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Zambia Copper Investments Limited - Interim Results
INTERIM RESULTS
Zambia Copper Investments Limited
(Incorporated in Bermuda)
Registration no. EC 1626
Share code: ZCI
ISIN : BMG988431240
("ZCI" or "the Company")
Consolidated statement of earnings
for the six months ended June 30, 2003
Audited
Unaudited Year
Six months ended
ended June 30 December 31
2003 2002 2002
US$"000 US$"000 US$"000
Turnover 177,569 207,658 394,096
Cost of sales (157,004) (167,867) (344,463)
Gross profit/(loss) 20,565 39,791 49,633
Other operating expenses (34,357) (35,511) (68,986)
Depreciation (8,186) (15,889) (30,272)
Impairment of tangible fixed - (240,369) (240,369)
assets
Loss from operations (21,978) (251,978) (289,994)
Other income 647 604 4,696
Interest income 7 - 17
Interest expense (596) (14,636) (9,516)
Commitment fees on loan - (102) (102)
facility
General and administration (135) (605) (784)
expenses
Impairment of goodwill - (8,265) (66,066)
Contributions to finance - - 16,876
restructuring
Restructuring costs - - (4,687)
Loss before taxation (22,055) (274,982) (349,560)
Taxation (139) (8) (193)
Loss after taxation (22,194) (274,990) (349,753)
Loss attributable to 9,256 - -
minority interest
Net loss (12,938) (274,990) (349,753)
per ordinary share in US
cents
Headline loss before
exceptional item
and amortisation of goodwill (10.25) (21.50) (44.90)
Exceptional income
Contributions to finance - - 13.65
restructuring
Exceptional expenses
Impairment of tangible - (196.13) (194.46)
fixed assets
Impairment of goodwill - (6.74) (53.44)
Restructuring costs - - (3.79)
Net loss (10.25) (224.37) (282.94)
Consolidated statement of changes to equity
for the six months ended June 30, 2003
Share Contributed Accumulated
capital surplus deficit Total
US$"000 US$"000 US$"000 US$"000
Balance at December 29,426 17,355 (107,762) (60,981)
31, 2001
Shares issued (note 873 - - 873
21)
Contributed on - 461,153 - 461,153
restructuring (note
21)
Loss for the year - - (349,753) (349,753)
Balance at December 30,299 478,508 (457,515) 51,292
31, 2002
Loss for the period - - (12,938) (12,938)
Balance at June 30, 30,299 478,508 (470,453) 38,354
2003
Consolidated statement of cash flow
for the six months ended June 30, 2003
Audited
Unaudited Year
Six months ended
ended June 30 December 31
2003 2002 2002
US$"000 US$"000 US$"000
Cash flow from operating
activities
Cash received from customers 180,188 212,933 398,559
Cash paid to suppliers and (188,358) (186,539) (378,425)
employees
Cash (absorbed)/generated by (8,170) 26,394 20,134
operations
Interest received 7 - -
Interest paid (692) (933) (1,343)
Income tax paid (170) - (80)
Net cash (9,025) 25,461 18,711
(absorbed)/generated by
operating activities
Cash flow from investing
activities
Proceeds from disposal of 3 - 334
tangible fixed assets
Capital expenditure (20,282) (34,654) (58,277)
Cash absorbed by investing (20,279) (34,654) (57,943)
activities
Cash flow from financing
activities
Proceeds from external - 95,000 -
borrowings
Advances by minority - 2,813 -
shareholders in KCM
Shareholders long-term loans - - 97,813
received
Other loans received - - 35,000
Contributions received to - - 33,637
finance restructuring
Short-term loans repaid - (60,000) (60,000)
Cash generated by financing - 37,813 106,450
activities
Net increase/(decrease) in (29,304) 28,620 67,218
cash
Net cash/(debt) at the 33,302 (33,916) (33,916)
beginning of the year
Net cash/(debt) at the end 3,998 (5,296) 33,302
of the year
Cash deposits and cash at 17,803 8,580 39,126
bank
Short-term loans and bank (13,805) (13,876) (5,824)
overdraft - unsecured
Net cash/(debt) at the end 3,998 (5,296) 33,302
of the year
Consolidated statement of financial position
as at June 30, 2003
Audited
Unaudited Year
Six months ended
ended June 30 December 31
2003 2002 2002
US$"000 US$"000 US$"000
Fixed assets
Tangible fixed assets 111,131 39,343 100,195
111,131 39,343 100,195
Investments and advances - 54,142 -
111,131 93,485 100,195
Current assets
Stocks 75,891 95,990 88,308
Accounts receivable 43,033 51,355 46,658
Cash and short-term 17,803 8,702 39,126
investments
136,727 156,047 174,092
Current liabilities
Short-term loans and bank (13,805) (13,877) (5,824)
overdrafts
Accounts payable and (42,684) (51,976) (53,171)
accrued liabilities
(56,489) (65,853) (58,995)
Net current assets 80,238 90,194 115,097
Total assets less current 191,369 183,679 215,292
liabilities
Long-term liabilities
Long-term loans (35,093) (380,105) (35,033)
Provisions (90,843) (77,632) (92,632)
Deferred purchase - (61,913) -
consideration
Minority interest (27,079) - (36,335)
Net assets/(liabilities) 38,354 (335,971) 51,292
Capital and reserves
Capital 508,807 46,781 508,807
Accumulated deficit (470,453) (382,752) (457,515)
38,354 (335,971) 51,292
Number of ordinary shares 126,197,362 122,559,900 126,197,362
in issue
Net asset value (per 30.39 (274.13) 40.64
ordinary share) in USD
cents
The financial statements were prepared in accordance with International
Financial Reporting Standards and in terms of the same accounting policies
applied during the previous financial period.
Chairman"s statement
The six-month period to June 30, 2003 was characterised by the focus on
consolidation after the restructuring process. The Company was able to build
positively upon the foundations laid during the restructuring and is looking
forward to further progress during the next period.
Despite progress on many fronts, the Company incurred a consolidated net loss of
US$12.9 million. This was mainly due to continued depressed metal prices
throughout the period and restructuring costs at our subsidiary, Konkola Copper
Mines plc (KCM). Production of copper at KCM was 92,477 tonnes. In spite of this
creditable performance in production, market conditions continue to be difficult
as the average price of copper was US cents 75.1 per pound (2002: US cents 71.5
per pound). Cobalt sales for the period were 726 tonnes at a realized price of
$7.72 per pound. Although there was a gradual improvement in copper and cobalt
prices over the period, the outlook for copper prices and demand for the next
period remains stable, although at relatively low levels. Operating expenses
remain high, while the refurbishment programme continues to realise improvements
in production levels and safety standards. Most significant is the Nkana smelter
modernization project scheduled for completion in September which will reduce
production costs by approximately U.S. 3c/lb of copper. The other is the Nchanga
Tailings Leach Plant CCD circuit that will commence operation in November and
increase leach copper recovery by 7%.
Since the withdrawal of Anglo American during September 2002, management has
been actively involved in the development of a new business plan and has sought
appropriate means to introduce additional finance to meet the capital
requirements of KCM. As previously recorded in the Company"s Annual Report, KCM
is in the process of seeking a strategic equity partner to provide further
technical assistance and financial support in the longer term.
The review process of potential strategic equity partners has been completed
and, of the 8 companies who met all of the initial participation criteria, the
shareholders of KCM have, after extensive consideration, selected Sterlite
Industries Limited as the bidder most likely to meet the ongoing needs and
requirements of KCM. As has been previously announced, Sterlite Industries
Limited has now been awarded preferred bidder status. At present,
representatives of the Government of the Republic of Zambia, ZCI, the Board of
KCM, and ZCCM Investments Holdings plc, are involved in negotiations with
Sterlite Industries Limited on the terms of the proposed investment. Further
announcements regarding any further developments in the process will be
published as they occur.
It is believed that the measures that have been put in place in the initial
period after the restructuring of the ZCI Group have begun to realise positive
results in the short term and are expected to remain a realistic platform from
which the business can be developed.
The directors of ZCI wish to record their appreciation of the efforts made by
all employees of KCM during the period, which has been a time of great change
and uncertainty for the Company, but which promises to be the foundation for
renewed stability, development and progress for the years ahead.
B Ireton
Chairman
Bermuda
September 16, 2003
Sponsor
RMBCorporate Finance
Registered Office: Clarendon House, 2 Church Street, Hamilton, Bermuda
Website: www.zci.lu
Date: 30/09/2003 08:30:10 AM Supplied by www.sharenet.co.za
Produced by the JSE SENS Department
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