2020 Annual Report

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2020 Annual Report

Published Date: 2nd September 2022


The Board shares 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 December, 2020. The year was a challenging one partly on account of disruptions in international trade caused by the Novel Corona Virus (COVID-19) pandemic, inability to influence operations within investee companies due to minority shareholding and financing constraints. These major factors negatively affected operating companies in which ZCCM-IH has invested. Despite the challenges that faced the Company during the year, ZCCM-IH rose above these and posted a profit for the year.

During the year under review, the Company revised and developed a new Strategic Plan (SP) to cover the period 2020 to 2026 (2026 SP). In the 2019 nine-month period performance review, we stated that the Company would exert more focus on mining and mining-related investments. Thus, in line with this theme, the 2026 SP goals focus on extracting value from the existing portfolio and investing in greenfield mining and mining-related ventures. The other goals of the 2026 SP are to achieve operational and financial excellence and generate greater shareholder value through stock-exchange price discovery.

In 2020, we revised ZCCM-IH’s business model which revisions include taking steps to enhance value extraction through diverse means other than dividend income. It also includes broadening the Company’s activities in the mining sector to include the whole value chain across a diverse mineral portfolio.

Global Economy

The COVID-19 Pandemic led to a contraction in the 2020 global growth which was estimated at -3.5%, 0.9% higher than consensus projections (reflecting stronger-than-expected momentum in the second half of 2020). The U.S. GDP declined -3.5%, its worst performance since at least the end of World War II, as a pandemic-induced recession took hold in February 2020. It grew rapidly in the fourth quarter and was forecast to continue recovering. On the other hand, China’s recovery from COVID-19 was swift. Aided by the containment of the COVID-19 outbreak since March 2020 and supported by accommodative financial and fiscal policies and resilient exports, China recorded +2.3% real GDP growth in 2020.

Globally, COVID infection rates increased significantly towards the end of 2020 in many countries, boosted by new, more easily transmissible variants of the virus.

National lockdowns were introduced in many countries with immediate adverse economic consequences. More positively, the approval and rollout of several vaccines offering a high degree of immunity raised hopes of a more permanent resolution of the COVID crisis. Emerging and Frontier markets were set for modest recovery, though risks remain mainly due to accessibility to

Zambian Economy

The domestic economy contracted by 3.0% in 2020, due to the adverse effects of the COVID-19 pandemic. Particularly hard hit were the wholesale and retail trade, education, construction and tourism sectors. The mining, agriculture, information and communication sectors performed strongly, mitigating the effects of the recession.

Inflationary pressures heightened during 2020 causing overall inflation to average about 15.7% from 9.1% in 2019, deviating further away from the upper bound of the 6-8 percent target range. This was mainly driven by the sharp depreciation of the Kwacha against the US dollar.

In the mining sector, copper production rose on the back of the commissioned refurbished plants at some mines, higher capacity utilisation, favourable ore grades, and reduction in cash costs. Copper prices were mostly supported by the pick-up in demand in China in the second half of the year.

To shore up international reserves, there was a new requirement by the Zambian Government that mining companies pay the remaining tax obligations directly in US dollars effective June 2020. In addition, on December 11, the Bank of Zambia (BOZ) signed two-year contracts with Kansanshi Mining Plc and Zambia Gold Company (ZGC) to purchase locally produced gold. On December 31, the Bank purchased 47.96 kilogrammes of gold doré from ZGC.

Financial Performance
Change of financial year end
ZCCM-IH with effect from 1st April 2019, changed its financial year end from 31st March to 31st December in order to comply with the provisions of section 71 of the Public Finance Management Act and to align with the financial year end of its majority shareholders, the Industrial Development Corporation (IDC). The prior period runs for nine (9) months from 1st April 2019 to 31st
December 2019, whilst the current period covers twelve (12) months from 1st January 2020 to 31st December 2020 and as a result, the comparative figures stated in the statement of profit or loss and other comprehensive income, statement of changes in equity, statement of cashflow and other related notes are not comparable.

ZCCM-IH’s performance, both as a Group and Company, improved when compared to the previous period. The comparative performance for the year under review to 2019 should, however, be understood from the point of view that the period to December 2019 was nine months on account of the change in financial year as announced during the time of change.

The Group reported a profit before tax of ZMW1,853 million (2019: ZMW 404 million) and a share of profit of equity accounted investees for the year ended of ZMW1,488 million (2019: ZMW420 million). The increase in profitability is largely attributable to exchange gains recorded from the Group’s foreign denominated assets combined with improved performance of investee companies.

The Group’s retained earnings as at 31 December 2020 were positive at ZMW4,271 million (2019: ZMW 2,191 million). The increase in retained earnings is attributed to recorded Group profit of ZMW2,131 million (2019: ZMW307 million). The Company’s retained earnings increased by 53 percent to ZMW1,494 million (31 December 2019: ZMW978 million) on account of profit recorded for the period of ZMW568 million.

Strategic developments

During the period under review, the Board approved the upgrading of the listing of the ZCCM-IH shares on the Euronext Stock Exchange from the Access tier to the Growth tier. This will ensure that ZCCM-IH improves the liquidity of its shares on Euronext via access to a greater pool of investors than is currently the case.

Earlier in the year, we announced the partnership between the Ministry of Finance and ZCCM-IH relating to the gold sector. At the beginning of 2020, this partnership was cemented through incorporation of Zambia Gold Company Ltd (ZGC) which is 51% owned by ZCCM-IH and 49% by the Ministry of Finance. ZGC’s main objective is to lead the development of the Zambian gold sector from the current state of activities, which are characterized by illegal mining and trading, to a commercially viable sector. Thus, ZGC will undertake the following, amongst others:

  • Acquire exploration licences with a specific focus on gold tenements in Zambia;
  • Raise funding or identify potential partners for the purpose of carrying out mineral exploration and evaluation on the acquired tenements;
  • Develop tenements into fully operational gold and other precious mineral mines in subsequent years;
  • Refining, processing, and grading of gold and other precious minerals;
  • Active trading of gold and other precious minerals; and
  • Support artisanal mining operations and transforming these into commercially viable activities.

In line with the 2026 SP, the Board of ZCCM-IH approved the proposed IDC/ZCCM-IH Group reorganization exercise whereby the Company will transfer its investment in non-mining assets (100% of Mushe Milling and 71.4% of Investrust Bank PLC) to the IDC in exchange for a mining asset (25% of Kagem Mining Ltd).

The Group reorganization objective is to achieve optimisation of operations and unlock opportunities for synergy within the IDC /ZCCM-IH Group. The proposed Group Reorganization is subject to approval by shareholders necessary and statutory regulatory authorities. The Group Reorganisation is expected to be finalised in the 2022 financial year.

As part of the ongoing diversification initiatives, we intend to participate in the mining supply chain (MSC) going forward. To this effect necessary preliminary work was undertaken in 2020 to prepare for the ZCCM-IH’s entrance into this subsector of the mining industry i.e. Supply of Consumables such as flocculants, mill balls, explosives valves and pumps. It is our intention that the MSC initiative will lead to greater participation in the mining value chain and therefore more synergy with all Investee Companies.

Shareholders will recall that in 2019 we announced the filing by ZCCM-IH of a petition in the High Court of Zambia for the winding-up of Konkola Copper Mines PLC. On 20th November 2020, the Court of Appeal overturned the decision of the High and stayed the liquidation proceedings, referring the parties to arbitration. During the year under review, the winding up proceedings stayed pending the conclusion of the Arbitration Proceedings in South Africa. As at the close of financial year, the Arbitration proceedings (which are confidential as between the parties) are underway, (See note 42(ii)).

In 2020, ZCCM-IH disposed of its 20% shareholding in CEC Africa Plc. Proceeds from the disposal will be applied on other opportunities in the mining and other mining related sectors of the domestic economy.

Capital market

The ZCCM-IH share price on the Lusaka Securities Exchange closed at ZMW38.80 (Dec 2019; ZMW28.49) showing a 27% improvement. Consequently, the market capitalisation as at 31 December 2019 was ZMW6.2 billion compared to ZMW4.58 billion, as at the end of December 2019.

Significant event posts the reporting date

Towards the end of the period under review, the Company announced that it was in discussions with Glencore Finance (Bermuda) Ltd (the majority shareholder of Carlisa Investments Corporation) regarding the future of Mopani Copper Mines PLC (“Mopani”). Subsquent to the year end , ZCCM-IH completed acquisition of 90% shareholding in Mopani to make it a wholly owned subsidiary. The details on the financial impact have been disclosed on note 42(i). The transaction is in line with the 2026 SP and forms a key milestone for ZCCM-IH.


The mining sector is generally expected to benefit from high commodity prices which analysts predicted to be bullish in 2021 and into the medium to long term.

With renewed focus, ZCCM-IH is committed to enhance value creation for its shareholders. Thus, ZCCM-IH will accelerate efforts to diversify its revenue whilst extracting more value from existing investments.


I express great appreciation to my fellow Board members for their resilience, advice and for providing clear direction to Management during a very difficult year of unprecedent global disruption caused by COVID-19. I also recognise the courage, commitment and professionalism of the Management and Staff of ZCCM-IH during the past year.

Finally, I again extend my gratitude to the shareholders for their continued confidence in their Company, ZCCM-IH.


Ms Dolika E S Banda

Board Chairperson