The directors have pleasure in presenting their report on the annual financial statements of the company and of the group for the year ended 30 September 2007.

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.

A comprehensive review of operations is detailed in the attached annual financial statements.

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 hyperinflationary losses incurred, dividends received have been set-off against the carrying value of the investment.

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 financial statements.

The company did not exercise its authority to buy back shares.

There are no post-balance sheet events that may have an impact on the group’s reported financial position at 30 September 2007.

Details of the beneficial holdings of directors of the company and their families in the ordinary shares of the company are given in note 37 to the group financial statements.

There has been no change in the directors’ interest in share capital since year-end.

The register of members of the company is open for inspection to members and the public, during normal office hours, at the offices of the company’s transfer secretaries, Link Market Services South Africa (Pty) Limited, or at Corpserve (Private) Limited (Zimbabwe).

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.

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 financial 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.

During the year under review, Barloworld Limited unbundled its 71,67% holding in Pretoria Portland Cement Company Limited following a strategic review of their operations. The company does not have an ultimate holding company. Details relating to the shareholders owning more than 5% of the issued share capital of the company appear in “PPC in the stock market” section.

The names and country of registration, as well as the amount of their share capital, percentage holding and interest held by PPC in each of its principal subsidiary companies are set out in Annexure 1. All subsidiary companies share the same financial year-end as PPC.

A special resolution authorising the directors to acquire issued shares in the ordinary share capital of the company was passed at the annual general meeting held on 23 January 2007 and registered on 15 February 2007.

Further special resolutions approving the 10:1 share subdivision of the company’s ordinary share capital and associated alteration to the company’s memorandum of association were passed on 8 June 2007 at a general meeting of shareholders. These special resolutions were registered on 18 June 2007.

The directors in office at the date of this report appear in the Board of Directors.

Details relating to the secretaries to the company, including their business and postal addresses, appear in the administration section.

At the annual general meeting held on 23 January 2007, Messrs O Fenn, JE Gomersall and DG Wilson were re-elected as directors of the company. Mr WAM Clewlow retired having reached retirement age and Messrs AJ Phillips and CB Thomson did not stand for re-election.

Changes to the directorate since the last annual general meeting were:

• Mr DG Wilson resigned as a director with effect from 16 July 2007
• Ms ZJ Kganyago and Ms NB Langa-Royds were appointed as directors with effect from 17 October 2007
• Mr EP Theron resigned as a director with effect from 29 October 2007

In terms of the company’s articles of association, Ms ZJ Kganyago and Ms NB Langa-Royds, having been appointed as directors by the board during the year, are required to retire and Messrs S Abdul Kader, MJ Shaw and J Shibambo are required to retire by rotation at the forthcoming annual general meeting. All retiring directors have offered themselves for election and re-election respectively at that meeting and the nominations committee has recommended their election and re-election respectively.

Deloitte & Touche were re-appointed as auditors to the company at the annual general meeting held on 23 January 2007.