ZCCM Investments Holdings PLC

Earnings Release • Oct 7, 2021

SENS ANNOUNCEMENT

(the "Notice" or "Announcement")

ISSUER

SPONSOR

Stockbrokers Zambia Limited [Founder Member of the Lusaka Securities Exchange] [Regulated and licensed by the Securities and Exchange Commission of Zambia]

Contact Number: +260-211-232456 Website: www.sbz.com.zm

APPROVAL

The captioned Notice or Announcement has been approved by:

• i. the Lusaka Securities Exchange ("LuSE")
• ii. the Securities and Exchange Commission ("SEC")
• iii. Stockbrokers Zambia Limited ("SBZ")

RISK WARNING

The Notice or Announcement contained herein contains information that may be of a price sensitive nature.

Investors are advised to seek the advice of their investment advisor, stockbroker, or any professional duly licensed by the Securities and Exchange Commission of Zambia to provide securities advice.

ISSUED: October 7, 2021

ZCCM INVESTMENTS HOLDINGS PLC (Incorporated in the Republic of Zambia)

DIRECTORS' INTERIM UNAUDITED FINANCIAL RESULTS FOR ZCCM INVESTMENTS HOLDINGS AND ITS SUBSIDIARIES (''THE GROUP'') FOR THE SIX MONTHS PERIOD ENDED 30TH JUNE 2021

INTRODUCTION

In compliance with the requirements of the "Securities Act, No. 41 of 2016 of the Laws of Zambia" and the Listing Rules of the Lusaka Securities Exchange, ZCCM Investments Holdings Plc (ZCCM-IH) announces the interim unaudited financial results of the Company and its Subsidiaries (collectively referred to as the Group) for the six months' period ended 30th June 2021.

STRUCTURE OF THE ZCCM-IH GROUP

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	74.10%
Zambia Gold 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%

FINANCIAL PERFORMANCE

UNAUDITED ABRIDGED GROUP STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME AS AT 30TH JUNE 2021

	30 June 2021	30 June 2020
	ZMW'000	ZMW'000
Revenue	8,286,253	61,983
Gross profit	847,182	3,643
Operating loss	(829,265)	(163,365)
Net finance (cost)/income	(164,130)	327,342
Share of profit of equity accounted investees Profit before tax	1,475,600 482,205	354,647 518,624
Income tax	(2,500)	(54,450)
Loss from discontinued operations	-	(25,242)
Profit for the period	479,705	438,932
Earnings per share (ZMW)	2.98	2.73
Basic and diluted earnings per share (ZMW)	2.98	2.73

UNAUDITED ABRIDGED COMPANY STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME AS AT 30TH JUNE 2021

	30 June 2021	30 June 2020 ZMW'000
	ZMW'000
Revenue	121,173	15,922
Operating profit/(loss)	26,380	(84,843)
Net finance income	182,790	331,760
Profit before tax	209,169	246,917
Income tax	(731)	(53,680)
Profit for the year	208,439	193,237
Earnings per share (ZMW)	1.30	1.20
Basic and diluted earnings per share (ZMW)	1.30	1.20

UNAUDITED ABRIDGED GROUP STATEMENT OF FINANCIAL POSITION AS AT 30TH JUNE 2021

	30-June-21	30-June-20
	ZMW'000	ZMW'000
Assets
Non-Current Asset	63,156,060	17,681,116
Current Assets	9,666,116	2,581,012
Total Assets	72,822,176	20,262,128
Equity and Liabilities
Shareholders' Funds	30,682,405	16,777,325
Non-Current Liabilities	36,810,124	366,022
Current Liabilities	5,329,647	3,118,781
Total Equity and Liabilities	72,822,176	20,262,128

UNAUDITED ABRIDGED COMPANY STATEMENT OF FINANCIAL POSITION AS AT 30TH JUNE 2021

	30-June-21 ZMW'000	30-June-20 ZMW'000
Assets
Non-Current Asset	12,230,647	11,807,148
Current Assets	1,723,199	912,849
Total Assets	13,953,846	12,719,997
Equity and Liabilities
Shareholders' Funds	10,015,213	9,505,909
Non-Current Liabilities	3,423,278	2,838,236
Current Liabilities	515,355	375,852
Total Equity and Liabilities	13,953,846	12,719,997

UNAUDITED ABRIDGED GROUP STATEMENT OF CASH FLOWS AS AT 30TH JUNE 2021

	30-June-21 ZMW'000	30-June-20 ZMW'000
Net cash flow from/(used) operating activities	2,838,677	(184,381)
Net cash (used)/Inflow from investing activities	(2,927,930)	176,149
Increase in cash and cash equivalents	(89,253)	(8,232)
Cash and cash equivalents at the beginning of the year	225,582	54,175
Cash and cash equivalents at the end of the period	136,329	45,943

UNAUDITED ABRIDGED COMPANY STATEMENT OF CASH FLOWS FOR THE SIX MONTHS ENDED 30TH JUNE 2021

	30-June-21 ZMW'000	30-June-20 ZMW'000
Net cash flow (used)/from operating activities	14,563	(120,423)
Net cash Inflow/(used) from investing activities	(63,209)	116,782
Increase in cash and cash equivalents	(48,646)	(3,641)
Cash and cash equivalents at the beginning of the year	120,758	54,359
Cash and cash equivalents at the end of the year	72,112	50,718

UNAUDITED ABRIDGED GROUP STATEMENT OF CHANGES IN EQUITY FOR THE SIX MONTHS ENDED 30TH JUNE 2021

	30-June-21	30-June-20
	ZMW'000	ZMW'000
Balance as at 1 January Profit for the year	21,075,617 479,705	12,983,636 438,932
Other comprehensive income	9,127,083	3,407,822
Dividend payment Balance as at 30 June	- 30,682,405	(53,065) 16,777,325

UNAUDITED ABRIDGED COMPANY STATEMENT OF CHANGES IN EQUITY FOR THE SIX MONTHS ENDED 30TH JUNE 2021

	30-June-21	30-June-20
	ZMW'000	ZMW'000
Balance at 1 January	9,674,487	9,561,545
Profit for the year	208,439	193,237
Other comprehensive Loss	132,287	(195,808)
Dividend payment	-	(53,065)
Balance as at 30 June	10,015,213	9,505,909

1. FINANCIAL PERFORMANCE HIGHLIGHTS

The Group recorded a turnover of ZMW8.3 billion for this period compared to ZMW62 million reported during the six-month period to 30th June 2020. The significant increase is largely on account of acquisition of Mopani Copper Mines Plc (Mopani) during the period. The revenue from Mopani accounts for 97% of the total revenue for the period.

The Group's share of profit in associate companies was ZMW1.48 billion (June 2020: ZMW354.7 million). This was due to profit recorded by investee companies in the copper Mining industry which experienced increased copper prices during this period. The copper prices recorded an average price of US\$ 9,200 per ton compared to US\$5,490 per ton recorded during the same period in 2020.

The Group's total assets increased to ZMW72.82 billion as at 30th June 2021 from ZMW20.26 billion as at 30th June 2020 due to the acquisition of Mopani Copper Mines Plc.

Overall, the Group recorded a 9% increase in profit after tax of ZMW479.7 million compared to ZMW438.7 million in the six-month period to 30th June 2021. This was due to an increase in share of profit from investee companies.

2. KEY OPERATIONS AND STRATEGIC DEVELOPMENTS

Acquisition of Mopani Copper Mines Plc

During the period, ZCCM-IH reached an agreement with Glencore, representing Carlisa Investments Corp. ("Carlisa"), for the acquisition of the 90% stake in Mopani Copper Mines Plc ("the Acquisition"). The Acquisition of the 90% stake and voting rights belonging to Carlisa, was successfully executed on 31 March 2021. A total consideration of US\$1 was paid by ZCCM-IH. In addition, Mopani owed Shareholders more than USD 4.3 billion in shareholders loans. After a detailed analysis, this debt level was considered to be unsustainable, which meant that Mopani would not be able to meet debt repayments. ZCCM-IH, therefore, negotiated for the said loan to be written down to USD 1.5 billion. The US\$1.5 billion loan is guaranteed by ZCCM-IH.

This transaction has effectively transformed ZCCM-IH from giving it the potential ability to create substantial value for its shareholders today and well into the future. The transition from Carlisa was done successfully and normal operations have continued for both mining and processing. Mopani recorded fair financial performance for the period under review with actual revenue exceeding budget by US\$24m due to favorable prices, and higher than budget sales volumes propelled by high opening stocks. Mopani recorded a positive EBITDA of USD5.8 million for the period under review.

Konkola Copper Mines Plc (KCM) Court proceeding

• Lusaka Proceedings Following the decision of the Court of Appeal to confirm the decision of the High Court, the winding up proceedings remain stayed pending the Arbitration Proceedings in South Africa. ZCCM-IH has since filed an application before the Supreme Court seeking leave to appeal the decision by the Court of Appeal.
• South African Proceedings The Arbitration proceedings (which are confidential as between the parties) are underway and yet to be resolved. Subsequent to the period under review and specifically on 7 July 2021 the Sole Arbitrator made a Partial Final Award which had the effect of staying the petition pending the hearing of the Arbitration.

Konkola Copper Mines Plc separation of Business Units

During the period to 30th June 2021, KCM was split into two separate Business Units. The split was done by way of formation of two subsidiary companies, namely KCM Smelter Co Limited, and KCM Mineral Resources Limited, with two Separate Management structures and employee arrangements. Both companies are currently wholly owned by KCM.

Kansanshi Holdings Limited (KHL) Arbitration proceedings

On 29th January 2021, the Arbitration Tribunal, issued a Partial Final Award in the arbitration, pursuant to which ZCCM-IH's defence was successful and various declarations granted in ZCCM-IH 's favour. Certain matters remain outstanding and will be addressed by the Tribunal in the final award.

3. SIGNIFICANT EVENTS SUBSEQUENT TO THE PERIOD UNDER REVIEW

Security and Guarantee of US\$100 million KCM Trafigura Transactions

Subsequent to the period under review, ZCCM-IH pledged US\$200 million worth of its shareholding in Kansanshi Mining Plc and executed a corporate guarantee in favor 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 on a monthly basis for a period of 18 months with a 6 month moratorium.

4. OUTLOOK

The Group will continue with the implementation of its Strategic Plan to enhance value creation for its shareholders. The Group will benefit from the strong copper price outlook for the second half of this year due to falling inventories and rising premiums in the top consumer China. In addition, the company will also get value from the expected good copper price due to a surge in demand. ZCCM-IH in line with its Strategic plan will also focus on commodity diversification by improving production of other minerals such as Gold, Manganese and Amethyst among others. Exploring of value addition initiatives will also remain key on the agenda of ZCCM-IH going forward.

By Order of the Board

Chabby Chabala Company Secretary Issued in Lusaka, Zambia on Thursday, October 7, 2021

Lusaka Securities Exchange Sponsoring Broker
	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 October 7, 2021

APPENDICES

US DOLLAR UNAUDITED ABRIDGED GROUP STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE SIX MONTHS ENDED 30TH JUNE 2021

	30 June 2021	30 June 2020
	USD'000	USD'000
Revenue	368,606	3,370
Gross profit	37,686	198
Operating loss	(36,889)	(8,881)
Net finance (cost)/income	(7,301)	17,796
Share of profit of equity accounted investees Profit before tax	65,641 21,450	19,281 28,195
Income tax	(111)	(2,960)
Loss from discontinued operations	-	(1,372)
Profit for the period	21,339	23,863
Earnings per share (USD)	0.13	0.15
Basic and diluted earnings per share (USD)	0.13	0.15

US DOLLAR UNAUDITED ABRIDGED COMPANY STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE SIX MONTHS ENDED 30TH JUNE 2021

	30 June 2021	30 June 2020 USD'000
	USD'000
Revenue	5,390	866
Operating (loss)/profit	1,173	(4,613)
Net finance income	8,131	18,036
Profit before tax	9,305	13,424
Income tax	(33)	(2,918)
Profit for the year	9,272	10,505
Earnings per share (USD)	0.06	0.07
Basic and diluted earnings per share (USD)	0.06	0.07

US DOLLAR UNAUDITED ABRIDGED GROUP STATEMENT OF FINANCIAL POSITION FOR THE SIX MONTHS ENDED 30th JUNE 2021

	30-June-21 USD'000	30-June-20 USD'000
Assets
Non-Current Asset	2,791,551	972,359
Current Assets	427,251	85,733
Total Assets	3,218,802	1,058,092
Equity and Liabilities
Shareholders' Funds	1,356,188	890,126
Non-Current Liabilities	1,627,039	28,665
Current Liabilities	235,575	139,301
Total Equity and Liabilities	3,218,802	1,058,092

US DOLLAR UNAUDITED ABRIDGED COMPANY STATEMENT OF FINANCIAL POSITION FOR THE SIX MONTHS ENDED 30th June 2021

	30-June-21 USD'000	30-June-20 USD'000
Assets
Non-Current Asset	667,887	649,048
Current Assets	76,167	50,180
Total Assets	744,054	699,228
Equity and Liabilities
Shareholders' Funds	569,963	522,547
Non-Current Liabilities	151,312	156,020
Current Liabilities	22,779	20,661
Total Equity and Liabilities	744,054	699,228