Log in
updated 6:54 AM SAST, Mar 14, 2031
  • facebook
  • twitter
  • linkedin
  • google plus
  • youtube

Zimbabwe: PPC hit hard by foreign currency crisis

PPC Zimbabwe Ltd is stuck with R896 million (US$64,2 million) due to its parent company in South Africa after the local company failed to remit rights issue proceeds and other amounts due to the JSE-listed construction materials manufacturing group.

In its interim financial results for the six months to September 30 2018, PPC group CE Johan Claassen said the amounts split as R510 million (U$36,5 million) in September 2017 and R466 million (US$33,4 million) in March 2018 were classified as cash and cash equivalents after the group failed to access the funds due to restrictive laws on transfers.

Zimbabwe is experiencing an acute shortage of foreign exchange that has seen foreign investors failing to remit dividends, capital gains and principal on the local exchange.

Additionally, there is a backlog of amounts running to several hundreds of millions outstanding to foreign suppliers. In the prior comparable period, PPC Zimbabwe's full cash and cash equivalents of R564 million (US$40,4 million) were reflected as restricted.

In October 2018, the government indicated that all cash held in the bank will be converted to Real-Time Gross Settlement (RTGS) which will only be usable in Zimbabwe. The rate is pegged at 1:1 with the US dollar, but is trading at US$1:3,50 on the parallel market.

Also held in the form of RTGS is R82 million (US$5,8 million) due to PPC Holdings raised from the rights issue (concluded in September 2016) for PPC shares listed on the Zimbabwe Stock Exchange.

"After due consideration, the prior period number has been restated to only reflect the funds included in the escrow account at September 2017 rather than the PPC Zimbabwe's full cash and cash equivalents as restricted cash and cash equivalents," said Claassen.

Claasen said the current liquidity issues in Zimbabwe have not allowed "Zimbabwe sponsors" to facilitate the transfer of funds to South Africa. "In light of the liquidity issues in Zimbabwe, the company continues to explore the most beneficial use of the funds while transfer to South Africa is not possible," he said.

PPC is also holding on to a significant amount of Treasury Bills with the initial face value of the TBs being US$706 831 (R8 million), repayable in three equal annual instalments from June 2017 to June 2019.

In the current period, an instalment of US$326 609 (September 2017: US$ nil; March 2018: US$188 613) was received. Acute forex shortages as well as liquidity constraints continue to hamper economic activity as PPC Zimbabwe is operationally self-sufficient and continues to drive local procurement and exports to reduce forex requirements.

More in News

Why buildings collapse in Nigeria, by Society of Engineers

Nigerian Society of Engineers (NSE) has blamed constant collapse of buildings in the country on absence of law… Read More ยป
DMC Firewall is a Joomla Security extension!