TIDMZCC
RNS Number : 8261U
ZCCM Invs.Hldgs PLC
11 April 2016
ZCCM Investments Holdings Plc
Statement to the Media on ZCCM-IH's Financial Performance for
2014/15
ZCCM Investments Holdings Plc (ZCCM-IH) group reported a loss
after tax, of K987 million for the year ended 31 March 2015.
However, during the previous year ended 31 march 2014, the group
recorded a profit of K277 million.
At Company level the loss was K639 million in 2015 versus a
profit of K893 million in 2014.
As a result of the good performance in 2014, ZCCM-IH declared
and paid a dividend of K1.56 per share, totaling K256 million,
equivalent to about USD 40million.
This was a record dividend in the history of ZCCM-IH, as it had
never paid any dividend since its inception.
In 2015 however, a number of factors impacted the performance of
the group.
Copper prices continued to decline falling from USD6,289 in 2014
to USD 4,701 in 2015.
As a result, dividend income was only K45 million in 2015
compared to K803 million in 2014, amid declined revenues and
production, in most of ZCCM-IH's investee companies.
ZCCM-IH reported a Group operating loss of K2.2 billion in 2015
compared to an operating profit of K871 million in 2014.
The operating loss in 2015, was mainly as a result of an
impairment loss of K2.1 billion, recognized in respect of amounts
receivable from KONKOLA COPPER MINES (KCM), of K719 million
(USD94.9million) and LUBAMBE COPPER MINES of K705 million (USD93
million).
A further impairment of K513.8 million was recorded, as a result
of a decline in the fair value of the investment in KCM, in view of
continued challenges at the mine.
LUBAMBE COPPER MINE (LCM)
Lubambe Copper Mine (LCM) Limited reported revenue for the
financial year ended 31(st) march 2015, at K1, 071 million or
USD164.7 million as compared to K1,483 million or USD237 million,
in
2014. It also reported a loss for the same period of USD78
million, compared to USD39 million in 2014.
The main challenge that LCM faced during the financial year
under review was the dilution of concentrates. Following an
extensive ore body stoping design review conducted by SRK
consulting, Lubambe evaluated various slot development methods and
equipment requirements, with the recommended solution being inverse
raise, using 3x SANDVIK dl411-15 long hole drill rigs.
Due to the above financial and operational challenges, LCM was
unable to make repayments on the K705 million (USD93 million)
shareholder loan, and this loan was thus fully impaired as at
31(st) march 2015.
The way forward is to pursue the rights of ZCCM-IH PLC under the
shareholder loan agreement.
KONKOLA COPPER MINES
For KCM, it reported a net loss of USD178.5 million for the
financial year ended 31(st) March 2015, compared to USD89.2 million
loss in 2014.
Revenue reported for the year, was USD1, 077.1 million, down
15.0% (2014: USD1, 271.4 million) due to a decline in the sale of
copper and copper related products.
Further, copper sales declined by 15.9% and sale of precious
metals in slimes declined by 33.9%. Total finished copper
production during the year was 168,923 MT compared to 177,018 MT in
2014.
During the year under review, KCM faced acute operational and
financial challenges including cash flow constraints that resulted
in KCM purchasing third party concentrates in smaller quantities
than what was sought. KCM is currently focusing on increasing
production volumes, and addressing productivity across all of its
operations.
To this end, KCM has been implementing various interventions, to
improve the overall operating performance and drive higher
equipment availability and utilization.
BRIEF OUTLOOK
ZCCM - IH core assets lie in the mining sector, and this makes
about 80% to 90% of our portfolio. Since privitisation, ZCCM-IH has
relied on dividend pay-outs largely from mining firms. Copper
prices have continued to be depressed in the recent past, and
recovery is slow. The copper price has recently shown some
recovery, however, it is expected that the impact on revenue will
be slow.
Hence, in order to move from relying on passive income and being
dependent on mining, we have embarked on diversifying our
investment portfolio, by actively looking for investment
opportunities beyond mining, into other sectors such as energy,
agriculture and real estate, so that the company can create and
maximize shareholder value.
For instance, in energy, the Maamba Project is expected to be
completed in June this year. ZCCM-IH owns 35% of Maamba Collieries
Limited. ZCCM-IH and its partner have invested close to USD 850
million at Maamba Collieries Ltd, into this thermal power plant
which will be producing 300MW of power.
Further, the recapitalization of Ndola Lime Company Limited has
advanced, with the project undergoing hot commissioning. ZCCM-IH is
reviewing the operations of Ndola Lime with a view to streamlining
its operations and make it competitive and efficient.
As part of diversification into real estate, ZCCM-IH recently
acquired an investment property that will be leased out to generate
passive income. ZCCM-IH has also been identifying a number of
strategic legacy properties, with a view of bringing them to use
and turn them into income generation projects.
Further, ZCCM-IH is currently looking for strategic partners to
invest in agricultural projects.
These are some of the efforts aimed at reducing dependence on
revenue from the copper industry, and mitigating the impact from
its cyclical nature.
Lusaka, 8 April 2016
This information is provided by RNS
The company news service from the London Stock Exchange
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