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Integrated annual report 2012


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Contents

About thi report

Scope and boundary o report 1

Reporting approach 1

Group overview 2

Our proile 2

Our vision 2

Investment proposition 2

Salient eatures 2012 3

Operations and geography 4

Leadership 5

Approach to sustainable business 10

Stakeholder engagement 11

Material issues 14

Our strategy 18

Commentary

Chairmans report 22

Chie executive oicers report 24

Chie inancial oicers report 28

Integrated review of 2012

Summary o integrated perormance 34

Value added statement 38

Mining charter scorecard 2012 39

Operations review 44

People review 48

Social review 60

Environmental review 66

Corporate governance review 76

Risk review 89

Remuneration review 92

Assurance statement 109

GRI index 110

summaried group annual financial tatement

Full financials are available on our website www.ppc.co.za

Directors report 114Report o the independent auditor on the

summarised annual inancial statements 118

Consolidated statement o inancial position 119

Consolidated income statement 120

Consolidated statement o comprehensive

income 121

Consolidated statement o changes in equity 122

Consolidated statement o cash lows 123

Segmental inormation 124

Notes to the summarised group annual fnancial

statements 126

Seven-year review o the groups results 128

Adminitration

PPC in the stock market 140

Corporate inormation 141Notice o annual general meeting 142

Form o proxy 149

Glossary o deinitions and acronyms 152

Forward-looking statementsThis report including, without limitation, those statements concerning thedemand outlook, PPCs expansion projects and its capital resources andexpenditure, contain certain orward-looking views. By their nature,orward-looking statements involve risk and uncertainty and although PPCbelieves the expectations refected in such statements are reasonable, noassurance can be given that these expectations will prove correct.Accordingly, results could dier materially rom those set out in theorward-looking statements as a result o, among other actors, changes ineconomic and market conditions, success o business and operatinginitiatives, changes in the regulatory environment, other governmentaction and business and operational risk management.

While PPC takes reasonable care to ensure the accuracy o inormationpresented, we accept no responsibility or any damages be theyconsequential, indirect, special or incidental, whether oreseeable orunoreseeable based on claims arising out o misrepresentation ornegligence in connection with a orward-looking statement. This documentis not intended to contain any prot orecasts or prot estimates, and someinormation in this document may be unaudited.

InnovatIon

EmpowErEd

to dElIvErpage 20

page 32

EntErprIsE

dEvElopmEntpage 42

In October 2012, Pretoria

Portland Cement Company

Limited changed its name to

PPC Ltd.

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How to get the most out of ourintegrated report

Readers are encouraged to start with the About

this report section, as this will provide context

This icon indicates material issues discussed in

this report

At the back o the report is the glossaryo defnitions and acronyms which arereerred to throughout the report

This icon reers to supplementary inormation that

can be ound online www.ppc.co.za

www.acebook.com/PPC.Cement

www.youtube.com/user/ppccement

@PPCisCement

EconomIc

EmpowErmEntpage 112

contInUal

modErnIsatIonpage 138


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1Integrated annual report 2012

About this report

Scope and boundary o report

This integrated annual report covers PPCs nancialand non-nancial perormance between 1 October 2011and 30 September 2012. It ollows the integrated annualreport published or the 2011 nancial year. Details orobtaining copies o the integrated report rom thePPC group company secretary appear on page 137.For urther details on sustainability matters, please

contact: Ms Tshilidzi Dlamini, PPC group manager,sustainability and environment, tel +27(11) 386 9122,ax +27(11) 386 9117, email [email protected].

The scope o this report covers all PPCs manuacturingacilities (cement and lime), aggregate quarries anddepots in South Arica, Botswana, Zimbabwe andMozambique.

Our annual nancial statements were prepared inaccordance with international nancial reportingstandards (IFRS), requirements o the South AricanCompanies Act, regulations o JSE Limited (JSE) andrecommendations o King III.

In compiling this report, PPC has considered the latestGlobal Reporting Initiative sustainability reportingguidelines, known as GRI G3.1, as well as guidelines oncorporate governance in South Arica set out in King IIIand the Listings Requirements o the JSE. The GRIclassication or our report is application level C+, whichis sel-declared and requires the group to report on atleast ten GRI indicators across economic, social andenvironmental perormance. Certain indicators have beenexternally assured by Deloitte & Touche, whose reportappears on page 109. The indicators published in thisreport refect the extent to which we meet GRI reportingrequirements. We have also included areas we believe willenhance understanding o our processes, achievements,challenges and progress or the year.

Online version available

Reporting approachThis is our third integrated annual report a style oreporting that allows us to emphasise the undamentallink between our nancial and non-nancial perormance(environmental, economic, social and governance issues),contextualise the risks and opportunities the group aces,and how these infuence our business strategy.

The JSE requires listed companies to produce integratedannual reports, in line with the recommendations oKing III. What, precisely, constitutes integrated reportingremains the subject o international debate, although wehave noted the discussion papers rom the InternationalIntegrated Reporting Committee. We have also beenguided by accepted best practice in annual reporting andGRI G3.1 reporting guidelines.

This integrated annual report ocuses on the most materialsustainability issues that drive business strategy. Thesewere identied ater analysing stakeholder concerns,business risks and global trends, and how they impact ourlong-term business sustainability.

partnering in africa

ABOUT THIS REPORT


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2 PPC Ltd

Our visionTo grow PPC into a leading emerging-market business.

PPC currently operates in emerging markets,where 70% o the worlds cement is produced.

These markets present higher growth inpopulations, GDP and cement demand, newopportunities, and deliver higher returns orproducers o cement and related products.

Our profileIn 2012, PPC celebrated its 120th year a ormidable 12 decades o innovation as aleading cement producer in southern Arica. Thismilestone comes two years ater PPC celebratedits 100th year listing on the JSE in 2010, becomingpart o an extremely small and elite group olisted centenarians, not only in South Arica butworldwide.

Established as De Eerste Cement FabriekenBeperkt in 1892, PPC has tracked the growthand development o South Arica, producingthe cement used in many o the countrys iconic

landmarks and construction projects, includingthe Union Buildings, Gariep Dam, Van StadensRiver Bridge, Gautrain, Medupi Power Station,the new Cape Town Stadium in Green Point andmuch o southern Aricas inrastructure.

Since unbundling rom Barloworld in 2007,PPC concluded R3,9 billion broad-based blackeconomic empowerment transactions in 2008 and2012, commissioned a R1,4 billion clinker plantin Dwaalboom and completed the R700 millionmining acility at its Hercules plant.

The group is the leading supplier o cementin southern Arica through eight cementmanuacturing acilities and three milling depotsin South Arica, Botswana and Zimbabwe that canproduce around eight million tonnes o cementproducts each year. PPC also produces aggregates,metallurgical-grade lime, burnt dolomite andlimestone. Our Mooiplaas aggregates quarry inGauteng has the largest production capacity inSouth Arica.

Our ocus extends beyond our group to thebroader industry. As a leader in this industry, PPC

has actively invested in technology to reduce airemissions, minimise waste production, recycleand recover raw materials, enhance energyeiciency and conserve natural resources whileproducing a reliable and aordable supply obuilding materials to support the economies ocountries where we operate.

PPC is a truly Arican success story a ocusedbusiness that relects the strengths o its people,products and services. As we expand into the resto Arica, we will deploy our sustainable businessmodel one built to last and the brand o choice

in our chosen marketplaces.

GROUP OVERVIEW

Investment proposition

Cash generative

Excellent dividend

yield and history

Leading producer insouthern Arica with bestgeographic spread

New capacity available

Strong inancial position

Financial strength to exploreexpansion opportunities

Experiencedmanagement team


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About this reportSALIENT FEATURES 2012

Team PPC delivered a good result by improving eiciencies and increasing normalised earnings by

11% despite another tough year. The company inalised a number o key strategic issues including

conversion o mining rights in South Arica and our irst new investment into sub-Saharan Arica.

Employees participate in 68% (R730 million)o the second BBBEE ownership transaction.

Invested R42,3 million or 5,7% o payroll inskills development.

People

Successul completion o the environmentalauthorisation process or new Riebeeck

plant. As part o our ive-year energy-saving plan,

integrated demand management projectsrealise energy savings o R2,8 million.

Environmental

Normalised earnings*

per share increased by

11%

Annual dividends increased

to 146 cents per share

12%

Cash earnings per

share rose by

16%

Financials (R million) 2012 2011 2010

Revenue 7 346 6 826 6 807

Operating prot* 1 866 1 710 2 115

Property, plant and equipment 4 483 4 287 4 175

Total assets 6 907 6 419 6 112

Cash generated rom operations 2 284 2 102 2 442

Ordinary share analysis

Headline earnings per share (cents)* 185 167 219

Earnings per share (cents)* 185 166 213

Dividends per share (cents) 146 130 175

Number o employees 3 085 3 087 3 257

* Excludes BBBEE IFRS 2 charges.

R38 million o a planned R60 millionover ive years spent on approved local

economic development projects.

88% o total procurement (R3,5 billion)

spent with BBBEE suppliers.

Social

New CEO appointed.

Ongoing improvement in integratedreporting acknowledged.

Governance aligned with newCompanies Act.

Corporate governance and risk


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PPC has operations and strong brands in South Arica, Botswana, Zimbabwe and Mozambique. In addition to serving

southern Arican markets, we export cement and lime to other Arican countries.

1. Jupiter

2. Hercules

3. Slurry

4. Dwaalboom

5. Riebeeck

6. De Hoek

7. Port Elizabeth

8. Colleen Bawn

9. Bulawayo

10. Lime Acres

11. Laezonia quarry

12. Mooiplaas quarry

13. Kgale quarry

14. Gaborone

15. Saldanha

16. Quarries o Botswana

17. George

18. Maputo

19. Habesha

Cement plant

Milling depot

Aggregate quarry

Lime plant

Sales depots

Project

Zimbabwe

Botswana

South Arica

Richards Bay

Bulawayo

Gaborone

Mafkeng

Port ElizabethSaldanha

Kimberley

Johannesburg

Cape Town

Durban

Mozambique

Ethiopia

14

9

155

6

10

7

24

1

16

16

16

3

13

8

12

11

17 George

18 Maputo

19

Addis Ababa

4 PPC Ltd

OPERATIONS AND GEOGRAPHY

Rest of Africa

Rm 2012 2011 2010

Revenue 1 560 1 193 1 202

Employees 793 693 699

South Africa

Rm 2012 2011 2010

Revenue 5 786 5 633 5 605

Employees 2 292 2 394 2 558


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About this report

Overview

PPC Cement not only has a proud and

successul track record spanning 120 years, but

can also lay claim to being the leading supplier

o cement in South Arica, Botswana and

Zimbabwe. Our unique combination o quality

products and good geographic ootprint allows

us to meet most customer requirements in parts

o these countries.

Cement product range

South AricaPPCs product range includes the premier

specialist brand OPC in the 52.5N strength

category, the market-leading 42.5N Surebuild

general-purpose cement, and the new SureRoad

brand or exclusive use in road construction.

ZimbabweSurebuild, Unicem, a trusted 32.5N

multipurpose cement, and PMC are distributed

rom the Bulawayo actory while OPC rom

South Arica is also available on request.

BotswanaThe popular 32.5R Botcem product,

manuactured at the Gaborone milling depot,

is complemented by the OPC and Surebuild

brands which are also available in Botswana.

Mozambique

PPCs 42.5N Surebuild is distributed as the Fora

brand and the 32.5N Obras product was

introduced during 2012.

Cement

Overview

PPC Lime has grown rom small operations in

1907 producing lime or the burgeoning gold

mining industry into one o the largest lime

producers in the southern hemisphere and the

leading supplier o metallurgical-grade lime,

burnt dolomite and related products in

southern Arica.

Lime products

Unslaked lime, hydrated lime and limestone and

burnt dolomite.

Lime

Overview

PPC Aggregates supplies quality construction

aggregates to the civil construction sector and

products or the chemical, metallurgical and

agricultural industries. PPC has aggregate

quarries in Gauteng (Mooiplaas and Laezonia)and in Botswana (Kgale, Selebi Phikwe and

Francistown).

Aggregates

Aggregate products

Concrete stone, road stone, crusher sand, river

sand, building sand, plaster sand, Magalies

silica, natural base, sub-base, ll material,

dolomite and agricultural lime.


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6 PPC Ltd

Chief financial officerTryphosa, CA(SA), was appointed chie fnancial ofcer (CFO) o PPCin 2011. Prior to that, she was CEO o WIP International (a subsidiaryo WIPHOLD ocused on Arican expansion). Tryphosa also served asCFO o SAA, and prior to that, she was requested to join NationalTreasury, where she set up a business unit with fnancial oversight ostate-owned entities. As chie director o this unit, she wasinstrumental in listing Telkom on the Johannesburg and New Yorkstock exchanges. Her diverse proessional development includesfnancial and strategic planning, corporate governance reorm,

industry analysis and corporate restructuring. She has served on anumber o boards, and is currently on the Airports Company oSA and Land Bank o SA boards as a non-executive director.

Mmakeaya MagoroTryphosa Ramano (41)

Executive directorOrganisational performance and transformation

Sello joined PPC in 2007 as group corporate social transormationmanager and was appointed executive: transormation in 2008. Heholds a BEd (Hons) rom Avondale College and a BEd Studs (Hons)

rom the University o Newcastle, Australia. Over a ten-year careerwith Gold Fields, Sello held positions in human resources, corporatecommunications and was appointed group transormation managerprior to joining PPC.

Sello Godfrey Helepi (41)

Chief executive officerPaul is an engineer by proession (BEng, University o Pretoria) andhis early career was spent in the steel industry. Ater joining PPC hespent 18 years in PPCs lime, packaging and logistics divisions andwas a member o the board rom 1995 to 2001. He joinedBarloworld in 2001 as CEO o its logistics division where he wasinvolved with international expansion and served on boards inSouth Arica, Spain, the UAE, UK and USA. Paul rejoined PPC asCEO in 2009.

Paul Stuiver (55)

Executive directorBusiness development and international expansion

Peter was a divisional director o PPCs cement division rom 1996 to2001 and group fnancial director o the Barloworld Coatings groupprior to rejoining PPC as chie fnancial ofcer in 2003. A charteredaccountant by proession, he also holds BCom and BAcc degrees,and has extensive experience in all aspects o manuacturing,corporate fnance and taxation. He now heads up the businessdevelopment team responsible or urthering PPCs Aricangrowth strategies.

Peter Esterhuysen (56)

Managing director, South Africa operationsSalim holds BSc, BB&A (Hons) and MBA (cum laude) degrees romthe University o Stellenbosch and joined PPC in 2004. He wasexecutive director responsible or organisational perormance andtransormation until 2009 when he was appointed managing director

o PPCs cement operations. In 2012, he was appointed to his currentposition and is responsible or all local operations, including cement,lime, aggregates and the recently acquired readymix business. Priorto joining PPC, he was a senior executive in the Tiger Brands group,responsible or organisational eectiveness ater acquiring managerialexperience in various technical and operational roles.

Salim Abdul Kader (42)

PPC understands that diversity,

empowerment and development at every

level can only be achieved through eective,transparent and accountable leadership.

Chairman (independent non-executive director)Bheki was appointed independent non-executive director and chairman o the PPC board in November 2008.He holds an MBA degree rom the University o Western Michigan (USA) and is a ounding chie executiveo Business Unity South Arica, the most authoritative voice o business in South Arica.

He has worked in a number o South Arican blue-chip companies including Ford Motor Company (humanresources), SA Breweries (procurement, logistics and human resources), Tongaat Hulett Sugar (director: humanresources), Transnet (director: human resources) and is currently chie executive o the Chamber o Mines.

Bheki has also served in a number o signifcant national policy-ormulating structures, such as the nationalanti-corruption orum, Presidents working group with business and the national Arica peer reviewmechanism council.

Bheki Lindinkosi Sibiya (55)

Ketso Gordhan (51)

Chief executive officer designateEective 1 January 2013, Ketso Gordhan will succeed Paul Stuiveras chie executive ofcer o PPC. Most recently, Ketso was with ThePresidency or the government o South Arica, ater almost ten yearsas head o private equity at FirstRand Financial Services Group, wherehe gained valuable experience o the manuacturing environment.Other successul roles in the public sector include the turnaround othe City o Johannesburgs fnancial perormance as city manager(1999 to 2000) and in-depth knowledge o the transportation sectorgained as director general o that national department (1994 1999). Ketso holds a BA in political studies and sociology (Universityo KwaZulu-Natal), MPhil in development studies (University oSussex, UK) and was a visiting ellow in fnance at the University oPennsylvania, Wharton, USA. Ketso is currently serving as anon-executive director at Lie Healthcare.

LEADERSHIP BOARD


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About this report

Non-executive directorPeter is executive chairman and ounder o the Peu Group. Ater anearly accounting career with Philips (SA), he started his own businessmanagement consultancy in 1984 and investment group Peu in1996. Peter has a BCom degree (Unisa) and completed managementprogrammes at Wits Business School and Wharton University (USA).He is chairman o Phumelela Gaming and Leisure, a director oInvestec Limited, Investec plc and certain Peu subsidiaries. Peter hasalso held advisory positions in government and directorships instate-owned enterprises.

Mangalani Peter Malungani (54)

Independent non-executive directorTim, CA(SA), was a partner with Deloitte & Touche or 36 years,retiring in 2008. He led the Johannesburg audit practice and servedon the executive as client service director as well as the board andremuneration committees. Tim was the lead/advisory partner or anumber o multinational clients and headed the Deloitte & ToucheWorld Cup 2010 initiative. He is a director o Liberty Group, EqstraHoldings, Adcorp and Mpact, chairing the audit and actuarialcommittee o Liberty and the audit committees o Eqstra, Adcorp andMpact. He is also a member o the risk committees o Liberty, Eqstra

and Mpact.

Tim Dacre Aird Ross (68)

Independent non-exeutive director

Andr holds BCom, LLB and PED-IMD qualifcations. He is retiredater a long career as a director and later CEO o a listed companyand chairman o industrial groups in Botswana and Namibia. Duringhis career he also had wide exposure to construction and mining-related industries. He served on numerous public bodies, includingas chairman o Business South Arica and Business Unity SouthArica, and as trustee o the Business Trust. He is a director oBusiness Leadership South Arica and a member o its executive.

Andr Jacobus Lamprecht (60)

Independent non-executive directorBridgette holds a BCompt (Hons) CTA degree, CA(SA) and CIMAcertifcation and has completed several management developmentprogrammes. She is the CEO o Kutira Capital and a non-executivedirector o Sun International Limited, Nestlie Assurance Limited, UnisaSchool o Business Leadership and Kanhym Estates (Pty) Limited. Shewas an audit partner at KPMG or 10 years. She sits on the auditcommittees o various companies.

Bridgette Modise (45)Non-executive directorSydney was appointed to the board on 1 March 2012 as arepresentative o the PPC consortium o strategic black partnersand as a member o the deal committee and remunerationcommittee o the board. He is a ounder and director o TamelaHoldings (Pty) Limited and has over 14 years experience ininvestment banking. A chartered accountant, Sydney completedhis articles at Ernst & Young in 1997 and is a member o theSouth Arican Institute o Chartered Accountants educationand examinations committee. He was a member o the SecuritiesRegulation Panel rom 2004 to 2006.

Sydney Knox Mhlarhi (39)

Independent non-executive directorNtombi has BA (Law) and LLB degrees rom National Universityo Lesotho and owns Nthake Consulting, a human resourcesconsultancy specialising in human resources management and alliedservices. She has over 25 years experience in the human resourcesenvironment, gained as director o human resources at IndependentNewspapers Holdings Limited, SABC and the Bevcan division oNampak Limited. Ntombi is a non-executive director o Arican BankLimited and Mpact Limited.

Nomalizo Beryl Langa-Royds (50)

Joe Shibambo (64)

Independent non-executive directorJoe (Dip Bus Econ, Dip Bus Admin, Dip Estate Agency) is managingdirector o Hlamalane Projects (Pty) Limited and has been in theconstruction industry or over 30 years. He has extensive knowledgeand experience o construction management, project management,property development, rail construction and maintenance. Throughhis organisation, he also assists the youth to acquire basicmanagement principles or the construction industry. Joe is aco-director o various other companies, and was one o the frstindependent residential developers and the frst contractor to

develop and build a shopping centre in Soweto.

Non-executive directorZibusiso holds a BCom degree (University o Natal) and apostgraduate diploma in property planning, development andmanagement. She has completed management developmentprogrammes at the Wharton School o Business and University oNevada, Reno. With 18 years property experience, Zibu has served asnon-executive director o the Johannesburg Property Company andmember o the Land Aairs Board. Currently, she is executive directoro development or Tsogo Sun Gaming.

Zibusiso Janice Kganyago (46)


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8 PPC Ltd

Chief audit executive*Phuti started as a trainee with a major audit frm, and spent ouryears in external audit management beore taking on an executivefnance role with a medium-sized printing company. He then movedinto internal audit and covered two leading fnancial institutionsbeore entering the orensic audit feld. Phuti holds qualifcations asa chartered accountant CA(SA), certifed internal auditor (CIA),certifed control sel-assessor (CCSA), certifcate in advanced bankinglaw (cum laude) and is currently studying towards a masters degree

in international accounting.

Phuti Semenya (36)

Executive,secretarial and legalJaco joined PPC in 2007 in his current position. He holds BA, LLB, LLMand MBA degrees and is an attorney o the High Court o SouthArica. He started his career as an attorney but ater a short stint aslecturer at a university was appointed as group legal advisor by Absa.He was responsible or corporate governance in the Absa Group priorto joining PPC. Jaco is the company secretary o PPC.

Jacobus Hendrik De La ReySnyman (45)

Klaas Paulus Pieter Meijer (52)

Managing director, international operationsPepe is a mechanical engineer (BEng) and holds BB&A (Hons) andMBA degrees rom the University o Stellenbosch. He previously heldthe positions o executive group services, executive cement operationsand various other senior and general management roles across thecement and lime divisions since joining PPC in 1988. Prior to that, heworked in the gold mining industry, with the last appointment beingas section engineer, and in the fshing/processing/rozen-ood industryas group projects manager.

LEADERSHIP GROUP EXECUTIVE COMMITTEE

Executive,strategy and corporate communicationsKevin holds a degree in mechanical engineering and is a registeredproessional engineer. He joined PPC in 1991 as a plant engineer atPPCs Riebeeck actory. Since then, he has gained extensiveknowledge o PPC and the cement industry. He has held a numbero positions at both manuacturing and corporate level includingactory engineering manager, group logistics manager and executiveo the group supply chain department.

Kevin Pieter Odendaal (45)

*Attends as observer only

Managing director, South Africa operationsSee page 6

Salim Abdul Kader (42)

Chief financial officerSee page 6

Mmakeaya MagoroTryphosa Ramano (41)

Executive director, organisational performance andtransformation

See page 6

Sello Godfrey Helepi (41)

Executive director, business development andinternational expansion

See page 6

Peter Esterhuysen (56)

Chief executive officerSee page 6

Paul Stuiver (55) Ketso Gordhan (51)

Chief executive officer designateSee page 6


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About this report

Awards in 2012During the year, PPC was recognised at a number o levels rom its integrated reporting to its progress with transormation

refecting a group concentrating on every aspect o its role in society and its responsibility to stakeholders.

Nkonki/Financial Mail award

or integrated reporting

PPC won the industrial category and was ranked second overall or its 2011

integrated report out o over 100 listed companies. Importantly, the companys

overall score improved, placing it among very ew top-rated companies or the

quality o its integrated reporting.

PMR Diamond Arrow Award Fith consecutive award or PPC Cement in this benchmark survey, and rst or PPC

Botswana. PMRs annual national survey evaluates and measures customer service

and satisaction.

Black Business Quarterly (BBQ)

2012 awards

Nolwandle Mantashe, PPCs executive or transormation and government relations,

was named BBQs transormation champion o the year.

Kaap Agri 2012 PPC was rated supplier o the year or the rst time, and won the category: hardware

building materials or the second year.


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10 PPC Ltd

APPROACH TO SUSTAINABLE BUSINESS

PPC understands that managing a sustainable business requires the balanced integration o

perormance, corporate governance, social, economic and environmental actors into the strategy

and operation o the business. Equally, we understand that this is dynamic and requires an

ongoing review process.

To ormulate our strategy and identiy our material issues, PPC uses a wide range o criteria, processes and

stakeholder engagements, summarised below:

Internal actors External actors

Groups vision, mission, key values, policies,

strategies, operational management systems,

objectives and targets.

Challenges and emerging issues or the

cement sector, or example global

industry consolidation.

Expectations and concerns o stakeholders, including

employees, customers, shareholders, governments,

suppliers and communities.

Relevant laws, regulations and changes to

legislation that aect PPC and its stakeholders

Companies Act, skills development, employment

equity, waste management, air quality, and localby-laws.

Underlying risks to PPC as deined by internal

integrated risk methodologies.

Changes involving sustainability issues, impacts,

risks or opportunities (eg climate change, energy

eiciency) identiied through published global

research and development.

Innovation, including product development and the

manner in which PPC could potentially inluencesuppliers and customers in terms o sustainable

development.

Advice received through external experts in the

business strategy, risk and sustainability ields.


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About this reportSTAKEHOLDER ENGAGEMENT

Non-governmental andcommunity organisations

CustomersSuppliers

Media

Banks, funders andinsurance companies

shareholders and

investment community

Employees

Trade unions

Academic institutions andproessional organisations

Industry associations

National, provincialand local government, and

regulatory bodies

In terms o PPCs inclusive process, we engage with all stakeholder groups. While interacting

with such diverse groups is challenging, we know that without their input we cannot run a truly

sustainable business. PPC uses many avenues to acilitate this engagement as listed below. One

o the most successul means has been through ormal stakeholder orums at both corporate

and operational level.


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12 PPC Ltd

Stakeholder Type of engagement Issues raised Action taken

EmployeesIn-house publications, intranet,

roadshows, actory Invocoms

and key leader meetings,

individual perception monitor,

perormance and one-on-one

meetings, actory saety and

environmental meetings.

All PPC leaders drive various

orums, rom the CEO down

Employee benefts including

salaries

Company perormance

Sae working environment

Understanding transormation

strategy and plans

Individual perormance and

development

Succession planning

Organisational climate

Environmental awareness

Through the Kambuku

philosophy, PPC has ongoing

dialogue with all employees to

address issues raised. The

response is oten via the same

engagement process through

which the issue was raised.

Trade unionsRegular meetings as per

respective recognition

agreements, key leader meetings

with all employee representatives

at each operation

Cost-o-living salary adjustments

and other employee benefts

Negotiated annual salary

adjustments.

Academicinstitutions andproessionalorganisations

Meetings, conerences, site

orums

Stack emissions and dust allout Emission levels recorded in the

integrated annual report.

Industryassociations

MeetingsConerences

Working groups

Publication o cement statisticsProposed CO

2tax

PPC provides environmentalinputs on projects and

legislation in various industry

associations and other orums.

National,provincial andlocal governmentregulatory bodies

Meetings, conerences, working

groups, actory inspections

Air quality and waste

management

Financial provisioning or

rehabilitation

Integrated water use licences

and water quality

Social and labour plan

implementationWestern Cape expansion plan

Mining charter scorecard

Environmental authorisation

applications

Financial provisions are made or

actory decommissioning and

quarry rehabilitation (see annual

fnancial statements).

Applications or licences have

been submitted.

Social and labour plans already

implemented.Frequent government

interaction during the current

environmental impact

assessment process.

All health and saety elements

reviewed and complied with.

STAKEHOLDER ENGAGEMENT continued


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About this report

Stakeholder Type of engagement Issues raised Action taken

CustomersCustomer visits

Factory visits

Industry conerences

Industry associations

Hospitality events

Independent customer

satisaction surveys

In-store visits and promotions

Technical support and education

Advertising

Price, service, product range,

quality

Managing cement waste (used

bags and spillage)

Empowerment status

PPC communicates price

increases in writing in advance.

A technical marketing unction

evaluates quality and product

range eedback.

Empowerment status certifcate

available to all stakeholders.

Appointed key account

managers.

SuppliersSite visits (including supplierssuppliers)

Meetings

Supplier audits

Tender briefng sessions

Product developmentAlignment to customer strategy

Environmental status o supply

chain

Health and saety or contractors

Increased ocus and capitalapproved or material handling

where necessary.

Standard practice is or all

contractors entering a site to

receive saety induction training.

MediaPress releases

Interviews

Meetings

Industry outlook

Financial results

Carbon ootprint

Products

People

PPC has a specifc engagement

plan and specifc media

interactions were held during

the year.

Shareholders,investors, banks,unders andinsurancecompanies

Annual and interim results

Website

Integrated annual reports

Investor roadshows

Meetings

Conerences

Cement demand and pricing

outlook

Financial perormance

Implementation o strategy

Competitor activity

Carbon ootprint

CEO succession

Written reporting and

responses given at the various

engagements.

New CEO appointed.

Communitiesincluding non-governmentaland communityorganisations

Public orums

Meetings

InternetPPC Community Trust

(community engagement orum

meetings)

Operational environmental

perormance

EmploymentProjects to support community

uplitment submitted to

trustees rom benefciary

communities

See social and environmental

reports.

Where possible employees aresourced rom the communities

in which we operate.

Trustees approve unding

allocations and community

projects or implementation.


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14 PPC Ltd

Material issues Response strategy Status

Markets

1 High exposure toSouth Aricaneconomy

In 2012, 79% o PPCsrevenue was generatedrom its South Aricanoperations.

Increase revenue generated inother countries by expandingPPCs ootprint into developing/

emerging market economies. Initial ocus is in sub-SaharanArica to grow revenue earnedoutside South Arica to at least40% by 2016.

27% stake secured in HabeshaCement, Ethiopia. Operationsunder construction; expected to

come on stream in 2014. PPC is currently engaged in ourmore projects which, i allsuccessul, would add some threemillion tonnes o capacity or 35%to revenue by 2016.

2 Weak demand andovercapacity inSouth Arica,Botswana andNamibia

Existing overcapacity inSouth Arica, Namibiaand Botswana putspressure on selling pricesin competitive markets.

Rationalise production capacity toimprove utilisation and eciencyacross all PPC sites.

Contain manuacturing costs. Increased ocus on customer

needs, marketing and productenhancement.

Continue to evaluate and exploitall export opportunities.

Older less-ecient equipmentremains on care andmaintenance, pending changes inmarket demand.

Continue to ensure most ecientallocation o resources and strongcustomer ocus.

Improvements at Transnets railservice have allowed us tomaximise use o our mostecient kilns in Dwaalboom.

Upgrade o De Hoek kiln 6completed in July 2012, ensuringthat our largest production unit inthe Western Cape now operatesat competitive eciency levels.

3 Imported cement

into South Arica

and Mozambique

Cement imports have

steadily risen to around

6% o South Arican

demand, despite

fuctuations in the

exchange rate.

Imports into Mozambique

have dampened prices.

Ensure PPC is competitive in cost,

quality and customer service.

Lobbying industry bodies,

government departments and

customers to understand the

threat o unstable supply, quality

breaches and local manuacturing

job losses.

Continuous ocus on eciency,

quality and customer service.

Engaging with relevant industry

bodies and supporting legal

action to ensure air application

o quality standards has been

unsuccessul.

Customer education on

disadvantages o using imported

product has had limited success.

MATERIAL ISSUES

Based on our approach to managing a sustainable business (page 10), stakeholder engagement and comprehensive risk

assessments, we have identied the material issues our stakeholders need to consider. For convenience, each issue is

identied by an icon and a number. Where a material issued is addressed in this report, it is cross reerenced.

In 2012, PPC has successully dealt with three material issues rom the 2011 integrated annual report, namely meeting

requirements or conversion o mineral rights, indigenisation o our Zimbabwe operations and CEO succession. These have

thus been removed as material issues but are discussed elsewhere in the report.


19/160


About this report


Regulatory

4 Increasinglyonerous regulatoryenvironment inSouth Arica

The nature, complexityand increase o legislationis making manuacturingin SA uncompetitive.

Ensure an eective andappropriately skilled complianceunction in place.

Allocate capital to ensurecompliance.

Lobby industry and state bodiesto ensure regulatory environmentcongruent with a competitivemanuacturing industry.

PPC has a compliance unction inplace and group-wide complianceto legislation is monitored.

Western Cape modernisationprogramme progressingsatisactorily. Appropriate budgetsin place to cater or upgrades atother sites.

Engaging with relevant industryand state bodies on: Developing an appropriatecarbon tax strategy

Waste handling legislation

Air emission legislation.

Strategic

5 Risks associatedwith acquisition,partnership and/orinvestment in anew country

Investments into the resto Arica carry sovereignand operational risks.

Thoroughly assess eachinvestment opportunity byensuring the appropriateresources are in place, includingindustry and country experts, toensure compliance with PPCs riskappetite.

Consult with relevantgovernment authorities.

Promote equity participation bylocal partners.

Use unding opportunities rom

development unding institutionsas these projects have broaddevelopment implications andthereore all within theirmandates.

Apply lessons learnt rom dealsconcluded.

Dedicated business developmentteam under leadership o anexperienced director in place.

A board deal committee assesseseach opportunity.

Appropriate risk assessmentsper opportunity.

Political

6 Uncertainty ongovernment policydirection

Clarity required tounderstand governments

stated intent onationalising strategicassets.Implications o fuidempowerment criteria.

Improve relationships withgovernment to better understandpolicy direction.

Lobby government throughindustry bodies.

The DMR has approved PPCscurrent empowerment status.

The company will remainengaged with government tokeep abreast o any policydevelopments.

7 Political or civilinstability inZimbabwe due to2013 nationalelections

Any instability due to

these elections will aectcement demand and mayhamper production atPPC Zimbabwe.

Abide by all regulations o thegovernment o the day andmitigate potential impact byimplementing contingency plans.

Ongoing monitoring o situationand contingency plans in place.


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16 PPC Ltd


Human

capital

8 Lack o critical

skills

In all countries where PPC

operates, there is

competition or skills to

operate a sustainable

manuacturing business.

This not only has the

potential to aect

business perormance,

but causes costs to spiral

to keep remuneration and

retention schemes

market-related, especially

with new entrants to the

industry.

PPC continues to practise its

Kambuku* people philosophy to

empower, motivate and develop

employees.

Fixed and perormance-based

remuneration and retention

schemes to be market-related.

Develop existing employees at the

accredited PPC Academies.

Maintain current succession

planning.

Employee turnover has declined

or 2012 to 14% in South Arica

but risen to 10,7% in Botswana

while it is 12,4% in Zimbabwe.

Internal individual perception

monitor has increased to 87%.

PPC Academies continue to

develop team members in

leadership, sales and marketing,

vocational training and bridging

programmes.

9 Saety

The number o lost-time

injuries remains

unacceptable.

Saety remains the top priority or

PPC. We continually strive to

improve saety standards, develop

a healthy work environment and

a saety-aware workorce.

The groups LTIFR reduced rom

0,34 to 0,23 in 2012.

PPC Alive! project has added

momentum to our saety eorts,

resulting in ewer lost-time

injuries.

Operational

10 High cost o

manuacturing in

SA and Zimbabwe

making industry

uncompetitive

Additional regulatory and

compliance requirements

increase the cost o doing

business. The level o

administered energy

prices and labour costsmake our products

uncompetitive relative to

Asian counterparts.

Ensure compliance with all

applicable legislation.

Engage government on

implications o current and

proposed legislation and propose

more ecient solutions.

Operate as eciently as possible.

Improve electrical and thermal

eciency.

Evaluate alternative orms o

energy supply.

Group-wide compliance to

legislation is monitored.

PPC is a member o the ACMP,

Manuacturing Circle and EIUG.

These industry bodies actively

engage authorities and aected

parties.

Eciency and environmental

perormance upgrade at De Hoek

actory concluded in July 2012.

Environmental impact assessment

or new Riebeeck plant inWestern Cape approved.

PPC/Inowind Wind Farm project

in Port Elizabeth granted

preerred-bidder status.

Burning waste materials to

replace coal remains delayed by

authorities.

MATERIAL ISSUES continued

*See page 52.


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About this report


Operational

11 Labour unrest in

South Arica

Intense labour unrest in a

number o industries in

the latter hal o 2012

has:

Reduced economic

outlook or SA

Interrupted business

execution

Brought uncertainty

to existing legal wage

agreements

Potential to spill into

PPCs workorce.

Respond to the dynamic

economic environment in an agile

and ecient manner.

Current business interruption

plans in place.

Increased emphasis on the PPC

Kambuku people philosophy.

Maintain PPC employees

reedom o association with

labour unions and ensure relevant

agreements are in place between

the company and recognised

unions.

Contingency plans partially

mitigated the impact o

September transport strike.

Only one strike in the group o

12 days at our lime operations

in November 2011.

Fundamental pillars o Kambuku:

ast, open communication

between management and

employees and a better lie or

all remain in place throughout

the group.

Environmental

12 Carbon ootprint

Due to the chemistry and

energy requirements o

the cement manuacturing

process, signicant

quantities o carbondioxide (CO

2) are

generated.

PPC has committed to reducing CO2

emissions, with signicant progress

over the past decade.

PPC will continue to improve

energy and process eciencies to

reduce its CO2

emissions and

carbon ootprint.

Continued ocus on energy

management and implementation

o a wide spectrum o energy

ecient projects.

PPC is an active member o a

number o industry and business

technical and lobby groupsregarding CO

2targets and

potential legislation.

The potential

implementation o a

carbon tax will have

nancial implications or

the cement and lime

industry.

PPC also actively participates in

industry/government consultative

processes to ensure decision

makers have a clear perspective

on:

easible CO2

reduction targets

how these should be

implemented

implications o any proposedCO

2tax

As part o the 2012 budget speech,

national treasury released a price

guideline or carbon tax that could

impact PPCs bottom line.

PPC is actively engaging to mitigate

the potential impact through climate

change committees.


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18 PPC Ltd

OUR STRATEGY

Strategic priorities Status

Focus on core business

Remain ocused on core business manuacture and supply o cement, lime and aggregate

products in our current operating areas.

Expand geographic ootprint

Exploit growth opportunities in other emerging markets that will enhance shareholder value by

diversiying the geographic ootprint o the groups income.

Generate sustainable cash fow returns

Ensure cash fow returns that allow or sustainable investment in current and new markets. Achieve global competitiveness

Ensure operating eciencies, overhead costs and environmental perormance are in line with

regional and international benchmarks.

Develop globally competitive people

People are a key sustainable competitive advantage and PPC will continually prioritise the

development o its people.

Practise sound corporate, social and environmental governance

We are committed to applying best practices in corporate governance and caring or the

communities and environment in which we operate.

Achieving

In progress

Our strategic priorities

Our aim is to grow into a leading emerging-market

business, starting in sub-Saharan Arica. As we expand

into the rest o Arica, it is crucial that we do not lose

ocus on the companys perormance and image in its

historical markets. As such, two key strategies support our

vision:

Enhance our industry-leadership position in southern

Arica

Expand our operational ootprint into other parts o

sub-Saharan Arica

Enhance our industry-leadership position in

southern Arica

Internally we reer to this as keeping the home res

burning. The successul execution o this strategy

requires that we improve our sales, marketing, customerocus and overall value oering while retaining our ocus

on operational and logistical eciencies and good

corporate governance. Renewing or upgrading

equipment, especially relating to environment or

eciency, is also an integral part o the business. Acquiring

businesses with a good strategic t complements this leg

o our strategy.

Expand our operational ootprint into other parts

o sub-Saharan Arica

In this strategy, internally reerred to as our rest o

Arica strategy, we have set ourselves an initial target to

grow the revenue earned outside o South Arica rom the

current 20% to over 40%.

We will target countries with high potential or

inrastructure development, low per-capita cement

consumption and experiencing current cement shortages.

We will avoid areas, especially on the east coast, which

are susceptible to imports. As sub-Saharan Arica is a

sizeable terrain, we have a plan to tackle this strategy in

stages as shown on the next page.


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About this report

Cement

20111

million

tonnes

GDP

growth2

%

Cement

20163

million

tonnes

Current operating areas 13 3,6 164

Current ocus areas 20 4,1 305

Future ocus areas 32 7,0 625

Total 65 5,4 108

1. PPC research, Cemnet

2. Real GDP growth 2011 2016 IMF, PPC calculations

3. PPC estimates

4. Cement growth = 1 x GDP

5. Cement growth = 2 x GDP

Expanding our operational ootprint into other pa rts o sub-Saharan Arica

Tunisia

LibyaEgypt

Eritrea

Djibouti

Somalia

UgandaRwandaBurundi

MadagascarZimbabwe

MozambiqueBotswanaNamibia

Angola

DRC

ZambiaMalawi

Tanzania

South

Sudan

Ethiopia

Kenya

Congo

E Guinea

CameroonCentral AR

Nigeria

NigerMaliMauritania

Senegal

Gambia Guinea Burkina Faso

LiberiaGhanaSierra Leone

AlgeriaMorocco

Western

Sahara

Chad Sudan

Swaziland

Lesotho

South Arica


24/160

20 PPC Ltd

Case study

PPC Womens Forum

developing potential is key to our growth

empowered todeliver

Empowerment or our uture

As part o Womens Day celebrations,

PPC hosted its rst annual Womens

Forum

conerence in August 2012 under the

theme First me, then we, then the

world.

8


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Commentary

Keynote speakers at the conerence included DrMamphela Ramphele, ounder o Citizens Movement orSocial Change and chairperson o the IndustrialDevelopment Corporation, Monhla Hlahla. Each presentershared a wealth o knowledge and expertise in theirrespective felds with topics ranging rom sel-leadershipto sel-awareness and fnancial wellness.

The aim o PPCs Womens Forum is to provide a platormor women in the workplace to voice issues that directlyaect them, share ideas, inspire and learn. Supported bythe PPC board o directors and championed by the chiefnancial ofcer, Tryphosa Ramano, the orum waslaunched in 2011 and is currently being piloted at thegroups head ofce in Sandton.

As part o PPCs business strategy, the orum aims to be achange agent in PPC in attracting, nurturing andadvancing emale talent to eectively lead the companyand encourage creativity and innovation. The career pathor women at PPC has expanded and, over the last

decade, the company has recorded a 67% increase in itsemale sta ratio and ourold increase o women in

management roles. At present, PPC employs over400 women and aims to achieve a 26% emaledemographic by 2016.

The dierence between a good company and a greatone is its people. At PPC, we recognise the importance oattracting the best in the country to maintain our positionas the leading cement manuacturer in southern Arica.We believe that by providing the opportunities, resourcesand means, we enrich our emale sta and assist them inreaching their ull potential.


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22 PPC Ltd

CHAIRMANS REPORT

Team PPC must be congratulated or achievements in a

number o areas this past year, including a strong

operating perormance and the nalisation o important

strategic issues.

PerormanceThe group increased normalised earnings by 11% and

remains nancially sound with a healthy balance sheet,

strong cash generation and sucient capacity or

expansion. During the year the board declared total

dividends o 146 cents per share (2011: 130 cents),

translating to a dividend cover o 1,26 times, well within

our stated dividend policy.

PPCs revenue growth was achieved despite volumes

coming under pressure in most divisions. The exceptionwas in Zimbabwe, which showed strong sales volume

growth or the ourth successive year. Revenue rom

countries outside South Arica rose to 21%, mainly on

signicant improvements in Zimbabwe.

Economic environmentDuring 2012, the South Arican economy struggled to

gain momentum, with reduced growth in the third quarter

o the calendar year. A urther slowdown is expected in

the ourth quarter due to a combination o a slowing

global economy as well as labour disruptions in the mining

and adjacent industries.

The South Arican construction industry continues to wait

in readiness or our governments announced R845 billion

inrastructure programme. The national ratio o gross

xed capital ormation to gross domestic product is

currently at some 19%, whereas it should be above 25%

to begin addressing some o our socio-economic and

inrastructure backlogs.

The residential building market remains under pressure,

largely due to the ratio o household debt to disposable

income which is still elevated at levels above 70%. This

high level o indebtedness has meant that despite theSouth Arican Reserve Banks eorts to lower interest

rates to record lows, extension o new mortgage loans

remains subdued.

We are closely watching developments in the unsecured

lending market, as evidence suggests that around one

quarter o all loans extended to date are being used or

building and renovations. The growth o these loans is

likely to be unsustainable.

The company is also concerned about the violent labour

unrest that has gripped our nation. A lasting resolutionmust be ound where labour, government and the private

sector can enjoy mutually benecial relations.

11

Team PPCs achievements and

strong operating perormance in

challenging markets refect thegroup-wide commitment to

realising strategic goals.

Revenue fromoutside South Africa

rose to

21%

Bheki Sibiya | Chairman

2


27/160


Commentary

Given the rather subdued outlook or the South Arican

economy in the short to medium term, we remain excited

about prospects elsewhere in sub-Saharan Arica.

Most countries, including Ethiopia where we have

made our investment into Habesha Cement Company,

continue to record strong economic growth rates. PPC is

well placed to assist these countries to achieve their

inrastructural development ambitions.

BoardSeveral new appointments and changes in responsibility

were made to the board and its committees during

the year.

Mr Jerry Vilakazis three-year term as a representative o

the PPC consortium o strategic black partners ended on1 March 2012. Mr Vilakazi made a valuable contribution

to the board and company during his term.

Mr Sydney Mhlarhi was appointed as a non-executive

director, representing the PPC consortium o strategic

black partners on 1 March 2012. Mr Mhlarhi is a chartered

accountant with over 14 years experience in investment

banking. He was also appointed as a member o the deal

committee and remuneration committee o the board.

Ms Bridgette Modise, who was appointed to the board

and audit committee in December 2010, was appointedto the risk and compliance committee rom 1 March

2012. Her 15 years auditing experience has urther

strengthened this committee.

Corporate governanceTo elevate the boards corporate governance structures to

be in line with global best practice, PPC appointed Phuti

Semenya as chie audit executive in May 2012. Phuti is a

chartered accountant with extensive experience in

external, internal and orensic auditing.

The leniency agreement between PPC and the Competition

Commission concluded during 2009 remains intact andwe continue to cooperate ully with the commission.

TransormationI am pleased to announce that PPCs second-phase broad-

based black economic empowerment transaction o

R1,1 billion was approved, ensuring that the company

meets the Mineral and Petroleum Resources Development

Acts requirements and acilitating conversion o our old-

order mining rights to new-order mining rights. Two-

thirds o the shares were allocated to employees o PPCs

South Arican businesses, ensuring that our sta are well

aligned with shareholders.

This transaction has also given the company the

opportunity to align its corporate structure with our rest

o Arica strategy, allowing or increased eciencies and

improved risk management. In the year ahead we will

create a separate South Arican entity as well as separate

international operating entities. We also used this

opportunity to rename the holding company rom Pretoria

Portland Cement Company Limited to PPC Ltd. We believe

PPC is a strong brand in our country as well as across the

Arican continent and that the name change will allow us

to urther harness the power o this admirable brand.

PPC has received an indigenisation certicate or

its operations in Zimbabwe. The certicate acknowledges

our compliance with both the spirit and letter o

the Zimbabwean Indigenisation and Economic

Empowerment Act.

ProspectsWe continue to anticipate an investment-led economic

growth path or South Arica, propelled by governments

planned inrastructure programme. Stabilisation o the

euro-zone nations is also critical to boost local economic

growth, given the strong trade linkages that exist.

Our trading environment will remain tough and

competitive, however, PPCs strategies in the home

territories and the rest o Arica position this ormidable

business well or the uture.

It is a great pleasure to introduce Ketso Gordhan as theincoming chie executive ocer o PPC Ltd. Ketso joined

us on 1 November 2012 as CEO designate and will take

over as CEO rom 1 January 2013. I am condent he

will guide PPC to even greater heights as we continue on

our ambitious journey to become a leading emerging-

market business.

I also extend my sincerest thanks to retiring CEO Paul

Stuiver, who has headed PPC since May 2009 and took

over at a challenging time; steering the organisation

through the Competition Commission investigation and

during tough, recessionary economic conditions. Paul

hands over a strong, well-capitalised PPC on which Ketsocan build to realise the companys vision.

I would like to extend my sincere gratitude to my ellow

board members as well as Team PPC or their combined

eorts and commitment during this nancial year. I also

express my appreciation to our customers, shareholders

and other stakeholders or their continued support.

Bheki Sibiya

Chairman

12 November 2012

1


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24 PPC Ltd

CHIEF EXECUTIVE OFFICERS REPORT

A challenging but rewarding year

Despite another year in a tough economic environment,

Team PPC delivered good results through improvedrevenue and operating eciencies. We also addressed a

number o key strategic issues during the year.

The key strategic issues include CEO succession,

conversion o our South Arican mineral rights and our

rst new investment into sub-Saharan Arica. Post year

end, we announced that we had achieved an indigenisation

certicate or our operations in Zimbabwe. These three

issues were highlighted as some o the most signicant

risks acing the company in last years report.

To ocus on the underlying operational perormance o

the company, one has to exclude the accounting treatment

o the black economic empowerment (BEE) transaction

concluded toward the end o the nancial year, hence my

reerence to normalised earnings below.

The highlight o our 2012 results was the good operating

perormance by the cement and lime divisions. This

translated into group revenue increasing by 8% to

R7,35 billion, improvements in EBITDA and operating

margins with EBITDA rising by 8% to R2,33 billion,

normalised earnings increasing by 11% and overall

dividends or the year growing by 12%.

This was achieved in an environment characterised by

overcapacity, competitive pricing and rising energy costs

and should assure shareholders that PPC has reacted

appropriately to market dynamics and the prevailing

economic circumstances.

Our South Arican operations, which accounted or 79%o group revenue, were also impacted by labour unrest in

the mining industry and a nationwide strike in the

transport industry in the nal quarter o our nancial year.

Although the PPC operations themselves did not

experience any recent labour unrest or strikes, they did

suer the knock-on eects o these disruptions. We

estimate this reduced our overall earnings perormance

or the year by some 2%.

In Botswana, our cement and aggregate operations were

aected by a slowdown in construction activity, mainly

as a result o reduced government spending on

inrastructure projects.

2/10

11

The highlight o our 2012 results was

the good operating perormance.

This translated into group revenueincreasing by 8% to R7,35 billion,

EBITDA rising by 8% to R2,33 billion,

normalised earnings increasing

by 11%.

Dividends forthe year

increased

12%

Paul Stuiver | Chie executive oicer


29/160


Commentary

On a more positive note, we again enjoyed strong growth

in cement demand in Zimbabwe and or our lime products

in Zambia and Democratic Republic o Congo (DRC).

Progress on key objectives

Last year I highlighted a number o objectives or 2012,

including our strategies to keep the home res burning in

southern Arica and to expand into the rest o Arica.

With regard to our home res, we completed the

acquisition and integration o Quarries o Botswana and

announced our acquisition o Pronto Holdings, a

prominent ready-mix and fy ash supplier in central South

Arica during the year.

The PPC team must be congratulated or their eciency

improvements and cost containment that resulted in

production costs or cement in South Arica rising by only

3%. This was despite a 22% increase in electricity prices

that now make up around 10% o our total costs. Similar

improvements were achieved in the lime division.

Key cost component increases

or cement manuacturing

in South Arica

%

movement

Salaries (R) +4%

Depreciation (R) +5%

Coal (R/t) -2%

Electricity (R/t) +22%

Maintenance (R/t) -3%

Packaging (R/t) +1%

Other (R/t) +5%

Some key drivers in cost containment were improved rail

services rom Transnet which allowed us to produce more

rom our most ecient actory, Dwaalboom, the reduction

in employee numbers during 2011 and reconguring our

Port Elizabeth actory into a single-product acility.

We continued with many customer-ocused initiatives

including urther product enhancements and customised

solutions targeted at specic market segments. These

contributed to PPC retaining its premium quality/price

position and achieving an average 5% selling price

10

increase in the very competitive South Arican cement

market. Selling price increases in Zimbabwe were also in

line with local infation.

The rst phase o our Western Cape modernisation, a

R280 million upgrade at the De Hoek actory, was

completed within budget and has exceeded our

expectations since being recommissioned in July 2012.

We did not start the second phase o our Western Cape

modernisation, the replacement o two ageing cement

kilns at our Riebeeck actory, as environmental

authorisation or this phase was only received towards the

end o our nancial year. The environmental authorisation

includes some new requirements that will be incorporated

into a redesign to be completed during 2013.

I am particularly pleased that the additional ocus and

awareness generated by our PPC Alive! saety campaign

resulted in a 26% reduction o on-duty injuries and in our

injury requency rate improving rom 1,7 to 1,2 lost-time

injuries per million hours worked.

With regard to environmental emissions, the upgrade at

the De Hoek actory has resulted in a lower carbon

ootprint and dust emissions. We also acilitated a project

to erect a 60MW wind arm on one o our properties. As

part o this project, PPC will in uture source some 10% o

its electric power requirements rom renewable energy.

The PPC Womens Forum that was established in 2011

continued to urther our ambition to attract, nurture and

advance emale talent at PPC. Although we still have

room to improve, considerable progress has been made

with the racial and gender prole o PPC employees andthe PPC board.

Finally, and with regard to keeping our home res burning,

it was signicant that the main beneciaries o our second

black economic empowerment transaction were our

South Arican employees who will share in 68% or

R730 million o the total transaction value o R1,1 billion.

Added to our rst BEE transaction in 2008, our employees

now make up a signicant shareholder component by

collectively owning more than 7% o the company.

10

9

12

8


30/160

26 PPC Ltd

Rest o Arica strategy

Sub-Saharan Arica currently consumes some 70 million

tonnes o cement per annum or an average o 90kgcement per person each year. This is below the global

average, even or emerging markets, with Brazil

consuming 300kg per person per annum, South Arica

200kg and India 180kg. Economies in sub-Saharan Arica

are projected to grow over 5% per annum, which implies

that cement demand in the region will grow by as much

as 40 million tonnes per annum during the next ve years.

Although PPC, with a total current capacity o around

8 million tonnes o cement per annum, does not have the

capacity or resources to erect all 40 million tonnes o new

capacity required in sub-Saharan Arica during the next

ve years, it is realistic to target our involvement in projects

totalling 3 to 4 million tonnes during the next ve years. I

achieved, this would result in signicant growth or PPC

and increase revenue generated outside South Arica

rom the current 21% to around 40% o total revenue.

Unortunately we were not successul in our bid or CINAT

in the DRC, highlighted in last years report.

Our 27% investment in Habesha Cement o Ethiopia

announced during the year has the potential to increase

PPCs non-South Arican revenue by around 5% rom

2015. Phase 1 o the Habesha project involves establishing

a new 1,4 million tonne per annum cement actory near

Addis Ababa, which should be completed towards the

end o 2014.

CHIEF EXECUTIVE OFFICERS REPORT continued

The Habesha actory is being built in a way that will allow

a relatively quick doubling o capacity to 2,8 million

tonnes per annum in subsequent years. This would urtherincrease Habeshas contribution to PPCs non-South

Arican revenue. In addition, our involvement with

Habesha will also provide opportunities to increase our

shareholding in the company and to establish aggregate

and ready-mix operations in Ethiopia in due course.

In addition to the Habesha project, we have announced

that we are currently pursuing our other projects in sub-

Saharan Arica. Much o the time-consuming work

involved with understanding regional opportunities and

markets, conrming limestone reserves and identiying

suitable local partners has been completed during the

past two years and, thereore, we are condent we

will make considerable progress on these projects in the

year ahead.

1

Ethiopia and Habesha Cement Company at a glance

Ethiopias population is 85 million with an estimated cement demand o around nine million tons per annum.

Ethiopias GDP is orecast to grow at approximately 7% per annum or the next ve years.

Project has commenced with commissing expected during 2014.

Project cost is $130 million o which one third is equity and the remainder is debt nancing rom Development Bank

o Ethiopia.

PPC has secured a 27% stake with an equity investment o $12 million.

53% o the company is owned by 16 000 local Ethiopians.

Plans are in place to double capacity ater rst line is commissioned.


31/160


Commentary

Outlook

South Arican industry cement sales volumes to June

2012 showed cement demand growing by 6,9%compared to 2011. However, given the impact o labour

unrest in the mining and transport sectors, it is likely that

much lower numbers will be reported or the rest o 2012.

Other local developments and continued weakness in the

global economy suggest that economic growth will

remain subdued into 2013.

We expect cement demand in Zimbabwe to continue

growing and cement demand in Botswana to improve as

that government has now released some projects that will

begin in 2013.

We continue to monitor activities by new entrants to the

South Arican cement market. I their activities progress

according to their own announcements, they will not

impact during our 2013 nancial year. This presents

urther opportunity to enhance our leadership position in

the region.

Finally, we look orward to reporting on signicant

progress with our rest o Arica strategy in 2013, which

will ensure signicant growth over the next our to

ve years.

11,12

Remarks as outgoing CEO

At the time o writing, I have spent six hectic weeks with

incoming CEO Ketso Gordhan visiting most o ouroperations, some o our projects in the rest o Arica and

meeting with most o our major customers and

shareholders. During this time, Ketso has built great

rapport with PPC employees and developed a keen

understanding o our operations and strategic issues.

Ketsos own blend o experience and insights will add

considerably to the PPC team and I am very condent that

he will lead PPC to greater heights.

I thank my PPC colleagues and our many stakeholders,

including customers, suppliers and investors, or their

contributions and support during my time as CEO.

With their continued commitment and support, PPC is

ready or whatever the uture holds.

Paul Stuiver

Chie executive ocer

12 November 2012


32/160

1,2

28 PPC Ltd

CHIEF FINANCIAL OFFICERS REPORT

OverviewTeam PPC delivered a good nancial perormance despiteanother year o tough economic conditions. Headline

earnings o R971 million, beore the impact o the IFRS 2charges on our two BBBEE transactions, were 11% higherthan 2011.

Cash generation remains strong and the group was ableto und its capital requirements, dividend payments andacquisitions almost entirely rom operating cash fows,with limited debt added during the year.

The group successully completed its second BBBEEtransaction, which acilitates conversion o itsmining rights.

RevenuePPCs overall cement volumes declined 3% rom 2011ater lower sales in Botswana and reduced exports, partlyoset by growing demand in Gauteng, Port Elizabethand Zimbabwe.

The impact o the transport strike and heavy rains in thelast quarter aected our South Arican cement salesvolumes, which ended 1% below last years levels whilecement selling prices rose 5% with slightly lower priceincreases realised in Botswana.

In Zimbabwe, improved selling prices and a weakeningrand against the US dollar, together with volumegrowth, enabled revenue to increase by double digits inrand terms.

Following intense competition in our neighbouringcountries, our cement exports into these countries havedeclined rom the previous year. Competition in thesemarkets derives rom both local producers and importsrom Asia.

Revenue rom the rest o Arica increased to 21% o totalrevenue ollowing the double digit growth achieved inZimbabwe partly oset by the lower volumes in Botswana.

Team PPC delivered a good nancial

perormance, despite another year

o tough economic conditions.

Cash earningsper share up

16%

Tryphosa Ramano | Chie inancial oicer

Financial overviewChange

%

2012

Rm

2011

Rm

2010

Rm

Revenue 8 7 346 6 826 6 807

EBITDA* 8 2 327 2 146 2 483

Operating prot* 9 1 866 1 710 2 115

Earnings per share* 11 185 166 213

Total dividend 12 146 130 175EBITDA margin (%)* 31,7 31,4 36,5

Operating margin* 25,4 25,1 31,1

*Before impact of BEE IFRS 2 charges.


33/160

10


Commentary

Cost o sales and operating expensesThe group continues to ocus on cost containment and

operational eciencies, with the combined eort rom

our operational teams restricting cost o sales growth to

only 7% on the back o double-digit increases in certain

input costs.

South Arican cement costs increased by only 3% on a

rand/tonne basis. All major cost component increases

were kept to low to mid single-digit increases, except

electricity, which rose 22% on a rand/tonne basis. Benets

o the restructuring programme nalised in 2011 were

evident with salaries only increasing 4%.

Zimbabwe cost o sales per tonne grew 4% in dollar terms

ollowing high cost increases, with diesel and electricityrising by some 40% and 25% respectively. Production

problems in the beginning o the year resulted in a six-

week interruption which required importing clinker rom

South Arica at higher transport costs.

Lime cost o sales increased by 5% due to real price

increases in power and outbound logistics, partly oset by

savings in coal costs and operational eciencies.

Aggregates cost o sales increased marginally above

volume growth.

Administration and other operating expenses were 9%above 2011 at R671 million (2011: R616 million). The

main drivers or the year-on-year increase were the higher

IFRS 2 charge on the groups long-term incentive schemes

ollowing the 25% appreciation in PPCs share price over

the year and the new oreitable share plan awards made

in the current year (in part, a catch-up or 2011 when no

awards were made), R15 million transaction costs incurred

to implement the second phase o our BBBEE transaction,

combined with increased marketing spend and the ull

costs o running our Mozambique operations which were

in eect or one month in 2011.

In 2011, PPC nalised a voluntary restructuring programme

to reduce overheads. We believe the company has realised

benet rom this programme, and i once-o items rom

2012 are excluded, current-year overheads would be in

line with costs recorded last year.

EBITDAThe group recorded an EBITDA o R2 327 million,8% above 2011, with an EBITDA margin o 31,7%

(2011: 31,4%).

EBITDA or the cement division rose 7% to R2 087 million(2011: R1 942 million) and the EBITDA margin wasmaintained at 33,4%, with Zimbabwe compensating orthe impact o lower volumes in Botswana and exportmarkets. Our lime operations EBITDA increased by 22%to R188 million (2011: R154 million), with the EBITDAmargin strengthening to 22,5% (2011: 19,9%) on goodcost control and a contractual pricing ormula. Followinglower volumes in Botswana, increased pricing pressuresand the costs o integrating the newly acquired quarries inBotswana, our aggregates operations EBITDA was in line

with 2011 at R56 million, but at a reduced margin o18,7% (2011: 20,7%).

Net inance costsNet nance costs were R347 million (2011: R325 million),with the benets o lower interest rates partly oset byreset unding rates on the preerence shares o the BEE 1transaction ater the abolishment o STC rom 1 April2012. Interest o R6 million was capitalised to property,plant and equipment, mainly due to the upgrade o ourkiln 6 at De Hoek.

TaxationThe eective taxation rate or 2012 was 39,7% (2011:

37,6%). The increase can be ascribed to the BEE IFRS 2charges not being tax deductible and increasedwithholding taxes incurred on dividends received romZimbabwe (2012: R31 million; 2011: R7 million), partlyoset by no STC being recorded on the companys interimdividend ater the implementation o dividend tax rom1 April 2012.

Our long-term guidance on an eective group taxationrate is between 32% and 33%. This may changedepending on potential acquisitions and the applicableruling taxation rate in the various jurisdictions.

EarningsEarnings per share, beore BEE IFRS 2 charges, were185 cents (2011: 166 cents), refecting an 11%improvement. Non-South Arican operations contributed30 cents per share (2011: 32 cents per share) or 16% ogroup earnings.

Statement o inancial position and cash lowChange

%

2012

Rm

2011

Rm

2010

Rm

Property, plant and equipment 5 4 483 4 287 4 175

Intangible assets 48 139 94 78

Net working capital 2807

794 636

Net debt 2 3 337 3 286 3 281

Cash generated rom operations 9 2 284 2 102 2 442

Investment in property, plant and equipment 26 609 483 613


34/160

30 PPC Ltd

Non-current assetsDuring the year, the group invested R609 million inproperty, plant and equipment (PPE) with the most

signicant item being the De Hoek kiln 6 upgrade projectat R159 million. Depreciation charges were R439 million(2011: R417 million). With the acquisition o the quarriesin Botswana, R26 million o the purchase considerationwas attributable to PPE. Translation adjustments amountedto R12 million (2011: R81 million) ater the rand weakenedagainst both the US dollar and Botswana pula.

Capital expenditure on property, plant and equipment or2013 is estimated to be between R550 million andR650 million.

Following the acquisition o the quarries in Botswana, andin terms o IFRS 3 Business Combinations, R22 million was

recorded under intangible assets or mining rights andreserves, while R6 million was refected as goodwill. Thegroup invested R31 million (2011: R34 million) on ERPsystems and sotware.

Net working capitalThe groups net working capital at year end wasR807 million (2011: R794 million). Inventory levels haveincreased, with year-on-year growth coming rom lowerSeptember sales resulting in increased raw material andin-process stock, combined with the impact o thedevaluation o the rand against the US dollar andBotswana pula or stock held at our oreign operations.

Accounts receivable were R820 million (2011:R901 million) ater lower sales in September 2012 whichhad three ewer selling days than the prior September,combined with the impact o the transport strike at monthend and declining sales in the latter part o September.

Management continues to ocus on reducingworking capital.

Cash lowThe group continues to generate strong cash fows and itscash conversion ratio remains high at 98% o EBITDA(2011: 98%). Operating cash fows beore working capital

changes were R2 137 million, a 9% improvement on theR2 127 million in 2011.

Net cash fow rom operating activities was 69% higherthan last year at R945 million (2011: R559 million) as aresult o increased operating cash fows and lowerdividend payments, partly oset by increased investmentin working capital.

The company was able to und its normal operating cashfow requirements, capital investments and acquisitions asis evident rom the graph shown below.

Capital structureNet debt at year end was R3 337 million (2011:R3 286 million), translating into a net debt to EBITDA ratioo 1,4 times (2011: 1,5 times), and EBITDA interest cover

o 6,2 times (2011: 5,9 times).

No covenants were breached during the year under review.

Debt remains within the stated target range and thegroup had borrowing acilities o R4 221 million o whichit had used 55% at year end. We continue to exploreopportunities to optimally und the current business anduture acquisitions.

DividendsAter taking capital requirements, the current and orecasttrading position, cash fows and potential acquisitions intoconsideration, a ull-year dividend o 146 cents per share

has been declared, 12% above 2011. The 2012 dividendcover was 1,3 times, which is in line with 2011 andremains within the groups target dividend cover range.

The dividend yield at year end remains healthy at 5,0%(2011: 5,6%).

The total dividend paid during the year was R706 million(2011: R876 million).

The group does not anticipate changing the targeteddividend cover range o 1,2 to 1,5 times cover.

CHIEF FINANCIAL OFFICERS REPORT continued

Cash ow

Operatingcash ows

Workingcapital

Stated capital FSP scheme

Subsidiariesand associates

Net nancecosts

Taxationpaid

Net capexspend

Dividendspaid

2 500

2 000

1 500

1 000

500

0

R2 317m (R33m) (R90m)(R210m)

(R216m)

(R417m)

(R638)

(R706)


35/160


Commentary

AcquisitionsThe acquisition o three quarries in Botswana or a total o

R52 million was nalised in October 2011. This makes PPC

the leading supplier o aggregates in the Botswana market

and extends our ootprint throughout the country. Due to

the slowdown in the Botswana economy beore and post

the acquisition o the quarries, this new business posted

an operating loss o R4 million. We remain condent

about the long-term potential o the business.

In June 2012, PPC concluded the rst phase o its

acquisition o Pronto Holdings (Pty) Limited, where 25%

o the equity was purchased or R70 million and unded

rom internal cash generation. A urther 25% o the

equity will be purchased in May 2013 and the remaining

50% in 2014. The total consideration payable or the ull100% should not exceed R400 million. For the period

under review, PPCs share o Prontos earnings was

R7 million.

Further to PPCs strategy o expanding into Arica, the

group concluded a 27% equity investment in Habesha

Cement Share Company in Ethiopia or R102 million.

Habesha is building a US$130 million cement plant with

annual capacity o 1,4 million tonnes and plans to

commission the plant in 2014.

The group is currently pursuing our urther opportunitiesin other Arican countries. These are at dierent stages

o investigation, with one opportunity at nal due-

diligence stage.

BEE transactionThe second phase o the companys BEE transaction,

valued at R1,1 billion, was approved by shareholders in

September and meets the requirements o the mining

charters 2014 equity ownership requirements. This will

result in a urther 6,5% black ownership in the group post

the issue o 39,3 million new PPC shares, which were

listed on JSE Limited on 1 October 2012.

The transaction, which will be acilitated by PPC through

notes ppc case study

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