Zambia Consolidated Copper Mines Investment Holdings-ZCCM IH share earnings are forecast to rise 34 percent higher than the six months ending 31 March last year as total number of shares in issue almost doubled.
Stockbrokers Zambia, the agents for multi listed holding mining company, in a cautionary notice to shareholders and issued on behalf of the ZCCM IH board of directors, envisages the earnings per share to be 34 percent higher than that the price pegged for during the six months period ended 31 March 2013.
However, the total number of shares in issue rose to 160 800 286 from 89 296 428 shares on 29 March 2014. The average number of shares in issue recorded as at 31 March 2014 is therefore 90 488 159, the stockbroker adds in a statement.
The notice to shareholders is in accordance with the listing rules, regulations or requirement for all companies trading publicly or otherwise on the Lusaka Stock Exchange expected on any bourse (capital market) to comply.
“In accordance with the Lusaka Stock Exchange Limited (“LuSE”) Listings Requirements, the Board of Directors advice the Shareholders of ZCCM Investments Holdings PLC (“the Company”) that the earnings per share is expected to be 34 percent higher than that for the six months period ended 31 March 2013.
It, however, cautioned shareholders to trade carefully as the information contained in the trading statement has not been reviewed or reported on by the external auditors of the Company.
The Company expects its results for the six months ended 31 March 2014 to be released on SENS and published in the local press on or about Friday, 11 July 2014.
“Accordingly, shareholders are advised to exercise caution when dealing in the Company’s securities until publication of the results.”
Last year ZCCM IH ZCCM-IH announced plans to offer shares to its existing shareholders to raise money to clear its debt and help clean its balance sheet for future investments.
ZCCM-IH, which holds stake on behalf of the government in privatised mines, is currently battling liquidity problems, which were hampering the company’s ambitious transformation programmes.
“The proposed rights offer has a number of critical and important objectives that include to de-gear the ZCCM-IH balance sheet by expunging government debt of approximately K1.998 billion about US3 million and thereby unlock the value of ZCCM-IH for the benefit of shareholders,” company secretary Chabby Chabala said.
“After the implementation of the rights offer exercise, the government debt will be eliminated or significantly reduced, leaving ZCCM-IH with a clean balance sheet and therefore in a better position to consider payment of dividends to all shareholders going forward.” He added.
Clearing the huge government debt would help ZCCM-IH acquire fresh capital, which the company would use for its strategic investments and developments.
“The GRZ indebtedness has severely constrained the balance sheet of ZCCM-IH in the recent past. In turn, this has affected valuation of the company by the market and limited the capacity of management to unlock value for the benefit of shareholders,” Chabala stated.
ZCCM IH board believed at the time that the urgent action was necessary and a new strategic direction for ZCCM-IH is required in order to improve its operational performance and unlock value for the benefit of all shareholders on the one hand and simultaneously have capacity to participate in new projects and opportunities in Zambia and beyond going forward.”
The balance sheet of ZCCM-IH for the year ended 31 March, 2012 carried total liabilities of K2, 352 million against total assets of K2, 302 million, resulting in a negative book value of K50.5 million.
The bulk of the liabilities constitute debt owed to the government carried over from ZCCM, an earlier financial report stated.
History of ZCCM-IH
It is one of Zambia’s prime investments holdings companies with the majority of its investments in the copper mining sector of Zambia. It is quoted (trades secretly) on the Lusaka, London and Euronext Stock Exchanges.
The Company’s shareholders are the Government of the Republic of Zambia (GRZ) with 87.6 percent shareholding and private equity holders with 12.4 percent. Minority shareholders are spread throughout the world in various locations. ZCCM-IH is a successor company to Zambia Consolidated Copper Mines Limited (ZCCM Ltd). Prior to privatization in 2000, ZCCM Ltd was a consolidated copper mining conglomerate which owned and operated a number of mining divisions which at privatization were sold off as independent mining companies.
ZCCM Limited was majority owned 60.3 percent by the Government of the Republic of Zambia, 27.3 percent by Zambia Copper Investments Limited (ZCI), an associate company of Anglo American Plc and 12.4 percent by private investors.
Since the privatization of the mines in the early 2000, the mines that have been privatized have generated US$8 billion in direct foreign investments.
Various reputable multinational companies including First Quantum Minerals Limited, Vedanta Resources and commodity trader, Glencore Xstrata, have all initiated new projects in addition to the units secured during privatization.
“They in all, have injecting over US$8 billion, which is envisaged to grow to US$15 billion in the next few years,” said chamber of mines president Emmanuel Mutati.