PPC Cement will consolidate PPC Zimbabwe financial results in accordance with the International Financial Reporting Standards.
This follows after Zimbabwe changed the functional currency of Zimbabwean businesses to the real-time gross settlement (RTGS) dollar in October.
The reported results of PPC Zimbabwe consolidated in PPC Cement’s results for the reporting period ended September 30, 2018, remain unchanged and there will be no restatement of previously reported figures.
The reported results of PPC Zimbabwe will, from October 1, 2018, be based on prevailing commercial rates for the remainder of the 2019 financial year, ranging from 2.5 RTGS dollars per $1 to 3.5 RTGS dollar per $1.
In terms of guidance for the financial year to end March 31, PPC Zimbabwe’s earnings before interest, taxes, depreciation and amortisation (Ebitda) in rands is expected to be within 5% to 15% of the reported Ebitda of R573-million for the 2018 financial year.
PPC Cement will, for the 2019 group financial results reporting, provide extensive financial statement disclosures with regard to the Zimbabwean business and the impact of the change in functional currency on the reported results.
Meanwhile, PPC on Wednesday pointed out that S&P Global Ratings had downgraded the cement producer’s long and short-term South African national scale corporate credit ratings from ‘zaA-/zaA-2’ to ‘zaBBB-/zaA-3’ as a result of the changes to monetary policy in Zimbabwe and the challenging domestic trading conditions.
“While they do acknowledge that the Zimbabwean business will not require
financial support from PPC group, we do believe that this approach is unduly
punitive and not reflective of the economic reality of our business,” PPC stated.
It added that PPC remained adequately capitalised with the previously guided liquidity headroom of 15% being maintained.