We have extracted the financial summary from the 2018 Annual Report of Lafarge Cement Zimbabwe, listed on the Zimbabwe Stock Exchange under the share code LACZ.zw. Lafarge Cement Zimbabwe manufactures and distributes cement and allied products for the building industry. Lafarge Cement Zimbabwe also sells a range of allied products which include washed sand, 6-mm stones, 20-millitre stones and crusher run. Specialised products include Agricultural lime, Colorbrite and Snolime, pre-sanded Cemwash and Impermo.
Revenue was up by 24% on prior year to $72.3m due to the better average selling price achieved following price adjustments in the last quarter of the year and a favourable product mix skewed in favour of higher strength cements. The business expanded its distribution footprint into regional markets. Profit before tax increased to $4.4m compared to $0.4m achieved in prior year. The business took advantage of the tax amnesty announced by the Government and reassessed its risk on a previously disclosed contingent liability of $7.9m. Although the matter was heard in the courts in June and judgment is yet to be handed down, the business booked a tax provision of $3m towards this case. Despite the high tax expense, the prior year after tax loss of $0.6m was reversed and a profit of $1.3m recorded. There was a reduction in prepayments and inventories from the consumption of prepaid strategic raw materials. Trade and related party payables also significantly reduced following the settlement of long outstanding third party balances and restructuring of related party forex balances. The inability to access foreign currency to settle foreign obligations resulted in an accumulation of cash balances ($14m) and short term money market investments ($11.9m).Whilst the cash position of the business closed strong for 2018, this high level of cash poses a risk to the business as subsequent to year end, the balance is all denominated as RTGS dollars which can only be transacted with locally.
In 2019 we look