| Fri 30 Jun 2006, 17:54 | | ZCI - Unaudited Consolidated Financial Results and |
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ZCI
ZAKK
ZCI - Unaudited Consolidated Financial Results and Further Cautionary
Announcement
Zambia Copper Investments Limited
(Registered in Bermuda)
("ZCI" or "the Company")
JSE code: ZCI
ISIN: BMG988431240
Unaudited Consolidated Financial Results and Further Cautionary Announcement
CONSOLIDATED INCOME STATEMENT
for the period 1 January 2005 to 31 March 2006
expressed in thousands of US Dollars
1 January 2005 Year ended
to 31 March 31 December
2006 2004
Turnover - 440,649
Cost of sales - (300,638)
Gross Profit - 140,011
Other operating expenses - (62,020)
Depreciation - (12,412)
Profit from operations - 65,579
Other income - 2,485
Interest income 133 30
Interest expense - (1,331)
General and administration expenses (1,359) (1,090)
Income on sale of investment in subsidiary
company - (19)
Income from affiliated company 37,640 25,093
Exceptional item - (9,763)
Profit before taxation 36,414 80,984
Taxation (76) (85)
Profit after taxation 36,338 80,899
Profit attributable to minority interest - (23,510)
Net Profit 36,338 57,389
Per ordinary share in US cents
Headline earnings before exceptional items 28.79 53.21
Exceptional items - (7.73)
Earnings per share 28.79 45.48
Number of ordinary shares in issue 126,197,362 126,197,362
CONSOLIDATED BALANCE SHEET
as at 31 March 2006
expressed in thousands of US Dollars
1 January 2005 Year ended
to 31 March 31 December
2006 2004
Non-Current Assets
Long term accounts receivable 10,440 15,660
Investment in associate 84,502 61,282
Available for sale investment 2,842 -
97,784 76,942
Current assets
Accounts receivable 5,296 5,220
Cash and short-term investments 4,066 3,120
9,362 8,340
Current liabilities
Accounts payable and accrued liabilities (260) (356)
Net current assets 9,102 7,984
Total assets less current liabilities 106,886 84,926
Net assets 106,886 84,926
Capital and reserves
Capital 334,547 508,807
Revaluation reserves 42 -
Hedging reserves (14,420) -
Accumulated deficit (213,283) (249,621)
Shareholders" equity 106,886 84,926
CONSOLIDATED STATEMENT OF CHANGES TO EQUITY
for the period 1 January 2005 to 31 March 2006
expressed in thousands of US Dollars
Share Contributed Accumulated
capital surplus deficit
Balance at 31 December 2003
as restated 30,299 478,508 (481,270)
Reversal of net loss on cashflow
hedges
transferred to income statement - - -
Reversal of Minority interest on
cash flow hedges - - -
Reversal of revaluation on
Equity fund investment - - -
Change in scope of consolidation - (174,260) 174,260
Profit for the year - - 57,389
Balance at 31 December 2004 30,299 304,248 (249,621)
Revaluation on Equity fund
investment - - -
Hedging reserve of associated
company - - -
Profit for the period - - 36,338
Balance at 31 March 2006 30,299 304,248 (213,283)
Revaluation Hedging
reserve reserves Total
Balance at 31 December 2003
as restated 1,220 (1,734) 27,023
Reversal of net loss on cashflow
hedges
transferred to income statement - 2,989 2,989
Reversal of Minority interest on
cash flow hedges - (1,255) (1,255)
Reversal of revaluation on
Equity fund investment (1,220) - (1,220)
Change in scope of consolidation - - -
Profit for the year - - 57,389
Balance at 31 December 2004 - - 84,926
Revaluation on Equity fund investment 42 - 42
Hedging reserve of associated company - (14,420) (14,420)
Profit for the period - - 36,338
Balance at 31 March 2006 42 (14,420) 106,886
CONSOLIDATED STATEMENT OF CASH FLOWS
for the period 1 January 2005 to 31 March 2006
expressed in thousands of US Dollars
1 January 2005 Year ended
to 31 March 31 December
2006 2004
Cash flow from operating activities
Cash received from customers - 425,201
Cash paid to suppliers and employees (1,480) (325,967)
Cash (absorbed) / generated by operations (1,480) 99,234
Interest received 96 30
Interest paid - (1,020)
Income tax paid (90) (121)
Net cash generated / (absorbed) by operating
activities (1,474) 98,123
Cash flow from investing activities
Purchase of available for sale investments (2,800) -
Proceeds from disposal of short term
investment - 981
Proceeds from partial disposal of investment
in subsidiary 5,220 2,320
Purchase of tangible fixed assets - (46,060)
Cash generated / (absorbed) by investing
activities 2,420 (42,759)
Cash flow from financing activities
Lease financing paid - (3,526)
Cash absorbed by financing activities - (3,256)
Change in scope of consolidation - (26,326)
Net increase in cash 946 25,512
Net cash / (debt) at the beginning of the
period / year 3,120 (22,392)
Net cash at the end of the period / year 4,066 3,120
Cash deposits and cash at bank 4,066 3,120
Net cash at the end of the period /year 4,066 3,120
CHAIRMAN"S REPORT
I am pleased to present the Company"s unaudited annual financial statements for
the fifteen months ended 31 March 2006. The Company"s audit is nearing
finalisation and will be completed shortly once the Company receives the
signed audited financial statements of Konkola Copper Mines plc ("KCM"). It
will be noted that these results reflect a satisfactory consolidated net profit
figure of USD 36.3 million, which compares favourably to the USD 13,6 million
published for the period ended 31 December 2005.
Shareholders will recall that, with effect from the date of the acquisition by
Vedanta Resources plc ("Vedanta") of 51% of KCM on which date KCM"s accounting
status in ZCI"s books changed from Subsidiary to Associated Company, the book
cost of the Company"s investment in KCM was USD36.2 million. This is the cost
brought forward as at 1 January 2005 as the cost of ZCI"s investment in its
Associate. In the present financial statements, this cost has been increased
by the Company"s share in the income of KCM, of which ZCI"s share amounts to
USD 37.6 million. The Directors are of the opinion that the present results
correctly reflect the Company"s 28.4% share in the income of KCM.
The results indicate that while KCM and by extension, the Company, have
benefited from the consistently high price of copper over the past 10 months,
the Directors are of the view that disappointingly low production levels at KCM
have resulted in KCM not having been able to maximise its profitability further
by taking advantage of the currently favourable copper market.
The period commenced with the sad passing of the previous Chairman, Jean-Pierre
Rozan. This unfortunate event necessitated certain changes to the Company"s
board and in January 2006, Michel Clerc, Chairman of AMZCI, the association of
minority shareholders in France, was elected to the Board. In February 2006,
I was elected to assume the position of Chairman of the Company.
The most significant issue that has occupied the attention of the Board as well
as those of our shareholders over the past ten months and beyond, is the
continuing negotiation with Vedanta resulting from the exercise by Vedanta of
its call option in terms of the Vedanta Call Option Deed ("the Deed") over the
remaining 28.4% of KCM shares held by ZCI through its wholly owned subsidiary,
ZCI Holdings S.A. In August 2005, Vedanta gave notice that it intended to
exercise its call option and since that date, the Board of ZCI has attempted to
finalise the terms of reference to be submitted to the Independent Bank ("the
Bank") for the purposes of settling the letter of engagement and enabling the
Bank to progress with the valuation.
The Board is extremely conscious of the fact that this process could be the
most significant event in the history of the Company and is making every effort
to ensure that the interests of the Company and its shareholders are protected.
It is evident from the length of the negotiations to date, that the ultimate
outcome of the call option process is substantial for both parties and your
Board is mindful of the fact that continued vigilance will be necessary to
ensure that the Company"s rights and interests are not undermined. The
Directors believe that the appointment of the Bank is likely to be finalised
shortly and that the remaining few issues remain to be resolved between Vedanta
and the Bank directly, after which further announcements will be made. At that
stage, shareholders will be advised of the approximate timing of the valuation
and the expected duration of the entire process to its ultimate conclusion.
Shareholders are reminded that in the event that Vedanta is unwilling to pay
the option exercise price as determined by the Bank, it shall not be required
to proceed with the associated purchase of ZCI"s KCM shares. In terms of the
provisions of the Deed, ZCI shall be bound to accept the valuation made by the
Bank. As before, shareholders are advised to continue to exercise caution when
dealing in ZCI"s securities until detailed announcements are made.
ACCOUNTING POLICIES
As shareholders are aware, the Company"s financial year-end has been changed
from 31 December to 31 March in order to bring the Company in line with the
financial reporting period of KCM and primarily with the object of avoiding
previous delays associated with timeous production of financial results. As a
result, the comparative amounts for the income statement, statement of changes
to equity, cash flows, and related notes are not comparable. The principal
accounting policies applied in the preparation of these financial statements
for the fifteen months ended 31 March 2006 are in accordance with International
Financial Reporting Standards.
The consolidated balance sheet of Zambia Copper Investments Limited and its
subsidiaries (the "Group") for the fifteen-month period ended 31 March 2006 and
the related consolidated statements of income, cash flow and changes in
shareholders" equity for the period then ended, are in the process of being
audited by KPMG Audit S.a.r.l., Luxembourg. These consolidated financial
statements are the responsibility of the Board of Directors. The Group reduced
its shareholding in KCM. from 58% to 28.4% in 2004. While the financial
information on this associated company has been subject to audit by an external
auditor as at 31 March 2006, the signed audit report of this associated company
(KCM) has not been received by the Company. As the investment in KCM represents
the main asset of the Group and due to the significance of the matters described
above, KPMG are not in a position to form an opinion at this stage. The audit is
expected to be completed shortly. The audit report will be available for
inspection at the registered office of ZCI once the audit is completed.
ANNUAL GENERAL MEETING
Notice is hereby given that the annual general meeting of the Company will be
held at the offices of Maitland Luxembourg S.A., 6 Rue Adolphe Fischer,
Luxembourg, on Wednesday 9 August 2006 at 11h00, to transact the business as
stated in the notice of annual general meeting included in the annual report.
Thomas Kamwendo
Chairman
Bermuda, 30 June 2006
Registered office
Clarendon House, 2 Church Street, Hamilton, Bermuda
Transfer Secretaries
Computershare Investor Services 2004 (Pty) Limited, 70 Marshall Street,
Johannesburg, 2001
Website: www.zci.lu
Date: 30/06/2006 05:54:50 PM Produced by the JSE SENS Department
