Zccm Inv.hds.b Regulatory News (ZCC)

SENS ANNOUNCEMENT

(the "Notice" or "Announcement")

ZCCM INVESTMENTS HOLDINGS PLC ("ZCCM-IH")

[Incorporated in the Republic of Zambia]

Company registration number: 771

Share Code: ZCCM-IH

ISIN: ZM0000000037

Authorised by: Chabby Chabala - Company Secretary

Stockbrokers Zambia Limited

[Founder Member of the Lusaka Securities Exchange]

[Regulated and licensed by the Securities and Exchange Commission of Zambia]

Contact Number: +260-211-232456

Website: www.sbz.com.zm

The captioned Notice or Announcement has been approved by:

i. the Lusaka Securities Exchange ("LuSE")

ii. the Securities and Exchange Commission ("SEC")

iii. Stockbrokers Zambia Limited ("SBZ")

The Notice or Announcement contained herein contains information that may be of a price sensitive nature.

ISSUED: 1 October 2020

ZCCM INVESTMENTS HOLDINGS PLC

[Incorporated in the Republic of Zambia]

Company registration number: 771

Share Code: ZCCM-IH

ISIN: ZM0000000037

["ZCCM-IH" or "the Company"]

DIRECTORS' UNAUDITED HALF YEAR FINANCIAL RESULTS FOR ZCCM INVESTMENTS

HOLDINGS PLC AND ITS SUBSIDIARIES (''THE GROUP'') FOR THE PERIOD ENDED 30TH JUNE 2020

INTRODUCTION

In compliance with the requirements of the Securities Act No. 21 of 2016 and the Listing Rules of the Lusaka Securities Exchange, ZCCM Investments Holdings Plc (ZCCM-IH) announces the interim unaudited financial results of the Company and its Subsidiaries (collectively referred to as the Group) for the six-month period ended 30th June 2020.

STRUCTURE OF THE ZCCM-IH GROUP

The ZCCM-IH Group consist of the following eight (8) companies:

The Company also has other interests in the undernoted companies:

FINANCIAL PERFORMANCE

ABRIDGED GROUP STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

ABRIDGED SEPARATE STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

ABRIDGED GROUP STATEMENT OF FINANCIAL POSITION FOR THE SIX MONTHS ENDED 30TH JUNE 2020

ABRIDGED SEPARATE STATEMENT OF FINANCIAL POSITION FOR THE SIX MONTHS ENDED 30TH JUNE 2020

ABRIDGED GROUP STATEMENT OF CASH FLOWS FOR THE SIX MONTHS ENDED 30TH JUNE 2020

ABRIDGED SEPARATE STATEMENT OF CASH FLOWS FOR THE SIX MONTHS ENDED 30TH JUNE 2020

ABRIDGED GROUP STATEMENT OF CHANGES IN EQUITY

ABRIDGED SEPERATE STATEMENT OF CHANGES IN EQUITY

1. FINANCIAL PERFORMANCE HIGHLIGHTS

The Group reported a profit for the period of ZMW438.9 million (September 2019: ZMW128 million), mainly due to the following:

· Increase in net finance income from ZMW138.7 million recorded in September 2019 to ZMW327.3 million recorded in June 2020. The increase in finance income is due to exchange gains recorded on foreign denominated assets arising from the depreciation of the Zambian Kwacha from an average of ZMW13.9 per US Dollar as at 30 September 2019 to ZMW17.2 per US Dollar as at 30 June 2020.

· Increase in the Group's share of profit in associate companies from ZMW154.8 million recorded in September 2019 to ZMW 354.7 million in June 2020. This is mainly due to the increase in the profitability of some investee companies in the mining sector such as Maamba Collieries Limited and Kansanshi Mining Plc.

Group total assets increased by 40% to ZMW 20,262 million in June 2020 from ZMW14, 519 million in September 2019. This is mainly attributed to increase in values of investments in associates as a result of improved performance of Kansanshi Mining Plc, Maamba Collieries Limited and exchange gains arising from translation of US Dollar denominated investments.

2. KEY OPERATIONS AND STRATEGIC DEVELOPMENTS

Zambia Gold Company

During the period, Zambia Gold Company Limited ("ZGCL"), 51% owned by ZCCM-IH and 49% owned by Ministry of Finance, was granted Small-Scale Mining in the Mwinilunga District. Exploration and mining works are underway. This is in line with its countrywide mandate to manage the programmes and the activities of the gold sector throughout the entire value chain.

ZGCL also continued gold trading during the period with gold purchases extended to the Rufunsa District. Further, ZGCL has been working with artisanal miners in the forming and operationalization of gold artisanal mining cooperatives in various districts.

Ndola Lime Company Ltd Restructuring

The restructuring of Ndola Lime Company Limited ("NLC") commenced. The restructuring was done through a hybrid of Out of Court Settlement and formal insolvency procedures. In this regard, it was decided that a Scheme of Arrangement ("the Scheme") and reconstruction of creditors be undertaken.

The objective of the Scheme was to create a new company that was free from liabilities and able to operate more efficiently. Therefore, the new company was incorporated and is known as Limestone Resources Limited ("LRL"). Furthermore, the restructuring involved the transfer of the business and assets of NLC to LRL and the consequent issue of equity shares by LRL to the shareholders of NLC.

Maamba Collieries Limited

On 25 March 2019, ZCCM Investments Holdings Plc provided short-term liquidity support amounting to $10 million to Maamba Collieries Limited (MCL) on condition that the amount was payable within 60 days from disbursement, following the receipt of power sale proceeds from ZESCO.

However, despite the agreed conditions, MCL has still not repaid the advanced sum and as a result of this, ZCCM Investments Holdings Plc instituted legal proceedings against MCL (during the period under review) in the Lusaka High Court seeking the payment of the US$10 million plus damages and interest. 

Industrial Development Corporation Ltd Group (IDC) Reorganization Transaction

During the period, the Board of ZCCM-IH considered and approved the proposed IDC/ZCCM-IH Group reorganization exercise whereby:

i) IDC transfers its 25% equity stake in Kagem Mining Limited, at fair market value, to ZCCM IH;

ii) ZCCM-IH transfers its 71.4% equity stake in Investrust Bank PLC, at fair market value to IDC; and

iii) ZCCM-IH transfers its 100% stake in Mushe Milling Limited to IDC at fair market value. These 3 corporate actions listed above will be undertaken simultaneously as a corporate group reorganization exercise involving IDC and ZCCM-IH and constitute the proposed Group Portfolio Rationalization and Reorganization (or the "Group Reorganization ").

The Group reorganization objective is to achieve optimisation of operations and unlock opportunities for synergy within the IDC /ZCCM-IH Group. The Proposed Group Reorganization will enhance and improve operational efficiency and performance of ZCCM-IH, by realigning and streamlining management oversight on its investments portfolio to support and sustain Company growth and unlock value for its shareholders going forward.

The proposed Group Reorganization is subject to approval by shareholders of ZCCM-IH via a general meeting and the statutory regulatory authorities. The Group Reorganisation is expected to be finalized by 31 December 2020.

CEC Africa Investments Limited

Subsequent to the period under review, ZCCM-IH disposed of its 20% shareholding in CEC Africa Investments Limited. Proceeds from the disposal shall be applied on other opportunities in the mining and other mining related sectors of the domestic economy.

3. OUTLOOK

Copper prices are expected to increase steadily on the back of solid recovery in demand from China, the largest Copper consumer. In addition, low copper inventories in exchange warehouses, disrupted ore supplies from the top producing region in South America due to the COVID-19 pandemic and US Dollar strengthening are contributing to the bullish outlook for Copper.

By Order of the Board

Chabby Chabala

Company Secretary

Issued in Lusaka, Zambia on Thursday 1st October 2020

Issued 1 October 2020

APPENDICES