LAFARGE Cement Zimbabwe has obtained a long-term US$30 million facility to enable settlement of outstanding obligations.
By Kudzai Kuwaza
In its audited results for the year ended December 31 2018, the cement manufacturer revealed that the group obtained a US$30 million facility from parent company LafargeHolcim to cover long outstanding obligations. The group also acquired a short-term loan facility of US$4,4 million from a local bank to cover working capital requirements.
“As at 31 December 2018, the company had utilized US$24 million of the group facility and US$0,8 million of the local facility,” the group revealed.
The cement maker revealed that it has contingent liabilities related to the tax authorities.
“Although the business submitted an application for tax amnesty legislated in the Finance Act No 1 of 2018 that was published on 15 March 2018, no response has yet been received from the tax authorities,” the group said in its financial statement. “The company reassessed its risk against this previously disclosed contingent liability of $7,9 million.
Although judgement is still to be handed down in this matter, a provision of $3 million was booked in the current financial year following the hearing of the matter in the courts in June 2018 and $2,7 million relating to interest and penalties is covered by the amnesty. An amount of $2,2 remains a contingent liability.”
The group posted a profit before tax of $4,4 million compared to $377 000 in 2017.
Lafarge revealed that the company could not fully comply with accounting standards.
“While full compliance with IFRS has been possible in previous reporting periods, only partial compliance has been achieved for the year 31 December 2018,” the group said. “The IASB’s Conceptual Framework for Financial Reporting provides that in applying fair presentation to the financial statements, entities should go beyond consideration of the legal form of transactions and other factors impacting on the financial statements to also consider the underlying economic substance therein.”
The group added that the financial statements do not comply with IFRS as directors had to comply with legal requirements of Statutory Instrument 33 of 2019, which implicitly inhibits an ability to apply the requirements of IAS 21.
“The application of IAS 21 would have had a material impact on the results and position of the company,” the group said.
The conflict between the country
’s laws and international accounting standards has created widespread uncertainty for companies who have delayed publishing their results. This has prompted the Public Accountants and Auditors Board to urge companies to use the US dollar as the presentation currency for 2018 financial statements.