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  ZCCM company press release from 07/10/2021

  07/10/2021 - 15:45

ZCCM-IH_ HALF YEAR RESULTS_2021


SENS ANNOUNCEMENT

(the “Notice” or “Announcement”)

 
   


ISSUER

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

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:

  1. the Lusaka Securities Exchange (“LuSE”)
  2. the Securities and Exchange Commission (“SEC”)
  3. 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   1,475,600   354,647
Profit before tax   482,205   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   30-June-20
  ZMW'000   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   30-June-20
  ZMW'000   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   30-June-20
  ZMW'000   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 21,075,617   12,983,636
  Profit for the year 479,705   438,932
  Other comprehensive income 9,127,083   3,407,822
  Dividend payment -   (53,065)
  Balance as at 30 June 30,682,405   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.

  1. 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% stakein 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 declarationsgranted in ZCCM-IH ‘s favour. Certain matters remain outstanding and will be addressed by the Tribunal in the final award.

  1. 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.

  1. 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 | [email protected]
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   65,641   19,281
Profit before tax   21,450   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 202 1

  30-June-21   30-June-20
  USD'000   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 202 1

  30-June-21   30-June-20
  USD'000   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

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  Original Source: ZCCM