Half-year Result-ZCCM-IH

RNS Number : 3943O
ZCCM Invs.Hldgs PLC
07 October 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:

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 6, 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.

 

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 Wednesday, October 6, 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 6, 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 2021 

 

 

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 2021 

 

 

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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