TIDMZCC

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 PERIODED 30(TH) 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 30(th) 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 30(TH) 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 30(TH) 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 30(TH) 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 30(TH)   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 30(TH) 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 MONTHSED 30(TH) 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 MONTHSED 30(TH) 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 MONTHSED 30(TH) 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 30(th) 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 30(th) June 2021 from ZMW20.26 billion as at 30(th) 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 30(th) 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 30(th) 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 29(th) 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 
 

APPICES

US DOLLAR UNAUDITED ABRIDGED GROUP STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE SIX MONTHSED 30(TH) 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 MONTHSED 30(TH) 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 30(th) 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 30(th) 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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