Zim’s currency change delays PPC’s results

Currency reforms in Zimbabwe have forced cement maker, PPC Limited, to delay announcing its results for the year ended March 31, 2019, which were due on Wednesday.

Zimbabwe, where PPC has operations, this week introduced new currency measures that saw the use of foreign currency to make local transactions being outlawed.

The southern African country has been using a multi-currency system since 2009, but limited export earnings and ballooning imports made the use of foreign currency unsustainable.

The banning of foreign currencies, however, has however forced corporates and other economic players to rethink their strategies and also figure out how to account for their earnings and balance sheets.

“Shareholders are advised that the anticipated release of the Reviewed Financial Results for the year ended March 31, 2019 (“Annual Results”) has been delayed to allow for the completion of the review by the company´s auditors,” said PPC in a statement released on Wednesday.

“This delay is due to considerations relating to fair value adjustments of Zimbabwean financial assets that could range between R0 – R50m,” reads the statement. 

What’s at stake?

PPC Zimbabwe reported a cash balance of US$63m at the end of September 2018, which was reduced to US$60m by a debt repayment at the end of February 2019.

“The exchange rate will, however, apply only to a portion of the US$60m cash balance, amounting to US$30m – US$35m,” said PPC in March.

“The remaining balance, including US$16m in dividends and US$5m rights offer proceeds, qualifies as legacy debt due to PPC RSA which is awaiting repatriation.”

PPC is the largest cement producer in Zimbabwe and operates three plants with a combined capacity of 1.4 tonnes per year.  

In March this year, PPC viewed “the introduction of a formalised floating foreign exchange market in Zimbabwe as a positive development toward curbing the high inflation and excessive premiums created by the parallel exchange rates.”

“The exchange market should result in a more efficient allocation of foreign currency, removing the distortions that were impacting the market, and facilitate the repatriation of cash in the medium to long term.”