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Directors Interim Report 31 March 2012

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DIRECTORS’ INTERIM REPORT

For the six month period ended 31st March 2012

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, ZCCM Investments Holdings Plc (ZCCM-IH) announces the unaudited results for the six month period ended 31st March 2012.

The Group achieved a turnover of K124,871 million during the six month period ended 31st March 2012 which was 15.5% below the turnover of K147,762 million for the six months to 31st March 2011.

This reduction in turnover was mainly as a result of reduction in sales of Ndola Lime Company (NLC), a wholly owned subsidiary of ZCCM-IH. Turnover of K92,472 million for NLC during the period ended 31st March 2012 was 16.2% below that of K110,286 million for the corresponding period to 31st March 2011. This decrease was largely due to the reduction in production arising from the partial shutdown of the rotary kiln, for installation of the Electrostatic Precipitator as a means of containing dust emissions from the stack.

The cost of turnover for the Group increased to K95,637 million for the period to 31st March 2012 from K92,912 million for the corresponding period to 31st March 2011. This was largely due to additional costs of maintaining the rotary kiln at NLC.

The operating profit for the period under review of K29,233 million, was K25,617 million (46.7%) lower than that for the same period last year. This was mainly attributed to loss of sales during the period of the rotary kiln shutdown.

The Company’s share of profit from Associate Companies for the period 31st March 2012 was K247,021 million compared to K322,944 million for the period to 31st March 2011. The reduction in share of profits from Associate Companies is mainly due to a decline of profits from Konkola Copper Mines Plc and Kansanshi Mining Plc for the six month period to 31st March 2012 compared to the corresponding period to 31st March 2011.

A dividend of K6, 541 million (US$ 1,350,000) was received from Chibuluma Mines during the period.

ZCCM-IH is in the process of acquiring a 50% stake in Kariba Minerals Limited (KML). KML is in the business of prospecting, mining, processing and marketing of amethyst and any such other precious and semi-precious stones. KML’s amethyst asset in Mapatizya in the Southern Province of Zambia is considered the largest amethyst deposit in the World, the only amethyst with a very deep purple colour. KML is the largest single producer of amethyst in Zambia and the World.

The Government of the Republic of Zambia (GRZ) and ZCCM-IH signed the Sale and Purchase Agreement for the 50% KML shares in the period under review. Finalisation of the transaction is expected before the end of the calendar year 2012.

During the period under review, ZCCM-IH investee companies made significant progress as regards strengthening the asset bases as follows:

Maamba Collieries Limited commenced mining and production of coal while the EPC contract for development of the 300 MW Thermal Power Plant was signed in February 2012;

The Konnoco Project reached 57% of overall progress by March 2012 while mining development of the 113 and 130 mL sublevel ore body drives commenced in March and a total of 126m were developed; and,
Most of the main civil works for the NLC Recapitalization Project were completed by March 2012 while the contract to construct the new Vertical Kiln and the Coal Pulverizing Plant was signed during the said month. The recapitalization project is expected to significantly improve the operational efficiency of NLC and lower the unit cost of production.
ZCCM-IH contributed funding to the mentioned projects in the form of equity and shareholder loans.

The Company undertook a review of its 2012 -2016 Strategic Plan with a view to enhancing and maximizing shareholder value. The review resulted in the following seven Strategic Focus Areas:

a) Strategic Focus Area1: Leveraging and consolidating existing investments in the copper mining sector and pursuing other copper assets;

b) Strategic Focus Area 2: Diversifying into other minerals;

c) Strategic Focus Area 3: Investing in mining related sectors;

d) Strategic Focus Area 4: Investing in mining related manufacturing;

e) Strategic Focus Area 5: Treasury management;

f) Strategic Focus Area 6: Reducing legacy liabilities;

g) Strategic Focus Area 7: Repositioning the Company.

During the period under review, new members of the Board of Directors were appointed and previous members retired resulting in a change in the entire composition as follows:

Mr W D Mung’omba Appointed 1 December 2011 (Executive Chairman)

Mr. J M D Patterson Appointed 13 February 2012 (Non-executive Director)

Mr. C Mwananshiku Appointed 13 February 2012 (Non-executive Director)

Ms. S Mutemba Appointed 13 February 2012 (Non-executive Director)

Dr. A Mwenda Appointed 13 February 2012 (Non-executive Director)

Dr. V Mutambo Appointed 13 February 2012 (Non-executive Director)

Dr B K E Ng’andu Appointed 2 April 2012 (Non-executive Director)

ZCCM-IH has also taken steps to strengthen its representation on Boards of all its investee companies.

By Order of the Board

C Chabala

Company Secretary

13th July 2012







ZCCM INVESTMENTS HOLDINGS PLC















COMPREHENSIVE GROUP INCOME STATEMENT FOR THE SIX MONTH ENDED 31ST MARCH 2012











































SIX MONTHS ENDED



SIX MONTHS ENDED







31 MARCH 2012



31 MARCH 2011



















Consolidated



Consolidated



















K' million



K' million













Turnover





124,871



147,762

Cost of turnover





(95,637)



(92,912)













Operating profit





29,233



54,850













Exchange gain





57,902



13,545

Environmental expenses





(1,375)



(23,409)

Interest charge





(1,911)



(7,580)

Royalty on minerals





(3,184)



(3,309)

Other income





5,786



4,448

Associate Companies Share of Profit



247,021



322,944

Profit before taxation





333,471



361,490













Income tax





(5,360)



(6,055)













Retained profit





328,112



355,435