| Wed 24 Jan 2007, 14:16 | | ZCI - Zambia Copper Investments Limited - Reviewed |
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ZCI
ZAKK
ZCI - Zambia Copper Investments Limited - Reviewed Interim Report
ZAMBIA COPPER INVESTMENTS LIMITED
(Registered in Bermuda)
JSE code: ZCI
ISIN: BMG988431240
("ZCI")
REVIEWED INTERIM REPORT
Consolidated statement of earnings for the six months ended September 30, 2006
expressed in thousands of US Dollars
Reviewed Audited Unaudited
Six months Fifteen months Six months
ended ended ended
September 30, 2006 March 31, 2006 September 30, 2005
Turnover - - -
Cost of sales - - -
Gross profit - - -
Finance income 359 2,248 893
General and administration
expenses (239) (1,359) (430)
Income from associated
companies 44,869 37,640 6,178
Profit before taxation 44,989 38,529 6,641
Taxation (30) (76) (29)
Net profit 44,959 38,453 6,612
Per ordinary share in US cents
Headline earnings before
exceptional items 35.63 30.47 5.24
Exceptional expenses - - -
Earnings per share 35.63 30.47 5.24
Number of ordinary shares
in issue 126,197,362 126,197,362 126,197,362
Consolidated statement of financial position at September 30, 2006
expressed in thousands of US Dollars
Reviewed Audited
September 30, 2006 March 31, 2006
Non-current assets
Long-term accounts receivable 9,797 9,477
Investment in associated companies 134,359 84,502
144,156 93,979
Current assets
Available for sale investment 4,799 2,842
Accounts receivable 5,245 5,296
Cash and cash equivalents 1,713 4,066
11,757 12,204
Current liabilities
Accounts payable and accrued liabilities (86) (260)
(86) (260)
Net current assets 11,671 11,944
Total assets less current liabilities 155,827 105,923
Net assets 155,827 105,923
Capital and reserves
Capital 334,547 334,547
Revaluation reserve (1) 42
Deficit on hedging reserve (9,432) (14,420)
Accumulated deficit (169,287) (214,246)
155,827 105,923
Number of ordinary shares in issue 126,197,362 126,197,362
Net asset value per ordinary share
(US cents) 123.48 83.93
Consolidated statement of cash flow for the six months ended September 30, 2006
expressed in thousands of US Dollars
Reviewed Audited Unaudited
Six months Fifteen months Six months
ended ended ended
September 30, 2006 March 31, 2006 September 30, 2005
Cash flow from operating
activities
Cash received from customers - - -
Cash paid to suppliers
and employees (400) (1,480) (375)
Cash utilised by operations (400) (1,480) (375)
Interest received 77 96 11
Interest paid - - -
Income tax paid (30) (30) (29)
Net cash utilised by
operating activities (353) (1,474) (393)
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 -
Purchase of tangible
fixed assets - - -
Cash absorbed by investing
activities (2,000) (2,420) -
Cash flow from financing
activities
Lease financing paid - - -
Cash absorbed by financing
activities - - -
Net (decrease)/increase in cash (2,353) 946 (393)
Net cash at beginning of period 4,066 3,120 2,777
Net cash at end of period 1,713 4,066 2,384
Cash deposits and cash at bank 1,713 4,066 2,384
Short-term loans and
bank overdraft
- unsecured - - -
Net cash at end of period 1,713 4,066 2,384
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
March 31, 2005 30,299 304,248 (247,216)
Profit for period - - 6,612
Balance at
September 30, 2005 30,299 304,248 (240,604)
Revaluation on available
for sale investment - - -
Hedging reserve
of associated company - - -
Profit for period - - 26,358
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 - - 44,959
Balance at
September 30, 2006 30,299 304,248 (169,287)
Revaluation Hedging
reserve reserves Total
Balance at
March 31, 2005 - - 87,331
Profit for period - - 6,612
Balance at
September 30, 2005 - - 93,943
Revaluation on available
for sale investment 42 - 42
Hedging reserve
of associated company - (14,420) (14,420)
Profit for period - - 26,358
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 - - 44,959
Balance at
September 30, 2006 (1) (9,432) 155,827
Notes to the interim financial statements for the six months ended September 30,
2006
expressed in thousands of US Dollars
1. 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 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 September 30, 2006 and the
related consolidated statements of income, cash flow, and change to
shareholders` equity for the period then ended, have been reviewed by KMPG Audit
S.a.r.l. Luxembourg, in accordance with the International Standard on Review
Engagements (ISRE) 2400, applicable to review engagements, and their review
report is available for inspection at the registered office of the Company.
These consolidated interim financial statements are the responsibility of the
Board of Directors.
2. ASSOCIATED COMPANIES
The Group reduced its shareholding in Konkola Copper Mines Plc, from 58.0% to
28.4% in 2004. The financial information on this associated company was subject
to a review by an external auditor at September 30, 2006. The review report is
available for inspection at the registered office of the Company.
2006 2005
Value at April 1 84,502 66,478
Share of associated companies` profit 44,869 6,178
Share of equity movements 4,988 -
Value at September 30 134,359 72,656
3. LONG-TERM ACCOUNTS RECEIVABLE
Resulting from the Vedanta transaction the Company will receive consideration of
US$23,200,000 for a waiver of their pre-emptive subscription rights to KCM
shares. This amount is receivable over a period from November 4, 2004 to
December 31, 2008. The deferred consideration is recorded at its discounted net
present value.
4. AVAILABLE FOR SALE INVESTMENT
The investment represents investments in an equity mutual fund. The fair value
for available for sale investments is based on dealer price quotations. The
Group has not designated any financial assets that are classified as held for
trading as financial assets at fair value through profit and loss.
Chairman`s statement
I am pleased to present the Company`s reviewed interim financial statements for
the six months ended September 30, 2006. It will be noted that these results
reflect a net profit figure of US$44,9 million, which compares favourably to the
US$38,5 million published for the fifteen-month period ended March 31, 2006.
ZCI`s investment in Konkola Copper Mines ("KCM") remains profitable. The
positive effect of high copper prices continues to be felt, but the Directors`
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 US$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 proved 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 keep 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
Bank. As before, shareholders are reminded to exercise caution when dealing in
ZCI`s securities until detailed announcements are made.
Thomas Kamwendo Bermuda
Chairman 24 January 2007
Registered Office: Clarendon House 2, Church Street, Hamilton, Bermuda
Website: www.zci.lu
Date: 24/01/2007 14:16:01 Produced by the JSE SENS Department.
