On behalf of the Board of Directors of ZCCM-IH, 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 2017.

Mining will continue to be Zambia’s main economic driver for the foreseeable future and, as such, ZCCM-IH will continue to leverage its unique position as a key player in the mining sector to create value for its shareholders. In recent years however, the mining industry by and large saw a dip in growth as a result of sustained low copper prices due to low demand by high copper consumer countries. Furthermore, the first half of 2016 saw a continued deficit in energy, which resulted in low production and productivity hence reduced revenues for most mining companies. The lower than expected performance in the mining sector resulted in reduced revenues for the Company and Group.

The last quarter of 2016 and the first quarter of 2017 saw an improvement in copper production for most major mining companies due to stability in energy supply and an improvement in copper prices on the world market.

Growth in the mining sector is expected to continue as major economies mainly the United States of America and China embark on expansion programs in the manufacturing and infrastructure development sectors. ZCCM-IH is poised to take advantage of the expected buoyance of the mining and related sectors to increase shareholder value.

Global economy

According to the International Monetary Fund (IMF) Report for 2016, the global economy grew by 3.1% reflecting a more subdued growth in advanced economies due to geopolitical reasons mainly in Europe and weaker than expected growth in economic activity in the United States of America. The IMF predicted a recovery of the global economy on the strength of the long awaited recovery in manufacturing and trade with growth estimated to increase marginally to 3.5% at the end of 2017. This growth will further be seen in emerging and developing economies as a result of a gradual improvement in commodity prices. Furthermore, growth is expected to remain strong in China and many other commodity importers.

Growth in Sub-Saharan Africa remained fragile in 2016 owing to lower than expected demand for commodity prices globally. Following the rebound of some commodity prices particularly copper and other minerals, growth is expected to improve marginally to between 5 and 7.5%.

Global annual copper production increased marginally by about 4% to 19.4 million tonnes as at December 2016. London Metal Exchange (LME copper prices increased by 17%, from US$ 4,710 per tonne at the end of December 2015 to US$5,500 per tonne at the end of December 2016. The prices have continued to increase steadily since December 2016.

Zambian Economy

The Zambian economy continued to be affected by two major factors, namely declining copper prices and the energy deficit due to low water levels. Other factors, such as high inflation, negatively impacted the growth of the economy. While copper production was up by around 8.2% to 575,780 metric tonnes in the first nine months of 2016, the mining sector did not fully realise its potential owing to low copper prices and high cost of production as a result of energy deficits. By the end of 2016, the economy had grown to 3% against a target of 5%. As a consequence of these factors, the economy is expected to grow marginally to 3.4% in 2017.

Financial Performance

The Group recorded turnover of K 95 million (2016: K199 million) and operating profit of K848 million (2016:loss of K 858 million). The low turnover is attributed to low sales recorded for lime and lime products at Ndola Lime Company Limited. The Group reported a profit before tax of K1,244 million (2016: loss of K 2,865 million). The Group recorded a profit after tax of K 729 million (2016: loss of K 2,912 million). The Group’s share of loss of equity accounted investees’ losses was K 189 million (2016: loss of K 2,210 million). The Group’s retained earnings as at 31 March 2017 were positive at K891 million (2016: K 147 million). The increase in retained earnings is attributed to profit recorded at group level of K 729 million (2016: loss of K 2,912 million). The Company’s retained earnings increased by 740 % to K 731 million (2016: K 87 million) owing to profit recorded at Company level.

Strategic and New Investments

Recapitalisation of Ndola Lime Company Limited (NLC)

Further to the hot commissioning phase of the Recapitalisation Project which commenced in prior the year, NLC continued to optimise the performance of the Vertical Kiln (VK2). The project was met with a series of technical hurdles which affected the performance the company.

The Board is undertaking a review of the entire operation of the company to determine an appropriate option that will result in improving the operations of NLC as well the performance of the Group.

Energy Sector

ZCCM-IH has continued to explore opportunities in the energy sector. With the commissioning of the first phase of the Maamba Collieries Limited (MCL) Thermal Power Plant (TPP), plans are underway to explore investment in the second phase of the TPP.

Manufacturing Sector

As part of its diversified program, ZCCM-IH is looking at value addition options for the limestone deposit in Ndola by developing a cement manufacturing plant. ZCCM-IH will develop the cement plant with the support of strategic and equity partners.

Capital Market

The ZCCM-IH share price on the Lusaka Securities Exchange closed the year at K38 (2016: K40). The market capitalisation as at 31 March 2017 reduced to K6,110 million (2016: K6,431 million). The marginal reduction in the share price is indicative of the general stock market performance, which has experienced low liquidity and hence low share transactions.

Outlook

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.

Copper prices are expected to increase steadily premised on increased demand from high copper consumer countries. ZCCM-IH’s performance is expected to improve as a result of the improvement in copper prices which drive the performance of the mining portfolio. Furthermore, as a result of good rains experienced during the 2016/17 season, the generation capacity of hydroelectricity is expected to improve, thereby stabilising energy supply.

The recovery in copper prices as well as stability in energy supply will contribute to the growth in copper production, which in turn will lead to growth in copper exports. The expected growth is further confirmed by additional investments of over $ 2 billion over the next several years announced by major multinational investors in the mining sector of Zambia.

In response to the positive outlook, ZCCM-IH will implement a new Strategic Plan hinged on expansion of its investment footprint in various sectors of the economy including mining with a focus on industrialisation, energy, agriculture, manufacturing, real estate and financial services.

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 shareholders and investee companies for their efforts and contributions during the year.

Mr. E S Silwamba, SC

Chairman