ZCCM Investments Holdings PLC

Earnings Release • Jul 11, 2014

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RNS Number : 0662M

ZCCM Invs.Hldgs PLC

11 July 2014

ZCCM INVESTMENTS HOLDINGS PLC

ZCCM INVESTMENTS HOLDINGS Plc

and its Subsidiaries

DIRECTORS' INTERIM SUMMARY

For the six months period ended 31 March 2014

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 (LuSE), ZCCM Investments Holdings Plc (ZCCM-IH) announces the unaudited results for the six months period ended 31st March 2014.

The Group achieved a turnover of K887.4 million during the six month period ended 31st March 2014 which was 527% above the turnover of K141.5 million for the six months to 31st March 2013. The turnover for Ndola Lime Company Limited (NLC) decreased by 26% to K79.1 million (2013: K 107.5 million).

Total Dividend income earned was K757.8 million (2013:K8.9 million). Dividends were earned from Kansanshi Mining Plc (K 752.3 million) and Chibuluma Copper Mines Plc (K 5.5 million).

Interest earned from placements and shareholder loans during the period under review amounted to K48.5 million (2013: K 25.2 million). Management fee income was K6.3 million (2013: ZMW 3.8 million).

The cost of turnover increased to K149.6 million (2013: K 139.2million). This was despite a reduction in cost of sales at NLC. The increase was largely driven by operating costs at Nkandabwe Coal Mines Limited and Mawe Exploration and Technical Services Limited.

The Group's operating profit for the period under review was K737.8 million (2013: K 2.3 million). Share of profits of associate companies was K77.8 million (2013:K204 million). As stated above a significant dividend of K752.3 million was earned from Kansanshi Mine. Under equity accounting dividends from associate companies are eliminated on consolidation. As a result, the Group retained profit for the period under review was K 277.8 million (2013: K 204.9 milion).

Copper prices continued to decline from an average of US$ 7,249 per tonne in October 2013 to US$6,670 per tonne as at end of March 2014.

The restructuring of Chambishi Metals Plc resulted in the formation of Nkana Alloy Smelting Company Limited (Nkana Alloy) and in April 2013 (i.e. subsequent to the period under consideration), ZCCM-IH retained a 10% shareholding in Nkana Alloy. Nkana Alloy is a company formed jointly by ENRC (BVI) Limited who own 90% of the total shareholding while ZCCM-IH holds the remaining 10%. The company was formed for purposes of processing the slag material from the Nkana Slag Dump situated in Kitwe, Copperbelt province of Zambia. The slag material will be processed into a copper/cobalt alloy. The Slag dump was previously part of Chambishi Metals Plc. As at 31st March 2014 operations at the company had not yet commenced.

At the Extraordinary General Meeting of the members of the Companyheld on 24 February, 2014, the shareholders unanimously resolved to recapitalize ZCCM-IH via a Claw back rights offer transaction. On 25th March 2014, ZCCM-IH announced that it had concluded the restructuring of its balance sheet. This momentous achievement was the result of the efforts of the Government of the Republic of Zambia (GRZ), in its capacity and role as the majority shareholder, to strengthen ZCCM-IH's balance sheet in order to reposition and attract new investment into the Company. As part of the balance sheet restructuring, GRZ converted the debt owed to it by ZCCM-IH into equity through a rights issue. 

By a Debt Settlement Agreement between the GRZ and ZCCM-IH signed on 25 March 2014, ZCCM-IH's net indebtedness of ZMW 1,829,298,173.06 to GRZ was converted into equity, thereby satisfying the issuance and subscription for 87.52% of the new shares by GRZ.

Simultaneously, ZCCM -IH raised fresh capital on the 12.48 % portion of the rights offer amounting to K260,759,573 which was underwritten by the National Pension Scheme Authority (NAPSA) on a Claw Back basis. The Claw-Back arrangement allows the minority shareholders of ZCCM-IH who before the rights offer held 12.48% shareholding in the Company to fully participate in the share rights offer at the same price as GRZ.

Following the Rights Offer, GRZ owns 87.52 % of ZCCM-IH while the remaining 12.48 % is held by the minority shareholders.

By Order of the Board

C Chabala

Company Secretary

11 June 2014

ZCCM INVESTMENTS HOLDINGS PLC
GROUP INCOME STATEMENT FOR THE SIX MONTHS ENDED 31st March 2014 (UNAUDITED)
			K'000
			SIX MONTHS ENDED		SIX MONTHS ENDED
			31 March 2014		31 March 2013
			Consolidated		Consolidated
Income
Sales			81,082		107,481
Dividends			757,797		8,860
Interest Earned			48,526		25,179
Investment disposal			-
			887,405		141,520
Cost of turnover			(149,580)		(139,195)
Operating profit/(loss)			737,825		2,325
Exchange (loss)/gain			102,495		9,743
Environmental expenses			(8,239)		(2,182)
Interest charge			(2,252)		(1,754)
Royalty on minerals			(3,965)		(6,285)
Other income			133,240		3,958
Associate Companies Share of Profit			77,793		204,991
Dividends Earned Adjustment			(752,300)		(4,000)
Profit/(loss) before taxation			284,597		206,795
Income tax			(6,779)		(1,919)
Retained profit/(loss)			277,818		204,877
EPS (Kwacha)			3.07		2.29

GROUP STATEMENT OF FINANCIAL POSITION AS AT 31st March 2014
(UNAUDITED)
			31 March 2014		31 March 2013
			K' 000		K' 000
Assets Employed
Non Current Assets			6,314,833		5,099,841
Current Assets			2,444,163		1,774,669
Total Assets			8,758,996		6,874,510
Equity and Liabilities
Shareholders' Funds			8,136,322		3,901,664
Non Current Liabilities			249,734		570,405
Current Liabilities			372,940		2,402,441
Total Equity and Liabilities			8,758,996		6,874,510

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