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Broad-based and sustainable Pretoria Portland Cement Company Limited Broad-based Black Economic Empowerment Transaction Presentation to Investors, Analysts.

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Presentation on theme: "Broad-based and sustainable Pretoria Portland Cement Company Limited Broad-based Black Economic Empowerment Transaction Presentation to Investors, Analysts."— Presentation transcript:

1 broad-based and sustainable Pretoria Portland Cement Company Limited Broad-based Black Economic Empowerment Transaction Presentation to Investors, Analysts and Media 28 August 2008

2 2 Ntombi Langa-Royds-MC, Non-Executive Director John Gomersall-PPC, CEO Community Service Groups Phutumile Dumisa-Shalamuka for Penreach Mike du Toit -Disability Empowerment Concerns, CEO Strategic Black Partners Salukazi Dakile-Hlongwane-Nozala, Executive Chairman Peter Malungani-PEU, Executive Chairman Mandla Gantsho-iLima Portland Consortium, CEO Jerry Vilakazi -Capital Edge Cement Consortium, Chairman Introducing the Team

3 broad-based and sustainable 3 3 John Gomersall PPC – Chief Executive Officer

4 4 R2.7bn broad-based black ownership initiative 15.00% shareholding in the increased issued share capital of PPC acquired by black people Major portion allocated to broad-based empowerment groupings through the inclusion of PPC employees and their families, communities, construction and related industry associations, education and community service groups This initiative will directly benefit approximately 3.5m people in South Africa, of which 99.90% are black individuals Total risk equity capital of approximately R65.4m contributed by empowerment parties An issue of new shares of 8.50% of PPC’s increased share capital and a Scheme of Arrangement in terms of Section 311 for 6.65% of PPC’s increased share capital PPC will raise approximately R1.5bn long-term debt to replace existing short-term interest-bearing debt raised to fund its capital expansion projects and working capital requirements Highlights

5 5 PPC’s approach to Transformation Employment Equity/Job Creation Employment Equity/Job Creation Black Equity Participation Develop Black Entrepreneurs Opportunities for black leaders and employees Empower and uplift disadvantaged communities The Poverty Barrier The Skills Barrier The Business Barrier The Opportunity Barrier Equitable Economic Opportunities CSI Skills Development Preferential Procurement Enterprise Development Ownership and Management

6 6 The transaction is structured to embrace the true spirit of broad-based black economic empowerment (BBBEE)  Developed in accordance with Mining Charter and the DTI’s Codes of Good Practice  A holistic part of our transformation strategy which is part of PPC’s DNA  A significant stride towards meeting our BBBEE objectives and conversion of mineral rights This empowerment transaction achieves:  Meaningful and sustainable wealth creation and black empowerment  Minimal dilution and cost to shareholders while strengthening our BEE credentials  Long-term mutual value creation for all stakeholders BBBEE Transaction overview

7 7 Transaction Structure Overview Broad-based stakeholders Total transaction 15.15% - R2.7bn Broad-based Entities 8.15% Strategic Black Partners 7.00% (Including some Broad-based elements)

8 8 Majority of 8.15% to Broad-based Entities  5.2% External stakeholders  2.95% Internal stakeholders 7% to Strategic Black Partners  4 partners in total some including Broad-based elements such as youth and women Transaction Structure Overview Broad-based stakeholders

9 9 Truly broad-based External Trusts and Community Service Groups (CSGs)  Largest allocation to Construction Industry Association Trust  Community Trust and CSGs (Shalamuka & DEC) Internal Trusts  Including staff, management and their families  Small allocation to a trust for 3 Independent Non-Executive Directors R1.46bn allocated to Broad-based stakeholders

10 10 R1.46bn allocated to Broad-based stakeholders Independent Black Non- Executive Directors 0.05% PPC Team Benefit Trust 0.50% PPC Current and Future Team Trust 0.57% PPC Black Managers Trust 1.83% Internal Components (2.95%) Community Service Groups 1.50% PPC Education Trust 1.00% PPC Community Trust 0.70% PPC Construction Industry Association Trust 2.00% External Components (5.20%)

11 11 Detailed structure – slide 39 - in Annexures at back of booklet  Reflects effective % shareholdings Source of shares  6.65% into various Trusts via Section 311 Scheme of Arrangement  8.5% via the issue of new shares Transaction Structure and Overview

12 12 Share price applicable R31.32 (30 day VWAP at 21 August 2008) Funding  Construction Association and PPC Education, Community, Team Benefit and the Black Managers Trusts - financed through a preference share funding structure  General staff and the black non-executive directors will receive a non-refundable contribution from PPC to purchase shares  New PPC shares to be issued to CSG - funded by a credit sale structure - (CSGs contribute nominal R5.4m in equity)  New PPC shares to be issued to SBP consortium - funded by a credit sale structure (SBP’s contribute R60m in equity) Vesting and Lock-in  Shareholdings have various vesting conditions and sale restriction periods Dividends  General Staff and black non-executive directors will receive dividends immediately  Trickle dividend to external trusts, PPC Team Benefit Trust and CSG’s Transaction Structure and Overview

13 13 Dividends / Earnings dilutionary effect  Initial dilution only 5.9% – (new shares issued - 8.5% of increased shares in issue reduced by 2.6% shares bought back held by PPC Treasury)  It is PPC’s intention to buy back shares when appropriate to limit dilution Balance Sheet  PPC will receive approx. R1.5 bn through the CSG PPC and SBP PPC interest bearing loans  PPC intends using these long-term interest bearing loans to replace existing short- term interest bearing borrowings raised to fund capital expansion projects and working capital requirements IFRS2 share-based payment charge  R557.4m equates to 3.24% of market capitalisation of R17.2bn at close of business on 21 August 2008 Transaction Structure and Overview

14 broad-based and sustainable 14 Phutumile Dumisa

15 15 The Shalamuka Foundation is a trust founded in 2006 to act solely as the funding vehicle for the highly regarded Penreach Whole School Development Programme (“Penreach”) Penreach has enjoyed 14 successful years of operation, reaching and imparting skills to over 900 schools and 2200 teachers annually, 4,000+ teachers / 3 million learners reached to date. 90% of the teachers are women and 95% are black rural South Africans. Beneficiaries are identifiable by their registration with the programme Shalamuka is focused on securing long-term sustainability and funding for Penreach The 350,000+ annual learners are mainly in Mpumalanga (rural/ disadvantaged township schools) and Limpopo (Bushbuckridge and Mkhuhlu areas) also in Swaziland Trustees 85% black South Africans and 71% are black women. All trustees are volunteers and do not benefit financially, including; Yvonne Chaka Chaka Mhinga; Leah Gcabashe; Phineas Mojapelo; Paul Harris; Elizabeth Maepa and Ethyl Nyembe Shalamuka has EmpowerDex certification and is compliant with 2007 DTI BEE codes. It enhances CSI/BEE scorecard of investee companies The Shalamuka Foundation 0.75% - R134m

16 16 Founded in 1994 with 40 teachers from 10 schools, Penreach is a non-profit skills development programme supporting qualified and unqualified teachers by providing skills training workshops, support visits to schools by experienced fieldworkers, and tutorial lessons in mathematics and science. The results are seen in improved teacher status and confidence, productivity and discipline, focused results in maths, science and literacy The Penreach mission statement is: “To improve the quality and accessibility of education for teachers and learners in disadvantaged schools” Penreach’s upliftment of local communities via improvement in education has been recognised by numerous awards and is supported by the Department of Education Penreach principles are currently being applied by, Grace College (KZN), Mitchell House Preparatory School (Polokwane), Thandulwazi Teacher Training Programme (Maths and Science), St. Stithians College (Johannesburg) The PPC transaction will enable Shalamuka to roll out their programme in a number of other regions and provinces, and schools outreach programmes, based on the Penreach model Shalamuka – The Penreach Programme

17 broad-based and sustainable 17 Mike du Toit

18 18 DEC – The Disability Empowerment Concerns Trust was established in 1996 by seven major South African NGO’s representing 2 million South Africans with disabilities, of whom at least 85% are black people. DEC investment returns contribute to funding the human rights and development work of:  SA Federation for Mental Health  Deaf Federation of South Africa  Disabled People South Africa  National Council for Persons with Physical Disabilities in SA  South African National Council for the Blind  Epilepsy South Africa  Thabo Mbeki Development Trust for Disabled People DEC was established to engage in business ventures as a Broad-based Black Economic Empowerment shareholder. Disability Empowerment Concerns Trust 0.75% - R134m

19 19 DEC is governed by a Board of Trustees made up of 14 independent trustees - 9 are black people (64%); 4 are black women (28%). 5 of 8 directors of the DEC Investment Holding Company are black people, 4 are black women, and all are people with disabilities. Mandate to develop a sizeable diversified portfolio of investments which will over time yield a sustainable income stream without the need for sale. DEC therefore has a long-term time horizon in evaluating investments DEC seeks that an investment is self funding, but if necessary supplements funding requirements from its own sources. DEC’s unique value proposition has led to our inclusion in the BEE transactions of many major South African companies Disability Empowerment Concerns Trust

20 20 Strategic Black Partners 7% in total – R1.25bn Also including broad-based elements Peu, 1.90% Nozala 1.80% iLima Portland Consortium 1.80% Capital Edge Consortium 1.50%

21 broad-based and sustainable 21 Salukazi Dakile-Hlongwane

22 22 Broad-based women's empowerment group. Established 1996 with 100% black management, 86% Black Shareholding; 34% Broad-based shareholding; 70% Black women owned and indirectly benefitting over 500,000 black women Mission involves economic advancement of women through constructive business partnerships. Develops and supports rural women entrepreneurs through Nozala Trust Long-term investor focused on the resources sector, industrial and consumer services. PPC completed its first BEE transaction with Nozala, (50% stake in Afripack) which was 100% vendor financed by PPC as an enterprise development project in 2004 In addition to broader business associations and relationships in SA, the rest of Africa and globally, Nozala is also able to contribute following:  Sourcing contracts for PPC  Support management in recruitment efforts for suitably qualified black executives  Support effective implementation of PPC’s enterprise development programme  Assist in identifying meaningful and sustainable community projects Nozala 1.8% – R322m

23 broad-based and sustainable 23 Peter Malungani

24 24 Peu is a black owned and black managed company, established in 1996 with a management shareholding of 72%, the balance (28%) is held by two trusts  Intsika Investment Trust and Intsika Enablement Trust which facilitate BBBEE Peter Malungani is the founder and Executive Chairman of Peu. The management team comprises of 7 individuals, with a combination of skills in finance and investment banking Prior to the formation of Peu, Peter was owner of a construction business which has built a long-standing relationship with PPC since 1993 when in partnership we built the first corporate owned shopping centre in Soweto in 1993 Peu holds strategic long term investments predominantly in infrastructure and various sectors Peu’s sector portfolio includes amongst others  DipCivils and Stabilid  Peu previously held 50% of Taylor Woodrow SA, which built the Hector Peterson Memorial complex in Soweto and together with Grinaker, built the Monte Casino complex Peu will add value by assisting PPC with advice on external trusts and enterprise development Peu 1.9% – R340m

25 broad-based and sustainable 25 Mandla Gantsho

26 26 Established to participate in the PPC transaction and expose shareholders to a prime infrastructure development and construction materials investment Key shareholders are:  Controlling shareholders of iLima Group (Pty) Ltd, i.e. Dr Mandla Gantsho, a development finance practitioner, currently working for the African Development Bank (formerly CEO of the DBSA) Dr Lupepe the Group Chief Executive of iLima Group an entrepreneur and founder Simisani Kupe the CEO of ILima Mining and Strategic Investments  iLima Group employees  Other non-iLima Group Black individuals, youth and women iLima Group is a long-term investor focused on infrastructure development, minerals exploration and energy generation and distribution Other significant iLima Group investments are in Group Five Limited, Bombela Concession and Imbumba Aganang Concession (Department of Foreign Affairs Headquarters) iLima Portland Consortium and PPC will both derive synergies from their strategic alignment along a more integrated infrastructure-related demand and materials-related supply chain linkages The iLima Portland Consortium 1.8% – R322m

27 broad-based and sustainable 27 Jerry Vilakazi

28 28 Capital Edge Cement Consortium is a Broad-based group formed in August 2006 primarily for the purpose of the Strategic Black Partnership with PPC. Our vision is to be a strategic partner by playing a leading role in BBBEE through participation in initiatives that have the potential to create employment and skills transfer Diverse - strong women component, youth and shareholder representation in all provinces Consortium is led by Jerry Vilakazi, (CEO of BUSA and entrepreneur) with key management in Dr. Rejoice Simelane, Chama Kamukwamba and Tiisetso Tsukudu Shareholders Capital Edge Cement Consortium consist of the following:  Capital Edge Resources(Jerry Vilakazi, )  Ubuntu-Botho Investment Holdings(Broad-based groups/individuals)  Black Management Forum Investment Co.(Broad-based professionals)  Imbewu Mineral Holdings(Tiisetso Tsukudu)  Baswa Investments (Youth Groupings)(Malose Kekana)  Yard Capital(Leslie Maasdorp)  Abafazi iAfrika Group(Fay Mukaddam) Together with the Black Management Forum (BMF) we are committed to Human Capital development and will further assist PPC in achieving its transformation through access to black skills and talent and proactively identifying new business opportunities in sub- Saharan Africa Capital Edge Cement Consortium 1.5% – R268m

29 broad-based and sustainable 29 John Gomersall PPC – Chief Executive Officer

30 30 Direct Beneficiary Analysis – Excluding Broad-based elements in Strategic Black Partners External Trusts 1.1m CSG’s 2.4m Internal Trusts Based on Stats SA dependency multiplier of 3 – Could touch over 12 million people? 3.5 million direct beneficiaries

31 31 Broad-based BEE and diverse partnership structure Positively impacts 3.5 million people directly Major stride advancing BBBEE in PPC. Future advances to come Transformation in PPC goes beyond just equity ownership Meets the requirements of the Mining Charter and DTI Codes Mutual long-term benefits for key stakeholders – shareholders, employees, communities, SBPs, CSGs Sustainable – lowest possible borrowing cost to participants IFRS2 charge at 3.24% of market capitalisation in line with recent BEE transactions Dilution is minimal Summary and Conclusion

32 32 Thank you – Any Questions?

33 33 broad-based and sustainable Ntombi Langa-Royds PPC – Non Executive Director

34 34 Key dates Circular and notice of general meeting posted to shareholders Thursday, 16 October General & Scheme meeting of shareholders Tuesday, 11 November Court hearing to sanction the Scheme Tuesday, 25 November Effective closing date of transaction on or about Monday, 15 December

35 35 Media are invited to a round table session at the front of the auditorium at 11:30 this morning PPC executives are available for further explanations Break for refreshments/finger lunch in the atrium Thank you once again for attending Closing Proceedings

36 36 Thank you Tel

37 37 broad-based and sustainable ANNEXURES

38 38 Strategic Black Partners CEOBEE CredentialsValue – Add NOZALA (1.8%) R322m Salukazi Dakile-HlongwaneBlack women’s empowerment group est.1996 focused on mining services and construction sectors Will assist PPC with new business, identification of black executive talent, implementation of community/ enterprise development projects Peu (1.9%) R340m Peter MalunganiBlack owned and managed investment company focused on operations in construction Will assist PPC with implementation of external trusts and enterprise development projects iLIMA PORTLAND CONSORTIUM (1.8%) R322m Mandla GantshoExtensive interest in construction, power generation and PPP’s Will assist PPC with International and African continental infrastructural networking and material supply chain linkages CAPITAL EDGE CEMENT CONSORTIUM (1.5%) R268m Jerry VilakaziFormed for PPC BEE transaction, includes women, youth and disabled component. It is a Broad-based consortium Will assist PPC with transformation, new business opportunities in Africa and identification of black executive and management talent Summary Table SBP’s BEE Credentials

39 39 Transaction Structure (based on 30 day VWAP to close of business on 21 August 2008 of R31.32 per PPC share) 0.70% The PPC Team Benefit Trust The PPC Community Trust 15.15% 0.50% The PPC Construction Industry Associations Trust 2.00% The PPC Team Benefit Trust Funding SPV The PPC Black Managers Trust 1.83% The PPC Black Independent Non- Executive Directors Trust The PPC Construction Industry Associations Trust Funding SPV The PPC Community Trust Funding SPV 100% The PPC Education Trust The PPC Education Trust Funding SPV 1.00% 100% Other PPC Shareholders 1.50% 0.75% 7.00% Peu The SBP Funding SPV NozalaCapital EdgeiLima 1.90%1.80%1.50%1.80%0.05% 0.57% The CSG Funding SPV Broad-based Strategic The Current PPC Team Trust and The Future PPC Team Trust DEC 0.75% Shalamuka External trustsInternal trusts Internal trust CSGs SBPs Percentage holdings all reflect effective holding in PPC post increase in shares issued – reduced by shares held by PPC in treasury

40 40 Trusts Effective % of PPC Shares (millions)Value (R million) External Components The PPC Construction Industry Associations Trust2.00%11.425R357.8 The Community Service Groups (Shalamuka & DEC)1.50%8.569R268.4 The PPC Community Trust0.70%4.016R125.8 The PPC Education Trust1.00%5.713R178.9 Internal Trusts The PPC Black Managers Trust1.83%10.470R327.9 The PPC Team Benefit Trust0.50%2.856R89.5 The Current & Future PPC Team Trust0.57%3.225R101.0 Black Independent Non-Executive Directors0.05%0.287R9.0 TOTALS8.15% R Overview of Broad-based components


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