2008 Annual Report

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2008 Annual Report

Published Date: 30th June 2008

It gives me great pleasure to present the Chairman's statement for the year-ended 30 June 2008. At the outset, and on behalf of the Board and Management of ZCCM-IH, I regret the protracted and inadvertent delay in releasing this report to our shareholders and other stakeholders. I thank you all for the forbearance you have shown to the Company in this regard.

For the financial year ended 30 June 2008, Group sales grew to K118.9 billion from K106.9 billion in the previous year, representing sales growth of 12%. Similarly, the group gross profit increased by 25%. The earnings per share increased by 5%.

The performance of Ndola Lime Company Limited (NLC), a 100% subsidiary of ZCCM-IH, impacted the group results positively. The global financial crisis, whose effects started to be felt in the later part of 2008, had a fundamental impact on most mining companies. Since ZCCMIH's investment assets are largely in the mining sector, the global financial crisis had a dampening effect on the results for the financial year.

In line with the Company's strategic intent of diversifying its investments into other mining activities other than base metals, the Company focused on diversifying its investments portfolio away from base metals into other sectors and mining activities during the financial year under review. The Company acquired a 2.1% stake in Albidon Limited, the developers of the Munali Nickel project in Southern Province of Zambia. The Company also acquired 100% shares in Maamba Collieries Limited (MCL), a coal producing company also located in the Southern Province.

Though the MCL acquisition affected the operating results, it presents a greater opportunity to enter the energy sector of the Zambian economy, as the intention of ZCCM-IH is to develop a thermal power plant with strategic partners. Given the projected demand for power in Zambia and the south and central regions of Africa as a whole, it is anticipated that the thermal power plant will generate significant returns to Maamba Collieries Limited, ZCCM-IH and the country as a whole.

The returns from existing investments continued to improve as evidenced by the increase in the share of profits from Associates, dividend payments as well as price participation receipts

With the environmental consequences of ZCCM Limited's mining activities to be resolved by ZCCM-IH, it was greatly appreciated that the Government of the Republic of Zambia (GRZ) obtained the support of the World Bank and the Nordic Development Fund for the Copperbelt Environment Project (CEP), to address legacy environmental liabilities and obligations. Work to address environmental concerns progressed well during the financial year.

The outlook for the future is pointing to an end to the global financial crisis and a recovery of the global economy. This will impact positively on the mining sector and other sectors of the economy. ZCCM-IH will continue to leverage value from its existing investments as well as pursuing value adding opportunities in other sectors of the Zambian economy.

During the year, Dr B Nsemukila retired from the Board of Directors and Mr P Mumba was appointed in his stead.

On behalf of the Board, I would like to thank the Management and Staff of ZCCM-IH and those from the investee companies for their efforts and contributions during the past year. The Group is well positioned to fully exploit the opportunities in the years ahead and has capacity to manage the challenges.

AJ Lungu

Chairman of the Board