| Fri 17 Jul 2009, 16:33 | | ZCI - Zambia Copper Investments Limited - Audited Consolidated Financial |
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ZCI
ZAKK
ZCI - Zambia Copper Investments Limited - Audited Consolidated Financial
Results
ZAMBIA COPPER INVESTMENTS LIMITED
(Registered in Bermuda)
(Bermudian registration number 661:1969)
(South African registration number 1970/000023/10)
JSE code: ZCI ISIN: BMG988431240
Euronext share code: BMG988431240
("ZCI" or "the Company")
Audited Consolidated Financial Results
Consolidated Income Statement
for the year ended 31 March 2009
expressed in thousands of US Dollars
Year ended Year ended
31 March 31 March
2009 2008
Finance income 3,652 465
General and administration expenses (2,177) (5,956)
Share of profit of associate - 36,268
Net loss arising from assets classified as held
for sale - (2,732)
Net loss on disposal of available for sale
investments (887) -
Profit before taxation 588 28,045
Taxation (72) (67)
Profit for the year 516 27,978
Basic and diluted earnings per ordinary share in
US cents 0.56 22.17
Number of ordinary shares in issue 55,677,643 126,197,362
Consolidated Balance Sheet
as at 31 March 2009
expressed in thousands of US Dollars
31 March 31 March
2009 2008
Current assets
Available for sale investment - 12,322
Assets classified as held for sale - 205,398
Trade and other receivables 76 5,258
Cash and cash equivalents 102,939 6,584
103,015 229,562
Current liabilities
Trade and other payables (327) (7,296)
Net current assets 102,688 222,266
Capital and reserves
Capital and contributed surplus 102,688 334,547
Revaluation of available for sale assets - 702
Amounts recognised directly in equity
relating to assets classified as held for sale - (12,113)
Accumulated deficit - (100,870)
Shareholders` equity 102,688 222,266
Consolidated statement of changes to equity
for the year ended 31 March 2009
expressed in thousands of US Dollars
Revaluation
reserve of
Share Contributed available for Hedging
capital surplus sale assets reserve
Balance at
31 March 2007 30,299 304,248 573 (12,558)
Revaluation on
available for
sale investment - - 129 -
Hedging reserve of
associated company - - - 445
Transfer from
hedging reserve - - - 12,113
Profit for the year - - - -
Balance at 31 March
2008 30,299 304,248 702 -
Share buyback and
reduction (16,924) (114,581) - -
Revaluation on
available for
sale investment - - (702) -
Transfer from
hedging reserve - - - -
Profit for the year - - - -
Transfer from
contributed surplus - (100,354) - -
Balance at 31 March
2009 13,375 89,313 - -
Assets
classified
as held Accumulated Total
for sale deficit equity
Balance at
31 March 2007 - (128,848) 193,714
Revaluation on available for
sale investment - - 129
Hedging reserve of
associated company - - 445
Transfer from hedging reserve (12,113) - -
Profit for the year - 27,978 27,978
Balance at 31 March 2008 (12,113) (100,870) 222,266
Share buyback and reduction - - (131,505)
Revaluation on available for
sale investment - - (702)
Transfer from hedging reserve 12,113 - 12,113
Profit for the year - 516 516
Transfer from contributed surplus - 100,354 -
Balance at 31 March 2009 - - 222,266
Consolidated statement of cash flows
for the year ended 31 March 2009
expressed in thousands of US Dollars
Year ended Year ended
31 March 31 March
2009 2008
Cash flow from operating activities
Cash paid to suppliers (4,769) (3,198)
Cash absorbed by operations (4,769) (3,198)
Interest received 3,614 135
Income tax paid (88) (86)
Net cash absorbed by operating activities (1,243) (3,149)
Cash flow from investing activities
Proceeds from disposal of available for sale
investments 10,733 -
Proceeds from partial disposal of investment in
subsidiary 5,220 5,220
Proceeds from disposal of assets classified as
held for sale 213,150 -
Purchase of available for sale investments - (1,600)
Dividends received from associated company - 1,628
Dividends received from assets classified as held
for sale - 1,629
Net cash generated by investing activities 229,103 6,877
Cash flow from financing activities
Repurchase of own issued shares (131,505) -
Net cash absorbed by financing activities (131,505) -
Net increase in cash 96,355 3,728
Net cash and cash equivalents at the beginning of
the year 6,584 2,856
Net cash and cash equivalents at the end of the
year 102,939 6,584
ACCOUNTING POLICIES
The principal accounting policies applied in the preparation of these
financial statements for the year ended 31 March 2009 are in accordance with
International Financial Reporting Standards and interpretations adopted by the
International Accounting Standards Board (IASB). The accounting policies
applied in the preparation of these consolidated results are consistent with
those applied in the preparation of the Group`s audited results for the year
ended 31 March 2008.
The consolidated balance sheet of Zambia Copper Investments Limited (the
"Company") and its subsidiaries (the "Group") for the year ended 31 March 2009
and the related consolidated statements of income, cash flow and changes in
shareholders` equity for the year then ended, were audited by KPMG Inc., South
Africa. The modified auditor`s report is available for inspection at the
Company`s registered office and the offices of the sponsor. The auditors have
drawn attention to ZCI`s non-compliance with section 4.8(b) of the Listings
Requirements of the JSE Limited which requires all issuers to appoint a
financial director.
These consolidated financial statements are the responsibility of the Board of
Directors.
EARNINGS PER SHARE
2009 2008
Headline (loss) / earnings (USD `000) (186) 32,339
Exceptional items:
Negative fair value of derivative - (4,361)
Reversal of provision on available for sale investment 702 -
Earnings attributable to shareholders (USD `000) 516 27,978
Weighted average number of ordinary shares in issue
(thousands) 92,870 126,197
Headline (loss) / earnings per share (US cents) (0.20) 25.62
Less exceptional items per share (US cents):
Negative fair value of derivative - 3.45
Reversal of provision on available for sale investment 0.76 -
Basic and diluted earnings per share (US cents) 0.56 22.17
SUBSEQUENT EVENTS
The Company made a binding offer of finance to African Copper Plc ("ACU")
which was accepted by ACU after a vote of its shareholders at the 7 May 2009
ACU Extraordinary General Meeting. ZCI provided interim bridge financing of
USD 7,000,000 and USD 25,400,000 to ACU so that ACU could meet its operating
current cash requirements and repay pre-existing creditors and bondholders.
The Company also made payments of approximately USD 6,000,000 directly to
three unrelated creditors in order to retire a portion of ACU`s outstanding
debts.
On 21 May 2009, the Company completed a Share Subscription Agreement under
which ZCI subscribed for 676,570,500 new ordinary shares of 1 pence each in
the capital of ACU, resulting in ZCI holding an 82.16% interest in the issued
share capital of ACU.
On 18 June 2009, the ACU Group and ZCI entered into a new Term Loan Facility
Agreement for an aggregate amount up to USD 31,129,100 which ACU may only use
to repay the interim bridge loans. Tranche A of the Term Loan Facility, for
USD 8,379,100, bears interest at 12 per cent per annum and is convertible into
ordinary share of 1 pence each in ACU at a conversion price of 1 pence per
share. The maximum aggregate number of new ordinary shares which may be issued
pursuant to the conversion rights is 556,307,262 new shares. Tranche B of the
Term Loan Facility, for an amount up to USD 22,750,000, bears interest at 14
per cent per annum and is not convertible. The Term Loan Facility is not
effective until security over assets of the ACU Group is perfected.
These agreements, Share Subscription and Term Loan Facility, will be ratified
by the ZCI shareholders, who will vote at the ZCI Annual General Meeting on 16
September 2009. The majority shareholder of ZCI has already provided written
confirmation of their approval of the ACU transaction. For purposes of IFRS 3,
fair values have not yet been finalised.
CHAIRMAN`S REPORT
I am pleased to present the audited annual results for the year ended 31 March
2009. Shareholders will note that the Company returned a profitable result of
USD 516,000 (2008: USD 27,978,000), which was primarily due to interest
earnings on cash and cash equivalent assets. Shareholders will note that the
board has taken the opportunity to write down a significant amount of
contributed surplus in its books, in terms of the powers devolved upon the
board by the Company`s Bye-Laws. This decision allows the Company to commence
its new business plan with a "clean slate" and will ensure that any future
profits need not first be allocated to the reduction of accumulated losses
prior to their consideration in the declaration of any possible future
dividend.
The period under review marked what was probably the most significant period
of change in the Company`s history. In the first few days of the financial
year, ZCI concluded the sale of the Company`s remaining shareholding in
Konkola Copper Mines ("KCM"), to Vedanta Resources Plc ("Vedanta") with the
receipt of the proceeds of the sale from Vedanta. This resulted in the Company
becoming a cash shell as defined in the JSE Limited Listing Requirements and
started the count-down to a possible suspension of trading of the shares,
should the Company`s status as a cash shell not be resolved within a six month
period ending on 12 October 2008.
Although the Board had been considering the possible mechanisms of returning
value to shareholders and to reduce the significant discount to net asset
value
("NAV") that the share had been trading at for some time prior to the
conclusion of the sale process, the receipt of the Vedanta sale proceeds
allowed the Company to finally initiate such a project. This was done in the
form of an unconditional tender to shareholders to buy back all shares
tendered at a NAV per share of $1.8648, being the projected NAV as at 31
August 2008. Shareholders were informed of the tender offer in a circular
posted in early September 2008 and which culminated in an Extraordinary
General Meeting ("EGM") to vote on the offer on 24 September 2008.
In the same circular, the opportunity was taken to expand on the Company`s
proposals for a new business plan, assuming that sufficient funding and
support
remain after the share tender offer. History has shown that shareholders voted
over whelmingly to support the tender offer and although over 55% of the total
shareholding was tendered in the offer, sufficient shareholder support and
therefore sufficient cash reserves remained in the Company after conclusion
of the tender offer to proceed with the stated new business plan. Further
detail regarding the share tender offer is provided in the notes to the
accounts. One of the notable results of the outcome of the share tender offer
was that the Copperbelt Development Foundation, previously a significant
minority shareholder of 44,3% of the Company`s shares, has now become the
Company`s majority shareholder, holding 71,5% of the issued shares.
At the Company`s EGM approving the share tender offer in September 2008,
shareholders also voted to approve the appointment of three new directors to
the Board of the Company, it having been considered both necessary and
desirable from a business as well as a corporate governance point of view, to
expand the capabilities of the board should a new business plan be
implemented.
I take this opportunity to welcome Professor Stephen Simukanga, Mr Edgar
Hamuwele and Mr M. M. (Thys) du Toit to the Board and confirm that all three
new board members have already made significant contributions to the Company
during a time of considerable change and activity, confirming that the
shareholders` faith in them is well placed.
Given that the Company was in the midst of its share tender process at the
expiry of the JSE`s six month deadline to resolve its cash shell status, the
JSE kindly agreed to grant an exceptional extension of this deadline and
therefore not to suspend the listing of the Company until 12 January 2009. In
order to meet this deadline, ZCI had two options open to it to retain its
JSE listing, namely to conclude a significant investment into an asset itself
capable of being listed, which would entitle ZCI to remain listed on the Main
Board of the JSE; or to apply for the relisting of the Company on the
Investment Entity Board of the JSE. Should the latter option be followed, a
circular to shareholders motivating the change of listing would need to have
been approved by the JSE and posted to shareholders by 12 January 2009.
Having considered the alternatives, the Board decided that as there was
little prospect of concluding a transaction suitable for continued Main Board
listing within three months (i.e. by 12 January 2009), the second option of
transferring the listing to the Investment Entity board was most appropriate
as
this aligned with the Company`s stated new business plan. The board was
however
mindful of the fact that the clear mandate given to it by the shareholders was
to pursue and implement the new business plan rather than to simply maintain
the listing. Accordingly and with the resources available to it, your board
proceeded to appoint its new investment adviser, iCapital (Mauritius) Limited
and commence with the sourcing and review of potential pipeline business,
while
at the same time and together with its advisers, started with the drafting of
a circular relating to the transfer of the listing to the Investment Entity
board of the JSE.
As events have shown, the Company was not able to meet the deadline to post a
relisting circular and ZCI`s shares have been suspended from trading since 12
January 2009 on both the JSE and the Euronext in Paris. ZCI has, however,
through its advisers, been in advanced discussions with the JSE regarding the
requirements for the transfer of the listing since the suspension date and
your board is confident at this stage that the listing can and will be
maintained. Since then, ZCI has recently successfully concluded negotiations
for the refinancing and acquisition of a substantial majority holding in the
AIM listed African Copper Plc. This transaction marks what is firmly believed
to be just the start of a successful new phase for ZCI as an investor in the
mining and metals sector of the southern African region.
ANNUAL GENERAL MEETING
Notice is hereby given that the annual general meeting of the shareholders of
the Company will be held at Hotel Novotel, 35 rue du Laboratoire, Luxembourg,
on Wednesday, 16 September 2009 at 14h00 CET to transact the business as
stated in the notice of annual general meeting, which is included in the
annual report.
Thomas Kamwendo
Chairman
Bermuda, 17 July 2009
Company Secretary
John Kleynhans
Registered office
Clarendon House, 2 Church Street, Hamilton, Bermuda
Transfer Secretaries
Computershare Investor Services 2004 (Pty) Limited, 70 Marshall Street,
Johannesburg, 2001 South Africa
Sponsor
Bridge Capital Advisors (Pty) Limited, 72 Fricker Road, Illovo Boulevard,
Illovo, 2196 South Africa
Auditors
KPMG Inc., KPMG Crescent, 85 Empire Road, Parktown, 2193, Private Page X9,
Parkview
Website: www.zci.lu
Date: 17/07/2009 16:33:04 Produced by the JSE SENS Department.
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