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Pretoria Portland Cement Company Limited Annual Report 2008

Front cover: Progress at Green Point stadium.

Pretor ia Port land Cement Company L imited Annual Report 2008

Revenues up 12% toR6,2 billion

HEPS increases 8% to 283 cents

Cash generated from operations up 16% to R2,5 billion

Ordinary dividend per share up 10% to 225 cents per share

OUR STRATEGY

The company’s strategies remain to:

Focus on core businesses;

Generate superior cash fl ow returns;

Achieve global competitiveness;

Develop globally competitive people;

Practise sound corporate, environmental and social

governance; and

Build on our strengths through synergistic growth.

OUR VALUES

We believe in satisfying our customers’ needs

We supply quality products and services

We respect the individual

We provide a non-discriminatory, healthy,

safe and challenging work environment

We are committed to improving the quality

of life for our people

We care for the environment and the communities

in which we operate

We act professionally

Financial highlights

Pretor ia Port land Cement Company L imited Annual Report 2008 page 1

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WBatsweledi expansion project successfully commissioned within budget

Broad-based black economic empowerment transaction completed

CONTENTS

Organisational profile 3

Group companies 6

Performance highlights 8

Financial summary 9

Chairman’s report 12

Chief executive officer’s report 18

Board of directors 24

Chief financial officer’s report 28

Corporate governance structure

and management systems 36

Environmental report 50

Social and risk report 74

GRI cross-reference index 98

Certificate by secretary 105

Independent auditors’ report 106

Directors’ report 107

Accounting policies 125

Group financial results 136

Company financial results 178

Financial calendar 199

Notice of AGM 200

Form of proxy 203

STRONG INVESTMENT CASE

• Leading market position

• Geographical spread

• Strong infrastructural demand outlook to 2014

• Capacity growth

• Cash generative

• Strong dividend underpin

• Strong balance sheet

• Experienced management team


Pretoria Portland Cement Company Limited (PPC) established the fi rst cement plant in South Africa in 1892 and listed on the

Johannesburg Stock Exchange in 1910.

PPC is the leading supplier of cement in southern Africa, with eight manufacturing facilities and three milling depots in

South Africa, Botswana and Zimbabwe. Together, these facilities are capable of producing more than seven million tons of

cementitious products each year.

The company has a distribution network that is responsible for supplying quality branded cement to the building and construction

industry, concrete product manufacturers, hardware stores and DIY centres. PPC is the market leader in South Africa today, with

a product range that encompasses all applications and a technical services team that is on hand to provide industry solutions.

PPC is committed to excellence in satisfying customers’ needs and strives for total quality in everything it does.

Related products sold include aggregates from the company’s Gauteng quarries at Mooiplaas and Laezonia, and in Botswana.

PPC Lime is the leading supplier of metallurgical-grade lime, burnt dolomite, limestone and related products in southern Africa.

It operates one of the largest lime plants in the world at Lime Acres in the Northern Cape, South Africa.

Organisational profi le

Hercules ................................ 1

Jupiter ................................... 2

Slurry ..................................... 3

Dwaalboom .......................... 4

Riebeeck ................................ 5

De Hoek ................................ 6

Port Elizabeth ....................... 7

Colleen Bawn ........................ 8

Bulawayo .............................. 9

Beestekraal quarry ............. 10

Dwaalboom quarry ............ 11

Slurry quarry ....................... 12

Zoutkloof quarry ................ 13

Riebeeck quarry .................. 14

Grassridge quarry ............... 15

Colleen Bawn quarry .......... 16

Lime Acres ........................... 17

Lime Acres quarry ............... 18

Mount Stewart quarry ....... 19

Laezonia quarry .................. 20

Mooiplaas quarry ............... 21

Kgale quarry ....................... 22

Gaborone Cement .............. 23

Head offi ce (Sandton) ........ 24

Saldanha ............................. 25

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▲ Cement plants ▼ Limestone quarries ❍ Aggregate quarries ■ Lime quarries ◗ Lime plant ❋ Gypsum quarry ❖ Head offi ce * Materials handling facility

1

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New PPC Western Cape cement factory

Business objectives

ECONOMIC

• Ensure cash fl ow returns that allow for continued

reinvestment in and replacement of cement

capacity

• Continuously explore ways to reduce costs and

improve effi ciency of operations

OPERATIONAL

• Reduce energy cost by using substitute fuels

• Increase manufacturing capacity to meet the

country’s needs

ENVIRONMENTAL

• Rehabilitate and obtain closure certifi cates for all

worked-out mining areas

• Meet all legislated emission level requirements and

further reduce emissions

• Reduce non-renewable resource requirements by

increasing level of extenders in the fi nal product

SOCIAL

• Assist with the upliftment of disadvantaged

communities by using resources from the communities

in which PPC operates

• Skills transfer in disadvantaged communities for

sustainable empowerment

• Continue to progress with BEE equity and board

participation as foreseen in the BBBEE and MPRD Acts

beyond

PPC plans a new factory to replace its existing plant at Riebeeck West, which is now approaching

50 years of production. The new plant will not only replace existing capacity, but will extend

the cement-manufacturing capacity in the Western Cape. The processing technology utilised in

the new Riebeeck plant will be signifi cantly more environmentally friendly and energy effi cient

than the current plant and will ensure the sustainable supply of cement to meet future demand

in the Western Cape.


A culture of improving knowledge and skills

2010R1,36 billioninvestment to increase the company’s inland cement capacity

in South Africa by more than 1,2 million tons per annum. The

additional capacity will supply future demand growth in the

South African cement market and the replacement of capacity

from older production facilities, which will be retired when

market conditions allow.

Batsweledi capacity expansion project

Recognising that the future growth and success of the company are inextricably linked to its ability to

grow and nurture the requisite skills, PPC has introduced a sixth vital element to the vital elements model.

Under the mantra Learning for Growth, the company has introduced individual development plans,

workplace skills plans, an operations academy, an academy for sales and marketing and other training-

related activities and programmes.


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Group companies

Porthold – 100%Registered in Zimbabwe, UNICEM is a cement made at the Bulawayo factory

from high-quality raw materials. Clinker is interground with gypsum and an

appropriate amount of extender.

PPC Botswana – 100%The PPC Botswana operation has been open for more than 50 years. Its sales

offi ce, along with the cement-blending operation, is situated in Gaborone

and supplies cement throughout Botswana.

Mooiplaas Dolomite – 100%Mooiplaas Dolomite is committed to the production of quality

aggregates and sands to meet customers’ requirements in the most cost-

effective manner.

Kgale Quarries – 100%Situated at Kgale Hills in Gaborone, this is a granite quarry where granite

is processed into quality aggregates and sands.

PPC Lime Limited – 100%PPC Lime is the leading supplier of metallurgical grade lime, burnt dolomite

and related products in southern Africa.


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100 000tons of cement estimated to be supplied to the five new World Cup stadiums


Performance highlights

• Record levels of local cement production reduces need for imports into South Africa

• Dwaalboom kiln successfully commissioned

• Lime division records a new PPC milestone of three million injury-free hours

• R70 million approved for dust emission reduction capital project at De Hoek factory

• 2 200 staff generated improvement suggestions which contribute to savings in excess of R18 million

CASH GENERATED FROM OPERATIONS (Rm)

2008

1 000 1 500 2 000 2 500

2007

2006

2005

2004

2003

ORDINARY DIVIDEND PER SHARE (cents)

2008

50 100 150 200

2007

2006

2005

2004

2003

Financial highlights

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P retor ia Port land Cement Company L imited Annual Report 2008 page 9

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IEWHEADLINE EARNINGS PER SHARE (cents)

2008

100 150 200 250

2007

2006

2005

2004

2003

FINANCIAL SUMMARY

2008 2007 2006

Financial results (Rm)

Revenue 6 248 5 566 4 686

Operating profi t 2 323 2 174 1 861

Net profi t 1 499 1 429 1 214

Property, plant and equipment 2 813 2 178 1 414

Total assets 4 534 4 882 4 355

Cash generated from operations 2 546 2 192 2 023

Ordinary share analysis (cents per share)

Headline earnings 283 263 226

Earnings 283 266 226

Ordinary dividend 225 205 143

Number of employees 3 164 3 097 3 025

Cement capacity (tons 000) SA operations only* 6 000 6 000 5 700

*Excludes the Dwaalboom kiln 2 (Batsweledi) capacity commissioned end September 2008.

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400 000tons of cement estimated to be used on the Gautrain project


The approval of the broad-based black economic

empowerment transaction, the commissioning of a

kiln, record-breaking cement production and a further

improvement in employee safety statistics are a few of this

year’s achievements.

Martin Shaw

Chairman’s report

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The past year has seen the attainment of a number of signifi cant milestones: the shareholder approval of the broad-based black economic empowerment transaction, the commissioning of the fi rst new kiln in PPC in 23 years, record-breaking cement production and, within this busy environment, a further improvement in employee safety statistics.

In achieving these milestones the PPC team has again demonstrated their commitment to excellence in all that they do. Group resultsGroup revenue grew by 12% to R6,2 billion (2007: R5,6 billion) in line with infl ation.

Group operating profi ts increased by 7% to R2,3 billion and headline earnings grew by 8% to 283 cents per share. The group operating margin declined to 37,2% (2007: 39,1%) due to the impact of unprecedented energy price increases in the second half. Cash fl ow and dividendsCash fl ow was again strong with cash generated from operations increasing by 16% to R2,5 billion. A total dividend of 225 cents per share has been declared (2007: 205 cents). No special dividend has been declared after the R753 million acquisition of treasury shares completed this year to minimise the dilutionary effect of the 15% BEE transaction.

Economic environmentThe continuing fi nancial markets crisis has had an negative impact on the global economy, resulting in many of the world’s largest fi nancial institutions receiving government assistance. The magnitude of this problem has now raised expectations of recession in many of the major economies.

South Africa, like other emerging markets, has experienced a severe weakening in the local stock market and its currency. Higher infl ation, high interest rates and substantially higher energy costs have put GDP growth targets under pressure. The sustainable supply of electricity to many industries, especially mining, will also hamper growth plans.

Notwithstanding this, we believe the government will continue with its infrastructure and affordable-housing programmes. Construction has started on two new coal-fi red power stations, Medupi and Kusile, two pumped-storage schemes, new airports and major road expansions and upgrades, to mention but a few.

Cement overviewAfter seven consecutive years of strong growth, the regional industry cement demand has showed, for the fi rst time, a small negative growth of -1,6% year

on year. This was due mainly to the continued drop in demand from the formal residential sector, but despite the delays in commencement of many of the aforementioned infrastructure projects, demand from that sector virtually offset the residential market decline.

All existing manufacturing units ran at full capacity throughout the year and imports into the Eastern Cape were discontinued from January 2008.

Signifi cant increases in diesel, coal and electricity prices exceeded the producer price infl ation index and exerted pressure on operating margins, particularly in the last quarter of the year. Although crude oil prices have recently shown a sharp decrease in dollar terms, the local price of coal has been much more resilient.

This, combined with the weakening of the rand, will mean continued cost pressure for 2009 despite the benefi ts from the more effi cient new Dwaalboom kiln line. These factors will result in cement price increases in excess of offi cial infl ation levels in the year ahead.

Cement-expansion projectsThe Dwaalboom kiln 2 was successfully commissioned in September 2008 and, although later than planned, it was commendably within budget. The project was delayed for various reasons, including shortages of skilled staff experienced by the contractors as the project neared completion and work stoppages when situations arose that would have compromised safety.

I am pleased to report that during October 2008 the PPC team, together with equipment supplier FL Smidth, successfully demonstrated the kiln’s production capability. This is indeed a remarkable achievement for such a large and complex project and bears testimony to the care taken in both the design and selection of contractors and equipment, and the professionalism of project execution. I would like to acknowledge and thank all who worked so enthusiastically and tirelessly on this project.

Appointment of

Bheki Sibiya as the

fi rst black chairman of

PPC


The Ntšhafatso new mill project at Hercules is progressing well and according to plan. The proposed expansion at our Riebeeck factory in the Western Cape has experienced further delays with the environmental impact assessment process. Signifi cant progress has been made this year, with PPC addressing the main issues raised. We hope that conclusion of the process can be achieved by the middle of 2009. Lime and aggregatesDemand for burnt lime was only marginally up on the previous year because of lengthy maintenance shutdowns at some key customers’ operations. This, combined with large increases in coal and diesel costs, has resulted in a challenging year for the lime business. Major supply contracts do make allowance for these cost increases to be recovered at the time of the next price review anniversaries, of which the main ones are occurring at the beginning of January 2009.

Our aggregates business has benefi ted from increased demand volumes, especially in Botswana, and achieved good growth in operating profi t. The R39 million expansion project at Laezonia was completed within budget and successfully commissioned in August 2008.

ZimbabweThe worsening situation in Zimbabwe continues to put our staff and operations under extreme pressure. Ongoing shortages of key production inputs such as coal and electricity and continued price control on cement have made it impossible to operate with any semblance of normality. But Porthold continues to produce cement, albeit at reduced capacity, and has maintained exports to earn the foreign exchange required for the procurement of imported inputs.

Broad-based black economic empowermentI am pleased to report that the empowerment transaction and associated Scheme of Arrangement were approved by the shareholders at the two meetings held on 11 November 2008 and will become effective on 15 December 2008.

The transaction will result in 15% of the ordinary share capital of PPC being held by our new black shareholders. The scheme comprises two elements, namely equity ownership by employees, community and industry associations through the establishment of trusts and a community services grouping, and a consortium of four strategic black partners.

The largest individual stake of 2% was allocated to the establishment of a Construction Industry Associations’ Trust to benefi t members of existing

and future black construction industry and related associations. Furthermore, an external trust with a 1% stake has been established, to develop technical and management skills of black individuals in the cement, lime and aggregates manufacturing, mining, construction and related industries.

The strategic black partners were chosen because of their experience and involvement in the wider construction and mining arena and their ability to add value to PPC. Some have their own broad-based black components such as black women and youth among their stakeholders.

Although the completion of this very broad-based transaction and its funding took almost two years to complete, the result fully embraces BBBEE. We are proud of the fact that more than 3,5 million black South Africans will benefi t directly from their stake in PPC. We believe the result is a very sustainable transaction with signifi cant value creation in the future for all the stakeholders.

I would like to take this opportunity to acknowledge and thank all those who strived tirelessly to construct this carefully formulated transaction and to welcome our new shareholders and partners to the company.

The company is now in the fi nal stages of engaging with the Department of Mineral and Energy Affairs to secure conversion of its old order mining rights in terms of the act. Thereafter, work must start to ensure that the next target of 26% black equity ownership is equally successfully implemented.

Safety and environmental commitmentSafety of our staff and contractors remains PPC’s top priority and we are pleased to report that our good safety record further improved over the past year, in particular on the major project construction sites.

PPC remains committed to its sustainability and environmental policies and to this end has initiated a number of projects to improve the environmental performance of our facilities. In August 2008 we announced the R70 million rand project to reduce dust emissions at our De Hoek factory in the Western Cape. This is in addition to the R40 million already spent on other dust-emission reduction projects such as the projects at Lime Acres and Port Elizabeth. Social investmentThis year PPC continued to build on its efforts to empower communities by ensuring all its initiatives are sustainable and by continuing its emphasis in the areas of education, training and job creation.

Chairman’s report continued


The PPC Academy extended its scope of learnerships with the launch of its Mining Academy in August 2008, and the PPC Graduate Academy commenced in January 2008 to enable new black graduates in the technical fi eld to be fast-tracked into the succession pipeline.

Through its Ntsika enterprise development Fund, PPC has this year partnered with three different projects to facilitate the development of entrepreneurs and the creation of employment.

Corporate governanceA number of important actions were completed during the past year. The fi rst of these was the appointment of Tim Ross to the board as an independent non-executive director and as chairman of the audit committee on 17 July 2008. In my last report I indicated that I would remain as chairman until the completion of the empowerment transaction and until a black chairman had been appointed.

The nominations committee completed a thorough search for black candidates for this important position. The fi nal selection process was conducted by the chairman selection committee, consisting of all the non-executive directors, and culminated in the appointment of Bheki Sibiya as an independent non-executive director on 10 November 2008 and as chairman from 17 November 2008. As a result, I stood down as chairman from that date. In addition and in line with JSE Limited requirements, he assumed the chairmanship of the nominations committee from 17 November 2008.

Ntombi Langa-Royds was appointed chairperson of the BEE and transformation committee and the remuneration committee with effect from 10 November 2008. Her appointment to these two positions replaces John Gomersall and myself as the chairmen of the two committees respectively.

These appointments now align the board and its committee structures with corporate governance best practice.

The nominations committee has commenced the process of identifying potential candidates for the position of CEO to take over from John Gomersall when he retires. The committee believes that an appropriate handover period should be allowed for during the transition of this important position.

Reviews of the Board Charter, board committees’ terms of reference and the amendment or adoption of various policies were conducted during the year.

The implementation of a formal programme for the continued training and development of the board and a new board performance evaluation approach, including the additional evaluation of the board chairman, company secretary and board committees, has been implemented.

ProspectsThe current turmoil in global markets and predictions of recession during 2009 and 2010 in many of the major economies must have some impact on the South African economy. We believe this is likely to be less in the infrastructure-intensive sectors of the economy, but it would be foolhardy to expect that there would be no impact.

In this environment, it is therefore almost impossible to give any defi nitive outlook for the year ahead. The company has examined different scenarios for cement demand, ranging from modest to negative growth, and has action plans in place that will be implemented as the actual scenario unfolds.

Cement requirements for infrastructural projects will continue and although the most immediate are related to the 2010 Football World Cup, a myriad of other major projects will sustain demand until at least 2014.

The commissioning of the Dwaalboom kiln 2 will allow PPC to further optimise operations and service to customers and supply export markets previously relinquished or supplied from imports such as Zambia and Mozambique. AppreciationMy tenure as chairman has been relatively short, but during this time I have experienced being part of a team that never stops trying to create increasing value for all the company’s stake holders. Team PPC continues to prove that at the heart of any great company are its people. My thanks and appreciation goes to the team and to the board for another solid performance during a busy year.

I congratulate Bheki Sibiya on his appointment as chairman and wish him well in leading the board over the years ahead.

Martin ShawChairman

Pretor ia Port land Cement Company L imited Annual Report 2008page 16 Pretor ia Port land Cement Company L imited Annual Report 2008

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3 000 000Affordable housing backlog to be eliminated by 2014


The key to sustainability in this modern world is focusing, nurturing, developing and empowering the human intellect of the company and using it better than your competitors. It is the most precious of all inputs to any human endeavour.

John Gomersall

Chief executive offi cer’s report

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The focus on sustainability has increased in recent years

and is perhaps even more critical in the current world

economic turbulence. PPC has thrived and grown

for more than 116 years through many uncertain

economic and political times. The company’s strong

foundations provide the platform for continued

success over the next 100 years.

2008 has been a challenging year but Team PPC has

risen to the occasion and is proud to report on another

year of outstanding achievements. Among these were

record cement production, a further improvement in

our safety statistics, the approval of the broad-based

black economic empowerment transaction and the

commissioning of the new kiln at Dwaalboom.

Cement demand

Industry regional sales were slightly down on the

previous year, with strong growth experienced in the

Eastern Cape and Mpumalanga, and the Gauteng

and Western Cape markets showed a decline. In

the Western Cape, we estimate that approximately

160,000 tons of PPC sales were lost due to the

excessively wet winter.

The cement industry imported more than 1 million

tons of clinker and cement during the year, indicating

that usable industry capacity had been overstated. We

believe that supply constraints resulted in demand for

the year being somewhat understated.

PPC’s regional volumes were fl at year on year. Our

imports into the Port Elizabeth area were kept to

a minimum in the fi rst quarter of the year and we

maintained our presence in Mozambique with

imported Surebuild cement.

Much has been written about the downturn in the

formal residential construction sector, but research

shows that this decline commenced as far back as the

end of 2006. Demand in the rural market currently

accounts for 15% of regional sales and, because this

sector is not interest rate sensitive, it is still performing

strongly. Cement demand for affordable housing

projects should continue or even accelerate as a new

government delivers on reducing the backlog of nearly

three million housing units.

Regional demand stabilised in a range of 1,2% to

1,6% year-on-year decline since March this year

and, as we predicted last year, refl ects that increased

infrastructural sector demand has thus far virtually off-

set the residential sector decline. Major construction

companies are still reporting record order books

driven mainly by infrastructure related projects and

this pipeline should help to support demand over the

next year or two.

Operations overview: Cement

All our production lines ran at high utilisation levels

and the optimisation of our Western Cape capacity

enabled us to discontinue importing into the Port

Elizabeth area from January 2008. A total of 170 000

tons of cement was transported into the inland and

Gauteng regions from our Western Cape and Porthold

operations. Although additional logistics costs were

incurred on these movements, it was more benefi cial

for PPC to supply its own manufactured product.

Cement input costs increased signifi cantly

above the producer

price index because of

the excessive increases

in energy costs


Cement input costs increased signifi cantly above

the producer price index because of the excessive

increases in energy costs as international energy

demand drove coal and diesel prices to record levels

during the second half of the fi nancial year. The real

price increase for electricity approved by NERSA and

the increases in rail tariffs have also contributed to

these alarming cost increases.

Although the current international economic crisis

has already had an impact on international prices for

crude oil and coal, the local prices have been slow

to react and it is expected to be a while before we

see any signifi cant reductions. Diesel is a typical case

in point, because the reduction in the rand price of

crude oil has not fi ltered through to the diesel price to

the same extent that it has in the petrol price.

These inputs have a high weighting in the cost of

manufacturing cement and we shall have to recover

them in cement price increases. Hopefully, the local

prices of these inputs will reduce and alleviate pressure

on cement prices in the future.

Operations overview: Lime and Aggregates

Lime division also experienced extraordinary increases

in coal, diesel and electricity prices, which put margins

under pressure in the second half of the year. These

increases should be recovered in terms of contract

pricing adjustments in the future. In the year ahead,

we expect weaker demand due to the production

cutbacks announced by steel producers.

Gauteng aggregate volumes improved with increased

metallurgical dolomite stone demand resulting in

good profi t growth. Kgale quarry volumes in Botswana

increased substantially after the continued investment

in infrastructure and commercial development projects

in southern Botswana.

Operations overview: Zimbabwe

The situation in Zimbabwe has reached the point

where, effectively, major parts of the economy

including parastatals are only functioning in foreign

currency. Zimbabwe urgently requires a political

settlement to facilitate the economic reconstruction

that is so desperately needed. Despite this situation,

Porthold continues to produce cement, both for the

domestic market and for export, to generate critical

foreign currency earnings.

Manufacturing capacity beyond 2010

The most modern cement kiln (Batsweledi) in

southern Africa was completed within budget and

commissioned at our Dwaalboom plant in September

2008. The kiln ran at warranted output within 30 days

of its start-up.

This is testament to the professional team work that

occurred between all players on this project, extending

from our own in-house project management,

operations and technical teams to the equipment

suppliers, especially FL Smidth, as well as engineering

consultants and erection contractors.

This kiln has the potential to be the most thermally

and electrically effi cient kiln in southern Africa. It is

too soon to give precise fi gures, but the production to

date indicates that the effi ciencies will be signifi cantly

better than our older units. Coal consumption

will be dramatically reduced through the use of an

inline pre-calciner and six-stage pre-heater. Electrical

energy-effi ciency gains are achieved by the use of

vertical roller mills and high-effi ciency electric motors

throughout the plant.

On the environmental side, the use of bag fi lter

technology has ensured that emissions are within

international limits while requiring less than half

the water consumption per ton of cement normally

needed.

Chief executive offi cer’s report continued

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The safety record achieved during the 26-month

construction period was outstanding. Only seven,

mainly minor, lost-time injuries occurred over this

period, in which more than fi ve million man-hours

were worked, refl ecting the enormous effort of all

team members to reduce the risk of injury.

The Ntšhafatso new mill project at Hercules in Pretoria

continues according to plan and the erection of the

mill itself is now under way. This is also a latest-

technology vertical roller mill, which will improve

electrical consumption per ton of cement produced

signifi cantly. The necessary additional electricity supply

and electrical infrastructure is already completed. We

do not anticipate that this project will add to PPC’s

capacity in the 2009 fi nancial year.

The submission of the environmental impact

assessment (EIA) report for the new plant near

Riebeeck West was delayed for the completion of

important further specialist studies and the granting

of additional time to interested parties to submit

comments. The EIA submission is expected shortly but

it is unlikely that approvals will be forthcoming before

mid-2009. This has been a thorough process and we

are confi dent that all aspects of the EIA process have

been conducted to our usual high standard. More

about this process is contained in the environmental

section (page 69).

Human resources beyond 2010

PPC has always understood that the sustainability of

the company and the country is directly dependant on

the growth of its people’s intellect, skills, attitudes and

wellbeing, and so it should be no surprise that during

this past year we continued to expand our capabilities

to educate, train and uplift our people. We have

further extended our PPC Academy to incorporate

learnerships in the fi eld of mining and have initiated

a Graduate Development Academy. Ten new tertiary

education learners were welcomed to PPC as part of

the 2008 bursary intake and, in addition, 30% more

apprentices were employed this year.

Succession planning is one of the key pillars in our

Kambuku people programme and I am pleased to

report that four of our fi ve new black executives came

up through the PPC succession planning route. This

is yet another example of how PPC has continued

to sustainably transform the company. More detail

on this progress is contained in the social section

(page 78).

Another aspect of ensuring a sustainable workforce is

to entrench health and safety as top priorities in daily

operations. The behavioural-based safety initiative

has in the past two years shown major benefi ts

and I am pleased to report that our lost-time injury

frequency rate has reduced by 50% to only 1,5 lost-

time injuries (LTIs) per million man-hours worked. This

number includes all contractors working on our sites

for which we take responsibility and demonstrates

our ability to share and inculcate our safety culture

into their activities. Our ultimate aim remains zero

injuries and our target for this year is to reduce our

frequency further to less than 1 LTI per million man-

hours worked.

The new technology

used in expansion and

modernisation projects

will enable PPC to reduce

its direct and indirect

carbon footprint


Ensuring a better environment beyond 2010

We have maintained a high focus on this area of our

business and have continued to make progress during

the year. We now have a strong team of highly skilled

and knowledgeable experts situated throughout PPC

operations to monitor the implementation of the

actions plans arising from our baseline environmental

audits.

To date, a number of projects have been completed

or are in progress to reduce dust emissions. The

announcement of the R70 million project to reduce

emissions at our De Hoek factory is another example

of PPC’s commitment to improve its environmental

performance.

Further similar projects are currently under

investigation to ensure continual improvement in the

company’s environmental standards and adherence

to ever-tightening legislation.

As new production lines come on stream and replace

old equipment, we will move to unprecedented low

emission levels from the modernised facilities. The

proposed multi- billion rand new factory to replace the

50-year-old facility near Riebeeck West in the Western

Cape is another example of modern technology

making a huge difference to the environment.

The new technology used in expansion and

modernisation projects will enable PPC to reduce its

direct and indirect carbon footprint and bring about a

dramatic reduction in dust emission levels.

Value for shareholders beyond 2010

This year has been another year of good cash fl ow

returns to shareholders with cash generated from

operations increasing by 16% to R2,5 billion. The

total dividend declared for the year is up 10% to

225 cents per share.

The buy-back of 20,1 million shares at a cost of

R753 million was completed during the year to

minimise the dilution resulting from the broad-based

black economic empowerment transaction.

During this fi rst year after the company’s unbundling

from Barloworld, signifi cant effort has been made in

improving investor communications. As at fi nancial

year-end, the company’s foreign shareholder base had

risen to 32%, up from 22% in 2007.

Broad-based black economic empowerment

The recently approved broad-based black economic

empowerment transaction was the culmination of a

long process that was necessary to ensure the original

objectives of the transaction were realised.

The fi rst objective was to ensure that it was in

accordance with the Mining Charter and the

Department of Trade and Industry’s codes of good

practice. Secondly, to ensure as large a benefi ciary

base amongst our stakeholders as possible, which

was achieved through the establishment of trusts

involving employees, communities in which we

operate and users of our product. In addition to

this, the strategic black partners selected are either

involved in construction or mining.

Thirdly, to structure the transaction fi nancing to

keep funding cost to a minimum to ensure that

the transaction was as sustainable as possible for

the benefi t of both our existing and our new BEE

shareholders.

Finally, to ensure that the transaction minimised

the dilutionary effect on existing shareholders. The

resultant transaction structure, together with the

share buy-back and scheme of arrangement, limited

the dilution to only 5,3%.

Chief executive offi cer’s report continued

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REAL social investment

PPC applies the same logic to social investment

initiatives as it does throughout its entire transformation

philosophy – is it REAL? REAL is a simple fi lter which

ensures that all initiatives are Relevant, will Empower,

will be Actualised and will Last into the future.

This year a number of social investment projects were

undertaken with the emphasis on job creation and

skills development. Through our Ntsika enterprise

development fund, we helped two businesses to

improve their potential for sustainability beyond 2010.

Comprehensive details of all our social investment

projects this past year is included in the social section

(page 94).

Customers beyond 2010

Gross fi xed capital formation (GFCF) during the second

quarter of 2008 rose to 22% of GDP, the highest level

in 20 years. Economists are now predicting it could

reach 25%, the level of GFCF required to sustain the

infrastructure of a growing economy, sooner than

the government’s target of 2014. This was reinforced

in the recent medium-term policy statement that

confi rmed the R600 billion infrastructural investment

over the next three years.

Existing infrastructure projects such as Gauteng road

projects, the Gautrain and World Cup 2010 facilities

are in full swing and a number of new projects are just

starting. These include the Medupi and Kusile power

stations, two Eskom pumped-storage schemes, the

Coega container quay and a number of hotels for the

World Cup. Demand for cement could well maintain

current levels despite continued weakness in the

formal residential housing sector.

Demand for cement for the rebuilding of the

infrastructure will continue well beyond 2014, despite

the negative global outlook for the next year or two.

Some observers are already predicting that residential

construction may see some modest recovery later in

2009 if interest rates are reduced as anticipated in

tandem with trends around the world.

We have examined a variety of cement scenarios

unfolding over the next year or two and have simulated

the actions we will take to optimise shareholder value

creation in whatever scenario unfolds. Team PPC is

ready to respond quickly to any situation that arises,

which is key in uncertain times.

Whichever scenario unfolds, PPC will continue to

optimise the supply of cement to customers by using

its wide geographic footprint and capacity fl exibility.

We have already revisited traditional export markets

and have re-established the logistic channels to serve

these markets from our own production again.

Appreciation

Our thanks go to Martin Shaw for his decisive and

inspiring leadership during his tenure as chairman and

our warm welcome and congratulations go to our

new chairman, Bheki Sibiya.

Finally, I would also like to thank Team PPC for the

foundations they have laid this past year and for their

unwavering commitment to generating value for all

stakeholders.

John Gomersall

Chief executive offi cer


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Martin John Shaw (70)ChairmanMartin Shaw was appointed to the PPC board in 2001. He served as managing partner, chief executive and chairman of Deloitte & Touche in South Africa until his retirement from the firm in 2001. He was president of the Natal Society of Chartered Accountants from 1977 to 1978 and president of the South African Institute of Chartered Accountants from 1982 to 1983. He is also a director of Illovo Sugar Limited, JD Group Limited, Liberty Group Limited, Liberty Holdings Limited, Murray & Roberts Holdings Limited, Reunert Limited, Standard Bank Group Limited and Standard Bank.

Bhekokuhle Lindinkosi Sibiya (51)Incoming chairmanBorn in the deep rural areas of KwaZulu-Natal, Bheki completed a BAdmin degree at the University of Zululand and received an MBA from Western Michigan University in the US. He has worked in a number of companies and serves as the deputy chairman of Tiger Brands and as chairman of Brait South Africa. He is the past president of the BMF and a founding CEO of Business Unity South Africa.

John Edward Gomersall (62) (British)Chief executive officerJohn Gomersall joined Barloworld in 1971 and has completed in excess of 35 years in capital-intensive commodity businesses. He started his career in the stainless steel and ferrochrome industries, culminating in his appointment as group managing director of Middelburg Steel and Alloys (Pty) Limited in 1986. He joined the Barloworld board in 1989 and moved into the cement and lime business segment as group managing director of Pretoria Portland Cement in 1992. In 1990 he led the business team that created the Middelburg Peace Forum, which was the role model for the National Peace Accord in South Africa.

He is a past deputy president of the International Chrome Development Association, headquartered in Paris, and past chairman of the South African Cement and Concrete Institute.

Robert Harley Dent (57)Director, lime, aggregates and strategic projectsHarley Dent was appointed to the PPC board in 1993 as director: strategic projects. He joined Cape Portland

Cement Company Limited, a subsidiary of PPC, in 1978 and has been with the group for 29 years. He is a fellow of the South African Chemical Institute, the South African Institute of Mining and Metallurgy and the Institute of Quarrying of Southern Africa. He is a past chairman of the Institute of Quarrying of Southern Africa and is currently chairman of the Aggregate and Sand Producers Association of South Africa (Aspasa).

Peter Esterhuysen (52)Chief financial officerPeter Esterhuysen was appointed to the PPC board in December 2003. He has prior experience in cement, having been a divisional director of the cement division of PPC from 1996 to 2001. He was group financial director in the Coatings division of Barloworld until rejoining PPC in 2003.

Prior to joining PPC in 1996, he held various executive directorship positions in a number of South African manufacturing and retailing companies, including major corporates. He has extensive experience in all aspects of manufacturing, corporate finance and taxation.

Orrie Fenn (54) (British)Chief operating officerOrrie Fenn was appointed chief operating officer in May 2005. He was appointed to the PPC board in March 2004 as managing director of the cement division.

He joined the PPC Group in 1999, initially to lead the global technical benchmarking of the cement division facilities. Later in that year he was appointed operations director of the cement division, with responsibility for the South African cement factories and quarries. In 2002 he was appointed sales and marketing director of the cement division.

Prior to joining PPC, he spent seven years at the Chamber of Mines Research Organisation (COMRO) and obtained a doctorate in the field of underground rock boring. He was also projects director of the Murray & Roberts cement, aggregate and readymix division.

He is a member of the SA Institute of Mining and Metallurgy, a fellow of the SA Institute of Quarrying and has a government Certificate of Competency (Mines and Works).

Board of directors continued

BOARD RACE BALANCE

2008

2 4 6 8 10 12

2007

■ White ■ Black

BOARD GENDER BALANCE

2008

2 4 6 8 10 12

2007

■ Men ■ Women

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Salim Abdul Kader (38)Director: organisational performance and corporate socialSalim Abdul Kader was appointed to the PPC board in May 2005 as executive director responsible for organisational performance. During 2007 he also assumed executive responsibility for transformation. He joined the PPC group in 2004 as organisational performance director in the cement division and was thereafter appointed an alternate director on the PPC board in November 2004.

Prior to joining PPC he was organisational effectiveness executive for the Tiger Brands group responsible for human resources development. Salim started his career with Tiger Food Brands in the technical and operations functions before moving into human resources.

Zibusiso Janice Kganyago (42)Independent non-executive directorZibu Kganyago was appointed to the PPC board in October 2007. She is executive director of property development at Tsogo Sun Gaming and has been involved with property development and construction management over the past 13 years. She was the executive director responsible for the recently completed R370 million Montecasino lifestyle development. She qualified with a Bachelor of Commerce degree from the University of Natal and has a postgraduate qualification in property planning, development and management. She has been doing a business development programme at the Wharton School of Business in Pennsylvania and an executive development programme at the University of Nevada, Reno.

André Jacobus Lamprecht (56)Independent non-executive directorAndré Lamprecht was appointed to the PPC board in 1997. He practised as an advocate of the High Court of South Africa before being invited to join the Barloworld group in 1981. From 1983 he played a leading role in steering the group through a turbulent decade of political transition into a post-apartheid South Africa. He was appointed to the Barloworld board in 1993, assuming responsibility for the company’s interests in Namibia and Botswana in addition to human resources, social investment and other responsibilities.

He has served on behalf of Barloworld on numerous public bodies and is a past chairman of Business South Africa, past president of the Afrikaanse

Handelsinstituut and past chairman of its board of trustees, and chairman of the standing committee on corporate and public governance. He is also a director of the National Business Initiative (NBI), trustee of the Business Trust and former business convenor of the Trade and Industry Chamber of the National Economic Development and Labour Advisory Council (Nedlac), a member of its executive council, a member of the BUSA and CHAMSA councils and a member of the retirement funds advisory committee of the minister of finance. He is also a long-standing senior member of the standards committee of the International Labour Organisation (ILO).

Presently, André is chief executive officer of Freeworld Coatings Limited.

Timothy Dacre Aird Ross (64)Independent non-executive directorTim Ross was appointed to the PPC board in July 2008. He recently retired from Deloitte & Touche where he served as the lead client service partner to many major South African clients, where he is chairman of both group risk and group audit and actuarial committees.

He is also a director of Liberty Group Limited and Eqstra Holdings Limited, where he chairs the audit committee.

Nomalizo Beryl Langa-Royds (46)Independent non-executive directorNtombi Langa-Royds was appointed to the PPC board in October 2007. She owns Nthake Consulting, a human resources consulting firm specialising in human resources management and allied services. She has 19 years’ experience in the human resources consulting environment, with previous positions such as director of human resources at Independent Newspapers Holdings Limited, the South African Broadcasting Corporation and Bevcan division of Nampak Limited.

Joe Shibambo (60)Independent non-executive directorJoe Shibambo was appointed to the PPC board in May 2005. He has been involved in the construction industry since 1979, where he gained invaluable knowledge in building construction, construction management, property development and the implementation of BBBEE development programmes. He is the managing director of Hlamalane Projects, a company established in 1995. Through his organisation, he helps historically disadvantaged individuals in the basic management principles of starting a business and the effective management thereof. He was the first black residential township developer and independent contractor to build a shopping centre in Soweto.

BOARD BALANCE

2008

2 4 6 8 10 12

2007

■ Non-executive directors ■ Executive directors


Shares to the value of R753 million were

repurchased to limit the dilutionary effect of the

broad-based black ownership initiative.

Peter Esterhuysen

Chief fi nancial offi cer’s report

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The reduction in both the corporate taxation and

secondary tax on companies’ rates contributed

R62 million to earnings, or 12 cents per share.

Headline earnings per share increased by 8% to

283 cents per share, calculated using the weighted

number of shares in issue of 529 049 918, adjusted for

treasury shares held in terms of the share buy-back.

Consistent with 2007, the results of Porthold, a

wholly owned Zimbabwean subsidiary, have not been

consolidated into the group results. More details are

contained in note 3 on page 183.

Cash flow

The ability of the group to generate cash remained

strong. Cash generated from operations increased

by 16% to R2,5 billion (2007: R2,2 billion; 2006:

R2,0 billion).

Working capital management

Strong focus on working capital management

continued with the net investment in working capital

only increasing R17 million in the current year. The

carrying value of trade receivables increased on higher

revenues and there was also an improvement in the

number of days outstanding. Imported cement, which

in the prior year accounted for the sharp increase

in working capital, reduced significantly during the

current year because cement imports into South Africa

were curtailed from January onwards and supplied

from local operations, with only the Mozambique

market continuing to be supplied from imports.

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Financial results

Group revenue increased 12% to R6,2 billion and

operating profit rose 7% to R2,3 billion.

Increases in transport costs had a significant impact

on cement margins. This arose from increased rates by

transporters emanating from higher diesel prices and

also the additional distances travelled to source and

deliver product to customers. Continued high demand

in the inland market meant product could not always

be supplied from the nearest factory and cement

was often transported long distances from other PPC

factories. Other significant increases also arose from

coal, electricity and maintenance costs, and future

price increases will have to reflect cost recovery from

these inflationary pressures.

Lime operating profit and margins reduced after a

substantial increase in energy input costs during the

second half of the financial year. These cost increases

are recovered through price increase mechanisms

contained in customer supply agreements, albeit

delayed, because price adjustments are mostly annual

and do not necessarily coincide with supplier cost

increases.

The aggregate operations continued their good

performance with an increase in volume and operating

profit and margins, and benefited from the exit of the

readymix business in Botswana during the previous

financial year.

Administrative and other operating expenditure

included R20 million of costs pertaining to the broad-

based black ownership initiative and a final settlement

of R13 million to the Barloworld medical scheme in

respect of pensioners of PPC who wished to remain on

the Barloworld scheme after the unbundling of PPC

from Barloworld. This settlement was only actuarially

calculated in the current year once it was established

which pensioners would remain on the Barloworld

scheme.

Borrowings raised to primarily fund the investment

on expansion projects increased finance charges to

R157 million; net of interest capitalised to projects in

progress of R44 million.

Cash generated from

operations increased by

16% to R2,5 billion


Dividends

The directors have declared a final dividend

of 180 cents per share (2007: 166 cents per share;

2006: 110 cents per share). Total dividends for the year

are 225 cents per share (2007: 205 cents per share;

2006: 143 cents per share) and reflect a dividend cover

of 1,26 times, which is within the company’s stated

target range of 1,2 to 1,5 times.

Approval by shareholders for the issue of new

shares to empowerment partners in terms of the BEE

initiative has been obtained and will result in the issue

of 48,6 million PPC shares on 15 December 2008.

These shares will qualify for the final dividend, which

will be paid in January 2009.

Capital expenditure

The cash impact of capital expenditure was:

2008Rm

Dwaalboom (Batsweledi) expansion project 328

Hercules (Ntšhafatso) expansion project 143

Other expansion projects 46

Expansion projects 517

Replacement projects 277

Total 794

Projected cash fl ows for 2009:

Dwaalboom (Batsweledi) expansion project 136

Hercules (Ntšhafatso) expansion project 386

Other expansion projects 50

Expected annual replacement capital expenditure 300 – 400

Capital expenditure including interest capitalised of

R44 million (2007: R8 million, 2006: nil) amounted to

R838 million (2007: R962 million; 2006: R395 million)

and related mainly to the Batsweledi and Ntšhafatso

expansion projects.

Capital expenditure to ensure continual improvement

in the company’s environmental standards and

adherence to ever-tightening legislation is included in

the expected annual cash flow above.

The recent weakening of the rand against the euro is

likely to have an impact on the cost of future capital

expansion and replacement projects, and the group

will continue with its plans to implement appropriate

hedging strategies.

Dwaalboom (Batsweledi) expansion project

The Batsweledi expansion project was successfully

commissioned in late September 2008, five months

later than previously communicated but within budget.

The full depreciation charge will be included from the

2009 financial year. Increased efficiencies, particularly

in energy consumption, on the new kiln line is likely to

provide for increased output with a lower cash cost of

production than other older production lines currently

in use.

Incentivisation accounting

During 2007, PPC introduced a cash-settled long-term

incentive scheme to replace the Barloworld equity-

settled share option scheme and the company has

made a further award during the current financial

year. A total of R4 million (2007: R3 million; 2006:

R1 million) was expensed in terms of IFRS 2 for the

current year.

The exposure relating to the 2007 allotment was

hedged and, after the movement in the PPC share

price by 30 September, an amount of R15 million was

expensed as the mark-to-market adjustment on the

hedging premium. More details on this scheme are

contained in note 35.

Share buy-back

In terms of a special resolution authorised at the

28 January 2008 annual general meeting, the directors

Chief fi nancial offi cer’s report continued

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have a general authority to buy back up to 10% of

the issued share capital of the company. In terms of

this authority, PPC Cement (Proprietary) Limited, a

wholly owned subsidiary of PPC Company Limited,

acquired 14,9 million shares between 15 February and

31 March 2008 at an average price of R39,51 per

share, including costs.

A further 5,2 million shares were acquired between

5 September and 30 September 2008 at an average

price of R31,29 per share, inclusive of costs. The

cumulative cost of the repurchase program amounts

to R753 million and was funded from surplus cash.

The buy-back programme was entered into in

anticipation of and to limit the dilutionary effect of

the issue of new shares for purposes of the broad-

based black ownership initiative. The shares are held

as treasury shares with further share buy-backs to be

considered on an ongoing basis, where appropriate.

Share trading

During the year under review there was a significant

increase in the volume of PPC shares traded on

the Johannesburg Stock Exchange Limited (JSE),

particularly in the last quarter. The current global

economic crisis and fears of a world recession have

not left South Africa unscathed and most equities

listed on the JSE have fallen sharply over the past year,

including PPC. Market capitalisation at year-end was

R16,8 billion (2007: R25,7 billion) and the percentage

of foreign shareholders increased to 32% by the end

of September 2008.

Effect of significant changes in IFRS

A number of statements and interpretations became

effective for the year under review. The most significant

was the adoption of IFRS 7 – Financial Instruments:

Disclosures. The adoption of these standards did not

impact the reported results of the group.

Capital structure and debt

As communicated in the 2007 annual report, the

structuring of the balance sheet remains a key focus,

with target debt levels remaining set at between two

to three times gross debt to EBITDA and around five

times interest cover.

The group increased its short-term debt to

R1,6 billion, which was utilised to fund capital

expansion programmes and the investment in working

capital. This represents a 0,7 times gross debt/EBITDA

cover and 12 times interest cover, which is well within

the targeted levels. The group will continue to fund

future major capital expenditure through borrowings.

In terms of the broad-based black ownership initiative,

the group will receive approximately R1,5 billion in

long-term debt, which will be used to repay short-

term debt.

Finance costs increased by R73 million over the last

year; net of interest charges of R44 million capitalised

to expansion projects. Increased gearing in the

company will continue to have an impact on finance

charges going forward.

Cash flow 2009

The company should continue to reflect a steady

performance with a strong operating cash flow for the

year ahead.

Although the IFRS 2 charge will mostly be expensed

in the 2009 year and will have a significant impact

on earnings per share for the year, the payment of

dividends will be determined in terms of the company’s

policy of 1,2 – 1,5 times cover before this charge.

Major capital expenditure

will continue to be funded

from borrowings as

appropriate


Broad-based black ownership initiative

The company announced the details of its

empowerment initiative in August 2008 and it was

approved by shareholders at a general and scheme

meeting held early in November 2008. The broad-

based black ownership initiative incorporates PPC

employees, the communities in which PPC operates,

construction and related industry associations,

education and community service groups, the

disabled, and strategic black partners. The initiative,

in aggregate, will represent 15,29% of PPC’s increased

share capital.

A circular to shareholders was issued on 16 October

2008 and provided details of the initiative. In summary,

the initiative comprises a combination of debt funding,

preference share funding and contributions from PPC

group companies. In terms of the initiative, PPC will

issue 48,6 million new shares and a further 38,0 million

shares will be acquired from existing PPC shareholders

by means of a scheme of arrangement in terms of

section 311 of the Companies Act at a consideration

of R31,32 per share, being the 30-trading day volume

weighted average price at the close of business on

Thursday, 21 August 2008.

As a result of residual risk pertaining to a number

of the trusts, accounting standards require that they

be consolidated into the group financial results.

This will have the effect of bringing additional debt

of approximately R1,1 billion onto the consolidated

PPC balance sheet and a corresponding debit against

equity.

PPC’s facilitation of the broad-based black ownership

initiative is expected to have an impact of approximately

R557,4 million, calculated in accordance with IFRS 2.

This equates to 3,24% of PPC’s market capitalisation

of R17,2 billion based on the PPC share price of

R32,00 per share at the close of business on Thursday,

21 August 2008. Of this charge R474,0 million will be

expensed in the 2009 financial year, and the balance

of R83,4 million will be expensed over the respective

vesting periods of the shares.

The cash cost of the transaction is estimated at

R44 million, of which R20 million was expensed

in the 2008 financial year, and a further estimated

R5 million relating to legal and consulting fees will

be expensed in the 2009 financial year. The balance

relates to underwriting fees that will be capitalised and

amortised over the funding period.

The transaction will be effected on 15 December

2008.

Peter Esterhuysen

Chief financial officer

Chief fi nancial offi cer’s report continued


Transaction structure and overview

• Source of shares

– 6,72% into various trusts via section 311 Scheme

of Arrangement

– 8,57% via the issue of new shares

• Share price applicable R31,32 (30 day VWAP at

21 August 2008)

• Funding

– Construction association and PPC education,

community, team benefit and the black managers

trusts – financed through a preference share

funding structure

– General staff and the black non-executive directors

will receive a non-refundable contribution from

PPC to purchase shares

– New PPC shares to be issued to CSG – funded by

a credit sale structure – (CSGs contribute nominal

R5,4 million in equity)

– New PPC shares to be issued to SBP consortium

– funded by a credit sale structure (SBPs contribute

R60 million in equity)

• Vesting and Lock-in

– Shareholdings have various vesting conditions

and sale restriction periods

• Dividends

– General staff and black non-executive directors

will receive dividends immediately

– Trickle dividend to external trusts, PPC Team

Benefit Trust and CSGs

• Dividends/earnings dilutionary effect

– Dilution of 5,3% – (8,57% of increased shares in

issue reduced by shares bought back and held as

treasury shares)

• Balance sheet

– PPC will receive approximately R1,5 billion

through CSG PPC and SBP PPC interest-bearing

loans

– PPC intends using these long-term interest

bearing loans to replace existing short-term

interest bearing borrowings raised to fund

capital expansion projects and working capital

requirements

• IFRS 2 share-based payment charge

– Estimated R557,4 million charge equates to

3,24% of market capitalisation of R17,2 billion

at close of business on 21 August 2008


Shalamuka

The CSG Funding SPV

PortlandNozalaPeu

The SBP Funding SPV

DEC Capital Edge

The PPC

Community Trust

Funding SPV

The PPC

Team Benefi t

Trust Funding SPV

The PPC

Construction

Industry Associations

Trust Funding SPV

The PPC

Education Trust

Funding SPV

The PPC

Community Trust

The PPC

Team Benefi t Trust

The PPC

Construction

Industry

Associations Trust

The PPC Black

Managers Trust

The PPC

Education Trust

The Current PPC

Team Trust and

The Future PPC

Team Trust

EXTERNAL TRUSTS

COMMUNITY SERVICE GROUPS

The PPC Black Independent

Non-Executive Directors Trust

100% 100% 100% 100%

1,51%R268,4 million

15,29%R2 710,7 million

Other PPC shareholders

7,06%R1 252,4 million

0,71%R125,8 million

2,02%R357,8 million

1,01%R178,9 million

0,50%R89,5 million

1,85%R327,9 million

0,57%R101,0 million

50% 50% 25,71%27,15% 25,71% 21,43%

0,05%R9,0 million

INTERNAL TRUST

INTERNAL TRUSTS

STRATEGIC BLACK PARTNERS

PPC’s broad-based black economic empowerment transaction structure

Key: CSG = Community service group

DEC = Disability empowerment concerns

SBP = Strategic black partners

SPV = Special purpose vehicle

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It will directly benefi t approximately 3,5 million people in South Africa, of whom the majority are black individuals

A broad-based black ownership initiative totalling R2,7 billion

This is a historic milestone for the company and the culmination of processes started a number of years ago. This heralds a signifi cant achievement by the company as it reaches a key empowerment objective at the equity level. We set out to ensure that the structure of the deal was as broad-based as possible, benefi ting mainly black South African stakeholders.

John Gomersall

Broad-based black economic empowerment transaction


Good corporate governance should extend further

than mere statements of compliance. PPC has a strong

ethos of corporate governance, which it has maintained

since its formation in 1892. This ethos remains an

important consideration in the company’s day-to-day

operations. PPC and its subsidiaries are fully committed

to the principles of fairness, discipline, independence,

accountability, transparency and social responsibility

associated with good corporate governance.

The company is incorporated in South Africa under the

provisions of the Companies Act, 1973, as amended.

It accepts the principles and fi rm recommendations set

out in the Code of Corporate Practices and Conduct

in the Report on Corporate Governance for South

Africa 2002 (King II), and complies with the additional

governance requirements of the JSE Limited and the

Public Investment Corporation Limited’s (PIC) principles,

policies and practical application regarding corporate

governance. The instances of non-compliance are

noted and reasons are supplied.

In terms of non-fi nancial aspects, PPC complements

these extended reporting requirements by adopting

the Global Reporting Initiative’s (GRI) sustainability

reporting guidelines on economic, environmental and

social performance. The company has also continued

to meet the criteria of the JSE Limited’s Social

Responsibility Investment Index since its inception in

2004.

The company’s systems of corporate governance

continue to evolve in pursuit of best practice and as

the needs and expectations of stakeholders develop.

Achievements during the period under review in

pursuit of best practice and meeting these expectations

include:

• A review of the board’s charter and board

committee’s terms of reference to ensure compliance

with the Corporate Laws Amendment Act 24, 2006

King II, the JSE Limited’s listings requirements and

the PIC’s principles of corporate governance;

• The amendment and/or adoption of policies on

the selection and appointment of directors and the

chairman of the board, the disposal of immovable

property, executive and director remuneration,

environmental management, group share dealing,

directors’ interests and risk management.

• The reconstitution of all board committees to ensure

that membership comprises only non-executive

directors;

• The appointment of an independent, non-executive

director as chairman of the audit committee, and

the reconstitution of this committee to comprise

only non-executive directors;

• The appointment of a black independent, non-

executive director as chairman of the board;

• The introduction of a formal programme for the

continued training and development of the board;

and

• The introduction of a new board performance

evaluation approach, which includes additional

evaluations of the board chairman, company

secretary and board committees.

Board accountability and delegated functions

The board is responsible to shareholders for creating

and sustaining shareholder value through the

management of the group’s businesses. It is also

responsible for ensuring that management maintains

an effective system of internal control.

The board has formally reserved itself the following

functions:

• Approving and monitoring the implementation of

the strategic and annual business plans, setting

objectives and reviewing key risks and performance

areas, especially in respect of technology and

systems, environmental issues and transformation;

• Appointing the chief executive offi cer and

maintaining a succession plan;

• Appointing directors; and

• Determination of overall policies and processes

to ensure the integrity of the company’s risk

management and internal control.

While retaining overall accountability and subject

to matters reserved for its domain, the board has

delegated to the chief executive offi cer and executive

directors the authority to run the day-to-day affairs of

the company.

Corporate governance structure and management systems

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Specifi c responsibilities have been delegated to

the board’s committees, which have access to

independent advice at the group’s expense. Audit,

risk management and compliance, black economic

empowerment and transformation, and nominations

and remuneration committees assist the board in the

discharge of its duties and report to the board on

their activities. Each committee acts within its written

terms of reference, under which certain functions of

the board are delegated with clearly defi ned purposes

and membership requirements. The performance and

effectiveness of the committees are evaluated during

an annual evaluation by the board, and the committees’

chairpersons are required to attend annual general

meetings to answer shareholders’ questions.

A formal self-evaluation of the board, its chairman,

company secretary and its committees’ performance

and effectiveness was carried out during the period

under review. This exercise was conducted by means

of individual questionnaires completed by each board

and committee member. The group company secretary

collated the results of all the questionnaires, which

were then reported to the board in November 2008.

Generally, the result of the evaluation was satisfactory

and the board concluded that it continues to operate

effectively and that the exercise has ensured the

board remains effi cient and relevant to the company’s

business objectives.

Board of directors

At the time of this report, the board comprises

fi ve executive and seven non-executive directors. A

number of changes were made to the board during the

year, including the appointment of Mr TDA Ross and

Mr BL Sibiya to the board on 17 July and 10 November

2008 respectively.

The aim is to have a board with an appropriate balance

of skills and experience to support the company’s

strategy and meet the requirements to lead it

effectively. The nominations committee is responsible

for overseeing the process for appointing new

directors to the board. (The report on its activities is

published on page 42.) The selection and nomination

of directors take place according to well-defi ned

procedures and any proposed new appointment of a

director is considered by the board, as a whole, on the

recommendation of the nominations committee.

In line with best practice around the globe, more

than half of the board’s members are independent,

non-executive directors. The board considered

the issue of independence at its board meeting in

November 2008 and concluded that Ms ZJ Kganyago,

Ms NB Langa-Royds, Mr TDA Ross, Mr BL Sibiya,

Mr MJ Shaw and Mr J Shibambo are independent,

non-executive directors of PPC as defi ned in sub-

paragraph 2.4.3 of King II and paragraph 3.84(f) of

the JSE Limited’s listings requirements.

The PPC board contends that Mr AJ Lamprecht,

who is chief executive offi cer of Freeworld Coatings

Limited and was previously a director of a major

shareholder of the company, should be considered an

independent, non-executive director for the period

under review.

The curriculum vitae of each director of the company

is published on page 26.

To ensure the effective functioning of the board,

the board agenda and supporting papers are usually

distributed to all directors a week prior to each board

meeting. Further explanations and motivations for

items of business that require decisions are supplied

during the meeting by the appropriate executive

director. When necessary, decisions are taken by the

directors between meetings by written resolution as

provided for in the company’s articles of association.

Directors have unrestricted access to all company

property, information and records.

During the period under review, the following scheduled

board meetings were held:

• 28 January 2008;

• 28 February 2008;

• 6 May 2008;

• 6 August 2008; and

• 10 November 2008.


Special board meetings were held on 27 August and

2 October 2008. Ms ZJ Kganyago could not attend

the meetings on 27 August and 10 November and

Mr AJ Lamprecht could not attend the meeting on

2 October.

All new directors undergo a comprehensive induction

process arranged by the company secretary. It includes

a detailed information pack, an explanation of their

fi duciary duties and responsibilities, meetings with

the executives of the company, director development

programmes arranged through the Institute of

Directors, and visits to the main operations

where discussions with management facilitate an

understanding of the company’s affairs and operations.

The company secretary facilitates additional training

and updates for directors on particular issues, such as

competition and mining legislation, on a continuing

basis.

In certain circumstances it may become necessary for

a non-executive or independent director, acting in the

best interests of the company, to obtain independent

professional advice. Such a director has unrestricted

access to the chairman, executive directors and

the group company secretary. If a non-executive or

independent director takes reasonable action and

incurs costs, these are carried by the company.

Conventionally, executive directors retire from the

board at 63, while non-executive and independent

directors retire at the next annual general meeting after

their 70th birthday. Having reached the retirement age,

Mr MJ Shaw will retire at the annual general meeting.

In terms of the company’s articles of association, at

every annual general meeting at least one-third of the

directors retire from the board. In addition, a director

appointed by the board must retire from this offi ce at

the next annual general meeting. Directors who retire

in this manner may make themselves available for

election or re-election, as the case may be, subject to

recommendation from the nominations committee.

At the forthcoming annual general meeting on

26 January 2009, Mr TDA Ross and Mr BL Sibiya,

who were appointed as directors by the board during

the year, are required to retire and Mr RH Dent, Mr

P Esterhuysen and Mr AJ Lamprecht are required to

retire by rotation in terms of the articles of association.

They have all made themselves available for election

or re-election at that meeting and the nominations

committee has recommended this be done.

There are no contracts of service between any

director and the company or any of its subsidiaries

that are terminable at periods of notice exceeding

three months and require payment of compensation,

with the exception of a fi xed-term contract with

Mr JE Gomersall that expires on 31 January 2010, after

the annual general meeting and four months after his

63rd birthday. Mr JE Gomersall has an option to take

early retirement with six months’ notice.

Fees payable to non-executive and independent

directors are proposed by the remuneration

committee, recommended by the board and fi xed by

the shareholders at the annual general meeting. The

fees proposed for 2009 are published on page 200.

Frequent meetings of the executive directors were

held during the period under review to assist the chief

executive offi cer and the chief operating offi cer to

guide and control the overall direction of the business

of the company, monitor business performance and

act as a medium of communication and coordination

between business units, group companies and the

board.

Chairman and chief executive offi cer

No individual board member has unfettered powers

of decision-making. The responsibility for running the

board and executive responsibility for the conduct of

business are differentiated. Accordingly, the roles of

the chairman of the board and chief executive offi cer

are separate.

The group company secretary

The group company secretary provides the board

as a whole, and directors individually, with detailed

guidance on the discharge of their responsibilities. He

is a central source of information and advice to the

Corporate governance structure and management systems continued

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board and within the company on matters of ethics

and good governance. He also ensures that the

proceedings and affairs of the board, its committees,

the company itself and, where appropriate, owners of

securities in the company are properly administered in

accordance with the pertinent laws. He is responsible

for compliance with the rules and listings requirements

of the 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.

All directors have direct access to the group company

secretary at all times and the directors and offi cers of

the company keep him advised of all their dealings in

company securities.

Insider trading

The Securities Services Act regulates transactions

by directors and offi cers in securities issued by the

company, and the company has issued a set of

guidelines and rules for its directors, offi cers and

employees.

No employee, his/her nominee or members of their

immediate family may deal directly or indirectly, at any

time, in the securities of the company on the basis

of unpublished, price-sensitive information regarding

the company’s business and affairs. No director or

offi cer of the company may deal in the securities of

the company during the closed periods determined by

the board in terms of a formal policy controlled by the

group company secretary. Closed periods are from the

end of the interim and annual reporting periods until

24 hours after the announcement of fi nancial and

operating results for the respective period. From time

to time, additional periods may be declared closed if

circumstances warrant it.

Dealing in the securities of the company at any other

time is permitted, but approval must be obtained

from the chief executive offi cer in advance of any

transaction.

When any director or offi cer wishes to buy, sell or take

a position in securities of the company, they must notify

the group company secretary of their intentions prior

to the transaction and record in writing immediately

after the transaction the particulars thereof and deliver

a detailed written record to the group company

secretary within 24 hours.

A list of persons who are restricted for this purpose has

been approved by the board and is revised from time

to time. A register of directors and offi cers is available

for inspection at the company’s registered offi ce in

Sandton, South Africa.

The listings requirements of the JSE Limited extend

obligations regarding transactions in the securities

of the company to be disclosed to the market within

48 hours. These specifi cally include all group directors

and the group company secretary, as well as any

associate of the group’s directors or group company

secretary, or any independent entity or investment

managers through which the group directors or group

company secretary may derive a present or future

benefi cial or non-benefi cial interest.

Accounting and reporting

The board places strong emphasis on achieving

the highest standards of fi nancial management,

accounting and reporting to shareholders.

Audit committee

Mr TDA Ross (chairman)

Ms ZJ Kganyago, Mr J Shibambo

During the period under review, Mr JE Gomersall and

Mr MJ Shaw retired from the audit committee and

Ms ZJ Kganyago and Mr TDA Ross were appointed in

their places.

The audit committee comprises three independent

directors as required by the Companies Act and the

PIC’s principles, policies and practical application

regarding corporate governance. Its chairman,

Mr TDA Ross, is an independent, non-executive

director. He replaced Mr MJ Shaw, who also acted

temporarily as chairman of the board of directors.

Internal audit services are provided by Ernst & Young,

who have been appointed for this purpose for the

2008 and 2009 fi nancial years.


The head of the internal audit team and the designated

auditor in charge of the external audit were invited to

attend all meetings. They had unrestricted access to the

chairman and other members of the audit committee.

The chief fi nancial offi cer and other relevant executives

were also invited to attend the meetings of the audit

committee. No invited attendee had voting rights.

The audit committee met on the following dates and

all members attended these meetings:

• 5 May 2008 to consider reports from the internal

and external auditors and the interim report for the

half-year ended on 31 March 2008. The committee

was satisfi ed that the interim fi nancial information

and the interim report were accurate and resolved

that the chairman recommend approval by the

board on 6 May 2008; and

• 3 November 2008 to consider reports from the

internal and external auditors and the fi nancial

statements for the year ended on 30 September

2008. The committee was satisfi ed that the fi nancial

statements and preliminary report were accurate and

resolved that the chairman recommend approval by

the board on 10 November 2008. The designated

auditor in charge of the external audit and the

head of the internal audit team were present. The

committee also considered the company’s ability

to continue as a going concern, exceptional items,

outstanding litigation and claims, judgements and

sources of estimation and uncertainty, as well as

business continuity plans and information security.

At the board meeting on 10 November 2008 the

chairman of the audit committee reported on how it

has carried out its functions:

Audit committee report

We are pleased to report to you on the audit

committee’s activities in 2008. In fulfi lling

its oversight responsibilities, the committee

reviewed and discussed the audited fi nancial

statements and related schedules in the annual

report with company management. This included

a discussion of both the quality and acceptability

of the accounting principles, the reasonableness

of signifi cant judgments and the adequacy of

disclosures in the fi nancial statements.

With the independent audit fi rm, which is

responsible for expressing an opinion on the

fair presentation of those audited fi nancial

statements and related schedules in accordance

with International Financial Reporting Standards,

the committee reviewed the group’s judgments

on the quality and acceptability of the company’s

accounting principles. In addition, the committee

discussed with the audit fi rm its independence

from the company and its management, and

considered the impact of non-audit services on

the audit fi rm’s independence. The committee

discussed with both the company’s internal and

external auditors the overall scope and plans

for their respective audits. The committee also

met with both these parties in the presence

of management to discuss the results of their

examinations, evaluations of the company’s

internal control – including internal control over

fi nancial reporting – and the overall quality of the

company’s fi nancial reporting.

The committee’s responsibilities include

monitoring and reviewing the appointment of the

external auditors and overseeing their relationship

with the company. The annual evaluation of

the external auditors was carried out through

interviews with senior members of the company’s

fi nance function and the results of these were

considered at the committee’s meeting on

3 November 2008.

Based on the reviews, discussions and interviews,

the committee recommended to the board of

directors, and it has subsequently been approved,

that the audited fi nancial statements and related

schedules, as well as management’s assessment

of the company’s internal control over fi nancial

reporting, be included and incorporated by

reference in the annual report fi led by the company

for the year ended on 30 September 2008. The

committee and the board also recommended the

selection of the company’s independent audit

fi rm and the specifi c designated partner, subject

to shareholder approval.


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The committee is governed by its terms of

reference, which are aligned with relevant

legislation. The committee held two meetings

during the fi nancial year 2008. As required

by legislation the committee comprises only

independent directors:

Mr TDA Ross Audit committee chair

Ms ZJ Kganyago Audit committee member

Mr J Shibambo Audit committee member

3 November 2008

The board has determined that the audit committee,

which has no executive powers, has satisfi ed its

responsibilities for the period under review in

compliance with its terms of reference.

Risk management and compliance committee

Mr J Shibambo (chairman)

Mr TDA Ross and Mr MJ Shaw

During the period under review, Mr TDA Ross was

appointed to the risk management and compliance

committee, which acts within written terms of

reference approved by the board. The chairman of the

committee, Mr J Shibambo, is an independent, non-

executive director.

The primary function of the committee is to assist the

board in the assessment and management of risk and

legal compliance across the PPC group, to ensure the

requisite risk management culture, practices, policies,

resources, systems and controls are in place, and to

function effectively in providing reasonable assurance

that the company is in compliance with the laws and

regulations to which it is subject.

The committee primarily addresses health, safety,

statutory, legal, environmental, mining, production

and engineering risks. During 2008 it again reviewed

developments in high-level risks and their potential

impact on business.

The company has merged its internal auditing activities

under one umbrella, known as the joint audit process

(JAP), with the overall objective of fostering in the

group:

• Common audit methodologies and the avoidance

of duplication;

• A holistic view of the business and its related risks;

• The involvement of internal and external line

specialists;

• The sharing of operational best practice and

knowledge;

• Encouraging continual improvement;

• Adherence to company policies; and

• Compliance with legislation.

The head of JAP is invited to attend all meetings and

has unrestricted access to the chairman and other

members of the risk management and compliance

committee. At the discretion of the chairman other

executives may also be invited to attend and give

input, but no attendee so invited has voting rights.

During the period under review, the committee met on

5 May and 3 November 2008. All committee members

attended these meetings.

The board has determined that the risk management

and compliance committee, which has no executive

powers, has satisfi ed its responsibilities for the

period under review in accordance with its terms of

reference.

Black economic empowerment (BEE) and

transformation committee

Ms NB Langa-Royds (chairman)

Mr AJ Lamprecht, Mr MJ Shaw, Mr J Shibambo

During the period under review Ms NB Langa-Royds

was appointed as chairperson of the black economic

empowerment and transformation committee to

replace Mr JE Gomersall, who retired.

This committee is composed of independent non-

executive directors only and assists the board in

adopting an holistic approach to transformation and

compliance with all relevant legislation and charters.


In accordance with its delegated authority, the

committee’s objectives are to:

• Ensure management embraces the principles of

transformation across all facets of the group’s

activities;

• Develop and implement an appropriate

transformation strategy;

• Ensure that equity ownership of PPC conforms to

the requirements of the Mining Charter;

• Design, implement and regularly review policies,

plans and processes aimed at facilitating

transformation in the group;

• Implement integrated annual reporting to

stakeholders on aspects of transformation; and

• Provide an objective forum that is dedicated to

policy recommendations to the board and guide

signifi cant matters in terms of transformation

within the group.

During the year under review the focus of the

committee has been on the fi nalisation of the

company’s broad-based black ownership initiative, as

advised to shareholders in a Stock Exchange News

Service (SENS) announcement on 28 August 2008.

PPC’s broad-based black ownership initiative has been

developed in accordance with the Mining Charter,

black-empowerment codes and the Broad-Based

Black Economic Empowerment (BBBEE) Act, 2003.

The Mining Charter requires that at least 15% of the

company’s share capital be held by black people by

the time applications for conversion of mining licences

are submitted, which is May 2009 at the latest, to

enable PPC to convert its existing old-order mining

rights to new-order mining rights. The broad-based

black ownership initiative enables PPC to meet this

requirement.

On 11 November 2008, shareholders approved the

proposed transaction and the scheme of arrangement.

The board believes the initiative is both sustainable

and embraces the principles of BBBEE in terms of

ownership by black people.

The committee held three scheduled meetings

during the period under review to consider funding

structures, strategic partner selection and transaction

documentation. All committee members attended the

scheduled meetings, but Mr MJ Shaw was not able to

attend a special meeting held on 21 July 2008.

The board has determined that the black economic

empowerment and transformation committee has

satisfi ed its responsibilities for the period under review

in compliance with its terms of reference.

Nominations committeeMr BL Sibiya (chairman)

Mr MJ Shaw, Ms NB Langa-Royds, Mr J Shibambo,

Mr AJ Lamprecht

During the period under review Mr BL Sibiya was

appointed as chairman of the nominations committee

to replace Mr MJ Shaw in accordance with the

requirements of the JSE Limited listings requirements.

The committee is composed entirely of independent,

non-executive directors and makes recommendations

to the board on the composition of the board and

the balance between executive and non-executive

directors. Skill, experience and diversity are considered

in this process.

The committee must identify and nominate for approval

by the board candidates for additional directors, or to

fi ll any board vacancies when they arise, in terms of a

policy detailing the procedures for such appointments

that requires this process to be formal and transparent.

It also advises the board on succession planning,

especially in respect of the positions of chairman of

the board and chief executive offi cer.

The committee also recommends for re-election, as it

considers appropriate, directors who retire in terms of

the company’s articles of association.

During the period under review, the committee met

for scheduled meetings on 6 May and 10 November

2008. The committee also met for special meetings

on 26 June, 6 August, 17 September and 2 October

2008 to discuss and recommend to the board the

appointment of Mr TDA Ross and Mr BL Sibiya to the

board, respectively as chairman of the audit committee

and chairman of the board.

The committee also considered the directors who were

standing for re-election at the forthcoming annual

general meeting. In accordance with the committee’s

fi ndings, the board recommended to shareholders

the election of Mr TDA Ross and Mr BL Sibiya and the

re-election of Mr RH Dent, Mr P Esterhuysen and

Mr AJ Lamprecht to the board.


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All committee members attended these meetings,

except Ms NB Langa-Royds, who recused herself from

the meetings on 17 September and 2 October 2008.

Mr BL Sibiya was appointed in November 2008 and

therefore attended the November meeting only.

The board has determined that the nominations

committee, which has no executive powers, has

satisfi ed its responsibilities for the period under review

in compliance with its terms of reference.

Remuneration committee

Ms NB Langa-Royds (chairman)

Mr MJ Shaw, Mr J Shibambo

During the period under review Ms NB Langa-Royds

was appointed as chairperson of the remuneration

committee in anticipation of the retirement of

Mr MJ Shaw at the annual general meeting in January

2009.

This committee is composed entirely of independent, non-

executive directors. It is mandated, within agreed terms of

reference, to deal with the remuneration policy in general

and approve the salaries and benefi ts of the executive

directors and senior management. The committee also

makes recommendations to the board, for onward

recommendation to shareholders at the annual general

meeting, on non-executive directors’ fees and fees for

directors who are members of board committees.

The company’s philosophy is to set remuneration that is

appropriate, taking into account levels of responsibility

and the need to attract, motivate and retain directors,

executives and other individuals of high calibre.

Guaranteed packages are normally reviewed once a

year and take into account external market practices

and conditions as well as the achievement of individual

performance targets. Annual salary increases are not

guaranteed.

The committee appointed PricewaterhouseCoopers

to provide advice and recommendations and assist in

meeting the increasingly onerous corporate governance

requirements in respect of executive remuneration.

Share appreciation rights, as detailed on page 44,

were approved by the board on the recommendation

of the remuneration committee and granted on

17 September 2008 at R31,80 per PPC share

equivalent, which constituted the volume weighted

average price of a PPC share for the fi ve trading

days prior to that day. One-third of the rights may

be exercised after each of the third, fourth and fi fth

anniversaries of the grant date. For executive directors

and executive management, this is subject to the group

exceeding 2% real growth per annum in cumulative

headline earnings per ordinary share over the two

fi nancial years after the fi nancial years starting at the

end of September 2008. If the performance condition

is not met for the two fi nancial years, retesting is

subsequently permitted on a cumulative basis for the

three, four or fi ve fi nancial years, after which the rights

are forfeited if the performance condition has not been

met. The remuneration committee may waive, amend

or replace the performance conditions if events cause

the committee to consider reasonably that a changed

performance condition would be a fairer measure of

performance and would be no more diffi cult to satisfy.

Rights may not be exercised during a closed period

and must be exercised before the tenth anniversary of

the grant date, failing which they will lapse.

The 2008 grant was based on multiples of basic salary

used in companies operating in similar industries. The

terms governing future long-term incentive awards

are likely to be substantially similar to the 2008

award, with annual grant values set each year in line

with market benchmarks for long-term incentives.

The remuneration committee may, however, change

certain aspects such as the vesting period, the lapse

period and performance conditions at its discretion to

ensure new awards are in line with market trends and

remain fair and motivating long-term rewards.

All rights immediately lapse if a participant resigns

or is dismissed for disciplinary reasons. In the case of

retirement, a participant’s rights will be subject to the same

conditions as if he had continued to be an employee. In

the case of retrenchment or termination of employment

due to ill health, disability or any other circumstances

that the committee may consider appropriate, a

participant must exercise vested rights within three

months. The committee also has absolute discretion to

allow a portion of the unvested rights to vest.

In the case of transactions that involve restructuring

of the company, variations in share capital, capital

distributions and similar events, the committee will


take action it deems appropriate to protect the interests

of participants. In the event of a reconstruction or

takeover leading to a change of control, the committee

is obliged to deem as vested a portion of the rights

of executive participants pro rata to the performance

period lapsed if, in their reasonable opinion, they

consider the performance conditions to have been met

substantially.

The company will periodically recommend to the

remuneration committee the names of employees

to whom it intends awarding incentives in the form

of share appreciation rights, the quantum of the

awards to be made, vesting dates and the nature of

the performance conditions. The committee, after

review and due consideration, will recommend such

allocations, where appropriate, to the board for

approval.


Recipients of share appreciation rights 2008

JE Gomersall 0

O Fenn 150 000

S Abdul Kader 90 000

RH Dent 90 000

P Esterhuysen 105 000

Executive directors (subject to performance conditions) 435 000

Executive management (subject to performance conditions) 456 000

Senior management (not subject to performance conditions) 1 321 000

2 212 000

The company continues to review the balance between

fi xed and variable components of remuneration with

the aim of increasing the variable component, which is

then subject to company and individual performance.

The proposed change is motivated by the need to

sustain superior performance and increase shareholder

value in the long term.

The chief executive offi cer, Mr JE Gomersall, attends the

committee meetings ex offi cio. He does not participate

in discussions regarding his own remuneration, which

is set by the committee.

In respect of each director, details are provided in

note 38 to the group annual fi nancial statements of

salary, bonus, retirement and medical aid contributions,

gains from PPC or Barloworld share options exercised

or ceded, and other benefi ts. Details of directors’

shareholdings are also disclosed.

Non-executive directors are remunerated for their

membership of PPC’s board and its committees. These

fees are benchmarked annually against companies of

similar size and complexity and take into account the

increasing level of responsibilities and risks associated

with directorships. Executive directors of PPC are not

entitled to fees.

During the period under review, the committee met

fi ve times. All committee members attended these

meetings.

The board has determined that the remuneration

committee has satisfi ed its responsibilities for the

period under review in compliance with its terms of

reference.

Internal audit

The board and the audit committee appointed Ernst

& Young to fulfi l PPC’s internal audit requirements

until the end of the 2009 fi nancial year. The use of

group-wide audit professionals fosters independence,

standardisation of audit procedures and sharing of

best practices.

Internal audit activities principally determine, at each

of the business units of the company, whether the PPC

network of risk management, control and governance

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processes are adequate and function in a manner to

ensure that:

• Risks are appropriately identifi ed and managed;

• Interaction with various governance groups within

the organisation occurs appropriately;

• Signifi cant fi nancial, managerial and operating

information is accurate, reliable and timely;

• Employees’ actions are in compliance with policies,

procedures and applicable laws and regulations;

• Resources are acquired in an economical manner,

used effi ciently and safeguarded adequately;

• Company objectives and plans are achieved;

• Continual improvement in quality of the internal

control processes as well as the risk management

framework is fostered across the PPC group; and

• Signifi cant legislative and regulatory issues that

have an impact on the group are recognised and

addressed appropriately.

The internal audit function reports to the audit

committee on its fi ndings and has unrestricted access

to the committee and its chairman.

Audit plans are drawn up annually and take into account

changing business needs and risk assessments. Issues

highlighted by the audit committee and management

are considered and follow-up audits are planned in

areas in which weaknesses have been identifi ed. The

audit committee approves the internal audit plan.

During the period under review, no major breakdowns

in internal controls were identifi ed.

Risk management

In terms of a written risk management philosophy

statement issued by the chief executive offi cer

and endorsed by the directorate, the company is

committed to manage its risks and opportunities in the

interests of all stakeholders. Every business unit and

each employee has a responsibility to act proactively

in this manner.

An ongoing systematic, multi-tiered and enterprise-

wide risk assessment process supports the company’s

risk management philosophy. This ensures that risks

are adequately identifi ed, evaluated and managed at

the appropriate level in the business units, and that

their individual and joint impact on the company as a

whole is taken into consideration.

Risk registers are maintained as part of the risk

management process. Where appropriate, internal,

external and JAP auditors adapt their audit procedures

to include coverage of these risks in their reviews and

compliance audits. During the year under review, the

risk management process was subject to review by

internal audit.

Divisional boards and senior managers carry out

detailed annual self-assessments of risk. This process

identifi es the critical business, operational, fi nancial

and compliance exposures facing the company, and

the adequacy and effectiveness of control factors

are reviewed and updated on a six-monthly basis.

Facilitation of the process is undertaken in alternate

years by external risk advisers Marsh Vikela.

Business recovery plans have been compiled for each

operation and are subject to regular testing.

The audit and risk management and compliance

committees regularly review the main risks and

risk management processes and advise the board

accordingly.

Third party managementNo part of the company’s business was managed

during the year by any third party in which any director

had an interest.

CommunicationThe company subscribes to the principles of

objective, honest, prompt, balanced, relevant and

clear communication of both its fi nancial and non-

fi nancial matters. The focus is on substance rather

than form, and communication with stakeholders

with a legitimate interest in the company’s affairs

is sensitive and systematic. The company regularly

meets with institutional investors with due regard for

statutory, regulatory and other directives that prohibit

the dissemination of unpublished, price-sensitive

information by the company and its directors and

offi cers.

In accordance with the Promotion of Access to

Information Act, 2000, the company has prepared and

published the required manual. This is available on the

company website (www.ppc.co.za) and explains how

information must be requested as well as the nature of

available information.


The board has also approved a disclosure policy with

regard to external communications of the fi nancial and

operational performance of the company. The policy

notes the requirements of the JSE Limited and global

best practice for disclosure by public companies.

The group’s disclosure policy is not only in respect of

information disclosed to the investment community

and the fi nancial media, but applies to communication

with anyone who would not normally be privy to

that information, including suppliers, customers and

employees within the group.

Company results communications

Earnings press release – Earnings press releases will

be released via SENS and posted on the corporate

website as soon as possible thereafter, prior to the

commencement of any discussions or meetings about

the results.

Earnings presentation – Any earnings presentation

will be posted on the PPC website at the time

the presentation commences. There may also

be a live broadcast on a South African business

television channel and the event will be recorded

and subsequently posted on PPC’s website. These

broadcasts assist with fair and timely disclosure to all

investors and act as a record of events.

Fines and prosecutions

Besides the individual fi nes referred to in the

environmental report on page 71, the company has

not been fi ned or prosecuted in terms of any anti-

competitive or governance issues.

Code of ethicsAll employees must adhere to the company’s code of

ethics as well as its published equal-opportunity and

anti-discrimination policies. These policies provide


PPC GROUP MAIN RISKS (in alphabetical order)

Key risks Management response

Electricity supply

Exposure to supply curtailments, interruptions and cost

increases

• Optimise electricity consumption through

greater effi ciencies

• Maintain close relationship with Eskom and

voluntary load-shifting

• Investigate co-generation using waste heat

Skills retention

Ongoing management of skills retention and development

challenges

• Through competency-based assessments,

employees regularly reviewed to ensure the

appropriate skill sets are available to enable

performance at optimum levels

• Reward and incentives schemes implemented

to ensure recognition and retention of

high-performing employees. Regular update

of succession plan and ensure appropriate

investment in the development of people

Competitor actions

The risk of competitors taking individual actions, through

pricing or other activities, that will erode the company’s

competitive position and have a signifi cant impact on the value

it creates for shareholders

• Continually reduce costs by focusing on

operational effi ciencies and staff training

• Maintain cost competitiveness and improve

products and service

Economic slowdown and exposure to a single region’s economy

Exposure to a phase of lower South African economic growth

• Reduce costs by optimising use of the

numerous production facilities in the group

• Pursue exports

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steps to be taken if an employee feels the policies’

letter or intent has been breached. No retaliation may

be taken against an employee who fi les a complaint.

The integrity of new employees is assessed in the

company’s selection and promotion procedures.

Due care is exercised in delegating discretionary

authority to individuals in the company. All new

employees are advised, at the time of their induction,

about the company’s values, standards and compliance

procedures.

All employees are consulted on, and trained in,

policies and practices with regard to human rights

in the workplace. Furthermore, contractors to PPC

are entitled to the same privileges and treatment as

permanent employees.

As a company that aims to provide fair and equal

employment opportunities, PPC continually strives to

subscribe to the legislative frameworks and guidelines

that address the needs of indigenous people in the

countries in which it operates, and employment

practices are aligned accordingly.

Freedom of association is another right enshrined and

protected by the PPC ethics policy. The company has

a long-standing tradition of recognising and dealing

with trade unions that represent employees at its

business units.

The company’s procurement policy ensures that

outsourced service providers have policies and

procedures to protect the human rights of their

employees. Contractor services are secured according

to legal compliance practices in individual countries.

The code of ethics is enforced with appropriate

discipline on a consistent basis and action is taken to

prevent the recurrence of an offence.

The PPC ethics policy prohibits child, compulsory

or forced labour and is enforced throughout the

company. The hiring of labour is aligned with the

relevant legislation and standards of the countries in

which PPC operates.

The ethics policy outlines the principles for relationships

with political parties and no contributions are made to

fund political parties, election campaigns or electoral

candidates. The company has no affi liations with any

political parties.

The ethics policy also governs bribery and corruption

and PPC applies a zero-tolerance stance on this

issue. An employee found guilty of such practices is

dismissed. A register of gifts received by employees

and permissible guidelines is maintained.

The company provides an independent, confi dential

and safe system by which employees or other parties

can report unethical or dishonest behaviour. Such

reports can be submitted to the PPC Ethics Line, the

details of which are set out below.

South Africa

PPC Ethics Line

Deloitte & Touche

Tip-offs Anonymous

Telephone 0800 00 67 05

Free fax 0800 00 77 88

Address PPC Ethics Line

Free post c/o Tip-offs Anonymous

Free Post KZN 138

Umhlanga Rocks, 4320, South Africa

E-mail [email protected]

International +27 31 571 5493

or

Zimbabwe

Deloitte & Touche

Tip-offs Anonymous

Telephone 0800 4100

Fax +263 91 8240 921

Address The Call Centre

Freepost PO Box HG 883

Highlands, Harare

Zimbabwe

E-mail [email protected]

Tip-offs Anonymous is an independent body within

Deloitte & Touche that provides an opportunity to

anyone who wishes to report unethical activities

or dishonest behaviour affecting the PPC group. If

desired, total anonymity is assured.

Each incident reported through the PPC Ethics Line

is fully investigated at the highest level and the risk

and compliance and audit committees are appraised

of the outcome and actions required to address

shortcomings, if any.

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Environmental section


Introduction

Approach to reporting

The aim of this report is to provide feedback with regard

to PPC’s sustainability performance. The environmental

component of the annual report was guided by the PPC

environmental framework document of 2007, which

involved a benchmark assessment and stakeholder-

engagement process as shown in fi gure 1. Feedback

from external stakeholders through surveys, interviews

and media reviews, as well as the environmental issues

that most affect business strategy, are included in

this report. It addresses the areas that matter most to

external stakeholders, as well as the issues identifi ed

as material during an external workshop held in

September 2008. Compliance to progress on the

material issues are managed as part of PPC’s global

reporting index system and the World Business Council

for Sustainable Development template.

Materiality

The determination of material issues were undertaken

according to G3 methodology, a globally recognised

system to provide stakeholders with a universally

applicable framework in which to understand

disclosed information. The methodology focuses on

materiality, stakeholder inclusiveness, sustainability

context and completeness. The sustainability context

parameters included factors relating to impacts, risks

or opportunities in terms of social, economic and

environmental issues. The material issues are captured

in fi gure 2 and are used to inform business strategy

and the high-level risk assessment process.

Environmental report

Audit performance

Track sustainable development performance against material

sustainable development issues, internally report to board and update framework

Publish report and distribute to stakeholders via different media

sources

Internal and external

review of draft report

Non-material issues reported at local

stakeholder meetings

External workshop to identify material

issues included in the draft report

Figure 1: PPC’s approach to sustainability reporting

PPC environmentframework document

Benchmark assessmentStakeholder engagement

Stakeholder mapping

Key groups of stakeholders identifi ed per site

Stakeholder engagement

and issues identifi cation

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Process fl ow and products

The cement-manufacturing process is depicted in

fi gure 3 below. Sustainability issues are identifi ed as

part of PPC’s risk assessment process, which informs

the company’s environmental management systems.

Table 1 overleaf describes the management of material

sustainability issues.

Figure 2: Material issues identifi ed for 2007/2008

Figure 3: Process fl ow of the cement-manufacturing process

Compliance incidence

Natural resources (limestone)

Mining closure and rehabilitation

Climate change

Education and capacity building

Energy effi ciency

Suppliers

Air emissions

Water and waste

2007/2008material

issues

Mining limestone Crushing plant Limestone blending Coal stockpile

Raw mill

Pre-heater, kiln line and cooler Clinker storage Cement milling and dispatch

Coal mill


The strong demand for cement continued in 2008, with

most of PPC’s operations performing at rated output

capacities. PPC investigated and initiated a number of

expansion and upgrade projects to meet the growing

demand for cement and improve the environmental

performance of equipment.

This report covers all PPC’s manufacturing facilities,

aggregate quarries and cement depots in South Africa,

Botswana and Zimbabwe. Progress with the expansion

and upgrade projects are also highlighted. Logistics

associated with the transportation of raw materials

and the fi nal product, as well as the Kgale Readymix

plant in Botswana that was sold in June 2008, is

excluded from the scope.

Environmental management

Group sustainability policy

Sustainability encompasses the balanced integration of social, ethical, economic, environmental, health and safety

factors into all the planning, implementation and decision-making of the business. PPC exercises due diligence in

all areas of operation to promote the sustainable development of its business, employees, the environment and the

communities within which it operates.

Environmental report continued

Table 1: Management of sustainability issues

Activity Sustainability issues managed Cross cutting sustainability issues

for activities

Mining of limestone Preventing dust, noise, vibration and

water impacts

Effi cient use of mineral resources

Rehabilitation and achievement of

mine closure objectives

Land disturbance minimisation

Engaging with communities

Implementing duty-of-care

responsibilities in terms of the National

Environmental Management Act, 2002

Safety as well as elimination of

accidents

Crushing and blending Minimising fugitive dust emissions

Coal stockpile Minimising dust and water impacts

Mills Minimising air emissions and noise

impacts

Managing energy effi ciency

Kilns Minimising air emissions

Managing energy effi ciency

Climate change

Cement storage and despatch Minimising fugitive dust emissions

Scope

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PPC is committed to deliver stakeholder value in all its endeavours:

• Board accountability

PPC directors are accountable for PPC’s sustainability performance.

• Aligning values and principles with sustainable development

PPC aligns all decisions pertaining to the company’s fi nancial sustainability and the fundamental rights of all its

stakeholders (employees, customers, shareholders, suppliers and the communities in which it operates) within an

established framework of values and ethical principles.

• Assessing risks and opportunities

In identifying and effectively responding to sustainability risks and opportunities, the company continues to

enhance long-term shareholder value and simultaneously fulfi ls its broader economic, social and environmental

responsibilities to society.

• Management systems

PPC performs regular audits of its management systems and programmes to ensure the company’s sustainability

policy is implemented and remains effective. The International Organisation for Standardisation (ISO) and

Aggregate and Sand Producer Association of South Africa (Aspasa) systems are externally audited. Performance

and quality requirements are internationally recognised by the ISO certifi cation. PPC is committed to the use of

systems and programmes that meet or exceed applicable legal and regulatory standards.

• Performance monitoring and reporting

PPC’s sustainability performance is reported publicly to stakeholders. The company is committed to monitor its use

of natural resources and develop indicators to assess its progress against recognised standards.

• Engaging stakeholders

PPC establishes and maintains constructive, proactive and informed relationships with all stakeholders.

• Minimising environmental impact

PPC is committed to identify, assess and reduce the environmental impact of activities performed by employees,

contractors and suppliers.

• Training and research

PPC promotes innovative research, training and technology cooperation in the search for environmentally sensitive

solutions to minimise the organisation’s environmental impact.

The company embraces principles of social justice and fairness to achieve optimal well-being and prosperity for all

its stakeholders.

Chief operating offi cer

Orrie Fenn

30 September 2008

Environmental vision

To minimise the impact of PPC’s environmental footprint by providing energy- and resource-effi cient products

manufactured by a company that is driven by sustainable development.


Environmental policy

Pretoria Portland Cement Company Limited (PPC)

is committed to understanding and managing any

potential environmental impacts of our activities

relating to the sustainable manufacture of cement

and lime as well as the mining of aggregates and

other minerals.

We do this by ensuring that environmental

management is an integral part of our operations.

We continue to strive to meet the expectations

and requirements of all our stakeholders through

monitoring and managing environmental

performance using an integrated and effective

environmental management system.

We believe that all PPC employees and everyone

associated with the organisation have an important

role to play in achieving our environmental objectives

and targets.

To this end PPC is committed to:

• Establishing clear accountability for environ-

mental performance;

• Continual environmental improvement by

providing a customised framework for setting

and reviewing environmental objectives and

targets based on stakeholder engagement and

the identifi cation of signifi cant environmental

impacts;

• Comply with environmental legislation and

other requirements to which PPC subscribes

that enables PPC to identify and implement

resource optimisation strategies and technology

improvements to achieve a level of environmental

performance that meets or surpasses the

requirements for regulatory compliance;

• Implement effective waste and energy

management principles and cleaner technology

alternatives throughout the organisation;

• Effective and transparent communication for

our stakeholders by establishing environmental-

management stakeholder forums and internal

communiqués; and

• Building capacity among our stakeholders

to identify, report and act proactively on

opportunities to minimise environmental

impacts.

This policy will be reviewed annually to demonstrate

our commitment to ongoing environmental

management and will be communicated to all

stakeholders throughout our value chain.

Martin Shaw

Chairman

3 November 2008

Environmental achievements in 2008

Increased commitment to corporate action

The board of directors mandated the various

operations to identify and investigate the risks and

opportunities of environmental legal non-compliance

and develop master projects and programmes with

detailed resource requirements.

Decrease in carbon footprint

There has been a 13% reduction in PPC’s carbon

footprint per ton of cement, lime and dolomite

produced against the 2000 baseline, but there was an

increase from the 2007 values because of the increased

utilisation of older facilities.

Decrease in electricity consumption

A 10% reduction in electricity consumption (kWh) per

ton of cement, lime and dolomite produced against

the 2000 baseline was achieved.

Engaged proactively in forthcoming legislation

PPC has constructively commented on and assisted

in the development of proposed national legislation

on waste reduction, air quality and changes to the

environmental impact assessment regulations.

With the support of the Association for Cementitious

Material Producers (ACMP), the company has played a

signifi cant role in the standard-setting procedure for air

quality emission limits for cement and lime processes.

The working group to facilitate comments on the

proposed air quality standards, SABS TC146 SCA WG2

Air Quality Standard: Source Emissions, is chaired by


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In 2007 the PPC Jupiter factory instituted an

environmental stakeholder forum as a platform

to improve stakeholder communication. The

forum selected a management committee, which

included staff from PPC and members from the

community, nearby industries and the government.

The management committee is responsible for

responding to the needs of its members and updating

the forum’s terms of reference. This initiative

was successfully extended to the Hercules, Port

Elizabeth, Lime Acres and Slurry operations. The

De Hoek, Riebeeck, Dwaalboom and aggregate mines

will formalise their environmental stakeholder forums

in 2009. The issues raised by stakeholders are captured

in table 2.

All suggestions for environmental improvement are

considered and each site works actively with the

stakeholders to achieve concrete improvement goals

and targets.

PPC has developed detailed stakeholder maps for each

site that defi nes who the stakeholders are and how

PPC establishes and maintains communication fl ows

with them. The maps will be updated quarterly or prior

to announcing changes at any of the operations.

PPC stakeholders include:

• Employees;

• Unions;

• Suppliers;

• Customers;

• Non-governmental and community-based

organisations;

• Academic institutions;

• Regulatory authorities;

• Shareholders and investors;

• National, provincial and local governments;

• Professional organisations; and

• Peer companies.

PPC and supported by the members of the ACMP. All

PPC’s cement and lime operations have proactively

submitted air quality amendment applications to the

Department of Environmental Affairs and Tourism to

align with the proposed requirements.

PPC also plays a leading role in the development of a

national policy on high-temperature thermal treatment

of waste and the co-processing of alternative fuels in

cement kilns. This policy will set out the government’s

position on the incineration and co-processing of

waste in South Africa.

Improvement in the development and

implementation of PPC-specifi c environmental

best practices

PPC has developed environmental best practices that

are relevant to its operations’ circumstances and

locations, for example, the following best-practice

operational controls to manage dust emissions from

the kiln stacks were agreed with all operations:

• Address all incidences of exceeding dust limits

within 20 minutes;

• Any incidences not addressed within 30 minutes

will result in the production throughput of the kiln

being reduced until dust emission levels stabilise to

within permitted levels; and

• Should the problem not be resolved within six

hours (not exceeding 96% abatement equipment

availability, i.e. 28 hours per month), the kiln system

will be systematically shut down and the problem

addressed prior to restarting.

The development of best practices will continue and

accelerate because of the increased awareness on

environmental performance.

Air emission control upgrade

In excess of R100 million was approved by the PPC

board to improve emissions management at the

PPC De Hoek and PPC Slurry operations in the Western

Cape and North West provinces respectively.


Table 2: Issues raised by stakeholders

Stakeholders Major issues and concerns raised PPC’s response (pages)

Environmental stakeholder forums Dust and lack of suffi cient public

participation55, 65, 69

Media PPC’s carbon footprint and the use of old

technology60, 62

Stakeholder questionnaire Public participation and air quality

management61

Department of Environmental Affairs

and Tourism

Stack dust emissions, carbon dioxide (CO2)

and oxides of nitrogen (NOx) 63, 64

Department of Minerals and Energy Ongoing rehabilitation and the approach to

sustainability reporting67

Eskom Management of electricity consumption 63, 64

Communities in new projects Increased volume of traffi c at Riebeeck

Technologies used69

Suppliers Environmental management systems and

compliance management71

Appointment of environment and sustainability

managers

PPC has appointed environmental experts at group level

as well as at all cement, lime and aggregate operations.

These experts are empowered with the necessary

authority and budget to champion their portfolio of

environmental and sustainability management.

The aim of appointing site-specifi c environmental

experts was to embed the responsibility of

environmental management in the governance

structures of each site.

Generating operational effi ciencies

Through the reporting and auditing processes, a

number of operational effi ciencies and cost savings

have been realised. These include energy savings

through energy audits, switching to energy-effi cient

lighting, and water conservation through fi xing

water leaks and replacing old pipes. The audits also

highlighted areas in which the cost of waste treatment

and disposal could be decreased.


Mass balance emission estimation project

The mass balance emission estimation project has

been successfully initiated at Hercules, Jupiter, Lime

Acres, De Hoek, Slurry, Riebeeck and Dwaalboom. The

remaining operations will start this project in 2009.

Environmental challenges during 2008

• The complete roll-out of the mass balance project

because of limited knowledge of and experience

in process-engineering measurements, as well as

vacancies in key positions due to a scarcity of skills

in the engineering and environmental fi eld;

• The implementation of the secondary materials

co-processing project, which involves the

replacement of coal and virgin input material with

alternative waste materials, because of delays in

authorisation from the mandated environmental

authorities;

• Increased complexity in complying with

environmental laws and standards. However,

PPC continues to maintain good relationships

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with national, provincial and local authorities

to keep abreast of the changing environmental

requirements, and the company has appointed an

independent environmental legal fi rm to prepare

and update site-specifi c legal registers. These

registers include best-practice implementation plans

to ensure that changing legislation is consistently

and comprehensively managed throughout the

group;

• The dependence on limited coal resources and

the challenges associated with using alternative

materials for energy; and

• Energy-saving, specifi cally electricity consumption,

to meet industry targets.

The continued reduction of PPC’s carbon footprint is

an ongoing challenge.

Management of environmental commitments

PPC’s business has the potential to have an impact on

the environment and the lives of communities that exist

around its operations. Although PPC’s environmental

framework supports the company’s growth objectives

by focusing on process effi ciencies and resource

optimisation, it also considers the importance of

the wellbeing and safety of PPC’s employees, the

communities on which it has an impact and the

environment at large (see table 3).

Table 3: PPC’s commitments, performance and targets

Commitments from

2007

Performance during 2008 Future targets (2009 and beyond)

Optimise the

consumption of indirect

and direct energy

Energy consumption increased from 2007 to 2008 by

2,8%

Decrease energy consumption in line with

PPC’s energy effi ciency accord targets

Optimise the use

of non-renewable

resources

Completed the baseline assessment on inputs of

cement and lime kilns

1% of thermal energy for cement production was

supplied from renewable materials

Decreased use of quantities of non-renewable minerals

(shale and limestone) in 2008 from 2007 levels

Track non-renewable inputs of the kilns

even more closely

Increase the use of renewable materials as

a thermal energy source by 5% by 2015,

subject to environmental approvals

The issue of reporting on consumption of

raw materials is not material to PPC and

will not be reported in future. Information

will be managed as part of PPC’s internal

global reporting index protocol

Reduce greenhouse gas

emissions per ton of

product produced

Carbon dioxide emitted per ton of clinker, lime and

dolomite in 2008 was 1 062 kg/ton

Actual emissions for carbon dioxide per ton of cement,

lime and dolomite in 2008 was 901 kg/ton

Target for carbon dioxide per ton of

clinker, lime and dolomite in 2009 is

1 000 kg/ton

Target for carbon

dioxide emitted per ton

of cement, lime and

dolomite in 2008 was

900 kg/ton cement

The total of carbon dioxide emissions from all PPC

operations was 5 719 315 tons

Target for carbon dioxide per ton of

cement, lime and dolomite in 2009 is

850 kg/ton

Manage the impact on

land and biodiversity

All PPC operations have alien-plant replacement

programmes and biodiversity action plans. The plans

include measures to monitor, manage and enhance

local biodiversity

All sites will undergo ecological (fl ora and

fauna) and heritage impact assessments to

further inform management efforts



Control, manage and

minimise the footprint

of overburden waste

(materials, for example

rock and soil, that lie

above the limestone

being mined)

The in-pit crushing and screening plant at Mooiplaas

has been adapted to enable the recovery of clay-rich

fi nes from the overburden dump. It has reduced

signifi cantly the volume of waste rock delivered to the

overburden dumps. The long-term plan is to recycle

the waste rock in the overburden dumps, thereby

reducing the height and footprint of these dumps

Detailed plans are in place to manage the visual

impact of the overburden dumps at De Hoek and

Riebeeck. Optimal dump design will be used to

accommodate the overburden volumes and enable the

cultivation of crops on the rehabilitated dump surface

Target is to have 100% completion

of all reasonably possible concurrent

rehabilitation

Target is to ensure ongoing adherence

to the 100% concurrent rehabilitation

goal, with particular focus on meeting

the specifi ed environmental management

plans

Optimise water

consumption

All operations reviewed their water use and made

submissions to the relevant water authorities

All plants will have updated water balances

and water meters at strategic locations

Water-saving targets will be published in

the 2009 annual report

Raise internal

awareness of signifi cant

direct and indirect

impacts

PPC site-specifi c legal training modules and a fi eld

guide have been developed by an independent, highly

experienced team comprising an environmental lawyer

and environmental engineer. All PPC’s environmental

experts have completed their training successfully

Training modules will be summarised and

delivered to all PPC staff and discussed in

all the environmental stakeholder forums

Comply with legal and

regulatory requirements

All operations have submitted their applications and

correspondence about environmental legal non-

compliance issues identifi ed to the relevant authorities

Maintain environmental legal compliance

by facilitating the required behavioural

changes at PPC operations and

increasing the level of awareness about

environmental matters

Zero non-compliance to conditions of all

environmental authorisations by 2009

Improve transparency,

understanding and

engagement between

the company and

industry and other

stakeholders

56% of operations have formalised environmental

stakeholder forums and management committees

PPC is committed to the environmental principles

of the Global Compact, a United Nation’s initiative

to encourage businesses to adopt sustainable and

socially responsible policies and report on their

implementation:

PPC responds to environmental challenges through the

development of monitoring and management tools

PPC encourages the use of best available technology

in all new projects as well as retrofi tting projects

All operations must have formalised these

forums and committees

Continue to use the Global Compact

principles as important criteria for project

selection and milestone evaluation

Environmental management systems

Every PPC plant has environmental management

systems to facilitate improved overall environmental

performance and effi ciency. In South Africa, all PPC’s

lime and cement operations, with the exception of

Jupiter, have achieved full ISO 14001 certifi cation since

2004. The Jupiter operation was audited in September

2008 by the external body and awaits its certifi cation.

The sales and marketing offi ces and depots have

maintained their single ISO 14001 umbrella listing for

all their operations, and PPC’s aggregate quarries were

managed using the recognised Aggregate and Sand

Producer Association South Africa system. Without

exception, the company’s operations have maintained

their high environmental standards, as evident in the

external audit scores for 2008.

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The ISO 14001 system requirements

The ISO 14000 environmental management standards exist to help organisations to minimise how their operations

negatively affect the environment (cause adverse changes to air, water or land) and comply with applicable laws

and regulations. An annual review by an independent accrediting body verifi es the system’s implementation. The

ISO14001 certifi cation requires PPC to periodically take stock of its environmental performance, commit to effective

and reliable processes, address environmental impacts and develop sustainable action plans to deliver on its

commitments. This establishes a solid, verifi ed base for the reliable and consistent management of environmental

obligations. PPC’s environmental management system (EMS) enables the company to monitor and manage

environmental performance throughout its business. The EMS is designed to monitor environmental aspects

that are both directly within a factory’s control and external to its control but within its sphere of infl uence. PPC

strives to continually enhance its system to improve overall environmental performance in line with the company’s

sustainability policy. Regular EMS audits enable PPC to determine conformance with ISO 14001 specifi cations. All

fi ndings identifi ed during the annual audit are addressed by the development and implementation of action plans.

Corrective actions needed are implemented to ensure ongoing compliance with all regulatory requirements and

facilitate continual environmental performance.

Environmental accountability

The environmental accountability and reporting

structure is shown in fi gure 4 overleaf. The board

of directors is ultimately accountable for sustainable

environmental management at PPC. The board is kept

abreast of operations’ environmental compliance and

high-level environmental risks through regular reports

and presentations. The divisional executive committee

has been integrally involved in the development of

PPC master projects and programmes to facilitate

environmental compliance and continual improvement

at all PPC sites.

In recognition of a globally increasing focus on the

environment, requests from nearby communities

for environmental forums and environment-related

demands and requirements from different spheres of

government, PPC has increased its resources in the

group environment and sustainability department.

This department is responsible for identifying areas of

environmental risks and developing high-level controls

to effectively manage challenges. The department

also develops implementation plans and reporting

deadlines to support the effective execution of PPC’s

master projects and programmes. Best practices and

minimum environmental standards are developed to

further entrench responsible environmental practices

and increase the success of their implementation

at the coalface. To ensure that all PPC operations’

performance is aligned with group objectives, regular

joint audit protocol and corporate governance audits

of all the company’s operations are done. Critical

risks and liabilities identifi ed during these audits are

communicated at a senior level and reported to the

board of directors.

Environment and sustainability departments have been

created at each of the cement and lime operations

in South Africa. Environment managers, who report

directly to the general manager of the factory, must

implement the master projects and programmes in their

locations and areas of responsibility. An environment

manager was appointed in the projects division to

manage, lead and drive environmental sustainability in

all the commitments and action plans relating to the

major expansion and technology-replacement projects

at all PPC operations. The aggregate division has created

a dedicated position for an environmental expert on

its team to champion and support environmental

management at the three aggregate mines: Mooiplaas

and Laezonia in Gauteng, South Africa, and Kgale in

Gaborone, Botswana. These environmental experts

report to the group environment and sustainability

manager on all technical matters.


PPC employees acknowledge that each of us is

responsible for operating in an environmentally

sustainable and responsible manner to protect the

environment which, inevitably, is affected by our

actions. The on-site environmental experts support

PPC employees to understand their environmental

responsibilities through extensive awareness and

training programmes.

Environmental performance

Climate change

The PPC carbon footprint

PPC’s carbon footprint relates to the total amount of

carbon dioxide that can be attributed to the actions of

all its operations. PPC uses the CO2 protocol from the

World Business Council for Sustainable Development’s

cement sustainability initiative to calculate the

company’s carbon footprint. This protocol is used by

80% of the world’s cement companies.

The protocol supplies the international standard for

measuring the direct and indirect CO2 emissions from

the manufacture of cement. PPC’s direct emissions are

from the high-temperature burning of limestone in

the cement kilns and the use of fuels such as coal and

diesel. The indirect CO2 emissions stem from electricity

consumption.

The carbon footprint of cement production is

dominated by the direct emissions created during the

manufacturing process. PPC’s footprint for the year

under review is summarised in table 4.

Table 4: PPC’s carbon footprint for 2008

Direct CO2 emissions

Percentage contribution

Emissions from calcination 51

Emissions from the use of fuels 40

Indirect CO2 emissions 9

PPC supplies information on the emission of carbon

dioxide that arises from the combustion of coal in the

manufacture of cement clinker, burnt lime and burnt

dolomite. This differentiates PPC from other cement

producers because the manufacturing of lime is more

CO2 intensive than that of cement.


Figure 4: PPC’s environmental accountability and reporting structure

Board of directors

Divisional executive

Environment and sustainability (graduate – 1)

General managers: cement and lime

Environment and sustainability manager/specialist

(Operations – 9)

Group manager: environment and sustainability

Environment and sustainability manager (Corporate – 2)

Projects risk manager/aggregates risk manager

Environment and sustainability manager(Projects division – 1)

(Aggregates division – 1)

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The emission of carbon dioxide varies with production

which, in turn, is dependent on economic growth.

Therefore, the reporting of absolute tons of carbon

dioxide does not necessarily enable the company to

measure effi ciencies. The absolute tons of carbon

dioxide are thus divided by the tons of product (cement,

burnt lime and burnt dolomite) to establish a relative

effi ciency, which can be compared from year to year

(fi gure 5).

In 2008, the target for carbon dioxide per ton of

clinker, lime and dolomite was 1 050 kg/ton, and per

ton of cement, lime and dolomite it was 900 kg/ton.

It is evident in the graph that PPC did not meet its

targets. The carbon dioxide emitted per ton of clinker,

lime and dolomite was 1 062 kg/ton, and the actual

emissions of carbon dioxide per ton of cement, lime

and dolomite were 901 kg/ton.

The major contributor to the increased CO2 levels

for 2008 was the increased use of PPC’s older and

less energy-effi cient kilns. In addition, there was

only a marginal increase in extender levels (less than

1%). Extenders are supplementary materials that are

used to offset the amount of clinker needed in the

manufacturing of cement. However, in 2009 the CO2

levels are expected to improve with the operation of

Dwaalboom’s kiln 2.

The target for carbon dioxide per ton of clinker, lime

and dolomite in 2009 is 1 000 kg/ton, and per ton

of cement, lime and dolomite it is 850 kg/ton. These

targets are in line with the climate change strategy of

the company.

The trend displayed in the CO2 performance graph

(fi gure 5) is the result of reduced clinker content in the

cements produced in the period 1996 to 2008. The fact

that it levelled in 2005 and 2006 was due to market

demand for products that contained more clinker. This

was coupled with the recommissioning of old-technology

kilns, which necessitated higher coal consumption.

The challenges faced by Zimbabwe in terms of the

interrupted production and supply of electricity and

other resources have resulted in incomplete information

for the year under review, and Zimbabwe’s contribution

to PPC’s carbon footprint had to be excluded. The CO2

emissions from the company’s Botswana operations have

been included in the calculation, but their contribution

to the total CO2 emissions is insignifi cant and therefore

comparison of the 2007 and 2008 company levels is

justifi able.

The new-technology kiln at Dwaalboom has been

successfully commissioned as per the 2008 deadline

and will reduce carbon dioxide from coal consumption

by approximately 4% per ton of clinker. Similarly, the

planned expansion of clinker capacity in the Western

Cape should reduce carbon dioxide from coal combustion

by a further 4% in three to fi ve years.

1 300

1 200

1 100

1 000

900

800

kg

CO

2 /to

n

Figure 5: PPC’s CO2 emissions

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Per ton clinker, lime and dolomite Per ton cement, lime and dolomite

Year



PPC is committed to reducing clinker content in its

cements and the reduction will become evident in

future reports. But PPC is also committed to supply

products that satisfy consumer needs and, typically,

this involves increased clinker contents. As such, the

company is cognisant of the fi ne balance between

market-demand delivery and environmentally

responsible operations.

Climate change strategy

South Africa’s national long-term mitigation scenarios

(LTMS), created in October 2007 by the Department

of Environmental Affairs and Tourism, highlighted the

uniqueness of the country’s climate change situation,

because the specifi c CO2 emissions per capita and

per GDP are high compared to the rest of the world,

and higher than those of India and China, which

are coal-based economies too. PPC’s environment

framework document of 2007, which came about

through an independent stakeholder engagement and

benchmarking process, also identifi ed climate change

and energy effi ciency as important focus areas for

monitoring and reporting.

PPC has recognised climate change as a strategic

priority and developed a climate change strategy that

is aimed to address high-level interventions to support

PPC’s CO2 reduction targets and reduce the carbon

footprint of its operations.

The strategy sets a target of reducing CO2 emissions

from the manufacture of cement by 15% per ton by

the year 2020, using 2008 as a baseline.

Targets

The climate change strategy contains a plan of action to reduce PPC’s carbon footprint by setting achievable but

ambitious targets for carbon emissions.

PPC will implement actions to reduce the greenhouse gas (GHG) intensity of the products it produces to 15% per

ton below 2008 levels by the year 2020.

The company also signed the energy effi ciency accord of the National Business Initiative, with a commitment to

reduce the energy intensity of the company by 15% from 2000 levels by the year 2015.

Reducing PPC’s GHG intensity

PPC will reduce its GHG intensity by:

• Applying thermal and electrical energy effi ciency measures;

• Optimising product composition;

• Using alternative fuels and raw materials; and

• Replacing old kilns with modern, energy-effi cient cement plants.

PPC will increase its investment in projects and initiatives that lower CO2 emissions through the following

initiatives:

Clean development mechanism: PPC will evaluate opportunities to use the clean development mechanism to

improve the fi nancial return of projects that lower its CO2 emissions;

Inclusion of the carbon footprint in the company’s capex evaluation: PPC will evaluate the impact of capital

projects on its carbon footprint during the investment decision-making process. A portion of the capital budget

will be dedicated to projects that reduce its carbon footprint;

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Research funding: PPC is funding research into the development of technologies that will reduce the carbon

emissions from the company’s kilns and increase the use of renewable materials in its processes; and

Monitoring and reporting: PPC will establish an energy working group to monitor the GHG emissions of the

company and track its progress in achieving the targets set in the climate change strategy.

PPC will monitor the direct and indirect GHG emissions from all its operations according to the latest measurement

protocols of the World Business Council for Sustainable Development.

Because of the specifi c nature of PPC’s various operations, only direct and indirect emissions that stem from them

will be monitored. Emissions derived from administrative functions in the company will be estimated once and

then become the reported emissions fi gure.

PPC will include its GHG emissions and, if necessary, plans for their signifi cant improvement, in the annual report.

Moreover, the company will continue to participate in the Carbon Disclosure Project, which is an independent not-

for-profi t organisation that acts as an intermediary between shareholders and corporations on all issues related to

climate change. It was extended to South Africa in 2007.

Scheme (ECS) introduced by Eskom, which will be

implemented in 2009. The ECS rules are still being

fi nalised. PPC is currently evaluating and negotiating

the baseline consumption fi gures that will be used as

reference to achieve the monthly savings prescribed by

the scheme.

Energy-effi ciency technologies, in areas such as

lighting, variable speed drives, solar geysers

and mechanical transport systems, are already

implemented throughout PPC’s various plants.

Preliminary calculations show an average possible

saving of 3% to 5%, and further efforts to achieve

the required saving of 10% by Eskom continue.

A pilot solar water-heating feasibility study will be

undertaken at one of our major production sites and,

if economically viable, it will be explored at other

appropriate PPC facilities.

The energy effi ciency accord

PPC is a signatory to the energy effi ciency accord,

created in May 2005, and actively participates in

its activities. The company is committed to the

voluntary initiatives to improve energy effi ciency that

membership requires. PPC appointed a technical

committee to champion its responsibilities as signatory

to the accord.

The clean development mechanism

PPC has been actively investigating projects with

clean development mechanism (CDM) potential. This

mechanism allows a country with an emission-reduction

or emission-limitation commitment under the Kyoto

Protocol to implement an emission-reduction project in

developing countries. Such projects can earn saleable

certifi ed emission-reduction credits, each equivalent to

one ton of CO2 which can be counted towards meeting

Kyoto targets.

The largest potential for CDM credits in cement

production lies in the use of secondary materials in the

manufacturing process. At present the development of

CDM projects is restricted because a national policy on

the high-temperature treatment of waste and the use of

alternative fuels in cement kilns is still in development.

This policy will regulate the use of secondary materials

and will facilitate the implementation of CDM projects

at PPC.

Energy effi ciency and supply

Energy effi ciency

Since the Eskom electricity-supply crisis of early 2008

and the subsequent reduction in the parastatal’s reserve

margins, all efforts have been focused to reduce power

consumption in terms of the Energy Conservation



During the period under review, the technical

committee’s main activities centred on the electricity

crisis and industry’s response to it. Figure 6 depicts

the energy consumption per ton of product produced

since 2000 using coal, diesel, electricity and secondary

the company’s operations. In response to these

assessments, the Department of Environmental Affairs

and Tourism embarked on the development of a

national policy on the high-temperature treatment of

waste and its co-processing in cement kilns.

This policy is expected to provide the national

government’s position on the co-processing of waste

in cement kilns and guidelines on its regulation.

These regulatory developments are expected

to accelerate the use of secondary materials at

PPC operations, which would reduce further

the dependence on natural resources in cement

manufacturing.

PPC is committed to investigate the use of alternative

materials to be utilised as input material. The company

uses boiler ash, synthetic gypsum, magnetite and mine

sand as input materials to minimise the impact on our

natural resources.

materials. There was a marked increase in energy

consumption in 2008 from the last upsurge in 2005

because of additional coal consumed by older, less

energy-effi cient kilns.

Diesel consumption

Diesel is consumed primarily in the winning of

limestone from the quarries. Haul ramp access into the

deeper mines is designed at the optimal safe-operating

gradient and haul routes are constantly re-evaluated

to reduce travel distance to the crusher or the surface

overburden-dumping areas. Backfi lling of waste

material in mined-out areas is implemented in line

with the long-term mine plans, which reduces double-

handling of materials during their rehabilitation.

Moreover, because the strategic placement of the

crusher in mines has been recognised, it is now

considered in the initial planning phase and PPC

plans the phased relocation of the primary crusher at

certain other operations. Primarily, this will reduce the

hauling distance – reducing diesel consumption – by

extending the overland conveyor system.

Alternative energy (secondary materials)

PPC has been studying the increased use of secondary

materials by doing fi ve environmental impact

assessments on the use of secondary materials at

105%

100%

95%

90%

85%

Rel

ativ

e %

Figure 6: PPC energy consumption

PPC energy consumption vs 2000 base year

2000 2001 2002 2003 2004 2005 2006 2007 2008Year

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Air emissions control and mitigation

Air emissions refer to the gases and particles that are

released into the atmosphere as part of the cement,

lime and aggregate manufacturing process. These

emissions are released from stacks (the point source)

or from stockpiles and transfer points (the fugitive

source). Historically, PPC only managed dust emissions

from kilns because of the limited technology available

for online gas monitoring, but PPC recently invested

in both online and portable gas analysers to monitor

these emissions.

The air emissions that concerned stakeholders were dust

or particulate matter, sulphur dioxide (SO2) and oxides

of nitrogen (NOx), which were released from the kiln

stacks. The SO2 emissions were caused by the burning

of sulphur-containing coal and the NOx emissions were

caused by the high-temperature combustion in kilns.

PPC’s cement and lime plants are authorised in terms

of the Atmospheric Pollution Prevention Act (APPA)

registration certifi cates, which allow the emission of

dust within a stipulated limit expressed in mg/Nm3.

Generally, there is no limit stipulated for SO2 and NOx in

the APPA registration certifi cates.

PPC continues to pursue different options to effi ciently

and reliably manage air emissions during the cement and

lime manufacturing processes. The company is refi ning

its stack-emission monitoring and reporting systems to

improve the overall air quality management of stack

emissions at all its factories. Further improvements are

achieved by increasing the knowledge and awareness

of stack performance beyond dust monitoring. PPC is

committed to implementing a sustainable system to

monitor and report emissions with trained personnel

and qualifi ed service providers.

The following projects and initiatives were completed

successfully in 2008 in PPC’s cement and lime

operations in South Africa to address the concerns

around kiln-stack emissions:

1. Air quality pilot project at PPC Hercules, using the

mass balance approach;

2. Roll-out of the pilot project to lime and selected

cement plants;

3. Performance of a baseline analysis of dust, NOx and

SO2 at all kilns;

4. Implementation of a monitoring programme for

regular analysis of dust, NOx and SO2 at all kilns;

5. Development of a long-term compliance plan to

manage emissions, which included the replacement

of electrostatic precipitators (ESP) with bag fi lters;

and

6. Development of a training and awareness module

for air-quality monitoring and reporting.

Case study: Mass balance project

To quantify emissions from PPC operations, the company has adopted the mass balance emission estimation

approach (mass balance project). The approach adopted in this project measured quality and quantity input streams

(coal and feed to kilns) and output streams (clinker and gas). The gas volumes were measured, and so were

the gas concentrations in terms of particulate concentration, SO2 and NOx. It was assumed that the elemental

concentration of the particulate matter correlated to dust returned to the kiln. The main reason for this assumption

was the diffi culty experienced in obtaining a sample of suitable size for analysis. The results of the emissions from

the mass balance project undertaken in 2008, using a random sample technique were monitored by an external

consultant over a period of one week. All emissions were below the plants’ APPA registration certifi cate limits.

The mass balance emission estimation approach offers the advantage that people are trained to understand

trends in the cement-manufacturing process, both from a cement quality and emissions management perspective.

This understanding will support improved air quality management at cement operations in a highly sustainable

manner. The lessons learnt from the mass balance project were shared with other organisations at the recent

National Association for Clean Air conference in Nelspruit, South Africa.



Point-source emissions management

PPC uses either electrostatic precipitators or bag fi lters

to manage dust emissions from stacks. The ESPs use

electric power to separate dust particles from gases,

which enables the plants to operate with very low dust

emissions. The ESP is typically 99,5% effi cient. Bag

fi lters, on the other hand, are generally more effi cient

at removing dust from the gas stream and the dust

concentration in the cleaned gas seldom exceeds

50 mg/Nm3.

Fugitive emissions management

Points of fugitive emission at a cement manufacturing

facility include:

• Unpaved and paved roads;

• Stockpiles;

• Material-handling areas; and

• Conveyors.

Methods to reduce fugitive dust emissions at sites

include:

• Chemical suppression of roads and stockpiles;

• Wet suppression of roads;

• Enclosing of conveyors; and

• Using water sprays on transfer points in conveyor

systems.

The biggest source of fugitive dust identifi ed at Jupiter

was the result of materials-handling prior to storage

in the designated facilities. PPC Jupiter has instituted

a rigorous housekeeping schedule to reduce the dust

levels. Instructions for the management of stockpiles

have also been developed and implemented.

The testing of mobile emissions from diesel-driven

vehicles on public roads has also been prioritised by

PPC. All diesel-driven vehicles owned by the company

are tested on an annual basis to ensure compliance

with national legislation and local by-laws.

To demonstrate its commitment to responsible air

quality management, PPC engaged the Department

of Environmental Affairs and Tourism to discuss the

conditions of the APPA registration certifi cate (1997)

prior to the start-up of the Jupiter kiln in 2006. The

department amended the APPA certifi cate with more

stringent conditions. PPC invested R20 million in

environmental improvements, which included:

• Upgrading the kiln ESP to ensure compliance with

more stringent limits;

• Replacing the existing raw-mill ESP with a new bag

fi lter;

• Introducing additional dust control measures on

the conveyors;

• Upgrading the dust collectors; and

• Overhauling the bag fi lters.

Case study: Innovation for dust-suppression initiative for fugitive emissions at Slurry and Lime Acres

At PPC Slurry, members of PPC’s engineering and production teams have been collaborating to develop new ways

to assist with dust reduction. The team has installed two kiln back-end water injection systems to reduce dust

emissions. The systems spray a fi ne water mist that changes the resistivity of the dust so that the electrostatic fi lter

works more effi ciently, which further restricts emissions.

Lime Acres has commissioned the use of Benetech dust-suppression systems in the primary crushers as well as the

secondary crusher during the third quarter of the 2008 fi nancial year. BT-210W, a wet dust-suppressant product,

minimises water usage and provides residual properties for multi-transfer point suppression systems, and BT-515

is a residual dust-suppression chemical that contains a proprietary blend of speciality binders, humectants and

surfactants. It controls airborne dust generated during the conveying process and minimises fugitive problems.

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Mining

Mine rehabilitation

A mining resource or reserve is fi nite and because of

depletion its value decreases over time. PPC has long-

term mine plans (strategic, broad-based plans that

cover the life of the mine), phase plans (more detailed,

medium-term plans) and short-term plans (annual plans

to complement the phase plan) for each of its quarries.

The long-term plan defi nes the available in-situ

geological resource and evaluates possible scenarios

for depletion of the resource. Long-term planning also

addresses the major objectives and design requirements

for eventual mine closure. Short-term plans are focused

on the allocation of resources to meet the objectives of

the long-term plan. PPC compiles an annual internal

resource and reserve statement, which is based on

the South African Mineral Resource Committee’s

classifi cation guideline but modifi ed to meet the

requirements specifi c to the cement industry.

PPC continually conducts prospect drilling to augment

the geological information on current mining licence

areas and develop new mineral resources. During the

past 12 months, drilling has been conducted in seven

different projects across the PPC group. Resource

optimisation has also been achieved by optimising

the extraction strategy for certain sites, for example,

substituting a 50 ton excavator with an 85 ton unit at

Grassridge has enabled long-wall mining to advance

through areas of hard reserves that would otherwise

have required blasting and may not have been mined

as a result.

PPC conducts an aerial survey of all its South Africa-

based mines at the end of each fi nancial year. This

survey assists in the reconciliation of mined-out reserves,

refl ects conformance with the company’s annual mining

plans and enables the annual re-evaluation of fi nance

provision required for mine closure. It is also used to

assess progress in terms of concurrent rehabilitation.

In September 2007, PPC’s concurrent rehabilitation

target for cement and aggregate operations stood at

100% for all but two sites, which were allocated a

target of 90%. At the time, these sites had concurrently

rehabilitated 946 of a possible 1 004 hectares.

Figure 7: PPC’s concurrent rehabilitation performance

110

100

90

80

70

60

50

40

30

Perc

ent

2000 2001 2002 2003 2004 2005 2006 2007Year

PPC cement actual Concurrent backlog objective



The photographic imagery that indicates the

rehabilitation performance for 2008 is being processed.

The management of waste rock in the reduction of PPC’s

mining footprint has been targeted in recent years. The

opportunity for backfi lling of the depleted areas of the

Beestekraal and Zoutkloof pits with overburden waste

has reduced the void area for these mines by almost

10 hectares over a three-year period. The optimal use

of waste rock to construct settlement dam perimeter

walls at the Laezonia operation has resulted in a low-

risk classifi cation for the mine residue deposit in terms of

both mine health and safety and the environment. The

concurrent rehabilitation of these settlement dams is on

track.

The calculation of pecuniary provisions for mine closure

has been done in line with the Department of Minerals

and Energy’s guidelines. The total mine closure cost for

all South Africa-based PPC mines is R91,2 million, of

which R5 million has been expended on the mine closure

rehabilitation of the Loerie quarry. The current provision

in PPC’s rehabilitation trust is adequate to cover this

cost.

Resources optimisation

To limit the use of natural resources, PPC investigated

the substitution of natural materials with synthetic or

secondary materials. At the PPC Jupiter factory, natural

sand is replaced by sand recovered from old mine dumps,

and iron is replaced by magnetite, a by-product of the

phosphorous industry. This preserves natural resources,

and the use of mine sand also provides a solution for

sand removal from a gold-mining operation located

in the factory’s vicinity. In the year under review, PPC

recovered 19 844 tons of sand for use at Jupiter.

The volumes of shale and synthetic gypsum consumed

by all PPC operations for the period 2007/08 are not

regarded as material and are not contained in this

report.

Water optimisation and waste management

Water usage

All PPC plants are engaging with the Department of

Water Affairs and Forestry to identify areas in which

water usage can be curbed. These include, for example,

the use of pit water to irrigate gardens. No water is

discharged from the cement-manufacturing process. PPC

has prioritised the installation of necessary infrastructure

to measure water usage adequately.

Waste minimisation

PPC is committed to implement the waste hierarchy

through increased programmes on recycling and minimise

the use of the disposal option. The company does not

generate any solid waste from the cement process, and

all off-specifi cation material is reworked or reprocessed.

Any on-site waste is managed in accordance with the

relevant legislation.

Case study: PPC supplier Barloworld Logistics (BWL) supports in decreasing cement carbon footprint

BWL is contracted by PPC to manage transportation. Striving towards sustainable development and on renewal of

its contract with Dwaalboom, BWL replaced the existing fl eet of trucks and bulk tankers with a revolutionary

interlink trailer combination to deliver optimal payload and minimise fuel consumption and carbon emissions.

The use of the Freightliner Argosy truck tractors resulted in a decrease in fuel consumption of more than 10%

which, combined with the increased payload capacity, resulted in about 20% reduction in energy used per ton

of cement delivered. This equated to a reduction of CO2 emissions of 2 335 tons. BWL also ensures that all its

vehicles meet the legislated noise and diesel emission limits and has installed tracking devices to mandate the

implementation of agreed logistic plans.

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Applications for the storage of waste, in terms of

section 20 of the Environment Conservation Act,

1989 have been submitted to the Department of

Environmental Affairs and Tourism for all our plants.

PPC has used the decision matrix, developed in

collaboration with the Association of Cementitious

Material Producers, to support the applications.

In line with the waste hierarchy’s principles, all PPC

operations embark upon projects that promote

recycling and re-use. Spilled materials at plants are not

discarded but added to raw-material stockpiles to be

used as feed in the kilns.

To effectively manage waste generated on site, PPC

Jupiter has contracted a scrap metal recycling company

to remove and recycle its scrap metal. During the year

under review, 101 tons of scrap metal was recycled at

the PPC Jupiter operations alone. Printer cartridges,

paper, aluminium cans and glass bottles are examples of

other waste materials that were recycled.

Progress with expansion and environmental

improvement projects

The PPC Riebeeck operation is nearing the end of its

economic life. In a bid to continue the guarantee of

supply in the region in the long term, PPC is investigating

the establishment of a new 1,2 million ton per annum

clinker production facility. The new facility will use

leading international technology and deliver reduced

CO2, NOx and SO2 emissions, as well as reduced water

and energy consumption per ton of clinker produced.

An environmental impact assessment is underway

and has been complemented by an extensive public

participation process, which allows the surrounding

communities to raise their concerns and other issues.

Numerous concerns over increased traffi c volumes

and the impact on the tourism potential of the valley

have been brought to the fore. PPC has committed

to more than 146 mitigation measures, including the

following:

• PPC will cap the heavy-duty vehicle traffi c on the

R311 through Riebeek West and Riebeek Kasteel at

the current levels;

• Funding to the value of R1,5 million has been

approved for a transport assessment to fi nd

potential solutions to the increasing traffi c volumes

through Riebeek West and Riebeeck Kasteel;

• PPC is prepared to enter into a public-private

partnership to fund on a 50:50 basis, to a maximum

of R100 million, an alternative solution that will serve

both the interests of the community and PPC;

• PPC will build the factory at the preferred location

of the interested and affected parties and the

recommendations of the specialist investigations;

and

• An amount of R20 million has been committed

to mutually agreed programmes, aligned with the

Swartland Integrated Development Plan, which

are aimed at uplifting local communities. This is in

addition to PPC’s social and labour plan as required

by the Department of Minerals and Energy.

Case study: Waste management improvements

PPC Dwaalboom experienced diffi culty with waste management, because the nearest registered landfi ll site is

about 90km from the plant and no response was received to an application to register a waste disposal facility on

site. There was limited separation at source, limited re-use and no recycling. A management decision was taken

to contract the waste management function to an experienced waste management specialist.

The benefi ts of this decision have included increased:

• Separation at source, achieved through the colour-coding of bins;

• Collection points at the plants, offi ce, staff village and construction camps;

• Waste recycling because of fi nal sorting prior to landfi lling;

• General awareness as a result of the increased focus on waste management;

• Compliance as a result of rigorous checks on waste transporters; and

• Quantifi cation of all types of waste, compilation of manifests and administration.



Extensive focus has been placed on internalising

impacts, while ensuring that a sustainable solution

is delivered to meet the needs of PPC and all its

stakeholders.

The PPC Dwaalboom Batsweledi project has been

commissioned in North West. All indications are that

the dust collectors will perform to stringent, specifi ed

emission guarantee levels of 50 mg/m³.

Additional environmental improvement projects

currently in the feasibility phase include:

• PPC Hercules – replacement of the Sonex mill

electrostatic precipitator (ESP) with a bag fi lter;

• PPC Port Elizabeth – upgrade of the raw-milling

system and replacement of the dust collector unit

with bag-house technology that will signifi cantly

reduce point-source emissions;

• De Hoek – completing Mill 5’s replacement with a

bag fi lter to improve dust levels; and

• PPC Lime Acres – conversion of the LK6 ESP to bag-

house technology.

Environmental education and capacity-building

PPC believes competence is attained through

knowledge and training. As part of this belief, the

company has placed strong emphasis on transferring

skills to its people. Company employees from the

environment and risk sections have attended sessions

on legal environmental issues, emissions from kilns and

environmental management systems.

PPC also acknowledges its responsibility to provide

capacity to its stakeholders and the company has

held many capacity-building workshops with local

municipalities and provincial departments.

PPC Slurry invited three local schools to be part of an

Environment Day celebration on 5 June 2008. Learners

from Laerskool Buhrmannsdrift, Onkgopotse Tiro

Comprehensive School and Slurry Intermediate School

came to the plant to take part in a competition to paint

the rubbish bins, using spring as a theme. There was

great enthusiasm as the youngsters showed their true

“colours” and made a proud environmental statement

in the process. The bins stand prominently around the

site and serve as an important reminder to recycle waste

wherever possible.

All PPC contractors are inducted through a formal

training session and all conditions of the authorisations

relevant to the scope of the contractors’ work are

shared.

An environmental graduate has been recruited at group

level and her work is supported by environmental

training modules and focused cement-specifi c

workshops. This position was created to support skills

training in the environmental engineering fi eld. In

addition, PPC Riebeeck has provided an opportunity

to an environmental undergraduate to be part of the

environmental management team on site. Hercules has

supported a team of students from Tshwane University

of Technology with their air quality module assignments

by providing the data, hands-on experience and expert

time needed to complete their assignments.

As part of the mass balance approach, PPC has

developed methods to analyse trace elements on the

inductively coupled plasma spectrometer. It allows PPC

to cross-check gas analysis from the in-stream isokinetic

stack sampling. It also increases the laboratory analysts’

exposure to method validation techniques, increasing

their skills in this area. In line with its quality philosophy,

PPC has implemented advanced raw-mill control software

at all its plants and updated the analytical equipment to

include a new state-of-the-art X-ray diffractometer at

group laboratory services, particle-size analysers in the

laboratories and cross-belt analysers that use gamma-

neutron technology at some of its sites.

Environmental compliance

The following PPC plants were audited by environmental

management inspectors, known as the Green Scorpions,

from the government’s environmental management unit,

which has started to enforce environmental legislation

and permits:

• PPC Hercules;

• PPC Dwaalboom;

• PPC Slurry;

• PPC Port Elizabeth;

• PPC De Hoek; and

• PPC Riebeeck.

The Green Scorpions’ report for PPC Riebeeck has been

received and contained no major legal fi ndings. Issues of

concern in the report included the management of dust

impacts and waste management at the PPC Riebeeck

landfi ll.

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On 23 June 2008, PPC Jupiter was issued with a directive

in terms of section 31A of the Environment Conservation

Act, 1989. It was issued as part of an artifi cial process

to ensure that PPC’s duty-of-care requirements were

met during the plant’s start-up. The requirements of

the directive included the investigation of options for air

quality management and resource optimisation. All the

conditions of the directive have been integrated into the

plant’s environmental management system.

PPC has responded to the provincial environment

departments’ requirements for section 24G (post-

facto) applications to be submitted for the Slurry and

Dwaalboom operations. The Dwaalboom operation

has completed its section 24G application for the use

of secondary materials in cement kilns and extension of

the airstrip, and a sum of R120 000 was paid in fi nes for

both operations. PPC has demonstrated that at no point

during the post-facto activity was there any potential for

detrimental impacts on the environment.

PPC has submitted the mining authorisation conversion

application to the Department of Minerals and

Energy and has drafted social and labour plans in preparation

of the relevant mining authorisations in terms of the

Mineral and Petroleum Resources Development Act,

2002.

Two environmental incidents at PPC included fi res at

the De Hoek main substation and the raw material belt

at Dwaalboom crushing facilities. The best-practice

document was updated to capture the learnings.

Environmentally conscious suppliers

PPC wants to support suppliers that conduct their

business in an environmentally conscious manner, and

ISO 14001 certifi cation is encouraged by the procurement

department through a supplier accreditation process.

PPC has developed a checklist to conduct third-party

audits to assess suppliers’ compliance and levels of

commitment in all environmental matters, which

enables the company to discern their conformance to

environmental standards.

Strategic move towards sustainability

PPC is committed to create systems to monitor its

environmental spending and future reports will include

details about the company’s actual spending on

environmental projects and programmes as well as plant

upgrades.

The following projects and programmes will be

undertaken to drive sustainable development throughout

the organisation:

• Structure a complete stack-emissions profi le for all

PPC cement and lime kilns;

• Set quantifi able targets for selected PPC environmental

indicators;

• Continue to develop environmental and sustainability

training modules for all levels; and

• Develop and implement a PPC green procurement

strategy.

Recognition and awards

The cement industry, specifi cally PPC Slurry, was

recognised for its improvement to dust management

in the North West region by the province’s air pollution

control forum and the North West 2008 provincial

environment report.

During the year under review, PPC’s group laboratory

services and the factory laboratories participated in

the annual Cement and Concrete Institute audits. The

factory laboratories all achieved a zero-fi ndings report

for the fi fth consecutive year, which underscores the

company’s commitment to quality systems.

The aggregate division’s quarries, Mooiplaas and

Laezonia, have maintained the Aggregate and Sand

Producer Association of South Africa’s showplace

standard, because they have achieved a fi nal audit score

of greater than 95%.

The way forward

PPC will focus on the following priority areas in the next

fi nancial year, in line with the recommendations of the

environmental framework document:

• Undertake environmental compliance audits of 20%

of its major suppliers and customers;

• Develop emissions inventories informed by the mass

balance and fugitive emission estimation for all PPC

operations;

• Train every environmental specialist and manager in

environmental best practices and standards;

• Create stakeholder maps and formalised

environmental forums for each PPC operation; and

• Entrench the environmental framework objectives

and recommendations throughout PPC.

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Social and risk report


People highlights

• A positive staff satisfaction index rating of more

than 90% was achieved in the Individual Perception

Monitor and a year-on-year positive climate was

recorded;

• The Kambuku enrichment programme delivered

the transfer and improvement of technical skills;

• Coaching and mentoring became part of the

learning offering for internal talent;

• Communication remained a key priority and a

multilevel process known internally as an Invocom®

scored consistently above benchmark standards;

• More than 3 500 improvement suggestions were

generated, of which 2 200 contributed to savings

in excess of R18 million;

• Black management appointments increased to

40% and black divisional executive appointments

increased from 0% to 56%;

• Broad-based black economic empowerment

transaction was approved and further empowerment

of employees through share ownership is

envisaged;

• R12 million expansion of the Technical Skills

Academy successfully completed;

• PPC academies enrolled 165 students for various

cement-related qualifi cations; and

• The Adult Basic Education and Training programme

achieved positive results.

Growth and transformation through an

empowered workforce

PPC’s unceasing people success can be attributed

to the passion and unconditional commitment of

its employees, which is, in essence, the true spirit

of Kambuku. The word is derived from Tsonga and

means “great tusker”, referring to an elephant bull,

whose characteristics of tenacity and loyalty are

seen to encapsulate PPC’s value-based management

philosophy. Stakeholder value is created through the

continual growth and alignment of people processes

with business objectives.

The PPC way of life

The sustainability of the organisation’s success is reliant

on its people, who are integral to the maintenance

of the Kambuku philosophy. This PPC “way of life”

creates a climate that provides a healthy, rewarding

and satisfying working environment in which everyone

has opportunities to contribute to the success of the

organisation and their own development, and achieve

recognition for excellence.

A growing workforce

The growth experienced in the construction sector

and the implementation of the PPC Inland capacity

expansion projects have been responsible for a slight

increase in the company’s staff complement during the

2008 fi nancial year.

The company’s workforce, including Zimbabwe

and Botswana, increased to 3 164 employees from

3 097 in 2007.

The annual average employee turnover in 2008 was

4,1% across South African operations, decreasing

from 7,8% in 2007. The average employee turnover

for the group, including Botswana and Zimbabwe,

was 11,4%. This increase from 7,1% in 2007 was due

to the restructuring of PPC’s business in Botswana.

Maintaining open dialogue

PPC believes in maintaining open and honest dialogue

with its employees and places high importance on

engaging and consulting with them. The percentage

of employees recognised as members of a trade

union is 32% in South Africa, 63% in Botswana and

69% in Zimbabwe. The company acknowledges

freedom of association and the agreements that exist

between it and the relevant unions.

KAMBUKU – GOING FOR GOLD

Building on a strong foundation

The inception of the Kambuku process more than seven

years ago has entrenched a high-performance culture

across PPC and underpins the way the company does

business. It is important to continually provide clear

direction and realign the energies of employees to

support this culture.

For almost eight years, the PPC team has embraced

the Kambuku processes and principles to turn the

organisation into a world-class operation in all aspects.

Social report

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Kambuku: The vital elements of a performing organisation

Release energy rewardDirect focus energyStructure/harness energyCreate energy

Invocom®Communication

Reviewing progress

Stretching targets

Solving problems

Education

Fairness, order, rules of the game

Communication, information, infl uence

Management style

Recognition

Code of conduct

Remuneration and benefi ts

Effective HR administration

Inspiring climate

Career development

Skills development

Succession planning

NQF alignment

Learning for growth

Continuous

performance

improvement

Vision strategy

• Communication

• Understood

• Journey maps

Clear purpose

Value drivers

Structure

Job model

• Purpose

• Scorecard

• Competencies

Alignment

Role and function clarity

Accountability

Scorecards, targets and action plans

Performance measurement

Performance review

• Recognition

• Action plans under performance

Performance improvement(Organisational/Individual)

Building on the foundation that has been created with

passion, commitment, innovation and teamwork, the

team continued to record signifi cant achievements.

These included:

• The group average for our Invocom® teams

4,4 and organisational benchmark standards

3,3 exceeded world-class standards; and

• More than 85% of our employees participated

in the annual PPC Individual Perception Monitor,

which gave the company a positive index rating of

more than 90%.

As part of the Kambuku process, an organisational

performance model was developed, known as The Vital

Elements of a Performing Organisation. This model

sets the benchmark for the internal standards, systems

and processes that facilitate employee engagement

and participation. The effectiveness of the individual

elements is assessed on an annual basis.


Individual Perception Monitor

Listening, learning and continually improving

For the past seven years, PPC’s annual Individual

Perception Monitor survey has given all our employees

the opportunity to express their views and rate the

company on critical processes, including understanding

our vision, employee benefi ts, leadership behaviour,

remuneration, training, coaching and communication.

Participation in the survey is both voluntary and

confi dential. Importantly, the results of the survey

are analysed by each site and by management on a

centralised basis with the purpose of identifying and

addressing areas of concern and reinforcing positive

trends. A healthy positive index average in excess of

90% has been maintained.

Kambuku enrichment

Enriching Kambuku through empowerment,

transformation and learning

To ensure that PPC sustains its performance in a

challenging and transforming environment, a number

of opportunities have been identifi ed to enrich the

existing elements of the Kambuku process.

Firstly, Kambuku principles and processes must be

maintained and entrenched further to ensure their

sustainable performance. Secondly, the Kambuku

enrichment initiative establishes a strong foundation

on which to further empower employees and facilitate

their growth. Among others, there are initiatives to

advance their mentoring and coaching skills, a greater

understanding of PPC’s REAL (relevant, empowered,

actualised and lasting) transformation philosophy,

and the ability of managers to inspire employees in

a diverse environment. Lastly, the enrichment process

aims to increase the ability and effectiveness of

Invocom® team members through broad-based skills

to ensure their continuous improvement.

Kambuku enrichment is therefore not a new initiative

but the strengthening of the existing process through

focusing on maintaining present Kambuku processes,

embracing transformation and nurturing the skills and

ability of PPC employees.

Social report continued

PPC Individual Perception Monitor (2002-2008) – Total % positive results

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■ 02

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succession framework because it has a direct impact

on the success of the company’s employment equity

and development initiatives. The CAP process lies at

the centre of transferring skills and knowledge to the

younger generation of primarily black colleagues, and

particularly those in critical positions.

Engaging employees at all levels across PPC

Participative processes and systems

Employee engagement

One of the fundamental principles of the Kambuku

process is that positive results are within easy grasp

when employees across all levels are engaged,

empowered and held accountable. Accordingly,

active involvement and communication takes place

frequently and across the entire company through

well-established organisational systems and processes.

Coaching and mentoring

Empowering tomorrow’s leaders today

As part of PPC’s focused efforts to improve and

sustain superior business results, the company has

introduced a multi-level coaching and mentoring

initiative called the Coaching Advance Performance

(CAP) programme. During the year under review, this

programme was revised and introduced as a broad-

based skill to all the appointed leaders in PPC. As a

point of reference, coaching refers to the transfer of

operational theory and core skills into practice, and

mentoring refers to the transfer of leadership skills,

knowledge and attributes.

A formal and structured process, the CAP programme

is an integral part of PPC’s development and

Conducive climate and culture

Climate creation workshop

BEE transaction

Diversity

Coaching Mentoring (Cap)

Fou

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Fou

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Operational performance

base line

Success indicators

Ideal future profi le

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Kambuku: The vital elements of a performing organisation

Release energy rewardDirect focus energyStructure/harness energyCreate energy

Invocom®Communication

Reviewing progress

Stretching targets

Solving problems

Education

Fairness, order, rules of the game

Communication, information, infl uence

Management style

Recognition

Code of conduct

Remuneration and benefi ts

Effective HR administration

Inspiring climate

Career development

Skills development

Succession planning

NQF alignment

Learning for growth

Continuous

performance

improvement

Vision strategy

• Communication

• Understood

• Journey maps

Clear purpose

Value drivers

Structure

Job model

• Purpose

• Scorecard

• Competencies

Alignment

Role and function clarity

Accountability

Scorecards, targets and action plans

Performance measurement

Performance review

• Recognition

• Action plans under perfomance

Performance improvement(Organisational/Individual)

Details of the Kambuku enrichment initiative


PPC’s participation and communication efforts are

encapsulated in the Kambuku process, which has

various components. Two of these are:

Key leader summits: These are regular team meetings

held at plant or site level throughout the company,

involving all appointed, elected and informal leaders.

The purpose of the meetings is to inform employees

about plant or site performance, strategic initiatives,

challenges and opportunities. In an environment of

mutual trust and cooperation, space is created for

robust and constructive communication, after which

the outcomes of each summit are communicated

clearly and promptly down to shop-fl oor level. This

process enhances PPC’s efforts to maintain a clear

purpose and common vision and direction throughout

the company.

Invocoms®: These are structured, team-based

discussions that take place on a daily basis for teams

at shop-fl oor level, on a weekly basis at sectional

supervisory level and monthly at departmental level.

Invocoms® are held throughout PPC at all levels

and across all functions of the business. There are

approximately 350 effectively functioning Invocoms®

in operation across PPC.

The discussions are designed to communicate

elements of PPC’s vision and objectives, evaluate team

performance, analyse obstacles that affect performance

and develop action plans to overcome these obstacles,

thereby ensuring the achievement of targets. Initiatives

such as behavioural safety, educational topics and

development are also discussed in Invocoms®.

Plant and site-level Invocom® structures are designed to

spread communication both upwards and downwards

through the company. These structures also enable

transparent problem resolution and employee

participation. Invocoms® are also useful to:

• Encourage teams to regularly stretch outputs

and targets by reviewing and assessing team

performance;

• Capture innovations and suggestions that enhance

cost savings, process improvement, effi ciency and

safety;

• Effectively communicate positive recognition;

• Capture best practices on a centralised database;

and

• Manage the PPC climate through team members’

adherence to the company’s code of conduct.

Innovations and suggestions

During the year under review, more than 3 500 value-

adding suggestions were generated through the

Invocom® structures. Of these, more than 2 200 were

evaluated, accepted by management and implemented.

An estimated R18 million has been saved through

these suggestions during 2008, compared with

R14 million in 2007.

Succession planning

Standing on the shoulders of peers

PPC’s succession strategy is designed to ensure the

continual availability of competent successors for

key positions in the company. The strategy entails

the following:

• Succession planning discussions are held twice a

year at group and site level;

• Development plans include mentorship and

coaching;

• Strong alignment with economic empowerment

targets and plans;

• 42% of appointments made in management are

succession candidates;

• 65% of learners in the PPC academies are succession

candidates; and

• 80% of black divisional executive appointments are

internal promotions.


2008

1 500500 2500

2007

2006

NUMBER OF VALUE-ADDED SUGGESTIONS IMPLEMENTED PER YEAR

Num

ber

of

sugg

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ns

2008

105 15

2007

2006

ESTIMATED SAVINGS THROUGH IMPROVEMENT SUGGESTIONS

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PPC Riebeeck West – ABET programme

Abraham Johannes Patience

Hannes, as he is fondly known at Riebeeck, started

his career at PPC Riebeeck in January 1995 as an

artisan assistant in the electrical workshop.

Hannes had a standard 4 (grade 6) qualifi cation,

but could still not read or write. He started ABET

in March 2007 on mother tongue level 1 and has

since been unstoppable.

“I have so many stories to tell of how ABET has

improved my life,” Hannes said. “One specifi c

example is that I could never use the ATM before

and always sent my daughter or my wife when

I needed to draw money. But since starting

ABET, I no longer have to send them; I can now

go on my own.”

Like many other ABET learners, Hannes has

discovered that literacy and numeracy skills open

new doors to freedom, dignity and a better life.

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Growth through learning and development

The learning and growth dimension in the annual

Internal Performance Monitor survey recorded a

signifi cantly improved year-on-year result of 89% in

2008 against 86% in 2007, which exemplifi ed PPC’s

ongoing commitment to develop globally competitive

people.

Adult Basic Education and Training (ABET)

The building blocks to success

With 74% of the workforce assessed for ABET training,

PPC is well on its way to achieving the stated target

of all employees attaining minimum ABET level 4 in

communication and numeracy by 2010. This target

aims to give all employees the opportunity to fast-

track their careers through the PPC academies and

represents the company’s commitment to life-long

learning.

Profi le of assessed learners

To date, 1 739 employees have been selected for ABET,

623 of whom are currently placed in various ABET

level 1 to 4 programmes. These programmes have

proven highly successful with an impressive overall

pass rate of 95%.

PPC Port Elizabeth – Ikhwezi ABET

programme

In an effort to uplift the literacy levels of our

temporary employees, PPC Port Elizabeth

has opened its Ikhwezi ABET classes to local

communities. Learners with matric maths are

invited to join the programme on a voluntary

basis and PPC covers all tuition and learning

material costs. On completion of their assessed

ABET levels, graduate learners are considered for

fi xed-term contract work at the plant. Permanent

appointments, when available, are made from

this group of employees.

Siyabulelo Dlakadla, Msimelelo Baba and Nicholas Qalinge are completing their maths levels in the ABET programme


Learnerships

The number of PPC learnerships (243) in engineering,

sales and marketing and operations, as well as the

structured learning and development initiatives at site

and group level, contribute signifi cantly to PPC’s broad-

based black economic empowerment scorecard.

Percentage of payroll spent on skills

development

The development of skills is a passion and commitment

that is refl ected through the Kambuku philosophy and

approach to the empowerment of people. During

the year under review, PPC spent 5,7% of its payroll

(i.e. leviable amount) on the skills development of

employees, and 82% of this amount was spent on

previously disadvantaged employees at a total cost of

R25,2 million.


Learning for growth investment

Skills development: creating value for all stakeholders

A total of 243 PPC employees are currently on learnerships or skills programmes. Of these students, 179 (74%) are

previously disadvantaged.

Economic empowerment profi le of students

African Indian Coloured White

Male Female Male Female Male Female Male Female

Total 78 12 81 3 4 1 53 11

Total skills development expenditure (Rm) – R30,8 million

Cost of training (Rm) (SA only)

■ African male

■ African female

■ Coloured male

■ Coloured female

■ Indian male

■ Indian female

■ White male

■ White female

African male R14,6 million

Coloured male R6 million

Coloured female R0,9 million

Indian male R0,3 million

Indian female R0,2 million

White male R6 million

White female R1,3 million

African female R1,5 million

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Learnership for performance development

practitioners

The fi rst education, training and development

learnership for practitioners was successfully

completed earlier this year and achieved a laudable

100% pass rate. This qualifi cation enables six of PPC’s

learning specialists to facilitate organisational education

at a globally competitive level. The talented team is

now highly equipped to successfully and competently

facilitate skills development, design and develop

training programmes, facilitate, assess, moderate

and evaluate learning, and support all PPC’s various

learners and trainees. A further 15 learning specialists

will embark on the practitioners’ learnership in early

December 2008.

Participating in industry skills-development

forums

• PPC is a founding member of the Cement, Lime,

Aggregates and Sand Committee, which strives to

develop qualifi cations and training standards for

the industry.

• PPC is a member of various training bodies and

actively contributes to its sectoral education

and training authority, the Mining Qualifi cations

Authority.

Building leaders through the PPC Academy

During the past year, the company continued to build

on the solid foundations of the PPC Academy that

were laid in 2007. The three specialist faculties, namely

operations, mining and sales and marketing, are now

fully operational. The academy aims to align with

and complement the programmes developed under

the National Qualifi cations Framework, which will

deliver employee skills that are recognised externally

by the South African cement and mining industry. PPC

believes the academy demonstrates a positive

contribution to truly building an educated and multi-

skilled nation.

The year under review was a landmark in terms of the

launch of the faculties for operations and sales and

marketing, both of which experienced an increased

intake, and the new faculty for mining. This faculty

will aim to produce competent employees that are

equipped with the much-desired rock-breaking

(blasting) qualifi cation.

Launch of PPC Academy’s bridging programme

A vital bridging programme was successfully launched

in 2007 as an accredited preparation course to assist

employees to obtain the relevant entry requirements

for the academy’s programmes. It is a registered skills

programme, offered as a three-week block release

course that takes students four to six months to

complete.

The total number of people who trained in the

bridging programme in 2007 was 46, and 33 people

were found competent after external moderation,

which constituted a success rate of 73%.

In 2008, a further 45 students entered the programme.

They will be moderated in April 2009 and their results

will be tracked and reported in the 2009 annual

report.

Growing the PPC Academy

ProgrammeAfrican Indian Coloured White

TotalMale Female Male Female Male Female Male Female

Bridging 2007 intake 15 1 0 0 19 1 8 2 46

Bridging 2008 intake 11 0 0 0 22 0 10 2 45

S&M 2007 intake 1 2 2 0 1 0 2 1 9

S&M 2008 intake 3 0 0 0 2 1 1 3 10

OPS 2007 intake 5 2 0 0 5 0 8 0 20

OPS 2008 intake 7 0 0 0 5 0 7 0 19

Mining 2008 intake 7 0 0 0 6 0 3 0 16

Total 49 5 2 0 60 2 39 8 165


PPC Academy: mining faculty

PPC has been proactively preparing itself for the

new explosives regulations that will come into effect

in 2009 by offering a unique qualifi cation in rock-

breaking, which has been accredited by the Mining

Qualifi cations Authority. PPC Academy’s mining faculty

started with an intake of 16 learners to study for this

brand-new national qualifi cation.

Graduate development programme

PPC’s graduate development programme was launched

early in 2008 with nine graduates in fi ve key disciplines

critical to the business: engineering, production and

process services, mining, quality, and environment and

sustainability.

The programme targeted new graduates from various

tertiary institutions across the country with a focus on

fast-tracking their development within these functional

disciplines. Through the initiative, PPC wants to

identify graduates to be considered for permanent

appointment once they have successfully completed

the two-year programme.

The graduates are based on-site and follow a course,

developed by PPC specialists, that provides the correct

balance between theory and practical, hands-on

learning.


In 2007 a fi rst group of 11 PPC learners and 20 from

Plascon, a division of New World Coatings, were

selected to study for the internationally recognised

national certifi cate in customer management

(NQF 4). They completed their studies this year and

will graduate in 2009.

The level 4 certifi cate is accredited locally through

the National Qualifi cations Framework, but is also

recognised internationally by the European Marketing

Federation, which gives PPC Academy’s qualifi cations

an exportable edge.

In 2008 the second group, comprising 10 students

from PPC and 19 from Plascon, began their studies.

The group attends the Technical Skills Academy in

Slurry and will graduate in 2010.

The PPC Academy’s operations faculty was launched

in July 2007 with an intake of 21 learners studying

for the further education and training certifi cate in

carbonate materials manufacturing process on NQF

level 4. They will qualify for this certifi cate, which is

registered with the Mining Qualifi cations Authority, in

May 2009. The second intake of 19 learners began

their studies for this qualifi cation in August 2008 and

will graduate in 2010.

PPC also implemented a cement-manufacturing

simulator training programme, which is used in

both the academy and at the plants. It provides an

opportunity for learners to experience real-time plant

operations and apply problem-solving and trouble-

shooting techniques in a safe environment.

The second group of PPC learners at the sales and marketing academy pictured with the accredited service provider

The second intake of 19 students for the nationally recognised cement and lime manufacturing qualifi cation for operators

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An open and supportive studying environment has

been created through regular quality assurance in

the form of site visits and individual and focus group

interviews.

Leadership development

PPC’s signifi cant investment in leadership development

in previous years has been cemented during the

year under review. Key leadership development

initiatives included individual and team leadership

development, and emotional intelligence profi ling and

coaching for new and current managers. The annual

leadership behaviour 360-degree review has also

been implemented at management level, with a 97%

response rate from superiors, peers and subordinates.

Technician development programme

PPC established a technician development programme

in response to an identifi ed shortage of technicians

in the business and in an effort to attract, retain and

develop technicians from within and outside the

company.

The programme offers two routes towards technicians’

development. The fi rst one involves offering external

students at universities of technology the opportunity

to complete their in-service training with PPC, after

which PPC will have the choice of retaining them in the

company in a technician development programme.

The second route offers PPC employees who are

technicians, or those who want to develop in the

fi eld, the opportunity to either develop their current

technician competencies or follow the technician route

by developing their knowledge, skills and experience.

Both routes of development will feed into technician

succession pipelines.

The graduates who attended the development programme training in March 2008

The completed R12 million expansion of the Technical Skills Academy, formerly known as the Group

Training Centre



The TSA has maintained its ISO 9001; Mining

Qualifi cations Authority and Merseta accreditation as a

certifi ed training provider for engineering learnerships.

These accreditations ensure that artisans who qualify at

our training centre are of the highest calibre and highly

sought-after in South Africa as well as internationally.

The R12 million expansion of the Technical Skills

Academy (TSA) was approved last year and completed

in September 2008. This will enable the TSA to

increase its intake of students for artisan training, and

the complex will be able to host all PPC Academy’s

learners.

As part of the expansion project, 11 unemployed

workers were trained in building trades such as

bricklaying, plastering, tiling and electrical wiring.

New training hall equipped with the latest audiovisual equipment that can comfortably accommodate 56 delegates in an auditorium-style seating arrangement

The expansion project included 10 housing units. Each unit has four bedrooms with private bathrooms and a lounge

Lindzia Salimu, an electrical learner from Port Elizabeth, practises the connection of various lamp circuits in the electrical workshop

Queen Ramafoto, a learner from Slurry factory, was the fi rst female to pass a trade test as plater/welder at TSA on 30 September 2008

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Workforce analysis – Botswana and Zimbabwe

Male Female

Senior management 5 0

Middle management 39 6

Skilled upper 124 29

Semi-skilled/apprentices 267 21

Labourers/unskilled 206 3

Total 641 59

Recruiting to meet demographics

PPC endeavours to recruit, where appropriate,

black talent in accordance with the demographic

requirements of the regions in which it operates.

Recruitment in this aspect has increased to 85% during

the year under review from 68% in 2007.

Workforce analysis – South Africa

African Coloured Indian White Total

Male Female Male Female Male Female Male Female

Executive 0 0 0 0 1 0 4 0 5

Senior management 1 0 2 0 0 0 10 0 13

Middle management/

professional 32 17 25 6 23 12 152 36 303

Skilled upper/technical 157 39 113 35 9 8 272 65 698

Semi-skilled/apprentices/

trainees 717 48 239 46 2 4 32 47 1 135

Labourers/unskilled 262 13 29 0 0 0 6 0 310

Total 1 169 117 408 87 35 24 476 148 2 464

SA RECRUITMENT BY RACE – 2007

■ African

■ Indian

■ Coloured

■ White

48%

4%

32%

16%

SA RECRUITMENT BY RACE – 2008

■ African

■ Indian

■ Coloured

■ White

59%

3%

15%

23%

Transforming beyond 2010

2008 highlights

• Announcement of a 15,29% BBBEE transaction;

• 57% increase in procurement from historically

disadvantaged South Africans;

• Appointment of fi ve black executives, including

PPC’s fi rst black female executive;

• 2% increase in women in management;

• 5,5% increase in black management staff;

• Projects agreed with local communities for inclusion

in the company’s social and labour plans; and

• Letters of support received from all host

municipalities for PPC’s application of conversion

from old-order to new-order mineral rights.

Achieving REAL transformation beyond

compliance

PPC is committed to the national broad-based

socioeconomic transformation objectives of South

Africa beyond 2014. PPC’s transformation path

continues to be guided by PPC’s REAL transformation

philosophy, which is at the heart of all its initiatives and

refers to transformation that is relevant, empowering,

actualised and lasting.

During the year under review, PPC consulted and

engaged with various national and provincial

government departments and municipalities in pursuit

of realising its REAL transformation objectives.



Figure 1: PPC’s REAL transformation philosophy.

Transformation must be REAL

Relevant

Empower

Actualise

Lasting

Sustainable, visible and emotional impact

Be part of DNA of doing business, a way of life

Must make a difference to many; must bridge socio-economic gap

Must make business sense; add economic value to all stakeholders

Continuing to implement the transformation philosophy

In 2008, the transformation initiative within PPC gained momentum to meet the transformation objectives

as depicted here

To create future black leaders (skills

development, Mining Charter)

To invest in and develop black business (enterprise development, preferential

procurement)

To develop and create opportunities for black employees (skills development, employment equity)

To invest in and develop disadvantaged communities (corporate social investment, social

and labour plans)

To create business opportunities for black

partners (equity and ownership

Figure 2: Transformation objectives

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Creating business opportunities for black

partners beyond 2010

PPC is fi rmly committed to black economic

empowerment in South Africa and recognises that

meaningful participation by black people in the

mainstream economy is essential to sustain the

country’s socioeconomic objectives. PPC realigned

its shareholding to include broad-based groupings

of black shareholders, including employees and

communities. This culminated in the announcement

of a broad-based black economic empowerment

transaction.

Achieving a sustainable broad-based ownership

The BBBEE transaction created and transferred equity

into black hands through various broad-based trusts,

a consortium of four strategic business partners and

two community services groups. The equity distribution

to achieve this sustainable and all-encompassing

transaction was as follows:

• Strategic business partners

• Community services groups

• PPC Education Trust

• Community Trust

• Current and Future PPC Team Trust

• PPC Team Benefi t Trust

• Black Non-Executive Directors Trust

• PPC Construction Industry Associations Trust

• Black Managers Trust

Releasing REAL empowerment value to the

benefi ciaries beyond compliance

The total value of the BBBEE transaction is

R2,7 billion1, which represents 15,29% of the value of

PPC. The funding of this transaction has been achieved

through innovative funding structures that release the

maximum benefi t to the broad-based participants

at the earliest possible time through the payment of

dividends.

Investing and developing disadvantaged

communities

Community Trust

Building thriving and sustainable communities

The PPC Community Trust was established to give

communities that host our operations 0,71%

ownership of the company. The vision of the trust is

to build thriving and sustainable host communities

beyond the life of the mining operations.

Community participation

The Community Trust will be managed and controlled

by trustees who are responsible for the administration

and application of the fi nances on behalf of the 10 host

communities across South Africa. The appointment of

trustees will be in consultation with community forums

established as a mechanism to give benefi ciaries

direct participation in the trust. Host community

benefi ciaries, in the form of local public-benefi t

organisations, community-based organisations and

non-governmental organisations will be represented

on the community forums and will identify, prioritise

and recommend to the trust sustainable community

development projects that are aligned with their

municipality’s integrated development plans.

Investment areas

The main areas of investment for the trust will be in

trustee-approved projects that meet the following

criterium:

• Alignment with the municipality integrated

development plans

Benefi ciaries

Benefi ciaries who are black will include:

• Youth;

• Women;

• People with disabilities; and

• The elderly

1These numbers are based on a PPC share price of R31,32 per share



Developing and creating opportunities for

employees

Black Managers Trust

The Black Managers Trust was established to empower

current and future black South African managers of

PPC. The trust is designed to attract, provide incentives

to and empower black managers. The trust will assist

PPC in achieving black equity ownership by attracting

black professionals from outside the group to achieve

its transformation commitments.

PPC Team Trust

Sharing the value, building a better future

As part of PPC’s process of transformation, the

company is introducing an exciting employee share-

ownership empowerment vehicle, the PPC Team

Trust. This trust contains provisions that are required

by the BEE codes of good practice. The objective of

this arrangement is primarily to empower current and

future employees of PPC and to attract and provide

incentives to these employees.

• The Current Team Trust seeks to empower all

general employees in the permanent employ of the

company at the transaction date.

• The Future Team Trust seeks to empower all

permanent general employees of the company

with less than one year service as well as future

permanent general employees.

PPC will fund the initiative by making a non-refundable

donation to the trust, which in turn will subscribe for

PPC shares.

Shares allocated to each benefi ciary will vest upon

allocation, although the shares will only be delivered

to benefi ciaries and become tradable after a lock-

in period of fi ve years from the date of allocation.

Benefi ciaries will be entitled to all dividends paid and

distributions made in respect of the shares that have

been allocated to them.

The Future Team Trust will also assist PPC to attract

a diverse pool of talent from outside the group to

achieve its business and transformation targets into

the future. The trust will terminate after fi ve years,

after the last shares have been allocated.

Developing and creating opportunities for black

emerging contractors

The PPC Construction Industry Associations Trust

The Construction Industry Associations Trust is

intended to empower construction and related industry

associations and their members to deliver strategic

projects. These projects are intended to contribute

to the socioeconomic upliftment of disadvantaged

individuals and their communities across South Africa.

PPC Education Trust

The PPC Education Trust is a broad-based trust in

terms of requirements of the BBBEE codes of good

practice. The income of the trust is for the education

and training of black stakeholders within the cement-

manufacturing, mining and construction industries.

Educational organisations and institutions that satisfy

the trust’s criteria will be identifi ed by the board of

trustees to participate as service providers to the trust.

Special provisions have been built into this trust in the

event that it may want to register as a public-benefi t

organisation in the long term.

PPC Team Benefi t Trust

The Team Benefi t Trust was established to facilitate

black ownership and benefi t a broad base of PPC

employees and their dependants. The income received

by the trust will be applied towards the following

priority focus areas:

• Education and development;

• Healthcare and wellness; and

• Other compassionate needs.

Empowering emerging contractors

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Black Non-executive Directors Trust

The benefi ciaries of this trust will be independent

black non-executive directors of PPC as selected by the

company’s board of directors.

The trust was established to primarily contribute

towards black ownership and to appropriately provide

incentives to black non-executive directors.

Investing to empower

As a committed corporate citizen, PPC embraces

the principles of corporate social responsibility and

corporate social investment. PPC’s CSI policy and

community upliftment programmes uphold the socio-

economic tenets of the Mining Charter and the BBBEE

scorecard. CSI and social and labour plans address the

company’s contribution to the communities in which

PPC operates and sources its labour force.

CSI spend

The company has concentrated its CSI efforts on

empowering communities through skills development

and training to build sustainable projects that achieve

a better life for all.

Through its CSI initiatives, PPC is making a signifi cant

contribution to the lives of many thousands of needy

South Africans, particularly children.

PPC spent R7 million in support of various projects

across the country during the year under review.

As in previous years, preference was given to projects

and initiatives that promote:

• Education and training;

• Health and welfare;

• Infrastructure development;

• Poverty alleviation;

• Sport; and

• Job creation.

2007 – 2008 Group CSI expenditure

■ Education

■ Community training

■ Infrastructure

■ Welfare

■ Arts & culture

■ HIV/Aids

■ Drug rehabilitation

■ Other – Sport

■ Job creation

Education55,4%

Infrastructure16,1%

Welfare 4,5%

Arts & culture 0,8%

HIV/Aids 4,5%

Other – Sport 3,8%

Community training3,1%

Drug rehabilitation0,3%

Job creation11,5%



Case study – Zenzele Counselling Permaculture Project

The Zenzele Counselling Permaculture Project is a home-based care organisation that was started by the late Winnie

Gertrude Mabaso, popularly known in the Finetown area, south of Johannesburg, as Mama Winnie. The project

counsels adults, orphans and vulnerable children infected and affected by HIV and Aids.

In the 2007/2008 fi nancial year, PPC, in consultation with Zenzele’s management and caregivers, started an initiative

to grow organic fruit and vegetables that would allow the centre to provide a consistent and long-term supply of

adequate nutrition to the children and the ill. Food and Trees for Africa was identifi ed as the provider to implement

the permaculture garden.

Aims and objectives

In line with the company’s corporate social investment motto, Invest to Empower, and PPC’s REAL transformation

philosophy, the focus and intention were to:

• Develop a permaculture food garden for the centre;

• Impart permaculture skills to the caregivers and the community at large;

• Promote food security among the project members, their families and community members;

• Improve nutrition of those served by the centre through the increased availability of fresh food; and

• Generate income through the sale of garden produce.

Permaculture food garden development

• The food garden at Zenzele is well designed, with a variety of fruit trees and vegetables. A number of herbs and

medicinal plants, including comfrey, yarrow, calendula, impepho (a traditional African herb) and lavender, are

used in the making of healing ointments. Culinary herbs such as rosemary, thyme, marjoram and basil are used for

cooking and making herbal salts, which are sold to generate income.

• The garden has improved the aesthetics of the property and it is also a useful breeding ground and habitat for

natural predators such as birds and lizards that help to reduce the number of pests in the food garden.

Permaculture skills training

Project members have acquired a number of skills, including:

• The art of mulching, companion planting and the making and application of compost and liquid manure;

• Crop rotation and water harvesting;

• The preparation and use of medicinal plants and herbs through workshops provided by volunteer group Khanya

Africa. Members were taught to make herbal salts, ointments and cough mixtures; and

• Sunfi re Solutions facilitated a solar cooker workshop, which illustrated how meals can be prepared using solar

cookers and pots. This technology will help to reduce energy bills and will also serve as a backup during power

cuts.

Promoting food security

• The garden has a large variety of vegetables, herbs and fruit trees and the diversity ensures there is always fresh

produce available, contributing to food security for the whole community. The project now supplies vegetables

to the patients serviced by the home-based caregivers. The community is encouraged to join the various training

projects and workshops to acquire the skills and plant similar gardens at home to support themselves.

Improving nutrition

• All produce from the garden is organic and has maximum nutrient value. Project members have gained knowledge

on nutrition and the preparation of healthy, fresh food, which has a positive impact on the health of the orphans,

project members and their families, the terminally ill benefi ciaries of the home-based care services and the

community at large.

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Case study – Zenzele Counselling Permaculture Project (continued)

Income generation

• Fresh vegetables are sold to the community;

• The surplus from the gardens is dried and sold to the community;

• The herbs are used in making salts that are sold;

• Some herbs are used in making cough mixtures, ointments and mouth washes, which are sold to the patients and

the local community; and

• Seeds are harvested and kept for the next planting season, which saves money and contributes to the project’s

sustainability.

The project has been a great success and serves as a model that has encouraged PPC to develop similar gardens in

other areas. It is a testimony to PPC’s REAL transformation philosophy: the food garden is relevant to the Zenzele

project because it enables the children to enjoy fresh organic vegetables grown without any pesticides. Furthermore,

excess produce is sold to generate much-needed income to support the project. The Finetown community has been

empowered and has acquired skills to develop food gardens in their backyards. The project has, therefore, made a

difference in the lives of many. PPC will continue to be involved in social upliftment initiatives of this nature, because

investing in the upliftment of fellow citizens is part of the business’s DNA and is the actual way of life at PPC. The

permaculture food garden is sustainable and has a lasting future.

Dinaledi bursaries

Building the educational capacity of black

communities

PPC believes that strengthening the educational

capacity of historically disadvantaged South African

communities is the key to sustainable development.

By investing in and supporting a variety of education

programmes, the company intends to facilitate the

empowerment of young people, which will enable

them to participate in mainstream economic activity.

In 2008, PPC spent a total of R1,4 million to support

18 Dinaledi bursars selected from disadvantaged

communities throughout South Africa to study at

various universities in the following disciplines:

Study disciplines Male Female

Chemical engineering 5 3

Mining engineering 2 3

Mechanical engineering 4 0

Electro-mechanical engineering 1 0

Total 12 6

Figure 3: 2008 Dinaledi bursars’ study disciplines

Sustainability beyond legislative compliance

PPC has made signifi cant progress in its effort to meet

the government’s requirements of the Broad-based

Socioeconomic Charter for the Mining Industry and

the Minerals and Petroleum Resources Development

Act, 2002. PPC’s old-order mineral rights conversion

applications were submitted to the Department of

Minerals and Energy for evaluation in 2008.

The department has formally engaged PPC with

feedback on the applications, and amended social

and labour plans will be submitted for approval by the

end of 2008. Through these plans, PPC is committed

to accelerate its broad-based socioeconomic

transformation process.



Mining Charter scorecard

Details of PPC’s progress in accordance with the scorecard for the broad-based socioeconomic charter for the mining

industry are itemised below:

Requirements Achieved

Human resources development

• Has the company offered every employee the opportunity to be functionally literate and numerate and are employees being trained?

•

•

Yes, the opportunity to become functionally literate and numerate is offered at all sites.623 employees were trained in ABET (a 79% increase from 2007)

• Has the company implemented career paths for Historically Disadvantaged South African (HDSA) employees, including skills development plans?

•

•

•

Yes, PPC has appointed skills development facilitators for every site to develop annual workplace skills plans (WSP) and compile annual skills development reports. Workplace skills development plans were formulated and submitted to the relevant Seta in accordance with legislation.2 293 employees benefi ted from skills development interventions, 77% of which were HDSAs (a 317% increase from 2007).Individual development plans, linked to career paths, have been formulated and are being implemented in accordance with the WSP.

• Has the company developed systems through which empowerment groups can be mentored?

• Yes, PPC established the enterprise development unit through which empowerment groups will be developed, supported and mentored.

Employment equity

• Has the company published its employment equity plan and reported on its annual progress in that plan?

•

•

Yes, the employment equity reports for all sites were submitted to the Department of Labour.Progress of the plan is published annually in the annual report and communicated to stakeholders through the employment equity forums in accordance with employment equity legislation.

• Has the company established a plan to achieve a target for HDSA participation in management of 40% within fi ve years of implementing its plan?

•

••

Yes, signifi cant progress has been made towards the 40% in management target across the group – it is now 48,2%.Black executive representation currently at 56%.Black female executive representation at 11%.

• Has the company identifi ed a talent pool and is it fast-tracking this pool?

• Yes, one-on-one performance reviews, intellectual capital reviews and succession plan processes across all levels are used to identify talent pools to fast-track development and promotion.

• Has the company established a plan to achieve the target for female participation in mining of 10% within fi ve years and is it implementing the plan?

•

•

•

•

•

Yes, PPC has prioritised the recruitment of women to increase their participation beyond 2009.PPC prioritised the recruitment of women, especially black females, into management positions.Women’s participation in learnerships, bursaries and development initiatives increased signifi cantly in line with this plan.Currently 18,6% women are employed across PPC against 15,2% in 2007. 2% increase of women in management positions.

Foreign migrant labour

• Has the company subscribed to the government and industry’s agreements to ensure non-discrimination against foreign migrant labour?

•

•

Yes, PPC subscribes to the government and industry’s agreements to ensure non-discrimination against foreign migrant labour.A non-discriminatory recruitment policy is in place and is implemented.

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Local economic development

• Has the company cooperated in the formulation of integrated development plans, and is it cooperating with the government in the implementation of these plans for communities in which mining takes place and for major sending areas?

• Yes, all social and labour plans have been aligned with the integrated development plans of local municipalities, and engagement on the identifi cation of projects for implementation has been completed.

• Has there been an effort on the side of the company to engage the local mine community and major labour sending-area communities?

•

•

•

Yes, arrangements are in place to engage with the development and implementation of host and labour-source municipality integrated development plans.Continuing interaction and engagement takes place in established bilateral forums.PPC sites participate in the mining forums of the host municipalities in which they operate.

Housing and living conditions

• For company-provided housing, has the company, in consultation with stakeholders, established measures for improving the standard of housing, including the upgrading of hostels and conversions of hostels to family units, and promoted home-ownership options for mine employees?

•

•

•

PPC prioritises the sourcing of labour from host and neighbouring communities.Company housing is provided at most of the remote operations.PPC promotes home ownership by facilitating opportunities for employees to secure housing loans where required.

• Companies will be required to indicate what they have done to improve housing and provide a plan to progress the issue over time and show its implementation.

Procurement

• Has the company given HDSA’s preferred-supplier status?

• Yes, PPC’s procurement policy gives preferred-supplier status to HDSAs.

• Has the company identifi ed present levels of procurement from HDSA companies in terms of capital goods, consumables and services?

• Yes, all PPC sites have completed the required Form T’s to identify the present levels of procurement in the sites’ social and labour plans.

• Has the company indicated a commitment to a progression of procurement from HDSA companies over a three to fi ve-year time frame in terms of capital goods and consumables, and to what extent has the commitment been implemented?

•

•

•

Yes, PPC intends to increase HDSA procurement to 50% by 2014.At present, the procurement spend on HDSA companies is 39%.Total procurement spend on HDSA companies in 2008 was R1,415 billion.

Ownership and joint venture

• Has the company achieved HDSA participation in terms of ownership for equity or attributable units of production of 15% in HDSA hands within fi ve years and 26% in 10 years?

•

•

Yes, PPC achieved broad-based HDSA participation in terms of placing ownership of 15% equity in black hands.The Department of Minerals and Energy is engaged in discussions with PPC to verify this ownership element of the scorecard.

Benefi ciation

• Has the mining company identifi ed its current levels of benefi ciation?

• Guidelines for the industry in which PPC operates are yet to be published. PPC benefi ciates all limestone mined into cement or lime. This equates to 30 times that of the mined mineral.

• Has the mining company established its baseline level of benefi ciation and indicated the extent to which this will have to be increased to qualify for an offset?

••

PPC benefi ciation reached the limit.The fi nal product is cement, which is utilised in the building and construction industry.




Human resources development

Reporting

• Has the company reported on an annual basis in the annual report its progress towards achieving its commitments?

•

•

•

Yes, the progress on the Mining Charter scorecard and the implementation of social and labour plan commitments is a permanent feature of the annual report.Independently verifi ed annual reports on the implementation of social and labour plans will be submitted to the Department of Minerals and Energy in accordance with legislative requirements in 2009.Extensive reporting on sustainability and social performance indicators are included in the annual report.

Empowering small business

Investing in and developing black businesses In terms of BEE codes of good practice and in keeping

with PPC’s nation-building philosophy, the company

established the PPC Ntsika Fund (Pty) Limited to assist

enterprises and entrepreneurs to grow their businesses

and reach their ultimate goal of operational and

fi nancial independence. Ntsika is a Nguni word that

means “pillar of strength”.

PPC Ntsika Fund (Pty) Limited – Empowering small businesses

Empowering disadvantaged womenPPC’s small business enterprise development fund

entered into a partnership with a local women’s

enterprise, known as the Loerie Vrouegroep, in the

Eastern Cape. The PPC Ntsika Fund assisted the group,

whose members are mostly disadvantaged women, to

fi nance its acquisition of the company’s rehabilitated

quarry and adjacent pieces of land measuring 1 200

hectares. The Loerie Vrouegroep plans to utilise the

land to develop its hospitality business.

The PPC Ntsika Fund provided a loan facility to the

Loerie Vrouegroep to purchase the land, part of which

was used as a quarry until it was closed down eight

years ago. The quarry land has undergone extensive

rehabilitation, which was successfully completed in

2005. During the process of rehabilitation, the Loerie

Vrouegroep was established to conduct feasibility

studies into how the land could best be utilised to

benefi t the local community, especially rural women.

The Ntsika Fund will continue to support the Loerie

Vrouegroep to ensure that the ongoing partnership

remains solid and will endeavour to assist the group

in achieving its operational and fi nancial independence

objectives.

Empowering gifted artists

The model builder

Moses Masibi has lived in Mabopane, north of Pretoria,

his entire life. He was born with a birth defect that

affected both his legs and spine, and was in and out

of hospital as a child. It was here that he discovered

his passion for the building of models. “I was fi rst

exposed to model building in hospital when I saw

other children building models. I was so desperate to

try it that, when I went home for Christmas, I began

to build models with Omo and Surf washing powder

boxes and masking tape. I was only six or seven at the

time,” he said.

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As he got older, Mr Masibi’s enthusiasm for the art

increased. He continued to build his models, but

his passion received a new lease of life when he

discovered that one could actually make a living from

what he considered to be just a hobby. “I watched a

programme on television and there was a model

being used in a presentation for some architects.

I was amazed,” Mr Masibi said.

Spurred on by the thought of making a living from this

part-time activity, Mr Masibi combed the newspapers

for model-building work and eventually found

employment at an architect’s fi rm. But, after working

at the fi rm for seven years, health reasons forced him

to leave. “I knew model-building was my destiny,

though, and so I decided to start my own company,”

he said.

Mr Masibi started by doing a learnership at Desto

College in Pretoria. During his studies, he applied for

fi nancial assistance from PPC to start his business.

“I wrote to PPC, explaining to them what I do. I also

included photos of my work. I asked them for funds to

start up my business. They contacted Desto and came

to my business plan presentation at the college.”

PPC was suitably impressed and decided to assist

Mr Masibi through its Ntsika Fund. In addition, the

company asked Mr Masibi to build a model of its head

offi ce in Sandton. “It took me a month to build and

I lost a couple of kilograms doing it. I worked fl at out,

until two or three every morning,” he said.

Today, his model stands proudly in the foyer of PPC’s

head offi ce in Sandton.

BBBEE audit and verifi cation

PPC conducted its very fi rst BBBEE audit and verifi cation

in 2004, followed by annual audits in 2005 and 2007.

At present, the company has a recognition level of

7 according to the BEE codes of good practice, but this

should improve once the 2008 audit and verifi cation is

completed. A further improvement is expected once

the equity component is taken into account. This

higher recognition level will result from the conclusion

of PPC’s BBBEE transaction and major changes to the

company’s senior management structure in terms

of the appointment of senior black executives. With

the exception of enterprise development, all other

components of the generic scorecard are expected to

score well.

Growth and transformation through preferential

procurement

Preferential procurement has increased signifi cantly

over the course of the year. In terms of the codes of

good practice, a preferential procurement target of

R1,4 billion with BEE suppliers was set for 2008. This

target was achieved with the spend of R1,415 billion

for the year.

Customer health and safety

Just as the company focuses on employees’ health and

safety, it is equally important to focus on ensuring the

health and safety of our customers. Information on the

safe use of PPC products is printed on the bags, delivery

notes, silos and tankers; providing clear instructions

and information to prevent any health or safety related

incidents. Detailed product safety data sheets are made

available and a toll-free telephone number is published

extensively to further assist PPC’s customers during their

time of need. Quality assurance and technical experts,

employees of the company, are available to engage

continually with customers as part of PPC’s customer

service ethos.

There were no instances of non-compliance with

regulations concerning customer health and safety, nor

any penalties or fi nes imposed for any breach recorded

in the past year. Similarly no complaints were upheld by

regulatory or offi cial organisations with regard to health

and safety in respect of PPC products and services.Talent unearthed


Procedures to deal with product quality non-

conformances form part of the integrated SHEQ

(safety, health, environment and quality) management

systems. Customer focus groups are held regularly

enabling the company to address issues relating to

product information. There were no instances of non-

compliance with any regulations concerning packaging

and product information and labelling, nor were any

fi nes or penalties for breaches recorded.

The company’s strategic approach to marketing-related

or company-specifi c advertising, is in accordance with

the guidelines of the National Advertising Standards

Authority. Accredited and noteworthy service providers

are employed to manage the design and placement of

the adverts on behalf of PPC. As such, no breaches of

advertising or market regulations were reported in the

2008 fi nancial year.

Furthermore, information security policies and

procedures have been implemented throughout PPC to

ensure the confi dentiality and privacy of all customers.

Risk reportDespite increased activity at all our factories, the trend

for the lost-time injury frequency rate continued to

decline, ending the year at 0,29. This represents just

under 1,5 injuries per 1 million man hours worked.

The total number of lost time injuries decreased from

28 to 20 for the year under review. These statistics are

analysed and discussed at monthly executive meetings

and distributed widely throughout the company.


The following sites achieved more than 0,5 million

LTI-free hours.

Factory Million hours

Lime Acres 3,01

Zimbabwe 2,20

Port Elizabeth 1,85

Dwaalboom (excluding projects) 1,08

Aggregates 1,00

PPC Cement Sales and Marketing 0,97

Hercules/Beestekraal 0,59

De Hoek 0,53

All operations in the company are now certifi ed to

SANS 16000:2007, a national standard for HIV/Aids

management. This standard not only focuses on the

implementation of minimum standards, but is also a

philosophy of continual improvement towards best

practice.

All factories have maintained their Occupational Health

and Safety Assessment Series 18001 certifi cations,

which ensure that PPC complies with the International

Labour Organisation’s standards for health and safety

in the workplace. All sites have been audited by Dekra,

an independent European certifi cation body that

ensures compliance with recognised standards. All

sites achieved fi ve-shield status during 2008.

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6

5

4

3

2

1

0

Group LTIs Group LTIFR

Oct

200

6

Dec

200

6

Feb

200

7

Ap

r 20

07

Jun

200

7

Au

g 2

007

Oct

200

7

Dec

200

7

Feb

200

8

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08

Jun

e 20

08

Au

g 2

008

The following PPC sites received awards from Dekra:

Award Criteria Factory name

Silver sustainability shield award Five shield certifi cates in safety, health, environmental and HIV/Aids management, and quality

PPC Lime Acres


PPC Hercules


PPC Port Elizabeth


PPC Dwaalboom

Bronze shield awards Five shield certifi cates in safety, health and environmental management, and quality

PPC Slurry


PPC Saldanha


PPC Riebeeck


PPC De Hoek


PPC Montague Gardens

The protection of employees’ health and safety and the prevention of incidents have been a major focus for the company.

During the 2008 fi nancial year 2 050 employees were trained in hazard-identifi cation techniques.


GRI cross-reference index

GRI indicator numbern/a – not applicable/not available

VISION AND STRATEGY Page

1.1 Vision and strategy on sustainable development 53, 741.2 Key elements of report 1

PROFILEOrganisational profi le2.1 Name of reporting organisation Every page2.2 Major products and/or services, including brands 42.3 Operational structure 72.4 Major divisions, operating companies, subsidiaries and joint ventures 7, 1962.5 Countries of operation 4, 72.6 Nature of ownership 72.7 Markets served 7, 19 – 202.8 Scale of reporting organisation

– Number of employees 9, 74, 109– Products/services offered 4, 7– Net sales 137– Total capitalisation debt and equity 136– Value added 109– Total assets 136– Sales/revenue by country/region 40– Major products/services 4– Costs by country/region n/a– Employees by country/region

2.9 Stakeholders– Communities 85, 87, 90 – 94– Customers 23– Shareholders and providers of capital 22, 198– Suppliers 95– Trade unions 74– Workforce, direct and indirect 74, 85

Report scope2.10 Contact person 1992.11 Reporting period 1042.12 Date of most recent previous report 30 Sept 072.13 Boundaries of report n/a2.14 Changes in size, structure, ownership of products/services 292.15 Joint ventures, partially owned subsidiaries, leased facilities, outsourced operations and other 7, 1962.16 Restatements of information in earlier reports 124-125

Report profi le2.17 Decisions not to apply GRI principles n/a2.18 Defi nitions 120 – 1242.19 Changes in measurement methods 1252.20 Policies and internal practices to enhance assurance about report 36, 44 – 472.21 Policy on independent assurance for report n/a2.22 Additional information n/a

GOVERNANCE STRUCTURE AND MANAGEMENT SYSTEMSStructure and governance3.1 Governance structure 36 – 473.2 Independent non-executive directors 24, 25, 27, 36 – 393.3 Expertise of board members 26 – 27, 36 – 373.4 Board identifi cation of risks and opportunities 41, 45 – 463.5 Executive compensation and goals 36 – 47, 168 – 1733.6 Organisation structure – economic, environmental, social and related policies 7, 52 – 533.7 Principles and policies on economic, environmental and social performance 50 – 953.8 Shareowner recommendations to board n/a


3.9 Identifi cation of stakeholders 41, 53, 553.10 Stakeholder consultation 53, 553.11 Information from stakeholder consultations 55, 563.12 Use of information from stakeholder engagement 53, 55, 56

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GOVERNANCE STRUCTURE AND MANAGEMENT SYSTEMS Page

Overarching policies and management systems3.13 Precautionary approach 45, 463.14 Externally developed principles endorsed 36, 58 – 59, 693.15 Industry, business and advocacy organisations 55 – 563.16 Upstream and downstream impacts:

– Outsourcing and supplier performance 71– Product and service stewardship 67 – 68

3.17 Indirect impacts of organisation 50 – 713.18 Major changes in location or operations 13 – 15, 19 – 233.19 Programmes and procedures for social performance, including:

– Priority and target setting 72 – 78– Performance improvement 72– Internal communication and training 78 – 84– Performance monitoring 53, 57 – 58, 63, 78– Internal and external auditing 40, 44, 106– Senior management review 107 – 108

3.20 Certifi cation of management systems 52, 53, 68 – 70, 95

GRI CONTENT INDEX4.1 Location of GRI report content 97 – 101

PERFORMANCE INDICATORSEconomic performance indicators

CustomersEC1 Net sales 137EC2 Geographic breakdown of markets 176 – 177

SuppliersEC3 Cost of goods, materials and services purchased 109EC4 Contracts paid in accordance with agreed terms 109EC11 Suppliers by organisation and country n/a

EmployeesEC5 Payroll and benefi ts 109

Providers of capitalEC6 Distribution to providers of capital 109EC7 Increase/decrease in retained earnings 138 – 139

Public sectorEC8 Taxes by country 155 – 156EC9 Subsidies received by country n/aEC10 Donations to community, civil society and others 89 – 91EC12 Non-core business infrastructure development n/a

Indirect economic impactsEC13 Divisions’ indirect economic impacts 87 – 95

MaterialsEN1 Materials used other than water, by type 64EN2 Percentage of materials used that are wastes from external sources 58, 64

EnergyEN3 Direct energy use 60EN4 Indirect energy use 60EN17 Initiatives to use renewable energy sources and increase energy effi ciency 56, 57, 63, 64, 68, 69EN18 Energy consumption footprint of major products 64EN19 Indirect (upstream or downstream) energy use 60

WaterEN5 Water use 58, 68 – 69EN20 Water sources and ecosystems and habitats affected 68EN21 Withdrawals of ground and surface water 68EN22 Recycling of water 68


GRI cross-reference index continued


PERFORMANCE INDICATORSEconomic performance indicators Page

BiodiversityEN6 Land in biodiversity-rich habitats n/aEN7 Impacts on biodiversity in terrestrial, fresh-water and marine environments 57EN23 Land for production activities or extractive use n/aEN24 Impermeable surface of land n/aEN25 Impacts on protected and sensitive areas 57EN26 Changes to natural habitats from activities and habitats protected or restored n/aEN27 Objectives for protecting and restoring ecosystems 57EN28 Species with habitats in areas of operation 57EN29 Business units in or around protected or sensitive areas n/a

Emissions, effl uents and wasteEN8 Greenhouse gas emissions 57, 60 – 63, 68EN9 Ozone-depleting substances 57, 60 – 62, 68 – 69EN10 Other signifi cant air emissions by type 56, 61, 65 – 66, 70EN11 Waste by type and destination 58, 68 – 70EN12 Discharges to water n/aEN13 Spills of chemicals, oils and fuels n/aEN30 Indirect greenhouse gas emissions n/aEN31 Hazardous waste n/aEN32 Ecosystems/habitats affected by water run-off n/a

SuppliersEN33 Performance of suppliers 71

Products and servicesEN14 Impacts of products and services 61, 65EN15 Products and reclaimable n/a

ComplianceEN16 Incidence of fi nes for environmental non-compliance 71

TransportEN34 Impacts of transportation used for logistical purposes 68 – 69

OverallEN35 Total environmental expenditures by type n/a

SOCIAL PERFORMANCE INDICATORS:labour practices and decent work

EmploymentLA1 Workforce by region/country, employee/non-employee, full-time/part-time, by contract

(indefi nite or permanent/fi xed term or temporary), temporary agency co-employment85

LA2 Net employment creation and average turnover segmented by region/country 74, 85LA12 Employee benefi ts beyond legal mandate n/a

Labour/Management relationsLA3 Employees represented by trade unions, bona fi de employee representatives or covered by collective

bargaining agreements47, 74

LA4 Information, consultation and negotiation with employees over changes in operations 74A13 Formal worker representation in decision-making or management, including corporate governance 74

Health and safetyLA5 Recording and notifi cation of occupational accidents and diseases 96, 97LA6 Formal health and safety committees comprising manager and worker representatives 96LA7 Standard injury, lost day and absentee rates and number of work-related fatalities

(including subcontracted workers) 96, 97LA8 Policies or programmes on HIV/Aids 96, 97LA14 Compliance with ILO Guidelines for Occupational Health Management Systems 97LA15 Agreements with trade unions or bona fi de employee representatives covering health

and safety at work 96

Training and educationLA9 Average hours of training per year by category of employee n/aLA16 Programmes to support continued employability of employees and to manage career endings 79 – 84LA17 Programmes for skills management or for lifelong learning 79 – 84

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SOCIAL PERFORMANCE INDICATORS: labour practices and decent work Page

Diversity and opportunityLA10 Equal opportunity policies and programmes and monitoring systems 42, 47, 77 – 84LA11 Senior management and corporate governance bodies including female/male ratios and

other cultural diversity 85

Strategy and managementHR1 Human rights in relation to operations, including monitoring mechanisms and results 47HR2 Human rights impacts on investment and procurement 47HR3 Human rights within supply chain, including monitoring systems 47HR8 Employee training on human rights in operations 47

Non-discriminationHR4 Prevention of discrimination in operations 46 – 47, 92

Freedom of association and collective bargainingHR5 Freedom of association policy 47, 72

Child labourHR6 Child labour 47

Forced and compulsory labourHR7 Forced and compulsory labour 47

Disciplinary practicesHR9 Appeal practices n/aHR10 Non-retaliation policy 47

Security practices

HR11 Human rights training for security personnel 47

Indigenous rightsHR12 Needs of indigenous people 47HR13 Jointly managed community grievance mechanisms n/aHR14 Share of operating revenues redistributed to local communities 89

SocietyCommunitySO1 Communities affected by activities 85, 87, 90 – 94SO4 Awards for social, ethical and environmental performance 71, 96

Bribery and corruptionSO2 Policy on bribery and corruption 47

Political contributionsSO3 Political lobbying and contributions 47, 85SO5 Money paid to political bodies 47

Competition and pricingSO6 Court decisions on anti-trust and monopoly regulations n/aSO7 Mechanisms to prevent anti-competitive behaviour n/a

PRODUCT RESPONSIBILITYCustomer health and safetyPR1 Customer health and safety during use of products and services 95, 96PR4 Non-compliance concerning customer health and safety 95PR5 Number of complaints 95PR6 Voluntary code compliance

Products and servicesPR2 Product information and labelling 96PR7 Non-compliance concerning product information and labelling 96PR8 Customer satisfaction 95, 96

AdvertisingPR9 Advertising policy 96PR10 Breaches of advertising and marketing regulations 96

Respect of privacyPR3 Consumer privacy policy 96PR11 Breaches of consumer privacy n/a

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tons of cement estimated to be used in the Medupi power station project


Certifi cate by company secretary 105

Approval of annual fi nancial statements 105

Report of the independent auditors 106

Directors’ report 107

Value added statement 109

Seven-year review of the group’s results 110

Share performance – JSE Limited 118

Glossary of accounting terminology 120

Accounting policies 125

Group balance sheets 136

Group income statements 137

Group statements of changes in equity 138

Group cash fl ow statements 140

Notes to the group annual fi nancial statements 142

Company balance sheets 178

Company income statements 179

Company statements of changes in equity 180

Company cash fl ow statements 181

Notes to the company annual fi nancial statements 182

Annexure 1 (Interest in subsidiary companies and unlisted associates) 196

PPC in the stock market 198

Administration 199

Notice of annual general meeting 200

Form of proxy 203

Annual fi nancial statementsfor the year ended 30 September 2008

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The directors of the company are responsible for the integrity and objectivity of the annual fi nancial statements and other information contained

in this annual report, which has been prepared in accordance with International Financial Reporting Standards and in the manner required by

the Companies Act, South Africa.

In discharging this responsibility, the group maintains suitable internal control systems designed to provide reasonable assurance that assets are

safeguarded and transactions are executed and recorded in accordance with group policies.

The directors, supported by the audit committee, are satisfi ed that such controls, systems and procedures are in place to minimise the possibility

of material loss or misstatement.

The directors believe that the group has adequate resources to continue in operation for the foreseeable future and the fi nancial statements

appearing on pages 107 and 108 and 125 to 197 have, therefore, been prepared on a going-concern basis.

The annual fi nancial statements were approved by the board of directors on 10 November 2008 and are signed on its behalf by:

MJ Shaw JE Gomersall

Chairman Chief executive offi cer

10 November 2008

Sandton

Certifi cate by company secretaryfor the year ended 30 September 2008

Approval of annual fi nancial statementsfor the year ended 30 September 2008

In terms of section 268G(d) of the Companies Act, 1973, as amended, I certify that Pretoria Portland Cement Company Limited has lodged

with the registrar of companies all such returns as are required of a public company in terms of the act. I further certify that such returns are

true, correct and up to date.

JHDLR Snyman

Company secretary

10 November 2008


Report of the independent auditorsfor the year ended 30 September 2008

TO THE SHAREHOLDERS OF PRETORIA PORTLAND CEMENT

COMPANY LIMITED

We have audited the annual fi nancial statements and group

annual fi nancial statements of Pretoria Portland Cement Company

Limited, which comprise the balance sheets at 30 September 2008

and the income statements, the statements of changes in equity,

the cash fl ow statements for the year then ended, and a summary

of signifi cant accounting policies and other explanatory notes, as

set out on pages 107 and 108 and 125 to 197.

Directors’ responsibility for the fi nancial statements

The company’s directors are responsible for the preparation and

fair presentation of these fi nancial statements in accordance with

International Financial Reporting Standards, and in the manner

required by the Companies Act of South Africa. This responsibility

includes designing, implementing and maintaining internal control

relevant to the preparation and fair presentation of fi nancial

statements that are free from material misstatement, whether due

to fraud or error, selecting and applying appropriate accounting

policies, and making accounting estimates that are reasonable in

the circumstances.

Auditors’ responsibility

Our responsibility is to express an opinion on these fi nancial

statements based on our audit. We conducted our audit in

accordance with international standards on auditing. Those

standards require that we comply with ethical requirements and plan

and perform the audit to obtain reasonable assurance on whether

the fi nancial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence

about the amounts and disclosures in the fi nancial statements. The

procedures selected depend on the auditor’s judgement, including

the assessment of the risks of material misstatement of the fi nancial

statements, whether due to fraud or error. In making those risk

assessments, the auditor considers internal control relevant to

the entity’s preparation and fair presentation of the fi nancial

statements to design audit procedures that are appropriate in the

circumstances, but not for the purpose of expressing an opinion

on the effectiveness of the entity’s internal control. An audit also

includes evaluating the appropriateness of accounting principles

used and the reasonableness of accounting estimates made by

the directors, as well as evaluating the overall fi nancial statement

presentation.

We believe that the audit evidence we have obtained is suffi cient

and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the fi nancial statements and group fi nancial

statements fairly present, in all material respects, the fi nancial

position of the company and the group at 30 September 2008 and

of the fi nancial performance and cash fl ows for the year then ended

in accordance with International Financial Reporting Standards, and

in the manner required by the Companies Act of South Africa.

Deloitte & Touche

Registered auditors

Per MJ Jarvis

Partner

10 November 2008

Buildings 1 and 2, Deloitte Place, The Woodlands Offi ce Park,

Woodlands Drive, Sandton.

National Executive: GG Gelink Chief Executive, AE Swiegers Chief Operating Offi cer, GM Pinnock Audit, DL Kennedy Tax, Legal and Advisory,

L Geeringh Consulting, L Bam Corporate Finance and Strategy, CR Beukman Finance, TJ Brown Clients & Markets, NT Mtoba Chairman of the Board,

CR Qually Deputy Chairman of the Board.

A full list of partners and directors is available on request.

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The directors have pleasure in presenting their report on the annual

fi nancial statements of the company and of the group for the year

ended 30 September 2008.

Business activities

Pretoria Portland Cement Company Limited, its subsidiaries

and associates operate in southern Africa as manufacturers of

cementitious and aggregate products, lime and limestone.

The principal activities of the company and its subsidiaries remain

unchanged from the previous year.

Review of operations

A comprehensive review of operations is detailed in the attached

annual fi nancial statements.

Share capital and premium

The authorised share capital is 600 000 000 ordinary shares of

10 cents each. On 30 September 2008 the issued share capital of

the company was 537 612 390 shares of 10 cents each (2007:

537 612 390 of 10 cents each and 2006: 53 761 239 shares of

R1 each), and the share premium stood at R63 million (2007:

R814 million; 2006: R814 million).

Details of shares authorised, issued and unissued at 30 September

2008 are given in note 10 to the group fi nancial statements.

Register of members

The register of members of the company is open for inspection to

members and the public, during normal offi ce hours, at the offi ces

of the company’s transfer secretaries, Link Market Services South

Africa (Pty) Limited, or at Corpserve (Private) Limited (Zimbabwe).

Directors’ interest in share capital

Details of the benefi cial holdings of directors of the company and

their families in the ordinary shares of the company are given in

note 38 to the group fi nancial statements.

There has been no change in the directors’ interest in share capital

since year-end.

Holding and subsidiary companies

Details relating to the benefi cial shareholders owning more than

3% of the issued share capital of the company appear in “PPC in

the stock market” section on page 198.

The names and country of registration, as well as the amount

of their share capital, percentage holding and interest held by

PPC in each of its principal subsidiary companies are set out in

Annexure 1 on page 196. All subsidiary companies share the same

fi nancial year-end as PPC.

Non-consolidation of Portland Holdings Limited

The results of Portland Holdings Limited have not been consolidated

into the group results. There are signifi cant constraints that have

an impact on the normal operation of Porthold Holdings Limited

and the PPC board concluded that management does not have the

ability to exercise effective control over the business. Due to the

hyperinfl ationary losses incurred, dividends received have been set

off against the carrying value of the investment.

Share buy-back

During the current year, in terms of a special resolution, a group

subsidiary company bought back 20 140 401 ordinary shares

in the company. These shares are treated as treasury shares on

consolidation. The average purchase consideration, including costs,

approximated R37,37 per share, and the company has purchased

3,75% of the issued share capital. As at 30 September 2008,

the subsidiary company is technically insolvent following

mark-to-market revaluations on the shares purchased. Pretoria

Portland Cement Company Limited has provided guarantees in

the way of a subordination agreement relating to the loan that is

receivable from the subsidiary company.

Special resolutions

A special resolution authorising the directors to acquire issued

shares in the ordinary share capital of the company was passed at

the annual general meeting held on 28 January 2008 and registered

on 14 February 2008.

Special resolutions passed by subsidiary companies

No special resolutions were passed by subsidiaries of the company.

Directors’ reportfor the year ended 30 September 2008


Directors’ report continued

for the year ended 30 September 2008

Dividends

No Description Declaration date Record date Payment date Cents per share

2008 2007 2006

Special – 61,0 77,0

210 Final 10 November 2008 9 January 2009 12 January 2009 180,0 166,0 110,0

209 Interim 7 May 2008 30 May 2008 2 June 2008 45,0 38,5 33,0

Property, plant and equipment

Certain of the company’s properties are the subject of land claims.

The company is in the process of discussion with the Land Claims

Commissioner and is awaiting the outcome of claims referred to

the Land Claims Court. The claims are not expected to have a

material impact on the company’s operations.

At 30 September 2008 the group’s net investment in property, plant

and equipment amounted to R2 813 million (2007: R2 178 million;

2006: R1 414 million), details of which are set out in note 1 to

the group fi nancial statements. Capital commitments at the year-

end amounted to R805 million (2007: R1 303 million; 2006:

R1 299 million) and related mainly to the expansion projects

currently in progress. There has been no change in the nature of

the property, plant and equipment or to the policy relating to the

use thereof during the year.

Borrowings

The company’s borrowing powers are unlimited. At 30 September

2008 borrowings amounted to R1 674 million (2007: R1 442 million;

2006: R1 073 million). The borrowing powers of its wholly owned

subsidiary company, Portland Holdings Limited, are limited by its

articles of association to twice the amount of shareholders’ interest.

At 30 September 2008 the level of borrowings did not exceed the

limit.

Post-balance sheet events

There are no post-balance sheet events that may have an impact on

the group’s reported fi nancial position at 30 September 2008.

Broad-based black economic empowerment initiative

The company announced the details of its empowerment initiative

in August 2008 for approval by shareholders at a general and

scheme meeting on 11 November 2008. For details of the initiative,

refer to the circular issued to shareholders on 16 October 2008.

Directors and company secretary

The directors in offi ce at the date of this report appear on pages

24 and 25.

Details relating to the company secretary appear in the administration

section on page 199.

At the annual general meeting held on 28 January 2008, Messrs

S Abdul Kader, MJ Shaw, J Shibambo, Ms NB Langa-Royds and

Ms ZJ Kganyago were re-elected as directors of the company.

Subsequent to the last annual general meeting, Messrs TDA Ross

(with effect from 17 July 2008) and BL Sibiya (with effect from

10 November 2008) were appointed to the board.

In terms of the company’s articles of association, Messrs

TDA Ross and BL Sibiya, having been appointed as directors by the

board during the year, are required to retire and Messrs RH Dent,

P Esterhuysen and AJ Lamprecht are required to retire by rotation

in terms of the articles of association. All have offered themselves

for election and re-election respectively at that meeting and the

nominations committee has recommended their election and

re-election respectively.

Auditors

Deloitte & Touche were reappointed as auditors to the company at

the annual general meeting held on 28 January 2008.

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Value added statementfor the year ended 30 September 2008

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.

Notes2008

Rm2007

Rm2006

Rm

Revenue 6 248 5 566 4 686

Paid to suppliers for materials and services 1 (3 021) (2 593) (2 178)

Value added 3 227 2 973 2 508

Exceptional items 2 14 –

Income from investments* 94 89 67

Total wealth created 3 323 3 076 2 575

Wealth distribution:

Salaries, wages and other benefi ts 2 679 597 459

Providers of capital 1 558 1 296 1 111

Finance costs 157 84 52

Dividends 1 401 1 212 1 059

Ordinary dividends 1 088 798 629

Special dividend 313 414 430

Government 3 632 777 676

Reinvested in the group to maintain and develop operations 454 406 329

Depreciation 214 192 165

Retained profi t 98 217 155

Deferred taxation 142 (3) 9

3 323 3 076 2 575

Value added ratios

Number of employees (30 September)^ 3 164 3 097 3 025

Revenue per employee (R000)** 2 461 2 262 1 955

Wealth created per employee (R000)** 1 310 1 228 1 074

NOTES

1. Paid to suppliers for materials and services Transnet Freight Rail and Barloworld Logistics are the only suppliers of services

exceeding 10% of total amount paid. All contracts are paid in accordance with agreed terms.

2. Salaries, wages and other benefi ts

Salaries, wages, overtime payments, commissions, bonuses and allowances 599 525 394

Employer contributions† 80 72 65

679 597 459

3. Government

Central and local government:

Taxation – SA normal, CGT, STC and foreign 625 768 661

Regional services council levies – – 6

Rates and taxes paid to local authorities 3 3 3

Customs duties, import surcharges and excise taxes 2 2 3

Skills development levy 4 4 4

Cash grants and cash subsidies granted by the government (2) – (2)

Gross contribution to central and local government 632 777 675

* Includes interest received, dividend income and share of associate’s retained profi t** Excludes employees of Porthold† In respect of pension funds, retirement annuities, provident funds, medical aid and insurance^ Includes employees of Porthold


Seven-year review of the group’s resultsfor the years ended 30 September

2008Rm

2007Rm

2006Rm

2005Rm

2004Rm

2003Rm

2002Rm

CONSOLIDATED BALANCE SHEETS

Assets

Non-current assets

Property, plant and equipment 2 813 2 178 1 414 1 247 1 225 1 523 1 545

Intangible assets 19 20 14 14 15 10 11

Investment in non-consolidated subsidiary 260 260 290 295 315 – –

Negative goodwill – – – – (1) (1) (1)

Other non-current financial assets and investment in associate 104 88 99 214 366 383 401

Deferred taxation assets – – – 24 19 16 12

3 196 2 546 1 817 1 794 1 939 1 931 1 968

Current assets 1 338 2 336 2 538 1 462 1 611 1 546 1 465

Inventories and receivables 1 114 1 033 828 723 663 642 604

Short-term investment – 2 98 147 – – –

Assets classified as held for sale – – 130 – – – –

Cash and cash equivalents 224 1 301 1 482 592 948 904 861

Total assets 4 534 4 882 4 355 3 256 3 550 3 477 3 433

Equity and liabilities

Capital and reserves

Share capital and premium 115 868 868 868 867 866 866

Reserves and retained profit 1 598 1 481 1 335 1 138 1 464 1 264 1 255

Equity attributable to equity holders of the parent 1 713 2 349 2 203 2 006 2 331 2 130 2 121

Outside shareholders’ interest – – – 21 8 – –

Total equity 1 713 2 349 2 203 2 027 2 339 2 130 2 121

Non-current liabilities 511 340 364 483 692 749 779

Deferred taxation liabilities 299 156 174 182 181 263 275

Other non-current liabilities 212 184 190 301 511 486 504

Current liabilities 2 310 2 193 1 788 746 519 598 533

Short-term borrowings 1 619 1 366 983 160 21 13 13

Taxation payable 61 236 212 160 166 240 161

Trade and other payables 629 579 472 415 322 337 354

Liabilities directly associated with assets classified as held for sale – – 112 – – – –

Provisions 1 12 9 11 10 8 5

Total equity and liabilities 4 534 4 882 4 355 3 256 3 550 3 477 3 433

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2008Rm

2007Rm

2006Rm

2005Rm

2004Rm

2003Rm

2002Rm

CONSOLIDATED INCOME STATEMENTS

Revenue 6 248 5 566 4 686 3 974 3 440 3 016 2 505

Cost of sales, non-operating income and other costs 3 925 3 392 2 825 2 465 2 270 2 153 1 891

Operating profit 2 323 2 174 1 861 1 509 1 170 863 614

Fair value gains/(losses) on financial instruments 4 1 – (7) – 7 18

Finance costs 157 84 52 64 59 56 74

Income from investments 84 82 67 84 101 126 91

Profit before exceptional items 2 254 2 173 1 876 1 522 1 212 940 649

Exceptional items 2 14 – 13 – 4 159

Share of associate’s retained profit 10 7 – 1 11 6 27

Profit before taxation 2 266 2 194 1 876 1 536 1 223 950 835

Taxation 767 765 670 582 438 325 230

Net profit from continuing operations 1 499 1 429 1 206 954 785 625 605

Discontinued operation

Net profit from discontinued operation – – 8 – – – –

Net profit 1 499 1 429 1 214 954 785 625 605

Attributable to:

Equity holders of the parent company 1 499 1 429 1 214 941 781 625 605

Outside shareholders’ interest – – – 13 4 – –

1 499 1 429 1 214 954 785 625 605

Attributable net profit excluding exceptional items 1 497 1 415 1 214 928 781 621 446

ABRIDGED CONSOLIDATED CASH FLOW STATEMENTS

Cash available from operations 1 644 1 460 1 437 1 095 807 811 629

Dividends paid (1 401) (1 207) (1 059) (1 269) (737) (601) (524)

Equity-settled share incentive scheme refund/(payment) 2 (30) – – – – –

Net cash inflow/(outflow) from operating activities 245 223 378 (174) 70 210 105

Net cash (outflow)/inflow from investing activities (1 562) (772) (242) (128) (44) (137) 253

Net cash inflow/(outflow) from financing activities 240 368 761 (65) 34 (21) (10)

Net (decrease)/increase in cash and cash equivalents (1 077) (181) 897 (367) 60 52 348


Seven-year review of the group’s results continued

for the years ended 30 September

STATISTICS

Share performance

Weighted average number of ordinary shares in issue during the year (000)

Time weighted number of ordinary shares in issue during the year

Earnings per share (cents) Net profit attributable to shareholders of PPC Company Limited

Weighted average number of shares in issue during the year

Earnings per share before exceptional items (cents) Net profit attributable to shareholders of PPC Company Limited adjusted for the exceptional items net of taxation


Headline earnings per share (cents) Net profit attributable to shareholders of PPC Company Limited adjusted for the exceptional items net of taxation, amortisation of goodwill and capital profits or losses net of taxation


Ordinary dividends per share (cents) Interim dividend per share paid and final dividend per share declared

Special dividend per share (cents) A non-recurring dividend that is exceptional in terms of either size or date declared

Dividend cover (times) (excluding special dividend) Earnings per share before exceptional items

Ordinary dividends per share

Net asset value per share (cents) Total equity, including investments at market value

Total number of shares in issue

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2008 2007 2006 2005 2004 2003 2002

529 050 537 612 537 612 537 607 537 452 537 440 535 510

283 266 226 175 146 116 113

283 263 226 173 146 116 83

283 263 226 172 146 115 84

225 205 143 110 92 73 54

– 61 77 80 140 65 60

1,3 1,3 1,6 1,6 1,6 1,6 1,6

331 437 410 373 434 396 395




Profitability and asset management

Operating margin (%) Operating profit

Revenue

EBITDA (Rm) Profit from continuing operations before exceptional items, adjusted for investment income, finance costs, fair value adjustments, depreciation and amortisation

EBITDA to revenue (%) EBITDA

Revenue

Net asset turn (times) Revenue

Average net assets

Return on net assets (%) Profit before exceptional items adjusted for finance costs, associate income and amortisation of goodwill

Average net assets

Return on total assets (%) Profit before exceptional items adjusted for finance costs, associate income and amortisation of goodwill

Average total assets

Return on shareholders’ interest (%) Net profit attributable to shareholders of PPC Company Limited

Average interest of shareholders of PPC Company Limited

Return on shareholders’ interest (excluding exceptional items) (%)

Net profit attributable to shareholders of PPC Company Limited less exceptional items net of taxation

Average interest of shareholders of PPC Company Limited

Effective rate of taxation (%) Taxation (excluding prior year taxation, secondary taxation on companies and taxation on exceptional items)

Profit before taxation, excluding dividend income and exceptional items

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2008 2007 2006 2005 2004 2003 2002

37,2 39,1 39,7 38,0 34,0 28,6 24,6

2 541 2 370 2 030 1 668 1 328 1 040 787

40,7 42,6 43,3 42,0 38,6 34,5 31,4

1,6 1,4 1,4 1,4 1,1 1,0 0,9

61,1 57,0 59,6 55,0 42,3 33,8 26,9

51,4 49,0 50,7 46,7 36,5 29,0 23,2

73,8 62,8 57,7 43,4 35,0 29,4 29,8

73,7 62,2 57,7 42,8 35,1 29,2 22,0

28,0 28,3 28,9 29,1 29,7 28,5 28,4

EBITDA (Rm)

2008

1 000500 1 500 2 000 2 500

2007

2006

2005

2004

2003

2002

RETURN ON SHAREHOLDERS’ INTEREST (%)

2008

3015 45 60

2007

2006

2005

2004

2003

2002




Liquidity and leverage

Total liabilities to shareholders’ interest (%) Current and long-term liabilities, excluding deferred taxation

Interest of shareholders of PPC Company Limited

Total borrowings to shareholders’ interest (%) Short-term and long-term borrowings

Interest of shareholders of PPC Company Limited

Current ratio (times) Current assets

Current liabilities

Quick ratio (times) Current assets, excluding inventories

Current liabilities

Interest cover (times) Profit before exceptional items, excluding finance costs

Finance costs, including finance costs capitalised

Number of years to repay interest-bearing debt Total borrowings

Cash available from operations

Cash generated from operations (Rm) Cash derived from normal operating activities

Cash flow from operations to total liabilities (times) Cash available from operations

Total liabilities

VALUE ADDED

Number of employees ** Number of persons employed full-time, part-time or other basis

Revenue per employee (R000)* Revenue for the year

Average number of employees

Wealth created per employee (R000)* Wealth created during the year

Average number of employees

* Excludes employees of Porthold (Zimbabwe) (2008, 2007, 2006 and 2005) and Afripack (2008, 2007 and 2006)

** Includes employees of Porthold (Zimbabwe)

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2008 2007 2006 2005 2004 2003 2002

147 101 90 52 44 51 49

98 61 48 18 18 18 19

0,6 1,1 1,4 2,0 3,1 2,6 2,8

0,4 0,9 1,3 1,7 2,7 2,2 2,3

12,0 24,6 37,4 24,9 21,7 17,8 9,9

1 1 1 – 1 1 1

2 546 2 191 2 023 1 668 1 294 993 783

0,7 0,6 0,7 1,0 0,8 0,7 0,6

3 164 3 097 3 025 3 010 2 971 3 085 3 300

2 461 2 262 1 955 1 681 1 266 945 795

1 310 1 288 1 074 951 706 507 464


Share performance – JSE Limitedfor the years ended 30 September

Number of shares in issue (millions) Number of authorised shares that are sold to and held by the shareholders of PPC Company Limited on the JSE Limited

Volume of shares traded (millions) Number of shares transacted during the year

Market price (cents)

– high Highest prevailing price at which share was sold

– low Lowest prevailing price at which share was sold

– at year-end Prevailing price at which share was sold on 30 September

Value of shares traded (Rm) Number of shares transacted during the year times prevailing price

Volume of shares traded as a percentage of total issued shares (%)

Number of shares transacted during the year

Number of shares in issue

Number of transactions Number of exchanges of PPC Company Limited shares between a buyer and a seller

Earnings yield (%) Earnings per share excluding exceptional items

Market price per share at year-end

Dividend yield (%) Total dividends paid out of current year’s earnings

Market price per share at year-end

Price-earnings ratio Market price per share at year-end

Earnings per share excluding exceptional items

FTSE/JSE All Share Industrial index Average prices of a selected number of shares listed on the JSE Limited

Market capitalisation at 30 September (Rm) Number of shares in issue times market price per share at year-end

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2008 2007 2006 2005 2004 2003 2002

510 510 510 510 510 501 501

606 302 127 147 133 75 59

5 199 5 300 4 498 2 943 1 830 1 220 820

2 590 3 360 2 770 1 716 1 100 770 587

3 125 4 780 3 479 2 910 1 810 1 135 780

22 577 14 448 4 516 3 367 1 877 715 411

118,8 59,2 24,9 28,8 26,1 15,0 11,8

216 815 108 130 47 543 25 789 16 280 4 028 2 668

9,1 5,6 6,5 6,0 8,0 10,2 10,7

7,2 5,6 6,3 6,5 12,8 12,1 14,6

11,0 18,0 15,4 16,9 12,4 9,8 9,4

24 966 29 959 22 375 16 876 11 761 8 926 9 465

15 938 24 392 17 756 14 853 9 246 5 684 3 906

VOLUME OF SHARES TRADED (mil l ions)

2008

200100 300 400 500 600

2007

2006

2005

2004

2003

2002

VALUE OF SHARES TRADED (Rm)

2008

10 0005 000 15 000 20 000

2007

2006

2005

2004

2003

2002


Glossary of accounting terminologyfor the year ended 30 September 2008

Accounting policies

The specifi c principles, bases, conventions, rules and practices

applied in preparing and presenting fi nancial statements.

Accrual accounting

The effects of transactions and other events are recognised when

they occur rather than when the cash is received or paid.

Actuarial gains and losses

The effect of differences between the previous actuarial assumptions

and what has actually occurred as well as the effect of changes in

actuarial assumptions.

Amortised cost

The amount at which a fi nancial asset or fi nancial liability is

measured at initial recognition, adjusted for principal repayments,

plus or minus the cumulative amortisation using the effective

interest method of any difference between that initial amount and

the maturity amount and minus any reduction for impairment or

uncollectibility.

Asset

A resource controlled by the entity as a result of a past event from

which future economic benefi ts are expected to fl ow.

Associate

An entity over which the investor has signifi cant infl uence and that

is neither a subsidiary nor an interest in a joint venture.

Available-for-sale fi nancial assets

Non-derivative fi nancial assets that are not classifi ed as loans and

receivables, held-to-maturity investments or fi nancial assets at fair

value through profi t or loss.

Borrowing costs

Interest and other costs incurred in connection with the borrowing

of funds.

Business combination

A business combination is the bringing together of separate entities

or businesses into one reporting entity.

Carrying amount

The amount at which an asset is recognised after deducting any

accumulated depreciation and accumulated impairment losses.

Cash and cash equivalents

Cash and cash equivalents comprise cash on hand and demand

deposits. They are short-term, highly liquid investments that are

readily convertible to known amounts of cash and are subject to an

insignifi cant risk of changes in value.

Cash fl ow hedge

A hedge of the exposure to variability in cash fl ows that is

attributable to a particular risk associated with an asset or liability,

or a highly probable forecast transaction that could affect profi t

or loss.

Cash-generating unit

The smallest identifi able group of assets that generates cash infl ows

and are largely independent of the cash infl ows from other assets

or groups of assets.

Change in accounting estimate

An adjustment to an asset or a liability as a result of new information

or developments.

Constructive obligation

An obligation that derives from an established pattern of past

practice, published policies or a suffi ciently specifi c current

statement such that it created a valid expectation on the part of

other parties that the obligation will be met.

Consolidated fi nancial statements

The fi nancial statements of a group presented as those of a single

economic entity.

Contingent asset

A possible asset that arises from past events and whose existence

will be confi rmed only by the occurrence or non-occurrence of one

or more uncertain future events not wholly within the control of

the entity.

Contingent liability

A possible obligation that arises from past events and whose

existence will be confi rmed only by the occurrence or non-

occurrence of one or more uncertain future events not wholly

within the control of the entity, or a present obligation that arises

from past events but is not recognised because it is not probable

that an outfl ow of resources embodying economic benefi ts will be

required to settle the obligation, or the amount of the obligation

cannot be measured with suffi cient reliability.

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Control

The power to govern the fi nancial and operating policies of an

entity so as to obtain benefi ts from its activities.

Costs to sell

The incremental costs directly attributable to the disposal of an

asset (or disposal group), excluding fi nance costs and income

taxation expense.

Date of transaction

The date on which the transaction fi rst qualifi es for recognition in

accordance with International Financial Reporting Standards.

Depreciation (or amortisation)

The systematic allocation of the depreciable amount of an asset

over its useful life. The depreciable amount of an asset is the cost

of an asset less its residual value.

Derecognition

The removal of a previously recognised asset or liability from the

balance sheet.

Derivative

A fi nancial instrument whose value changes in response to an

underlying contract, requires no initial or minimal net investment

in relation to other types of contracts that would be expected to

have a similar response to changes in market factors and is settled

at a future date.

Development

The application of research fi ndings or other knowledge to a plan

or design for the production of new or substantially improved

materials, devices, products, processes, systems or services before

starting commercial production or use.


A component that has either been disposed of or is classifi ed as

held for sale and represents a separate major line of business or

geographical operational area or a subsidiary acquired exclusively

with a view to resale.

Discount rate

The rate used for purposes of determining discounted cash fl ows

defi ned as the yield on relevant South African government bonds

that have maturity dates approximating the term of the related

cash fl ows. The pre-taxation interest rate refl ects the current

market assessment of the time value of money. In determining the

cash fl ows, the risks specifi c to the asset or liability are taken into

account and are not included in determining the discount rate.

Effective interest rate

The derived rate that discounts the expected future cash fl ows

to the current carrying amount of the fi nancial asset or fi nancial

liability.

Equity instrument

A contract that evidences a residual interest in the total assets after

deducting the total liabilities.

Equity method

A method in which the investment is initially recognised at cost and

adjusted thereafter for the post-acquisition change in the share of

net assets of the investee. Profi t or loss includes the share of the

investee’s profi t or loss.

Employee benefi ts

All forms of consideration given in exchange for services rendered

by employees.

Expenses

The decreases in economic benefi ts in the form of outfl ows

or depletion of assets or incurrences of liabilities that result in

decreases in equity, other than those relating to distributions to

equity participants.

Fair value

The amount for which an asset could be exchanged between

knowledgeable and willing parties in an arm’s-length transaction.

Fair value hedge

A hedge of exposure to changes in fair value of a recognised asset,

liability or fi rm commitment.

Finance lease

A lease that transfers substantially all the risks and rewards

incidental to ownership of an asset. Title may or may not eventually

be transferred.


Glossary of accounting terminology continued


Financial asset

Cash or cash equivalents, a contractual right to receive cash, an

equity instrument or a contractual right to exchange fi nancial

instruments under favourable conditions.

Financial liability

A contractual obligation to pay cash or transfer other benefi ts, or

a contractual obligation to exchange a fi nancial instrument under

unfavourable conditions.

Financial instrument

A contract that gives rise to a fi nancial asset of one entity and a

fi nancial liability or equity instrument of another entity.

Financial asset or liability at fair value through profi t or loss

A fi nancial asset or fi nancial liability that is classifi ed as held-for-

trading or is designated as such on initial recognition other than

investments in equity instruments that do not have a quoted

market price in an active market and whose fair value cannot be

reliably measured.

Firm commitment

A binding agreement for the exchange of a specifi ed quantity of

resources at a specifi ed price on a specifi ed future date or dates.

Forecast transaction

An uncommitted but anticipated future transaction.

Functional currency

The currency of the primary economic environment in which an

entity operates.

Going-concern basis

The assumption that the entity will continue in operation for the

foreseeable future.

Gross investment in lease

The aggregate of the minimum lease payments receivable by the

lessor under a fi nance lease and any unguaranteed residual value

accruing to the lessor.

Group

The group comprises Pretoria Portland Cement Company Limited,

its subsidiaries and associates.

Hedged item

An asset, liability, fi rm commitment, highly probable forecast

transaction or net investment in a foreign operation that exposes

the entity to risk of changes in fair value or future cash fl ows and is

designated as being hedged.

Hedging instrument

A designated derivative or non-derivative fi nancial asset or non-

derivative fi nancial liability whose fair value or cash fl ows are

expected to offset changes in the fair value or cash fl ows of a

designated hedged item.

Held-for-trading fi nancial asset or fi nancial liability

One that is acquired or incurred principally for the purpose of

selling or repurchasing in the near term or as part of a portfolio

of identifi ed fi nancial instruments that are managed together and

for which there is evidence of a recent actual pattern of short-

term profi t-taking or a derivative (except for a derivative that is a

designated and effective hedging instrument).

Held-to-maturity investment

A non-derivative fi nancial asset with fi xed or determinable payments

and fi xed maturity where there is a positive intention and ability to

hold it to maturity.

Immaterial

If individually or collectively it would not infl uence the economic

decisions of the users.

Impairment loss

The amount by which the carrying amount of an asset or a cash-

generating unit exceeds its recoverable amount or sales price.

Impracticable

When, after making every reasonable effort to do so, the requirement

cannot be applied.

Income

Increase in economic benefi ts in the form of infl ows or enhancements

of assets or decreases of liabilities that result in increases in equity,

other than those relating to contributions from equity participants.

Joint control

The contractually agreed sharing of control over an economic activity.

Joint venture

A contractual arrangement whereby two or more parties undertake

an economic activity that is subject to joint control.

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Legal obligation

An obligation that derives from a contract, legislation or other

operation of law.

Liability

A present obligation arising from a past event, the settlement of

which is expected to result in an outfl ow of resources embodying

economic benefi ts.

Loans and receivables

Non-derivative fi nancial asset with fi xed or determinable repayments

that are not quoted in an active market.

Minimum lease payments

Payments over the lease term that the lessee is or can be required

to make, excluding contingent rent, costs for services and taxes to

be paid by and reimbursed to the lessor, together with any amounts

guaranteed by the lessee or by a party related to the lessee or, in

the case of a lessor, any residual value guaranteed to the lessor by

the lessee, a party related to the lessee or a third party unrelated to

the lessor that is fi nancially capable of discharging the obligations

under the guarantee.

Monetary asset

An asset which will be settled in a fi xed or determinable amount

of money.

Monetary liability

A liability which will be settled in a fi xed or determinable amount

of money.

Net investment in the lease

The gross investment in the lease discounted at the interest rate

implicit in the lease.

Operating lease

A lease other than a fi nance lease.

Onerous contract

A contract in which the unavoidable costs of meeting the obligations

under the contract exceed the economic benefi ts expected to be

received under it.

Owner-occupied property

Property held by the owner or by the lessee under a fi nance lease

for use in the production or supply of goods or services or for

administrative purposes.

Past service cost

The increase or decrease in the present value of the defi ned benefi t

obligation for employee service in prior periods resulting from the

introduction of, or changes to, post-employment benefi ts or other

long-term employee benefi ts.

Point-of-sale costs

Commissions to brokers and dealers, levies by regulatory agencies

and commodity exchanges and transfer taxes and duties, excluding

transport and other costs necessary to get the assets to the

market.

Post-employment benefi ts

Employee benefi ts (other than termination benefi ts) that are

payable after the completion of employment.

Post-employment benefi t plans

Formal or informal arrangements under which an entity provides

post-employment benefi ts to employees.

Defi ned contribution benefi t plans are where there are no legal

or constructive obligations for the employer to pay further

contributions if the fund does not hold suffi cient assets to pay all

employee benefi ts relating to employee service in the current and

prior periods.

Defi ned benefi t plans are post-employment benefi t plans other

than defi ned contribution plans.

Presentation currency

The currency in which the fi nancial statements are presented.

Prior period error

An omission from or misstatement in the fi nancial statements

for one or more prior periods arising from a failure to use, or the

misuse of, reliable information that was available when fi nancial

statements for those periods were authorised for issue and could

reasonably be expected to have been obtained and taken into

account in the preparation of those fi nancial statements.

Proportionate consolidation

A method where the venturer’s share of each of the assets,

liabilities, income and expenses of a jointly controlled entity is

combined line by line with similar items in the venturer’s fi nancial

statements or reported as separate line items in the venturer’s

fi nancial statements.


Glossary of accounting terminology continued


Prospective application

Applying a new accounting policy to transactions, other events

and conditions occurring after the date the policy changed, or

recognising the effect of the accounting policy change in the

current and future periods.

Recoverable amount

The higher of an asset’s or cash-generating unit’s fair value less

costs to sell and its value-in-use.

Regular way purchase or sale

A purchase or sale of a fi nancial asset under a contract whose

terms require delivery of the asset within the timeframe established

by regulation or convention in the marketplace concerned.

Related party

Parties are considered to be related if one party directly or indirectly

has the ability to control the other party or exercise signifi cant

infl uence over the other party in making fi nancial and operating

decisions or is a member of the key management of the entity.

Research

The original and planned investigation undertaken with the

prospect of gaining new scientifi c or technical knowledge and

understanding.

Residual value

The estimated amount that an entity would currently obtain from

disposal of an asset, after deducting the estimated costs of disposal,

if the asset were already of the age and in the condition expected

at the end of its useful life.

Retrospective application

Applying a new accounting policy to transactions, other events and

conditions as if that policy had always been applied.

Retrospective restatement

Correcting the recognition, measurement and disclosure of

amounts as if a prior period error had never occurred.

Share-based payment

A transaction in which the entity issues shares or share options to

employees in exchange for services rendered.

Signifi cant infl uence

Signifi cant infl uence is the power to participate in the fi nancial and

operating policy decisions of the associate, which is not control or

joint control over those policies.

Subsidiary

An entity that is controlled by the parent.

Tax base

The tax base of an asset is the amount that is deductible for taxation

purposes if the economic benefi ts from the asset are taxable or is

the carrying amount of the asset if the economic benefi ts are not

taxable.

The tax base of a liability is the carrying amount of the liability less

the amount deductible in respect of that liability in future periods.

The tax base of revenue received in advance is the carrying amount

less any amount of the revenue that will not be taxed in future

periods.

Temporary differences

The differences between the carrying amount of an asset or liability

and its tax base.

Transaction costs

Incremental costs that are directly attributable to the acquisition,

issue or disposal of a fi nancial asset or fi nancial liability.

Unearned fi nance income

The difference between the gross investment in the lease and the

net investment in the lease.

Useful life

The period over which an asset is expected to be available for

use, or the number of production or similar units expected to be

obtained from the asset.

Value-in-use

The present value of the future cash fl ows expected to be derived

from an asset or cash-generating unit.

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Accounting policiesfor the year ended 30 September 2008

BASIS OF PREPARATION

Accounting framework

The fi nancial statements are prepared in accordance with

International Financial Reporting Standards (IFRS) and

interpretations of those standards using the historical cost

convention except for certain fi nancial instruments that are stated

at fair value.

The basis of preparation is consistent with the prior year, except

where the group has adopted new or revised accounting standards

and interpretations of those standards. The following accounting

standards, interpretations and amendments, which did not have

a material impact on reported results, were adopted in the current

year:

• IFRS 7: Financial Instruments: Disclosures

• IFRS 8: Operating Segments

• IFRS 2: Share-based Payment (Amendment) (Vesting Conditions

and Cancellations)

• IFRIC 15: Agreements for the Construction of Real Estate

• IFRIC 16: Hedges of a Net Investment in a Foreign Operation

Underlying concepts

The fi nancial statements are prepared on the going-concern basis

using accrual accounting.

Assets and liabilities and income and expenses are not offset unless

specifi cally permitted by an accounting standard.

Financial assets and fi nancial liabilities are offset and the net

amount reported only when a legally enforceable right to set off

the amounts exists and the intention is either to settle on a net

basis or to realise the asset and settle the liability simultaneously.

Changes in accounting policies are accounted for in accordance with

the transitional provisions in the standard. If no such guidance is

given, then they are applied retrospectively, unless it is impracticable

to do so, in which case they are applied prospectively.

Prior period errors are retrospectively restated unless it

is impracticable to do so, in which case they are applied

prospectively.

Changes in accounting estimates are recognised in profi t or loss.

Preparing fi nancial statements in conformity with IFRS requires

estimates and assumptions that affect reported amounts and related

disclosures. Actual results could differ from these estimates.

Recognition of assets and liabilities

Assets are only recognised if they meet the defi nition of an asset,

if it is probable that future economic benefi ts associated with the

asset will fl ow to the group and if the cost or fair value can be

measured reliably.

Liabilities are only recognised if they meet the defi nition of a liability,

if it is probable that future economic benefi ts associated with the

liability will fl ow from the group and if the cost or fair value can be

measured reliably.

Financial instruments are recognised when the group becomes a

party to the contractual provisions of the instrument. Financial assets

and liabilities, as a result of fi rm commitments, are only recognised

when one of the parties has performed under the contract.

Derecognition of assets and liabilities

Financial assets are derecognised when the contractual rights to

receive cash fl ows have been transferred or have expired or when

substantially all the risks and rewards of ownership have passed.

All other assets are derecognised on disposal or when no future

economic benefi ts are expected from their use or on disposal.

Financial liabilities are derecognised when the relevant obligation

has either been discharged or cancelled or has expired.

Property, plant and equipment

Property, plant and equipment represents tangible items and

intangible items that are integrated with tangible items that are

held for use in the production or supply of goods and are expected

to be used during more than one period.

Items of property, plant and equipment are stated at cost less

accumulated depreciation and impairment losses. The cost of


Accounting policies continued


self-constructed assets includes expenditures on materials, direct

labour and an allocated portion of project overheads. Cost also

includes the estimated cost of dismantling and removing the assets

and site rehabilitation costs to the extent that they relate to the

construction of the asset as well as gains and losses on qualifying

cash fl ow hedges attributable to that asset.

Owner-occupied properties in the course of construction are carried

at cost, less any impairment loss where the recoverable amount of

the asset is estimated to be lower than its carrying value.

Depreciation is charged so as to write off the depreciable amount of

the assets, other than land, over their estimated useful lives, using a

method that refl ects the pattern in which the asset’s future economic

benefi ts are expected to be consumed by the entity. Where signifi cant

parts of an item have different useful lives to the item itself, these

parts are depreciated over their estimated useful lives. The methods

of depreciation, useful lives and residual values are reviewed annually.

The following methods and rates were used during the year:

Buildings Straight-line 30 years

Plant Straight-line 5 to 35 years

Vehicles Straight-line 5 to 10 years

Furniture and equipment Straight-line 3 to 6 years

Mineral rights Straight-line Estimated life of reserve

Assets held under fi nance leases are depreciated over their expected

useful lives or the term of the relevant lease, where shorter.

The gain or loss arising on the disposal or scrapping of property,

plant and equipment is recognised in profi t or loss.

Factory decommissioning and quarry rehabilitation

Group companies are generally required to restore mine and

processing sites at the end of their producing lives to a condition

acceptable to the relevant authorities and consistent with the

group’s environmental policies.

The expected cost of any committed decommissioning or restoration

programme, discounted to its net present value, is provided and

capitalised at the beginning of each project. The capitalised cost

is depreciated over the expected life of the asset and the increase

in the net present value of the provision for the expected cost is

included with fi nance costs.

Changes in the measurement of an existing decommissioning or

restoration liability that result from changes in the estimated timing

or amount of expected costs, or a change in the discount rate, are

accounted for in the respective asset or recognised in profi t or loss

as appropriate.

An Environmental Rehabilitation Trust Fund was created in

accordance with statutory requirements. Annual contributions are

made to this fund where applicable.

Intangible assets

An intangible asset is an identifi able non-monetary asset without

physical substance, which is not integrated with a tangible asset.

It includes patents, trademarks, capitalised development costs and

certain costs of purchase and installation of major information

systems (including packaged software).

Intangible assets are initially recognised at cost if acquired separately

or internally generated, or at fair value if acquired as part of a

business combination. If assessed as having an indefi nite useful life,

it is not amortised but tested for impairment annually and impaired

if necessary. If assessed as having a fi nite useful life, it is amortised

over its useful life (generally three to seven years) using a straight-

line basis and tested for impairment if there is an indication that it

may be impaired.

Research costs are recognised in profi t or loss when they are

incurred.

Development costs are capitalised only when and if they meet the

criteria for capitalisation. Otherwise they are recognised in profi t

or loss.

Patents and trademarks are measured initially at cost and amortised

on a straight-line basis over their estimated useful lives.

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Goodwill

Goodwill represents the future economic benefi ts arising from

assets that are not capable of being individually identifi ed and

separately recognised in a business combination.

Goodwill arising on the acquisition of a business, subsidiary,

associate or joint venture is recognised as an asset and is stated at

cost less impairment losses. Goodwill is not amortised. Goodwill of

associates is included in the carrying amount of the associate.

If, on a business combination, the fair value of the group’s interest

in the identifi able assets, liabilities and contingent liabilities exceeds

the cost of acquisition, this excess is recognised in profi t or loss

immediately.

On disposal of a subsidiary, associate, joint venture or business

unit to which goodwill was allocated on acquisition, the amount

attributable to such goodwill is included in the determination of the

profi t or loss on disposal.

Impairment of assets

At each reporting date, the carrying amount of the tangible and

intangible assets are assessed to determine whether there is any

indication that those assets may have suffered an impairment loss.

If any such indication exists, the recoverable amount of the asset is

estimated to determine the extent of the impairment loss. Where it

is not possible to estimate the recoverable amount of an individual

asset, the recoverable amount of the cash-generating unit to which

the asset belongs is estimated. Value-in-use is estimated taking

into account future cash fl ows, forecast market conditions and the

expected lives of the assets.

If the recoverable amount of an asset or cash-generating unit is

estimated to be less than the carrying amount, its carrying amount

is reduced to the higher of the recoverable amount or zero.

Impairment losses are recognised in profi t or loss. The loss is fi rst

allocated to reduce the carrying amount of goodwill and then to

the other assets of the cash-generating unit. Subsequent to the

recognition of an impairment loss, the depreciation or amortisation

charge for the asset is adjusted to allocate its remaining carrying

value, less any residual value, over its remaining useful life.

If an impairment loss subsequently reverses, the carrying amount

of the asset or cash-generating unit is increased to the revised

estimate of its recoverable amount, but limited to the carrying

amount that would have been determined had no impairment loss

been recognised in prior years. A reversal of an impairment loss is

recognised in profi t or loss.

Goodwill and intangible assets with indefi nite useful lives and

cash-generating units to which these assets have been allocated

are tested for impairment annually even if there is no indication of

impairment. Impaired goodwill and intangible assets with indefi nite

lives are only reversed when the associated business is sold.

At each reporting date the carrying amount of fi nancial assets,

other than those at fair value through profi t or loss, are assessed for

indicators of impairment. For fi nancial assets carried at amortised

cost, the amount of impairment is the difference between the

asset’s carrying amount and the present value of estimated future

cash fl ows, discounted at the fi nancial asset’s original effective

interest rate.

The carrying amount of the fi nancial asset is reduced by the

impairment loss directly for all fi nancial assets except for trade

receivables, where the carrying amount is reduced through the use

of an allowance account.

Subsidiaries, associates and joint ventures

Investments in subsidiaries, associates and joint ventures in the

separate fi nancial statements presented by the company are

recognised at cost.

Interest in subsidiaries

The consolidated fi nancial statements incorporate the assets,

liabilities, income, expenses and cash fl ows of the company and its

subsidiaries as if they are a single economic entity.

The results of subsidiaries acquired or disposed of during the year

are included in the consolidated income statement from the date

of acquisition or up to the date of disposal.




Inter-company transactions and balances between group entities

are eliminated on consolidation.

On acquisition of a subsidiary, minorities’ interest is measured at

the proportion of the pre-acquisition fair values of the identifi able

assets and liabilities acquired.

The results of special purpose entities that in substance are

controlled by the group are consolidated.

Interest in associates

The consolidated fi nancial statements incorporate the assets,

liabilities, income and expenses of associates using the equity

method of accounting, applying the group’s accounting policies

from the acquisition date to the disposal date, except when the

investment is classifi ed as held for sale, in which case it is accounted

for as non-current assets held for sale.

The investment is carried at cost and adjusted for post-acquisition

changes in the group’s share of net assets of the associate, less

any impairment in value in the individual investment. Losses of an

associate in excess of the group’s interest in that associate are not

recognised, unless the group has incurred a legal or constructive

obligation or made payments on behalf of the associate.

Where a group entity transacts with an associate of the group,

unrealised profi ts and losses are eliminated to the extent of the

group’s interest in the relevant associate.

Financial assets

Financial assets are initially measured at fair value plus transaction

costs. However, transaction costs in respect of fi nancial assets

classifi ed at fair value through profi t or loss are expensed.

Financial assets are classifi ed into the following categories:

Held-to-maturity investments

Investments classifi ed as held-to-maturity fi nancial assets are

measured at amortised cost using the effective interest rate method

less any impairment losses recognised to refl ect irrecoverable

amounts.

Financial assets at fair value through profi t or loss

Financial assets are classifi ed as at fair value through profi t or loss

where the fi nancial asset is either held-for-trading or is designated

as at fair value through profi t or loss. Financial assets at fair value

through profi t or loss are carried at fair value with any gains or

losses being recognised in profi t or loss. Fair value, for this purpose,

is market value if listed, or a value arrived at by using appropriate

valuation models if unlisted.


Trade and other receivables that have fi xed or determinable

payments that are not quoted in an active market are classifi ed as

loans and receivables and are measured at amortised cost using

the effective interest method less provision for doubtful debts.

Write-downs of these assets are expensed in profi t or loss. Interest

income is recognised by applying the effective interest rate, except

for short-term receivables when the recognition of interest would

be immaterial.

Available-for-sale fi nancial assets

Investments in unlisted shares are classifi ed as available-for-sale

fi nancial assets. These investments are carried at fair value with

any gains or losses being recognised directly in equity. Fair value,

for this purpose, is a value arrived at by using appropriate valuation

models. An investment intended to be held for an indefi nite period

of time, which may be sold in response to needs for liquidity or

changes in interest rates, is classifi ed as non-current available-

for-sale fi nancial assets. Where the investment is disposed of or

determined to be impaired, the cumulative gain or loss previously

recognised in equity is included in profi t or loss for the period.

Financial liabilities

Financial liabilities are classifi ed as either fi nancial liabilities at fair value

through profi t or loss or fi nancial liabilities measured at amortised

cost.

Financial liabilities at fair value through profi t or loss

Financial liabilities at fair value through profi t or loss are measured

at fair value with any resultant gain or loss recognised in profi t

or loss.

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Financial liabilities measured at amortised cost

Financial liabilities measured at amortised cost are initially measured

at fair value, net-of-transaction costs. These fi nancial liabilities

are subsequently measured at amortised cost using the effective

interest rate method.

Derivative fi nancial instruments

Derivatives that are assets are measured at fair value, with changes

in fair value being included in profi t or loss other than derivatives

designated as cash fl ow hedges. To the extent that a derivative

instrument has a maturity period of longer than one year, the fair

value of these instruments will be refl ected as a non-current asset

or liability.

Derivatives that are liabilities are measured at fair value, with

changes in fair value being included in profi t or loss other than

derivatives designated as cash fl ow hedges.

Hedge accounting

If a fair value hedge meets the conditions for hedge accounting,

any gain or loss on the hedged item attributable to the hedged

risk is included in the carrying amount of the hedged item and

recognised in profi t or loss.

If a cash fl ow hedge meets the conditions for hedge accounting,

the portion of the gain or loss on the hedging instrument that is

determined to be an effective hedge, is recognised directly in equity

and the ineffective portion is recognised in profi t or loss.

If an effective hedge of a forecast transaction subsequently results

in the recognition of a fi nancial asset or fi nancial liability, the

associated gains or losses recognised in equity are transferred to

income in the same period in which the asset or liability affects

profi t or loss.

If a hedge of a forecast transaction subsequently results in the

recognition of a non-fi nancial asset or non-fi nancial liability, the

associated gains or losses recognised in equity are included in

the initial measurement of the acquisition cost or other carrying

amount of the asset or liability.

Hedge accounting is discontinued on a prospective basis when the

hedge no longer meets the hedge accounting criteria (including

when it becomes ineffective), when the hedge instrument is sold,

terminated or exercised, when for cash fl ow hedges the forecast

transaction is no longer expected to occur, or when the hedge

designation is revoked.

Any cumulative gain or loss on the hedging instrument for a forecast

transaction is retained in equity until the transaction occurs, unless

the transaction is no longer expected to occur, in which case it is

transferred to profi t or loss for the period.

Leasing

Classifi cation

Leases are classifi ed as fi nance leases or operating leases at the

inception of the lease.

In the capacity of a lessee

Finance leases are recognised as assets and liabilities at the lower

of the fair value of the asset and the present value of the minimum

lease payments at the date of acquisition. Finance costs represent

the difference between the total leasing commitments and the fair

value of the assets acquired. Finance costs are charged to profi t or

loss over the term of the lease and at interest rates applicable to the

lease on the remaining balance of the obligations.

Rentals payable under operating leases are charged to income on

a straight-line basis over the term of the relevant lease or another

basis if more representative of the time pattern of the user’s

benefi t.

In the capacity of a lessor

Rental income from operating leases is recognised on a straight-

line basis over the term of the lease. Initial direct costs incurred

in negotiating and arranging an operating lease are added to the

carrying amount of the leased asset and recognised on a straight-

line basis over the lease term.




Share-based payments

Cash-settled

The cost of cash-settled transactions is measured initially at fair value

at the grant date using the binomial option pricing model, taking

into account the terms and conditions upon which the instruments

were granted. This fair value is expensed over the vesting period

with a corresponding charge to liabilities. The liability is remeasured

at each reporting period, up to and including the settlement date,

with changes in fair value recognised in profi t or loss over the

vesting period.

Equity-settled

The fair value of the share options is recognised and charged

against profi t or loss together with a corresponding movement

in equity. Fair value adjustments are calculated over the vesting

period, ending on the date on which the performance conditions

are fulfi lled and the employees become fully entitled to exercise

their options. The cumulative expense recognised for share options

granted at each balance sheet date until the vesting date refl ects

the extent to which the vesting period has expired and the number

of share option grants that will ultimately vest, in management’s

opinion, at that date. This is based on the best available estimate of

the number of share options that will ultimately vest.

Fair value is measured using the binomial option pricing model.

The expected life used in the model has been adjusted, based on

management’s best estimate, for the effects of non-transferability,

exercise restrictions and behavioural considerations such as volatility,

dividend yield and the vesting period.

Deferred taxation assets

A deferred taxation asset represents the amount of income taxes

recoverable in future periods in respect of deductible temporary

differences, the carry forward of unused tax losses and the

carry forward of unused tax credits, including unused credits for

secondary taxation on companies.

A deferred taxation asset is only recognised to the extent that

it is probable that taxable profi ts will be available against which

deductible temporary differences can be utilised and is accounted

for using the balance sheet liability method. It is measured at the

taxation rates that have been enacted or substantially enacted at

balance sheet date.

Inventories

Inventories are assets held for sale in the ordinary course of

business, in the process of production for such sale or in the form

of materials or supplies to be consumed in the production process.

Inventories are stated at the lower of cost and net realisable value.

Cost includes all costs of purchase, costs of conversion and other

costs incurred in bringing the inventories to their present location

and condition, net of discount and rebates received. Net realisable

value is the estimated selling price in the ordinary course of business,

less the estimated cost of completion, distribution and selling.

The specifi c identifi cation basis is used to arrive at the cost of

items that are not interchangeable. Otherwise, the fi rst-in, fi rst-out

method or weighted average method for certain classes of inventory

is used to arrive at the cost of items that are interchangeable.

Non-current assets held for sale

Non-current assets or disposal groups are classifi ed as held for sale

if the carrying amount will be recovered principally through sale

rather than through continuing use. This condition is regarded as

met only when the sale is highly probable and the asset held for

sale or disposal groups are available for immediate sale in their

present condition.

Immediately prior to being classifi ed as held for sale, the carrying

amount of the item is measured in accordance with the applicable

accounting standard. After classifi cation as held for sale, it is

measured at the lower of the carrying amount and fair value less

costs to sell. An impairment loss is recognised in profi t or loss for

any initial and subsequent write-down of the asset and disposal

group to fair value less costs to sell. A gain for any subsequent

increase in fair value less costs to sell is recognised in profi t or loss

to the extent that it is not in excess of the cumulative impairment

loss previously recognised.

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Non-current assets or disposal groups that are classifi ed as held for

sale are not depreciated.

Cash and cash equivalents

Cash and cash equivalents are measured at fair value, with changes

in fair value being included in profi t or loss.

Deferred taxation liability

A deferred taxation liability represents the amount of income taxes

payable in future periods in respect of taxable temporary differences.

A deferred taxation liability is recognised for taxable temporary

differences, unless specifi cally exempt, at the taxation rates that

have been enacted or substantially enacted at the balance sheet

date and is accounted for using the balance sheet liability method.

Deferred taxation arising on investments in subsidiaries, associates

and joint ventures is recognised except where the group is able to

control the reversal of the temporary difference and it is probable

that the temporary difference will not reverse in the foreseeable

future.

Defi ned contribution retirement plans

Payments to defi ned contribution retirement plans are charged to

the income statement as incurred.

Defi ned benefi t post-employment healthcare benefi ts

The cost of providing defi ned benefi ts is determined using the

projected unit credit method. Valuations are conducted every

three years and interim adjustments to those valuations are made

annually.

Actuarial gains and losses that exceed 10% of the greater of the

present value of the group’s pension obligations or the fair value

of plan assets are amortised over the expected average remaining

working lives of the participating employees.

Gains or losses on the curtailment or settlement of a defi ned benefi t

plan are recognised in profi t or loss when the group is demonstrably

committed to the curtailment or settlement.

The amount recognised in the balance sheet represents the present

value of the defi ned benefi t obligation as adjusted for unrecognised

actuarial gains and losses and the unrecognised past service costs.

Provisions

Provisions represent liabilities of uncertain timing or amount.

Provisions are recognised when the group has a present legal or

constructive obligation, as a result of past events, for which it is

probable that an outfl ow of economic benefi ts will be required

to settle the obligation and a reliable estimate can be made for

the amount of the obligation. Provision for onerous contracts

are established after taking into consideration the recognition of

impairment losses that have occurred on assets dedicated to those

specifi c contracts.

Provisions are measured at the expenditure required to settle the

present obligation. Where the effect of discounting is material,

provisions are measured at their present value using a pre-taxation

discount rate that refl ects the current market assessment of the

time value of money and the risks for which future cash fl ow

estimates have not been adjusted.

Treasury shares

Shares in the company held by group subsidiary companies are

classifi ed as treasury shares. The consideration paid, inclusive of

directly attributable costs, is disclosed as a deduction from equity.

The issued and weighted average number of shares is reduced by

the treasury shares, weighted for the period they have been held by

the subsidiary company, for the purpose of determining earnings

and headline earnings per share calculations. Dividends received on

treasury shares are eliminated on consolidation.

Dividends

Dividends to equity holders are only recognised as a liability when

declared and are included in the statement of changes in equity.

Secondary taxation on companies in respect of such dividends is

recognised as a liability when the dividends are recognised as a

liability and are included in the taxation charge in profi t or loss.




Revenue

Revenue represents the gross infl ow of economic benefi ts during

the period arising in the course of the ordinary activities when those

infl ows result in increases in equity, other than increases relating to

contributions from equity participants.

Revenue is measured at the amount received or receivable net of cash

and settlement discounts, rebates, VAT and other indirect taxes.

Revenue from the sale of goods is recognised when the signifi cant

risks and rewards of ownership have been transferred, when

delivery has been made and title has passed, when the amount

of the revenue and the related costs can be reliably measured and

when it is probable that the debtor will pay for the goods.

Cost of sales

When inventories are sold, the carrying amount is recognised as

part of cost of sales. Any write-down of inventories to net realisable

value and all losses of inventories or reversals of previous write-

downs or losses are recognised in cost of sales in the period the

write-down, loss or reversal occurs.

Employee benefi t costs

The cost of providing employee benefi ts is accounted for in the

period in which the benefi ts are earned by employees.

The cost of short-term employee benefi ts is recognised in the

period in which the service is rendered and is not discounted. The

expected cost of short-term accumulating compensated absences

is recognised as an expense as the employees render service that

increases their entitlement or, in the case of non-accumulating

absences, when the absences occur.

The expected cost of profi t-sharing and bonus payments is

recognised as an expense when there is a legal or constructive

obligation to make such payments as a result of past

performance.

Borrowing costs

Borrowing costs directly attributable to the acquisition, construction

or production of assets that necessarily take a substantial period of

time to get ready for their intended use are added to the cost of

those assets, until such time as the assets are substantially ready for

their intended use. All other borrowing costs are expensed in the

period in which they are incurred.

Investment income

Interest income is accrued on a time basis by reference to the

principal outstanding and at the interest rate applicable.

Dividend income from investments is recognised when the

shareholder’s right to receive payment has been established.

Exceptional items

Exceptional items cover those amounts that are not considered to

be of an operating nature and generally include profi t or loss on

disposal of property, investments and businesses, other non-current

assets and impairments of capital items and goodwill.

Taxation

The charge for current taxation is based on the results for the year

as adjusted for income that is exempt and expenses that are not

deductible using taxation rates that are applicable to the taxable

income.

Secondary taxation on companies is recognised as part of the

current taxation charge when the related dividend is declared.

Deferred taxation is recognised if dividends received in the current

year can be offset against future dividend payments to the extent

of the reduction of future secondary taxation on companies.

Deferred taxation is recognised in profi t or loss except when it

relates to items credited or charged directly to equity, in which case

it is also recognised in equity, for all temporary differences, unless

specifi cally exempt at the taxation rates that have been enacted or

substantially enacted at the balance sheet date.

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Discontinued operations

The results of discontinued operations are presented separately

in the income statement and the assets associated with these

operations are included with non-current assets held for sale in the

balance sheet.

Foreign currencies

The functional currency of each entity within the group is determined

based on the currency of the primary economic environment in

which that entity operates. Transactions in currencies other than the

entity’s functional currency are recognised at the rates of exchange

ruling on the date of the transaction. Monetary assets and liabilities

denominated in such currencies are translated at the rates ruling at

the balance sheet date.

Gains and losses arising on exchange differences are recognised in

profi t or loss.

The fi nancial statements of entities within the group, whose

functional currencies are different to the group’s presentation

currency, are translated as follows:

• Assets, including goodwill, and liabilities at exchange rates ruling

on the balance sheet date

• Income, expense items and cash fl ows at the average exchange

rates for the period

• Equity items at the exchange rate ruling when they arose

Resulting exchange differences are classifi ed as a foreign currency

translation reserve and recognised directly in equity. On disposal of

such a business unit, this reserve is recognised in profi t or loss.

Hyperinfl ationary currencies

The fi nancial statements of foreign entities that report in the currency

of a hyperinfl ationary economy are restated for the decrease in

general purchasing power of the currency at the balance sheet date

before they are translated into the group’s presentation currency.

Post-balance sheet events

Recognised amounts in the fi nancial statements are adjusted to

refl ect events arising after the balance sheet date that provide

evidence of conditions that existed at the balance sheet date.

Events after the balance sheet that are indicative of conditions that

arose after the balance sheet date are dealt with by way of a note.

Comparative fi gures

Comparative fi gures are restated in the event of a change in

accounting policy or prior period errors. Furthermore, where there

is a subdivision of ordinary shares during the current year, the

comparative fi gures are restated.

Operating segment information

Reporting segments

The group has three main reporting segments that comprise the

structure used by the group executive (GE) to make key operating

decisions and assess performance. The group’s reportable segments

are operating segments that are differentiated by the activities that

each undertakes and the products they manufacture and market.

The group evaluates the performance of its reportable segments

based on operating profi t. The group accounts for intersegment

sales and transfers as if the sales and transfers were entered into

under the same terms and conditions as would have been entered

into in a market-related transaction.

The fi nancial information of the group’s reportable segments is

reported to the GE for purposes of making decisions about allocating

resources to the segment and assessing its performance.

The group’s reporting segments comprise the following segments:

Cement

The cement division’s activities include the mining of limestone and

the manufacture and supply of cementitious products.

Lime

The lime division’s activities include the mining of limestone and the

manufacture and supply of metallurgical grade limestone, burnt

lime and burnt dolomite.

Aggregates

The aggregate division’s activities include the mining and supply of

aggregates and metallurgical grade dolomitic limestone.




Judgments made by management

Preparing fi nancial statements in conformity with IFRS requires

estimates and assumptions that affect reported amounts and related

disclosures. Actual results could differ from these estimates.

Judgments made by management in applying the accounting

policies, other than those dealt with above, that could have a

signifi cant effect on the amounts recognised in the fi nancial

statements are:

Asset lives and residual values

Property, plant and equipment is depreciated over its useful life

taking into account residual values, where appropriate. The actual

lives of the assets and residual values are assessed annually and

may vary depending on a number of factors. In reassessing asset

lives, factors such as technological innovation, product lifecycles

and maintenance programmes are taken into account. Residual

value assessments consider issues such as future market conditions,

the remaining life of the asset and projected disposal values.

Impairment of assets

Goodwill is considered for impairment annually. Property, plant and

equipment and intangible assets are considered for impairment

if there is a reason to believe that impairment may be necessary.

Factors taken into consideration in reaching such a decision include

the economic viability of the asset itself and, where it is a component

of a larger economic unit, the viability of that unit itself.

The future cash fl ows expected to be generated by the assets are

projected, taking into account market conditions and the expected

useful lives of the assets. The present value of these cash fl ows,

determined using an appropriate discount rate, is compared to the

current net asset value and, if lower, the assets are impaired to the

present value.

Non-consolidation of subsidiary

The results of Porthold, a wholly owned Zimbabwean subsidiary,

have not been consolidated into the group as at 30 September

2008. There are signifi cant constraints that have an impact on

the normal operation of Porthold and the PPC board concluded

that management does not have the ability to exercise effective

control over the business. In view of the circumstances, the results

of Porthold have continued to be excluded from the group results

in the current year. In terms of IFRS 7, the investment is classifi ed as

an available-for-sale fi nancial asset.

Consolidation of special purpose entities

Special purpose entities established in the Afripack black economic

empowerment transactions have in the past been consolidated

into the group results in terms of IAS 27 (Consolidated Financial

Statements and Accounting for Investments in Subsidiaries).

Valuation of fi nancial instruments

The valuation of derivative fi nancial instruments is based on the

market situation at balance sheet date. The value of the derivative

instruments fl uctuates on a daily basis and the actual amounts

realised may differ materially from their values at the balance sheet

date.

Provision for doubtful debts

The provision for impairment of trade receivables is established

when there is objective evidence that the group will not be able

to collect all amounts due in accordance with the original terms

of credit given and includes an assessment of recoverability based

on historical trend analysis and events that exist at balance sheet

date.

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Deferred taxation assets

Deferred taxation assets are recognised to the extent it is probable

that taxable profi ts will be available against which deductible

temporary differences can be utilised. Future tax profi ts are

estimated based on business plans that include estimates and

assumptions regarding economic growth, interest, infl ation and

taxation rates and competitive forces. Deferred taxation assets are

also recognised on secondary taxation on company credits to the

extent it is probable that future dividends will utilise these credits.

Fair value of share-based payments

Fair value used in calculating the amount to be expensed as a

share-based payment is subject to a level of uncertainty. The group

is required to calculate the fair value of the equity and cash-settled

instruments granted to employees in terms of the share option

schemes implemented. This fair value is calculated by applying

a valuation model, which is in itself judgmental and takes into

account certain inherently uncertain assumptions (detailed in note

35).

Factory decommissioning and rehabilitation obligations

Estimating the future costs of these obligations is complex and

requires management to make estimates and judgments because

most of the obligations will be fulfi lled in the future and contracts

and laws are often not clear regarding what is required. The

resulting provisions are further infl uenced by changing technologies

and political, environmental, safety, business and statutory

considerations.

Post-employment benefi t valuations

Actuarial valuations of employee benefi t obligations under the now

closed defi ned healthcare benefi t plans are based on assumptions

that include employee turnover, mortality rates, infl ation rates,

discount rates, medical infl ation, the expected long-term return on

plan assets and the rate of compensation increases.

Sources of estimation uncertainty

There are no signifi cant assumptions made concerning the future

or other sources of estimation uncertainty that have been identifi ed

as giving rise to a signifi cant risk of causing a material adjustment

to the carrying amount of assets and liabilities within the next

fi nancial year.


Group balance sheetsat 30 September 2008

Notes2008

Rm2007

Rm2006

Rm

ASSETS

Non-current assets 3 196 2 546 1 817

Property, plant and equipment 1 2 813 2 178 1 414

Intangible assets 2 19 20 14

Investment in non-consolidated subsidiary 3 260 260 290

Other non-current fi nancial assets 4 90 78 99

Investment in associate 5 14 10 –

Current assets 1 338 2 336 2 538

Inventories 6 363 337 223

Trade and other receivables 7 751 696 605

Short-term investment 4 – 2 98

Assets classifi ed as held for sale 8 – – 130

Cash and cash equivalents 9 224 1 301 1 482

Total assets 4 534 4 882 4 355

EQUITY AND LIABILITIES


Share capital and premium 10 115 868 868

Other reserves 57 16 90

Retained profi t 1 541 1 465 1 245

Total equity 1 713 2 349 2 203

Non-current liabilities 511 340 364

Deferred taxation liabilities 11 299 156 174

Long-term borrowings 12 55 68 83

Provisions 13 151 114 107

Other non-current liabilities 14 6 2 –

Current liabilities 2 310 2 193 1 788

Short-term borrowings 15 1 619 1 366 983

Taxation payable 61 236 212

Trade and other payables 16 629 579 472

Liabilities directly associated with assets classifi ed as held for sale 8 – – 112


Total equity and liabilities 4 534 4 882 4 355

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Group income statementsfor the year ended 30 September 2008

Notes2008

Rm2007

Rm2006

Rm

Continuing operations

Revenue 6 248 5 566 4 686

Cost of sales 3 547 3 069 2 520

Gross profi t 2 701 2 497 2 166

Non-operating income – 1 1

Administrative and other operating expenditure 378 324 306

Operating profi t 17 2 323 2 174 1 861

Fair value gains on fi nancial instruments 18 4 1 –

Finance costs 19 157 84 52

Investment income 20 84 82 67

Profi t before exceptional items 2 254 2 173 1 876

Exceptional items 21 2 14 –

Share of associate’s retained profi t 5 10 7 –

Profi t before taxation 2 266 2 194 1 876

Taxation 22 767 765 670

Net profi t from continuing operations 1 499 1 429 1 206


Net profi t from discontinued operation – – 8

Net profi t 1 499 1 429 1 214

Earnings per share (cents) 23.2

From continuing and discontinued operations

– basic and fully diluted 283 266 226

From continuing operations

– basic and fully diluted 283 266 224

REVENUE (Rm)

2008

2 4001 200 3 600 4 800 6 000

2007

2006

OPERATING PROFIT (Rm)

2008

800400 1 200 1 600 2 000

2007

2006


Group statements of changes in equityfor the year ended 30 September 2008

Sharecapital

Rm

Sharepremium

Rm

Capital redemption

reserve fundRm

Unrealised surplus on

reclassifi cationof plant

Rm

Balance at 1 October 2005 54 814 1 29

Movement for the year

Exchange differences on translation of foreign operation – – – –

Revaluation of investments – – – –

Cash fl ow hedge recognised directly through equity – – – –

Deferred taxation on hedging movement – – – –

Outside shareholders’ interest associated with held for sale assets – – – –

Deregistration of dormant subsidiary companies – – (1) –

Equity-settled share incentive scheme charge – – – –

Other reserve movements – – – (3)

Net profi t – – – –

Dividends declared – – – –

Balance at 30 September 2006 54 814 – 26




Deferred taxation on revaluation – – – –


Cash fl ow hedge recognised in cost of plant – – – –

Deferred taxation on hedging movements – – – –

Equity-settled share incentive scheme charge – – – –

Equity-settled share incentive scheme payment – – – –








Deferred taxation on revaluation – – – –


Cash fl ow hedge recognised in profi t or loss – – – –

Cash fl ow hedge recognised in cost of plant – – – –

Deferred taxation on hedging movements – – – –

Equity-settled share incentive scheme refund – – – –

Repurchase of shares treated as treasury shares (2) (751) – –


Deferred taxation on other reserve movements – – – –




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Other reserves

Foreign currency

translationRm

Available-for- sale fi nancial

assetsRm

Hedgingreserves

Rm

Equity compensation

reservesRm

Retainedprofi t

Rm

Attributable to equity holders

of parentRm

Outside shareholders’

interestRm

Totalequity

Rm

(10) 27 – 5 1 086 2 006 21 2 027

6 – – – – 6 – 6

– (1) – – – (1) – (1)

– – 50 – – 50 – 50

– – (14) – – (14) – (14)

– – – – – – (21) (21)

– – – – 1 – – –

– – – 1 – 1 – 1

– – – – 3 – – –

– – – – 1 214 1 214 – 1 214

– – – – (1 059) (1 059) – (1 059)

(4) 26 36 6 1 245 2 203 – 2 203

(6) – – – – (6) – (6)

– (4) – – – (4) – (4)

– 1 – – – 1 – 1

– – (14) – – (14) – (14)

– – (33) – – (33) – (33)

– – 14 – – 14 – 14

– – – 1 – 1 – 1

– – – (30) – (30) – (30)

– – – – 3 – – –

– – – – 1 429 1 429 – 1 429

– – – – (1 212) (1 212) – (1 212)

(10) 23 3 (23) 1 465 2 349 – 2 349

5 – – – – 5 – 5

– 10 – – – 10 – 10

– (1) – – – (1) – (1)

– – 10 – – 10 – 10

– – (2) – – (2) – (2)

– – (4) – – (4) – (4)

– – (1) – – (1) – (1)

– – – 2 – 2 – 2

– – – – – (753) – (753)

– – – 26 (22) 1 – 1

– – – (1) – (1) – (1)

– – – – 1 499 1 499 – 1 499

– – – – (1 401) (1 401) – (1 401)

(5) 32 6 4 1 541 1 713 – 1 713


Group cash fl ow statementsfor the year ended 30 September 2008

Notes2008

Rm2007

Rm2006

Rm

CASH FLOWS FROM OPERATING ACTIVITIES

Profi t before exceptional items 2 254 2 173 1 876

Adjustments for:

– depreciation 214 192 165

– amortisation of intangible assets 4 4 4

– (profi t)/loss on disposal of plant and equipment and intangibles (2) (3) 1

– dividends received (8) (8) (15)

– interest received (76) (74) (52)

– fi nance costs 157 84 52

– loss on derivative (cash-settled share-based payment hedge) 15 – –

– other non-cash fl ow items 5 2 –

Operating cash fl ows before movements in working capital 2 563 2 370 2 031

Increase in inventories (26) (116) (18)

Increase in trade and other receivables (55) (147) (80)

Increase in trade and other payables and provisions 64 85 90

Cash generated from operations 2 546 2 192 2 023

Finance costs paid 26 (192) (84) (45)

Dividends received from investments and associate 14 21 15

Interest received 76 74 52

Taxation paid 27 (800) (743) (608)

Cash available from operations 1 644 1 460 1 437

Dividends paid 28 (1 401) (1 207) (1 059)

Equity-settled share incentive scheme refund/(payment) 2 (30) –

Net cash infl ow from operating activities 245 223 378

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Notes2008

Rm2007

Rm2006

Rm

CASH FLOWS FROM INVESTING ACTIVITIES

Acquisition of property, plant and equipment 29 (794) (954) (395)

– replacement capital expenditure (277) (129) (101)

– expansion capital expenditure (517) (825) (294)

Acquisition of intangible assets (3) (10) (3)

Dividends received from non-consolidated subsidiary company – 30 5

Net proceeds received on disposal of property, plant and equipment 5 8 1

Movement in investments and loans 30 (27) 114 140

Redemption of preference shares – 30 –

Acquisition of treasury shares (753) – –

Receipt of instalment on long-term loan 30 10 10 10

Net cash outfl ow from investing activities (1 562) (772) (242)

Net cash (outfl ow)/infl ow before fi nancing activities (1 317) (549) 136

CASH FLOWS FROM FINANCING ACTIVITIES

Long-term borrowings repaid (13) (111) (111)

Net short-term borrowings raised 253 479 872

Net cash infl ow from fi nancing activities 240 368 761

Net (decrease)/increase in cash and cash equivalents (1 077) (181) 897

Cash and cash equivalents at beginning of the year 1 301 1 482 592

Effects of exchange rates on cash – – 1

Deconsolidation of subsidiary company 31 – – (8)

Cash and cash equivalents at end of the year 224 1 301 1 482

DIVIDENDS PAID (Rm)

2008

250 500 750 1 000 1 250

2007

2006

EXPANSION CAPITAL EXPENDITURE (Rm)

2008

200 400 600 800

2007

2006


Notes to the group annual fi nancial statementsfor the year ended 30 September 2008

Freehold andleasehold

land,buildings

and mineral rights

Rm

Factorydecom-

missioningand quarry

rehabilitationassets

Rm

Plant, vehicles,

furniture andequipment

Rm

Capitalisedleasedplant

RmTotal

Rm

1. PROPERTY, PLANT AND EQUIPMENT

2008

Cost 456 39 3 882 302 4 679

Accumulated depreciation and impairments 185 17 1 469 195 1 866

Net carrying value 271 22 2 413 107 2 813

2007

Cost 411 27 3 131 302 3 871



2006

Cost 384 27 2 233 302 2 946



Plant and equipment with a net carrying value of R107 million (2007: R135 million; 2006: R154 million) are encumbered as disclosed in note 12.

The registers of land and buildings are open for inspection at the registered offi ce of the company and its subsidiaries.

The insured value of the group’s property, plant and equipment at 30 September 2008 amounted to R23 833 million (2007: R17 191 million; 2006: R13 512 million), which is based on the cost of replacement of such assets, except for motor vehicles, which are included at estimated retail value.

The historic value of land included above amounts to R56 million (2007: R56 million; 2006: R59 million).

Included in plant, vehicles, furniture and equipment is capital work-in-progress of R330 million (2007: R931 million; 2006: R155 million), which relates mainly to the various expansion projects currently in progress.

Certain of the company’s properties are the subject of land claims. The company is in the process of discussion with the Land Claims Commissioner and is awaiting outcome of the claims referred to the Land Claims Court. The claims are not expected to have a material impact on the company’s operations.

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Freehold andleasehold

land,buildings

and mineral rights

Rm

Factorydecom-


rehabilitationassets

Rm

Plant, vehicles,

furniture andequipment

Rm

Capitalisedleasedplant

RmTotal

Rm

1. PROPERTY, PLANT AND EQUIPMENT (continued)

Movement of property, plant and equipment

2008

Net carrying value at beginning of the year 243 10 1 790 135 2 178

Additions 45 12 793 – 850

288 22 2 583 135 3 028

Disposals – – (3) – (3)

Depreciation (18) – (168) (28) (214)

Translation differences* 1 – 1 – 2

Net carrying value at end of the year 271 22 2 413 107 2 813

*The translation differences comprise:

– cost 4

– accumulated depreciation (2)

2

2007

Net carrying value at beginning of the year 230 10 1 020 154 1 414

Additions 28 – 934 – 962

258 10 1 954 154 2 376

Disposals (1) – (2) – (3)

Depreciation (13) – (160) (19) (192)

Impairment – – (1) – (1)

Translation differences* (1) – (1) – (2)



– cost (5)

– accumulated depreciation 3

(2)

2006

Net carrying value at beginning of the year 243 11 829 164 1 247

Additions 17 – 378 – 395

Reclassifi cation – – (17) 17 –

260 11 1 190 181 1 642

Disposals – – (2) – (2)

Deconsolidation of subsidiary company (18) – (43) – (61)

Change in estimate for rehabilitation assets – (1) – – (1)

Depreciation (13) – (125) (27) (165)

Translation differences* 1 – – – 1



– cost 2

– accumulated depreciation (1)

1


Notes to the group annual fi nancial statements continued


Right of use of mineralright asset

Rm

Restraint of trade

Rm

ERP development

and other software

RmTotal

Rm

2. INTANGIBLE ASSETS

2008

Cost 8 – 50 58

Accumulated amortisation and impairments 2 – 37 39

Net carrying value 6 – 13 19

2007

Cost 10 2 45 57

Accumulated amortisation and impairments 4 2 31 37


2006

Cost 8 2 39 49

Accumulated amortisation and impairments 1 2 32 35


Movement of intangible assets

2008

Net carrying value at beginning of the year 6 – 14 20

Additions – – 3 3

Amortisation – – (4) (4)

Net carrying value at end of the year 6 – 13 19

2007



Amortisation (1) – (3) (4)


2006



Amortisation (1) – (3) (4)

Translation differences 1 – – 1


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2008Rm

2007Rm

2006Rm

3. INVESTMENT IN NON-CONSOLIDATED SUBSIDIARY

Carrying value at beginning of the year 260 290 295

Less: Dividends received – (30) (5)

Carrying value at end of the year 260 260 290

The results of Porthold, a wholly owned Zimbabwean subsidiary, have not been consolidated into the PPC group as at 30 September 2008. There are signifi cant constraints impacting on the normal operation of Porthold and the PPC board concluded that management does not have the ability to exercise effective control over the business. In view of the circumstances, the results of Porthold have continued to be excluded from the group results in the current year. In terms of IFRS 7, the investment is classifi ed as an available-for-sale fi nancial asset. Due to the hyperinfl ationary losses incurred, dividends received have been set off against the carrying value of the investment.

The PPC board has considered the carrying value of the investment in Porthold and determined that no impairment is necessary.

Due to the exceptional economic circumstances being experienced in Zimbabwe and the diffi culty in determining a reasonable exchange rate, disclosure of the fi nancial results of the company is not meaningful and has therefore not been provided.

4. OTHER NON-CURRENT FINANCIAL ASSETS

Unlisted investments at fair value 36 26 30

Non-current portion of preference shares* – – 2

Guaranteed loan in respect of railway line** – 3 6

Long-term loan† 39 49 61

Derivative fi nancial instrument (fair value hedge)‡ 15 – –

90 78 99

*Preference shares

The unlisted preference shares earned dividends at an average rate of 9,6% per annum (2007: 9,6% per annum; 2006: 9,6% per annum) and were redeemable at the option of the group as follows:

1 October 2006 – – 49

1 April 2007 – – 49

1 October 2007 – 2 2

Unlisted preference shares at amortised cost – 2 100

Less: Transferred to current assets – (2) (98)

Non-current portion of preference shares – – 2

The company redeemed the remaining portion of the preference shares in 2008 (2007: R98 million; 2006: R147 million).

The investment in preference shares was encumbered as per note 12.

**Guaranteed loan in respect of railway line

Amortised over the period of the loan by way of reduced payment to Transnet Freight Rail for rail transport services, and bears interest at prime less 4%. The <R1 million balance will be fully repaid during the 2009 fi nancial year.†Long-term loan

This loan is repayable in annual capital instalments of R10 million payable on 30 June each year, with the last payment on 30 April 2013, and bears interest at an effective interest rate of 13,5% per annum. ‡Derivative fi nancial instrument

Fair value of the premium paid to hedge cash-settled share-based payments (refer notes 35 and 37).


2008Rm

2007Rm

2006Rm

5. INVESTMENT IN ASSOCIATE

Investment at cost 7 – –

Cost of associate previously accounted for as an asset held for sale (refer note 8) – 7 –

7 7 –

Share of retained profi t: 7 3 –

Retained profi t at beginning of the year 3 – –

Previously accounted for as an asset held for sale – 11 –

Current year movement:

– share of current year’s retained profi t 10 7 –

– dividends received (6) (13) –

Other movements – (2) –

14 10 –

Valuation of interest in associate

Fair value of unlisted associate as determined by the directors 14 10 –

PPC’s portion of its associate’s

Property, plant and equipment, investments and cash 25 13 –

Total borrowings 14 2 –

Net working capital 3 (1) –

Revenue 107 85 –

Profi t after taxation 10 7 –

Cash fl ow from operations 2 18 –

6. INVENTORIES

Raw materials 80 79 42

Work-in-progress 31 53 27

Finished goods 66 84 61

Maintenance stores 186 121 93

363 337 223

The value of inventories has been determined on the following cost

formula bases:

– fi rst-in, fi rst-out – 34 29

– weighted average 363 303 194

363 337 223

Amount of inventories recognised as an expense during the year 2 470 2 432 1 910

Amount of write-down of inventories to net realisable value and losses of inventories 4 2 1

No inventories have been pledged as security.



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Cement Rm

LimeRm

Aggregates Rm

TotalRm

Trade receivables that are neither past due nor impaired*

2008 529 56 17 602

2007 499 43 15 557

2006 397 49 16 462

Trade receivables that are past due but not impaired

2008

Age analysis 50,7 5,1 3,0 58,8

0 – 30 days 47,5 4,7 2,9 55,1

31 – 60 days 2,6 0,3 0,1 3,0

61 – 90 days 0,6 0,1 – 0,7

Fair value of collateral held** 16,7 – – 16,7

2007

Age analysis 29,2 8,0 2,8 40,0

0 – 30 days 23,0 7,7 2,5 33,2

31 – 60 days 4,4 – – 4,4

61 – 90 days 1,4 – – 1,4

91 – 120 days 0,4 0,3 0,3 1,0


* There is no history of default relating to trade receivables in this category.

** The majority of collateral held consists of bank guarantees, with the balance comprising suretyships, mortgage bonds, notarial bonds and cessions.

2008Rm

2007Rm

2006Rm

7. TRADE AND OTHER RECEIVABLES

Trade receivables 666 602 499

Less: Impairment of trade receivables (5) (5) (7)

Originated loans and receivables 661 597 492

Derivative fi nancial instruments (held-for-trading fi nancial assets) 5 1 2

Derivative fi nancial instruments (cash fl ow hedge) 6 4 50

Other fi nancial receivables 40 34 36

Trade and other fi nancial receivables 712 636 580

Prepayments 32 38 12

Taxation prepaid – – 1

Other non-fi nancial receivables 7 22 12

751 696 605

The gains on fi nancial instruments relating to the cash fl ow hedge should materialise within the next fi nancial year. These gains are to be included in the initial measurement of the acquisition of the hedged asset, where appropriate.

Originated loans and receivables comprise: 661 597 492

Trade receivables that are neither past due nor impaired 602 557 462

Trade receivables that are past due but not impaired 59 40 30


Cement Rm

LimeRm

Aggregates Rm

TotalRm

7. TRADE AND OTHER RECEIVABLES (continued)

Trade receivables that are past due but not impaired (continued)

2006

Age analysis 27,2 1,7 0,7 29,6

0 – 30 days 18,5 1,4 0,3 20,2

31 – 60 days 8,6 0,2 0,3 9,1

61 – 90 days 0,1 0,1 – 0,2

91 – 120 days – – 0,1 0,1



Impairment of trade receivables

2008

Balance at beginning of the year 4 – 1 5

Allowance raised through profi t or loss 1 – 1 2

Utilisation of allowance (1) – (1) (2)

Balance at end of the year 4 – 1 5

2007


Allowance reversed through profi t or loss (2) – – (2)


2006


Allowance reversed through profi t or loss – – (1) (1)


No trade receivables have been pledged as security.

No individual customer represents more than 10% of the group’s revenue.



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2008 Rm

2007 Rm

2006 Rm

8. ASSETS CLASSIFIED AS HELD FOR SALE

Net carrying value at beginning of the year – 18 –

Movement for the year – – 18

Transferred to investment in associate – (18) –

Net carrying value at end of the year – – 18

During the 2004 fi nancial year, PPC sold 75% of its share in Afripack (Pty) Ltd (Afripack) to a black empowerment and management consortium. The purchase price was funded via PPC’s subscription to redeemable preference shares and cash proceeds. Afripack continued to be consolidated into PPC’s group results, in terms of IAS 27 (Revised) Consolidated and Separate Financial Statements, as PPC management continued to have effective control of Afripack until the preference shares were redeemed in October 2006. Following the redemption, Afripack’s results were deconsolidated in the 2007 fi nancial year.

For the year ended 30 September 2006, Afripack was consolidated in terms of IFRS 5 Non-current assets held for sale and discontinued operations, as an asset classifi ed as held for sale.

The results of Afripack as at 30 September 2006 were as follows:

Revenue 177

Operating profi t 44

Assets:

Non-current assets

Property, plant and equipment 51

Current assets 79

Inventories 23

Trade and other receivables 28

Cash and cash equivalents 28

Total assets 130

Liabilities:

Non-current liabilities 47

Interest-bearing 3

Non-interest-bearing and other non-current liabilities 36

Deferred taxation liabilities 8

Current liabilities 65

Trade and other payables 60

Taxation payable 5

Total liabilities 112

Net carrying value at end of the year 18


2008Rm

2007Rm

2006Rm

9. CASH AND CASH EQUIVALENTS

Cash on hand and on deposit 224 1 301 1 482

Cash and cash equivalents are comprised as follows:

– South African rand 147 1 242 1 437

– Foreign currency – Botswana pula 77 59 45

224 1 301 1 482

There are restrictions on the ability to utilise R80 million (2007: R31 million; 2006: R28 million) relating to The PPC Environmental Trust. During the current year the group contributed R50 million to The PPC Environmental Trust.

10. SHARE CAPITAL AND PREMIUM

Authorised share capital

600 000 000 ordinary shares of 10 cents each 60 60 60

Issued share capital

537 612 390 (2007: 537 612 390; 2006: 537 612 390) ordinary shares in issue at beginning of the year 54 54 54

20 140 401 (2007: Nil; 2006: Nil) ordinary shares bought back during the year (2) – –

517 471 989 (2007: 537 612 390; 2006: 537 612 390) ordinary shares in issue at end of the year 52 54 54

Share premium

Balance at beginning of the year 814 814 814

Utilised for the share buy-back (751) – –

Balance at end of the year 63 814 814

Total issued share capital and premium 115 868 868

During the current year, in terms of a special resolution authorised at the 28 January 2008 annual general meeting, PPC Cement (Pty) Limited, a group subsidiary company, bought back 20 140 401 ordinary shares in the company. These shares are held as treasury shares. The average purchase consideration, including costs, approximated R37,37 per share. As at 30 September 2008, the company had purchased 3,75% of the issued share capital.

The buy-back programme was entered into in anticipation of, and to limit the dilutionary effect of the issue of new shares for purposes of the broad-based black ownership initiative. Further share buy-backs will be considered on an ongoing basis, where appropriate.

Unissued shares

Unissued share capital comprises 62 387 610 (2007: 62 387 610; 2006: 62 387 610) shares of 10 cents each. This excludes the impact of shares held as treasury shares.



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2008Rm

2007Rm

2006Rm

11. DEFERRED TAXATION

Movement of deferred taxation

Balance at beginning of the year:

– deferred taxation assets – – 24

– deferred taxation liabilities 156 174 182

Net liability at beginning of the year 156 174 158

Deconsolidation of subsidiary company – – (7)

Charged directly in equity 3 (15) 14

Movement through income statement* 147 (3) 9

Impact of change in taxation rate (5) – –

Other (2) – –

Liability at end of the year 299 156 174

Deferred taxation liabilities:

Capital allowances 335 194 193

Provisions (50) (36) (34)

Non-current fi nancial assets/(liabilities) 6 (1) –

Prepayments and other receivables 14 11 3

Other temporary differences (6) (12) 12

299 156 174

* The movement relates primarily to the commissioning of the Dwaalboom (Batsweledi) expansion project that was commissioned during September 2008.

12. LONG-TERM BORROWINGS

Interest-bearing 68 83 194

Less: Current portion repayable within one year (refer note 15) 13 15 111

55 68 83

Secured debts

Liabilities under capitalised fi nance lease 68 83 194

Repayable during the year ending 30 September Total owing

2009 2010 2011 2012 2013 2008 2007 2006

Rm Rm Rm Rm Rm Rm Rm Rm

13 13 14 14 14 68 83 194

Assets encumbered are made up as follows:

Property, plant and equipment (refer note 1) 107 135 154

Current investment in preference shares (refer note 4) – 2 98

Non-current investment in preference shares (refer note 4) – – 2

107 137 254

Details of maturity analysis and interest rates on fi nancial risk management are disclosed in note 37.


2008Rm

2007Rm

2006Rm

13. PROVISIONS

Non-current 151 114 107

Current 1 12 9

152 126 116

Factorydecom-


rehabilitationRm

Retirementand

post-retirement

benefi tsRm

Onerouscontract

RmTotal

Rm

Movement of provisions

2008

Balance at beginning of the year 111 14 1 126

Amounts added 22 2 – 24

Unwinding of discount 9 – – 9

Amounts utilised (5) (1) (1) (7)

Balance at end of the year 137 15 – 152

Incurred:

– within one year – 1 – 1

– between two to fi ve years 29 2 – 31

– more than fi ve years 108 12 – 120

137 15 – 152

2007

Balance at beginning of the year 103 13 – 116

Amounts added 1 1 1 3


Amounts utilised (1) – – (1)

Balance at end of the year 111 14 1 126

Incurred:

– within one year 7 4 1 12

– between two to fi ve years 25 – – 25


111 14 1 126

2006

Balance at beginning of the year 97 16 – 113


Amounts utilised (1) (3) – (4)

Balance at end of the year 103 13 – 116

Incurred:

– within one year 6 3 – 9

– between two to fi ve years 1 – – 1


103 13 – 116



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13. PROVISIONS (continued)

Factory decommissioning and quarry rehabilitation The group is required to restore mine and processing sites at the end of their productive lives to an acceptable condition consistent with the group’s environmental policies. The expected cost of any committed decommissioning or restoration programme, discounted to its net present value, is provided for at the beginning of each project. PPC has set up an Environmental Trust to administer the funds required to fund the expected cost of decommissioning or restoration. The Environmental Trust is fully consolidated into PPC’s group results.

Retirement and post-retirement benefi ts Included in provisions are the following liabilities:

Cement and Concrete Institute employees The provision relates to PPC’s proportionate share of the post-retirement healthcare liability for employees of the Cement and Concrete Institute. This amounted to R5 million (2007: R3 million; 2006: R3 million). This liability was last actuarially valued during February 2006 and is due for valuation by February 2009. The liability has been determined using the projected unit credit method.

Corner House Pension Fund and Lime Acres continuation members The provision relates to post-employment healthcare benefi ts in respect of certain Corner House Pension Fund and Lime Acres continuation members. This amounted to R10 million (2007: R11 million; 2006: R10 million). This liability was last actuarially valued during September 2008. The liability has been determined using the projected unit credit method.

Benefi ts under these schemes were granted to employees under historical employment contracts and schemes are closed to new members.

Onerous contract The provision for onerous contract relates to a property lease agreement in Botswana following the decision to exit the local readymix operation. The provision for onerous contract was a fi nancial liability carried at amortised cost, for which the carrying amount approximates its fair value.

2008Rm

2007Rm

2006Rm

14. OTHER NON-CURRENT LIABILITIES

Cash-settled share-based payment liability 6 2 –

Details of the cash-settled share-based payment liability are disclosed in note 35.

15. SHORT-TERM BORROWINGS

Short-term loans and bank overdraft 1 606 1 351 872

Current portion of long-term interest-bearing liability (note 12) 13 15 111

1 619 1 366 983

At year-end, the company had borrowing facilities of approximately R2 570 million.

In terms of the broad-based black ownership initiative, the company will receive approximately R1,5 billion in long-term debt, which is intended as part repayment of the short-term borrowings.

Details of maturity analysis and interest rates on fi nancial risk management are disclosed in note 37.

16. TRADE AND OTHER PAYABLES

Trade payables and accruals 389 327 183

Other fi nancial payables 50 30 90

Derivative fi nancial instruments (held-for-trading fi nancial liabilities) 5 – –

Trade and other fi nancial payables 444 357 273

Payroll accruals 153 161 136

VAT payable 21 20 26

Other non-fi nancial payables 11 41 37

629 579 472

Trade and other payables are payable within a 30 – 60 day period.


2008Rm

2007Rm

2006Rm

17. OPERATING PROFITOperating profi t includes:Administrative and management fees paid 12 9 7

Amortisation of intangible assets (refer note 2) 4 4 4

Auditors’ remuneration – fees 4 3 4

Consultation fees in respect of the broad-based black ownership initiative 20 – –

Depreciation (refer note 1):

– cost of sales 201 178 152

– operating costs 13 14 13

214 192 165

Directors’ remuneration (refer note 38) 19 16 12

Distribution costs included in cost of sales 841 637 610

Exploration and research costs – 1 –

Fees paid to previous holding company – 19 27

Technical fees paid 5 5 5

Operating lease charges:

– land and buildings 5 3 3

– plant, vehicles and equipment 1 2 3

6 5 6

(Profi t)/loss on disposal of plant and equipment and intangibles (2) (3) 1

Retirement benefi t contributions (refer note 34) 45 38 35

Share-based payments (refer note 35):

– cash-settled share incentive scheme charge 4 2 –

– equity-settled share incentive scheme charge – 1 1

4 3 1

Staff costs:

– South Africa 601 514 457

– Other Africa 15 14 13

616 528 470

Less: Costs capitalised to plant and equipment (20) (11) (10)

596 517 460

18. FAIR VALUE GAINS ON FINANCIAL INSTRUMENTSGains/(losses) on derivatives designated as economic hedging instruments 18 4 (1)

Loss on derivative (cash-settled share-based payment hedge) (15) – –

Gains/(losses) on translation of foreign currency monetary items 1 (3) 1

4 1 –

19. FINANCE COSTSBank and other borrowings 182 68 18

Finance lease interest 10 16 27

Unwinding of discount on decommissioning and rehabilitation provisions 9 8 7

201 92 52

Capitalised to plant and equipment* (44) (8) –

157 84 52

* Interest capitalised to the Dwaalboom (Batsweledi) expansion project (R36 million), Hercules (Ntšhafatso) expansion project (R7 million) and Western Cape expansion project (R1 million)



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2008Rm

2007Rm

2006Rm

20. INVESTMENT INCOME

Dividends

– unlisted investments 8 8 15

Interest received

– on deposits 65 62 39

– non-current assets 11 12 13

84 82 67

21. EXCEPTIONAL ITEMS

Profi t on disposal of investments – 12 –

Profi t on disposal of properties 2 3 –

Impairment of plant and equipment – (1) –

Gross exceptional items 2 14 –

Taxation – current – – –

Net exceptional items 2 14 –

22. TAXATION

South African normal taxation

– current year 466 604 527

– prior year 1 1 1

467 605 528

Foreign taxation


– prior year – – (1)

18 13 6

Deferred taxation

– current year 147 (2) 4

– prior year – (1) –

– rate change (5) – –

142 (3) 4

Secondary taxation on companies


– deferred – – 5

140 150 132

Taxation attributable to the company and its subsidiaries 767 765 670

Incurred

– South Africa 749 752 664

– Other Africa 18 13 6

767 765 670


2008%

2007%

2006%

22. TAXATION (continued)Reconciliation of rate of taxationTaxation as a percentage of profi t before taxation (excluding prior year taxation) 33,8 34,8 35,7 Adjustment due to the inclusion of dividend income 0,1 0,1 0,2

Effective rate of taxation 33,9 34,9 35,9

Reduction in rate of taxation 1,1 1,4 0,7

– permanent differences 0,1 0,8 0,4 – rate change adjustment 0,2 – –– foreign taxation differential 0,8 0,6 0,3

Increase in rate of taxation (7,0) (7,3) (7,6)

– disallowable charges (0,8) (0,3) (0,3)– taxation on unprovided temporary differences – (0,2) (0,3)– secondary taxation on companies (6,2) (6,8) (7,0)

South African normal taxation rate 28,0 29,0 29,0

Group taxation losses and secondary taxation on company credits at end of the year, allowable for taxation:South African – unutilised secondary taxation on company credits – – 4 Less: Utilised to reduce deferred taxation or create deferred taxation assets – – 4

– – –

2008Rm

2007Rm

2006Rm

23. EARNINGS AND HEADLINE EARNINGS PER SHARE23.1 FULLY WEIGHTED AVERAGE NUMBER OF ORDINARY SHARES

Weighted average number of ordinary shares (excluding impact of share buy-back) 537 612 390 537 612 390 537 612 390 Weighted average impact of share buy-back (8 562 472) – –

Fully weighted average number of ordinary shares 529 049 918 537 612 390 537 612 390

Account is taken of the number of shares in issue for the period in which they are entitled to participate in the net profi t of the group.

23.2 EARNINGS PER SHARE (cents)From continuing and discontinued operationsCalculated on net profi t of R1 499 million (2007: R1 429 million; 2006: R1 214 million) 283 266 226From continuing operationsCalculated on net profi t of R1 499 million (2007: R1 429 million; 2006: R1 206 million) 283 266 224Fully weighted average number of ordinary shares 529 049 918 537 612 390 537 612 390

23.3 HEADLINE EARNINGS PER SHARE (cents)Calculated on headline earnings of R1 495 million (2007: R1 415 million; 2006: R1 214 million) 283 263 226 Headline earnings is calculated as follows:Net profi t attributable to shareholders (Rm) 1 499 1 429 1 214 Adjusted for:– Profi t on disposal of property, plant and equipment, investments and intangibles (4) (15) –– Impairment of plant, equipment and intangibles – 1 –

1 495 1 415 1 214




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2008Rm

2007Rm

2006Rm

23. EARNINGS AND HEADLINE EARNINGS PER SHARE (continued)

23.4 CASH EARNINGS PER SHARE (cents)

Calculated on cash available from operations of R1 644 million (2007: R1 460 million; 2006: R1 437 million) 311 272 267


24. DIVIDENDS

Ordinary shares

Final No 207 – 166 cents per share (2007: 110 cents; 2006: 84 cents) 853 591 452

Special No 208 – 61 cents per share (2007: 77 cents; 2006: 80 cents) 313 414 430

Interim No 209 – 45 cents per share (2007: 38,5 cents; 2006: 33 cents) 235 207 177

1 401 1 212 1 059

Relief on payment to foreign shareholders – (5) –

1 401 1 207 1 059

On 10 November 2008 the directors declared dividend No 210 (fi nal) of 180 cents per share. This dividend will be paid to shareholders on Monday, 12 January 2009. This dividend has not been included as a liability in these fi nancial statements.

A new ISIN number, ISIN ZAE000125886, will be allocated to PPC with effect from 8 December 2008. Therefore, ISIN ZAE000125886 shall be applicable to the dividend timetable set out below.

In compliance with the requirements of the JSE Limited, the following dates are applicable:

Last day to trade CUM dividend Friday, 2 January 2009

Shares trade EX dividend Monday, 5 January 2009

Record date Friday, 9 January 2009

Payment date Monday, 12 January 2009

Share certifi cates may not be dematerialised or rematerialised between Monday, 5 January 2009 and Friday, 9 January 2009, both days inclusive.

Dividends per share (cents)

Interim No 209 – declared 7 May 2008 45 39 33

Final No 210 – declared 10 November 2008 180 166 110

Special – 61 77

225 266 220

Secondary taxation on companies is payable at a rate of 10% (2007: 10%; 2006: 12,5%) on the net dividend declared.

The charge on the 2008 fi nal dividend would approximate R93 million.

25. ATTRIBUTABLE INTEREST IN SUBSIDIARIES

Attributable interest in the aggregate amount of profi ts or losses of subsidiaries after taxation and outside shareholders’ interest:

Profi ts 226 211 148

26. FINANCE COSTS PAID

Finance costs as per income statement charge 157 84 52

Unwinding of discount on decommissioning and rehabilitation provisions (9) (8) (7)

Interest capitalised to plant and equipment 44 8 –

192 84 45


2008Rm

2007Rm

2006Rm

27. TAXATION PAID

Net amounts outstanding at beginning of the year 236 211 158

Charge per income statement (excluding deferred taxation) 625 768 662

Adjustment in respect of translation differences – – (1)

Net amounts outstanding at end of the year (61) (236) (211)

800 743 608

28. DIVIDENDS PAID

Dividends declared 1 401 1 212 1 059


1 401 1 207 1 059

29. ACQUISITION OF PROPERTY, PLANT AND EQUIPMENT

Freehold and leasehold land, buildings and mineral rights 45 28 17

Plant, vehicles, furniture and equipment 793 934 378

838 962 395

Interest capitalised (44) (8) –

794 954 395

30. MOVEMENT IN INVESTMENTS AND LOANS

Net movement (12) 128 151

Revaluation of available-for-sale fi nancial assets through reserves 10 (4) (1)


(17) 124 (150)

Comprising:

Movement in investments and loans (27) 114 140

Receipt of instalment on long-term loan 10 10 10

(17) 124 150

31. DECONSOLIDATION OF SUBSIDIARY COMPANY (refer note 8)

Property, plant and equipment (62)

Non-current assets and loans 40

Inventories (16)

Receivables (24)

Payables, taxation and deferred taxation 46

Long-term borrowings 3

Outside shareholders’ interest 21

Net assets deconsolidated 8

Cash and cash equivalents deconsolidated (8)

–



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The group has foreign letters of credit guarantees unexpired at year-end amounting to €5,7 million (R66,7 million). These guarantees relate to the Hercules (Ntšhafatso) expansion project and expiry dates of the guarantees are during the 2009 fi nancial year.

2013 and thereafter

Rm2012

Rm2011

Rm2010

Rm2009

Rm

Total 2008

Rm

Total 2007

Rm

Total 2006

Rm

Operating lease commitments

Land and buildings 7 6 6 6 6 31 22 23

Other – – – – – – – 4

7 6 6 6 6 31 22 27

33. CONTINGENT LIABILITIES

Guarantees for loans, banking facilities and other obligations to third parties. – 8 7

Litigation, current or pending, is not considered likely to have a material adverse effect on the group.

34. RETIREMENT BENEFIT INFORMATION

It is the policy of the group to encourage, facilitate and contribute to the provision of retirement benefi ts for all permanent employees. To this end, the group’s permanent employees are usually required to be members of either a pension or provident fund, depending on local legal requirements.

All current permanent employees belong to one of eight defi ned contribution retirement funds. Group employment is a prerequisite for membership of these funds. The local funds are subject to the provisions of the Pension Funds Act of 1956. The list of retirement funds at 30 September 2008 is as follows:

– Pretoria Portland Cement Defi ned Contribution Pension Fund

– Pretoria Portland Cement Defi ned Contribution Provident Fund

– PPC Negotiated Provident Fund

– PPC Lime Employees’ Provident Fund

– BANP Provident Fund

– PPC Eastern Cape Provident Fund

– PPC Western Cape Provident Fund

– Barloworld Botswana Retirement Fund

Historically, qualifying employees were granted certain post-retirement healthcare benefi ts. The obligation for the employer to pay medical aid contributions after retirement is no longer part of the conditions of employment for new employees. A number of pensioners remain entitled to this benefi t, the cost of which has been fully provided and disclosed in note 13.

Defi ned contribution plansThe total cost charged to the income statement of R45 million (2007: R38 million; 2006: R35 million) represents contributions payable to these schemes by the group at rates specifi ed in the rules of the schemes. At 30 September 2008, all contributions due in respect of the current reporting period had been paid over to the schemes.

2008Rm

2007Rm

2006Rm

32. COMMITMENTS

Capital commitments

– contracted 378 766 668

– approved 427 537 631

805 1 303 1 299

Commitments for capital expenditure are stated in current values which, together with expected price escalations, will be fi nanced from surplus cash generated from operations and borrowing facilities available to the group.

The majority of the commitments relate to the group’s approved expansion projects and are to be incurred during the 2009 fi nancial year.


35. SHARE-BASED PAYMENTS

35.1 CASH-SETTLED

Executive directors and certain senior employees have been granted cash-settled share appreciation rights in terms of PPC’s long-term incentive scheme. The scheme was implemented during the 2007 year in recognition of services rendered to encourage long-term shareholder value creation and as an incentive for current and prospective employees to benefi t from growth in the value of PPC in the medium and long term. All share appreciation rights are approved by the remuneration committee.

Reconciliation of share appreciation rights granted:

2008 2007

Number ofoptions

Weightedaverageexercise

price Number of

options

Weightedaverageexercise

price

Outstanding at beginning of the year 3 540 000 43,00 – –

Granted during the year 2 212 000 31,80 3 540 000 43,00

Forfeited during the year (349 000) 43,00 – –

Outstanding at end of the year 5 403 000 38,41 3 540 000 43,00

Exercisable at end of the year – – – –

Share appreciation rights were priced using binomial option pricing, taking into account the following inputs:

2008 2007

Date of grant 17/09/2008 08/08/2007

Grant price of share appreciation rights (based on fi ve day volume weighted average price) (rand) 31,80 43,00

Expiry date 17/09/2018 08/08/2017

Market price of PPC shares at end of the year (rand) 31,25 47,80

Expected volatility of stock over remaining life of the option (%) 37,00 28,40

Risk-free rate (%) 9,38 8,20

Expected volatility is based on the historical share price over the past year.

All rights vest in thirds after the third, fourth and fi fth anniversary of the grant date. All share appreciation rights will lapse if not exercised within 10 years from grant date. Certain share appreciation rights were forfeited during the year due to senior executives leaving the employment of PPC.

Vesting of the rights granted to the directors and certain senior executives is subject to PPC group headline earnings per share growth performance conditions.

The expense recognised in the current year amounted to R4 million (2007: R2 million; 2006: not applicable).

The carrying amount of the liability relating to cash-settled share appreciation rights as at 30 September 2008 is R6 million (2007: R2 million; 2006: not applicable).

The weighted average remaining contractual life for cash-settled share appreciation rights outstanding as at 30 September 2008 is 9 years (2007: 10 years; 2006: not applicable).

The group has partially hedged its exposure to fl uctuations in the cash settlement amount in respect of the 2007 share appreciation rights granted, by acquiring a derivative fi nancial instrument in the form of extended European cash-settled call options from a fi nancial institution. This derivative fi nancial instrument is classifi ed as held-for-trading at fair value through profi t or loss (refer note 37).



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35. SHARE-BASED PAYMENTS (continued)

35.2 EQUITY-SETTLED

Prior to the unbundling of PPC from Barloworld in the 2007 year, executive directors and senior executives were granted equity-settled share options in the ordinary share capital of Barloworld Limited. The salient features of this scheme are that one-third of each allocation becomes exercisable by the participant after three years have lapsed from the date of allocation. A maximum of two-thirds of the original allocation are exercisable after four years, and the full allocation after fi ve years.

During the 2007 year, PPC paid Barloworld R30 million in respect of the then market value of the equity-settled incentive scheme liability relating to the number of unexercised Barloworld share options held by PPC executive directors and senior executives. This payment was charged against equity compensation reserves.

During the current fi nancial year, a total of R2 million was credited against the equity compensation reserve for refunds due by Barloworld for unexercised share options that lapsed due to PPC senior executives leaving the employment of PPC.

A total of R25 million of the total reimbursement was transferred to distributable reserves during 2008, and the balance of R4 million will be transferred in 2009 over the vesting period of the equity-settled share options.

The expense recognised in the current year amounted to <R1 million (2007: R1 million; 2006: R1 million).

36. CHANGES IN ACCOUNTING POLICIES AND DISCLOSURES

The annual fi nancial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) on a basis consistent with the prior year, except for the adoption of the following new or revised accounting standards and interpretations, which had no fi nancial impact on PPC.

New or revised standards and interpretations adopted during the year

Effective date reporting period on or after Early adopted

IFRS 7: Financial Instruments: Disclosures 1 January 2007

IFRS 8: Operating Segments 1 January 2009

IFRS 2: Share-based Payment (Amendment) (Vesting Conditions and Cancellations) 1 January 2009

IFRIC 15: Agreements for the Construction of Real Estate 1 January 2009

IFRIC 16: Hedges of a Net Investment in a Foreign Operation 1 October 2009

The following amendments to published accounting standards are in issue but not yet effective. These revised standards will be adopted by PPC in the future.

Revised standards in issue not yet effectiveEffective date reporting

period on or afterFinancial implication

on PPC

IAS 1 (Revised): Presentation of Financial Statements 1 January 2009 Disclosure impact only

IASB improvement project

Various standards have been amended as a result of the IASB’s improvement project. Management is in the process of considering the relevant amendments to the standards and determining the fi nancial implications on the group.


37. FINANCIAL RISK MANAGEMENT

The group’s fi nancial instruments consist mainly of borrowings from fi nancial institutions, deposits with banks, local money market instruments, accounts receivable and payable, and leases.

Forward exchange contracts are used by the group for hedging purposes. The group does not speculate in the trading of derivative instruments.

Capital risk management

The group manages its capital to ensure that entities in the group will continue as going concerns, while maximising the return to stakeholders through the optimisation of the debt and equity balances.

The capital structure of the group consists of debt, which includes the borrowings disclosed in notes 12 and 15, cash and cash equivalents and equity attributable to equity holders, comprising issued capital, reserves and retained profi t as disclosed in notes 9 and 10 respectively.

PPC’s senior executives review the capital structure on a semi-annual basis. As part of this review, the cost of capital and the risks associated with each class of capital are considered. Based on recommendations of the committee, PPC will balance its overall capital structure through the payment of dividends, new share issues and buy-backs as well as the issue of new debt or the redemption of existing debt.

Treasury risk management

Senior executives meet on a regular basis to analyse currency and interest rate exposure and to re-evaluate treasury management strategies against revised economic forecasts. The group’s treasury operation provides the group with access to local money markets and provides group subsidiaries with the benefi t of bulk fi nancing and depositing.

Foreign currency management

Trade and capital commitmentsThe group is exposed to exchange rate fl uctuations as it undertakes certain transactions denominated in foreign currencies. Exchange rate exposures are managed within approved policy parameters utilising forward exchange contracts. The group’s policy is to cover forward all material foreign currency commitments.

Forward exchange contracts are carried at fair value with the resultant profi t or loss included in income. The only exception relates to the effective portion of cash fl ow hedges, where profi ts or losses are recorded directly in equity and are either included in the initial acquisition cost of the hedged assets, or are transferred to income when the hedged transaction affects income where appropriate. Fair value of the forward exchange contracts at balance sheet date is R150 million.

Foreign currency denominated commitments for the capital expansion projects amounting to €5,2 million have been hedged using designated forward exchange contracts to reduce the exposure to volatile cash fl ows that could result from currency movements. These commitments will be settled in the next 12 months. Fair value adjustments have been recorded directly in equity and <R1 million relating to an ineffective portion was recognised in income.

The amounts below represent forward exchange contract commitments to sell and purchase foreign currencies:

< 1 yearRm

1 – 3 yearsRm

Total Rm

2008 150 – 150

2007 134 72 206

2006 232 24 256

Total forward exchange contracts comprise the following:

€13 million at an average rate of R11,51/€ (2007: €13 million at an average rate of R9,93/€; 2006: €27 million at an average rate of R8,12/€)

<$1 million at an average rate of R8,36/$ (2007: $10 million at an average rate of R7,12/$; 2006: $4 million at an average rate of R7,27/$)

The average rates shown above include the cost of forward cover.



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37. FINANCIAL RISK MANAGEMENT (continued)

Interest rate management

The group is exposed to interest rate risk arising from fl uctuations in fi nancing costs on loans, which are primarily at fl oating interest rates. The majority of this exposure is expected to be of a very short-term nature and will diminish with the onset of the broad-based black economic empowerment initiative. As part of the process of managing the group’s fi xed and fl oating rate borrowings mix, the interest rate characteristics of new borrowings and the refi nancing of existing borrowings are positioned according to expected movements in interest rates. The interest rate profi le of total borrowings is as follows:

DescriptionYear of

repayment2008

Rm2007

Rm2006

Rm

SA rand liabilities

Secured 2009 – 2013 68 83 194

The above liabilities bear interest at fi xed rates.

The South African fi nance leases bear interest at an effective interest rate of 13,5% per annum. The weighted average interest rate paid for the 2008 fi nancial year was 13,5% (2007: 13,2%; 2006: 12,8%).

Unsecured, short-term loans bear interest at rates varying between 10,5% and 13% per annum for the year under review.

Sensitivity analysis

Interest rate riskAt 30 September 2008, if all interest rates on interest-bearing loan receivables, short-term cash investments, short-term loans payable and bank overdrafts at that date had been 100 basis points higher, with all other variables held constant, attributable earnings would have been R9 million (earnings per share: 1,8 cents) lower. Conversely, at 30 September 2008, if all interest rates at that date had been 100 basis points lower, with all other variables held constant, the attributable earnings would have been R9 million (earnings per share: 1,8 cents) higher.

Equity price risk – Cash-settled share appreciation rightsAt 30 September 2008, if the share price of PPC Limited had been R16,55 higher, with all other variables held constant, attributable earnings would have been R19 million (earnings per share: 3,5 cents) higher. Conversely, at 30 September 2008, if the share price of PPC Limited had been R10,82 lower, with all other variables held constant, attributable earnings would have been R8 million (earnings per share: 1,5 cents) lower.



Fair values of fi nancial assets and liabilities

The carrying values of certain fi nancial assets and liabilities, which are accounted for at historical cost, may differ from their fair values.

The estimated fair values have been determined using available market information and appropriate valuation methodologies.

Cement

NotesCarrying amount

RmFair value

Rm

2008Financial assetsAvailable-for-sale 296 296 Investment in non-consolidated subsidiary 3 260 260 Unlisted investments at fair value 4 36 36 Loans and receivables 810 818Long-term loan 4 39 42 Trade and other receivables 7 614 619 Cash and cash equivalents 9 151 151 Derivative fi nancial instruments (cash fl ow hedge) 7 6 6 At fair value through profi t or loss – held-for-trading 20 20 Derivative fi nancial instrument – non-current 4 15 15 Derivative fi nancial instruments – current 7 5 5 Financial liabilitiesFinancial liabilities measured at amortised cost 2 061 2 066 Long-term borrowings 12 55 53 Short-term borrowings 15 1 619 1 626 Trade and other payables 16 387 387

2007Financial assetsAvailable-for-sale 286 286 Investment in non-consolidated subsidiary 3 260 260 Unlisted investments at fair value 4 26 26 Current portion of preference shares 4 – –Loans and receivables 1 898 1 909 Long-term loan 4 49 54 Guaranteed loan in respect of railway line 4 3 3 Trade and other receivables 7 562 568 Cash and cash equivalents 9 1 280 1 280 Derivative fi nancial instruments (cash fl ow hedge) 7 4 4 At fair value through profi t or loss – held-for-trading 1 1 Derivative fi nancial instruments 7 1 1 Financial liabilitiesFinancial liabilities measured at amortised cost 1 745 1 751 Long-term borrowings 12 68 73 Short-term borrowings 15 1 366 1 367 Trade and other payables 16 310 310 Provision for onerous contract 13 1 1

2006Financial assetsAvailable-for-sale 320 320 Investment in non-consolidated subsidiary 3 290 290 Unlisted investments at fair value 4 30 30 Non-current portion of preference shares 4 – –Current portion of preference shares 4 – –Loans and receivables 2 003 2 018 Long-term loan 4 61 69 Guaranteed loan in respect of railway line 4 6 6 Trade and other receivables 7 460 467 Cash and cash equivalents 9 1 426 1 426 Derivative fi nancial instruments (cash fl ow hedge) 7 50 50 At fair value through profi t or loss – held-for-trading 2 2 Derivative fi nancial instruments 7 2 2 Financial liabilitiesFinancial liabilities measured at amortised cost 1 190 1 201Short-term borrowings 15 885 895Long-term borrowings 12 81 82 Trade and other payables 16 224 224



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Lime Aggregates Other Total

Carrying amountRm

Fair valueRm

Carrying amountRm

Fair valueRm

Carrying amountRm

Fair valueRm

Carrying amountRm

Fair valueRm

– – – – – – 296 296 – – – – – – 260 260 – – – – – – 36 36

114 114 45 45 – – 969 977– – – – – – 39 42

66 66 21 21 – – 701 706 48 48 24 24 – – 223 223

– – – – – – 6 6 – – – – – – 20 20 – – – – – – 15 15 – – – – – – 5 5

44 44 13 13 – – 2 118 2 123 – – – – – – 55 53 – – – – – – 1 619 1 626

44 44 13 13 – – 444 444

– – – – 2 2 288 288 – – – – – – 260 260 – – – – – – 26 26 – – – – 2 2 2 2

65 65 25 25 – – 1 988 1 999 – – – – – – 49 54 – – – – – – 3 3

51 51 18 18 – – 631 637 14 14 7 7 – – 1 301 1 301

– – – – – – 4 4 – – – – – – 1 1 – – – – – – 1 1

29 29 18 18 – – 1 792 1 798 – – – – – – 68 73 – – – – – – 1 366 1 367

29 29 18 18 – – 357 357 – – – – – – 1 1

– – – – 100 100 420 420 – – – – – – 290 290 – – – – – – 30 30 – – – – 2 2 2 2 – – – – 98 98 98 98

93 93 31 31 – – 2 127 2 142 – – – – – – 61 69 – – – – – – 6 6

51 51 17 17 – – 528 535 42 42 14 14 – – 1 482 1 482

– – – – – – 50 50 – – – – – – 2 2 – – – – – – 2 2

31 31 18 18 100 100 1 339 1 350– – – – 98 98 983 993– – – – 2 2 83 84

31 31 18 18 – – 273 273



Methods and assumptions used by the group in determining fair values:

The estimated fair values of fi nancial instruments are determined, at discrete points in time, by reference to the mid-price in an active market wherever possible. Where no such active market exists for the particular asset or liability, the company uses a valuation technique to arrive at the fair value, including the use of prices obtained in recent arm’s length transactions, discounted cash fl ow analysis and other valuation techniques commonly used by market participants.

The fair value of derivative fi nancial instruments relating to cash-settled share appreciation rights is determined with reference to valuations performed by third party fi nancial institutions at balance sheet date, using an actuarial binomial pricing model. The inputs into the model were as follows:

2008

Weighted average exercise price of derivative fi nancial instruments (rand) 43,00

Weighted average life of initial term of derivative instruments (years) 3

PPC share price at end of the year (rand) 31,25

Expected share price volatility (%) 46,00

Risk-free interest rate (%) 11,25

Credit risk management

The potential exposure to credit risk is represented by the carrying amounts of trade receivables, short-term cash investments and derivative assets in the balance sheet. Trade receivables comprise a large, widespread customer base and credit risk arises from the possibility that customers may not be able to settle their obligations as agreed. To manage this risk, the granting of credit is controlled by application and account limits, and the group only deals with creditworthy customers supported by appropriate collateral. The group periodically re-evaluates counterparty limits and the fi nancial reliability of its customers. Provision is made for specifi c doubtful debts, and as at 30 September 2008, where appropriate, management did not consider there to be any material credit risk exposure that was not already covered by security or a doubtful debt provision.

The group only deposits short-term cash surpluses with fi nancial institutions of high-quality credit standing.

The following table details the group’s maximum credit exposure:

CementRm

LimeRm

Aggregates Rm

Other Rm

TotalRm

Maximum credit risk exposure

2008 815 115 45 – 975

2007 1 899 65 25 2 1 991

2006 2 006 93 30 100 2 229



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Liquidity risk management

Liquidity risk is the risk of the group being unable to meet its payment obligations when they fall due and being unable to replace funds if facilities are withdrawn. The group manages liquidity risk centrally by maintaining adequate cash reserves, banking facilities and reserve borrowing facilities to meet its liquidity requirements at all times, and by continuously monitoring forecast and actual cash fl ows.

The following table details the group’s remaining contractual maturity for its fi nancial liabilities. The table has been prepared based on undiscounted cash fl ows at the earliest date on which the group can be required to pay. The amounts include both interest and capital. The maturity analysis of fi nancial liabilities is summarised as follows:

Note

Nominal value

of liabilityRm

< 1 yearRm

1 – 3 yearsRm

> 3 yearsRm

TotalRm

2008

Capitalised lease liability 12 68 22 40 33 95

Short-term borrowings 15 1 606 1 622 – – 1 622

Trade and other payables 16 444 444 – – 444

2007

Capitalised lease liabilities 12 83 26 43 52 121

Short-term borrowings 15 1 351 1 351 – – 1 351


Provision – onerous contract 13 1 – 1 – 1

2006

Capitalised lease liabilities 12 194 127 48 73 248

Short-term borrowings 15 872 872 – – 872


The company’s borrowing powers are not restricted.

The group does not have any other material fi nancial instruments that are not based in the currency in which the entity operates.


38. DIRECTORS’ REMUNERATION AND INTEREST

The directors’ remuneration for the year ended 30 September 2008 was as follows:

Executive directors

NameSalary R000

Incentivebonus R000

Retirementand medicalcontributions

R000

Carallowances

R000

Other benefi ts

R000Total R000

JE Gomersall 2 917 1 371 721 – 380 5 389

O Fenn 1 894 881 311 269 47 3 402

S Abdul Kader 1 335 648 232 249 17 2 481

RH Dent 1 421 693 244 249 7 2 614

P Esterhuysen 1 579 721 260 249 14 2 823

9 146 4 314 1 768 1 016 465 16 709

The annual bonus is capped at 125% of basic salary for all the executive directors on the achievement of stretch performance targets, which are measured relative to both fi nancial and non-fi nancial measures.

Non-executive directors

NameFees

R000

Auditcommittee

R000

Risk management

andcompliancecommittee

R000

Nominationcommittee

R000

Re-munerationcommittee

R000

Chairman fees

R000

BEE and transfor-

mation committee

R000TotalR000

AJ Lamprecht 135 – – 8 – – 40 183

MJ Shaw – 125 – 80 100 525 – 830

J Shibambo 180 65 80 40 50 – 40 455

EP Theron (resigned 29 October 2007) 11 – – 3 4 – – 18

Z Kganyago 135 33 – – – – – 168

NB Langa-Royds 135 – – 40 50 – – 225

TDA Ross 34 – – – – – – 34

630 223 80 171 204 525 80 1 913

Total 18 622



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38. DIRECTORS’ REMUNERATION AND INTEREST (continued)


Executive directors

NameSalary R000

Incentivebonus R000

Retirementand medical

contributions R000

Carallowances

R000

Other benefi ts

R000Total R000

JE Gomersall* 1 045 1 960 290 92 21 3 408

O Fenn 1 464 1 485 253 250 1 3 453

S Abdul Kader 999 1 002 183 232 – 2 416

RH Dent 1 126 1 087 205 232 2 2 652

P Esterhuysen 1 214 1 180 214 232 – 2 840

5 848 6 714 1 145 1 038 24 14 769


NameFees

R000

Auditcommittee

R000

Risk management


R000

Nominationcommittee

R000

Re-munerationcommittee

R000

Chairman fees

R000

BEE and transfor-

mation committee

R000TotalR000

WAM Clewlow (resigned 23 January 2007) 30 9 – 2 2 – – 43 AJ Lamprecht 95 – – – – – 5 100 AJ Phillips (resigned 23 January 2007) – – 7 2 2 46 – 57 MJ Shaw 35 40 23 17 27 99 20 261 J Shibambo 100 28 13 14 24 – 20 199 EP Theron 95 – – 17 27 – – 139 CB Thomson (resigned 23 January 2007) 30 9 – – – – – 39 DG Wilson (appointed 7 November 2006; resigned 16 July 2007) 85 25 – – – – 10 120

470 111 43 52 82 145 55 958

Total 15 727

SalaryR000

Incentive bonusR000

Retirement and medical

contributionsR000

Carallowances

R000

Other benefi ts

R000TotalR000

* In addition, the following remuneration was received from the Barloworld group 1 478 716 337 69 1 139 3 739




Executive directors

NameSalary R000

Incentivebonus R000


contributions R000

Carallowances

R000

Other benefi ts

R000Total R000

JE Gomersall* 622 1 000 147 46 36 1 851

O Fenn 1 180 1 310 210 235 3 2 938

S Abdul Kader 780 776 149 218 – 1 923

RH Dent 965 944 180 218 5 2 312

P Esterhuysen 991 996 183 218 4 2 392

4 538 5 026 869 935 48 11 416


NameFees

R000

Auditcommittee

R000

Risk management


R000

Nominationcommittee

R000

Remunerationcommittee

R000

Chairman fees

R000 TotalR000

WAM Clewlow 90 27 – 7 7 – 131

AJ Lamprecht 90 – – – – – 90

AJ Phillips – – 22 7 7 138 174

MJ Shaw 90 37 22 7 7 – 163

J Shibambo 90 27 – – – – 117

EP Theron 90 – – 7 7 – 104

CB Thomson 90 27 – – – – 117

540 118 44 28 28 138 896

Total 12 312

SalaryR000

IncentivebonusR000


contributionsR000

Carallowances

R000

Other benefi ts

R000TotalR000

* In addition, the following remuneration was received from the Barloworld group 2 144 1 630 294 92 72 4 232



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Gains on Barloworld and PPC equity-settled share options exercised/ceded by directors

Name2008R000

2007R000

2006R000

JE Gomersall – 3 328 10 238

O Fenn 159 2 377 1 082

RH Dent 704 7 019 –

P Esterhuysen 715 1 531 415

1 578 14 255 11 735

Interest of directors in share capital

The aggregate benefi cial holdings as at 30 September 2008 of the directors of the company and their immediate families (none of which has a holding in excess of 1%) in the issued ordinary shares of the company are detailed below. There have been no material changes in these shareholdings since that date.

2008 2007 2006

Name Direct Indirect Direct Indirect Direct Indirect

Executive directors

JE Gomersall 463 689 – 532 343* – – –

O Fenn 44 346 – 32 160 – – –

RH Dent 393 688 – 382 891 – 265 350 –

P Esterhuysen 12 369 – 12 369 – – –

Non-executive director

AJ Lamprecht 5 567 – 5 567 – – –

919 659 – 965 330 – 265 350 –

* Over this period, the 2007 number of shares held was incorrectly advised by the registrars and the correct number of shares is refl ected in the 2008 column.

A register detailing directors’ and offi cers’ interest in the company is available for inspection at the company’s registered offi ce.

Directors’ loans

The directors have loans with the company, granted in terms of the Barloworld share option scheme that was in place prior to the unbundling of PPC from Barloworld. The balances outstanding at year-end are:

P Esterhuysen – 2008: R0,4 million (2007: R0,4 million; 2006: nil)

O Fenn – 2008: R0,9 million (2007: R1 million; 2006: nil)

The loans bear interest at fi xed rates, calculated using the ruling prescribed rate applicable when the loans are granted to the directors, and have no predetermined terms of repayment.

Interest of directors in contracts

The directors have certifi ed that they had no material interest in any transaction of any signifi cance with the company or any of its subsidiaries.



The interests of the executive and non-executive directors of Pretoria Portland Cement Company Limited in terms of the Barloworld Share Option Scheme (refer note 35.2), provided in the form of equity-settled share options, are shown in the table below. The executive directors participated in the Barloworld Share Option Scheme before the unbundling of Pretoria Portland Cement Company Limited from Barloworld Limited on 16 July 2007, and the right to Pretoria Portland Cement Company Limited options relate to the unbundling. Pretoria Portland Cement Company Limited has no equity-settled share option scheme in existence.

2008

First exercisable date

Number of options

as at Sep 30 2006

Number of options

as at Sep 30 2007

Options exercised/

ceded

Number of options

as at Sep 30 2008

Option strike price on date

exercised/ Sep 30 2008

Market price

on date exercised Expiry date

Barloworld share options

RH Dent

Exercised pre-unbundling

13/06/00 20 000 – – – 47,65 150,00 13/06/2007

01/04/01 12 000 – – – 41,00 150,00 01/04/2008

01/09/01 6 000 – – – 23,25 150,00 01/09/2008

29/05/03 8 000 – – – 36,70 150,00 29/05/2010

25/09/04 9 000 – – – 45,70 150,00 25/09/2011

01/04/06 2 500 – – – 47,50 150,00 01/04/2013

01/04/06 2 500 – – – 47,50 195,37 01/04/2013

26/05/07 3 333 – – – 67,80 197,50 26/05/2010

Exercisable post-unbundling

01/04/06 2 500 2 500 2 500 – 14,59 114,50 01/04/2013

26/05/07 6 667 6 667 3 333 3 334 25,48 94,75 26/05/2010

Total 72 500 9 167 5 833 3 334

P Esterhuysen


25/09/04 1 667 – – – 45,70 173,88 25/09/2011

01/04/06 3 333 – – – 47,50 173,93 01/04/2013

01/04/06 3 333 – – – 47,50 192,05 01/04/2013

26/05/07 3 333 – – – 67,80 192,05 26/05/2010


01/04/06 3 334 3 334 3 334 – 14,59 110,77 01/04/2013

26/05/07 6 667 6 667 3 333 3 334 25,48 95,48 26/05/2010

Total 21 667 10 001 6 667 3 334

O Fenn


25/09/04 4 000 – – – 45,70 192,05 25/09/2011

01/04/06 6 666 – – – 47,50 192,05 01/04/2013

26/05/07 6 666 – – – 67,80 192,05 26/05/2010


01/04/06 3 334 3 334 – 3 334 14,59 01/04/2013

26/05/07 13 334 13 334 – 13 334 25,48 26/05/2010

Total 34 000 16 668 – 16 668



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2008

First exercisable date

Number of options

as at Sep 30 2006

Number of options

as at Sep 30 2007

Options exercised/

ceded

Number of options

as at Sep 30 2008

Option strike price on date

exercised/ Sep 30 2008

Market price

on date exercised Expiry date

Barloworld share options (continued)

JE GomersallExercised pre-unbundling01/04/06 12 300 – – – 47,50 195,75 01/04/201326/05/07 11 600 – – – 67,80 197,50 26/05/2010Exercisable post-unbundling01/04/06 11 700 11 700 – 11 700 14,59 01/04/201326/05/07 23 400 23 400 – 23 400 25,48 26/05/2010

Total 59 000 35 100 – 35 100

AJ LamprechtExercised pre-unbundling01/04/06 11 667 – – – 47,50 200,12 01/04/201326/05/07 11 666 – – – 67,80 198,55 26/05/2010Exercisable post-unbundling01/04/06 11 667 21 771 21 771 – 14,59 111,57 01/04/201326/05/07 23 334 23 334 – 23 334 25,48 26/05/2010

Total 58 334 45 105 21 771 23 334

Total Barloworld share options 245 501 116 041 34 271 81 770

PPC share options

RH Dent01/04/06 – 4 639 4 639 – 11,88 38,00 01/04/201326/05/07 – 12 371 6 185 6 186 16,95 33,44 26/05/2010

Total – 17 010 10 824 6 186

P Esterhuysen 01/04/06 – 6 186 6 186 – 11,88 37,89 01/04/2013

26/05/07 – 12 371 – 12 371 16,95 26/05/2010

Total – 18 557 6 186 12 371

O Fenn01/04/06 – 6 186 6 186 – 11,88 27,45 01/04/2013

26/05/07 – 24 741 6 000 18 741 16,95 27,45 26/05/2010

Total – 30 927 12 186 18 741

JE Gomersall

01/04/06 – 21 709 – 21 709 11,88 01/04/2013

26/05/07 – 43 419 – 43 419 16,95 26/05/2010

Total – 65 128 – 65 128

AJ Lamprecht26/05/07 – 43 296 – 43 296 16,95 26/05/2010

Total – 43 296 – 43 296

Total PPC share options – 174 918 29 196 145 722


39. RELATED PARTY TRANSACTIONS

Rm

Parent company

of reportingentity

Associates of the group

Fellowsubsidiaries of reporting

entity

Subsidiary of reporting

entity

2008

Goods and services sold

Portland Holdings Limited – – – (3)

Goods and services purchased

Afripack (Pty) Limited – 114 – –

Portland Holdings Limited – – – 5

– 114 – 5

Amounts due (to)/from as at end of the year

Afripack (Pty) Limited – (4) – –


– (4) – 2

Group companies, in the ordinary course of business, entered into purchase transactions with associates and subsidiaries. The terms and conditions of these transactions are determined on an arm's-length basis.

2007


Barloworld Logistics (Pty) Limited – – 1 –

Interest received

Barloworld Capital (Pty) Limited – – 8 –


Afripack (Pty) Limited – 43 – –

Avis Southern Africa – – 1 –

Barloworld Equipment (Pty) Limited – – 29 –

Barloworld Limited (franchise fees) 13 – – –

Barloworld Limited (internal audit) 2 – – –

Barloworld Limited (other) 16 – – –


Barloworld Motor – – 1 –


31 43 519 8

Interest paid


Equity-settled share incentive scheme payment

Barloworld Limited 30 – – –


Afripack (Pty) Limited – (7) – –

Portland Holdings Limited – – 1 –

– (7) 1 –

Related party transactions with Barloworld group include amounts in respect of transactions concluded up to 16 July 2007. Barloworld is no longer a related party of PPC post the unbundling of PPC from Barloworld.



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39. RELATED PARTY TRANSACTIONS (continued)

Rm

Parent company

of reportingentity

Associates of the group

Fellowsubsidiaries of reporting

entity

Subsidiary of reporting

entity

2006



Interest received



Avis Southern Africa – – 1 –

Barloworld Air (Pty) Limited – – 1 –

Barloworld Equipment (Pty) Limited – – 28 –

Barloworld Farms (Pty) Limited – – 1 –

Barloworld Handling – – 2 –

Barloworld Limited (franchise fees) 16 – – –

Barloworld Limited (information services) 15 – – –

Barloworld Limited (internal audit) 3 – – –

Barloworld Limited (other) 10 – – –


Barloworld Motor – – 7 –

Barloworld Optimus (Pty) Limited – – 6 –


44 – 600 12

Interest paid



Barloworld Limited Current OGA Account, unsecured, payable 25 October 2006 – – (9) –

Amount owing from Barloworld Capital (Pty) Limited* – – 872 –

Amount owing to Barloworld Capital (Pty) Limited** – – (872) –

Barloworld Logistics (Pty) Limited Current Loan – – (58) –

Portland Holdings Limited – – – (1)

– – (67) (1)

* Unsecured short-term deposit at September 2006 bearing interest at 9% per annum

**Unsecured borrowings with no fixed terms of repayment at market related interest rates (8,1% per annum as at 30 September 2006)


41. ADDITIONAL DISCLOSURE

Directors and key management

The executive directors of PPC are regarded as key management personnel. Details regarding directors’ remuneration and interest are disclosed in note 38.

Shareholders

The principal shareholders of the company are disclosed on page 198.

40. OPERATING SEGMENTS

The group discloses its operating segments according to the business units, which are regularly reviewed by the Group Executive. These comprise cement, lime and aggregates.

Group

Rm 2008 2007 2006

RevenueSouth Africa 5 808 5 238 4 477 Other Africa 440 334 217

6 248 5 572 4 694 Inter-segment revenue – (6) (8)

Total revenue 6 248 5 566 4 686

Operating profi t 2 323 2 174 1 861 Fair value adjustments on fi nancial instruments 4 1 –Finance costs 157 84 52 Investment income 84 82 67

Profi t before exceptional items 2 254 2 173 1 876 Exceptional items 2 14 –Share of associate’s retained profi t 10 7 –

Profi t before taxation 2 266 2 194 1 876 Taxation 767 765 670

Net profi t from continuing operations 1 499 1 429 1 206

Discontinued operations – – 8 Material non-cash items included in segment profi t:Depreciation and amortisation 218 196 169 Operating margin (%) 37% 39% 40%AssetsTotal assets 4 534 4 882 4 355

Non-current assets 3 196 2 546 1 817 Current assets 1 338 2 336 2 538

Included in total assets:Additions to property, plant and equipment 850 962 395

LiabilitiesTotal liabilities (2 821) (2 533) (2 152)

Non-current liabilities (511) (340) (364)Current liabilities (2 310) (2 193) (1 788)

OPERATING PROFIT 2008 OPERATING PROFIT 2007 OPERATING PROFIT 2006

■ Cement 90%

■ Lime 6%

■ Aggregates 4%

■ Cement 90%

■ Lime 7%

■ Aggregates 3%

■ Cement 91%

■ Lime 6%

■ Aggregates 3%



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Cement Lime Aggregates

2008 2007 2006 2008 2007 2006 2008 2007 2006

4 980 4 516 3 842 599 512 449 229 210 186 388 282 179 – – – 52 52 38

5 368 4 798 4 021 599 512 449 281 262 224 – – – – – – – – –

5 368 4 798 4 021 599 512 449 281 262 224

2 100 1 951 1 700 141 154 108 82 69 53 4 1 – – – – – – –

154 83 50 2 1 2 1 – – 77 75 60 2 3 5 5 4 2

2 027 1 944 1 710 141 156 111 86 73 55 2 14 – – – – – – –

10 7 – – – – – – –

2 039 1 965 1 710 141 156 111 86 73 55 701 694 624 44 50 32 22 21 14

1 338 1 271 1 086 97 106 79 64 52 41

– – 8 – – – – – –

181 161 133 26 22 26 11 13 10 39% 41% 42% 24% 30% 24% 29% 26% 24%

3 944 4 407 3 921 404 338 308 186 137 126

2 841 2 252 1 567 248 221 185 107 73 65 1 103 2 155 2 354 156 117 123 79 64 61

772 886 367 43 59 16 35 17 12

(2 595) (2 355) (2 032) (172) (136) (94) (54) (42) (26)

(385) (247) (301) (107) (73) (54) (19) (20) (9) (2 210) (2 108) (1 731) (65) (63) (40) (35) (22) (17)

TOTAL ASSETS 2008 TOTAL ASSETS 2007 TOTAL ASSETS 2006

■ Cement 87%

■ Lime 9%

■ Aggregates 4%

■ Cement 90%

■ Lime 7%

■ Aggregates 3%

■ Cement 90%

■ Lime 7%

■ Aggregates 3%


Company balance sheetsat 30 September 2008

Notes2008

Rm2007

Rm2006

Rm

ASSETS

Non-current assets 2 970 2 309 1 617

Property, plant and equipment 1 2 512 1 894 1 165

Intangible assets 2 13 12 5

Investment in non-consolidated subsidiary 3 260 260 290

Other non-current assets 4 178 136 157

Investment in associate 5 7 7 –

Current assets 1 749 2 104 2 126

Inventories 6 286 277 180

Trade and other receivables 7 657 609 541

Assets classifi ed as held for sale 8 – – 36

Amounts owing by subsidiaries 4 785 6 11

Cash and cash equivalents 21 1 212 1 358

Total assets 4 719 4 413 3 743

EQUITY AND LIABILITIES


Share capital and premium 9 868 868 868

Other reserves 42 4 69

Retained profi t 1 153 1 145 1 000

Total equity 2 063 2 017 1 937

Non-current liabilities 417 255 283

Deferred taxation liabilities 10 230 92 116

Long-term borrowings 11 55 68 81


Other non-current liabilities 13 6 2 –

Current liabilities 2 239 2 141 1 523

Short-term borrowings 14 1 619 1 366 885

Taxation payable 54 210 191

Trade and other payables 15 520 490 397

Amounts owing to subsidiaries 4 45 64 41


Total equity and liabilities 4 719 4 413 3 743

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Company income statementsfor the year ended 30 September 2008

Notes2008

Rm2007

Rm2006

Rm

Revenue 5 259 4 705 3 959

Cost of sales 2 885 2 519 2 043

Gross profit 2 374 2 186 1 916

Non-operating income 191 153 158

Administrative and other operating expenditure 357 296 275

Operating profit 16 2 208 2 043 1 799

Fair value gains on financial instruments 17 3 3 –

Finance costs 18 158 87 53

Investment income 19 74 84 52

Profit before exceptional items 2 127 2 043 1 798

Exceptional items 20 2 3 (1)

Profit before taxation 2 129 2 046 1 797

Taxation 21 687 689 617

Net profit 1 442 1 357 1 180


Company statements of changes in equityfor the year ended 30 September 2008

Other reserves

Share capital

Rm

Share premium

Rm

Available-for-sale

financial assets

Rm

Hedging reserves

Rm

Equity compen-

sation reserves

Rm

Retained profit

RmTotal

Rm

Balance at 1 October 2005 54 814 28 – 5 840 1 741


Revaluation of investments – – (1) – – – (1)

Cash flow hedge recognised directly through equity – – – 50 – – 50

Deferred taxation on hedging movements – – – (14) – – (14)

Equity-settled share incentive scheme charge – – – – 1 – 1

Divisionalisation of company – – – – – 39 39

Net profit – – – – – 1 180 1 180

Dividends declared – – – – – (1 059) (1 059)

Balance at 30 September 2006 54 814 27 36 6 1 000 1 937


Revaluation of investments – – (4) – – – (4)

Deferred taxation on revaluation – – 1 – – – 1

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

Cash flow hedge recognised in cost of plant – – – (33) – – (33)

Deferred taxation on hedging movements – – – 14 – – 14

Equity-settled share incentive scheme charge – – – – 1 – 1

Equity-settled share incentive scheme payment – – – – (30) – (30)

Net profit – – – – – 1 357 1 357


Balance at 30 September 2007 54 814 24 3 (23) 1 145 2 017


Revaluation of investments – – 9 – – – 9

Deferred taxation on revaluation – – (1) – – – (1)

Cash flow hedge recognised directly through equity – – – 10 – – 10

Cash flow hedge recognised in cost of plant – – – (4) – – (4)

Amount recognised in profit or loss – – – (2) – – (2)

Deferred taxation on hedging movements – – – (1) – – (1)

Equity-settled share incentive scheme refund – – – – 2 – 2

Other reserve movements – – – – 26 (26) –

Deferred taxation on other reserve movements – – – – (1) – (1)

Net profit – – – – – 1 442 1 442


Balance at 30 September 2008 54 814 32 6 4 1 153 2 063

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Company cash fl ow statementsfor the year ended 30 September 2008

Notes2008

Rm2007

Rm2006

Rm

CASH FLOWS FROM OPERATING ACTIVITIESProfit before exceptional items 2 127 2 043 1 798 Adjustments for:– depreciation 175 158 128 – amortisation of intangible assets 3 2 3 – loss/(profit) on disposal of plant and equipment and intangibles 1 (3) (3)– dividends received (14) (20) (9)– income from subsidiary companies (191) (153) (157)– interest received (60) (64) (43)– finance costs 158 87 53 – loss on derivative (cash-settled share-based payment hedge) 15 – –– other non-cash flow items (4) 2 (11)

Operating cash flows before movements in working capital 2 210 2 052 1 759 Increase in inventories (9) (97) (21)Increase in trade and other receivables (48) (113) (69)Increase in trade and other payables and provisions 45 91 74

Cash generated from operations 2 198 1 933 1 743 Finance costs paid 22 (195) (89) (48)Dividends received from investments and associate 14 20 9 Interest received 60 64 43 Income from subsidiary companies 191 153 157 Taxation paid 23 (706) (680) (570)

Cash available from operations 1 562 1 401 1 334 Dividends paid 24 (1 408) (1 207) (1 059)Equity-settled share incentive scheme refund/(payment) 2 (30) –

Net cash inflow from operating activities 156 164 275

CASH FLOWS FROM INVESTING ACTIVITIES

Acquisition of property, plant and equipment 25 (758) (881) (366)

– replacement capital expenditure (241) (120) (80)

– expansion capital expenditure (517) (761) (286)

Acquisition of intangible assets (4) (9) (3)Dividends received from non-consolidated subsidiary company – 30 5Net proceeds received on disposal of property, plant and equipment 21 8 5 Movement in investments and loans 26 (60) 2 (8)Redemption of preference shares – 30 –(Increase)/decrease in net amountsowing by subsidiary and associate companies (798) 28 83 Receipt of instalment on long-term loan 26 12 14 –

Net cash outflow from investing activities (1 587) (778) (284)

Net cash outflow before financing activities (1 431) (614) (9)

CASH FLOWS FROM FINANCING ACTIVITIESLong-term borrowings repaid (13) (13) (13)Net short-term borrowings raised 253 481 872

Net cash inflow from financing activities 240 468 859

Net (decrease)/increase in cash and cash equivalents (1 191) (146) 850 Cash and cash equivalents at beginning of the year 1 212 1 358 502 Cash transferred on divisionalisation of company 27 – – 6

Cash and cash equivalents at end of the year 21 1 212 1 358


Notes to the company annual fi nancial statementsfor the year ended 30 September 2008

Freehold and leasehold

land, buildings

and mineralrights

Rm

Factorydecom-

missioning and quarry

rehabilitation assets

Rm

Plant, vehicles, furniture

and equipment

Rm

Capitalised leased plant

RmTotal

Rm

1. PROPERTY, PLANT AND EQUIPMENT2008Cost 397 35 3 263 302 3 997 Accumulated depreciation and impairments 156 14 1 120 195 1 485


2007Cost 356 24 2 545 302 3 227 Accumulated depreciation and impairments 144 14 999 176 1 333


2006Cost 330 24 1 708 302 2 364 Accumulated depreciation and impairments 132 14 896 157 1 199

Net carrying value 198 10 812 145 1 165

Movement of property, plant and equipment2008Net carrying value at beginning of the year 212 10 1 546 126 1 894

Additions 42 11 760 – 813 254 21 2 306 126 2 707

Depreciation (13) – (143) (19) (175)Disposals – – (20) – (20)


2007Net carrying value at beginning of the year 198 10 812 145 1 165 Additions 26 – 863 – 889

224 10 1 675 145 2 054 Depreciation (12) – (127) (19) (158)Disposals – – (2) – (2)


2006Net carrying value at beginning of the year 195 10 509 89 803 Divisionalisation of company – – 43 82 125 Additions 15 – 351 – 366

210 10 903 171 1 294 Depreciation (12) – (90) (26) (128)Disposals – – (1) – (1)

Net carrying value at end of the year 198 10 812 145 1 165

Included in plant, vehicles, furniture and equipment is capital work-in-progress of R285 million (2007: R885 million; 2006: R155 million), which relates mainly to the various expansion projects currently in progress.

Certain of the company’s properties are the subject of land claims. The company is in the process of discussion with the Land Claims Commissioner and awaiting outcome of the claims referred to the Land Claims Court. The claims are not expected to have a material impact on the company’s operations.

Refer to the group results for additional disclosures on property, plant and equipment.

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2008Rm

2007Rm

2006Rm

2. INTANGIBLE ASSETS

ERP development and other software

Cost 44 38 32

Accumulated amortisation and impairments 31 26 27

Net carrying value 13 12 5

Movement of intangible assets

Net carrying value at beginning of the year 12 5 4

Additions 4 9 3

Divisionalisation of company – – 2

Disposals – – (1)

Amortisation (3) (2) (3)

Net carrying value at end of the year 13 12 5

3. INVESTMENT IN NON-CONSOLIDATED SUBSIDIARY

Carrying value at beginning of the year 260 290 295

Less: Dividends received – (30) (5)

Carrying value at end of the year 260 260 290

In terms of IFRS 7, the investment is classified as an available-for-sale financial asset. Due to the hyperinflationary losses incurred, dividends received have been set off against the carrying value of the investment.

The board of directors has considered the carrying value of the investment in Porthold and determined that no impairment is necessary.


Notes to the company annual fi nancial statements continued


2008Rm

2007Rm

2006Rm

4. OTHER NON-CURRENT ASSETS

Investment in subsidiaries 39 39 39

Unlisted investments 80 38 42

Unlisted investments at fair value 36 26 30

Contributions to The PPC Environmental Trust* 44 12 12

Guaranteed loan in respect of railway line** – 3 6

Long-term loan† 44 56 70

Derivative financial instrument (fair value hedge)‡ 15 – –

178 136 157

Comprising:

Other non-current assets 83 51 51

Other non-current financial assets 95 85 106

178 136 157

INTEREST IN SUBSIDIARIES

(ANNEXURE 1)

Shares at cost (including non-consolidated subsidiary) 479 479 479

Less: Amounts written off and dividends received (180) (180) (150)

299 299 329

Add: Amounts owing by subsidiaries# 785 6 11

1 084 305 340

Less: Amounts owing to subsidiaries# (45) (64) (41)

1 039 241 299

*Contributions to The PPC Environmental Trust These contributions are invested with independent financial institutions in interest-bearing deposits and can be utilised on approval from the Department of Mineral and Energy Affairs for rehabilitation costs.

**Guaranteed loan in respect of railway line Amortised over the period of the loan by way of reduced payment to Transnet Freight Rail for rail transport services, and bears interest at prime less 4%. The <R1 million balance will be fully repaid during the 2009 financial year.

†Long-term loan The long-term loan is repayable in annual capital instalments on 30 June each year, with the last payment on 30 April 2013, and bears interest at an effective rate of 11,8% per annum.

‡Derivative financial instrumentFair value of the premium paid to hedge cash-settled share-based payments (refer notes 35 and 37 in the group results).

#Amounts owing by and to subsidiaries The loans have no fixed terms of repayment and, where appropriate, interest is calculated using ruling interest rates. Refer Annexure 1 for amounts owing by and owing to subsidiaries at year-end.

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2008Rm

2007Rm

2006Rm

5. INVESTMENT IN ASSOCIATE

Investment at cost 7 – 7

Less: Transfer from/(to) assets classified as held for sale – 7 (7)

7 7 –

Refer Annexure 1

6. INVENTORIES

Raw materials 52 64 36

Work-in-progress 31 53 26

Finished goods 53 61 42

Maintenance stores 150 99 76

286 277 180

The value of inventories has been determined on the following cost formula bases:

– first-in, first-out – 7 5

– weighted average 286 270 175

286 277 180

Amount of inventories recognised as an expense during the year 2 084 1 929 1 531

Amount of write-down of inventory to net realisable value and losses of inventory 4 1 –

No inventories have been pledged as security.

7. TRADE AND OTHER RECEIVABLES

Trade receivables 581 520 420

Less: Impairment of trade receivables (4) (3) (5)

Originated loans and receivables 577 517 415

Derivative financial instruments (held-for-trading financial assets) 5 – 2

Derivative financial instruments (cash flow hedge) 6 4 50

Other financial receivables 16 33 42

Trade and other financial receivables 604 554 509

Prepayments 29 38 12

Other non-financial receivables 24 17 20

657 609 541

No trade receivables have been pledged as security. Amounts due to the company should be settled within the normal credit terms of 30 – 60 days.

The gains on financial instruments relating to the cash flow hedge should materialise within the next financial year. These gains are to be included in the initial measurement of the acquisition of the hedged asset, where appropriate.




2008Rm

2007Rm

2006Rm

7. TRADE AND OTHER RECEIVABLES (continued)

Originated loans and receivables comprise: 577 517 415

Trade receivables that are neither past due nor impaired* 531 492 396

Trade receivables that are past due but not impaired 46 25 19

Trade receivables that are past due but not impaired

Age analysis 45,9 25,0 19,2

0 – 30 days 43,0 19,1 12,4 31 – 60 days 2,6 4,3 6,7 61 – 90 days 0,3 1,3 0,1 91 – 120 days – 0,3 –

Fair value of collateral held** 15,7 4,6 7,2

* There is no history of default relating to trade receivables in this category.


Impairment of trade receivablesBalance at beginning of the year 3 5 5 Allowance raised through profit or loss 2 – –Allowance utilised (1) – –Allowance reversed through profit or loss – (2) –


8. ASSETS CLASSIFIED AS HELD FOR SALE

Investment in unlisted preference shares at amortised cost# – – 30

Investment in associate company^ – – 6

– – 36

#Investment in unlisted preference shares These preference shares earned dividends at a rate of 70% of the current prime lending rate plus 3%, and were redeemed during 2007.

^Investment in associate company The investment relates to the company’s 25% shareholding in Afripack (Pty) Limited, recorded at cost.

The investment was categorised as held for sale during 2006. Following the repayment of the preference shares, the investment in Afripack (Pty) Limited has been accounted for as an investment in associate (refer note 5).

9. SHARE CAPITAL AND PREMIUMAuthorised share capital600 000 000 ordinary shares of 10 cents each 60 60 60 Issued share capital537 612 390 (2007: 537 612 390; 2006: 537 612 390) ordinary shares in issue at end of the year 54 54 54 Share premiumShare premium at end of the year 814 814 814

Total issued share capital and premium 868 868 868

Unissued shares

Unissued share capital comprises 62 387 610 (2007: 62 387 610; 2006: 62 387 610) shares of 10 cents each.

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2008Rm

2007Rm

2006Rm

10. DEFERRED TAXATION

Liability at beginning of the year 92 116 89

Directly accounted for in equity 3 (14) 14

Divisionalisation of company – – 2

Movement per income statement* 140 (10) 11

Other movements (2) – –

Impact of change in taxation rate (3) – –

Liability at end of the year 230 92 116

Deferred taxation liabilities

Capital allowances 264 123 129

Provisions (45) (30) (28)

Non-current financial assets 13 1 1

Prepayments and other receivables (5) 11 3

Other temporary differences 3 (13) 11

230 92 116

* The movement relates primarily to the commissioning of the Dwaalboom (Batsweledi) expansion project that was commissioned during September 2008.

11. LONG-TERM BORROWINGS

Interest-bearing 68 81 94

Less: Current portion repayable within one year (refer note 14) 13 13 13

55 68 81

Secured debt

Liability under capitalised finance lease 68 81 94

Repayable during the year ending 30 September Total owing

2009 2010 2011 2012 2013 Rm Rm Rm Rm Rm

2008Rm

2007Rm

2006Rm

13 13 14 14 14 68 81 94

Assets encumbered are made up as follows:

Property, plant and equipment 107 126 145




2008Rm

2007Rm

2006Rm

12. PROVISIONS

Non-current 126 93 86

Current 1 11 9

127 104 95

Factorydecommission-ing and quarry

rehabilitationRm

Retirement and post-

retirementbenefits

RmTotal

Rm

Movement of provisions

2008


Amounts added 20 2 22

Amounts utilised (5) – (5)

Amounts reversed – (1) (1)

Unwinding of discount 7 – 7


Incurred:

– within one year – 1 1

– between two to five years 27 2 29

– more than five years 84 13 97

111 16 127

2007


Amounts added 1 2 3



Incurred:

– within one year 7 4 11

– between two to five years 25 – 25


89 15 104

2006


Amounts added 3 – 3


Amounts utilised – (1) (1)


Incurred:

– within one year 5 4 9

– between two to five years 1 – 1


82 13 95

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12. PROVISIONS (continued)

Factory decommissioning and quarry rehabilitation

The group is required to restore mine and processing sites at the end of their productive lives to an acceptable condition consistent with the group’s environmental policies. The expected cost of any committed decommissioning or restoration programme, discounted to its net present value, is provided at the beginning of each project. PPC has set up The PPC Environmental Trust to administer the funds required to fund the expected cost of decommissioning or restoration.

Retirement and post-retirement benefits

Included in provisions are the following liabilities:

Cement and Concrete Institute employees

The provision relates to PPC’s proportionate share of the post-retirement healthcare liability for employees of the Cement and Concrete Institute. This amounted to R6 million (2007: R4 million; 2006: R4 million). This liability was last actuarially valued during February 2006 and is due for valuation by February 2009. The liability has been determined using the projected unit credit method.

Corner House Pension Fund and Lime Acres continuation members

The provision relates to post-employment healthcare benefits in respect of certain Corner House Pension Fund and Lime Acres continuation members. This amounted to R10 million (2007: R11 million; 2006: R9 million). This liability was last actuarially valued during September 2008. The liability has been determined using the projected unit credit method.

Benefits under these schemes were granted to employees under historical employment contracts and the schemes are closed to new members.

2008Rm

2007Rm

2006Rm

13. OTHER NON-CURRENT LIABILITIES

Cash-settled share-based payment liability 6 2 –

For further details on the cash-settled share-based payment liability, refer note 35 in the group results.

14. SHORT-TERM BORROWINGS

Short-term loans and bank overdraft 1 606 1 353 872

Current portion of long-term borrowing (refer note 11) 13 13 13

1 619 1 366 885

In terms of the broad-based black ownership initiative, the company will receive approximately R1,5 billion in long-term debt, which is intended as part repayment of the short-term borrowings.

15. TRADE AND OTHER PAYABLES

Trade payables and accruals 304 279 201

Other financial payables 56 37 37

Derivative financial instruments (held-for-trading financial assets) 5 2 –

Trade and other financial payables 365 318 238

Payroll accruals 124 134 113

VAT payable 20 17 20

Other non-financial payables 11 21 26

520 490 397

Trade and other payables are payable within a 30 – 60 day period.




2008Rm

2007Rm

2006Rm

16. OPERATING PROFIT

Operating profit includes:

Administrative and management fees paid 6 8 7

Amortisation of intangible assets (refer note 2) 3 2 3

Auditors’ remuneration – fees 3 3 3

Consultation fees in respect of the broad-based black ownership initiative 20 – –

Depreciation (refer note 1):

– cost of sales 163 145 118

– operating costs 12 13 10

175 158 128

Distribution cost included in cost of sales 699 590 512

Exploration and research costs – 1 –

Fees paid to previous holding company 15 25

Income from subsidiary companies:

– fees 17 13 12

– interest 1 – 1

– dividends 173 140 144

191 153 157

Operating lease charges:

– land and buildings 6 2 3

– plant, vehicles and equipment 1 3 3

7 5 6

Loss/(profit) on disposal of plant and equipment and intangibles 1 (3) (3)

Retirement benefit contributions 39 32 30

Share-based payments:

– cash-settled share incentive scheme charge 4 2 –

– equity-settled share incentive scheme charge – 1 1

4 3 1

Staff costs 545 413 360

Less: Cost capitalised to plant and equipment (20) (11) (10)

525 402 350

Technical fees 5 5 4

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2008Rm

2007Rm

2006Rm

17. FAIR VALUE GAINS ON FINANCIAL INSTRUMENTS

Gains/(losses) on derivatives designated as economic hedging instruments 18 4 (1)


(Losses)/gains on translation of foreign currency monetary items – (1) 1

3 3 –

18. FINANCE COSTS

Bank and other borrowings 181 67 17

Finance lease interest 10 16 24

Subsidiary companies 4 6 7

Unwinding of discount on decommissioning and rehabilitation provisions 7 6 5

202 95 53

Capitalised to plant and equipment (44) (8) –

158 87 53

19. INVESTMENT INCOME

Dividends

– unlisted investments 8 7 9

– associate company 6 13 –

Interest received

– on deposits and non-current financial assets 60 64 43

74 84 52

20. EXCEPTIONAL ITEMS

Profit on disposal of properties 2 3 –

Deregistration of dormant subsidiary companies – – (1)

Gross exceptional items 2 3 (1)

Taxation – deferred – – –

Net exceptional items 2 3 (1)




2008Rm

2007Rm

2006Rm

21. TAXATION

South African normal taxation


– prior year 1 – –

415 551 475

Foreign taxation


Deferred taxation

– current year 140 (10) 7

– rate change (3) – –

137 (10) 7

Secondary taxation on companies


– deferred – – 5

129 142 132

Taxation attributable to the company 687 689 617

2008%

2007%

2006%

Reconciliation of rate of taxation

Taxation as a percentage of profit before taxation

(excluding prior year taxation) 32,2 33,7 34,3

Adjustment due to the inclusion of dividend income 2,3 2,0 2,3

34,5 35,7 36,6

Reduction in rate of taxation 0,3 0,9 0,3

– permanent differences and exempt income 0,2 0,9 0,3

– rate change adjustment 0,1 – –

Increase in rate of taxation (6,8) (7,6) (7,9)

– disallowable charges (0,4) (0,4) (0,4)

– secondary taxation on companies (6,1) (6,9) (7,3)

– taxation on foreign dividend received (0,3) (0,3) (0,2)

South African normal taxation rate 28,0 29,0 29,0

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2008Rm

2007Rm

2006Rm

22. FINANCE COSTS PAID

Finance costs as per income statement charge 158 87 53

Interest capitalised to plant and equipment 44 8 –

Unwinding of discount on decommissioning and rehabilitation provisions (7) (6) (5)

195 89 48

23. TAXATION PAID

Net amounts outstanding at beginning of the year 210 191 153

Charge per income statement (excluding deferred taxation) 550 699 605

Adjustment in respect of divisionalisation of company – – 3

Net amounts outstanding at end of the year (54) (210) (191)

706 680 570

24. DIVIDENDS PAID

Dividends declared 1 408 1 212 1 059


1 408 1 207 1 059

25. ACQUISITION OF PROPERTY, PLANT AND EQUIPMENT

Freehold and leasehold land, buildings and mineral rights 42 26 15

Plant, vehicles, furniture and equipment 760 863 351

802 889 366

Interest capitalised (44) (8) –

758 881 366

26. MOVEMENT IN INVESTMENTS AND LOANS

Net movement (42) 20 (7)

Revaluation of available-for-sale financial assets through reserves 9 (4) (1)


(48) 16 (8)

Comprising:

Movement in investments and loans (60) 2 (8)

Receipt of instalment on long-term loan 12 14 –

(48) 16 (8)




2008Rm

2007Rm

2006Rm

27. DIVISIONALISATION OF COMPANY

Property, plant and equipment, intangible assets and non-current assets 125

Inventories 4

Trade and other receivables 10

Trade and other payables, taxation and deferred taxation (38)

Borrowings net of cash (107)

Net assets acquired (6)

Cash transferred on divisionalisation 6

–

28. CONTINGENT LIABILITIES

Guarantees for loans, banking facilities and other obligations to third parties – 8 7

Secondary taxation on companies is payable on dividends declared at a rate of 10% (2007: 10%; 2006: 12,5%).

Litigation, current or pending, is not considered likely to have a material adverse effect on the company.

A wholly owned subsidiary company, PPC Cement (Pty) Limited, is technically insolvent following mark-to-market revaluations on the PPC shares it purchased during the current financial year. The company has provided guarantees in the way of a subordination agreement relating to the loan that is receivable from PPC Cement (Pty) Limited.

29. RELATED PARTY TRANSACTIONS

In addition to the related party transactions disclosed in the group results, the company had the following related party transactions:

Goods sold to

PPC Botswana (Pty) Limited 213 120 107

Technical services provided to

PPC Lime Limited 15 13 12

Mooiplaas Dolomite (Pty) Limited 2 – –

Interest received from

PPC Lime Limited 1 – –

Interest paid to

Mooiplaas Dolomite (Pty) Limited 4 4 3

PPC Lime Limited – 2 4

Dividends received from


PPC Lime Limited 66 73 112

Mooiplaas Dolomite (Pty) Limited 37 23 –

PPC Cement (Pty) Limited 7 – –

Trade amounts due from as at end of the year


For details on amounts due to and due from related parties, refer Annexure 1.

The terms and conditions of these transactions are determined on an arm’s length basis.

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30. FINANCIAL RISK MANAGEMENT

Fair values of financial assets and liabilities

The carrying values of certain financial assets and liabilities, which are accounted for at historical cost, may differ from their fair values.

The estimated fair values have been determined using available market information and approximate valuation methodologies.

Disclosed below are the carrying and fair values of financial assets and liabilities which differ from the amounts reflected under group.

2008 2007 2006

Carrying amount

RmFair value

Rm

Carrying amount

RmFair value

Rm

Carrying amount

RmFair value

Rm

Financial assets


Long-term loan (refer note 4) 44 42 56 65 70 77

Trade and other receivables (refer note 7) 604 609 554 559 509 515

Amounts owing by subsidiaries (refer note 4) 785 785 6 6 11 11

Financial liabilities

Financial liabilities measured at amortised cost

Amounts owing to subsidiaries (refer note 4) 45 45 64 64 41 41

Trade and other payables (refer note 15) 365 365 318 318 238 238

2008Rm

2007Rm

2006Rm

Credit risk management

Maximum credit risk exposure 1 456 1 831 1 985

31. ADDITIONAL DISCLOSURE

Refer to the group results for additional disclosure on the following:

– Accounting policies

– Commitments

– Directors’ remuneration and interest

– Financial risk management

– Foreign exchange gains and losses

– Related party transactions

– Retirement benefit information

– Share-based payments


Annexure 1 Interest in subsidiary companies and unlisted associatesfor the year ended 30 September 2008

SUBSIDIARY COMPANIES

Issued share

capitalR

Percentage held

Name of company2008

%2007

%2006

%

Cape Portland Cement Co Limited 5 264 000 100 100 100

Cooper & Cooper Holdings (Pty) Limited 100 000 100 100 100

Mooiplaas Dolomite (Pty) Limited 100 100 100 100

PPC Botswana (Pty) Limited* 6 000 000 A** 100 100 100

6 000 000 B** 100 100 100

Portland Holdings Limited† 83 920 148 ‡ 100 100 100

PPC Lime Limited 4 207 965 100 100 100

Property Cats (Pty) Limited 100 100 100 100

Kgale Quarries (Pty) Limited* 3 643 000 ** 100 100 100

PPC Cement (Pty) Limited 100 100 100

Other minor subsidiary companies

Less: Amounts written off and dividends received

ASSOCIATES

Issued sharecapital

R

Percentage held

Name of entityPrincipalactivity

2008%

2007%

2006%

Afripack (Pty) Limited Paper sack manufacturers 1 260 000 25 25 25

Shaleje Services Trust Admin Services 15 15 15

All subsidiary companies and associates are incorporated in the Republic of South Africa, except as indicated otherwise.

A full list of subsidiary companies and unlisted associates is available for inspection at the registered office of the company.

The financial year-ends of the associates are as follows:

Afripack (Pty) Limited 30 September

Shaleje Services Trust 31 May

*Registered in Botswana

**Botswana pula

† Registered in Zimbabwe

‡ Zimbabwe dollar

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Shares Indebtedness due by/(due to)

2008Rm

2007Rm

2006Rm

2008Rm

2007Rm

2006Rm

1 1 1 (5) (5) (5)

– – – – – –

– – – (36) (55) (33)

12 12 12 3 3 –

436 436 436 – – –

18 18 18 31 2 11

12 12 12 1 1 1

– – – – 1 –

– – – 751 – –

– – – (4) (4) (3)

479 479 479 741 (57) (29)

180 180 150 1 1 1

299 299 329 740 (58) (30)

Shares Indebtedness due by/(due to)

2008Rm

2007Rm

2006Rm

2008Rm

2007Rm

2006Rm

7 7 – – – –

– – – – – –

7 7 – – – –


PPC in the stock market

SHARE OWNERSHIP

CategoryNumber of

shareholdersNumber ofshares held

% of issuedcapital

1 1 000 19 188 9 781 502 1,821 001 10 000 16 243 52 224 888 9,7110 001 100 000 2 524 66 070 058 12,29100 001 1 000 000 262 77 238 618 14,37 over 1 000 000 53 332 297 324 61,81

38 270 537 612 390 100,00

Distribution of shareholdersBanks 1 812 123 0,34Broker 7 911 082 1,47Close corporations 1 789 998 0,33Endowment funds 4 458 329 0,83Individuals 66 668 856 12,40Insurance companies 38 595 053 7,18Investment companies 10 375 160 1,93Medical aid schemes 624 315 0,12Mutual funds 68 444 943 12,73Nominees and trusts 166 698 546 31,01Other corporations 3 063 878 0,57Own holdings 20 140 401 3,75Pension funds 94 589 725 17,58Private companies 20 586 642 3,83Public companies 31 692 438 5,90Script account 160 901 0,03

537 612 390 100,00

Public and non-public shareholdingNumber of

shareholdersNumber ofshares held

% of issuedcapital

Public 38 259 516 552 330 96,08Non-public 11 21 060 060– Directors’ holdings 10 919 659 0,17– Company owned holdings 1 20 140 401 3,75

Total 38 270 537 612 390 100,00

Beneficial holding The following parties hold beneficial interests of greater than 3%– Public Investment Corporation 60 943 118 11,34– Lazard Emerging Markets Portfolio 26 799 537 4,98– PPC Cement (Pty) Limited 20 140 401 3,75– Liberty group 17 103 970 3,18

CURRENCY CONVERSION GUIDE

Approximate value of foreign currencies relative to the rand at 30 September

2008 2007 2006

Botswana pula 0,84 0,87 0,83US dollar 0,12 0,15 0,13Euro 0,09 0,10 0,10Danish krone 0,64 0,77 0,76

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Administration

PRETORIA PORTLAND CEMENT COMPANY LIMITED(Incorporated in the Republic of South Africa)Company registration number: 1892/000667/06

JSE code: PPC ISIN code: ZAE000125886*

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

Transfer secretariesLink Market Services South Africa (Proprietary) Limited11 Diagonal StreetJohannesburg, South AfricaPO Box 4844Johannesburg, 2000, South AfricaTelephone +27 11 834 2266Telefax +27 11 834 4398E-mail [email protected]

Secretary and registered offi ceJHDLR Snyman180 Katherine Street, SandtonPO Box 787416Sandton, 2146, South AfricaTelephone +27 11 386 9000Telefax +27 11 386 9001

Transfer secretaries: ZimbabweCorpserve (Private) Limited4th Floor, Intermarket CentreCorner First Street, Kwame Nkrumah AvenueHarare, ZimbabwePO Box 2208Harare, ZimbabweTelephone +263 4 758 193/751 559Telefax +263 4 752 629

SponsorMerrill Lynch138 West StreetSandown, SandtonPO Box 651987Benmore, 2010, South AfricaTelephone +27 11 305 5555Telefax +27 11 305 5600

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

Financial calendar

Financial year-end 30 September

Annual general meeting 26 January 2009

Reports

• Interim results for half-year to March Published May

• Preliminary announcement of annual results Published November

• Annual fi nancial statements Published December

Dividends

• Interim Declared May

Paid June

• Final Declared November

Paid January

*New ISIN number implemented with effect from 8 December 2008


Notice of annual general meetingfor the year ended 30 September 2008

PRETORIA PORTLAND CEMENT COMPANY LIMITED Incorporated in the Republic of South Africa(Registration No.: 1892/000667/06)(“PPC”) or (“the company”)JSE share code: PPCZSE share code: PPCISIN code: ZAE000125886

NOTICE IS HEREBY GIVEN THAT the one hundred and thirteenth annual general meeting of Pretoria Portland Cement Company Limited will be held in the auditorium of Deloitte & Touche, Deloitte Place, The Woodlands, 20 Woodlands Drive, Woodmead, Sandton, on Monday, 26 January 2009 at 12:00 for the purpose of conducting the following business:

1. To receive, consider and adopt the annual financial statements for the year ended 30 September 2008, including the directors’ report and the report of the auditors.

2. To confirm the appointment of the following two directors who were appointed between the two annual general meetings: Messrs TDA Ross and BL Sibiya. Brief curriculum vitae of the directors standing for election appear on pages 26 and 27 of this report.

2.1 “Resolved that the appointment of TDA Ross as a director of the company on 17 July 2008 is hereby confirmed.” 2.2 “Resolved that the appointment of BL Sibiya as a director of the company on 10 November 2008 is hereby confirmed.”

3. To consider the re-election of Messrs RH Dent, P Esterhuysen and AJ Lamprecht who are required to retire by rotation and having offered themselves for re-election, are hereby recommended for re-election by the nominations committee. Brief curriculum vitae of the directors standing for re-election appear on pages 26 and 27 of this report.

3.1 “Resolved that RH Dent who is required to retire as a director of the company at this annual general meeting is hereby reappointed as

a director of the company with immediate effect.” 3.2 “Resolved that P Esterhuysen who is required to retire as a director of the company at this annual general meeting is hereby reappointed

as a director of the company with immediate effect.” 3.3 “Resolved that AJ Lamprecht who is required to retire as a director of the company at this annual general meeting is hereby reappointed

as a director of the company with immediate effect.”

4. To consider and, if deemed fit, to pass with or without modification, the following ordinary resolution: “Resolved that with effect from 1 October 2008 and in terms of article 61 of the company’s articles of association, the fees payable to the

non-executive directors be set as follows: • The chairman, an all inclusive fee of R560 000 per annum; • A board member, R150 000 per annum; • The audit committee chairman, R140 000 per annum; • An audit committee member, R72 500 per annum; • The remuneration committee chairman, R110 000 per annum; • A remuneration committee member, R55 000 per annum; • The risk and compliance committee chairman, R90 000 per annum; • A risk and compliance committee member, R45 000 per annum; • Other committee chairman, R90 000 per annum; and • Other committee member, R45 000 per annum.”

5. To consider and, if deemed fit, to pass, with or without modification, the following resolution as a special resolution in order to provide the directors with flexibility to repurchase securities in terms of section 85 of the Companies Act as and when suitable situations arise:

“ Resolved that the company or any subsidiary of the company may, subject to the Companies Act, the company’s articles of association and the listings requirements of the JSE from time to time (listings requirements) and any other stock exchange upon which the securitiesin the capital of the company may be quoted or listed from time to time, repurchase securities issued by the company, provided that this authority shall be valid only until the next annual general meeting of the company or for 15 (fifteen) months from the date of the resolution, whichever is the shorter, and may be varied by a special resolution by any general meeting of the company at any time prior to the next annual general meeting.”

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It is recorded that the company or any subsidiary of the company may only make a general repurchase of the company’s securities if: • the repurchase of securities is effected through the order book operated by the JSE trading system and is done without any prior

understanding or arrangement between the company or the relevant subsidiary and the counterparty; • the company is authorised thereto by its articles of association; • the company is authorised thereto by its shareholders in terms of a special resolution of the company in general meeting, which

authorisation shall be valid only until the next annual general meeting or for 15 (fifteen) months from the date of the resolution, whichever period is the shorter;

• repurchases are made at a price not greater than 10% (ten per cent) above the weighted average of the market value for the securities for the 5 (five) business days immediately preceding the date on which the repurchase is effected;

• at any point in time, the company or the relevant subsidiary may only appoint one agent to effect any repurchases on the company’s behalf;

• the company or the relevant subsidiary only undertake repurchases if, after such repurchase, the company still complies with shareholder-spread requirements in terms of the listings requirements;

• the company or the relevant subsidiary does not repurchase securities during a prohibited period defined in terms of the listings requirements, unless it has a repurchase programme where the dates and quantities of securities to be traded during the relevant period are fixed (not subject to any variation) and full details of the programme have been disclosed in an announcement on Sens prior to the commencement of the prohibited period;

• a paid press announcement containing full details of such repurchases is published as soon as the company has repurchased securities constituting, on a cumulative basis, 3% (three per cent) of the number of securities in issue prior to the repurchases and for each 3% (three per cent), on a cumulative basis, thereafter; and

• the general repurchase is limited to a maximum of 10% (ten per cent) of the company’s issued share capital of that class in any one financial year.

Any acquisition shall be subject to: • the company’s Articles of Association • the Companies Act, as amended; • the listings requirements and any other applicable stock exchange rules, as may be amended from time to time; and • the sanction of any other relevant authority whose approval is required by law.

The directors of the company undertake that, after having considered the effect of the repurchases, they will not undertake such repurchases unless:

• the company and the group would be able to repay their debts in the ordinary course of business for the period of 12 (twelve) months after the date of the notice of the annual general meeting;

• the assets of the company and the group, fairly valued in accordance with International Financial Reporting Standards and the company’s accounting policies used in the latest audited group financial statements, will be in excess of the liabilities of the company and the group for the period of 12 (twelve) months after the date of the notice of the annual general meeting;

• the company and the group will have adequate capital and reserves for ordinary business purposes for the period of 12 (twelve) months after the date of the notice of the annual general meeting; and

• the working capital of the company and the group will be adequate for ordinary business purposes for the period of 12 (twelve) months after the date of the notice of the annual general meeting.

In terms of the listings requirements, the maximum number of shares that can be repurchased amounts to 10% (ten per cent) of the ordinary shares in issue.

The reason for passing of the special resolution is to enable the company or any of its subsidiaries, by way of a general authority from shareholders, to repurchase securities issued by the company.

The effect of the special resolution, once registered, will be to permit the company or any of its subsidiaries to repurchase such securities in terms of the Companies Act. This authority will only be used if circumstances are appropriate.

For the purposes of considering the special resolution and in compliance with paragraph 11.26 of the listings requirements, certain information is either listed below or has been included elsewhere in this report, in which this notice of annual general meeting is included:

• Directors and management – refer to pages 26 and 27 of this report. • Major shareholders – refer to page 198 of this report. • No material changes in the financial or trading position of the company and its subsidiaries have occurred since 11 November 2008.


Notice of annual general meeting continued


• Directors’ interests in securities – refer to page 171 of this report. • Share capital of the company – refer to page 150 of this report. • The directors, whose names are set out on pages 26 and 27 of this report, collectively and individually accept full responsibility for the

accuracy of the information contained in this notice and accompanying documents and certify that, to the best of their knowledge and belief, there are no other facts, the omission of which would make any statement false or misleading and that they have made all reasonable enquiries in this regard, and further that this notice contains all information required by law and the listings requirements.

• There are no legal or arbitration proceedings (including any such proceedings that are pending or threatened of which the company is aware), which may have or have had a material effect on the company’s financial position over the past 12 (twelve) months.

6. To confirm the re-appointment of Messrs Deloitte & Touche as external auditors of the company as recommended by the audit committee to hold office from the conclusion of the one hundred and thirteenth annual general meeting until the conclusion of the next annual general meeting of the company. Mr Michael John Jarvis (IRBA no. 342297) from the mentioned firm of auditors will undertake the audit.

7. To authorise the directors to fix the remuneration of the external auditors, Messrs Deloitte & Touche, for the past year’s audit.

8. To transact such other business as may be transacted at an annual general meeting.

Proxy and voting procedureMembers who have not dematerialised their shares or who have dematerialised their shares with “own name” registration are entitled to attend or vote at the annual general meeting and are entitled to appoint a proxy to attend, speak and vote in their stead. The person so appointed need not be a member of the company.

If certificated members or dematerialised members with “own name” registration are unable to attend the annual general meeting, but wish to be represented thereat, they must complete the proxy form on page 203 of this report.

In order to be effective, proxy forms should be delivered 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), so as to reach these addresses no later than 12:00 on Thursday, 22 January 2009.

Members who have dematerialised their shares, other than those members who have dematerialised their shares with “own name” registration, should contact their participant (previously central securities depository participant) or stockbroker:• to furnish their participant or stockbroker with their voting instruction; or• in the event that they wish to attend the meeting, to obtain the necessary authority to do so.

Any shareholder having difficulties or queries with regard to the above may contact the company secretary on +27 11 386 9000.

By order of the board

JHDLR SnymanCompany secretary10 November 2008Sandton

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Form of proxy

PRETORIA PORTLAND CEMENT COMPANY LIMITED(Incorporated in the Republic of South Africa)Company registration number: 1892/000667/06(“PPC”) or (“the company”)JSE code: PPCZSE share code: PPCISIN code: ZAE000125886

Only for the use of registered holders of certifi cated 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 to be held at 12:00 on Monday, 26 January 2009, in the auditorium of Deloitte & Touche, Deloitte Place, The Woodlands, 20 Woodlands Drive, Woodmead, Sandton.

Holders of ordinary shares in the company (whether certifi cated or dematerialised) through a nominee must not complete this form of proxy but should timeously inform that nominee, or, if applicable, their Central Securities Depository Participant (CSDP) or stockbroker of their intention to attend the annual general meeting and request such nominee, CSDP or stockbroker to issue them with the necessary letter of representation to attend or provide such nominee, CSDP or stockbroker with their voting instructions should they not wish to attend the annual general meeting in person but wish to be represented 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, 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 annual general meeting of the company to be held in the auditorium of Deloitte & Touche, Deloitte Place, The Woodlands, 20 Woodlands Drive, Woodmead, Sandton, on Monday, 26 January 2009, and at any adjournment of that meeting as follows:

In favour of Against Abstain

1. Adoption of annual fi nancial statements

2. To confi rm the appointment of the following two directors

2.1 TDA Ross

2.2 BL Sibiya

3. To consider the re-election of the following three directors

3.1 RH Dent

3.2 P Esterhuysen

3.3 AJ Lamprecht

4. Remuneration of non-executive directors/committee members and chairman

5. Acquisition of own shares*

6. Re-appoint Messrs Deloitte & Touche as external auditors of the company

7. Authorise directors to fi x remuneration of external auditors

* Special resolution

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 200

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 annual general meeting.

Please read the notes on the reverse side of this form of proxy


Explanatory notes regarding proxies

1. A shareholder may insert the name of a proxy of the shareholder’s choice in the space provided, with or without deleting “the chairman of

the meeting”, but any such deletion must be initialled by the shareholder. The person whose name stands first on the form of proxy and

who is present at the annual general meeting will be entitled to act as proxy to the exclusion of those whose names follow.

2. Please insert an “X” in the relevant space 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 shares than you own in the company, insert the number of shares held in respect of which you wish to vote.

Failure to comply with the above will be deemed to authorise the proxy to vote or to abstain from voting at the annual general meeting as

he/she deems fit in respect of the entire shareholder’s votes exercisable at the annual general meeting. A shareholder or his/her proxy is not

obliged to use all the votes exercisable by the shareholder or by his/her proxy, but the total of the votes cast in respect of which abstention

is recorded may not exceed the total number of the votes exercisable by the shareholder or by his/her proxy.

3. In order to be effective, proxy forms should be delivered 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), so as

to reach these addresses no later than 12:00 on Thursday, 22 January 2009.

4. Where there are joint holders of any shares, only that holder whose name appears first in the register in respect of such shares need sign

this form of proxy.

5. The completion and lodging of this form of proxy will not preclude the relevant shareholder from attending the annual general meeting and

speaking and voting in person at the annual general meeting to the exclusion of any proxy appointed in terms of this proxy form.

6. Any alteration to this form of proxy must be signed in full and not initialled.

7. If this form of proxy is signed under a power of attorney, then such power of attorney or a notarially certified copy thereof must be sent

with this form of proxy for noting (unless it has already been noted by the transfer secretaries).

8. A minor must be assisted by his/her parent or guardian unless the relevant documents establishing his/her legal capacity are produced or

have been registered by the transfer secretaries.

9. The chairman of the annual general meeting may accept any form of proxy which is completed other than in accordance with these notes

if he is satisfied as to the manner in which the shareholder wishes to vote.

BASTION GRAPHICS

CONTACT US

Head Offi ce and Cement Division

PPC Building

180 Katherine Street

Barlow Park ext.

Sandton

PO Box 787416

Sandton

2146

South Africa

Telephone: 00 27 (0)11 386 9000

Fax: 00 27 (0)11 386 9001

Website:

http://www.ppc.co.za/ and

http://www.ppccement.co.za/

E-mail: [email protected]

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