Group performance benefited from a stable business environment in the Zambian economy, favourable business conditions in China and positive sentiment about the global economy.

Financial Performance

During the period under review, copper prices on average rose from around US$3 per pound at the beginning to US$4.27 per pound at the close of the financial year. Copper prices were influenced by increased Chinese demand, positive sentiment about future global economic expansion, continued constraints and disruptions to the global supply of copper and receding concerns of a double dip recession in the United States.

For the Group, the increases in copper prices encouraged continued scaling up of operations and a relatively stable Zambian Kwacha. The overall impact of all this was that the Group significantly increased its profitability in the 2011 financial year.

The Group recorded sales of ZMK396 billion (2010: ZMK142 billion) and operating profit of ZMK530 billion (2010: ZMK47 billion as restated). High commodity prices impacted positively on the revenues of most of the investee companies which continued to record profitability. This impacted positively on ZCCM-IH as reflected in the share of profits of associates of ZMK745 billion (2010 : ZMK366 billion) in the financial year under review.

As a consequence of the significant share of profits of associates and the favourable economic and business environment, the Group reported a profit before tax of ZMK1,530 billion in the 2011 financial year (2010: ZMK85 5 billion as restated).

While the Group recorded positive retained earnings of ZMK2,005 billion (20 10: ZMK571 billion) driven by 7 share of profits of associates, the Company recorded negative retained earnings of ZMK628 billion (2010: ZMK966 billion as restated) resulting mainly from exchange losses incurred on historical United States Dollar denominated shareholder debts.

Strategic and new investments

Shareholders will recall that over the last 11years, the Company continued to report that ZCCM-IH had a choice to take up either 15% or 20% in Konkola North Copper Project (Konnoco). The developers ofKonnoco finally made a development decision in the financial year under review following the completion of feasibility studies. In this respect, ZCCM-IH took up 20% shareholding in Konnoco on 16 November 2011. This was in line with the provisions of the Konnoco Agreement of 1997. Negotiations in respect of transaction documents for the actual development of Konnoco mine commenced and were finalised post the financial year under review.

ZCCM-IH owns 20.6% of shares in Konkola Copper Mines Plc (KCM) while Vedanta owns 79.4%. During the financial year under review, Vedanta announced the incorporation of a new company, Konkola Resources Plc ("KR") in En gland and Wales which was to issue new shares to ZCCM-IH and Vedanta Resources Plc (Vedanta) in exchange for their shares in Konkola Copper Mines Plc (KCM). It was envisaged after the share exchange that KR would proceed with an initial public offering of its ordinary shares on the London Stock Ex change to be followed by an offering on the Lusaka Stock Ex change. However, due to market volatility and other events, the boards of Vedanta and KCM resolved to pursue the share ex change and attendant transactions at a future date.

As reported in the previous financial year, the Sale and Purchase Agreement for the sale of ZCCM-IH's 65% shares in Maamba Collieries Limited (MCL) to Nava Bharat (Singapore) Pte Limited was signed subject to completing and satisfying conditions precedent. The completion point in this regard was reached in the financial year under review paving way for commencement of initiatives to recapitalise MCL and to develop a 300 me ga watt thermal power plant. Whilst ali the legal requirements requiring the transfer of the shares to Nava Bharat have since been finalised, financial closure awaits conclusion of discussions in respect of statutory liabilities of MCL such as PayAsYouEarn(PAYE) and contributions to the National Pensions Scheme Authority(NAPSA).

In continued efforts to diversify to other minerals, the Company accepted an offer to purchase 50% of the shares of Kariba Minerals Limited (KML) from the Government of the Republic of Zambia during the financial year. The transaction is expected to be finalised during the financial year ending 31 March 2013. KML is in the business of prospecting, mining, processing and marketing of amethyst and any su ch other precious and semiprecious stones. KML's amethyst asset in Mapatizya in the Southern Province of Zambia is considered to be the largest amethyst deposit in the World, the only amethyst with a very deep purple colour. KML is the largest single producer of amethyst in Zambia and the World.

Capital market

The closing share priee of ZMK10,000 for the period under review showed a decline from the opening price of ZMK2 7,000 at the beginning of the period, on the Lusaka Stock Ex change, the Company's primary listing. This was mainly a result of a lag in the impact of the global financial crisis that began in 2008. The market capitalisation as at 31 March 2011 was K 893 billion.

Outlook

The Zambian economy and the business environment is expected to remain stable in the future. A number of the investee companies were expected to undertake projects aimed at improving efficiencies, lowering unit costs of operations as well as expanding capacity. The level of dividend receipt, at the moment, from investee companies operating the mines is yet to correspond to the levels in rise in commodity prices, improved business environment and the general economy. The Company will thus focus on activities and actions to ensure optimum dividend receipts and increased efforts to value adding investments.

The continued recovery of the global economy and high commodity prices will impact positively on the mining sector and other sectors of the economy.

This scenario will allow ZCCM-IH to maximise returns from its existing investments currently concentrated in copper mining, as well as pursuing value adding opportunities in other minerals and mining related opportunities.

Directorate

During the year, Dr. D. H. Kalyalya retired from the Board of Directors, in November 2010. A replacement director had not been appointed as at the financial year end.

Appreciation

I would like to thank my fellow Board members, 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. The Group remains well positioned to seize the opportunities in the years ahead and has capacity to manage the challenges.

- Wila D.Mung'omba

Executive Chairman of the Board