T h i s i s o u r s t o r y o f r e s i l i e n c e i n t h e p u r s u i t o f s h … d i v e r s i f i e d p o r t f o l i o i s pay i n g o f f solid group financial performance

I N T E R I M R E S U LT S F O R T H E H A L F - Y E A R E N D E D 3 0 S E P T E M B E R 2 0 1 7

T h i s i s o u r s t o r y o f r e s i l i e n c e i n t h e p u r s u i t

o f s h a r e h o l d e r v a l u e

2

INTERIM RESULTS FOR THE HALF-YEAR ENDED 30 SEPTEMBER 2017

Our investment case

Operational review

Corporate action

Strategic priorities and executionOutlook

Group results6

CONTENTS

2

I N P U R S U I T O F S H A R E H O L D E R VA L U E

1

6

5

2

3

4

1. Our investment case

4


1.1 OUR INVESTMENT CASE

We l l p o s i t i o n e d t o d e l i ve r l o n g t e r m

s u st a i n a b l e s h a re h o l d e r va l u e

4

Strong quality asset base with ~40% capacity being new

Strong quality leadership and senior management team with combined expertise of more than 100 years

Well developed footprint in Africa with strong presence in southern & East Africa

Market leader in more than 80% of markets we operate in

De-leveraged Balance Sheet

POSITION ● ASSETS ● MANAGEMENT

2. Corporate Action

6


Fairfax Partial Offer and AfriSam Merger

LafargeHolcim (LH) and CRH

On 25 August 2017 the company notified the market of the firm intention letter delivered by Fairfax

Fairfax expressed a firm intention to make a partial offer to acquire shares of between R1 - 2 billion at an offer price of R5.75 per share

The partial offer was conditional upon, amongst other things, the recommendation by the Independent Board of PPC

The Independent Board appointed Investec Bank Limited as its independent expert

The Independent Board yesterday published a SENS announcement confirming that, having completed its process of considering the terms and conditions of the Partial Offer, it has resolved not to recommend its acceptance to Shareholders

The Independent Board has also advised Fairfax that it will not be recommending the Partial Offer, and that PPC will not convene a general meeting of Shareholders for purposes of approving the Proposed Merger with AfriSam

Based on the conditionality of the Fairfax partial offer, this should bring the matter to an end

PPC will keep shareholders informed of any further developments

2.1 CORPORATE ACTION

6

PPC is continuing its engagements with LH and CRH regarding their respective non-binding expressions of interest, in accordance with the Independent Board processes described in the announcement

Shareholders should note that the engagements with LH and CRH may or may not lead to the submission of firm intention letters

3. STRATEGIC PRIORITIES AND EXECUTION

3.1 FOH – FOUR Strategic priorities (Group)

3.2 Progress on key priorities

3.3 Result highlights

O V E R T H E PA S T F I V E M O N T H S W E H AV E R E F O C U S E D O U R TA C T I C S

8


HUMAN CAPITAL

FINANCIAL

OPERATIONS

OPTIMISATION

3.1 FOH – FOUR STRATEGIC PRIORITIES FOR THE NEXT 12 TO 18 MONTHS

FINANCIAL

OPERATIONS

HUMAN CAPITAL

F 1

2

4

1

2

3

4

O

H

1

2

3

4

Optimal capital structure

Liquidity

Financial discipline

BEE III

Southern Africa Cement – R50/tonne improvement to profitability

Rest of Africa Cement – operationalise businesses with key focus on ramp up and route to market (RTM)

Materials – maintain cash generation and entrench value chain

Adopt value based management principles

HR solutions

Talent management

High performing organisation

Organisational culture

3

D E L I V E R S U S T A I N A B L E S H A R E H O L D E R V A L U E

Group

8

9


3.2 KEY PRIORITIES | FOH – FOUR FOR VALUE CREATION

9

Financial

Optimal Capital

Structure

Liquidity


• Optimal mix of long and short-term debt relative to equity

• Compliance to covenants

• Optimising cost of capital (ROIC vs WACC)

• Lengthening and smoothing maturity profile of debt

• DRC debt restructuring to optimise cash requirements

• Managing liquidity and working capital across the Group

• Entrenching standardised models and procedures

• Optimising ERP systems• Managing tax risk• Proactive funding and liquidity

management through governance structures

Operational

BEE III• Implementation of BEE III in line

with MPRDA requirement (top up transaction)

SA Cement

Rest of Africa

Materials

• Up to R50/tonne improvement to profitability• Revenue enhancement• Variable delivered costs

– improve efficiencies• Fixed costs and S&GA - optimise

• Optimise RTM

• Raw material and energy optimisation

• Plant efficiencies

• Improve cash generation

• Entrench the value chain

• Integration of businesses and improve efficiencies

Adopt Value Based

Management

• Align business and operations to create value

• Target is to deliver sustainable returns above cost of capital

Human Capital

HR Solutions

Talent

High Performing

Organization

• Improve systems and resources

• Harmonising policies across Group

• Focus on development of leadership and young talent

• Entrench succession planning

• Recognition of performance

• Focus on the well-being of employees

• Fit for purpose

Organisation Culture

• Leadership to set the tone at the top

• Ensure that the behaviour of employees resonate with the ethos of PPC

10


What we said

What we said

3.2 PROGRESS ON KEY PRIORITIES | WHAT WE HAVE ACHIEVED

10

Financial

Optimal Capital

Structure

Liquidity


• Significant progress made with Group debtfunding package

• Term sheet received and commercial term being evaluated

• Group net debt to EBITDA at 2,1x – balance sheet de-leveraged

• Significant progress with re-structuring of DRC funding, term sheet being evaluated

• Negotiation with EPC contractor progressing well

• Significant progress in lengthening and smoothing maturity profile

• Developed tax risk matrix across Group

• Developed funding and liquidity framework

BEE III• Significant progress on BEE III structure

• On track to announce terms structure before March 2018

Operational

SA Cement

Rest of Africa

Materials

• Alternative fuel initiatives progressing well

• Cost optimisation programme underway to deliver targeted savings of R50/tonne

• Complete integration of Safika Cement into SA Cement

• Energy mix progressing well with Rwanda cost of production down 8%

• Operationalising of businesses progressing well

• Implementing RTM strategies

• Localisation of input cost progressing well

• Rationalisation and integration underway

• Entrench value chain through cement pull through

Adopt Value Based

Management

• Project underway to align the Group

• Measurements and metrics being established

A L I G N I N G O U R H R O P T I M I S A T I O N T O E N S U R E D E L I V E R Y

What we achieved What we achieved

11


Delivered on key priorities

SA revenue marginal decline to R2 893m

EBITDA maintained at R740m

EBITDA margin improved to 25.6% in a challenging environment

RoA revenue up 9% to R1 259m

EBITDA growth of 25% to R422m

EBITDA margin achieved 34%

Contribution to Group EBITDA 35%

3.3 RESULTS HIGHLIGHTS | SIGNIFICANT IMPROVEMENT IN PROFITABILTY AND LIQUIDITY

11

D I V E R S I F I E D P O R T F O L I O I S P A Y I N G O F F

SOLID GROUP FINANCIAL PERFORMANCE IN A

CHALLENGING ENVIRONMENT

STRONG PERFORMANCE FROM REST OF

AFRICA CEMENT

MAINTAINED POSITION AS MARKET LEADER IN SOUTHERN AFRICA

DELIVERING LONG TERM SUSTAINABLE

SHAREHOLDER VALUE

Revenue up1% to R5 188m

EBITDA up 4%at R1 193m

Attributable net profit

+188%

Net debt improved by R1.0bn

Strong cash generation from operations of R1.3bn

EPS +54%to 20c

HEPS +36%to 19c

426

1498

344

2 965.0

453

1639

288

0

1 000

2 000

3 000

Group cement Lime (kt) Aggregates (kt) Readymix ('000 m3)

Volumes

1H18 1H17

3002

Improved profitability

Improved debt and liquidity position

Improved in cash generation

Leveraged target confirmed

+1.2%

-8.6%

-5.8%% +19.4%

4. Group Results

4.1 Income Statement

4.2 Balance Sheet

4.3 Cash Flow Statement

4.4 Options available for DRC

4.5 FOH – FOUR strategic priorities (Group Finance)

R E S I L I E N T P E R F O R M A N C E I N A TO U G H O P E R AT I N G E N V I R O N M E N T

13


13

1.REVENUE

Revenue is up 1% due to volume and price increases in Zimbabwe, volume in Rwanda and price increases in southern Africa cement operations

4.1 INCOME STATEMENT

13

3.OVERHEADS

Adjusted overheads down ~10% if non-recurring costs are excluded. Well controlled with evidence of contribution from PIP program.

RoA contributed to the positive performance and controlled costs

2.COST OF SALESSouth Africa and Zimbabwe variable costs increased by 3 – 5% on a per tonne basis. Rwanda cost of production decreased by 8% due to more efficient energy mix being

used in operations. This despite inflationary increases

4. FINANCE COSTS

In the current period non-recurring liquidity and guarantee facility fees (LAGFA) excluded. The balance sheet was recapitalised with R4bn in September 2016

6.EPS AND HEPSWeighted average number of shares increased from 757m shares in the

prior period to 1 510m

5.TAXATION

Group effective taxation rate of 39%. RSA effective taxation rate of 33.9% (due to non-deductible expenses). Zimbabwe 50% due to prior year tax of US$3m

Six months ended

30 September2017

Rm

Six months ended

30 September2016

Rm % Change

Revenue 5 188 5 156 1%

Cost of sales 3 859 3 838 (1%)

Gross profit 1 329 1 318 1%

Administrative and other operating expenditure 549 577 5%

Operating profit before item listed below: 780 741 5%

Empowerment transactions IFRS 2 charges 17 17

Operating profit 763 724 5%

Foreign exchange loss 1 87

Finance costs 285 509 44%

Investment income 20 6

Profit before equity-accounted earnings 497 134 271%

Earnings from equity accounted investments - -

Impairments - (10)

Profit before taxation 497 124 301%

Taxation 193 66 -192%

Profit for the period 304 58 424%

Attributable to:

Shareholders of PPC Ltd 294 102 188%

Non-controlling interests 10 (44)

EPS 20 13 54%

HEPS 19 14 36%

14


4.1.1 DIVERSIFIED QUALITY PORTFOLIO OF ASSETS

Revenue (Rm) 1H18 1H17 % Change Movement

Southern Africa 2 893 2 946 (2%)

Rest of Africa 1 259 1 152 9%

Rwanda 433 372 16%

DRC - 25

Zimbabwe 820 752 9%

Other 6 3 100%

Materials 1 036 1 058 (2%)

Group Services - - - -

Group 5 188 5 156 1%

14

EBITDA (Rm) 1H18 1H17 % Change Movement

Southern Africa 740 742 0%

Rest of Africa 422 339 25%

Rwanda 168 126 33%

DRC 8 (15) 153%

Zimbabwe 247 230 8%

Other (1) (2)

Materials 108 199 (46%)

Group Services (77) (134) 43%

Group 1 193 1 146 4%

Net interest (Rm) 1H18 1H17 % Change Movement

Southern Africa 123 99 24%


Rwanda 58 73 (21%)

DRC 3 3 0%

Zimbabwe 40 2

Other - - - -

Materials 4 7 (43%)

Group Services 57 325 (82%)

Group 285 509 (44%)

Att. net profit (Rm) 1H18 1H17 % Change Movement

Southern Africa 317 336 (6%)


Rwanda 17 (28) 162%

DRC (11) (47) 77%

Zimbabwe 69 128 (46%)

Other (2) - -

Materials 45 102 (56%)

Group Services (141) (389) 64%

Group 294 102 188%

15


Southern Africa cement

56%RoA cement

24%

Materials20%

Revenue contribution 1H18

4.1.2 REVENUE CONTRIBUTION PER SEGMENT

15

REVENUE

R E S I L I E N T P E R F O R M A N C E I N A T O U G H O P E R A T I N G E N V I R O N M E N T

Southern Africa cement

57%RoA cement22%

Materials21%

Revenue contribution 1H17

Southern Africa cement volumes down 1% - 4% with selling prices up 2%

Rest of Africa cement growth key driver of Group revenue

Rwanda volumes up 32%, with realised pricing marginally down 1% - 2%

Zimbabwe volumes up 28% and 4% price increase in US$

R:$ strengthened by ~9% in the reporting period

Materials division, below last year due to tough market conditions

16


4.1.3 EBITDA CONTRIBUTIONS & MARGINS PER SEGMENT

62.0%

35.4%

9.0%-6.5%

64.7%

29.6%

17.4%

-11.7%

-20.0%

-10.0%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

Southern Africacement

ROA cement Materials Group Services

EBITDA contribution

1H18 1H17

25.6%

33.5%

10.4%

23.0%25.2%

29.5%

18.8%22.2%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

Southern Africacement

ROA cement Materials PPC Group

EBITDA margins

1H18 1H17

16

Growth driven by RoA

SA flat

Cost of sales and overheads well controlled

Operational leverage in RoA business as route to market is embedded

Product mix in Rwanda and Zimbabwe (introduction of bulk and SURECAST respectively)

Rwanda’s cost of production was down 8% due to thermal energy mix

Diversified portfolio paying off

RoA margin within guidance

SA margins improvement despite tough environment

Price increase in South Africa played a significant role

Materials division impacted negatively

EBITDA CONTRIBUTIONS

EBITDA MARGINS

Southern Africa 65%

RoA35%

Geographic contribution 1H18

Southern Africa 70%

RoA30%

Geographic contribution 1H17

R O A I M P R O V E M E N T I N E B I T D A M A R G I N S D U E T O O P E R A T I O N A L L E V E R A G E

17


17

4.1.4 ADJUSTED EBITDA INCREASED BY 12%

17

1146

47 1193

43

25

28 1289

1000

1050

1100

1150

1200

1250

1300

1350

1H17 EBITDA 1H18 EBITDA growth 1H18 EBITDA Forex impact Corporate action Project costs & other Adjusted EBITDA

EBITDA Bridge (Rm)

G O O D P E R F O R M A N C E D E S P I T E T O U G H E N V I R O N M E N T D I V E R S I F I E D P O R T F O L I O P A Y I N G O F F

EBITDA margin 25%

EBITDA margin 23%

EBITDA margin 22%

+ 8.0%+ 4.0%

18


4.1.5 TAX RATE RECONCILIATION

Group effective tax rate 1H18

Group Standard Reporting Rate 28.0%

RSA permanent differences 5.9%

RSA effective tax rate 33.9%

RoA permanent differences 4.9%

Group effective tax rate 38.8%

37.4%

30.7%

45.5%

13.5%

49.6%

28.0% 30.0%

35.0%

20.0%

26.0%

0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

South Africa Rwanda DRC Botswana* Zimbabwe**

Effective tax rate In-country standard rate

18

*Standard rate is a blend between manufacturing 15% and non-manufacturing 22%** Additional US$3m tax paid

Group effective tax rate

• South Africa reconciliation:

• Restructuring, corporate action (capital nature); and

• Excludes Botswana

• RoA reconciliation

• Additional assessments US$3m paid, relates to pre-2012 (Zimbabwe).

Country-by-country effective tax rate

• Rwanda effect of in-country non-deductibles;

• DRC impacted by VAT mark-to-mark revaluation, DRC tax holiday (NB assessed losses carried-forward);

• Botswana in-country adjustments & effect of blended rate of 15% (manufacturing enterprises ) and 22% (non-manufacturing) ; and

• Zimbabwe additional assessments US$3m

* Reconciliation expressed as % of Group Profit Before Tax

19


19

4.2 BALANCE SHEET

19

1. CASH AND CASH EQUIVALENTS

Cash and cash equivalents increased to R1.0bn

Restricted cash of R540m in Zimbabwe

2. GROSS DEBT

Gross debt reduced from R5.7bn to R5.4bn

Significant progress on improving liquidity and maturity profile

.

De-leveraged balance sheet

30 September2017

Rm

31 March2017

Rm

ASSETS

Non-current assets 14 357 14 192

Property, plant and equipment 12 714 12 531

Goodwill 236 237

Other intangible assets 638 677

Equity-accounted investments 271 225

Other non-current assets 312 380

Deferred taxation assets 186 142

Non-current assets held for sale 39 38

Current assets 3 662 3 805

Inventories 1 174 1 163

Trade and other receivables 1 485 1 652

Cash and cash equivalents 1 003 990

Total assets 18 058 18 035

EQUITY AND LIABILITIES

Equity attributable to shareholders of PPC Ltd 8 422 8 051

Non-controlling interests 344 334

Total equity 8 766 8 385

Non-current liabilities 5 277 5 626

Provisions 554 545

Deferred taxation liabilities 1 114 1 073

Long-term borrowings 3 165 3 555

Other non-current liabilities 444 453

Current liabilities 4 015 4 024

Short-term borrowings 2 267 2 181

Trade and other payables 1 748 1 843

Total equity and liabilities 18 058 18 035

20


20

2119

2856

3038

2058

1035

518650

750900

1000 1000

1200

0

500

1000

1500

2000

2500

3000

3500

FY14 FY15 PF MAR16

FY17 1H17 1H18 FY18 FY19 FY20

Capex & PPE (Rm)

Actual capex & PPE Lower range High range

4.2.1 INVESTMENT IN A DIVERSIFIED PORTFOLIO OF QUALITY ASSETS

20

CAPACITY BUILD-UP 2015 – 2018 (MTPA)

P P C H A S I N V E S T E D > $ 7 5 0 M S I N C E 2 0 1 4 I N A Q U A L I T Y A S S E T P O R T F O L I O P E A K C A P E X I N F Y 1 6

-50%

Capex guidance

8,0 0,6 8,6 0,41,0

1,4 11,41,0 12,4

0

2

4

6

8

10

12

14

Capacity in2015

Rwanda Capacity in2016

Zimbabwemill

DRC Ethiopia Capacity in2017

SK9 Capacity in2018

+32.6%+8.8%

Capex guidance (Rm)

FY 1H18 FY18 FY19 FY20

Southern Africa

230 450 - 600 650 - 800 800 - 1000

ROA 288 200 - 400 100 - 200 100 - 200

Rest of Africa capacity increased to 4.4mtpa

21


Countries

Capacity

(mtpa)

Total Assets

Total equity

Rest of Africa (RoA) EBITDA contribution

Se

pt

20

11

Se

pt

20

17

K E Y O P P O R T U N I T Y T O D E L I V E R R E T U R N S A B O V E C O S T O F C A P I TA L

4.2.2 WELL POSITIONED TO DELIVER SUSTAINABLE RETURNS

21

3

8.0

R6.4bn

R0.96bn

17%

Doubled

+33%

~2.8X

~8.8X

~2.1X

6

11.4

R18bn

R8.4bn

35%

Countries

Capacity

(mtpa)

Total Assets

Total equity

Rest of Africa (RoA) EBITDA contribution

6 Years

22


4.2.3 DE-LEVERAGED BALANCE SHEET AND IMPROVED MATURITY PROFILE

Group debt profile (Rm) Current debt maturity profile (Rm)

22

T E R M S H E E T S R E C E I V E D A N D B E I N G R E V I E W E D

0.0

1.0

2.0

3.0

4.0

5.0

2 000

4 000

6 000

8 000

10 000

Mar-16 Jun-16 Mar-17 Jun-17 Sep-16 Sep-17

Gross debt (lhs) Net debt Gross debt/EBITDA (rhs) Net debt/EBITDA

-

500

1 000

1 500

2 000

2 500

FY18 FY19 FY20 FY21 FY22 FY23 FY24 FY25

RSA ROA

Post re-structure debt maturity profile (Rm)

-

500

1 000

1 500

2 000

2 500

FY18 FY19 FY20 FY21 FY22 FY23 FY24 FY25

RSA ROA

Debt EBITDA Ratio

PPC centre 1 746 1 380 1.3

Covenant Group 2 344 1 835 1.3

Group 5 432 2 112 2.6

23


4.2.4 GROUP DEBT PER REGION AND CURRENCY

Gross debt by region 1H18 Gross debt by currency 1H18

23

Gross debt by region FY17 Gross debt by currency FY17

RSA33.8%

RoA66.2%

RSA35.8%

RoA64.2%

I N C R E A S E I N R O A D E B T D U E T O D R C

ZAR33.8%

USD58.6%

RWF7.6%

ZAR35.8%%

USD56.7%

RWF7.6%

24


Cash by country 1H18 Cash by country FY17

4.2.5 CONTRIBUTION TO CASH BALANCE BY COUNTRY

24

Southern Africa16%

DRC 4%

Rwanda 23%

Zimbabwe 56%

Other1%

Other1%

Southern Africa38%

DRC9%

Rwanda18%

Zimbabwe34%

25


25

4.3 CASH FLOW STATEMENT

25

1. OPERATING CASH FLOW

• Increase in operating cash flow before working capital due to good operational performance

• Finance costs paid reduced due to non-recurring LAGFA fees • Positive working capital movement due to favourable movement

in receivables

2. INVESTING ACTIVITIES

• Outflow from investing activities reduced by R518m due to the reduction in capex spend

3. FINANCING ACTIVITIES

• Debt repayment of R323m is mainly Rwanda, DRC and Zimbabwe• Previous year was exceptional as bonds became due and payable as a

result of the S&P downgrade• Cash and equivalents of R1.0bn is due to good operational performance • ~50% of cash is attributable to Zimbabwe

.

Six months ended

30 September2017 (Rm)

Six months ended

30 September2016 (Rm)

Operating cash flows before movements in working capital 1 211 1 145

Working capital movements 59 141

Cash generated from operations 1 270 1 286

Finance costs paid (248) (513)

Investment income received 20 6

Taxation paid (172) (196)

Cash available from operations 870 583

Cash flow from investing activities

Acquisition of additional shares in equity-accounted investment

(40) -

Acquisition of additional shares in subsidiary - (18)

Investments in intangible assets (4) (10)

Investments in property, plant and equipment (518) (1 035)

Movements in other investing activities 13 (4)

Net cash outflow from investing activities (549) (1 067)

Cash flow from financing activities

Net borrowings repaid before repayment of the notes (323) (1 453)

Proceeds from the issuance of shares following rights issue - 3 706

Proceeds from the sale of nil paid letters by consolidated BBBEE entities

- 137

Purchase of PPC Ltd shares in terms of the FSP share incentive scheme

- (74)

Repayment of notes - (1 614)

Net cash (outflow)/inflow from financing activities (323) 702

Net movement in cash and cash equivalents (2) 218

Cash and cash equivalents at the end of the period 1 003 648

26


S I G N I F I C A N T P R O G R E S S R E G A R D I N G D E B T R E S T R U C T U R I N G

DRC DEBT ROA DEBT (ex DRC)ROA DEBT

4.4 OPTIONS AVAILABLE FOR DRC | IMPACT ON BALANCE SHEET

26

REST OF AFRICA DEBT EXCLUDING DRC (RM)

**US$162m

R3.6bn R2.2bn** R1.4bn

• Rest of Africa debt as at March 2017 excluding DRC debt was R1.4bn • DRC debt ~R2.2bn (US$162m) as at September 2017 • ~60% of RoA debt is DRC

UPDATE ON OPTIONS

Negotiation with EPC contractor progressing well1) 18 - 24 month extension of US$24m EPC contract retention fee or2) Conversion of US$24m into equity subject to due diligence

Att. Net profit (Rm) 1H18 1H17

RoA 73 53

DRC (11) (47)

RoA (excluding DRC) 82 100

Negotiation with funders with regard to debt restructuring progressing well

Joint venture with another cement producer currently not actively being pursued

PPC as first sponsor in the DRC: No financial close

Project financing shortfalls to date of US$31.5m have been settled from cash reserves ~US$17m was capital & interest

Restructuring of debt will reduce additional cash requirements in FY18 from US$23 - US$27m to US$10 - US$15m

27


N . B . T H E P U T O P T I O N I S N O T L I N K E D T O T H E O U T S TA N D I N G D E B T I N T H E D R C

Policy Put Option Commercial Put Option

Put Option period started in August 2015 and ends in 2026

The IFC can put its shares in PPC Barnet to PPC Ltd at a Put Price

The Put Price is determined by a pre-determined formula and based on an acceptable return to the IFC based on their initial investment

Liability in PPC Ltd AFS not based on Policy Put Option

Put Option period starts in 2021 and ends in 2026 The IFC can put its shares in the PPC Barnet to PPC Ltd at a

Put Price The Put Price is determined by an Independent Valuer with an

EV/EBITDA methodology used for the valuation The Put Option liability is currently valued at R424m in the PPC

balance sheet under other non-current liabilities

4.4.1 DRC IFC PUT OPTION AGREEMENT

27

PPC entered into a Put Option agreement in relation to an equity investment with the IFC of ~US$11m in August 2015, which comprises 2 parts

Mechanics Mechanics

Trigger Trigger

Contingent on pre-defined breach clauses

Based on behaviour compliance

IFC exiting their investment in PPC Barnet from 2021 They cannot put prior to 2021 This is an exit mechanism for the IFC

28


HUMAN CAPITAL

FINANCIAL

OPERATIONS

OPTIMISATION


FINANCIAL

OPERATIONS

HUMAN CAPITAL

F 1

2

3

1

2

3

O

H

1

2

3

Optimal capital structure – long term gearing target, maturity profile, liquidity

Developing centres of excellence across the Group

Performance culture geared towards shareholder value

Financial disciplines and processes which include:

Entrenching governance structures

Implementing BEE III

Embedding ERP systems across the Group

Entrenching standardised policies and procedures

Financial portfolio optimisation – cost of capital & hurdle rates vs returns, capital allocation priorities, dividend framework

Free cash flow generation

G R O W I N G S U S TA I N A B L E S H A R E H O L D E R VA L U E T H R O U G H E F F E C T I V E A N D E F F I C I E N T F I N A N C I A L S T R AT E G Y

Group Finance

28

5.1 OPERATIONAL REVIEW

O P T I M I S AT I O N O F R T M A N D P L A N T E F F I C I E N C I E S

I M P R O V I N G C O S T R E D U C T I O N A C R O S S O U R O P E R AT I O N S

D E L I V E R O N R O A B U S I N E S S P L A N S

30


NATURAL CAPITAL HUMAN CAPITAL

R300 million spent over last 5 years on environmental upgrades at existing operations

All new plants equipped with the latest design filter technology

Nearly 80% of our operations had no LTI in the period

8 operations have had no LTI in the past 3 years, with in excess of 15 million LTI free hours

7 sites now have more than 1 000 000 LTI free hours

Number of injuries across the Group dropped by 40%

5.1 PERFORMANCE AGAINST KEY SUSTAINABILITY METRICS

D e H o e k , i n r e s p o n s e t o t h e d r o u g h t ,

r e d u c e d w a t e r c o n s u m p t i o n b y 4 0 %

LT I F R r e d u c e d t o 0 . 3 3 a t t h e e n d o f S e p t e m b e r 2 0 1 7 d u e

t o t h e s u c c e s s f u l i m p l e m e n t a t i o n o f t h e S n a k e s & H a z a r d s

PYTHON: DEVELOPING HAZARD

ADDER: HIDDEN HAZARD

COBRA: KNOWN HAZARD

30

5.2 SOUTHERN AFRICA

5.2.1 Price recovery in a difficult trading environment

5.2.2 Operational overview

5.2.3 Imports declined

5.2.4 Supply and demand

5.2.5 Slurry kiln 9

5.2.6 Access to the regional markets

5.2.7 Cost breakdown

5.2.8 Operational efficiencies

5.2.9 FOH – FOUR Outlook (southern Africa)

32


32

85.00

90.00

95.00

100.00

105.00

110.00Ja

n-1

5

Feb

-15

Mar

-15

Ap

r-1

5

May

-15

Jun

-15

Jul-

15

Au

g-15

Sep

-15

Oct

-15

No

v-15

Dec

-15

Jan

-16

Feb

-16

Mar

-16

Ap

r-1

6

May

-16

Jun

-16

Jul-

16

Au

g-16

Sep

-16

Oct

-16

No

v-16

Dec

-16

Jan

-17

Feb

-17

Mar

-17

Ap

r-1

7

May

-17

Jun

-17

Jul-

17

Au

g-17

Sep

-17

ASP indexed from January 2015

Average Selling Price (ASP) Trends

Source: PPC Research

5.2.1 PRICE RECOVERY IN A DIFFICULT TRADING ENVIRONMENT

32

Price increase

Price increase

33


SOUTH AFRICA BOTSWANA

Realised cement pricing up 2% in this period

Price increases in February and August 2017

Cement volumes

PPC volumes declined 1.0% - 4.0% in line with the industry

Inland volumes contracted due to a competitive market and weaker demand

Coastal showed resilience with positive growth

Portfolio effect of PPC’s national footprint

Realised cement pricing up 4.0% in this period

Cement volumes

Down between 4% - 6%

The Botswana economy is slowly recovering from the 2015 diamond trade slowdown

The Economic Stimulus Plan which is supposed to stimulate the non-mining sector of the economy has been slow to get going

Infrastructure spend by Government is expected to accelerate in 2018

5.2.2 OPERATIONAL REVIEW | PRICING BOTTOMED IN SOUTHERN AFRICA

33

P R I C I N G I S A N I M P O R TA N T FA C T O R I N S TA B I L I S I N G M A R K E T S

34


5.2.3 IMPORTS DECLINED BY 28% IN Q2 2017 FROM Q2 2016

Imports in 1st half of 2017 have increased marginally year-on-year

Q2 2017 imports have declined by 28% from 137k tonnes to 98k tonnes quarter on quarter

Western Cape imports declined for the same period

Over the past 12 months the bulk of the imports have been from China

Shipping rates increased and the R/$ exchange rate has strengthened since June 2016

Imports from Pakistan in October 2017 in KwaZulu-Natal

34

Baltic Dry Index and R/$ exchange rate

0

100 000

200 000

300 000

400 000

500 000

Q1-13 Q2-13 Q3-13 Q4-13 Q1-14 Q2-14 Q3-14 Q4-14 Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 Q3-16 Q4-16 Q1-17 Q2-17

Durban PE&EL CPT

660

1350

11.5

12.0

12.5

13.0

13.5

14.0

14.5

15.0

0200400600800

1000120014001600

BDI R/$ (rhs)

14.7

12.8

35


-20.0%

0.0%

20.0%

40.0%

60.0%

80.0%

100.0%

6 000

8 000

10 000

12 000

14 000

16 000

18 000

20 000

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

20

17

20

18

20

19

20

20

20

21

20

22

'00

0 t

on

nes

Annual cementitous supply and demand in South Africa, Botswana, Lesotho & Swaziland

Industry demand Industry demand locally produced Industry Capacity (with SK9) Annual % change in demand

5.2.4 PPC WILL HAVE THE NEWEST KILN COMING ONLINE IN 2018

• SK9 PROVIDES PPC WITH NEWEST TECHNOLOGY IN THE DOMESTIC INDUSTRY

• IN 2020 AN ESTIMATED 3.0MTPA OF INDUSTRY CAPACITY WILL NOT MEET EMISSIONS REGULATIONS

• AFTER 2020 THE INDUSTRY WILL BE RUNNING AT HIGH CAPACITY SUGGESTING ADDITIONAL CAPACITY WILL BE REQUIRED

35

New entrant

New entrant

PPC - Dwaalboom

PPC SK9

36


5.2.5 SLURRY KILN 9 | PROJECT UPDATE

36

S K 9 W I L L E N H A N C E P P C ’ S C O M P E T I T I V E P O S I T I O N T H R O U G H C O S T, T E C H N I C A L A N D E N V I R O N M E N TA L E F F I C I E N C I E S

80%Complete

T H E S K 9 P R OJ E C T, T H E N E W K I L N B E I N G B U I LT I N S O U T H A F R I C A’ S

N O R T H W E S T P R OV I N C E TO I N C R E A S E P R O D U C T I O N C A PA C I T Y

I S 8 0 % C O M P L E T E A N D S C H E D U L E D F O R C O M M I S S I O N I N G I N T H E

F I RS T H A L F O F 2 0 1 8

37


5.2.6 ACCESS TO THE REGIONAL MARKETS

37

P P C H A S T H E M O S T D E S I R A B L E C E M E N T D E L I V E R Y F O O T P R I N T I N S O U T H A F R I C A

• Well positioned for alternative fuel • Favourable proximity to market

WESTERN CAPE 1mtpa *

PPC footprint enables:

• Integrated plants and depots to serve key markets

• Portfol io effect del iver ing prof i tabi l i ty

• Abi l i ty to del iver at lowest cost through optimal sourcing

9

3

3

2

3

1

Botswana

* Grinding plant only

Key

Port Elizabeth

**

Polokwane

Lichtenburg

Cape Town

Saldanha

* Riebeeck

De Hoek

Richards Bay

Port Shepstone

*

East London

Durban

Newcastle

Gaborone

Nelspruit*

* *Johannesburg

1

• SK9 newest technology• Increased optimal sourcing

opportunities, increased competitiveness

SLURRY 2mtpa* 2

• Pioneered six stage pre-heater technology in South Africa

• Modernised plant • Waste product substitution• Increased energy efficiency

DWAALBOOM 2mtpa*3

1

2

3

*cement capacity

PPC

AfriSam

Sephaku

NPC

Mamba

Lafarge

38


Cost breakdown

5.2.7 COST BREAKDOWN

38

23%

22%

11%

11%

8%

8%

5%

8%

4% Distribution

Other*

Salaries

Electricity

Depreciation

MaterialconsumablesMaintenance

Coal

Packaging

OTHER*

Other includes explosives, spares, drill bits, lubricants, vehicle hire and

pallet costs

39


5.2.8 WE CONTINUE TO DRIVE OPERATIONAL EFFICIENCIES

PIP phase I exceeded R650m

Improvements in operational efficiency were mainly due to:

Restructuring the business to meet operational requirements

Multi-skilling and training of employees

Optimising outbound logistics

Improving energy efficiency

Fixed Costs of Production (Real Rm based to 100) Cost of Production per tonne (based to 100)

39

Logistics savings on a R/tonne basis

60

80

100

120

Sep-09 Sep-10 Sep-11 Sep-12 Sep-13 Sep-14 Sep-15 Sep-16 Sep-17

Fixed costs of production (Rm) Rand per ton

0

50

100

150

Sep-09 Sep-10 Sep-11 Sep-12 Sep-13 Sep-14 Sep-15 Sep-16 Sep-17

Rand per ton VCOP Rand per ton VDCOP

Based to 100

0.900.951.001.051.101.151.201.25

FY11 FY12 FY13 FY14 FY15 Oct 15 -Sept 16

Oct 16 -Sept 17

40


HUMAN CAPITAL

FINANCIAL

OPERATIONS

OPTIMISATION

5.2.9 FOH – FOUR STRATEGIC PRIORITIES FOR THE NEXT 12 TO 18 MONTHS

FINANCIAL

OPERATIONS

HUMAN CAPITAL

F 1

2

3

4

1

2

3

O

H

R50/tonne improvement in profitability

Talent management

Organisation culture


Realise SK9 benefits

Supply chain optimisation

Optimise RTM

Alternative fuel and plant efficiency

Safika Cement integration

Structure optimisation

Implement value based management principles

C O S T O P T I M I S AT I O N T O D E L I V E R M A R G I N I M P R O V E M E N T

Southern Africa

1

2

3

4

40

5.3 Rest of Africa

5.3.1 Overview

5.3.2 Rest of Africa key drivers

5.3.3 Progress on key priorities

5.3.4 Rwanda operational review

5.3.5 Zimbabwe operational review

5.3.6 DRC operational review

5.3.7 Ethiopia operational review

5.3.8 FOH – FOUR Outlook (Rest of Africa)

S T R O N G P R E S E N C E I N G R O W I N G U R B A N C E N T R E S O F T H E C O N T I N E N T

42


30% - 35%1.4mtpaZimbabwe

40% - 60% 170 - 255

Annualised capacityutilisation

EBITDAmargin at steady state

Average retail pricing US$/tonne

5.3.1 OVERVIEW OF REST OF AFRICA CEMENT

42

30% - 35%1mtpaDRC Ramp - up 150 - 200

30% - 35%1.4mtpaEthiopia

Ramp - up 80 - 100

30% - 35%0.6mtpa Rwanda 60% - 70% 205 - 235

W E L L P O S I T I O N E D T O G A I N M A R K E T S H A R E I N E M E R G I N G M A R K E T S

43


Real GDP growth % Net FDI % of GDP

5.3.2 REST OF AFRICA KEY DRIVERS

43

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

2014 2015 2016E 2017F 2018F 2019F 2020F

Ethiopia Rwanda DRC Zimbabwe

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

2014 2015 2016 2017F 2018F 2019F 2020F

Ethiopia Rwanda DRC Zimbabwe

REAL GDP

• Strong growth in Ethiopia and Rwanda

• Zimbabwe and DRC recovering

FDI FLOWS

• Strong FDI flows in Ethiopia and Rwanda

• Zimbabwe and DRC stabilising

Source: NKC

44


5.3.3 PROGRESS MADE ON KEY PRIORITIES

1. RTM strategy

• In place to gain market share and grow volumes

• Export strategy developed to gain forex

2. Operational efficiencies

• Identified thermal energy options to be sourced locally and preserve forex

• Implementing business architecture to support growth in volumes

• Identified alternative extender to optimise product mix

1. RTM strategy Entrenching strategy with market share > 20%

2. Operational efficiencies Renegotiating electricity tariff structure Power planning to reduce maximum demand charge Multi-skilling and job rotation to increase productivity Right sizing at all levels

3. Funding Renegotiation of funding agreements progressing well with additional capital

holiday eminent

Zimbabwe Rwanda

1. Liquidity management

• Identified export opportunities to neighbouring countries

• Local sourcing of key input materials in progress

• Packaging material and consumables


• Entrenched RTM strategy in the North of Zimbabwe to support volume growth (>40%)

• Diversifying product mix with SURECAST representing 10% - 15% of volumes, none in the previous year

1. Raw material optimisation

Identified 4 potential deposits to extend limestone reserves from 11.5 to approx. 16 years. Drilling is in progress to quantify

Also identified larger deposits in the eastern DRC , with ongoing engagements


Localising raw material inputs progressing well with, diversified sources for gypsum and coal

Project to localise thermal energy costs, with methane gas, is in progress

44

Ethiopia DRC

D E L I V E R I N G O N O U R P R O M I S E S

45


5.3.4 RWANDA OPERATIONAL REVIEW

0%

20%

40%

60%

80%

100%

Sep-16 Mar-17 Sep-17

45

OPERATIONAL UPDATE Rwanda domestic market share

$0

$50

$100

$150

$200

$250

$300

Mar-16 Sep-16 Mar-17 Sep-17

Spot retail price (US$)

32.5 42.5

Cement volumes increased by ~32% compared to previous year due to:

Successful route to market strategy

Export volumes volume increased by more than 150%

Excellent service delivery

Product consistency and technical support

Launched bulk cement supply to grow volumes in the construction and Concrete Product Manufacturer’s (CPM) sector

Cost of production reduced by 8% due to optimisation of thermal energy mix and improved fixed cost absorption

Retail cement pricing remained fairly stable

EBITDA up by 59% compared to previous year

R T M S T R A T E G I E S P A Y I N G O F FI N C R E A S E D M A R K E T S H A R E D U E T O C O M P E T I T I V E A D V A N T A G E I N D E L I V E R I N G C U S T O M E R S O L U T I O N S

Energy35%

Maintenance5%

Labour & overheads23%

Dep17%

Raw materials & other20%

Cost breakdown

46


5.3.5 ZIMBABWE OPERATIONAL REVIEW

Overall domestic cement volumes increased by 28% compared to previous year due to:

Growth in the North between 30 - 40% following commissioning of Harare milling plant

Enhanced product portfolio following launch of SURECAST in March2017

Excellent service delivery

Product consistency and technical support

Net realised selling price up between 2% - 4% due to Harare plant commissioning

Delivered cost reduced ~15% - 20% following commissioning of Harare mill

EBITDA in USD is up between 15% - 20% compared to the previous year

46

OPERATIONAL UPDATE

52%

54%

56%

58%

60%

62%

64%

Mar 16 Sept 16 Sept 17

Zimbabwe domestic market share

$0

$50

$100

$150

$200

$250

$300



32.5 42.5

Energy15%

Maintenance7%

Labour & overheads

27%Transport

18%

Raw materials &

other19%

Dep14%

Cost breakdown

R T M S T R A T E G I E S P A Y I N G O F FG A I N I N G M A R K E T S H A R E I N K E Y M A R K E T S

47


5.3.6 DRC OPERATIONAL REVIEW

The DRC operation commenced with sales in April 2017

Though ramp is slow, volumes have increased month-on-month

Proven route to market strategy implemented to grow volumes with key focus on:

Building strategic partnerships

Technical support to customers

Enhance service delivery

Excellent product quality

Focus on construction and CPM segments

Alignment of fixed cost to plant ramp up completed

Key focus is for DRC to generate positive cash flow

47

OPERATIONAL UPDATE

0

5 000

10 000

15 000

20 000

25 000

30 000

Apr-17 Jun-17 Sep-17

DRC ramp-up volumes

$ 0

$ 50

$ 100

$ 150

$ 200

$ 250

$ 300

$ 350



32.5 42.5

Energy42%

Maintenance8%

Labour & overheads14%

Dep14%

Other22%

Cost breakdown

G A I N I N G M A R K E T S H A R E I N A C H A L L E N G I N G M A R K E T

48


5.3.7 ETHIOPIA OPERATIONAL REVIEW

Production commenced in June 2017 and presold over 100kt

Delivered 65% of cement order book by end September 2017

Retail selling price reduced end September due to devaluation of Ethiopian BIRR against the USD

The recent unrest in Ethiopia has impacted the cement market in Oromia region

Consequently, delaying completion of Habesha’s plant performance testing

The provisional acceptance certificate (PAC) is still planned FY18

Technical agreement between PPC and Habesha being established to support ongoing operations

Full ramp-up of Habesha will be in 12 - 18 months as compared with normal PPC operations of 24 - 36 months

Included in PPC Group accounts

48

OPERATIONAL UPDATE

0

20 000

40 000

60 000

80 000

100 000

120 000

Jun-17 Jul-17 Sep-17

Ethiopia ramp-up volumes

$ 0

$ 20

$ 40

$ 60

$ 80

$ 100

$ 120

$ 140

$ 160



32.5 42.5

Energy40%

Maintenance6%Transport

12%

Labour & OH10%

Dep6%

Other26%

Cost breakdown

U N L O C K I N G O P P O R T U N I T I E S I N D E V E L O P I N G M A R K E T S

49


HUMAN CAPITAL

FINANCIAL

OPERATIONS

OPTIMISATION


FINANCIAL

OPERATIONS

HUMAN CAPITAL

F 1

2

3

4

1

2

3

O

H

1

2

3

4

Renegotiation of funding agreements

Financial discipline to align to the Group

Skills development and talent management in the local marketEmbed organisational culture inline with Group,incorporating local requirements

Improve liquidity to meet foreign payment obligations

Value based management principles

Operational efficiencies in all markets

Optimise RTM strategy in all markets

Energy mix optimisation in Rwanda, DRC & Ethiopia

Optimise raw materials sourcing (coal, gypsum & packaging)

Structure optimisation across all regions

Rest of Africa

L E V E R A G I N G G R O W I N G A F R I C A N M A R K E T S W I T H L O W E R P E R C A P I T A C E M E N T C O N S U M P T I O N

49

5.4 Materials

5.4.1 Lime, Aggregate & Readymix

5.4.2 FOH FOUR Outlook (Materials)

50

51


Aggregates & Readymix Lime

Pricing

Under pressure due to a competitive market

Reduction in volumes due to

Significant reduction in construction projects in Gauteng

Aggregates exposure to the readymix market

Pricing

At similar levels to the previous period

Volumes declined marginally due to

Lime significantly exposed to the domestic steel industry

Major client shutdowns during the period

Non-extension of milk of lime contract

5.4.1 LIME, AGGREGATES & READYMIX OPERATIONAL REVIEW

51

52


HUMAN CAPITAL

FINANCIAL

OPERATIONS

OPTIMISATION


FINANCIAL

OPERATIONS

HUMAN CAPITAL

F 1

2

3

1

2

3

O

H

1

2

Financial discipline through integration

Skills development and talent management

Organisation culture in line with Group

Value based management principles

Improve operational efficiencies through integration

Structure optimisation

Entrench the value chain through cement pull-through

Focus on cash generation and working capital management

C A P I TA L I S I N G O N O P P O R T U N I T I E S I N Z O N E S O F N AT U R A L A D VA N TA G E G O O D P L AT F O R M F O R C E M E N T VA L U E C H A I N O P P O R T U N I T I E S T O R E P L I C AT E M O D E L I N R O A

Materials

52

6. Outlook

O P T I M I S I N G O U R C A P I TA L I N V E S T M E N T S TO D E L I V E R LO N G T E R M S U S TA I N A B L E

S H A R E H O L D E R VA LU E

54


HUMAN CAPITAL

FINANCIAL

OPERATIONS

OPTIMISATION


1

4

2

3

5

6

Ensure value based management philosophy will create long term sustainable success

Group Finalise debt re-structuring to lengthen and smooth Group maturity profile

Finalise DRC debt restructuring

Implement R50/tonne improvement to profitability (PIP Phase II)

Optimise RTM, raw materials and plant efficiencies in RoA

Grow and develop globally competent teams(fit for purpose)

BEE III implemented

7

54

Questions

Appendix

57


CORPORATE SOCIAL

RESPONSIBILITY

W H AT W E B U I L D W I L L B U I L D U S !

KEY CORPORATE GOVERNANCE PRINCIPLES AND RISK PRINCIPLES

57

I n e xe c u t i n g i t s s t ra t e g y, t h e B o a rd a n d m a n a g e m e n t o f P P C t a ke s i n t o a c c o u n t i t s s o c i a l re s p o n s i b i l i t y

WE SUPPORT SOCIO ECONOMIC DEVELOPMENT

WE ACT WITHIN OUR RISK APPETITE

WE COMPLY WITH THE RULES

WE PLAN FOR SUSTAINABILITY

WE PROMOTE ETHICAL LEADERSHIP

58


INVESTOR CONTACTS

58

Anashrin PillayInvestor Relations

[email protected]

+27 11 386 9000

www.ppc.co.za

mailto:[email protected]

http://www.ppc.co.za/

59


59

This document including, without limitation, those statements concerning the demand outlook, PPC’s expansion projects and its capital resources and expenditure, contain certain forward-looking statements and views. By their nature, forward-looking statements involve risk and uncertainty and although PPC believes that the expectations reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations will prove to be correct. Accordingly, results could differ materially from those set out in the forward-looking statements as a result of, among other factors, changes in economic and market conditions, success of business and operating initiatives, changes in the regulatory environment, other government action and business and operational risk management.

Whilst PPC takes reasonable care to ensure the accuracy of the information presented, PPC accepts no responsibility for any damages, be they consequential, indirect, special or incidental, whether foreseeable or unforeseeable, based on claims arising out of misrepresentation or negligence arising in connection with a forward-looking statement. This document is not intended to contain any profit forecasts or profit estimates, and the information published in this document is unaudited.

DISCLAIMER

59

Documents

T h i s i s o u r s t o r y o f r e s i l i e n c e i n t h e p u r s u i t o f s h … d i v e r s i f i e d p o r t f o l i o i s pay i n g o f f solid group financial performance