During the period under review, the Company changed its financial year end from 30 June to 31 March and therefore this Report is for the nine month financial period 1 July 2009 to 31 March 2010. The change was necessitated by the need to align ZCCM-IH’s financial year to those of the majority of its investee companies (subsidiaries and associates) and thereby improve the efficiency of preparing group reports.

The period under review coincided with an upturn in the world economy following the easing of the Global Financial Crisis (GFC). During this period, the Group focused on leveraging activities to exploit emerging opportunities in the business environment.

Financial Performance and strategic investments

From a major slump in both demand and prices (low prices of US$1.64 per lb) in the previous period, 1 July 2008 to 30 June 2009, copper made strong recoveries in the current period 1 July 2009 to 31 March 2010 (high prices of US$3.30 per lb) influenced by demand from China, positive sentiments about future economic expansion and supply disruptions in Chile.

For the Company, the upturn in the world economy manifested in significant increases in copper prices, scaling up of operations as well as strengthening of the Zambian kwacha (the exchange rate improved from K5,180.71 per US$1 at the beginning of the financial year, 1 July 2009, to K4,698.75 per US$1 at the end, 31 March 2009). The overall impact of all this was that the Company returned to profitability in the 2010 financial period reversing the net loss of the previous year.

For the financial period 1 July 2009 to 31 March 2010, the Group recorded sales of K116 billion. For the same period, the Group recorded an operating profit of K42 billion. Rising commodity prices resulted in increased revenues of most of the investee companies who recorded profitability particularly in the last quarter of the financial period under review. This impacted positively on ZCCM-IH as reflected in the share of profits of associates of K391 billion in the period under review.

As reported in the previous financial year, Chambishi Metals Plc, Luanshya Copper Mines Plc and Albidon Zambia Limited were placed under care and maintenance due to depressed commodity prices resulting from the GFC. However, following the rising of commodity prices, the companies resumed operations in the period under review.

The strengthening Zambian Kwacha caused the Group’s Administration expenses to reduce by 72% as a result of an impairment review on receivables and also for the group to record exchange gains of K104 billion. The Company continued to explore measures that could be undertaken to mitigate exposure to fluctuations in foreign exchange.

As a consequence of the above favourable economic and business circumstances, the Group reported a profit in 2010 period of K436 billion.

Following the placement of Luanshya Copper Mines Limited (LCM) under care and maintenance in the previous year, the majority shareholder (Enya Holdings BV) sold its shares to China Nonferrous Metal Mining (Group) Limited (CNMM). As a way of delivering value to the members of ZCCM-IH, it is pleasing to note that during negotiations of the sale, ZCCM-IH was awarded an additional 5% free carried interest bringing its total shareholding in LCM to 20%. It is anticipated that CNMM will reopen, finance recapitalisation and give a new lease of life to LCM.

The Company continued with activities intended to diversify its investments into other mining activities other than base metals. In this regard, negotiations with the preferred bidder for the strategic equity partner in Maamba Collieries Limited (MCL),a coal mine, were concluded during the period under review. This resulted in the signing of the Sale and Purchase Agreement whereby Nava Bharat (Singapore) Pte Limited offered to buy 65% of ZCCM-IH’s shares in MCL upon completion and satisfying conditions precedents. The Agreement incorporated the commitment to recapitalise MCL and to develop a 300 mega watt thermal power plant. The completion of conditions precedent is anticipated in the next financial year.

Capital Market

The closing share price for the period under review was the same as the opening price of K27,000 at the beginning of the period, on Lusaka Stock Exchange, the Company’s primary listing. The market capitalisation as at 31 March 2010 was K 2,411 billion.

Outlook

The outlook points to a steady recovery of the global economy and an increase in commodity prices. This would impact positively on the mining sector and other sectors of the economy. This would allow ZCCM-IH to maximise returns from its existing investments currently concentrated in the mining sector, as well as pursuing value adding opportunities in other sectors of the Zambian economy.

Directorate

During the year, Mr. P Mumba retired from the Board of Directors in November 2009 and Mr. T J Kasonso was appointed in his stead in the same month.

Appreciation

On behalf of the Board, I would like to thank the Management and Staff of ZCCM-IH for their loyalty, dedication and hard work and those from the investee companies for their efforts and contributions during the past year. I also thank my fellow Board members for their support and wise counsel. The Group is well positioned to seize the opportunities in the years ahead and has capacity to manage the challenges.

A J Lungu

Chairman of the Board