CEMENT maker, PPC Zimbabwe’s change of functional currency from local to foreign has eliminated a net monetary loss of ZAR131 million (US$7,06 million) for its South Africa-domiciled parent company.

Over the past few months, many firms have been moving away from local currency accounting to use United States dollars reporting, given the volatility of the Zimdollar.

This volatility eventually led to the Zimdollar being scrapped on April 5 for the adoption of the ZiG.

In a trading statement for the year ended March 31, 2024, PPC Limited (PPC), the South African parent company for PPC Zimbabwe, said it was finalising its financial results for the period under review.

PPC also noted that a “strong performance” from its Zimbabwe subsidiary led to an overall positive impact for the group.

“Shareholders are advised that PPC is satisfied that a reasonable degree of certainty exists that the expected earnings per share (‘EPS’) and headline earning per share (‘HEPS’) for the current period will differ by at least 20% from that for the previous corresponding period, being the year ended March 31, 2023 (‘the prior period’) and that a trading statement is required in terms of the JSE [Johannesburg Stock Exchange] Limited Listings Requirements,” the cement making company said.

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“This difference is primarily due to the current period EPS and HEPS numbers being impacted by a strong performance by PPC Zimbabwe in the current period compared to the prior period in which it had an extended kiln shutdown.”

During PPC Zimbabwe’s financial year, the Zimdollar had depreciated by well over 500%, causing a significant impact on the group’s balance sheet.

“In addition, in the current period, PPC Zimbabwe changed its functional currency from the Zimbabwe dollar to the United States dollar and this also had a positive impact given the elimination of net monetary losses of ZAR131 million arising in the prior period due to hyperinflation accounting,” PPC said.

Both auditors and local accountants have issued adverse opinions on many financial statements of local firms as the volatility of the local currency has made it hard to ascertain a company’s true performance within a given period.

“The financial information on which this trading statement is based is the responsibility of the directors of PPC and has not been reviewed or reported on by the group’s independent external auditor,” PPC said.

“Full details of the groups’ performance will be contained in the group’s audited consolidated financial statements for the year ended March 31, 2024, which are expected to be released on or about June 24, 2024.”

In its second half-year performance locally, PPC Zimbabwe was involved in a heavily volatile cement market, where exorbitant cement prices were being charged.

This was after one of the country’s top cement manufacturers, Khayah Cement Limited (Khayah) experienced a breakdown at its mills.

Consequently, retailers and consumers started hoarding cement and charging between US$18 and US$20 per bag, well above the norm.

Government then intervened by allowing the importation of up to five metric tonnes of cement, leading both Khayah and PPC to revise their prices downwards.

However, in March, government closed the import window.