for the year ended 30 September 2007
The directors of the company are responsible for the integrity and objectivity of the annual fi nancial statements and other information contained in this annual report, which have been prepared in accordance with International Financial Reporting Standards and in the manner required by the Companies Act, South Africa.
In discharging this responsibility, the group maintains suitable internal control systems designed to provide reasonable assurance that assets are safeguarded and that transactions are executed and recorded in accordance with group policies.
The directors, supported by the audit committee, are satisfi ed that such controls, systems and procedures are in place to minimise the possibility of material loss or misstatement.
The directors believe that the group has adequate resources to continue in operation for the foreseeable future and the fi nancial statements appearing on pages 91 and 92 and 109 to 175 have, therefore, been prepared on a going-concern basis.
The annual fi nancial statements were approved by the board of directors on 29 October 2007 and are signed on its behalf by:
MJ Shaw JE Gomersall
Chairman Chief executive offi cer
29 October 2007 Sandton
TO THE SHAREHOLDERS OF PRETORIA PORTLAND CEMENT COMPANY LIMITED
We have audited the annual fi nancial statements and group annual fi nancial statements of Pretoria Portland Cement Company Limited which comprise the balance sheets at 30 September 2007 and the income statements, the statements of changes in equity, the cash fl ow statements for the year then ended, a summary of signifi cant accounting policies and other explanatory notes, as set out on pages 91 and 92 and 109 to 175.
Directors’ responsibility for the fi nancial statements
The company’s directors are responsible for the preparation and fair presentation of these fi nancial statements in accordance with International Financial Reporting Standards, and in the manner required by the Companies Act of South Africa. This responsibility includes designing, implementing and maintaining internal control relevant to the preparation and fair presentation of fi nancial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.
Auditors’ responsibility
Our responsibility is to express an opinion on these fi nancial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the fi nancial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the fi nancial statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the fi nancial for the year ended 30 September 2007
statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the fi nancial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting principles used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall fi nancial statement presentation.
We believe that the audit evidence we have obtained is suffi cient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the fi nancial statements and group fi nancial statements fairly present, in all material respects, the fi nancial position of the company and the group at 30 September 2007, and of the fi nancial performance and cash fl ows for the year then ended in accordance with International Financial Reporting Standards, and in the manner required by the Companies Act of South Africa.
Deloitte & Touche
Registered Auditors
Per MJ Jarvis
Partner
29 October 2007
Buildings 1 and 2, Deloitte Place, The Woodlands Offi ce Park, Woodlands Drive, Sandton.
National Executive: GG Gelink Chief Executive, AE Swiegers Chief Operating Offi cer, GM Pinnock Audit, DL Kennedy Tax, L Geeringh Consulting, L Bam Strategy, CR Beukman Finance, TJ Brown Clients & Markets, NT Mtoba Chairman of the Board, J Rhynes Deputy Chairman of the Board.
Financial Review The directors have pleasure in presenting their report on the annual
fi nancial statements of the company and of the group for the year ended 30 September 2007.
– BUSINESS ACTIVITIES –
Pretoria Portland Cement Company Limited, its subsidiaries and associates, operate in southern Africa as manufacturers of cementitious and aggregate products, lime and limestone.
The principal activities of the company and its subsidiaries, remain unchanged from the previous year.
– REVIEW OF OPERATIONS –
A comprehensive review of operations is detailed in the attached annual fi nancial statements.
– ACCOUNTING POLICIES –
The results of Portland Holdings Limited have not been consolidated in the group results. Increasingly restrictive practices on foreign currency and pricing, and ongoing shortages of transport and production inputs impact on the ability to exercise effective control and justify the continued non-consolidation of this company’s results. The investment has been accounted for on a fair value investment basis. Due to hyperinfl ationary losses incurred, dividends received have been set-off against the carrying value of the investment.
– SHARE CAPITAL AND PREMIUM –
During the current year, in terms of a special resolution, the share capital of the company was restructured, subdividing each PPC share of R1,00 each into 10 PPC shares of R0,10 each. The effective date of the share subdivision was 16 July 2007.
The authorised share capital following the share subdivision is 600 000 000 ordinary shares of 10 cents each. On 30 September 2007 the issued share capital of the company was 537 612 390 shares of 10 cents each (2006: 53 761 239 and 2005: 53 761 239 shares of R1 each) and the share premium stood at R814 million (2006: R814 million; 2005: R814 million).
Details of shares authorised, issued and unissued at 30 September 2007 are given in note 10 to the group fi nancial statements.
– ACQUISITION BY THE COMPANY OF ISSUED SHARES – The company did not exercise its authority to buy back shares.
– POST-BALANCE SHEET EVENTS –
There are no post-balance sheet events that may have an impact on the group’s reported fi nancial position at 30 September 2007.
– DIRECTORS’ INTEREST IN SHARE CAPITAL –
Details of the benefi cial holdings of directors of the company and their families in the ordinary shares of the company are given in note 37 to the group fi nancial statements.
There has been no change in the directors’ interest in share capital since year-end.
– REGISTER OF MEMBERS –
The register of members of the company is open for inspection to members and the public, during normal offi ce hours, at the offi ces of the company’s transfer secretaries, Link Market Services South Africa (Pty) Limited, or at Corpserve (Private) Limited (Zimbabwe).
– BORROWINGS –
The company’s borrowing powers are unlimited. At 30 September 2007 borrowings and guarantees amounted to R1 442 million (2006: R1 073 million; 2005: R364 million). The borrowing powers of its subsidiary company, Portland Holdings Limited, are limited by its articles of association, to twice the amount of shareholders interest. At 30 September 2007 the level of borrowings did not exceed the limit.
– PROPERTY, PLANT AND EQUIPMENT –
Certain of the company’s properties are the subject of land claims. The company is in the process of discussions with the Land Claims Commissioner and awaiting the outcome of claims referred to the Land Claims Court. The claims are not expected to have an impact on the company’s operations.
At 30 September 2007 the group investment in property, plant and equipment amounted to R2 178 million (2006: R1 414 million; 2005: R1 247 million) details of which are set out in note 1 to the group fi nancial statements. Capital commitments at the year-end amounted to R1 303 million (2006: R1 299 million; 2005: R1 479 million). There has been no change in the nature of the property, plant and equipment or to the policy relating to the use thereof during the year.