ZCCM INVESTMENTS HOLDINGS PLC · Mr. C Chabala Chief Corporate Services Officer /Company Secretary Ms. M Chanda Chief Investments Officer (Separated 31 January 2016) Mr. M T Chipata

ZCCM-IH

ANNUAL REPORT

ZCCM INVESTMENTS HOLDINGS PLC

2016

ZCCM-IH

ZCCM Investments Holdings Plc

Annual report and financial statementsfor the year ended 31 March 2016

ZCCM-IH

ZCCM-IH

ZCCM Investments Holdings PlcAnnual reportfor the year ended 31 March 2016

Contents

Directorate and administration 1

Management committee 2

Chairman’s statement 3 - 7

Report of the directors 8 - 12

Operations report

§ Subsidiary companies’ performance 13 - 14

§ Associate companies’ performance 15 - 19

§ Other investee companies 20 - 22

§ Corporate social responsibility and environmental review 22 - 23

Directors’ responsibilities in respect of the preparation of financial statements 24

Independent auditors’ report 25 - 26

Consolidated and company statements of financial position 27 - 28

Consolidated and company statements of profit or loss and other comprehensive income 29 - 30

Consolidated and company statements of changes in equity 31 - 32

Consolidated and company statements of cash flows 33 - 34

Notes to the financial statements 35 - 138

Corporate information 139 - 140


1

ZCCM-IH

DIRECTORATE AND ADMINISTRATION

DIRECTORS The Directors who held office during the year to 31 March 2016 and up to the date of this report were:

Mr. C Mwananshiku Non Executive Director (Retired 27 July 2016)

Ms. S Mutemba Non Executive Director (Retired 27 July 2016)

Dr. B K E Ng’andu Non Executive Director (Retired 27 July 2016)

Mrs. P C Kabamba Non Executive Director (Retired 27 July 2016)

Mr. P Taussac Non Executive Director

Mr. P M Chanda Non Executive Director (Retired 27 July 2016 and reappointed 15 December 2016)

Dr P C Kasolo Executive Director (Appointed 19 February 2016)

Mr F K Yamba Non-Executive Director (Appointed 15 December 2016) and Vice Chairman)

Mr M C Kaluba Non-Executive Director (Appointed 15 December 2016)

Mr T D Mulonga Non-Executive Director (Appointed 31 October 2016 and retired on 18 January 2017)

Mr Y Kachinda Non-Executive Director (Appointed 19 January 2017)


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ZCCM-IH

MANAGEMENT COMMITTEE

Management officials who held office during the year to 31 March 2016 and up to the date of this report were:

Dr. P Kasolo Chief Executive Officer

Mr. C Chabala Chief Corporate Services Officer /Company Secretary

Ms. M Chanda Chief Investments Officer (Separated 31 January 2016)

Mr. M T Chipata Chief Financial Officer

Ms. Y Mkandawire General Counsel

Ms. W Mangambwa Chief Risk and Internal Audit Officer

Mrs. L Mukwasa Human Resources Manager (Separated 28 February 2016)

Mr. C Mjumphi Corporate Services Manager (Appointed 23 March 2017)

Mrs L M Kakoma Public Relations Manager (Appointed 8 January 2016)

Mr. S C Mubano Acting Chief Investments Officer (Appointed 23 February 2016)

Mr P Banda Human Resource Manager (Appointed 3 March 2017)


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ZCCM-IH

CHAIRMAN’S STATEMENT

On behalf of the Board of Directors, I am pleased to share with you the performance of ZCCM Investments Holdings Plc (ZCCM-IH) as a Company and that of its investee companies during the financial year ended 31 March 2016.

As ZCCM-IH’s investment is largely in the mining sector, the Company experienced low to static growth owing to the challenges faced by the mining sector in general. The mining sector was faced with a significant energy deficit which affected production negatively and consequently led to a reduction in revenues. The situation was further compounded by low commodity prices particularly copper due to increased supply on the market and reduced demand mainly in high copper consumer countries such as China. As a result of the foregoing, investment in the mining sector was reduced and mainly concentrated on consolidation of already existing operations.

The lower than expected performance in the mining sector resulted in reduced revenues and impairment of the value of certain investee companies for the Company and consequently a loss at Group level.

Global economy

The International Monetary Fund (IMF) World Economic Outlook estimated global economic growth to slow to 3.1% in 2016, reflecting a more subdued growth in advanced economies due to geopolitical reasons mainly in Europe and weaker than expected growth economic activity in the United States of America. It is further projected that the global economy will marginally increase to around 3.4% in 2017.

Regarding the prospects of Sub-Saharan Africa, the IMF projected a sharp slowdown in growth generally due to a reduction in demand for commodities on which the Sub-Saharan African economies rely. Growth for the region as a whole fell to 3.5 percent in 2015 and remained within the same range as at 31 March 2016. This figure has been the lowest level in some 15 years, and may remain unchanged in 2017.

Global annual copper production remained constant at around 18.7 million tonnes as at December 2015. LME copper prices declined by 26%, from US$ 6,359 per tonne at the end of December 2014 to US$4,710 per tonne at the end of December 2015.

The decline in copper prices as well as the challenges in the energy sector resulted in a lower than expected growth in the Zambian economy of just above 3 percent in 2016 (growth was projected to be around 5 percent). Other sectors such as agriculture could not provide the needed buffer as severe weather conditions impacted negatively on the sector resulting in reduced production of commercial crops. The manufacturing sector was equally negatively affected by the energy deficit and unstable exchange rates (depreciation of the kwacha) which increased the cost of production and consequently reduced demand for locally manufactured goods.


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ZCCM-IH

CHAIRMAN’S STATEMENT (continued)

Financial performance

199.00 242.00

(858)

(2,179) (3,000.00)

(2,000.00)

(1,000.00)

-‐

1,000.00

2016 2015

K-‐million

Turnover Opera1ng-‐ Profit/Loss

The Group recorded turnover of K 199 million (2015: K242 million) and operating loss of K 858 million (2015: K2, 179 million).

(2,865) (2,912)

(2,210)

(1,329) (987)

281

(3,500)

(3,000)

(2,500)

(2,000)

(1,500)

(1,000)

(500)

-‐

500

Profit/Loss Before Tax Profit/Loss A=er Tax Share of Profit/Loss

K -‐million

2016 2015

The Group reported a loss before tax of K 2,865 million (2015: K 1,329 million). The Group recorded a loss after tax of K 2,912 million (2015: K 987 million). The Group’s share of loss of equity accounted investees’ was K 2,210 million (2015: Profit of K 281 million).


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ZCCM-IH


Financial performance (continued)

147 87

3,058

512

-‐

500

1,000

1,500

2,000

2,500

3,000

3,500

Group Company

Retained Earnings-‐ K-‐million

Retained Earnings 2016 Retained Earnings 2015

The Group’s retained earnings as at 31 March 2016 were positive at K 147 million (2015: K 3,058 million). The reduction in retained earnings is attributed to an increase in the share of losses as a result of operating losses reported by the investee companies mainly: Kansanshi Mining Plc, Konkola Copper Mines Plc and Copperbelt Energy Corporation Plc. The Company’s retained earnings were K87 million (2015: K 512 million).

Strategic and new investments

Recapitalisation of Ndola Lime Company (NLC)

The recapitalisation project at NLC continued. ZCCM-IH provided an additional shareholder loan of K28.7 million (US$ 2.82 million) for the Ndola Lime Recapitalisation Project. The Second Vertical Kiln (“VK-2”) is still undergoing hot commissioning. Furthermore, there are plans to restructure the operations of NLC to improve its performance in response to the changing market environment.

Real Estate

As part of its diversification program, ZCCM-IH has acquired the Trinity Park offices located along Alick Nkhata road. The premises consist of three identical buildings suitable for up-market office accommodation. ZCCM-IH offices will move to one of the buildings while two-thirds of the buildings have been leased out to other tenants. ZCCM-IH will continue to seek for opportunities in this sector as it has huge and varied potential.


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ZCCM-IH


GRZ Share Sell Down and Transfer of Shares

During the presentation of the 2015 National Budget, the Minister of Finance directed the Securities and Exchange Commission (SEC) to ensure that all listed Companies on the Lusaka Stock Exchange (LuSE) complied with the LuSE minimum free (public) float requirements of 25% of the shares. In this regard, the Finance Minister announced GRZ’s intention to reduce its shareholding in ZCCM-IH from 87.5% to 60.3% by selling some of its shares. Subsequently, GRZ transferred its 60.3% to the Industrial Development Corporation (IDC) while the 27.2% were offered to the public through a Preferential Secondary Market Offer.

The objectives of the Preferential Secondary Market Offer were as follows:

i) to increase economic participation of Zambian citizens in economic development through a Preferential Secondary Market Offer of shares to Zambian citizens;

ii) to ensure a broad distribution of shares in order to increase the liquidity and trading of ZCCM-IH shares on the LuSE;

iii) to comply with LuSE Listings Requirements with regard to the minimum percentage of shareholding available to the public;

iv) implement GRZ’s initial intention of the second phase of privatisation, specifically the sale of part of its shares in ZCCM-IH; and

v) to raise revenue for the Treasury through the sale of GRZ’s shares in ZCCM-IH.

The results of the share sell down was an under-subscription due to low liquidity in the market. Generally, the stock market experienced low growth as evidenced from the share price index on the LuSE.

Amidst the challenges of the past, ZCCM-IH is confident that with improved prospects in the mining sector, there will be an increased appetite for investment in the sector through the purchase of shares on the stock exchange.

Capital market

The ZCCM-IH share price on the Lusaka Stock Exchange closed the year at K40 (2015: K40). The market capitalisation as at 31 March 2016 remained unchanged at K6, 431 million (2015: K6, 431 million). The static share price is indicative of the general stock market performance, which has experienced low liquidity and hence low share transactions.

Outlook

Beyond these current challenges, the underlying drivers of growth in Sub-Saharan Africa that have been in play domestically in the region over the past decade most importantly, the much improved business environment generally continue to be in place, and favorable demographics are poised to support these drivers over the coming decades. These will anchor medium-term growth prospects.

The Zambian economy is expected to continue on a recovery path and maintain a steady growth of around 3.4 percent in 2017. This growth is hinged on key sector policy interventions in agriculture, tourism, industrialisation and mining within a diversification framework. The move to more cost reflective tariffs is expected to improve investment in the energy sector which will help drive growth in the key sectors of the economy.

As the majority of ZCCM-IH’s investment remains in the mining industry, the Company is confident that the industry will perform better in the coming years premised on the recent improvements in the copper prices as a result of anticipated demand in the United States of America, China and Europe.


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ZCCM-IH


Outlook (continued)

The commissioning of the 150 MW power plant by Maamba Collieries Limited (MCL) is a success story for ZCCM-IH and its partners who have worked tirelessly to ensure the project was completed. Once the plant is fully operational, it will provide the much needed dependable and sustainable base load power, which is crucial for the country’s economic growth and energy security.

In response to the challenges faced by the Company and in order to increase shareholder value, ZCCM-IH will implement a robust strategy aimed at taking advantage of the opportunities that exist in various sectors of the economy including mining, energy, agriculture and real estate. ZCCM-IH is better placed to leverage its position and expand its operations in sectors of the economy that offer opportunities.

Directorate

During the year, the following changes were made to the Directorate:

Mr Cosmas Mwananshiku Retired Non-Executive Director Dr Bwalya Ng’andu Retired Non-Executive DirectorMrs Pamela C Kabamba Retired Non-Executive DirectorMs Sophie Mutemba Retired Non-Executive DirectorMr Paul Chanda Retired and reappointed Non-Executive DirectorMr Fredson Yamba Appointed Non-Executive DirectorMr Mateyo Kaluba Appointed Non-Executive DirectorMr Yollard Kachinda Appointed Non-Executive DirectorDr Pius C Kasolo Appointed Executive Director

Appreciation

I express sincere gratitude to my fellow Board members, the immediate past Board members, the Management and Staff of ZCCM-IH for their dedication and commitment during the past year. I again extend my gratitude to the investee companies for their efforts and contributions during the year.

Director


8

ZCCM-IH

REPORT OF THE DIRECTORS

The Directors submit their report together with the audited financial statements for the year ended 31 March 2015, which disclose the state of affairs of ZCCM Investments Holdings Plc (‘the Company’) and its subsidiaries (together “the Group”).

Shareholding

The Group has the following interests in the undernoted companies:

1 Ndola Lime Company Limited 100.00%2 Misenge Environmental and Technical Services Ltd 100.00%3 Kariba Minerals Limited 50.00%4 Maamba Collieries Limited 35.00%5 Konkola Copper Mines Plc 20.60%6 Kansanshi Mining Plc 20.00%7 Copperbelt Energy Corporation Plc 20.00%8 Lubambe Copper Mine Plc 20.00%9 CNMC Luanshya Copper Mines Plc 20.00%10 NFC Africa Mining Plc 15.00%11 Chibuluma Mines Plc 15.00%12 Investrust Bank Plc 10.60%13 Chambishi Metals Plc 10.00%14 Mopani Copper Mines Plc 10.00%15 Nkana Alloy Smelting Company Limited 10.00%

Share capital

The authorised share capital of the Company remained unchanged at K2,000,000 divided as follows:

120,000,000 “A” Ordinary Shares of K 0.01 each; and 80,000,000 “B” Ordinary Shares of K 0.01 each.

There were no changes in the issued share capital of K1,608,003 with a nominal value of K1,608,003 during the year which remained as detailed below:

Number ofshares

AmountK

At beginning and end of year160,800,286 1,608,003


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ZCCM-IH

REPORT OF THE DIRECTORS (continued)

The shares were held as follows:

SHAREHOLDER ClassShareholding Amount

Number of Shares % K

Industrial Development Corporation A 96,926,669 60.30 969,267

Minister of Finance B 27,735,173 17.30 277,352

NAPSA B 24,120,043 15.00 241,200

Other Shareholders B 12,018,401 7.40 120,184

Total A and B 160,800,286 100.00 1,608,003

The 12,018,401 “B” ordinary shares are thinly spread and as at 31 March 2016 were held by 4,341 non-controlling shareholders, mainly based in Europe.

Directors’ interests in shares

According to the register of directors’ shareholdings:

• Mr P Taussac who held office at the end of the financial year had 160,589 shares in the Company. These shares were all held in Mr Tuassac’s name.

• Dr P C Kasolo who also held office at the end of the financial year had 2000 shares in the Company.

PRINCIPAL ACTIVITIES

ZCCM –IH (“ the Company’’) is an investment holding company which has a primary listing on the Lusaka Stock Exchange and secondary listings on the London and Euronext Stock Exchanges. The Company has the majority of its investments held in the copper mining sector of Zambia. Its principal activities include managing the Zambian Government’s stake in the mining sector. Other activities include:

• developing and implementing investment strategies and aligning company operations towards maximizing of shareholder value;

• monitoring investee companies to ensure they consistently declare reasonable dividends and ensure Company growth;• ensuring effective representation on the boards of the investee companies;• establishing and securing joint venture partnerships for projects assessed to be viable; and• promoting Zambian ownership and management in mining assets.


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ZCCM-IH


Functions of the Company

In its transformed state as an investments holding company, the Company’s strategic focus areas are as follows:

• Strategic Focus Area 1: Leveraging and consolidating existing investments in the Copper Mining Sector and pursue other copper assets;

• Strategic Focus Area 2: Diversifying into other minerals;• Strategic Focus Area 3: Investing in Mining Related Sectors; • Strategic Focus Area 4: Investing in Mining Related Manufacturing;• Strategic Focus Area 5: Treasury Management;• Strategic Focus Area 6: Reducing legacy liabilities; and• Strategic Focus Area 7: Reposition the company.

DIVIDENDS PAID

During the year to March 2016, there were no dividends proposed (2015:K251 million).

CORPORATE GOVERNANCE

The Group continued to operate by enforcing good corporate governance practices and observing the separation of powers between the Directors and Management on one hand and the Chairman of the Board and the Chief Executive Officer on the other. All Directors on the Board, except the Chief Executive Officer, were non-executive during the financial year.

Company activities were further streamlined by the full utilisation of the existing Audit, Remuneration and Investments Committees of the Board whose membership as at the date of this report is indicated below:

Audit Committee Remuneration Committee

Mr. M C Kaluba (Chairman)Mr. T D Mulonga Dr P C Kasolo Mr P Taussac Mr Y Kachinda

Mr. P M Chanda (Chairman)Mr F K YambaMr T D Mulonga Dr P C Kasolo

Mr Y Kachinda

Investments Committee

Mr. P Taussac (Chairman)Mr M C Kaluba Mr P M ChandaDr P Kasolo Mr M T Chipata Mr S. MubanoMr.C Mpundu Mr. B Nundwe Mr P D Chisanga

Non-executive DirectorNon-executive DirectorNon-executive DirectorChief Executive Officer & Executive Director Chief Financial Officer Acting Chief Investments OfficerCo-opted MemberCo-opted MemberCo-opted Member


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ZCCM-IH


CORPORATE GOVERNANCE (continued)

Record of Attendance of Board and Committee Meetings held during the year to 31 March 2016

Board Meetings:

Date of Meeting 21.04.15 19.06.15 02.11.15 08.12.15 24.02.16 31.03.16

Mr Cosmas Mwananshiku (Chairman) P P P P P P

Dr Bwalya Ng’andu P P P P P P

Mrs Pamela C Kabamba P P P P P P

Ms Sophie Mutemba P P P P P P

Mr Phillipe Taussac − P P P P P

Mr Paul Chanda P P P P P P

Dr Pius C Kasolo − − − − P P

Audit Committee Meetings:

Date of Meeting 09.06.15 27.10.15 01.12.15 23.02.16 17.03.16 30.03.16

Mr Cosmas Mwananshiku (Chairman) P P P P P P

Mrs Pamela C Kabamba P P P P P P

Ms Sophie Mutemba P P P P

Mr Paul Chanda P P − − − −

Mr Phillipe Taussac − − P P P P

Dr Pius C Kasolo − − − P P P

Investments Committee Meetings:

Date of Meeting 05.06.15 18.09.15 02.12.15 18.03.16

Dr Bwalya Ng’andu (Chairman) P P P P

Mrs Pamela C Kabamba P P P P

Mr Phillipe Taussac P P P P

Mr Charles Mpundu − P P P

Mr Patrick Chisanga P P P P

Mr Basil Nundwe P − − −

Dr Pius Kasolo P P P P

Mr Mabvuto Chipata P P P P

Mr Paul Chanda − − P P

Remuneration Committee Meetings:

Date of Meeting 10.06.15 17.09.15 01.12.15 16.03.16

Ms Sophie Mutemba (Chairperson) P P P P

Dr Bwalya Ng’andu P P P P

Mr Cosmas Mwananshiku P P P P

Mr Paul Chanda P P P P

Dr Pius C Kasolo P P P P


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ZCCM-IH


Average number and remuneration of employees

The total remuneration of employees during the year amounted to K72.9 million (2015: K81.4 million) for the Group and K25.9 million (2015: K22.5 million) for the Company. The average number of employees was as follows:

Month Subsidiaries Company Group Month Subsidiaries Company Group

April 2015 481 43 524 October 2015 503 43 546

May 2015 523 43 566 November 2015 500 43 543

June 2015 518 43 561 December 2015 483 43 526

July 2015 514 43 557 January 2016 479 42 521

August 2015 506 43 549 February 2016 473 41 514

September 2015 521 43 564 March 2016 469 40 509

Staff expenses

2016 2015

Subsidiary Companies 46,993 58,938

ZCCM-IH 25,905 22,490

72,898 81,428

Signed on their behalf by:

........................................ .........................................Director Director


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ZCCM-IH

OPERATIONS REPORT

(A) Subsidiary Companies

The performance of the subsidiary companies for the year ended 31 March 2016 is summarised below:

1 Ndola Lime Company Limited

Ndola Lime Company Limited (NLC) reported total revenues for the financial year ended 31st March 2016 of K196.6 million (2015: K195.7 million) and a loss after tax of K86.3 million (2015: K17.7 million).

The company’s results during the year were affected by reduced sales margins, prolonged run of the inefficient rotary kiln, year-end inventory adjustments, additional depreciation charges arising from the commissioned new plant and exchange losses.

ZCCM-IH continued to provide financial support towards the completion of the Ndola Lime Recapitalisation Project. During the year an additional shareholder loan of K28.7 million (US$2.82 million) was provided. The project is expected to increase the company’s production volume at a reduced unit cost of production by using alternative cheaper fuel and is still undergoing hot commissioning.

The conversion of the ZCCM-IH shareholder loans into equity amounting to K659 million significantly improved NLC’s gearing.

There were no dividends declared during the year under review (2015: nil).

2 Misenge Environmental and Technical Services Limited

Rehabilitated Gullies at TD 10- Mufulira

Misenge Environmental and Technical Services Limited (METS) earned a total of K6.22 million as revenue for the year ended 31st March 2016 (2015: K6.23 million). METS recorded a loss after tax of K2.9 million (2015: K0.6 million).


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ZCCM-IH

OPERATIONS REPORT (continued)

(A) Subsidiary Companies (continued)

2 Misenge Environmental and Technical Services Limited (continued)

METS was awarded a contract as a project management consultant firm during the nine month preparatory stage of the Zambian Mining Environmental Remediation and Improvement Project (ZMERIP). ZMERIP is a World Bank led project whose “objective is to reduce environmental health risks to the local population associated with the mining sector in critically polluted areas in Kabwe and Copperbelt provinces through improved capacity of the key institutions”. This is expected to improve METS’s income base going forward.


3 Mawe Exploration and Technical Services Limited and Nkandabwe Coal Mine Limited

Further to the decision by the Board of ZCCM-IH to re-instate Mawe as a technical department within ZCCM-IH and the cancellation of the mining licence that had been issued to ZCCM-IH with respect to Nkandabwe Coal Mines Limited (formerly Collum Coal Mine Limited), the Board took a decision to unwind the two companies. Consequently the process of unwinding the two entities continued during the period under review.


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ZCCM-IH


(B) Associate Companies’ Performance

The performance of associate companies for the year ended 31 March 2016 is summarised below:

1. Kariba Minerals Limited

For the financial year ended 31st March 2016, Kariba Minerals Limited (Kariba) reported revenues of K19.3 million (2015: K11.1 million) with a profit after tax of K5.6 million (2014: K0.06 million).

The company’s current liabilities exceeded its current assets by K32.5 million (2015: K22.2 million) and the company had negative equity of K55.3 million (2015: K39.1 million) as 31st March 2016. During the period under review, Kariba held two auctions for high quality amethyst that grossed over US$653,800 in total revenue. Going forward, the company will continue with its operational activities with continued support from the shareholders. Kariba projects profitability in 2018 that will be driven by an increase in mining production.

There were no dividends declared during the financial year ended 30th June 2015 (2014: nil).

2. Maamba Collieries Limited

Maamba Collieries Limited (MCL) reported total revenue of K121.9 million (US$12.3 million) for the year ended 31st March 2016 (2015: K94.5 million (US$14.6 million) and had profit after tax of K52.9 million (US$5.4 million) (2015: Loss K503 million (US$0.069 million)). The company’s current assets exceeded its liabilities by K1, 180 million (US$105.6 million) as at 31st March 2016 (2015: US$103.7 million). Additionally, the company has accumulated losses amounting to K999.5 million (US$89.4 million) (2015: K1, 136.4 million (US$95.2 million).

MCL’s 300-megawatt fully integrated coal-fired power plant reached Financial Closure on 28th July 2015. The peak funding of the project was capped at US$843 million and funded on a debt/equity ratio of 70:30. ZCCM-IH and Nava Bharat (Singapore) Pte Limited (Nava Bharat) have contributed US$253 million toward the project, and US$590 million is debt in form of long term loans from Development Financial Institutions and Commercial Banks.

The power plant is the first private power project in the Sub-Saharan region to receive Export Credit Agency insurance cover from China Export and Credit Insurance Corporation (Sinosure).

MCL signed a 20-year power purchase agreement to supply 100% of the power plant’s output to ZESCO.

In May 2015, ZCCM-IH issued a letter of credit (LC) of US$8.75 million, through Standard Chartered Bank Zambia as a contingent equity support for the thermal power plant at Maamba. In support of the LC, the funds were placed as a fixed term deposit at a Kwacha interest rate of 14% and fixed exchange rate of K7.385/US$.

Subsequent to year-end, the first 150 MW was commissioned on 7th August 2016 and the next 150 MW was commissioned in November 2016 where after Nava Bharat will be responsible for the operation and maintenance of the power plant.



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ZCCM-IH


3. Konkola Copper Mines Plc

Konkola Copper Mines (KCM) reported total revenue of K9, 607 million (US$972.5 million) for the financial year ended 31st March 2016 (2015: K7, 006 million (US$1,077.1 million)). The reduction in revenue was attributed to lower metal prices. The net loss for the year was at K3, 685.7 million (US$373.1 million) (2015: K1, 243.6 million (US$191.3 million) loss).

Total finished copper production during the year was up 7.7% at 182 thousand tonnes for the year ending March 2016 (2015: 169 thousand).

During the year under review, KCM focused on increasing production volumes and addressing some productivity challenges that the company faced in the past. The increased production was firstly driven by a 22.5% increase at the Konkola Deep underground mine due to improved ore grade and concentrator recoveries, and the completion of the rehabilitation work on 1-Shaft. Secondly, the Tailings Leach Plant (TLP) production improved by 5.8% due to higher plant reliability and higher throughput. Lastly, finished copper production from third parties rose by 3.1% due to higher availability of third party feed.

However, there was a 25% decline at the Nchanga plant because the plant was placed under care and maintenance in the quarter ending 31st December 2015, due to low copper prices.

Moving forward, KCM’s strategy is to strive for higher operating productivity levels at the Konkola underground mine, more reliable TLP facility with potential to increase recoveries, increased usage of the smelter by processing third-party concentrates from Zambia and DRC, and improved cost cutting measures.

Subsequent to year end, ZCCM-IH filed a Claim Form with the English High Court on 6th June 2016 to recover outstanding sums in excess of US$100 million due to it from KCM, pursuant to the terms of the Settlement Agreement entered into in 2013. On 16 December 2016, ZCCM-IH was successful in its application for default judgment. KCM was ordered to pay all sums owed to ZCCM-IH pursuant to the Settlement Agreement (plus associated contractual interest) within thirty (30) days. The total amount to be paid by KCM amounted to approximately US$103 million. KCM was also ordered to reimburse ZCCM-IH 80% of the costs it had incurred in pursuing its claim.

Further directions were given to determine whether KCM made payments to Vedanta Group Companies in breach of the prohibition on doing so under the Settlement Agreement. If and to the extent it is determined that such payments were made, ZCCM-IH will be entitled to recover additional sums from KCM.



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ZCCM-IH


4. Kansanshi Mining Plc

Kansanshi Mining Plc (KMP) had sales revenue of K15, 699 million (US$1, 586.1 million) (2015: K10, 204.4 million (US$1, 568.7 million) for the financial year ended 31st March 2016. The net loss for the year was at K5, 110.9 million (US$517.4 million) (2015: Profit of K4,169.6 million (US$792.7 million). Total copper production was down 14% at 226,674 tonnes (2015: 262,287 tonnes) due to lower oxide and sulphide throughput during the first half of the year.

KMP intentionally reduced throughput in order to match KMP’s acid consumption with the smelter’s ramp-up to commercial production, while gold production was 12% lower at 136,257 ounces (2014: 154, 431 ounces) due to lower concentrate production and lower head grade. The lower sales volumes were offset by the introduction of the KMP smelter in 2015 that recorded revenue of US$403 million.

In 2015, KMP completed the copper smelter well ahead of schedule and commercial production was declared on 1st July 2015. KMP’s smelter processed 709,188 tonnes of concentrate in 2015 and produced a total of 150, 292 tonnes of copper anode and 645,000 tonnes of sulphuric acid. The KMP smelter achieved an overall copper recovery of 98%.

Subsequent to year end, ZCCM-IH filed a Notice of Arbitration on 26th October 2016 in London (UK) against Kansanshi Holdings Limited and Kansanshi Mining PLC. Further, on 28th October 2016 ZCCM-IH commenced legal proceedings in Lusaka, Zambia, against First Quantum Limited, FQM Finance Limited, Philip K.R. Pascal, Arthur Mathias Pascal, Clive Newall, Martin R. Rowley and Kansanshi Mining PLC for various claims arising from transactions between Kansanshi Mining Plc and FQM Finance Limited.

Total dividends paid during the period under review amounted to K59.3 million (US$8 million) (2015: K113 million (US$18 million). The amount payable to ZCCM-IH was K11.9 million (US$1.6 million) (2015: K22.6 million (US$3.6 million).


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ZCCM-IH


5. Copperbelt Energy Corporation Plc

The group’s revenue increased from K4, 339.9 million (US$667.2 million) for the year ended 31 March 2015 to K6, 392.5 million (US$647.1 million) for the year ended 31 March 2016. The increase in revenue was driven by the improvement in the average billing efficiency at Abuja Electricity Distribution Plc (AED). The group posted a net loss of K2, 236.3 million (US$226.4 million) (2015: K1, 283.1 million (US$197.3 million). The net losses were driven by provisions for bad debt totalling US$94.5 million and impairment charges on property, plant and equipment of US$86.1 million at AED.

Copperbelt Energy Corporation Plc’s (CEC) revenue decreased insignificantly to K2, 875.7 million (US$291.1 million) (2014: K1, 898.6 million (US$291.9 million). Total energy sales to the mines was 2.8% lower at 4,092GWh (2014: 4,208GWh) due to the national energy deficit and the falling prices of copper on the world market, which negatively impacted operations at the mines.

The net profit for the year was K390.2 million (US$39.5 million) (2014: K218.5 million (US$33.6 million) due to increase in power trading at K236.1 million (US$23.9 million) (2014: K68.3 million (US$10.5 million) through the Southern African Power Pool (SAPP) Day Ahead Market. SAPP is the regional organisation of power utilities within the Southern African Development Community (SADC) formed in 1995 and whose aim is to create a competitive regional electricity market for all SADC Member States. Power trading revenue was recorded as part of other income and was not yet classified as a core business activity in the normal course of business.

The CEC share price on the LuSE moved from K 0.63 as at end of March 2015 to K 0.72 at end of March 2016, representing capital gains of 14.29% year-on-year.

For the period under review, CEC paid out a total of K184.5 million (US$16.4 million) (2015: K90 million (US$14 million) in dividend payments. ZCCM-IH’s share was K36.9 million (US$3.28 million) (2015:K18 million).


19

ZCCM-IH


6. Lubambe Copper Mine Limited

Lubambe Copper Mine Limited’s (LCM) financial results for the year ending 31st March 2016 showed revenues of K931 million (US$94.2 million) (2015: K1,071 million (US$164.7 million)) and reported a net loss of K3,810.2 million (US$385.7 million) (2015:K539.2 million (US$78 million) loss). The loss was driven by LCM’s impairment of property, plant and equipment upon revision of the mine plan and a decrease in the short term copper price outlook. An impairment of K1,105.8 million (US$111.94 million) was recognised in the income statement as part of operating expenses.

LCM continued to face operational challenges during the year under review. The major challenge LCM has faced in the recent past has been dilution of concentrates with the effect that production ramp up could not be achieved due to stoppable reserves required not being generated at the rate planned on account of slower than anticipated access development progress and overall rates being below target. Following an extensive ore body stoping design review conducted by SRK Consulting, Lubambe evaluated various slot development methods and equipment requirements with the recommended solution being inverse raise using 3x Sandvik DL411-15 long hole drill rigs.

There were no dividends declared during the year ended 30th June 2015 (2014: nil).

7. CNMC Luanshya Copper Mines Plc

CNMC Luanshya Copper Mines plc (CNMC) recorded a turnover of K1,867.7 million (US189.1 million) for the year ended 31st March 2016 (2015: K1, 741.1 million (US$267.7 million). The loss after tax was K1, 052.1 million (US$106.5 million) (2014:K72.2 million (US$11.1 million) profit).

CNMC planned to produce 46,000t of copper metal which included 16,000t copper in concentrate from Baluba Mine and 30,000t of copper cathode from Muliashi Mine. By the end of 31 December 2015, Baluba Mine and Muliashi Mine produced 11,371t and 33,101t of copper metal respectively. Thus in 2015 the total copper production was 44,472t, representing 96.68% of the annual plan. As noted, Muliashi Mine exceeded its annual production target for 2015 whilst Baluba Mine did not achieve its annual production target.

The failure by Baluba mine to meet its target is attributed to the difficulty in mining the gently inclined thin ore body with its variable structure and the increasing reclaimed tonnage and decreasing geological grade and also the fact that the mine had been put on Care and Maintenance since September 2015 because of power shortages.

There were no dividends paid during the year ended 31st December 2015 (2014: nil).


20

ZCCM-IH


(C) Other Investee Companies

1. NFC Africa Mining Plc

NFCA continued with the development of the South East Ore Body project. The company reported project expenditure of K2,669.2 million (US$270.2 million) as at 31st March 2016. Total planned project investment is K8,219.1 (US$832 million). Once completed, the project is expected to extend the life of the mine for 20 years. The design and annual capacity at full production is estimated at 3.3 million tonnes of ore containing 60 thousand tonnes of copper. The project is expected to be completed in 2018.

There were no dividends paid during the year ended 31st December 2015 (2016: nil).

2. Chibuluma Mines Plc

Net revenue for the financial year ended 31st December 2015 was K656.9 million (US$66.5 million) (2014: K691.4 (US$106.3 million)). Net loss over the same period was K312.2 million (US$31.6 million) (2014: K144.4 million (US$22.2 million profit)). Chibuluma Mines Plc’s (CMP) cash position reduced to US$0.056 million as at 31st December 2014 (2014: US$8 million). The loss was mainly due to the low copper prices and an impairment loss of US$13.4 million on property, plant and equipment.

Production was negatively affected by the poor availability of mine equipment, which, coupled with low copper prices led to constrained cash flow at the company. Consequently, CMP embarked on cost saving measures and a survival plan with emphasis on reduced and targeted mining and processing activities at the mine.

As mine reserves get exhausted CMP has been exploring the Chifupu project for the last two years to extend the life

of mine and have been actively exploring new mining activities. However, due to cash flow constraints, works on the Chifupu project have reduced and CMP is evaluating the option of starting production early at the Chifupu project to recover some of the investments incurred on the project.

No dividends were paid for the financial year ended 31st December 2015 (2014: US$10.8 million).

3. Investrust Bank Plc

Investrust Bank Plc (Investrust) recorded a 19% decrease in net interest income to K39.77 million during the year ended 31st December 2015 (2014: K49.30 million). This was driven by the increase in interest rates in fixed term deposits and inter-bank lending. During the year under review, the bank did not expand the physical branch network. Rather, the bank focused on consolidating operations in its branch networks.

In 2015, Investrust embarked on a capital raising exercise through a Claw back Rights Offer to meet the minimum capital requirement set by Bank of Zambia. ZCCM-IH fully underwrote the offer and the results, subsequent to year end, indicated that ZCCM-IH ended up with 48% of the shareholding in the bank

ZCCM-IH made an application for waiver of a mandatory offer to the SEC and the SEC approved the application on condition that ZCCM-IH sold down its shareholding to below 35% which is the trigger for a mandatory offer. ZCCM-IH has since sold 3.2% of its shares in the bank and is currently at 45.4% shareholding.

The bank’s share price on the LuSE closed the period under review at K13.50 (2014: K13.50).

There were no dividends declared during the financial year ended 31st March 2016 (2015: Nil).


21

ZCCM-IH


(c) Other Investee Companies (continued)

4. Chambishi Metals Plc

During the financial year ended 31st December 2015, Chambishi Metals Plc (Chambishi) generated total revenues of K2, 015.3 million (US$204 million) (2014: K1, 883 million (US$289.50 million). The net loss was at K396.1 million (US$40.1 million) (2014: K88.5 million (US$13.6 million).

ZCCM-IH has been engaging with Chambishi on the perennial losses and it was agreed that Chambishi would have to scale up production to be able to generate enough gross profits to cover all its operational costs and to generate profits. This would necessitate creating further capacity particularly for copper beyond the current capacity of 55,000 tonnes. A study is being undertaken to assess the financial implications of this proposal.

During the period under review, Chambishi commenced a research project to improve revenue at the plant. The research involves plant optimization, improved technology at the plant to improve recoveries and a global market study to identify suitable concentrates from which high value metals such as gold and silver can be extracted.

5. Mopani Copper Mines Plc

During the financial year ended 31st December 2015, Mopani Copper Mines Plc (Mopani) reported net revenue of K11, 017 million (US$1,121 million) (2014: K8, 696 million (US$1,337 million)). The net loss was at K2, 815 million (US$285 million) mainly as a result of lower copper sales prices and losses on forex revaluations (2014: K150 million (US$23 million).

During the year ending 31st December 2015, Mopani produced a total of 92.2 thousand tonnes of copper from own source (2014: 109.9 thousand tonnes). Total production including third party feed totalled 184.7 thousand tonnes (2014: 185.1 thousand tonnes).

Mopani Copper Mines (MCM) commenced the partial suspension of operations in September 2015 and reduced smelter operating capacity. This was done in view of the lower copper environment. During the suspension period, MCM focused on making capital improvements on the Synclinorium Shaft at Nkana, and the Mindola Deeps and Mufulira Deeps projects. The Synclinorium project was successfully commissioned on 5th May 2016 on time and on budget at a total project cost of $323m. The 1,280m shaft will extend the life of the Nkana mine by 20 to 25 years. The two other shafts, the Mufulira and Mindola Deeps shafts are being sunk at a budgeted cost of $$559m. The projects are scheduled to be completed in the first half of 2017. The capital projects are aimed at reducing operational costs and improving long-term competitiveness.

There were no dividends paid during the financial year ended 31st December 2015 (2014: nil).


22

ZCCM-IH


6. Nkana Alloy Smelting Company Limited

The interlocutory order of injunction served on the Company in the past, restraining it from interfering with activities on the slag dump was still in effect. The plaintiffs, Lunga Mineral and Exploration Limited, were handed the property for purposes of commencing prospecting works at the site as per mineral processing licence until determination of the matter. The order further directed that the plaintiffs and the local community it has partnered with, be given reasonable, unfettered and immediate access to the process area.

(d) Corporate Social Responsibility and Environmental Review

A) Corporate Social Responsibility

The Company continued to meet its social obligations during the year by supporting social and cultural events and educational programs among others. Further, the Company made material donations to the Cancer Centre at the University Teaching Hospital (UTH) during the commemoration of the International Women’s Day on the 8th March 2016. In total, the Company spent K0.2 million (2015: K0.09 million) in supporting various corporate social responsibility activities.

ZCCM-IH members of staff presenting gifts to the Cancer Centre at UTH in Lusaka.


23

ZCCM-IH


(B) Environmental Review (continued)

The Company’s environmental related activities continued to be managed through Misenge Environmental and Technical Services Company Limited (METS), a wholly owned subsidiary of ZCCM-IH. Some of the major activities undertaken included the following:

• Integrated Case Management (ICM) – Monitoring and Testing: METS conducted home visitations in some townships of Kabwe. The purpose of conducting the visitations was to assess and assist caregivers, of children with persistently high lead levels, on the implementation of messages on prevention of lead exposure and poisoning. Further, ICM clinics and soil monitoring tests were conducted in various communities in Kabwe.

• Inspection and Maintenance of Tailing Dams (TD) and Over Burdens (OB) in Kitwe, Mufulira. This included water sampling and testing from the spillways as well as dam seepage to ensure that there was limited contamination of water.

• Monitoring of the Radioactive Waste Storage Building in Kalulushi: radiation surveys were conducted to determine typical background dose rates and ensure that the levels were maintained within acceptable limits.

Dr. Pius C. Kasolo LusakaChief Executive Officer 2017


24

ZCCM-IH

Directors’ responsibilities in respect of the preparation of consolidated and separate financial statements

The directors are responsible for the preparation and fair presentation of the consolidated and separate financial statements of ZCCM Investments Holdings Plc, comprising the statements of financial position at 31 March 2016, the statements of profit or loss and other comprehensive income, changes in equity and cash flows for the year then ended, and the notes to the financial statements, which include a summary of significant accounting policies and other explanatory notes, in accordance with International Financial Reporting Standards and the requirements of the Companies Act of Zambia. In addition, the directors are responsible for preparing the annual report.

The directors are also responsible for such internal controls as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error and for maintaining adequate accounting records and an effective system of risk management.

The directors have made an assessment of the company and its subsidiaries’ ability to continue as going concerns and have no reason to believe the businesses will not be going concerns in the year ahead.

The auditor is responsible for reporting on whether the consolidated and separate financial statements are fairly presented in accordance with International Financial Reporting Standards and the requirements of the Companies Act of Zambia.

Approval of the financial statements

The consolidated and separate financial statements of ZCCM Investments Holdings Plc, as identified in the first paragraph, were approved by the board of directors on 5 May 2017 and signed on its behalf by:

------------------------------- --------------------------Director Director

25

KPMG Chartered AccountantsFirst Floor, Elunda TwoAddis Ababa RoundaboutRhodes Park, LusakaPO Box 31282Lusaka, Zambia

Telephone +260 211 372 900Website www.kpmg.com

KPMG Chartered Accountants, a Zambian partnership, is a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

Partners: A list of partners is available at the above mentioned address.

Independent auditors’ report to the shareholders of ZCCM Investments Holdings Plc

Report on the consolidated and seperate financial statements

We have audited the consolidated and seperate financial statements of ZCCM Investments Holdings Plc, which comprise the statements of financial position at 31 March 2016, the statements of profit or loss and other comprehensive income, changes in equity and cash flows for the year then ended, and notes to the financial statements comprising a summary of significant accounting policies and other explanatory information, as set out on pages 27 to 138.

Directors’ responsibility for the consolidated and seperate financial statements

The Company’s directors are responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards and the requirements of the Companies Act and Securities Act of Zambia, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgement, including the assessment of the risk of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

26

Opinion

In our opinion, these financial statements present fairly, in all material respects, the consolidated and separate financial position of ZCCM Investments Holdings Plc as at 31 March 2016, and its consolidated and separate financial performance and consolidated and separate cash flows for the year then ended in accordance with International Financial Reporting Standards, and the requirements of the Companies Act and Securities Act of Zambia.

Report on other legal and regulatory requirements

In accordance with Section 173 (3) of the Companies Act of Zambia, we report that, in our opinion, the required accounting records, other records and registers have been properly kept in accordance with the Act.

In accordance with section 149 of the Securities Act of Zambia, we report as follows:

In terms of relevant International Standards applicable to audit, review and other assurance engagements we were unable to accept and perform an engagement on the existence, adequacy and effectiveness or otherwise of the internal control system of the Company, as required by section 149 of the Securities Act, for the Act does not specify which internal control framework to use in assessment of the Company’s internal control. We have not performed any audit, review or other assurance engagement in relation to these matters and accordingly we do not express any assurance opinion or conclusion thereon.

KPMG Chartered Accountants 2017

Jason Kazilimani, Jr AUD/F000336Partner


27

ZCCM-IH

Consolidated statement of financial positionas at 31 March 2016

In thousands of Kwacha

Notes 2016 2015AssetsProperty, plant and equipment 15 1,030,284 775,616Intangible assets 16 673 1,030Investment property 17 100,778 15,000Investment in associates 19 6,852,955 5,886,415Financial assets at fair value through profit or loss 20 238,247 290,229Trade and other receivables 22 313,641 200,285Deferred tax assets 30 698,304 646,046Non-current assets 9,234,882 7,814,621

Inventories 21 35,349 53,097Trade and other receivables 22 136,019 78,551Held-to-maturity investment securities 23 355,172 514,007Cash and cash equivalents 24 35,850 43,782Current assets 562,390 689,437Total assets 9,797,272 8,504,058EquityShare capital 27(i) 1,608 1,608Share premium 27(ii) 2,089,343 2,089,343Reserves 28 6,088,394 2,221,476Retained earnings 146,883 3,057,532Equity attributable to shareholders 8,326,228 7,369,959

LiabilitiesBorrowings 29 221,754 198,567Trade and other payables 25 29,437 -Deferred tax liabilities 30 211,786 292,820Retirement benefits 31 2,904 2,334Provisions for environmental rehabilitation 32 263,491 45,798Non-current liabilities 729,372 539,519

Bank overdraft 24 319 -Borrowings 29 70,890 68,886Trade and other payables 25 256,834 186,299Provisions 26 139,197 98,538Current tax liabilities 12 232,542 130,431Retirement benefits 31 41,890 47,996Provisions for environmental rehabilitation 32 - 62,430Current liabilities 741,672 594,580Total liabilities 1,471,044 1,134,099Total equity and liabilities 9,797,272 8,504,058

The financial statements were approved for issue by the Board of Directors on 5 May 2017 and signed on its behalf by:

……………………………. …………………………….Director Director

The notes on pages 35 to 138 are an integral part of these consolidated and separate financial statements.


28

ZCCM-IH

Company statement of financial positionas at 31 March 2016In thousands of Kwacha

Notes 2016 2015AssetsProperty, plant and equipment 15 29,658 22,304

Intangible assets 16 540 860

Investment property 17 100,778 15,000

Investments in subsidiaries 18 95,644 157,120

Investment in associates 19 3,831,768 3,787,416

Financial assets at fair value through profit or loss 20 238,247 290,229

Trade and other receivables 22 313,642 493,836

Non-current assets 4,610,277 4,766,765

Trade and other receivables 22 95,722 251,921

Held-to-maturity investment securities 23 355,172 514,007

Cash and cash equivalents 24 34,982 25,920

Current assets 485,876 791,848

Total assets 5,096,153 5,558,613

Equity

Share capital 27(i) 1,608 1,608

Share premium 27(ii) 2,089,343 2,089,343

Reserves 28 2,000,626 1,917,082

Retained earnings 87,245 512,147

Equity attributable to shareholders 4,178,822 4,520,180

Liabilities

Borrowings 29 155 384

Deferred tax liabilities 30 245,519 641,115

Retirement benefits 31 2,904 2,334

Provisions for environmental rehabilitation 32 218,754 34,246

Non-current liabilities 467,332 678,079

Borrowings 29 237 27,614

Trade and other payables 25 77,466 37,861

Provisions 26 136,588 98,538

Current tax liabilities 12 235,708 133,911

Provisions for environmental rehabilitation 32 - 62,430

Current liabilities 449,999 360,354

Total liabilities 917,331 1,038,433

Total equity and liabilities 5,096,153 5,558,613

The financial statements were approved for issue by the Board of Directors on 5 May 2017 and signed on its behalf by:

…………………………… ………………………………..Director Director



29

ZCCM-IH

Consolidated statement of profit or loss and other comprehensive incomefor the year ended 31 March 2016In thousands of Kwacha

Notes 2016 2015

Revenue 6 198,661 241,989

Cost of sales (180,368) (130,873)

Gross profit 18,293 111,116

Other income 7 9,882 12,433

Environmental expenses 8 (73,282) (50,233)

Administration expenses 9 (812,814) (2,252,769)

Operating loss (857,921) (2,179,453)

Finance income 431,957 684,635

Finance costs (228,710) (114,685)

Net finance income 11 203,247 569,950

Share of (loss)/profit of equity-accounted investees, net of tax 19(b) (2,210,199) 280,535

Loss before tax (2,864,873) (1,328,968)

Income tax (expense)/credit 12 (47,356) 341,851

Loss for the year (2,912,229) (987,117)

Other comprehensive income

Items that will never be reclassified to profit or loss

Revaluation on property, plant and equipment 15 16,748 9,289

Deferred tax on revaluation reserve 30 (4,733) (3,717)

Actuarial loss on defined benefit pension plans 31 983 (101)

Deferred tax on defined benefit actuarial loss 30 (344) 35

Equity-accounted investees- share of OCI 19 (204) -

12,450 5,506

Items that are or may be reclassified to profit or loss

Foreign currency translation differences - equity - accounted investees 19 4,122,445 597,689

Equity-accounted investees- share of OCI 19 (266,397) -

3,856,048 597,689

Other comprehensive income, net of tax 3,868,498 603,195

Total comprehensive income 956,269 (383,922)

Loss attributable to:

Owners of the company (2,259,890) (863,962)

Non-controlling interests (652,339) (123,155)

(2,912,229) (987,117)

Total comprehensive income attributable to:

Owners of the company 836,963 (336,023)

Non-controlling interests 119,306 (47,899)

956,269 (383,922)

Earnings per share Basic earnings per share (K) 13 (18.11) (6.14)

Diluted earnings per share (K) 13 (18.11) (6.14)



30

ZCCM-IH

Company statement of profit or loss and other comprehensive incomefor the year ended 31 March 2016In thousands of Kwacha

Notes 2016 2015

Revenue 6 48,782 45,065

Other income 7 9,665 12,126

Environmental expense 8 (77,892) (49,042)

Administration expenses 9 (904,286) (1,638,265)

Operating loss (923,731) (1,630,116)

Finance income 467,865 726,795

Finance costs (219,244) (112,303)

Net finance income 11 248,621 614,492

Loss before tax (675,110) (1,015,624)

Income tax credit 12 248,843 375,723

Profit/(loss) for the year (426,267) (639,901)

Other comprehensive income

Items that will never be reclassified to profit or loss

Revaluation of property, plant and equipment 15 - 9,289

Deferred tax on revaluation reserve 30 - (3,251)

Actuarial loss on defined benefit pension plans 31 983 (101)

Deferred tax on defined benefit actuarial loss 30 (344) 35

639 5,972

Items that are or maybe reclassified to profit or loss

Available-for-sale investments in subsidiaries – net change in fair value 18 (720,663) (244,079)

Available-for-sale investments in associates – net change in fair value 19 44,352 (1,742,580)

Deferred tax on fair value change on subsidiaries 30 252,232 85,428

Deferred tax on fair value change on investments 30 (15,523) 609,903Available-for-sale investments in associates – amounts reclassified to profit or loss 19 78,232 -Available-for-sale investments in subsidiaries – amounts reclassified to profit or loss 18 720,663Deferred tax on fair value change on investments in associates reclassified to profit or loss 30 (27,381) -Deferred tax on fair value change on investments in subsidiaries reclassified to profit or loss 30 (252,232)

79,680 (1,291,328)

Other comprehensive income, net of tax 80,319 (1,285,356)

Total comprehensive income (345,948) (1,925,257)Earnings per share

Basic earnings per share (K) 13 (2.65) (3.98)

Diluted earnings per share (K) 13 (2.65) (3.98)


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cial

sta

tem

ents

.


33

ZCCM-IH

Cosolidated Statements of Cashflowsfor the year ended 31 March 2016In thousands of Kwacha

Cash flows from operating activities Notes 2016 2015

Loss for the year (2,912,229) (987,117)Adjustments for:Depreciation 15 26,343 20,965Amortisation 16 482 312Impairment loss on property, plant and equipment 15 1,159 1,008Interest income 11 (67,888) (52,729)Interest expense 11 4,358 1,630Interest expense on borrowings 29 117,345 55,603Unrealised foreign currency loss 356 -Chambishi Metals borrowing reversal 29 (27,950)Change in fair value on financial assets at fair value through profit or loss 20 51,982 57,881Impairment of investments 19 630,323 573,806Fair value change on investment property 17 (491) (3,670)Defined benefits expense 31 1,637 732Share of profit of equity – accounted investees, net of tax 19 2,210,199 (280,535)Profit on disposal of property, plant and equipment 7 - (27)Tax expense 12 47,356 (341,851)Change in: 82,982 (953,992)Inventories 17,748 (28,877)Trade and other receivables (170,826) 1,460,000Trade and other payables and provisions 140,633 21,812Provision for environmental rehabilitation 155,263 48,393Cash generated from operating activities 225,800 547,824Interest paid 11 (4,358) (1,630)Tax paid 12 (83,614) (11,241)Benefits paid (6,190) (5,656)Net cash from operating activities 131,638 529,297Cash flows from investing activitiesInterest received 11 67,888 52,729Dividend received 19 48,782 -Proceeds from disposal of property, plant and equipment - 27Acquisition of property and equipment 15 (265,422) (155,426)Acquisition of intangible assets 16 (125) (199)Acquisition of investment property 17 (85,287) -Proceeds on maturity of fixed deposits 23 514,007 108,623Acquisition of held to maturity investments 23 (355,172) (514,007)Net cash used in investing activities (75,329) (639,881)Cash flows from financing activitiesProceeds from borrowings 29 - 2,900Repayment of borrowings 29 (64,204) (3,674)Dividend paid 14 - (250,851)Net cash used in financing activities (64,204) (251,625)Net decrease in cash and cash equivalents (7,895) (230,581)Effect of movement in exchange rates on cash held (356) -Cash and cash equivalents at 1 April 43,782 274,363Cash and cash equivalents at 31 March 24 35,531 43,782

Cash and cash equivalents includes bank overdrafts that are repayable on demand and form an integral part of the Groups cash management.



34

ZCCM-IH

34

Company Statement of Cashflowsfor the year ended 31 March 2016In thousands of Kwacha

Cash flows from operating activities Notes 2016 2015

Profit/(loss) (426,267) (639,901)Adjustments for:

Depreciation 15 2,470 1,767Amortisation 16 445 218

Impairment of assets 15 - 987Impairment of investee companies 78,232Fair value changes of financial assets at fair value through profit or loss 20 51,982 57,881Impairment of investment in subsidiaries 18 720,663 -Defined benefits expense 31 1,637 732Fair value change on investment property 17 (491) (3,670)

Chambishi Metals borrowing reversal 29 (27,950) -

Interest expense on borrowings 29 344 8,463Interest receivable 11 (103,796) (52,190)Interest expense 11 94 640Unrealised foreign currency loss 356 -Tax credit/expense 12 (248,843) (375,723)

48,876 (1,000,796)Change in: Trade and other receivables (322,794) 1,328,682Trade and other payables 39,605 6,087Provisions 38,050 -Provision for environmental rehabilitation 122,078 47,203Cash generated from operating activities (74,185) 381,176Interest paid 11 (94) (640)Tax paid 12 (83,614) (11,241)Retirement paid (84) (796)Net cash (used in) /from operating activities (157,977) 368,499Cash flows from investing activities

Interest received 11 103,796 52,190Acquisition of property, plant and equipment 15 (9,824) (4,883)Acquisition of intangible assets 16 (125) (127)Acquisition of investment property 17 (85,287) -Proceeds on maturity of fixed deposits 23 514,007 108,623

Acquisition of held to maturity investments 23 (355,172) (514,007)

Equity contribution in subsidiary 18 - (474)Net cash flows from/( used in) investing activities 167,395 (358,678)Cash flows from financing activities

Dividend paid 14 - (250,851)Net cash used in financing activities - (250,851)Increase/(decrease) in cash and cash equivalents 9,418 (241,030)Effect of movement in exchange rates on cash held (356) -Cash and cash equivalents at 1 April 25,920 266,950Cash and cash equivalents at 31 March 24 34,982 25,920



35

ZCCM-IH

Notes to the financial statements

1 Reporting entity

ZCCM Investments Holdings Plc (the “Company” or “ZCCM – IH”) is domiciled in Zambia. The Company’s registered office is at ZCCM-IH Office Park Stand No. 16806, Alick Nkhata Road, Mass Media Complex Area, P O Box 30048 Lusaka 10101, Zambia. These consolidated financial statements comprise the Company, its subsidiaries and investments in associates (collectively the ‘Group’ and individually ‘Group companies’). The principal activity of the Company is to manage the Zambian Government’s stake in the mining sector, as the Zambian Government through the Industrial Development Corporation (IDC), is the principal shareholder of the entity.

The Company’s shares are listed on the Lusaka Stock Exchange (LuSE), the London Stock Exchange and Euronext.

2 Basis of accounting

These consolidated and separate financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) and the requirements of the Companies Act of Zambia. They were authorised for issue by the Company’s board of directors on 5 May 2017.

Details of the Group’s accounting policies, including changes during the year, are included in note 39.

Going concern

As at 31 March 2016, the group’s current liabilities exceed its current assets by ZMW 179 million (2015: current assets exceeded its current liabilities by ZMW 95 million).

Subsequent to year end, as indicated in note 37 (settlement agreements with KCM), the court case that the Company was pursuing against KCM was successful. KCM was ordered to pay all sums owed to the Company and 80% of the costs it had to incur in pursuing its claim. In addition, a dividend was received from Copperbelt Energy Corporation Plc, a related party. The settlement amount and dividend restored the Group’s liquidity and has enabled the Group and Company to realise their assets and settle their liabilities in the ordinary course of business and subsequent to year end.

Accordingly, the financial statements are prepared on the basis of accounting policies applicable to a going concern.

3 Functional and presentation currency

These financial statements are presented in Zambian Kwacha, which is the Company’s functional currency. All amounts presented in Kwacha have been rounded to the nearest thousand, unless otherwise indicated.

Several of the Company’s equity investments prepare financial statements in US Dollars which is their functional currency, due to the nature of the industry in which they operate. This has resulted in a foreign currency translation reserve at the consolidated level. More detail is included in note 19.

4 Use of estimates and judgements

In preparing these financial statements, management has made judgements, estimates and assumptions that affect the application of the Group and Company’s accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to estimates are recognised prospectively.

a) Judgements

There are no judgements made in applying accounting policies that have the most significant effects on the amounts recognised in the consolidated and separate financial statements.



36

ZCCM-IH

Notes to the financial statements (continued)

4 Use of estimates and judgements (continued)

(b) Assumptions and estimation uncertainties Information about assumptions and estimation uncertainties that have a significant risk of resulting in a material

adjustment in the year ending 31 March 2016 is included in the following notes:

• Note 31 - measurement of defined benefit obligations: key actuarial assumptions.• Notes 18, 19 & 20 – measurement of fair value of investee companies; key assumptions about discounted

cash flow assumptions.• Note 39(h) - impairment test: key assumptions underlying recoverable amounts; and• Note 34 - recognition and measurement of provisions and contingencies: key assumptions about the

likelihood and magnitude of an outflow of resources.

Measurement of fair values

A number of the Group’s accounting policies and disclosures require the measurement of fair values, for both financial and non-financial assets and liabilities.

The Group has an established control framework with respect to the measurement of fair values. Significant valuation issues are reported to the Group Audit Committee. This includes the Group finance department that held overall responsibilities for overseeing all significant fair value measurement including level 3 fair values and reports directly to the Chief Financial Officer (CFO).

The finance team regularly reviews significant unobservable inputs and valuation adjustments. If third party information arises such as broker quotes or pricing services, used to measure fair values, then the finance team assesses the evidence obtained from third parties to support the conclusion that such valuations meet the requirement of IFRS, including the level in the fair value hierarchy in which such valuations should be classified.

Significant valuations are reported to the Group Audit Committee.

When measuring the fair value of an asset or a liability, the Group uses market observable data as far as possible. Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows:

• Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.• Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability,

either directly (i.e. as prices) or indirectly (i.e. derived from prices). • Level 3: inputs for the asset or liability that are not based on observable market data (unobservable

inputs).

If the inputs used to measure the fair value of an asset or a liability fall into different levels of the fair value hierarchy, then the fair value measurement is categorised in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement.

Further information about the assumptions made in measuring fair values is included in the following notes:

• Note 36- financial instruments.• Note 17 - investment property.



37

ZCCM-IH

Notes to the financial statements (continued)

5 Operating segments

a) Basis for segmentation

The Group has five reportable segments, as described below, which are the Group’s strategic divisions. The strategic divisions offer different products and services, and are managed separately because they require different technology and marketing strategies.

The following summary describes the operations of each reportable segment.

Reportable segments Operations

Total revenue

Revenue from

Zambia

Revenue from

foreign countries

Total Segment

assetsNoncurrent

assets

Current assets

ZCCM-IH PlcInvestment holding company

48,782 48,782 - 369,223 369,223 -

Ndola Lime Company Limited

Manufacturing of lime, mining

196,582 172,992 23,590 1,152,820 1,117,471 35,349

Nkandabwe Coal Mines Limited

Coal mining -

Documents

ZCCM INVESTMENTS HOLDINGS PLC · Mr. C Chabala Chief Corporate Services Officer /Company Secretary Ms. M Chanda Chief Investments Officer (Separated 31 January 2016) Mr. M T Chipata