Annual / Quarterly Financial Statement • Oct 31, 2022
Annual / Quarterly Financial Statement
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(Incorporated in the Republic of Zambia)
In compliance with the requirements of the Securities Act No. 41 of 2016, ZCCM Investments Holdings PLC ("ZCCM-IH PLC" or "the Company") announces the provisional financial statements results of the Company and its subsidiaries(Collectively referred to as the ''the Group'') for the year ended 31 December 2021.
The ZCCM-IH Group consist of the following Ten (10) companies:
| Name | Shareholding |
|---|---|
| Mopani Copper Mine PLC | 100.00% |
| Ndola Lime Company Limited | 100.00% |
| Kariba Minerals Limited | 100.00% |
| Misenge Environmental and Technical Services Limited | 100.00% |
| Mushe Milling Limited | 100.00% |
| Kabundi Resources Limited | 100.00% |
| Limestone Resources Limited | 100.00% |
| Investrust Bank PLC | 71.40% |
| Zambia Gold Company Limited | 51.00% |
The Company also has other interests in the undernoted companies:
| Name | Shareholding |
|---|---|
| Rembrandt Properties | 49.00% |
| Central African Cement Limited | 49.00% |
| Maamba Collieries Limited | 35.00% |
| Konkola Copper Mines PLC | 20.60% |
| Kansanshi Mining PLC | 20.00% |
| Copperbelt Energy Corporation PLC | 24.10% |
| CNMC Luanshya Copper Mines PLC | 20.00% |
| Lubambe Copper Mines PLC | 20.00% |
| NFCA Africa Mining PLC | 15.00% |
| Chibuluma Mines PLC | 15.00% |
| Chambishi Metals PLC | 15.00% |
|---|---|
| Copper Tree Mineral Limited | 15.58% |
| Oranto Oil Block | 10.00% |
| Nkana Alloy Smelting Company Limited | 10.00% |
| Unaudited | Audited | |
|---|---|---|
| 31 Dec | 31 Dec | |
| 2021 | 2020 | |
| ZMW'000 | ZMW'000 | |
| Revenue | 14,733,446 | 113,088 |
| Gross profit | 628,560 | 55,740 |
| Operating loss | (1,070,629) | (579,590) |
| Net finance income | 311,702 | 944,878 |
| Share of profit of equity accounted investees | 3,004,542 | 1,487,537 |
| Profit before tax | 2,245,615 | 1,852,825 |
| Income tax expense | (248,307) | (221,737) |
| (Loss)/Profits from discontinued operation |
(32,978) | 500,399 |
| Profit for the year | 1,964,330 | 2,131,487 |
| Earnings per share (ZMW) | 12.22 | 13.26 |
| Basic and diluted earnings per share (ZMW) | 12.22 | 13.26 |
| Unaudited 31 Dec 2021 |
Audited 31 Dec 2020 |
|
|---|---|---|
| Revenue from contracts with customers Gross profit Investment income |
ZMW'000 79,837 2,130 968,137 |
ZMW'000 3,695 695 226,169 |
| Operating profit/(loss) | 675,747 | (174,194) |
| Net finance income | 914,013 | 955,040 |
| Profit before tax Income tax expense Profit for the year |
1,589,760 (248,745) 1,341,015 |
780,846 (212,415) 568,431 |
| Earnings per share (ZMW) | 8.34 | 3.54 |
| Basic and diluted earnings per share (ZMW) | 8.34 | 3.54 |
| Unaudited | Audited | |
|---|---|---|
| 31 Dec 2021 | 31 Dec 2020 | |
| Assets | ZMW'000 | ZMW'000 |
| Property, plant and equipment | 30,604,366 | 187,727 |
| Intangible assets | 2,569 | 749 |
| Investment property | 192,227 | 183,917 |
| Investments in associates | 17,067,159 | 19,351,000 |
| Financial assets at fair value through profit or loss | 1,458,000 | 292,000 |
| Inventories | 4,651,883 | 55,728 |
| Trade and other receivables | 4,494,392 | 1,295,594 |
| Environmental Protection Fund | 87,130 | - |
| Deferred tax assets | - | 141,400 |
| Assets held for sale | 1,478,569 | 1,307,400 |
| Term deposits | 653,742 | 194,369 |
| Cash and cash equivalents | 184,625 | 181,209 |
| Total assets | 60,874,662 | 23,191,093 |
| Equity and liabilities | ||
| Capital and reserves | 27,127,357 | 20,899,212 |
| Borrowings | 25,343,567 | 161,370 |
| Deferred tax liabilities | 79,257 | - |
| Trade and other payables | 4,798,460 | 174,388 |
| Liabilities associated with assets classified as held for sale | 1,678,575 | 1,423,669 |
| Bank overdraft | 70,449 | 10,034 |
| Provisions | 31,425 | 121,177 |
| Retirement benefits | 340,288 | 13,194 |
| Provisions for environmental rehabilitation | 1,202,588 | 173,522 |
| Current tax liabilities | 202,696 | 214,527 |
| Total equity and liabilities | 60,874,662 | 23,191,093 |
| Unaudited | Audited | |
|---|---|---|
| 31 Dec 2021 | 31 Dec 2020 |
|
| ZMW'000 | ZMW'000 | |
| Net cash flow generated/(used) from operating activities Net cash (used)/generated from investing activities |
672,082 (358,351) |
(183,930) 284,417 |
| Net cash(outflow)/inflow from financing activities | (402,675) | 158,655 |
| (Decrease)/Increase in cash and cash equivalents | (88,944) | 259,142 |
| Cash and cash equivalents at the beginning of the year | 425,005 | 165,863 |
| Cash and cash equivalents at the end of the period | 336,061 | 425,005 |
| Included in cash and cash equivalents | 114,176 | 171,175 |
| Included in assets held for sale | 221,885 | 253,830 |
| 336,061 | 425,005 |
| Unaudited | Audited | |
|---|---|---|
| 31 Dec 2021 | 31 Dec 2020 | |
| ZMW'000 | ZMW'000 | |
| Net cash inflow /(outflow) from operating activities | 571,543 | (124,291) |
| Net cash (used)/generated from investing activities | (486,227) | 31,916 |
| Net cash (outflow)/inflow from financing activities | (124,457) | 158,655 |
| (Decreased)/Increase in cash and cash equivalents | (39,141) | 66,280 |
| Cash and cash equivalents at the beginning of the year | 120,639 | 54,359 |
| Cash and cash equivalents at the end of the period | 81,498 | 120,639 |
| Unaudited | Audited | |
|---|---|---|
| 31 Dec 2021 | 31 Dec 2020 | |
| ZMW'000 | ZMW'000 | |
| Balance at 1 Jan | 20,899,212 | 12,629,831 |
| Profit for the year | 1,964,330 | 2,131,487 |
| Other comprehensive income | 4,316,891 | 6,190,959 |
| Dividend paid | (53,076) | (53,065) |
| Balance at 31 Dec | 27,127,357 | 20,899,212 |
| Audited | Audited | |
|---|---|---|
| 31 Dec 2021 |
31 Dec 2020 |
|
| ZMW'000 | ZMW'000 | |
| Balance at 1 Jan/April | 16,459,336 | 9,484,935 |
| Profit/(loss) for the year | 1,341,015 | 568,431 |
| Other comprehensive income | 905,171 | 6,459,035 |
| Dividend paid | (53,076) | (53,065) |
| Balance at 31 Dec | 18,652,446 | 16,459,336 |
ZCCM-IH's Group performance reported a profit for the year of ZMW1.9 billion (2020: ZMW2.1 billion) mainly due to Increase in share of profits recorded from investee companies of ZMW3.0 billion (US\$ 152 million) from ZMW1.5 billion (US\$79 million) recorded in 2020. The performance of investee companies operating in the mining sector was boosted by the bullish copper prices experienced for the most part of 2021.
In 2021, the Group recorded a cash position of ZMW336 million compared to ZMW425 million recorded in 2020. The reported reduction in cashflow position is mainly due to repayment of loans and advances by Mopani Copper mines.
In 2021, the Group recorded increased total assets from ZMW23.19 billion (2020) to ZMW 60.87 billion following the acquisition of additional 90% equity stake in Mopani. Mopani's assets account for 67% of the group's total assets.
Similarly, the Group's total liabilities increased from ZMW2.3 billion (US\$ 107 million) in 2020 to ZMW33.7 billion (US\$ 2.03 billion) in 2021 mainly on account of the Glencore long-term loan facility advanced to Mopani of US\$1.5 billion.
Shareholders are referred to the announcements by ZCCM-IH released on SENS on 21st December 2020, 8th January 2021 and 20th January 2021 regarding the acquisition of 90% shareholding in Mopani Copper Mines Plc on 31st March 2021. Refer to the said announcements for detailed transaction terms and conditions.
Following the 90% acquisition of Mopani, these Abridged Group financial statements include the 9 months performance of Mopani which has contributed ZMW1.32 billion loss, ZMW38.69 billion in assets and ZMW31.36 billion in liabilities to the Group. Below is a summary of Mopani's performance assets and liabilities included in the abridged Group Financial Statements:
| Statement of Profit and Loss and Other Comprehensive - Mopani Copper Mine Plc |
ZMW'000 |
|---|---|
| Revenue | 14,492,315 |
| Gross profit | 594,155 |
| Operating loss | (713,764) |
| Net finance income | (604,157) |
| Profit before tax | (1,317,921) |
| Income tax expense | - |
| Profit for the year | (1,317,921) |
| Statement of Financial Position - Mopani Copper Mine Plc |
ZMW'000 |
| Property, plant and equipment | 30,361,795 |
| Inventories | 4,564,849 |
| Trade and other receivables | 3,595,239 |
| Environmental Protection Fund | 87,130 |
| Cash and cash equivalents | 78,469 |
| Total assets | 38,687,482 |
| Equity and liabilities | |
| Capital and reserves | 7,327,440 |
| Borrowings | 25,342,432 |
| Trade and other payables | 4,606,105 |
| Bank overdraft | 65,743 |
| Retirement benefits | 330,032 |
| Provisions for environmental rehabilitation | 1,015,730 |
| Total equity and liabilities | 38,687,482 |
Subsequent to the acquisition of Mopani by ZCCM-IH, the key strategic needs of Mopani include the completion of the expansion projects which are estimated to cost about
USD300 million broken down as follows: Synclinorium Shaft (USD100 million), Mindola Shaft (USD110 million), Henderson Shaft (USD40 million), the new Nkana Concentrator (USD5 million), and the Tailings Storage Facility (USD45 million).
Mopani's copper production was 87,618 tonnes during the year. Copper production was restricted by the funding constraints. In addition, Mopani recorded loss for the 9 months period due to high cost of production and huge finance costs related to loans from Glencore group and is therefore unable to declare and pay dividends in the immediate future.
Going forward, key for Mopani will be the completion of the expansion projects which are estimated at US\$300 million, and once implemented production of finished copper cathode is expected to increase to 225,000 tonnes by 2026. Mopani will also have the capacity to hoist close to 9 million tonnes of copper ore in the long term.
In June 2022, ZCCM-IH announced the engagement of an international investment bank, Rothschild & Co., South Africa (Pty) Ltd ("Rothschild & Co.") to assist the Company with the strategic review of Mopani to ensure its sustainability and continued development. Rothschild & Co is a leading global financial services group, with a history of over 200 years at the Centre of the world's financial markets. It is expected that this process will be concluded within a period of six (6) months from the date of contract award, with the ability to extend for a further 6-month period, considering progress to date and the closing provisions of any transaction agreements that have been signed.
The Board of ZCCM-IH will update the market on the results of this exercise in due course.
As previously announced, effective 22 October 2021, the mining and processing operations at Kasenseli Gold Mine ("Kasenseli Mine") in Mwinilunga, North-Western Province were suspended following a ministerial directive from the Ministry of Mines and Minerals Development to suspend operations and address concerns relating to Kansenseli Mine's license conditions and safety regulations. The concerns raised by the Ministry mainly related to safety and security, amongst others. Zambia Gold has managed to address all key safety and security matters and the remaining concerns are matters that are expected to be attended to at the mine site.
On 31 May 2022, the Mines Safety Department lifted the suspension of mining and processing operations at Kansenseli Gold Mine in Mwinilunga, Mining licence and directed that full gold production and mining processing shall only commerce upon fulfillment of the statutory obligation which included amongst others :
The remaining said environmental matters are expected to be addressed once the mine re-starts its operations
Zambia Gold is currently in engagements with key stakeholders to reach agreement and conclusion on matters which will lead to resumptions of operations at Kansenseli Mine. ZGC has not recorded any production of gold or sales during this period.
Shareholders will recall the previous Market Announcements of June 2021, in relation to the Group Restructuring and Reorganization Agreement (asset swap), pursuant to which the ZCCM-IH conditionally agreed to disposing off its entire shareholding holding in Investrust Bank PLC and Mushe Milling Limited of 74.1 % and 100% respectively, in exchange of IDC's equity stake of 25% in Kagem Mining Limited. As disclosed in the Announcements, the parties to the Group Restructuring and Reorganization Agreement, agreed that Completion shall take place once all stipulated conditions precedent were met. Following IDC's recent review of the proposed asset swap, it has been decided not to proceed with the transaction.
ZCCM-IH is currently undertaking a review of strategic options going forward for the affected assets.
In October 2021, the Company announced the pledge of US\$200 million worth of ZCCM-IH's shareholding in Kansanshi Mining PLC and execution of a corporate guarantee in favour of Trafigura as security for a US\$100 million prepayment transaction to KCM by Trafigura. The prepayment carries an interest rate of Libor plus 7% and is repayable by KCM through copper deliveries to Trafigura monthly for a period of 18 months with a 6 month moratorium.
In June 2022, Trafigura signed a Deed of Release in which the parties agreed to discharge the ZCCM-IH pledged US\$200 million worth of its shareholding in Kansanshi Mining PLC under this transaction. Therefore, only the ZCCM-IH corporate guarantee remains as the security under this facility.
After the yearend, ZCCM Investments Holdings Plc, provided a Corporate Guarantee in favour of ZANACO amounting to US\$10 million on behalf of Konkola Copper Mines Plc. The guarantee is valid until 31 December 2022 and comprises:
Limestone Resources Limited ("LRL") commenced operations on 1st September 2020, having acquired all NLC assets and licenses through a restructuring process. The company has nearly 29 million tonnes of limestone deposits and has three installed processing Kilns, the Rotary Kiln (RK), the Vertical Kiln 1 (VK1), and the Vertical Kiln 2 (VK2).
The RK has been decommissioned and is currently not operational. VK2 is the newest Kiln at LRL but has not been fully commissioned to reach nameplate production capacity. LRL management have recently modified VK2 to make it semi-automatic and be able to use coal as the firing system in place of an expensive Heavy Fuel Oil (HFO) which was being used in VK1.
ZCCM-IH continues to explore options related to the long-term funding needs of LRL to be able to secure its long-term future by carrying out major repairs across its mining and processing equipment. The process of engaging a Strategic Equity Partner for LRL to secure long term funding is still on going.
ZCCM-IH is yet to publish its financial statements for the year ended 31 December 2021. The hold up to issuance of the said financial statements has been occasioned by the delayed completion of the audit of the financial statements. The financial statements audit for the year 2021 awaits completion of fair valuation of assets and liabilities related to the acquisitions of 90% shares of Mopani as of 31 March 2021. The fair valuation exercise is in progress and ZCCM-IH anticipates completion before the end of the year and the audit will then be finalised upon completion of the said fair valuation and the audited financial statement issued thereafter.
ZCCM-IH continues to position itself to pursue more opportunities in the mining sector. As per ZCCM-IH strategy, which is to promote mineral value addition, the Bilateral Corporation agreements between Zambia and DRC that will promote and provide an opportunity for ZCCM -IH to participate in the Electric Vehicle Battery Value Chain. As the framework of these agreements is being formulated, ZCCM-IH will continue exploration activities as well as push for the acquisition of new licenses not only for Copper and Cobalt but also other strategic minerals such as Gold, Manganese and Gemstones to diversify the country's mineral basket.
ZCCM-IH's focus going forward continues to be:
By Order of the Board
Chabby Chabala Company Secretary
Issued on 28 October 2022
Pangaea Securities Limited [a member of the Lusaka Securities Exchange] Regulated and Licensed by the Securities and Exchange Commission Zambia Telephone Number: +260 211 220707 | Website: www.pangaea.co.zm
| Unaudited | Audited |
|---|---|
| 31 Dec | 31 Dec |
| 2022 | 2020 |
| US\$'000 | US\$'000 |
| 748,783 | 6,070 |
| 31,945 | 2,992 |
| (54,412) | (31,109) |
| 15,841 | 50,716 |
| 152,697 | 79,845 |
| 114,126 | 99,452 |
| (12,619) (1,676) 99,831 0.62 |
(11,902) 26,859 114,409 0.71 0.71 |
| 0.62 |
| Unaudited 31 Dec 2021 |
Audited 31 Dec 2020 |
|
|---|---|---|
| Revenue from contracts with customers Gross profit Investment income Operating (loss)/profit |
US\$'000 4,057 108 49,203 34,343 |
US\$'000 198 37 12,140 (9,350) |
| Net finance income | 46,452 | 51,263 |
| Profit before tax Income tax expense Profit for the year |
80,795 (12,642) 68,153 |
41,913 (11,402) 30,511 |
| Earnings per share (US\$) Basic and diluted earnings per share (US\$) |
0.42 0.42 |
0.19 0.19 |
| Unaudited 31 Dec 2021 US\$'000 |
Audited 31 Dec 2020 US\$'000 |
|
|---|---|---|
| Assets | ||
| Property, plant and equipment | 1,562,523 | 16,688 |
| Intangible assets | 232 | 140 |
| Investment property | 11,541 | 15,397 |
| Investments in associates | 1,024,655 | 914,768 |
| Financial assets at fair value through profit or loss | 87,533 | 13,804 |
| Inventories | 238,575 | 4,989 |
| Trade and other receivables | 269,828 | 61,246 |
| Environmental Protection Fund | 5,231 | - |
| Deferred tax assets | - | 6,684 |
| Assets held for sale | 88,768 | 61,804 |
| Term deposits | 39,248 | 9,188 |
| Cash and cash equivalents | 11,084 | 8,566 |
| Total assets | 3,339,218 | 1,113,274 |
| Equity and liabilities | ||
| Capital and reserves | 1,313,144 | 1,004,932 |
| Borrowings | 1,521,542 | 7,628 |
| Deferred tax liabilities | 4,758 | - |
| Trade and other payables | 288,083 | 8,244 |
| Liabilities associated with assets classified as held for sale | 100,776 | 67,300 |
| Bank overdraft | 4,230 | 474 |
| Provisions | 1,887 | 5,728 |
| Retirement benefits | 20,430 | 624 |
| Provisions for environmental rehabilitation | 72,199 | 8,203 |
| Current tax liabilities | 12,169 | 10,141 |
| Total equity and liabilities | 3,339,218 | 1,113,274 |
| US DOLLAR ABRIDGED COMPANY STATEMENT OF FINANCIAL POSITION |
||
|---|---|---|
| Unaudited | Audited | |
| 31 Dec 2021 | 31 Dec 2020 US\$'000 |
|
| US\$'000 | ||
| Assets | ||
| Property, plant and equipment | 6,702 | 6,733 |
| Intangible assets | 149 | 58 |
| Investment property | 11,541 | 14,563 |
| Investments in subsidiaries | 19,688 | 13,079 |
| Investments in associates | 1,236,940 | 976,969 |
| Financial assets at fair value through profit or loss | 87,533 | 13,804 |
| Trade and other receivables | 52,491 | 59,402 |
| Assets held for sale | 25,874 | 18,548 |
| Term deposits | 38,003 | 9,188 |
| Inventory | 1,159 | 738 |
| Cash and cash equivalents | 4,893 | 5,703 |
| Total assets | 1,484,973 | 1,118,785 |
| Equity and liabilities | ||
| Capital and reserves | 1,121,654 | 787,049 |
| Borrowings | 68 | 7,628 |
| Deferred tax liabilities | 336,904 | 300,215 |
| Trade and other payables | 7,017 | 4,848 |
| Provisions | 1,773 | 5,659 |
| Retirement benefits | 616 | 510 |
| Provisions for environmental rehabilitation | 4,799 | 3,148 |
| Current tax liabilities | 12,142 | 9,728 |
| Total equity and liabilities | 1,484,973 | 1,118,785 |
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