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Structure and Management Systems

PPC has a strong ethos of corporate governance which is an important consideration in its dayto- day operations. The company is incorporated in South Africa under the provisions of the Companies Act, 1973, as amended (the Companies Act). 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 accepts the principles and firm recommendations set out in the Code of Corporate Practices and Conduct in the King Report on Corporate Governance for South Africa (2002) (King II), complies with the additional governance requirements of the JSE Limited and the Public Investment Corporation's (PIC) Principles, Policies and Practical Application regarding corporate governance. In this report, instances of non-compliance are noted and reasons are given.

In terms of non-financial aspects, the company complements these extended reporting requirements by adopting the Global Reporting Initiative's (GRI) sustainability reporting guidelines on economic, environmental and social performance. This company has again been included in JSE Limited's Socially Responsible Investment Index, moving into the best performer category.

PPC's systems of corporate governance are continually evolving in pursuit of best practice and as the needs and expectations of stakeholders develop.

Key achievements
Key achievements during the period in line with best practices and stakeholder expectations include:

  • The appointment of a new Chairman to the PPC board.
  • The appointment of a new CEO for the PPC group.
  • The Dekra audit and excellent rating of corporate governance in the PPC group which has resulted in PPC Lime being awarded a fivestar Dekra rating

Board of directors

The shareholders' meeting is the company's highest decision-making forum. Among other issues, the shareholders' meeting elects the members of the board of directors. The board is responsible for governance and its duties include, among other issues, the appointment and dismissal of the chief executive officer. The board of directors' primary responsibility is to provide effective governance over the company's affairs for the benefit of its shareholders, and for creating sustainable shareholder value through balancing the interests of all constituencies, including its customers, employees, suppliers and local communities. The board is governed by a formal board charter setting out its duties and responsibilities.

The board has formally reserved the following functions for itself:

  • Approval and monitoring the implementation of the strategic plan and the annual business plan, setting objectives and reviewing key risks and performance areas, especially technology and systems, environmental issues and transformation.
  • The appointment of directors.
  • Appointment of the chief executive officer and maintaining a succession plan.
  • Determining overall policies and processes to ensure the integrity of the company's management of risk and internal control.

While retaining overall accountability and subject to matters reserved to itself, the board has delegated to the chief executive officer and other executive directors authority to run the day-today affairs of the company.

Click here to see our Directors

Annual strategic review
In accordance with its annual meeting plan, the board reviewed the company's long-term strategic plans and principal issues it expects the company may face in future during a special board meeting in August 2009.

 




Board committees

Specific responsibilities have been delegated to the committees of the board that have access to independent advice at the group's expense. Audit, risk management and compliance, black economic empowerment and transformation, nominations and remuneration committees assist the company's board in the discharging 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 defined purposes and membership requirements. The performance and effectiveness of the committees were evaluated during the annual evaluation by the board. Chairmen of the board committees are required to attend annual general meetings to answer questions raised by shareholders.

Evaluation of the board and board committee performance
A formal self-evaluation of the board and its committees' performance and effectiveness was carried out during the period under review. This exercise was conducted by individual questionnaires completed by each board and committee member. The group company secretary collated the results of all the questionnaires which were reported to the board in November 2009 and the board concluded that it continues to operate effectively. The exercise has ensured that the board remains effective and relevant to the business objectives of the company.

The performance of individual directors is evaluated by the nominations committee before each occasion when a director comes up for reelection. The performance of the Chairman is evaluated separately by the board.

Special (unscheduled) board meetings were held on 21 May 2009, 10 July 2009 and 5 August 2009. Ms NB Langa-Royds, Messrs J Shibambo and JS Vilakazi could not attend the meeting on 21 May 2009 and Mr AJ Lamprecht could not attend the meeting on 10 July 2009.

Number and selection of board members
At the date of this report, the board comprises five executive and eight non-executive directors. A significant number of changes were made to the board during the year. Mr BL Sibiya was appointed Chairman of the board on 11 November 2008. Messrs MP Malungani and JS Vilakazi were appointed to the board on 27 February 2009, and the new CEO, Mr P Stuiver, on 1 June 2009.

The aim is to have a board that has an appropriate balance of skills and experience to support our strategy and meet present requirements to lead the company effectively. The nominations committee is responsible for overseeing the process for appointing new directors to the board and it reports on its activities on page 47. The selection and nomination of directors takes place according to well-defined procedures and any proposed new appointment of a director is considered by the board as a whole, on the recommendation of the nominations committee.

Succession planning
The nominations committee annually reviews the board's performance, structure, size and composition and makes recommendations to the board on succession, training and replacements.

Director independence
In line with best practice around the globe, more than half the board members are independent non-executive directors. The board considered the issue of independence at its board meeting in November 2009 and concluded that Ms ZJ Kganyago, Ms NB Langa-Royds and Messrs TDA Ross, BL Sibiya, AJ Lamprecht and J Shibambo are independent non-executive directors of PPC as contemplated in sub-paragraph 2.4.3 of the King Code of Corporate Practices and Conduct and paragraph 3.84(f) of the JSE Limited's listings requirements.

Director orientation and continuing education
All new directors receive a comprehensive induction. The induction is the responsibility of the group company secretary and includes a comprehensive information pack, an explanation of their fiduciary duties and responsibilities, meetings with the Chairman and executives of the company to facilitate an understanding of the company's affairs and operations, and director development programmes arranged through the Institute of Directors.

The group company secretary continually facilitates additional training and updates for directors on particular issues such as competition and mining legislation etc.

In certain circumstances it may become necessary for a non-executive director to obtain independent professional advice in order to act in the best interests of the company. Such a director also has unrestricted access to the Chairman, executive directors and group company secretary. Where a non-executive director takes reasonable action and costs are incurred, these are borne by the company.


Retirement from the board and terms of contracts
By convention, executive directors retire from the board at 63 years of age while non-executive directors retire at the next annual general meeting following their 70th birthday.

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 to fill a vacant seat must retire from that office at the next annual general meeting. Directors retiring in this manner may offer themselves for election or re-election, as the case may be, subject to recommendation from the nominations committee.

At the forthcoming annual general meeting, Messrs SG Helepi, MP Malungani, P Stuiver and JS Vilakazi, having been appointed as directors by the board during the year, are required to retire and Mr S Abdul Kader, Ms ZJ Kganyago, Ms NB Langa-Royds and Mr J Shibambo 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 re-election.

There are no contracts of service between any directors and the company or any of its subsidiaries that are terminable at periods of notice exceeding three months and requiring payment of compensation with the exception of fixed‑term contracts with Mr JE Gomersall and Mr P Stuiver. Mr Gomersall's contract was to expire on 31 January 2010, after the annual general meeting and four months after his 63rd birthday. As the company had been unbundled from Barloworld, and was in the middle of a major capital expenditure programme until 2010, it was deemed to be in the company's best interests that the services of the then chief executive officer were secured to lead the company through this important phase. Mr JE Gomersall however exercised his option to take early retirement with six months' notice, and this option was exercised in November 2008 with effect from 30 June 2009.

The company has entered into a three-year fixedterm contract with Mr P Stuiver which may be extended by agreement.

Director compensation
The form and amount of director compensation is determined by the board based on the recommendation of the remuneration committee. The remuneration committee conducts an annual review of director compensation. The executive directors (who are employees of the company) do not receive any additional compensation for their services as directors. Directors who are not employees of the company may not enter into any consulting arrangements with the company without the prior approval of the board and their fees are recommended by the board and fixed by shareholders at the annual general meeting.

The remuneration of executive directors is determined by a disinterested quorum of the board based on the recommendations of the remuneration committee which is also responsible for the annual review and approval of criteria to measure the performance of executive directors in discharging their functions and responsibilities. Refer to the report on page 48.

Chairman and chief executive officer
In line with King ll recommendations and the board charter, the roles and offices of the group CEO and Chairman of the board are strictly separated. While non-executive directors are not involved in the day-to-day operations of the company, they have unfettered access to management.

The group company secretary
The group company secretary is Mr JHDLR Snyman and he provides the board as a whole and directors individually with detailed guidance on discharging their responsibilities. He is a central source of information and advice to the 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 relevant 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 officers of the company must keep him advised of all their dealings in securities of the company.

Insider trading
The Securities Services Act regulates transactions by directors and officers in securities issued by the company and the company has issued a set of guidelines and rules for its directors, officers and employees. When any director or officer 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 details thereof and deliver a detailed written record to the group company secretary within 24 hours.

During the review period, a misunderstanding between the Chairman and a director resulted in delayed disclosure of a director's dealings in securities.

Accounting and reporting
The board places strong emphasis on achieving the highest standards of financial management, accounting and reporting to shareholders.

Audit committee

- TDA Ross (Chairman)
- ZJ Kganyago
- J Shibambo

The committee comprises the following members: TDA Ross (Chairman), ZJ Kganyago and J Shibambo. No changes were made to the committee during the period under review. The audit committee consists of three independent non-executive directors as required by legislation and corporate governance best practice. Its Chairman, Mr TDA Ross, is an independent non-executive.

As stipulated by its terms of reference, the committee assists the board in discharging its duties on safeguarding assets, operation of adequate systems and control processes, and presentation of accurate and balanced financial statements and reports complying with all relevant corporate governance disclosure requirements and accounting standards, including International Financial Reporting Standards.

The audit committee met on:

  • 28 November 2008, to consider internal and external audit plans for the 2009 year. The committee approved these plans and mandated the Chairman to sign the engagement letter for external audit and non-audit services. The committee's terms of reference were also updated;
  • 6 May 2009, to consider reports from internal and external auditors and to review the financial statements for the half-year ended 31 March 2009. The committee was satisfied that the financial statements and interim report were fairly stated and resolved that the Chairman recommend approval by the board on 11 May 2009;
  • 16 October 2009, to consider internal and external audit plans for the 2010 year. The committee approved these plans; and
  • 9 November 2009, to consider reports from internal and external auditors and to review the financial statements for the year ended 30 September 2009. The committee was satisfied that the financial statements and audited preliminary report should be recommended for approval by the board on 10 November 2009. The Deloitte principal engagement partner responsible for the audit was present and the committee held discussions in the absence of management with both internal and external auditors. Similarly, discussions were held with management in the absence of the internal and external auditors.

At the board meeting on 10 November 2009, the audit committee reported on how it has carried out its duties and reports as follows to shareholders:

Audit committee report - 2009

- TDA Ross (Chairman)
- ZJ Kganyago
- J Shibambo

We are pleased to report to you on the audit committee's (the committee) activities in 2009. The committee executes its responsibility in compliance with the Companies Act (the act) and within the mandate given by the PPC board as stipulated in its terms of reference.

Membership and meetings
The committee comprises solely independent non-executive directors as required by legislation. The members are Mr Tim Ross (Chair), Ms Zibusiso Kganyago and Mr Joe Shibambo. In accordance with its annual meeting plan, the committee has held four meetings in 2009 and we confirm that it has discharged its oversight responsibilities within the scope of its mandate.

External audit
The committee reviewed with the external audit firm, which is responsible for expressing an opinion on the conformity of those audited financial statements and related schedules with IFRS and its judgements as to the quality, not just the acceptability, of the company's accounting principles. There is a formal procedure that governs the process whereby the external auditors are considered to provide non-audit services. These services are set out in an engagement letter for and approved by the committee in advance. The committee has satisfied itself through enquiry that the external auditor is independent as defined by the act.

The committee has met with the internal and external audit firms in the absence of management, to discuss the results of their examinations; evaluations of the company's internal control, including internal control over financial reporting, and the overall quality of the company's financial reporting. No matters of concern were raised during those meetings.

The committee has agreed to an audit fee for the 2009 financial year which is disclosed in note 18 to the group financial statements. We are of the view that this fee is appropriate.

In reliance on the reviews and discussions referred to above, the committee has nominated Deloitte & Touche as the external auditors for the 2010 financial year subject to approval at the annual general meeting. Mr Michael John Jarvis (IRBA no 342297) from the noted firm of auditors has been nominated as the designated auditor.

Financial director review
The committee has also reviewed the performance, appropriateness and expertise of the chief financial officer Mr Peter Esterhuysen, and confirms his suitability for appointment as financial director in terms of the JSE listings requirements.

The annual report
In fulfilling its oversight responsibilities, the committee has reviewed and discussed the audited financial statements and the related schedules as reported in the annual report with company management. The committee considers that the report complies with the act and International Financial Reporting Standards and has therefore recommended the annual financial statements for approval by the board. These statements will be open for discussion at the forthcoming annual general meeting.

The board has determined that the audit committee, which has no executive powers, has satisfied its responsibilities for the period under review in compliance with its terms of reference.

Risk management and compliance committee

- J Shibambo (Chairman)
- TDA Ross
- JS Vilakazi

To comply with best practice and following the committee's recommendations, the board has decided that this committee should comprise exclusively non-executive directors. The committee now comprises the following members: J Shibambo (Chairman), TDA Ross and JS Vilakazi (appointed during the year). The following members resigned during the year: RH Dent, O Fenn, JE Gomersall and MJ Shaw. The Chairman of the committee, Mr J Shibambo, is an independent non-executive director.

As stipulated by the committee's terms of reference, the committee assists the board in discharging its duties with respect to recognising all material risks to which the group is exposed and ensuring the requisite risk management culture, practices, policies, resources and systems are in place and functioning effectively, and that controls are in place to provide reasonable assurance that the company is in compliance with those laws and regulations to which it is subject. During 2009, this committee reviewed high-level risk areas and their potential impact on the business. Further details on page 51.

The board has determined that the risk management and compliance committee, which has no executive powers, has satisfied its responsibilities for the period under review in accordance with its terms of reference.

Black economic empowerment (BEE) and transformation committee

- NB Langa-Royds (Chairman)
- J Shibambo,
- AJ Lamprecht
- MP Malungani.

In terms of mining legislation passed in South Africa, including the Minerals and Petroleum Resources Development Act, the broad-based socio-economic charter for the mining industry (the mining charter) was developed. The goal of the charter is to create a non-racial mining industry in South Africa. To assess the progress of mining companies to reach defined socioeconomic goals, a mining scorecard has been developed. As the PPC group has quarrying operations governed by this act, it has to comply with the act even though the group is not a mining company per se and its quarrying operations are a minor part of its overall operations.

The BEE and transformation committee assists the board in adopting a holistic approach to transformation and complying with all relevant legislation and charters in this regard.

The committee had five scheduled meetings during the period under review:

  • 26 February 2009, the dividend flow to BEE trusts was noted and Mr Abdul Kader reported on the implementation and administration of the BEE trusts.
  • 11 May 2009, the members of the allocation committee (the committee proposing participation in the benefits of the BEE trusts) were appointed and funding of the trusts discussed in detail. The PPC BBBEE scorecard as at March 2009 was discussed and an improvement from level 7 to level 4 was noted
  • 11 August 2009, the committee considered the BEE strategic plan and it was decided to progress from a scorecard rating of 4 to a rating of 3. Employment equity targets would be the focus for improvement.
  • 6 November 2009, the committee considered an update on the activities of the BEE trusts and the Ntsika fund and also discussed BEE procurement. The improvement of the BBBEE scorecard from level 4 to level 3 was noted.

The board has determined that the BEE and transformation committee has satisfied its responsibilities for the period under review in compliance with its terms of reference.

Nominations committee

- BL Sibiya (Chairman)
- J Shibambo,
- NB Langa-Royds
- AJ Lamprecht.

During the period under review Mr BL Sibiya was appointed as Chairman of the committee in accordance with the JSE listings requirements.

The nominations 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 taken into account in this process. The committee is responsible for identifying and nominating candidates for the approval of the board as additional directors or to fill any board vacancies when they arise, in terms of a policy detailing the procedures for such appointments and which requires these to be formal and transparent. It also advises the board on succession planning, especially in respect of the Chairman of the board and chief executive officer. During the period under review, the committee met for the following scheduled meetings:

During the period under review, the committee met for the following scheduled meetings:

  • 26 January 2009, progress with appointing a new CEO was discussed.
  • 6 November 2009, the independence of directors was discussed, the report on the board performance noted and director rotation and succession was discussed.

Remuneration committee

- NB Langa-Royds (Chairman),
- J Shibambo and
- JS Vilakazi

This committee is composed entirely of independent non-executive directors. It is mandated, within agreed terms of reference, to deal with remuneration policy in general and to approve the salaries and benefits of executive directors and senior management. The committee also advises on non-executive directors' fees, and fees for those directors who are members of board committees, for onward recommendation to shareholders at the annual general meeting.

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 individuals of high calibre.

Basic guaranteed packages are normally reviewed once a year and take into account external market practices and conditions as well as the achievement of targeted individual performance. Annual salary increases are not guaranteed.

The committee appointed Pricewaterhouse- Coopers to provide advice and recommendations as corporate governance requirements for executive remuneration have become more onerous.

In terms of the company's approved long-term incentive scheme, share appreciation rights were approved by the board on the recommendation of the remuneration committee and granted on 25 September 2009. Exercise is subject for executive directors and certain senior management, to fulfilment of the following performance condition: cumulative headline earnings per ordinary share over the two financial years following the financial year ending September 2009 exceeding 2% real growth per annum. If the performance condition is not met for the two financial years, retesting is subsequently permitted for the third, fourth or fifth financial years, with the rights being forfeited thereafter 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 reconsider reasonably that a changed performance condition would be a fairer measure of performance. 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.

A restricted share scheme is in place with the objective of retaining the services of key employees who are critical to the future of the group. The scheme is a notional scheme in that participants will not be entitled to acquire actual shares in the capital of the company, but the scheme will enable a participant who has been granted restricted share units to receive a future cash amount subject to the conditions of this scheme and calculated with reference to a share in the capital of the company.

The grants are 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 2009 award, with annual grant values set each year in line with market benchmarks for long-term incentives, although the remuneration committee may change certain aspects such as the vesting period, 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/she had continued to be an employee. In the case of retrenchment, or termination of employment due to ill health, disability or any other circumstances which 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 involving restructuring of the company, variations in share capital, capital distributions and similar events, the committee will take such action as it considers 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 that the performance conditions have been substantially met.

The company will periodically recommend to the remuneration committee which employees it intends to incentivise by making grants of share appreciation rights or restricted share units, the quantum of the awards to be made, vesting dates and nature of performance conditions. The committee, after review and due consideration, will recommend such allocations as it deems fit to the board for approval.

The company continues to review the balance between the fixed and variable components of its remuneration with the aim of increasing, subject to company and individual performance, the variable component. The proposed change is motivated by the need to sustain superior performance and increase shareholder value in the long term.

The CEO, Mr P Stuiver, attends committee meetings ex officio. He does not participate in discussions on his own remuneration, which is set by the committee.

In respect of each director, details are given in note 31 to the group annual financial statements on salary, bonus, retirement and medical aid contributions, gains from Barloworld share options exercised or ceded and other benefits. Details of directors' shareholdings are also disclosed.

Non-executive directors are remunerated for their membership of the board of PPC 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.

Shareholders are referred to note 39 on page 148 regarding the share option allocation to some of the non-executive directors in terms of the BBBEE transaction.

During the period under review, the committee met five times for the following scheduled meetings:

  • 26 February 2009, the formulae for the annual gain share and management bonuses were considered and approved, the financial performance targets for 2009 were considered and approved, and the personal objectives of the executives for 2009 noted.
  • 11 May 2009, the annual meeting programme for the committee was considered and approved and the committee discussed
  • remuneration trends and market developments.
  • 11 August 2009, the committee discussed plans to retain key employees and allocations in terms of the long-term incentive plan of the company.
  • 25 September 2009, Mr Stuiver presented the management restructuring plan and implications for remuneration at executive level were considered by the committee, allocations in terms of the long-term incentive plan were approved and amendment of the restricted share scheme rules proposed.
  • 6 November 2009, the committee considered inter alia the report on the CEO's performance and proposed board fees for 2010.

The board has determined that the remuneration committee has satisfied its responsibilities for the period under review in compliance with its terms of reference.

Company results communications
Earnings press release - Earnings press releases will be released on the Stock Exchange News Service (SENS) and posted on the corporate website as soon as possible, prior to the start of any discussions or meetings on the results.

Earnings presentation - Any earnings presentations will be posted on the PPC website at the time of the presentation. There may also be a live broadcast on a South African television business channel and the event will be recorded and subsequently posted on the PPC website. These broadcasts are to assist with fair and timely disclosure to all investors and to act as a record of events.

 

 
Internal audit


The board and the audit committee appointed Ernst & Young to fulfil PPC's internal audit requirements until the end of the calendar year. The use of group-wide audit professionals fosters independence, standardisation of audit procedures and sharing of best practices.

Internal audit activities principally address the following key issues at each of the business units of the company:

  • Appraising systems, procedures and management controls.
  • Assessing the effectiveness of risk management processes.
  • Evaluating the reliability and integrity of management and financial information.
  • Assessing the control over assets and verifying their existence.
  • Reviewing compliance with policies and procedures.
  • Recommending improvements in procedures and systems to enhance efficiencies and prevent fraud.

The internal audit function reports to the audit committee on its findings and has unrestricted access to that committee and its Chairman.

Audit plans are drawn up annually and take account of changing business needs and risk assessments. Cognisance is taken of issues highlighted by the audit committee and management. Follow-up audits are planned in areas where weaknesses are identified. The audit committee approves the internal audit plan.

During the period under review, no major breakdowns in internal controls were identified.






Assessing Risk

PPC is committed to managing its risks and opportunities in the interests of all stakeholders and to ensure that it meets its social, environmental, governance and economic objectives and obligations.

A systematic, multi-tiered risk assessment process supports the company's risk management philosophy. This ensures risks are adequately identified, 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 considered. An enterprise-wide risk management framework is currently being developed.

Risk registers are maintained as part of the risk management process. Where appropriate, internal, external and joint audit protocol auditors adapt their audit procedures to include coverage of these risks in their reviews and compliance audits.

Divisional boards and senior managers carry out detailed annual self-assessments of risk. This process identifies the critical business, operational, financial and compliance exposures facing the company, and the adequacy and effectiveness of control factors are reviewed and updated every six months. The process is facilitated in alternate years by external risk advisers Marsh.

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.

The audit, risk management and compliance committees regularly review the main risks and risk management processes and advise the board accordingly.

 


PPC group main risks
RISK MANAGEMENT RESPONSE
Electricity supply
Electricity supply, quality, reliability and price
-

Reduce electricity consumption where possible through improved efficiencies.

- Maintain relationship with Eskom through co-operation and voluntary load shifting.
Speed of economic recovery
Extent and duration of the South African economic recovery
- Reduce costs by optimising production facilities (kilns and mills).
Competitor actions
Actions by competitors that could erode the company's competitive position and profitability
- Ensure competitive fixed and variable remuneration with emphasis on scarce skills.
- Robust succession planning which includes bench positions, individual development plans and training.
- Extraordinary effort in employee training and development, eg PPC Academy.
- Use specialist consultants for projects and source the best available supplier skills.
Skills
Inadequate depth, numbers and span of skills base (applies to operations and project teams, key suppliers and contractors)
- Ensure competitive fixed and variable remuneration with emphasis on scarce skills.
- Robust succession planning which includes bench
positions, individual development plans and training.
- Extraordinary effort in employee training and
development, eg PPC Academy.
- Use specialist consultants for projects and source the best available supplier skills.
Exposure to regional economies - Flexibility in starting and stopping plant in response to demand.
- Cautiously explore opportunities in other areas of Africa.



Third-party management

No part of the company's business was managed during the year by any third party in which any director had an interest.




Communication

The company subscribes to the principles of objective, honest, timely, balanced, relevant and understandable communication of both its financial and non-financial matters. The focus is on substance, not form, and communication with stakeholders with a legitimate interest in the company's affairs is sensitive and systematic.

The company regularly enters into dialogue with institutional investors with due regard for statutory, regulatory and other directives prohibiting the dissemination of unpublished price-sensitive information by the company and its directors and officers.

In accordance with the Promotion of Access to Information Act, the company has prepared and published the required manual. This is available on the company website and contains all necessary details on requesting information as well as what information is freely available

The board has also approved a disclosure policy on external communications of the financial and operational performance of the company. The policy considers 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 financial media. This policy applies to communication with anyone who would not normally be privy to that information, including suppliers, customers and also employees within the group.


Fines and prosecutions

Following notification of the Commission's investigation in June 2009, PPC immediately appointed external legal advisers to conduct an investigation under the supervision of a board sub-committee consisting entirely of non-executive directors.

PPC's investigation revealed historical marketsharing arrangements with other cement producers in the late 1990s. These were introduced into the organisation under the guise of being autonomous behaviour by a few former employees who knew about the arrangements and who made arrangements to disclose detailed sales information through the Cement and Concrete Institute.

In November 2009, PPC was granted conditional leniency from prosecution under the Competition Act by the Competition Commission. This was in exchange for PPC's complete and truthful disclosure of market sharing arrangements between PPC and its competitors in the late 1990s.

A specific concern of the Commission is this practice of submitting detailed sales information through the Cement and Concrete Institute. PPC will stop this practice immediately and the Commission has indicated it will facilitate a process with relevant stakeholders to determine an appropriate means for publication of industry sales statistics.




Code of ethics

All employees are accountable for adherence to the company's code of ethics, and equal opportunity and anti-discrimination policies published by the company. These provide steps to be taken if an employee feels that the letter or intent of the policies is broken. No retaliation may be taken against an employee who files a complaint.

The integrity of new employees is assessed in the company's selection and promotion procedures.


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: ppc@ethics-line.com
International: +27 31 571 5493

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: reportszw@tip-offs.com

Tip-offs Anonymous is an independent body within Deloitte & Touche which provides an opportunity to anyone wishing to report unethical activities or dishonest behaviour that affects the PPC group. Total anonymity, if desired, is assured.

Each incident reported through the ethics line is fully investigated and the risk and compliance committee and audit committee are appraised of the outcome required to address shortcomings, if any.




   
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