17 September 2019 12:38:36 PM

PPC updates on Financial Reporting and Auditing Guidance in Zimbabwe

- 2019-03-28 01:54:32 PM

Following the SENS announcement on 7 March 2019, PPC wishes to update investors on the accounting implications of the announcement by the Zimbabwe Public Accountants and Auditors Board (PAAB) on 21 March 2019 regarding currency changes in Zimbabwe.


The PAAB guidance was issued to highlight considerations auditors of financial statements would be required to make for reporting for periods commencing on or
after 1 January 2018. By implication, acknowledgement that the functional currency of Zimbabwe businesses has changed to the Real Time Gross Settlement (RTGS) $, PPC has reviewed the guidance issued by the PAAB and the impact on the group is as

   1.   PPC will consolidate PPC Zimbabwe according to IFRS with the effective date of the change in functional currency being 1 October 2018
   2.   The reported results of PPC Zimbabwe being consolidated in PPC Group as at 30 September 2018 remains unchanged. There will be no restatement of previously  reported figures;
   3.   The reported results of PPC Zimbabwe being consolidated in PPC Group from 1 October 2018 will be based on prevailing commercial rates for the remainder of the 2019 financial year, ranging between 2.5 RTGS$ : 1 US$ to 3.5 RTGS$ : 1 US$;

In terms of guidance and reference to March 2018 results, PPC Zimbabwe’s EBITDA in rands is expected to be within 5% to 15% of previously reported EBITDA for March
2018 of R573m. PPC will, for the 2019 Group financial results reporting, provide extensive financial statement disclosures with regard to the Zimbabwean business
and the impact of the change in functional currency on the reported results.



On 22 March 2019, S&P Global Ratings (“S&P”) downgraded PPC’s long - and short-term South African national scale corporate credit ratings from ‘zaA-/zaA-2’ to ‘zaBBB-
/zaA-3’. The rationale for the downgrade was attributed to the announced changes to monetary policy in Zimbabwe and challenging domestic trading conditions. It is important to note that S&P has excluded the Zimbabwe operations in their assessment of PPC's financial profile, and will do so until there is more certainty on reporting and cash repatriation prospects. It should also be noted that PPC’s latest rating is still four rating levels above that of the ‘zaBB –’ rating on the national scale S&P ratings, when the company was downgraded in 2016.

While they do acknowledge that the Zimbabwean business is will not require financial support from PPC group, we do believe that this approach is unduly punitive and not reflective of the economic reality of our business.


The PPC group remains adequately capitalised with previously guided liquidity headroom of 15% being maintained. Furthermore, the maturity profile remains adequate and covenant levels are aligned to previously guided ranges.

Management is confident that the facilities in place are adequate to enable the group to navigate any volatility in the markets in which the company operates. As reported in the operational update on the 5 February 2019, group gross debt has remained at similar levels to that reported in September 2018. The downgrade does not trigger early repayment of debt, however the downgrade may impact PPC’s cost of debt in future.