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ZCI
ZAKK
ZCI - ZCI - Unaudited Interim Report
Zambia Copper Investments Limited
Registration number (1970/000023/01)
(Registered in Bermuda)
JSE code: ZCI
ISIN: BMG988431240
("ZCI" or "the company")
UNAUDITED INTERIM REPORT
CONSOLIDATED STATEMENT OF EARNINGS
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2006
expressed in thousands of US Dollars
Unaudited Reviewed Audited
Six months Twelve months Fifteen months
ended ended ended
September 30, December 31, March 31,
2006 2005 2006
Turnover - - -
Cost of sales - - -
Gross Profit - - -
- - -
Other operating expenses
Depreciation - - -
Profit from operations - - -
Other income / (loss) - - -
Finance income / (loss) 39 78 2,248
Interest expense - (2) -
General and
administration
expenses (239) (978) (1,359)
Income from associated
companies 44,869 14,545 37,640
Profit before taxation 44,629 13,643 38,529
Taxation (30) (60) (76)
Net Profit 44,639 13,583 38,453
per ordinary share in US cents
Headline earnings before
exceptional item
and amortisation of goodwill 35.37 10.76 30.47
Exceptional expenses - - -
Earnings per share (EPS) 35.37 10.76 30.47
Number of ordinary shares in
issue 126,197,362 126,197,362 126,197,362
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT SEPTEMBER 30, 2006
expressed in thousands of US Dollars
Unaudited Reviewed Audited
Six months Twelve months Fifteen months
ended ended ended
September 30, December 31, March 31,
2006 2005 2006
Fixed assets
Tangible fixed assets - - -
Long term accounts
receivable 9,477 10,440 9,477
Investment in associated
companies 134,359 75,828 84,502
Current assets
Available for sale
investment 4,799 - 2,842
Accounts receivable 5,245 5,237 5,296
Cash and short-term
investments 1,713 7,344 4,066
11,757 12,581 12,204
Current liabilities
Accounts payable and
accrued
liabilities (86) (340) (260)
(86) (340) (260)
Net current assets 11,671 12,241 11,944
Total assets less current
liabilities 155,507 98,509 105,923
Long term liabilities
Long term loans - - -
Provisions - - -
Net assets 155,507 98,509 105,923
Capital and reserves
Capital 334,547 334,547 334,547
Revaluation reserve (1) - 42
Deficit on hedging
reserve (9,432) - (14,420)
Accumulated deficit (169,607) (236,038) (214,246)
155,507 98,509 105,923
Number of ordinary
shares in issue 126,197,362 126,197,362 126,197,362
Net asset value (per
ordinary share)
in USD cents 123.23 78.06 83.93
CONSOLIDATED STATEMENT OF CHANGES TO EQUITY
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2006
expressed in thousands of US Dollars
Share Contributed Accumulated
capital surplus deficit
Balance at December 31, 2004
(restated) 30,299 304,248 (252,699)
Revaluation on available for sale
investment - - -
Hedging reserve of associated
company - - -
Profit for the period - - 38,453
Balance at March 31, 2006 30,299 304,248 (214,246)
Revaluation on available for sale
investment - - -
Hedging reserve of associated
company - - -
Profit for the period - - (44,639)
Balance at September 30, 2006 30,299 304,248 (169,607)
Revaluation Hedging
reserve reserves Total
Balance at December 31, 2004
(restated) - - 81,848
Revaluation on available for sale
investment 42 - 42
Hedging reserve of associated company - (14,420) (14,420)
Profit for the period - - 38,453
Balance at March 31, 2006 42 (14,420) 105,923
Revaluation on available for sale
investment (43) - (43)
Hedging reserve of associated company - 4,988 4,988
Profit for the period - - (44,639)
Balance at September 30, 2006 (1) (9,432) 155,507
CONSOLIDATED STATEMENT OF CASH FLOW
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2006
expressed in thousands of US Dollars
Unaudited Reviewed Audited
Six months Twelve months Fifteen months
ended ended ended
September 30, December 31, March 31,
2006 2005 2006
Cash flow from operating
activities
Cash received from customers - - -
Cash paid to suppliers
and employees (401) (995) (1,480)
Cash generated /
(utilized) by operations (401) (995) (1,480)
Interest received 77 61 96
Interest paid - (2) -
Income tax paid (29) (60) (90)
Net cash generated /
(utilized) by operating
activities (353) (996) (1,474)
Cash flow from investing
activities
Purchase of available
for sale investments (2,000) - (2,800)
Proceeds from partial
disposal of investment
in subsidiary - 5,220 5,220
Purchase of tangible
fixed assets - - -
Cash absorbed by
investing activities (2,000) 5,220 (2,420)
Cash flow from financing
activities
Lease financing paid - - -
Cash absorbed by
financing activities - - -
Change in scope of
consolidation - - -
Net (decrease) /
increase in cash (2,353) 4,224 946
Net cash at the
beginning of the period 4,066 3,120 3,120
Net cash at the end of
the period 1,713 7,344 4,066
Cash deposits and cash
at bank 1,713 7,344 4,066
Short term loans and bank
overdraft - unsecured - - -
Net cash at the end of
the period 1,713 7,344 4,066
ACCOUNTING POLICIES
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. Following the change in majority
ownership of Konkola Copper Mines Plc ("KCM") with effect from 31 October 2004,
the results of KCM are included according to the equity accounting method for
associated companies.
The consolidated balance sheet of Zambia Copper Investments Limited and its
subsidiaries (the "Group") for the period ended 30 September 2006 and the
related consolidated statements of income, cash flow and changes in
shareholders` equity for the period then ended, are unaudited.
These consolidated interim financial statements are the responsibility of the
Board of Directors. The Group reduced its shareholding in KCM from 58% to 28.4%
in 2004. The financial information on this associated company was subject to a
review by an external auditor as at 30 September 2006. This review report on KCM
is available for inspection at the registered office of the Company.
CHAIRMAN`S STATEMENT
I am pleased to present the Company`s unaudited interim financial statements
for the six months ended 30 September 2006. These results, once reviewed by the
Company`s auditors, will be published and posted to shareholders during January
2007. It will be noted that these results reflect a net profit figure of USD
44,6 million, which compares favourably to the USD 38,5 million published for
the fifteen-month period ended 31 March 2006. ZCI`s investment in Konkola
Copper Mines ("KCM") remains profitable. The positive effect of high copper
prices continues to be felt, but the Director`s concerns relating to low
production levels at KCM remain largely unresolved
On a more positive note, I am delighted to announce that at the end of November
2006 and after the close of the financial period under review, ZCI received its
first dividend payment in many years from KCM.
The amount of USD 1,6 million received by the Company, may be lower than the
Board and shareholders would have hoped, but it is an extremely encouraging
sign of the effects of current copper price levels on the profitability of KCM
and by extension, ZCI.
As shareholders will have noted from the regular announcements posted by ZCI on
the stock exchanges and on the Company`s website, negotiations with Vedanta
Resources plc ("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., continue to be the Company`s primary focus. Although these
negotiations have proven to be extremely time consuming, progress has been made
and agreement had been reached on the terms of engagement of the independent
bank that will undertake the valuation. However, as was announced in October
2006, a material dispute has arisen between ZCI and Vedanta relating to the
interpretation of the Deed and the appointment of the independent investment
bank cannot be finalised and the valuation process cannot progress until the
dispute is resolved. As a last resort, ZCI issued a notice of arbitration to
Vedanta.
In terms of the confidentiality provisions of the Deed, the Company is
regrettably unable to release detailed information relating to the subject
matter of the arbitration or the arbitration proceedings, but the Board is
satisfied that the current proceedings are crucial to protect the interests of
ZCI and its shareholders. Preparations for the arbitration proceedings are
continuing and the parties have agreed on the appointment of the arbitrator.
It is expected that the arbitration will be heard in mid-2007. Once the ruling
is received, the independent bank`s terms of engagement will be finalized and
It will be able to undertake its valuation. The Company will continue to keeps
its shareholders informed of the progress of these proceedings insofar as it is
able to do so without falling foul of its confidentiality obligations.
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
independent bank. As before, shareholders are reminded to exercise caution when
dealing in ZCI`s securities until detailed announcements are made.
Thomas Kamwendo
Chairman
Bermuda
29 December 2006
Date: 29/12/2006 11:45:08 Produced by the JSE SENS Department.
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