seeing opportunity by yaoyufang

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									           I N T E G R AT E D A N N U A L R E P O R T 2 0 1 1




seeing opportunity
in challenging markets
About this report
This is our first integrated report in terms of the King Report on    The changes in the board and management structures of the
Governance for South Africa (King III). We acknowledge that           group during the year under review have presented us with an
integrated reporting is a journey and that this report is our         opportunity to evaluate our business strategy and its alignment
first step on this journey. Integrated reporting will enable our      to our strategic priorities.
stakeholders to better assess our business, associated risks,
                                                                      This report covers the period from 1 March 2010 to 28 February
operations, governance practices, sustainability and our impact
                                                                      2011 and provides an overview of the operations, financial
on the environment.
                                                                      performance and sustainability of the group. The scope of the
Our integrated reporting objectives are to:                           integrated report includes all operational subsidiaries and joint
•   Deliver quality reporting on the way the group conducts           ventures unless stated otherwise. This report has not been
    its business                                                      independently assured in its entirety, however, our goal is to
•   Align internal reporting processes to best practice               move towards obtaining combined assurance going forward.
    recommendations on integrated reporting
•   Improve the group’s sustainability reporting




contents
    1   About Protech /   2 Performance indicators /      4 Group structure
    5   Operational structure /   6 Board, committees and executive management
    8   Strategy and risk / 10 Chairman’s statement
    14 Chief executive officer’s review / 16 Chief financial officer’s report
    18 Operational review / 19 Contracting / 22 Geotechnical laboratory and survey
    23 Readymix / 26 Governance review / 34 Remuneration report
    40 Sustainability review / 42 Engaging with our stakeholders
    42 Our people / 46 Communities / 47 Environment / 47 Transformation
    49 Value added statement / 50 Shareholder information / 51 Assurance
    51 Directors’ responsibility statement / 52 Group annual financial statements
    99 Company annual financial statements / 114 Corporate information
115 Notice of annual general meeting
119 Form of proxy
about
Protech
Protech is a broad-based civil engineering grouP. We offer bulk
earthWorks, civil Works and services, mining-related infrastructure
develoPment and oPencast mining, ground imProvement solutions
as Well as readymix concrete and concrete PumPing services.
Protech is active in the mining, Private and Public infrastructure sectors
and our customers range from individuals involved in residential
develoPments to national and international construction and mining
firms. our ability to quickly shift our sector focus gives us the agility
to resPond to changing market conditions.
since incePtion in 1989, We have built a strong rePutation based on an
unmatched ability to deliver fast-track contracting solutions. the
comPany listed on the main board of the Jse in august 2007 under
the heavy construction sector. today We emPloy some 1600 PeoPle With
oPerations in south africa, namibia, botsWana, tanzania and sierra leone.
Protech has a level 9 construction industry develoPment board grading
and is rated at level 4 under the dePartment of trade and industry’s
codes of good Practice for broad-based black economic emPoWerment.




                                       SIerra	LeOne




                                                                                        TanZanIa
	8	   	 he	strategy	and	risk	spread	presents	our	strategic	
      T
      objectives	and	our	performance	against	these		
      objectives,	as	well	as	our	major	strategic	risks		
      and	how	we	mitigate	these	risks.                          namIBIa
                                                                            BOTSWana
     T
	6 	 	 he	governance	review	details	Protech’s	governance	
2
      structures	and	processes,	as	well	as	how	we	manage	
      risk	within	the	business.	Our	major	strategic	risks		               SOUTH	aFrICa
      are	set	out	on	page	9.

     I
	0 	 	nformation	on	our	progress	in	transformation	
4
      and	empowerment	is	set	out	in	the	sustainability		
      review.	Our	scorecard	can	be	found	on	page	48,		
      and	information	on	transformation	initiatives	relating	
      to	our	people	on	page	42	and	communities	on	page	46.



                                                                          Protech Integrated Annual Report 2011   1
performance indicators




Financial performance
                                                              2011     2010

Group	summary	(r	million)
Revenue                                                     1	069,7   748,8
Operating income (EBIT)                                        77,1   118,6
Total assets                                                  853,9   727,3
Total borrowings                                              293,6   264,6
Operating cash flow                                           121,4   104,5
Total number of employees at 28 February 2011                 1	623   1 398

Ordinary	share	performance	(cents)
Basic earnings per share                                      10,8      20,9
Headline earnings per share                                   11,8      20,2
Operating cash flow per share                                 33,5      28,8
Net tangible asset value per share at 28 February             81,8      75,8

Financial	statistics
Operating margin                                              7,2%    15,8%
Attributable earnings on shareholders’ funds                 12,2%    27,7%
Interest cover (times)                                          3,1      5,2
Return on average assets                                      5,0%    10,7%

ratios
Net interest bearing debt:equity (%)                         66,0%    57,2%
Days receivable outstanding (days) – excluding retentions        82       73
Current (times)                                                 1,4      1,6




  2
Non-financial performance




                             Training
                             and
                             development




                    Protech Integrated Annual Report 2011   3
group structure

                                                              PrOTeCH	kHUTHeLe	HOLdInGS	LImITed	




COnTraCTInG	                   GeOTeCHnICaL	LaBOraTOry	and	SUrvey	              readymIx	




COnTraCTOr
PrOTeCH	kHUTHeLe	(PTy)	LTd	    SOUTH	aFrICan	rOad	TeSTInG	ServICeS	(PTy)	LTd	   PrOTeCH	readymIx	(PTy)	LTd
PrOTeCH	POWerCOrP	(PTy)	LTd1
BOTSWana
PrOTeCH	BamBOO	rOCk	jv1
TanZanIa	
1	FOreIGn	OPeraTIOnS




PLanT	
PeLa	PLanT	(PTy)	LTd
ImPaCT	COmPaCTIOn	(PTy)	LTd
GrOUnd	ImPrOvemenT	SOLUTIOnS	(PTy)	LTd	




        the grouP exPanded its geograPhic footPrint to
        service contracts outside south africa. locally,
        We continue to look for oPPortunities in line With
        our strategic focus on the mining infrastructure
        sector, and to service existing clients in the Private
        and Public infrastructure sectors.

  4
Operational structure
COnTraCTInG                                 GeOTeCHnICaL	LaBOraTOry	                  readymIx
With access to premium plant and            and	SUrvey                                Manufactures and delivers readymix
equipment including specialist impact       Provides a fully equipped South           concrete and concrete pumping
compaction, the division offers the         African National Accreditation System     services. The division operates six
following contracting services:             (SANAS) accredited laboratory,
                                                                                      readymix batch plants, situated
•   Bulk excavations and earthworks         including mobile onsite laboratories,
                                                                                      strategically throughout Gauteng
•   Roads and civil works                   along with professional survey service
                                                                                      province. Readymix supplies readymix
•   Infrastructure development              using GPS survey and control systems.
                                                                                      concrete to its own customers and to
    and rehabilitation                      This business acts in support of the
                                            contracting division.                     the contracting division.
•   Crushing and screening
•   Impact compaction and
    soil compression
•   Opencast mining
•   Drilling and blasting

The division is the largest in the group,
with access to its own in-house fleet
and logistical support of approximately
350 units.




                                                                                     Protech Integrated Annual Report 2011   5
Board, committees and executive management
BOard	and	COmmITTeeS

    main	board                                                           audit	and	risk	               remuneration	
                                                                         committee                     and	nominations	
                                                                                                       committee


                 mafahle	mareletse (52)
                         Acting chairman
        Independent non-executive director




                          matsotso	vuso (38)
                          Independent non-executive director




                   vincent	raseroka (51)
                   Non-executive director




                          	 ellis	Wolmarans (43)	
                          n
                          Executive director




exeCUTIve	manaGemenT	Team




1                     2                      3                      4                 5                       6



                          	 	 	 ulian	dovey	(38)
                          1 j
                              Acting chief executive officer
                             n
                          2	 	 ellis	Wolmarans	(43)
                             Chief financial officer
                             H
                          3	 	 ardie	Swanepoel	(40)
                             Managing director – Pela Plant and Impact Compaction 	
                             j
                          4	 	 ohn	le	roux	(34)
                             Managing director – Protech Khuthele
                             d
                          5	 	 ieter	rothman	(46)
                             Managing director – Protech Readymix
                             C
                          6	 	 hris	Porter	(52)
                             Commercial director and managing director – Geotechnical laboratory and survey




    6
the grouP’s board and management structures
underWent a number of changes during the year
under revieW, Which are discussed in the chairman’s
statement on Page 10 and detailed under the
governance revieW on Page 26.


                                     Protech Integrated Annual Report 2011   7
strategy and risk
STraTeGIC	OBjeCTIveS	and	PerFOrmanCe
the grouP is able to quickly shift its Primary sector focus to remain agile under changing
markets conditions. the core business of the grouP is bulk earthWorks contracting, a field in
Which We have become sPecialists. strategically We classify our earthWorks contracting target
market into three distinct sectors: Public infrastructure, Private and commercial, and mining.
the grouP business strategy is revieWed and aPProved by the board.


Strategic objectiveS                                                      Performance againSt Strategic objectiveS

    COnTraCTInG
o   Target large bulk earthworks contracts in all three target sectors.   o   In the current economic environment, coupled with a very
                                                                              depressed construction sector, the bulk of contracting
                                                                              activities are currently in the mining sector. We closely
                                                                              monitor activity levels in other sectors.

o   Focus on projects that allow the delivery of value added services.    o   Value added services such as impact compaction and
    Provide solutions-orientated value added services such as:                alternative designs were instrumental in winning contracts.
    u   Fast-tracking and programme acceleration.
    u   Turnkey solutions.
    u   Design and programming.

o   Maximise operating margins through efficiency and value               o   Efficiency levels remain high but margins are under pressure
    added services where possible.                                            due to the weak state of the economy.

o   Maximise efficiency by:
    u Operating a new fleet of premium brand equipment to                     u   Plant utilisation remains at high levels as a result of the
      achieve maximum utilisation and minimal downtime.                           plant policy and stringent fleet management processes.
    u   Employing, developing and retaining a skilled workforce.              u   Staff turnover remains low.
    u   Utilising in-house specialist services.                               u   In-house specialist services such as the geotechnical
                                                                                  laboratory, survey services, impact compaction, drilling and
                                                                                  blasting support and complement the earthmoving activities.

o   Set and maintain high standards in health and safety.                 o   Fatality and Disabling Injury Frequency Rate remains on zero.

o   Expand our geographical footprint.                                    o   The geographical footprint has improved with current
                                                                              contracts in Tanzania, Sierra Leone and Botswana.

    GeOTeCHnICaL	LaBOraTOry	and	SUrvey
o   Develop and maintain a high level of technical expertise.             o   Training programme introduced. SANAS accreditation obtained.

o   Invest in technology to improve service offering to the               o   State-of-the-art survey equipment was procured and is in use.
    contracting business.

    readymIx
o   Improve market share.                                                 o   Market share has grown with volumes increasing by 9%.

o   Focus on growing market share in the commercial, industrial           o   Contribution from commercial and industrial sector has
    and infrastructure sectors.                                               increased significantly over that of the residential sector.

o   Reduce operating costs and increase sales volumes without             o   Operating margins have improved.
    sacrificing margin.

o   Product development to meet requirements and improve                  o   Improved mix designs and a focus on procuring the right
    service offering.                                                         quality of aggregate has improved product quality and
                                                                              reduced costs.



    8
majOr	STraTeGIC	rISkS
the risk and control Procedures of the grouP are develoPed by management and aPProved
by the board of directors. the audit and risk committee is resPonsible for revieWing the risk
management Plan and rePorts PrePared by management. our risk Profile includes any event
or circumstance that could materially imPact the business of the grouP.


 riSk                    context                                          mitigation

Depressed economy        Global recessionary conditions have had a        o   We have the ability to quickly shift sector focus and
                         significant negative impact on the broader           have successfully shifted our focus to the mining
                         construction sector. Consequently earnings           sector, particularly coal, where activity levels have
                         are depressed and margins narrow.                    remained fairly robust.

increasing competition   The lack of public spending on infrastructure    o   We have increased our geographical footprint in Africa.
                         and the dearth of construction activity in the   o   We offer value added services and solutions to
                         private and commercial sector have led to            customers by getting involved in the planning and
                         intense competition. This has driven prices          design phases of a contract as opposed to strictly
                         down and has led to declining operating              focusing on contracting only.
                         margins.

Plant utilisation        Our business is primarily focused on large       o   We operate a fleet of equipment that is new and
                         scale bulk earthworks and as such is very            reliable. Our plant replacement policy ensures that the
                         capital intensive. The investment in plant           oldest units in the fleet are not older than three years.
                         and equipment is significant and in order to
                                                                          o   Maintenance is carefully managed and controlled
                         generate the required returns on investment,
                                                                              to minimise downtime and lost production time.
                         maximum utilisation of plant is essential.
                                                                          o   We hire in a portion of our fleet to maintain a buffer
                                                                              in times when the demand for plant is lower – hired
                                                                              plant can be returned in a short space of time.

non-delivery by          As a specialist fast-track contractor, it is     o   The group forms strategic alliances with suppliers
strategic suppliers      imperative that the suppliers to the group           and continuously interacts with them, thus
                         are highly efficient.                                maintaining the efficiency of the supply chain.

inadequate health        Health and safety policies of a very high        o   The group has stringent policies and procedures
and safety policies      standard are required to ensure the safety           in place, with client audits and regular inspections.
                         of our employees. This is a non-negotiable
                                                                          o   Health and safety incident reports are compiled
                         requirement, particularly for our mining
                                                                              and reviewed on a weekly basis.
                         sector customers.

transformation           A suitable broad-based black economic            o   The group constantly strives to improve its BBBEE
                         empowerment (BBBEE) rating is essential to           status through focused programmes, particularly in
                         secure large contracts. The group is a Level 4       preferential procurement, enterprise development,
                         contributor, as rated by Emex Trust.                 skills development and socioeconomic
                                                                              development projects.




                                                                                           Protech Integrated Annual Report 2011     9
chairman’s
statement




10
Protech’s strategic ability to shift its focus
to sectors that offer the greatest oPPortunity
continued to serve it Well, desPite Persisting difficult
conditions in the global economy and a dePressed
local construction sector. in light of the changing
governance landscaPe in south africa, this year
We have initiated our Journey toWards integrated
rePorting and We Welcome stakeholders’ feedback
on our integrated rePort.




                                       Protech Integrated Annual Report 2011   11
CHaIrman’S	STaTemenT
COnTInUed




eCOnOmIC	PerSPeCTIve                                                    which contributed to the growth in revenue. We are currently
the World economy is shoWing signs of a sloW recovery                   engaged in a number of projects on the continent, primarily in
from the global economic crisis and subsequent                          sub-Saharan Africa.
recession. desPite this recovery, limited as it is to                   Our immediate focus will remain on the resources industry both
certain Pockets of the global economy, a number                         domestically and in the rest of Africa. Our ability to quickly shift
of countries still find themselves in the griP of                       sector focus positions us well to take full advantage of any
maJor financial crisis and fears of a second round
                                                                        upswing in the domestic construction and infrastructure sectors,
of recessionary conditions Persist. the World bank
                                                                        and we will monitor activity in these sectors closely. It is this
has exPressed concern about fiscal sustainability
                                                                        agility of the group to minimise concentration risk by moving out
in high income countries. fiscal deficits and sovereign
                                                                        of markets that are unprofitable into sectors where the greatest
debt in develoPed economies remain high, Which in
                                                                        opportunity exits, which is a key differentiator of Protech’s
turn could negatively imPact the economies of
                                                                        strategy.
develoPing countries and regions.

In Africa, the moderate recovery in industrial activity and the         OUr	PeOPLe
resources industry was not felt in the construction industry,           Protech’s success over the years is directly linked to the efforts
which remained depressed. Earnings in the construction sector           and contributions of our employees, under the leadership of
in South Africa continued to decline and the short-term outlook         a dedicated management team. We continue to build and
remains challenging. The slump in the local residential building        strengthen the skills of our people through various development
market and sharp declines in construction and infrastructure            initiatives. Executive management and our employees’ success
development are impacting hard on the sector, driving competition       in taking the company through challenging times is testament
between construction companies who are turning to industries            to their strength, character and ability.
where activity levels remain appealing – particularly mining – to       We are committed to realising opportunities for our employees
bolster their revenue streams. Many South African construction          through skills development and transformation, which remain
companies are now looking further afield to the rest of Africa,         high on our agenda. The overall wellbeing of our people is critical
and there has been a notable increase in the activity of these          to our business, and to this end, we continue to offer primary
companies on the continent.                                             healthcare services and HIV/Aids education programmes. Our
                                                                        non-negotiable approach to safety manifests itself in our excellent
STraTeGy	and	PerFOrmanCe
                                                                        safety record, and we continuously refine and improve our health
Protech took a strategic decision in the latter half of 2009 to shift   and safety processes.
the focus of its activities to the mining sector, which currently
constitutes the bulk of the group’s contracting activities. Through     GOvernanCe
this strategy we have been able to realise pleasing growth in           Corporate governance has entered a new era in light of changes
revenue; albeit at lower margins than what the business had             in corporate legislation and the advent of integrated reporting.
grown accustomed to. The drop in margins is as a direct result          This is our first integrated report as advocated by the King
of the shortage of work, and hence greater competition in the           Report on Governance for South Africa 2009 (King III) in which
construction and infrastructure sectors. We believe that margins        we attempt to present financial and sustainability-related
will increase in line with a normalisation in the volume of work        information in such a way as to enable stakeholders to assess
in these sectors. In response to the difficult conditions locally,      our performance and our ability to create and sustain value.
we increased our African footprint over the past financial year         We acknowledge that this is our first step on the journey to



 12
integrated reporting, and will continuously work towards aligning    THe	Way	FOrWard
our internal processes and procedures to provide a clear view        Protech will continue to capitalise on its ability to adapt to
of the relationship between strategy, risk and opportunity and       changing and challenging markets and seize appropriate
the social, environmental, economic and financial aspects of         opportunities that arise. We are committed to maintaining
our business.                                                        our excellent relationships with our blue-chip client base while
We are committed to improving the maturity of our reporting and      forging and strengthening new relationships and staying true
compliance with the requirements of King III, and believe this       to our promise of unequalled customer service.
report is a well-placed first step to this end. We welcome
                                                                     aPPreCIaTIOn
feedback from our stakeholders on how we can better serve
                                                                     The past year has been tough and presented us with a number
their needs through our reporting.
                                                                     of challenges, all of which the group dealt with effectively
During the year, two of our directors, Pieter van Tonder and Dirk    and successfully. These challenges required fortitude and
Ackerman, resigned from the board. Both Pieter and Dirk served       perseverance from all of us, from the board to all our people
as non-executive directors since the listing of the company in       on the ground. I would like to thank my fellow board members
August 2007, with Dirk serving as chairperson of the board           and each and every employee for their efforts during this time.
throughout his tenure. I wish to extend my sincere thanks to         I would also like to make special mention of Julian Dovey, who
both Pieter and Dirk for contributing their substantial expertise    performed excellently when he took up the task of acting chief
and experience to the group. Our former chief executive,             executive. Lastly, my sincerest appreciation and gratitude to
Gerald Chapman, also left the group during the year. Gerald          the entire executive management team for their unrelenting
was one of the founding members of Protech which he led              effort during difficult times.
successfully for more than two decades, and guided the
company through its listing on the JSE Limited. For his invaluable
contribution I also wish to extend my greatest appreciation.

Following the rotational retirement of the two non-executive         mafahle	mareletse
directors and the retirement of our former chief executive, the      Acting chairman
board was left depleted and the position of the chief executive
vacant. The board immediately embarked on a process of
identifying and appointing a chief executive that has the
necessary skill and expertise to lead the group through the
challenging times ahead. After an exhaustive and thorough
process, Antony Page, formerly managing director of Grinaker
LTA’s Earthworks Engineering Business, was appointed as
director and chief executive. Antony will commence his duties
on 1 September 2011. We welcome Antony aboard and wish
him well in his task of leading the group. Some vacancies on
the board remain and we are actively engaged in identifying
and appointing additional non-executive directors.




                                                                                             Protech Integrated Annual Report 2011   13
chief executive
officer’s review
OUR EXPECTATION THAT 2011 WOULD BE A CHALLENGING                         remaInInG	aGILe	Under	
YEAR PROVED CORRECT, WITH THE FULL EFFECT OF GLOBAL                      CHaLLenGInG	COndITIOnS
RECESSIONARY CONDITIONS PUTTING SUBSTANTIAL                              Protech has proven its ability to quickly shift sector focus to
PRESSURE ON THE SOUTH AFRICAN CONSTRUCTION                               best position the group to take advantage of opportunities in a
INDUSTRY. DEPRESSED MARKETS, CHARACTERISED BY                            constrained market.
DWINDLING ACTIVITY LEVELS AND CONSEQUENTLY GREATER                       Our strategic decision to increase focus on the coal sector
COMPETITION FOR SCARCE WORK, INCREASED PRESSURE                          enabled us to secure additional work, increasing our exposure
ON OUR MARGINS. DESPITE THESE DIFFICULT CONDITIONS,                      in this sector from 50% in 2010 to 80% for the year under
PROTECH SUCCEEDED IN DELIVERING A SOLID SET OF                           review. Protech’s reputation for being solutions driven and our
RESULTS FOR THE YEAR.                                                    service delivery culture in the mining industry has contributed
                                                                         to this growth, and helped us secure extensions to existing
Protech’s focus on the mining sector stood it in good stead,
                                                                         contracts with our top three clients – BHP Billiton, Xstrata Coal
as demonstrated by a 43% increase in revenue for the financial
                                                                         and Total Coal.
year. We continued to win new work, but at lower margins
compared to high levels achieved in previous years. Operating            Currently, margins in the mining sector remain markedly higher
profit decreased by 35% and interest payable increased due               than in the private and public sectors in which margins were
to additional plant purchases to service new mining contracts.           historically higher. Margins in these two sectors have deteriorated
As a result, earnings per share was down 48% and headline                sharply to around break-even or even below cost. For this reason
earnings per share down 42%.                                             we further decreased our exposure to the private sector to 8%
                                                                         from 10% in 2010, and also moved out of the public sector. We
A trend that continued from the prior year was the continued
                                                                         did however manage to win some contracts with our established
decline in activity in the public and private sectors, with suppressed
                                                                         client base in the private sector, notably the Middelburg Mall
spending putting pressure on our results. The lower spend in turn
                                                                         and Toyota distribution centre.
increased competition for work across sectors including mining,
despite safety and reputation being big barriers to entry in this
sector. The excessive rainfall experienced in the latter half of the
previous year, recorded at two to three times above average,
continued into the first quarter, which continued to impact the
starting of new contracts and the flow of current contracts.




 14
InCreaSInG	OUr	exPerIenCe	In	aFrICa	                                   was equal to approximately 96% of the contracting revenue
In line with our intention indicated in our previous report, we        achieved during the 2011 financial year. We are confident that
undertook to diversify the geographies in which we operate             our team and strategy (with a proven plant policy) will continue
to decrease over-concentrated risk exposure in South Africa.           to succeed, despite a depressed market. Our key strengths – our
Late in the year under review we won contracts in Botswana,            ability to quickly shift sector focus, established relationships, an
Tanzania and Sierra Leone. These contracts are all within our          unwavering commitment to safety, our culture of service delivery
risk appetite and have contributed to revenue growth. All our          and our reputation for being solutions driven – will ensure that
current contracts outside South Africa were awarded by either          we secure new work and have existing contracts extended.
locally or internationally listed entities within the mining sector,   Most of our revenue continues to be generated in the mining
which serves to minimise non-payment risk. These contracts             sector, with 81% of our realistic revenue pipeline of R1,4 billion
are building our knowledge and experience in working across
                                                                       expected from this sector. Protech’s focus will remain on mining
the continent, and will support our future endeavours.
                                                                       infrastructure, which accounts for 70% of work secured in the
                                                                       sector. We anticipate spend to occur in select pockets in the
a	PeOPLe-CenTred	BUSIneSS
                                                                       private sector. However, with much capacity in the industry
Although Protech is most often recognised for our plant and
                                                                       standing idle, competition will remain rife until more work
equipment, it is our people who are our greatest asset. We are
                                                                       becomes available. With the slow rollout of infrastructure projects
an industry leader in safety and have had zero fatalities and zero
                                                                       in the public sector, we do not foresee spend recovering to levels
disabling injuries over the past 22 years. Our lost time injury
                                                                       experienced in the run-up to the 2010 FIFA World CupTM in the
frequency rate for the 2011 financial year was 0,44, and we
                                                                       short to medium term.
have set a target of 0,25 for 2012 to bring us even closer to our
goal of zero injuries.                                                 We will continue to work for locally or internationally listed entities
                                                                       within the mining sector, and seek opportunities in Africa that
During the year, our staff turnover remained below 2%. We
                                                                       fall within our risk profile. The experience and knowledge we
continue to offer occupational health and preventative healthcare
                                                                       are gaining through this work will support this objective well.
services to employees, and Protech’s mobile clinic continued
delivering HIV/Aids counselling and testing services. During           Over the next year we will be engaging with our stakeholders to
the year under review, we started providing employees with a           understand their needs and concerns in relation to our sustainability
nutritional supplement to reduce the incidence of illness and          practices. This will help us develop a sustainability strategy that
malnutrition.                                                          will incorporate aspects of the Global Reporting Initiative (GRI)
                                                                       G3 guidelines and comply with the requirements of King III.
OUTLOOk                                                                We will work towards improving our data collection and recording
We anticipate that markets will remain weak for the foreseeable        processes to ensure that our sustainability information is accurate
future, and this will continue to impact our ability to improve        and comparable. We will also be developing a carbon footprint
margins. Secured work at the end of the first quarter of 2012          strategy for completion in 2012.




aPPreCIaTIOn
Protech’s business model and strategy was developed to see us through challenging times, which remained a feature of the 2011
financial year. Under these conditions the Protech team continued to give of their best, and I would like to take this opportunity to
thank all our people for their dedication, commitment and belief in the way that Protech does business. I also extend our special
appreciation to the board, our stakeholders and our clients – as the cornerstone of our business we thank you for entrusting Protech
to deliver on your behalf.
I would like to extend my most sincere appreciation to Gerald Chapman for his contribution as chief executive of Protech over the
last 22 years – we will continue to build on the solid foundation he has created. To Antony Page, our new CEO – welcome to the
Protech family. We trust that your time with us will be fulfilling and rewarding, and we look forward to your contribution to the
Protech group.




julian	dovey
Acting chief executive officer




                                                                                               Protech Integrated Annual Report 2011     15
chief financial
officer’s report




THE PAST FINANCIAL YEAR WAS ONE OF THE TOUGHEST                     • High rainfall experienced in the first quarter of 2011.
TRADING YEARS EVER EXPERIENCED IN THE SOUTH AFRICAN                 • Startup costs in the fourth quarter of 2011 related to African
CONSTRUCTION SECTOR. DESPITE DWINDLING ACTIVITY IN                   operations.
THE PRIVATE AND PUBLIC SECTORS, INCREASED COMPETITION               • Once-off non-recurring expenses, including R7,8 million related
AND MARGIN PRESSURES, PROTECH POSTED A SOLID SET                     to the retirement of the previous chief executive officer.
OF RESULTS.
                                                                    • Increased provisions related to doubtful debts.
The group’s increased exposure to the mining sector has impacted
                                                                    The operating margin achieved by the contracting division,
its ability to maintain its traditionally high margins, hence the
                                                                    excluding non-recurring expenses, was 8,7% (2010: 18,8%).
operating margin being lower than the group’s target of 20%.
                                                                    As the division derived 80% of its revenue from the mining sector
Despite offering lower margins, the mining sector has been the
                                                                    during 2011, the decrease in margin was a direct reflection of
only sector which provided sufficient workflow.                     the margins experienced in this sector. In light of the scarcity of
                                                                    work in other sectors, the group increased its focus on this
year	Under	revIeW
                                                                    sector during 2011 and will continue to do so until activity levels
Statement	of	comprehensive	income
                                                                    and margins improve in the private and public sectors. The
The group managed to grow revenue by 43% to R1 069,7 million
                                                                    group will also not take on work at margins below cost to
(2010: R748,8 million). The contracting division contributed        secure work, as has become prevalent in the industry. We feel
86% to group revenue before inter-group eliminations, achieving     that the group’s medium-term operating margin target of 20%
revenue growth of 47% at R942,9 million (2010: R640,2 million).     holds true, and are confident that this margin is maintainable in
It was also pleasing to see the Readymix division grow its          less volatile markets.
revenue by almost 14% to R128,6 million (2010: R113,0 million)
in a very competitive and depressed market.                         The net interest expense increased by 49% to R23,2 million
                                                                    (2010: R15,6 million) during the year. The increase in this expense
Operating profit decreased by 35% to R77,1 million (2010:           is skewed, as a once-off interest recovery of R4 million was billed
R118,6 million) and the operating margin decreased by 55%           to one of our clients during 2010. Excluding this recovery, the
to 7,2% (2010: 15,8%). The factors that contributed to the          net interest expense increased by 28% which can be directly
decrease in operating profit included:                              attributed to the increase in the asset-backed finance related to
• The prevailing recessionary environment.                          plant and equipment purchases.



 16
The group’s effective tax rate was 27,2% compared to 26,6% in        Statement	of	cash	flows
2010. Group earnings for the period under review of R39,2 million    Cash generated before working capital changes was R146,7 million
(2010: R75,6 million) were 48% lower than the previous financial     (2010: R153,8 million). However, when comparing cash generated
year. Earnings per share for the year under review came to           by operations before working capital changes to earnings before
10,8 cents per share (2010: 20,9 cents per share), which was         interest, taxes, depreciation and amortisation (EBITDA), the
48% lower than the prior year. Headline earnings per share do        ratio of cash generated to EBITDA improved from 95% in 2010
not differ significantly from earnings per share.
                                                                     to 104% in 2011. We therefore remain confident of our cash-
                                                                     generating ability.
Statement	of	financial	position
The group invested R211,7 million (R109,0 million) in new plant      dividend
and equipment during the year under review, to support its
                                                                     The generally poor and uncertain economic environment along
increased focus on the mining sector. Of this capital spend,
                                                                     with a particularly depressed construction sector is forcing the
R114,5 million related to the replacement of plant and equipment
                                                                     group to take a very conservative view to preserving cash
in line with the group’s plant policy while R97,2 million was
                                                                     resources. Consequently no dividend was declared in respect
spent on new plant and equipment to cater for the new mining
                                                                     of the 2011 financial year.
projects awarded during the year. Plant sold in the replacement
process amounted to R86,7 million (2010: R74,7 million), resulting
                                                                     appreciation
in net capital expenditure in respect of plant and machinery of
                                                                     I wish to thank the board and everyone who contributed to this
R125,0 million (2010: R34,3 million).
                                                                     report, which is Protech’s first integrated report. Your efforts are
Interest-bearing liabilities increased by 11% to R293,6 million      greatly appreciated.
(2010: R264,6 million) at the end of the year under review. The
group’s net debt:equity ratio at 66%, although slightly higher
than the 57% in 2010, is comfortably within the medium-term
target range set by the group.
Net asset value per share increased by 8% from 85,6 cents per
share to 92,4 cents per share. Net working capital decreased
by R18,1 million to R103,2 million from the previous year’s net      nellis	Wolmarans
working capital of R121,2 million.                                   Chief financial officer



                                                                                               Protech Integrated Annual Report 2011   17
operational review




18
                           Contracting contributed



                           86%
                                                     (2010: 83%)
                                                     to group revenue




& 97%  (2010: 102%)
       to group operating profit


Contracting
the grouP’s contracting arm offers highly effective solutions
to clients Within our focussed sectors.




                                                Protech Integrated Annual Report 2011   19
OPeraTIOnaL	revIeW	
COnTraCTInG




deLIvery	On	STraTeGy                                                   increased its hired plant to owned plant ratio from 25% to 38%,
Protech is able to quickly shift its sector focus in response to       which resulted in the hire-in ratio remaining above our target of
anticipated market changes. Together with our solid reputation         15%. We believe this action was necessary in order to mitigate
as a fast-track contractor and exemplary safety record, the            business risk and as an alternative to further increased gearing.
division’s continued strategy of focusing on sectors that offer
the greatest opportunities resulted in good revenue growth             Ground Improvement Solutions, a new venture started during
over the past year.                                                    2010, strengthened the division’s fast-track ability by offering
                                                                       in-house compaction technology, and granted us access to
Our increased focus on the mining and mining infrastructure
                                                                       new contracting opportunities in southern and east Africa. This
        sectors has proven successful, and our activities in
             these sectors were well supported by our in-              business owns intellectual property and equipment to perform
               house fleet of plant and equipment and original         impact compaction, which enables us to offer clients an alternative
                equipment manufacturers. To accommodate                compaction technology which often translates into time and/or
                the additional work being awarded, the division        cost savings.




OPeraTIOnaL	OvervIeW
South	africa
The pressures experienced in the latter part of the previous financial year persisted into 2011. Excessively high rainfall continued
well into the first quarter, and activity levels in the private and public sectors continued to decline which increased competition in all
sectors, including our focus area of mining infrastructure. An additional driver of competition was the entrance of larger international
construction businesses into the local market, in pursuit of new opportunities due to the global recession. Together these pressures
negatively impacted margins.

The mining sector contributed the most to revenue in the past year, with 80% of contracting revenue derived from this sector.
Of this total, mining infrastructure contributed 75% and contract mining 25%.

Activity within the coal sector remained strong. Protech was awarded two significant mining projects from BHP Billiton at the
Middelburg and Wolwekrans Collieries. The combined value of these contracts is over R500 million and the duration is 24 and 36
months respectively. These two projects, along with contract extensions and additional work on the Atcom (Xstrata) and Dorstfontein



 20
(Total Coal SA) mining infrastructure projects, provided a solid revenue stream for the year. Additionally, we were awarded the
Medupi Power Station (bulk earthworks to a large conveyor belt) project for completion during the second half of 2011.
A few minor projects were awarded in the private and public sectors, which jointly contributed only 20% of contracting revenue.
The volume and value of this work were much lower compared to the activity levels in these sectors in previous years.

africa
In light of the increasing competition in South Africa, we took on a number of projects in the mining and mining infrastructure sectors
on the continent. Protech, together with joint venture partner, Bamboo Rock (an entity incorporated in Tanzania), was awarded a
contract in Tanzania during September 2010 to build an access road to a new gold and uranium mine for Mantra Resources Limited.
The initial project value is estimated at R68 million over a period of six months. We have also been awarded a further infrastructure
and mining contract in that country for Shanta Gold.

Through our joint venture partner in Botswana, Protech Powercorp, we secured a bulk earthworks project for a new substation near
Gaborone from ABB International in December 2010, to the value of R11 million. After year end, phase two of this project (valued
at R5 million) was also awarded to Protech. Completion of this phase is anticipated during August 2011.

During January 2011, Protech commenced a bulk earthworks project in Sierra Leone for a 10km railway line for African Minerals,
awarded by Basil Read, to the value of R43 million.




reSULTS	OvervIeW                                                      OUTLOOk
                                                                      The contracting division will continue to grow its pipeline of
                                        2011             2010         work through pursuing opportunities both locally and within
Revenue (R’000)                     942	890           640 235         Africa. With the majority of our work concentrated on the coal
Operating profit (R’000)             74	485           120 137         mining sector within South Africa, we believe that further
Operating margin                      7,9%             18,8%          expanding our African footprint, in line with our expertise and
Contribution to group                                                 risk appetite, will serve the business well.
operating profit                      97,3%           102,2%
                                                                      We anticipate trading conditions to remain challenging, in line
For the year under review, the contracting division increased its     with those experienced over the past 18 months. This is likely
revenue by 47%, albeit at lower margins, to R942,9 million.           to further increase competition locally and continue to impact
Operating profit was down 38% to R74,5 million due to the             margins negatively. In the face of these conditions, Protech
persisting challenges discussed previously and start-up costs         remains steadfast against pricing recklessly and will continue to
incurred in our African operations in the fourth quarter. This        conduct its business ethically. With our ability to quickly shift
in turn resulted in the decline in operating margin from 18,8%        sector focus, the contracting division will be able to respond to
to 7,9%.                                                              any increase in activity in the public and private sectors.




                                                                                             Protech Integrated Annual Report 2011   21
OPeraTIOnaL	revIeW	
GeOTeCHnICaL	LaBOraTOry	and	SUrvey




Geotechnical laboratory and survey
Protech’s geotechnical laboratory and survey division suPPorts
the contracting division through fast and effective survey
and laboratory testing services Provided by its survey and
geotechnical dePartments resPectively. in november 2010,
the local laboratory Was accredited by the south african
national accreditation system (sanas).




deLIvery	On	STraTeGy                                                   reSULTS	OvervIeW
The survey department continued to provide fast, accurate
and reliable survey and analysis services to support Protech’s                                                 2011              2010
contracting ability, utilising the latest technology and equipment.
                                                                       Revenue (R’000)                       18	827            16 064
During the year, Protech’s increased activity in the mining
                                                                       Operating profit (R’000)               3	575             2 847
sector required that some survey department functions be
                                                                       Operating margin                      19,0%             17,7%
relocated to Witbank to improve the survey capacity and
                                                                       Contribution to group
efficiency of the business.
                                                                       operating profit                        4,7%              2,4%
The reliability and reputation of our Lanseria laboratory was
further recognised through SANAS accreditation related to civil        Revenue for the year was up 17% to R18,8 million compared
engineering testing, awarded in accordance with International          to 2010, on the back of strong performance in the contracting
Standard ISO/IEC 17025:2005. This accreditation indicates that         division and a relatively stable cost base. Operating profit also
we have the technical competency to undertake a defined                improved by 26% to R3,6 million, and the increased revenue
scope of laboratory services and that our laboratory operates          within current capacity capabilities resulted in an operating
an effective quality management system.                                margin of 19,0%.

As with other ISO quality standards, ISO/IEC 17025 requires            OUTLOOk
that we make continual improvements. To this end, we conduct           Geotechnical laboratory and survey will continue to invest in
regular internal audits to ascertain opportunities to improve          new technology and training initiatives to improve its service
testing and calibration, and keep abreast of scientific and            offerings to Protech and external clients. The time and effort
technological advances in relevant areas. We are confident             required to align our laboratory services with SANAS accreditation
that this accreditation will contribute to future opportunities        requirements resulted in a lack of capacity to implement policies
from outside the group.                                                and procedures related to other material testing fields. We will
                                                                       prioritise the implementation of these policies and procedures in
OPeraTIOnaL	OvervIeW
                                                                       the coming year to further expand the range of testing services
The challenging conditions in which the contracting division           we offer. We anticipate our SANAS-accredited status to unlock
operated negatively impacted the performance of the geotechnical       further opportunities in the coming year.
laboratory and survey division, as it is the primary client to which
we provide services. However, due to improved internal processes
and continued underlying support from contracting, the division
returned an acceptable performance with the survey department’s
revenue improving by 11% and the geotechnical department by
25% compared to the previous period.



 22
       Readymix
       Protech readymix (readymix) Provides readymix concrete and
       concrete PumPing services across all sectors. during the year
       We managed to increase volumes and reduce our losses on the
       Previous year, in large Part due to our ability to quickly and
       efficiently align our solutions to various industrial sectors
       and an imProved service rePutation.




deLIvery	On	STraTeGy
During the year Readymix continued to build on its key strengths:       We also expanded our service offering through strengthening
being first-to-market, having the shortest lead time in the industry    our ability to effectively source and procure high-quality aggregates.
and offering superior personalised service with no operational          Through this initiative, we are proud to be able to offer clients cost
downtime. Our ability to offer customised solutions and to shift        effective, specialist solutions ranging from low cost applications
focus, resources and market prominence across the various               to technically demanding solutions.
industrial sectors quickly and efficiently contributed to us securing
some prominent base load projects during the year.




                                                                                                Protech Integrated Annual Report 2011    23
OPeraTIOnaL	revIeW	
readymIx




OPeraTIOnaL	OvervIeW
Operating in a constrained readymix concrete environment proved extremely challenging during the year. Factors that exacerbated
these constraints include a significant decline in public works infrastructure projects and the market remaining over-traded, with
many of the larger players now aggressively competing for limited business in the private sector.

Despite the tough market conditions and a general decline in volumes across all sectors, Readymix managed to grow its volumes
year-on-year by 9%. This growth can be attributed to our concerted effort to improve our service reputation, which enabled us to
secure some significant base load contracts, including the Sunderland and Percy Stuart Waste Water Treatment Works, and allowed
us to secure substantial business in the highly demanding mining sector.

The BCI (Building Confidence Index) hit its lowest level since the beginning of the recession in the first quarter of 2011, mirrored by
the decline in confidence of leading sectors within the building industry. Building in both the residential and non-residential sectors
continued to contract despite the lowest mortgage rates in recent memory. Additionally, Cement and Concrete Institute statistics
indicated a further decline in cement sales for the year under review of 6%, compared to the already-low base in the previous year.

Although these conditions are cause for concern, we remain cautiously optimistic in light of projects still being awarded in the private
sector. We will continue to selectively pursue projects at the right margin across all industry sectors.




 24
reSULTS	OvervIeW                                               OUTLOOk
                                                               Despite the negative market conditions across most sectors
                                     2011            2010      Readymix has sustained its pipeline of work and experienced

Revenue (R’000)                   128	617         113 049      overall growth in volumes. We do not anticipate any near-term
Operating loss (R’000)             (1	500)         (5 430)     rebound in the residential, industrial or commercial sectors.
Operating margin                    –1,2%          –4,8%       With the six-month moratorium placed on all public works being
Contribution to group                                          awarded we expect markets to remain depressed for at least
operating profit                   –2,0%           –4,6%       the next 12 to 18 months.

Revenues were up 14% to R128,6 million driven largely by the   Readymix will remain focused on reducing costs and increasing
increase in sales volumes to the mining sector. However as     our margins, as well as building our service reputation across
indicated in our interim results, margins remained under       all sectors. We remain well positioned for any recovery in the
constant pressure due to supply exceeding demand in the        market and will continue to actively seek new opportunities
market. The business reported a smaller loss of R1,5 million   locally and across Africa.
against the previous year’s loss of R5,4 million.




                                                                                      Protech Integrated Annual Report 2011   25
governance review




26
the board of directors subscribes to resPonsible and ethical
governance based on the PrinciPles of disciPline, indePendence,
fairness, social resPonsibility, transParency and accountability to all
stakeholders. the core PhilosoPhy of the king rePort on governance
for south africa 2009 (king iii) revolves around effective leadershiP,
sustainability as a moral and economic imPerative and good corPorate
citizenshiP, Which is a Product of effective and ethical leadershiP.
the board recognises the need to govern the business in line With
the king iii code (the code). We strive to comPly With king iii in all
material resPects and Where comPliance is not yet achieved this 
is stated and exPlained.




                                                  Protech Integrated Annual Report 2011   27
GOvernanCe	revIeW
COnTInUed




                                                             G
                                                         8.	 	 OvernInG	STakeHOLder	
                                                             reLaTIOnSHIPS


                              I
                          7.	 	nTernaL	aUdIT                                                 	
                                                                                         9.	 InTeGraTed	rePOrTInG	
                                                                                             and	dISCLOSUre




    m
6.	 	 OnITOrInG	COmPLIanCe	
    WITH	LaWS,	COdeS,	rULeS	
    and	STandardS

                                                                                                        e
                                                                                                    1.	 	 THICaL	LeaderSHIP	and	
                                                                                                        COrPOraTe	CITIZenSHIP



         T
     5.	 	 He	GOvernanCe	OF	
         InFOrmaTIOn	TeCHnOLOGy

                                                                                                   	
                                                                                               2.	 BOard	and	dIreCTOrS



                        	
                    4.	 THe	GOvernanCe	OF	rISk
                                                                                                                              Current	state
                                                                          a
                                                                      3.	 	 UdIT	COmmITTeeS
                                                                                                                              desired	state


achieving a desired state of good governance is a continuous process. During the past year Protech performed a self-
assessment in partnership with Deloitte & touche to identify areas where the desired level of compliance with king iii had
not yet been attained. the diagram above illustrates the group’s current versus desired state of adoption per principle.




As illustrated, the following areas require improvement to reach       executive directors. The elected lead independent non-executive
a desired level of compliance appropriate to our business:             director, Mr M Mareletse, was appointed as acting chair of both
•   Board composition                                                  the board and the remuneration committee.
•   Governance of risk                                                 The group chief executive officer, Mr G Chapman, retired from the
•   Governance of information technology                               group effective 30 November 2010 following a personal tragedy.
•   Monitoring of compliance with laws, codes, rules and standards     The board embarked on a thorough process to appoint a new chief
                                                                       executive with the requisite skills, expertise and background to
Details of the extent of non-compliance and the remedial
                                                                       lead the business. On 8 July 2011 it was announced that Mr
actions to be taken are discussed under the relevant sections
                                                                       Antony Page (previously from Grinaker LTA) would take over as
in this governance review.
                                                                       chief executive officer effective 1 September 2011.
BOard                                                                  To ensure an appropriate balance of power and objectivity on
Protech Khuthele Holdings Limited has a unitary board structure        the board and to comply with regulatory requirements, the
which at the date of this report comprised four directors, of          composition of the board is currently under review. The board
which three are non-executive and one is an executive director.        intends to appoint at least two independent non-executive
Two of the non-executive directors are independent which               directors to align its composition with best practice and the
includes the acting chairman.                                          requirements of King III. Once the board is fully constituted in line
                                                                       with these changes, a permanent chairman and permanent chair
During the year under review, Mr D Ackerman (non-executive
                                                                       for the remuneration and nominations committee will be elected.
chairman and chairman of the remuneration committee) and Mr
P van Tonder (non-executive director) resigned from the board          The appointment of directors to the board will follow a formal
effective 22 September 2010. These two resignations were by            process managed by the acting chairman, assisted by the
rotation and the decision not to stand for re-election was prompted    remuneration and nominations committee.
by the fact that both directors held significant shareholdings in      Due to the number of resignations from the board during the
the business and as such were not viewed as independent non-           year, no formal evaluation process of the performance of the



    28
board and board committees was undertaken as in previous                   IndePendenT	advICe
years. The necessary processes will again be implemented                   The board recognises that there may be occasions where
following the proposed appointment of additional directors.                directors consider it necessary to take independent professional
To facilitate continuity of the board, one third of directors retire       advice. This is done at the company’s expense according to an
by rotation at each annual general meeting and their re-                   agreed procedure.
appointment is subject to shareholders’ approval. The directors
                                                                           BOard	meeTInGS
retiring by rotation are Messrs M Mareletse and V Raseroka.
                                                                           The board aims to meet four times a year, however during the
All directors, excluding the chief executive officer and chief
                                                                           past year the board met six times. Three of these meetings
financial officer, are subject to retirement and re-election by
                                                                           were special meetings.
shareholders.

Details of the directors in office as at 28 February 2011 appear
on page 6 of this report.



the following table sets out the attendance of directors at these meetings:

                                                                  Special              Special             Special
Member                  28/05/2010          06/08/2010          22/09/2010           23/09/2010          25/10/2010          22/11/2010

D Ackerman¹                                                         –                   –                  –                   –

G Chapman²                                                                                                                  –

N Wolmarans                                                                                                                 

M Mareletse                                                                                                                 

M Vuso                                                                                                                      

V Raseroka                                                                                                                  

P van Tonder³                                                       –                   –                  –                   –

notes:
¹ D Ackerman resigned on 22 September 2010, ² G Chapman resigned on 1 November 2010 and ³ P van Tonder resigned on 22 September 2010.



BOard	COmmITTeeS                                                           As King III stipulates that the audit committee should be
The board has two standing committees that assist it in                    chaired by an independent non-executive director, and that the
discharging its responsibilities. Each non-executive director is a         board chairperson should not be on the committee at all, the
member of one or more of these committees. All committees                  appointment of the audit and risk committee chairman, Mr
operate under board-approved terms of reference which are                  M Mareletse, to fulfil the role of acting chairman of the board
updated from time to time to reflect developments in the                   is not compliant with the code.
regulatory environment and governance best practice.                       The audit and risk committee ensures the transparency and
                                                                           integrity of the group’s financial reporting, as well as the
aUdIT	and	rISk	COmmITTee
                                                                           identification and mitigation of risks associated with the group’s
The composition of the audit and risk committee is not in full
                                                                           business. In addition, the committee fulfils the statutory duties
compliance with King III, which advocates that the committee
                                                                           of an audit committee as required by the act.
should have at least three members and that the chairperson of
the board should not be a member of the committee.                         The committee currently comprises two independent non-
                                                                           executive directors: Mr M Mareletse (chairman) and Ms M Vuso,
As at 28 February 2011, the composition of the committee was
                                                                           and one non-executive director, Mr V Raseroka. Details of the
satisfactory in terms of the Companies Act 61 of 1973.
                                                                           members’ qualifications and period served on the committee
However, in terms of the new Companies Act No 71 of 2008
                                                                           are detailed below:
(the act), effective 1 May 2011, the committee must appoint an
additional member to fully comply with the act and the code.               • Mr Mareletse holds a BA Administration degree from the

To comply with the act, Mr V Raseroka was appointed to the                  University of Limpopo (formerly University of the North) and a
committee on 5 August 2011. Although Mr Raseroka does not                   certificate in financial analysis from Wits Business School and
meet the recommendations of the code as far as board                        has been a member of the committee since 18 July 2007.
committee membership is concerned, he does meet the                        • Ms Vuso holds an Hons. BCompt degree from the University
statutory requirements for membership of the audit committee.               of South Africa (UNISA). She is a chartered accountant by



                                                                                                  Protech Integrated Annual Report 2011   29
GOvernanCe	revIeW
COnTInUed
    profession and a member of the South African Institute of          Emoluments to non-executive directors are recommended by
    Chartered Accountants (SAICA) and has been a member of             the remuneration and nominations committee and executive
    the committee since 1 September 2008.                              directors for approval by shareholders by way of a special
• Mr Raseroka holds a BA (Hons) (Cum Laude) degree in Public           resolution, set out in the notice of the annual general meeting
    Administration from Fisk University in Nashville, USA. He          that forms part of this report. Remuneration of executive
    attended the Senior Executive Programme at Stanford University     directors in their capacities as executive members of the
    in 1997.                                                           management team, as approved by the remuneration and
                                                                       nominations committee, are fully disclosed in note 29 to the
    the following table sets out the attendance of directors           financial statements.
    at these meetings:
                                                                       SOCIaL	and	eTHICS	COmmITTee
Member                              27/05/2010       19/11/2010
                                                                       The Companies Act 71 of 2008 and resultant regulations, which
M Mareletse                                              
                                                                       became effective on 1 May 2011, call for listed companies to
M Vuso                                                               establish a social and ethics committee. Protech will establish
                                                                       such a committee before 31 April 2012 to oversee the company’s
P van Tonder (invitee)                                   –
                                                                       activities related to:
V Raseroka1                               –               –
                                                                       •   Social and economic development, including the ten principles
Mr Raseroka joined the committee on 5 August 2011.
1
                                                                           set out in the United Nations Global Compact Principles; the
The committee is satisfied with the expertise and experience of            OECD recommendations regarding corruption; employment
the chief financial officer as required in terms of the JSE Listings       equity; and broad-based black economic empowerment.
Requirements. In addition, the committee is satisfied as to the        •   Good corporate citizenship, including equality, discrimination,
independence of the external auditor for the year under review.            ethics, social responsibility and managing environmental impacts.
The committee has recommended this integrated report to the            •   Labour and employment, including skills development.
board for approval.
                                                                       •   Consumer relations.
remUneraTIOn	and	nOmInaTIOnS	COmmITTee
                                                                       GOvernanCe	OF	rISk
The composition of the remuneration and nominations committee
does not fully comply with the requirements of King III, which         The board and management recognise that managing risk is
advocates a majority of independent non-executive directors.           critical to effective corporate governance. Management develops
Of the two non-executive directors currently serving on the            the risk and control procedures of the business in accordance with
committee, only one is independent. As discussed previously,           the board-approved enterprise risk management philosophy
the proposed appointment of directors to the board will remedy         and plan. The management of enterprise risk is a continuous
this situation.                                                        process whereby risks are methodically identified, classified,
The committee’s responsibilities include:                              analysed, monitored and reported on.
•   Ensuring that directors, management and staff are fairly           The group defines risk as the combination of the probability of
    remunerated in line with the group’s remuneration policy.          an event occurring, and the consequences of that event. In all
•   Identifying and evaluating suitable candidates for appointment     undertakings and business activities, there is potential for
    to the board. The authority to appoint directors remains a         events and consequences that constitute opportunities for
    board function.                                                    benefit (upside) or threats to success (downside). Risk
•   Identifying and evaluating suitable candidates for the position    management is concerned with both positive and negative
    of chief executive officer and chief financial officer.            aspects of risk.
•   Making recommendations on board composition in terms of
                                                                       King III requires that risk tolerance levels be determined by the
    skills mix, size and the number of committees required.
                                                                       board, which is ultimately responsible for the governance of
•   Reviewing and approving executive succession.
                                                                       risk through the risk management structures in place. The
                                                                       determination and defining of risk tolerance levels and the
    the committee currently comprises two non-executive
    directors: mr m mareletse (chairman) and mr v raseroka.            development of key risk indicators have been identified as
    During the past year the committee met twice with                  areas within the risk management process which can be
    attendance as follows:                                             improved. This process will be refined and implemented to
                                                                       improve risk governance and achieve closer alignment to the
Member                              26/05/2010       23/07/2010
                                                                       requirements of King III.
D Ackerman¹                                              
                                                                       The board has approved the enterprise risk management policy
M Mareletse                                                          and the resultant risk management plan and procedures. The
V Raseroka                                                          audit and risk committee is responsible for reviewing the risk
                                                                       management plan and the risk management reports prepared
note: ¹ D Ackerman resigned on 22 September 2010.



    30
by management. The audit and risk committee reports and                                   •   Jeopardise or threaten the sustainability of any part of the
makes recommendations to the board on matters related to                                      group or its activities.
risk management.                                                                          •   Lead to erosion of stakeholder value.

Protech’s risk policy is to consider any event or circumstance
                                                                                          •   Cause reputational damage.
that might potentially have a material impact on the business of                          •   Lead to material financial loss.
the group as part of the group’s risk profile. This includes any
event or circumstance that potentially could:




      the risk management framework is illustrated below:




                                               BOard	OF	dIreCTOrS
       OverSIGHT	and	GOvernanCe




                                                            •   Ultimate responsibility for risk management
                                                            •   Determine risk management policy
                                                            •   approve the risk management plan


                                            aUdIT	and	rISk	COmmITTee

                                                            •   review and consider risk management plan
                                                            •   review and consider quarterly risk management report
                                                            •   report to the board




                                              CeO	and	manaGemenT
       manaGemenT




                                                            •   Design and implement risk management plan
                                                            •   monitor risk management process
                                                            •   report to audit and risk committee




      the risk management process follows naturally from the approved policy and framework and is encapsulated
      in the risk management plan. this process is illustrated in the following diagram:




                                                                     IdenTIFy	key	rISkS




                                  COmmUnICaTe	TO	STakeHOLderS                                       anaLySe	and	aSSeSS	ImPaCT




                                     mOnITOr	and	evaLUaTe                                 deveLOP	rISk	reSPOnSe	and	InTervenTIOn




                                                                                                                   Protech Integrated Annual Report 2011   31
GOvernanCe	revIeW
COnTInUed
COde	OF	COndUCT                                                       The board engages with management on issues of legal
The group’s code of ethics requires all executives and employees      compliance and receives input from various assurance providers
to maintain the highest ethical standards. An anonymous and           in terms of the level of compliance. The board is not aware of
independently managed whistle blowing facility, ScamStop              any instances of non-compliance during the period under review.
fraud reporting hotline, allows for any unethical, fraudulent or      A formal legal compliance framework (including standards,
dishonest behaviour to be reported. During the year no reports        procedures and policies) is being developed and once
were received through this facility, however one employee was         implemented, we will be better able to monitor and report on
disciplined for dishonest behaviour.                                  the level of legal compliance in the business. This will in turn
                                                                      facilitate the determination of training requirements and further
Protech takes ethical behaviour across all its operations very
                                                                      policy development.
seriously and aims to create an environment where open
communication is encouraged. We will be providing ethics
                                                                      COmPany	SeCreTary
training to management and specific employees during the next
                                                                      All directors have access to the advice and services of the
year, and will continue to communicate internally on ethical
                                                                      company secretary, Ms A van der Merwe. To assist the board
behaviour and practices.
                                                                      in fulfilling its duties and functions effectively, all directors have
COmPLIanCe	WITH	LaWS,	COdeS,	rULeS	and	                               full and timely access to relevant information including corporate
STandardS                                                             announcements, investor communication and developments
                                                                      that may impact Protech and its operations.
The principle of legal compliance in all areas of the business is
entrenched in our code of ethics. Protech strives to comply with      The company secretary is responsible for director training.
all relevant legislation, rules, codes and standards applicable       Together with the chief executive officer, the company secretary
to our business. The complexity of the applicable regulatory          inducts new directors, which includes briefings on their fiduciary
framework necessitates that structures and procedures are             and statutory responsibilities and on the group’s operations
put in place to constantly monitor legal compliance.                  as required.




SHare	deaLInGS
Protech has a share dealing policy requiring all directors, senior executives and the company secretary to obtain prior written consent
from the chairperson, chief executive officer or chief financial officer before dealing in Protech shares. Approved dealings are
disclosed to the JSE and published on the Stock Exchange News Service (SENS). All approved dealings are reported at board
meetings.

Closed periods are implemented as per the JSE Listings Requirements. During these periods, the group’s directors, executives and
employees are not allowed to deal in Protech shares. Additional closed periods are enforced should Protech be subject to any
corporate activity requiring a cautionary announcement as prescribed by the JSE Listings Requirements.




 32
COmmUnICaTIOn	WITH	SHareHOLderS                                       governance; and legal and regulatory compliance. The audits for
Protech highly values its interaction with shareholders as an         occupational health and safety and information technology and
opportunity to effectively communicate about its business,            governance were completed as at 28 February 2011. There were
strategy and ongoing activities. Communication with shareholders      no matters reported to the board that indicated a breakdown
is done through planned events such as formal presentations           in the functioning of the group’s internal controls and systems
during interim and annual results presentations as well as during     during the year under review.
meetings with institutional shareholders after releasing results
or when requested.                                                    InFOrmaTIOn	TeCHnOLOGy	GOvernanCe
                                                                      Protech’s core operations are not overly dependent on its
InTernaL	COnTrOL                                                      information technology environment; however internal
The board is ultimately responsible for the group’s system of         administrative and financial support services are dependent on
internal controls and the effective working thereof to provide        information technology. Therefore we must ensure that our
reasonable assurance that:                                            internal information technology governance structures, policies
•   Assets are safeguarded.                                           and procedures are aligned to the recommendations of King III
•   Losses arising from fraud and/or errors are minimised.            to ensure that these resources are utilised effectively and that
•   The group complies with legal and regulatory requirements.        all related risks are managed appropriately.

The internal audit function is performed by Grant Thornton who        Protech’s existing information technology framework includes
are required to provide independent, objective assurance of the       information security and business continuity. In the coming
group’s internal control systems. Internal audit follows a risk-      year we will review our governance framework in conjunction
based approach that aims to test the integrity of controls in         with the findings and recommendations made by internal
managing significant risks. As part of the revolving internal audit   audit to ensure that our information technology strategy and
plan three areas were focused on during the year, namely              framework are aligned to the needs of the business and that it
occupational health and safety; information technology and            provides optimal value.




                                                                                            Protech Integrated Annual Report 2011   33
remuneration report




Protech recognises that the success of any business
dePends on its emPloyees being motivated, focused and
skilled, and that they share the vision of the comPany
and subscribe to its ethos. We encourage a Working
environment based on mutual trust and resPect, and
Which Provides oPPortunities for individuals to excel
and advance through their Personal efforts.




34
Protech Integrated Annual Report 2011   35
remUneraTIOn	rePOrT
COnTInUed
Executive management, as part of this team, work together                  •   affordability
with all employees for the benefit of all our stakeholders. We                 In accordance with the group’s business plan and strategy and
strive to provide:                                                             in consideration of the annual budgetary scope, certain limits
• A pleasant and rewarding working environment for all employees               are set with regard to remuneration and other human resource
    at all levels                                                              costs. These serve as a guideline for what can be spent. The
• Service of outstanding quality to ensure customer satisfaction               annual adjustment in the company’s remuneration account
                                                                               and the components of the remuneration adjustments take
• A superior return on investment to shareholders
                                                                               place with due allowance for the:
Protech subscribes to the principles of being an equal opportunity
employer. To this end, recruitment, training and advancement                   – Necessity of competitive remuneration
within the company are done without discriminating on the basis of             – Available budget funds
race, religion, gender, age or physical disability. Remuneration and           – Inflation rate
reward are determined by merit, qualification and individual effort.           – Desirability and extent of performance bonuses
                                                                               – Need for structural adjustments with regard to the
remUneraTIOn	STraTeGy                                                            remuneration of individuals and occupational groups
To ensure the integrity and credibility of our remuneration                •   remuneration	for	development
system, the development and implementation of related policies,
                                                                               The company encourages its employees to improve their
programmes, practices and decisions are guided by the following
                                                                               competency in ways that concur with the needs of the company
remuneration objectives:
                                                                               by offering them opportunities to do so and by encouraging,
•   Transparent	communication                                                  acknowledging and rewarding career development and, where
    All information required to make well-considered decisions                 possible, offering resources to this end.
    regarding remuneration will be communicated frankly and
                                                                           remUneraTIOn	PHILOSOPHy
    consistently, while the confidentiality of personal remuneration
    information of individuals is to be respected. This will improve       Protech stands by the principles of its remuneration philosophy,
    the quality of decisions, promote openness and honesty and             which aims to:
    ensure that ownership and accountability are accepted.                 •   Manage remuneration expenditure appropriately and realise
                                                                               the desired behaviour and performance of employees, in line
•   non-discriminatory	practices                                               with the group’s inclusive values and performance indicators.
    All remuneration policy directives and practices will be free of       •   Use the value of the remuneration system as a central
    unfair distinction, since unfair discrimination based on race,             mechanism with which to achieve organisational objectives.
    gender, pregnancy, marital status, family responsibility, ethnic       •   Acknowledge the contribution of individual employees to
    or social origin, sexual orientation, age, disability, religion, HIV
                                                                               ensure the success of the group.
    status, conscience, convictions, political orientation, culture,
                                                                           •   Offer managers the necessary flexibility to manage remuneration
    language and birth is unacceptable to the group. However, fair
                                                                               effectively.
    distinction, based on performance, scarcity factors and skills,
    will be applied.
                                                                           •   Position the remuneration levels of the group appropriately
                                                                               and sustainably in the labour market.
•   Internal	equity                                                        •   Offer the group’s managers a powerful mechanism with which
    The group endeavours to remunerate all staff fairly and                    to achieve operational and strategic objectives.
    consistently according to their role and individual value. The         •   Enable managers to differentiate the total remuneration
    consistent application of the remuneration system throughout               according to individual performance.
    the group is encouraged.                                               •   Within the boundaries of affordability, over time maintain the
•   external	parity                                                            remuneration of average and excellent performers in real terms.

    The group continuously takes sector and national remuneration          •   Maintain the group’s competitive remuneration position in the
    trends into consideration to position the organisation strategically       market.
    to ensure competitive total remuneration within the parameters
                                                                           remUneraTIOn	and	nOmInaTIOnS	COmmITTee
    of affordability, as far as is achievable and sustainable.
                                                                           The board is responsible for the remuneration policy and this is
•   Performance-driven	remuneration                                        applied through the remuneration and nominations committee.
    The group endeavours to strengthen the link between                    The committee’s responsibilities and composition are discussed
    remuneration and performance by means of performance                   in the Governance review on page 30.
    management systems that enable it to differentiate between
    excellent, average and below-average performers. The                   eLemenTS	OF	remUneraTIOn
    remuneration system aims to reward overall contribution                The remuneration of all employees, including senior management
    rather than status or position.                                        and executive directors, is comprised of a guaranteed package



    36
and variable remuneration. The variable component includes              Under this scheme a weighted combination of the following
short-term incentives which are based on individual performance         will be offered to participants:
and their contribution to achieving strategic goals and financial       •   Allocations of share appreciation rights
targets, and long-term incentives in the form of a share incentive      •   Awards of performance shares.
scheme aimed at executives and selected managers.
                                                                        These offers will be governed by Protech’s reward philosophy
SHare	InCenTIve	SCHeme                                                  and strategy, which includes setting the expected value of
                                                                        incentive reward for defined categories of executives and
Protech is in the process of implementing a share incentive
                                                                        senior management.
scheme for executives and selected managers. The share
scheme was approved by shareholders at the annual general               The first allocation of share appreciation rights and award of
meeting on 22 September 2010.                                           performance shares under the scheme will be made in the 2012
                                                                        financial year.

PaymenT	TO	exeCUTIve	dIreCTOrS	and	dISCLOSed	emPLOyeeS

the following table sets out remuneration to directors and the top three-earning employees, as per the disclosure
requirements of king iii:
r’000
                                        Salaries                     medical                        Other                         Total
2011
GD Chapman ¹                               2 487                        103                        7 800²                        10 390

CJA Wolmarans                              2 233                            78                           –                        2 311

Executive 1                                2 233                            71                                                    2 304

Executive 2                                2 233                            71                                                    2 304

Executive 3                                2 233                            69                                                    2 302
total                                    11 419                         392                         7 800                        19 611
2010
GD Chapman                                 2 424                            64                     2 000³                         4 488

CJA Wolmarans                              1 835                            47                           –                        1 882

Executive 1                                1 868                            39                                                    1 907

Executive 2                                1 868                            39                                                    1 907

Executive 3                                1 868                            39                                                    1 907
total                                      9 863                        228                         2 000                        12 091
¹ Mr GD Chapman resigned from the board with effect 30 November 2010.
² A restraint and retirement payment was made to Mr Chapman on his retirement.
³ In 2010 Mr GD Chapman received a retention bonus as approved by the remuneration and nominations committee.

PaymenTS	TO	nOn-exeCUTIve	dIreCTOrS

the following table sets out payments to non-executive directors for the year under review:
r’000
                                           directors	fees                        Committee	fees                          Total
                                          2011                2010               2011             2010             2011               2010
M Maraletse                                 133                100                205              150               338                  250

V Raseroka                                  100                100                115              125               215                  225

M Vuso                                      100                100                130              105               230                  205

D Ackerman¹                                  98                175                 90              160               188                  335

P van Tonder¹                                56                100                 55              125               111                  225

C Nkosi²                                       –                60                  –               20                  –                 80

Total                                       487                635                595              685             1	082             1	320
¹ Resigned 22 September 2010 and ² resigned 6 October 2009.


                                                                                                  Protech Integrated Annual Report 2011    37
remUneraTIOn	rePOrT
COnTInUed

the remuneration structure for non-executive directors for the year under review is as follows:

r’000

Category                                                                    annual	retainer       Fee	per	meeting	attended

Board

Chairman                                                                                175                           25,0

Member                                                                                  100                           20,0

Audit and risk committee

Chairman                                                                                   –                          20,0

Member                                                                                     –                          15,0

Remuneration and nominations committee

Chairman                                                                                   –                          20,0

Member                                                                                     –                          15,0


the proposed remuneration structure for non-executive directors from 01 march 2011 is as follows:

r’000

Category                                                                    annual	retainer       Fee	per	meeting	attended

Board

Chairman                                                                                 189                          27,0

Member                                                                                   108                          21,6

Audit and risk committee

Chairman                                                                                   –                          21,6

Member                                                                                     –                          16,2

Remuneration and nominations committee

Chairman                                                                                   –                          21,6

Member                                                                                     –                          16,2

Social and ethics committee

Chairman                                                                                   –                          21,6

Member                                                                                     –                          16,2




38
Protech Integrated Annual Report 2011   39
sustainability review




40
the nature of our oPerations means that We have a significant
role to Play in ensuring zero harm to any Person and minimising
our imPact on the environment. ensuring zero harm Pertains
not only to our Workforce, but also to subcontractors and
the communities We oPerate in. for Protech to continue oPerating
as a sustainable business into the future, it must minimise adverse
imPacts on the environment and society, contribute to the
broader transformation of the south african economy and
conduct its business in an ethical manner.




In the coming year we will engage with our stakeholders to get a better understanding of their needs and concerns regarding our
sustainability practices. This will inform the development of a sustainability strategy whereby we will aim to incorporate aspects of
the Global Reporting Initiative (GRI) G3 guidelines and comply with the requirements of the King Code of Governance Principles for
South Africa 2009 (King III). We are also aiming to improve our data collection and recording processes to ensure information
comparability and accuracy year on year.




                                                                                           Protech Integrated Annual Report 2011   41
SUSTaInaBILITy	revIeW
COnTInUed

Engaging with our stakeholders
Effective stakeholder engagement is crucial to good corporate governance. King III emphasises the importance for companies to
take into account the concerns and objectives of stakeholders in their decision-making and how the business is managed.

At Protech we are putting concerted effort into improving our engagement with all our stakeholders. Our long-term success relies
largely on our ability to communicate and interact with our stakeholders to understand and respond to their needs. We have defined
our main stakeholder groups as follows:
•   Our people
•   Our business partners
•   Communities adjacent to our operations
•   Investor community


the following periodic communication channels are used to communicate with our stakeholder groups:

    Our	people:	                                                      Our	business	partners (suppliers and customers):

    ongoing monthly: newsletters and information desk emails;         ongoing monthly or quarterly: email; one-on-one meetings,
    site visits and dialogue sessions with management through         site visits, email feedback, website updates and press
    Toolbox talks.                                                    releases (partner-specific).
    Planned: specific content communication through                   Planned: customer feedback surveys; commercial events.
    newsletters; performance reviews and feedback.

    Communities	adjacent	to	our	operations:	                          Investor	community	and	analysts:	

    ongoing: one-on-one meetings on a monthly basis;                  ongoing: publication on SENS; financial updates at half year
    site visits; volunteer work (partner-specific, e.g. communities   and year end; press releases; website updates; one-on-one
    and corporate social responsibility partner).                     meetings and teleconferencing.
    Planned: social programmes; dialogue sessions.


Our people
Our people are our most important asset, as the continued success and good reputation of Protech is in their hands. Employee
engagement is critical to the successful execution of our business strategy. Loyal, involved employees go above and beyond what
is required to satisfy client and customer needs and to achieve business goals. Therefore, we continuously invest in identifying,
recruiting and retaining top talent by making Protech a great organisation to work for that is safe, ethical and loyal to its people.

We seek to attract, hire and retain key talent by offering a value proposition that includes:
•   Interesting, challenging and innovative work
•   A variety of career opportunities
•   Skills training, mentorship and development
•   Competitive remuneration and reward




    42
OUr	WOrkFOrCe                                                          Employees participate in all investigations following incidents to
As at 28 February 2011 Protech employed 1623 people (2010:             help them understand the root causes that can lead to safety
1398). We are pleased to report that our rate of staff turnover        incidents. Additionally, weekly incident reports are circulated
for the year remained below 2%.                                        between all projects to share learning experiences across
                                                                       projects and business units.
COmmITTed	TO	SaFeTy
Protech Khuthele implemented a formalised and standardised             Safety	indicators
safety, health, environment and quality system in 2006. This           The group utilises a set of leading and lagging indicators to
integrated system, based on the Occupational Health and Safety         measure and improve group-wide safety performance. We
Act, is used throughout the group to improve overall safety,           continuously review and track our performance against these
compliance and reporting. During the year under review we              indicators and compare them against leading industry benchmarks.
changed the structure of our safety department and increased its       Although indicators can vary between projects depending on the
staff complement to ensure that the department could maintain          type of work being performed, indicators are measured for all
its high service levels.                                               projects. The indicators we currently focus on are:
During the past five years we have made continuous improvements        •   Total hours worked
to our safety, health, environment and quality (SHEQ) system           •   Total workforce (including subcontractors)
to include different aspects and standards such as ISO 9000,           •   Lost time injury frequency rate (LTIFR)
ISO 14000 and OSHAS 18000. Before commencing any new                   •   Number of lost time injury (LTI) incidents
project, we conduct assessments to identify and assess
                                                                       •   Breakdown of LTI incidents
compliance with all applicable SHEQ laws, regulations, approvals,
licences, permits and other requirements.
                                                                       •   Fatality and disabling injury rate

Building a culture of safety is a key focus area for Protech. Our      We are working towards recording and reporting on additional
various initiatives and activities in this regard have resulted        indicators which include:
in significant behavioural change among our employees relating         •   Number of field visits
to safety on site, proper record keeping and reporting. To enable      •   Time spent on site by senior management
us to set goals to improve safety and implement comprehensive          •   System audits and site inspections
incident reporting to measure our performance, a system for            •   Recorded observations
identifying, recording and eliminating potentially dangerous acts      •   Inspections planned
or situations is implemented on all projects.                          •   Reporting and recording near misses
However, we find that occasionally employees fail to identify          •   Incident reporting, analysis and close outs
hazards pertaining to specific activities they undertake. To help
address this, we have appointed specialists at our sites who perform   Performance	statistics
risk assessments and develop suitable safe operating procedures.       Since inception 22 years ago, Protech has not recorded a single
Feedback from these assessments informs the training programme         fatality or disabling injury. This is evidence of our commitment
for each site on how to identify specific hazards.                     to ensuring the safety of all our employees. The prevention of




The	two	graphs	illustrate	our	lost	time	injury	and	frequency	performance	over	five	years.

                                 At year end, the group’s LTIFR
                                 stood at 0,44, below the target
                                 indicated last year of 0,5. A total
                                 of eight LTIs occurred during the
                                 year under review, two of which
                                 were in January and February
                                 2011. Our target for 2012 is set
                                 at below 0,25. The group’s fatality
                                 and disabling injury frequency
                                 rate remained at zero.




                                                                                                 Protech Integrated Annual Report 2011   43
SUSTaInaBILITy	revIeW	
COnTInUed




fatalities, whether single or multiple events, and/or disabling          Results are used on site to ensure employees working near
injuries remains our number one priority. While focused on               equipment are not exposed to excessive noise levels. The
fatality prevention, our ultimate goal is zero harm to any person        assessments indicated that no employees were exposed to
or the environment. All our safety efforts are directed towards          levels above the legal limit of 85dB(A) or a noise dose exposure
this goal.                                                               above 100%.

Occupational	hygiene                                                     Protech’s plant policy of using relatively new equipment, with
A formal occupational hygiene assessment was conducted by                the bulk of the fleet not older than two years, means that all
an accredited service provider in December 2010, to ensure               cabs are airtight which reduces operators’ exposure to both
compliance with applicable requirements and to identify any              noise and dust.
legislative requirements that the group does not adhere to. This     •   time-weighted average respirable dust concentration
assessment focused on randomly-selected sites and not on all
                                                                         Results indicated that no employees are exposed to TWA
active projects during the year. Findings at our head office and
                                                                         respirable dust concentrations above the legal limit of 1.0 mg/m3.
laboratory revealed the following:
                                                                         Again, the airtight caps limit the dust concentrations operators
•   time-weighted average (eight hour) personal noise exposure           are exposed to.
    levels                                                           •   respirable silica quartz dust exposure concentration
    The assessment indicated that employees in the boiler workshop
                                                                         Results indicate that no employees are exposed to TWA
    were exposed to noise levels above the legal limit of 85dB(A).
                                                                         respirable silica dust concentrations above the legal limit of
    Employees were issued with ear protection devices to reduce
                                                                         0.1 mg/m3.
    exposure.
                                                                     Occupational	health	and	preventative	healthcare
•   time-weighted average respirable dust concentration
    No employees were exposed to time-weighted average               We encourage and enable our employees to improve their
    (TWA) respirable dust concentrations above the legal limit       personal health by raising awareness and providing health-
    of 1.0 mg/m 3.                                                   related information and assistance. Employees have access to
                                                                     a clinic and a qualified healthcare professional at our head office
•   respirable silica quartz dust exposure concentration             in Lanseria. This main clinic is supported by a mobile clinic which
    Analysis certificates proved that silica concentrations were     conducts onsite health assessments and testing services, which
    below the analytical technique detection limits.                 enables us to minimise lost production time.
Site-specific assessments indicated the following:                   The clinic offers primary healthcare services to all employees,
•   time-weighted average (eight hour) personal noise exposure       providing them with treatment for minor ailments or referring
    levels and noise exposure generated by vehicles                  them to secondary or tertiary institutions when required. Tests
    Three noise zones were presented:                                offered by the clinic include blood pressure, blood glucose,
    – The distance away from the vehicle at 90dB(A)                  weight and HIV tests. All new employees undergo a pre-
    – The distance away from the vehicle at 85dB(A)                  employment medical, and are thus introduced to the services
    – The distance away from the vehicle at 82dB(A)                  on offer.



    44
dUrInG	THe	year	THe	FOLLOWInG	vISITS	and	medICaLS	Were	reCOrded	By	THe	CLInIC:




Having employees who are better informed about their health            within the group, and to creating a safer workplace and more
reduces the incidence of health-related risks as well as the           satisfied and engaged employees.
number of sick days and healthcare costs. A newsletter, Ripple
                                                                       The group’s training and skills development initiatives focus
Effect, is distributed to employees every month to raise awareness
                                                                       on both our employees and on offering training to people from
on different health topics, assist with preventative healthcare
                                                                       disadvantaged communities within our operational areas. During
and improve daily habits.
                                                                       the year we invested R6 million in training initiatives through
During the year we undertook a number of initiatives to improve        funding obtained from various training SETAs. These initiatives
communication, wellness and nutrition. These included:                 included:

•   Hiv/aids awareness and education                                   •   Learnerships – we conducted 381 learnerships during the
    Protech’s HIV/Aids policy promotes voluntary testing, non-             year under review, which focused on general management
    discrimination and awareness about prevention and living with          development. Of this total, 250 were unskilled and unemployed
    the disease. The mobile clinic provided HIV/Aids awareness             people in and around our projects in Tshwane, Johannesburg
    and education throughout the year through numerous site visits,        and Ekurhuleni.
    during which a trained in-house HIV counsellor offered employees   •   internal training programmes – conducted through our mobile
    free HIV tests including pre- and post-test counselling. During        training unit, 762 black employees received onsite training
    the year 369 employees underwent voluntary counselling and             during the year. Of this total, 683 employees received training
    testing (VCT) while 471 employees attended training related to         related to general development. Operators’ training was also
    HIV/Aids.                                                              provided to 79 employees to help unskilled workers become
HIV/Aids awareness was further enhanced through information                semi-skilled operators.
stands at Protech’s head office in Lanseria and its office in          •   bursaries – we awarded 13 bursaries (both internally and
Witbank. Statistics collected during the year were submitted to            externally) to students in the field of civil engineering, 45%
the Department of Health.                                                  of who are black students of which 7% are black women.
•   nutrition and wellbeing                                            •   recognition of prior learning (rPL) – our RPL approach
    During the year we started distributing the GoAhead nutritional        ensures that people receive a formal qualification for their
    meal supplement to our employees, in an effort to reduce               vocational work experience. This requires that evidence of skills
    absenteeism due to illness and malnutrition. Since we started          gained is collected within the workplace, so that a portfolio of
    distributing the meal there has been a notable reduction in            skills can be compiled against a formal National Qualifications
    absenteeism and an increase in employees’ overall wellness             Framework (NQF) qualification. During this year we piloted
    and productivity.                                                      seven RPL programmes with a total of 226 participants, which
                                                                           centred on the Further Education and Training Certificate:
Training	and	development
                                                                           Business Practice.
We believe that investing in training and development helps
ensure that we are ready to face challenges in the longer term.
Skills development contributes to opportunities for advancement



                                                                                                Protech Integrated Annual Report 2011   45
SUSTaInaBILITy	revIeW	
COnTInUed
Competitive	remuneration	and	reward                                            employment	equity
At Protech we recognise that our people are critical to the                    Protech is committed to transformation, non-discrimination and
success of our business, and believe that employees should                     freedom of association. The group’s approach to employment
be remunerated in line with their performance, potential and                   equity calls for equal opportunity and fair treatment in all its
contribution to the business’s success. We are refining our                    employment practices.
remuneration and performance reward strategy and implementing
                                                                               The group’s employment equity summary indicates that some
new systems to manage this process, to improve our internal
                                                                               progress has been made in transformation at junior and middle
processes and ensure that the process of rating performance is
                                                                               management levels. We acknowledge that more work is required
fair and equitable.
                                                                               to drive transformation at senior and top management levels, in
equal	opportunity	employment                                                   line with our long-term targets.

We aim to hire, develop and promote all employees on an equal-                 Each of the group’s South African business operations compiles
opportunity basis – that is, without discrimination on the basis of            employment equity plans and reports to the Department of
race, gender, sexual orientation, religion, appearance, age and/or             Labour.
physical disability. We also strive to create a working environment
free of harassment, intimidation and discrimination towards
anyone.


consolidated summary of Protech’s employment equity profile in South africa, as at 28 february 2011

                                                           male                                           female
                                                                                                                                        grand
occupational Levels                african coloured indian             White     total african coloured indian         White    total    total

Top management1                           2            0          0       12       14            1        0        0       1        2      16

Senior management                         9            2           2      38       51             0       0        2       2        4      55

Professionally qualified
and experienced specialists
and mid-management                       69            4          1       28      102            0        0        0      12       12     114

Skilled technical and
academically qualified
workers, junior management,
supervisors, foremen and
superintendents                          81            4          0       16      101            1        0        1       2        4     105

Semi-skilled and discretionary
decision making                        612             4          0        7      623           14        1        0       6       21     644

Unskilled and defined
decision making                        494             7          28       0      529           124       7      32        0     163      692

Total	permanent                      1	267            21          31     101    1	420           140       8      35       23     206    1	626

¹ Includes non-executive directors. These directors are not full-time employees of the group.




Communities
At Protech we believe that the economic development of the communities in which we operate is of great importance. To this end,
we aim to develop a culture of community awareness and continue to support local communities through procurement initiatives
and job creation. Procurement initiatives include supporting food and accommodation providers, security services and local labour.
In all our foreign operations we provide formal training to local operators to equip them with the knowledge necessary to safely
operate our plant and equipment. In addition, informal, on-the-job training is ongoing.

During the year we continued to support enterprise development activities through the group’s operating companies. This included
the procurement of subcontractors from small, medium and micro enterprises (SMMEs), early payment to SMME suppliers and
financial and administration support to certain contractors. We also include members of communities surrounding our operations in
our training and development initiatives, discussed on page 45.




 46
The group aims to spend 1% of its annual earnings after tax                •   Running relatively new plant, equipment and trucks which
on socioeconomic development initiatives. During the year                      further reduces noise and air pollution and emissions (due to
we continued to support Refilwe, a multi-focused, registered                   Tier 3 emission-certified engines being used).
non-profit and public benefit organisation which serves the                •   Disposing of waste only through approved certified service
disadvantaged communities of Lanseria, north of Johannesburg,                  providers.
through child care and sustainable community development
                                                                           By developing a carbon footprint strategy we will be in a better
initiatives. Refilwe Enterprises (www.refilweenterprises.co.za)
                                                                           position to:
offers an indigenous tree nursery, organic fruit orchard, carpentry        •   Collate data and information related to our most pertinent
project, vegetable garden and compost worm farming.                            environmental risks.
                                                                           •   Monitor and report on performance against our internal
                                                                               benchmarks.
Environment
                                                                           •   Reduce emissions and pollution to ensure greener operations.
We recognise that the work we do impacts on the environment.
To this end, we continue to develop a culture of environmental             •   Save costs over the long term.
awareness, to minimise the impact of our emissions, effluents,             For the 2012 financial year we aim to report on our key
hazardous chemicals and waste.                                             environmental risks, measurable statistics and initiatives
The group’s environmental system forms part of its integrated              undertaken to reduce our carbon footprint.
SHEQ system and is based on ISO 14000. The aim of this
standard is to help all types of organisations protect the
environment, prevent pollution and improve their environmental
                                                                           Transformation
                                                                           Protech continues to work towards improving its performance
performance. In addition to compliance with legislation and
                                                                           against the Department of Trade and Industry’s Codes of
internal standards, the group adopts clients’ environmental
                                                                           Good Practice for Broad-based Black Economic Empowerment
requirements on site as well as industry standards set by
                                                                           (BBBEE codes). For the year under review, we managed to
leading mining houses.
                                                                           maintain our level 4 rating in terms of the Construction Sector
The reporting of environmental incidents is included in the                Charter.
group’s standard incident procedures. We are proud to report
                                                                           Although we met most of our objectives in terms of the BBBEE
that no significant environmental incidents occurred during the
                                                                           codes scorecard pillars, we have not performed as well as
year under review.
                                                                           envisaged in employment equity, skills development and
In the coming year we will develop an environmental strategy               enterprise development. We aim to maintain and improve our
in partnership with our stakeholders to improve our management             ratings in terms of the BBBEE codes and will continue to invest
and reporting of environmental issues.                                     time and effort in areas that require improvement.

CarBOn	FOOTPrInT	                                                          Our scorecard presents our performance against the charter
We are in the process of developing a carbon footprint strategy            pillars and provides commentary on this performance for each
that addresses both our direct and indirect emissions. A feature           pillar. Skills development and employment equity are discussed
of this strategy will be to consider ways to reduce our energy             further on pages 45 and 46 respectively. Community economic
consumption in our operations and within our supply chain.                 development is discussed on page 46.
The primary sources of energy used by Protech in its operations
include diesel, petrol, electricity, grease, oil and liquefied petroleum
gas (LPG).

Due to the nature of our operations and our fleet of plant and
equipment, the following environmental risks are most pertinent
to our business:
•   Release of hydrocarbons.
•   Air, water and noise pollution.
•   Waste management (including hazardous materials).

Our operations currently undertake the following actions to
ensure that our environmental impact is minimised:
•   Cleaning our plant and equipment on site with environmentally
    friendly materials.
•   Using hazardous chemicals within strict regulations.



                                                                                                   Protech Integrated Annual Report 2011   47
SUSTaInaBILITy	revIeW	
COnTInUed

element                         Weighting %              2011¹   2010    2009    commentary
equity ownership                           25.0          23.24   20.42    19.0   Equity ownership changed slightly due to changes in
                                                                                 shareholder demographics. Black ownership remained
                                                                                 unchanged at 30,1% compared to the prior year.
management control                         10.0            5.0    4.83     3.0   Management and control changed minimally from the
                                                                                 prior year.
employment equity                          10.0           6.43    8.52     8.6   Employment equity changed slightly due to changes in
                                                                                 staff composition. During the year the group promoted
                                                                                 four black males to mid-management and nineteen
                                                                                 black males to junior management as a result of
                                                                                 ongoing learning and development. The group
                                                                                 however experienced a loss at senior management
                                                                                 level with three employees leaving the employment of
                                                                                 the group. We endeavour to improve our employment
                                                                                 equity throughout our workforce.
Skills development                         15.0          10.59   12.01    6.87   Training and skills development initiatives continued in
                                                                                 line with our internal goals and project requirements.
Preferential                               20.0          16.87   10.93    8.82   Preferential procurement increased substantially due
procurement                                                                      to focused initiatives and improved communication
                                                                                 with suppliers.
enterprise development                     15.0            0.5   12.24    15.0   We did not achieve our goals in terms of enterprise
                                                                                 development during the past year. We are in the
                                                                                 process of aligning our enterprise development
                                                                                 initiatives to our business strategy and we expect
                                                                                 to see an improvement in the new year.
Socioeconomic                               5.0            5.0     5.0     5.0   Socioeconomic development initiatives continue
development                                                                      to be undertaken in line with our planned objectives
                                                                                 of supporting local communities in and around our
                                                                                 projects.

                                         100.0           67.63   73.95   66.29

¹ Rating performed in May for the 2011 financial year.




 48
value added
statement
for the year ended 28 February 2011


                                                                  2011                               2010
Sustainability	indicator                                         r’000                              R’000

revenue                                             	   						1	069	665	                          748 778

Less: purchased cost of goods and services      	            (745	382)                           (435 678)

Value added                                  98%              324	283           98%               313 100

Other income                                  2%                  7	235          2%                 5 855

Wealth created                               100%             331	518          100%               318 955

Employees                                    57%              189	922           49%               156 589

Providers of funding                          7%                23	226           5%                15 561

Government                                    4%                14	666           8%                27 407

Reinvested in the group                      32%              103	704           38%               119 398

Wealth distribution                          100%             331	518          100%               318 955

Number of employees*                            	                 1	623                             1 398

Wealth created per employee (r)                 	        							204	262	                          228 151

Weighted average number of shares               	             362	500                             362 500

Wealth created per share (r)                    	          										0.91	                            0.88

* Excluding non-executive directors.




                                                                  Protech Integrated Annual Report 2011   49
Shareholder information at 28 February 2011
                                                number of       % of all     number of        % of shares
                                                 members       members      shares held            issued

analysis of shareholding

Range
1 – 1 000                                             447       24,83%            384   341        0,11%
1 001 – 5 000                                         426       23,65%        1   409   437        0,39%
5 001 – 10 000                                        200       11,10%        1   695   371        0,47%
10 001 – 100 000                                      577       32,04%       21   579   387        5,95%
100 001 – 1 000 000                                   120        6,66%       33   444   824        9,23%
1 000 001 and more                                     31        1,72%      303   986   640       83,85%

Totals                                              	1	801	    100,00%      362	500	000	         100,00%

Distribution of shareholders by category

Trusts                                                 92        5,11%      133 533     556       36,84%
Investment funds                                       41        2,28%       75 734     429       20,89%
Companies                                              44        2,44%       94 959     605       26,20%
Retirement funds                                        5        0,28%        3 517     579        0,97%
Individuals                                         1 570       87,17%       52 387     051       14,45%
Other                                                  20        1,11%          840     948        0,23%
Close corporation                                      29        1,61%        1 526     832        0,42%

Totals                                              	1	801	    100,00%      362	500	000	         100,00%

members holding 5% or more of shares in issue

Protech Khuthele Staff BEE Trust                                             73   795   552       20,36%
Peregrine                                                                    44   868   317       12,38%
GDC Business Trust                                                           40   000   000       11,03%
Platinum/JMD Business Trust                                                  32   207   967        8,88%
Tumsedi Share Trust                                                          18   487   500        5,10%

Shareholder spread

Public                                              1,798       99,83%      269 916 948           74,46%
Non-public                                              3        0,17%       92 583 052           25,54%

Directors                                                2       0,11%       18 787 500            5,18%
Protech Khuthele Staff BEE Trust                         1       0,06%       73 795 552           20,36%

Totals                                           					1	801	   100,00%     		362	500	000	        100,00%




 50
Assurance
The data in this report has been assured to the extent set out below. We acknowledge that combined assurance is preferable to the
limited assurance provided for this report; however our approach to combined assurance is still at an early stage. The combined
assurance model, as proposed by the King Report on Governance for South Africa 2009 (King III), envisages robust assurance
through coordinated efforts from management, internal assurance providers and external assurance providers. Protech is assessing
its internal and external assurance and matching this to the group’s risk management. Based on a full understanding of who is assuring
what and for whom, we will be able to evaluate both the quality of our assurance and identify any shortcomings.

We are actively moving towards achieving combined assurance on both financial and non-financial information disclosed in future
stakeholder reports. Our audit and risk management committee has approved this approach.


exTenT	OF	aSSUranCe
Financial	information
Our consolidated annual financial statements were audited by our external auditors, Deloitte & Touche. The scope of their audit was
limited to the information in the consolidated annual financial statements and did not include any financial or operating indicators in
the integrated report. Their report can be found on page 54 of this report.

non-financial	information:	Sustainability
No assurance was obtained on our sustainability measures.

non-financial	information:	BBBee
Broad-based Black Economic Empowerment information was verified by Emex, an accredited ratings agency.




Directors’ responsibility statement
The board of directors acknowledges its responsibility to ensure the integrity of the integrated report. The board has applied its mind
to the integrated report and believes that it addresses all material issues and fairly presents the integrated performance of the
organisation and its impacts. This integrated report was prepared in line with best practice and the recommendations of the King III
Code (Principle 9.1).

The integrated report was approved by the board on 12 August 2011 and is signed on its behalf:




acting	chairman	                                                  Chief	financial	officer



                                                                                             Protech Integrated Annual Report 2011   51
   o p ann al
financial
statements

contents
53 responsibilities of directors for the annual financial statements
53 company secretary certificate /    54 independent auditor’s report
55 directors’ report /   56 audit and risk management committee report
58 consolidated statement of financial position
59 consolidated statement of comprehensive income
60 consolidated statement of cash flows /     61 consolidated statement of changes in equity
62 operational segmental reporting /    64 accounting policies
73 notes to the consolidated financial statements




 52
Responsibilities of directors for the annual financial statements
for the year ended 28 February 2011



The directors are responsible for the preparation of financial       Financial Reporting Standards and are based on appropriate
statements that fairly present the state of affairs of the company   accounting policies, supported by reasonable and prudent
and group at the end of the period and of the profit or loss for     judgements.
that period in conformity with International Financial Reporting
                                                                     The directors are of the opinion that the company and group have
Standards and in the manner required by the Companies Act in
                                                                     adequate resources to continue in operation for the foreseeable
South Africa.                                                        future and accordingly the financial statements have been
To enable the directors to meet these responsibilities the board     prepared on a going concern basis.
and management set standards and management implements               It is the responsibility of the auditors to express an opinion on
systems of internal controls, accounting and information systems.    the financial statements. Their report to the members of the
The directors are responsible for the systems of internal control.   company and group is set out on page 54.
These are designed to provide reasonable, if not absolute,
                                                                     ApprovAl of AnnuAl finAnciAl stAtements
assurance as to the reliability of the financial statements and
                                                                     The financial statements for the year ended 28 February 2011,
to adequately safeguard, verify and maintain accountability of
                                                                     set out on pages 55 to 113 were approved by the board of
assets, and to prevent and detect material misstatement
                                                                     directors on 27 May 2011.
and loss. The systems are implemented and monitored by
suitably trained personnel with an appropriate segregation
of authority and duties. Nothing has come to the attention of
the directors to indicate that any material breakdown in the
functioning of these control procedures and systems has
occurred during the year under review.

The annual financial statements have been prepared in accordance     mafahle mareletse                      nellis Wolmarans
with the Companies Act, 1973, as amended, and International          Acting chairman of the board           Group financial director




Company secretary certificate
for the year ended 28 February 2011



In terms of section 88(2)(e) of the Companies Act 71 of 2008, as amended, I certify that, to the best of my knowledge and belief
that the company has, in respect of the financial year reported upon, lodged with the Registrar of Companies all returns required
of a public company in terms of the abovementioned Act and that all such returns are true, correct and up to date.




ms Annamarie van der merwe
Company secretary

12 August 2011




                                                                                           Protech Integrated Annual Report 2011   53
Independent auditor’s report


to the memBers of protech Khuthele holDinGs limiteD

We have audited the group annual financial statements, which          opinion
comprise the consolidated and separate statements of financial        In our opinion, these financial statements present fairly, in all
position as at 28 February 2011, the consolidated and separate        material respects, the consolidated and separate financial position
statements of comprehensive income, the consolidated and              of Protech Khuthele Holdings Limited as at 28 February 2011,
separate statements of changes in equity and consolidated and         and its consolidated and separate financial performance and
separate statements of cash flows for the year then ended,            consolidated and separate cash flows for the year then ended
and a summary of significant accounting policies and other            in accordance with International Financial Reporting Standards,
explanatory notes, the directors’ report and audit and risk           and in the manner required by the Companies Act of South Africa.
management committee report, as set out on pages 55 to 113.

Directors’ responsibility for the financial statements
The directors are responsible for the preparation and fair
presentation of these financial statements in accordance with         Deloitte & touche
International Financial Reporting Standards and in the manner         Per: Martin Bierman
required by the Companies Act of South Africa, and for such           Partner
internal control as the directors determine is necessary to enable    Registered auditors
the preparation of financial statements that are free from material   27 May 2011
misstatement, whether due to fraud or error.

Auditor’s responsibility
Our responsibility is to express an opinion on these financial
statements based on our audit. We conducted our audit in
accordance with International Standards on Auditing. Those
                                                                      Building 2
standards require that we comply with ethical requirements
                                                                      Deloitte Place
and plan and perform the audit to obtain reasonable assurance         The Woodlands
whether the financial statements are free from material               Woodlands Drive
misstatement.                                                         Woodmead, Sandton
An audit involves performing procedures to obtain audit               National executive: GG Gelink Chief executive,
evidence about the amounts and disclosures in the financial           Ae swiegers Chief operating officer, Gm pinnock Audit,
statements. The procedures selected depend on the auditor’s           Dl Kennedy Risk advisory, nB Kader Tax & legal services,
judgement, including the assessment of the risks of material          l Geeringh Consulting, l Bam Corporate finance,
misstatement of the financial statements, whether due to fraud        JK mazzocco Human resources, cr Beukman Finance,
or error. In making those risk assessments, the auditor considers     tJ Brown Clients, nt mtoba Chairman of the board,
internal control relevant to the entity’s preparation and fair        mJ comber Deputy chairman of the board.
presentation of the financial statements in order to design audit     A full list of partners and directors is available on request.
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 financial statement presentation.

We believe that the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our audit opinion.




 54
Directors' report            for the year ended 28 February 2011




The directors present their annual report which forms part of the     interests of directors
audited annual financial statements of the group for the year         At 28 February 2011, the present directors of the company
ended 28 February 2011.                                               held direct and indirect beneficial and non-beneficial interest in
                                                                      22 447 500 of the company's issued ordinary shares. Details of
nAture of Business
                                                                      the ordinary shares held per individual directors are listed below.
The group's business operations revolves around construction
and construction related services including contracting (fast-track   Beneficial                          Direct             Indirect
bulk earthworks, plant hire and logistical services), geotechnical    V Raseroka                    18 487 500                    –
laboratory and survey services and readymix concrete.                 N Wolmarans                      960 000            3 000 000

operAtinG results                                                     At the date of this report, these interests remain unchanged.
The profit of the group for the year was R39,2 million (2010:
R75,6 million) after taking into account taxation of R14,7 million
                                                                      AuDitors
(2010: R27,4 million).                                                Deloitte & Touche will continue in office in accordance with
                                                                      section 270 (2) of the Companies Act.
Full details of the financial position and results of the group are
set out in these financial statements.                                27 May 2011

The annual financial statements have been prepared in accordance
with International Financial Reporting Standards.

shAre cApitAl
Full details of the authorised and issued capital of the company
at 28 February 2011 are contained in note 9 of the financial
statements.

DiviDenDs
The following dividend was declared during the year in respect of
the year ended 28 February 2010:

– Final dividend of 4 cents per ordinary share.

events After the reportinG DAte
The directors are not aware of any matter or circumstance
arising since the end of the financial year, not otherwise dealt
with in the annual financial statements, which significantly
affect the financial position of the company or the results of
its operations.

DirectorAte AnD secretAry
At the date of this report, the directors of the company were:

independent non-executive
M Mareletse (acting chairman)
M Vuso

non-executive
D Ackerman (chairman) (Resigned: 22 September 2010)
V Raseroka
P van Tonder (Resigned: 22 September 2010)

executive
G Chapman (group chief executive) (Resigned: 10 November 2010)
N Wolmarans (group financial director)

The company secretary is Mrs A van der Merwe.




                                                                                             Protech Integrated Annual Report 2011   55
Audit and risk management committee report                                for the year ended 28 February 2011




BAcKGrounD                                                          The committee performed the following activities during the
The audit and risk management committee (“the committee”)           year under review:
is pleased to present this report on its activities during the
                                                                    • Two meetings were held during the period under review.
financial year ended 28 February 2011.
                                                                      All committee members attended all meetings. The chief
memBership                                                            executive officer, chief financial officer, lead internal audit
The committee is comprised of the following independent non-          partner, lead audit partner and senior audit manager of the
executive directors:                                                  external auditors attend meetings of this committee but have
– M Mareletse (chairman)                                              no voting rights. At each board meeting, the chairperson
– M Vuso                                                              reported on the activities and recommendations made by the
– V Raseroka                                                          committee.

oBJective AnD scope                                                 • Received and reviewed reports from both internal and external

The main purpose of the committee is to review and report             auditors concerning the effectiveness of the internal control
back to the board on all financial matters of the group. It also      environment, systems and processes.
has the responsibility to encourage continuous improvement          • Considered the independence and objectivity of the external
of, and foster adherence to, the company’s policies, procedures,
                                                                      auditors and ensured that the scope of their additional
and practices at all levels. The committee should also provide
                                                                      services provided was not such that they could be seen to
for open communication among the independent auditor, financial
                                                                      have impaired their independence.
and senior management, the internal audit function, and the
board of directors.                                                 • Reviewed and recommended for adoption by the board
                                                                      such financial information which is publicly disclosed and
The committee assists the board inter alia in:
                                                                      included in the annual financial statements for the year ended
• Overseeing the integrity of the company’s financial statements
                                                                      28 February 2011 and the interim results for the six months
  and the company’s accounting and financial reporting processes
                                                                      ended 31 August 2010.
  and financial statement audits.
                                                                    • Considered the effectiveness of internal audit, approved the
• Overseeing the company’s compliance with legal and regulatory
  requirements.                                                       audit plan for the year under review and monitored adherence
                                                                      of internal audit to its year plan.
• Overseeing the registered public accounting firm’s (independent
  auditor’s) qualifications and independence.                       The committee is of the opinion that the objectives of the
• Overseeing the performance of the company’s independent           committee were met during the year under review.
  auditor and internal audit function.
                                                                    externAl AuDit
• Overseeing the company’s systems of disclosure controls
  and procedures, internal controls over financial reporting, and   • The committee satisfied itself through enquiry that the external

  compliance with ethical standards adopted by the company.           auditor of Protech Khuthele Holdings Limited is independent
                                                                      as defined by the Act.
risK mAnAGement
                                                                    • Both audit and non-audit services by the external auditors
• The total process of risk management is the responsibility of
                                                                      were reviewed and pre-approved. Non-audit services are
  the board and the board ensures that management implements
  appropriate risk management processes and controls through          defined in the terms of reference of the committee and all
  the audit committee. Risk management is undertaken at               non-audit services performed by the external auditors are
  executive committee level and reported to the committee.            approved in terms of the committee’s non-audit services
• Formalised risk management policies are in place within             policy. The nature and extent of the of non-audit services is
  the group and these have been clearly communicated to               determined in the non-audit services policy.
  all employees.                                                    • The committee, in consultation with management, agreed
• The risk management committee regularly undertakes a                the audit fee for the 2011 financial year. The fee is considered
  review of the risk management policies. The monitoring of           appropriate for the work as foreseen at the time. Audit fees
  the risk management policies is regularly disclosed to the
                                                                      are disclosed in note 20 of the financial statements.
  committee and any deviation from risk management policies
  is communicated to and noted by the board.                        • The committee reviewed the performance of the external
                                                                      auditors and nominated, for approval at the annual general
• The total process of risk management includes a related
  system of internal controls. An annual risk assessment is           meeting, Deloitte & Touche as the external auditor for the
  performed at subsidiary level. This is then consolidated at         2012 financial year, and Mr M Bierman as the designated lead
  group level and additional risks added.                             auditor. This will be his fifth year as auditor of the company.



 56
chief finAnciAl officer                                              Deloitte & Touche, the external auditors, has provided stakeholders
The committee has reviewed the performance, appropriateness          with an independent opinion on whether the annual financial
and expertise of the chief financial officer, Mr CJA Wolmarans,      statements for the year ended 28 February 2011 fairly present,
and confirms his suitability for appointment as financial director   in all material respects, the financial results for the year and the
in terms of the JSE Listings Requirements.                           position of the company and the group at 28 February 2011.

AnnuAl finAnciAl stAtements
The committee has evaluated the annual financial statements
for the year ended 28 February 2011 and considers that they
comply in all material aspects, with the requirements of the
Companies Act 61 of 1973, as amended, and International
Financial Reporting Standards. The committee has therefore
recommended the annual financial statements for approval to          m mareletse
the board. The board has subsequently approved the annual
                                                                     Audit and risk management committee chairman
financial statements which will be open for discussion at the
forthcoming annual general meeting.                                  27 May 2011




                                                                                            Protech Integrated Annual Report 2011   57
Consolidated statement of financial position                   at 28 February 2011




                                                                                        2011        2010
                                                                    Notes              r’000       R’000

Assets
non-current assets                                                                   469 998     412 130

Property, plant and equipment                                           1            429 430     373   659
Goodwill                                                                2             33 549      33   549
Other intangible assets                                                 3              4 648       1   762
Other financial assets                                                  7                  –       2   202
Deferred tax                                                           13              2 371           958

current assets                                                                       383 879     315 187

Inventory                                                               4             11   434     8   536
Amounts due from contract customers                                     5             80   265    90   149
Trade and other receivables                                             6            216   067   122   183
Other financial assets                                                  7              3   501     7   173
Bank balances and cash                                                  8             72   612    87   146

total assets                                                                         853 877     727 317

equity AnD liABilities
total equity                                                                         334 898     310 255

Share capital and share premium                                         9             228 598     228 598
Reserves                                                               10            (124 029)   (123 943)
Retained earnings                                                                     230 329     205 600

equity attributable to equity holders of the holding company                         334 898     310 255
Non-controlling interests                                              11                  –           –

total liabilities                                                                    518 979     417 062

non-current liabilities                                                              238 280     223 113

Borrowings                                                             12            171 102     165 481
Deferred tax                                                           13             67 178      57 632

current liabilities                                                                  280 699     193 949

Borrowings                                                             12            122   535    99   100
Trade and other payables                                               14            120   778    81   087
Subcontractor liabilities                                              15             28   844     6   928
Current tax liabilities                                                                8   542     6   834

total equity and liabilities                                                         853 877     727 317

supplementary statement of financial position information
Total number of shares in issue (’000)                                               362 500     362 500
Net asset value per share (cents)                                                       92,4        85,6

capital expenditure (r’000)
– Spent                                                                              211 667     109 185
– Commitments – authorised but unspent                                               226 360     143 294

performance guarantees issued (r’000)                                                133 356      82 432




 58
Consolidated statement of comprehensive income                        for the year ended 28 February 2011




                                                                                         2011                  2010
                                                                    Notes               r’000                 R’000

Revenue                                                               17            1 069 665               748 778
Cost of sales                                                                        (693 272)             (414 588)

Gross profit                                                                          376 393               334 190
Sundry income                                                                           7 235                 5 855
Operating expenses                                                                   (242 032)             (177 679)

earnings before interest, taxation, depreciation and amortisation                     141 596               162 366
Depreciation                                                           1              (64 004)               (43 597)
Amortisation of intangible assets                                      3                 (471)                  (215)

earnings before interest and taxation                                                  77 121               118 554
Interest received                                                     18                1 837                 7 155
Interest paid                                                         19              (25 063)              (22 716)

earnings before taxation                                              20               53 895               102 993
Taxation                                                              21              (14 666)               (27 407)

earnings for the year                                                                  39 229                75 586

Other comprehensive income for the year, net of tax                                        (86)                      55

Movement in foreign currency translation reserve                                           (86)                      55

total comprehensive income for the year                                                39 143                75 641

Earnings attributable to:                                                              39 229                75 586

– Equity holders of the holding company                                                39 229                75 586
– Non-controlling interests                                           11                    –                     –

Total comprehensive income attributable to:

– Equity shareholders of the company                                                   39 143                75 641
– Non-controlling interests                                                                 –                     –

total comprehensive income for the year                                                39 143                75 641

earnings per share (cents)
Basic earnings per share                                              22                  10,8                  20,9
Diluted earnings per share                                            22                  10,8                  20,9




                                                                             Protech Integrated Annual Report 2011    59
Consolidated statement of cash flows                           for the year ended 28 February 2011




                                                                                                      2011      2010
                                                                              Notes                  r’000     R’000

cash flows from operating activities                                                             78 825       45 888

Cash receipts from customers                                                                    992 900       711 569
Cash paid to suppliers and employees                                                           (871 523)     (607 038)

Cash generated by operations                                                     26             121   377    104 531
Interest received                                                                                 1   837       7 155
Interest paid                                                                                   (25   063)   (22 716)
Dividends paid                                                                                  (14   500)          –
Income taxes paid                                                                27              (4   826)    (43 082)

cash flows from investing activities                                                           (122 415)      (46 747)

Purchase of property, plant and equipment                                                      (211 667)     (109 025)

– Replacement                                                                                  (114 502)      (86 331)
– Additions                                                                                     (97 165)      (22 694)

Purchase of intangible assets                                                                    (3 357)         (160)
Proceeds on disposal of property, plant and equipment                                            86 735        74 732
Movement in loan through acquisition                                             24                   –       (11 625)
Decrease/(increase) in loans granted                                                              5 874          (669)

cash flows from financing activities                                                             29 056       (13 583)

Payments in terms of bank loans                                                12.2              (7 476)       (11 349)
Increase in borrowings related to instalment sale agreements                                    222 778       107 607
Payments in terms of instalment sale agreements                                                (186 246)     (109 841)

net (decrease) in cash and cash equivalents                                                     (14 534)      (14 442)
cash and cash equivalents at the beginning of the year                                           87 146      101 588

cash and cash equivalents at the end of the year                                                 72 612       87 146

Cash and cash equivalents comprise of:
Bank balances and cash                                                            8              72 612       87 146




 60
Consolidated statement of changes in equity                                     for the year ended 28 February 2011




                                                                                                        equity
                                                                                                      attribut-
                                                                                                       able to
                                                                           Foreign                  the share-          Non-
                                                           Common         currency                     holders       control-
                                    Share       Share        control    translation   Retained          of the           ling         total
                                   capital   premium        reserve        reserve    earnings       company         interest        equity
                                   R’000        R’000         R’000          R’000      R’000            r’000         R’000          r’000

Balance at 1 March 2009                 2     228 596      (122 053)             –     128 069        234 614               –      234 614
Realisation in respect
of deregistered dormant
subsidiaries¹                           –             –       (1 945)            –        1 945               –             –              –
Total comprehensive
income for the year                     –             –            –            55      75 586         75 641               –       75 641

Balance at 28 February 2010             2     228 596      (123 998)            55     205 600        310 255               –      310 255
Dividends paid                          –           –             –              –     (14 500)       (14 500)              –      (14 500)
Total comprehensive
income for the year                     –             –            –           (86)     39 229         39 143               –       39 143

Balance at
28 february 2011                        2     228 596      (123 998)           (31)    230 329        334 898               –      334 898

1 The adjustment against the common control reserve relates to the deregistration of the dormant subsidiaries Protech Projects Holding (Pty) Ltd
  and Umvundla Investments No.2 (Pty) Ltd subsequent to the 2010 year end.




                                                                                                   Protech Integrated Annual Report 2011   61
Operational segmental reporting                            for the year ended 28 February 2011




services Within eAch Business seGment
For management purposes, the group is organised into three major operating divisions – contracting, geotechnical laboratory and
readymix. These three divisions are the basis on which the group reports its primary segment information. The principal services and
products of each of these divisions are as follows:

Contracting – bulk earthworks, roads and civil engineering contractors, plant hire, impact compaction and logistical services.

Geotechnical laboratory – geotechnical laboratory and surveying services.

Readymix – supplier of readymixed concrete and pumping services.

segment revenue and segment result

                                                                  segment revenue                      segment result


                                                                    2011               2010             2011                 2010
                                                                   r’000              R’000            r’000                R’000

Contracting                                                      942 890            640 235           74 485              120 137
Geotechnical laboratory                                           18 827             16 064            3 575                 2 847
Readymix                                                         128 617            113 049           (1 500)               (5 430)

                                                                1 090 334           769 348            76 560             117 554
Corporate¹                                                          8 930             8 960            15 298               1 071
Intergroup eliminations                                           (29 599)          (29 530)          (14 737)                 (71)

                                                                1 069 665           748 778

Operating profit                                                                                       77 121             118 554
Net interest paid                                                                                     (23 226)             (15 561)

Profit before tax                                                                                      53 895             102 993
Taxation                                                                                              (14 666)             (27 407)

Profit for the year                                                                                   39 229               75 586

1 Corporate includes the transactions of the holding company.


Segment revenue reported above represents revenue generated from external customers. Intersegment sales amounted to R29,7 million
(2010: R29,5 million). Segment result reported above represents operating profit per segment prior to taking interest into account.

The accounting policies of the reportable segments are the same as the group's accounting policies.

information about major customers

Included in revenues arising from contracting income of R942,9 million (2010: R640,2 million) are revenues of approximately
R511,2 million (2010: R302,8 million) which arose from contracting income from two of the group’s largest customers.

operating segments

The operating segments reported above form the basis on which internal reporting is structured for the chief decision makers.
Therefore there are no differences in terms of the numbers reported to shareholders and management.




 62
segment assets and liabilities

                                                                  segment assets                         segment liabilities


                                                                   2011               2010                  2011                  2010
                                                                  r’000              R’000                 r’000                 R’000

Contracting                                                     815 776            727 947               517 052               430 273
Geotechnical laboratory                                           9 216              6 489                 2 188                 2 036
Readymix                                                         72 293             79 724                85 856                89 990

                                                                 897 285            814 160              605 096               522 299
Corporate¹                                                       391 872            388 282              157 470               171 148
Intergroup eliminations                                         (435 280)          (475 125)            (243 587)             (276 385)

                                                                853 877            727 317               518 979               417 062

other segment information

                                                          Depreciation and amortisation           Additions to non-current assets


                                                                   2011               2010                  2011                  2010
                                                                  r’000              R’000                 r’000                 R’000

Contracting                                                      58   106           38 405               209 506               106 034
Geotechnical laboratory                                           1   196            1 007                   878                 2 686
Readymix                                                          3   933            4 400                   494                   465
Corporate¹                                                        1   240                –                   789                25 681

                                                                 64 475             43 812               211 667               134 866

1 Corporate includes the transactions of the holding company.




                                                                                               Protech Integrated Annual Report 2011   63
Accounting policies                 for the year ended 28 February 2011




GenerAl informAtion                                                      • IAS 36: Impairment of Assets – Amendments resulting from
Protech Khuthele Holdings Limited (the company) is a limited               April 2009 Annual Improvements to IFRSs (effective for
company incorporated in South Africa. The address of its                   accounting periods beginning on or after 1 January 2010).
registered office and principal place of business are disclosed          • IAS 39: Financial Instruments – Recognition and Measurement
on page 114 of this report.                                                (effective for accounting periods beginning on or after
The company is the holding company of a number of subsidiary               1 July 2009).
companies principally engaged in contracting (fast-track bulk            • IFRIC 9 & IAS 39: Embedded Derivatives (New Interpretation)
earthworks, plant hire and logistical services), geotechnical              (effective for financial years commencing on or after
laboratory and survey services and readymix concrete.                      30 June 2009).
                                                                         • IFRIC 16 (Amended) – Hedges of a Net Investment in a
ADoption of neW AnD reviseD stAtements
                                                                           Foreign Operation (effective for financial periods beginning
standards and interpretations effective in the                             on or after 1 July 2009).
current period                                                           • IFRIC 17: Distributions of Non-cash Assets to Owners
The following statements and interpretations became effective              (effective for accounting periods beginning on or after 1 July
in the current period:                                                     2009).
• IFRS 2: (Amendment) Share based Payments – Group Cash-                 • IFRIC 18: Transfers of Assets from Customers (effective for
  settled Share based Payment Transactions (effective for                  accounting periods beginning on or after 1 July 2009).
  accounting periods beginning on or after 1 January 2010).
                                                                         The adoption of these standards and interpretations has not led
• IFRS 3: (Revised) Business Combinations (Financial years
                                                                         to any changes in the company’s accounting policies.
  commencing on or after 1 July 2009).
• IFRS 5: (Amendment) Non-current Assets Held for Sale and               standards and interpretations in issue not
  Discontinued Operations – Amendments resulting from April              yet adopted
  2009 Annual Improvements to IFRSs (amendments effective                At the date of authorisation of these financial statements the
  for accounting periods beginning on or after 1 January 2010).          following interpretations were in issue but not yet effective:
• IFRS 8: (Amendment) Operating Segments – Amendments
                                                                         • IFRS 7: (Amendment) Financial Instruments: Disclosures –
  resulting from April 2009 Annual Improvements to IFRSs
                                                                           Amendments enhancing disclosures about transfers of financial
  (amendments effective for accounting periods beginning on
                                                                           assets (effective for annual periods beginning on or after
  or after 1 January 2010).
                                                                           1 July 2011).
• IAS 1: Presentation of Financial Statements – Amendments
                                                                         • IFRS 9: Financial Instruments (effective for financial periods
  resulting from April 2009 Annual Improvements to IFRSs
                                                                           beginning on or after 1 January 2013).
  (effective for financial periods beginning on or after
  1 January 2010).                                                       • IAS 12: Income Taxes – Limited scope amendment (recovery
                                                                           of underlying assets)(effective for financial periods beginning
• IAS 7: Statement of Cash Flows – Amendments resulting
                                                                           on or after 1 January 2012).
  from April 2009 Annual Improvements to IFRSs (effective for
  financial periods beginning on or after 1 January 2010).               • IAS 24: Related Party Disclosures (effective for financial
                                                                           periods beginning on or after 1 January 2011).
• IAS 10: (Amendment) – Events After the Reporting Period
  (effective for financial periods beginning on or after 1 July 2009).   • IFRIC 14, IAS 19: The Limit on a Defined Benefit Asset,

• IAS 17: Leases – Amendments resulting from April 2009                    minimum funding requirements and their interaction (effective
  Annual Improvements to IFRSs (effective for financial periods            for financial periods beginning on or after 1 January 2011).
  beginning on or after 1 January 2010).                                 • IFRIC 19: Extinguishing Financial Liabilities with Equity

• IAS 27: (Revised) Consolidated and Separate Financial                    Investments (effective for financial periods beginning on or
  Statements (effective for accounting periods beginning on                after 1 July 2010).
  or after 1 July 2009).                                                 • Improvement Projects Improvements to IFRS financial years
• IAS 28: (Amendment) Investment in Associates (effective for              commencing on or after 1 July 2010 and 1 July 2011.
  accounting periods beginning on or after 1 July 2009).
                                                                         The directors anticipate that all of the above standards and
• IAS 31: (Amendment) Interest in Joint Ventures (effective for          interpretations will be adopted in the company’s financial
  accounting periods beginning on or after 1 July 2009).                 statements for the year in which they become effective and
• IAS 32: (Amendment) Financial Instruments: Presentation                that the adoption of those standards and interpretations will
  (effective for financial periods beginning on or after 1 February      have no material impact on the financial statements of the
  2010).                                                                 company in the period of initial application.



 64
siGnificAnt AccountinG policies                                           Acquisitions of subsidiaries and businesses are accounted for
                                                                          using the purchase method. The cost of the business combination
statement of compliance                                                   is measured as the aggregate of the fair values (at the date
These consolidated financial statements are prepared in                   of exchange) of assets given, liabilities incurred or assumed,
accordance with IFRS and interpretations adopted by the                   and equity instruments issued by the group in exchange for
International Accounting Standards Board (IASB), the International
                                                                          control of the acquiree, plus any costs directly attributable to the
Financial Reporting Interpretations Committee (IFRIC) of the
                                                                          business combination. The acquiree’s identifiable assets, liabilities
IASB and the Companies Act in South Africa.
                                                                          and contingent liabilities that meet the conditions for recognition
Basis of consolidation                                                    under IFRS 3: Business Combinations are recognised at their fair
                                                                          values at the acquisition date, except for non-current assets (or
The consolidated financial statements incorporate the financial
statements of the company and entities (including special                 disposal groups) that are classified as held for sale in accordance
purpose entities) controlled by the company (its subsidiaries).           with IFRS 5: Non-current Assets Held for Sale and Discontinued
Control is achieved where the company has the power to govern             Operations, which are recognised and measured at fair value
the financial and operating policies of an entity so as to obtain         less costs to sell.
benefits from its activities.
                                                                          Goodwill arising on acquisition is recognised as an asset and
Where necessary, adjustments are made to the financial statements         initially measured at cost, being the excess of the cost of the
of subsidiaries to bring their accounting policies into line with those   business combination over the group’s interest in the net fair
used by other members of the group.                                       value of the identifiable assets, liabilities and contingent liabilities
All intragroup transactions, balances, income and expenses are            recognised. If, after reassessment, the group’s interest in the
eliminated in full on consolidation.                                      net fair value of the acquiree’s identifiable assets, liabilities
                                                                          and contingent liabilities exceeds the cost of the business
Basis of preparation                                                      combination, the excess is recognised immediately in profit
These consolidated financial statements have been prepared                or loss.
under the historical cost convention as modified by the revaluation
of non-trading financial asset investments, financial assets and          The interest of non-controlling shareholders in the acquiree is
financial liabilities held for trading and financial assets designated    initially measured at their proportion of the net fair value of the
as fair value through profit and loss. Non-current assets and             assets, liabilities and contingent liabilities recognised.
disposal groups held for sale, where applicable, are stated at
the lower of carrying amount and fair value less costs to sell.           interest in joint ventures
                                                                          Joint ventures are contractual agreements whereby the company
The preparation of financial statements requires the use of
                                                                          and other parties undertake an economic activity that is subject to
estimates and assumptions that affect the reported amounts
of assets and liabilities, and disclosure of contingent assets            joint control, that is when the strategic financial and operating
and liabilities at the date of the financial statements and the           policy decisions relating to the activities require the unanimous
reported amounts of revenues and expenses during the reporting            consent of the parties sharing control. These joint ventures may
period. Although these estimates are based on management’s                take the form of jointly controlled operations such as construction
best knowledge of current events and actions, actual results              contracts, jointly controlled assets, jointly controlled partnerships
may ultimately differ from those estimates.                               or companies.

The estimates and underlying assumptions are reviewed on an               Joint ventures are accounted for by means of the proportionate
ongoing basis. Revisions to accounting estimates are recognised           consolidation method whereby the company’s share of the
in the period in which the estimate is revised if the revision            assets, liabilities, income, expenses and cash flows of joint
affects only that period, or in the period of the revision and future     ventures are included on a line by line basis in the financial
periods if the revision affects both current and future periods.
                                                                          statements.

Business combinations
                                                                          foreign currencies
The IFRS on business combinations (IFRS 3) does not apply
to business combinations effected between parties that are                Functional and Presentation currency
ultimately controlled by the same shareholders, otherwise                 Items included in the financial statements of each entity in the
known as common control transactions. When Protech acquired               group are measured using the currency that best reflects the
its initial operating subsidiaries on 1 July 2007 the company             economic substance of the underlying events and circumstances
elected to apply "predecessor accounting" as determined by the            relevant to that entity (the functional currency). For the purpose
principles generally accepted in the United States of America.            of the consolidated financial statements, the results and the
All other business combinations will be subject to the conditions         financial position of each entity are expressed in Rands, which
and recognition criteria as stipulated by IFRS 3: Business                is the functional currency of the company and the presentation
Combinations.                                                             currency for the consolidated financial statements.



                                                                                                   Protech Integrated Annual Report 2011     65
Accounting policies                  for the year ended 28 February 2011
(Continued)



Foreign currency transactions                                            Any exchange difference arising on an intragroup monetary item,
In preparing the financial statements of the individual entities,        whether short term or long term, continues to be recognised
transactions in currencies other than the entity’s functional            as income or expense since the monetary item represents a
currency (foreign currencies) are recorded at the rates of               commitment to convert one currency into another and exposes
exchange prevailing on the dates of the transactions.                    the group to a gain or loss through currency fluctuations.
                                                                         However, exchange differences arising on a monetary item
Foreign currency monetary items
                                                                         that, in substance, forms part of the group’s net investment in
Monetary assets denominated in foreign currencies are translated
                                                                         a foreign entity are classified as equity until the disposal of the
into the functional currency at the bid rate of exchange ruling at
                                                                         net investment at which time the cumulative amount of the
the reporting date. Exchange differences arising on translation
                                                                         exchange differences that has been deferred and relates to that
are credited to or charged against income.
                                                                         foreign entity is recognised as income or expense in the same
Monetary liabilities denominated in foreign currencies are               period in which the gain or loss on disposal is recognised.
translated into the functional currency at the offer rate of
exchange ruling at the reporting date. Exchange differences              Goodwill
arising on translation are credited to or charged against income.        Goodwill arising on the acquisition of a subsidiary or a jointly
                                                                         controlled entity represents the excess of the cost of acquisition
Monetary assets and liabilities (being loans, call accounts,
                                                                         over the group’s interest in the net fair value of the identifiable
receivables and payables) denominated in foreign currencies
                                                                         assets, liabilities and contingent liabilities of the subsidiary or
are translated into the functional currency at the mid rate of
                                                                         jointly controlled entity recognised at the date of acquisition.
exchange ruling at the reporting date. Exchange differences
                                                                         Goodwill is initially recognised as an asset at cost and is
arising on translation are credited to or charged against income.
                                                                         subsequently measured at cost less any accumulated impairment
Exchange differences arising, if any, are recognised in other
                                                                         losses.
comprehensive income (attributed to non-controlling interests
as appropriate).                                                         For the purpose of impairment testing, goodwill is allocated to
                                                                         each of the group’s cash-generating units expected to benefit
Foreign currency non-monetary items
                                                                         from the synergies of the combination. Cash-generating units
Non-monetary items carried at fair value, denominated in foreign
                                                                         to which goodwill has been allocated are tested for impairment
currencies, are translated at the rates prevailing on the date
                                                                         annually, or more frequently when there is an indication that the
when the fair value was determined. Exchange differences
                                                                         unit may be impaired. If the recoverable amount of the cash-
arising on translation are credited to or charged against income
                                                                         generating unit is less than the carrying amount of the unit, the
except for differences arising on the translation of non-monetary
                                                                         impairment loss is allocated first to reduce the carrying amount
items in respect of which gains and losses are recognised directly
                                                                         of any goodwill allocated to the unit and then to the other
in other comprehensive income. For such items, any exchange
                                                                         assets of the unit pro-rata on the basis of the carrying amount
component of that gain or loss is also recognised directly in
                                                                         of each asset in the unit. An impairment loss recognised for
other comprehensive income.
                                                                         goodwill is not reversed in a subsequent period.
Non-monetary items that are measured in terms of historical cost
                                                                         On disposal of a subsidiary or a jointly controlled entity, the
in a foreign currency are translated at historical exchange rates.
                                                                         attributable amount of goodwill is included in the determination
Foreign entities                                                         of the profit or loss on disposal.
The results and financial position of foreign entities that have a
functional currency different from the presentation currency are         revenue
translated into the presentation currency as follows:                    Revenue is the aggregate of the external turnover of subsidiaries
                                                                         and is measured at the fair value of the consideration received
• Assets and liabilities, at rates of exchange ruling at the reporting
                                                                         or receivable and represents amounts receivable for goods
  date.
                                                                         and services provided in the normal course of business, net of
• Income, expenditure and cash flow items at average rates.              rebates, discounts and sales related taxes.
All resulting exchange differences are reflected in other
                                                                         sale oF goods
comprehensive income as part of the foreign currency translation
                                                                         Revenue from the sale of goods is recognised when all the
reserve. On disposal of a foreign entity, the cumulative translation
                                                                         following conditions are satisfied:
differences relating to that entity are recognised in the statement
of comprehensive income as part of the cumulative gain or loss           • The group has transferred to the buyer the significant risks
on disposal.                                                               and rewards of ownership of the goods.

Goodwill and fair value adjustments arising on the acquisition           • The group retains neither continuing managerial involvement

of a foreign entity are treated as assets and liabilities of the           to the degree usually associated with ownership nor effective
foreign entity and translated at the rates of exchange ruling at           control over the goods sold.
the reporting date.                                                      • The amount of revenue can be measured reliably.




 66
• It is probable that the economic benefits associated with the        deFerred tax
  transaction will flow to the entity.                                 Deferred tax is recognised on differences between the carrying
• The costs incurred or to be incurred in respect of the transaction   amounts of assets and liabilities in the financial statements and
  can be measured reliably.                                            the corresponding tax bases used in the computation of taxable
                                                                       profit, and is accounted for using the liability method. Deferred
rendering oF services
                                                                       tax liabilities are generally recognised for all taxable temporary
Revenue from services is recognised over the period during             differences, and deferred tax assets are generally recognised
which the services are rendered.                                       for all deductible temporary differences to the extent that it is
                                                                       probable that taxable profits will be available against which those
construction contracts
                                                                       deductible temporary differences can be utilised. Such assets
Where the outcome of a construction contract can be reliably
                                                                       and liabilities are not recognised if the temporary difference
measured, revenue and costs are recognised by reference to
                                                                       arises from goodwill or from the initial recognition (other than
the stage of completion of the contract at the reporting date,
as measured by the surveys of work performed. Variations in            in a business combination) of other assets and liabilities in
contract work, claims and incentive payments are included to           a transaction that affects neither the taxable profit nor the
the extent that collection is probable and the amounts can             accounting profit.
be reliably measured. Anticipated losses to completion are             Deferred tax liabilities are recognised for taxable temporary
immediately recognised as an expense in contract costs.
                                                                       differences associated with interests in joint ventures, except
Where the outcome of the long-term construction contracts              where the group is able to control the reversal of the temporary
cannot be estimated reliably, contract revenue is recognised to        difference and it is probable that the temporary difference will
the extent that the recoverability of incurred costs is probable.      not reverse in the foreseeable future. Deferred tax assets arising

When it is probable that total contract costs will exceed total        from deductible temporary differences associated with such
contract revenue, the expected loss is recognised as an expense        investments and interests are only recognised to the extent that
immediately.                                                           it is probable that there will be sufficient taxable profits against
                                                                       which to utilise the benefits of the temporary differences and
interest revenue                                                       they are expected to reverse in the foreseeable future.
Interest is recognised on a time proportion basis, taking account
                                                                       The carrying amount of deferred tax assets is reviewed at each
of the principal outstanding and the effective rate over the period
                                                                       reporting date and reduced to the extent that it is no longer
to maturity.
                                                                       probable that sufficient taxable profits will be available to allow
dividend income                                                        all or part of the asset to be recovered.
Dividend revenue from investments is recognised when the
                                                                       Deferred tax assets and liabilities are measured at the tax
shareholder’s right to receive payment has been established.
                                                                       rates that are expected to apply in the period in which the
                                                                       liability is settled or the asset realised, based on tax rates (and
Borrowing costs
                                                                       tax laws) that have been enacted or substantively enacted by
Borrowing costs incurred in respect of the acquisition or
                                                                       the reporting date. The measurement of deferred tax liabilities
manufacturing of qualifying assets, that require a substantial
                                                                       and assets reflects the tax consequences that would follow
period to prepare assets for their intended use, are capitalised
up to the date that the development of the asset is ready for          from the manner in which the group expects, at the reporting
its intended use. Other borrowing costs are recognised in the          date, to recover or settle the carrying amount of its assets
statement of comprehensive income as incurred.                         and liabilities.

                                                                       Deferred tax assets and liabilities are offset when there is a
taxation
                                                                       legally enforceable right to set off current tax assets against
Income tax expense represents the sum of the tax currently
                                                                       current tax liabilities and when they relate to income taxes
payable and deferred tax.
                                                                       levied by the same taxation authority and the group intends to
current tax                                                            settle its current tax assets and liabilities on a net basis.
The tax currently payable is based on taxable profit for the year.     secondary tax on comPanies (stc)
Taxable profit differs from profit as reported in the statement of     A liability for STC will be recognised when a dividend has been
comprehensive income because it excludes items of income               declared that results in such STC becoming payable.
or expense that are taxable or deductible in other years and
it further excludes items that are never taxable or deductible.        current and deFerred tax For the Period
The company's liability for current tax is calculated using tax        Current and deferred tax are recognised as an expense or income
rates that have been enacted or substantively enacted by the           in profit or loss, except when they relate to items credited or
reporting date.                                                        debited directly to other comprehensive income, in which case



                                                                                              Protech Integrated Annual Report 2011    67
Accounting policies                  for the year ended 28 February 2011
(Continued)



the tax is also recognised directly in other comprehensive               The estimated life of the other categories of assets are set
income, or where they arise from the initial accounting for a            out below:
business combination. In the case of a business combination,             Office equipment                                      2 – 6 years
the tax effect is taken into account in calculating goodwill or          Other equipment                                       3 – 5 years
in determining the excess of the acquirer’s interest in the net
                                                                         Depreciation commences when the asset is ready for its intended
fair value of the acquiree’s identifiable assets, liabilities and
                                                                         use and ceases when the asset is derecognised or classified as
contingent liabilities over cost.
                                                                         held for sale.

property, plant and equipment                                            The useful life and residual value of each component is reviewed
                                                                         annually at year end and, if expectations differ from previous
Property, plant and equipment are tangible assets that the
                                                                         estimates, adjusted prospectively as a change in accounting
group holds for its own use or for rental to others and which the
                                                                         estimate.
group expects to use for more than one period. Property, plant
and equipment could be constructed by the group or purchased             Gains or losses on disposal are determined by comparing the
from other entities. The consumption of property, plant and              proceeds with the carrying amount of the asset.
equipment is reflected through a depreciation charge designed
                                                                         imPairments
to reduce the asset to its residual value over its useful life.
                                                                         Where the carrying value of an asset is greater than its estimated
measurement                                                              recoverable amount, an impairment provision is raised immediately
All property, plant and equipment is stated at cost less accumulated     to bring the carrying value in line with the recoverable amount.
depreciation and accumulated impairment losses, except for land,         revaluations
which is stated at cost less accumulated impairment losses. Cost
                                                                         Property, plant and equipment are not revalued other than at
includes expenditure that is directly attributable to the acquisition    acquisition of subsidiaries in terms of a business combination.
of the item.
                                                                         intangible assets other than goodwill
subsequent costs
                                                                         An intangible asset is an identifiable, non-monetary asset that
Subsequent costs are included in an asset’s carrying value only          has no physical substance. An intangible asset is recognised
when it is probable that future economic benefits associated             when it is identifiable; the group has control over the asset; it
with the item will flow to the group and the cost of the item            is probable that economic benefits will flow to the group; and
can be measured reliably. Day-to-day servicing costs are                 the cost of the asset can be measured reliably.
recognised in the statement of comprehensive income in the
year incurred.                                                           intangible assets acquired seParately
                                                                         Intangible assets acquired separately are reported at cost less
dePreciation                                                             accumulated amortisation and accumulated impairment losses.
Depreciation is calculated on the straight-line or units of production   Amortisation is charged on a straight-line basis over their
basis at rates considered appropriate to reduce the carrying value       estimated useful lives. The estimated useful life and amortisation
of each component of an asset to its estimated residual value            method are reviewed at the end of each annual reporting period,
over its estimated useful life. The residual values and useful lives     with the effect of any changes in estimate being accounted for
of all items of property, plant and equipment are reviewed, and          on a prospective basis.
adjusted if necessary, at each reporting date. Depreciation is
                                                                         intangible assets acquired in a business combination
charged to profit or loss.
                                                                         Intangible assets acquired in a business combination are identified
Plant and machinery are depreciated on a units of output method          and recognised separately from goodwill where they satisfy the
over the estimated useful lives which is expressed in distances          definition of an intangible asset and their fair values can be
travelled or hours of production. The estimated useful lives             measured reliably. The cost of such intangible assets is their fair
of equipment is considered to be 500 000 km, 250 000 km                  value at the acquisition date.
or 15 000 hours of production. Certain road-going equipment              Subsequent to initial recognition, intangible assets acquired in
was previously depreciated over 500 000 km. During 2011 it was           a business combination are reported at cost less accumulated
changed from 500 000 km to 250 000 km and this represents                amortisation and accumulated impairment losses, on the same
a change in accounting estimate as explained in note 1.                  basis as intangible assets acquired separately.

Properties consist of freehold land and buildings. The buildings         amortisation oF intangible assets
are classified as owner occupied property and is carried at cost         Amortisation is charged to the statement of comprehensive
less accumulated depreciation other than land which is not               income on a systematic basis over the estimated useful life of
depreciated. Depreciation is calculated to write off the cost of         the intangible asset from the date that they are available for use
these properties over their expected useful lives on a straight-         unless the useful lives are indefinite. Intangible assets with
line basis; generally, buildings are depreciated over 50 years.          indefinite lives are tested annually for impairment.



 68
The estimated life of the other categories of assets are set           leases
out below:                                                             Leases of property, plant and equipment where the group
                                                                       substantially carries all the risks and rewards of ownership, are
Technical drawings and patents                          – 10 years
                                                                       classified as finance leases. Finance leases are capitalised. All
                                                                       other leases are classified as operating leases. The classification
impairment of tangible and intangible assets
                                                                       is based on the substance and financial reality of the whole
excluding goodwill
                                                                       transaction rather than the legal form. Greater weight is therefore
At each reporting date, the group reviews the carrying amounts         given to those features which have a commercial effect in
of its tangible and intangible assets to determine whether there       practice. Leases of land and buildings are analysed separately
is any indication that those assets have suffered an impairment        to determine whether each component is an operating or
loss. If any such indication exists, the recoverable amount of the     finance lease.
asset is estimated in order to determine the extent of the
impairment loss (if any). Where it is not possible to estimate the     Finance leases

recoverable amount of an individual asset, the group estimates         At the commencement of the lease term, finance leases are
the recoverable amount of the cash-generating unit to which the        recognised as assets and liabilities in the statement of financial
                                                                       position at an amount equal to the fair value of the leased asset
asset belongs. Where a reasonable and consistent basis of
                                                                       or, if lower, the present value of the minimum lease payments.
allocation can be identified, corporate assets are also allocated to
                                                                       Any direct cost incurred in negotiating or arranging a lease is
individual cash-generating units, or otherwise they are allocated
                                                                       added to the cost of the asset. The present value of the cost of
to the smallest group of cash-generating units for which a
                                                                       decommissioning, restoration or similar obligations relating to
reasonable and consistent allocation basis can be identified.          the asset are also capitalised to the cost of the asset on initial
Intangible assets with indefinite useful lives and intangible          recognition. The discount rate used in calculating the present
assets not yet available for use are tested for impairment             value of minimum lease payments is the rate implicit in the lease.

annually, and whenever there is an indication that the asset           Capitalised leased assets are accounted for as property, plant
may be impaired.                                                       and equipment. They are depreciated using the straight-line
                                                                       or unit of production basis at rates considered appropriate to
Recoverable amount is the higher of fair value less costs to sell
                                                                       reduce the carrying values over the estimated useful lives to
and value in use. In assessing value in use, the estimated future
                                                                       the estimated residual values. Where it is not certain that an
cash flows are discounted to their present value using a pre-tax       asset will be taken over by the group at the end of the lease,
discount rate that reflects current market assessments of the          the asset is depreciated over the shorter of the lease period
time value of money and the risks specific to the asset for which      and the estimated useful life of the asset.
the estimates of future cash flows have not been adjusted.
                                                                       Finance lease payments are allocated between the lease finance
If the recoverable amount of an asset (or cash-generating unit)        cost and the capital repayment using the effective interest rate
is estimated to be less than its carrying amount, the carrying         method. Lease finance costs are charged to operating costs as
amount of the asset (or cash-generating unit) is reduced to            they become due.
its recoverable amount. An impairment loss is recognised
                                                                       oPerating leases
immediately in profit or loss, unless the relevant asset is carried
                                                                       Operating lease payments are recognised in the statement of
at a revalued amount, in which case the impairment loss is
                                                                       comprehensive income on a straight-line basis over the lease
treated as a revaluation decrease.
                                                                       term. In negotiating a new or renewed operating lease, the
                                                                       lessor may provide incentives for the group to enter into the
inventories
                                                                       agreement, such as up front cash payments or an initial rent-
Inventories comprise raw materials, consumables and work-              free period. These benefits are recognised as a reduction of the
in-progress. Inventories are valued at the lower of cost and           rental expense over the lease term, on a straight-line basis.
net realisable value.
                                                                       provisions
The cost of inventories is determined using the following cost
                                                                       Provisions are recognised when the group has a present obligation
formulas:
                                                                       (legal or constructive) as a result of a past event, it is probable
• raw materials – first-in, first-out cost basis                       that the group will be required to settle the obligation, and a
                                                                       reliable estimate can be made of the amount of the obligation.
• consumables – average cost

• contract work in progress – actual cost                              The amount recognised as a provision is the best estimate of
                                                                       the consideration required to settle the present obligation at
Net realisable value represents the estimated selling price            the reporting date, taking into account the risks and uncertainties
in the ordinary course of business less all estimated costs            surrounding the obligation. Where a provision is measured using
of completion and costs to be incurred in marketing, selling           the cash flows estimated to settle the present obligation, its
and distribution.                                                      carrying amount is the present value of those cash flows.



                                                                                              Protech Integrated Annual Report 2011   69
Accounting policies                 for the year ended 28 February 2011
(Continued)



When some or all of the economic benefits required to settle           contract receivables and retentions
a provision are expected to be recovered from a third party,           Contract receivables and retentions are initially recognised at fair
the receivable is recognised as an asset if it is virtually certain    value, and are subsequently classified as loans and receivables
that reimbursement will be received and the amount of the              and measured at amortised cost using the effective interest rate
receivable can be measured reliably.                                   method. Retention receivables are shown at the net present
                                                                       value of future cash flows.
onerous contracts
Present obligations arising under onerous contracts are recognised     Contract and retention receivables comprise amounts due in
and measured as provisions. An onerous contract is considered          respect of certified or approved certificates by the client or
to exist where the group has a contract under which the                consultant at the reporting date for which payment has not
unavoidable costs of meeting the obligations under the contract        been received, and amounts held as retentions on certified
exceed the economic benefits expected to be received under it.         certificates at the reporting date.

contingent liabilities acquired in a business combination              trade receivables
Contingent liabilities acquired in a business combination are          Trade receivables are initially recognised at fair value, and are
initially measured at fair value at the date of acquisition. At        subsequently classified as loans and receivables and measured
subsequent reporting dates, such contingent liabilities are            at amortised cost using the effective interest rate method.
measured at the higher of the amount that would be recognised
                                                                       The provision for impairment of trade receivables is established
in accordance with IAS 37: Provisions, Contingent Liabilities
                                                                       when there is objective evidence that the group will not be able
and Contingent Assets and the amount initially recognised
                                                                       to collect all amounts due in accordance with the original terms
less cumulative amortisation recognised in accordance with
                                                                       of the credit given and includes an assessment of recoverability
IAS 18: Revenue.
                                                                       based on historical trend analysis and events that exist at
financial instruments                                                  reporting date. The amount of the provision is the difference
                                                                       between the carrying value and the present value of estimated
classiFication
                                                                       future cash flows, discounted at the effective interest rate
Financial assets and liabilities are recognised in the statement
                                                                       computed at initial recognition.
of financial position when the group has become a party to the
contractual provisions of the instruments. Purchases and sales         cash and cash equivalents
of financial instruments are recognised on trade date, being           Cash and cash equivalents comprise cash on deposits and
the date on which the group commits to purchase or sell the            other short-term highly liquid investments readily convertible to
instrument. Financial assets are initially measured at fair value      a known amount of cash and subject to an insignificant risk of
and are subsequently measured on the basis as set out below.           changes in value.

Financial assets                                                       Bank overdrafts are not offset against positive bank balances
Investments are recognised and derecognised on trade date              unless a legally enforceable right of offset exists, and there
where the purchase or sale of an investment is under a contract        is an intention to settle the overdraft and realise the net cash
whose terms require delivery of the investment within the              simultaneously, or to settle on a net basis.
timeframe established by the market concerned, and are initially
                                                                       All short-term cash investments are invested with major financial
measured at fair value, plus transaction costs, except for those
                                                                       institutions in order to manage credit risk.
financial assets classified as at fair value through profit or loss,
which are initially measured at fair value.                            Financial liabilities and equity
Financial assets for the group comprise of loans and receivables.      Financial liabilities and equity are classified according to the
                                                                       substance of the contractual arrangements entered into and
loans and receivables                                                  the definitions of a financial liability and an equity instrument.
Loans and receivables are stated at amortised cost. Amortised          An equity instrument is any contract that evidences a residual
cost represents the original invoice amount less principal             interest in the assets of the group after deducting all of its
repayments received, the impact of discounting to net present          liabilities.
value and a provision for impairment, where applicable.
                                                                       equity instruments
The provision for impairment is established when there is objective
                                                                       Equity instruments issued by the company are recognised at
evidence that the group will not be able to collect all amounts
                                                                       the proceeds received, net of direct issue costs.
due according to the original terms of the loan or receivable.
When a loan has a fixed maturity date but carries no interest,         non-trading Financial liabilities
the carrying value reflects the time value of money, and the           Non-trading financial liabilities are recognised at amortised
loan is discounted to its net present value. The unwinding of          cost. Amortised cost represents the original debt less principal
the discount is subsequently reflected in the statement of             payments made, the impact of discounting to net present value
comprehensive income as part of interest income.                       and amortisations of related costs.



 70
trade Payables                                                          carried at amortised cost. If it is probable that the advance
Trade payables are liabilities to pay for goods or services that        payment will be repaid with goods or services, the liability is
have been received or supplied and have been invoiced or                carried at historic cost.
formally agreed with the supplier. Trade payables are initially
recognised at fair value, and are subsequently classified as non-
                                                                        segmental reporting
trading financial liabilities and carried at amortised cost using       A business segment is a group of assets and operations engaged
the effective interest rate method.                                     in providing products or services that are subject to risks and
                                                                        returns that are different from those of other business segments.
subcontractor liabilities                                               A geographical segment is engaged in providing products
Subcontractor liabilities represent the actual unpaid liability owing   or services within a particular economic environment that are
to subcontractors for work performed including retention monies         subject to risks and returns that are different from those of
owed. Subcontractor liabilities are initially recognised at fair        segments operating in other economic environments.
value, and are subsequently classified as non-trading financial         The group’s primary format for reporting segmental information
liabilities and carried at amortised cost using the effective           is determined in accordance with the nature of business. The
interest rate method.                                                   group's operations are all based in southern Africa, hence no
loans to (From) grouP comPanies
                                                                        reporting is required in terms of geographical location.

These include loans to and from holding companies, fellow               inter-segment transFers
subsidiaries, subsidiaries, joint ventures and associates and are       Segment revenue, segment expenses and segment results
recognised initially at fair value plus direct transaction costs.       include transfers between business segments and between
Loans to group companies are classified as loans and receivables.       geographical segments. Such transfers are accounted for at arms-
                                                                        length prices. These transfers are eliminated on consolidation.
Loans from group companies are classified as financial liabilities
measured at amortised cost.                                             segmental revenue and exPenses
                                                                        All segment revenue and expenses are directly attributable
bank overdraFt and borrowings
                                                                        to the segments. Segment revenue and expenses are allocated
Bank overdrafts and borrowings are initially measured at fair           to the business segments based on the nature of the business
value, and are subsequently measured at amortised cost, using           operations.
the effective interest rate method. Any difference between
the proceeds (net of transaction costs) and the settlement or           segmental assets
redemption of borrowings is recognised over the term of the             All operating assets used by a segment consist primarily of
borrowings in accordance with the company’s accounting policy           property, plant and equipment, investments, inventories,
for borrowing costs.                                                    contracts in progress, and receivables, net of allowances.
                                                                        Segment assets are allocated to the business segments based
related party transactions                                              on the nature of the business operations.
Related parties are considered to be related if one party has the
ability to control or jointly control the other party or exercise       segmental liabilities
significant influence over the other party in making financial          All operating liabilities of a segment consist primarily of accounts
and operating decisions. Key management personnel are also              payable, sub-contractor liabilities and interest bearing borrowings.
regarded as related parties. Key management personnel are
those persons having authority and responsibility for planning,         Dividends
directing, and controlling the activities of the group, directly or     Dividends are accounted for on the date of declaration and are
indirectly, including all executive and non-executive directors.        not accrued as a liability in the financial statements until declared.

Related party transactions are those where a transfer of resources      contingent liabilities
or obligations between related parties occurs, regardless of
                                                                        A contingent liability is a possible obligation that arises from
whether or not a price is charged.                                      past events and whose existence will be confirmed only by the
                                                                        occurrence or non-occurrence of one or more uncertain future
contracts in progress
                                                                        events not wholly within the control of the group, or a present
Contracts in progress represent those costs recognised by the
                                                                        obligation that arises from past events but is not recognised
stage of completion of the contract activity at the reporting
                                                                        because it is not probable that an outflow of resources embodying
date. Anticipated losses to completion are deducted.
                                                                        economic benefits will be required to settle the obligation;
advance Payments received                                               or the amount of the obligation cannot be measured with
                                                                        sufficient reliability.
Advance payments received are assessed on initial recognition
to determine whether it is probable that it will be repaid in           If the likelihood of an outflow of resources is remote, the
cash or another financial asset. In this instance, the advance          possible obligation is neither a provision nor a contingent
payment is classified as a non-trading financial liability that is      liability and no disclosure is made.



                                                                                                Protech Integrated Annual Report 2011    71
Accounting policies                for the year ended 28 February 2011
(Continued)



contingent assets                                                     in the period in which the estimate is revised if the revision
A contingent asset is a possible asset that arises from past          affects only that period, or in the period of the revision and future
events and whose existence will be confirmed only by the              periods if the revision affects both current and future periods.
occurrence or non-occurrence of one or more uncertain future
                                                                      Key sources of estimation uncertainty
events not wholly within the control of the group.
                                                                      The following are the key assumptions concerning the future,
In the ordinary course of business the group may pursue a             and other key sources of estimation uncertainty at the reporting
claim against a subcontractor or client.                              date, that have a significant risk of causing a material adjustment
                                                                      to the carrying amounts of assets and liabilities within the next
Such contingent assets are only recognised in the financial
                                                                      financial year.
statements where the realisation of income is virtually certain.
If the inflow of economic benefits is only probable, the contingent   impairment of goodwill
asset is disclosed as a claim in favour of the group but not          Determining whether goodwill is impaired requires an estimation
recognised on the statement of financial position.                    of the value in use of the cash-generating units to which goodwill
                                                                      has been allocated. The value in use calculation requires the
criticAl AccountinG JuDGements AnD Key                                directors to estimate the future cash flows expected to arise
sources of estimAtion uncertAinty
                                                                      from the cash-generating unit and a suitable discount rate in
In the application of the group’s accounting policies the directors   order to calculate present value.
are required to make judgements, estimates and assumptions
                                                                      The carrying amount of goodwill at the reporting date was
about the carrying amounts of assets and liabilities that are
                                                                      R33,5 million.
not readily apparent from other sources. The estimates and
associated assumptions are based on historical experience and
                                                                      useful lives and residual values of property, plant
other factors that are considered to be relevant. Actual results
                                                                      and equipment
may differ from these estimates.
                                                                      The group reviews the estimated useful lives and residual values
The estimates and underlying assumptions are reviewed on an           of property, plant and equipment at the end of each annual
ongoing basis. Revisions to accounting estimates are recognised       reporting period. Refer note 1.




 72
Notes to the consolidated financial statements                              for the year ended 28 February 2011




                                                         plant and                         office         other
                                                        machinery        property     equipment      equipment             total
                                                             r’000          r’000          r’000          r’000            r’000

1.    property, plAnt AnD equipment
      year ended 28 february 2011
      cost or valuation
      At 28 February 2009                                  380 387          5 000          6 093           4 217         395   697
      Additions                                            103 748              –          1 885           3 392         109   025
      Acquisition of subsidiary                                   –        25 681               –              –          25   681
      Disposals – at cost                                   (89 204)            –              (8)          (215)        (89   427)

      At 28 February 2010                                  394 931         30 681          7 970           7 394         440 976
      Scrapping                                                  –              –              –               (3)            (3)
      Additions                                            206 847            789          2 466           1 565         211 667
      Disposals – at cost                                 (115 748)        (1 315)             –                –       (117 063)

      At 28 february 2011                                  486 030         30 155         10 436           8 956         535 577

      Accumulated depreciation
      At 28 February 2009                                  (37 141)              –         (2 788)        (1 596)        (41 525)
      Disposals                                             17 709               –              5             91          17 805
      Depreciation charge                                  (40 151)              –         (2 113)        (1 333)        (43 597)

      At 28 February 2010                                  (59 583)              –         (4 896)        (2 838)        (67 317)
      Scrapping                                                  –               –              –              3               3
      Disposals                                             25 171               –              –              –          25 171
      Depreciation charge                                  (59 092)         (1 240)        (2 046)        (1 626)        (64 004)

      At 28 february 2011                                  (93 504)         (1 240)        (6 942)        (4 461)       (106 147)

      net book value
      At 28 february 2011                                  392 526         28 915          3 494           4 495         429 430

      At 28 February 2010                                  335 348         30 681          3 074           4 556         373 659

1.1   Assets pledged as security

      The group’s obligations under instalment sale liabilities (see note 12 Borrowings) are secured by the lessors’ title to the
      financed assets, which have a carrying amount of R379,3 million (2010: R317,4 million).
      The term loan facility in note 12.2 is secured by a notarial bond of R30 million over fixed assets held by the group.




                                                                                          Protech Integrated Annual Report 2011   73
Notes to the consolidated financial statements                            for the year ended 28 February 2011
(Continued)



1.    property, plAnt AnD equipment (continued)
1.2   Details of freehold land and fixed property
      Protech khuthele ProPerties (Pty) ltd
      The property consists of Portion 180, a portion of portion 101, of the Farm De Kroon 444, North West Province.

      The freehold land was valued at R5 million on 3 October 2007 by an independent professional valuer, TL van der Linde, to
      determine the fair value of the property. The comparable sales method of valuation has been followed in determining the
      market value of the property. The property has not been pledged as security.

      Protech khuthele ProPerty investments (Pty) ltd
      The property consists of Portion 52, a portion of portion 22 of the Farm Bultfontein 533, Lanseria, Johannesburg.

      The freehold land and buildings was valued at R27 million on 18 April 2011 by an independent professional valuer, TL van
      der Linde, to determine the fair value of the property. The comparable sales method of valuation has been followed in
      determining the market value of the property. The property has been pledged as security for a loan at Investec Private Bank
      Limited (see note 12 Borrowings).

      During the year a portion of the property was expropriated.

1.3   change in accounting estimate

      Previously the depreciation charge was determined with reference to the expected units of output for each plant unit,
      expressed in production hours or distances travelled. During the current year the directors of the company changed the
      useful life of certain road-going equipment, measured in distance, from 500 000 km to 250 000 km. The change was made
      to better reflect the pattern in which the asset's future economic benefits are expected to be consumed by the company.
      The change represents a change in an accounting estimate hence the changes will be applied prospectively. The effect of
      the change in accounting estimate is as follows:

                                                                                                                           2011
      year ended 28 february                                                                                              r’000

      Increase in depreciation                                                                                            6 588
      Decrease in income tax expense                                                                                      1 845

      Decrease in profit for the period                                                                                   4 743

      Decrease in property, plant and equipment                                                                           6 588
      Decrease in deferred taxation liability                                                                             1 845

      Decrease in equity                                                                                                  4 743

      Depreciation for certain road-going equipment is based on mileage done over a period of time. The mileage done by the
      equipment varies from project to project, hence the calculation for future depreciation is considered to be impracticable.




 74
                                                                                                         2011                  2010
                                                                                                        r’000                 R’000

2.    GooDWill

      cost
      Balance at the beginning and end of the year                                                     33 549                33 549

      Accumulated impairment losses
      There were no impairment losses recognised during the current or prior year.
      Business segmentation
      Readymix                                                                                         33 549                33 549

      Goodwill is not amortised but subject to an annual impairment test.
2.    GooDWill (continued)
2.1   Annual test for impairment

      The company acquired the Readymix business on 29 February 2008 through a business combination, hence a portion of the
      purchase price was recognised as goodwill. At year end the directors assessed the recoverable amount of goodwill and believe
      that the profits generated over the next couple of years attributable to the acquired business is sufficient to recover goodwill.

      The key assumptions used in testing for impairment can be summarised as follows:

      • Earnings before interest, tax, depreciation and amortisation is used as the basis of the calculation as this equates roughly
        to cash generated by operations.
      • The average price increase per cubic metre were taken as 10% over the next five years with an average increase in sales
        volumes of 5% per annum.
      • The discount rate applied is indicative of the cost for capital of the cash-generating unit.

2.2   Allocation of goodwill to cash-generating units

      Goodwill has been allocated for impairment testing purposes to the Readymix cash-generating unit.

      The goodwill associated with the Readymix business arose when that business was acquired by the group on 29 February 2008.
      The directors are of the opinion that the business operations are performing in line with expectations. No impairment of
      goodwill is expected.

2.3   Goodwill arising on acquisition

      Goodwill arose in the business combination because the cost of the combination included a control premium paid to acquire
      the Readymix businesses. In addition, the consideration paid for the combination effectively included amounts in relation
      to the benefit of expected synergies, revenue growth, future market development and the assembled workforce of the
      Readymix business. These benefits are not recognised separately from goodwill as the future economic benefits arising
      from them cannot be reliably measured.




                                                                                            Protech Integrated Annual Report 2011   75
Notes to the consolidated financial statements                            for the year ended 28 February 2011
(Continued)




                                                                                                 2011                2010
                                                                                                r’000               R’000

3.    intAnGiBle Assets
      cost
      Balance at 1 March                                                                         2 124              1 964
      Additions                                                                                  3 357                160

      Balance at 28 February                                                                     5 481              2 124

      Accumulated amortisation and impairment
      Balance at 1 March                                                                          (362)              (147)
      Amortisation - current year                                                                 (471)              (215)

      Balance at 28 February                                                                      (833)              (362)

      carrying amount

      As at 28 February                                                                          4 648              1 762

      The intangible asset recognised relates to technical drawings and patents.
      The remaining useful life is estimated at 7,25 years (2010: 8,25 years).

4.    inventory

      Inventories consist of:
      Raw materials                                                                              3 370              3 393
      Consumables                                                                                8 064              5 143

                                                                                               11 434               8 536

      The cost of inventories recognised as an expense during the year was
      R88,9 million (2010: R82,5 million).

5.    contrActs in proGress AnD contrAct receivABles

      Contracts in progress at the reporting date:
      Construction costs incurred plus recognised profits                                      530 522            337 389
      Less: progress billings                                                                 (463 479)          (268 300)

      Amounts due from contract customers                                                      67 043              69 089
      Contract work in progress                                                                13 222              21 060

                                                                                               80 265              90 149

      Recognised and included in the financial statements as amounts due:
      From customers under construction contracts                                              80 265              90 149

      Contract work in progress comprise of work completed but not yet certified and will be recognised as an expense in the
      following period.




 76
                                                                                                          2011                  2010
                                                                                                         r’000                 R’000

6.    trADe AnD other receivABles
      Trade receivables                                                                                194 131                86 941
      Less: allowance for bad debts                                                                    (24 572)                (6 806)

      Net trade receivables                                                                            169 559                80 135
      Retention receivables                                                                             48 587                41 611
      Less: unearned finance income                                                                     (4 423)                (3 518)

      Net retention receivables                                                                         44 164                38 093
      VAT receivable                                                                                       409                 2 048
      Prepayments                                                                                          193                   112
      Other receivables                                                                                  1 742                 1 795

                                                                                                       216 067               122 183

      Debtors have been ceded as security for loan and overdraft facilities
      (see note 16).
      The directors consider that the carrying amount of the trade and other
      receivables approximate their fair value.

6.1   trade receivables

      Total trade receivables (net of allowances) held by the group at 28 February 2011
      amounted to R169,6 million (2010: R80,1 million).

      The average credit period on construction contracts is between 30 and 60 days.
      Retention receivables have an average ageing of 107 days (2010: 162 days).
      Where applicable, interest is charged on overdue trade receivables or retention
      amounts. The group has fully provided for certain trade receivables over 90 days,
      not paid to date, because these receivables have been assessed as not recoverable.

      Before accepting any new customer, the group assesses the credit quality of
      each customer. Exposure to customers with a high percentage of the total trade
      receivables are constantly monitored. 72% (2010: 76%) of the trade receivables
      (excluding retention) are current. Of the trade receivables balance (excluding
      retention) at the end of the year, R113,6 million (2010: R39,9 million) are due from
      companies which individually make up more than 5% of the trade receivables.
      Of this amount R89,7 million (2010: 28,9 million) has been paid up to 30 April 2011.
      At 30 April 2011, R105,0 million (2010: R55,1 million) was collected in respect
      of trade receivables subsequent to February 2011.

      Included in the group's trade receivable balance are debtors with a carrying amount
      of R36,4 million (2010: R27,6 million) which are past due for which the group has
      not provided as there has not been a significant change in credit quality and the
      amounts are still considered recoverable. At 30 April 2011, R18,2 million
      (2010: R18,6 million) of this amount was collected after February 2011. The
      group does not hold any collateral over these balances.

      Ageing of past due but not impaired
      30 – 60 days                                                                                      10 649                15 148
      60 – 90 days                                                                                       9 262                 3 113
      over 90 days                                                                                      16 496                 9 355

      Total                                                                                             36 407                27 616




                                                                                             Protech Integrated Annual Report 2011   77
Notes to the consolidated financial statements                                 for the year ended 28 February 2011
(Continued)




                                                                                                      2011             2010
                                                                                                     r’000            R’000

6.    trADe AnD other receivABles (continued)
6.1   trade receivables (continued)

      movement in the allowance for doubtful debts
      Balance at the beginning of the year                                                           6 806             5 435
      Impairment losses recognised on receivables                                                   18 209             3 671
      Amounts written off                                                                             (443)           (2 300)

      Balance at the end of the year                                                                24 572             6 806

      In determining the recoverability of a trade receivable, the group considers each
      receivable which is past due individually. The concentration of credit risk (excluding
      receivables from customers which individually make up more than 5% of trade
      receivables) is limited due to the customer base being large and unrelated.
      Accordingly, the directors believe that there is no further credit provision required
      in excess of the allowance for doubtful debts.

7.    other finAnciAl Assets
      loans carried at amortised cost
      Loans to entities:                                                                               775             6 101

      –   PPK Services (Pty) Ltd                                                                        51                51
      –   Lidonga Construction (Pty) Ltd                                                                 –             5 185
      –   Moon Plant & Construction (Pty) Ltd                                                          387               585
      –   Truload Hauliers (PVT) Limited                                                               145               115
      –   Protech Khuthele Zambia Ltd                                                                  124               124
      –   Majorshelf 63 (Pty) Ltd                                                                       68                41

      Loans to trusts:                                                                                2 726            3 274

      – Protech Khuthele BEE Trust                                                                    2 726            3 274

                                                                                                      3 501            9 375
      Less: non-current portion                                                                           –           (2 202)

                                                                                                      3 501            7 173

      Loans granted to companies are unsecured, bear no interest and have no fixed terms of repayment. Loans granted to related
      parties are disclosed in note 30 Related Parties.

      The loans to trusts are interest free and unsecured. No fixed date for repayment has been set.




 78
                                                                                                          2011                  2010
                                                                                                         r’000                 R’000

8.    BAnK BAlAnces AnD cAsh
      For the purposes of the statement of cash flows, cash and cash equivalents
      include cash on hand and in banks and investments in money market instruments.
      Cash and cash equivalents at the end of the financial year as shown in the statement
      of cash flows can be reconciled to the related items in the statement of financial
      position as follows:

      Bank balances                                                                                     72 164                86 351
      Cash on hand                                                                                         448                   795

                                                                                                        72 612                87 146

      Cash and cash equivalents comprise bank balances and cash on hand. The carrying
      amount of these assets approximate their fair value.

9.    shAre cApitAl AnD premium
9.1   issued capital

      Authorised
      1 000 000 000 ordinary shares of R0,000005                                                              5                      5

      issued                                                  share capital                              share premium


                                                              2011                 2010                   2011                  2010
                                                             r’000                R’000                  r’000                 R’000

      362 500 000 fully paid ordinary shares                      2                    2               228 596               228 596

      The directors are authorised by resolution of the shareholders until the forthcoming annual general meeting to issue up to
      a maximum of 5% of the total number of issued ordinary shares for any purpose and upon such terms and conditions as
      they see fit.

      20% of the issued share capital of the group is owned by employees through the Protech Khuthele BEE Trust.




                                                                                             Protech Integrated Annual Report 2011   79
Notes to the consolidated financial statements                                  for the year ended 28 February 2011
(Continued)




                                                                                                       2011              2010
                                                                                                      r’000             R’000

10.    reserves
       Common control reserve (note 10.1)                                                           (123 998)         (123 998)
       Foreign currency translation reserve (10.2)                                                       (31)               55

                                                                                                    (124 029)         (123 943)

10.1   common control reserve
       Balance at the beginning of the year                                                         (123 998)         (122 053)
       Realisation in respect of deregistered dormant subsidiaries¹                                        –             (1 945)

       Balance at the end of the year                                                               (123 998)         (123 998)

       This reserve is a result of predecessor accounting applied after the Company
       acquired its subsidiaries in 2008 as detailed in the accounting policy note on
       Business Combinations. The difference between the consideration given and the
       share capital (including share premium) of the acquired entities was recorded as
       a separate reserve in the statement of changes in equity ("the common control
       reserve"). As a result no goodwill was recognised on acquisition.

       ¹ Protech Projects Holding (Pty) Ltd and Umvundla Investments No. 2 (Pty) Ltd were
         deregistered subsequent to February 2010 therefore the common control reserve was
         adjusted accordingly.

10.2   foreign currency translation reserve
       At beginning of the year                                                                           55                55
       Foreign currency translation movements                                                            (86)                –

                                                                                                         (31)               55

       The foreign currency translation reserve is the result of exchange differences arising
       from the translation of the group’s foreign subsidiary companies and joint venture
       interests to Rands being the functional currency of the holding company.

11.    non-controllinG interests
       The group has an interest in a company Protech Power Corp (Pty) Limited registered
       in Botswana. The company has reflected an accumulated loss to date which the
       group has funded.

12.    BorroWinGs
       Borrowings comprise of:
       secured at amortised cost
       Instalment sale liabilities (note 12.1)                                                      254 600           218 068
       Interest-bearing bank loans (note 12.2)                                                       39 037            46 513

       total borrowings                                                                             293 637           264 581

       Less: current portion of borrowings                                                          (122 535)          (99 100)

       Non-current portion of borrowings                                                            171 102           165 481




 80
12.    BorroWinGs (continued)
12.1   instalment sale liabilities                         minimum instalment                present value of minimum instalment
                                                              sale payments                             sale payments


                                                               2011                 2010                  2011                  2010
                                                              r’000                R’000                 r’000                 R’000

       Payable:
       Within 1 year                                        120 990               104 423              110 947                89 106
       Within years 2 – 5                                   160 513               140 063              143 653               128 962

                                                            281 503               244 486

       Less: future interest charges                         (26 903)             (26 418)

                                                            254 600               218 068              254 600               218 068

       Less: current portion                                                                          (110 947)               (89 106)

                                                                                                       143 653               128 962

12.2   interest bearing bank loans                         minimum instalment                present value of minimum instalment
                                                              sale payments                             sale payments


                                                               2011                 2010                  2011                  2010
                                                              r’000                R’000                 r’000                 R’000

       Payable:
       Within 1 year                                         14 235                13 896               11 588                 9 994
       Within years 2 – 5                                    30 125                42 354               27 449                36 519

                                                             44 360                56 250

       Less: future interest charges                          (5 323)              (9 737)

                                                             39 037                46 513               39 037                46 513

       Less: current portion                                                                           (11 588)                (9 994)
                                                                                                        27 449                36 519

       Instalment sale liabilities bear interest at rates ranging from 7,0% to 9,0% per annum.

       The assets encumbered to secure the loans are detailed in note 1. Details of the company's interest rate risk management
       policies are set out in note 23.

       The interest bearing bank loans comprise the following facilities:

       (a) revolving loan – absa bank limited
       The revolving loan facility of R32,2 million bears interest at prime minus 1% and is payable over 84 months. At 28 February 2011
       there were 48 monthly instalments still payable. The facility is secured by cession of debtors and unlimited cross suretyship
       by group companies (refer to note 16).

       (b) term loan – absa bank limited
       The term loan facility of R30 million bears interest at prime minus 1,5% and is payable over 60 months. At 28 February 2011
       there were 24 monthly instalments still payable. The facility is secured by a notarial bond of R30 million over fixed assets
       held by Protech Readymix (Pty) Ltd and unlimited cross suretyship by group companies (refer to note 16).

       (c) loan – investec Private bank limited
       The loan with Investec Private Bank Limited bears interest at prime minus 1,25% per annum. At 28 February 2011 there
       were 19 monthly instalments still payable with a final instalment of R2,8 million. The loan is secured by the fixed property
       of Protech Khuthele Property Investments (Pty) Ltd as detailed in note 1.

       The fair values of these liabilities are equal to their carrying amount.




                                                                                             Protech Integrated Annual Report 2011   81
Notes to the consolidated financial statements                                for the year ended 28 February 2011
(Continued)




                                                                                                         2011                 2010
                                                                                                        r’000                R’000

13.    DeferreD tAxAtion
13.1   Deferred tax reconciliation
       Balance at beginning of year                                                                    56 674               49 049
       Timing differences during the year                                                               8 133                7 625

       Balance at end of year                                                                          64 807               56 674

       Disclosed as:
       Deferred tax asset                                                                              (2 371)                (958)
       Deferred tax liability                                                                          67 178               57 632

                                                                                                       64 807               56 674

13.2   Deferred tax liabilities/(assets)

                                                                             opening          charge/(credit)              closing
                                                                             balance              to income                balance


       2011                                                                       r’000                 r’000                r’000

       temporary differences
       Retention debtors                                                        10 667                  1 701               12 368
       Accelerated wear and tear                                                51 454                  8 980               60 434
       Provision for leave pay and bonuses                                      (1 797)                  (422)              (2 219)
       Provisions                                                                    –                   (560)                (560)
       Doubtful debts                                                             (515)                  (102)                (617)
       Estimated tax losses                                                     (3 135)                (1 464)              (4 599)

                                                                                56 674                  8 133               64 807

       2010

       temporary differences
       Retention debtors                                                          7 652                 3 015               10 667
       Accelerated wear and tear                                                 45 483                 5 971               51 454
       Provision for leave pay and bonuses                                       (1 538)                 (259)              (1 797)
       Doubtful debts                                                               (90)                 (425)                (515)
       Estimated tax losses                                                      (2 458)                 (677)              (3 135)

                                                                                 49 049                 7 625               56 674

13.3   taxation losses
       At year end, the group had estimated taxation losses of R16,4 million (2010: R11,2 million) available for offset against future
       profits. Future profits are expected hence a deferred taxation asset of R4,6 million (2010: R3,1 million) has been recognised
       in respect of the losses. At year end the group had estimated unused taxation losses of R0,5 million (2010: R1,0 million) for
       which no deferred tax asset has been raised.




 82
                                                                                                      2011                  2010
                                                                                                     r’000                 R’000

14.   trADe AnD other pAyABles
      Trade payables                                                                                97 031                67 543
      Accruals                                                                                      13 005                  4 347
      Transfer from provisions – bonus and leavepay accrual                                               –                 6 418
      VAT payable                                                                                   10 742                  2 779

                                                                                                   120 778                81 087

      Trade and other payables comprise amounts outstanding for trade purchases
      and ongoing costs. Trade and other payables are normally settled within 30 days.

      The directors consider that the carrying amount of the trade and other payables
      approximate their fair value.

      Interest charged on outstanding balances varies from client to client. The group
      has financial risk management policies in place to ensure that all payables are
      paid within the credit timeframe.

15.   suBcontrActor liABilities
      Current subcontractor liabilities                                                             28 844                  6 928

      Contracts in progress and contract receivables include claims against clients
      in respect of subcontractor liabilities. These liabilities are only settled when
      payment has been received from clients.




                                                                                         Protech Integrated Annual Report 2011   83
Notes to the consolidated financial statements                                for the year ended 28 February 2011
(Continued)




                                                                                                     2011                2010
                                                                                                    r’000               R’000

16.    non-cAsh trAnsActions AnD finAncinG fAcilities
16.1   non-cash investing and financing transactions
       There were no such transactions during the current financial year.

16.2   financing facilities
       Secured bank overdraft facility
       – Facility                                                                                  21 200              11 200
       – Utilised                                                                                       –                   –

       – Unutilised                                                                                21 200              11 200

       The facilities above are secured as follows:
       – Cession of debtors
       – Limited surety of R3 million by each of the following entities:
       > Protech Khuthele (Pty) Ltd
       > Pela Plant (Pty) Ltd

       –   Unlimited cross suretyships, including cession of loan accounts by and
           between the following entities:
           > Protech Khuthele Holdings Ltd
           > Protech Khuthele (Pty) Ltd
           > Pela Plant (Pty) Ltd
           > South African Road Testing Services (Pty) Ltd
           > Protech Readymix (Pty) Ltd
           > Impact Compaction (Pty) Ltd
           > Protech Khuthele Properties (Pty) Ltd

       Secured bank loan facilities
       – Facility                                                                                  512 774             467 370
       – Utilised                                                                                 (293 637)           (264 581)

       – Unutilised                                                                               219 137             202 789

       The balances indicated above as being secured, are secured as follows:

       • Plant and equipment financed serve as security for the loan facilities utilised.

       • Suretyship has been provided for the above loans at each financial institution:

       Absa – Unlimited cross suretyships including cession of loan accounts by and between the following companies: Protech
       Khuthele Holdings Limited, Protech Khuthele (Pty) Ltd, Protech Readymix (Pty) Ltd, South African Road Testing Services
       (Pty) Ltd, Protech Khuthele Properties (Pty) Ltd and Pela Plant (Pty) Ltd.

       WesBank – Unlimited suretyship excluding cession of loan account dated 13/07/2010 by Protech Khuthele (Pty) Ltd.

       imperial Bank – Suretyship by Protech Khuthele Holdings Limited, Protech Khuthele (Pty) Ltd and South African Road Testing
       Services (Pty) Ltd, Protech Readymix (Pty) Ltd, Protech Khuthele Properties (Pty) Ltd, limited to R50 million per company.

       Daimler chrysler financial services south Africa (pty) ltd – Cross guarantees between Protech Khuthele (Pty) Ltd and
       Pela Plant (Pty) Ltd.

       Bidvest – Unlimited guarantee by Protech Khuthele Holdings Limited in favour of Pela Plant (Pty) Ltd.




 84
16.    non-cAsh trAnsActions AnD finAncinG fAcilities (continued)
16.2   finAncinG fAcilities

                                                                                                                  2011                   2010
                                                                                                                 r’000                  R’000

       Guarantee facilities
       Total guarantee facilities in place                                                                     197 433               122 433
       Current utilisation                                                                                    (133 356)               (82 432)

       Guarantee facilities not utilised                                                                        64 077                 40 001

       Of the current facilities utilised R47,3 million (2010: R36,4 million) relates to retention
       guarantees whilst the remaining portion of R86,1 million (2010: R46,0 million) relates
       to performance guarantees. Details are listed below:

       Absa
       Guarantee facility                                                                                         2 433                 2 433
       Current utilisation                                                                                            –                     –

       Guarantee facilities not utilised                                                                          2 433                 2 433

       – Limited surety as per the overdraft facility

       Guarantee Placings (Pty) Ltd
       Guarantee facility                                                                                       20 000                 20 000
       Current utilisation                                                                                           –                 (1 336)

       Guarantee facilities not utilised                                                                        20 000                 18 664

       Cross guarantees exist between the subsidiaries for the aforementioned facility.

       SGI Guarantee Acceptances (Pty) Ltd
       Guarantee facility                                                                                      175 000               100 000
       Current utilisation                                                                                    (133 356)               (81 096)

       Guarantee facilities not utilised                                                                        41 644                 18 904

       – Limited surety by Protech Khuthele Holdings Ltd for R60 million.

17.    revenue
       Revenue comprises:
       – Contract income                                                                                       936 544               626 379
       – Sale of goods                                                                                         128 617               113 049
       – Retentions                                                                                              4 504                 9 350

                                                                                                             1 069 665               748 778




                                                                                                     Protech Integrated Annual Report 2011   85
Notes to the consolidated financial statements                           for the year ended 28 February 2011
(Continued)




                                                                                                2011             2010
                                                                                               r’000            R’000

18.   investment revenue
      Interest revenue:
      – Bank account                                                                             517               929
      – Interest on outstanding amounts owed from retention debtors                            1 312             2 107
      – Loans and other receivables                                                                –             4 119
      – Other                                                                                      8                 –

                                                                                               1 837             7 155

      Investment revenue earned on financial assets, analysed by category of asset,
      is as follows:

      Loans and receivables (including cash and bank balances)                                 1 837             7 155

19.   interest pAiD
      Interest on outstanding amounts owed to suppliers                                            –                 6
      Interest paid on loans and other payables                                                  412             1 302
      Interest on interest-bearing borrowings                                                 24 651            21 408

                                                                                              25 063            22 716

      The weighted average rate paid on funds borrowed was 8,5% per annum
      (2010: 9,4%).

20.   eArninGs Before tAxAtion
      The following items are included in earnings before tax

      income:
      Profit on disposal of property, plant and equipment                                            –           3 110

      expenses:
      Auditors’ remuneration

      – Audit services                                                                         1 460             1 300
      – Non-audit services                                                                       460               442

      Amortisation of intangible assets (note 3)                                                 471               215
      Depreciation (note 1)                                                                   64 004            43 597
      Directors’ remuneration (note 29)
      – For management services                                                               13   783           7 690
      Total employee costs                                                                   182   122         148 899
      Loss on disposal of property, plant and equipment                                        5   157               –
      Operating lease costs                                                                    2   688             519
      Professional fees                                                                        2   107           1 959
      Subcontractor costs                                                                     16   598          17 500




 86
                                                                                                           2011                  2010
                                                                                                          r’000                 R’000

21.    income tAxes
21.1   income tax recognised in profit
       Current tax expense                                                                                4 148                19 782

       – Normal                                                                                           3 956                19 192
       – Capital gains tax                                                                                  192                   590

       Deferred taxation                                                                                  8 132                  7 625

       – Current year                                                                                     8 132                  7 625

       Secondary tax on companies                                                                         1 450                       –
       Withholding taxes paid                                                                               936                       –

                                                                                                         14 666                27 407

       The total charge for the year can be reconciled to the accounting profit as follows:
       Accounting profit                                                                                 53 895               102 993

       Income tax expense calculated at 28% (2010: 28%)                                                  15 091                28 838

       permanent differences:
       Tax effect of income and expenses that are not taxable or deductible in determining
       taxable profit                                                                                     (3 137)               (1 431)
       Foreign tax differential                                                                              326                     –
       Secondary tax on companies                                                                          1 450                     –
       Withholding taxes paid                                                                                936                     –

       Income tax expense recognised in profit                                                           14 666                27 407

       Effective tax rate                                                                                   27,2%                 26,6%

       The tax rate used for the 2011 reconciliation above is the corporate tax rate of
       28% (2010: 28%) payable by corporate entities in South Africa on taxable profits
       under tax law in that jurisdiction. Taxation in other jurisdictions is calculated at
       rates prevailing in those relevant jurisdictions.




                                                                                              Protech Integrated Annual Report 2011   87
Notes to the consolidated financial statements                                 for the year ended 28 February 2011
(Continued)




                                                                                                      2011             2010
                                                                                                     r’000            R’000

22.      eArninGs per shAre
         Basic earnings per share (cents)                                                              10,8             20,9

         Diluted earnings per share (cents)                                                            10,8             20,9

         Headline earnings per share (cents)                                                           11,8             20,2

22.1     Basic earnings per share
         The earnings and weighted average number of ordinary shares used in the
         calculation of basic earnings per share are as follows:

         earnings
         Earnings for the year attributable to ordinary shareholders of the parent                  39 229            75 586

         Weighted average number of ordinary shares for the purposes of basic earnings
         per share (‘000)                                                                          362 500           362 500

22.2     headline earnings per share
         Earnings attributable to the equity holders of the company                                 39 229            75 586
         Non-controlling interests                                                                       –                 –

         Sub total                                                                                  39 229            75 586
         Adjust for:
         Loss/(profit) on disposal of assets                                                          5 157           (3 110)
         Tax effect thereof                                                                          (1 444)             871

         Headline earnings                                                                          42 942            73 347

23.      finAnciAl risK mAnAGement
23.1     capital risk management
         The group manages its capital to ensure that entities in the group will be able to
         continue as going concerns while maximising the return to stakeholders through
         the optimisation of the debt and equity balances.

         The capital structure of the group consists of debt, which includes the borrowings
         disclosed in note 12, cash and cash equivalents and equity attributable to equity
         holders of the parent, comprising issued capital, reserves and retained earnings
         as disclosed.

23.1.1   gearing ratio
         The group’s audit and risk management committee reviews the capital structure
         on a semi-annual basis. As part of this review, the committee considers the cost
         of capital and the risks associated with each class of capital.

         net interest-bearing debt: equity
         Debt1                                                                                     293 637           264 581
         Cash and cash equivalents                                                                  72 612            87 146

         Net debt                                                                                  221 025           177 435

         Equity   2
                                                                                                   334 898           310 255

         Net debt: equity ratio                                                                       66%              57%

         1   Debt comprises the long- and short-term borrowings as disclosed in
             note 12 Borrowings.
         2   Equity includes all capital and reserves of the group.




 88
23.    finAnciAl risK mAnAGement (continued)
23.2   significant accounting policies
       Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of measurement
       and the basis on which income and expenses are recognised, in respect of each class of financial asset, financial liability and
       equity instrument are disclosed in the accounting policy notes to the financial statements.

23.3   financial instruments
       The group does not trade in financial instruments but, in the normal course of operations, is exposed to currency, credit,
       interest and liquidity risk.

       In order to manage these risks, the group may enter into transactions that make use of financial instruments. The group’s
       financial instruments consist mainly of deposits with banks, local money market instruments, short-term investments,
       accounts receivable and payable and interest-bearing borrowings.

                                                                                                            2011                   2010
                                                                                                           r’000                  R’000

       categories of financial instruments
       financial assets
       Loans and receivables (including cash and cash equivalents)                                       359 223               308 853

       financial liabilities
       Borrowings – at amortised cost                                                                    293 637               264 581
       Trade and other payables                                                                          120 778                81 087
       Subcontractor liabilities                                                                          28 844                 6 928

       The carrying amount reflected above represents the group’s maximum exposure to credit risk for such loans and receivables.

23.4   financial risk management objectives
       The group’s treasury function provides services to the business, co-ordinates access to domestic financial markets and monitors
       and manages the financial risks relating to the operations of the group. Operational and business risks are reviewed and
       addressed on a weekly basis. These risks include market risk (including currency risk, fair value interest rate risk and price
       risk), credit risk, liquidity risk and cash flow interest rate risk.

       To mitigate medium- to long-term risks in terms of currency, interest rate and price risk, budgeting is performed up to 12 months
       in advance to ensure access to cash and financing facilities.

       The group does not enter into or trade in financial instruments, including derivative financial instruments, for speculative
       purposes.




                                                                                               Protech Integrated Annual Report 2011   89
Notes to the consolidated financial statements                                for the year ended 28 February 2011
(Continued)



23.    finAnciAl risK mAnAGement (continued)
23.5   foreign currency risk management
       The group has operations in Botswana and Tanzania, hence has an exposure to fluctuations in exchange rates.

       foreign currency sensitivity
       The group is mainly exposed to the currencies of the United States (Dollar), Tanzania (Shilling) and Botswana (Pula). The
       table below details the group’s major foreign currency balances at year end.

       If these foreign currencies had to increase/decrease with 10% against the Rand the after tax earnings for the group for the
       year ended 28 February 2011 would decrease/increase by R0,3 million (2010: R0,01 million). The sensitivity includes only
       foreign currency denominated monetary items and adjusts their translation at the period end for a change in foreign currency
       rates. A positive number indicates an increase in profit and other equity where the Rand weakens against the relevant
       currencies.

                                                                   Assets                                liabilities

                                                              2011                  2010              2011                 2010
                                                             r’000                 R’000             r’000                R’000

       Botswana Pula                                         1 069                   223                481                 402
       United States Dollar                                  1 561                     –                  –                   –
       Tanzanian Shilling                                    4 528                     –              1 018                   _

                                                             7 158                   223              1 499                 402


       The carrying amounts of significant financial assets are denominated in the
       following currencies:

                                                                                                      2011                 2010
                                                                                                     r’000                R’000

       Bank balances and cash
       United States Dollar                                                                          1 561                    –
       Tanzanian Shilling                                                                              269                    –
       Botswana Pula                                                                                   249                    5
       South African Rand                                                                           70 533               87 141

                                                                                                    72 612               87 146

       trade and other receivables
       Tanzanian Shilling                                                                            4 259                    –
       Botswana Pula                                                                                   820                  218
       South African Rand                                                                          210 988              121 965

                                                                                                   216 067              122 183

       The carrying amounts of significant financial liabilities are denominated in the
       following currencies:

       trade and other payables
       Tanzanian Shilling                                                                            1 018                    –
       Botswana Pula                                                                                   481                  402
       South African Rand                                                                          119 279               80 685

                                                                                                   120 778               81 087




 90
23.      finAnciAl risK mAnAGement (continued)
23.6     market risk
         The group’s activities expose it primarily to the financial risks of changes in interest rates and liquidity.

23.7     interest rate risk management
         The group is exposed to interest rate risk as entities in the group borrow funds at floating interest rates. The risk is managed
         by the group by using an access deposit account for its lease liabilities. By using an access deposit account, excess cash is
         kept in this account to minimise the interest expense.

         The group’s exposures to interest rates on financial assets and financial liabilities are detailed in the liquidity risk management
         section of this note.

23.7.1   interest rate sensitivity analysis
         The sensitivity analysis below has been determined based on the exposure to interest rates for both derivatives and non-
         derivative instruments at the reporting date. For floating rate liabilities, the analysis are prepared assuming the amount of
         the liability outstanding at the reporting date was outstanding for the whole year. A 100 basis point increase or decrease is
         used when reporting interest rate risk internally to key management personnel and represents management’s assessment
         of a reasonable and possible change in interest rates.

         If interest rates had been 100 basis points higher/lower and all other variables were held constant, the group’s earnings after
         tax for the year ended 28 February 2011 would decrease/increase by R2,1 million (2010: R1,9 million). This is attributable to
         the group’s exposure to interest rates on its variable rate borrowings.

23.8     credit risk management
         Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the
         group. The group prefers dealing with creditworthy counterparties only and obtaining sufficient collateral, where appropriate,
         as a means of mitigating the risk of financial loss from defaults. The group uses other publicly available financial information
         and its own trading records to rate its major customers. The group’s exposure and the credit ratings of its counterparties are
         continuously monitored and the aggregate value of transactions concluded is spread amongst approved counterparties.

         Trade receivables consist of a large number of customers spread across diverse industries. Credit risk is managed by
         performing credit checks on customers and setting of credit limits where necessary. Ongoing credit evaluation is performed
         on the financial condition of accounts receivable and, where appropriate, credit guarantee insurance cover is purchased.

         Provision is made for specific bad debts and at year end, management believed that any material credit risk exposure was
         covered by credit guarantee or a bad debt provision.

         The group deposits short-term cash investments with major financial institutions.

         The group has a significant credit risk exposure to a single counterparty where a substantial part of the fleet is financed.




                                                                                                 Protech Integrated Annual Report 2011   91
Notes to the consolidated financial statements                                     for the year ended 28 February 2011
(Continued)



23.      finAnciAl risK mAnAGement (continued)
23.9     liquidity risk management
         Ultimate responsibility for liquidity risk management rests with the board of directors, which has built an appropriate liquidity
         risk management framework for the management of the group’s short-, medium- and long-term funding and liquidity
         management requirements. The group manages liquidity risk by maintaining adequate reserves, banking facilities and
         reserve borrowing facilities, by continuously monitoring forecast and actual cash flows and matching the maturity profiles of
         financial assets and liabilities. Included in note 16 is a listing of additional undrawn facilities that the group has at its disposal
         to further reduce liquidity risk.

23.9.1   maturity ProFile oF Financial instruments
         The maturity profiles of the recognised financial instruments are summarised below. These profiles represent the
         undiscounted cash flows that are expected to occur in the future.

                                                              Weighted
                                                               average
                                                               effective
                                                                interest              < 1 year          year 1 to 5                  total
                                                                    rate                 r’000               r’000                   r’000

         financial assets
         Loans and receivables                                                        359 223                       –             359 223

         financial liabilities
         Instalment sale liabilities                                  8,6%            120   990             160 513               281   503
         Interest-bearing bank loans                                  7,8%             14   235              30 125                44   360
         Trade and other payables                                                     120   778                   –               120   778
         Subcontractor liabilities                                                     28   844                   –                28   844

                                                                                      284 847               190 638               475 485

         The group has access to financing facilities (excluding bank overdraft), the total unused amount which is R219,1 million
         (2010: R202,8 million) (note 16) at the reporting date. The group expects to meet its other obligations from operating cash flows.

         The directors consider that the carrying amounts of financial assets and financial liabilities recorded at amortised cost in the
         financial statements approximate their fair values:


                                                                       2011                                         2010
                                                               carrying                   fair              Carrying                   Fair
                                                                amount                  value               amount                   value
                                                                  r’000                 r’000                 R’000                  R’000

         financial assets
         Loans and receivables                                  359 223               359 223                308 853              308 853

         financial liabilities
         Interest bearing borrowings
         – instalment sale liabilities                          254   600             254   600              218   068            218   068
         Interest-bearing bank loans                             39   037              39   037               46   513             46   513
         Trade and other payables                               120   778             120   778               81   087             81   087
         Subcontractor liabilities                               28   844              28   844                6   928              6   928

                                                                443 259               443 259                352 596              352 596




 92
24.      Acquisition of Businesses
24.1     prior year acquisition
         protech Khuthele property investments (pty) ltd
         The group does not own an equity stake in the company, however the board of Protech Khuthele (Pty) Ltd has the power to
         govern the financial and operating policies via, inter alia, shareholder agreements and therefore has control. Consequently the
         company was consolidated as a subsidiary on 28 February 2010.
                                                                                                                           Book value
                                                                                                                                2010
                                                                                                                               R’000

24.1.1   analysis oF assets and liabilities acquired
         current assets:
         VAT receivable                                                                                                         1 014

         non-current assets:
         Property                                                                                                             25 681

         current liabilities
         Interest-bearing borrowings                                                                                             (393)

         non-current liabilities
         Interest-bearing borrowings                                                                                           (3 415)

         Total net assets                                                                                                     22 887

         These values represent the fair values of the assets and liabilities at reporting
         date in terms of IFRS 3: Business Combinations.

24.1.2   net cash outFlow on acquisition
         Total net assets acquired                                                                                             22 887
         Loan account Protech Khuthele Holdings Limited (Company)                                                                (435)
         Loan account Protech Khuthele (Pty) Ltd                                                                              (22 452)

                                                                                                                                     –

24.1.3   movement in loan through acquisition
         Opening balance of loan                                                                                                2 826
         Trade receivables                                                                                                      8 436

         Loan balance 1 March 2009                                                                                            11 262
         Cash flow movement                                                                                                   11 625

                                                                                                                              22 887

25.      Joint ventures
         Joint venture operations
         The company holds a 67% interest in a joint venture which is a jointly controlled operation with Bamboo Rock (Pty) Ltd.
         In terms of the joint venture agreement the company is entitled to exercise 50% voting rights in the joint venture.

                                                                                                           2011                 2010
                                                                                                          r’000                R’000

         Protech Khuthele (Pty) Ltd interest in the joint venture is as follows:
         Non-current assets                                                                                  48                      –
         Current assets                                                                                   6 089                      –
         Current liabilities                                                                              1 018                      –

         Income                                                                                          18 979                      –
         Expenses                                                                                        20 114                      –
         Cash utilised by operations                                                                     (6 254)                     –

         Joint venture entities
         The company holds a 50% interest in Ground Improvement Solutions (Pty) Ltd.



                                                                                             Protech Integrated Annual Report 2011   93
Notes to the consolidated financial statements                             for the year ended 28 February 2011
(Continued)




                                                                                                  2011              2010
                                                                                                 r’000             R’000

26.    cAsh GenerAteD By operAtions
       Reconciliation of earnings before taxation to cash generated by operations:
       Earnings before taxation                                                                 53 895           102 993
       Adjusted for:
       Amortisation of intangible assets                                                           471               215
       Loss/(profit) on sale of plant and equipment                                              5 157             (3110)
       Interest received                                                                        (1 837)           (7 155)
       Finance costs                                                                            25 063            22 716
       Provisions                                                                                    –             (5496)
       Other non-cash items                                                                        (85)                –
       Depreciation                                                                             64 004            43 597

       Operating cash flow before working capital changes                                      146    668        153     760
       (Increase)/decrease in inventories                                                       (2    898)           8   410
       Increase in trade and other receivables                                                 (84    000)        (47    376)
       Increase/(decrease) in trade and other payables                                          39    691           (7   487)
       Increase/(decrease) in subcontractor liabilities                                         21    916           (2   776)

       Cash generated by operations                                                            121 377           104 531

27.    income tAxes pAiD

       Opening balance                                                                            6   834         30 134
       Current year tax charge (excluding deferred tax)                                           5   084         19 782
       Secondary tax on companies                                                                 1   450               –
       Closing balance                                                                           (8   542)         (6 834)

       Amount paid                                                                               (4 826)         (43 082)

28.    operAtinG leAse ArrAnGements
28.1   General operating leases
       Operating lease payments represent rentals payable for the rental of freehold
       land. These leases have varying terms, escalation clauses and renewal periods.

       operating lease costs
       Operating lease costs recognised in the statement of comprehensive income are
       set out in note 20.

       operating lease commitments
       The future minimum lease payments under non-cancellable operating leases are:
       Due within one year                                                                        1 094                  393
       Due between two and five years                                                             1 292                  807

                                                                                                  2 386             1 200




 94
                                                                                                        2011                  2010
                                                                                                       r’000                 R’000

29.    Directors’ emoluments
29.1   Directors’ remuneration
       Non-executive directors                                                                         1 082                  1 320

       – Director’s fees                                                                                  487                      635
       – Committee fees                                                                                   595                      685

       Executive directors                                                                            12 701                  6 370

       – Salaries and benefits                                                                         4 901                  4 370
       – Retirement and restraint of trade agreement*                                                  7 800                      –
       – Other fees                                                                                        –                  2 000

       total directors’ emoluments                                                                    13 783                  7 690


                                                                                       2011
                                                                            retirement
                                                           salaries        and medical           other fees                 total
                                                             r’000                r’000              r’000                  r’000

       Director
       Executive
       G Chapman                                              2 487                  103               7 800*              10 390
       N Wolmarans                                            2 233                   78                   –                2 311

                                                              4 720                  181               7 800               12 701


                                                                         Director’s fees   committee fees                    total
                                                                                  r’000            r’000                     r’000

       Non-executive
       D Ackerman**                                                                   98                  90                   188
       M Maraletse                                                                   133                 205                   338
       V Raseroka                                                                    100                 115                   215
       P van Tonder**                                                                 56                  55                   111
       M Vuso                                                                        100                 130                   230

                                                                                     487                 595                 1 082

       total emoluments                                                                                                    13 783

       * During 2011 Mr G Chapman resigned from the board on 10 November 2010. A retirement and restraint of trade agreement was paid
          to Mr G Chapman.
       ** Resigned on 22 September 2010.




                                                                                           Protech Integrated Annual Report 2011    95
Notes to the consolidated financial statements                                for the year ended 28 February 2011
(Continued)



29.    Directors’ emoluments (continued)
29.1   Directors’ remuneration (continued)
                                                                                          2010
                                                                                Retirement
                                                              Salaries         and medical           Other fees                Total
                                                               R’000                 R’000               R’000                R’000

       Director
       Executive
       G Chapman                                                 2 424                   64               2 000*              4 488
       N Wolmarans                                               1 835                   47                   –               1 882

                                                                 4 259                 111                2 000               6 370

                                                                            Director’s fees    Committee fees                  Total
                                                                                     R’000             R’000                  R’000

       Non-executive
       D Ackerman                                                                      175                  160                   335
       M Maraletse                                                                     100                  150                   250
       C Nkosi**                                                                        60                   20                    80
       V Raseroka                                                                      100                  125                   225
       P van Tonder                                                                    100                  125                   225
       M Vuso                                                                          100                  105                   205

                                                                                       635                  685               1 320

       total emoluments                                                                                                       7 690

       The remuneration of directors is determined by the Remuneration and nomination committee having regard to the performance
       of individuals and market trends.

       Executive directors do not receive directors’ fees and the directors have service contracts with group companies.

       Executive directors are subject to the company’s standard conditions of employment.

       * During 2010 Mr G Chapman received a retention bonus as approved by the Remuneration and nomination committee.
       ** Mrs C Nkosi resigned with effect from 6 October 2009.

29.2   interest of directors’ in contracts
       A register detailing directors’ interests in the company is available for inspection at the company’s registered office.

29.3   share purchases and sales by directors and director controlled entities
       During 2011 no main board directors traded in any shares or share derivatives of the company.

30.    relAteD pArties
30.1   identity of related parties
       Transactions between the company and its subsidiaries, which are related parties of the company, have been eliminated on
       consolidation and are not disclosed in this note. Details of transactions between the group and other related parties are
       disclosed below.

       Directors of the companies stated below are involved with Protech Khuthele Holdings Limited:
       –   PPK Services (Pty) Ltd
       –   Panamo Properties (Pty) Ltd
       –   Circle Seven Plant (Pty) Ltd
       –   Big Cedar Trading (Pty) Ltd
       –   Millcliff Trading (Pty) Ltd
       –   Straightprops 57 (Pty) Ltd
       –   Protech Khuthele BEE Trust
       –   Lidonga Construction (Pty) Ltd
       –   Protech Khuthele Property Investments (Pty) Ltd
       –   Majorshelf 63 (Pty) Ltd
       –   Truload Hauliers (PVT) Limited
       –   Protech Khuthele Zambia (Pty) Ltd

 96
30.    relAteD pArties (continued)
30.2   related party transactions and balances
       During the year, the company and its related parties, in the ordinary course of business, entered into various related party sale
       and purchase transactions. These transactions are no less favourable than those arranged with independent third parties.

                                                                                                 Amounts owed to         Amounts owed by
                                                revenue                    expenses               related parties         related parties

                                             2011          2010         2011          2010         2011         2010        2011         2010
                                            r’000         R’000        r’000         R’000        r’000        R’000       r’000        R’000

       PPK Services (Pty) Ltd                     –            –            –            –           512          512           2              –
       Circle Seven Plant (Pty) Ltd               –            –            –            –             –            –           –              –
       Straightprops 57 (Pty) Ltd                 –            –          943        1 377             –            –           –              –
       Protech Khuthele
       BEE Trust                                  –            –             –               –    2 7262      3 2742             –             –
       Lidonga Construction
       (Pty) Ltd                                  –      20 750              –      23 654             –      5 1852             –           1293
       Majorshelf 63 (Pty) Ltd                    –           –              –           –           682         412             –              –
       Protech Khuthele Property
       Investments (Pty) Ltd*                     –            –             –             480         –            –            –              –
       Truload Hauliers
       (PVT) Limited                              –            –             –               –      1452        1152             –             –
       Protech Khuthele
       Zambia Ltd                                 –            –             –               –      1242        1242            –              –
       Bamboo Rock (Pty) Ltd                      –            –             –               –    4 1981           –         8623              –
       Compaction Technology
       (Pty) Ltd                                61             –        8 219                –       702            –      4 1523              –

                                                61       20 750         9 162       25 511         7 382       8 790        5 016            129

       The amounts outstanding are unsecured and will be settled in cash within the normal operating cycle of the company. No
       guarantees have been given or received except for Lidonga Construction (Pty) Ltd (see note 7).

       All the abovementioned transactions were made on terms equivalent to those that prevail in arm’s length transactions.

       1   Details of these amounts are disclosed in note 6 Trade and other receivables.
       2   Details of these amounts are disclosed in note 7 Other financial assets.
       3   Details of these amounts are disclosed in note 14 Trade and other payables.
       *   Included as a subsidiary from 28 February 2010.




                                                                                                     Protech Integrated Annual Report 2011    97
Notes to the consolidated financial statements                                  for the year ended 28 February 2011
(Continued)




                                                                                                            2011                   2010
                                                                                                           r’000                  R’000

30.    relAteD pArties (continued)
30.3   compensation to key management personnel
       The remuneration of directors and other key management personnel during the
       year was as follows:
       Short-term benefits
       – Directors (note 29)                                                                              13 783                  7 690
       – Other key management personnel                                                                   12 697                 10 632

                                                                                                          26 480                 18 322

       The remuneration of directors and key management personnel is determined by the Remuneration and nomination committee
       having regard to the performance of individuals and market trends.

       Key management personnel relate to the executive management team of the group.

31.    suBsiDiAries
       Details of the company's subsidiaries at 28 February 2011 are as follows:


                                                                        proportion of      proportion
                                                          place of        ownership         of voting
       name of subsidiary                            incorporation          interests     power held      principal activity

       Protech Khuthele (Pty) Limited                  South Africa            100%             100%      Bulk and fast-track earthworks
       Pela Plant (Pty) Limited                        South Africa            100%             100%      Plant hire
       South African Road Testing Services                                                                Geotechnical and
       (Pty) Limited                                   South   Africa          100%             100%      Laboratory services
       Protech Readymix (Pty) Limited                  South   Africa          100%             100%      Ready mixed concrete
       Protech Khuthele Properties (Pty) Limited       South   Africa          100%             100%      Property company
       Impact Compaction (Pty) Limited                 South   Africa          100%             100%      Impact compaction services

       Although the group does not own more than half of the equity shares of the following companies, it has the power to
       govern the financial and operating policies via, inter alia, shareholder agreements and therefore has control. Consequently
       the companies are consolidated as subsidiaries.


                                                                         place of           % direct
       name of subsidiary                                           incorporation         ownership       principal activity

       Protech Power Corp (Pty) Ltd                                       Botswana               49%      Contracting
       Protech Khuthele Property Investments
       (Pty) Limited                                                    South Africa               0%     Property company

32.    events After the reportinG DAte
       The directors are not aware of any matter or circumstances arising since the end of the financial year, not otherwise dealt with
       in the annual financial statements, which significantly affect the financial position of the group or the results of its operations.




 98
company
financial
statements


contents
100 company statement of financial position / 101 company statement of comprehensive income
101 company statement of changes in equity / 102 company statement of cash flows
103 notes to the company financial statements




                                                                                  Protech Integrated Annual Report 2011   99
Company statement of financial position   as at 28 February 2011




                                                                     2011      2010
                                                     Notes          r’000     R’000

Assets
non-current assets                                                 231 801   239 906

Investment in subsidiaries                               2         202 574   202 574
Other financial assets                                   3          24 467    35 306
Deferred tax                                            12           4 760     2 026

current assets                                                     136 839   155 840

Other financial assets                                   3          62 544    65 249
Trade and other receivables                              4           9 143     6 415
Cash and cash equivalents                                5          65 152    84 176

total assets                                                       368 640   395 746

equity AnD liABilities
total equity                                                       232 687   231 500

Share capital                                            6         228 598   228 598
Retained earnings                                                    4 089     2 902

total liabilities                                                  135 953   164 246

non-current liabilities                                             24 467    33 104

Borrowings                                               7          24 467    33 104

current liabilities                                                111 486   131 142

Borrowings                                               7         105 199   124 900
Trade and other payables                                 8           6 203     6 040
Current tax liabilities                                                 84       202

total equity and liabilities                                       368 640   395 746




 100
Company statement of comprehensive income                   for the year ended 28 February 2011




                                                                                         2011                  2010
                                                                Notes                   r’000                 R’000

Revenue                                                             9                   8   150                8   880
Sundry revenue                                                      9                  24   500              15    393
Operating expenses                                                                     (8   451)              (7   892)
Other expenses                                                                         (9   763)            (15    325)

earning before depreciation, interest and taxation                                     14 436                 1 056
Depreciation                                                                                –                     –

earnings before interest and taxation                                                  14 436                 1 056
Interest received                                                   9                   3 410                 5 133
Finance costs                                                      10                  (3 307)               (3 800)

earnings before taxation                                           11                  14 539                 2 389
Taxation credit                                                    12                   1 148                   258

earnings for the year                                                                  15 687                 2 647
Other comprehensive income                                                                  –                     –

total comprehensive income for the year                                                15 687                 2 647




Company statement of changes in equity               for the year ended 28 February 2011




                                                                    Share          Share      Retained       total
                                                                   capital      premium       earnings      equity
                                                                   R’000           R’000        R’000        r’000

Balance as at 1 March 2009                                              2       228 596              255   228 853
Total comprehensive income for the year                                 –             –            2 647     2 647

Balance as at 28 February 2010                                          2       228 596          2 902     231 500
Total comprehensive income for the year                                 –             –         15 687      15 687
Dividends paid                                                          –             –        (14 500)    (14 500)

Balance as at 28 february 2011                                          2       228 596            4 089   232 687




                                                                             Protech Integrated Annual Report 2011 101
Company statement of cash flows                      for the year ended 28 February 2011




                                                                                             2011         2010
                                                                           Notes            r’000        R’000

cash flows from operating activities                                                        5 533       18 763

Cash receipts from customers                                                                 5 422      11 048
Cash paid to suppliers and employees                                                        (8 248)      (6 737)

Cash (utilised)/generated by operations                                       14            (2   826)     4 311
Finance costs paid                                                                          (3   307)    (3 800)
Interest received                                                                            3   410      5 133
Dividends paid                                                                             (14   500)         –
Dividends received                                                                          24   500    15 393
Taxation paid                                                                               (1   744)    (2 274)

cash flows from investing activities                                                               –          –*

Purchase of subsidiaries                                                                           –          –*

cash flows from financing activities                                                       (24 557)     (34 040)

Payments in respect of secured borrowings                                                   (7 080)     (11 349)
Receipts from loans granted                                                                  3 781            –
Payments of loans granted                                                                        –      (22 037)
Loans from subsidiaries                                                                    (21 258)        (654)

net decrease in cash and cash equivalents                                                  (19 024)     (15 277)

cash and cash equivalents at the beginning of the period                                   84 176       99 453

cash and cash equivalents at the end of the period                             5           65 152       84 176

* Amount below R1 000.




 102
Notes to the company financial statements                                 for the year ended 28 February 2011




                                                                                                              2011                   2010
                                                                                                             r’000                  R’000

1.   AccountinG policies
     The accounting policies are the same as the group and are set out
     on pages 64 to 72.

2.   investment in suBsiDiAries
     Reflected as non-current assets
     Shares at cost                                                                                        202 574                202 574

     –   Protech Khuthele (Pty) Ltd                                                                        159 920                159 920
     –   Pela Plant (Pty) Ltd                                                                               38 276                 38 276
     –   South African Road Testing Services (Pty) Ltd                                                       4 378                  4 378
     –   Umvundla Investments No. 2 (Pty) Ltd                                                                    –                      –#
     –   Protech Projects Holding (Pty) Ltd                                                                      –                      –#
     –   Protech Readymix (Pty) Ltd                                                                              –*                     –*
     –   Protech Khuthele Properties (Pty) Ltd                                                                   –*                     –*
     –   Impact Compaction (Pty) Ltd                                                                             –*                     –*
     –   Protech Power Corp (Pty) Ltd                                                                            –*                     –*

     * Amount below R1 000.
     # Following the declaration of all the reserves in this company as dividends, the investment was impaired as the company was deregistered
       in June 2010.

     Investments in subsidiaries are accounted for at cost.

     In terms of Protech’s group funding policy, subsidiaries are funded by way of equity from the holding company as well as
     long-term interest-free loans. These long-term loans granted by the holding company are considered to form part of the
     permanent capital structure of the subsidiaries and therefore are not deemed to form part of the debt of the subsidiary. The
     loans are unsecured and there are no fixed terms of repayment.




                                                                                                Protech Integrated Annual Report 2011 103
Notes to the company financial statements                             for the year ended 28 February 2011
(Continued)



3.     other finAnciAl Assets
                                                                current                                non-current


                                                             2011                 2010                2011                 2010
                                                            r’000                R’000               r’000                R’000

       Loans to companies
       non-interest bearing loans                          68 386               59 902                    –                     –

       Unsecured – at amortised cost
       – Protech Khuthele Zambia Ltd                          118                  118                    –                     –
       – Truload Hauliers (PVT) Limited                         –                   60                    –                     –
       – Protech Power Corp (Pty) Ltd                         271                    –                    –                     –
       – Umvundla Investments No. 2 (Pty) Ltd                   –                    1                    –                     –
       – Protech Khuthele BEE (Pty) Ltd                         2                    1                    –                     –
       – Protech Khuthele BEE Trust                         2 262                3 233                    –                     –
       – Protech Khuthele (Pty) Ltd                        17 348               17 331                    –                     –
       – PPK Labour Services (Pty) Ltd                         50                   50                    –                     –
       – Protech Khuthele Property
         Investments (Pty) Ltd                                  –                  435                    –                     –
       – Impact Compaction (Pty) Ltd*                      13 630                5 636                    –                     –
       – Protech Khuthele Properties (Pty) Ltd              3 247                3 745                    –                     –
       – Protech Readymix (Pty) Ltd*                       31 458               29 292                    –                     –

       Impairment of loans                                (17 000)              (7 237)                   –                     –

       interest-bearing loans                              11 158               12 584              24 467               35 306

       Secured – at amortised cost
       – Lidonga Construction (Pty) Ltd                         –                2 983                    –               2 202
       Unsecured – at amortised cost
       – Protech Readymix (Pty) Ltd
         (Acquisition loan)                                11 158                9 601              24 467               33 104

                                                           62 544               65 249              24 467               35 306

       * These loans have been subordinated in favour of other providers of credit to the various companies. Impairment provisions
         have been provided against the investments held in these companies.

         Loans to companies are unsecured and interest free. No fixed date of repayment has been set.

         The acquisition loan to Protech Readymix (Pty) Ltd is payable in line with terms from Absa Bank Ltd as per note 7.2.

         Loans receivable comprises net amounts receivable after provision for impairment. The directors consider that the carrying
         amount of the loans receivable approximate their fair value.

         Loans granted to related parties are disclosed in note 16 Related parties.




 104
                                                                                                            2011                 2010
                                                                                                           r’000                R’000

4.    trADe AnD other receivABles
      Trade receivables                                                                                    9 029                6 303
      Other                                                                                                  114                  112

                                                                                                           9 143                6 415

      The directors consider that the carrying amount of the trade and other receivables
      to approximate their fair value.

      Trade receivables owing by related parties amount to R9,0 million (2010: R6,1 million)
      as disclosed in note 16 Related parties.

4.1   trade receivables
      Total trade receivables (net of allowances) held by the company at 28 February 2011
      amounted to R9,0 million (2010: R6,3 million) which relate to receivables from
      group companies.

      No interest is charged on the trade receivables.

5.    cAsh AnD cAsh equivAlents
      For the purposes of the cash flow statement, cash and cash equivalents include
      cash on hand and in banks and investments in money market instruments, net
      of outstanding bank overdrafts. Cash and cash equivalents at the end of the
      financial year as shown in the statement of cash flows can be reconciled to
      the related items in the statement of financial position as follows:

      Bank balances and cash                                                                              65 152               84 176

      Cash and cash equivalents comprise cash and cash at bank. The carrying amount
      of these assets approximate to their fair value.

6.    shAre cApitAl
      Ordinary share capital
      Issued and fully paid

      Authorised
      1 000 000 000 ordinary shares of R0,000005                                                               5                     5

                                                                share capital                              share premium

                                                               2011                  2010                   2011                 2010
                                                              r’000                 R’000                  r’000                R’000

      Issued and fully paid ordinary shares
      362 500 000 shares in issue                                  2                     2              228 596               228 596

      total share capital and premium                                                                   228 598               228 598

      The directors are authorised, by resolution of the shareholders until the forthcoming annual general meeting, to issue up
      to a maximum of 5% of the total number of issued ordinary shares for any purpose and upon such terms and conditions
      as they see fit.

      20% of the issued share capital of the group is owned by employees through the BEE Share Trust.




                                                                                               Protech Integrated Annual Report 2011 105
Notes to the company financial statements                               for the year ended 28 February 2011
(Continued)



7.     BorroWinGs

                                                                       2011                                      2010
                                                             current          non-current                Current         Non-current
                                                               r’000                r’000                 R’000               R’000

       Non-interest bearing borrowings (7.1)                   94 041                    –               115 299                    –
       Interest-bearing borrowings (7.2)                       11 158               24 467                 9 601               33 104

                                                              105 199               24 467              124 900                33 104

7.1    non-interest bearing borrowings
       Unsecured – at amortised cost
       Loans from entities
       – Pela Plant (Pty) Ltd                                  88 064                     –              114 907                     –
       – South African Road Testing Services
         (Pty) Ltd                                              3 418                     –                  392                     –
       – Protech Khuthele Property
         Investments (Pty) Ltd                                    557                     –                     –                    –
       – Ground Improvement Solutions (Pty) Ltd                 2 002                     –                     –                    –

                                                               94 041                     –             115 299                      –

       The loans from entities are interest free
       and unsecured and have no fixed terms
       of repayment.

       Loans received from entities are disclosed
       in note 16 Related parties.

7.2    interest bearing borrowings
       Secured – at amortised cost
       Loan facilities from banks
       Absa Bank Ltd
       Revolving loan facility                                  5 082               17 918                 3 961               20 188
       Term loan facility                                       6 076                6 549                 5 640               12 916

                                                               11 158               24 467                 9 601               33 104

       The revolving loan facility bears interest at prime minus 1% and is payable over 84 months. There are 48 (2010: 60) monthly
       instalments of R0,561 million (2010: R0,507 million) still payable. The facility is secured by cession of debtors and unlimited
       cross suretyship by group companies.

       The term loan facility bears interest at prime minus 1,5% and is payable over 60 months. There are 24 (2010: 36) monthly
       instalments of R0,568 million (2010: R0,590 million) still payable. The facility is secured by a notarial bond of R30 million over
       fixed assets held by Protech Readymix (Pty) Ltd and unlimited cross suretyship by group companies.




 106
7.      BorroWinGs (continued)
7.2     interest-bearing borrowings (continued)
7.2.1   obligations under loan Facilities From banks
        Loan facilities from banks relates to financing of the Readymix acquisition with finance terms of between 5 and 7 years.
        The company’s obligations under loan facilities are secured as stated in note 7.2.
                                                                                               present value of minimum
                                                        minimum loan payments                   instalment sale payments


                                                            2011                2010                  2011                 2010
                                                           r’000               R’000                 r’000                R’000

        Not later than 1 year                             13 556              13 167                11 158                9 601
        Later than 1 year and not later than
        5 years                                           27 032              38 507                24 467               33 104

                                                          40 588              51 674                35 625               42 705
        Less future finance charges                       (4 963)              (8 969)                   –                    –

        Present value of minimum loan
        receivables                                       35 625              42 705                35 625               42 705




                                                                                         Protech Integrated Annual Report 2011 107
Notes to the company financial statements                                 for the year ended 28 February 2011
(Continued)




                                                                                                       2011      2010
                                                                                                      r’000     R’000

8.     trADe AnD other pAyABles
       Trade payables                                                                                 6 203      6 040

       Trade and other payables comprise amounts outstanding for trade purchases and
       ongoing costs.

       The directors consider that the carrying amount of the trade and other payables
       approximate their fair value.

       Trade payables due to related parties of R0,5 million (2010: R0,3 million) are included
       in the above amount. These amounts are disclosed in note 16 Related parties.

9.     revenue
       Revenue comprises:
       Management fees –        intergroup                                                            8 150      8   880
       Dividends received –     intergroup                                                           24 500     15   393
       Interest received –      intergroup                                                            3 108      3   802
       Interest received –      other                                                                   302      1   331

                                                                                                     36 060     29 406

10.    interest pAiD
       – Banking institutions                                                                         3 303      3 797
       – Other                                                                                            4          3

                                                                                                      3 307      3 800

11.    eArninGs Before interest AnD tAxAtion
       The following items are included in earnings before interest and taxation:
       income:
       Dividends received                                                                            24 500     15 393

       expenses:
       Directors’ remuneration (note 15)
       – Other fees                                                                                   1 082      1 320
       Impairment of investments in subsidiaries                                                          –     13 524
       Impairment of other financial assets                                                           9 763      1 801




 108
                                                                                                           2011                 2010
                                                                                                          r’000                R’000

12.     tAxAtion
12.1.   income tax recognised in profit
        Current tax expense                                                                                 136                  246

        Deferred taxation
        – Current year                                                                                   (2 734)                 (504)

        Secondary tax on companies                                                                        1 450                     –

                                                                                                         (1 148)                 (258)

        The total charge for the year can be reconciled to the earnings before taxation
        as follows:

        Earnings before taxation                                                                         14 539                2 389

        Income tax expense calculated at 28% (2010: 28%)                                                  4 071                  669

        permanent differences:
        Tax effect of income and expenses that are not taxable or deductible in
        determining taxable earnings                                                                     (6 669)                 (927)

        Secondary tax on companies                                                                        1 450                     –

        Income tax (credit) recognised in earnings                                                       (1 148)                 (258)

        Effective tax rate                                                                                (7,9%)              (10,8%)

12.2    Deferred tax
        Balance at beginning of year                                                                     (2 026)               (1 522)
        Timing differences during the year                                                               (2 734)                 (504)

        Balance at end of year                                                                           (4 760)               (2 026)



                                                                              opening                    credit              closing
                                                                              balance               to income                balance
        2011                                                                    r’000                    r’000                 r’000

        temporary differences
        Impairment on loans receivable                                             (2 026)               (2 734)              (4 760)

                                                                                   (2 026)               (2 734)              (4 760)

                                                                                  Opening                 Credit            Closing
                                                                                   balance           to income              balance
        2010                                                                        R’000                 R’000              R’000

        temporary differences
        Impairment on loans receivable                                              (1 522)                (504)              (2 026)

                                                                                    (1 522)                (504)              (2 026)




                                                                                              Protech Integrated Annual Report 2011 109
Notes to the company financial statements                                   for the year ended 28 February 2011
(Continued)



13.      finAnciAl instruments
13.1     capital risk management
         The company manages its capital to ensure that the company will be able to continue as a going concern while maximising
         the return to stakeholders through the optimisation of the debt and equity balance.

         The capital structure of the company consists of debt, which includes loans to subsidiaries, cash and cash equivalents and
         equity, comprising issued capital, reserves and retained earnings as disclosed.

         Short-term borrowings pertain to the treasury loans from subsidiaries.

13.2     significant accounting policies
         Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of measurement
         and the basis on which income and expenses are recognised, in respect of each class of financial asset, financial liability and
         equity instrument are disclosed in the accounting policies to the financial statements.


                                                                                                               2011                   2010
                                                                                                              r’000                  R’000

13.3     categories of financial instruments
         financial assets
         Loans and receivables (including cash and cash equivalents)                                        161 306               191 146

         financial liabilities
         Trade and other payables                                                                             6 203                 6 040
         Borrowings                                                                                         129 666               158 004

         The carrying amount reflected above represents the company’s maximum exposure to credit risk for such loans and receivables.

13.4     financial risk management objectives
         The company does not enter into or trade financial instruments, including derivative financial instruments, for speculative purposes.

13.5     market risk
         The company’s activities do not expose it to major financial risks.

13.6     interest rate risk management
         The company is exposed to interest rate risk as it has loan facilities linked to floating interest rates. The risk is managed by
         the company by keeping excess cash in an access deposit account linked to these facilities to minimise the interest expense.

13.6.1   interest rate sensitivity analysis
         The sensitivity analysis below has been determined based on the exposure to interest rates for both derivatives and non-
         derivative instruments at the reporting date. For floating rate liabilities, the analysis is prepared assuming the amount of
         liability outstanding at the reporting date was outstanding for the whole year. A 100 basis point increase or decrease is used
         when reporting interest rate risk internally to key management personnel and represents management’s assessment of the
         reasonably possible change in interest rates.

         If interest rates had been 100 basis points higher/lower and all other variables were held constant, the company’s profit for
         the year ended 28 February 2011 would decrease/increase by R0,3 million (2010: R0,3 million). This is attributable mainly to
         the company’s exposure to interest rates on its variable rate borrowings.

13.7     credit risk management
         The company does not have any credit risk as it has no debtors pertaining to the selling of goods and services. The company
         is the holding company of the group and fulfils a treasury function.




 110
13.      finAnciAl instruments (continued)
13.8     liquidity risk management
         Ultimate responsibility for liquidity risk management rests with the board of directors, which provides sufficient guidance for
         the management of the company’s short-, medium- and long-term funding and liquidity management requirements.

13.8.1   liquidity and interest risk tables
         The following tables detail the company’s remaining contractual maturity for its non-derivative financial liabilities. The tables
         have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the
         company can be required to pay. The table includes both interest and principal cash flows.


                                                    Weighted
                                                     average
                                                     effective
                                                      interest     less than         1–3       3 months            1–5
                                                          rate      1 month        months       to 1 year         years         total
         2011                                                          r’000        r’000           r’000         r’000         r’000

         Interest-bearing bank loans                        7,8%        1 130         2 259       10 167         27 032        40 588
         Trade and other payables                                           –         6 203            –              –         6 203
         Intergroup borrowings                                              –             –       94 041              –        94 041

                                                                        1 130         8 462      104 208         27 032      140 832

         2010
         Interest-bearing bank loans                        9,3%        1 097         2 195        9 875         38 507       51 674
         Trade and other payables                                           –         6 040            –              –        6 040
         Intergroup borrowings                                              –             –      115 299              –      115 299

                                                                        1 097         8 235      125 174         38 507      173 013

         Loans to and from subsidiaries are interest free except for the acquisition loan to Protech Readymix (Pty) Ltd.

         Except as detailed in the following table, the directors consider that the carrying amounts of financial assets and financial
         liabilities recorded at amortised cost in the financial statements approximate their fair values:



                                                                        2011                                     2010
                                                             carrying                   fair             Carrying                  Fair
                                                              amount                  value              amount                  value
                                                                r’000                 r’000                R’000                 R’000

         financial assets
         Loans and receivables (excluding cash
         and cash equivalents)                                   96 154              96 154               106 970             106 970

         financial liabilities
         Trade and other payables                                6 203                6 203                 6 040               6 040
         Borrowings                                            129 666              129 666               158 004             158 004

         Due to the short term nature of these instruments the current value approximates its fair value.




                                                                                               Protech Integrated Annual Report 2011 111
Notes to the company financial statements                                  for the year ended 28 February 2011
(Continued)




                                                                                                        2011                 2010
                                                                                                       r’000                R’000

14.    cAsh (utiliseD)/GenerAteD By operAtions
       Reconciliation of earnings before taxation to cash (utilised)/generated by operations:

       Earnings before taxation                                                                       14 539                 2 389
       Adjusted for non cash and other separate disclosable items:
        Interest received                                                                             (3 410)               (5   133)
        Interest paid                                                                                  3 307                 3   800
        Impairment of investment in subsidiaries                                                           –                13   524
        Impairment of loans granted                                                                    9 763                 1   801
        Dividends received                                                                           (24 500)              (15   393)

       Operating cash flow before working capital changes                                                (301)                   988

       Working capital changes:
        (Increase)/decrease in trade and other receivables                                             (2 728)               2 167
        Increase in trade and other payables                                                              203                1 156

       cash (utilised)/generated by operations                                                         (2 826)               4 311

15.    Directors’ emoluments
       At the date of this report, the company had four directors. Details of directors’ emoluments are set out in note 29 to the
       consolidated financial statements.

16.    relAteD pArties
16.1   identity of related parties
       The company has a related party relationship with its subsidiaries (see note 2) and with its directors.

16.2   related party transactions and balances
       During the year, the company and its related parties, in the ordinary course of business, entered into various intergroup sale
       and purchase transactions. These transactions are no less favourable than those arranged with third parties.

                                                                     revenue                              expenses


                                                                  2011                2010              2011                 2010
                                                                 r’000               R’000             r’000                R’000

       Pela Plant (Pty) Ltd                                      3 960                3 240                 –                      –
       South African Road Testing Services
       (Pty) Ltd                                                   792                  648                –                    –
       Protech Khuthele (Pty) Ltd                               27 703                4 992              480                  480
       Protech Readymix (Pty) Ltd                                3 288                3 802            7 2501               2 6141
       Impact Compaction (Pty) Ltd                                  50                    –            2 5131                (813)1
       Umvundla Investments No. 2 (Pty) Ltd                          –                5 702                –                5 0362
       Protech Projects Holding (Pty) Ltd                            –                9 691                –                8 4882

                                                                35 793              28 075            10 243               15 805

       1 During the year loans were impaired as set out in note 3.
       2 During the year investments were impaired as set out in note 2.




112
16.   relAteD pArties (continued)
                                                                                         Amounts owed by                      Amounts owed to
                                                                                          related parties                      related parties


                                                                                            2011              2010                2011               2010
                                                                                           r’000             R’000               r’000              R’000

      Pela Plant (Pty) Ltd                                                                 4 514 1            1 8471           88 0644            114 9074
      South African Road Testing Services (Pty) Ltd                                          903 1              3691            3 4184                3924
      Protech Khuthele (Pty) Ltd                                                          20 960 1&2         21 2081&2            5473                2743
      Protech Khuthele BEE Trust                                                           2 262 2            3 2332                –                   –
      Protech Khuthele BEE (Pty) Ltd                                                             22               12                 –                   –
      Protech Projects Holding (Pty) Ltd                                                         –                –                  –                   –
      PPK Labour Services (Pty) Ltd                                                            50 2              502                 –                   –
      Lidonga Construction (Pty) Ltd                                                             –2           5 1852                 –                   –
      Protech Khuthele Property Investments (Pty) Ltd                                            –   2
                                                                                                                435   2
                                                                                                                                   557   4
                                                                                                                                                         –
      Protech Khuthele Properties (Pty) Ltd                                                 3 247 2           3 7452                 –                   –
      Umvundla Investments No. 2 (Pty) Ltd                                                       –2               12                 –                   –
      Protech Khuthele Zambia Ltd                                                             118 2             1182                 –                   –
      Truload Hauliers (PVT) Limited                                                            –2               602                 –                   –
      Impact Compaction (Pty) Ltd                                                         13 630 2            5 6362                 –                   –
      Protech Readymix (Pty) Ltd                                                          67 083 2           71 9972                 –                   –
      Ground Improvement Solutions (Pty) Ltd                                                   –                  –              2 0024                  –

                                                                                         112 769            113 885            94 588             115 573

      The amounts outstanding are unsecured and will be settled in cash within the normal operating cycle of the company.
      Apart from the loans to and from companies disclosed above there were no other loans to or from related parties.

      1   Details   of   these   amounts   are   disclosed   in   note   4   Trade and other receivables.
      2   Details   of   these   amounts   are   disclosed   in   note   3   Other financial assets.
      3   Details   of   these   amounts   are   disclosed   in   note   8   Trade and other payables.
      4   Details   of   these   amounts   are   disclosed   in   note   7   Borrowings.




                                                                                                                  Protech Integrated Annual Report 2011 113
Corporate information


Directors
executive directors                                Date of resignation
GD Chapman                                         10 November 2010
CJA Wolmarans

non-executive directors
DA Ackerman                                        22 September 2010
MSG Mareletse
V Raseroka
P van Tonder                                       22 September 2010
M Vuso

AuDitors
Deloitte & Touche
Registered Auditors
Buildings 1 and 2, Deloitte Place, The Woodlands
Woodlands Drive, Woodmead, Sandton

Telephone: +27 (0) 11 806 5000
Facsimile: +27 (0) 11 806 5111

commerciAl BAnKers
Absa Corporate & Business Bank – Sandton
11 Diagonal Street
Newtown
Johannesburg
2001

Telephone: +27 (0) 11 556 6116
Facsimile: +27 (0) 11 566 6919

reGistereD offices
Cnr R512 to Lanseria & Elandsdrift Road
Lanseria 1748
Private Bag X6
Lanseria 1748

Telephone: +27 (0) 11 301 5599
Facsimile: +27 (0) 86 646 3850

trAnsfer secretAries
Link Market Services
13th Floor
Rennie House
19 Ameshoff Street
Braamfontein

PO Box 4844
Johannesburg, 2000
www.linkmarketservices.co.za

Local: 0861LINKSA or 0861 546572
International: +27 (0) 11 713 0800




 114
Notice of annual general meeting


Protech Khuthele Holdings Limited                                       ordinary resolution 5: Authority to issue shares for cash
Incorporated in the Republic of South Africa                            To consider and, if deemed fit, to pass, with or without
Registration number 2000/024352/06                                      modification, the following ordinary resolution:
JSE code: PKH ISIN: ZAE 000101986
(“Protech” or “the company”)                                            “resolveD that, in terms of the Listings Requirements of the
                                                                        JSE Limited (JSE), the mandate given to the directors of the
Notice is hereby given that the annual general meeting of the           company in terms of a general authority to issue securities for
shareholders of Protech Khuthele Holdings Limited (“the                 cash, as and when suitable opportunities arise, be renewed
company”) will be held at the Hertford Country Hotel on Corner          subject to the following conditions:
of the R512 to Lanseria and Elandsdrift Road on Monday,
                                                                        • That this authority shall only be valid until the next annual
24 October 2011 at 08h00 to deal with the business as set out
                                                                          general meeting of the company but shall not extend beyond
below and to consider and, if deemed appropriate, pass the
                                                                          15 months from the date of this meeting.
ordinary and special resolutions set out in this notice.
                                                                        • The allotment and issue of the shares must be made to
electronic pArticipAtion in the AnnuAl                                    persons qualifying as public shareholders as defined in the
GenerAl meetinG                                                           Listings Requirements of the JSE.
Please note that facilities for electronic participation will not       • The shares which are the subject of the issue for cash must
be available for purposes of the annual general meeting.                  be of a class already in issue, or where this is not the case,
                                                                          must be limited to such shares or rights that are convertible
presentAtion of AnnuAl
                                                                          into a class already in issue.
finAnciAl stAtements
The consolidated audited annual financial statements of the             • That a paid press announcement giving full details, including

company and its subsidiaries, incorporating the reports of the            the impact of the issue on net asset value, net tangible
auditors, the audit committee and the directors for the year ended        asset value, earnings and headline earnings per share and
28 February 2011 will be presented to shareholders as required in         if applicable, diluted earnings and diluted headline earnings
terms of section 30(3)(d) of the Companies Act of 2008.                   per share, be published after any issue representing, on a
                                                                          cumulative basis within one financial year, 5% of the number
resolutions for consiDerAtion                                             of shares in issue prior to the issue concerned.
AnD ApprovAl
                                                                        • That the issues in aggregate in any one financial year
ordinary resolution 1: rotation of Directors                              (including the number of any shares that may be issued in
To elect by way of separate resolutions, directors in the place           future arising out of the issue of options) shall not exceed
of those retiring in accordance with the company’s articles of            15% of the number of shares of the company’s issued
association. The directors retiring are Messrs M Mareletse                ordinary share capital.
and V Raseroka all of whom being eligible offer themselves              • That in determining the price at which an issue of shares for
for re-election.                                                          cash will be made in terms of this authority, the maximum
                                                                          discount permitted shall be 10% of the weighted average
ordinary resolution 2: Appointment of audit
                                                                          traded price of the ordinary shares on the JSE, measured
and risk committee
                                                                          over the 30 business days prior to the date that the price of
To confirm, by way of separate resolutions, the appointment of            the issue is agreed between the company and the party
the following independent non-executive directors as members              subscribing for the securities.“
of the audit and risk committee:
• Mr M Mareletse                                                        ordinary resolution 6: remuneration philosophy
• Ms M Vuso                                                             To approve, by way of a non-binding, advisory vote, the remunera-
• Mr V Raseroka                                                         tion philosophy of the company as set out on pages 34 to 38
                                                                        of the integrated report of which this notice forms part.
ordinary resolution 3: Appointment of auditors
To re-appoint, on recommendation of the audit committee,                special resolution 1: General authority
Deloitte & Touche as independent auditors of the company, the           to repurchase shares
designated auditor meeting the requirements of section 90(2)            To consider and, if deemed fit, to pass, with or without modifica-
of the Companies Act of 2008.                                           tion, the following special resolution:
ordinary resolution 4: Authority to issue shares                        “resolveD by way of a special resolution that the mandate
To authorise the directors to allot and issue at their discretion the   given to the company in terms of its articles of association or
unissued but authorised ordinary shares in the share capital of         memorandum of incorporation (or one of its wholly-owned
the company and/or grant options to subscribe for the unissued          subsidiaries) providing authorisation, by way of a general approval,
shares, for such purposes and on such terms and conditions as           to acquire the company’s own securities, upon such terms and
they may determine, provided that such transaction(s) has/have          conditions and in such amounts as the directors may from time
been approved by the JSE Limited and are subject to the JSE             to time decide, subject to the Listings Requirements of the JSE
Listings Requirements.                                                  Limited (the JSE), be extended, subject to the following:



                                                                                               Protech Integrated Annual Report 2011 115
Notice of Annual General Meeting
(Continued)



• This general authority be valid until the company’s next           • The company’s and the group’s ordinary share capital and
  annual general meeting, provided that it shall not extend            reserves will be adequate for ordinary business purposes.
  beyond 15 (fifteen) months from the date of passing of this
  resolution (whichever period is shorter).                          special resolution 2: Directors’ remuneration

• The repurchase being effected through the order book operated
                                                                     To consider and, if deemed fit, to pass, with or without
  by the JSE trading system, without any prior understandi g
                                                         n           modification, the following special resolution:
  or arrangement between the company and the counterparty.           “resolveD, as a special resolution:
• Repurchases may not be made at a price greater than 10%
                                                                     • That the company be and is hereby authorised to pay
  (ten percent) above the weighted average of the market
  value of the ordinary shares for the 5 (five) business days          remuneration to its directors for their services as directors,
  immediately preceding the date on which the transaction              as contemplated in s66(8) and 66(9) of the Companies Act of
  was effected.                                                        2008.

• An announcement being published as soon as the company             • That the remuneration structure and amounts as set out
  has repurchased ordinary shares constituting, on a cumulative        below for the year ending 28 February 2012, inclusive of an
  basis, 3% (three percent) of the initial number of ordinary          8% increase, be and are hereby approved until such time as
  shares, and for each 3% (three percent) in aggregate of the          rescinded or amended by shareholders by way of a special
  initial number of ordinary shares repurchased thereafter,            resolution:
  containing full details of such repurchases.                                                                                   fee per
                                                                       rand                                        Annual        meeting
• The number of shares which may be acquired pursuant to
                                                                       category                                   retainer      attended
  this authority in any one financial year may not in the
                                                                       Board
  aggregate exceed 20% (twenty percent) of the company’s
                                                                       Chairman                                   189 000          27 000
  issued share capital as at the date of passing of this special
                                                                       Member                                     108 000          21 600
  resolution or 10% of the company’s issued share capital in
                                                                       Audit and risk committee
  the case of an acquisition of shares in the company by a
  subsidiary of the company.                                           Chairman                                           –        21 600
                                                                       Member                                             –        16 200
• The company’s sponsor confirming the adequacy of the
                                                                       remuneration and
  company’s working capital for purposes of undertaking the
                                                                       nominations committee
  repurchase of ordinary shares in writing to the JSE prior to the
                                                                       Chairman                                           –        21 600
  company entering the market to proceed with the repurchase.
                                                                       Member                                             –        16 200
• The company and/or its subsidiaries not repurchasing securities
                                                                       social and ethics committee
  during a prohibited period as defined in the JSE Listings
                                                                       Chairman                                           –        21 600
  Requirements, unless it has in place a repurchase programme
                                                                       Member                                             –        16 200
  where the dates and quantities of securities to be traded
  during the relevant period are fixed and full details of the
  programme have been disclosed in an announcement                   special resolution 3: financial assistance to related
  published on SENS prior to the commencement of the                 and inter-related companies
  prohibited period.                                                 To consider and, if deemed fit, to pass, with or without modification,
• At any point in time the company only appointing one agent         the following special resolution:
  to effect any repurchases on its behalf.
                                                                     “resolveD, by way of a special resolution, that the directors
• The board of directors must pass a resolution that they
                                                                     of the company be and are hereby authorised as required in
  authorised the repurchase and that the company passed the
                                                                     terms of section 45(2) of the Companies Act of 2008 to provide
  solvency and liquidity test set out in s4 of the Companies Act
                                                                     financial assistance to all related and inter-related companies
  of 2008 and that since the test was done there have been no
                                                                     within the Protech group of companies, at such times and on
  material changes to the financial position of the group.
                                                                     such terms and conditions as the directors in their sole discretion
The directors, having considered the effects of the maximum
                                                                     deem fit and subject to all relevant statutory and regulatory
repurchase permitted, are of the opinion that for a period of
                                                                     requirements being met, such authority to remain in place until
12 (twelve) months after the date of the notice of the annual
                                                                     rescinded by way of special resolution passed at a duly constituted
general meeting and at the actual date of the repurchase:
                                                                     annual general meeting of the company.”
• The company and the group will be able, in the ordinary course
  of business, to pay its debts.                                     ordinary resolution 7: signing authority
• The working capital of the company and the group will be           To authorise any one director or the secretary of the company to
  adequate for ordinary business purposes.                           do all such things and sign all such documents as are deemed
• The assets of the company and the group, fairly valued in          necessary to implement the resolutions set out in the notice
  accordance with International Financial Reporting Standards,       convening the annual general meeting at which this ordinary
  will exceed the liabilities of the company and the group.          resolution will be considered and approved at such meeting.



 116
Additional information                                               proxies
The following additional information, some of which may appear       Any shareholder holding shares in certificated form or recorded
elsewhere in the integrated report, is provided in terms of the      on the company’s subregister in electronic dematerialised
JSE Listings Requirements for purposes of the general authority      form in “own name” and entitled to attend, speak and vote at
to repurchase the company’s shares set out in special resolution     the meeting is entitled to appoint a proxy to attend, speak and
number 1 above:                                                      on a poll vote in his stead. A proxy need not be a member of
• Directors and management – page 6.                                 the company.
• Major shareholders – page 50.                                      Proxy forms must be lodged at the offices of the transfer
• Directors’ interests in ordinary shares – page 55.                 secretaries, Link Market Services (13th Floor, Rennie House,
• Share capital of the company – page 79.                            19 Ameshoff Street, Braamfontein: PO Box 4844, Johannesburg,
                                                                     2000), by no later than Thursday, 20 October 2011 at 08h00.
litigation statement
The directors in office whose names appear on page 6 of the          All beneficial owners whose shares have been dematerialised
integrated report, are not aware of any legal or arbitration         through a Central Securities Depository Participant (“CSDP”) or
proceedings, including any proceedings that are pending or           broker other than with “own name” registration, must provide
threatened, that may have, or have had, in the recent past,          the CSDP or broker with their voting instructions in terms of
being at least the previous 12 (twelve) months from the date         their custody agreement should they wish to vote at the annual
of this integrated report, a material effect on the group’s          general meeting. Alternatively, they may request the CSDP or
financial position.                                                  broker to provide them with a letter of representation, in terms
                                                                     of their custody agreements, should they wish to attend the
Directors’ responsibility statement                                  annual general meeting.
The directors in office, whose names appear on page 6 of
                                                                     Shareholders and proxies of shareholders are advised that they
the integrated report, collectively and individually accept full
                                                                     will be required to present reasonably satisfactory identification
responsibility for the accuracy of the information pertaining to     in order to attend or participate in the annual general meeting as
special resolution number 1 and certify that, to the best of         required in terms of section 63(1) of the Companies Act of 2008.
their knowledge and belief, there are no facts that have been
omitted which would make any statement false or misleading,          votinG
and that all reasonable enquiries to ascertain such facts have       For the purpose of resolutions proposed in terms of the JSE
been made and that the special resolution contains all information   Listings Requirements wherein any votes are to be excluded
required by law and the JSE Listings Requirements.                   from that resolution, any proxy given by a holder of securities
                                                                     to the holder of such an excluded vote shall be excluded from
material changes
                                                                     voting for the purposes of that resolution.
Other than the facts and developments reported on in the
integrated report, there have been no material changes in the        By order of the board
affairs or financial position of the company and its subsidiaries
since the company’s financial year end and the date of signature
of the integrated report.

Directors’ intention regarding the general authority
to repurchase the company’s shares                                   A van der merwe
                                                                     Company secretary
The directors have no specific intention, at present, for the
                                                                     Lanseria
company to repurchase any of its shares but consider that such
a general authority should be put in place should an opportunity     12 August 2011
present itself to do so during the year which is in the best
interests of the company and its shareholders.




                                                                                             Protech Integrated Annual Report 2011 117
Notice of annual general meeting – explanatory notes


orDinAry resolution 1 – re-election                                  the approval of a 75% majority of the votes cast by shareholders
of Directors                                                         present or represented by proxy at the Annual General Meeting
In accordance with the company’s articles of association, one        for ordinary resolution number 5 to become effective.
third of the directors are required to retire at each annual
                                                                     orDinAry resolution 6 –
general meeting and may offer themselves for re-election. In
                                                                     remunerAtion philosophy
addition, any person appointed to the board of directors
                                                                     The King Report on Corporate Governance for South Africa, 2009
following the previous annual general meeting is similarly
                                                                     recommends that the remuneration philosophy of the King Report
required to retire and is eligible for re-election at the next
                                                                     on Governance for South Africa (King III), company be submitted
annual general meeting.
                                                                     to shareholders for consideration and for an advisory, non-
The following directors are eligible for re-election:                binding vote to provide shareholders with an opportunity to
Mr M Mareletse                                                       indicate should they not be in support of the material provisions
Mr V Raseroka                                                        of the remuneration philosophy and policy of the company.
Brief biographical details of each of the above directors and the    speciAl resolution 1 –
remaining members of the board are contained on page 29 and          GenerAl Authority to repurchAse shAres
30 of the integrated report of which this notice forms part.
                                                                     S48 of the Companies Act 71 of 2008 (the Act) authorises
orDinAry resolution 2 –                                              the board of directors of a company to approve the acquisition
Appointment of AuDit committee                                       of its own shares subject to the provisions of s48 and s46
In terms of s94(2) of the Companies Act 71 of 2008 (the Act), a      having been met. The JSE Listings Requirements require the
public company must at each annual general meeting elect an          shareholders of the company to approve the authority to
audit committee comprising at least three members who are            repurchase shares and the approval of a 75% majority of the
directors and who meet the criteria of s94(4) of the Act.            votes cast by shareholders present or represented by proxy at
                                                                     the annual general meeting for ordinary resolution number 8 to
Regulation 42 to the Act specifies that one third of the members
                                                                     become effective.
of the audit committee must have appropriate academic qualifica-
tions or experience in the areas as listed in the regulation.        speciAl resolution 2 –
The board of directors of the company is satisfied that the          Directors’ remunerAtion
proposed members of the audit committee meet all relevant            In terms of s66(8) and s66(9) of the Companies Act 71 of 2008,
requirements.                                                        companies may pay remuneration to directors for their services
                                                                     as directors unless otherwise provided by the memorandum of
orDinAry resolution 3 – Appointment
                                                                     incorporation and on approval of shareholders by way of a special
of AuDitors
                                                                     resolution. Executive directors are not specifically remunerated
Deloitte & Touche has indicated its willingness to continue in       for their services as directors but as employees of the company
office and resolution 4 proposes the re-appointment of that          and as such, the resolution as included in the notice requests
firm as the company’s auditors with effect from 1 March 2011.        approval of the remuneration paid to non-executive directors for
S90(3) of the Companies Act 71 of 2008 (the Act) requires the        their services as directors of the company.
designated auditor to meet the criteria as set out in s90(2) of
the Act.                                                             speciAl resolution 3 – finAnciAl AssistAnce
                                                                     to relAteD AnD inter-relAteD compAnies
The board of directors of the company is satisfied that both
Deloitte & Touche and the designated auditor meets are relevant      S45(2) of the Companies Act 71 of 2008 (the Act) authorises
requirements.                                                        the board to provide direct or indirect financial assistance to a
                                                                     related or inter-related company, subject to subsections (3) and (4)
orDinAry resolutions 4 AnD 5 –                                       of s45 of the Act and unless otherwise provided in the company’s
plAcement AnD issue of shAres for cAsh                               memorandum of incorporation. In terms of s45(3) of the Act, a
In terms of the Companies Act 71 of 2008 (the Act), directors        special resolution of shareholders is required in these instances.
are authorised to allot and issue the unissued shares of             The main purpose of the special resolution as set out in the notice
the company, unless otherwise provided in the company’s              of the meeting is to approve the granting of inter-company loans,
memorandum of incorporation or in instances as listed in s41 of      a recognised and well known practice, details of which are also
the Act. The JSE requires that the memorandum of incorporation       set out in the notes to the annual financial statements.
should provide that shareholders in a general meeting may
                                                                     orDinAry resolution 7 – siGninG Authority
authorise the directors to issue unissued securities and/or grant
                                                                     Authority is required to do all such things and sign all documents
options to subscribe for unissued securities as the directors in
                                                                     and take all such action as necessary to implement the resolutions
their discretion think fit, provided that such transaction(s) has/
                                                                     set out in the notice and approved at the annual general meeting.
have been approved by the JSE and are subject to the JSE
                                                                     It is proposed that the company secretary and/or director be
Listings Requirements. In the absence of the memorandum of
                                                                     authorised accordingly.
incorporation as contemplated in the Act, ordinary resolution 4
has been included to confirm directors’ authority to issue shares.   GenerAl
Directors confirm that there is no specific intention to issue any   Shareholders and proxies attending the annual general meeting
shares, other than as part of and in terms of the rules of the       on behalf of shareholders are reminded that s63(1) of the
company’s share incentive scheme, as at the date of this notice.     Companies Act 71 of 2008 requires that reasonably satisfactory
Also, in terms of the JSE Listings Requirements, the authority to    identification be presented in order for such shareholder or
issue shares for cash as set out in ordinary resolution 5 requires   proxy to be allowed to attend or participate in the meeting.



 118
Form of proxy


                                                                                            PROTECH KHUTHELE HOLDINGS LIMITED
                                                                                            Incorporated in the Republic of South Africa
                                                                                                  Registration number 2000/024352/06
                                                                                                  JSE code: PKH ISIN: ZAE 000101986
                                                                                                         (“Protech” or “the company”)
     to be completed by certificated shareholders and dematerialised shareholders with “own name” registration only
For completion by registered members of Protech be unable to attend the annual general meeting of the company to be held on
Monday, 24 October 2011 at 08h00, at the Hertford Country Hotel on Corner of the R512 to Lanseria and Elandsdrift Road, or at any
adjournment thereof.
I/We
of                                                                                                                              (address)
being the holder/s of                                                                        shares in the company, do hereby appoint:
1                                                                                                                       or, failing him/her
2                                                                                                                       or, failing him/her
the chairman of the annual general meeting, as my/our proxy to attend, speak and, on a poll, vote on my/our behalf at the
abovementioned annual general meeting of members or at any adjournment thereof, and to vote or abstain from voting as follows
on the ordinary and special resolutions to be proposed at such meeting:

                                                                                                  for         Against         Abstain

 1. Ordinary resolution 1:   To re-elect the directors required to retire in terms of the
                             articles of association:

                             1.1 Mr M Mareletse

                             1.2 Mr V Raseroka

 2. Ordinary resolution 2:   To elect the members of the audit and risk committee:

                             2.1 Mr M Mareletse

                             2.2 Ms M Vuso

                             2.3 Mr V Raseroka

 3. Ordinary resolution 3:   Appointment of auditors

 4. Ordinary resolution 4:   To authorise directors to allot and issue unissued
                             ordinary shares

 5. Ordinary resolution 5:   To authorise directors to allot and issue ordinary shares
                             for cash

 6. Ordinary resolution 6:   To approve the remuneration philosophy by way
                             of a non-binding, advisory vote

 7. Special resolution 1:    To authorise directors to repurchase company shares

 8. Special resolution 2:    To approve directors’ remuneration

 9. Special resolution 3:    To approve financial assistance to related and
                             inter-related companies

10. Ordinary resolution 7:   To provide signing authority

Please indicate with an “X” in the appropriate spaces provided above how you wish your vote to be cast. If no indication is given,
the proxy may vote or abstain as he/she sees fit.

Signed at                                   this                                              day of                                 2011

Signature

Assisted by me, where applicable (name and signature)


                                                                                  please read the notes on the reverse side hereof.


                                                                                               Protech Integrated Annual Report 2011 119
Notes to proxy


 1. A form of proxy is only to be completed by those ordinary shareholders who are:
       1.1 holding ordinary shares in certificated form; or
       1.2 recorded on sub-register electronic form in “own name”.

 2. If you have already dematerialised your ordinary shares through a Central Securities Depository Participant (CSDP) or broker
    and wish to attend the annual general meeting, you must request your CSDP or broker to provide you with a Letter of
    Representation or you must instruct your CSDP or broker to vote by proxy on your behalf in terms of the agreement entered
    into between yourself and your CSDP or broker.

 3. A member may insert the name of a proxy or the names of two alternative proxies of the member’s choice in the space. The
    person whose name stands first on the form of proxy and who is present at the annual general meeting of shareholders will
    be entitled to act to the exclusion of those whose names follow.

 4. On a show of hands a member of the company present in person or by proxy shall have one (1) vote irrespective of the number
    of shares he/she holds or represents, provided that a proxy shall, irrespective of the number of members he/she represents,
    have only one (1) vote. On a poll, a member who is present in person or represented by proxy shall be entitled to that proportion
    of the total votes in the company, which the aggregate amount of the nominal value of the shares held by him/her bears to the
    aggregate amount of the nominal value of all the shares issued by the company.

 5. A member’s instructions to the proxy must be indicated by the insertion of the relevant numbers of votes exercisable by the
    member in the appropriate box provided. Failure to comply with the above will be deemed to authorise the proxy to vote or to
    abstain from voting at the annual general meeting as he/she deems fit in respect of all the member’s votes exercisable thereat.
    A member or the proxy is not obliged to use all the votes exercisable by the member or by the proxy, but the total of the votes
    cast and in respect of which abstention is recorded may not exceed the total of the votes exercisable by the member or by
    the proxy.

 6. Forms of proxy must be lodged at, or posted to Link Market Services, to be received not later than 48 hours before the time
    fixed for the meeting (excluding Saturdays, Sundays and public holidays).

       For shareholders on the south african register:
       Link Market Services
       13th Floor
       Rennie House
       19 Ameshoff Street
       Braamfontein
       PO Box 4844
       Johannesburg, 2000
       www.linkmarketservices.co.za
       Local: 0861LINKSA or 0861 546572
       International: +27 (0) 11 713-0800

 7. The completion and lodging of this form of proxy will not preclude the relevant member from attending the annual general
    meeting and speaking and voting in person thereat to the exclusion of any proxy appointed in terms hereof.

 8. Documentary evidence establishing the authority of a person signing this form of proxy in a representative capacity or other
    legal capacity must be attached to this form of proxy, unless previously recorded by the transfer secretaries or waived by the
    chairman of the annual general meeting.

 9.    Any alteration or correction made to this form of proxy must be initialled by the signatory/ies.

10.    Notwithstanding the aforegoing, the chairman of the annual general meeting may waive any formalities that would otherwise
       be a prerequisite for a valid proxy.

11.    If any shares are jointly held, all joint members must sign this form of proxy. If more than one of those members is present at
       the annual general meeting either in person or by proxy, the person whose name appears first in the register shall be entitled
       to vote.




 120
www.pkh.co.za

								
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