broad-based and sustainable
Pretoria Portland Cement Company Limited
Broad-based Black Economic
Empowerment Transaction
Presentation to Investors, Analysts and Media
28 August 2008
Introducing the Team

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
2
broad-based and sustainable
John Gomersall
PPC – Chief Executive Officer
3
3
Highlights

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

4
PPC’s approach to Transformation
Equitable Economic Opportunities
Black Equity Participation
Ownership and
Management
The Opportunity Barrier
Preferential
Procurement
Enterprise
Development
Develop Black Entrepreneurs
The Business Barrier
Opportunities for black
leaders and employees
Skills
Development
The Skills Barrier
Employment
Equity/Job Creation
CSI
Empower and uplift
disadvantaged communities
The Poverty Barrier
5
BBBEE Transaction overview

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
6
Transaction Structure Overview
Broad-based stakeholders
Broad-based Entities
8.15%
Strategic Black
Partners
7.00%
(Including some Broad-based
elements)
Total transaction 15.15% - R2.7bn
7
Transaction Structure Overview
Broad-based stakeholders


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
8
R1.46bn allocated to Broad-based
stakeholders

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
9
R1.46bn allocated to Broad-based
stakeholders
Internal Components (2.95%)
External Components (5.20%)
PPC Black Managers Trust
1.83%
PPC Construction Industry
Association Trust
2.00%
PPC Current and
Future Team Trust
0.57%
PPC Team Benefit Trust
0.50%
Independent Black NonExecutive Directors
0.05%
Community
Service Groups
1.50%
PPC Community Trust
0.70%
PPC Education Trust
1.00%
10
Transaction Structure and Overview

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
11
Transaction Structure and Overview


Share price applicable R31.32 (30 day VWAP at 21 August 2008)
Funding





Vesting and Lock-in


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)
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
12
Transaction Structure and Overview

Dividends / Earnings dilutionary effect



Balance Sheet



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
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 shortterm 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
13
broad-based and sustainable
Phutumile Dumisa
14 14
The Shalamuka Foundation
0.75% - R134m

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
15
Shalamuka –
The Penreach Programme

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
16
broad-based and sustainable
Mike du Toit
17 17
Disability Empowerment Concerns Trust
0.75% - R134m


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.
18
Disability Empowerment Concerns Trust


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
19
Strategic Black Partners
7% in total – R1.25bn
Nozala
1.80%
Capital Edge
Consortium
1.50%
Peu,
1.90%
iLima Portland
Consortium
1.80%
Also including broad-based elements
20
broad-based and sustainable
Salukazi Dakile-Hlongwane
21 21
Nozala
1.8% – R322m

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
22
broad-based and sustainable
Peter Malungani
23 23
Peu
1.9% – R340m






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
24
broad-based and sustainable
Mandla Gantsho
25 25
The iLima Portland Consortium
1.8% – R322m

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
26
broad-based and sustainable
Jerry Vilakazi
27 27
Capital Edge Cement Consortium
1.5% – R268m





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
Ubuntu-Botho Investment Holdings
Black Management Forum Investment Co.
Imbewu Mineral Holdings
Baswa Investments (Youth Groupings)
Yard Capital
Abafazi iAfrika Group
(Jerry Vilakazi, )
(Broad-based groups/individuals)
(Broad-based professionals)
(Tiisetso Tsukudu)
(Malose Kekana)
(Leslie Maasdorp)
(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 subSaharan Africa
28
broad-based and sustainable
John Gomersall
PPC – Chief Executive Officer
29 29
Direct Beneficiary Analysis –
Excluding Broad-based elements in Strategic Black Partners
Internal Trusts
4 000
External
Trusts
1.1m
CSG’s
2.4m
3.5 million direct
beneficiaries
Based on Stats SA dependency multiplier of 3 –
Could touch over 12 million people?
30
Summary and Conclusion

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
31
Thank you – Any Questions?
32
broad-based and sustainable
Ntombi Langa-Royds
PPC – Non Executive Director
33
33
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
34
Closing Proceedings

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
35
Thank you
Tel. 011 386 9000
www.ppc.co.za
36
broad-based and sustainable
ANNEXURES
37
Summary Table SBP’s BEE Credentials
Strategic Black
Partners
CEO
BEE Credentials
Value – Add
NOZALA
(1.8%)
R322m
Salukazi Dakile-Hlongwane
Black 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 Malungani
Black 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 Gantsho
Extensive 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 Vilakazi
Formed 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
38
Transaction Structure (based on 30 day VWAP to
close of business on 21 August 2008 of R31.32 per PPC share)
Broad-based
External trusts
Internal trusts
The PPC Construction
Industry Associations
Trust
The PPC
Community Trust
100%
The PPC
Education Trust
100%
The PPC
Community Trust
Funding SPV
100%
The PPC Construction
Industry Associations
Trust Funding SPV
0.70%
The Current PPC Team Trust and
The Future PPC Team Trust
100%
The PPC
Education Trust
Funding SPV
2.00%
The PPC Black
Managers Trust
The PPC Team
Benefit Trust
The PPC Team
Benefit Trust
Funding SPV
1.00%
Strategic
1.90%
Nozala
Shalamuka
DEC
0.75%
0.75%
The CSG Funding SPV
0.50%
1.83%
0.57%
SBPs
Peu
CSGs
1.50%
Internal trust
iLima
1.80%
1.80%
Capital Edge
The PPC Black Independent NonExecutive Directors Trust
1.50%
0.05%
The SBP Funding SPV
7.00%
15.15%
Percentage holdings all reflect effective holding
in PPC post increase in shares issued –
reduced by shares held by PPC in treasury
Other PPC
Shareholders
39
Overview of Broad-based components
Effective %
of PPC
Shares (millions)
Value (R million)
The PPC Construction Industry Associations Trust
2.00%
11.425
R357.8
The Community Service Groups (Shalamuka & DEC)
1.50%
8.569
R268.4
The PPC Community Trust
0.70%
4.016
R125.8
The PPC Education Trust
1.00%
5.713
R178.9
The PPC Black Managers Trust
1.83%
10.470
R327.9
The PPC Team Benefit Trust
0.50%
2.856
R89.5
The Current & Future PPC Team Trust
0.57%
3.225
R101.0
Black Independent Non-Executive Directors
0.05%
0.287
R9.0
TOTALS
8.15%
46.562
R1 458.3
Trusts
External Components
Internal Trusts
40