JSE Securities Exchange-listed Pretoria Portland Cement (PPC) says the financial results of its subsidiary company, Portland Holdings Ltd, will be excluded from the group’s results because
of the severe economic situation in Zimbabwe.
PPC said Porthold was struggling to access foreign currency as shortages worsen on the auction system.
“The circumstances in Zimbabwe are such that there are severe restrictions placed on PPC’s ability to access foreign currency and remit funds,” PPC said in its financial results for the half-year to March 31.
It said in view of these circumstances, the results of Porthold had continued to be excluded from group results.
Porthold is a wholly owned Zimbabwean subsidiary of PPC.
As a reflection of the continued foreign currency shortage on the auction system, the average rejection rate rose from 93% in January to 97% in February.
The total amount of bids surpassed the US$100 million mark at the February 10 and 14 auctions, translating into demand of 9 times more than the fixed supply of US$11 million per auction.
Of late, companies have excluded from group results or sold their subsidiaries in Zimbabwe as economic conditions worsen.
These include Royal Philips of the Netherlands which sold Philips Electrical Zimbabwe to management.
PPC said its cement operations in Zimbabwe were difficult because of a contracting economy and a hyperinflationary environment.
“Despite this, Portland continued to export to neighbouring countries, thereby earning much needed foreign exchange and has again remained cash positive over the period,” the company said.
The group’s revenue improved 11% to R1,8 billion following increased South African cement sales volumes while Porthold had revenue of R116,8 million. South African cement volumes increased by 10%.
On the other hand an overall slowing of the Botswana economy resulted in a sharp decline in cement demand in that country.
PPC said a strong rand and Spoornet’s capacity problems continue to curtail exports.
The company is finalising the scope and costing of the one million tonne inland capacity project and anticipates submitting it for board approval in the last quarter of the financial year.
PPC is the third largest cement manufacturer in South Africa and is one of the leading suppliers in southern Africa.
It has about eight manufacturing facilities in SA, Botswana and Zimbabwe.
The group declared a dividend of 260 cents per share for the six months ended March 31.
In Zimbabwe the dividend will be payable in local currency at the rate quoted by the Stanbic Bank Zimbabwe Ltd.