of labour for PPC s Van Rhynsdorp operation. Construction began in July 2013 and is expected to be complete in December 2013, benefiting a population of over Swartland waste water treatment works in progress Following a request from the Swartland Municipality, PPC Riebeeck is assisting with the upgrade of the overloaded Riebeeck Valley waste water treatment works, which will benefit a sizeable community. PPC will contribute R5 million over three years, starting in October Five-year summary 2008 to jobs 130 jobs 116 jobs 116 jobs 100 jobs Social and labour plan spent and jobs created (R000) North West Limpopo 560 Gauteng Western Cape Northern Cape Eastern Cape Project and province Province Jobs created Total spent 2008 Rm 2009 Rm 2010 Rm 2011 Rm 2012 Rm Ottoshoop Clinic North West Ramokoka Primary School North West Kgatelopele SMME Centre North West Bakgatla Ba Kgafela Feedlot Limpopo Diepsloot Multi-Purpose Centre Gauteng province Centre Gauteng province Atteridgeville Construction Incubator Gauteng province Wittewater Water Project Western Cape De Hoek Invader Tree Eradication Western Cape Steynville Primary Grade R Rooms Western Cape Riebeeck Wielie Walie Crèche Western Cape Riebeeck West Primary Grade R Rooms Western Cape Riebeeck Meiring Primary Grade R Rooms Western Cape Swartland (POP) Youth Centre Western Cape Kgatelopele Electrification (287) Northern Cape Kgatelopele Paving of Roads Northern Cape Motherwell Small Business Development Centre Eastern Cape Klipplat Ostrich Farm Eastern Cape Willowmore Skills Development Centre Eastern Cape Totals Lessons learned in the first five-year cycle Important lessons were learned in our first cycle of social and labour plans. Some projects were not completed while others had to be abandoned in the face of challenges outside our control including: Unavailability of land for development Community disagreements Shifting priorities of municipalities Lack of municipal capacity Outlook Our focus on socio-economic development remains aligned with the Millennium Development Goals while caring for the communities and environment in which we operate. Consultations are under way for the finalisation and approval of our new five-year social and labour plans (2013 to 2017) which will include a contribution of R1 million a year for each PPC mining operation to socio-economic development projects. In addition, some of our mining operations face significant challenges due to the prolonged and severe downturn in the building and construction industry. This constrains their ability to fund socio-economic development, which is a predetermined percentage of profits.

60 56 PPC Ltd Social review continued Enterprise development The PPC Ntsika Fund (Pty) Limited (PPC Ntsika) was established in 2008 as a formal vehicle for financial support and active mentorship to black-owned enterprises. It is PPC s enterprise development fund. To date, the PPC Ntsika board has invested R55 million in six black-owned businesses. Given the entrepreneurial nature of these initiatives, and the current economic environment, it is not unexpected that some of these initiatives are struggling. PPC Ntsika is, however, focused on ensuring long-term success where possible through financial support and mentorship. The investment portfolio is summarised below: Afripack (Pty) Limited Afripack manufactures and supplies flexible packaging solutions to the industrial and fast-moving consumer goods (FMCG) markets. Highlights: To date, Ntsika has invested R42 million to expand the business base Challenges: The business has made some losses, which management believes are temporary. The Cape plant was closed down, resulting in exceptional costs of some R15 million, in addition to fairly significant unrealised forex losses on rand devaluation, and higher interest costs due to capex and the Polisak acquisition Market conditions are difficult in terms of recovering significant cost movements, as well as depressed volumes in certain businesses In terms of loan repayments and interest, PPC Ntsika has no concerns about Afripack meeting these commitments as the interest liability is already being serviced Outlook: In terms of the new Codes of Good Practice gazetted on 11 October 2013, Afripack will no longer qualify towards PPC s enterprise development points, as its turnover is above the qualifying threshold Metlakgola Construction & Development (Pty) Limited Metlakgola is active in the construction and sale of residential property. Highlights: The PPC Ntsika board initially invested R2,1 million for the purchase and development of 23 plots into residential housing units in Soweto Challenges: Due to a number of legal and operational difficulties, only six stands were developed and only four were sold. Consequently, the Ntsika loan has been impaired by R1,3 million Outlook: PPC Ntsika is obtaining transfer of the remaining five properties that have yet to be developed or sold, in lieu of the outstanding debt Rhulanani Concrete Mixers (Pty) Limited Rhulanani is a ready-mix concrete business operating in Lephalale, Limpopo. Highlights: PPC Ntsika has invested R5,9 million to supplement the owners investment of R3,9 million Challenges: Due to a number of operational challenges, this project is under review Outlook: PPC Ntsika is selling its 40% PPC stake to a larger player in the same market that will be able to inject further working capital and operational management

61 PPC Ltd 57 Olegra Oil (Pty) Limited Olegra collects used oil from surrounding mining operations and operates a filling station, fitment centre and a guest house in Lime Acres village. Used oil is sold to PPC Lime as environmentally friendly fuel for its kilns. Highlights: PPC Ntsika invested R5,75 million into this business Loan repayments of R4,4 million have been made and the project is on track to repay its loan in full in 2014 The members of the black employees share trust, which owns 51% of Olegra shares, will receive their first dividend in 2014 Challenges: Managing succession planning Outlook: Plans are in place to expand the used oil collection business beyond PPC Lime and explore other related businesses to diversify the client base and increase profitability First Gas LPG and Fossil Fuel Distribution (Pty) Limited First Gas is currently distributing liquid petroleum (LP) gas, diesel and paraffin from a site in Germiston, Gauteng. Highlights: PPC Ntsika has invested R2,9 million in this business to buy plant, equipment and stock for the supply of LP gas and paraffin Challenges: Sales are low and the market extremely competitive, with illegal operators undercutting prices The business has not reached break-even and is struggling to generate cash flow Due to a number of operational challenges, the total loan was impaired Outlook: PPC Ntsika must decide whether it will provide additional financial support to this business as it is currently struggling to pay liabilities as they fall due Modise Woodworks and Projects cc Modise supplies cut-to-size laminated chipboard and accessories to the residential housing market in Soshanguve. Highlights: PPC Ntsika has invested R1,4 million in Modise The business currently employs nine individuals from the surrounding community Challenges: The company is currently trading close to break-even and the loan is repayable in March 2014 Outlook: Modise has expanded its business to include installing fitted cupboards and has won a major contract to supply these to a housing project This loan repayment is currently under review as there are no realistic prospects that Modise will be able to repay the loan in March 2014 Loerie Community Trading (Pty) Limited Loerie acquired the property of a rehabilitated lime quarry in Port Elizabeth, previously operated by PPC, and converted the buildings into a 100-bed residential facility. Highlights: PPC Ntsika invested R2,4 million in this project and the loan was fully repaid during this financial year

62 58 PPC Ltd Social review continued Preferential procurement PPC supports preferential procurement as a driver for economic transformation and broad-based black economic empowerment (BBBEE). We are committed to working with our existing suppliers to transform their companies and their own suppliers, as well as sourcing products and services from new suppliers that embody the principles of transformation. For the review period, total measured spend was R4,65 billion (2012: R3,5 billion) of which 89% (R4,1 billion) was BEE-recognised spend in terms of the dti Codes of good practice. PPC has consistently met the compliance target of 70%. In terms of preferential spend against the mining charter, we met or exceeded all targets, except for multinational contributions. The DMR is formulating a model to implement multinationals 0,5% contribution to social development. Spend category 2014 target % 2013 target % 2013 actual % 2012 actual % Capital goods Consumable goods Services Preferential procurement in 2014 In terms of the recently gazetted Codes of Good Practice, our strategy will be to transact with suppliers categorised as exempted micro enterprises (EMEs) and qualifying small enterprises (QSEs) that are over 51% black-owned and over 30% black womenowned. Suppliers that do not meet this minimum requirement will be considered on an exceptional basis and equally be encouraged to improve on their transformation agenda, particularly ownership. Supplier engagement To ensure continuity in delivery, pricing and quality throughout the value chain, PPC s procurement department will periodically evaluate the performance of the supply base in terms of progress in implementing their transformation programmes. Aspirant new suppliers will 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 In addition, walk-in facilities to cater for online registration will be available at the various operations to assist potential suppliers who do not have remote access Enterprise and supplier development PPC views enterprise and supplier development as an integral part of developing and fostering SMME (small, medium and micro enterprise) development in South Africa. We are an integral part of the national agenda to promote SMME sustainability, poverty reduction, employment creation and shared economic growth. We seek to migrate procurement from non-transformed companies and bring new participants into mainstream procurement opportunities without relinquishing our established value-formoney principles. Case study Empowerment: all rise In May 2013, the Forest Town School s bakery, confectionery and IT technology training centre was inaugurated. The Johannesburg centre, funded by PPC, provides accredited work-based training in a fully functional business facility for youth with complex disabilities between ages 16 and 22. The unemployment rate for people with disabilities remains high nearly double the rate of people without disabilities and it is crucial to reverse this trend. PPC s initiative, in partnership with the Department for Women, Children and People with Disabilities, will ensure that people with disabilities are better prepared to contribute to the growth of the country s economy. Expanding on the commercial bakery installed by PPC in 2009, the training centre now includes six confectionery workstations and a refurbished IT workshop. The bakery is accredited by LIS Hospitality College and its products are sold to the public. The confectionery stations are also used for public functions and open days. Last year, PPC also invested in a unique server at the Forest Town School, called Breadbin, which provides the materials needed for education, therapy and training, as well as learner projects through a customised and flexible kiosk-style touch-screen interface. Forest Town School was the first school for children with disabilities in the country, established in In 2006, the school opened the work experience programme (WEP) to help 18-year-old school leavers find employment. Given the nature of their disabilities, more support and training time was required to practise their skills. So, in 2009, Forest Town opened the post-school training centre where trainees could stay until they turn 22. Young people with mild mental disabilities, combined with physical challenges, are among the most marginalised members of our society, because they require some adaptations and more support during their training period. The work experience programme has devised modified accreditation while giving them time to mature and specialise in their chosen skills, making the transition to the workplace much more successful and sustainable. PPC s partnership with Forest Town started in 2007, as part of our upliftment programmes that aim to contribute towards creating thriving and sustainable communities.

63 PPC Ltd 59 Corporate social investment hallmark). These are sold to the public, with PPC and universities as the main customers. To date, over bags have been sold, generating much-needed income for the centre. Highlights Significant increase in CSI expenditure CSI strategy finalised for Botswana and Zimbabwe operations Two income-generating projects implemented in the last two years now showing profits Challenges Identifying appropriate projects that have the potential to become self-sustaining The socio-economic development mandate is a constant indicator against which PPC invests in its communities as well as in projects aligned with its philosophy of sustainability. The BBBEE Codes, the mining charter in South Africa, and the international Millennium Development Goals act as broad guidelines for social development. However, we strive to go beyond compliance with these protocols by boosting grassroots innovation and social upliftment. We believe financial independence must be the ultimate goal for all beneficiaries and, as such, we invest over three to five-year terms with a strong focus on education and developing skills that support sustainability. During the year, PPC spent over R9,75 million (FY12: R7,4 million) on various socio-economic development projects in South Africa, Botswana and Zimbabwe. Total expenditure by developmental areas Job creation 27% Education 49% Community training 7% Infrastructure 8% Welfare 6% Arts and culture 3% Other sport 1% We summarise some of our long-running projects and new initiatives below. Long-running projects Time for Change Time for Change a home for abandoned, orphaned, vulnerable children, abused women and youth who have lived on the streets continues to develop innovative ways for residents to generate income. Beyond sewing and baking, the centre has introduced a small business making shopping bags from old PPC cement bags, lined with shweshwe (indigo cloth that has become a South African Forest Town School for Children with Disabilities Rise Bakery, confectionery centre and the Breadbin In 2006, the school established a dedicated training centre to offer its students work experience. PPC realised the potential of this programme and funded a fully fledged bakery in The success of the accredited bakery training has seen the range of products extended and marketed to the public. Post-school students become supervisors and are involved with training each new intake of 16-year-old learners. Known as Rise Bakery, students have made great progress, which has led to the second phase of training. In 2013, PPC provided funding to extend training to confectionery, with six individual workstations built and fully operational by May In addition, PPC funded the extension of the IT training centre workshop. During the period, PPC also invested in a unique server, called Breadbin, a touch-screen system that provides all the materials needed for education, therapy and training, as well as learner projects and other resources. A post-school learnership student was trained to operate this system for the school and the work experience programme. The Love of Christ Ministries (TLC) The poultry-farming initiative at TLC a home for abandoned babies is generating income to supplement the centre s running expenses. In 2013, PPC funded an upgrade for the poultry facility, which will increase capacity and maintain the required standards. The centre has secured an anchor customer from the city, and if they can produce chickens per month, they can make a significant profit. The Thandulwazi Maths and Science Academy Thandulwazi (isizulu for love of learning ) is well-placed to offer an educational programme that improves both the learning and teaching of core subjects (maths, physical science, life sciences, English and accounting). It also provides skills development workshops and a professional development programme for educators in Gauteng.

64 60 PPC Ltd Social review continued The four main focus areas identified by Thandulwazi are: Intern-teacher training programme, a mentored in-service training programme for new teachers. In 2013, 27 interns undertook teacher training in the five St Stithians schools (which cover all the educational phases), while studying part-time related degrees through Unisa Thandulwazi-Rokunda teacher development programme caters for over teachers annually, focusing on the development and skills of teachers working in schools in previously disadvantaged areas Saturday school provides effective extra tuition in core subjects annually for some learners (grades 10, 11 and 12) from over 160 high schools across Gauteng Learner sponsorship programme provides bursaries for talented maths/science learners from previously disadvantaged communities Field Band Foundation This is a national organisation, which is also internationally recognised, teaching life skills through music and dance to the youth from age seven. It is a way of keeping learners socially engaged in legal and constructive activities. PPC continues to support three bands Grahamstown, Danielskuil and Cullinan. African Leadership Academy The academy seeks to transform the continent by developing and supporting future generations of African leaders. It currently brings together over 100 of the most promising 16 to 19-year-old leaders from more than 40 African nations for an innovative twoyear programme designed to prepare each student for a lifetime of leadership. PPC has to date supported five girls and one boy. Employee volunteerism PPC staff participated in a range of initiatives during the year: 140 PPC employees took part in the Kaya FM Mandela Day race Annually, 20 to 25 employees participate in the Momentum 94.7 cycle challenge, raising funds for various causes Head office staff raised R towards the R67 initiative for Mandela Day Executives partnered with the CSI team by investing in food gardens and bakeries PPC also continues to support numerous other initiatives, including: QuadPara Association of South Africa Habitat for Humanity Youth Build in Orange Farm in partnership with the University of Johannesburg Uvuyo Trading climate change diaries Khula Community Development Project vehicle for the Eastern Cape initiative against human trafficking and exploitation Various welfare organisations such as CHOC Childhood Cancer, Woodside Sanctuary and Hospice Khula Child Rights Organisation Bolamahlo Orphanage National Business Initiative Lime Acres invested in a paving project that generated employment for the community and continues to support the Rally to Read initiative as well as adult basic education and training Riebeeck continued to support surrounding schools De Hoek focused on community training Hercules invested in infrastructure development by contributing cement to various construction projects PPC Express Outlets and cement donations PPC donated over R worth of cement to various institutions and NGOs involved in building schools, libraries, orphanage homes and low-cost houses. A significant proportion of this cement was supplied to entrepreneurs who qualified for a PPC Express Outlet, a PPC-branded container for storing cement. As an income-generating initiative, two NGOs SOS Village and Olivers House qualified for PPC Express Outlets as they operate brick-making projects. Since March 2013, they have sold over bags of cement. New initiatives in 2013 MaLerato Bakery PPC invested in a container bakery at MaLerato Home of Hope as an income-generating project. The bakery now employs three people from the community and generates income for the home. Tumelo Home for Children with Disabilities PPC invested in a permaculture garden for the home, which now has enough vegetables for its own use and sells surplus to the community. Further funding was provided to train beneficiaries in making their own manure and seedlings. Christel House South Africa (CHSA) CHSA projects address four primary risk factors afflicting families living in poverty emotional and social challenges, acute and chronic stress factors, cognitive lags and health and safety issues. PPC supported four pupils from grades 8 to 12 at R per year in 2013, and has doubled this number for the next financial year. The strategy is to use this special school as a source of future PPC bursary students. Langeberg Doulos Trust In partnership with Ikhaya Power and Robertson Winery, PPC supported a shopping bag project in which we supplied old bags and funds to cover labour costs for 15 homeless people, Ikhaya Power trained the people and Robertson Winery supplied other materials. The finished products were used as goodie bags for over people at the annual Cape Wine festival.

65 PPC Ltd 61 Shalamuka Foundation Penreach Whole School Development Programme PPC invested R into Shalamuka Foundation to support educational interventions that stretch from birth to post-matric, aimed at creating communities of learning in which teaching and learning conditions are improved for children in underresourced areas. Disability Empowerment Concerns PPC invested R in disability empowerment programmes for these beneficiaries. New Jerusalem Children s Home As an income-generating initiative, an oyster mushroom harvesting project was implemented. The home will have enough produce to feed its beneficiaries, with the surplus sold to the fresh produce market. Endangered Wildlife Trust (EWT) Eco School Project The EWT, with close to 40 years as a conservation leader, provides environmental education and environmental management to six rural schools and surrounding communities in Hammanskraal, by equipping learners and community members with the knowledge and skills to preserve and maintain their environment and develop an environmental ethos. Over people benefit from this project. Case study Ikusasa School of Cooking PPC contributed R towards the set-up of Ikusasa School of Cooking in Riebeeck West. Ikusasa, meaning tomorrow in isizulu, will offer 10 students from impoverished families, children s homes and disadvantaged schools an opportunity to participate in basic food preparation skills, leading to a City and Guilds of London qualification. The Ikusasa School of Cooking was established in 2009 in Durban to give school leavers who are unable to attend regular culinary schools because of financial constraints the opportunity to earn an internationally recognised entry-level qualification. The culinary industry offers great opportunities to qualified, passionate people throughout the world. Dinaledi Bursary Programme Class of 2012 Five students from the disciplines below joined the PPC graduate programme in January 2013: Mechanical engineering (one male and one female) Mining engineering (two females) Chemical engineering (one male) Class of 2013 Five students will join the graduate development programme in January 2014: Chemical engineering (two females) Mechanical engineering (one male) Mining engineering (two females) CSI beyond South African borders Botswana With the CSI strategy now in place, PPC Cement and PPC Aggregates invested in two flagship projects Molepole sewing project (P ) and Lady Khama Charity Trust (P ). In total, P (some R ) was spent on social upliftment projects in Botswana. Zimbabwe Most of Zimbabwe s CSI expenditure at US$ (some R ) was spent on education and welfare initiatives. Career day In March 2013, Colleen Bawn hosted a career day attracting 840 students, 115 teachers and exhibitions by NUST University, Zimbabwe Open University, Zimbabwe Republic Police, JM Poly and ZB Bank. The 16 intern students are compiling a booklet on career guidance, which will be distributed to schools before the next career guidance day in The course is run over 10 months, finishing in December Students attend classes for three days every week and are required to undergo work-integrated learning under supervision in a local culinary outlet for another three days in each week. Successful students are not required to pay any school fees; however, they are also not paid during their work-integrated learning periods. The purpose of these periods is for students to build experience of a real industry work environment. Their working hours are set by the proprietor of the establishment and may mean working long and unusual hours at times. The inaugural class of 2013 will graduate at the end of the year with an internationally recognised diploma, giving them the freedom to work anywhere in the world.

66 62 PPC Ltd Environmental review Highlights Our Hercules Sonex Mill and Slurry Finishing Mill (FM4) upgrades reduced emissions significantly to below 30 mg/nm 3 We successfully facilitated a mini cement technology course for licensing authorities to assist in understanding the cement industry and be able to effectively process air quality emission licences for PPC Construction on the Grassridge wind farm project started in October Plans are well advanced for the development of the Ukomeleza wind farm project Improved relationships with Western Cape provincial and local authorities have allowed PPC to debate legislative requirements and shorten project implementation timeframes The focus on environmental issues at our Zimbabwe operations resulted in no fines during the reporting period PPC Jupiter received authorisation to mill slag at its plant The PPC De Hoek kiln 6 upgrade has improved emission performance, significantly reduced water use and improved energy performance Good relationships and continuous engagement resulted in almost 70% of our water use licences being issued by the Department of Water Affairs Lowlights The carbon tax paper has been published with no amendments from suggestions after the previous commenting period. This issue still presents significant risks to PPC National Environmental Management Act (NEMA) section 30 incident reported at PPC Riebeeck Slurry kiln 7 dust emissions remain a challenge. After authorities were engaged to discuss options, an impact study was requested. The results suggest that PPC Slurry does not have a significant impact on the surrounding environment Outlook Maintain ISO accreditation for all certified operations Finalise the revision of environmental best practices for the group Source and train an environmental specialist to address environmental issues in our African operation Continue to support and acquire necessary authorisations for our new projects in the rest of Africa and local upgrade projects Focus on building awareness around water-efficiency management. Prioritise water-efficiency considerations in new and upgrade projects across South Africa Increase the use of alternative fuels at Dwaalboom and implement other alternative fuel-projects at our clinker plants Implement phase 2 of the Grassridge wind-farm project and increase uptake of renewable energy through solar photovoltaic and biogas developments Increase uptake of energy-efficiency projects with the assistance of the Eskom integrated demand management programme Accelerate implementation of energy management systems at key factories PPC environmental vision and policy We are committed to integrating environmental and sustainability issues into our business strategy. Top management regularly reviews the group environmental policy to ensure specific commitments are enacted, including: Establishing clear accountability for environmental performance Continual environmental improvement Complying with environmental legislation and other requirements Preventing pollution Managing natural resources Effective and transparent communication for our stakeholders Building capacity among our stakeholders to identify, report and act on opportunities to minimise environmental impacts Managing our land through concurrent rehabilitation and maintaining biodiversity Long-term focus on environmental issues We aim to minimise the impact of PPC s environmental footprint and create more positive outcomes in the long term. We recognise that the impacts of climate change, management of water resources and energy security are among the greatest challenges facing society and our company. The strategic steps we have taken in reducing our environmental footprint, as an integral part of our sustainable development measures, will allow PPC to create more positive outcomes in the long term. Energy policy 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 specific energy-efficiency targets. PPC aims to source 10% of its energy requirements from renewable or alternative energy sources by 2017.

67 PPC Ltd 63 Key environmental issues Legal compliance Committed to environmental legal compliance Ensure proposed legislation promotes sustainable business Carbon footprint Implement comprehensive water management programmes in line with licence requirements Participate in industry initiatives to ensure sustainable water management Energy Energy committee to oversee evaluation and implementation of electrical and thermal energy projects Key focus areas include coal replacement and renewable energy Committed to reducing specific carbon intensity through energy and process efficiencies Actively engage with government on CO 2 reduction and carbon tax Water resource management Ensure effective implementation of monitoring and management systems Optimise abatement technology and processes in order to comply with emission limits Implement planned upgrades in line with compliance timeframes Air quality Legal compliance management In line with our environmental policy commitments, PPC is committed to environmental compliance across the group. To ensure we achieve this, PPC has dedicated legal registers in all our South African operations that are managed through ISO systems. These are audited every two years by a qualified external legal auditor. PPC manages, maintains and implements permit requirements and other regulatory requirements across the group. In this reporting year, PPC reported one transgression of section 30 of the National Environmental Management Act (NEMA). After PPC Riebeeck reported a historical diesel tank spillage, the Department of Environmental Affairs issued a directive to address this and PPC Riebeeck is implementing recommendations from the directive. PPC Jupiter and PPC Hercules were inspected by the Gauteng Environmental Inspectorate to verify compliance against environmental permit conditions and duty of care. No reports have been received for these inspections. PPC Zimbabwe conducted its first legal audit to identify any gaps and areas for improving compliance. Action plans to address the outcome of this audit will be developed. Law reform process The speed of change in environmental legislation has been challenging for the cement industry. PPC continues to engage extensively on legislation with the potential to impact on our business. Current engagements have focused on air quality legislation at national and local level, climate change and carbon tax, and waste issues including the definitions of waste. Systems approach: environmental management systems PPC s commitment to compliance is demonstrated by the fact that all cement and lime operations are ISO certified and have retained this certification over the years. Our operations identify their aspects and impacts, with objectives and targets set and managed through the environmental management systems. One major finding was raised at the PPC Dwaalboom site, which was a repeat finding from the previous year. This was addressed and cleared by the certification body within seven days and we retained the certification. Our aggregates business is certified by the Aggregates and Sand Producers Association of South Africa (ASPASA), which conducts audits every two years.

68 64 PPC Ltd Environmental review continued Case study: secondary material co-processing at Dwaalboom There are various quality, process and environmental benefits from co-processing secondary materials during the clinker manufacturing process. Environmental benefits include: Diverting waste from landfill: the waste will become part of our clinker (and thus cement) instead of being sent to a landfill site Eliminating certain hazardous properties of waste due to burning at high temperatures Reducing greenhouse gas emissions mainly due to decreasing our use of coal, but also by avoiding those greenhouse gases that would normally be released during the decomposition of waste A positive record of decision was issued by the Limpopo Economic Development, Environment and Tourism Department to PPC Dwaalboom in One of the conditions of the record of decision stipulates that an independent environmental compliance officer be appointed by PPC to monitor performance and compliance with all legal requirements during handling and feeding of waste streams. Collectively this requires the compliance officer to assess compliance to some 500 aspects listed in the documents. Over 90 of these requirements have been completed during the trial burn phase and relate to submission of proof of performance. This leaves 415 aspects relating to carbonaceous spent pot lining to be audited by the compliance officer. Results of audits 2012 to Results of secondary materials co-processing compliance audits during financial year Oct-12 Nov-12 Dec-12 Jan-13 C-SPL audit score Feb-13 Mar-13 Stakeholder engagement PPC is committed to empowering communities in which we operate with knowledge about environmental management. Environmental stakeholder forums continue at all sites at least twice a year. We conducted our stakeholder survey to assess the level of knowledge about sustainability issues in PPC. Covering both internal and external stakeholders, the survey confirmed a good level of understanding of the company s environmental performance and its material issues. Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sept-13 Together with operations, PPC is consulting with authorities as part of the air quality emission licence renewal process. In addition, as a group, we will soon engage with authorities in applying for postponement of compliance timeframes for facilities that will not meet emissions limits by PPC continues to engage with the Association of Cementitious Material Producers (ACMP), whose focus for 2013 is on air quality, waste management and climate change. Given the changing legal regime in South Africa, ACMP engages stakeholders on behalf of cement producers such as PPC covering issues such as carbon tax, minimum standards for air quality, mining regulations and the waste management act. To build capacity for licensing authorities, PPC facilitated a mini cement technology course. This was aimed at assisting authorities to understand cement manufacturing, which in turn would assist them when processing PPC air quality emission licences. In Zimbabwe, PPC was invited by the Business Council on Sustainable Development to present its work on carbon footprint. The workshop was attended by government representatives and captains of industry. Three public complaints about fugitive emissions were recorded at PPC Jupiter, PPC Port Elizabeth and PPC Hercules for the reporting year. Stakeholders were engaged and necessary investigations took place. Energy and climate change Because PPC is an energy-intensive business, we understand the relationship between energy consumption and greenhouse gas emissions. We also recognise that the science behind climate change is robust and compelling. As such, we are guided by the precautionary principle and apply a risk-averse and cautious approach, which considers the limits of current knowledge about the consequences of decisions and actions. We believe the magnitude of the potential impacts of climate change in future warrants global action to address this now. Carbon tax PPC has engaged extensively with authorities, on many levels, about carbon tax. However, the national treasury has not taken many of the suggestions of industry into its latest policy document. Carbon tax is still expected to have a significant impact on PPC s bottom line, but this is likely to be delayed one or two years beyond the planned implementation date of January 2015 due to the complexity of implementation. Energy management system The successful implementation of energy management systems at Lime Acres and De Hoek has shown that this improves both awareness and energy performance. However, the lack of sufficient resources at other operations is hampering implementation of the system. Integrated demand management projects PPC completed two projects under the Eskom integrated demand management programme in the last quarter of By implementing a silo and production monitoring and management system, we can now stop the mills at Slurry and Dwaalboom during peak hours on weekdays, the most expensive tariff period.

69 PPC Ltd 65 We are expanding these projects to Hercules, Jupiter and De Hoek. This will also give PPC a combined view of the energy performance of these factories. Dwaalboom kiln 2 The carbonaceous spent pot lining expansion at Dwaalboom is under way and will allow us to co-process additional spent pot linings at this facility. It will also enhance the quality of clinker at Dwaalboom by equalising quality between the two kilns while increasing revenue for the operation. Returns of 40% over a threeyear period are projected. Carbon footprint and energy CO 2 emissions Tonnes Total Direct Indirect Cement, lime and dolomite SA Cement SA (only) Aggregates SA (only) Cement Zimbabwe SA cement performance CO 2 emissions Factor 2012 Factor 2013 Factor CO 2 /tonne clinker CO 2 /tonne cement Cement SA* recorded a 1,6% reduction in specific carbon intensity compared to the 2010 base year. Year on year, there has been a 3,7% reduction in specific carbon intensity, reflecting the prioritisation of more efficient equipment across the group and a slight improvement in the clinker to cement ratio. * Cement SA incorporates all South African cement facilities and includes head office, Saldanha and facilities that distribute products. Energy consumption (SA operations*) GJ Direct Indirect Total direct and indirect energy consumption for SA operations* was flat, although increases in overall production were noted. This reflects the focus on running the most efficient equipment across the group. Cement, clinker, lime and dolomite performance (base) CO 2 /t of clinker, lime and dolomite CO 2 /t of cement, lime and dolomite The carbon intensity of cement, lime and dolomite has decreased slightly compared to our 2010 base year. Although offset slightly by the efficiency of lime and dolomite production, the decrease still reflects our prioritisation of the most efficient technology in the group. Air quality management PPC manages both point and fugitive emissions from our operations, with dust emission remaining one of our most challenging environmental issues. With the repeal of the Atmospheric Pollution Prevention Act (APPA) in April 2010, transitional arrangements for all registration certificates issued under this act came into effect (section 61 of NEM:AQA) and PPC operations with listed activities were required to submit renewal applications by end March These were submitted in time and we are engaging with the authorities on the licensing process as required. The Department of Environmental Affairs issued amended draft minimum emission standards. PPC has actively engaged with the department through the ACMP and represented the lime operations as PPC. These amendments are expected to resolve issues raised by the cement industry and provide standards for co-processing waste in lime kilns. Point source emissions Emissions from point sources are calculated using project CLEAR (the Concise Library of Emission to Air Reports, with 2010 as the base year) and include particulate matter (dust), SO 2 and NO x from kiln stacks. Using this project to monitor our air emission has resulted in wide benefits for PPC and informs our compliance and future plant upgrades. The PPC Riebeeck upgrade has been delayed until further notice and the two old kilns will not be running past In our Zimbabwe operations, a focused project using external experts has improved air emissions significantly to acceptable levels. No fines were issued to these operations during the year. * SA operations incorporates all South African operations including aggregates, cement and lime, head office and facilities that distribute products.

70 66 PPC Ltd Environmental review continued Emission performance (SA cement kilns*) Dust Oxides of nitrogen Sulphur dioxide FY Tonnes * Under normal operating conditions. The reduction in dust emission largely reflects the PPC De Hoek kiln 6 upgrade and limited running for older kilns such as PPC Riebeeck and Port Elizabeth. Fugitive emissions PPC has developed a customised fugitive emissions template for cement and lime operations, approved by the authorities. Fugitive emissions remain a challenge in our operations especially at Lime, Hercules and Jupiter. PPC operations submitted fugitive emission plans as part of the atmospheric emissions licensing process. These are managed and verified during the internal auditing process. PPC Slurry FM4 upgrade project environmental benefits During the year, we successfully completed a significant upgrade on the Slurry finish mill 4 (FM4) unit by replacing static separators with two new-generation separators. The technology upgrade has produced increased efficiencies in terms of energy consumption per tonne of cement produced. As part of the process, we also replaced the electrostatic precipitator on the milling circuit with a more efficient bag house and added a dust collector on each separator. The upgrade has significantly decreased dust emission and water consumption. Case study: Water saving from De Hoek 6 upgrade Prior to the upgrade at PPC De Hoek, average water consumption on the DK6 conditioning tower was kl per month. This more than halved after the electrostatic precipitator was replaced with a bag filter. The average monthly consumption of the kiln since the start-up (August 2012) is now kl, translating into a 60% water saving. The conditioning tower (with electrostatic precipitator) is the largest water-consuming process of all the mining and manufacturing processes; if maintained at this lower level, it will contribute to a saving of some 15% in total annual process water consumption Water resource management PPC has made progress on water use authorisation compared to the previous year. With two additional licences received, 70% of our operations now have the correct permits. We are liaising with the Department of Water Affairs national licensing offices to facilitate the outstanding applications. PPC will continue to manage water consumption, with the bulk of savings being realised from upgrades Average k for 12 months prior to ESP replacement Average k for 6 months after the ESP replacement Municipal water consumption The total volume of municipal water consumed by our South African operations for the past two years is shown below: m m 3 Monitoring systems are being developed to provide a more accurate view of water consumption across the group. Currently we are accounting for total water consumption of m 3, of which municipal consumption makes up about 18%. Waste management Although the group received amended waste licences in the last quarter of 2011, PPC De Hoek and Riebeeck had concerns about conditions in their licences. These related to the omission of landfill sites, mitigation measures on access and signage at landfill sites, alignment of the waste licence to the water use licence, lack of clarity on validity dates and omission of certain waste storage areas. After engaging with the authorities, we agreed to prepare variation applications for both PPC De Hoek and Riebeeck. These were submitted to the relevant authority during the review period. We continue to look for opportunities for sustainable waste management. As much as 44% of the general waste generated by PPC is now either reused or recycled, a significant improvement on 2012 (33%). Remote plants are still challenged by the lack of costeffective recycling opportunities.

71 PPC Ltd 67 14% 56% 44% General waste Recycle or reuse Disposal Hazardous waste Recycle Disposal 86% Mine rehabilitation/biodiversity PPC recognises its responsibility for proactive land and resource stewardship. Most of our mines are in environments ranging from wheat and game farming to peri-urban areas. The company owns surface rights to all areas where deposits are being mined and land not required for current operations is leased to farmers for agricultural purposes. Rehabilitation is concurrent with mining operations and rehabilitated land is leased in exchange for farming land required for ongoing mining. PPC s concurrent rehabilitation reconciliation as at September 2012 (%) Beestekraal Dwaalboom Grassridge Slurry Riebeeck De Hoek Laezonia Mooiplaas PPC Rehabilitation at September % 85% 99% 98% 99% 94% 92% 88% 95% Note: As the annual mining survey is conducted aerially at year-end, rehabilitation data always lags one year. Upgrade projects Lime Acres kiln 6 The PPC Lime kiln 6 filter upgrade planned for mid-2013 was moved to September due to logistical delays. The upgrade will guarantee emissions of under the minimum standards of 30 mg/nm 3. De Hoek The Department of Environmental Affairs visited De Hoek to discuss and facilitate its application for a waste licence to burn alternative fuel resources. We are engaging with the authorities to facilitate processing of this application. Energy projects Wind energy The development of a 60 MW wind farm on our Grassridge property for round 2 of the Department of Energy s renewable energy procurement programme and the associated development of a private 21 MW wind farm project for PPC (Ukomeleza wind farm) are well advanced. The financial close was reached on the first phase of Grassridge, and development of the Ukomeleza project is being prioritised. Expansion of service to third parties We are investigating the establishment of an enterprise to expand our services to BHP Billiton Aluminium SA to include crushing spent pot linings, at Richards Bay and Mozal, and transporting spent pot linings to our own operations. We will focus on Richards Bay only for the first contract. Solar photovoltaic We are establishing a captive, grid-tied, 1 MW peak solar photovoltaic installation as a strategic project to develop this type of capacity in PPC and investigating appropriate storage technology to stabilise long-term power costs at PPC Slurry. The project size at Slurry is 10 MW at peak, with long-term potential of 25 MW at peak (10% of PPC SA s annual use). In Zimbabwe, a feasibility study is under way to establish a 5 MW peak captive, grid-tied, solar photovoltaic installation to stabilise electrical energy costs at Colleen Bawn and install appropriate storage technology to improve the ability of the factory to manage short power outages. Coal fines We are investigating a process, using a combination of existing technologies, to recover coal that is suitable for use in cement kilns from fine coal dumps in the Mpumalanga coalfields. The feasibility study will be complete by March Co-processing tyres at Dwaalboom Following publication of the official plan for recycling tyres in South Africa, we are proceeding with studies to select appropriate technology and develop the collection and logistics model to coprocess tyres at PPC Dwaalboom. The projected return is positive over 10 years, with an estimated annual coal cost reduction of R20 million. Biogas as renewable energy fuel UHURU Energy proposes to establish a cactus and energy grass farm near Lime Acres to produce biogas and syngas to fire the kilns. The development of biogas energy at other operations will also be investigated, but the focus will remain at Lime Acres. Benefits include stabilising energy costs, eliminating carbon tax and improving operations by eliminating ash rings.

72 68 PPC Ltd Awards in 2013 During the year, PPC was recognised at a number of levels, reflecting a group concentrating on every aspect of its role in society and its responsibility to stakeholders Women in Construction Excellence awards The general manager of our Jupiter factory, Busi Legodi, received the Woman in Concrete award at the TotallyConcrete Expo The awards ceremony celebrated the expanded roles now available for women in the cement, concrete and construction industries and recognised women who have pioneered development of the African built environment. Legodi was appointed as PPC s first black general manager in 2012, to oversee operations at its Jupiter plant in Germiston. EY Excellence in Integrated Reporting 2013 PPC was again one of the listed companies whose integrated reports were judged Excellent in this premier ranking. Nkonki Top 100 Integrated Reporting awards PPC s 2012 integrated report received first place in the 2013 awards. This is the second time PPC has received this award. PPC also won the industrials sector trophy and received an award for Excellence. Gender Mainstreaming awards PPC was well recognised at this inaugural event, receiving the empowerment initiative award, gender mainstreaming and disability award and the overall gender mainstreaming champion The company was also a finalist in the investing in young women and women empowerment in the workplace categories. Business Day BASA awards PPC received the innovation award at the 16th annual event recognising the support of business for the arts, for our Young Concrete Sculptor Awards (YCSA) art competitions. This unique collaboration with fashion designer, Suzaan Heyns, whose collection demonstrated the versatility of concrete by uniquely incorporating it into her designs as part of the Reimagine Concrete Collection unveiled at SA Fashion Week in March PPC was a finalist in the long-term sponsorship and youth development awards. SteinBuild supplier awards PPC received a recognition award for suppliers that go the extra mile, where support and initiative have been paramount in forming a successful relationship. Essential Hardware national supplier of the year awards PPC received gold for suppliers who have shown excellence in their commitment to the Essential Hardware brand. Kaap Agri national supplier of the year PPC received this prestigious award for the second consecutive year, competing against over contenders. PMR.africa Diamond Arrow award PPC Zimbabwe received a Diamond Arrow while PPC Botswana was rated highly in these prestigious awards. Sunday Times Top 100 Companies CSI award PPC ranked third on corporate social investment.

73 PPC Ltd 69 Mining charter scorecard 2013* Element Description Measure Compliance target 2014 Progress Reporting Reporting level of compliance with charter for calendar year Documentary proof of receipt from DMR Annual Employment equity and social and labour plans submitted Ownership Minimum target for effective HDSA ownership Meaningful economic participation Full shareholder rights 26% 26% Second phase of PPC s BBBEE transaction increased black ownership of South African operations to effective 26%, in line with mining charter requirements Over R33 million in dividends paid to employee shareholders in 2013 Housing and living conditions Conversion and upgrading hostels to attain occupancy rate of one person per room Percentage reduction of occupancy rate towards 2014 target 100% Company housing is provided at most remote locations. PPC also promotes home ownership by facilitating opportunities for employees to secure housing loans Extensive survey under way to address housing requirements for staff Conversion and upgrading of hostels into family units Percentage conversion of hostels into family accommodation 100% Only Lime Acres has a hostel, and upgrading is under way Procurement and enterprise development Procurement spend from BEE entity 70% PPC has consistently met the dti s compliance target of 70%. In 2013, 89% (R4,1 billion) of discretionary spending was with BEE companies: Target 2013 Actual 2013 Capital goods 40% 30% 30% Services 70% 60% 60% Consumable goods 50% 40% 47% Multinational suppliers contribution to social fund Annual spend on procurement from multinational suppliers 0,5% of procurement value The DMR is formulating a model to implement this contribution to social development Employment equity Diversification of workplace to reflect the country s demographics to attain competitiveness Top management (board) Senior management (exco) 40% 67% 40% 50% Middle management 40% 48% Junior management 40% 64% Core skills 40% 86% * Due to the nature of cement manufacture, PPC s empowerment credentials are measured against both the South African mining charter scorecard and the South African dti s revised codes of good practice. PPC reports on both in this section.

74 70 PPC Ltd Mining charter scorecard 2013* continued Element Description Measure Compliance target 2014 Progress Human resources development (see detailed table on page 71) 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 HRD expenditure as percentage of total annual payroll (*excluding mandatory skills development levy) 5% 5,3% spent on skills development (R44,3 million) 100% of R&D expenditure directed at South Africabased businesses Mine community development Conduct ethnographic community consultative and collaborative processes to delineate community needs analysis Implement approved community projects Up-to-date project implementation In first five-year cycle, R38 million of planned R60 million spent on approved projects: of 28 projects in 12 communities in six provinces, 14 were handed over to communities New social and labour plans commit to R1 million per licence per annum Sustainable development and growth Improvement of industry s environmental management Improvement of industry s mine health and safety performance Implementation of approved EMPs Implementation of tripartite action plan on health and safety 100% All plants have approved EMPs 100% Dedicated group safety and health manager appointed. External company training safety and health representatives Use of South Africa-based research facilities for analysing samples across mining value chain Percentage of samples in SA facilities 100% 100% of samples are processed in South African facilities Beneficiation Contribution towards beneficiation (effective from 2012) Added production volume contributory to local value addition beyond the baseline Section 26 of MRPDA (percentage above baseline) No detail on how to measure but raw limestone is beneficiated into cement and lime products in South Africa Aggregates are fully beneficiated in South Africa Health and safety Implementation of culture transformation framework Percentage versus gap analysis 100% 90% (ahead of target) Percentage of employees embarking on occupational health and safety training 2% per annum 8% 4% (on target) Percentage of leading practices from MHSC investigated for implementation Percentage of research findings from MOSH learning hub investigated for implementation All investigated for 100% All investigated for 100% 100% 100% 100% 100% Health: percentage of mandatory occupational health reports submitted Health: adherence to HIV/AIDS and TB guidelines 4 required for 100% 100% 100% Yes/No Yes On target

75 PPC Ltd 71 Human resource development Year: 2013 A C I W Description Measures Category M F M F M F M F Total Develop requisite HRD expenditure Learnerships and skills, including support for as percentage of total annual bursaries (of core and critical skills) SA-based R&D payroll (excluding initiatives intended mandatory skills Artisans to develop solutions in development levy) ABET training (level I, II, III, IV mining, processing and NQF 1) and exploration Other training 28 on PPC bridging programme technology (school support efficiency (energy 12 students on graduate development programme and post-matric and water use programmes) in mining), beneficiation, environmental conservation and rehabilitation Support for SA-based R&D initiatives 100% of R&D expenditure directed at SA-based companies dti BBBEE status* PPC s broad-based black economic empowerment status as at September 2013 was audited and verified by rating agency Empowerlogic in November In terms of the revised dti codes of good practice, PPC is a level 2 BBBEE contributor with a procurement recognition of 156%. This enables our customers to claim back 156% of their spending with our group for their own preferential procurement points. BBBEE status verified level 2 Element levels Equity ownership 1 Management composition 1 Employment equity 6 Skills development 6 Preferential procurement 2 Enterprise development 1 Socio-economic development 1 Black ownership Value-adding vendor 34,55% black ownership 11,68% black women ownership Yes BEE procurement recognition 156% * Due to the nature of cement manufacture, PPC s empowerment credentials are measured against both the South African mining charter scorecard and the South African dti s revised codes of good practice. PPC reports on both in this section.

76 72 PPC Ltd Corporate governance review Governance In line with the latest practice in governance reporting, our governance report is structured in two parts. The first part tells the governance story of PPC, while the second focuses on compliance with applicable governance and regulatory standards. Overview CHAIRMAN Key objectives: board leadership and performance, custodian of the corporate governance processes. More on page 73. THE PPC BOARD Key objectives: strategic planning, setting objectives, appointing CEO, monitoring implementation of board plans and strategies. More on page 73. AUDIT COMMITTEE Key objectives: provide governance control over the financial results, performance of internal and external audit and the group s system of internal control. More on page 77. 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. More on page 81. SOCIAL AND ETHICS COMMITTEE Key objectives: monitor company activities on social and economic development, good corporate citizenship, environment, labour and employment. More on page 83. REMUNERATION COMMITTEE Key objectives: establish a remuneration policy, monitor executive remuneration and ensure the mix of salary and incentives supports achievement of PPC targets. More on page 82. NOMINATIONS COMMITTEE Key objectives: ensure appropriate board composition, induction and training of directors and succession plans. More on page 82. As with most stories, our governance story begins with one man. The chairman of our board is Bheki Sibiya who has been annually reappointed to that position since He is an independent non-executive director and 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 that the performance of the board is annually reviewed against performance standards. In executing his responsibilities and those of the board, Bheki is assisted by a very capable team of directors. On 18 November 2013, 12 directors served on the group board. The majority of these were non-executive directors with an independent majority when classified as required by the JSE listings requirements. More information on board composition and activities follows in this report. The strategy of expansion into the rest of Africa, as orchestrated by the board, has been discussed with shareholders and widely publicised. The board is well aware of the operational challenges in executing this strategy, and of the demands of this expansion on its governance structures. As a key project, the group governance framework was refined in 2013 to address the new group governance challenges. This framework addresses important issues including group governance structures, guidelines on managing legal entities, corporate lifecycle management, group corporate governance, group company secretarial standards, high-level discretions and levels of authority. For the mining industry in South African, it has been another year of labour and social unrest. While the group has not experienced such turmoil, the board accepts that the future of the company is linked to three interdependent sub-systems the natural environment, the sociopolitical system and the global economy. With sustainability issues, the board is assisted by the social and ethics committee. The group has continued to focus on its role as a good corporate citizen.

77 PPC Ltd 73 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 KETSO GORDHAN The role of the CEO is determined by the board and formalised in the board charter: The chief executive officer leads the company and the management team He is responsible for the day-to-day operations of the company while the chairman is the leader of the board He is the company s principal spokesperson The company secretary JACO SNYMAN The role of the company secretary is largely determined in section 88 of 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 relevant to or 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, or of the company s audit committee, are properly recorded in accordance with the Act 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, in accordance with the Act, to every person who is entitled to it The group company secretary, Jaco Snyman, is a central source of information and advice to the board and in the company on matters of ethics and good governance. Details on his qualifications and experience appear on page 17 of this report. He is responsible for compliance with the rules and listings requirements of JSE Limited 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 board has evaluated the company secretary s performance as part of the annual board evaluation. To align with best practice and the listings requirements on the arm s length relationship between a company and its company secretary, his reporting line was changed during the year and he now reports directly to the CEO. 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. How the board operates The members of our board are shown below: Tim Ross Bridgette Modise Bheki Sibiya Joe Shibambo Zibu Kganyago Ntombi Langa- Royds THE GROUP BOARD Tryphosa Ramano André Lamprecht Ketso Gordhan Todd Moyo Peter Malungani Sydney Mhlarhi INDEPENDENT NON-EXECUTIVE EXECUTIVE NON-EXECUTIVE 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 of directors 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.

78 74 PPC Ltd Corporate governance review continued The board comprises a non-executive chairman, two executive and 9 non-executive directors. At its meeting in October 2013, the nominations committee evaluated the independence of nonexecutive directors and concluded that the following directors are independent as defined in King III (the code) and the JSE listings requirements: Tim Ross Joe Shibambo Bridgette Modise Ntombi Langa- Royds INDEPENDENT DIRECTORS Bheki Sibiya André Lamprecht Todd Moyo Zibu Kganyago Todd Moyo was appointed to the board in November 2013 as an independent non-executive director, bringing the number of independent directors to eight. The board has made notable progress in transformation and compliance with the code as reflected in the following graphs: Balance between executives and non-executives During the review period, the balance on the PPC board between executive and non-executive directors moved further in favour of non-executives after the resignations of Messrs Abdul Kader, Sello Helepi and Peter Esterhuysen. As a result, the number of executives on the board has reduced from five to two by year-end Board balance Executive directors Non-executive directors 2 Gender balance In 2010, women made up only 12,5% of the board members of FTSE 100 companies, compared with 9,4% in 2004, with over half of FTSE 250 companies having no female board directors at all. This is not an issue in the UK alone. Many countries are now introducing quotas or disclosure requirements to address this. The current position at PPC is that 33% of board members are women, and the chairperson of the social and ethics committee and remuneration committee is female Gender balance Women 10 2 Men Racial balance At 18 November 2013, 83% of directors were black as defined in South African BBBEE legislation. This transformation has been remarkable given that, in 2008, only 40% of members were black Racial balance White directors Black directors

79 PPC Ltd 75 Age analysis Research on this subject seems to indicate a relationship between age diversity and company performance. In light of these findings, age diversity is considered when the nominations committee evaluates the board composition. Age analysis Bheki Sibiya 56 Ketso Gordhan 52 Tryphosa Ramano 42 Zibusiso Kganyago 47 André Lamprecht 61 Ntombi Langa-Royds 51 Peter Malungani 55 Sydney Mhlarhi 40 Bridgette Modise 46 Todd Moyo 56 Tim Ross 69 Joe Shibambo 65 Average 53 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 at our board is 5 years. Tenure on board Bheki Sibiya 5 Ketso Gordhan 1 Tryphosa Ramano 2 Zibusiso Kganyago 6 André Lamprecht 16 Ntombi Langa-Royds 6 Peter Malungani 4 Sydney Mhlarhi 2 Bridgette Modise 3 Todd Moyo 0 Tim Ross 5 Joe Shibambo 8 Average 5 André Lamprecht has been a member of the board since November 1997, but after rigorous review of his independence and performance by the nominations committee, it was concluded that he has maintained his independence. He has, however, indicated that he would not be available for re-election in Directors are appointed through a formal and transparent process and the nominations committee assists in identifying suitable candidates to be proposed 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 has oversight of this policy. 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 of South Africa. 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 board succession plan was reviewed by the nominations committee at its meeting in October At the annual general meeting in January 2014, at least one-third of non-executive directors will retire by rotation (refer to the notice of AGM on page 130).

80 76 PPC Ltd Corporate governance review continued The table below indicates the attendance of board members at scheduled meetings during the period 13 November 2012 to 18 November 2013: Board AGM Audit Social and ethics Risk and compliance Non-executive directors Board members BL Sibiya 5/5 1/1 2/2 8/8 ZJ Kganyago 5/5 1/1 3/3 9/9 AJ Lamprecht 4/5 1/1 2/2 2/2 9/10 NB Langa-Royds 5/5 1/1 2/2 2/2 3/3 13/13 MP Malungani 4/5 1/1 2/2 7/8 SK Mhlarhi 5/5 1/1 3/3 9/9 B Modise 5/5 1/1 3/3 1/2 10/11 TDA Ross 5/5 1/1 3/3 2/2 11/11 J Shibambo 4/5 1/1 2/2 2/2 3/3 1/2 13/15 Social and ethics Risk and compliance Nomination Remuneration Attendance Nomination Remuneration Attendance Board AGM Audit Executive directors Executive members KM Gordhan 5/5 1/1 2/2 2/2 2/2 3/3 2/2 17/17 S Abdul Kader* 3/3 1/1 1/1 1/2 6/7 P Esterhuysen # 4/4 0/1 1/1 1/1 6/7 SG Helepi^ 1/1 1/1 2/2 MMT 5/5 1/1 3/3 2/2 2/2 2/2 15/15 Notes: * Mr Abdul Kader resigned in August # Mr Esterhuysen resigned in October ^ Mr Helepi resigned in February Ms Ramano started attending remuneration meetings in February With the exception of Mr Esterhuysen attending the risk and compliance committee all other executive directors attended as invitees. Annual board evaluation The King 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. The evaluation was conducted internally in November and the results will be reported to the board for consideration. 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 reviews the strategy at its meeting in July. 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 reviewing, in detail, the effectiveness of the company s system of internal controls. After completing these reviews, the committee reports to the board on its findings so that the board as a whole can take a view on this matter. This has been subject to regular review over a number of years, resulting in several refinements. Delegation The board delegates certain functions to committees and management, but 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 reviewed 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

81 PPC Ltd 77 How board committees operate The board has five 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: Social and ethics committee Ntombi Langa-Royds Remuneration committee Ntombi Langa-Royds Audit committee Tim Ross BOARD COMMITTEES Risk and compliance committee Joe Shibambo Nominations committee Bheki Sibiya The ad hoc deal committee, established by the board, has also been appointed to assist in executing the company s expansion strategy, with Peter Malungani as the chairperson. Although Peter is not an independent director, the board has appointed him based on his experience and skills and the fact that the committee would be convened on an ad hoc basis only. 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 the minutes of the committees, their performance and conformance to terms of reference are annually evaluated by the board. At its meeting in November 2013, the board concluded that all committees had executed their responsibilities within the scope of their respective terms of reference in the review period. About the audit committee The current members of the audit committee are: Name Qualifications Status TDA Ross (chair) CA(SA) Independent The chairpersons of these committees are independent nonexecutive directors. The racial and gender mix of the chairpersons is reflected below. 20% Chairpersons racial analysis ZJ Kganyago BCom Independent B Modise CA(SA) Independent All members are independent, as required by the code and the Act. The committee may obtain, at PPC s expense, independent professional advice on any matters covered by its terms of reference. The committee was in place throughout the 2013 financial year, and the external auditors and head of internal audit have direct access to its chairperson. 80% Black White 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. 40% 60% Chairpersons gender analysis Male Female Members of the executive team, including the CFO and CEO, 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 head of internal audit 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 for information and performance review processes.

82 78 PPC Ltd Corporate governance review continued The audit committee has adopted formal terms of reference that have been approved by the board of directors, and has executed its duties in the past financial year in accordance with these terms of reference. These are reviewed annually. Among others, the committee s terms of reference include the following responsibilities: Financial statements The committee reviews 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 annual financial statements for the financial year: 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 Approving the internal audit plan and any significant changes and satisfying itself that this plan makes provision for effectively addressing the critical risk areas of the business Ensuring the internal audit function is subject to an independent quality review, 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 The chief audit executive is required to report to the audit committee on the effectiveness of internal controls 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

83 PPC Ltd 79 IT governance In 2013 all IT-specific policies, procedures, governance framework and charter were reviewed by PPC s IT management committee. All policies and procedures identified were updated and new standards developed and rolled out across the group. PPC continues upgrading current information security processes and controls using ISO 27000:2005 information security management standard as reference. The IT steering committee, which reports to the audit committee, was formed this year to ensure that our IT initiatives and proposed projects will support PPC in achieving its strategic goals. The focus of PPC s IT department in the review period was the relevant King III principles on IT to address both the governance of information and the governance of IT projects. Accordingly, we have concentrated on: Strategic alignment: ensuring the linkage of business and IT plans; defining, maintaining and validating the IT value proposition; and aligning IT operations with PPC operations Value delivery: creating new value for PPC, maintaining and extending existing value, while eliminating initiatives and assets that are not creating sufficient value Risk management: embedding risk management responsibilities in PPC to address IT-related risks and using technology to assist in managing business risks Resource management: having the right capability to execute the strategic plan, and providing sufficient, appropriate and effective resources Performance measurement: tracking progress against PPC s objectives beyond conventional accounting measures; complying with specific external requirements 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 reviews the expertise, resources and experience of the company s finance function, and discloses the results in the integrated report and to shareholders. Report by chief audit executive The chief audit executive has completed a report to the board on the effectiveness of internal controls and risk management, which was tabled at the board meeting in November In this report, he concluded that the effectiveness of controls and risk management was satisfactory. He confirmed that nothing had 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 confirmed that he was not aware of anything that would cause him to believe that the controls over financial processes do not provide a sound basis for the preparation of reliable financial statements.

84 80 PPC Ltd Corporate governance review continued Report to shareholders on the activities of the audit committee for the year ended 30 September 2013 The audit committee is a committee of the board of directors and in addition to having specific statutory responsibilities to the shareholders in terms of the Companies Act, it assists the board through 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 have been updated during the year and approved by the board of directors, and has executed its duties during the past financial year in accordance with these terms of reference. Composition The committee consists of three independent non-executive directors as required by law. At 30 September 2013 the audit committee comprised the members as set out in the following table: Name Qualifications Period served TDA Ross (chair) CA(SA) 5 years ZJ Kganyago BCom 5 years B Modise CA(SA) 2 years The chief executive officer, the chief financial officer, chief audit executive, senior financial executives of the group and representatives from the external and internal auditors attend the committee meetings. The internal and external auditors have unrestricted access to the audit committee. Meetings The audit committee held three scheduled meetings during the year. Attendance at these meetings is shown in the table below: Director May September November TDA Ross ZJ Kganyago B Modise In addition, a special meeting was held in November to review the integrated report. Apologies were received from ZJ Kganyago for this meeting. Statutory duties In execution of its statutory duties during the 2013 financial year, the audit committee: Nominated Mr Nyembe, from the audit firm Deloitte & Touche, for appointment who in the opinion of the committee 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 that the external auditors may provide to the company or that the external auditors may not provide Pre-approved all non-audit service contracts with Deloitte Received no complaints relating to the accounting practices and internal audit of the company, the content or auditing of its financial statements, the internal financial controls of the company, and other any related matters Delegated duties In execution of its delegated duties (as reflected in its terms of reference), the audit committee fulfilled all its obligations including the following: Financial statements The committee reviewed the annual financial statements, the interim and preliminary announcements, the accompanying reports to shareholders and other announcements regarding the company s 2013 results to the public. Integrated reporting Recommended to the board to engage an external assurance provider on material sustainability issues Reviewed the disclosure in the integrated report to ensure that it is reliable and does not conflict with the financial information Recommended the integrated report for approval by the board Internal audit Took responsibility for the performance assessment of Mr Semenya, the chief audit executive Approved the internal audit plan and the 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 has been updated during the year and was approved by the audit 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 participated in the risk management process and specifically reviewed: Financial risk Financial reporting risks Internal financial controls Fraud risks as it relates to financial reporting IT governance

85 PPC Ltd 81 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 the activities outlined above, we have recommended to the board that Deloitte should be reappointed for Mr Nyembe from Deloitte was nominated as the registered auditor Determined the fees to be paid and the terms of engagement of the auditor Ensured that the appointment of the auditor complies with the Companies Act and other relevant legislation Financial director The committee has satisfied itself of the appropriateness of the expertise and experience of Ms Ramano, the financial director, and wishes to confirm this to shareholders. Financial function The committee has reviewed the expertise, resources and experience of the company s finance function, and wishes to confirm 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 that the accounting practices are effective Oversight of risk management The committee has received assurance that the process and procedures followed by the risk management committee are adequate to ensure that financial risks are identified and monitored. 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 that significant internal financial controls are effective Regulatory compliance The audit committee has complied with all applicable legal and regulatory responsibilities. In making these assessments, we have obtained feedback from both external and internal audit. Based on the processes and assurances obtained, we believe that the accounting practices are effective. Integrated report Based on processes and assurances obtained, we have recommended the integrated report to the board for approval. On behalf of the audit committee Tim Ross Chairman 18 November 2013 About the risk and compliance committee The members of the committee are: Name Qualifications Status J Shibambo (chair) Dip Bus Econ, Dip Bus Admin Independent B Modise CA(SA) Independent TDA Ross CA(SA) Independent P Esterhuysen, an executive director, was a member of the committee to align it with the best-practice recommendations of the code. All other members of the committee are non-executive directors. The committee may obtain, at PPC s expense, independent professional advice on any matters covered by its terms of reference. P Esterhuysen has resigned from the board in November and the board is looking to replace him with another executive director. B Modise will succeed J Shibambo as chair of this committee in J Shibambo will stay on as a member. Members of the executive team responsible for risk and compliance management, including the CEO, 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 reviewed annually. Among other issues, the committee s terms of reference include responsibility to: Oversee the development and annual review 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 taking place by means of risk management framework 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

86 82 PPC Ltd Corporate governance review continued 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 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 review on risk, refer to page 103 of this report. The report on compliance appears on page 105 The committee reported on its activities for the review 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 Qualifications Status BL Sibiya (chair) MBA Independent AJ Lamprecht BCom, LLB, PED-IMD Independent NB Langa-Royds BA (law), LLB Independent J Shibambo Dip Bus Econ, Dip Bus Admin Independent The committee was in place throughout the 2013 financial year. All members are independent non-executive directors as defined in the code. The committee may obtain, at PPC s expense, independent professional advice on any matters covered by its terms of reference. 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 reviewed 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 that becomes 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 review 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 Qualifications Status NB Langa-Royds (chair) BA (law), LLB Independent SK Mhlarhi CA(SA) Non-executive J Shibambo Dip Bus Econ, Dip Bus Admin Independent 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. 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.

87 PPC Ltd 83 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 reviewing 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 For a more detailed report on remuneration, refer to page 86. The remuneration policy of the company is annually presented to shareholders to pass a non-binding advisory vote to indicate support for this policy. PPC s remuneration policy appears on page 86 and shareholders will be requested to pass a non-binding advisory to indicate support for this policy at the annual general meeting. The committee has reviewed group remuneration policies to ensure these are aligned with the company s strategy and linked to individual performance. About the social and ethics committee The members of the social and ethics committee are: Name Qualifications Status NB Langa-Royds (chair) BA (law), LLB Independent The committee has its own terms of reference approved by the board and reviewed 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 Good corporate citizenship The environment Health and public safety Stakeholder relationships Labour and employment The committee reported on its activities for the review 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 deal committee The members of the deal committee are: Name Qualifications Status MP Malungani (chair) BCom Non-executive KM Gordhan BA, MPhil Executive ZJ Kganyago BCom Independent AJ Lamprecht BCom, LLB, PED-IMD Independent SK Mhlarhi CA(SA) Non-executive MMT Ramano CA(SA) Executive TDA Ross CA(SA) Independent The committee is an ad hoc body and its terms of reference are to: Consider strategic options and recommendations presented by management on expansion opportunities Provide guidance, support and explore options that will facilitate progress in periods between board meetings Committee meetings are scheduled when required by progress on transactions. TDA Ross has been appointed to the committee to represent the risk and compliance as well as the audit committees. AJ Lamprecht BCom, LLB, PED-IMD Independent MP Malungani BCom Non-executive J Shibambo Dip Bus Econ, Dip Bus Admin Independent All members of the committee are non-executive directors.

88 84 PPC Ltd Corporate governance review continued 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 2013 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). The code can be found on the IODSA website ( 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. Compliance with mandatory principles for JSE main board issuers Paragraph 3.84 of the JSE listings requirements (the listings requirements) stipulates that issuers must comply with certain specific requirements on corporate governance and issuers do not have the option of explaining any non-compliance. PPC has complied with all the mandatory principles and in the table below the detail of this compliance is given. Par Required practice Application 3.84(a) 3.84(b) 3.84(c) 3.85(d) 3.85(e) 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 nomination committee. The nomination committee must constitute only nonexecutive 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 decision-making. 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. Full compliance The PPC board has appointed a nominations committee with a formal mandate which 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 committee members are all non-executive directors and the committee is chaired by the chairman of the board. Full compliance The board charter specifies the different roles of the members to ensure that a balance of power is maintained. The role of the chairman and the role of the CEO is also clearly defined to avoid role confusion. In addition, a guideline is in place which specifies the role of the chairman. Full compliance The board has appointed Mr Gordhan as CEO and the position of chairman of the board is held by Mr Sibiya. Mr Sibiya is an independent director of the board and has been annually re-elected to that position since Full compliance The board has appointed an audit committee, remuneration committee, nominations committee, risk and compliance committee and social and ethics committee. The details are disclosed in the corporate governance report. Full compliance The CVs of the directors standing for re-election appears on pages 14 and 15.

89 PPC Ltd 85 Par Required practice Application 3.85(f) 3.85(g) 3.85(h) 3.85(i) 3.85(j) 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 parttime 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 annual report that the audit committee has executed this responsibility. 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 annual report that the 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. The recommended practice of the King III report on corporate 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. Full compliance The nominations committee annually evaluates the categorisation of all the directors appears on page 73. Full compliance Ms Ramano has been appointed as the CFO of the company and she is in the full-time employment of the company. Full compliance The audit committee annually assesses the appropriateness of the expertise and experience of the CFO. In this regard we refer to the report of the audit committee. Full compliance The board annually assesses the competence, qualifications and experience of the company secretary. In this regard we refer to the corporate governance report. Full compliance 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.

90 86 PPC Ltd Remuneration review Dear shareholder The board of PPC Ltd and the remuneration committee present the remuneration report for the financial year ended 30 September This details the company s remuneration policy and particularly executive remuneration, both fixed and variable elements, as well as fees paid to non-executive directors. During the year, the remuneration committee evaluated the strategy and performance of the company relative to the creation of value for shareholders. Accordingly, fundamental changes to the company s reward philosophy were implemented from October In short, greater emphasis is being placed on reward for performance at senior levels, while the overall reward for semi-skilled employees is being increased. In addition, semi-skilled employees have benefited from voluntary pay and incentive freezes by senior management to reduce the wage gap, and business unit-specific incentive structures have been put in place to support the business strategy over the medium term. The information in this report has been approved by the board on the recommendation of the remuneration committee. The remuneration committee is satisfied that the principles laid down by the King III report on corporate governance for South Africa and the Companies Act 2008 (the Act) have been adhered to, unless otherwise stated in this report. In line with emerging best practice, this year s remuneration report has been segmented into disclosure of the remuneration philosophy and policy (part 1) and its implementation (part 2). Ntombi Langa-Royds Remuneration committee chairperson 18 November 2013 Part 1: Remuneration philosophy and policy Governance and the remuneration committee Role of the remuneration committee The remuneration committee assists the board in setting the PPC group remuneration policy and directors remuneration. According to its terms of reference, the remuneration committee s mandate is to: Oversee the establishment of a remuneration policy aligned to achieving strategic objectives, encourage individual performance and support the company s long-term interest Ensure the remuneration policy is put to a non-binding advisory vote at the general meeting of shareholders once every year Review the outcomes of implementing the remuneration policy and whether objectives are being achieved Monitor the overall cost of remuneration structures in the company, including approving the cost of general annual salary increases, mandates for negotiation with trade unions or other bodies, benefits, short-term incentive payments and the value of long-term incentive awards granted Ensure that the mix of fixed and variable pay, in cash, shares and other elements, meets the company s needs and strategic objectives Satisfy itself on the accuracy of recorded performance measures determining the vesting of incentives Ensure all benefits, including retirement benefits and other financial arrangements, are justified and appropriate to the market Consider the need to adopt a specific remuneration policy to retain key employees and approve such a policy, where appropriate Review (at least annually) the terms and conditions of executive directors service agreements Select an appropriate comparative group when assessing remuneration levels Regularly review incentive and retention schemes to ensure continued contribution to shareholder value and that these are administered in terms of the rules Consider the appropriateness of early vesting of share-based schemes at the end of employment Oversee preparation of the remuneration report and recommend to the board that it be included in the integrated report, as: Accurate, complete and transparent Providing a clear explanation of how the remuneration policy has been implemented Providing sufficient forward-looking information for shareholders to pass a special resolution in terms of section 66(9) of the Act Ensure the chairman of the remuneration committee or an appointed deputy attends the annual general meeting or similar forums to answer questions about the remuneration strategy and policy Ensure interaction with shareholders/institutional investors on remuneration matters for executive directors and prescribed officers

91 PPC Ltd 87 Members of remuneration committee The members of the committee are non-executive directors, and the majority are independent as defined by King III. The committee holds three meetings per year. 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 or senior 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 philosophy and policy PPC s key remuneration philosophies and policy include: The remuneration policy is designed to support key business strategies and create a strong, performance-orientated environment while aiming to attract, motivate and retain talented employees Remuneration levels are set considering the remuneration policies and practices of comparable companies Remuneration consists of fixed and variable components, comprising: An annual total guaranteed pay (TGP) package, which is reviewed annually in September A performance-related annual cash incentive awarded under the short-term incentive scheme (STIS), gearing a significant portion of senior management remuneration towards company or business unit performance and, for specific employees, towards execution of special projects over the medium term A long-term incentive awarded under the forfeitable share plan (FSP) Service contracts with directors and senior management are aligned to the objectives of the remuneration policy Non-executive directors do not receive remuneration or incentive awards related to share price or corporate performance, and non-executive directors fees are approved by shareholders each year in advance Overview of remuneration Introduction The company uses the Peromnes grading system as follows: Grade 1: CEO Grade 2: Executive directors Grade 3: Prescribed officers and divisional executives Grade 4: General managers Grades 5 to 7: Heads of departments, professionals, specialists Grades 8 to 12: Skilled technical and academically qualified workers, junior management, supervisors, foremen Grades 13 to 16: Semi-skilled Grade A: Learners The table summarises the elements of the total remuneration package paid to executive directors and prescribed officers in the 2013 financial year, as well as proposed changes for the 2014 financial year: Element Fixed/ variable Policy Proposed changes for 2014 Total guaranteed pay (TGP includes salary, car allowance, retirement, life insurance and medical aid contributions) Fixed The company generally pays TGP within the median of the market and TGP is targeted to be competitive for comparable roles in companies of similar complexity and size, taking cognisance of the individual. CEO s voluntary TGP reduction. A once-off pay and short-term incentive freeze has been volunteered by a number of managers so that higher increases can be given to semi-skilled employees to narrow the wage gap. Short-term incentive scheme (STIS) Variable Short-term incentive payments aim to create a pay-for-performance culture by considering personal and group performance targets over a one-year period. Proposed structural changes include: Improved alignment by emphasising divisional rather than group performance for this. Specific project focus applied to major business unit heads, major project leaders and the CEO. Long-term incentives Variable To drive performance by directly aligning the interests of shareholders and participants, and act as a retention tool over a three-year period. Two existing legacy incentive plans and one current plan (FSP) are reported on in this review. No anticipated changes to the structure of awards, but participation will be extended to certain grade 8 employees (foremen and sales consultants).

92 88 PPC Ltd Remuneration review continued TGP/basic pay Grades 1 to 7 employees are remunerated on a TGP package structure. Other employees are remunerated on a basic-plusbenefits structure. The TGP package is targeted to be competitive for comparable roles in companies of similar complexity and size. TGP is subject to annual review, with company performance, affordability, individual performance, changes in responsibilities and average increases granted to general staff considered when determining the size of any increases. The company uses professional advisers such as PwC Remchannel for benchmark information to guide decisions on salary adjustments. Salaries are adjusted around the benchmarks depending on individual performance and experience, and reviewed each year. The review considers changes in scope of roles performed by individuals, changes required to meet the principles of the remuneration policy and market competitiveness of salaries and benefits. Attention is paid to consistent job evaluation and grading of roles throughout the group, to ensure equity of reward, to facilitate transformation objectives and ensure mobility within the company. With effect from 1 October 2013, the CEO has voluntarily agreed to a R reduction in his TGP, and a number of managers have elected to be subject to a pay and short-term incentive freeze so that higher increases can be given to semi-skilled employees, narrowing the wage gap. Generally, in determining TGP increases for executive directors, the committee considers average increases to the general staff population and conducts a benchmarking exercise. In selecting a comparator group, companies listed on the JSE are sized according to sector, EBITDA 1, total assets, turnover and number of employees. Companies that are comparable to PPC based on these factors and of a similar market capitalisation are selected. Certain larger companies that are considered direct comparators are also added to this list. Salary and benefit adjustments for directors are reviewed and approved by the remuneration committee, while overall adjustments for all other employees are approved by the CEO. 1 EBITDA group earnings before interest, tax, depreciation and amortisation. Benefits The table details benefits provided to employees, including executive directors, as part of TGP or in addition to basic pay: Benefit Retirement fund Medical aid Group personal accident cover Car allowance Detail Participation in the PPC Retirement Fund is compulsory for all permanent employees. The fund is an in-house defined contribution fund that supplies risk cover for death and disability. All employees are required to belong to a choice of company-sponsored external medical aids or to be a member of a 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 a portion of their TGP as a car allowance. Short-term incentive scheme Employees on grades 1 to 7 participate in the company s STIS and levels below participate in a bonus pool. The approximate on-target 2 and maximum earnings potential for the 2013 financial year were: Level On-target % of TGP Maximum % of TGP CEO 69% 120% Other executive directors 58% 100% Prescribed officers 45 50% 60 80% Financial and personal performance is used to determine the bonus payment under the STIS. The weighting between financial and personal performance is: Level Financial Personal CEO and executive directors 70% 30% Prescribed officers 50% 50% In the past, the financial component of STIS was based on EBITDA. A second metric was added for the 2013 STIS, being the group cash conversion ratio (CCR), which reflects the importance of effectively managing cash flow. 2 Based on on-target financial performance and 75% achievement of personal targets.

93 PPC Ltd 89 From the 2014 financial year, the following STIS will be operated: Standard STIS (majority of employees) Business unit heads Major project leaders Internal audit employees CEO Measurements Depending on role, the financial performance measure will be based on EBITDA of a specific business unit, or group performance, while group CCR will act as a gatekeeper. Financial performance will be multiplied by the individual scorecard outcome. The maximum bonus percentages will be revisited. This STIS will operate on the same basis as the standard STIS, but instead of an individual scorecard, a project scorecard will be used. Based on successful timely completion of major projects. Calculated on an equitable basis to standard STIS but emphasising only individual performance and having no reference to financial performance. A combination of the following measures will be used: Annual group EBITDA targets Delivery of projects Individual scorecard Measurement period One year Generally one year, but could be extended if the project scope extends beyond one year Typically over two to three years with no payment before project completion One year Up to the end of his fixed term contract in 2017 Details of financial targets and key performance areas (KPAs) for the 2013 financial year, their weighting and computation of short-term incentives are disclosed in part 2 of this report. The committee retains the discretion to make upward or downward adjustments to bonuses earned at the end of the year on an exceptional basis, considering both financial performance and the overall and specific contribution of individuals in meeting the company s objectives. Long-term incentive The major design principles of the company s long-term incentive are to: Attract, motivate and retain participants as part of a market-competitive package Reward participants for medium to longer-term company performance Align participants with shareholders interests Legacy plans Until 2011, the company operated a cash-settled share appreciation right scheme and a cash-settled restricted share scheme (RSS). With the exception of MMT Ramano, who continues to participate in the restricted share scheme in terms of her employment contract, no new awards have been made under the legacy plans since 2011, and all prior awards will continue until fruition or expiry.

94 90 PPC Ltd Remuneration review continued Current plan The salient terms of the forfeitable share plan (FSP) are: Purpose Description of the plan To align employees with shareholders over the long term by making performance awards and, at the same time, to act as a retention tool by making retention awards. An FSP award is a free transfer of shares to a participant on the award date. However, the shares are subject to risk of forfeiture where company performance conditions are not met over a predetermined performance period (typically over three financial years); and/or a participant ceases employment prior to the vesting date. Prior to the vesting date, the participant has dividend and shareholder voting rights. As the company is faced with skills shortages and the risk of losing employees, a portion of each award will be subject to continued employment only (retention awards) and the remainder will be subject to continued employment and performance conditions (performance awards). Eligibility Employees on grades 1 to 7 are eligible for FSP awards, subject to approval by the remuneration committee. From 2014, participation will be extended to foremen and sales consultants (certain grade 8 employees). Mix between retention and performance awards Performance period and conditions Vesting period Dilution The level of seniority determines the mix between performance awards and retention awards, shown below: Position Grade Performance award Retention award CEO 1 75% 25% Executive directors 2 75% 25% Prescribed officers % 60 50% The performance condition used to determine the extent to which the performance award vests is growth in headline earnings per share (HEPS) measured over a three-year performance period. Three years from the award date. The FSP is not dilutive to shareholders as no shares can be issued under the FSP. The FSP can only be settled by a market purchase of shares. Despite the fact that long-term incentives will not result in any shareholder dilution, PPC has adopted quasi dilution limits to ensure overall affordability to the company on the one hand and reasonable, but attractive, benefits to executives on the other. The aggregate maximum number of awards that may be made under the FSP, RSS and LTIP is restricted to 5% of issued shares as at 1 September 2011, totalling shares (or quasi shares for the LTIP and RSS). Individual limit The maximum number of long-term incentive awards that may be held by an individual may not exceed 0,5% of the issued share capital. Early termination The rules of the FSP distinguish between so-called good leavers (death, retrenchment, retirement, ill health, injury or disability) and bad leavers (resignations or dismissals). Bad leavers forfeit all unvested awards. Good leavers will receive a proportion of their unvested awards, pro-rated for service and performance to the date of terminating employment. Award policy Subject to the discretion of the remuneration committee, the FSP is used for annual long-term incentive awards based on multiples of the TGP of the employee. The committee reviews these multiples regularly to ensure they are in line with market trends, and remain fair and motivating as longer-term rewards. The values of the 2013 awards at the date of award were as follows: Value at grant date Position as a % of TGP CEO and CFO 55% Other executive directors 46% Prescribed officers 22 30%

95 PPC Ltd 91 BBBEE schemes South African employees participated in a BBBEE scheme in 2008 and a second BBBEE scheme in Certain directors and prescribed officers also participated in these schemes as detailed on page 102. Package design PPC aims to reward executive directors and management with performance-based variable pay which will, depending on role, function and responsibility constitute between 40% and 60% of their total remuneration. The current on-target pay mix for executive directors and prescribed officers is as follows: Pay mix on-target (%) TGP CEO STI (on-target) CFO Prescribed officers LTI (indicative expected value) Changes to the remuneration policy are aimed at supporting a performance-driven culture in the company. Following remuneration policy changes noted, the variable pay levels for on-target performance will be reduced while achieving stretch performance will result in higher variable pay levels. Retention payments or severance lump sums Retention payments (over and above FSP retention awards) or discretionary severance lump sums are only considered in exceptional circumstances. Where these payments have been made, they are detailed in part 2 below the remuneration tables where the payment is disclosed. 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 with a term of not less than a year 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 Appointment of executive and non-executive directors Both executive and non-executive directors 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. The appointment of a non-executive director may be terminated without compensation if that director is not re-elected by shareholders or otherwise in accordance with the company s memorandum of incorporation. 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. In this regard, the chief executive officer and the remuneration committee rely on benchmark studies by its independent advisers based on the same comparator group used for executive directors remuneration. In selecting a comparator group, companies listed on the JSE are sized according to sector, EBITDA, total assets, turnover, number of employees and market capitalisation. Certain larger companies that are considered direct comparators are added to this list. As suggested by King III, board fees comprise both a base fee and an attendance fee which, in the committee s view, is sufficient to attract board members with the appropriate level of skill and expertise. As a policy principle, fees are aimed at the median of the selected comparator group. Fees are not automatically increased to be aligned with the median of the market. Non-binding advisory vote by shareholders At the annual general meeting, shareholders will be requested to express their level of support for part 1: remuneration philosophy and policy.

96 92 PPC Ltd Remuneration review continued Part 2: Implementation of policies for the review period Summary of remuneration activities/decisions during the year The main issues considered and approved by the remuneration committee for 2013 were: Approval of the remuneration committee s working cycle for 2013 Approving salary increases for executive directors Approval of minor amendments to the remuneration committee s terms of reference Approval of amendments to the company s remuneration policy Approval of STIS bonus payments for executive directors for 2013 and actual STIS targets for 2013 and 2014 Approval of 2013 FSP awards Approving this remuneration report Reviewing recommendations for fees payable to non-executive directors Total guaranteed pay (TGP) The average increase in TGP in October 2012 was 6,0% for executive directors and prescribed officers. This compares to an increase of between 6,0% and 7,0% for all employees, with the highest increases being awarded to semi-skilled employees. With effect from 1 October 2013, the CEO has voluntarily agreed to a R reduction in his TGP, and a number of managers have elected to be subject to a pay and short-term incentive freeze so that higher increases can be given to semi-skilled employees, narrowing the wage gap. In South Africa, this has enabled a onceoff increase of R875 per month for semi-skilled employees and lifted PPC s minimum wage for permanent full-time employees to R6 500 (±R8 000 TGP). Retention payments In terms of the retention agreement entered into with Mr Esterhuysen in 2011, the amount owing to him for the 2013 financial year has been accrued in terms of the agreement. Payments to outgoing directors In terms of his employment contract, the outgoing CEO, Mr Paul Stuiver, was eligible for a long-term bonus calculated by reference to predetermined performance conditions. An amount of R was paid in respect of partial satisfaction of these conditions and taking cognisance of his support for the initiative of narrowing the wage gap in the company. On resignation, Mr Helepi was paid R and forfeited the rights he had received in respect of the second BBBEE transaction. On resignation, Mr Abdul Kader was paid R in lieu of leave and notice and forfeited the unvested rights he had received in respect of both BBBEE transactions and all FSPs. STIS outcome 2013 financial performance measures Financial performance for the review period depended on achieving the following group EBITDA and CCR targets, as approved by the remuneration committee: EBITDA yearon-year growth (70% weighting) % CCR (30% weighting) % % of maximum earning potential Stretch Target Threshold Linear interpolation is applied between the above levels personal performance measure The personal performance component is measured on a balanced scorecard. Personal performance below 70% results in no bonus accruing at all. The company s scorecard contained the following: Performance pillar People Detail Effective motivation of staff, appropriate action taken for issues, evidence of CEO approval from top- 100 staff, zero fatalities and lost-time injury rate below 0,18 Customers Increase sales by 6% and defend and extend presence in SA, Zimbabwe and Botswana Shareholders Internal processes Exceed budgeted EBITDA target and cash conversion ratio of 0,98% Complete one African expansion deal and commit to one further African deal Design and implement a plan to retain and recruit skills needed for African expansion Complete legal and blueprint process for group restructure Implement innovation award system and two emerging ideas No significant breach of corporate governance Weighting %

97 PPC Ltd STIS bonuses for executive directors and prescribed officers The company did not achieve the threshold EBITDA target set for the STIS, but exceeded the CCR stretch target, resulting in a score of 30% for financial performance, which is weighted 70% for executive directors and 50% for prescribed officers. Scores for personal performance were 80% for both of the executive directors, and ranged between 70% and 80% for the prescribed officers. The CEO s performance measures for 2013 were determined by the board and included elements of stakeholder management, financial targets and implementation of strategy. Performance evaluation against these targets was conducted by a subcommittee of the board and confirmed by the board. Bonuses were also influenced by the short-term incentive freeze elected by certain employees. The table on page 100 illustrates the bonuses for executive directors and prescribed officers for the year ended 30 September Long-term incentives Overview of likelihood of vesting The following table summarises the actual and likely outcome of vesting of the performance component of awards that have been made under the FSP: Year of award Actual/likely outcome 2011 Performance component has been forfeited as the performance condition has not been met 2012 Performance component likely to vest as the performance condition is likely to be met 2013 Performance component likely to vest as the performance condition is likely to be met FSP 2013 award Performance condition targets for the 2013 award were again based on HEPS growth over three years: Target Vesting percentage Growth Threshold 33,33% CPI + 3% On-target 66,67% CPI + 6% Stretch 100% CPI + 9% Linear vesting applies between the above levels. Value of long-term incentives The tables below deal with the company s prior and current long-term incentives as at 30 September 2013: Number exercised (LTIP)/ vested (RSS and FSP) in current year Price on exercise date/ vesting price R Number allocated Number allocated Number forfeited Grant Exercise/ vesting Current Estimated value at in prior in current in current Closing price gain unit value year-end Award date years year year number R R000 R R000 Executive directors P Esterhuysen Share appreciation rights (LTIP) 2008/09/ , /09/ , Restricted share units (RSS) 2009/09/ , , FSP with performance conditions 2012/09/ , /03/ , Total

98 94 PPC Ltd Remuneration review continued Award date Number allocated in prior years Number allocated in current year Number exercised (LTIP)/ vested (RSS and FSP) in current year Number forfeited in current year Closing number Grant price R Price on exercise date/ vesting price R Exercise/ vesting gain R000 Current unit value R Estimated value at year-end R000 Executive directors continued KM Gordhan FSP no performance conditions 2013/03/ , FSP with performance conditions 2013/03/ , Total MMT Ramano Restricted share units (RSS) 2011/08/ , /09/ , /09/ , FSP with performance conditions 2012/09/ , /03/ , Total Prescribed officers PL Booysen Share appreciation rights (LTIP) 2007/08/ ,00 1, /09/ ,80 6, /09/ ,35 6, FSP no performance conditions 2011/09/ , /02/ , /03/ , FSP with performance conditions 2011/09/ /02/ , /03/ , Total 1 411

99 PPC Ltd 95 Award date Number allocated in prior years Number allocated in current year Number exercised (LTIP)/ vested (RSS and FSP) in current year Number forfeited in current year Closing number Grant price R Price on exercise date/ vesting price R Exercise/ vesting gain R000 Current unit value R Estimated value at year-end R000 Prescribed officers continued JT Claassen Share appreciation rights (LTIP) 2007/08/ ,00 1, /09/ ,80 6, /09/ ,35 6, FSP no performance conditions 2011/09/ , /02/ , /03/ , FSP with performance conditions 2011/09/ /02/ , /03/ , Total AC Lowan FSP no performance conditions 2013/03/ , FSP with performance conditions 2013/03/ , Total 308

100 96 PPC Ltd Remuneration review continued Award date Number allocated in prior years Number allocated in current year Number exercised (LTIP)/ vested (RSS and FSP) in current year Number forfeited in current year Closing number Grant price R Price on exercise date/ vesting price R Exercise/ vesting gain R000 Current unit value R Estimated value at year-end R000 Prescribed officers continued KPP Meijer Share appreciation rights (LTIP) 2007/08/ ,00 1, /09/ ,80 6, /09/ ,35 6, FSP no performance conditions 2011/09/ , /02/ , /03/ , FSP with performance conditions 2011/09/ /02/ , /03/ , Total KP Odendaal Share appreciation rights (LTIP) 2008/09/ , /09/ , FSP no performance conditions 2012/02/ , /03/ , FSP with performance conditions 2012/02/ , /03/ , Total 2 150

101 PPC Ltd 97 Award date Number allocated in prior years Number allocated in current year Number exercised (LTIP)/ vested (RSS and FSP) in current year Number forfeited in current year Closing number Grant price R Price on exercise date/ vesting price R Exercise/ vesting gain R000 Current unit value R Estimated value at year-end R000 Prescribed officers continued JHDLR Snyman Share appreciation rights (LTIP) 2007/08/ ,36 1, /09/ ,80 6, /09/ ,35 6, FSP no performance conditions 2012/02/ , /03/ , FSP with performance conditions 2012/02/ , /03/ , Total JJ Taljaard Share appreciation rights (LTIP) 2007/08/ ,00 1, /09/ ,80 6, /09/ ,35 6, FSP no performance conditions 2011/09/ , /02/ , /03/ , FSP with performance conditions 2011/09/ /02/ , /03/ , Total 2 903

102 98 PPC Ltd Remuneration review continued Award date Number allocated in prior years Number allocated in current year Number exercised (LTIP)/ vested (RSS and FSP) in current year Number forfeited in current year Closing number Grant price R Price on exercise date/ vesting price R Exercise/ vesting gain R000 Current unit value R Estimated value at year-end R000 Prescribed officers continued RS Tomes Share appreciation rights (LTIP) 2007/08/ ,00 1, /09/ ,80 6, /09/ ,35 6, FSP no performance conditions 2011/09/ , /02/ , /03/ , FSP with performance conditions 2011/09/ /02/ , /03/ , Total A Wadee Share appreciation rights (LTIP) 2007/08/ ,00 1, /09/ ,80 6, /09/ ,35 6, FSP no performance conditions 2011/09/ , /02/ , /03/ , FSP with performance conditions 2011/09/ /02/ , /03/ , Total 1 756

103 PPC Ltd 99 Award date Number allocated in prior years Number allocated in current year Number exercised (LTIP)/ vested (RSS and FSP) in current year Number forfeited in current year Closing number Grant price R Price on exercise date/ vesting price R Exercise/ vesting gain R000 Current unit value R Estimated value at year-end R000 Past directors S Abdul Kader (resigned 5 August 2013) Share appreciation rights (LTIP) 2008/09/ , /09/ , Restricted share units (RSS) 2009/09/ ,71 FSP no performance conditions 2012/02/ , /03/ , FSP with performance conditions 2012/02/ , /03/ , Total RH Dent (retired 31 December 2010) Share appreciation rights (LTIP) 2008/09/ , /09/ , SG Helepi (resigned 14 February 2013) Share appreciation rights (LTIP) 2007/08/ ,00 1, /09/ , /09/ , FSP no performance conditions 2012/02/ , ,20 FSP with performance conditions 2012/02/ , ,20 Total

104 100 PPC Ltd Remuneration review continued Remuneration paid to executive directors and prescribed officers in 2013 In line with international best practice, the method for disclosing long-term incentives earned has changed to reflect the value attributable to long-term incentives that vested in the financial year. The executive directors and prescribed officers remuneration for the year ended 30 September 2013 was as follows: TGP Variable pay R000 Salary Retirement and medical contributions Car allowance Incentive bonus LTI attributable value* Other Total Executive directors P Esterhuysen KM Gordhan MMT Ramano Prescribed officers PL Booysen JT Claassen AC Lowan KPP Meijer KP Odendaal JHDLR Snyman JJ Taljaard RS Tomes A Wadee Past directors S Abdul Kader SG Helepi P Stuiver The following directors were not eligible for a short-term incentive bonus in 2013 as they were not in employment at the date of payment in November 2013: Salim Abdul Kader, Peter Esterhuysen, Sello Helepi and Paul Stuiver. * Arising from the last tranche of the 2008 LTIP award, the second third of the 2009 LTIP award, the 2009 RSS award and the 2012 FSP award that vested early for participants who terminated their services. 1 Employed for 10 months of the financial year. 2 Employed for 6 months of the financial year. 3 Employed for 11 months of the financial year. 4 Employed for 3 months of the financial year. 5 Refer page 92 Retention payments and payments to outgoing directors. The executive directors and prescribed officers remuneration for the year ended 30 September 2012 was as follows: R000 Salary TGP Retirement and medical contributions Car allowance Incentive bonus Variable pay LTI attributable value* Executive directors S Abdul Kader P Esterhuysen SG Helepi MMT Ramano P Stuiver Prescribed officers KPP Meijer KP Odendaal JHDLR Snyman * Arising from the 2008 and 2009 RSS awards. Total

105 PPC Ltd 101 Non-executive director fees Non-executive director fees are as approved by the previous annual general meeting and valid from that date until the next AGM. Total emoluments to non-executive directors for the year ended 30 September 2013 were: Committee R000 Board fees Chairman fees Audit Risk and compliance Social and ethics Special meetings Deal Total ZJ Kganyago NB Langa-Royds AJ Lamprecht MP Malungani SK Mhlarhi B Modise TDA Ross J Shibambo BL Sibiya Total emoluments to non-executive directors for the year ended 30 September 2012 were: Committee R000 Board fees Chairman fees Audit Risk and compliance Nominations Remuneration Nominations Remuneration Social and ethics Special meetings Deal Total ZJ Kganyago NB Langa-Royds AJ Lamprecht MP Malungani SK Mhlarhi* B Modise TDA Ross J Shibambo BL Sibiya JS Vilakazi** * Appointed 1 March 2012 ** Resigned 29 February Interests of directors and prescribed officers in stated capital The aggregate beneficial holdings of directors of the company 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 have been no material changes in these shareholdings since that date. Current directors Name Direct Indirect Direct Indirect P Esterhuysen KM Gordhan SK Mhlarhi Prescribed officers Name Direct Indirect Direct Indirect KP Odendaal Past directors Name Direct Indirect Direct Indirect P Stuiver

106 102 PPC Ltd Remuneration review continued Interests of directors and prescribed officers in BBBEE schemes In 2008, in terms of the company s first BBBEE transaction (BEE1) 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 are subject to a lock-in expiring on 15 December Certain nonexecutive directors received vested rights in 2008 in a trust owning donated shares which are subject to vesting conditions expiring annually in thirds from 15 December 2012 and a lock-in expiring on 31 December During the 2013 financial year, following the implementation of the company s second BBBEE transaction (BEE2) 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 lock-in period restricting transferability which expires in September Interest of directors in contracts The directors have certified that they had no material interest in any transaction of any significance with the company or any of its subsidiaries. Participation rights held by directors and prescribed officers at 30 September 2013 BEE1 BEE2 Executive directors P Esterhuysen KM Gordhan MMT Ramano Non-executive directors ZJ Kganyago NB Langa-Royds J Shibambo Prescribed officers PL Booysen JT Claassen AC Lowan KPP Meijer KP Odendaal JHDLR Snyman JJ Taljaard RS Tomes A Wadee Past directors S Abdul Kader SG Helepi

107 PPC Ltd 103 Risk and compliance review To ensure value add and continuous improvement to PPC s governance system, we have initiated the appraisal of our enterprise risk management framework. This will encompass the review of risk policy, identification of risk universe, establishment and evaluation of governance structures, identification of key risk indicators, alignment of risk to objectives and reassessment of risk appetite and tolerance limits. Risk management policy Risk is inherent in most business activities. The PPC group will evaluate and manage risk through a structured and integrated risk management process that will consider the interest of all its stakeholders. Risk management comprises the identification and evaluation of existing and potential risk associated with the company s operations and strategy, followed by appropriate management responses such as tolerance (acceptance), mitigation, transfer, avoidance or termination or a combination of such responses. The board is accountable to shareholders for the governance of risk and should ensure that the company s strategic and business plans have properly considered and evaluated the associated risks. In fulfilling this obligation, the board approves and annually evaluates the implementation of this policy and the risk management plan of the company. The board has delegated responsibility to evaluate the risk management progress, the effectiveness of risk management activities, key risks facing the company and appropriate responses to address key risks to the risk and compliance committee of the board. The board has delegated the responsibility to design, implement and monitor the risk management plan to management. Risk management is, however, a team effort and every employee will be responsible for the management of risk within his/her working environment and should therefore assist to identify risk at all levels and within all functions of the business as required by the integrated risk management plan. Regular and formal risk analysis will provide the basis for risk identification and evaluation and the appropriate risk responses and treatment. Management will ensure effective management of risk through continuous and regular measurement and reporting of the company s risk management performance to the risk and compliance committee. Control assurance will focus on continuously improving the underlying quality and sustainability of the company s business activities. The risk management process will cover the whole spectrum of the company s activities including safety and health, commercial, financial, human resources, technical, legal, regulatory, contractual, political, information, competitive, social, strategic, environmental, tax exposure and reputational risks. Risk tolerance and risk appetite During the year PPC s risk tolerance and risk appetite were reviewed. Risk tolerance Any occurrence or potential occurrence which had or may have, in the view of management, a +50% (probability) chance of resulting in an annual negative impact on cash of +5% of profit after tax (2012: R50 million) or any occurrence which caused or may cause a fatality.

108 104 PPC Ltd Risk and compliance review continued Risk identification process PPC s risk identification process is based on a bottom-up approach, which ensures that all risks are taken into cognisance and managed at the correct level of the organisation s hierarchy. The outcome of this process informs the key strategic risks which are highlighted as material issues on page 12 of this report. Group material issues Group strategic risk register noted Board Group strategic risk register reviewed Risk and compliance committee External input Group strategic risk register refined Group management committee Group strategic risk register compiled Risk assessments Financial risk sub-committee Credit Funding Treasury Compliance status Physical asset review Risk assessments South Africa and international operations Cement, lime and aggregates Risk assessments Strategy PESTEL Global industry Porter s five forces High-level risk assessment Business development team input External stakeholders views Shareholders Customers Other stakeholders The operational risk registers that provide input to the group s material issues are reviewed annually to ensure relevance and escalation of any issues that may require attention.

109 PPC Ltd 105 Business continuity management PPC views business continuity as a critical process of the business that aims to ensure sustainability of our business by focusing on those aspects that may disrupt our company s strategy, operations, key products and services. As a business, we strive to ensure that this process receives the attention required by any process key to the delivery of our main products and underlying services. With this view in mind, efforts to improve the existing business continuity management system and aligning it with internationally recognised best practices (ISO 22301) have been set in motion. Routine simulations and disaster recovery exercises were successfully conducted during the year at all operational sites. As part of the annual internal audit plan, a maturity evaluation of business continuity management was conducted and recommendations on process improvement were made. These will be incorporated into the business continuity management implementation strategy. Insurance Underwriting and machinery breakdown surveys and maximum probable loss calculations were conducted at all PPC operations, including those in Rwanda, Botswana and Zimbabwe. A review of the appropriateness of the PPC insurance cover was conducted during the year. No significant issues were identified. PPC s insurance cover and associated premiums were reviewed in July 2013 and cover extended to the end of February Compliance report Background As a governance principle, the board ensures that the company complies with applicable laws and considers adherence to nonbinding rules, codes and standards. In the PPC 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 that it is observed and that compliance risk is reported. The committee s mandate can be found on page 81. Management is responsible for implementation of the compliance policy and for the day to day management of compliance risks. This includes responsibility for ensuring that appropriate remedial or disciplinary action is taken if breaches are identified. 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 the execution of this responsibility it relies on the assistance of the management of all subsidiaries and business units and the designated unit compliance officers. The compliance function is subject to review by group internal audit. PPC s universe of legislation With the assistance of the legal department, the legislation applicable to PPC has been identified. In it the business unit to whom a specific law is most applicable is indicated. The register also indicates the following: regulators responsible for the enforcement of the legislation; basic content and scope of the legislation; an analysis of impact of the legislation; and details of the penalties for non-compliance with the legislation. A complication in the management of the universe of legislation is that laws are constantly repealed, amended or announced. This therefore requires the publication of a bi-monthly compliance review to: identify all changes to the legislation; identify changes to practice and procedure and the training requirements to ensure compliance; and provide information on compliance training events. Legislation watchlist The following new legislation is currently on the PPC group watch list: Mineral and Petroleum Resources Development Amendment (MPRDA) Bill, 2012: There are dramatic amendments in the Draft Amendment Bill which potentially could have a major impact on stakeholders in the mining industry. National Environmental Management Air Quality Act: Draft national dust control regulations. Draft Infrastructure Development Bill: The main object of the draft Bill seems to be the identification and implementation of strategic integrated projects which are of significant economic or social importance to the State or a region. The Financial Markets Bill, 2012 (the Bill), seeks to replace the Securities Services Act, 2004 (Act 36 of 2004) (the SSA): The SSA took effect on 1 February It governs the regulation of securities services in South Africa and primarily focuses on the regulation of securities exchanges, central securities depositories, clearing houses and their members. (Act Commences June 2013) Labour Law amendments: Parliament s Portfolio Committee on Labour continues to scrutinise and consider the following proposed legislation: the Labour Relations Amendment Bill, 2012; the Basic Conditions of Employment Amendment Bill, 2012; the Employment Equity Amendment Bill, 2012; and the Employment Services Bill, 2012.

110 106 PPC Ltd Risk and compliance review continued BBBEE Bill: Revisions to the Bill and the dti codes of good practice will change the way in which empowerment is measured in South Africa. Carbon tax: The key design features of the new carbon tax are that the tax will be implemented on 1 January 2015 at R120 per ton of CO 2 e (carbon dioxide equivalent), rising 10% a year (R12 in year two; R13.20 in year three, etc). The revised double tax agreement between South Africa and Mauritius was announced on Monday, 27 May. It will have implications for both Mauritian companies investing into South Africa as well as for South African companies expanding offshore via Mauritius. The Protection of Personal Information Act (POPI) will soon be law. The latest draft of POPI has been passed by the national assembly and should be adopted by the National Council of Provinces soon. Notable changes Prevention and Combating of Corrupt Activities Act, 12 of 2004: The SAPS Amendment Act 2012 amended the duty to report corrupt transactions on 14 September The Competition Commission (the Commission) for the Common Market for Eastern and Southern Africa (COMESA) region announced on 14 January that it is now operational. Specific compliance issues Environmental compliance In this reporting year PPC reported two section 30 of the National Environmental management Act (NEMA). PPC Riebeeck reported a historical diesel tank spillage. The Department of Environmental Affairs issued a positive directive to address the leak. PPC Riebeeck is busy implementing recommendations from the directive. PPC Jupiter and PPC Hercules were inspected by Gauteng Environmental Inspectorate to verify compliance against environmental permit conditions and the duty of care. No reports have been received for both plants. Carbon tax PPC has engaged extensively with authorities, on many levels, regarding the carbon tax. However the Department of Treasury has not taken many of the suggestions of industry into their latest policy document. The carbon tax is still expected to have a significant impact on PPC s bottom line; however, the impact is likely to be delayed beyond the planned implementation date of January 2015 due to the complexity of the implementation. It is likely that the tax will be delayed by one or two years. National Environmental Management Waste Act: As from 1 January 2013, the National Waste Information Regulations regulates the collection of data and information for the national waste information system. Protection from Harassment Act came into operation in April Mozambique has promulgated Competition Law, 10 of 2013, which will enter into force on 10 July The Act applies to all economic activities in or having an effect in Mozambique, subject to certain exceptions. The Act creates an independent regulating authority (the Authority). The Act prohibits certain horizontal and vertical agreements and the abuse of dominance. The Authority will also regulate concerted conduct.

111 PPC Ltd 107 Independent assurance report Assurance report of the independent auditor, Deloitte & Touche, to PPC Limited on their sustainability indicator disclosures and their self-declared Global Reporting Initiative G3.1 application level as contained in their Integrated Report for the year ended September 2013 (the report) Scope of our work PPC Limited (PPC) engaged us to perform limited assurance procedures for the year ended 30 September 2013 on the selfdeclared Global Reporting Initiative G3.1 Guidelines (GRI 3.1) C+ application level and the following subject matter: The selected performance indicators are as follows (for South Africa only, unless otherwise stated): Direct energy consumption by primary energy source Indirect energy consumptions by primary source Total direct and indirect greenhouse gas emissions by weight Monetary value of significant fines and total number of nonmonetary sanctions for non-compliance with environmental laws and regulations (including Botswana and Zimbabwe) Total workforce by employee type, employment contract, and region, broken down by gender (including Botswana) Total number and rate of new employee hires and employee turnover by age group, gender, and region (including Botswana) Percentage of employees covered by collective bargaining agreements (including Botswana and Zimbabwe) Rates of injury, occupational diseases, lost days, absenteeism, and total number of work-related fatalities, by region and by gender (including Botswana and Zimbabwe) Average hours of training per year per employee by gender and by employee category Composition of governance bodies and breakdown of employees per employee category according to gender, age group, minority group membership, and other indicators of diversity 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 (including Botswana and Zimbabwe) Direct economic value generated and distributed, including revenues, operating costs, employee compensation, donations and other community investments, retained earnings, and payments to capital providers and governments (including Botswana and Zimbabwe) Directors responsibility The directors are responsible for the preparation of the Integrated Report for the year ended September 2013, including the implementation and execution of systems to collect required sustainability data. Auditors responsibility Our responsibility is to express our limited assurance conclusion on selected sustainability performance disclosures and the self-declared GRI 3.1 application level for the year ended 30 September We conducted our limited assurance engagement in accordance with the International Standard on Assurance Engagements 3000, Assurance Engagements Other Than Audits or Reviews of Historical Financial Information (ISAE 3000). This standard requires us to comply with ethical requirements and to plan and perform our assurance engagement to obtain sufficient appropriate evidence on which to base our limited assurance conclusion. The evaluation criteria used for our assurance are the PPC definitions and basis of reporting. GRI 3.1 served as the criteria used for the application level assurance. Summary of work performed Considering the risk of material error, our multi-disciplinary team of sustainability assurance specialists planned and performed our work to obtain all the information and explanations we considered necessary to provide sufficient appropriate evidence. Our work was planned to mirror PPC s own group level compilation processes. Key procedures we conducted included: Gaining an understanding of PPC s systems through interviews with management responsible for reporting systems at corporate head office and site level Reviewing the systems and procedures to capture, collate, aggregate, validate and process source data for the assured performance data included in the report Our conclusion We noted deviations relating to the accuracy and completeness of the average hours of training by gender and employee category. With the exception of the matter noted above, based on our examination of the evidence obtained, nothing has come to our attention which causes us to believe that the selected sustainability performance indicators are not fairly presented. Based on the work performed on the report, nothing has come to our attention that causes us to believe that management s declaration of an application level C+ in terms of the GRI 3.1 Guidelines is not fairly stated. This report is made solely to PPC in accordance with our engagement letter. Our work has been undertaken so that we might state to the company those matters we are required to state to them in a limited assurance report and for no other purpose. Thus, we do not accept or assume responsibility to anyone other than PPC for our work, for this report, or for the conclusions we have formed. Deloitte & Touche Registered Auditor Per AN le Riche Partner 26 November st Floor, The Square, Cape Quarter, 27 Somerset Road, Greenpoint, Cape Town, 8005.

112 108 PPC Ltd Index to Global Reporting Initiative indicators (G3.1) GRI Topic Page/link Strategy and analysis 1.1 Statement from CEO Key impacts, risks and opportunities 12, 42, 62 Organisational profile General organisational details 2, 7, Awards 68 Report parameters Report profile i Report scope and boundary i 3.12 GRI index Assurance 107 Governance, commitments and engagement Governance issues Commitment to external initiatives Stakeholder engagement 8 Environmental performance EN1 EN2 Materials used and recycling 66 EN3 EN7 Energy 65 EN8 EN10 Water 66 EN11 EN15 Biodiversity 67 EN16 EN25 Emissions, effluents and waste 62 EN26 EN27 Products and services 66 EN28 Compliance 63 EN29 EN30 Transport

113 PPC Ltd 109 GRI Topic Page/link Social performance HR1 HR4 Human rights and non-discrimination 72 HR5 HR11 Freedom of association, security practices, indigenous rights 45, 72 LA1 LA5 and LA15 Workforce breakdown, turnover, labour relations 48 LA6 LA9 Occupational health and safety 42 LA10 LA12 Training and education 50, 51 LA13 LA14 Diversity and equal opportunity 48, 72 Society SO1, SO9 and SO10 Community 59 SO2 SO4 Corruption 72 SO5 SO8 Public policy and anti-competitive behaviour 72 PR1 PR9 Customer health and safety 83 Economic performance EC1 Economic value generated and distributed 11 EC2 EC4 Implications of climate change, defined benefit plan obligations, assistance from government 12, 62 EC5 EC7 Market presence 45, 69, 86 EC8 Infrastructure investments 54 EC9 Indirect economic impacts 54

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115 Case study EQUALITY BEYOND THE BAG The PPC Women s Forum, whose vision is to attract, nurture and advance female talent to lead PPC, is setting the standard in transformation, empowerment and the upliftment of people, especially women in business and the communities in which we engage. The forum was launched in October 2011 to facilitate dialogue among women and create support networks drawn from skilled and experienced men and women in PPC. It has become a leading forum of its kind not only for the women of PPC. In 2013, the forum achieved a number of objectives and milestones, including: Representation of women in the workforce up from 18,5% in 2011 to 21,7% in 2013 Close to 30% female representation at executive level Rollout of the forum to all sites, including Botswana and Zimbabwe Developing a pipeline of female leadership through mentorship, coaching and programmes for women in management Recognised as 2013 Gender Mainstreaming champions PPC is a signatory to the UN Women Empowerment Principles and the forum is promoting implementation of the following principles: Establishing high-level corporate leadership for gender equality Promoting education, training and professional development for women Ensuring the health, safety and well-being of all employees Treating all women and men fairly at work respect and support human rights and non-discrimination Promoting equality through community initiatives Through the forum, the women of PPC are developing their potential, and adding an invigorating dimension to the workplace. Please see case studies on our website.

116 112 PPC Ltd Summarised annual financial statements for the year ended 30 September 2013 BASIS FOR PREPARATION The summarised consolidated financial statements have been prepared in accordance with the recognition and measurement criteria of International Financial Reporting Standards (IFRS) and its interpretations adopted by the International Accounting Standards Board (IASB) in issue and effective for the group at 30 September 2013 and the SAICA Financial Reporting Guides, as issued by the Accounting Practices Committee and financial reporting pronouncements as issued by the Financial Reporting Standards Council. The results are presented in accordance with IAS 34 Interim Financial Reporting and comply with the Listings Requirements of the JSE Limited and the Companies Act of South Africa. These summarised consolidated financial statements do not include all the information required for full annual financial statements and should be read in conjunction with the consolidated annual financial statements. These summarised consolidated financial statements have been prepared under the supervision of MMT Ramano, chief financial officer, CA(SA) and were approved by the board of directors on 18 November These summarised financial statements have been derived from the group s financial statements and are consistent in all material respects with the group s financial statements and have been audited by the company s auditors, Deloitte & Touche, who have issued an unmodified opinion thereon. The auditors report does not necessarily report on all of the information contained in this integrated report. Any reference to future financial information included in this integrated report has not been reviewed or reported on by the auditors. Shareholders are advised that in order to obtain a full understanding of the nature of the auditors engagement, they should obtain a copy of that report together with the accompanying financial information from the company s registered office. For a better understanding of the group s financial position these summarised financial statements should be read in conjunction with the group s annual financial statements, which can be found on or can be obtained from the group company secretary, whose details appear on page 129 of this report. An analysis of the key financial features for the year are included in the chief financial officer s report on pages 26 to 31 of this report. The accounting policies and methods of computation used are consistent with those used in the preparation of the annual financial statements for the year ended 30 September 2012, except for the following revised accounting standards and interpretations that were adopted during the year, and which did not have a material impact on the reported results: IAS 1 (amendment) Presentation of Items of Other Comprehensive Income IAS 12 Deferred Tax (Recovery of underlying assets) Circular 2/2013 (Headline earnings)

117 PPC Ltd 113 Independent auditors report on the audited summarised annual financial statements To the shareholders of PPC Ltd The audited summarised annual financial statements of PPC Ltd, contained in the accompanying summarised report, which comprise the summarised consolidated statement of financial position as at 30 September 2013, the summarised consolidated statement of comprehensive income, summarised consolidated statement of changes in equity and summarised consolidated statement of cash flows for the year then ended, and related notes, are derived from the audited consolidated annual financial statements of PPC Ltd for the year ended 30 September We expressed an unmodified audit opinion on those consolidated annual financial statements in our report dated 18 November Our auditors report on the audited consolidated annual financial statements contained an other matter paragraph titled other reports required by the Companies Act. The audited summarised annual financial statements do not contain all the disclosures required by the International Financial Reporting Standards and the requirements of the Companies Act of South Africa as applicable to annual financial statements. Reading the audited summarised annual financial statements, therefore, is not a substitute for reading the audited consolidated annual financial statements of PPC Ltd. Directors responsibility for the summarised consolidated annual financial statements The directors are responsible for the preparation of the summarised consolidated annual financial statements in accordance with the requirements of the JSE Limited listings requirements for summarised reports, and the requirements of the Companies Act of South Africa as applicable to summarised financial statements, and for such internal control as the directors determine is necessary to enable the preparation of the summarised consolidated annual financial statements that are free from material misstatement, whether due to fraud or error. The listings requirements require audited summarised reports to be prepared in accordance with the framework concepts and the measurement and recognition requirements of International Financial Reporting Standards (IFRS), the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and Financial Pronouncements as issued by the Financial Reporting Standards Council also, and to also, as a minimum, contain the information required by IAS 34 Interim Financial Reporting. Auditors responsibility Our responsibility is to express an opinion on the audited summarised annual financial statements based on our procedures, which were conducted in accordance with International Standards on Auditing (ISA) 810 Engagements to Report on Summary Financial Statements. Opinion In our opinion, the audited summarised annual financial statements derived from the audited consolidated annual financial statements of PPC Ltd for the year ended 30 September 2013 are consistent, in all material respects, with those audited consolidated annual financial statements, in accordance with the requirements of the JSE Limited listings requirements for summarised reports, and the requirements of the Companies Act of South Africa as applicable to summarised financial statements. Other reports required by the Companies Act The other reports required by the Companies Act paragraph in our audit report dated 18 November 2013 states that as part of our audit of the consolidated annual financial statements for the year ended 30 September 2013, we have read the directors report, the remuneration report, audit committee s report and the company secretary s certificate for the purpose of identifying whether there are material inconsistencies between these reports and the audited consolidated annual financial statements. These reports are the

118 114 PPC Ltd Independent auditors report on the audited summarised annual financial statements continued responsibility of the respective preparers. The paragraph also states that, based on reading these reports, we have not identified material inconsistencies between these reports and the audited consolidated annual financial statements. The paragraph furthermore states that we have not audited these reports and accordingly do not express an opinion on these reports. The paragraph does not have an effect on the audited summarised annual financial statements or our opinion thereon. Deloitte & Touche Registered auditors Per: B Nyembe Partner 18 November 2013 Buildings 1 and 2, Deloitte Place The Woodlands Office Park Woodlands Drive Sandton National Executive: LL Bam (chief executive), AE Swiegers (chief operating officer), GM Pinnock (audit), DL Kennedy (risk advisory), NB Kader (tax), TP Pillay (consulting), K Black (clients and industries), JK Mazzocco (talent and transformation), CR Beukman (finance), M Jordan (strategy), S Gwala (special projects) TJ Brown (chairman of the board), MJ Comber (deputy chairman of the board). A full list of partners and directors is available on request. BBBEE rating: Level 2 contributor in terms of the Chartered Accountancy Profession Sector Code. Member of Deloitte Touche Tohmatsu Limited.

119 PPC Ltd 115 Consolidated statement of financial position as at 30 September 2013 ASSETS Non-current assets Property, plant and equipment Goodwill Other intangible assets Non-current financial assets Equity-accounted investments Deferred taxation assets 2013 Rm 2012 Rm 3 Current assets Inventories Trade and other receivables Cash and cash equivalents Total assets EQUITY AND LIABILITIES Capital and reserves Stated capital (1 236) (1 181) Other reserves Retained profit Equity attributable to shareholders of PPC Ltd Non-controlling interests 578 Total equity Non-current liabilities Deferred taxation liabilities Long-term borrowings Provisions Other non-current liabilities Current liabilities Short-term borrowings Trade and other payables Total equity and liabilities

120 116 PPC Ltd Consolidated income statement for the year ended 30 September 2013 Revenue Cost of sales Gross profit Administrative and other operating expenditure Operating profit before items listed below: BBBEE IFRS 2 charges Zimbabwe indigenisation costs 93 Operating profit Fair value gains/(losses) on financial instruments 25 (3) Finance costs Investment income Profit before exceptional items Exceptional items (1) Earnings from equity-accounted investments 20 7 Profit before taxation Taxation Net profit Attributable to: Shareholders of PPC Ltd Non-controlling interests Earnings per share (cents) basic diluted Rm 2012 Rm

121 PPC Ltd 117 Consolidated statement of comprehensive income for the year ended 30 September 2013 Unrealised surplus on reclassification of plant Rm Foreign currency translation reserve Rm Availablefor-sale financial assets Rm Hedging reserves Rm Retained profit Rm Total comprehensive income Rm 2013 Net profit for the year Items that will not be reclassified to profit or loss (4) Revaluation of investments Deferred taxation on revaluation of investments (2) (2) Transfer to retained profit (4) 4 Items that will be reclassified to profit or loss upon derecognition Exchange rate differences on translation of foreign operations Cash flow hedge recognised directly through equity Other comprehensive income, net of taxation (4) Total comprehensive income (4) Net profit for the year Items that will not be reclassified to profit or loss (4) (2) 4 (2) Revaluation of investments (4) (4) Deferred taxation on revaluation of investments 2 2 Transfer to retained profit (4) 4 Items that will be reclassified to profit or loss upon derecognition Exchange rate differences on translation of foreign operations Cash flow hedge recognised directly through equity Other comprehensive income, net of taxation (4) 17 (2) Total comprehensive income (4) 17 (2)

122 118 PPC Ltd Consolidated statement of changes in equity for the year ended 30 September 2013 Stated capital Rm Unrealised surplus on reclassification of plant Rm Foreign currency translation Rm Other reserves Availablefor-sale financial assets Rm Hedging reserves Rm Equity compensation reserves Rm Retained profit Rm Equity attributable to shareholders of parent Rm Noncontrolling interests Rm 2013 Opening balance at the beginning of the year (1 181) (43) Movement for the year (55) (4) BBBEE IFRS 2 charges Zimbabwe indigenisation IFRS 2 charges FSP IFRS 2 charges Transfer to retained profit (17) 17 Total comprehensive income (4) Treasury shares held in terms of the FSP share scheme (56) (56) (56) Sale of shares by consolidated BBBEE entity (treated as treasury shares) 1 (1) Reclassification movements 3 (3) Dividends declared to PPC shareholders (770) (770) (770) IFRS 2 charges transferred to noncontrolling interests (62) (62) 62 Contribution from participants of the Zimbabwe indigenisation transaction 3 3 Acquired through business combinations Foreign exchange impact on translation of non-controlling interests 5 5 Balance at 30 September 2013 (1 236) (7) Opening balance at the beginning of the year (1 091) (57) Movement for the year (90) (4) 17 (2) BBBEE IFRS 2 charges FSP IFRS 2 charges Transfer to retained profit (10) 10 Total comprehensive income (4) 17 (2) Treasury shares held in terms of the FSP share scheme (89) (89) (89) Securities transfer taxation on cancellation of treasury shares (1) (1) (1) Dividends declared by trust funding SPVs to non-consolidated trusts (4) (4) (4) Dividends declared to PPC shareholders (702) (702) (702) Balance at 30 September 2012 (1 181) (43) Total Equity Rm

123 PPC Ltd 119 Consolidated statement of cash flows for the year ended 30 September 2013 CASH FLOWS FROM OPERATING ACTIVITIES Operating cash flows before movements in working capital Movement in inventories 2013 Rm 2012 Rm (12) (129) Movement in trade and other receivables Movement in trade and other payables and provisions Cash generated from operations Finance costs paid (269) (248) Dividends received from investments 4 10 Interest received Taxation paid (525) (417) Cash available from operations Dividends paid (770) (706) Net cash inflow from operating activities CASH FLOWS FROM INVESTING ACTIVITIES Acquisitions in terms of business combinations (140) (42) Acquisition of property, plant and equipment (964) (609) Acquisition of intangible assets (6) (31) Acquisition of equity-accounted investments (126) (172) Net proceeds received on disposal of property, plant and equipment 15 2 Movements in investments and loans 2 (5) Receipt of instalment on long-term loan 9 Net cash outflow from investing activities (1 219) (848) Net cash inflow before financing activities CASH FLOWS FROM FINANCING ACTIVITIES Long-term borrowings repaid BBBEE funding transaction (102) (14) 2 Net short-term borrowings (repaid)/raised (398) 29 Proceeds from the issuance of bond 650 Purchase of shares in terms of FSP share scheme (56) (89) Security transfer taxation on cancellation of treasury shares (1) Net cash inflow/(outflow) from financing activities 94 (73) Net increase in cash and cash equivalents Cash and cash equivalents at the beginning of the year Cash and cash equivalents acquired through business combination 6 Impact of foreign rate differences on opening cash and cash equivalents 20 Cash and cash equivalents at the end of the year Cash earnings per share (cents)

124 120 PPC Ltd Segmental information for the year ended 30 September 2013 The group discloses its operating segments according to the business units which are regularly reviewed by the group executive committee. These comprise cement, lime, aggregates and other Rm Group 2012 Rm Cement* 2013 Rm Revenue South Africa Rest of Africa Inter-segment revenue (36) (37) Total revenue Operating profit before items listed below BBBEE IFRS 2 charges Zimbabwe indigenisation costs Restructuring costs Operating profit Fair value gains/(losses) on financial instruments 25 (3) 29 (1) Finance costs Investment income Profit before exceptional items Exceptional items (1) 10 Earnings from equity accounted investments Profit before taxation Taxation Net profit Depreciation and amortisation EBITDA ~ EBITDA margin ~ (%) 30,1 31,7 32,0 33,4 Operating margin ~ (%) 23,8 25,4 25,6 26,9 Assets Total assets Non-current assets Current assets Additions to property, plant and equipment Capital commitments Liabilities Total liabilities Non-current liabilities Current liabilities * Includes head office activities. ^ Other comprises BBBEE trusts and trust funding SPVs. ~ Excluding BBBEE IFRS 2 charges, Zimbabwe indigenisation costs and restructuring costs Rm

125 PPC Ltd Rm Lime Aggregates Other^ 2012 Rm 2013 Rm 2012 Rm 2013 Rm 2012 Rm (16) (4) (16) (4) 1 1 (6) (2) 1 (1) (148) (141) (11) (148) (141) (6) 22 (148) (141) (16) (4) 20,4 22,5 13,7 18,7 15,8 18,1 7,5 12,

126 122 PPC Ltd Notes to the summarised annual financial statements for the year ended 30 September Acquisitions in terms of business combinations In January 2013 PPC acquired a 51% equity stake in a Rwandan cement company, CIMERWA Limited (CIMERWA), for a transaction value of US$69 million (R629 million) of which US$15 million was paid to previous shareholders of the company, while a further US$54 million will be used to subscribe for shares in CIMERWA and is payable by December At the date of this report US$23 million is still due to CIMERWA. As the company is consolidated and US$54,4 million is paid or payable to CIMERWA, only the US$15 million (R136 million) payable external to the PPC group is reflected as a cash flow outside the consolidated PPC group. The fair values of assets acquired and liabilities have now been finalised, with no material changes to the amounts previously disclosed. In October 2011 all conditions precedent with regards to the transaction to acquire three aggregate quarries in Botswana were met. The transaction value amounted to R52 million and the consideration paid in the year amounted to R4 million (2012: R42 million). The purchase consideration outstanding is payable on the second anniversary of the transaction. 30 Sept 2013 Rm 30 Sept 2012 Rm Acquisition of subsidiary companies Property, plant and equipment Intangible assets (including goodwill) Current assets Long-term borrowings (108) Long-term provisions and deferred taxation (75) (7) Short-term borrowings (35) Current liabilities (47) Other (6) Non-controlling interest (512) Total consideration Paid to CIMERWA for new equity in the company 181 Payable to CIMERWA for new equity in the company 312 Paid to previous shareholders of CIMERWA Paid to previous shareholders of Botswana quarries 4 42 Payable to previous shareholders of Botswana quarries Impact of the transaction on the results for the year ended: Revenue Operating loss (4) Loss attributable to shareholder (8) Impact on EPS and HEPS (cents per share) (1) Included in intangible assets acquired on the acquisition of CIMERWA is goodwill of R100 million and other intangible assets of R124 million, relating to mineral reserves and brands and trademarks of R25 million and R99 million respectively. The mineral reserves will be amortised over the life of the current limestone reserves, while the brand will be amortised on a straight line basis over a 15-year period, which is anticipated to coincide with the estimated life of mine of the current reserves. During the year the goodwill acquired on the aggregate quarry acquisition in Botswana was assessed for potential impairment at a cash generating unit level. This assessment resulted in goodwill being impaired by R6 million and a further write-down of property, plant and equipment by R6 million. The goodwill of R100 million acquired on the CIMERWA acquisition was also considered for impairment, with no impairment deemed necessary. Both assessments utilised the discounted cash flow methodology. Country specific growth assumptions and discount rates were utilised in the calculations.

127 PPC Ltd Stated capital During October 2012, new PPC shares were issued in terms of the company s second BBBEE transaction, which was facilitated via a notional vending funding (NVF) mechanism. As a result of these new shares being funded through an NVF, the shares only participate in 20% of the dividend with the balance being used to offset the NVF balance during the seven-year transaction period. In terms of the group s long-term employee incentive scheme, the forfeitable share plan, R56 million of shares were purchased on the open market during the year and are treated as treasury shares during the vesting period of the award Number of shares (000) 2012 Number of shares (000) Analysis of the group s issued shares: Total shares in issue at beginning of the year Cancellation of treasury shares owned by a wholly owned group subsidiary company (20 140) Shares issued in terms of second BBBEE transaction Total shares in issue before recognising shares treated as treasury shares Shares issued in terms of second BBBEE transaction treated as treasury shares (39 350) Shares held by consolidated BBBEE trusts and trust funding SPVs treated as treasury shares (37 967) (37 991) Shares held by consolidated Porthold Trust (Pvt) Limited treated as treasury shares (1 285) (1 285) Shares purchased in terms of the FSP share incentive scheme treated as treasury shares (4 745) (3 080) Total shares in issue (net of treasury shares) Weighted average number of shares Used for earnings and headline earnings per share Used for dilutive earnings and headline earnings per share Borrowings Long-term loan Bonds* 645 Long-term loans denominated in a foreign currency 87 Preference shares BBBEE funding transaction Preference shares Long-term loans Long-term borrowings Short-term borrowings and short-term portion of long-term borrowings Total borrowings The group is compliant with its debt covenants. * Net of transaction costs capitalised Rm 2012 Rm

128 124 PPC Ltd Notes to the summarised annual financial statements continued for the year ended 30 September Taxation A reconciliation of the standard South African normal taxation rate is shown below: Taxation as a percentage of profit before exceptional items (excluding prior year taxation) 35,3 39,6 Secondary taxation on companies (3,8) Empowerment transactions and IFRS 2 charges non-deductible (2,8) (2,4) Preference dividend and interest on BBBEE funding transaction non-deductible (2,6) (2,7) Withholding taxation (1,0) (2,2) Other non-tax deductible costs (0,9) (0,5) South African normal taxation rate 28,0 28, % 2012 % 5. Earnings and headline earnings per share 30 Sept 2013 Rm 30 Sept 2012 Rm Normalised earnings per share (cents) basic diluted Headline earnings Net profit Impairment losses on financial assets 1 1 Impairment losses on property and equipment and intangible assets 12 Reversal of impairment (1) (Profit)/loss on disposal of property, plant and equipment and intangible assets (11) 3 Taxation on profit/(loss) on disposal of property, plant and equipment and intangible assets 2 (1) Headline earnings Normalisation adjustments Normalised headline earnings Headline earnings per share (cents) basic diluted basic (normalised) diluted (normalised) Normalisation adjustments adjusts the reported earnings for the effects of BBBEE IFRS 2 charges, Zimbabwe indigenisation costs and restructuring costs.

129 PPC Ltd Commitments Contracted capital commitments Approved capital commitments Capital commitments Operating lease commitments Rm 2012 Rm PPC continues to investigate business opportunities in both South Africa and the rest of Africa. Details of current transactions, approved or requiring approval, are noted below: Approved transaction The final 50% tranche on the acquisition of Pronto Holdings (Pty) Limited is payable in May The purchase consideration is determined using an EBITDA multiple less net debt. Transactions still requiring approval The company has signed a memorandum of understanding for the construction of a new cement plant in the DRC. The total cost of the project amounts to US$260 million. It is estimated that PPC will have a 69% shareholding in the project. Commercial terms, including funding facilities, are in the process of being finalised. The company has also entered into an agreement to purchase a controlling stake in Safika Cement Holdings (Pty) Limited for a cash consideration of approximately R350 million. The transaction is subject to regulatory approval. Further to the SENS announcement in February 2013, the group continues investigations into the construction of a new one million tpa cement plant in Zimbabwe and grinding facility in Mozambique. 7. Events after 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 Subsequent to the year, the following was considered by the board: In order to further enhance an entrepreneurial spirit and business environment within our lime and aggregates business units, both locally and in Botswana, the company is investigating various ownership alternatives to our current structure. Any potential outcomes will still be subject to both internal and external approvals; and Investigating the opportunities of restructuring the company s first BBBEE transaction.

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131 Case study HISTORY BEYOND THE BAG On display in the former cell of Tata Sindile Mngqibisia, who was imprisoned on Robben Island in 1963, is an old PPC Surebuild bag. According to the display plaque, Sindile and other prisoners smuggled cement bags from their work at the prison s harbour into their cells to continue their education. Since warders would confiscate and burn any traditional learning material, the prisoners used whatever worked and would not cause trouble. In Sindile s words, We used the cement bag paper to make books. Sometimes, the criminals who worked for the warders smuggled in paper and lead pencils in exchange for tobacco. During the day, prisoners were set to work crushing quarry stones, but this is where most of their learning took place. I would put my brown paper bag in front of you and you would teach me, Sindile explained. If the warders came near, you would hide the paper under the stones. Sindile was released from Robben Island in 1978, after being incarcerated for 15 years. In 1997 he returned to the island to work as a museum guide until his death in Please see case studies on our website.

132 128 PPC Ltd PPC shareholder analysis Register date: 27 September 2013 Issued share capital: SHAREHOLDER SPREAD Number of shareholders % Number of shares % shares , , shares , , shares , , shares 209 1, , shares and over 75 0, ,28 Total DISTRIBUTION OF SHAREHOLDERS Banks 139 0, ,71 Brokers 82 0, ,05 Close corporations 151 0, ,12 Endowment funds 84 0, ,21 Individuals , ,07 Insurance companies 28 0, ,47 Investment companies 18 0, ,26 Medical aid schemes 8 0, ,05 Mutual funds 215 1, ,87 Nominees and trusts , ,44 Other corporations 91 0, ,10 Pension funds 147 0, ,88 Private companies 300 1, ,53 Public companies 20 0, ,04 Sovereign wealth fund 7 0, ,20 Total PUBLIC/NON-PUBLIC SHAREHOLDERS Non-public shareholders 22 0, ,84 Directors holdings 2 0, ,16 Broad-based black ownership 19 0, ,08 Strategic holdings (10% or more) 1 0, ,60 Public shareholders , ,16 Total BENEFICIAL SHAREHOLDERS HOLDING 3% OR MORE Number of shares % Government Employees Pension Fund ,60 PPC SBP Consortium Fundings SPV (Pty) Ltd ,61 PPC Masakhane Employee Share Trust ,42

133 PPC Ltd 129 Corporate information PPC Ltd (Incorporated in the Republic of South Africa) Company registration number: 1892/000667/06 JSE code: PPC ZSE code: PPC JSE ISIN code: ZAE 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 180 Katherine Street, Sandton PO Box Sandton, 2146, South Africa Telephone Telefax Sponsor: South Africa Merrill Lynch SA (Pty) Limited 138 West Street Sandown, Sandton PO Box Benmore, 2010, South Africa Telephone Telefax Transfer secretaries: South Africa Link Market Services (Pty) Limited 11 Diagonal Street Johannesburg, South Africa PO Box 4844 Johannesburg, 2000, South Africa Telephone Telefax Transfer secretaries: Zimbabwe Corpserve (Private) Limited 2nd Floor, ZB Centre Corner First Street and Kwame Nkrumah Avenue Harare, Zimbabwe PO Box 2208 Harare, Zimbabwe Telephone / Telefax Sponsor: Zimbabwe Imara Edwards Securities (Private) Limited Block 2, Tendeseka Office Park Samora Machel Avenue Harare, Zimbabwe PO Box 1475 Harare, Zimbabwe Telephone Telefax Financial calendar Financial year-end 30 September Annual general meeting 27 January 2014 Reports Interim results for half-year to March Published May Preliminary announcement of annual results Published November Annual financial statements Published December Dividends Interim Declared May Paid June Final Declared November Paid January

134 130 PPC Ltd Notice of annual general meeting for the year ended 30 September 2013 PPC Ltd Incorporated in the Republic of South Africa (Registration number: 1892/000667/06) JSE share code: PPC ZSE share code: PPC ISIN code: ZAE (PPC) or (the company) NOTICE IS HEREBY GIVEN to shareholders as at 20 December 2013, being the record date to receive the notice of annual general meeting (AGM), that the 120th AGM of the company will be held in the auditorium at the African Pride Hotel, 1 Melrose Square, Melrose Arch, on Monday, 27 January 2014 at 12:00 to consider the following business and, if deemed fit, to approve, with or without modification, the ordinary and special resolutions set out below. Record date The board of directors of the company (board) has, in terms of section 59(1)(a) of the Companies Act 71 of 2008 (Act), set the record date for the purpose of determining which shareholders of the company are entitled to receive notice of the AGM, as 20 December 2013, and has, in terms of section 59(1)(b) of the Act, set the record date, for purposes of determining which shareholders of the company are entitled to participate in and vote at the AGM, as at 17 January Accordingly, the last day to trade will be 10 January 2014 and only shareholders who are registered in the register of members of the company on 17 January 2014 will be entitled to participate in and vote at the AGM. Shareholders are reminded that: A shareholder entitled to attend and vote at the AGM is entitled to appoint a proxy (or more than one proxy) to attend, participate in and vote at the AGM in place of the shareholder, and shareholders are referred to the form of proxy attached to this notice in this regard A proxy need not also be a shareholder of the company In terms of section 63(1) of the Act, any person attending or participating in a meeting of shareholders must present reasonably satisfactory identification and the person presiding at the shareholder meeting must be reasonably satisfied that the right of any person to participate and vote (whether as shareholder or as proxy for a shareholder) has been reasonably verified. Acceptable forms of verification include a green barcoded identification document issued by the South African Department of Home Affairs, a driving licence and a valid passport This notice of meeting includes the attached form of proxy Electronic participation in the annual general meeting Shareholders or their proxies may participate in the AGM by way of a teleconference call provided that, if they wish to do so: They must contact the company secretary (by at the address jaco.snyman@ppc.co.za by no later than 12:00 on 17 January 2014) to obtain a pin number and dial-in details for that teleconference call They will be required to provide reasonably satisfactory identification, by prior arrangement with the company secretary They will be billed separately by their own telephone service providers for their telephone call to participate in the AGM Presentation of annual financial statements The consolidated audited annual financial statements of the company and its subsidiaries, incorporating the reports of the auditors, audit committee and directors for the year ended 30 September 2013, as approved by the board on 18 November 2013, are hereby presented to shareholders as required in terms of section 30(3)(d) read with section 61(8)(1)(a) of the Act. Ordinary business Election of directors Mr Moyo was appointed to the board as a director with effect from 20 November In terms of the JSE listings requirements, article of the memorandum of incorporation (MOI) and section 68(1) read with section 70(3)(b)(i) of the Act, his election as director must be confirmed at this AGM by a new election. A brief curriculum vitae for Mr Moyo appears on page 15. Ordinary resolution number 1: Resolved that in terms of the JSE listings requirements, article of the MOI and section 68(1) read with section 70(3) (b)(i) of the Act, Mr Moyo be and is hereby elected to the board as director with immediate effect. The percentage of voting rights required for ordinary resolution number 1 to be adopted: more than 50% (fifty percent) of the voting rights exercised on the resolution by shareholders present at the AGM or represented by proxy and entitled to exercise voting rights on the resolution. Directors retiring by rotation In terms of article 25.6 of the MOI, one-third of the company s non-executive directors are required to retire at every AGM. Mr Lamprecht, Ms Modise and Mr Shibambo are accordingly required to retire by rotation at this AGM. A retiring director is, however, entitled to offer him/herself for re-election. Ms Modise and Mr Shibambo have offered themselves for re-election, and the

135 PPC Ltd 131 board, through the nominations committee, has recommended their re-election. A brief curriculum vitae of each of the directors standing for re-election appears on pages 14 to 15. Mr Lamprecht has been a director of the board since 1997 and has informed the board that he will not be available for re-election and so will retire from the board at the AGM. Ordinary resolution number 2: Resolved that Ms Modise, who is required to retire as a director of the company at this AGM in terms of article of the MOI and who, being eligible, offers herself for re-election, be and is hereby elected, in terms of section 68(1) of the Act and article 25.2 of the MOI, as a director of the company with immediate effect. The percentage of voting rights required for ordinary resolution number 2 to be adopted: more than 50% (fifty percent) of the voting rights exercised on the resolution by shareholders present at the AGM or represented by proxy and entitled to exercise voting rights on the resolution. Ordinary resolution number 3: Resolved that Mr Shibambo, who is required to retire as a director of the company at this AGM in terms of article of the MOI and who, being eligible, offers himself for re-election, be and is hereby elected, in terms of section 68(1) of the Act and article 25.2 of the MOI, as a director of the company with immediate effect. The percentage of voting rights required for ordinary resolution number 3 to be adopted: more than 50% (fifty percent) of the voting rights exercised on the resolution by shareholders present at the AGM or represented by proxy and entitled to exercise voting rights on the resolution. Reappointment of external auditors In terms of section 90(1) of the Act, the auditor of the company must be appointed at the AGM each year. To be appointed as auditor, the auditor must satisfy the requirements of section 90(2) of the Act and section 22 of the JSE listings requirements. The audit committee and the board (based on the findings of the audit committee) are satisfied that Deloitte & Touche Incorporated (Deloitte & Touche) meets the requirements of section 90(2) of the Act and section 22 of the JSE listings requirements. Accordingly, the audit committee and the board have proposed the reappointment of Deloitte & Touche as independent auditors of the company for the year ending 30 September 2014 to hold office until the conclusion of the next AGM. Ordinary resolution number 4: Resolved that Deloitte & Touche (on recommendation by the audit committee and the board) be and are hereby appointed as external independent auditors of the company to hold office until the conclusion of the next AGM of the company. Mr Nyembe (IRBA No ) from Deloitte & Touche will undertake the audit for the financial year ending 30 September The percentage of voting rights required for ordinary resolution number 4 to be adopted: more than 50% (fifty percent) of the voting rights exercised on the resolution by shareholders present at the AGM or represented by proxy and entitled to exercise voting rights on the resolution. Authorisation for auditors remuneration The directors propose to fix the remuneration payable to the external auditors for the audit conducted for the year ended 30 September Ordinary resolution number 5: Resolved that the directors be and are hereby authorised to fix the remuneration of the external auditors, Deloitte & Touche, for the audit conducted for the year ended 30 September The percentage of voting rights required for ordinary resolution number 5 to be adopted: more than 50% (fifty percent) of the voting rights exercised on the resolution by shareholders present at the AGM or represented by proxy and entitled to exercise voting rights on the resolution. Appointment of members of the audit committee In terms of section 94(2) of the Act, at each AGM, the company is required to elect an audit committee comprising at least three members, each of whom must satisfy the requirements set out in section 94(4) of the Act. Mr T Ross, Ms Z Kganyago and Ms B Modise are the incumbent members of the audit committee and their term of office ends at the conclusion of this AGM. The nominations committee and the board are satisfied that each member meets the requirements of section 94(4) of the Act and that each member meets the minimum qualification requirements for a member of an audit committee and that they, together, have adequate relevant knowledge and experience to equip the audit committee to perform its functions. Each of Mr T Ross, Ms Z Kganyago and Ms B Modise are eligible for re-election and have each agreed to stand for re-election. A brief curriculum vitae of each member appears on pages 14 and 15. Ordinary resolution number 6: Resolved that Mr T Ross, who is an independent non-executive director of the company, be and is hereby elected as a member of the audit committee with immediate effect to hold office until the next AGM. The percentage of voting rights required for ordinary resolution number 6 to be adopted: more than 50% (fifty percent) of the voting rights exercised on the resolution by shareholders present at the AGM or represented by proxy and entitled to exercise voting rights on the resolution.

136 132 PPC Ltd Notice of annual general meeting continued for the year ended 30 September 2013 Ordinary resolution number 7: Resolved that Ms Z Kganyago, who is an independent nonexecutive director of the company, be and is hereby elected as a member of the audit committee with immediate effect to hold office until the next AGM. The percentage of voting rights required for ordinary resolution number 7 to be adopted: more than 50% (fifty percent) of the voting rights exercised on the resolution by shareholders present at the AGM or represented by proxy and entitled to exercise voting rights on the resolution. Ordinary resolution number 8: Resolved that subject to her election in terms of ordinary resolution number 3, Ms B Modise, who is an independent nonexecutive director of the company, be and is hereby elected as a member of the audit committee with immediate effect to hold office until the next AGM. The percentage of voting rights required for ordinary resolution number 8 to be adopted: more than 50% (fifty percent) of the voting rights exercised on the resolution by shareholders present at the AGM or represented by proxy and entitled to exercise voting rights on the resolution. Non-binding approval of the remuneration policy King III requires the board (with the assistance of the remuneration committee) to put forward a policy of remuneration to the shareholders. The company s remuneration policy is set out from page 86 of the annual report of which this notice forms part. In accordance with the recommendations of King III, the company should give shareholders the right to express their views on the remuneration policy by casting an advisory vote in the manner set out below. Ordinary resolution number 9: Resolved that the company s remuneration policy be and is hereby approved, through a non-binding advisory vote, in accordance with the recommendations of King III. The percentage of voting rights required for ordinary resolution number 9 to be adopted: more than 50% (fifty percent) of the voting rights exercised on the resolution by shareholders present at the AGM or represented by proxy and entitled to exercise voting rights on the resolution. Special business Special resolution number 1 to authorise inter-company loans Background in respect of special resolution number 1 In terms of the Companies Act No 61 of 1973, shareholders were not required to approve the advance of financial assistance (which includes giving a loan, guaranteeing a loan or obligation and/or securing any debt or obligation) to a related or interrelated company (which includes a group company). In terms of section 45 of the Act, however, a company is now required to approve any financial assistance to a related or inter-related company by passing a special resolution and only after the board has applied the solvency and liquidity test. The reason for special resolution number 1 is that the company does advance loans to subsidiaries and other related companies in its group. Given that these loans constitute financial assistance for purposes of the Act, shareholders are required to pass special resolution number 1 to approve the company advancing such financial assistance. The effect of special resolution number 1 is that the company will be authorised to advance loans and provide security to companies in its group, subject to the board meeting the solvency and liquidity tests and subject further to the financial assistance falling within the category of assistance mentioned in sub-paragraph (c) of special resolution number 1 below. Resolved that, as a special resolution, in terms of section 45(3)(a)(ii) of the Act, shareholders of the company hereby approve of the company providing, at any time during the period of 2 (two) years from the date of passing this special resolution, any direct or indirect financial assistance as contemplated in section 45 of the Act to any company within the PPC group of companies, provided that: (a) The recipient or recipients of such financial assistance, the form, nature and extent of such financial assistance and the terms and conditions under which such financial assistance is to be provided, are determined by the board from time to time (b) (c) The board may not authorise the company to provide any financial assistance pursuant to this special resolution unless the board meets all the requirements of section 45 of the Act Such financial assistance to a recipient is, in the opinion of the board, required for the purpose of (i) meeting all or any of such recipient s operating expenses (including capital expenditure), and/or (ii) funding the growth, expansion, reorganisation or restructuring of the businesses or operations of such recipient, and/or (iii) funding such recipient for any other purpose which, in the opinion of the board, is directly or indirectly in the interests of the company

137 PPC Ltd 133 The percentage of voting rights required for special resolution number 1 to be adopted: at least 75% (seventy-five percent) of the voting rights exercised on the resolution by shareholders present at the AGM or represented by proxy and entitled to exercise voting rights on the resolution. Shareholders are referred to the notice to shareholders in terms of section 45(5) of the Companies Act set out in annexure 1 hereto Special resolution number 2 pre-approval of remuneration of the non-executive directors Background in respect of special resolution number 2 In terms of section 66(8) read with section 66(9) of the Act, except to the extent that the Act provides otherwise, the company may pay remuneration to its directors for their service as directors and any such remuneration must be approved by special resolution of shareholders within in the previous two years. The remuneration committee has determined the remuneration for non-executive directors and the board has accepted the recommendations of this committee. The reason for special resolution number 2 is to authorise the company to pay remuneration to its non-executive directors. Resolved, as a special resolution, that, in terms of section 66(8) read with section 66(9) of the Act, the company be and is hereby authorised to pay remuneration to non-executive directors for their services as non-executive directors for the period from the date of the passing of this special resolution to the conclusion of the next AGM, as follows: Base fee and attendance fee 2014 R Base fee and attendance fee 2013 R Board Chairman Each non-executive director Audit committee Chairman Each non-executive director Remuneration committee Chair Each non-executive director Risk and compliance committee Chairman Each non-executive director Social and ethics committee Chairman Each non-executive director Nominations committee Chairman Each non-executive director The attendance fee for special meetings for a chairman will be R and for a member R The percentage of voting rights required for special resolution number 2 to be adopted: at least 75% (seventy-five percent) of the voting rights exercised on the resolution by shareholders present at the AGM or represented by proxy and entitled to exercise voting rights on the resolution.

138 134 PPC Ltd Notice of annual general meeting continued for the year ended 30 September 2013 General authority to repurchase ordinary shares Special resolution number 3 general authority to repurchase shares Background in respect of special resolution number 3 It terms of the JSE listings requirements, the MOI and section 48 of the Act, a company may repurchase some of its own shares and a subsidiary company may acquire shares in its holding company (both referred to as a repurchase). The reason for special resolution number 3 is to grant the company or any of its subsidiaries a general authority in terms of the Act and the JSE listings requirements to implement a repurchase. This authority will be valid until the earlier of the next AGM of the company or the variation or revocation of such general authority by special resolution by any subsequent meeting of shareholders, provided that the general authority does not extend beyond 15 (fifteen) months from the date of passing this special resolution number 3. The passing of this special resolution will have the effect of authorising the company to undertake a repurchase. Resolved, as a special resolution, that the board is hereby authorised by way of a renewable general authority, in terms of the provisions of the JSE listings requirements, the Act and otherwise as permitted in the MOI, to approve a repurchase by the company and any of its subsidiaries, on such terms and conditions and in such amounts as the board may from time to time determine, but subject to the MOI, the provisions of the Act and the JSE listings requirements, when applicable, and provided that: Any such repurchase of ordinary shares will be effected through the order book operated by the JSE trading system and done without any prior understanding or arrangement between the company and/or any of its subsidiaries and the counterparty This general authority will only be valid until the company s next AGM provided that it will not extend beyond 15 (fifteen) months from the date of passing this special resolution A press announcement will be published in accordance with, and giving such details as required in terms of the JSE listings requirements, where the company or its subsidiaries has/have repurchased ordinary shares constituting, on a cumulative basis, 3% (three percent) of the initial number of shares (the number of that class of ordinary shares in issue at the time that the general authority from shareholders is granted) and in respect of every 3% (three percent) in the aggregate of the initial number of shares thereafter. This announcement will contain full details of such repurchases The general repurchase by the company and/or any subsidiary of the company of ordinary shares in the aggregate in any one financial year does not exceed 10% of the company s issued ordinary share capital as at the beginning of the financial year, provided that the acquisition of shares as treasury stock by a subsidiary of the company will not be effected to the extent that in aggregate more than 10% of the number of issued shares in the company are held by or for the benefit of all the subsidiaries of the company taken together General repurchases by the company and/or any subsidiary of the company in terms of this authority may not be made at a price greater than 10% above the weighted average of the market value at which such ordinary shares are traded on the JSE, as determined over the 5 (five) business days immediately preceding the date of repurchase of such ordinary shares by the company and/or any subsidiary of the company Any such general repurchases are subject to exchange control regulations and approvals at that point, where relevant A resolution has been passed by the board of the company and/or any subsidiary of the company confirming that the board has authorised the repurchase, and that the company and/or its subsidiary/ies have satisfied the solvency and liquidity test contemplated in section 4 of the Act, and that since the application of the liquidity and solvency test there have been no material changes to the financial position of the company and its subsidiaries (group) The company may at any point only appoint one agent to effect any repurchase(s) on its behalf The company and/or any of its subsidiaries may not repurchase securities during a prohibited period, as defined in paragraph 3.67 of the JSE listings requirements, unless the company and/or any of its subsidiaries has a repurchase programme in place where the dates and quantities of securities to be traded during the relevant period are fixed (and not subject to any variation) and full details of the programme have been disclosed in an announcement over SENS (the Securities Exchange News Service) prior to the start of the prohibited period. The percentage of voting rights required for special resolution number 3 to be adopted: at least 75% (seventy-five percent) of the voting rights exercised on the resolution by shareholders present at the AGM or represented by proxy and entitled to exercise voting rights on the resolution. Additional information in respect of special resolution number 3 The information required by the JSE listings requirements on this general authority appears in the annual report, of which this notice of AGM forms part, as indicated below: Directors and management of the company: page 14 Major shareholders: page 128 Stated capital: page 123 Directors interest in stated capital: page 101. Directors responsibility statement The directors, whose names are given on pages 14 and 15 of the integrated report, collectively and individually accept full responsibility for the accuracy of the information given, in respect of this special resolution number 3, and certify that to the best of their knowledge and belief no facts have been omitted that would make any statement false or misleading, and that all reasonable enquiries to ascertain such facts have been made and that the annual report and notice of AGM contain all information required by the Act and the JSE listings requirements.

139 PPC Ltd 135 Material changes There has been no material change in the financial or trading position of the company or any of its subsidiaries since 30 September Litigation statement There are no legal or arbitration proceedings (including any pending or threatened legal or arbitration proceedings) against the company or its subsidiaries, of which the directors are aware, which may have, or have had in the last 12 months, a material effect on the financial position of the company or its subsidiaries. In terms of the JSE listings requirements, the directors of the company hereby state that: The intention of the company and/or any of its subsidiaries is to use this authority only if at some future date the cash resources of the company exceed its requirements. In this regard the directors will take into account, inter alia, an appropriate capitalisation structure for the company, the long-term cash needs of the company, and will ensure that any such use is in the interest of shareholders The method by which the company and/or any of its subsidiaries intends to repurchase securities and the date on which such repurchase will take place has not yet been determined After considering the effect of a maximum permitted repurchase of securities, the company and its subsidiaries are, as at the date of this notice convening the AGM of the company, able to fully comply with the JSE listings requirements. Nevertheless, at the time the contemplated repurchase is to take place, the directors of the company will ensure that: The company and the group will be able in the ordinary course of business to pay its debts for a period of 12 (twelve) months after the date of the notice of the AGM The assets of the company and the group will exceed the liabilities of the company and the group for a period of 12 months after the date of the notice of the AGM. For this purpose, the assets and liabilities will be recognised and measured in accordance with the accounting policies used in the latest audited annual group financial statements The share capital and reserves of the company and the group will be adequate for ordinary business purposes for a period of 12 (twelve) months after the date of the notice of the AGM The working capital of the company and the group will be adequate for ordinary business purposes for a period of 12 (twelve) months after the date of the notice of the AGM A resolution by the board will authorise the repurchase, that the company and its subsidiary/ies have passed the solvency and liquidity test and that from the date on which the test was last performed, there have been no material changes to the financial position of the group The company will provide its sponsor and the JSE with all documentation as required in Schedule 25 of the JSE listings requirements, and will not initiate any repurchase programme until the sponsor has signed off on the adequacy of its working capital, advised the JSE accordingly and the JSE has approved the documentation To transact such other business as may be transacted at an AGM Proxy and voting procedure On a show of hands, every shareholder present in person or by proxy, and if a member is a body corporate, its representatives, will have one vote and, on a poll, every shareholder present in person or by proxy and, if the person is a body corporate, its representative, will have one vote for every share held or represented by him/her. Shareholders holding dematerialised shares, but not in their own name, must furnish their central securities depository participant (CSDP) or broker with their instructions for voting at the AGM. If your CSDP or broker, as the case may be, does not obtain instructions from you, it will be obliged to act in accordance with your mandate furnished to it, or if the mandate is silent in this regard, complete the form of proxy enclosed. Unless you advise your CSDP or broker, in terms of the agreement between you and your CSDP or broker, by the stipulated cut-off time, that you wish to attend the AGM or send a proxy to represent you at this AGM, your CSDP or broker will assume that you do not wish to attend the AGM or send a proxy. If you wish to attend the AGM or send a proxy, you must request your CSDP or broker to issue the necessary letter of authority to you. Shareholders holding dematerialised shares, and who are unable to attend the AGM and wish to be represented at the AGM, must complete the form of proxy enclosed in accordance with the instructions and lodge it with or mail it to the transfer secretaries. Forms of proxy (enclosed) must be dated and signed by the shareholder appointing a proxy and should be forwarded to reach the transfer secretaries, Link Market Services South Africa (Proprietary) Limited, 11 Diagonal Street, Johannesburg, 2001 (PO Box 4844, Johannesburg, 2000) and for Zimbabwean PPC shareholders, Corpserve (Private) Limited, 2nd floor, ZB Centre, corner First Street and Kwame Nkrumah Avenue, Harare, Zimbabwe (PO Box 2208, Harare, Zimbabwe), by no later than 12:00 on 24 January Before a proxy exercises any rights of a shareholder at the AGM, this form of proxy must be delivered.

140 136 PPC Ltd Notice of annual general meeting continued for the year ended 30 September 2013 In compliance with the provisions of section 58(8)(b)(i) of the Act, a summary of the rights of a shareholder to be represented by proxy is set out below. An ordinary shareholder entitled to attend and vote at the AGM may appoint any individual (or two or more individuals) as a proxy or proxies to attend, participate in and vote at the AGM in the place of the shareholder. A proxy need not be a shareholder of the company. A proxy appointment must be in writing, dated and signed by the shareholder appointing a proxy, and, subject to the rights of a shareholder to revoke such appointment (as set out below), remains valid only until the end of the AGM. Proof of identification required In terms of section 63(1) of the Act, any person (shareholder or proxy) who wishes to attend or participate in a shareholders meeting must present reasonably satisfactory identification at the meeting. A green bar-coded identification document issued by the South African Department of Home Affairs, a driving licence or a valid passport will be accepted as sufficient identification. By order of the board A proxy may delegate the proxy s authority to act on behalf of a shareholder to another person, subject to any restrictions set out in the instrument appointing the proxy. Irrespective of the form of instrument used to appoint the proxy, the appointment of a proxy is suspended at any time and to the extent that the shareholder who appointed such proxy chooses to act directly and in person in exercising any rights as a shareholder. Unless the proxy appointment expressly provides otherwise, the appointment of a proxy is revocable by the shareholder in question cancelling it in writing, or making a later inconsistent appointment of a proxy, and delivering a copy of the revocation instrument to the proxy and to the company. The revocation of a proxy appointment constitutes a complete and final cancellation of the proxy s authority to act on behalf of the shareholder as of the later of (a) the date stated in the revocation instrument, if any; and (b) the date on which a copy of the revocation instrument is delivered to the company as required in the first sentence of this paragraph. JHDLR Snyman Company secretary 18 November 2013 Sandton If the instrument appointing the proxy or proxies has been delivered to the company, as long as that appointment remains in effect, any notice that is required by the Act or the MOI to be delivered by the company to the shareholder, must be delivered by the company to (a) the shareholder, or (b) the proxy or proxies, if the shareholder has (i) directed the company to do so in writing; and (ii) paid any reasonable fee charged by the company for doing so. Attention is also drawn to the explanatory notes regarding the proxy on the form of proxy. The completion of a form of proxy does not preclude any shareholder attending the AGM. Any shareholder having difficulties or queries on the above may contact the company secretary on

141 PPC Ltd 137 Form of proxy PPC Ltd Incorporated in the Republic of South Africa (Registration number 1892/000667/06) JSE share code: PPC ZSE share code: PPC ISIN code: ZAE (PPC) or (the company) Only for use by registered holders of certificated ordinary shares in the company and the holders of dematerialised ordinary shares in the capital of the company in own-name form, at the annual general meeting (AGM) to be held at 12:00 on Monday, 27 January 2014, in the auditorium at the African Pride Hotel in Melrose Arch. Holders of ordinary shares in the company (whether certificated or dematerialised) through a nominee must not complete this form of proxy but should timeously inform that nominee, or, if applicable, their participant or stockbroker of their intention to attend the AGM and request such nominee, participant or stockbroker to issue them with the necessary letter of representation to attend or provide such nominee, participant or stockbroker with their voting instructions should they not wish to attend the AGM in person but wish to be represented by proxy at the meeting. Such ordinary shareholders must not return this form of proxy to the transfer secretaries. I/We of (name and address in block letters) being a member/s of the above company and holding ordinary shares therein, hereby appoint of or, failing him/her the chairman of the meeting as my/our proxy to attend, speak and vote for me/us and on my/our behalf or to abstain from voting at the AGM of the company to be held in the auditorium at the African Pride Hotel in Melrose Arch, on Monday, 27 January 2014, and at any postponement or adjournment of that meeting as follows: In favour of Against Abstain Ordinary resolutions 1 Election of T Moyo as director to the board 2 Re-election of B Modise as a director to the board 3 Re-election of J Shibambo as a director to the board 4 Appointment of Deloitte & Touche as external auditors of the company 5 Authorise directors to fix remuneration of external auditors 6 Appointment to audit committee T Ross 7 Appointment to audit committee Z Kganyago 8 Appointment to audit committee B Modise 9 Advisory vote on company s remuneration policy Special resolutions 1 To authorise the provision of financial assistance 2 To approve the board fees 3 Repurchase of own shares or acquisition of the company s shares by a subsidiary Insert an X in the relevant spaces above according to how you wish your votes to be cast. However, if you wish to cast your votes in respect of a lesser number of ordinary shares than you own in the company, insert the number of ordinary shares held in respect of which you desire to vote (see note 2). Signed at on 20 Signature/s Assisted by (where applicable) Each member is entitled to appoint a proxy (who need not be a member of the company) to attend, speak and vote in place of that member at the AGM. Please read the notes to the form of proxy overleaf.

142 138 PPC Ltd Explanatory notes regarding proxy 1. The form of proxy must only be used by shareholders who hold shares in certificated form or who are recorded on the sub-register in electronic form in own name. 2. All other beneficial owners who have dematerialised their shares through a CSDP or broker and wish to attend the AGM must provide the CSDP or broker with their voting instructions in terms of the relevant agreement entered into between them and the CSDP or broker. 3. A shareholder entitled to attend and vote at the AGM may insert the name of a proxy or the names of two or more alternate proxies of the shareholder s choice in the space provided, with or without deleting the chairperson of the AGM. The person whose name stands first on the form of proxy and who is present at the AGM will be entitled to act as proxy to the exclusion of such proxy(ies) whose names follow. 4. A shareholder is entitled to one vote on a show of hands and, on a poll, one vote in respect of each ordinary share held. A shareholder s instructions to the proxy must be indicated by inserting the relevant number of votes exercisable by that shareholder in the appropriate space provided. If an X has been inserted in one of the blocks to a particular resolution, it will indicate the voting of all the shares held by the shareholder concerned. Failure to comply with this will be deemed to authorise the proxy to vote or to abstain from voting at the AGM as he/she deems fit in respect of all the shareholder s exercisable votes. A shareholder or the proxy is not obliged to use all the votes exercisable by the shareholder or by the proxy, but the total of the votes cast and in respect of which abstention is recorded may not exceed the total of the votes exercisable by the shareholder or the proxy. 5. A vote given in terms of an instrument of proxy will be valid in relation to the AGM despite the death, insanity or other legal disability of the person granting it, or the revocation of the proxy, or the transfer of the shares in respect of which the proxy is given, unless notice on any of the noted matters has been received by the transfer secretaries not less than 48 hours before the start of the AGM. 6. If a shareholder does not indicate on this form that his/her proxy is to vote in favour of or against any resolution or to abstain from voting, or gives contradictory instructions, or should any further resolution(s) or any amendment(s) which may properly be put before the AGM be proposed, such proxy shall be entitled to vote as he/she thinks fit. 8. A shareholder s authorisation to the proxy including the chairperson of the AGM, to vote on such shareholder s behalf, will be deemed to include the authority to vote on procedural matters at the AGM. 9. The completion and lodging of this form of proxy will not preclude the relevant shareholder from attending the AGM and speaking and voting in person to the exclusion of any proxy appointed in terms hereof. 10. Documentary evidence establishing the authority of a person signing the form of proxy in a representative capacity must be attached to this form of proxy, unless previously recorded by the company s transfer secretaries or waived by the chairperson of the AGM. 11. A minor or any other person under legal incapacity must be assisted by his/her parent or guardian, as applicable, unless the relevant documents establishing his/her capacity are produced or have been registered by the transfer secretaries of the company. 12. Where there are joint holders of shares: Any one holder may sign the form of proxy The vote(s) of the senior shareholder (for that purpose seniority will be determined by the order in which the names of shareholders appear in the company s register of shareholders) who tenders a vote (whether in person or by proxy) will be accepted to the exclusion of the vote(s) of the other joint shareholder(s) 13. Forms of proxy should be lodged with or mailed to the transfer secretaries, Link Market Services South Africa (Proprietary) Limited, 11 Diagonal Street, Johannesburg, 2001 (PO Box 4844, Johannesburg, 2000) and for Zimbabwean PPC shareholders, Corpserve (Private) Limited, 2nd floor, ZB Centre, corner First Street and Kwame Nkrumah Avenue, Harare, Zimbabwe (PO Box 2208, Harare, Zimbabwe) to be received by no later than 12:00 on 24 January 2014 (or 48 (forty-eight) hours before any adjournment of the AGM, which date, if necessary, will be notified on SENS). 14. A deletion of any printed matter and the completion of any blank space need not be signed or initialled. Any alteration or correction must be signed and not merely initialled. 7. The chairperson of the AGM may reject or accept any form of proxy which is completed and/or received other than in compliance with Act, the MOI and these notes.

143 PPC Ltd 139 Annexure 1 Notice to shareholders in terms of section 45(5) of the companies act in respect of special resolution number 1 Notice is hereby given to shareholders of the company in terms of section 45(5) of the Companies Act of a resolution adopted by the board of directors of the company (board) authorising the company to provide such direct or indirect financial assistance as specified in special resolution number 1 on the basis that: (a) by the time that the notice of annual general meeting is delivered to shareholders of the company, the board of directors of the company will have adopted a resolution (section 45 board resolution) authorising the company to provide, at any time and from time to time during the period of 2 (two) years commencing on the date on which the special resolution number 1 is adopted, any direct or indirect financial assistance as contemplated in section 45 of the Companies Act to any one or more related or inter-related companies or corporations of the company and/or to any one or more members of any such related or inter-related company or corporation and/or to any one or more persons related to any such company or corporation; (b) the section 45 board resolution will be effective only if and to the extent that the special resolution number 1 is adopted by the shareholders of the company, and the provision of any such direct or indirect financial assistance by the company, pursuant to such resolution, will always be subject to the board being satisfied that (i) immediately after providing such financial assistance, the company will satisfy the solvency and liquidity test as referred to in section 45(3)(b)(i) of the Companies Act, and that (ii) the terms under which such financial assistance is to be given are fair and reasonable to the company as referred to in section 45(3)(b)(ii); (c) in as much as the section 45 board resolution contemplates that such financial assistance will in the aggregate exceed onetenth of one percent of the company s net worth at the date of adoption of such resolution, the company hereby provides notice of the section 45 board resolution to shareholders of the company. Such notice will also be provided to any trade union representing any employees of the company.

144 140 PPC Ltd 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 Corporate 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 2 International Financial Reporting Standards for share-based payment transactions ISO International Standards Organisation King III King Report on 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

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