ZCCM-IH Half Year Report- 30 September 2017- Reissued

SENS ANNOUNCEMENT

(the “Notice” or “Announcement”)

ZCCM INVESTMENTS HOLDINGS PLC (“ZCCM-IH”)

[Incorporated in the Republic of Zambia]

Company registration number: 771

Share Code: ZCCM-IH

ISIN: ZM0000000037

Authorised by: Chabby Chabala – Company Secretary

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

The captioned Notice or Announcement has been approved by:

the Lusaka Securities Exchange (“LuSE”)
the Securities and Exchange Commission (“SEC”)
Stockbrokers Zambia Limited (“SBZ”)

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

ISSUED: 10 January 2018

ZCCM INVESTMENTS HOLDINGS PLC

(Incorporated in the Republic of Zambia)

DIRECTORS' HALF YEARLY INTERIM SUMMARY FOR THE SIX MONTHS PERIOD ENDED 30th SEPTEMBER 2017

Introduction

In compliance with the requirements of the “Securities Act, Cap 354 of the Laws of Zambia” and the Listing Rules of the Lusaka Securities Exchange, ZCCM Investments Holdings Plc (ZCCM-IH) announces the unaudited results for the six months' period ended 30th September 2017.

Structure of the ZCCM-IH Group

The ZCCM-IH Group consist of the following three (3) companies:

ZCCM-IH (Parent Company)
Ndola Lime Company Limited (100% owned subsidiary )
Misenge Environmental and Technical Services Limited (100% owned subsidiary )

The Group has the following interests in associated companies (i.e. interest of 20% and above):

 

Kariba Minerals Limited
50.00%




 

Investrust Bank Plc
45.40%




 

Maamba Collieries Limited
35.00%




 

Konkola Copper Mines Plc
20.60%




 

Kansanshi Mining Plc
20.00%




 

Copperbelt Energy Corporation Plc
20.00%




 

CEC Africa Investments Limited
20.00%




 

Lubambe Copper Mine Plc
20.00%




 

CNMC Luanshya Copper Mines Plc
20.00%

Financial Performance

The Group recorded a turnover of K37.7 million for the six-month period ended 30th September 2017 which was 42% below the turnover of K65.5 million reported during the six months to 30th September 2016. The lower Group turnover was mainly as a result of a decrease in turnover for Ndola Lime Company Limited by 41% from K62.5 million to K36.7 million for the period under review. The Group recorded an operating loss of K123 million (Sept 2016: loss K65.1 million) No Dividends were earned for the period ended 30th September 2017 (September 2016: Nil).

The Group's share of profit in associate companies was K227.3 million (September 2015:K58.6 million). The performance of the associate companies improved on account of improved Copper prices. The price of Copper rose from US$4,790 per ton as at 30th September 2016 to US$6,482 per ton at 30th September 2017 representing a 35% increase. Overall the Group recorded an after tax profit of K87.8 million (September 2016: loss K134.7 million).

Operations and Strategic developments

Proposed Joint Venture for setting up of a Cement Manufacturing Company

As part of ZCCM-IH's strategy to diversify its portfolio, the Company is progressing towards finalizing a Joint Venture partnership which will culminate into setting up of a Cement Manufacturing Company.

ZCCM-IH intends to hold 35% of the shares while its Chinese Partner will have 65%. The planned production capacity of the Plant will be 5000 tonnes per day of Clinker with a 50 MW Thermal Power Plant. Furthermore, the proposed plant will be installed with a waste heat recovery system which will add another 7.5 MW of power. It is expected that the Plant will take 3 years to construct and employ over 1000 people during construction. Once completed, the plant is expected to employ about 400 people. 

Commencement of construction is conditional upon financial closure.

Disposal of ARM & Vale's indirect interest in Lubambe Copper Mine Ltd (Lubambe)

African Rainbow Minerals (ARM) and Vale International SA (Vale) concluded an agreement to dispose ARM and Vale's combined 80% beneficial interest in Lubambe to EMR Capital Limited (EMR). The 80% beneficial interest in Lubambe, which is held in equal shares by ARM and Vale included the equity holding in Lubambe as well as loans to Lubambe. Lubambe is owned 40% by ARM and 40% by VALE, both as beneficial owners and 20% by ZCCM-IH.

The purchase consideration for the Disposal is US$97.1 million and will be settled in cash. The final amount receivable is subject to, amongst others, the following adjustments which will be finalised on completion of the Disposal:

Settlement of Lubambe general banking facility; and
Additional funding provided to Lubambe by ARM and Vale between 1 May 2017 and the completion date.

Completion of the Disposal is subject to the fulfilment of agreed conditions precedent and regulatory approvals.

EMR is a specialist resources private equity management firm with a proven investment track record spanning over 20 years. It manages investments of more than US$2 billion.

EMR will provide additional funding to improve mining operations at Lubambe.

Mandatory Offer to Investrust Shareholders

In February 2016, ZCCM undertook to subscribe for all shares not subscribed for by other Investrust Bank Plc (Investrust) shareholders in the Investrust Rights Offer. This resulted in an increase in ZCCM-IH's shareholding in Investrust from 10% to 45.4%. As a result, ZCCM-IH was required to proceed with a Mandatory Offer to all other shareholders in Investrust in accordance with Rule 56 of the Third Schedule of the Securities (Takeovers and Mergers) Rules, Statutory Instrument No 170 of 1993, , issued pursuant to the Securities Act, Chapter 354 of the Laws of Zambia.

The process is expected to be concluded by end of March 2018.

 

CONSOLIDATED GROUP INCOME STATEMENT FOR THE SIX MONTHS ENDED 30TH SEPTEMBER 2017 (UNAUDITED)

 
 
 
 
K'000


 
 
30-Sep-17
 
30-Sep-16


 
 
 
 
 


Revenue
 
37,647
 
65,470


Cost of sales
 
 (44,449)
 
 (50,547)


Gross profit
 
 (6,802)
 
14,922


Other income
 
5,301
 
4,803


Environmental expenses
 
 (364)
 
(66)


Administration expenses
 
(121,479)
 
(84,734)


Operating loss
 
(123,344)
 
(65,076)


Finance costs
 
(100,391)
 
(101,567)


Finance income
 
86,729
 
28,036


Net finance income
 
(13,662)
 
(73,531)


Share of profit/(loss) of equity accounted investees
 
 227,349
 
 58,626


Profit/(loss) before tax
 
 90,343
 
(79,981)


Income tax
 
(2,523)
 
(54,737)


Profit/(loss) from continuing operations
 
 87,821
 
 (134,717)


Retained loss
 
 87,821
 
(134,717)


EPS
 
0.55
 
(0.84)

CONSOLIDATED GROUP STATEMENT OF FINANCIAL POSITION FOR THE SIX MONTHS ENDED 30th SEPTEMBER 2017 (UNAUDITED)

 
 
 
K'000


 
30-Sep-17
 
30-Sep-16


Assets Employed
 
 
 


Non-Current Asset
9,709,983
 
9,694,731


Current Assets
1,369,944
 
781,642


Total Assets
11,079,927
 
10,476,373


 
 
 
 


Equity and Liabilities
 
 
 


Shareholders' Funds
9,833,950
 
8,889,391


Non-Current Liabilities
 445,725
 
710,838


Current Liabilities
 800,252
 
876,144


Total Equity and Liabilities
11,079,927
 
10,476,373

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE SIX MONTHS ENDED 30TH SEPTEMBER 2017 (UNAUDITED)

 
 
 
 
 
 
 
K'000


 
 
 
 
 
 
 
 


 
 
Share capital
Share premium
Revaluation reserve
Translation reserve
Retained earnings
Total


 
 
 
 
 
 
 
 


 Balance at 1 April 2016
 
1,608
2,089,343
260,015
5,828,379
146,883
8,326,228


 Total comprehensive income
 
 
 
 
 
 
 


 Loss for the year
 
-
-
-
-
1,253,860
1,253,860


 Currency translation – equity accounted investees
 
-
-
-
(998,561)
-
(998,561)


 Revaluation surplus on PPE, net of tax
 
-
-
-
-
-
-


 Amortisation of revaluation surplus
 
-
-
(726)
-
726
-


 Actuarial loss on defined benefit, net of tax
 
-
-
-
-
(302)
(302)


 Share of associates' OCI
 
 
 
106
80,267
 
80,373


 Balance at 31 March 2017
 
1,608
2,089,343
259,395
4,910,085
1,401,167
8,661,598


 
 
 
 
 
 
 
 


 Balance at 1 April 2017
 
1,608
2,089,343
259,395
4,910,085
1,401,167
8,661,598


 Total comprehensive income
 
 
 
 
 
 
 


 Profit 
 
-
-
-
-
87,821
87,821


 Currency translation – equity accounted investees
-
-
-
1,084,532
-
1,084,532


 Balance at 30 September 2017
 
1,608
2,089,343
 
5,994,617
1,488,988
9,833,950