The Vault...Strength beyond the bag Giving strength to Africa’s dreams . . . Overview of PPC...

PPC Ltd

Integrated report 2013

STRENGTHBEYOND THE BAG


Strength beyond the bagGiving strength to Africa’s dreams . . .

Overview of PPC

Commentary

Chairman’s report 20

Chief executive officer’s report 22

Chief financial officer’s report 26

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

2013 performancereview

Summary of integrated performance 34

Seven-year financial review 36

Operations review 38

People review 42

Social review 53

Environmental review 62

Awards in 2013 68

Mining charter scorecard 2013 69

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

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 statementsThis 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.

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 1 139

Glossary 140

PPC LtdIntegrated report 2013

i

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 2013. 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) 386 9122, fax +27(11) 386 9117, email [email protected].

Reporting approachThis 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.

Board approvalThe 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.

Bheki Sibiya Ketso Gordhan Chairman Chief executive officer

About this report

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PPC’s 2012 Integrated Report was voted as the overall winner at the Nkonki Top 100 SA Integrated Reporting Awards.


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


Governance and risk• Compliant with King III

• Compliant with mining charter scorecard

• Continuous improvement in integrated reporting acknowledged in awards


2013 at a glance

+13%R8,3 billion

+16%214 cents per share

+8%R2,5 billion

+26%R2,9 billion

2012: R7,3 billion2012: 185 cents

per share2012: R2,3 billion 2012: R2,3 billion

RevenueNormalised earnings

per share*Normalised EBITDA*

Cash generated from operations

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


Environmental• Major upgrades further reduce air emissions

and improve energy performance

• ISO 14001 accreditation for all certified operations maintained

• Renewable energy: construction on first wind farm on PPC site under way


* Calculated before the impact of BBBEE IFRS 2 charges, Zimbabwe indigenisation and restructuring costs.

PPC’s total cement sales volumes up

7%

ii


1

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 600 000 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

1 255 752 Six-month daily average shares traded

2013 % change 2012

Financials (R million)

Revenue 8 316 13 7 346

Operating profit* 1 981 6 1 866

Property, plant and equipment 5 522 23 4 483

Total assets 8 876 29 6 907

Cash generated from operations 2 885 26 2 284

Ordinary share analysis

Headline earnings per share (cents)* 215 16 185

Earnings per share (cents)* 214 16 185

Dividends per share (cents) 156 7 146

Number of employees 3 185 3 3 085



2

VisionTo grow PPC into a leading emerging-

market 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.

ProfileLast 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.

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


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.

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.

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

We meet our commitments. We do what we say. We are honest and obey the law.

Legitimacy

We are seen by our stakeholders as caring and adding value. We are seen as long-term contributors and not short-term takers. We care for the environment and the communities in which we operate.

Creating a better life for all stakeholders

Everyone’s contribution creates the value. All stakeholders share in the value and success we create.


4

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 AfricaInternally we refer to this as “keeping the home fires burning”. The key drivers of this strategy and our progress are shown below:

Key driver Progress

Improve our sales, marketing, customer focus and overall value proposition

• New products address both customer needs and value

Achieve global competitiveness by retaining our focus on operational and logistical efficiencies, and good corporate governance

• 2013 South African cement production costs per tonne up 6%

• Governance structures continually enhanced

Renew or upgrade equipment, especially relating to environment or efficiency

• Over R2 billion invested in operating efficiencies

• Environmental performance in line with regional and international benchmarks

Acquire businesses with a good strategic fit • Acquisition of Pronto Ready Mix in progress; awaiting regulatory approval of Safika Cement acquisition

Ensure cash flow returns that support sustainable investment in current and new markets

• 2013 cash flow generated from operations up 26%

Expand our operational footprint into other parts of AfricaIn 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 2017. Key drivers and progress are shown below:

Key driver Progress

Target countries with high potential for infrastructure development, low per capita cement consumption and current cement shortages

• 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 600 000 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


5

Operations and geography

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

● Current operations

● Current project

● Current operations and current project

7

Bulawayo •Gaborone •

• Port Elizabeth

15

56

• Johannesburg

Cape Town •

• Durban

17

• Maputo

South Africa

ZimbabweBotswana

Mozambique

Democratic Republic

of the Congo

Ethiopia

Rwanda

18

9

1

24

121110

3

• Addis Ababa19

16

2021

16

81613 14

Expanding our operational footprint into rest of Africa

● Cement plant

● Milling depot

● Aggregate quarry

● Lime plant

● Sales depots

● Project

20 CIMERWA

21 Democratic Republic of Congo

• Kinshasa


6

• 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 1998

• 1996 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

Key milestones

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.


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 External factors

Group’s vision, mission, key values, policies, strategies, operational management systems, objectives and targets.

Challenges and emerging issues for the cement sector, for example global industry consolidation.

Expectations and concerns of stakeholders, including employees, customers, shareholders, governments, suppliers and communities.

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.

Underlying risks to PPC as defined by internal integrated risk methodologies.

Changes involving sustainability issues, impacts, risks or opportunities (eg climate change, energy efficiency) identified through published global research and development.

Innovation, including product development and the manner in which PPC could potentially influence suppliers and customers in terms of sustainable development.

Advice received through external experts in the business strategy, risk and sustainability fields.


8

In terms of PPC’s inclusive process, we engage with all stakeholder groups.

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.

Trade unions

Academic institutions and professional

organisations

Industry associations

National, provincialand local government, and regulatory bodies

Customers

Non-governmental and community organisations

Banks, funders and insurance companies

Employees

Suppliers

Media

Shareholders and investment community

Stakeholder engagement


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

Organisational climate

Environmental awareness

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.

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 CO2 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.


10

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

People

PPC has a specific engagement plan and specific media interactions were held during the year.

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 non-governmental 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.

PPC stakeholder engagement continued


11

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 2013 2012

Revenue 8 316 7 346

Paid to suppliers for materials and services 1, 4 (4 645) (3 917)

Value added 3 671 3 429

BBBEE IFRS 2 charges (48) (123)

Zimbabwe indigenisation costs (93) –

Exceptional items (1) –

Income from investments^ 42 37

Total wealth created 3 571 3 343

Wealth distribution:Salaries, wages and other benefits 2 1 215 1 084

Providers of capital 1 149 1 083

Finance costs 379 377

Dividends 770 706

Ordinary dividends 770 702

Dividends paid to external BBBEE trusts by consolidated SPVs – 4

Government 3 458 463

Reinvested in the group to maintain and develop operations 749 713

Depreciation and amortisation 522 461

Retained profit 161 144

Deferred taxation 66 108

3 571 3 343

Value added ratiosNumber of employees (30 September) 3 185 3 085

Revenue per employee (R000) 2 611 2 381

Wealth created per employee (R000) 1 121 1 084

NOTES1. 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 allowances@ 1 059 935

Employer contributions~ 156 149

1 215 1 084

3. Government Taxation – normal, CGT and STC 441 449

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)

458 463

4. Included in “Paid to suppliers for materials and services” is: Donations and social labour plan expenditure 16 17

Dividends paid to BBBEE transaction beneficiaries 16 4

32 21 ^ Includes interest received, dividend income and share of associate’s retained profit.@ Includes restructuring costs of R64 million (2012: Rnil million).~ In respect of pension funds, retirement annuities, provident funds, medical aid and insurance.

Value added statement for the year ended 30 September 2013

Value added


12

Material issues Response strategy Status

Markets

Weak demand and overcapacity in South Africa and Botswana

New entrant in South African market despite existing overcapacity.

• 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 regulatoryIncreasingly onerous policy and regulatory environment in South Africa

The complexity of legislation, and pace of change, is making manufacturing in South Africa uncompetitive.

• 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

1

2

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

2

3

4

MarketsMacro factors beyond our control but essential in developing our strategy.

Political and regulatoryMaintaining the competitiveness of our products is an ongoing challenge.

StrategicThe pillars of PPC’s sustainable growth for the benefit of all stakeholders.

Human capitalThe skills and commitment of team PPC are the cornerstone of our growth.

Material issues


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.

• 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.

• 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.

• 2013 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 2013.

• First-line management training under way.

• Salary sacrifice of senior employees has meant double-digit wage growth for those earning R14 000 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

3

4


14

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 non-executive 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 2008. 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.

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23

4

5

6


15

7 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 2006.

9 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 1996. 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 state-owned 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 2008. 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.

9 10 11

PPC understands that diversity, empowerment and development at every level can only be achieved through

effective, transparent and accountable leadership

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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 1996. 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 1988. 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.

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17

Our people are integral to our success

8 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 2013. 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 self-assessor (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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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.

Case study

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.

INSIGHTBEYOND THE BAG


20

PerformanceThe 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

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 non-residential 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 least-advantaged 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.

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 environmentCalendar 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 2012. 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

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.“

“


21

Strategic updateOur 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 100 000 tonne-per-annum cement-producing plant, and construction of a 600 000 tonne cement-producing facility is well advanced. Construction on new projects in the Democratic Republic of the Congo and Ethiopia will begin in 2014.

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.

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 heritageThis 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 state-of-the-art facilities at the Technical Skills Academy. The academy is fully accredited and regularly produces top electricians, fitters and turners, welders and mechanics.

ProspectsGrowth 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 2017.

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 SibiyaChairman

18 November 2013

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 regulatoryThe leniency agreement between PPC and the Competition Commission concluded in 2009 remains intact and we continue to cooperate fully with the commission.

GovernanceThe 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

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.“

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Growing in challenging environmentsFor 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.

Chief executive officer’s report

Our expansion strategy into the rest of the African continent has gained significant momentum, with identified projects progressing well in a number of countries.

“ “

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


23

While our South African operations continue to account for the majority of our group revenues (76%), we are pleased to have added our 100 000 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 burningIn 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 2014.

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 lower-than-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,

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 2013. 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 R14 000 per month. This has led to employees in the lower bands receiving double-digit wage growth for 2013.

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.

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 full-service 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.

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%.

“

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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.

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.

Chief executive officer’s report continued

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 100 000 tpa plant, construction on the new 600 000 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

Per capita cement consumption (kg)

0

50

100

150

200

250

Per capita cement consumption (kg)

24

62

32

74

222

DRC Rwanda Ethiopia Zimbabwe South Africa

Source: Cemnet, 2013


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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 2016.

Approach to sustainable developmentAt PPC, we understand that a sustainable business requires the balanced integration of performance, corporate governance, social, economic and environmental factors

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 2012. 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

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.

OutlookCement 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

New 600 000 tpa factory for CIMERWA.


26

The table below summarises the key financial indicators that we monitor to assess our group financial performance.

2013 % change 2012

Revenue (Rm) 8 316 13 7 346

Cost of sales (Rm) 5 546 15 4 809

EBITDA (Rm) 2 440 5 2 327

Normalised EBITDA (Rm)* 2 504 8 2 327

Headline earnings per share (cents) 179 10 162

Normalised headline earnings per share (cents)* 215 16 185

Cash generated from operations (Rm) 2 885 26 2 284

Cash conversion ratio (times) 1,1 12 1,0

Total borrowings (Rm) 4 046 13 3 585

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 (%) 24 21


Chief financial officer’s report

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.

+13%Revenue

+8%EBITDA*

+26%Cash generated from operations

+16%Normalised earnings per share*

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.


27

EBITDA

EBITDA for the year was R2 440 million

(2012: R2 327 million) reflecting a year-on-

year 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.

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

2012. 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.


28

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 2012. 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:

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 write-

down 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

100

120

140

160

180

200

220

240

Headline earnings per share (cents per share)

162

48

10 (2) (2) (12)

(25)

179

Sept 12 Tradingpro�ts

STC Net�nancecosts

Taxationimpact

Restructuringcosts

Overheads Sept 13


29

(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 non-

controlling 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.

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

2013. 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%

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 2012.

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


30

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.

Chief financial officer’s report continued

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-

0

500

1 000

1 500

2 000

2 500

3 000

3 500

Movement in net cash and cash equivalents (Rm)

248

2 486

399150 33 6 (56) (126)

(136)(247)

(525)

(770)

(970)

492

Sept 12 Operatingcash �ows

Networkingcapital

movement

Movementin net

funding position

Other Cashacquired on

businesscombination

Purchase ofshares interms of

FSP scheme

Equity-accounted

investments

Acquisitionof CIMERWA

Net�nancecostspaid

Taxationpaid

Dividendspaid

Acquisitionof PPE andintangibles

Sept 13

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:


31

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

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

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

Acquisitions and expansions are setting a solid base for sustainable growth in our selected markets, guided by robust risk management processes.“

“

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.

Case study

SUSTAINABLE

BEYOND THE BAG


34

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.

2013 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 2013.

New five-year social and labour plans finalised and all mining charter requirements fulfilled.

R50 million commitment across five years for 10 PPC sites.

Summary of integrated performance


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 first-line 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 2013.

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 self-sustaining.

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 2013.

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 CO2 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.


36

Seven-year financial review

2013 2012 2011 2010 2009 2008 2007

Total assets (Rm) 8 876 6 907 6 419 6 112 5 819 4 534 4 882

Net working capital (Rm) 723 807 794 636 602 423 206

Total equity (Rm) 2 142 1 176 955 858 915 1 713 2 349

Total borrowings (Rm) 4 046 3 585 3 510 3 521 3 392 1 674 1 434

EBITDA interest cover (times) 6,2 6,2 5,9 6,6 7,3 12,6 25,9

Net debt to EBITDA (times) 1,2 1,4 1,5 1,3 1,2 0,6 0,1

Number of years to repay interest-bearing borrowings (years) 1,9 1,5 2,4 2,1 2,1 2,0 1,0

Revenue (Rm) 8 316 7 346 6 826 6 807 6 783 6 248 5 566

Normalised EBITDA^ (Rm) 2 504 2 327 2 146 2 483 2 733 2 541 2 370

Normalised EBITDA margin (%)^ 30,1 31,7 31,4 36,5 40,3 40,7 42,6

Effective taxation rate (%) 31,9 33,3 30,7 29,8 29,3 28,0 28,3

Normalised EPS (cents per share)^ 214 185 166 213 257 283 263

Normalised HEPS (cents per share)^ 215 185 167 219 257 283 263

Dividends per share (cents per share) 156 146 130 175 200 225 205

Dividend cover (times) 1,3 1,3 1,3 1,3 1,3 1,3 1,3

Cash generated from operations (Rm) 2 885 2 284 2 102 2 442 2 602 2 546 2 192

Cash conversion ratio 1,1 1,0 1,0 1,0 1,0 1,0 0,9

Dividends paid (Rm) 770 706 876 1 062 1 195 1 401 1 207

Investment in property, plant and equipment and intangible assets (Rm) 970 640 517 658 921 797 964

Investments in subsidiaries and equity accounted investments (Rm) 266 214 – – – – –

Weighted average number of ordinary shares in issue during the year (000) 522 678 524 567 526 754 520 780 525 867 529 050 537 612

Market capitalisation (Rm) 18 647 17 866 13 665 18 451 19 405 15 938 24 392

^ Calculated before the impact of BBBEE IFRS 2 charges, Zimbabwe indigenisation costs and restructuring costs.


37

2013 2012 2011 2010 2009 2008 2007

Total assets (Rm) 8 876 6 907 6 419 6 112 5 819 4 534 4 882

Net working capital (Rm) 723 807 794 636 602 423 206

Total equity (Rm) 2 142 1 176 955 858 915 1 713 2 349

Total borrowings (Rm) 4 046 3 585 3 510 3 521 3 392 1 674 1 434

EBITDA interest cover (times) 6,2 6,2 5,9 6,6 7,3 12,6 25,9

Net debt to EBITDA (times) 1,2 1,4 1,5 1,3 1,2 0,6 0,1

Number of years to repay interest-bearing borrowings (years) 1,9 1,5 2,4 2,1 2,1 2,0 1,0

Revenue (Rm) 8 316 7 346 6 826 6 807 6 783 6 248 5 566

Normalised EBITDA^ (Rm) 2 504 2 327 2 146 2 483 2 733 2 541 2 370

Normalised EBITDA margin (%)^ 30,1 31,7 31,4 36,5 40,3 40,7 42,6

Effective taxation rate (%) 31,9 33,3 30,7 29,8 29,3 28,0 28,3

Normalised EPS (cents per share)^ 214 185 166 213 257 283 263

Normalised HEPS (cents per share)^ 215 185 167 219 257 283 263

Dividends per share (cents per share) 156 146 130 175 200 225 205

Dividend cover (times) 1,3 1,3 1,3 1,3 1,3 1,3 1,3

Cash generated from operations (Rm) 2 885 2 284 2 102 2 442 2 602 2 546 2 192

Cash conversion ratio 1,1 1,0 1,0 1,0 1,0 1,0 0,9

Dividends paid (Rm) 770 706 876 1 062 1 195 1 401 1 207

Investment in property, plant and equipment and intangible assets (Rm) 970 640 517 658 921 797 964

Investments in subsidiaries and equity accounted investments (Rm) 266 214 – – – – –

Weighted average number of ordinary shares in issue during the year (000) 522 678 524 567 526 754 520 780 525 867 529 050 537 612

Market capitalisation (Rm) 18 647 17 866 13 665 18 451 19 405 15 938 24 392

^ Calculated before the impact of BBBEE IFRS 2 charges, Zimbabwe indigenisation costs and restructuring costs.


38

PPC Group2013 2012

Rm SARest of Africa SA

Rest of Africa

Revenue 6 356 1 960 5 786 1 560

Employees 2 299 886 2 292 793

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.

CementPPC 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 rangeSouth AfricaPPC’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.

ZimbabweSurebuild, 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.

BotswanaThe 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.

MozambiquePPC’s 42.5N Surebuild is distributed as the Força brand and the 32.5N Obras product was introduced during 2012.

RwandaCIMERWA produces a 42.5N Portland Pozzolana Cement and a 32.5N Portland Composite Cement.

Group Cement2013 % 2012

Revenue (Rm) 7 219 16 6 246

Normalised EBITDA* (Rm) 2 311 11 2 087

EBITDA margin (%)* 32,0 33,4

Operating profit (Rm) 1 846 10 1 682

Operating margin (%)* 25,6 26,9

Assets (Rm) 8 101 32 6 153


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 AfricaDemand

Cement industry sales volumes grew by 4,2% for the nine months1 from October 2012 to June 2013. 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.

Source: Reserve Bank

Gross �xed capital formation(% change)

-20

-15

-10

-5

0

5

10

15

20

25

2002

/04

2003

/01

2003

/02

2003

/03

2003

/04

2004

/01

2004

/02

2004

/03

2004

/04

2005

/01

2005

/02

2005

/03

2005

/04

2006

/01

2006

/02

2006

/03

2006

/04

2007

/01

2007

/02

2007

/03

2007

/04

2008

/01

2008

/02

2008

/03

2008

/04

2009

/01

2009

/02

2009

/03

2009

/04

2010

/01

2010

/02

2010

/03

2010

/04

2011

/01

2011

/02

2011

/03

2011

/04

2012

/01

2012

/02

2012

/03

2012

/04

2013

/01

2013

/02

Operations review


39

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 2013. 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 2014. In the context of a constrained economy, industry cement sales volumes are estimated to grow between 3% and 5% in 2013 and 2014.

Public and private-sector investments remain muted as growth in real gross fixed capital formation slowed to 4,1% in the first half of 2013. 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.

ZimbabweCement demand in Zimbabwe has continued to grow since the country adopted the US dollar in 2009. 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

Source: South African Revenue Service

Durban

Q1-

11

Q2-

11

Q3-

11

Q4-

11

Q1-

12

Q2-

12

Q3-

12

Q4-

12

Q1-

13

Q2-

13

Q3-

13

Port Elizabeth/East London Cape Town

Imported cement volumes by port of entry

0

50 000

100 000

150 000

200 000

250 000

300 000

350 000

tonn

es


40

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 2013. The commissioning of our palletiser project remains on target, also set for the end of calendar 2013.

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.

BotswanaAlthough 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.

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.

Operations review continued

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.

RwandaAfter 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 600 000 tpa plant. We were pleased with the improved performance of the existing operation, with its 100 000 tpa capacity, and the positive contribution it has made to group EBITDA for 2013.

The new project remains on track with commissioning expected during the final quarter of 2014.

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.


41

LimePPC 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 productsUnslaked lime, hydrated lime and limestone and

burnt dolomite.

2013 % 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) 487 4 467

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.

2013 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 2014.

AggregatesPPC 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 productsConcrete stone, road stone, crusher sand, river sand, building sand, plaster sand, natural base, sub-base, fill material, dolomite and agricultural lime.

2013 % 2012

Revenue (Rm) 335 12 299

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

Aggregates South AfricaSales 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 (370 000 m3 of concrete supplied via our ready-mix customers) as well as two road construction sites in the area (over 100 000 tonnes of base coarse material).

Variable costs rose 16% from last year mainly due to high diesel, power and explosive increases as well as above-inflation 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 BotswanaDespite 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 2013.

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.


42

Creating a sustainable culture of safety in PPCSafety 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

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 lost-time injuries

Lowlights• One fatality at Slurry in November 2012

• 18 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

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 safetyPPC 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 2013. 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 2012. 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.

People review

Safety and health


43

PPC group key safety indicators

Target2 Target Actual Actual

2014 2013 2013 2012

Number of fatalities 0 0 1 0

Fatality frequency rate per 200 000 hours worked1 0 0 0,02 0,001

Number of LTIs <10 <11 18 14

LTIFR per 200 000 hours worked (12-month window*)3 <0,15 <0,18 0,28 0,23

Days lost to LTIs4 400 <450 1 240 553

Significant administrative fines (number) 0 0 0 0

Notes1 Fatality frequency increased to 0,02 in November 2012.2 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 1 080 19 1 099

Botswana 18 0 18

Mozambique 0 0 0

Zimbabwe 108 0 108

Rwanda 15 0 15

Group 1 221 19 1 240

All manufacturing sites remain certified to the OHSAS 18001 standard.

Occupational healthUnder 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.


44

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 2013. 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 complianceNotices from authorities

2013 2012

Number of visits by authorities 42 31

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.

People review continued

Safety and health


45

Highlights• Extensive Kambuku revitalisation initiative

– Most senior employees voluntarily sacrificed their 2013 increase to lift salaries of employees earning less than R14 000 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 value-based 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 2 100 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 R14 000 per month. These employees received 6,5% annual wage increase and an additional R875 payment, resulting in a double-digit wage increase for 2013. PPC also raised its entry salary to R6 500 per month.

I Care, PPC caresThe 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.

Workforce


46

Empowering peopleOur 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 peopleThe 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.

CREATE ENERGY STRUCTURE/HARNESS ENERGY DIRECT/FOCUS ENERGY

Clear purposeVision strategy• Communication• Understood• Journey maps

Co

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Inspiring climate• Fairness, order, rules of the game• Communication, information,

influence• Management style• Recognition • Code of conduct • Effective HR administration • Safety and environment • Transformation

Learning for growth• Career development• Skills development • Succession planning • NQF alignment

Performance improvementOrganisational/individual• Role and function clarity• Accountability scorecards,

targets and action plans • Performance measurement• Performance review:

– Recognition – Action plans for under-

performance

AlignmentValue drivers, structure job model• Purpose• Scorecard• Competencies

The vital elements of a performing organisation

Invocom® • Communication• Reviewing progress• Stretching targets • Solving problems • Education

RELEASE ENERGY/REWARDCREATE ENERGY STRUCTURE/HARNESS ENERGY DIRECT/FOCUS ENERGY

Clear purposeVision strategy• Communication• Understood• Journey maps

Co

nti

nu

ou

s p

erfo

rman

ce

imp

rove

men

t

Inspiring climate• Fairness, order, rules of the game• Communication, information,

influence• Management style• Recognition • Code of conduct • Effective HR administration • Safety and environment • Transformation

Learning for growth• Career development• Skills development • Succession planning • NQF alignment

Performance improvementOrganisational/individual• Role and function clarity• Accountability scorecards,

targets and action plans • Performance measurement• Performance review:

– Recognition – Action plans for under-

performance

AlignmentValue drivers, structure job model• Purpose• Scorecard• Competencies

The vital elements of a performing organisation

Invocom® • Communication• Reviewing progress• Stretching targets • Solving problems • Education

RELEASE ENERGY/REWARD


Workforce


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 four-scale 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.

RecognitionA 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

2013 categorywinners

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


48

Balanced workforce PPC’s total workforce for 2013 is 3 185 compared to 3 085 in 2012. 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 equity levels**

African Coloured Indian White SA national Foreign Grand totalFemale Male Total Female Male Total Female Male Total Female Male Total Female Male Total Female Male

Top management (CEO) 0 0 0 0 0 0 0 1 1 0 0 0 0 1 1 0 0 1

Senior management 2 2 4 1 1 2 1 2 3 0 14 14 4 19 23 0 0 23

Professional 29 22 51 4 23 27 4 17 21 23 88 111 60 150 210 1 3 214

Skilled 110 299 409 69 178 247 21 9 30 93 257 350 293 743 1 036 2 9 1 047

Semi-skilled 78 620 698 23 174 197 1 1 2 6 10 16 108 805 913 0 0 913

Learners 0 4 4 1 2 3 0 0 0 0 0 0 1 6 7 0 0 7

Total permanent 219 947 1 166 98 378 476 27 30 57 122 369 491 466 1 724 2 190 3 12 2 205

Learners 8 11 19 1 16 17 0 0 0 0 5 5 9 32 41 0 0 41

Fixed-term contractors 14 26 40 4 7 11 0 0 0 2 0 2 20 33 53 0 0 53

Total fixed-term contractors 22 37 59 5 23 28 0 0 0 2 5 7 29 65 94 0 0 94

Grand total 241 984 1 225 103 401 504 27 30 57 124 374 498 495 1 789 2 284 3 12 2 299

* September 2013.

** Levels as defined by the Employment Equity Act.

Workforce analysis: Botswana*

Botswana nationalsSA

nationals

TotalFemale Male Male

Professional 1 9 1 11

Skilled 23 65 0 88

Semi-skilled 6 53 0 59

Total permanent 30 127 1 158

Fixed-term contractors 0 5 1 6

Total fixed-term contractors 0 5 1 6

Grand total 30 132 2 164

* September 2013.

Workforce analysis: Zimbabwe*

Female Male Total

Senior management 0 8 8

Middle management 4 14 18

Junior management 2 17 19

Skilled 31 129 160

Unskilled and semi-skilled 13 299 312

Learners 7 33 40

Total permanent 57 500 557

Fixed-term contractors 9 9 18

Grand total 66 509 575

* September 2013.


Workforce


49

Workforce demographicsPPC’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

Female Female total

%

Male Male total

%

Grandtotal

%African

%Coloured

%Indian

%White

%African

%Coloured

%Indian

%White

%30 – 50 56,9 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 turnoverThe 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 2012. 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 2013.

Total turnover

Region Grand total Botswana Botswana

total%

South AfricaSA total

%2013

%2012

%Age groupFemale

%Male

%Female

%Male

%30 – 50 27,8 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

Region Grand totalBotswana South Africa

2013%

2012%Age group

Female%

Male%

Total%

Female%

Male%

Total%

30 – 50 22,2 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*

Region Grand totalBotswana South Africa

2013%

2012%Age group

Female%

Male%

Total%

Female%

Male%

Total%

30 – 50 5,6 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.


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Absenteeism rate per region

Region

Female Male Total

2013%

2012%

2013%

2012%

2013%

2012%

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 relationsIn 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 developmentThe 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 EmployeesAverage training

hours per level

Top management 9,00 1 9,00

Senior management 894,00 23 38,87

Professional 9 914,27 216 45,90

Skilled 105 490,59 1 069 98,68

Semi-skilled 54 772,59 942 58,14

Learners 66 112,84 48 1 377,35

Total 237 193,29 2 299 103,17

Investment in training (RSA only) (R000)

Skills spend 2013

African Coloured Indian White

MaleR000

FemaleR000

MaleR000

FemaleR000

MaleR000

FemaleR000

MaleR000

FemaleR000

15 628 4 697 10 796 2 301 648 419 8 224 1 584

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 2007. 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.


Workforce


51

PPC leadership academyThe PPC leadership academy’s third successful intake of 19 senior managers finished their final block in September 2013. 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

ProgrammeAfrican Coloured Indian White

TotalTotal

graduatedM F M F M F M FOperations academy 5 1 11 0 0 0 3 0 20 30

Mining academy 1 0 8 1 0 0 1 0 11 12

Bridging skills programme 8 2 15 0 0 0 3 0 28 89

Leadership 5 3 0 1 1 0 9 0 19 30

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 WhiteTotal

Total graduatedM F M F M F M F

Electrical 2 4 3 1 0 0 2 0 12 73

Fitter and turner 3 1 8 1 0 0 4 0 17 78

Plater welder 4 0 6 0 0 0 0 0 10 28

Diesel mechanic 6 0 2 0 0 0 1 0 9 19

Total 15 5 19 2 0 0 7 0 48 198

Graduate development programmeAs 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.

ProgrammeAfrican Coloured Indian White

TotalTotal

graduatedM F M F M F M FGraduate development programme 2 8 2 0 0 0 0 0 12 13

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.


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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 5 000 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.


Workforce


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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 2012. 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 much-needed 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 3 000 beneficiaries participating in accredited training initiatives since inception.

Social review

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 P127 000 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

Empowered ownership 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 trustsThe 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 2 900 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, 2 149 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 P126 963 in cash payments.


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Social and labour plan projectsIn 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.

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

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 7 000 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 2012.

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 R500 000 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.

Social review continued

Socio-economic development


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 5 000.

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 2013.

Five-year summary2008 to 2012

North West 7 684Limpopo 560Gauteng 11 369Western Cape 7 635Northern Cape 3 491Eastern Cape 7 685

Social and labour plan spent and jobs created

100 jobs

116jobs

116jobs

130jobs

83jobs (R000)

Project and province ProvinceJobs

created Total spent2008

Rm 2009

Rm2010

Rm2011

Rm2012

Rm

Ottoshoop Clinic North West 35 2 782 000 2 782 000

Ramokoka Primary School North West 65 4 069 000 4 069 000

Kgatelopele SMME Centre North West 833 000 833 000

Bakgatla Ba Kgafela Feedlot Limpopo 560 000 560 000

Diepsloot Multi-Purpose Centre Gauteng province 7 1 816 000 1 816 000

Centre Gauteng province 60 2 796 000 2 796 000

Atteridgeville Construction Incubator Gauteng province 49 6 757 000 6 757 000

Wittewater Water Project Western Cape 25 948 000 948000

De Hoek Invader Tree Eradication Western Cape 14 1 213 000 1213000

Steynville Primary Grade R Rooms Western Cape 10 343 000 343 000

Riebeeck Wielie Walie Crèche Western Cape 17 784 000 784 000

Riebeeck West Primary Grade R Rooms Western Cape 12 538 000 538 000

Riebeeck Meiring Primary Grade R Rooms Western Cape 11 478 000 478 000

Swartland (POP) Youth Centre Western Cape 41 3 331 000 3 331 000

Kgatelopele Electrification (287) Northern Cape 25 1 636 000 1 636 000

Kgatelopele Paving of Roads Northern Cape 58 1 855 000 1 855 000

Motherwell Small Business Development Centre Eastern Cape 4 000 000 3 000 000 1 000 000

Klipplat Ostrich Farm Eastern Cape 16 3 148 000 3 148 000

Willowmore Skills Development Centre Eastern Cape 100 537 000 537 000

Totals 545 38 424 000 784 000 1 896 000 12 128 000 10 012 000 13 604 000

Lessons learned in the first five-year cycleImportant 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

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.

OutlookOur 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.


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Enterprise developmentThe 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



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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


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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 40 30 30 23

Consumable goods 50 40 47 43

Services 70 60 60 61

Preferential procurement in 2014In 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 women-owned. 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-for-money 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 1948. 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.


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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

We summarise some of our long-running projects and new initiatives below.

Long-running projectsTime 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

Job creation 27%Education 49%Community training 7%Infrastructure 8%Welfare 6%Arts and culture 3%Other – sport 1%

hallmark). These are sold to the public, with PPC and universities as the main customers. To date, over 8 000 bags have been sold, generating much-needed income for the centre.

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 2009. 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 2013. 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 1 000 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.

Corporate social investment

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


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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 1 000 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 1 000 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 two-year programme designed to prepare each student for a lifetime of leadership.

PPC has to date supported five girls and one boy.

Employee volunteerismPPC 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 R10 000 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 R500 000 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 4 000 bags of cement.

New initiatives in 2013MaLerato 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 R120 000 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 18 000 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 18 000 people at the annual Cape Wine festival.



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Shalamuka Foundation – Penreach Whole School Development Programme

PPC invested R250 000 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 under-resourced areas.

Disability Empowerment Concerns

PPC invested R250 000 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 3 000 people benefit from this project.

Case study – Ikusasa School of Cooking

PPC contributed R150 000 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.

The course is run over 10 months, finishing in December 2013. 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.

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 bordersBotswana

With the CSI strategy now in place, PPC Cement and PPC Aggregates invested in two flagship projects – Molepole sewing project (P250 000) and Lady Khama Charity Trust (P350 000). In total, P700 000 (some R786 800) was spent on social upliftment projects in Botswana.

Zimbabwe

Most of Zimbabwe’s CSI expenditure at US$25 881 (some R258 000) 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 2014.


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Environmental review

Highlights• Our Hercules Sonex Mill and Slurry Finishing Mill

(FM4) upgrades reduced emissions significantly to below 30 mg/Nm3

• 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 2013. 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 14001 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

PPC environmental vision and policyWe 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 issuesWe 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 policyOur group energy policy acknowledges that PPC is an energy-intensive 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.

• 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


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Legal compliance managementIn 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 14001 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.

Key environmental issues

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 systemsPPC’s commitment to compliance is demonstrated by the fact that all cement and lime operations are ISO 14001 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.

• Implement comprehensive water management programmes in line with licence requirements

• Participate in industry initiatives to ensure sustainable water management

• Energy committee to oversee evaluation and implementation of electrical and thermal energy projects

• Key focus areas include coal replacement and renewable energy

• Committed to environmental legal compliance

• Ensure proposed legislation promotes sustainable business

Energy

Carbon footprint

• 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

• Committed to reducing specific carbon intensity through energy and process efficiencies

• Actively engage with government on CO2 reduction and carbon tax

Legal compliance

Water resource management Air quality


64

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 2011. 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 2013

Stakeholder engagementPPC 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.

C-SPL audit score

96

97

98

99

100

101

Results of secondary materials co-processing compliance audits during �nancial year

Oct

-12

Nov

-12

Dec

-12

Jan-

13

Feb-

13

Mar

-13

Apr

-13

May

-13

Jun-

13

Jul-1

3

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 2015.

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 changeBecause 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 2013. 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.


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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 2The 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 three-year period are projected.

Carbon footprint and energy CO2 emissions

Tonnes Total Direct Indirect

Cement, lime and dolomite SA 4 833 679 4 252 186 581 493

Cement SA (only) 3 808 730 3 302 017 506 713

Aggregates SA (only) 19 710 1 613 18 097

Cement Zimbabwe 497 523 432 105 65 418

SA cement performance – CO2 emissions

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 2013 2012

Direct 20 599 20 572

Indirect 2 202 2 216

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.

* SA operations – incorporates all South African operations including aggregates, cement and lime, head office and facilities that distribute products.

CO2/tonne clinker

800

850

900

950

1 000

1 050

1 100

CO2/tonne cement

1 077

2010 2011 Factor 2012 Factor 2013 Factor

1 083 1 0681 052

869892 886

853

CO2/t of clinker, lime and dolomite

800

850

900

950

1 000

1 050

1 100

1 150

1 200

Cement, clinker, lime and dolomite performance

CO2/t of cement, lime and dolomite

2010 (base) 2011 2012 2013

1 167 1 1661 125

958992 995

940

1 147

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 managementPPC 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 2013. 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), SO2 and NOx 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 2013.

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.


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Environmental review continued

Emission performance (SA cement kilns*)

Dust Oxides of nitrogen Sulphur dioxide

FY 2013 2012 2013 2012 2013 2012

Tonnes 734 922 8 395 9 589 569 891

* 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.

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.

Municipal water consumption

The total volume of municipal water consumed by our South African operations for the past two years is shown below:

2013 2012

693 231 m3 737 553 m3

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 3 760 544 m3, of which municipal consumption makes up about 18%.

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 8 100 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 3 100 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.

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 cost-effective recycling opportunities.

Average k for 12 months prior to ESP replacement

Average k for 6 months after the ESP replacement

0

1 000

2 000

3 000

4 000

5 000

6 000

7 000

8 000

9 000


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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 2012 84% 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.

Recycle or reuseDisposal

General waste

44%56%RecycleDisposal

Hazardous waste

14%

86%

Upgrade projectsLime 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/Nm3.

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 projectsWind 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 partiesWe 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 photovoltaicWe 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 finesWe 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 2014.

Co-processing tyres at DwaalboomFollowing 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 co-process 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 fuelUHURU 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.


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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.

2013 Women in Construction Excellence awards

The general manager of our Jupiter factory, Busi Legodi, received the Woman in Concrete award at the TotallyConcrete Expo 2013. 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 2013. 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 2012. PPC was a finalist in the long-term sponsorship and youth development awards.

SteinBuild supplier awardsPPC 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 1 900 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.


69

Element Description MeasureCompliance 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)

40% 67%

Senior management (exco)

40% 50%

Middle management 40% 48%

Junior management 40% 64%

Core skills 40% 86%

Mining charter scorecard 2013*

* 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.


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Element Description MeasureCompliance 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 Africa-based 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

Implementation of approved EMPs

100% All plants have approved EMPs

Improvement of industry’s mine health and safety performance

Implementation of tripartite action plan on health and safety

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

All investigated for 100%

100% 100%

Percentage of research findings from MOSH learning hub investigated for implementation

All investigated for 100%

100% 100%

Health: percentage of mandatory occupational health reports submitted

4 required for 100% 100% 100%

Health: adherence to HIV/AIDS and TB guidelines

Yes/No Yes On target

Mining charter scorecard 2013* continued


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Human resource development

Year: 2013

A C I W

Description Measures Category M F M F M F M F Total

Develop requisite skills, including support for SA-based R&D initiatives intended to develop solutions in mining, processing and exploration technology efficiency (energy and water use in mining), beneficiation, environmental conservation and rehabilitation

HRD expenditure as percentage of total annual payroll (excluding mandatory skills development levy)

Learnerships and bursaries (of core and critical skills)

6 1 19 1 0 0 4 0 31

6 6 0 0 0 0 0 0 12

Artisans 15 4 20 2 0 0 7 0 48

ABET training (level I, II, III, IV and NQF 1) 93 10 7 5 0 1 0 0 116

Other training (school support and post-matric programmes)

• 28 on PPC bridging programme

• 12 students on graduate development programme

Support for SA-based R&D initiatives

100% of R&D expenditure directed at SA-based companies

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 34,55% black ownership

11,68% black women ownership

Value-adding vendor Yes

BEE procurement recognition 156%

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 2013. 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.

* 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.


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GovernanceIn 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

Corporate governance review

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 2008. 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 socio-political 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.

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.


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Key roles and responsibilitiesKey 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 operatesThe members of our board are shown below:

INDEPENDENTNON-EXECUTIVE

EXECUTIVE

NON-EXECUTIVE

Ntombi Langa-Royds André

LamprechtJoe

Shibambo

TimRoss

Bridgette Modise

Bheki Sibiya

Zibu Kganyago Tryphosa

Ramano

Ketso Gordhan

Sydney Mhlarhi

Peter Malungani

Todd Moyo

THEGROUPBOARD

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.


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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 non-executive directors and concluded that the following directors are independent as defined in King III (the code) and the JSE listings requirements:

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-executivesDuring 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.

INDEPENDENTDIRECTORS

Ntombi Langa-Royds

André Lamprecht

Joe Shibambo

Tim Ross

Bridgette Modise

Bheki Sibiya

Zibu Kganyago

Todd Moyo

0

2

4

6

8

10

12

14

Board balance

2007

4

5

5

7

5

8 8

4

9

5

9

5

10

2

2011201020092008 2012 2013

Non-executive directorsExecutive directors

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.

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.

0

2

4

6

8

10

12

14

Gender balance

2007 2011201020092008 2012 2013

MenWomen

8

2

10

2

10

2

10

2

10

4

10

4

8

4

6

4

7

5

5

7

4

8

4

10

4

10

2

10

0

2

4

6

8

10

12

14

Racial balance

2007 2011201020092008 2012 2013

Black directorsWhite directors

Corporate governance review continued


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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 2014.

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 2013. 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).


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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

ethicsNomi-nation

Remune-ration

Risk and compliance

Atten-dance

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

Board AGM Audit

Social and

ethicsNomi-nation

Remune-ration

Risk and compliance

Atten-dance

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 Ramano@ 5/5 1/1 3/3 2/2 2/2 2/2 15/15

Notes:* Mr Abdul Kader resigned in August 2013.# Mr Esterhuysen resigned in October 2013.^ Mr Helepi resigned in February 2013.@ Ms Ramano started attending remuneration meetings in February 2013.

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


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How board committees operateThe 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:

The chairpersons of these committees are independent non-executive directors. The racial and gender mix of the chairpersons is reflected below.

BOARDCOMMITTEES

Social and ethics

committee –

Ntombi Langa-Royds

Audit

committee –

Tim Ross

Risk and compliance committee –

Joe Shibambo

Nominations committee –

Bheki Sibiya

Remuneration committee –

Ntombi Langa-Royds

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 committeeThe current members of the audit committee are:

Name Qualifications Status

TDA Ross (chair) CA(SA) Independent

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.

Tim Ross has chaired the committee since 2009. He was a partner with Deloitte for 36 years and retired in May 2008. Tim is a member of the South African Institute of Chartered Accountants.

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.

MaleFemale

Chairpersons – gender analysis

60%

40%

BlackWhite

Chairpersons – racial analysis

80%

20%


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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 price-sensitive 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



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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 2013. 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.


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Report to shareholders on the activities of the audit committee for the year ended 30 September 2013The 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 referenceThe 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.

CompositionThe 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.

MeetingsThe 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 dutiesIn 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 dutiesIn 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



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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 2013. 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 managementThe 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 complianceThe 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 reportBased 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 committeeThe members of the committee are:


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 2014. 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


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• 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 2013. At this meeting, the board confirmed that the committee has complied with its terms of reference.

About the nominations committeeThe members of the nominations committee are:


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


About the remuneration committeeThe members of the remuneration committee are:


NB Langa-Royds (chair) BA (law), LLB Independent

SK Mhlarhi CA(SA) Non-executive


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.


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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 committeeThe members of the social and ethics committee are:


NB Langa-Royds (chair) BA (law), LLB Independent


Independent

MP Malungani BCom Non-executive


Independent

All members of the committee are non-executive directors.

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


About the deal committeeThe members of the deal committee are:


MP Malungani (chair) BCom Non-executive

KM Gordhan BA, MPhil Executive

ZJ Kganyago BCom Independent


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.


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ComplianceThis 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 governanceIn 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 (www.iodsa.co.za).

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 issuersParagraph 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) 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 non-executive directors, of whom the majority must be independent (as defined in paragraph 3.84(f)(iii)), and should be chaired by the chairman of the board of directors.

Full complianceThe 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.

3.84(b) 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.

Full complianceThe 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.

3.84(c) 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.

Full complianceThe 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 2008.

3.85(d) 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.

Full complianceThe 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.

3.85(e) 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 complianceThe CVs of the directors standing for re-election appears on pages 14 and 15.


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Par Required practice Application

3.85(f) The capacity of each director must be categorised as executive, non-executive or independent, using the prescribed guidelines.

Full complianceThe nominations committee annually evaluates the categorisation of all the directors appears on page 73.

3.85(g) All issuers must have an executive financial director. The JSE may, at its discretion, when requested to do so by the issuer and due to special circumstances, allow the financial director to be employed on a part-time basis only. This request must be accompanied by a detailed motivation by the issuer and the audit committee.

Full complianceMs Ramano has been appointed as the CFO of the company and she is in the full-time employment of the company.

3.85(h) 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.

Full complianceThe 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.

3.85(i) The board of directors must annually consider and satisfy itself on the competence, qualifications and experience of the company secretary. The issuer must confirm this by reporting to shareholders in its 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.

Full complianceThe board annually assesses the competence, qualifications and experience of the company secretary. In this regard we refer to the corporate governance report.

3.85(j) 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 complianceThe 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 principlesParagraph 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 2013.

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.


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Remuneration review

Dear shareholderThe board of PPC Ltd and the remuneration committee present the remuneration report for the financial year ended 30 September 2013. 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 2013. 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 policyGovernance and the remuneration committeeRole of the remuneration committeeThe 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


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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 remunerationIntroductionThe 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:

ElementFixed/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).


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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-plus-benefits 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 R1 000 000 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, EBITDA1, 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 Detail

Retirement fund

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.

Medical aid 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.

Group personal accident cover

All employees are covered for death, medical and disability expenses as a result of an accident.

Car allowance 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-target2 and maximum earnings potential for the 2013 financial year were:

LevelOn-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.


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From the 2014 financial year, the following STIS will be operated:

Measurements Measurement period

Standard STIS (majority of employees)

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.

One year

Business unit heads This STIS will operate on the same basis as the standard STIS, but instead of an individual scorecard, a project scorecard will be used.

Generally one year, but could be extended if the project scope extends beyond one year

Major project leaders

Based on successful timely completion of major projects. Typically over two to three years with no payment before project completion

Internal audit employees

Calculated on an equitable basis to standard STIS but emphasising only individual performance and having no reference to financial performance.

One year

CEO A combination of the following measures will be used:• Annual group EBITDA targets

• Delivery of projects

• Individual scorecard

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.


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Current plan

The salient terms of the forfeitable share plan (FSP) are:

Purpose 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.

Description of the plan 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

The level of seniority determines the mix between performance awards and retention awards, shown below:

Position GradePerformance

awardRetention

award

CEO 1 75% 25%

Executive directors 2 75% 25%

Prescribed officers 3 – 4 40 – 50% 60 – 50%

Performance period and conditions

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.

Vesting period Three years from the award date.

Dilution 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 29 308 518 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:

PositionValue at grant date

as a % of TGP

CEO and CFO 55%

Other executive directors 46%

Prescribed officers 22 – 30%


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BBBEE schemes

South African employees participated in a BBBEE scheme in 2008 and a second BBBEE scheme in 2012. 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:

0

20

40

60

80

100

120

Pay mix – on-target (%)

CEO Prescribedof�cers

CFO

LTI (indicative expected value)STI (on-target)TGP

45

30

25

49

28

23

58

25

17

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 shareholdersAt the annual general meeting, shareholders will be requested to express their level of support for part 1: remuneration philosophy and policy.


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Part 2: Implementation of policies for the review periodSummary of remuneration activities/decisions during the yearThe 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 R1 000 000 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 once-off 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 paymentsIn 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 directorsIn 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 R3 200 000 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 R2 977 111 and forfeited the rights he had received in respect of the second BBBEE transaction. On resignation, Mr Abdul Kader was paid R984 411 in lieu of leave and notice and forfeited the unvested rights he had received in respect of both BBBEE transactions and all FSPs.

STIS outcome2013 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 year-on-year growth

(70% weighting)%

CCR(30%

weighting)%

% of maximum

earning potential

Stretch 15 102 100

Target 11 98 50

Threshold 7 95 0

Linear interpolation is applied between the above levels.

2013 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 Detail

Weighting %

People • 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

25

Customers • Increase sales by 6% and defend and extend presence in SA, Zimbabwe and Botswana

30

Shareholders • 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

30

Internal processes

• Complete legal and blueprint process for group restructure

• Implement innovation award system and two emerging ideas

• No significant breach of corporate governance

15


93

2013 STIS bonuses for executive directors and prescribed officersThe 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 2013.

Long-term incentivesOverview 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 awardPerformance condition targets for the 2013 award were again based on HEPS growth over three years:

TargetVesting

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 incentivesThe tables below deal with the company’s prior and current long-term incentives as at 30 September 2013:

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-endR000

Executive directors

P Esterhuysen

Share appreciation rights (LTIP)

2008/09/17 105 000 – – 105 000 – 31,80 – – –

2009/09/25 120 000 – – – 120 000 35,35 – – –

225 000 – – 105 000 120 000 – –

Restricted share units (RSS)

2009/09/25 48 600 – 24 300 – 24 300 – 30,84 749 28,71 698

FSP – with performance conditions

2012/09/28 88 000 – – – 88 000 – – 30,20 2 658

2013/03/15 – 61 300 – – 61 300 – – 30,20 1 851

88 000 61 300 – – 149 300 – 4 509

Total 749 5 207


94


Award date

Number allocated

in prior years


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-endR000

Executive directors continued

KM Gordhan

FSP – no performance conditions

2013/03/15 – 25 300 – – 25 300 – – 30,20 764


2013/03/15 – 126 600 – 126 600 – – 30,20 3 823

Total – 4 587

MMT Ramano


2011/08/01 150 000 – – – 150 000 – – 27,75 4 162

2012/09/28 120 000 50 000 – – 170 000 – – 24,68 4 195

2013/09/30 – 170 000 – – 170 000 – – 22,28 3 788

270 000 220 000 – – 490 000 – 12 145


2012/09/28 96 800 – – – 96 800 – – 30,20 2 923

2013/03/15 – 78 700 – – 78 700 – – 30,20 2 377

96 800 78 700 – – 175 500 – 5 300

Total – 17 445

Prescribed officers

PL Booysen


2007/08/08 30 000 – – – 30 000 43,00 – 1,86 56

2008/09/17 24 000 – – – 24 000 31,80 – 6,29 151

2009/09/25 22 000 – – – 22 000 35,35 – 6,40 141

76 000 – – – 76 000 – 348


2011/09/30 8 900 – – – 8 900 – – 30,20 269

2012/02/16 6 500 – – – 6 500 – – 30,20 196

2013/03/15 – 6 800 – – 6 800 – – 30,20 205

15 400 6 800 – – 22 200 – 670


2011/09/30 9 900 – – 9 900 – – – – –

2012/02/16 5 400 – – – 5 400 – – 30,20 163

2013/03/15 – 7 600 – – 7 600 – – 30,20 230

15 300 7 600 – 9 900 13 000 – 393

Total – 1 411


95

Award date

Number allocated

in prior years


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-endR000

Prescribed officers continued

JT Claassen


2007/08/08 40 000 – – – 40 000 43,00 – 1,86 74

2008/09/17 24 000 – – – 24 000 31,80 – 6,29 151

2009/09/25 26 000 – – – 26 000 35,35 – 6,40 166

90 000 – – – 90 000 – 392


2011/09/30 12 400 – – – 12 400 – – 30,20 374

2012/02/16 10 200 – – – 10 200 – – 30,20 308

2013/03/15 – 10 400 – – 10 400 – – 30,20 314

22 600 10 400 – – 33 000 – 997


2011/09/30 20 600 – – 20 600 – – – – –

2012/02/16 12 700 – – – 12 700 – – 30,20 384

2013/03/15 – 17 300 – – 17 300 – – 30,20 522

33 300 17 300 – 20 600 30 000 – 906

Total – 2 294

AC Lowan


2013/03/15 – 4 800 – – 4 800 – – 30,20 145


2013/03/15 – 5 400 – – 5 400 – – 30,20 163

Total – 308


96

Award date

Number allocated

in prior years


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-endR000


KPP Meijer


2007/08/08 85 000 – – 21 250 63 750 43,00 – 1,86 119

2008/09/17 60 000 – – 15 000 45 000 31,80 – 6,29 283

2009/09/25 59 000 – – 14 750 44 250 35,35 – 6,40 283

204 000 – – 51 000 153 000 – 685


2011/09/30 14 200 – – – 14 200 – – 30,20 429

2012/02/16 11 200 – – – 11 200 – – 30,20 338

2013/03/15 – 12 300 – – 12 300 – – 30,20 371

25 400 12 300 – – 37 700 – 1 139


2011/09/30 23 600 – – 23 600 – – – –

2012/02/16 14 000 – – – 14 000 – – 30,20 423

2013/03/15 – 20 500 – – 20 500 – – 30,20 619

37 600 20 500 – 23 600 34 500 – 1 042

Total – 2 865

KP Odendaal


2008/09/17 50 000 – – 50 000 – 31,80 – – –

2009/09/25 54 000 – – – 54 000 35,35 – – –

104 000 – – 50 000 54 000 – –


2012/02/16 19 000 – – – 19 000 – – 30,20 574

2013/03/15 – 10 700 – – 10 700 – – 30,20 323

19 000 10 700 – – 29 700 – 897


2012/02/16 23 700 – – – 23 700 – – 30,20 716

2013/03/15 – 17 800 – – 17 800 – – 30,20 538

23 700 17 800 – – 41 500 – 1 253

Total – 2 150



97

Award date

Number allocated

in prior years


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-endR000


JHDLR Snyman


2007/08/08 25 000 – – – 25 000 47,36 – 1,86 46

2008/09/17 27 000 – – – 27 000 31,80 – 6,29 170

2009/09/25 23 000 – – – 23 000 35,35 – 6,40 147

75 000 – – – 75 000 – 364


2012/02/16 15 500 – – – 15 500 – – 30,20 468

2013/03/15 – 8 400 – – 8 400 – – 30,20 254

15 500 8 400 – – 23 900 – 722


2012/02/16 19 500 – – 19 500 – – 30,20 589

2013/03/15 – 13 900 – – 13 900 – – 30,20 420

19 500 13 900 – – 33 400 – 1 009

Total – 2 094

JJ Taljaard


2007/08/08 100 000 – – 25 000 75 000 43,00 – 1,86 139

2008/09/17 63 000 – – 15 750 47 250 31,80 – 6,29 297

2009/09/25 62 000 – – 15 500 46 500 35,35 – 6,40 298

225 000 – – 56 250 168 750 – 734


2011/09/30 14 500 – – – 14 500 – – 30,20 438

2012/02/16 11 500 – – – 11 500 – – 30,20 347

2013/03/15 – 11 800 – – 11 800 – – 30,20 356

26 000 11 800 – – 37 800 – 1 142


2011/09/30 24 100 – – 24 100 – – – –

2012/02/16 14 300 – – – 14 300 – – 30,20 432

2013/03/15 – 19 700 – – 19 700 – – 30,20 595

– 1 027

Total – 2 903


98

Award date

Number allocated

in prior years


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-endR000


RS Tomes


2007/08/08 33 000 – – – 33 000 43,00 – 1,86 61

2008/09/17 35 000 – – 8 750 26 250 31,80 – 6,29 165

2009/09/25 38 000 – – 9 500 28 500 35,35 – 6,40 182

106 000 – – 18 250 87 750 – 409


2011/09/30 10 800 – – – 10 800 – – 30,20 326

2012/02/16 9 100 – – – 9 100 – – 30,20 275

2013/03/15 – 9 200 – – 9 200 – – 30,20 278

19 900 9 200 – – 29 100 – 879


2011/09/30 18 000 – – 18 000 – – – –

2012/02/16 11 300 – – – 11 300 – – 30,20 341

2013/03/15 – 15 400 – – 15 400 – – 30,20 465

– 806

Total – 2 094

A Wadee


2007/08/08 32 000 – – – 32 000 43,00 – 1,86 59

2008/09/17 18 000 – – – 18 000 31,80 – 6,29 113

2009/09/25 20 000 – – – 20 000 35,35 – 6,40 128

70 000 – – – 70 000 – 301


2011/09/30 9 800 – – – 9 800 – – 30,20 296

2012/02/16 7 700 – – – 7 700 – – 30,20 233

2013/03/15 – 7 900 – – 7 900 – – 30,20 239

17 500 7 900 – – 25 400 – 767


2011/09/30 16 300 – – 16 300 – – – – –

2012/02/16 9 600 – – – 9 600 – – 30,20 290

2013/03/15 – 13 200 – – 13 200 – – 30,20 399

25 900 13 200 – 16 300 22 800 – 689

Total – 1 756



99

Award date

Number allocated

in prior years


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-endR000

Past directors

S Abdul Kader (resigned 5 August 2013)


2008/09/17 90 000 – – 90 000 – 31,80 – – –

2009/09/25 120 000 – – 120 000 – 35,35 – – –

210 000 – – 210 000 – – –


2009/09/25 42 600 – – 42 600 – – – 28,71 –


2012/02/16 21 600 – – 21 600 – – – 30,20 –

2013/03/15 – 11 300 – 11 300 – – – 30,20 –

21 600 11 300 – 32 900 – – –


2012/02/16 80 900 – – 80 900 – – – 30,20 –

2013/03/15 – 56 300 – 56 300 – – – 30,20 –

80 900 56 300 – 137 200 – – –

Total – –

RH Dent (retired 31 December 2010)


2008/09/17 90 000 – – 90 000 – 31,80 – – –

2009/09/25 120 000 – – – 120 000 35,35 – – –

210 000 – – 90 000 120 000 – –

SG Helepi (resigned 14 February 2013)


2007/08/08 18 000 – – – 18 000 43,00 – 1,86 33

2008/09/17 35 000 – – 35 000 – 31,80 – – –

2009/09/25 36 000 – – – 36 000 35,35 – – –

89 000 – – 35 000 54 000 – 33


2012/02/16 16 600 – 6 225 10 375 – – 35,13 219 30,20 –


2012/02/16 62 500 – 23 438 39 062 – – 35,13 823 30,20 –

Total 1 042 33


100

Remuneration paid to executive directors and prescribed officers in 2013In 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

contributionsCar

allowanceIncentive

bonus

LTI attributable

value* Other Total

Executive directorsP Esterhuysen 2 721 427 324 – 749 3 2335 7 455

KM Gordhan3 4 916 584 – 2 871 – 2 8 373

MMT Ramano 2 681 894 240 1 589 – 4 5 409

Prescribed officers PL Booysen 1 086 282 318 531 – 5 2 222

JT Claassen 1 480 343 480 641 – 5 2 949

AC Lowan 1 086 103 – 524 – 4 1 717

KPP Meijer 1 874 569 239 710 – 15 3 408

KP Odendaal 1 967 285 71 641 – 4 2 968

JHDLR Snyman 1 464 211 142 763 – 7 2 587

JJ Taljaard 1 903 339 320 934 – 3 3 500

RS Tomes 1 430 315 260 527 – 4 2 537

A Wadee 1 400 253 60 509 – 7 2 228

Past directors S Abdul Kader1 2 383 340 – – – 9895 3 712

SG Helepi2 1 034 169 121 – 1 042 3 1535 5 519

P Stuiver4 911 141 75 – – 3 2005 4 327

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:

TGP Variable pay

R000 Salary

Retirement and medical

contributionsCar

allowanceIncentive

bonus

LTI attributable

value* Total

Executive directors

S Abdul Kader 2 196 345 456 929 629 3 926

P Esterhuysen 2 537 399 324 1 011 718 4 271

SG Helepi 1 734 340 242 752 1 259 3 068

MMT Ramano 2 460 800 240 1 288 – 4 751

P Stuiver 3 206 803 300 1 336 – 5 645

Prescribed officers KPP Meijer 1 673 388 261 710 4 163 7 195

KP Odendaal 1 749 258 104 641 2 007 4 759

JHDLR Snyman 1 287 203 216 462 1 082 3 250

* Arising from the 2008 and 2009 RSS awards.



101

Non-executive director feesNon-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

R000Board

feesChairman

feesNomi-

nations Audit

Risk and

complianceRemune-

ration

Social and

ethicsSpecial

meetings Deal Total

ZJ Kganyago 242 – – 99 – – – 33 33 407

NB Langa-Royds 242 – 55 – – 149 179 81 – 706

AJ Lamprecht 214 – 55 – – – 88 191 32 580

MP Malungani 196 – – – – – 78 97 64 435

SK Mhlarhi 242 – – – – 73 – 81 16 412

B Modise 224 – – 99 83 – – 48 – 454

TDA Ross 224 – – 198 104 – – 95 – 621

J Shibambo 196 – 55 – 211 73 88 81 – 704

BL Sibiya – 877 110 – – – – 113 32 1 132

1 780 877 275 396 398 295 433 820 177 5 451

Total emoluments to non-executive directors for the year ended 30 September 2012 were:

Committee

R000Board

feesChairman

feesNomi-

nations Audit

Risk and

complianceRemune-

ration

Social and

ethicsSpecial

meetings Deal Total

ZJ Kganyago 194 – – 67 – – – 48 – 309

NB Langa-Royds 194 – 69 – – 137 152 191 – 743

AJ Lamprecht 194 – 69 – – – 74 111 32 480

MP Malungani 194 – – – – – 72 95 95 456

SK Mhlarhi* 97 – – – – 36 – 80 32 245

B Modise 194 – – 83 34 – – 80 – 391

TDA Ross 194 – – 166 62 – – 80 – 502

J Shibambo 194 – 53 – 126 114 74 95 – 656

BL Sibiya – 705 106 – – – – 286 – 1 097

JS Vilakazi** 88 – – – 31 26 – 32 – 177

1 543 705 297 316 253 313 372 1 098 159 5 056

* Appointed 1 March 2012** Resigned 29 February 2012.

Interests of directors and prescribed officers in stated capitalThe 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

2013 2012Name Direct Indirect Direct Indirect

P Esterhuysen – – – –

KM Gordhan 977 944 – – –

SK Mhlarhi 5 000 – 5 000 –

Prescribed officers


KP Odendaal 11 644 – 9 170 –

Past directors


P Stuiver 34 930 – 34 930 –


102

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

2016. In addition, during the 2012 financial year, they each received

rights to 2 541 shares in a trust owning donated shares which are

subject to a lock-in expiring on 15 December 2013. Certain non-

executive 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 2014.

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 2019.

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 – 34 720

KM Gordhan – 638 977

MMT Ramano 337 790 372 737

Non-executive directors

ZJ Kganyago 95 787 –

NB Langa-Royds 95 787 –

J Shibambo 95 787 –

Prescribed officers

PL Booysen – 16 322

JT Claassen – 22 501

AC Lowan – 118 850

KPP Meijer – 28 488

KP Odendaal – 22 489

JHDLR Snyman – 18 167

JJ Taljaard – 25 384

RS Tomes 89 812 200 567

A Wadee 95 514 170 807

Past directors

S Abdul Kader 2 541 –

SG Helepi 86 524 –



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 policyRisk 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 appetiteDuring the year PPC’s risk tolerance and risk appetite were reviewed.

Risk toleranceAny 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.


104

Risk identification processPPC’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.

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.

Group material issues

Group strategic risk register noted

Group strategic risk register reviewed

Group strategic risk register refined

Group strategic risk register compiled

Board

Risk and compliance committee

Group management committeeExternal input

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

Risk and compliance review continued


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.

InsuranceUnderwriting 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 2014.

Compliance reportBackgroundAs a governance principle, the board ensures that the company

complies with applicable laws and considers adherence to non-

binding 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 legislationWith 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 watchlistThe 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 2005. 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.


106

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

CO2e (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 2012.

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.

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 2013.

Mozambique has promulgated Competition Law, 10 of 2013, which

will enter into force on 10 July 2013. 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”.

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.

Risk and compliance review continued


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 workPPC Limited (PPC) engaged us to perform limited assurance procedures for the year ended 30 September 2013 on the self-declared 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 non-

monetary 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’ responsibilityThe 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’ responsibilityOur 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 2013. 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 performedConsidering 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 conclusionWe 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 & ToucheRegistered AuditorPer – AN le RichePartner

26 November 2013

1st Floor, The Square, Cape Quarter, 27 Somerset Road, Greenpoint, Cape Town, 8005.


108

GRI Topic Page/link

Strategy and analysis

1.1 Statement from CEO 22

1.2 Key impacts, risks and opportunities 12, 42, 62

Organisational profile

2.1 – 2.9 General organisational details 2, 7, 72

2.10 Awards 68

Report parameters

3.1 – 3.4 Report profile i

3.5 – 3.11 Report scope and boundary i

3.12 GRI index 108

3.13 Assurance 107

Governance, commitments and engagement

4.1 – 4.10 Governance issues 72

4.11 – 4.13 Commitment to external initiatives –

4.14 – 4.17 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 –

Index to Global Reporting Initiative indicators (G3.1)


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

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.

Case study

EQUALITYBEYOND THE BAG


112

BASIS FOR PREPARATIONThe 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 2013.

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)

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 www.ppc.co.za 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.

Summarised annual financial statementsfor the year ended 30 September 2013


113

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 2013. We expressed an unmodified

audit opinion on those consolidated annual financial statements

in our report dated 18 November 2013. 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

Independent auditors’ report on the audited summarised annual financial statements


114

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.

Independent auditors’ report on the audited summarised annual financial statements continued


115

2013 Rm

2012 Rm

ASSETSNon-current assets 6 411 4 998

Property, plant and equipment 5 522 4 483

Goodwill 101 6

Other intangible assets 232 133

Non-current financial assets 146 106

Equity-accounted investments 410 267

Deferred taxation assets – 3

Current assets 2 465 1 909

Inventories 923 841

Trade and other receivables 1 050 820

Cash and cash equivalents 492 248

Total assets 8 876 6 907

EQUITY AND LIABILITIESCapital and reserves

Stated capital (1 236) (1 181)

Other reserves 543 282

Retained profit 2 257 2 075

Equity attributable to shareholders of PPC Ltd 1 564 1 176

Non-controlling interests 578 –

Total equity 2 142 1 176

Non-current liabilities 4 900 4 008

Deferred taxation liabilities 1 063 859

Long-term borrowings 3 462 2 716

Provisions 348 320

Other non-current liabilities 27 113

Current liabilities 1 834 1 723

Short-term borrowings 584 869

Trade and other payables 1 250 854

Total equity and liabilities 8 876 6 907

Consolidated statement of financial positionas at 30 September 2013


116

2013 Rm

2012 Rm

Revenue 8 316 7 346

Cost of sales 5 546 4 809

Gross profit 2 770 2 537

Administrative and other operating expenditure 853 671

Operating profit before items listed below: 1 917 1 866

BBBEE IFRS 2 charges 48 123

Zimbabwe indigenisation costs 93 –

Operating profit 1 776 1 743

Fair value gains/(losses) on financial instruments 25 (3)

Finance costs 404 374

Investment income 22 30

Profit before exceptional items 1 419 1 396

Exceptional items (1) –

Earnings from equity-accounted investments 20 7

Profit before taxation 1 438 1 403

Taxation 507 557

Net profit 931 846

Attributable to:

Shareholders of PPC Ltd 931 846

Non-controlling interests – –

931 846

Earnings per share (cents)

– basic 178 161

– diluted 175 159

Consolidated income statementfor the year ended 30 September 2013


117

Unrealised surplus on

reclassificationof plant

Rm

Foreigncurrency

translationreserve

Rm

Available-for-sale

financialassets

Rm

Hedgingreserves

Rm

Retainedprofit

Rm

Totalcompre-hensiveincome

Rm

2013

Net profit for the year – – – – 931 931

Items that will not be reclassified to profit or loss (4) – 9 – 4 9

Revaluation of investments – – 11 – – 11

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 – 157 – 36 – 193

Exchange rate differences on translation of foreign operations – 157 – – – 157

Cash flow hedge recognised directly through equity – – – 36 – 36

Other comprehensive income, net of taxation (4) 157 9 36 4 202

Total comprehensive income (4) 157 9 36 935 1 133

2012

Net profit for the year – – – – 846 846

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 – 17 – 14 – 31

Exchange rate differences on translation of foreign operations – 17 – – – 17

Cash flow hedge recognised directly through equity – – – 14 – 14

Other comprehensive income, net of taxation (4) 17 (2) 14 4 29

Total comprehensive income (4) 17 (2) 14 850 875

Consolidated statement of comprehensive incomefor the year ended 30 September 2013


118

Other reserves

Statedcapital

Rm

Unrealised surplus on

reclassi-ficationof plant

Rm

Foreigncurrency

translationRm

Available-for-sale

financialassets

Rm

Hedgingreserves

Rm

Equitycompen-

sationreserves

Rm

Retainedprofit

Rm

Equityattri-

butable to share-

holdersof parent

Rm

Non-controlling

interestsRm

TotalEquity

Rm

2013

Opening balance at the beginning of the year (1 181) 5 45 25 (43) 250 2 075 1 176 – 1 176

Movement for the year (55) (4) 157 12 36 56 182 384 582 966

BBBEE IFRS 2 charges – – – – – 48 – 48 – 48

Zimbabwe indigenisation IFRS 2 charges – – – – – 62 – 62 – 62

FSP IFRS 2 charges – – – – – 29 – 29 – 29

Transfer to retained profit – – – – – (17) 17 – – –

Total comprehensive income – (4) 157 9 36 – 935 1 133 – 1 133

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 non-controlling interests – – – – – (62) – (62) 62 –

Contribution from participants of the Zimbabwe indigenisation transaction – – – – – – – – 3 3

Acquired through business combinations – – – – – – – – 512 512

Foreign exchange impact on translation of non-controlling interests – – – – – – – – 5 5

Balance at 30 September 2013 (1 236) 1 202 37 (7) 306 2 257 1 560 582 2 142

2012

Opening balance at the beginning of the year (1 091) 9 28 27 (57) 118 1 921 955 – 955

Movement for the year (90) (4) 17 (2) 14 132 154 221 – 221

BBBEE IFRS 2 charges – – – – – 123 – 123 – 123

FSP IFRS 2 charges – – – – – 19 – 19 – 19

Transfer to retained profit – – – – – (10) 10 – – –

Total comprehensive income – (4) 17 (2) 14 – 850 875 – 875

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) 5 45 25 (43) 250 2 075 1 176 – 1 176

Consolidated statement of changes in equityfor the year ended 30 September 2013


119

2013 Rm

2012 Rm

CASH FLOWS FROM OPERATING ACTIVITIESOperating cash flows before movements in working capital 2 486 2 317

Movement in inventories (12) (129)

Movement in trade and other receivables 63 81

Movement in trade and other payables and provisions 348 15

Cash generated from operations 2 885 2 284

Finance costs paid (269) (248)

Dividends received from investments 4 10

Interest received 18 22

Taxation paid (525) (417)

Cash available from operations 2 113 1 651

Dividends paid (770) (706)

Net cash inflow from operating activities 1 343 945

CASH FLOWS FROM INVESTING ACTIVITIESAcquisitions 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 124 97

CASH FLOWS FROM FINANCING ACTIVITIESLong-term borrowings repaid (102) (14)

BBBEE funding transaction – 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 218 24

Cash and cash equivalents at the beginning of the year 248 224

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 492 248

Cash earnings per share (cents) 404 315

Consolidated statement of cash flowsfor the year ended 30 September 2013


120

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.

Group Cement* Lime Aggregates Other^

2013 Rm

2012 Rm

2013 Rm

2012 Rm

2013 Rm

2012 Rm

2013 Rm

2012 Rm

2013 Rm

2012 Rm

Revenue

South Africa 6 392 5 823 5 413 4 867 724 727 255 229 – –

Rest of Africa 1 960 1 560 1 806 1 379 74 111 80 70 – –

8 352 7 383 7 219 6 246 798 838 335 299 – –

Inter-segment revenue (36) (37)

Total revenue 8 316 7 346

Operating profit before items listed below 1 981 1 866 1 846 1 682 126 151 25 37 (16) (4)

BBBEE IFRS 2 charges 48 123 44 122 3 1 1 – – –

Zimbabwe indigenisation costs 93 – 93 – – – – – – –

Restructuring costs 64 – 64 – – – – – – –

Operating profit 1 776 1 743 1 645 1 560 123 150 24 37 (16) (4)

Fair value gains/(losses) on financial instruments 25 (3) 29 (1) 1 1 (6) (2) 1 (1)

Finance costs 404 374 264 232 2 2 5 4 133 136

Investment income 22 30 17 26 3 2 2 2 – –

Profit before exceptional items 1 419 1 396 1 427 1 353 125 151 15 33 (148) (141)

Exceptional items (1) – 10 – – – (11) – – –

Earnings from equity accounted investments 20 7 20 7 – – – – – –

Profit before taxation 1 438 1 403 1 457 1 360 125 151 3 33 (148) (141)

Taxation 507 557 464 499 34 47 9 11 – –

Net profit 931 846 993 861 91 104 (6) 22 (148) (141)

Depreciation and amortisation 522 461 465 405 36 37 21 19 – –

EBITDA~ 2 504 2 327 2 312 2 087 162 188 46 56 (16) (4)

EBITDA margin~ (%) 30,1 31,7 32,0 33,4 20,4 22,5 13,7 18,7 – –

Operating margin~ (%) 23,8 25,4 25,6 26,9 15,8 18,1 7,5 12,3 – –

Assets

Total assets 8 876 6 907 8 101 6 153 487 467 283 285 5 2

Non-current assets 6 411 4 998 5 968 4 541 286 280 157 177 – –

Current assets 2 465 1 909 2 133 1 612 201 187 126 108 5 2

Additions to property, plant and equipment 964 609 917 553 37 41 10 15 – –

Capital commitments 1 088 317 1 078 314 9 2 1 1 – –

Liabilities

Total liabilities 6 734 5 731 5 104 4 084 164 138 79 148 1 387 1 361

Non-current liabilities 4 900 4 008 3 575 2 586 91 94 21 23 1 213 1 305

Current liabilities 1 834 1 723 1 529 1 498 73 44 58 125 174 56

* Includes head office activities.^ Other comprises BBBEE trusts and trust funding SPVs.~ Excluding BBBEE IFRS 2 charges, Zimbabwe indigenisation costs and restructuring costs.

Segmental informationfor the year ended 30 September 2013


121

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.

Group Cement* Lime Aggregates Other^

2013 Rm

2012 Rm

2013 Rm

2012 Rm

2013 Rm

2012 Rm

2013 Rm

2012 Rm

2013 Rm

2012 Rm

Revenue

South Africa 6 392 5 823 5 413 4 867 724 727 255 229 – –

Rest of Africa 1 960 1 560 1 806 1 379 74 111 80 70 – –

8 352 7 383 7 219 6 246 798 838 335 299 – –

Inter-segment revenue (36) (37)

Total revenue 8 316 7 346

Operating profit before items listed below 1 981 1 866 1 846 1 682 126 151 25 37 (16) (4)

BBBEE IFRS 2 charges 48 123 44 122 3 1 1 – – –

Zimbabwe indigenisation costs 93 – 93 – – – – – – –

Restructuring costs 64 – 64 – – – – – – –

Operating profit 1 776 1 743 1 645 1 560 123 150 24 37 (16) (4)

Fair value gains/(losses) on financial instruments 25 (3) 29 (1) 1 1 (6) (2) 1 (1)

Finance costs 404 374 264 232 2 2 5 4 133 136

Investment income 22 30 17 26 3 2 2 2 – –

Profit before exceptional items 1 419 1 396 1 427 1 353 125 151 15 33 (148) (141)

Exceptional items (1) – 10 – – – (11) – – –

Earnings from equity accounted investments 20 7 20 7 – – – – – –

Profit before taxation 1 438 1 403 1 457 1 360 125 151 3 33 (148) (141)

Taxation 507 557 464 499 34 47 9 11 – –

Net profit 931 846 993 861 91 104 (6) 22 (148) (141)

Depreciation and amortisation 522 461 465 405 36 37 21 19 – –

EBITDA~ 2 504 2 327 2 312 2 087 162 188 46 56 (16) (4)

EBITDA margin~ (%) 30,1 31,7 32,0 33,4 20,4 22,5 13,7 18,7 – –

Operating margin~ (%) 23,8 25,4 25,6 26,9 15,8 18,1 7,5 12,3 – –

Assets

Total assets 8 876 6 907 8 101 6 153 487 467 283 285 5 2

Non-current assets 6 411 4 998 5 968 4 541 286 280 157 177 – –

Current assets 2 465 1 909 2 133 1 612 201 187 126 108 5 2

Additions to property, plant and equipment 964 609 917 553 37 41 10 15 – –

Capital commitments 1 088 317 1 078 314 9 2 1 1 – –

Liabilities

Total liabilities 6 734 5 731 5 104 4 084 164 138 79 148 1 387 1 361

Non-current liabilities 4 900 4 008 3 575 2 586 91 94 21 23 1 213 1 305

Current liabilities 1 834 1 723 1 529 1 498 73 44 58 125 174 56

* Includes head office activities.^ Other comprises BBBEE trusts and trust funding SPVs.~ Excluding BBBEE IFRS 2 charges, Zimbabwe indigenisation costs and restructuring costs.


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1. Acquisitions in terms of business combinationsIn 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 2013. 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 Sept2013

Rm

30 Sept2012

Rm

Acquisition of subsidiary companies

Property, plant and equipment 433 26

Intangible assets (including goodwill) 224 28

Current assets 755 5

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 629 52

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 136 –

629 –

Paid to previous shareholders of Botswana quarries 4 42

Payable to previous shareholders of Botswana quarries – 10

4 52

Impact of the transaction on the results for the year ended:

Revenue 118 18

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.

Notes to the summarised annual financial statementsfor the year ended 30 September 2013


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2. Stated capitalDuring October 2012, 39 349 677 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.

2013Number

of shares(000)

2012Number

of shares(000)

Analysis of the group’s issued shares:

Total shares in issue at beginning of the year 566 030 586 170

Cancellation of treasury shares owned by a wholly owned group subsidiary company – (20 140)

Shares issued in terms of second BBBEE transaction 39 350 –

Total shares in issue before recognising shares treated as treasury shares 605 380 566 030

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) 522 033 523 674

Weighted average number of shares

– Used for earnings and headline earnings per share 522 678 524 567

– Used for dilutive earnings and headline earnings per share 530 869 530 028

3. Borrowings

2013Rm

2012Rm

Long-term loan 1 519 1 518

Bonds* 645 –

Long-term loans denominated in a foreign currency 87 –

Preference shares 88 110

2 339 1 628

BBBEE funding transaction 1 123 1 088

– Preference shares 482 495

– Long-term loans 641 593

Long-term borrowings 3 462 2 716

Short-term borrowings and short-term portion of long-term borrowings 584 869

Total borrowings 4 046 3 585

The group is compliant with its debt covenants.

* Net of transaction costs capitalised.


124

4. TaxationA reconciliation of the standard South African normal taxation rate is shown below:

2013%

2012%

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 28,0

5. Earnings and headline earnings per share

30 Sept2013

Rm

30 Sept2012

Rm

Normalised earnings per share (cents)

– basic 214 185

– diluted 212 182

Headline earnings

Net profit 931 846

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 935 848

Normalisation adjustments 188 123

Normalised headline earnings 1 123 971

Headline earnings per share (cents)

– basic 179 162

– diluted 176 160

– basic (normalised) 215 185

– diluted (normalised) 212 183

Normalisation adjustments adjusts the reported earnings for the effects of BBBEE IFRS 2 charges, Zimbabwe indigenisation costs and restructuring costs.

Notes to the summarised annual financial statements continuedfor the year ended 30 September 2013


125

6. Commitments

2013Rm

2012Rm

Contracted capital commitments 752 192

Approved capital commitments 336 125

Capital commitments 1 088 317

Operating lease commitments 195 19

1 283 336

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 2014. 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 2013.

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.

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 2002.


Case study

HISTORYBEYOND THE BAG


128

Register date: 27 September 2013

Issued share capital: 605 379 648

SHAREHOLDER SPREADNumber of

shareholders %Number

of shares %

1 – 1 000 shares 8 410 51,31 3 706 363 0,61

1 001 – 10 000 shares 6 605 40,30 21 690 762 3,58

10 001 – 100 000 shares 1 091 6,66 29 862 705 4,93

100 001 – 1 000 000 shares 209 1,28 64 144 540 10,60

1 000 001 shares and over 75 0,46 485 975 278 80,28

Total 16 390 100 605 379 648 100

DISTRIBUTION OF SHAREHOLDERS

Banks 139 0,85 173 824 548 28,71

Brokers 82 0,50 6 336 441 1,05

Close corporations 151 0,92 702 559 0,12

Endowment funds 84 0,51 1 250 805 0,21

Individuals 12 650 77,18 36 772 649 6,07

Insurance companies 28 0,17 21 018 646 3,47

Investment companies 18 0,11 1 600 492 0,26

Medical aid schemes 8 0,05 290 357 0,05

Mutual funds 215 1,31 83 945 499 13,87

Nominees and trusts 2 450 14,95 57 175 655 9,44

Other corporations 91 0,56 611 704 0,10

Pension funds 147 0,90 96 124 444 15,88

Private companies 300 1,83 106 101 400 17,53

Public companies 20 0,12 241 389 0,04

Sovereign wealth fund 7 0,04 19 383 060 3,20

Total 16 390 100 605 379 648 100

PUBLIC/NON-PUBLIC SHAREHOLDERS

Non-public shareholders 22 0,13 216 967 848 35,84

Directors’ holdings 2 0,01 982 944 0,16

Broad-based black ownership 19 0,12 145 764 928 24,08

Strategic holdings (10% or more) 1 0,01 70 219 976 11,60

Public shareholders 16 368 99,87 388 411 800 64,16

Total 16 390 100 605 379 648 100

BENEFICIAL SHAREHOLDERS HOLDING 3% OR MORENumber

of shares %

Government Employees Pension Fund 70 219 976 11,60

PPC SBP Consortium Fundings SPV (Pty) Ltd 39 988 926 6,61

PPC Masakhane Employee Share Trust 26 757 780 4,42

PPC shareholder analysis


129

PPC Ltd(Incorporated in the Republic of South Africa)Company registration number: 1892/000667/06

JSE code: PPCZSE code: PPCJSE ISIN code: ZAE000170049

AuditorsDeloitte & ToucheDeloitte PlaceThe WoodlandsWoodlands DriveWoodmead, SandtonPrivate Bag X6Gallo Manor, 2052, South AfricaTelephone +27 11 806 5000Telefax +27 11 806 5111

Transfer secretaries: South AfricaLink Market Services (Pty) Limited11 Diagonal StreetJohannesburg, South AfricaPO Box 4844Johannesburg, 2000, South AfricaTelephone +27 11 630 0815Telefax +27 866 743260Email [email protected]

Secretary and registered officeJHDLR Snyman180 Katherine Street, SandtonPO Box 787416Sandton, 2146, South AfricaTelephone +27 11 386 9000Telefax +27 11 386 9001Email [email protected]

Transfer secretaries: ZimbabweCorpserve (Private) Limited2nd Floor, ZB CentreCorner First Street and Kwame Nkrumah AvenueHarare, ZimbabwePO Box 2208Harare, ZimbabweTelephone +263 4 758 193/751 559Telefax +263 4 752 629

Sponsor: South AfricaMerrill Lynch SA (Pty) Limited138 West StreetSandown, SandtonPO Box 651987Benmore, 2010, South AfricaTelephone +27 11 305 5555Telefax +27 11 305 5600

Sponsor: ZimbabweImara Edwards Securities (Private) LimitedBlock 2, Tendeseka Office ParkSamora Machel Avenue Harare, ZimbabwePO Box 1475Harare, ZimbabweTelephone +263 4 790 090Telefax +263 4 791 345

Corporate information

Financial calendarFinancial 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


130

PPC Ltd Incorporated in the Republic of South Africa

(Registration number: 1892/000667/06)

JSE share code: PPC

ZSE share code: PPC

ISIN code: ZAE000170049

(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 dateThe 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 2014. 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 bar-coded 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 meetingShareholders 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 email at the address [email protected] 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 statementsThe 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 2013. In terms of the JSE listings requirements, article 25.8.1 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 25.8.1 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

Notice of annual general meetingfor the year ended 30 September 2013


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 25.6.1 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.


“Resolved that Mr Shibambo, who is required to retire as a director

of the company at this AGM in terms of article 25.6.1 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.”






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.


“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 841323) from Deloitte & Touche will undertake the audit for the financial year ending 30 September 2014.”


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 2013.


“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 2013.”


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.


“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.”



132


“Resolved that Ms Z Kganyago, 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.”







“Resolved that subject to her election in terms of ordinary

resolution number 3, Ms B Modise, 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.”






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.


“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.”






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 inter-

related 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) 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

(c) 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

Notice of annual general meeting continuedfor the year ended 30 September 2013


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


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 andattendance fee

2014R

Base fee andattendance fee

2013R

Board Chairman 993 182 819 581Each non-executive director 239 327 225 780

Audit committee Chairman 225 207 212 459Each non-executive director 112 842 106 455

Remuneration committee Chair 171 357 161 658Each non-executive director 83 764 79 023

Risk and compliance committee Chairman 171 357 161 658Each non-executive director 83 764 79 023

Social and ethics committee Chairman 171 357 161 658Each non-executive director 83 764 79 023

Nominations committee Chairman 129 766 112 890Each non-executive director 59 832 56 445

The attendance fee for special meetings for a chairman will be R35 899 and for a member R17 954.”



134

General authority to repurchase ordinary shares

Special resolution number 3 – general authority to repurchase shares


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.”


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.



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 2013.

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 AGMProxy 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 2014. Before a proxy exercises any rights of a shareholder at the AGM, this form of proxy must be delivered.


136

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.

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.

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 +27 11 386 9000.

Proof of identification requiredIn 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

JHDLR Snyman

Company secretary

18 November 2013

Sandton



137

PPC LtdIncorporated in the Republic of South Africa

(Registration number 1892/000667/06)

JSE share code: PPC

ZSE share code: PPC

ISIN code: ZAE000170049

(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 resolutions1 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 resolutions1 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.

Form of proxy


138

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.

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.

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.

Explanatory notes regarding proxy


139

Annexure 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;

Notice to shareholders in terms of section 45(5) of the companies act in respect of special resolution number 1

(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 one-

tenth 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.


140

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

Glossary

BASTION GRAPHICS

www.ppc.co.za

PPC Ltd


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