ZCCM-IH’s 2014-2015 financials make for interesting reading. The company embarked on investments over the last two years that when consolidated into the accounts led to major impairments being declared in the financials. As a result, the consolidated group’s operating expenses were swollen due to administrative costs caused by impairments from its takeovers. Other external macro factors such as the depreciation of the local currency and turmoil in the global commodities market also had an impact. However, although EPS nearly ‘halved’ in 2014, the consolidated group did make gains in 2015 closing with an EPS of 6.14. However, this is still short of its 2013 high prior to the group’s ambitious pursuits.
The group is not highly levered hence does not pose a financial risk for investors. This makes the company a prime investment partner for high net worth deals. However, the group will have to get a hold of its spiraling costs. This is noticed by its doubling of operating cash flow between 2014 and 2015 on the back of its investments. A highly volatile EBITDA signals bearish sentiments in the groups ability to manage costs. This may also impact on the preservation and value growth for the group as seen from its fluctuating EPS in the interim. Therefore, numbers management will be key in ensuring value growth for investors.