ZCCM – IH | Advance of a loan to the IDC

Industrial Development Corporation Limited (“IDC”) is the majority shareholder in ZCCM Investments Holdings Plc (“ZCCM-IH”), holding 60.28% of the total issued share capital of ZCCM-IH.

IDC requested bridge financing from ZCCM-IH. The Board of ZCCM-IH considered and approved IDC’s request on 29 March 2018. Therefore, ZCCM-IH has advanced a loan to IDC at commercial terms (“the Transaction”).

In line with the Listings Requirements of the Lusaka Securities Exchange (“LuSE”), this announcement sets out the major salient details of the Transaction, amongst others, as follows:

Lender: ZCCM Investments Holdings Plc (“ZCCM-IH”)
Borrower: Industrial Development Corporation Limited (“IDC”)
Principle Amount: USD 19,000,000.00.
Interest: Interest accrued is payable at maturity of the facility agreement.
Maturity Date: 12 months from the date of issuance
Use of Proceeds: The purpose of the loan is to secure financing for investments purposes.
Security: 360,937,534 ordinary shares in Zambia National Commercial Bank Plc (“ZANACO”).
Fair and Reasonable
Opinion on the Transaction:
The Independent Expert (“Expert”) conducted an analysis on the terms of the Transaction to ascertain the extent to which the terms of the Transaction are fair and reasonable as far as the minority shareholders of ZCCM-IH are concerned. The Expert has declared that the Transaction is Fair and Reasonable, and the fairness opinion will be available for inspection by shareholders at the ZCCM-IH offices for a period of 28 days from Friday, 15th June 2018.

The nature of the Transaction is classified as a Small-Related-Party Category 2 Transaction and is not subject to regulatory and Shareholder approval according to Section 10.7 of the Lusaka Securities Exchange Listings Rules.

By Order of the Board
Chabby Chabala
Company Secretary
Issued in Lusaka, Zambia on Friday, 15th June 2018

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First Issued on Friday, 15th June 2018

ZCCM-IH increases dividends to 35%

ZCCM-IH has increased its dividend policy to 35 per cent of net profit after tax from 20 per cent as part of the company’s strategic plan for the next five years following a substantial increase in copper prices.

According to ZCCM-IH’s 2017 Annual Report Presentation issued last week, ZCCM-IH has increased its dividends policy to 35 per cent of net profit after tax, from 20 per cent, as part of the strategic plan for the next five years.

ZCCM-IH chief executive officer, Dr Pius Kasolo, said the increment had been effected following a substantial increase in copper prices on the international market, which have averaged over US $6,000 per metric tonne since last year.

“As you can see from the financial highlights, the performance of the company has been positive, both at Group and at Company levels, compared to the previous year 2016. The latter part highlighted the economic fundamentals, both at country and global level, and my assignment for now is to state how, as a company we are positioning for the future by taking advantage of these fundamentals. We have put in place a Strategic Plan for the next five years from 2018 to 2023, which is an embodiment of the vision and strategic goals that will provide the thrust for ZCCM-IH Plc to achieve its full potential in returning value to its shareholders as well as becoming a useful corporate citizen to the other stakeholders. Increase shareholder value; increasing revenue and profits is our goal and diversifying into growth priority sectors is our winning strategy. Earlier on in the presentation, you saw that we have also increased our dividend policy from 20 per cent to 35 per cent of net profit after tax,” Dr Kasolo announced during a media briefing in Lusaka.

“In its 2018-2023 Strategy, ZCCM-IH has prioritized the generation of consistent and predictable income. New measures will be put in place to extract value from legacy and post-legacy portfolio companies. Further, as mentioned earlier on, growth priority sectors have been identified that will drive diversification and de-risking of the portfolio, providing additional revenue income streams. These include the energy, manufacturing and value addition sectors. A number of Greenfield and brownfield projects have been identified and lined up. ZCCM-IH will seek strategic partnerships to develop and exploit these opportunities to achieve above market returns. For the 2018-2023 planning period, we will embark on strategic internal income-generating ventures that will continue to drive business to profitability and returns across the portfolio of assets. ZCCM-IH intends to invest in available opportunities in mineral beneficiation and value-addition, while realizing optimal and tangible returns for its shareholders. Moving forward, we will continue focusing development activities in several key sectors that are intended to give ZCCM-IH diversification benefits whilst continuing to participate in the mining sector.”

And data in the Report reveals that the share of ZCCM-IH’s losses reduced by 91 per cent during its financial year under review despite low production that year.

“Despite low production in 2017, there was an improvement in the performance of the investee companies due to improved copper prices. The share of loss reduced by 91 per cent. Reversal of impairment of price participation receivable (that was considered irrecoverable previously) of K719 million contributed to the profit recorded during the financial year. The impairment of the Ndola Lime Plant (as a result of continued poor performance over the years) of K861 million negatively affected both the group profit and total assets. With a good future outlook, the fair value of the investee companies increased and positively contributed to the profit of both the group and company,” stated the Report.

Source: News Diggers