SOUTH Africa’s Portland Cement Company (PPC) said this week its Zimbabwean operations remained under sustained pressure from an unstable economic environment, warranting the non-consolidation of its results in the group’s financial statement.
In financial results for the half-year to March 31, PPC said its Zimbabwean subsidiary, Portland, “continued to experience very difficult operating and trading conditions, with continuous shortages of transport and production inputs leading to plant stoppages”.
These had impacted negatively on the company’s ability to supply customers.
The Johannesburg Securities-listed PPC, de-consolidated the results of its Zimbabwean subsidiary, Portland Holdings Ltd (Porthold) in 2004, saying foreign currency problems had hampered remittances from the country.
The circumstances in Zimbabwe were such that there had been severe restrictions placed on the group’s ability to access foreign currency and remit funds, the group said when it announced its decision.
The board had also concluded that the various constraints impacting the normal operations of Porthold meant that its management had no ability to exercise control over the business.
Despite the difficult conditions prevailing in Zimbabwe, Porthold managed to post a small profit and remained cash-positive.
The South African group said it was however not yet planning to dispose of its Zimbabwean subsidiary. A statement from the group chief executive, John Gomersall, made available to Businessdigest, read: “Inspite of PPC Zimbabwean plant continuing to operate under very difficult conditions,
PPC was not considering selling it.”
He said significant constraints impacting on the normal operation of Portland had resulted in the PPC board concluding that the management did not have the ability to exercise effective control over the business.
“As a result, Porthold have continued to be excluded from the group’s results in the current period,” said Gomersall.
Despite Porthold experiencing very difficult conditions, cash generation and profitability are said to be ahead of expectations following stronger than anticipated sales volumes. — Staff Writer.