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PPC - Pretoria Portland Cement Company Limited - PPC Media Release for SENS and Direct Distribution to Media Pretoria Portland Cement Company Limited (Incorporated in the Republic of South Africa) (Company registration number: 1892/000667/06) JSE code: PPC ISIN: ZAE000096475 PPC Media Release for SENS and Direct Distribution to Media 11 November 2008 Good results for PPC in a challenging year Highlights: - Revenues up 12% to R6,2 billion (2007: R5.6bn) - Strong cash generated from operations up 16% to R2,5 billion (2007: R2.2bn) - Batsweledi expansion project successfully commissioned within budget - Broad-based black economic empowerment transaction completed - Headline earnings per share up 8% to 283 cents (2007: 263cps) - Increased total dividend declared 225 cps (+ 10 %) (2007: 205cps excl. special of 61cps) PPC Financial results Group revenue increased 12% to R6,2 billion whilst operating profit rose 7% to R2,3 billion. All production units ran at full capacity to meet demand. The very high increase in diesel prices caused a substantial increase in cement distribution costs. Coal, electricity and maintenance costs also increased significantly above inflation and future selling price increases will need to achieve cost recovery of all these abnormal inflationary pressures. Headline earnings per share increased by 8% to 283 cents per share, calculated using the weighted number of shares in issue of 529 049 918 shares and also adjusted for treasury shares held in terms of the share buy-back. John Gomersall, CEO said "These are good results in a challenging year. Team PPC worked tirelessly to achieve several milestones in the past year including; the commissioning of the new kiln at Dwaalboom, our 15% BBBEE transaction, record cement production and an improved safety record. Unfortunately input costs such as fuel, coal and electricity escalated alarmingly in the second half of the year." Dwaalboom The Batsweledi capacity expansion at Dwaalboom was commissioned in the last week of September, within budget and achieved warranted output during a 5 day test in the first month of production. This is a remarkable achievement for such a large and complex project. The ramp up to consistent full output will however take some months. Broad-Based Black Economic Empowerment Transaction The company announced details of its empowerment transaction in August 2008. This requires shareholder approval at a general and scheme meeting to be held later this morning. The initiative, in aggregate, will represent 15.29% of PPC`s increased share capital. Share Buy-Back Programme In terms of shareholder authority granted at the previous annual general meeting, a wholly-owned subsidiary of PPC acquired 14.9 million PPC shares between 15 February 2008 and 31 March 2008 at an average price of R39.51 per share, inclusive of transaction costs. A further 5.2 million shares were acquired between 5 September 2008 and 30 September 2008 at an average price of R31.29 per share. Repurchased shares to date amount to R753 million and were funded from surplus cash. This repurchase assists in reducing the dilution effect of new shares to be issued in terms of the BBBEE transaction. Cement Operations Industry regional cement volumes declined slightly for the first time after seven consecutive years of strong growth. This was due mainly to the continued drop in demand from the formal residential sector but in spite of the delays in commencement of many of the above mentioned infrastructure projects, demand from that sector virtually offset the residential market decline. The cement operating margins came under pressure from spiralling energy and administered input price increases, particularly in the last quarter. Increases significantly above PPI inflation continued on diesel, coal and electricity as international energy prices ballooned Gomersall added, "Cement is an energy intensive business. Whilst the current international economic crisis has already impacted on international pricing specifically for fuel and coal, the reduction in local input cost is expected to take some time to flow through. We are seriously considering introducing an energy surcharge on cement to recover these dramatic increases until such time as there is a return to some sort of normality." Safety The company`s Behaviourial-Based Safety initiative has shown further improvement this year with the Lost Time Injury Frequency Rate declining to 1.5 lost time injuries per every million man-hours worked. Additionally. in our Lime operations a new milestone of 3 million injury free hours was achieved in September 2008, a new PPC record. These are proud achievements for PPC. New Chairman Appointed We are pleased to announce this morning that Mr Bheki Sibiya was appointed to the board on 10 November 2008 and as an independent non-executive Chairman with effect from 17 November 2008. Outlook We have examined different scenarios for cement demand in the year ahead, ranging from modest to negative growth and we have action plans in place that we will implement as appropriate. Gomersall commented further; "We expect cement demand for rural and affordable housing to continue as government plans to eliminate the backlog of almost 3 million houses by 2014. Additionally, we will optimise our production units, benefiting from the additional output and lower production cost of the new Dwaalboom kiln 2 and we should therefore be able to supply all regional demand without the need for imports. We will also resume supplying our traditional export markets". The South African government has announced plans for capital investment in excess of R600 billion over the next three years. This will give rise to accelerated investment by public enterprises, and should ensure that the strong demand from infrastructure projects will continue. Gomersall added, "Together with appropriate increased cost recovery, this should enable the company to report a steady performance and continue to report a strong operating cash flow for the year ahead". Ends - For further details on the 2008 year under review please refer to the full results released earlier on SENS or for further enquiries contact: Pretoria Portland Cement Company Limited Contact: John Gomersall Orrie Fenn +27 11 386 9015 +27 11 386 9069 College Hill Contact: Jacques de Bie Nandile Ngubentombi +27 11 447 3030 +27 82 691 5384 Date: 11/11/2008 07:30:03 Supplied by www.sharenet.co.za Produced by the JSE SENS Department. 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