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Friday, 31 October 2014

ZCCM-IH Annual Report 2014

The latest ZCCM-IH Annual Report is embedded below. ZCCM-IH is the investments holding company majority owned by the GRZ and holds minority equity interests in the successor mining companies created after the unbundling and privatization of Zambia Consolidated Copper Mines (ZCCM) in 2000. It is public listed on the LuSE. Its shares also trade on the Euronext stock exchange in Paris.



Under the current shareholding structure, GRZ holds 87.53 % whilst 12.47% is held by minority shareholders. Following privatization of ZCCM in 2000, ZCCM-IH inherited debt of approximately USD 363 million on its balance sheet. And for the next ten years the company was technically insolvent - and therefore unable to pay any dividends to its shareholders on account of this legacy debt.

In 2013, ZCCM-IH undertook a major internal restructuring exercise to expunge the legacy debt from its balance sheet. This was done via a share rights offer. Prior to the balance sheet clean up, the share price of ZCCM- IH on the LuSE was K12.50 on 2nd January, 2013. After the successful rights offer of May 2014 and elimination of the legacy debt from the balance sheet, the price of ZCCM –IH shares on the LuSE has risen significantly and was K40 as at the beginning of October, 2014. This represents a capital gain of 220% over a period of 21 months.

With a clean balance sheet, ZCCM-IH is now in a position to declare and pay dividends to its shareholders based on the dividend revenues it receives from its investee companies and operating subsidiaries. ZCCM-IH recently did just that. It declared dividend – and at the AGM held on 7th October, 2014, shareholders approved a total dividend of K250 million which is approximately US$40 million .With a market capitalization of US$ 1 billion, ZCCM-IH is now the company with the largest market capitalization on the LuSE.

In the 2015 Zambia national budget, Government announced that it ntends to scale down its shareholding in ZCCM-IH from 87.53% to 60%. This sell down of 27.53 % shareholding represents approximately US$ 270 million in current value terms. The plan is to sell the shares to "Zambian citizens". The net effect is that the free float of ZCCM-IH will increase significantly from the current 12.47% to 40%. This will improve the liquidity in the stock and on the LuSE as a whole.

We shall return to the question of ZCCM-IH in due course.

AUTHOR
Chola Mukanga
Economist | Researcher
Copyright © Zambian Economist 2014

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