ZCCM Investments Holdings PLC

Earnings Release • Jun 14, 2016

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RNS Number : 1802B

ZCCM Invs.Hldgs PLC

14 June 2016

ZCCM INVESTMENTS HOLDINGS PLC

(Incorporated in the Republic of Zambia)

Company registration number: 771

Share Code: ZCCM-IH

ISIN: ZM0000000037

["ZCCM-IH" or "the Company"]

DIRECTORS' HALF YEARLY SUMMARY FOR THE PERIOD ENDED 30TH SEPTEMBER 2015:  

Introduction

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 30th September 2015.

Financial Performance

The Group achieved a turnover of K208.4 million for the six-month period ended 30th September 2015 which was 10% above the turnover of K188.6 million achieved during the six months to 30th September 2014. The increase in Group turnover was mainly as a result of an increase in turnover for Ndola Lime Company by 21% from K96.3 million to K116.5 million for the six months ended 30th September 2015., Dividends earned decreased by 56% to K11.9 million for the period ended 30th September 2015 (September 2014: K27.1 million. However, Interest Income increased by 23% to K80 million (September 2014: K65.2 million).

The group recorded exchange gains of K1 316 million (2014: losses K66 million) during the period under review. This was due to the depreciation of the kwacha from K7.6250/$ at the start of April 2015 (April 2014: K6.1555/$) to K12.3815/$ as at the end of September 2015 (September 2014: K6.2705).

Dividends were earned from Kansanshi Mining Plc. (K11.9 million).

Interest earned from placements and fixed deposits amounted to K24.9 million (September 2014: K15.4 million). Other income was K4.8 million (September 2014: K9.9 million). This was mainly composed of Management fees amounting to K4.3 million (September 2014: K3.9 million). The cost of turnover was K156.7 million for the period to 30th September 2015 (September 2014: K129.6 million). The operating profit of K51.7 million was lower than the K59 million achieved during the same period in 2014.

The Group recorded share of losses of Associate Companies of K1 546.7 million (September 2014: Loss: K45.2 million). Overall the performance of the Associate companies was weak during the period. The significant share of losses of Associate companies were recorded from Kansanshi Mining Plc (K871.9 million), Konkola Copper Mine Plc (K546.42 million), Copperbelt Energy (K133.36 million). The price of copper reduced to US$4,970 per ton as at 30 September 2015 compared to US$6,748 per ton as at 30th September 2014 representing a 26% decrease. As a result, the Group recorded an after tax loss of K696.5 million (September 2014: Loss K55.3 million).

Operations and Strategic developments

Sale down of 27% GRZ shares in ZCCM-IH

During the presentation of the 2015 Zambian National Budget, the Minister of Finance directed the Securities and Exchange Commission (SEC)to ensure that all listed Companies on the Lusaka Stock Exchange LuSE complied with minimum LuSE minimum free (public )float requirement of 25% of the shares. In this regard the Minister of Finance announced that the Government of the Republic of Zambia (GRZ) would reduce its shareholding in ZCCM-IH from 87.5% to 60.3% via the sale of its shares proportionate to the required reduction.

Pursuant to the above, on 08 June 2015 GRZ sold 15,850,631 of its 43,811,861 Class B shares in ZCCM-IH  to the National Pension Scheme Authority (NAPSA) of Zambia (As Tranche1 of the sale down). As a result of the sale, GRZ shareholding in ZCCM-IH reduced from 87.5% to 77.5%. Tranche2 of the sell down relates to the sale of the balance of 27,961,237 Class B shares and was launched on 30 July 2015. Tranche 2 involves a Preferential Secondary Market offer of the shares for which priority is to be given to Preferred Applicants (Zambian Persons) in case of oversubscription. The offer closed   on 30November 2015.

Maamba Collieries Thermal Power Plant Project Attains Financial close

On 28 July 2015 Maamba Collieries Limited's fully integrated coal and power project reached Financial Closure. The project, which has already achieved about 80 percent completion, consists of the redevelopment of the existing coal mine and the construction of a 300 MW coal fired thermal power station and related infrastructure near the town of Maamba. The 300-megawatt coal-fired power project, fully integrated with captive coal mining, is estimated to cost about USD 830 million.

The project is being funded on a debt equity ratio of 70:30. The long-term loans are being advanced by a consortium of lenders comprising large international commercial banks together with development financial

institutions on a limited recourse project finance basis. Development financial institutions include the Development Bank of Southern Africa and the Industrial Development Corporation of South Africa, while

commercial banks include Bank of China, Industrial and Commercial Bank of China, Standard Chartered Bank and Barclays Africa Limited. This is the first private power project in the Sub-Saharan region to receive export credit agency insurance cover from China Export and Credit Insurance Corporation (Sinosure). This combination makes it a unique collaborative project in Africa, incorporating sponsors from Singapore and Zambia, principal contractors from China and funding by financial institutions across the globe.

Given the shortage of, and necessity for electricity in Zambia, as well as the wider region, the project is to provide the much needed dependable and sustainable base load power, which is crucial for the country's economic growth and energy security. The power plant has the required infrastructure to scale up in line with the growing demand up to 600MW.

Maamba Collieries Limited signed a 20-year power purchase agreement to supply 100% of the power plant's output to Zambia Electricity Supply Corporation. The project is scheduled for commissioning by mid-2016 where after Nava Bharat will be responsible for the operation & maintenance.

GRZ Transfers shares to Industrial Development Corporation

On 21 January 2014, the Government of the Republic of Zambia ("GRZ") incorporated the Industrial Development Corporation Zambia Limited ("IDC"). The IDC is wholly owned by the GRZ, via the Minister of Finance (Incorporation) Act, Cap 349 of the Laws of Zambia ("Minister of Finance").

The primary role and objective of the IDC is to stimulate economic development and growth, via industrialisation, job and wealth creation in Zambia, and do so for the benefit of the Zambian citizenry. Simultaneously, the IDC has been tasked by the GRZ to superintend the operations of state owned enterprises and its shareholding in companies incorporated under the Companies Act, Cap 388 of the Laws of Zambia as well those regulated under the Banking and Financial Services Act, Cap 387 of the Laws of Zambia.

Accordingly, on 24th August 2015, GRZ completed the transfer of its shares from the Minister of Finance to the IDC in 29 companies including ZCCM-IH.

As at close of business on 23 August 2015, the Government of the Republic of Zambia   held 77.7% shareholding in ZCCM-IH, via the Minister of Finance, made up of 96,926,669 as Class "A" shares and 27,961,237 as Class"B" shares.  On 24 August 2015, GRZ transferred to the IDC all the 96,926,669 Class "A" shares, representing 60.3% shareholding in ZCCM-IH. The 27,961,237 Class"B"shares, representing 17.4% shareholding in ZCCM-IH have not been transferred to the IDC at this stage. These were available for sale under a Preferential Secondary Market Offer.

The table below shows the shareholding in ZCCM-IH after the transfer of all the Class A shares to the IDC on 24 August 2015.

SHAREHOLDER	Class	Shareholding in ZCCM-IH before 24th August 2015		Shareholding in ZCCM-IH on and after  24th August 2015
Number of Shares	%	Number of Shares	%
GRZ - Directly held through Minister of Finance	A	96,926,669	60.3	-	-
GRZ - Directly held through Minister of Finance	B	27,961,237	17.4	27,961,237	17.4
IDC	A	-	-	96,926,669	60.3
NAPSA	B	24,120,043	15.0	24,120,043	15.0
Other Shareholders	B	11,792,337	7.3	11,792,337	7.3
Total	A and B	160,800,286	100	160,800,286	100

By Order of the Board

C Chabala

CCSO/Company Secretary

1 December 2015

CONSOLIDATED GROUP INCOME STATEMENT FOR THE SIX MONTHS ENDED 30TH SEPTEMBER 2015 (UNAUDITED)

			SIX MONTHS ENDED		SIX MONTHS ENDED
			30  September 2015		30  September 2014
			Consolidated		Consolidated
Income
Sales			116,525		96,342
Dividends			11,869		27,089
Interest Earned			80,001		65,200
			208,395		188,631
Cost of turnover			(155,216)		(129,618)
Operating profit/(loss)			53,179		59,013
Exchange (loss)/gain			1,311,165		(66,283)
Impairment			(406,416)		-
Environmental expenses			(2,014)		(1,459)
Interest charge			(1,685)		(733)
Royalty on minerals			(7,564)		(4,572)
Other income			5,332		9,973
Associate Companies Share of Loss			(1,546,688)		(45,190)
Profit/(loss) before taxation			(594,691)		(49,251)
Income tax			(6,706)		(6,019)
Profit from continuing operations			(601,397)		(55,270)
Retained profit/(Loss)			(601,397)		(55,270)
Earnings Per Share			(3.74)		(0.34)

CONSOLIDATED GROUP STATEMENT OF FINANCIAL POSITION FOR THE SIX MONTHS ENDED 30TH SEPTEMBER 2015 (UNAUDITED)

			30  September 2015		30  September 2014
			K' 000		K' 000
Assets Employed
Non-Current Assets			11,304,607		6,881,562
Current Assets			1,624,205		2,493,502
Total Assets			12,928,812		9,375,064
Equity and Liabilities
Shareholders' Funds			11,982,934		8,566,573
Non-Current Liabilities			457,446		217,566
Current Liabilities			488,433		590,925
Total Equity and Liabilities			12,928,812		9,375,064

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE SIX MONTHS ENDED 30TH SEPTEMBER 2015 (UNAUDITED)

Consolidated statement of changes in equity
for the half year to 30 September 2015
				K'000
		Share capital	Share premium	Total Reserves	Retained earnings	Total
	Notes
Balance at 1 April 2013		893	-	605,865	4,018,325	4,625,083
Total comprehensive income
Profit		-	-	-	277,186	277,186
Currency translation - equity accounted investees		-	-	1,012,998	-	1,012,998
Amortisation of revaluation surplus, net of tax		-	-	(433)	433	-
Actuarial loss on defined benefit, net of tax		-	-	-	(593)	(593)
Issue of ordinary shares		715	-		-	715
Share premium		-	2,089,343		-	2,089,343
Balance at 31 March 2014		1,608	2,089,343	1,618,430	4,295,351	8,004,732
Balance at 1 April 2014		1,608	2,089,343	1,618,430	4,295,351	8,004,732
Total comprehensive income
Profit		-	-		(987,117)	(987,117)
Currency translation - equity accounted investees		-	-	597,689		597,689
Revaluation surplus on PPE, net of tax				5,572		5,572
Amortisation of revaluation surplus		-	-	(215)	215	-
Actuarial loss on defined benefit, net of tax		-	-		(66)	(66)
Payment of dividend					(250,851)	(250,851)
Balance at 31 March 2015		1,608	2,089,343	2,221,476	3,057,532	7,369,959
Balance at 1 April 2015		1,608	2,089,343	2,221,476	3,057,532	7,369,959
Total comprehensive income						-
Profit					(601,397)	(601,397)
Currency translation - equity accounted investees				5,214,372		5,214,372
Revaluation surplus on PPE, net of tax						-
Amortisation of revaluation surplus						-
Actuarial loss on defined benefit, net of tax						-
Payment of dividend
Balance at 30 September 2015		1,608	2,089,343	7,435,848	2,456,135	11,982,934

CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE SIX MONTHS ENDED 30TH SEPTEMBER 2015 (UNAUDITED)

Cash flows from operating activities	Sep-15	Sep-14
(Loss)/ Profit	-601 397	-55 270
Adjustments for:
Depreciation and Amortisation	10 437	9 440
Impairment loss on property, plant and equipment
Interest income	-80 001	-65 200
Interest expense	1 685	733
Exchange differences/interest on borrowings	25 243	197 381
Change in fair value on financial assets at fair value through profit or loss	-
Impairment of investments	-
Fair value change on investment property	-53	0
Defined benefits expense	-
Share of profit of equity - accounted investees, net of tax	1 546 688	45 190
Profit on disposal of property, plant and equipment	-144
Tax expense	6 706	6 019
Change in:	909 164	138 294
Inventories	2 250	-11 845
Trade and other receivables	-691 214	314 302
Trade and other payables and provisions	21 733	-35 643
Provision for environmental rehabilitation	-157	-89
Conversion to equity of loan due from an associate	0	0
Cash generated from operating activities	241 776	405 019
Interest paid	-1 685	-733
Tax paid	-44 057	0
Retirement benefits paid	-4 632	-1 294
Net cash from operating activities	191 402	402 992
Cash flows from investing activities
Interest received	80 001	65 200
Proceeds from disposal of property, plant and equipment	144	0
Acquisition of PPE and intangible assets	-221 378	-111 708
Proceeds on maturity of fixed deposits	-579 089	108 623
Acquisition of held to maturity investments	514 007	-714 537
Net cash used in investing activities	-206 315	-652 422
Cash flows from financing activities
Proceeds from borrowings	-	16 025
Repayment of borrowings	-4 651	-4 555
Dividend Paid	-
Net cash used in/ from financing activities	-4 651	11 470
Net (decrease)/ increase in cash and cash equivalents	-19 564	-237 960
Cash and cash equivalents at 1 April	43 782	274 363
Cash and cash equivalents at 31 March	24 218	36 403

Issued in Lusaka, Zambia on 6 June 2016

	T     |     +260-211-232456 E     |     advisory@sbz.com.zm W   |     www.sbz.com.zm Stockbrokers Zambia Limited (SBZ) is a founder member of the Lusaka Securities Exchange and is regulated by the Securities and Exchange Commission of Zambia
First Issued on 6 June 2016

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