Directors' Half Year Summary- 31 March 2015

RNS Number : 7347S

ZCCM Invs.Hldgs PLC

10 July 2015

 

 

ZCCM INVESTMENTS HOLDINGS PLC

 [Incorporated in the Republic of Zambia]

Company registration number: 771

Share Code: ZCCM-IH

ISIN: ZM0000000037

["ZCCM-IH" or "the Company"]

DIRECTORS' INTERIM SUMMARY FOR THE SIX MONTHS PERIOD ENDED 31 MARCH 2015

Introduction

In compliance with the requirements of the Securities Act, Cap 354 of the Laws of Zambia and the Listing Rules of the Lusaka Stock Exchange (LuSE), ZCCM Investments Holdings Plc (ZCCM-IH) announces the unaudited results for the six months period ended 31^st March 2015.

Financial Performance

The Group achieved a turnover of K223.1 million during the six month period ended 31^st March 2015 which was 75% below the turnover of K887.4 million for the six months to 31^st March 2014. The turnover for Ndola Lime Company Limited (NLC) increased by 26% to K99.7 million (2014: K 79.1 million).

During the period under review total Dividend income earned was K18 million (2014:K758 million) and this was from Copperbelt Energy Corporation Plc.

Interest earned  during the period under review was K102 million (2014: K 48.5 million). Management fees income was K3.9 million (2014: ZMW 6.3 million).

The cost of turnover increased to K165.4 million (2014: K 149.6million). The 11% increase was largely driven by an increase in operating costs at Ndola Lime Company Limited.

The Group's operating profit for the period under review was K57.6 million (2014: K 737.8 million). Share of profits of associate companies was K388.7 million (2014: K77.8 million). Konkola Copper Mine Plc, Maamba Collieries Limited and Lubambe Copper Mine Limited recorded losses, while Kansanshi Mining Plc and Copperbelt Energy Corporation Plc recorded profits during the period under review.  The Group profit after tax for the six months ending 31^st March 2015 was K 832.9 million (2014: K 277.8 million).

Copper prices continued to decline from an average of US$ 6,740 per tonne in October 2014 to US$6,082 per tonne as at end of March 2015.

Operations and Strategic developments

Recapitalisation of Ndola Lime Company (NLC)

The recapitalisation project at NLC continued. ZCCM-IH provided additional shareholder loan of US$16.5 million for the Ndola Lime Recapitalisation Project. The commissioning is targeted for the end of September 2015. Once commissioned, VK-2 is expected to increase production by 500 tonnes per day, which is predominantly expected to substitute the less efficient Rotary Kiln's capacity of 400 tonnes per day. The use of coal in the VK-2 as opposed to Heavy Fuel Oil (HFO) will greatly enhance the prospects of reducing operating costs and thus make the products competitive.

Nkana Alloy Smelting Company Limited

ZCCM-IH owns 10% of Nkana Alloy Smelting Company Limited (Nkana Alloy), a company that was formed to process the slag material from the Nkana Slag Dump situated in Kitwe, Copperbelt Province of Zambia. As at 31 March 2015, operations at the company had not commenced due to an injunction served on Nkana Alloy, restraining it from interfering with activities on the slag dump. The plaintiffs who obtained the injunction were to be handed the property to commence prospecting works at the site as per mineral processing license until determination of the matter.

Mawe Exploration and Technical Services Limited

ZCCM-IH incorporated Mawe Exploration and Technical Services Limited (Mawe), a wholly owned subsidiary in April 2013. Mawe was intended to play a catalytic role in exploration of base metals and other minerals, oil and gas, the development of local content and beneficiation capabilities, small scale mining development, as well as the provision of attendant quality mining services.

Following a review of the structure and operations of Mawe, ZCCM-IH reversed this decision and will now retain the functions that were to be performed by Mawe into a Technical Directorate within ZCCM-IH. This decision is aimed at rationalising costs related to above-named activities.

Nkandabwe Coal Mine Limited

Following the granting to ZCCM-IH of the mining licences previously held by Collum Coal Mining Industries Limited (CCMIL) situated in Southern province of Zambia, ZCCM-IH incorporated Nkandabwe Coal Mines Limited, a 100% wholly owned subsidiary to operate the mine. During the period under review, ZCCM-IH applied to convert the small-scale coal licences into a large scale prospecting licence and was issued with one following approval by the Ministry of Mines, Energy and Water Development.  However, in March 2015, ZCCM-IH was informed that the licence was cancelled and re-issued to the previous owners, CCMIL. ZCCM-IH, therefore, has divested from this investment and the mines have since been handed over to CCMIL.

Real Estate and Agriculture

The Company recently included investment into the real estate and agriculture in its 2016 Strategic Plan. This is part of the on-going initiatives for diversification and one of the approaches to reduce its investment concentration in the mining sector.

GRZ Sale Down

In his Budget Speech in October 2014, the Minister of Finance announced that the Government of the Republic of Zambia (GRZ) would reduce its shareholding in ZCCM-IH from 87% to 60% via the sale of its shares proportionate to the required reduction. The reduction in GRZ's shareholding will also lead to ZCCM-IH complying with the listing requirement that the company must have at least 25% of each class of equity securities held by the public.

Subsequent to this announcement, ZCCM-IH was mandated to initiate processes to achieve the GRZ sale down. ZCCM-IH is in liaison with the relevant regulators and stakeholders to actualise the sale down.

Capital market

The ZCCM-IH share price on the Lusaka Stock Exchange closed the year at K40 (2014: K27). The market capitalisation as at 31 March 2015 was K6, 431 million (2014: K4, 341 million).The continued growth in the company's share price is indicative of the growing confidence from the market.

Directorate Changes

Mr Paul M Chanda was appointed to the Board of ZCCM-IH in November 2014.

By Order of the Board

C Chabala

CCSO/Company Secretary

1 July 2015

GROUP INCOME STATEMENT FOR THE SIX MONTHS ENDED 31 MARCH 2015 (UNAUDITED)
K'000 SIX MONTHS ENDED SIX MONTHS ENDED 31  March 2015 31  March 2014 Consolidated Consolidated Income Sales 103,033 81,082 Dividends 17,977 757,797 Interest Earned 102,040 48,526 223,050 887,405 Cost of turnover (165,428) (149,580) Operating profit/(loss) 57,622 737,825 Exchange (loss)/gain 415,558 102,495 Environmental expenses (2,039) (8,239) Interest charge (818) (2,252) Royalty on minerals (5,348) (3,965) Other income 4,065 133,240 Associate Companies Share of Profit/(loss) 388,731 77,793 Dividends Earned (17,977) (752,300) Profit/(loss) before taxation 839,794 284,597 Income tax (6,943) (6,779) Profit from continuing operations 854,374 277,818 Loss from discontinuing operations (21,523)                             -   Retained profit 832,851 277,818

EPS                                                                                         4.16                            1.39

GROUP STATEMENT OF FINANCIAL STATEMENT AS AT 31 MARCH 2015 31 March 2015 31 March 2014 K' 000 K' 000 Assets Employed Non Current Assets                   7,698,368                6,314,833 Current Assets                   2,247,193                2,444,163 Total Assets                   9,945,561                8,758,996 Equity and Liabilities Shareholders Funds                   9,155,786                8,136,322 Non Current Liabilities                      340,684                   249,734 Current Liabilities                      449,092                   372,940 Total Equity and Liabilities                   9,945,561                8,758,996
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