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  • ZCCM Investments Holdings Plc Annual report and financial statements

    for the year ended 31 March 2013

    ZCCM Investments Holdings Plc

    Annual report and financial statements for the year ended 31 March 2013

  • ZCCM Investments Holdings PlcZCCM Investments Holdings Plc Annual Report for the year ended 31 March 2013

    Contents Page

    Directorate and administration 1

    Management committee 2-3

    Chairman’s statement 4 - 6

    Report of the directors 7 - 10

    Operations report

     Subsidiary companies’ performance 11 - 12

     Associate companies and other investments’ performance 13 - 21

     Corporate social responsibility and environmental review 22

    Directors’ responsibilities in respect of the preparation of financial statements 23

    Report of the independent auditors 24 - 25

    Consolidated and company statements of comprehensive income 26 - 27

    Consolidated and company statements of financial position 28 - 29

    Consolidated and company statements of changes in equity 30 - 31

    Consolidated and company statements of cash flows 32 - 33

    Notes to the financial statements 34 - 93

    Corporate information 94 - 95

    12 - 21

    2 - 3

  • ZCCM Investments Holdings Plc

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    ZCCM Investments Holdings Plc Annual Report (continued) for the year ended 31 March 2013 DIRECTORATE AND ADMINISTRATION DIRECTORS The Directors who held office during the period to 31 March 2013 were: Mr. W D Mung’omba Executive Chairman of the Board Mr. J M D Patterson Non Executive Director Mr.C Mwananshiku Non Executive Director Ms. S Mutemba Non Executive Director Dr. V Mutambo Non Executive Director Dr. B K E Ng’andu Non Executive Director Appointed 02 April 2012 Mrs. P C Kabamba Non Executive Director Appointed 15 January 2013 Dr. A Mwenda Non Executive Director Retired 30 June 2012 The Directors who held office as at the date of approval of this report (08 November 2013) were: Mr. W D Mung’omba (Executive Chairman) Mr. J M D Patterson (Non-executive Director) Mr. C Mwananshiku (Non-executive Director) Ms. S Mutemba (Non-executive Director) Dr. V Mutambo (Non-executive Director) Dr. B K E Ng’andu (Non-executive Director) Mrs. P C Kabamba (Non-executive Director)

  • ZCCM Investments Holdings Plc

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    ZCCM Investments Holdings Plc Annual Report (continued) for the year ended 31 March 2013 MANAGEMENT COMMITTEE Management officials who held office during the year to 31 March 2013 were: Mr. W D Mung’omba Executive Chairman of the Board Mr. M Muyunda Chief Executive Officer Mr. C Chabala Company Secretary Ms. M Chanda Chief Operating Officer (Appointed 01 February 2013) Mr. M T Chipata Chief Financial Officer ( Appointed 1 July 2012) Ms. Y Mkandawire Acting Legal Manager (Appointed 21 November 2012) Mr. Moses Chilambe Acting Technical Manager (Appointed 21 August 2012) Mr C Mjumphi Corporate Officer (Appointed 07 January 2013) Mr. B F Shamalavu Head, Human Resources Ms. W Mangambwa Head, Risk and Internal Audit Mr. J Makumba Environmental Manager (separated 28 February 2013) Mr. M Mbewe Investments Manager (separated 02 November 2012) Mr. J K Kaite Legal Manager (separated 31 October 2012) Mr. M Khunga Corporate Officer (separated 24 September 2012) Mr. W K Katoto Technical Manager (separated 30 June 2012)

  • ZCCM Investments Holdings Plc

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    ZCCM Investments Holdings Plc Annual Report (continued) for the year ended 31 March 2013 MANAGEMENT COMMITTEE (continued) Management officials who held office as at the date of approval of this report (08 November 2013) were: Mr. W D Mung’omba Executive Chairman of the Board

    Mr. M Muyunda Chief Executive Officer

    Mr. C Chabala Chief Corporate Services Officer /Company Secretary

    Ms. M Chanda Chief Operating Officer

    Mr. M T Chipata Chief Financial Officer

    Ms. Y Mkandawire Deputy General Counsel

    Ms. W Mangambwa Head, Risk and Internal Audit

    Mr C Mjumphi Corporate Officer

  • ZCCM Investments Holdings Plc

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    ZCCM Investments Holdings Plc Annual Report (continued) for the year ended 31 March 2013 CHAIRMAN’S STATEMENT During the period under review the global economy continued to record sluggish growth and continuing volatility. Uncertainty across the major economic regions ranging from the post election fiscal cliff in the United States of America, the Chinese leadership transition, to reforms in the Eurozone area continued to impact the global economy. Global copper demand marginally increased by 3.1% (2012:3.2%), while copper production increased by 4.5% (2012: Nil). Copper prices declined 9.4%, from US$8,318 per tonne at the beginning of the year to US$7,540 per tonne at the close of the financial year. Despite the scenario above, the Zambian economy recorded growth of 7.2% in 2013 (2012:6.6%), 0.5% lower than forecast due to lower than budgeted performance in the mining sector and the weaker global economy. Financial performance For the Group, investment in productive capacity, efforts to reposition and enhance efficiencies continued. Investment in Ndola Lime Company Limited continued and this was expected to improve the production capacity of lime and the Group’s business. Other investee companies continued with their growth strategies premised on the prospect of recovery in global demand and improved investments in power projects intended to remove bottlenecks in electricity supply. Growth in output is expected in 2014-15 as investments continue in Lubambe Copper Mine Plc, Konkola Copper Mines Plc as well as First Quantum Minerals Limited’s new Trident Mine. The Group recorded turnover of K520 million (2012: K257 million) and operating profit of K417 million (2012: K367 million). Improved dividend payments from investee companies impacted positively on Group performance. The Group reported a profit before tax of K654 million (2012: K1, 053 million). The Group recorded a profit after tax of K762 million (2012: K1, 238 million). The Group’s share of profit of equity accounted investees reduced to K222 million (2012: K640 million). The Group’s retained earnings as at 31 March 2013 were positive at K4, 018 million (2012: K3, 256 million).The Company’s retained earnings became positive for the first time to K511 million (2012: negative K57 million). Strategic and new investments Ndola Lime Company Limited continued with the rehabilitation of the plant as part of the recapitalisation project of the company. The electrostatic precipitator on the rotary kiln was re- commissioned and a new dust abatement unit on the vertical kiln was installed. ZCCM-IH provided an additional loan of K133 million (2012: K137 million) for the recapitalisation project expected to be commissioned in December 2013.

  • ZCCM Investments Holdings Plc

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    ZCCM Investments Holdings Plc Annual Report (continued) for the year ended 31 March 2013 CHAIRMAN’S STATEMENT (continued) In September 2012, the Government of the Republic of Zambia (GRZ) gave approval for the conversion of all or part of the GRZ debt owed by ZCCM-IH amounting to K 1.9 billion (approximately US$352 million) into equity through a rights issue. As at 31st March 2013, implementation modalities involving the appointment of the Lead Financial Advisors to undertake the rights issue had progressed. As part of this exercise, a valuation of ZCCM-IH and its investments was conducted to ascertain the appropriate value of ZCCM-IH shares. The valuation has been incorporated in these financial statements. The whole balance sheet restructuring exercise is expected to be completed in 2014. During the period under review, ZCCM-IH and Konkola Copper Mines Plc (KCM) entered into a Settlement Agreement pursuant to which certain outstanding payments owed by KCM to ZCCM-IH and certain contingent amounts payable, under the then existing Price Participation Arrangements (PPAs) which dated back to March 2000 were settled. The PPAs were concurrently terminated. Under the settlement agreement, US$46.3 million was required to be paid by KCM (in instalments) to ZCCM-IH on or before 31 August 2013, and a further US$73.4 million (in instalments) on or before 30 September 2016.

    During the financial year under review, GRZ announced the cancellation of the Small Scale Mining Licenses issued to Collum Coal Mining Industries Limited (Collum) situated in Sinazongwe District in the Southern Province of Zambia. Following the cancellation of the licenses, ZCCM-IH applied for and was issued with licences for the coal mine. ZCCM-IH has incorporated Nkandabwe Coal Mine Limited, a 100% subsidiary to operate the coal mine. ZCCM-IH intends to look for strategic partners to work with and develop the mine. Albidon Zambia Ltd was placed under care and maintenance during the financial year under review so as to maintain the investment at Munali. On 28 March 2013, the Board of Albidon Limited announced, that Jin Tuo Investment Limited (a wholly owned subsidiary of Jinchuan Group Resources Holdings Limited, which is itself a majority shareholder of Albidon Limited) had proposed to acquire 100 per cent of the Albidon Limited at a cash price per share of US$0.0025. Subsequent to the financial year under review, the proposal was made to all shareholders other than the Jinchuan Group via a