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ZCI - ZCI Limited - Abridged report for the year ended 31 March 2010, Notice
of annual general meeting
ZCI Limited
(formerly Zambia Copper Investments Limited)
(Registered in Bermuda)
(South African registration number 1970/000023/10)
JSE share code: ZCI
ISIN: BMG988431240
Euronext share code: BMG988431240
("ZCI" or "the Company")
Abridged report for the year ended 31 March 2010, Notice of annual general
meeting
Audited Consolidated Financial Results
Shareholders are hereby advised that the Annual Report of ZCI for the year
ended 31 March 2010 was posted to shareholders on 1 September 2010. This
abridged report contains the audited annual financial statements for the year
ended 31 March 2010.
Consolidated statement of comprehensive income
For the year ended 31 March 2010
2010 2009
USD`000 USD`000
Revenue 7,392 -
Cost of sales (17,714) -
Gross loss from mining activities (10,322) -
Administrative expenses (1,531) (2,177)
Other expenses (4,439) (737)
Selling and distribution expenses (18) -
Foreign exchange losses (2,250) -
Operating loss (18,560) (2,914)
Negative goodwill 33,905 -
Profit/(loss) before net finance 15,345 (2,914)
Finance income 509 3,652
Finance expense (64) (150)
Profit before tax 15,790 588
Income tax 970 (72)
Profit for the year 16,760 516
Other comprehensive income:
Exchange differences on translation
of foreign operations (2,611) -
Total comprehensive income for the 14,149 516
Profit attributable to:
Equity holders of the parent 18,651 516
Non-controlling interest (1,891) -
Total comprehensive income
Equity holders of the parent 16,506 516
Non-controlling interest (2,357) -
Basic earnings per ordinary share 33.50 0.56
Diluted earnings per ordinary share 32.13 0.56
(US cents)
Consolidated statement of financial position
As at 31 March 2010
2010 2009
USD`000 USD`000
ASSETS
Property, plant and equipment 33,044 -
Intangible assets 50,923 -
Other financial asset 327 -
Long term receivable 3,000 -
Total non-current assets 87,294 -
Inventories 1,780 -
Trade and other receivables 984 76
Current portion of long term 3,000 -
Cash and cash equivalents 48,430 102,939
Total current assets 54,194 103,015
Total assets 141,488 103,015
EQUITY
Share capital 102,688 102,688
Foreign currency translation reserve (2,145) -
Retained earnings 18,651 -
Equity attributable to equity holders 119,194 102,688
of the parent
Non-controlling interest 6,286 -
Total equity 125,480 102,688
LIABILITIES
Deferred tax 6,530 -
Environmental rehabilitation 4,051 -
Total non-current liabilities 10,581 -
Trade and other payables 5,427 327
Total current liabilities 5,427 327
Total equity and liabilities 141,488 103,015
Consolidated statement of changes in equity
For the year ended 31 March 2010
Revaluation Assets
reserve of Foreign classified
Share available currency as held
capital for sale translation for sale
investment reserve reserve
USD`000 USD`000 USD`000 USD`000
Balance as at
1 April 2008 334,547 702 - (12,113)
Total comprehensive
income for the year
Profit for the year - - - -
Other comprehensive
income - (702) - 12,113
Transfer from hedging
reserve - - - 12,113
Revaluation on
available for sale
investment - (702) - -
Total comprehensive
income for the year - - - -
Transactions with
owners, recorded
directly in equity
Share buyback and
reduction (131,505) - - -
Transfer from
contribution surplus (100,354) - - -
Total contributions
by and distributions
to owners (231,859) - - -
Balance as at 31
March 2009 102,688 - - -
Arising on business
acquisition - - - -
Total comprehensive
income for the year
Profit/(loss) for the year - - - -
Other comprehensive
income - - (2,145) -
Foreign currency
translation
differences - - (2,145) -
Total comprehensive
income for the year - - (2,145) -
Balance as at 31
March 2010 102,688 - (2,145) -
Retained Attributable Non-
earnings/ to equity controlling Total
(accumulated holders of interest equity
losses) the parent
US`000 USD`000 USD`000 USD`000
Balance as at 1
April 2008 (100,870) 222,266 - 222,266
Total comprehensive
income for the year
Profit for the year 516 516 - 516
Other comprehensive income - 11,411 11,411
Transfer from hedging
reserve - 12,113 - 12,113
Revaluation on
available for sale
investment - (702) - (702)
Total comprehensive
income for the year 516 11,927 - 11,927
Transactions with
owners, recorded
directly in equity
Share buyback and reduction - (131,505) - (131,505)
Transfer from
contribution surplus 100 354 - - -
Total contributions by
and distributions to
owners 100 354 (131,505) - (131,505)
Balance as at 31
March 2009 - 102,688 - 102,688
Arising on business
acquisition - - 8,643 8,643
Total comprehensive
income for the year
Profit/(loss) for the
year 18,651 18,651 (1,891) 16,760
Other comprehensive
income - (2,145) (466) (2,611)
Foreign currency
translation
differences - (2,145) (466) (2,611)
Total comprehensive
income for the year 18,651 16,506 (2,357) 14,149
Balance as at 31
March 2010 18,651 119,194 6,286 125,480
Consolidated statement of cash flows
For the year ended 31 March 2010
2010 2009
USD`000 USD`000
Cash flows from operating activities
Cash utilised by operations (10,743) (4,769)
Interest received 509 3,614
Interest paid (64) -
Income tax paid - (88)
Cash outflow from operating activities (10,298) (1,243)
Cash flows from investing activities
Proceeds from disposal of available for sale investments - 10,733
Proceeds from partial disposal of investment in subsidiary - 5,220
Proceeds from disposal of assets
classified as held for sale - 213,150
Additions to maintain property, plant and equipment (2,594) -
Acquisition of subsidiary (net of cash acquired) (1,438) -
Repayment of interest bearing borrowings (34,414) -
Funds advanced (6,000) -
Cash (outflow)/inflow from investing activities (44,446) 229,103
Cash flows from financing activities
Repurchase own shares - (131,505)
Cash outflow from financing activities - (131,505)
Effect of foreign currency translation 235 -
Net (decrease)/increase in cash and cash equivalents (54,509) 96,355
Cash and cash equivalents at beginning of the year 102,939 6,584
Cash and cash equivalents at the end of the year 48,430 102,939
1.Basis of preparation
The abridged consolidated financial results for the year ended 31 March 2010
have been prepared in accordance with the recognition and measurement criteria
of IFRS, its interpretations adopted by the International Accounting Standards
Board ("IASB"), the presentation as well as the disclosure requirements of IAS
34 Interim Financial Reporting and the Listings Requirements of the JSE
Limited and the AC500 series issued by SAICA.
2. Accounting policies
The accounting policies applied in the presentation of the abridged
consolidated financial results are consistent with those applied for the year
ended 31 March 2009, with the exception of the following standards and
interpretations, effective for the first time for the current financial year,
that has been applied from 1 April 2009:
- IFRS 8 Operating Segments the application of the new standard has not
impacted the way management reports segmented information as the group has
only one segment.
- IAS 1 (Revised) Presentation of financial statements the revised standard
has changed the way the Group`s primary financial statements have been
presented. The revision required information to be aggregated on the basis of
shared characteristics and introduce a "statement of comprehensive income" to
enable readers to analyse changes in an entity`s equity resulting from
transactions with owners separately from "non-owner" changes. Comparative
information has been re-presented so that it also is in conformity with the
revised standard.
- IAS 23 (Amendment) Borrowing Costs the amendment has not impacted the
Group`s results to date.
- IFRS 2 (Amendment) Share based payments the adoption of this amendment has
not had any material impact on the Group financial statements as the Group
already applied these principles when accounting for share-based payments in
the past.
- IFRS 27 (Amendment) Consolidated and separate financial statements - there
has been no impact on the Group financial statements.
- IFRS 7 (Amendment) Financial instruments: Disclosures the amendment
introduced a three-level hierarchy for fair value measurement disclosures and
required entities to provide additional disclosures about the reliability of
those fair value measurements. These additional disclosures will be provided
in the in the notes to the annual financial statements.
The Group did not early adopt IFRS 3 (2008) to account for the ACU
transaction, but applied IFRS 3 (2004).
3. Group segment reporting
An operating segment is a component of the Group that engages in business
activities from which it may earn revenues and incur expenses, including
revenues and expenses that relate to transactions with any of the Group`s
other components. The Group`s only operating segment is the exploration for,
and the development of copper and other base metal deposits. All the Group`s
activities are related to the exploration for, and the development of copper
and other base metals in Botswana with the support provided from the Company
and it is reviewed as a whole by the Board (who is considered the chief
operating decision maker) to make decisions about resources to be allocated to
the segment and assess its performance, and for which discrete financial
information is available. All mining revenue derives from a single customer.
As such, no segmental report has been prepared.
4. Mineral resources and reserves
There have been no material changes to the resources and reserves as disclosed
in the Executive Summary of the Competent Persons Report ("CPR") prepared by
Read, Swatman & Voigt (Pty) Ltd ("RSV") of South Africa, in respect of African
Copper Plc`s ("ACU") mining and exploration assets. The Executive Summary of
the CPR was included in the Annual Report posted to shareholders on 1
September 2010.
5. Post balance sheet events
There have been no events that have occurred after balance sheet date that
would have a material impact on the reported results.
6. Audit opinion
The consolidated annual financial statements for the year ended 31 March 2010
have been audited by our auditors, KPMG Inc. Their unqualified audit report is
available for inspection at the registered office of the Company (Clarendon
House, 2 Church Street, Hamilton, Bermuda) and the offices of the sponsor.
These consolidated financial statements are the responsibility of the Board of
Directors.
Earnings per share
2010 2009
Basic earnings per ordinary share (US cents) 33.50 0.56
Diluted earnings per ordinary share 32.13 0.56
(US cents)
Headline earnings per ordinary share (27.40) (0.20)
(US cents)
Diluted headline earnings per (28.77) (0.20)
ordinary share (US cents)
Number of ordinary shares in issue 55,677,643 55,677,643
Weighted average and diluted number 55,677,643 55,677,643
of ordinary shares in issue
USD`000 USD`000
The following adjustments to profit
attributable to ordinary shareholders
were taken into account in the
calculation of diluted earnings per share:
Attributable to equity holders of the 18,651 516
parent
Increase in shareholding in
subsidiary with respect to
convertible portion of debt (763) -
Diluted profit attributable to equity
holders of the parent 17,888 516
The following adjustments to profit
attributable to ordinary shareholders
were taken into account in the
calculation of headline earnings and
diluted headline earnings per share:
2010 USD`000 USD`000 USD`000
Gross Tax effect Net
18,651 - 18,651
Attributable to equity holders of the
parent
- Negative goodwill (33,905) - (33,905)
Headline loss attributable to equity (15,254) - (15,254)
holders of the parent
Increase in shareholding in subsidiary
with respect to convertible portion
of debt (763) - (763)
Diluted headline loss attributable to
equity holders of the parent (16,017) - (16,017)
2009
Attributable to equity holders of the parent 516 - 516
- Reversal of provision on available for
sale investment (702) - (702)
Diluted headline (loss)/earnings
attributable to equity holders of the (186) - (186)
parent
Chairman`s Report
I am pleased to present the consolidated annual results for the year ended 31
March 2010. Shareholders will observe that the Company returned a profit of
USD 16.8 million (2009: USD 0.5 million). The results are a reflection of the
effect of the acquisition of ACU. The Company commenced the financial year
with a Net Asset Value per share ("NAVPS") of USD 1.84 and closed the
financial year with a NAVPS of USD 2.14.
The year under review was marked by significant change. On 21 May 2009, ZCI
subscribed for and acquired 676,570,500 ordinary shares in ACU a public
limited Company incorporated and domiciled in England, listed on the AIM
market of the London Stock Exchange as well as the Botswana Stock Exchange,
effectively obtaining control of this group. The financing transaction of
ACU`s operations, which was approved by the Company`s shareholders at an
extraordinary general meeting held on 11 January 2010 effectively ended the
Company`s classification as a cash shell on the JSE Limited ("JSE"). The
investment became the basis for the Company`s relisting on the non-ferrous
metal section of the JSE`s main board, which was finalised on 15 January 2010.
To mark this new era in its history, the Company finalised its name change in
May 2010 and is now trading on both its primary and secondary listings under
its new name, ZCI Limited, and with a new share code, BMG9887P1068.
The Company`s newly acquired subsidiary is the focus of ZCI`s business plan,
as published in the Company`s Circular to Shareholders dated 2 September 2008,
and it is an investment of which the Group is justifiably proud. ACU holds
exclusive rights for the exploration and development of copper deposits in an
extensive area of Botswana. As a prerequisite to its relisting on the JSE, the
Company commissioned the preparation of a Competent Persons Report ("CPR")
from Read, Swatman & Voigt (Pty) Ltd ("RSV"), in South Africa on ACU`s mining
and exploration assets. An executive summary of the CPR was included in a
Circular to Shareholders dated 17 December 2009 and is one of the many factors
engendering an optimistic outlook for the future of the investment.
The year was not without its difficulties however, not least of which was the
adverse economic climate in which the Company did business.
Against this background the Company concentrated its investment focus on
bringing the newly acquired subsidiary to achieving full commercial production
at its open-pit Mowana mine, which had been placed under care and maintenance
since January 2009. Production recommenced in late August 2009 and ZCI is
confident that significant progress has been made towards achieving
sustainable optimum production levels. The subsidiary has turned its attention
to exploiting and developing the Thakadu-Makala deposit, situated on the
Matsitama belt and conserving its prospecting licences in the areas believed
by management to be the most promising (or already hosting known
mineralization) based on exploration work completed in and prior to 2008.
The Company continues to review other investment opportunities in accordance
with its business plan. In the last quarter of the financial year the Company
advanced a loan of USD 6 million at attractive rates of return to the Zambia-
based Ndola Lime Company, which is the leading supplier of quicklime to the
mining industry in the Zambian/Congolese Copperbelt.
In conclusion, significant progress has been made in implementing the
Company`s business plan and achieving long-term optimal production at ACU.
I take this opportunity of welcoming Kathryn Bergkoetter as financial director
of the Company with effect from 8 September 2009. I can confirm that Ms
Bergkoetter`s expertise and in-depth knowledge of ZCI has made significant
contributions to the Company during a time of considerable change and
activity, confirming that the shareholders` faith in her is well-placed.
In accordance with the JSE Listings Requirements and the recommendations of
the King Code and Report on Governance for South Africa ("King Report"), the
Company appointed Professor Stephen Simukanga as the Lead Independent non-
Executive Director with effect from 8 April 2010. I am confident that
Professor Simukanga`s integrity and diligence will be of invaluable assistance
to the Company in meeting the expectations of the new era of corporate
governance.
The Company is in the process of complying with the JSE`s Listing Requirements
to appoint a Chief Executive Officer. In accordance with a temporary
dispensation granted by the JSE, ZCI will settle this issue by 31 March 2011.
It is thus on a note of determination and with a certain measure of optimism
that ZCI looks to the year ahead in the belief that it is both strategically
and financially placed to aggressively pursue its business plan for the coming
year.
Thomas Kamwendo
Chairman,
Bermuda
2 September 2010
Explanation for the differences
At the time of publishing the Provisional Report, ZCI`s Purchase Price
Allocation ("PPA") as required by IFRS 3 for the acquisition of its majority
stake in ACU had not been completed in full. Since the date of publication of
the Provisional Report and arising from further analysis of the property,
plant and equipment ("PPE") owned by ACU at the date of acquisition, the fair
value of PPE was updated and included in the PPA. The inclusion of the
increased value of PPE in the PPA resulted in the interlinked value attributed
to the intangible mineral and mining rights being reduced. There were further
correlated adjustments to deferred taxation and an increase in depreciation as
the useful life of the assets were reassessed at the time of determining the
fair value.
Notice of Annual General Meeting
Notice is hereby given that the Annual General Meeting of ZCI will be held At
the Hotel Novotel, 35 rue du Laboratoire, Luxembourg on 23 September 2010 at
14h00, to transact the business as stated in the notice of the Annual General
Meeting, which is included as part of the Annual Report distributed to
shareholders on 1 September 2010.
Registered office: Clarendon House, 2 Church Street, Hamilton, Bermuda
Company Secretary: John Kleynhans
Transfer secretaries: Computershare Investor Services (Pty) Ltd, 70 Marshall
Street, Johannesburg, 2000
Auditors: KPMG Inc., 85 Empire Road, Parktown, 2193, Johannesburg
Sponsor: Bridge Capital Advisors (Pty) Limited, 27 Fricker Road, Illovo
Boulevard, Illovo, 2196 South Africa
Website: www.zci.lu
Date: 02/09/2010 09:26:00 Supplied by www.sharenet.co.za
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