ZCCM Investments Holdings PLC

Earnings Release • Jun 24, 2013

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RNS Number : 6471H

ZCCM Invs.Hldgs PLC

22 June 2013

ZCCM INVESTMENTS HOLDINGS PLC

ZCCM INVESTMENTS HOLDINGS Plc

and its Subsidiaries

DIRECTORS' INTERIM SUMMARY

For the six months period ended 31  March 2013 (compared with the period ended 31 March 2012)

In compliance with the requirements of the "Securities Act, Cap 354 of the Laws of Zambia" and the Listing Rules of the Lusaka Stock Exchange, ZCCM Investments Holdings Plc announces the unaudited results for the six months period ended 31st  March 2013.

The Group achieved a turnover of ZMW141.5 million during the six month period ended 31 March 2013 which was 13% above the turnover of ZMW 124.9 million for the six months to 31 March 2012. The turnover for Ndola Lime Company Limited (NLC) increased by 16% to ZMW107.5 million (2012: ZMW 92.5 million) The increase in turnover was as a result of improved production levels following the successful repair of the electrostatic precipitator at the beginning of 2012.

Total Dividend income earned was ZMW 8.9 million (2012:ZMW23.3 million). Dividends were earned from Chibuluma Mines Plc (ZMW 5.5 million) and Copperbelt Energy Corporation Plc (ZMW 3.4 million).

Interest earned from placements and fixed deposits during the period under review amounted to ZMW 25.2 million (2012: ZMW 9.1 million). Management fee income was ZMW 3.8 million (2012: ZMW 2.8 million).

The cost of turnover increased to ZMW 139.2million (2012: ZMW 95.7million). The increase was due to increased production activity at NLC and a corresponding increase in production costs.

The Group's operating profit for the period under review was ZMW2.3 million      (2012: ZMW 29.2 million). The reduction was largely because of an increase in the cost of turnover at NLC on account of higher maintenance costs of plant and machinery. The retained profit for the period under review was ZMW204.9million(2012:ZMW 332.9milion).The reduction was mainly on account of a combination of lower share of profits from Associate Companies and lower exchange gains realized during the period.

The share of profits of Associate Companies  declined  by 19% over the six month period to ZMW 201.0 million(2012:ZMW 247.0 million)   mainly due to a decline in total revenues on account of  effects of a reduction in global metal prices. Copper prices  continued to decline from US$ 8,061 per tonne in October 2012 to US$7 540 per tonne as at end of March 2013.

In September 2012 the Government of the Republic of Zambia (GRZ) gave approval for the conversion of all or part of the GRZ debt owed by ZCCM-IH amounting to ZMW 1.9 billion (approximately US$352.5 million ) into Equity through a rights issue. As at 31st March 2013 implementation modalities involving the appointment of the Lead Financial advisors had progressed. As part of this exercise a valuation of ZCCM-IH and its Investments is underway to ascertain the appropriate fair value of ZCCM-IH shares. The whole exercise is expected to be completed by 30th September 2013.

In December 2012, the Board of ZCCM-IH resolved to restructure the Environmental department by incorporating Misenge Environmental and Technical Services Limited (METS), a separate company to be owned 100% by ZCCM-IH. The objective of the restructuring was to allow ZCCM-IH to be more focused on investment activities while METS would provide environmental management services to ZCCM-IH including taking over all outstanding and future environmental obligations for  ZCCM-IH. METS would also provide environmental management services to other clients. METS officially commenced its operations on 1 February 2013.

On 11  February 2013, ZCCM-IH  and Konkola Copper Mines (KCM) Plc entered into a Settlement Agreement pursuant to which certain outstanding payments owed by KCM to ZCCM-IH and certain contingent amounts payable in each case, under the then existing Price Participation arrangements which dated back to March 2000 were settled. The Price Participation Agreements (PPAs) were concurrently terminated. Under the Settlement Agreement, US$46.3 million is required to be paid by KCM in instalments to ZCCM-IH on or before 31 August 2013, and a further  US$73.4 million (in instalments) on or before 30 September 2016.

On 20 February 2013, GRZ announced the cancellation of the Small Scale Mining Licences issued to Collum Coal Mining Industries Limited (Collum) in Sinazongwe situated in the Southern Province of Zambia. Following the cancellation of these Licences, ZCCM-IH applied for and acquired the licences to enable mining operations of the Coal Mine to continue until such a time that a strategic investor was found. As at 31st March 2013 ZCCM-IH had commissioned the Government Valuation Department to conduct a valuation of the Assets, the basis of which it would enter into negotiations with the owners of Collum for the purchase and transfer of assets to enable the mine to recommence operations. Subsequent to this date, ZCCM-IH incorporated Nkandabwe Coal Mine Limited, a 100% subsidiary, to operate the Mine.

Albidon Zambia Ltd (Albidon) was placed under Care and Maintenance during the period under review so as to maintain the investment at Munali. On 28 March 2013, the Board of Albidon announced that Jin Tuo Investment Limited (a wholly owned subsidiary of Jinchuan Group Resources Holdings Limited which is itself a majority shareholder of Albidon Limited) had proposed to acquire 100 per cent of the Company at a cash price per share of US$0.0025. The proposal would be made to all shareholders other than the Jinchuan Group via a Statutory Merger pursuant to the British Virgin Islands Business Companies Act 2004 (as amended).

The Mine development works at Lubambe Copper Mine (Formerly Konkola North Copper Project) were completed ahead of schedule and the first copper concentrate was produced in October 2012.

NLC continued with the rehabilitation of the plant as part of the recapitalization project of the company. The Electrostatic Precipitator on the Rotary Kiln was re-commissioned and a new dust abatement unit on the Vertical Kiln was installed and is at commissioning stage. ZCCM-IH provided an additional loan of ZMW 132 million for the completion of the recapitalization project .The commissioning of the project is targeted for December 2013.

By Order of the Board

C Chabala

Company Secretary

20 June 2013

ZCCM-IH COMPREHENSIVE GROUP INCOME STATEMENT FOR THE SIX MONTHS ENDED 31 MARCH 2013

	SIX MONTHS ENDED 31 March 2013	SIX MONTHS ENDED 31 March 2012
	Consolidated	Consolidated
Income	ZMW	ZMW
Sales	107,480,615	92,472,291
Dividends	8,860,000	23,337,360
Interest Earned	25,178,940	9,061,910
	141,519,555	124,871,561
Cost of turnover	(139,194,762)	(95,637,411)
Operating profit/(loss)	2,324,793	29,234,150
Exchange (loss)/gain	9,743,072	57,902,315
Environmental expenses	(2,182,770)	(1,375,164)
Interest charge	(1,754,442)	(1,911,413)
Royalty on minerals	(6,284,363)	(3,184,217)
Other income	3,958,840	5,786,364
Share of Profit of Associate Companies	200,991,074	247,021,003
Profit before taxation	206,796,204	333,473,038
Income tax	(1,919,161)	(536,112)
Retained profit	204,877,043	332,936,926

ZCCM-IH GROUP STATEMENT OF FINANCIAL POSITION AS AT 31 MARCH 2013

	Consolidated	Consolidated
	31 March 2013	31 March 2012
	ZMW	ZMW
Assets Employed
Non current assets	5,099,840,744	4,880,510,292
Current assets	1,774,669,433	1,426,154,127
Total Assets	6,874,510,177	6,306,664,419
Equity and liabilities
Shareholders funds	3,901,664,001	3,706,382,143
Non current liabilities	570,405,190	304,943,857
Current liabilities	2,402,440,986	2,295,338,419
Total Equity and liabilities	6,874,510,177	6,306,664,419

This information is provided by RNS

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END

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