By Alois Vinga
LISTED cement maker, PPC Zimbabwe has acknowledged receipt of the entire legacy debt owed by the Reserve Bank of Zimbabwe (RBZ) in a development which strengthens the local unit’s balance sheet.
The debt accrued as a result of cash flows generated in Zimbabwe by foreign entities that could not be repatriated to foreign suppliers due to foreign exchange shortages.
Presenting the summarised financial performance for the year 2022 this week, PPC Africa group chief executive officer Roland van Wijnen, confirmed the latest developments.
“The RBZ honored its obligation to settle PPC Zimbabwe’s legacy debt. The debt was fully repaid during December 2021. PPC Zimbabwe is financially self-sufficient and is focused on cash preservation and maximising US$ EBITDA,” he said.
The development enabled PPC to receive US$6,2 million in dividends from PPC Zimbabwe in FY22, plus an additional US$4,4 million in June 2022.
These legacy foreign debts, which were assumed by the central bank according to Circular eight of 2019, cover the period between January 2016 and February 2019.
In 2019, the central bank called on all those whose blocked funds were approved to transfer the respective local currency to the central bank by April 30, 2020 through normal banking channels.
At the time when the funds were blocked, PPC Zimbabwe Ltd was saddled with a US$21 million legacy debt to PPC South Africa.
The local unit was stuck with an equivalent of US$64, 2 million which was due to its parent company after failing to remit rights issue proceeds and other amounts due to the Johannesburg Stock Exchange-listed construction materials manufacturing group.
Meanwhile, Wijnen said PPC Zimbabwe continues to trade ahead of expectations even though trading conditions remain challenging due to the macro-economic environment.
For the 12 months ended 31 March 2022, cement sales volumes increased by 28% year-on-year due to retail demand and support from government-funded projects. Relative to the 12 months ended 31 March 2020, volumes increased by 41%.
During the period, revenue also increased by 34% to R2 172 million (March 2021: R1 623 million) as a result of increased cement sales volumes.
“Ultimately, Team PPC was able to reduce net debt by R1, 2 billion and finalise the work to achieve a solid financial position. Furthermore, we have set our decarbonisation strategy in motion and are committed to tackling climate change head on.
“I extend my gratitude to all our customers for their continued support and to my colleagues who have worked diligently to ensure PPC continues to sustain its purpose of empowering people to experience a better quality of life,” added Wijen.