ZCCM Investments Holdings Plc 2012 Annual report

ZCCM Investments Holdings Plc

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Annual Report 2012

ZCCM Investments Holdings PlcAnnual report and financial statements

for the year ended 31 March 2012


Notice of meeting 1

Directorate and administration 2

Management committee 3-4

Chairman’s statement 5 - 7

Report of the directors 8 - 10

Operations report

Subsidiary company’s performance 11

Associate companies’ performance 12 - 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 - 88

Corporate information 89 - 90

Contents

Annual Report 2012for the year ended 31 March 2012


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NOTICE OF EXTRAORDINARY GENERAL MEETING

NOTICE IS HEREBY given that an Extraordinary General Meeting of the members of ZCCM Investments Holdings Plc will be held on Friday, 17th May 2013 at 10:00 hours at Southern Sun Ridgeway Hotel, corner of Church Road and Independence Avenue, Lusaka, Zambia for the following business:

1. To receive and adopt the audited Financial Statements of the Group for the year ended 31st March 2012, together with the Reports of the Directors and the Auditors to the Shareholders.

2. To ratify the appointment of Directors.

3. To ratify the appointment of Auditors for the financial year ended 31st March 2013 and to authorise Directors to fix their remuneration thereof.

A member entitled to attend and vote at the meeting is entitled to appoint one or more proxies to at-tend and, on a poll, to vote in his/her stead. The proxy need not be a member of the Company. The instrument appointing a proxy must be deposited at the office of the Company Secretary not less than 48 hours before the time appointed for holding the meeting.

By Order of the Board

Chabby ChabalaCompany Secretary

Lusaka, Zambia25 April 2013



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DIRECTORATE AND ADMINISTRATION

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ZCCM Investments Holdings Plc Annual Report 2012 (continued) for the year ended 31 March 2012 DIRECTORATE AND ADMINISTRATION DIRECTORS The Directors who left office during the period to 31 March 2012 were: Mr. A J Lungu Chairman of the Board, Non-Executive -retired November 2011 Mr L Ndalamei Retired October 2011 Dr. G M Beene Retired October 2011 Mr. T J Kasonso Retired November 2011 Dr A.Mwape Retired October 2011 Mrs. P C Banda Retired October 2012 Mr. O B Munyenyembe Deceased February 2012 The Directors who held office as at the date of approval of this report (13th March 2013) were: Mr. W D Mung’omba Appointed 1 December 2011 (Executive Chairman) Mr. J M D Patterson Appointed 13 February 2012 (Non-executive Director) Mr. C Mwananshiku Appointed 13 February 2012 “ Ms. S Mutemba Appointed 13 February 2012 “ Dr. A Mwenda Appointed 13 February 2012 Retired 30 June 2012 Dr. V Mutambo Appointed 13 February 2012 (Non-executive Director) Dr. B K E Ng’andu Appointed 2 April 2012 (Non-executive Director) Mrs. P C Kabamba Appointed 15 January 2013 (Non –executive Director)



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MANAGEMENT COMMITTEE

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ZCCM Investments Holdings Plc Annual Report 2012 (continued) for the year ended 31 March 2012 DIRECTORATE AND ADMINISTRATION DIRECTORS The Directors who left office during the period to 31 March 2012 were: Mr. A J Lungu Chairman of the Board, Non-Executive -retired November 2011 Mr L Ndalamei Retired October 2011 Dr. G M Beene Retired October 2011 Mr. T J Kasonso Retired November 2011 Dr A.Mwape Retired October 2011 Mrs. P C Banda Retired October 2012 Mr. O B Munyenyembe Deceased February 2012 The Directors who held office as at the date of approval of this report (13th March 2013) were: Mr. W D Mung’omba Appointed 1 December 2011 (Executive Chairman) Mr. J M D Patterson Appointed 13 February 2012 (Non-executive Director) Mr. C Mwananshiku Appointed 13 February 2012 “ Ms. S Mutemba Appointed 13 February 2012 “ Dr. A Mwenda Appointed 13 February 2012 Retired 30 June 2012 Dr. V Mutambo Appointed 13 February 2012 (Non-executive Director) Dr. B K E Ng’andu Appointed 2 April 2012 (Non-executive Director) Mrs. P C Kabamba Appointed 15 January 2013 (Non –executive Director)

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ZCCM Investments Holdings Plc Annual Report 2012 (continued) for the year ended 31 March 2012 MANAGEMENT COMMITTEE Management officials who held office during the year to 31 March 2012 were: Mr. M Muyunda Chief Executive Officer Mr. C Chabala Company Secretary Mr. M Mbewe Investments Manager (separated 2 November 2012) Mr. F Mukuka Acting Finance Manager (separated 28 December 2012) Mr. J K Kaite Legal Manager (separated 31 October 2012) Mr. W K Katoto Technical Manager (separated 30 June 2012) Mr. J Makumba Environmental Manager (separated 28 February 2013) Mr. B F Shamalavu Head, Human Resource and Administration Ms. W Mangambwa Head, Risk and Internal Audit

Mr. M Khunga Corporate Officer (separated 24 September 2012)

Management officials who held office as at the date of approval of this report (March 2013) were:

Mr. M Muyunda Chief Executive Officer

Mr. C Chabala Company Secretary

Ms. M Chanda Chief Operating Officer

Mr. M T Chipata Chief Financial Officer

Ms. Y Mkandawire Acting Legal Manager

Mr. Moses Chilambe Acting Technical Manager



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MANAGEMENT COMMITTEE (continued)

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ZCCM Investments Holdings Plc Annual Report 2012 (continued) for the year ended 31 March 2012 MANAGEMENT COMMITTEE (continued) Mr B F Shamalavu Head, Human Resource Ms. W Mangambwa Head, Risk and Internal Audit Mr C Mjumphi Corporate Officer



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CHAIRMAN’S STATEMENT

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ZCCM Investments Holdings Plc Annual Report 2012 (continued) for the year ended 31 March 2012 MANAGEMENT COMMITTEE (continued) Mr B F Shamalavu Head, Human Resource Ms. W Mangambwa Head, Risk and Internal Audit Mr C Mjumphi Corporate Officer

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ZCCM Investments Holdings Plc Annual Report 2012 (continued) for the year ended 31 March 2012 CHAIRMAN’S STATEMENT During the period under review the global economy experienced a slowdown on account of the Euro Zone debt crisis, weak recovery in the USA, a slowdown in Chinese exports and social geopolitical unrest in the Middle East and North Africa. These conditions resulted in emerging market economies being generally weaker than expected. Despite these conditions, the Zambian economy continued to grow at a rate of 6.8 percent in 2012. Good economic performance is expected to continue in the short term driven by the Government’s economic diversification programmes, infrastructure development, growth in mining, agricultural, manufacturing and service sectors. This economic performance places Zambia among Sub-Saharan Africa’s fastest growing economies.

Financial performance

During the year under review, copper prices on average declined from around US$9 642 per tonne at the beginning of the year to US$8 318 per tonne at the close of the financial year. Copper prices, like other commodity prices, were dampened by the challenging global economic conditions.

For the Group, despite the above global economic scenario, investment in productive capacity continued premised on the prospect of recovery in global demand as solutions are found for the fiscal challenges in Europe, the USA, return to growth in China and at a local level improved investments in power intended to remove bottlenecks in electricity supply. Output is expected to grow in 2014-15 as investments continue in Lubambe Copper Mine Limited and Konkola Copper Mines Plc. Further growth is expected from improved productive capacity at Ndola Lime Company Limited upon completion of the recapitalisation programme in 2013.

Despite remaining profitable, the Group experienced reduced revenues. The Group recognised sales of K257 billion (2011: K368 billion) and operating profit of K367 billion (2011: K501 billion). Lower commodity prices impacted negatively on the revenues of most of the investee companies. During the year under review, ZCCM-IH disposed of its 2.30% interest in Equinox Minerals Limited (Lumwana Copper Project) and realised a gain of K273 billion (proceeds of K802 billion (US$ 167.5 million) less carrying amount of K529 billion). The funds from this transaction were ring-fenced for purposes of reinvesting them in a manner that realised value to ZCCM-IH’s shareholders. The funds have since been reinvested in:

i. Ndola Lime Company Limited, to enable it complete the recapitalisation project within an appropriate timeframe and thus take advantage of the surplus demand for its products;

ii. New projects at Maamba Collieries Limited, particularly, the 300 MW Thermal Power Plant Project;

iii. Lubambe Copper Mine Limited (formally Konnoco); and iv. Partial repayment of outstanding loans to the majority shareholder, GRZ.

For the period under review, the Group reported a profit before tax of K1,053 billion (2011:K1, 532 billion). The profit after tax was K1, 238 billion (2011: K1, 431 billion). The Group’s retained earnings continued to be positive at K3,256 billion (2011; K2,019 billion).The Company’s retained earnings improved to negative K57 billion (2011: negative K656 billion) driven mainly by the gain on sale of shares in Equinox Minerals and share of profit of equity accounted investees of K640 billion (2011: K773 billion).



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CHAIRMAN’S STATEMENT (continued)

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ZCCM Investments Holdings Plc Annual Report 2012 (continued) for the year ended 31 March 2012 CHAIRMAN’S STATEMENT (continued) Strategic and new investments

As reported in the previous financial year, on 16 November 2011, ZCCM-IH exercised its option and took up 20% shareholding in Lubambe Copper Mine Limited, of which 5% is free carry while the additional 15% required that ZCCM-IH contributes cash to the development of the mine in line with the provisions of the Konnoco Agreement of 1997. Transaction agreements were signed by ZCCM-IH, VALE/ARM and Konnoco Zambia Limited representatives on 15 September 2011. As at 31March 2012, the Konnocco project reached 57% of overall project implementation. Production was expected to commence by end of the calendar year 2012.

During the year under review Maamba Collieries Limited commenced mining and production of coal while the Engineering, Procurement and Construction (EPC) contract for the development of the 300 MW Thermal Power Plant was signed in February 2012. Maamba Collieries Limited is implementing an Integrated Coal Mining and 300MW Thermal Power Plant Project. The project is expected to be completed in June 2014.

The sale and purchase agreement for the sale of the 50% Government of the Republic of Zambia (GRZ) shares in Kariba Minerals Limited (KML) to ZCCM-IH was cleared by the Attorney General’s office. As at 31 March 2012, documentation relating to the acquisition of the shares in KML was still being finalised. KML is in the business of prospecting, mining, processing and marketing of amethyst and any such other precious and semi precious stones. KML’s amethyst in Mapatizya in the Southern Province of Zambia is considered to be the largest amethyst deposit in the world. KML is the largest producer of amethyst in Zambia and the world. Finalisation of the transaction is expected before the end of the financial year ending 31 March 2013. In September 2011, ZCCM-IH acquired 494 000 000 shares representing 10.6% of the ordinary share capital of Investrust Bank Plc, a local bank listed on the Lusaka Stock Exchange at a price of K16 per share. The total consideration amounted to K7,904 million. The acquisition was done through underwriting of a rights issue exercise that the bank undertook. The Investrust Bank Plc share price closed the year at K18 per share. On 10 November 2011, the Board of Albidon Limited after consultations with the Zambian mining authorities and in accordance with the Mines and Mineral Development Act of 2008, announced that it had approved the temporary suspension of operations at its Munali Nickel Mine in Zambia. With the decline of global nickel prices by approximately 23% and less than budgeted nickel recoveries at Munali, the company experienced serious cash flow difficulties resulting in suspension of the company’s operations. On 7 February 2012 the Board of Albidon announced that it continued to seek to reach a transaction agreement with third parties for possible new investment in the mine. As at 31 March 2012 no progress had been made. Trading of Albidon shares, on the Australian Stock Exchange, remained under suspension as at 31 March 2012. Capital market The closing share price of K12,500 for the period under review showed an increase from the opening price of K10,000 at the beginning of the period, on the Lusaka Stock Exchange, the Company’s primary listing. The market capitalisation as at 31 March 2012 was K1,116 billion (2011: K893 billion).



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ZCCM Investments Holdings Plc Annual Report 2012 (continued) for the year ended 31 March 2012 CHAIRMAN’S STATEMENT (continued) The Company undertook a review of its 2012-2016 strategic plan with a view to enhancing and maximising shareholder value. The review resulted in the development of the following seven strategic focus areas; Leveraging and consolidating existing investments in the copper mining sector and pursuing

other copper assets; Diversifying into other minerals; Investing in mining related sectors; Investing in mining related manufacturing; Treasury management; Reducing legacy liabilities; and Repositioning the company. Outlook

The Zambian economy and the business environment are 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. It is expected that solutions will be found to the challenges affecting the global economy with the result that commodity prices, the mining sector, and other sectors of the economy will be impacted positively.

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, new members of the Board of Directors were appointed and previous members retired, resulting in a change in the entire composition as follows: Mr W D Mung’omba Appointed 1 December 2011 Executive Chairman Mr J M D Patterson Appointed 13 February 2012 Non Executive Director Mr C Mwananshiku Appointed 13 February 2012 Non Executive Director Ms S Mutemba Appointed 13 February 2012 Non Executive Director Dr A Mwenda Appointed 13 February 2012 Non Executive Director Dr V Mutambo Appointed 13 February 2012 Non Executive Director.

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

CHAIRMAN’S STATEMENT (continued)



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REPORT OF THE DIRECTORS

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ZCCM Investments Holdings Plc Annual Report 2012 (continued) for the year ended 31 March 2012 REPORT OF THE DIRECTORS The Directors submit their report together with the audited financial statements for the year ended 31 March 2012, which disclose the state of affairs of ZCCM Investments Holdings Plc (‘the Company’) and its subsidiaries (together “the Group”). Shareholding The Group has the following interests in the undernoted companies: 1 Ndola Lime Company Limited 100.00% 2 Maamba Collieries Limited 35.00% 3 Konkola Copper Mines Plc 20.60% 4 Kansanshi Mining Plc 20.00% 5 Copperbelt Energy Corporation Plc 20.00% 6 Lubambe Copper Mine Plc 20.00% 7 Luanshya Copper Mines Plc 15.00% 8 NFC Africa Mining Plc 15.00% 9 Chibuluma Mines Plc 15.00% 10 Investrust Bank Plc 10.60% 11 Chambishi Metals Plc 10.00% 12 Mopani Copper Mines Plc 10.00% 13 Albidon Limited 0.98%

Share capital

The authorised share capital of the Company remained unchanged at K900 000 000 divided as follows:

54,000,000 “A” Ordinary Shares of K10 each; and 36,000,000 “B” Ordinary Shares of K10 each.

There were no changes in the issued share capital of 89,296,428 shares with a nominal value of K892,964,280 during the year which remained as detailed below: Number of

shares Amount

ZMK At beginning and end of year 89,296,428 892,964,280

The shares are held as follows Number of

shares Amount

ZMK “A” shares - Ministry of Finance and National Planning on behalf of the Government of the Republic of Zambia (GRZ)

53,825,808

538,258,080

“B” shares - Ministry of Finance and National Planning on behalf of the Government of the Republic of Zambia (GRZ)

24,329,828

243,298,280

“B” Shares - Others 11,140,792 111,407,920

89,296,428 892,964,280 The 11, 140, 792 “B” Ordinary Shares are thinly spread and held, as at 31 March 2012, by 2,317 non-controlling shareholders.



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REPORT OF THE DIRECTORS (continued)

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ZCCM Investments Holdings Plc Annual Report 2012 (continued) for the year ended 31 March 2012 REPORT OF THE DIRECTORS The Directors submit their report together with the audited financial statements for the year ended 31 March 2012, which disclose the state of affairs of ZCCM Investments Holdings Plc (‘the Company’) and its subsidiaries (together “the Group”). Shareholding The Group has the following interests in the undernoted companies: 1 Ndola Lime Company Limited 100.00% 2 Maamba Collieries Limited 35.00% 3 Konkola Copper Mines Plc 20.60% 4 Kansanshi Mining Plc 20.00% 5 Copperbelt Energy Corporation Plc 20.00% 6 Lubambe Copper Mine Plc 20.00% 7 Luanshya Copper Mines Plc 15.00% 8 NFC Africa Mining Plc 15.00% 9 Chibuluma Mines Plc 15.00% 10 Investrust Bank Plc 10.60% 11 Chambishi Metals Plc 10.00% 12 Mopani Copper Mines Plc 10.00% 13 Albidon Limited 0.98%

Share capital

The authorised share capital of the Company remained unchanged at K900 000 000 divided as follows:

54,000,000 “A” Ordinary Shares of K10 each; and 36,000,000 “B” Ordinary Shares of K10 each.

There were no changes in the issued share capital of 89,296,428 shares with a nominal value of K892,964,280 during the year which remained as detailed below: Number of

shares Amount

ZMK At beginning and end of year 89,296,428 892,964,280

The shares are held as follows Number of

shares Amount

ZMK “A” shares - Ministry of Finance and National Planning on behalf of the Government of the Republic of Zambia (GRZ)

53,825,808

538,258,080

“B” shares - Ministry of Finance and National Planning on behalf of the Government of the Republic of Zambia (GRZ)

24,329,828

243,298,280

“B” Shares - Others 11,140,792 111,407,920

89,296,428 892,964,280 The 11, 140, 792 “B” Ordinary Shares are thinly spread and held, as at 31 March 2012, by 2,317 non-controlling shareholders.

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ZCCM Investments Holdings Plc Annual Report 2012 (continued) for the year ended 31 March 2012 REPORT OF THE DIRECTORS (continued)

PRINCIPAL ACTIVITIES

ZCCM–IH (“ the Company’’) is an investments holdings company which is quoted on the Lusaka, London and Euronext Stock Exchanges, and has the majority of its investments held in the copper mining sector of Zambia. Its principal activities include managing the Zambian Government’s stake in the mining sector.

ZCCM-IH is the successor Company to Zambia Consolidated Copper Mines Limited (ZCCM Limited). By the year 2000, the mining assets of ZCCM Limited had been unbundled and sold off as separate new entities or business packages to the private sector. The majority interests in the packages relating to certain of ZCCM Limited’s mining and power distribution operations were offered to trade buyers, which was to leave the transformed ZCCM Limited as an Investments Holdings Company, with minority interest in each of these packages. Through ZCCM-IH, the Government of the Republic of Zambia has retained minority interests within each of the business packages. ZCCM-IH is also charged with the responsibility of environmental restoration arising out of the past operations of ZCCM Limited.

Functions and performance of the Group

In its transformed state as an investments holding company, the main functions of the Company are as follows:

to monitor the performance of the investee companies with respect to production and metal prices in order to ensure that commitments agreed upon relating to disbursements are fulfilled on a timely basis;

to continue monitoring production and cost levels in the associate companies. In addition, payments of price participation disbursements have been followed through;

to anticipate the receipt of deferred sale considerations and ensure that these are received on a timely basis and in the correct amounts;

to ensure that ZCCM-IH environmental obligations under the transaction documents are complied with;

to ensure that environmental obligations continue to be attended to through different levels of participation. The Company undertook remedial environmental measures through its environmental department; and

to liaise with prospective greenfield investors in the mining and minerals industry who will enter into Agreements with the Government. The Group has continued to liaise with greenfield investors.

CORPORATE GOVERNANCE

The Group continued to operate by enforcing good corporate governance practices and observing the separation of powers between the Directors and Management on one hand and the Chairman of the Board and the Chief Executive Officer on the other. All Directors on the Board except for the Chairman were non-executive during the financial year.

Activities were further streamlined by the full utilisation of the existing Audit, Remuneration and Investments Committees of the Board whose membership as at the date of 31 March 2012 is indicated below.



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CORPORATE GOVERNANCE (continued)

Audit Committee

Remuneration Committee

Mr. C Mwananshiku (Chairperson) Mr. J Patterson Dr. A Mwenda Ms. S Mutemba

Ms. S Mutemba Mr.C Mwananshiku Dr.V Mutambo

Investments Committee

Dr A Mwenda Dr.V Mutambo Mr.J Patterson Mr.M Muyunda Mr.M Mbewe Mr.C Mpundu Mr.B Nundwe Mr.A Chimpwende

Chairperson Chief Executive Officer Investments Manager Co-opted Investments Expert Co-opted Investments Expert Co-opted Investments Expert

Average number and remuneration of employees

The total remuneration of employees during the year amounted to K53,868 million (2011: K49,556 million) for the Group and K23,157 million (2011: K22,359 million) for the Company. The average number of employees was as follows:

Month Subsidiary Company Group Month Subsidiary Company Group

April 2011 411 82 493 October 2011 419 81 500 May 2011 421 82 503 November 2011 416 84 500 June 2011 421 82 503 December 2011 414 85 499 July 2011 426 83 509 January 2012 413 84 497 August 2011 418 82 500 February 2012 413 85 498 September 2011 419 82 501 March 2012 413 84 497

Staff expenses 2012 2011

Subsidiary Companies 30,711 27,197 ZCCM-IH 23,157 22,359 53,868 49,556

Signed on their behalf by: ........................................ ......................................... Director Director


REPORT OF THE DIRECTORS (continued)



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OPERATIONS REPORT

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CORPORATE GOVERNANCE (continued)

Audit Committee

Remuneration Committee

Mr. C Mwananshiku (Chairperson) Mr. J Patterson Dr. A Mwenda Ms. S Mutemba

Ms. S Mutemba Mr.C Mwananshiku Dr.V Mutambo

Investments Committee

Dr A Mwenda Dr.V Mutambo Mr.J Patterson Mr.M Muyunda Mr.M Mbewe Mr.C Mpundu Mr.B Nundwe Mr.A Chimpwende

Chairperson Chief Executive Officer Investments Manager Co-opted Investments Expert Co-opted Investments Expert Co-opted Investments Expert

Average number and remuneration of employees

The total remuneration of employees during the year amounted to K53,868 million (2011: K49,556 million) for the Group and K23,157 million (2011: K22,359 million) for the Company. The average number of employees was as follows:

Month Subsidiary Company Group Month Subsidiary Company Group

April 2011 411 82 493 October 2011 419 81 500 May 2011 421 82 503 November 2011 416 84 500 June 2011 421 82 503 December 2011 414 85 499 July 2011 426 83 509 January 2012 413 84 497 August 2011 418 82 500 February 2012 413 85 498 September 2011 419 82 501 March 2012 413 84 497

Staff expenses 2012 2011

Subsidiary Companies 30,711 27,197 ZCCM-IH 23,157 22,359 53,868 49,556

Signed on their behalf by: ........................................ ......................................... Director Director


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Annual Report 2012 (continued) for the year ended 31 March 2012 OPERATIONS REPORT

(A) Subsidiary Company’s Performance

The performance of the subsidiary company for the year ended 31 March 2012 is summarised below: 1 Ndola Lime Company Limited

Total revenue in the period to 31 March 2012 was ZMK177,608 million compared to ZMK208, 549 million recorded in 2011. Ndola Lime Company Limited reported a net loss for the year of ZMK188 million compared to a net profit of ZMK23.9 billion as restated in 2011. During the year the Electrostatic Precipitator (ESP) which is the dust abatement unit on the Rotary Kiln failed and according to environmental regulations, Zambia Environmental Management Agency (ZEMA) could not allow the Company to operate the Rotary Kiln without the ESP. This led to the Rotary Kiln unit being out of operation for a period of nine months and this adversely affected sales revenue. The Company also exported goods amounting to ZMK40.6 billion compared to ZMK42.4 billion in the previous year from Zambia to other countries in the SADC region during the year under review. The Company obtained ZMK137 billion (US$ 26 million) as a shareholder loan from ZCCM Investments Holdings Plc to refinance the bridging facility obtained from Standard Bank of South Africa for the recapitalisation project. The re-capitalization project currently under way will enable Ndola Lime Company to increase its production capacity to meet increased demand. Improved technologies will not only lower the unit cost of production and hence improve profitability, but also guarantee the Company’s operations to be in compliance with the relevant regulations on environmental protection. There were no dividends paid during the year. (2011: Nil)



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OPERATIONS REPORT (continued)

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ZCCM Investments Holdings Plc Annual Report 2012 (continued) for the year ended 31 March 2012 OPERATIONS REPORT (continued)

(a) Subsidiary Company’s Performance (continued)

New Hydrating Plant installation

(B) Associate Companies’ Performance

The performance of investee companies for the year ended 31 March 2012 is summarised below:

1 Maamba Collieries Limited

During the year to 31 March 2012, Maamba Collieries Limited (Maamba) reported total revenue of ZMK1.5billion, a gross and net loss of ZMK4.5 billion and K8.8 billion, respectively. As at the end of the aforementioned period, the company had a negative equity position of ZMK150.3 billion. During the year, the company also expended ZMK229.0 billion on operations and ZMK169.0 billion on capital equipment. The expenditure was financed mainly from subscriptions waiting allotment of ZMK230.3 billion and external borrowings of ZMK246.9 billion.

Maamba Collieries Limited has in the last one year achieved substantial progress in the implementation of the revival plans to achieve resumption and subsequent development of its coal mining and coal handling processing operations.

The mining production, coal handling and processing operational plan for the year 2011-2012 was formulated in the context of the scheme of work as contained in the first year of the existing mining contract with GRN Construction Limited.

For Maamba Collieries Limited, power generation using thermal grade coal brings about the much needed value addition and viability to the coal mining operations. It is therefore considered necessary to keep the power project implementation on fast track by deploying all the available means and resources.

There were no dividends paid during the year (2011: Nil).



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(a) Subsidiary Company’s Performance (continued)

New Hydrating Plant installation

(B) Associate Companies’ Performance

The performance of investee companies for the year ended 31 March 2012 is summarised below:

1 Maamba Collieries Limited

During the year to 31 March 2012, Maamba Collieries Limited (Maamba) reported total revenue of ZMK1.5billion, a gross and net loss of ZMK4.5 billion and K8.8 billion, respectively. As at the end of the aforementioned period, the company had a negative equity position of ZMK150.3 billion. During the year, the company also expended ZMK229.0 billion on operations and ZMK169.0 billion on capital equipment. The expenditure was financed mainly from subscriptions waiting allotment of ZMK230.3 billion and external borrowings of ZMK246.9 billion.

Maamba Collieries Limited has in the last one year achieved substantial progress in the implementation of the revival plans to achieve resumption and subsequent development of its coal mining and coal handling processing operations.

The mining production, coal handling and processing operational plan for the year 2011-2012 was formulated in the context of the scheme of work as contained in the first year of the existing mining contract with GRN Construction Limited.

For Maamba Collieries Limited, power generation using thermal grade coal brings about the much needed value addition and viability to the coal mining operations. It is therefore considered necessary to keep the power project implementation on fast track by deploying all the available means and resources.

There were no dividends paid during the year (2011: Nil).

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(B) Associate Companies’ Performance (continued)

2 Kansanshi Mining Plc (Kansanshi)

Expansion of the oxide processing circuit at Kansanshi Mine Plc to 7.2 million tonnes per annum (“Mtpa”) progressed well and was scheduled for completion in Quarter 2 of 2012. The stage two expansions to 14.5 Mtpa is on track for commissioning in 2013.

The fifth Kansanshi acid plant was scheduled to be commissioned during Quarter 3 2012 allowing for full utilisation of the 7.2 Mtpa oxide circuit capacity.

Detailed design work on the Kansanshi copper smelter project was underway with long-lead equipment ordered and site construction works were scheduled to begin in Quarter 2 2012.

On January 30, 2012, a five-year US$1.0 billion senior term and revolving facility with a pledge of FQM’s 80 per cent shares in the company to enable capital expenditure financing requirements that between 2012 - 2017 are budgeted at US$1.7 billion was signed for Kansanshi Mining PLC.

Total dividends paid during the period under review amounted to K76.9 billion (US$16 million). The amount paid to ZCCM-IH was K15billion (2011: K160 billion).

Blasting at main pit



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Annual Report 2012 (continued) for the year ended 31 March 2012 OPERATIONS REPORT (continued) (B) Associate Companies’ Performance (continued)

3 Copperbelt Energy Corporation Plc (CEC) During the year, the company continued to pursue the following matters:

Signing of the Power Supply Agreement (PSA) amendments aimed at giving legal provision to the tariff adjustment of 2011 commenced during the year under review. Four such amendments were signed as at 31 March 2012. Similar agreements involving two other mining companies were anticipated to be signed by the end of June 2012. CEC also resolved to implement the five year tariff plan agreed in August 2011 with one of the major mining companies. The two parties are currently negotiating a repayment plan for arrears accumulated from January 2011 to-date. At Bulk Supply Agreement level, negotiations to get ZESCO’s agreement to the five year tariff plan continued;

Second Zambia - DRC Inter-connector -Based on the expectation that either or both sources of funding were about to be finalised, negotiations with selected EPC contractors for the project were scheduled to commence in the second quarter of 2012 in readiness for commencement of project implementation in the third quarter;

MCM Synclinorium Project – The preferred bidder was to be awarded the contract subject to contract negotiations.

CEC paid a total of ZMK 61 million (US$12.29 million) and in 2011 an amount of ZMK 40 billion (2011: US$ 8.2 million) in form of dividends during the period under review. The amount paid to ZCCM-IH was K12 billion (2011:K8 billion).

The CEC share price on the LuSE moved from ZMK680 as at end of April 2011 to ZMK649 as at 31 March 2012.

Part of CEC infrastructure

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Annual Report 2012 (continued) for the year ended 31 March 2012


(B) Associate Companies’ Performance (continued) 4 Konkola Copper Mines Plc (KCM)

The revenue for the year amounted to K 9,033 billion (US$1,709.8 million) compared to K8,853 billion ( US$1,825.0 million) for the period ended March 2011 and the profit after tax for the year under review amounted to K628.7 billion (US$119.0 million) compared to K824.7 billion (US$170.2 million) for the year ended March 2011.

The Konkola Deep Mining Project was on course in the period under review. Shaft 4 was in operation at mid shaft level and the work was progressing as per schedule for the bottom shaft loading which is likely to finish by 31 December 2013. This will facilitate the acceleration of primary development rate at KCM so as to ramp up the ore production.

KCM declared a total of K118.1 billion (US$25 million) on 23 April 2012 in form of dividends in respect of the year ended 31 March 2012. The amount paid to ZCCM-IH was K23.6 billion (2011: Nil).

5 Lubambe Copper Mine Plc (formerly Konnoco)

Lubambe held its first board meeting on 17 November 2011. This followed the initial signing of the transaction agreements on 15 September 2011 by ZCCM-IH, Vale and ARM, whilst awaiting Government’s signing of the termination agreement.

The following was reported on the project status during the year under review: General progress of all disciplines was satisfactory; Construction progress steadily gained ground; and It was envisaged that the construction progress would be as planned over the project

period.

There was no dividend paid during the year (2011: Nil). (C) Other Investments

1 NFC Africa Mining Plc

During the year NFC Africa Mining Plc completed and commissioned the constructed West Ore Body Project at a cost of US$ 126 million.The project was commenced in 2008 and for the year produced 10,500 tonnes contained copper in concentrates. Further during the year the Company commenced development of the South East Ore Body (SEOB) project at a total expected investment cost of US$800 million. The SEOB project once completed would produce 62,600 tonnes of contained copper in concentrates per annum. The company further upgraded its water treatment plant by installation of a modern water reticulation system at a cost of over US$400,000 to ensure provision of safe drinking water to its employees. There were no dividends paid to ZCCM-IH paid during the year (2011; K14 billion)



15


14


Annual Report 2012 (continued) for the year ended 31 March 2012 OPERATIONS REPORT (continued) (B) Associate Companies’ Performance (continued)

3 Copperbelt Energy Corporation Plc (CEC) During the year, the company continued to pursue the following matters:

Signing of the Power Supply Agreement (PSA) amendments aimed at giving legal provision to the tariff adjustment of 2011 commenced during the year under review. Four such amendments were signed as at 31 March 2012. Similar agreements involving two other mining companies were anticipated to be signed by the end of June 2012. CEC also resolved to implement the five year tariff plan agreed in August 2011 with one of the major mining companies. The two parties are currently negotiating a repayment plan for arrears accumulated from January 2011 to-date. At Bulk Supply Agreement level, negotiations to get ZESCO’s agreement to the five year tariff plan continued;

Second Zambia - DRC Inter-connector -Based on the expectation that either or both sources of funding were about to be finalised, negotiations with selected EPC contractors for the project were scheduled to commence in the second quarter of 2012 in readiness for commencement of project implementation in the third quarter;

MCM Synclinorium Project – The preferred bidder was to be awarded the contract subject to contract negotiations.

CEC paid a total of ZMK 61 million (US$12.29 million) and in 2011 an amount of ZMK 40 billion (2011: US$ 8.2 million) in form of dividends during the period under review. The amount paid to ZCCM-IH was K12 billion (2011:K8 billion).

The CEC share price on the LuSE moved from ZMK680 as at end of April 2011 to ZMK649 as at 31 March 2012.

Part of CEC infrastructure

15




(B) Associate Companies’ Performance (continued) 4 Konkola Copper Mines Plc (KCM)

The revenue for the year amounted to K 9,033 billion (US$1,709.8 million) compared to K8,853 billion ( US$1,825.0 million) for the period ended March 2011 and the profit after tax for the year under review amounted to K628.7 billion (US$119.0 million) compared to K824.7 billion (US$170.2 million) for the year ended March 2011.

The Konkola Deep Mining Project was on course in the period under review. Shaft 4 was in operation at mid shaft level and the work was progressing as per schedule for the bottom shaft loading which is likely to finish by 31 December 2013. This will facilitate the acceleration of primary development rate at KCM so as to ramp up the ore production.

KCM declared a total of K118.1 billion (US$25 million) on 23 April 2012 in form of dividends in respect of the year ended 31 March 2012. The amount paid to ZCCM-IH was K23.6 billion (2011: Nil).

5 Lubambe Copper Mine Plc (formerly Konnoco)

Lubambe held its first board meeting on 17 November 2011. This followed the initial signing of the transaction agreements on 15 September 2011 by ZCCM-IH, Vale and ARM, whilst awaiting Government’s signing of the termination agreement.

The following was reported on the project status during the year under review: General progress of all disciplines was satisfactory; Construction progress steadily gained ground; and It was envisaged that the construction progress would be as planned over the project

period.

There was no dividend paid during the year (2011: Nil). (C) Other Investments

1 NFC Africa Mining Plc

During the year NFC Africa Mining Plc completed and commissioned the constructed West Ore Body Project at a cost of US$ 126 million.The project was commenced in 2008 and for the year produced 10,500 tonnes contained copper in concentrates. Further during the year the Company commenced development of the South East Ore Body (SEOB) project at a total expected investment cost of US$800 million. The SEOB project once completed would produce 62,600 tonnes of contained copper in concentrates per annum. The company further upgraded its water treatment plant by installation of a modern water reticulation system at a cost of over US$400,000 to ensure provision of safe drinking water to its employees. There were no dividends paid to ZCCM-IH paid during the year (2011; K14 billion)



16


16




(C) Other Investments (continued)

Grinding shop

2 Chibuluma Mines Plc Subsequent to the takeover of Metorex Limited by Jinchuan, ZCCM-IH was assured that the existing Shareholders Agreement and Articles of Association of Chibuluma Mines Plc would be maintained together with other existing agreements.

During the year, the Securities and Exchange Commission of Zambia wrote to Jinchuan Group of China confirming that it had considered and approved the application for the waiver to the requirement for Jinchuan Group Limited to make a mandatory offer to eligible minority shareholders in Chibuluma Mines Plc.This meant that there would not be a need for Jinchuan to make a mandatory offer to buy the 15 per cent ZCCM-IH Plc shareholding in Chibuluma Mines Plc.

Chibuluma paid a total of K193.9 billion(S$36.7 million) in form of dividends during the period under review. The amount paid to ZCCM-IH was K28 billion (2011: K6 billion).

3 CNMC Luanshya Copper Mines Plc

Subsequent to year end, on 29 June 2012, China Nonferous Metal Company (CNMC) was listed on the Hong Kong Stock Exchange. CNMC’s interests in Zambia include CNMC Luanshya Copper Mines where it holds 85% of the total holding and ZCCM-IH holds the balance.

With regard to Muliashi, progress on the project during the year was as detailed below:

Site construction at the leaching plant approached the end and shifted to production

commissioning. Transformer substations were built. Installation, testing of electrical equipment was completed at the 100KV substation. The substations were thus ready to supply power to the systems.

In late December 2011, an accumulative investment of US$257.8 million was injected into the Muliashi Project.



17


16





Grinding shop

2 Chibuluma Mines Plc Subsequent to the takeover of Metorex Limited by Jinchuan, ZCCM-IH was assured that the existing Shareholders Agreement and Articles of Association of Chibuluma Mines Plc would be maintained together with other existing agreements.

During the year, the Securities and Exchange Commission of Zambia wrote to Jinchuan Group of China confirming that it had considered and approved the application for the waiver to the requirement for Jinchuan Group Limited to make a mandatory offer to eligible minority shareholders in Chibuluma Mines Plc.This meant that there would not be a need for Jinchuan to make a mandatory offer to buy the 15 per cent ZCCM-IH Plc shareholding in Chibuluma Mines Plc.

Chibuluma paid a total of K193.9 billion(S$36.7 million) in form of dividends during the period under review. The amount paid to ZCCM-IH was K28 billion (2011: K6 billion).

3 CNMC Luanshya Copper Mines Plc

Subsequent to year end, on 29 June 2012, China Nonferous Metal Company (CNMC) was listed on the Hong Kong Stock Exchange. CNMC’s interests in Zambia include CNMC Luanshya Copper Mines where it holds 85% of the total holding and ZCCM-IH holds the balance.

With regard to Muliashi, progress on the project during the year was as detailed below:

Site construction at the leaching plant approached the end and shifted to production

commissioning. Transformer substations were built. Installation, testing of electrical equipment was completed at the 100KV substation. The substations were thus ready to supply power to the systems.

In late December 2011, an accumulative investment of US$257.8 million was injected into the Muliashi Project.

17

ZCCM Investments Holdings Plc Annual Report 2012 (continued) for the year ended 31 March 2012 OPERATIONS REPORT (continued) (C) Other Investments (continued)

2 CNMC Luanshya Copper Mines Plc (continued)

There were no dividends paid during the year (2011: NIL).

Accepted atomising



18


18

ZCCM Investments Holdings Plc Annual Report 2012 (continued) for the year ended 31 March 2012

OPERATIONS REPORT (continued) (C) Other Investments (continued)

4 Chambishi Metals Plc

During the year, Zambia Revenue Authority (ZRA) accepted the company’s position that it pays windfall gain tax on production from its own mine (slag dumps) only. ZRA reassessed the additional principal liability of K4.1 billion and the company requested that ZRA waive the penalty and interest so as to proceed with the payment of the principle amount. The request was accepted by ZRA.

A number of projects to enhance productivity were under way in the period under review and included:

Upgrading of the Oxygen Plant and Pressure Leach Plant; Cobalt Tank house extension; Wire drawing and Spiral Elongation; and Prefeasibility study for leaching boss Low Sulphur Sulphide.


Chambishi Smelter

5 Mopani Copper Mines Plc

The Company approved expenditure in the amount of US$323 million for a new shaft to directly access the Synclinorium ore body, which has a reserve of 80 million tonnes of Copper. This large capital project is expected to be completed in April 2015 and will extend the mine life of Mopani Mines by at least twenty years.

The Company continued with its capital expenditure program, approving several new projects over the year, with a total of US$162.8 million spent. One significant area of capital investment approved and commenced in the year under review is the Smelter Phase III-Converter Project at Mufulira, which has wide reaching environmental benefits for the community around it.



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18


OPERATIONS REPORT (continued) (C) Other Investments (continued)

4 Chambishi Metals Plc

During the year, Zambia Revenue Authority (ZRA) accepted the company’s position that it pays windfall gain tax on production from its own mine (slag dumps) only. ZRA reassessed the additional principal liability of K4.1 billion and the company requested that ZRA waive the penalty and interest so as to proceed with the payment of the principle amount. The request was accepted by ZRA.

A number of projects to enhance productivity were under way in the period under review and included:

Upgrading of the Oxygen Plant and Pressure Leach Plant; Cobalt Tank house extension; Wire drawing and Spiral Elongation; and Prefeasibility study for leaching boss Low Sulphur Sulphide.


Chambishi Smelter

5 Mopani Copper Mines Plc

The Company approved expenditure in the amount of US$323 million for a new shaft to directly access the Synclinorium ore body, which has a reserve of 80 million tonnes of Copper. This large capital project is expected to be completed in April 2015 and will extend the mine life of Mopani Mines by at least twenty years.

The Company continued with its capital expenditure program, approving several new projects over the year, with a total of US$162.8 million spent. One significant area of capital investment approved and commenced in the year under review is the Smelter Phase III-Converter Project at Mufulira, which has wide reaching environmental benefits for the community around it.

19




5 Mopani Copper Mines Plc (continued)

The remedying of the emissions of sulphur dioxide into the atmosphere is being done in line with the Environmental Management Plan agreed with the Zambia Environmental Management Agency (ZEMA) and when complete, should achieve 97% capture of sulphur dioxide, which is world-class environmental practice. This project has been undertaken in phases; with phase I being the construction of a new smelter and acid plant, phase II was the construction of new anode furnaces and phase III is the installation of new converters and an additional acid plant to achieve 97% capture of sulphur dioxide. Capital expenditure in the amount of US$98.5 million was approved in the year for the third new converter and converter gas acid plant which is the final stage of the project.

No dividends were paid during the year (2011: NIL).

6 Albidon Limited (Munali Nickel Project)

On 30 August 2011, Albidon Limited requested a halt and subsequent suspension in the trading of its shares pending the conclusion of investigations regarding operational issues identified at the Munali Nickel Operation. During the investigations conducted as part of the Riverstone-led strategic review, it came to light that metallurgical recoveries reported in the June 2011 Quarterly Activity Report and preceding three Quarterly reports were incorrect. The actual metallurgical recovery results were found to be materially lower than those disclosed earlier.

The results disclosed earlier were based on theoretical calculations used by the Metallurgical Department for plant operating and control purposes. They had not, in accordance with best industry practice, been progressively validated by comparing metal output estimates against verifiable quantities shipped for the period on receipt of assay results.

The Albidon Executive Management and the Riverstone review team became aware of the discrepancy during an internal audit which revealed that final value assay results for concentrate produced and shipped during the period March to May 2011 reported lower contained metal than disclosed in the June 2011 Quarterly Activity Report. While the results of the internal audit were not made available to executive management until 31 August 2011, the Company called a trading halt on 30 August 2011 immediately on becoming aware that there was likely to be a material discrepancy to enable a thorough investigation of the issue over past reporting periods.

The Albidon Board also instituted the following measures:

Suspension of trading in shares; Recruitment of new management and independent directors; Re-organisation and restructuring of finance facilities; Raising new equity capital to strengthen their statement of financial position;

and Introduction of new strategic partners.



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20



(C) Other investments (continued)

6 Albidon Limited (Munali Nickel Project) (continued)

Subsequently, the Board of Albidon suspended operations at the Munali Nickel project on 10th November, 2011 due to the decline in nickel prices and the less-than-budgeted recoveries as earlier announced. This was meant to allow the company to re-direct its scarce cash resources towards the restructuring that was needed to improve the company’s efficiency in the future. On 7th February 2012, the Board of Albidon Limited announced that it continued to seek to reach a transaction agreement with third parties as previously announced. As part of the process, the third party referred to had continued to progress its due diligence review and the parties had continued to discuss regulatory, technical, commercial and transactional issues which would impact the transaction. There was no guarantee however that a transaction would be concluded. Trading in the shares of the Company has remained under suspension to date.

7 Investrust Bank (Z) Plc

ZCCM-IH Plc currently has 494,000,000 shares in Investrust Bank Plc bought in September 2011 at a price per share of ZMK16 each amounting to ZMK7,904 million. The acquisition was done through underwriting of the rights issue exercise that the bank undertook and represents a shareholding of 10.6 per cent in the bank as at 31 March 2012. In response to the Bank of Zambia circular issued on 30 January 2012 requiring commercial banks to comply with the new minimum primary capital requirements of ZMK104 billion, Investrust Bank has put in place a capitalisation plan which includes the following: To consider special resolutions to amend the Articles of Association of the Company

and to alter the Authorised Share Capital of the Company; To authorise the Directors to allot ordinary shares via a Rights Offer to raise

approximately ZMK 40 billion; To consider and if thought proper, approve a restructuring via a share consolidation

to increase the par value of the Ordinary Shares from ZMK 1 to ZMK 1000; and To authorise the Directors to allot shares via a share bonus issue by capitalising share

premiums and part of the existing reserves. In the short term, Investrust intends to continue with its goal to exceed customer expectations through offering quality products and services. It has decided to resume its branch expansion programme after successfully raising funds from existing and new shareholders via a Rights Issue with a view to open at least five new branches in 2012 and aim to acquire more customers in order to grow both its deposit and loan book operations.




21

20




6 Albidon Limited (Munali Nickel Project) (continued)

Subsequently, the Board of Albidon suspended operations at the Munali Nickel project on 10th November, 2011 due to the decline in nickel prices and the less-than-budgeted recoveries as earlier announced. This was meant to allow the company to re-direct its scarce cash resources towards the restructuring that was needed to improve the company’s efficiency in the future. On 7th February 2012, the Board of Albidon Limited announced that it continued to seek to reach a transaction agreement with third parties as previously announced. As part of the process, the third party referred to had continued to progress its due diligence review and the parties had continued to discuss regulatory, technical, commercial and transactional issues which would impact the transaction. There was no guarantee however that a transaction would be concluded. Trading in the shares of the Company has remained under suspension to date.

7 Investrust Bank (Z) Plc

ZCCM-IH Plc currently has 494,000,000 shares in Investrust Bank Plc bought in September 2011 at a price per share of ZMK16 each amounting to ZMK7,904 million. The acquisition was done through underwriting of the rights issue exercise that the bank undertook and represents a shareholding of 10.6 per cent in the bank as at 31 March 2012. In response to the Bank of Zambia circular issued on 30 January 2012 requiring commercial banks to comply with the new minimum primary capital requirements of ZMK104 billion, Investrust Bank has put in place a capitalisation plan which includes the following: To consider special resolutions to amend the Articles of Association of the Company

and to alter the Authorised Share Capital of the Company; To authorise the Directors to allot ordinary shares via a Rights Offer to raise

approximately ZMK 40 billion; To consider and if thought proper, approve a restructuring via a share consolidation

to increase the par value of the Ordinary Shares from ZMK 1 to ZMK 1000; and To authorise the Directors to allot shares via a share bonus issue by capitalising share

premiums and part of the existing reserves. In the short term, Investrust intends to continue with its goal to exceed customer expectations through offering quality products and services. It has decided to resume its branch expansion programme after successfully raising funds from existing and new shareholders via a Rights Issue with a view to open at least five new branches in 2012 and aim to acquire more customers in order to grow both its deposit and loan book operations.

21




7 Investrust Bank (Z) Plc (continued)

Going forward, the bank will continue to build on its competitive strengths and will enhance its position in target market segments and seize new opportunities to achieve long-term growth. Diversification of income streams will remain an important focus too.

The bank did not declare any dividends in the period under review. The Investrust share price on the LuSE closed the period under review at ZMK18.




22

Corporate Social Responsibility and Environmental Review

22


Corporate social responsibility and environmental review (A) Corporate Social Responsibility

The Company’s focus on meeting its social obligations during the year continued to be undertaken through completion of implementation of environmental programmes by the Company’s Environmental department.

(B) Environmental Review

The two subprojects on the Copperbelt which had not been completed before closure of the Copperbelt Environment Project (CEP) on 31 March 2011 were still not completed. All payments for the works done by Contractors before the CEP closed on 31 March 2011 were settled by ZCCM-IH after ZCCM-IH and GRZ agreed to a debt swap. The following are the major highlights of subproject implementation during the year:

i) A Technical Committee on Radioactive Waste Management in Zambia (TC-RWMZ)

continued to meet to identify an institution that can manage the ZCCM-IH Radiation Waste Storage Building in Kalulushi on long-term basis.

ii) During the year, implementation of the Integrated Case Management (ICM) of children with elevated blood lead levels (EBLLs) continued with household interviews, standardized physical examination and treatment at health centers. In addition, an outreach programme involving all parts of the community, providing guidance and education on minimizing exposure to lead continued.

iii) Monitoring of the physical integrity of Tailings Dams (TD) and overburden dumps continued during the year and where necessary, minor maintenance works were done. Feasibility studies by SINO Metals Plc to reprocess TD10 and TD8 continued during the year.

Mukela Muyunda Lusaka Chief Executive Officer April 2013



23

Directors’ responsibilities in respect of the preparation of financial statements

22


Corporate social responsibility and environmental review (A) Corporate Social Responsibility

The Company’s focus on meeting its social obligations during the year continued to be undertaken through completion of implementation of environmental programmes by the Company’s Environmental department.

(B) Environmental Review

The two subprojects on the Copperbelt which had not been completed before closure of the Copperbelt Environment Project (CEP) on 31 March 2011 were still not completed. All payments for the works done by Contractors before the CEP closed on 31 March 2011 were settled by ZCCM-IH after ZCCM-IH and GRZ agreed to a debt swap. The following are the major highlights of subproject implementation during the year:

i) A Technical Committee on Radioactive Waste Management in Zambia (TC-RWMZ)

continued to meet to identify an institution that can manage the ZCCM-IH Radiation Waste Storage Building in Kalulushi on long-term basis.

ii) During the year, implementation of the Integrated Case Management (ICM) of children with elevated blood lead levels (EBLLs) continued with household interviews, standardized physical examination and treatment at health centers. In addition, an outreach programme involving all parts of the community, providing guidance and education on minimizing exposure to lead continued.

iii) Monitoring of the physical integrity of Tailings Dams (TD) and overburden dumps continued during the year and where necessary, minor maintenance works were done. Feasibility studies by SINO Metals Plc to reprocess TD10 and TD8 continued during the year.

Mukela Muyunda Lusaka Chief Executive Officer April 2013

23

Directors' responsibilities in respect of the preparation of financial statements The Company’s directors are responsible for the preparation and fair presentation of the financial statements, comprising the consolidated and company statements of financial position at 31 March 2012, the consolidated and company statements of comprehensive income, changes in equity and cash flows for the year ended, and the notes to the financial statements, which include a summary of significant accounting policies and other explanatory notes, in accordance with International Financial Reporting Standards and in the manner required by the Companies Act of Zambia. In addition, the directors are responsible for preparing the chairman and directors’ report. The directors are also responsible for such internal controls as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error and for maintaining adequate accounting records and an effective system of risk management. The directors have made an assessment of the company and its subsidiary’s ability to continue as a going concern and have no reason to believe the business will not be a going concern in the year ahead. The auditor is responsible for reporting on whether the financial statements are fairly presented in accordance with the applicable financial reporting framework. Approval of the financial statements The annual financial statements of ZCCM Investments Holdings Plc, as identified in the first paragraph, were approved by the Board of Directors on 13th April 2013 and signed on its behalf by: .............................................. ............................................. Director Director


24

KPMG Chartered Accountants Telephone +260 211 372 900 First Floor, Elunda Two Website www.kpmg.com Addis Ababa Roundabout Rhodes Park, Lusaka P O Box 31282 Lusaka, Zambia

Independent auditor’s report to the shareholders of ZCCM Investments Holdings Plc Report on the financial statements We have audited the accompanying financial statements of ZCCM Investments Holdings Plc (“the Company”) and its subsidiaries (together “the Group”), which comprise the consolidated and company statements of financial position as at 31 March 2012, the consolidated and company statements of comprehensive income, changes in equity and cash flows for the year then ended, and the notes to the financial statements which include a summary of significant accounting policies and other explanatory notes as set out on pages 26 to 88. Directors’ responsibility for the financial statements The Company’s Directors are responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards and in the manner required by the Companies Act of Zambia, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor’s responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

KPMG Chartered Accountants, a Zambian partnership, is a member Firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“ KPMG International “), a Swiss entity. All Rights Reserved. Partners: A list of Partners is available at the above mentioned address. 24


25

Opinion In our opinion, these financial statements present fairly, in all material respects, the consolidated and company financial position of ZCCM Investments Holdings Plc as at 31 March 2012, and its consolidated and company financial performance and consolidated and company cash flows for the year then ended in accordance with International Financial Reporting Standards and in the manner required by the Companies Act of Zambia. Report on other legal and regulatory requirements In accordance with Section 173 (3) of the Companies Act of Zambia, we report that, in our opinion, the required accounting records, other records and registers have been properly kept in accordance with the Act. KPMG Chartered Accountants 2013 Lusaka, Zambia Jason Kazilimani, Jr Partner

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26

26


Consolidated statement of comprehensive income for the year ended 31 March 2012 (all amounts are in millions of Kwacha unless otherwise stated)

Notes 2012

2011 Restated

Revenue 8 257,316 368,062 Cost of sales (124,023) (116,173) Gross profit 133,293 251,889 Other income 9a 381,625 361,828 Grant income 9b 12,144 10,956

Environmental expenses 10 (2,552) (28,047)

Administration expenses 11 (157,217) (95,142) Operating profit 367,293 501,484

Finance costs (22,804) (22,603) Finance income 67,784 279,790

Net finance income 13 44,980 257,187

Share of profit of equity accounted investees 20 640,468 773,004

Profit before income tax 1,052,741 1,531,675

Income tax credit/ (expense) 14 185,069 (100,199)

Profit for the year 1,237,810 1,431,476

Other comprehensive income Revaluation of property, plant and equipment - 4,471 Deferred tax on fair value adjustment 30 - (1,442) Amortisation of revaluation reserve 443 391 Deferred tax revaluation surplus on property 30 (260) - Actuarial (loss) /gain on defined benefit pension plans 31 (1,071) 1,645 Deferred tax on defined benefit actuarial gain/loss 30 312 (576) Currency translation on equity - accounted investees 20 317,593 (259,052)

Other comprehensive income /(loss) for the year, net of tax 317,017 (254,563)

Total comprehensive income for the year 1,554,827 1,176,913

Earnings per share 15 13,908 16,084

Diluted earnings per share (K) 15 13,908 16,084 The notes on pages 34 to 88 are an integral part of these consolidated financial statements

28

ZCC M Investments Holdings Plc

Company statement of comprehensive income for the year ended 31 March 2012 (all amounts are in millions of Kwacha unless otherwise stated) Notes 2012

2011 Restated

Revenue 8 79,708 159,513 Gross profit 79,708 159,513 Other income 9a 378,431 33,353 Grant income 9b 12,144 10,956 Environmental expenses 10 - (28,047) Administration expenses 11 (108,982) (54,476) Operating profit 361,301 121,299 Finance cost (22,238) (9,565) Finance income 69,580 278,125 Net finance income 13 47,342 268,560 Profit before income tax expense 408,643 389,859 Income tax credit/(expense) 14 189,812 (81,176) Profit for the year 598,455 308,683 Other comprehensive income Revaluation reserves on property, plant and equipment - 4,471 Deferred tax on revaluation of property, plant and equipment 30 - (1,565) Amortisation of revaluation surplus 362 384 Deferred tax revaluation surplus on property 30 (126) - Actuarial gain on defined benefit pension plans 31 154 900 Deferred tax on defined benefit actuarial gain 30 (54) (315)

Other comprehensive income for the year net of tax 336 3,875

Total comprehensive income for the year 598,791 312,558

Basic earnings per share (K) 15 6,724 3,468

Diluted earnings per share (K) 15 6,724 3,468


27

28


Company statement of comprehensive income for the year ended 31 March 2012 (all amounts are in millions of Kwacha unless otherwise stated) Notes 2012

2011 Restated

Revenue 8 79,708 159,513 Gross profit 79,708 159,513 Other income 9a 378,431 33,353 Grant income 9b 12,144 10,956 Environmental expenses 10 - (28,047) Administration expenses 11 (108,982) (54,476) Operating profit 361,301 121,299 Finance cost (22,238) (9,565) Finance income 69,580 278,125 Net finance income 13 47,342 268,560 Profit before income tax expense 408,643 389,859 Income tax credit/(expense) 14 189,812 (81,176) Profit for the year 598,455 308,683 Other comprehensive income Revaluation reserves on property, plant and equipment - 4,471 Deferred tax on revaluation of property, plant and equipment 30 - (1,565) Amortisation of revaluation surplus 362 384 Deferred tax revaluation surplus on property 30 (126) - Actuarial gain on defined benefit pension plans 31 154 900 Deferred tax on defined benefit actuarial gain 30 (54) (315)

Other comprehensive income for the year net of tax 336 3,875

Total comprehensive income for the year 598,791 312,558

Basic earnings per share (K) 15 6,724 3,468

Diluted earnings per share (K) 15 6,724 3,468


28

29

The notes on pages 34 to 88 are an integral part of these consolidated financial statements


Consolidated statement of financial position As at 31 March 2012 (all amounts are in millions of Kwacha unless otherwise stated) Notes 2012

2011

Restated 2010

Restated

Assets Property, plant and equipment 17 270,464 105,585 50,296 Intangible assets 18 456 161 178 Investments in associates 20 4,262,220 3,106,056 2,592,104 Financial assets at fair value through profit or loss 21(a) 347,370 355,292 609,731

Total non-current assets 4,880,510 3,567,094 3,252,309

Inventories 22 14,431 16,069 13,618 Trade and other receivables 23 946,537 785,223 607,100 Held to maturity investment securities 24 403,957 74,143 5,333 Cash and cash equivalents 25 61,229 104,219 31,554 Assets classified as held for sale - - 16,611

Total current assets 1,426,154 979,654 674,216

Non-current assets held for sale 21(b) - 529,018 -

Total assets 6,306,664 5,075,766 3,926,525

Equity Share capital 27 893 893 893 Other reserves 28 449,415 132,005 388,419 Retained earnings 3,256,074 2,018,580 585,643 Total equity attributable to shareholders 3,706,382 2,151,478 974,955

Liabilities Borrowings 29 156,604 34,769 78,111 Deferred tax liabilities 30 64,457 253,056 214,827 Retirement benefits 31 37,941 33,881 32,072 Provisions for environmental rehabilitation 32 45,942 53,009 39,550

Total non-current liabilities 304,944 374,715 364,560

Trade and other payables 26a 110,588 119,393 8,896 Provisions 26b 70,612 39,849 40,088 Borrowings 29 1,133,928 1,411,572 1,263,647 Subordinated loan 29 865,445 865,445 865,445 Current tax liabilities 14 105,115 110,620 48,477 Provisions for environmental rehabilitation 32 9,650 2,694 15,381 Liabilities classified as held for sale - - 345,076

Total current liabilities 2,295,338 2,549,573 2,587,010

Total liabilities 2,600,282 2,924,288 2,951,570

Total equity and liabilities 6,306,664 5,075,766 3,926,525 The financial statements were approved for issue by the Board of Directors on 13th April 2013 and signed on its behalf by:

31


Company statement of financial position As at 31 March 2012 (all amounts are in millions of Kwacha unless otherwise stated) Notes 2012

2011 Restated

2010 Restated

Property, plant and equipment 17 15,158 13,354 7,547 Intangible assets 18 456 161 178 Investments in subsidiaries 19 12 12 12 Investments in associates 20 545,615 347,512 347,512 Financial assets at fair value through profit or loss 21(a) 347,370 355,292 609,731 Total non-current assets 908,611 716,331 964,980 Trade and other receivables 23 969,908 682,366 607,695 Held to maturity investment securities 24 403,957 74,143 5,333 Cash and cash equivalents 25 19,360 20,500 6,950 Total current assets 1,393,225 777,009 619,978 Non – current assets held for sale 21(b) - 529,018 - Total assets 2,301,836 2,022,358 1,584,958

Equity Share capital 27 893 893 893 Accumulated losses (57,275) (656,192) (965,844) Revaluation reserves 28 5,878 6,114 3,592 Deficit on equity attributable to shareholders (50,504) (649,185) (961,359) Liabilities Borrowings 29 17,884 15,623 22,031 Deferred tax liability 30 60,894 252,359 217,731 Retirement benefits 31 4,670 5,418 5,938 Provisions for environmental rehabilitation 32 32,886 42,195 39,549 Total non-current liabilities 116,334 315,595 285,249

Borrowings 29 1,132,044 1,273,673 1,272,332 Subordinated loan 29 865,445 865,445 865,445 Trade and other payables 26a 57,918 74,414 15,720 Provisions 26b 70,612 39,385 48,477 Tax liability 14 100,337 100,337 53,754 Provisions for environmental rehabilitation 32 9,650 2,694 5,340




32

…………………………… ……………………………….. Director Director The notes on pages 34 to 88 are an integral part of these consolidated financial statements

32



29

31


Company statement of financial position As at 31 March 2012 (all amounts are in millions of Kwacha unless otherwise stated) Notes 2012

2011 Restated

2010 Restated

Property, plant and equipment 17 15,158 13,354 7,547 Intangible assets 18 456 161 178 Investments in subsidiaries 19 12 12 12 Investments in associates 20 545,615 347,512 347,512 Financial assets at fair value through profit or loss 21(a) 347,370 355,292 609,731 Total non-current assets 908,611 716,331 964,980 Trade and other receivables 23 969,908 682,366 607,695 Held to maturity investment securities 24 403,957 74,143 5,333 Cash and cash equivalents 25 19,360 20,500 6,950 Total current assets 1,393,225 777,009 619,978 Non – current assets held for sale 21(b) - 529,018 - Total assets 2,301,836 2,022,358 1,584,958

Equity Share capital 27 893 893 893 Accumulated losses (57,275) (656,192) (965,844) Revaluation reserves 28 5,878 6,114 3,592 Deficit on equity attributable to shareholders (50,504) (649,185) (961,359) Liabilities Borrowings 29 17,884 15,623 22,031 Deferred tax liability 30 60,894 252,359 217,731 Retirement benefits 31 4,670 5,418 5,938 Provisions for environmental rehabilitation 32 32,886 42,195 39,549 Total non-current liabilities 116,334 315,595 285,249

Borrowings 29 1,132,044 1,273,673 1,272,332 Subordinated loan 29 865,445 865,445 865,445 Trade and other payables 26a 57,918 74,414 15,720 Provisions 26b 70,612 39,385 48,477 Tax liability 14 100,337 100,337 53,754 Provisions for environmental rehabilitation 32 9,650 2,694 5,340




32


ZCCM

Inve

stm

ents

Hol

ding

s Plc

30

33

ZCC

M In

vest

men

ts H

oldi

ngs P

lc

Con

solid

ated

stat

emen

t of c

hang

es in

equ

ity

for t

he y

ear e

nded

31

Mar

ch 2

012

(all

amou

nts a

re in

mill

ions

of K

wac

ha u

nles

s oth

erw

ise

stat

ed)

2011

N

otes

Sh

are

capi

tal

R

eval

uatio

n re

serv

e

Tr

ansla

tion

rese

rve

R

etai

ned

earn

ings

To

tal

Bal

ance

as a

t 31

Mar

ch 2

010

as p

revi

ousl

y st

ated

893

6,66

9 38

1,81

5 57

0,48

1 95

9,85

8 Pr

ior y

ear a

djus

tmen

ts (n

ote

38)

-

(

65)

- 15

,162

15

,097

Bal

ance

as a

t 31

Mar

ch 2

010

as st

ated

893

6,60

4 38

1,81

5 58

5,64

3 97

4,95

5 To

tal c

ompr

ehen

sive

inco

me

for

the

year

Pr

ofit

for t

he y

ear a

s res

tate

d

- -

- 1,

431,

476

1,43

1,47

6 O

ther

com

preh

ensiv

e in

com

e ne

t of t

ax

Rev

alua

tion

surp

lus o

n pr

oper

ty

17

- 4,

471

- -

4,47

1 C

urre

ncy

trans

latio

n –

equi

ty a

ccou

nted

inve

stee

s 20

-

- (2

59,0

52)

- (2

59,0

52)

Def

erre

d ta

x on

reva

luat

ion

surp

lus o

n pr

oper

ty

30

- (1

,442

) -

- (1

,442

) A

mor

tisat

ion

of re

valu

atio

n su

rplu

s 28

-

(391

) -

391

- A

ctua

rial g

ain

on d

efin

ed b

enef

it

31

- -

- 1,

646

1,64

6 D

efer

red

tax

on d

efin

ed b

enef

it ac

tuar

ial g

ains

30

-

- -

(576

) (5

76)

Tota

l oth

er c

ompr

ehen

sive

inco

me

for

the

year

- 2,

638

(259

,052

) 1,

461

(254

,953

) B

alan

ce a

s at 3

1 M

arch

201

1

89

3 9,

242

122,

763

2,01

8,58

0 2,

151,

478

2012

B

alan

ce a

s at 3

1 M

arch

201

1 as

pre

viou

sly st

ated

893

9,18

4 15

1,13

4 2,

005,

393

2,16

6,60

4 Pr

ior

year

adj

ustm

ents

(not

e 38

)

- 58

(2

8,37

1)

13,1

87

(15,

126)

B

alan

ce a

s at 1

Apr

il 20

11 a

s res

tate

d

893

9,24

2 12

2,76

3 2,

018,

580

2,15

1,47

8 To

tal c

ompr

ehen

sive

inco

me

for

the

year

Pr

ofit

for t

he y

ear

-

- -

1,23

7,81

0 1,

237,

810

Oth

er c

ompr

ehen

sive

inco

me

net o

f tax

C

urre

ncy

trans

latio

n –

equi

ty a

ccou

nted

inve

stee

s 20

-

- 31

7,59

3 -

317,

593

Am

ortis

atio

n of

reva

luat

ion

surp

lus

28

- (4

43)

- 44

3 -

Def

erre

d ta

x on

reva

luat

ion

surp

lus o

n pr

oper

ty

30

26

0 -

- 26

0 A

ctua

rial l

oss o

n de

fined

ben

efit

31

- -

- (1

,071

) (1

,071

) D

efer

red

tax

on d

efin

ed b

enef

it ac

tuar

ial l

oss

30

- -

- 31

2 31

2

Tota

l oth

er c

ompr

ehen

sive

inco

me

for

the

year

- (1

83)

317,

593

(316

) 31

7,09

4 A

t 31

Mar

ch 2

012

89

3 9,

059

440,

356

3,25

6,07

4 3,

706,

382

34

The

reta

ined

ear

ning

s wer

e ca

rrie

d fo

rwar

d re

cogn

ised

inco

me,

net

of e

xpen

ses o

f the

gro

up, p

lus c

urre

nt p

erio

d pr

ofits

attr

ibut

able

to sh

areh

olde

rs

The

note

s on

page

s 34

to 8

8 ar

e an

inte

gral

par

t of t

hese

con

solid

ated

fina

ncia

l sta

tem

ents

.

ZCCM

Inve

stm

ents

Hol

ding

s Plc

31

35

ZCC

M In

vest

men

ts H

oldi

ngs P

lc

Com

pany

stat

emen

t of c

hang

es in

equ

ity

for t

he y

ear e

nded

31

Mar

ch 2

012

(all

amou

nts a

re in

mill

ions

of K

wac

ha u

nles

s oth

erw

ise

stat

ed)

2011

N

otes

Sh

are

capi

tal

Rev

alua

tion

rese

rve

Acc

umul

ated

lo

sses

To

tal

Bal

ance

as a

t 1 A

pril

201

0

89

3 3,

592

(965

,844

) (9

61,3

59)

Tota

l com

preh

ensiv

e in

com

e fo

r th

e ye

ar

Pr

ofit

for t

he y

ear a

s res

tate

d

- -

308,

683

308,

683

Rev

alua

tion

surp

lus

-

4,47

1 -

4,47

1 D

efer

red

tax

on re

valu

atio

n su

rplu

s 30

-

(1,5

65)

- (1

,565

) A

mor

tisat

ion

of re

valu

atio

n of

pro

perty

- (3

84)

384

- A

ctua

rial g

ain

on d

efin

ed b

enef

it

31

- -

900

900

Def

erre

d ta

x on

def

ined

ben

efit

actu

aria

l gai

n 30

-

- (3

15)

(315

)

Oth

er c

ompr

ehen

sive

inco

me

net o

f tax

-

2,52

2

969

3,49

1 To

tal c

ompr

ehen

sive

inco

me

for t

he y

ear

-

2,52

2

309,

652

312,

174

Bal

ance

at 3

1 M

arch

201

1 as

rest

ated

893

6,11

4 (6

56,1

92)

(649

,185

) 20

12

Bala

nce

at 3

1 M

arch

201

1 as

pre

viou

sly st

ated

893

6,11

4 (6

27,8

21)

(620

,814

) Pr

ior

year

adj

ustm

ents

(not

e 38

)

- -

(28,

371)

(2

8,37

1)

Bala

nce

as a

t 1 A

pril

2011

893

6,11

4 (6

56,1

92)

(649

,185

) To

tal c

ompr

ehen

sive

inco

me

for

the

year

Prof

it fo

r the

yea

r

- -

598,

455

598,

455

Oth

er c

ompr

ehen

sive

inco

me

net o

f tax

Am

ortis

atio

n of

reva

luat

ion

surp

lus

28

- (3

62)

362

- D

efer

red

tax

on re

valu

atio

n su

rplu

s 30

-

126

- 12

6 A

ctua

rial g

ain

on d

efin

ed b

enef

it

31

- -

154

154

Def

erre

d ta

x on

def

ined

ben

efit

actu

aria

l gai

n 30

-

- (5

4)

(54)

Tota

l oth

er c

ompr

ehen

sive

inco

me

for

the

year

- (2

36)

462

226

Tota

l com

preh

ensiv

e in

com

e fo

r th

e ye

ar

-

(236

)

598,

917

598,

681

At 3

1 M

arch

201

2

893

5

,878

(5

7,27

5)

(50,

504)

36

The

reta

ined

ear

ning

s wer

e ca

rrie

d fo

rwar

d re

cogn

ised

loss

es, p

lus n

et o

f exp

ense

s of t

he C

ompa

ny, m

inus

cur

rent

per

iod

prof

it at

tribu

tabl

e to

shar

ehol

ders

. Th

e no

tes o

n pa

ges 3

4 to

88

are

an in

tegr

al p

art o

f the

se c

onso

lidat

ed fi

nanc

ial s

tate

men

ts


32


Consolidated statement of cash flows for the year ended 31 March 2012 (all amounts are in millions of Kwacha unless otherwise stated)

37

Cash flows from operating activities Note 2012 2011

Profit for the period 1,237,810 1,431,476 Adjustments for: Depreciation 17 10,358 8,342 Amortisation of intangible assets 18 107 41 Impairment loss on property, plant and equipment - 252 Interest income 13 (7,409) (5,211) Interest expenses 13 1,836 11,532 Dividend receivable 8 (79,708) (159,513) Change in fair value on financial assets at fair value through profit or loss

21

15,826

(274,579) Defined benefits expenses 31 6,326 6,606 Share of profit of equity – accounted investees 20 (640,468) (773,004) Profit from disposal of financial assets at fair value through profit or loss

9

(273,339)

(328,465) Profit on disposal of property, plant and equipment 9 (1,964) - Gain on acquisition of investments in associates 9 (84,935) - Income tax expense 14 (185,069) 100,199 (629) 17,676 Change in inventories 1,638 (2,451) Change in trade and other receivables (161,314) (178,123) Change in trade and other payables and provisions 21,958 110,260 Change in provision for environmental rehabilitation (1,316) 761 (139,663) (51,877) Interest paid (1,750) (11,456) Income tax paid 14 (8,983) (1,912) Retirement benefits paid 31 (1,699) (3,152) Net cash flows from operating activities (152,095) (68,397) Cash flows used in investing activities Interest received 13 7,409 5,211 Dividend received 8 79,708 159,513 Acquisition of financial assets at fair value through profit or loss 21 (7,904) - Proceeds from disposal financial assets at fair value through profit or loss

802,357 -

Proceeds from disposal of property, plant and equipment 1,964 - Acquisition of investments in associates (113,168) - Acquisition of intangible assets, property and equipment 17,18 (175,638) (59,436) Proceeds from disposal of government securities 24 74,143 5,333 Acquisition of government securities 24 (403,957) (74,143) Net cash flows generated from investing activities 264,914 36,478 Cash flows from financing activities Proceeds from borrowings 313,794 135,647 Repayment of borrowings (469,603) (31,063) Net cash flows from financing activities (155,809) 104,584 Net (decrease)/increase in cash and cash equivalents (42,990) 72,665 Cash and cash equivalents at the beginning of the period 104,219 31,554 Cash and cash equivalents at the end of the period 25 61,229 104,219 The notes on pages 34 to 88 are an integral part of these consolidated financial statements.


Company statement of cash flows for the year ended 31 March 2012 (all amounts are in millions of Kwacha unless otherwise stated)

38

Note 2012 2011 Cash flows from operating activities Profit for the period 598,455 308,683 Adjustments for: Depreciation and amortisation 17,18 1,677 671 Fair value changes of financial assets at fair value through profit or loss

21

15,826

(274,579)

Defined benefits expense (647) 1,147 Gain on purchase of investment in associates 9 (84,935) - Profit from disposal of financial assets at fair value through profit or loss

9

(273,339)

-

Profit on disposal of property, plant and equipment 9 (1,964) - Interest income 13 (7,409) (3,546) Interest expense 13 1,270 1,679 Income tax expense 14 (189,812) 81,176

59,122 115,231 Change in trade and other receivables (287,542) (74,671) Change in trade and other payables and provisions 14,731 49,602 Change in provision for environmental rehabilitation (2,353) -

(216,042) 90,162 Interest paid (864) (1,679) Income tax paid 14 (1,833) (1,845) Retirement benefit paid 31 (101) (767)

Net cash flows from operating activities (218,840) 85,871 Cash flows used in investing activities Interest income 13 7,409 3,546 Purchase of property, plant and equipment 17,18 (3,776) (1,990) Purchase of investments in associates (113,168) - Purchase of investments in financial assets at fair value through profit or loss

(7,904)

- Proceeds from disposal of financial assets at fair value through profit or loss

802,357

- Proceeds from disposal of property, plant and equipment 1,964 - Proceeds from disposal of government securities 24 74,143 5,333 Acquisition of government securities 24 (403,957) (74,143)

Net cash flows from investing activities 357,068 (67,254) Cash flows from financing activities Repayment of borrowings (139,368) (5,067)

Net cash flows from financing activities (139,368) (5,067)

(Decrease)/ increase in cash and cash equivalents (1,140) 13,550 Cash and cash equivalents at the beginning of the period 20,500 6,950

Cash and cash equivalents at the end of the year 25 19,360 20,500 The notes on pages 34 to 88 are an integral part of these consolidated financial statements.


33


Company statement of cash flows for the year ended 31 March 2012 (all amounts are in millions of Kwacha unless otherwise stated)

38

Note 2012 2011 Cash flows from operating activities Profit for the period 598,455 308,683 Adjustments for: Depreciation and amortisation 17,18 1,677 671 Fair value changes of financial assets at fair value through profit or loss

21

15,826

(274,579)

Defined benefits expense (647) 1,147 Gain on purchase of investment in associates 9 (84,935) - Profit from disposal of financial assets at fair value through profit or loss

9

(273,339)

-

Profit on disposal of property, plant and equipment 9 (1,964) - Interest income 13 (7,409) (3,546) Interest expense 13 1,270 1,679 Income tax expense 14 (189,812) 81,176

59,122 115,231 Change in trade and other receivables (287,542) (74,671) Change in trade and other payables and provisions 14,731 49,602 Change in provision for environmental rehabilitation (2,353) -

(216,042) 90,162 Interest paid (864) (1,679) Income tax paid 14 (1,833) (1,845) Retirement benefit paid 31 (101) (767)

Net cash flows from operating activities (218,840) 85,871 Cash flows used in investing activities Interest income 13 7,409 3,546 Purchase of property, plant and equipment 17,18 (3,776) (1,990) Purchase of investments in associates (113,168) - Purchase of investments in financial assets at fair value through profit or loss

(7,904)

- Proceeds from disposal of financial assets at fair value through profit or loss

802,357

- Proceeds from disposal of property, plant and equipment 1,964 - Proceeds from disposal of government securities 24 74,143 5,333 Acquisition of government securities 24 (403,957) (74,143)

Net cash flows from investing activities 357,068 (67,254) Cash flows from financing activities Repayment of borrowings (139,368) (5,067)

Net cash flows from financing activities (139,368) (5,067)

(Decrease)/ increase in cash and cash equivalents (1,140) 13,550 Cash and cash equivalents at the beginning of the period 20,500 6,950

Cash and cash equivalents at the end of the year 25 19,360 20,500 The notes on pages 34 to 88 are an integral part of these consolidated financial statements.


34

ZCCM Investments Holdings Plc Notes to the financial statements (continued) for the year ended 31 March 2012 (all amounts are in millions of Kwacha unless otherwise stated)

39

1 Reporting entity ZCCM Investments Holdings Plc (the “Company” or “ZCCM – IH”) is domiciled in Zambia. The

address of the Company is Mukuba Pension House, 5309 Dedan Kimathi Road. P.O Box 30048, Lusaka. The consolidated financial statements of the Company as of and for the year ended 31 March 2012 comprise the Company and its subsidiaries (together referred to as the “Group”) and the Group’s interest in associates.

The Company’s shares are listed on the Lusaka Stock Exchange (LuSE), the London Stock Exchange and Euronext. Where reference is made in the basis of preparation to Group it should be interpreted as being applied to the consolidated and separate financial statements as the context requires.

2 Basis of preparation

(a) Statement of compliance

The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) as issued by the International Accounting Standard Board (IASB) and in the manner required by the Companies Act of Zambia.

(b)

Basis of measurement

The financial statements have been prepared on the historical cost basis except for the following material items in the statement of financial position:

Non – derivative financial instruments at fair value through profit or loss are measured at fair value.

Land and buildings which are measured at fair value. The liability for the defined benefit obligation is recognised as the present value of

the defined obligation less the net total of the plant assets, plus unrecognised actuarial gains less unrecognised past service costs and unrecognised actuarial losses.

(c)

Functional and presentation currency These financial statements are presented in Zambian Kwacha, which is the Company’s functional currency. Except as otherwise indicated, financial information presented in Kwacha has been rounded to the nearest million.

(d)

Use of estimates and judgements The preparation of financial statements in conformity with IFRSs requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and in any future periods affected. Information about significant areas of estimation uncertainty and critical judgements in applying accounting policies that have the most significant effect on the amount recognised in the financial statements are described in note 6.


40

3 Significant accounting policies

The accounting policies set out below have been applied consistently to all periods presented in these financial statements, and have been applied consistently by Group entities.

3.1 Basis of consolidation

(i) Business combinations Business combinations are accounted for using the acquisition method as at the acquisition date, which is the date on which control is transferred to the Company. Control is the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, the Company takes into consideration potential voting rights that currently are exercisable. The Group measures goodwill at the acquisition date as: The fair value of the consideration transferred; plus; The recognised amount of any non-controlling interest in the acquiree; plus; If the business combination is achieved in stages, the fair value of the pre- existing equity interest

in the acquire; less; and The net recognised amount (generally fair value) of the identifiable assets acquired and liabilities

assumed.

When the excess is negative, a bargain purchase gain is recognised immediately in the statement of comprehensive income. The consideration transferred does not include amounts related to the settlement of pre-existing relationships. Such amounts generally are recognised in the statement of comprehensive income.

Transaction costs, other than those associated with the issue of debt or equity securities, that the Group incurs in connection with the business combination are expensed as incurred.

(ii) Subsidiaries

Subsidiaries are entities controlled by the Group. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases.

Investments in subsidiaries in the Company financial statements are measured at cost.

(iii) Loss of control

Upon the loss of control, the Group derecognises the assets and liabilities of the subsidiary, any non controlling interests and the other components of equity related to the subsidiary. Any surplus or deficit arising on the loss of control is recognised in profit or loss. If the Group retains any interest in the previous subsidiary, then such interest is measured at fair value at the date that control is lost. Subsequently it is accounted for as an equity-accounted investee or as an available-for-sale financial asset depending on the level of influence retained.


35


40

3 Significant accounting policies

The accounting policies set out below have been applied consistently to all periods presented in these financial statements, and have been applied consistently by Group entities.

3.1 Basis of consolidation

(i) Business combinations Business combinations are accounted for using the acquisition method as at the acquisition date, which is the date on which control is transferred to the Company. Control is the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, the Company takes into consideration potential voting rights that currently are exercisable. The Group measures goodwill at the acquisition date as: The fair value of the consideration transferred; plus; The recognised amount of any non-controlling interest in the acquiree; plus; If the business combination is achieved in stages, the fair value of the pre- existing equity interest

in the acquire; less; and The net recognised amount (generally fair value) of the identifiable assets acquired and liabilities

assumed.

When the excess is negative, a bargain purchase gain is recognised immediately in the statement of comprehensive income. The consideration transferred does not include amounts related to the settlement of pre-existing relationships. Such amounts generally are recognised in the statement of comprehensive income.

Transaction costs, other than those associated with the issue of debt or equity securities, that the Group incurs in connection with the business combination are expensed as incurred.

(ii) Subsidiaries

Subsidiaries are entities controlled by the Group. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases.

Investments in subsidiaries in the Company financial statements are measured at cost.

(iii) Loss of control

Upon the loss of control, the Group derecognises the assets and liabilities of the subsidiary, any non controlling interests and the other components of equity related to the subsidiary. Any surplus or deficit arising on the loss of control is recognised in profit or loss. If the Group retains any interest in the previous subsidiary, then such interest is measured at fair value at the date that control is lost. Subsequently it is accounted for as an equity-accounted investee or as an available-for-sale financial asset depending on the level of influence retained.


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(iv) Investments in associates (equity-accounted investees)

Associates are those entities in which the Group has significant influence, but not control, over the financial and operating policies. Significant influence is presumed to exist when the Group holds between 20 and 50 percent of the voting power of another entity.

Investments in associates are initially recognised at cost and subsequently accounted for using the equity method (equity-accounted investees). The cost of the investments includes transaction costs.

The consolidated financial statements include the Group’s share of the profit or loss and other comprehensive income, after adjustments to align the accounting policies with those of the Group, from the date that significant influence commences until the date that significant influence ceases.

When the Group’s share of losses exceeds its interest in an equity-accounted investee, the carrying amount of that interest, including any long-term investments, is reduced to zero, and the recognition of further losses is discontinued except to the extent that the Group has an obligation or has made payments on behalf of the investee.

(v) Transactions eliminated on consolidation

Intra-group balances and transactions, and any unrealised income and expenses arising from intra group transactions, are eliminated in preparing the consolidated financial statements. Unrealised gains arising from transactions with equity accounted investees are eliminated against the investment to the extent of the Group’s interest in the investee. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.

3.2 Foreign currency

(i) Foreign currency transactions

Transactions in foreign currencies are translated to the respective functional currencies of Group entities at exchange rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting date are retranslated to the functional currency at the exchange rate at that date. The foreign currency gain or loss on monetary items is the difference between amortised cost in the functional currency at the beginning of the year, adjusted for effective interest and payments during the year, and the amortised cost in foreign currency translated at the exchange rate at the end of the year. Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are retranslated to the functional currency at the exchange rate at the date that the fair value was determined. Non-monetary items in a foreign currency that are measured in terms of historical cost are translated using the exchange rate at the date of the transaction. Foreign currency differences arising on retranslation are recognised in profit or loss, except for differences arising on the retranslation of a financial liability designated as a hedge of the net investment in a foreign operation that is effective, which are recognised in other comprehensive income.


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3 3.2 (ii)

Significant accounting policies (continued) Foreign currency (continued) Foreign operations

The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisition, are translated to Zambian Kwacha at exchange rates at the reporting date. Foreign currency differences are recognised in other comprehensive income, and presented in the foreign currency translation reserve (translation reserve) in equity. However, if the operation is a non-wholly-owned subsidiary, then the relevant proportionate share of the translation difference is allocated to the non-controlling interests. When a foreign operation is disposed of such that control, significant influence or joint control is lost, the cumulative amount in the translation reserve related to that foreign operation is reclassified to profit or loss as part of the gain or loss on disposal. When the Group disposes of only part of its interest in a subsidiary that includes a foreign operation while retaining control, the relevant proportion of the cumulative amount is reattributed to non-controlling interests. When the Group disposes of only part of its investment in an associate that includes a foreign operation while retaining significant influence or joint control, the relevant proportion of the cumulative amount is reclassified to profit or loss. When the settlement of a monetary item receivable from or payable to a foreign operation is neither planned nor likely in the foreseeable future, foreign exchange gains and losses arising from such a monetary item are considered to form part of a net investment in a foreign operation and are recognised in other comprehensive income, and presented in the translation reserve in equity.

3.3 Financial instruments

(i) Non-derivative financial assets

The Group initially recognises loans and receivables on the date that they are originated. All other financial assets (including assets designated at fair values through profit or loss) are recognised initially on the trade date, which is the date that the Group becomes a party to the contractual provisions of the instrument. The Group derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or when it transfers the rights to receive the contractual cash flows on the financial asset in a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred. Financial assets and financial liabilities are offset and the net amount presented in the statement of financial position when, and only when, the Group has a legal right to offset the amounts and intends either to settle on a net basis or to realise the asset and settle the liability simultaneously. The Group classifies non-derivative financial assets into the following categories: held-to-maturity financial assets, loans and receivables and financial assets at fair value through profit or loss.


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3 3.2 (ii)

Significant accounting policies (continued) Foreign currency (continued) Foreign operations

The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisition, are translated to Zambian Kwacha at exchange rates at the reporting date. Foreign currency differences are recognised in other comprehensive income, and presented in the foreign currency translation reserve (translation reserve) in equity. However, if the operation is a non-wholly-owned subsidiary, then the relevant proportionate share of the translation difference is allocated to the non-controlling interests. When a foreign operation is disposed of such that control, significant influence or joint control is lost, the cumulative amount in the translation reserve related to that foreign operation is reclassified to profit or loss as part of the gain or loss on disposal. When the Group disposes of only part of its interest in a subsidiary that includes a foreign operation while retaining control, the relevant proportion of the cumulative amount is reattributed to non-controlling interests. When the Group disposes of only part of its investment in an associate that includes a foreign operation while retaining significant influence or joint control, the relevant proportion of the cumulative amount is reclassified to profit or loss. When the settlement of a monetary item receivable from or payable to a foreign operation is neither planned nor likely in the foreseeable future, foreign exchange gains and losses arising from such a monetary item are considered to form part of a net investment in a foreign operation and are recognised in other comprehensive income, and presented in the translation reserve in equity.

3.3 Financial instruments

(i) Non-derivative financial assets

The Group initially recognises loans and receivables on the date that they are originated. All other financial assets (including assets designated at fair values through profit or loss) are recognised initially on the trade date, which is the date that the Group becomes a party to the contractual provisions of the instrument. The Group derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or when it transfers the rights to receive the contractual cash flows on the financial asset in a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred. Financial assets and financial liabilities are offset and the net amount presented in the statement of financial position when, and only when, the Group has a legal right to offset the amounts and intends either to settle on a net basis or to realise the asset and settle the liability simultaneously. The Group classifies non-derivative financial assets into the following categories: held-to-maturity financial assets, loans and receivables and financial assets at fair value through profit or loss.


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3 Significant accounting policies (continued) 3.3 Financial instruments (continued)

(i) Non-derivative financial assets (continued) Held-to-maturity financial investment securities

If the Group has the positive intent and ability to hold debt securities to maturity, then such financial assets are classified as held-to-maturity. Held-to-maturity financial assets are recognised initially at fair value plus an directly attributable transaction costs. Subsequent to initial recognition, held-to-maturity financial assets are measured at amortised cost using the effective interest method, less any impairment losses (see note 3.8(i)).

Held-to-maturity financial assets comprise debt securities.

Financial assets at fair value through profit or loss

A financial asset is classified as at fair value through profit or loss if it is classified as held for trading or is designated as such on initial recognition. Financial assets are designated as at fair value through profit or loss if the Group manages such investments and makes purchase and sale decisions based on their fair value in accordance with the Group’s documented risk management or investment strategy. Attributable transactions costs are recognised in profit or loss as incurred. Financial assets at fair value through profit or loss are measured at fair value and changes therein, which takes into account any dividend income, are recognised in profit or loss.

Financial assets designated as at fair value through profit or loss comprise equity securities that otherwise would have been classified as available for sale.

Loans and receivables

Loans and receivables are financial assets with fixed or determinable payments that are not quoted in an active market. Such assets are recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, loans and receivables are measured at amortised costs using the effective interest method, less any impairment losses (see Note 3(j)(i)).

Loans and receivables comprise cash and cash equivalents, and trade and other receivables.

Cash and cash equivalents

Cash and cash equivalents comprise cash balances and call deposits with maturities of three months or less from the acquisition date that are subject to an insignificant risk of changes in their fair value, and are used by the Group in the management of its short-term commitments.

(ii) Non-derivative financial liabilities

The Group initially recognises debt securities issued and subordinated liabilities on the date that they are originated. All other financial liabilities (including financial liabilities designated at fair value through profit or loss) are recognised initially on the trade date, which is the date that the Group becomes a party to the contractual provisions of the instrument.

The Group derecognises a financial liability when its contractual obligations are discharged, cancelled or expire.

The Group classifies non-derivative financial liabilities into the other financial liabilities category. Such financial liabilities are recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, these financial liabilities are measured at amortised cost using the effective interest method.

Other financial liabilities comprise loans and borrowings, bank overdrafts, and trade and other payables. Bank overdrafts that are repayable on demand and form an integral part of the Group’s cash management are included as a component of cash and cash equivalents for the purpose of the statement of cash flows.


44

3 Significant accounting policies (continued)

3.4 Share capital

Ordinary shares Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares are recognised as a deduction from equity, net of any tax effects.

3.5 Property, plant and equipment (i) Recognition and measurement

All property, plant and equipment are initially recognised at cost. Items of plant and equipment are subsequently measured at cost less accumulated depreciation and accumulated impairment losses and property is subsequently measured at fair value less accumulated depreciation. Cost includes expenditure that is directly attributable to the acquisition of the asset. The cost of self constructed assets includes the cost of materials and direct labour, any other costs directly attributable to bringing the assets to a working condition for their intended use, the costs of dismantling and removing the items and restoring the site on which they are located and capitalised borrowing costs. Purchased software that is integral to the functionality of the related equipment is capitalised as part of that equipment. When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment. Capital work in progress relates to items of property, plant and equipment that are under construction and are yet to be commissioned for use. Work in progress is measured at the cost incurred in relation to the construction up to the reporting date. The Company’s policy is to revalue property every three to five years. The revaluation differences are credited to other comprehensive income and accumulated in equity under the heading "revaluation surplus" unless it represents the reversal of a revaluation decrease previously recognised as an expense, in which case it is recognised as income. A decrease arising as a result of a revaluation is recognised as an expense to the extent that it exceeds any amount previously credited to the revaluation surplus relating to the same asset. The gain or loss on disposal of an item of property, plant and equipment is determined by comparing the proceeds from disposal with the carrying amount of the property, plant and equipment, and is recognised net within other income/other expenses in profit or loss. When revalued assets are sold, any related amount included in the revaluation reserve is transferred to retained earnings.

(ii) Subsequent costs The cost of replacing a component of an item of property, plant and equipment is recognised in the

carrying amount of the item if it is probable that the future economic benefits embodied within the component will flow to the Group, and its cost can be measured reliably. The carrying amount of the replaced component is derecognised. The costs of the day-to-day servicing of property, plant and equipment are recognised in profit or loss as incurred.


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3.4 Share capital

Ordinary shares Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares are recognised as a deduction from equity, net of any tax effects.

3.5 Property, plant and equipment (i) Recognition and measurement

All property, plant and equipment are initially recognised at cost. Items of plant and equipment are subsequently measured at cost less accumulated depreciation and accumulated impairment losses and property is subsequently measured at fair value less accumulated depreciation. Cost includes expenditure that is directly attributable to the acquisition of the asset. The cost of self constructed assets includes the cost of materials and direct labour, any other costs directly attributable to bringing the assets to a working condition for their intended use, the costs of dismantling and removing the items and restoring the site on which they are located and capitalised borrowing costs. Purchased software that is integral to the functionality of the related equipment is capitalised as part of that equipment. When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment. Capital work in progress relates to items of property, plant and equipment that are under construction and are yet to be commissioned for use. Work in progress is measured at the cost incurred in relation to the construction up to the reporting date. The Company’s policy is to revalue property every three to five years. The revaluation differences are credited to other comprehensive income and accumulated in equity under the heading "revaluation surplus" unless it represents the reversal of a revaluation decrease previously recognised as an expense, in which case it is recognised as income. A decrease arising as a result of a revaluation is recognised as an expense to the extent that it exceeds any amount previously credited to the revaluation surplus relating to the same asset. The gain or loss on disposal of an item of property, plant and equipment is determined by comparing the proceeds from disposal with the carrying amount of the property, plant and equipment, and is recognised net within other income/other expenses in profit or loss. When revalued assets are sold, any related amount included in the revaluation reserve is transferred to retained earnings.

(ii) Subsequent costs The cost of replacing a component of an item of property, plant and equipment is recognised in the

carrying amount of the item if it is probable that the future economic benefits embodied within the component will flow to the Group, and its cost can be measured reliably. The carrying amount of the replaced component is derecognised. The costs of the day-to-day servicing of property, plant and equipment are recognised in profit or loss as incurred.


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3 Significant accounting policies (continued) 3.5

Property, plant and equipment (continued)

(iv) Depreciation

Depreciation is based on the cost of an asset less its residual value. Significant components of individual assets are assessed and if a component has a useful life that is different from the remainder of that asset, that component is depreciated separately. Capital work in progress is not depreciated. Depreciation is recognised in profit or loss on a straight-line basis over the estimated useful lives of each component of an item of property, plant and equipment. Leased assets are depreciated over the shorter of the lease term and their useful lives unless it is reasonably certain that the Group will obtain ownership by the end of the lease term. Land is not depreciated. The estimated useful lives for the current and comparative years are as follows: Property 40 years Vehicles 4 years Plant, equipment and furniture 5 years Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.

3.6 Intangible assets

Software Acquired computer software licences are capitalised on the basis of the costs incurred to acquire and

bring to use the specific software. These costs are amortised over their estimated useful lives (three to five years). Amortisation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate. Costs associated with maintaining computer software programmes are recognised as an expense as incurred. Costs that are directly associated with the production of identifiable and unique software products controlled by the Group, and that will probably generate economic benefits exceeding costs beyond one year, are recognised as intangible assets. Direct costs include the software development employee costs and an appropriate portion of relevant overheads.

3.7 Inventories Inventories are measured at the lower of cost and net realisable value. The cost of inventories is

based on the first-in first-out principle, and includes expenditure incurred in acquiring the inventories, production or conversion costs and other costs incurred in bringing them to their existing location and condition. In the case of manufactured inventories and work in progress, cost includes an appropriate share of production overheads based on normal operating capacity. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses.


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3.8 Impairment

(i) Non-derivative financial assets A financial asset not measured at fair value through profit or loss is assessed at each reporting

date to determine whether there is objective evidence that it is impaired. A financial asset is impaired if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset, and that the loss event had an impact on the estimated future cash flows of that asset that can be estimated reliably. Objective evidence that financial assets (including equity securities) are impaired can include default or delinquency by a debtor, restructuring of an amount due to the Group on terms that the Group would not consider otherwise, indications that a debtor or issuer will enter bankruptcy, adverse changes in the payment status of borrowers or issuers in the Group, economic conditions that correlate with defaults or the disappearance of an active market for a security. In addition, for an investment in an equity security, a significant or prolonged decline in its fair value below its cost is objective evidence of impairment.

Loans and receivables and held-to-maturity investment securities The Group considers evidence of impairment for loans and receivables and held-to-maturity investment securities on a specific level. All individually significant receivables and held to maturity investment securities are assessed for specific impairment. Assessment for insignificant receivables is done in aggregate to assess if they are impaired in total. An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying amount and the present value of the estimated future cash flows discounted at the asset’s original effective interest rate. Impairment losses are recognised in profit or loss and reflected in an allowance account against loans and receivables or held-to-maturity investment securities. Interest on the impaired asset continues to be recognised. When a subsequent event (e.g. repayment by a debtor) causes the amount of impairment loss to decrease, the decrease in impairment loss is reversed through profit or loss.

Impairment losses on available-for-sale financial assets are recognised by reclassifying the losses accumulated in the fair value reserve in equity to profit or loss. The cumulative loss that is reclassified from equity to profit or loss is the difference between the acquisition cost, net of any principal repayment and amortisation, and the current fair value, less any impairment loss recognised previously in profit or loss. Changes in cumulative impairment losses attributable to application of the effective interest method are reflected as a component of interest income. If, in a subsequent period, the fair value of an impaired available-for-sale debt security increased and the increase can be related objectively to an event occurring after the impairment loss was recognised, then the impairment loss is reversed, with the amount of the reversal recognised in profit or loss. However, any subsequent recovery, in the fair value of an impaired available-for-sale equity security is recognised in other comprehensive income. An impairment loss in respect of an equity-accounted investee is measured by comparing the recoverable amount of the investment with its carrying amount. An impairment loss is recognised in profit or loss. An impairment loss is reversed if there has been a favourable change in the estimates used to determine the recoverable amount.


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3.8 Impairment

(i) Non-derivative financial assets A financial asset not measured at fair value through profit or loss is assessed at each reporting

date to determine whether there is objective evidence that it is impaired. A financial asset is impaired if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset, and that the loss event had an impact on the estimated future cash flows of that asset that can be estimated reliably. Objective evidence that financial assets (including equity securities) are impaired can include default or delinquency by a debtor, restructuring of an amount due to the Group on terms that the Group would not consider otherwise, indications that a debtor or issuer will enter bankruptcy, adverse changes in the payment status of borrowers or issuers in the Group, economic conditions that correlate with defaults or the disappearance of an active market for a security. In addition, for an investment in an equity security, a significant or prolonged decline in its fair value below its cost is objective evidence of impairment.

Loans and receivables and held-to-maturity investment securities The Group considers evidence of impairment for loans and receivables and held-to-maturity investment securities on a specific level. All individually significant receivables and held to maturity investment securities are assessed for specific impairment. Assessment for insignificant receivables is done in aggregate to assess if they are impaired in total. An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying amount and the present value of the estimated future cash flows discounted at the asset’s original effective interest rate. Impairment losses are recognised in profit or loss and reflected in an allowance account against loans and receivables or held-to-maturity investment securities. Interest on the impaired asset continues to be recognised. When a subsequent event (e.g. repayment by a debtor) causes the amount of impairment loss to decrease, the decrease in impairment loss is reversed through profit or loss.

Impairment losses on available-for-sale financial assets are recognised by reclassifying the losses accumulated in the fair value reserve in equity to profit or loss. The cumulative loss that is reclassified from equity to profit or loss is the difference between the acquisition cost, net of any principal repayment and amortisation, and the current fair value, less any impairment loss recognised previously in profit or loss. Changes in cumulative impairment losses attributable to application of the effective interest method are reflected as a component of interest income. If, in a subsequent period, the fair value of an impaired available-for-sale debt security increased and the increase can be related objectively to an event occurring after the impairment loss was recognised, then the impairment loss is reversed, with the amount of the reversal recognised in profit or loss. However, any subsequent recovery, in the fair value of an impaired available-for-sale equity security is recognised in other comprehensive income. An impairment loss in respect of an equity-accounted investee is measured by comparing the recoverable amount of the investment with its carrying amount. An impairment loss is recognised in profit or loss. An impairment loss is reversed if there has been a favourable change in the estimates used to determine the recoverable amount.


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Notes to the financial statements (continued) for the year ended 31 March 2012 (all amounts are in millions of Kwacha unless otherwise stated)

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3

Significant accounting policies (continued)

3.8 Impairment (continued) (ii) Non-financial assets

The carrying amounts of the Group’s non-financial assets, other than, inventories and deferred tax assets are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated. For intangible assets that have indefinite useful lives or that are not yet available for use, the recoverable amount is estimated each year at the same time. An impairment loss is recognised if the carrying amount of an asset or its related cash-generating unit (CGU) exceeds its estimated recoverable amount.

The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or CGU. For the purpose of impairment testing, assets that cannot be tested individually are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or CGU. Subject to an operating segment ceiling test, for the purposes of goodwill impairment testing, CGUs to which goodwill has been allocated are aggregated so that the level at which impairment testing is performed reflects the lowest level at which goodwill is monitored for internal reporting purposes. Goodwill acquired in a business combination is allocated to groups of CGUs that are expected to benefit from the synergies of the combination. The Group’s corporate assets do not generate separate cash inflows and are utilised by more than one CGU. Corporate assets are allocated to CGUs on a reasonable and consistent basis and tested for impairment as part of the testing of the CGU to which the corporate asset is allocated. Impairment losses are recognised in profit or loss. Impairment losses recognised in respect of CGUs are allocated first to reduce the carrying amount of any goodwill allocated to the CGU (group of CGUs), and then to reduce the carrying amounts of the other assets in the CGU (group of CGUs) on a pro rata basis. An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.



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3.8 Impairment (continued)

(ii) Non-financial assets (continued)

Non-current assets held for sale Non-current assets or disposal group comprising assets and liabilities, that are expected to be recovered primarily through sale or distribution rather than through continuing use, are classified as held for sale or distribution. Immediately before classification as held for sale or distribution, the assets, or components of a disposal group, are re-measured in accordance with the Group’s accounting policies. Thereafter generally the assets, or disposal group, are measured at the lower of their carrying amount and fair value less costs to sell.

3.9 Employee benefits

(i) Defined contribution plans (ii)

The Group also operates a defined contribution retirement benefit scheme for all its employees. The Group and all its employees also contribute to the National Pension Scheme Authority, which is a defined contribution scheme. A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity. The Group has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods. Defined benefit plans The Group operates a retirement benefit scheme which is of the nature of a defined benefit scheme. Under the defined benefit scheme, the employees are entitled to retirement payment based on the number of years worked and their terminal salaries at retirement. The liability recognised in the statement of financial position in respect of the defined benefit plan is the present value of the defined benefit obligation at the reporting date, together with adjustments for unrecognised actuarial gains or losses and past service costs. The defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method. The present value of the defined benefit obligation is determined by estimating the expected future cash flows using interest rates of Government bonds which are denominated in the currency in which the benefit will be paid, and have terms to maturity approximating to the terms of the related pension liability. The Group recognises all actuarial gains and losses arising from defined benefit plans in other comprehensive income and all related expenses related to personnel expenses in profit or loss.


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3.8 Impairment (continued)

(ii) Non-financial assets (continued)

Non-current assets held for sale Non-current assets or disposal group comprising assets and liabilities, that are expected to be recovered primarily through sale or distribution rather than through continuing use, are classified as held for sale or distribution. Immediately before classification as held for sale or distribution, the assets, or components of a disposal group, are re-measured in accordance with the Group’s accounting policies. Thereafter generally the assets, or disposal group, are measured at the lower of their carrying amount and fair value less costs to sell.

3.9 Employee benefits

(i) Defined contribution plans (ii)

The Group also operates a defined contribution retirement benefit scheme for all its employees. The Group and all its employees also contribute to the National Pension Scheme Authority, which is a defined contribution scheme. A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity. The Group has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods. Defined benefit plans The Group operates a retirement benefit scheme which is of the nature of a defined benefit scheme. Under the defined benefit scheme, the employees are entitled to retirement payment based on the number of years worked and their terminal salaries at retirement. The liability recognised in the statement of financial position in respect of the defined benefit plan is the present value of the defined benefit obligation at the reporting date, together with adjustments for unrecognised actuarial gains or losses and past service costs. The defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method. The present value of the defined benefit obligation is determined by estimating the expected future cash flows using interest rates of Government bonds which are denominated in the currency in which the benefit will be paid, and have terms to maturity approximating to the terms of the related pension liability. The Group recognises all actuarial gains and losses arising from defined benefit plans in other comprehensive income and all related expenses related to personnel expenses in profit or loss.


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3 3.9

Significant accounting policies (continued) Employee benefits (continued)

(iii) Other entitlements

Some employees are on fixed term contracts or are entitled to gratuity. These are recognised when they accrue to employees. An estimate is made for the liability for such entitlements as a result of services rendered by employees up to the reporting date. The estimated monetary liability for employees’ accrued annual leave entitlement at the reporting date is recognised as an expense accrual.

(iv) Short term employee benefits

Short term employee benefit obligations are measured on an undiscounted basis and are recognised in profit or loss as the related service is provided. A liability is recognised for the amount expected to be paid under short-term cash bonus or profit-showing plans if the Group has a present legal or construction obligation to pay this amount as a result of past service provided by the employee, and the obligation can be estimated reliably.

3.10 Provisions

Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events for which it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and reliable estimate of the amount of the obligation can be made. The unwinding of the discount is recognised as finance costs.

3.11 Revenue

Revenue from the sale of goods in the course of ordinary activities is measured at the fair value of the consideration received or receivable, net of returns, trade discounts and volume rebates. Revenue is recognised when persuasive evidence units, usually in the form of an executed sales agreement, that the significant risks and rewards of ownership have been transferred to the customer, recovery of the consideration is probable, the associated costs and possible return of goods can be estimated reliably, there is no continuing management involvement in the goods, and the amount of revenue can be measured reliably. Revenue is recognised as follows: Interest income is recognised using the effective interest method.

Dividends are recognised as income in the period in which the right to receive payment is

established, which in the case of quoted securities is usually the ex-dividend date. Dividends are reflected as a component of other operating income based on the underlying classification of the equity investment.

Copper and cobalt participation income relates to payments made by various mining companies to the Company as a result of the agreements that were signed at the time of privatisation on the mining assets. This income is recognised as and when it is due.



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3.12 Government grants

The government grant relates to environmental cleanup works on behalf of the Government. The Government grant is recognised initially as deferred income at fair value when there is reasonable assurance that they will be received and the Group will comply with the conditions associated with the grant. The government grant is then recognised in profit or loss as grant income on a systematic basis over the useful life of the assets. Grants that compensate the Group for expenses incurred are recognised in profit or loss as grant income on a systematic basis in the same periods in which the expenses are recognised.

3.13 Finance income and finance costs

Finance income comprises interest income on funds invested, exchange losses on revaluation of price participation receivable, fair value adjustment financial asset at fair value through profit or loss and bank interest received. Interest income is recognised as it accrues in profit or loss, using the effective interest method.

Finance costs comprise interest expense on borrowings, and impairment losses recognised on financial assets at fair value through profit or loss. All non – qualifying borrowing costs are recognised in profit or loss using the effective interest method. Foreign currency gains and losses are reported on a net basis.

Borrowing costs that are not directly attributable to the acquisition, construction or production of qualifying assets are recognised in profit or loss using the effective interest method.

Foreign currency gains and losses are reported on a net basis as either finance income or finance cost depending on whether foreign currency movements are in a net gain or net loss position.

3.14 Income tax expenses

Income tax expense is the aggregate of current and deferred income tax.

Current income tax is the amount of tax payable on the taxable profit for the year determined in accordance with the relevant tax legislation.

Deferred tax is provided on all temporary differences arising between the tax bases of assets and liabilities and their carrying values for financial reporting purposes. However, if the deferred tax arises from the initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects either neither accounting nor taxable profit or loss, it is not accounted for. Deferred tax is determined using tax rates enacted or substantively enacted at the reporting date and are expected to apply when the related deferred tax liability is settled or deferred tax asset is realised.


45



50

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3.12 Government grants

The government grant relates to environmental cleanup works on behalf of the Government. The Government grant is recognised initially as deferred income at fair value when there is reasonable assurance that they will be received and the Group will comply with the conditions associated with the grant. The government grant is then recognised in profit or loss as grant income on a systematic basis over the useful life of the assets. Grants that compensate the Group for expenses incurred are recognised in profit or loss as grant income on a systematic basis in the same periods in which the expenses are recognised.

3.13 Finance income and finance costs

Finance income comprises interest income on funds invested, exchange losses on revaluation of price participation receivable, fair value adjustment financial asset at fair value through profit or loss and bank interest received. Interest income is recognised as it accrues in profit or loss, using the effective interest method.

Finance costs comprise interest expense on borrowings, and impairment losses recognised on financial assets at fair value through profit or loss. All non – qualifying borrowing costs are recognised in profit or loss using the effective interest method. Foreign currency gains and losses are reported on a net basis.

Borrowing costs that are not directly attributable to the acquisition, construction or production of qualifying assets are recognised in profit or loss using the effective interest method.

Foreign currency gains and losses are reported on a net basis as either finance income or finance cost depending on whether foreign currency movements are in a net gain or net loss position.

3.14 Income tax expenses

Income tax expense is the aggregate of current and deferred income tax.

Current income tax is the amount of tax payable on the taxable profit for the year determined in accordance with the relevant tax legislation.

Deferred tax is provided on all temporary differences arising between the tax bases of assets and liabilities and their carrying values for financial reporting purposes. However, if the deferred tax arises from the initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects either neither accounting nor taxable profit or loss, it is not accounted for. Deferred tax is determined using tax rates enacted or substantively enacted at the reporting date and are expected to apply when the related deferred tax liability is settled or deferred tax asset is realised.


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51


3.14 Income tax expenses (continued)

Deferred tax assets are recognised only to the extent that it is probable that future taxable profits will be available against which the temporary differences can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that future taxable profits will be available against which they can be utilised.

Deferred tax is provided on temporary differences arising on investments in subsidiaries and associates, except where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future.

Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or they will be realised simultaneously.

3.15 Earnings per share

The Group presents basic and diluted earnings per share data for its ordinary shares. Basic earnings per share is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the year, adjusted for own shares held. Diluted earnings per share is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding, adjusted for own shares held, for the effects of all dilutive potential ordinary shares, which comprise convertible notes and share options.

3.16 Segment reporting An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Group’s other components. All operating segments’ operating results are reviewed regularly by the Group’s Chief Executive Officer to make decisions about resources to be allocated to the segment and to assess its performance, and for which discrete financial information is available.



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3.17

3.18

Significant accounting policies (continued) Leases

Leases in terms of which the Group assumes substantially all the risks and rewards of ownership are classified as finance leases, all other leases are classified as operating leases. Upon initial recognition the leased asset is measured at an amount equal to the lower of its fair value and the present value of the minimum lease payments. Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that asset. (i) Lease payments

Payments made under operating leases are recognised in profit or loss on a straight-line basis over the term of the lease. Lease incentives received are recognised as an integral part of the total lease expense, over the term of the lease.

Minimum lease payments made under finance leases are apportioned between the finance

expenses and the reduction of the outstanding liability. The finance expense is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability.

(ii) Determining whether an arrangement contains a lease At inception of an arrangement, the Group determines whether such an arrangement is or

contains a lease. This will be the case if the following tow criteria are met:

The fulfilment of the arrangement is dependent on the use of a specific asset or assets; and

the arrangement contains a right to use the asset(s.) At inception or on reassessment of the arrangement, the Group separates payments and other

consideration required by such an arrangement into those for the lease and those for other elements on the basis of their relative fair values. If the Group concludes for a finance lease that it is impracticable to separate the payments reliably, then an asset and a liability are recognised at an amount equal to the fair value of the underlying asset. Subsequently the liability is reduced as payments are made and an imputed finance cost on the liability is recognised using the Group’s incremental borrowing rate.

Environmental rehabilitation and restoration provision

Provision for environmental rehabilitation and restoration are recognised when the Group has a present legal or constructive obligation as a result of the past events; it is probable that an outflow of resources will be required to settle the obligation; and the amount has been reliably estimated.

Provisions are measured at present value of the expenditures expected to be required to settle the obligation using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to passage of time is recognised in the profit or loss.


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3

3.17

3.18

Significant accounting policies (continued) Leases

Leases in terms of which the Group assumes substantially all the risks and rewards of ownership are classified as finance leases, all other leases are classified as operating leases. Upon initial recognition the leased asset is measured at an amount equal to the lower of its fair value and the present value of the minimum lease payments. Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that asset. (i) Lease payments

Payments made under operating leases are recognised in profit or loss on a straight-line basis over the term of the lease. Lease incentives received are recognised as an integral part of the total lease expense, over the term of the lease.

Minimum lease payments made under finance leases are apportioned between the finance

expenses and the reduction of the outstanding liability. The finance expense is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability.

(ii) Determining whether an arrangement contains a lease At inception of an arrangement, the Group determines whether such an arrangement is or

contains a lease. This will be the case if the following tow criteria are met:

The fulfilment of the arrangement is dependent on the use of a specific asset or assets; and

the arrangement contains a right to use the asset(s.) At inception or on reassessment of the arrangement, the Group separates payments and other

consideration required by such an arrangement into those for the lease and those for other elements on the basis of their relative fair values. If the Group concludes for a finance lease that it is impracticable to separate the payments reliably, then an asset and a liability are recognised at an amount equal to the fair value of the underlying asset. Subsequently the liability is reduced as payments are made and an imputed finance cost on the liability is recognised using the Group’s incremental borrowing rate.

Environmental rehabilitation and restoration provision

Provision for environmental rehabilitation and restoration are recognised when the Group has a present legal or constructive obligation as a result of the past events; it is probable that an outflow of resources will be required to settle the obligation; and the amount has been reliably estimated.

Provisions are measured at present value of the expenditures expected to be required to settle the obligation using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to passage of time is recognised in the profit or loss.


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3.19


New standards and interpretations not adopted

A number of new standards, amendments to standards and interpretation are effective for periods beginning after 1 January 2012, and have not been applied at the date of authorisation of these financial statements of the Group for the year ended 31 March 2012. The standards and interpretations relevant to the Group are set out below. The Group does not plan to adopt these standards early.

IFRS 9 (2010) Financial Instruments

IFRS 9 will be adopted by the Group for the first time for its financial reporting period ending 30 June 2015. The standard will be applied retrospectively, subject to transitional provisions.

IFRS 9 addresses the initial measurement and classification of financial assets and will replace the relevant sections of IAS 39.

Under IFRS 9 there are two options in respect of classification of financial assets, namely, financial assets measured at amortised cost or at fair value. Financial assets are measured at amortised cost when the business model is to hold assets in order to collect contractual cash flows and when they give rise to cash flows that are solely payments of principal and interest on the principal outstanding. All other financial assets are measured at fair value.

The impact on the financial statements for the Group has not yet been determined.

IFRS 10 Consolidated Financial Statements IFRS 10 will be adopted by for annual periods begging on or after 1 January 2013 for the first time for its financial reporting period ending 31 March 2013. The standard will be applied retrospectively if there is a change in the control between IAS 27/SIC 12 and IFRS 10. IFRS 10 introduces a single control model to assess whether an investee should be consolidated. This control model requires entities to perform the following in determining whether control exists:

Identify how decisions about the relevant activities are made, Assess whether the entity has power over the relevant activities by considering only the

entity’s substantive rights, Assess whether the entity is exposed to variability in returns, and Assess whether the entity is able to use its power over the investee to affect returns for its

own benefit.

Control should be assessed on a continuous basis and should be reassessed as facts and circumstances change. The impact on the financial statements for the Group has not yet been quantified.



54

3 3.19

Significant accounting policies (continued) New standards and interpretations not adopted (continued) IFRS 11 Joint Arrangements IFRS 11 will be adopted by the Group for the first time for its financial reporting period ending 31 March 2013. The standard will be applied retrospectively, subject to certain transitional provisions. IFRS 11 establishes that classification of the joint arrangement depends on whether parties have rights to and obligations for the underlying assets and liabilities. According to IFRS 11, joint arrangements are divided into two types, each having its own accounting model. Joint operations whereby the jointly controlling parties, known as joint operators, have rights and obligations for the liabilities, relating to the arrangement. Joint ventures whereby the joint controlling parties, known as joint ventures, have rights to the net assets of the arrangement. In terms of IFRS 11, all joint ventures will have to be equity accounted. The impact on the financial statements for the Group has not yet been determined. IFRS 12 Disclosure of Interests in Other Entities

IFRS 12 will be adopted by the Group for the first time for its financial reporting period ending 31 March 2013. IFRS 12 combines, in a single standard, the disclosure requirements for subsidiaries, associates and joint arrangements, as well as unconsolidated structured entities.

The required disclosures aim to provide information to enable users to evaluate:

The nature of, and risks associated with, an entity’s interests in other entities, and The effects of those interests on the entity’s financial position, financial performance and

cash flows.

The adoption of the new standard will increase the level of disclosure provided for the company’s interests in subsidiaries, joint arrangements, associates and structured entities. IFRS 13 Fair Value Measurement

IFRS 13 will be adopted by the Group for the first time for its financial reporting period ending 31 March 2013. The standard will be applied prospectively and comparatives will not be restated. IFRS 13 introduces a single source of guidance on fair value measurement for both financial and non-financial assets and liabilities by defining fair value, establishing a framework for measuring fair value and setting out disclosure requirements for fair value measurements. The key principles in IFRS 13 are as follows:


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3 3.19

Significant accounting policies (continued) New standards and interpretations not adopted (continued) IFRS 11 Joint Arrangements IFRS 11 will be adopted by the Group for the first time for its financial reporting period ending 31 March 2013. The standard will be applied retrospectively, subject to certain transitional provisions. IFRS 11 establishes that classification of the joint arrangement depends on whether parties have rights to and obligations for the underlying assets and liabilities. According to IFRS 11, joint arrangements are divided into two types, each having its own accounting model. Joint operations whereby the jointly controlling parties, known as joint operators, have rights and obligations for the liabilities, relating to the arrangement. Joint ventures whereby the joint controlling parties, known as joint ventures, have rights to the net assets of the arrangement. In terms of IFRS 11, all joint ventures will have to be equity accounted. The impact on the financial statements for the Group has not yet been determined. IFRS 12 Disclosure of Interests in Other Entities

IFRS 12 will be adopted by the Group for the first time for its financial reporting period ending 31 March 2013. IFRS 12 combines, in a single standard, the disclosure requirements for subsidiaries, associates and joint arrangements, as well as unconsolidated structured entities.

The required disclosures aim to provide information to enable users to evaluate:

The nature of, and risks associated with, an entity’s interests in other entities, and The effects of those interests on the entity’s financial position, financial performance and

cash flows.

The adoption of the new standard will increase the level of disclosure provided for the company’s interests in subsidiaries, joint arrangements, associates and structured entities. IFRS 13 Fair Value Measurement

IFRS 13 will be adopted by the Group for the first time for its financial reporting period ending 31 March 2013. The standard will be applied prospectively and comparatives will not be restated. IFRS 13 introduces a single source of guidance on fair value measurement for both financial and non-financial assets and liabilities by defining fair value, establishing a framework for measuring fair value and setting out disclosure requirements for fair value measurements. The key principles in IFRS 13 are as follows:


50



55

3 3.19

Significant accounting policies (continued) New standards and interpretations not adopted (continued) Fair value is an exit price Measurement considers characteristics of the asset or liability and not entity-specific

characteristics Measurement assumes a transaction in the entity’s principle (or most advantageous) market

between market participants Price is not adjusted for transaction costs Measurement maximises the use of relevant observable inputs and minimises the use of

unobservable inputs The three-level fair value hierarchy is extended to all fair value measurements The impact on the financial statements has not yet been quantified. IAS 28 (2011) Investments in Associates and Joint Ventures IAS 28 (2011) will be adopted by annual period beginning on or after 1 January 2013 for the first time for its financial reporting period ended 31 March 2013. IAS 28 (2011) supersedes IAS 28 (2009) and carries forward the existing accounting and disclosure requirements with limited amendments. These include: IFRS 5 is applicable to an investment, or a portion of an investment, in an associate or a

joint venture that meets the criteria to be classified as held-for-sale; and On cessation of significant influence or joint control, even if an investment in an associate

becomes an investment in a joint venture or vice versa, the company does not re-measure the retained interest.

The impact on the financial statements for the Group has not yet been quantified.

IFRIC Interpretation 20- Stripping Costs in the Production Phase of a Surface Mine This interpretation is effective for annual periods beginning on or after 1 January 2013. Entities will be required to apply its requirements for production phase stripping costs incurred from the start of the earliest comparative period presented- which means many entities will need to start tracking the impacts of the Interpretation from at least 1 January 2012. The impact on the financial statements for the Group has not yet been quantified. IAS 19 Employee Benefits (2011) IAS 19(2011) changes the definition of short term and other long-term employee benefits to clarify the distinction between the two. For defined benefit plans, removal of the accounting policy choice for the recognition of actuarial gains and losses is not expected to have any impact on the Group. However, the Group may need to assess the impact of the change in measurement principles of expected return on plan assets. IAS 19(2011) is effective for annual periods beginning on or after 1 January 2013 with early adoption permitted. The impact on the financial statements for the Group has not yet been quantified.



56

4

Determination of fair values

A number of the Group’s accounting policies and disclosures require the determination of fair value, for both financial and non-financial assets and liabilities. Fair values have been determined for measurement and disclosure purposes based on the following methods.

Equity and debt securities The fair value of equity and debt securities is determined by reference to their quoted closing bid price at the reporting date, or if unquoted, determined using a valuation technique. Valuation techniques employed include market multiples and discounted cash flow analysis using expected future cash flows and a market-related discount rate. The fair value of held-to maturity investments is determined for disclosure purposes only.

Trade and other receivables

The fair value of trade and other receivables is estimated at the present value of future cash flows, discounted at the market rate of interest at the reporting date. This fair value is determined for disclosure purposes or when acquired in a business combination.

Non-derivative financial liabilities

Fair value, which is determined for disclosure purposes, is calculated based on the present value of future principal and interest cash flows, discounted at the market rate of interest at the reporting date. For finance leases the market rate of interest is determined by reference to similar lease agreements.

5

Financial risk management

The Group’s activities expose it to a variety of financial risks: market risk (including price risk, foreign exchange risk, and interest rate risk), credit risk and liquidity risk. The Group’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on its financial performance.

Risk management is carried out by the investments department under policies approved by the Board of Directors. Group investment teams identifies, evaluates and manages financial risks in close co operation with the Group’s operating units. The Board provides written principles for overall risk management, as well as written policies covering specific areas such as foreign exchange risk, interest rate risk, credit risk and non-derivative financial instruments and investing excess liquidity.

Market risk

(i) Currency risk

The Group is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the US dollar. Foreign exchange risk arises from future commercial transactions, recognised assets and liabilities.


51



56

4

Determination of fair values

A number of the Group’s accounting policies and disclosures require the determination of fair value, for both financial and non-financial assets and liabilities. Fair values have been determined for measurement and disclosure purposes based on the following methods.

Equity and debt securities The fair value of equity and debt securities is determined by reference to their quoted closing bid price at the reporting date, or if unquoted, determined using a valuation technique. Valuation techniques employed include market multiples and discounted cash flow analysis using expected future cash flows and a market-related discount rate. The fair value of held-to maturity investments is determined for disclosure purposes only.

Trade and other receivables

The fair value of trade and other receivables is estimated at the present value of future cash flows, discounted at the market rate of interest at the reporting date. This fair value is determined for disclosure purposes or when acquired in a business combination.

Non-derivative financial liabilities

Fair value, which is determined for disclosure purposes, is calculated based on the present value of future principal and interest cash flows, discounted at the market rate of interest at the reporting date. For finance leases the market rate of interest is determined by reference to similar lease agreements.

5

Financial risk management

The Group’s activities expose it to a variety of financial risks: market risk (including price risk, foreign exchange risk, and interest rate risk), credit risk and liquidity risk. The Group’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on its financial performance.

Risk management is carried out by the investments department under policies approved by the Board of Directors. Group investment teams identifies, evaluates and manages financial risks in close co operation with the Group’s operating units. The Board provides written principles for overall risk management, as well as written policies covering specific areas such as foreign exchange risk, interest rate risk, credit risk and non-derivative financial instruments and investing excess liquidity.

Market risk

(i) Currency risk

The Group is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the US dollar. Foreign exchange risk arises from future commercial transactions, recognised assets and liabilities.


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57

5

Financial risk management (continued) Currency risk (continued) Group

2012 Financial assets

ZMK equivalent

of US$

ZMK

Total

Financial assets at fair value through profit or loss 338,478 8,892 347,370 Cash and cash equivalents 56,337 4,892 61,229 Trade and other receivables 781,780 164,757 946,537 Held to maturities investment securities 384,707 19,250 403,957

Total financial assets 1,561,302 197,791 1,759,093

Financial liabilities Borrowings (1,133,928) (156,604) (1,290,532) Subordinated loan - (865,445) (865,445) Trade and other payables - (110,588) (110,588)

Total financial liabilities (1,133,928) (1,132,637) (2,266,565)

Net position 427,374 (934,846) (507,472)

2011 Financial assets

ZMK equivalent of

US$

ZMK

Total

Financial instruments at fair value through profit or loss 355,292 - 355,292 Non- current assets held for sale 529,018 - 529,018 Cash and cash equivalents 10,478 93,741 104,219 Trade and other receivables 475,928 309,295 785,223 Held to maturities investment securities 63,885 10,258 74,143


Financial liabilities Borrowings (1,329,692) (116,649) (1,446,341) Subordinated loan - (865,445) (865,445) Trade and other payables - (119,393) (119,393) Total financial liabilities (1,329,692) (1,101,487) (2,431,179)

Net position 104,909 (688,193) (583,284)



58

5 Financial risk management (continued)

Currency risk (continued) Company

ZMK equivalent

of US$

ZMK

Total

2012 Financial assets Financial assets at fair value through profit or loss 338,478 8,892 347,370 Cash and cash equivalents 14,805 4,555 19,360 Trade and other receivables 911,376 58,532 969,908 Held to maturity investment securities 384,707 19,250 403,957



Total financial liabilities (1,137,607) (935,684) (2,073,291)

Net position 511,759 (844,455) (332,696)

2011 Financial assets Financial instruments at fair value through profit or loss 355,292 - 355,292 Non- current assets held for sale 529,018 - 529,018 Cash and cash equivalents 10,478 10,022 20,500 Trade and other receivables 515,334 167,032 682,366 Held to maturity investment securities 63,885 10,258 74,143




Net position 282,215 (850,051) (567,836) The following significant exchange rates applied during the year:

Average rate Reporting date spot rate 2012 2011 2012 2011 Kwacha USD 1 5,280.21

4,755.38 5,283.06 4,728.44


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58


Currency risk (continued) Company

ZMK equivalent

of US$

ZMK

Total

2012 Financial assets Financial assets at fair value through profit or loss 338,478 8,892 347,370 Cash and cash equivalents 14,805 4,555 19,360 Trade and other receivables 911,376 58,532 969,908 Held to maturity investment securities 384,707 19,250 403,957



Total financial liabilities (1,137,607) (935,684) (2,073,291)

Net position 511,759 (844,455) (332,696)

2011 Financial assets Financial instruments at fair value through profit or loss 355,292 - 355,292 Non- current assets held for sale 529,018 - 529,018 Cash and cash equivalents 10,478 10,022 20,500 Trade and other receivables 515,334 167,032 682,366 Held to maturity investment securities 63,885 10,258 74,143




Net position 282,215 (850,051) (567,836) The following significant exchange rates applied during the year:

Average rate Reporting date spot rate 2012 2011 2012 2011 Kwacha USD 1 5,280.21

4,755.38 5,283.06 4,728.44


54



59


Currency risk (continued) Sensitivity analysis

A 10 percent strengthening of the Kwacha against the US Dollar at 31 March 2012 would have increased (decreased) equity and profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular interest rates, remain constant. The analysis is performed on the same basis for 31 March 2011.

Equity

and profit or loss

31 March 2012 - USD 51,176 31 March 2011 - USD 28,221 A 10 percent weakening of the Kwacha against the US Dollar at 31 March 2012 would have had the equal but opposite effect on the above currencies to the amounts shown above, on the basis that all other variables remain constant.

(ii) Interest rate risk

The Group’s investments in corporate bonds and Government securities, all of which are floating rate and are measured at amortised cost exposes the Group to cash flow interest rate risk. The tenure of the investments is less than 1 year. At 31 March 2012, an increase/decrease of 100 basis points would have resulted in a decrease/increase in the consolidated and company post tax profit and equity of K4,567 million(2011: K741 million).

(iii) Price risk

The Group is exposed to equity securities price risk because of investments in quoted and unquoted shares classified as financial assets at fair value through profit or loss. To manage its price risk arising from investments in equity and debt securities, the Group diversifies its portfolio, in accordance with limits set by the Group. All quoted shares held by the Group are traded on the Lusaka, Toronto, or Australia stock exchange. At 31 March 2012, if the LSE Index had increased/decreased by 5% with all other variables held constant and all the Group’s equity instruments moved according to the historical correlation to the index, consolidated equity would have been K 445 higher/lower.



60


Credit risk (continued)

Financial risk management (continued) Credit risk

Credit risk is managed on a Group basis. Credit risk arises from cash and cash equivalents, corporate bonds and deposits with banks, as well as trade and other receivables. Neither the Group nor the Company has any significant concentrations of credit risk. The Company credit controller assesses the credit quality of each customer, taking into account its financial position, past experience and other factors. Individual risk limits are set based on internal or external ratings in accordance with limits set by the Board. The utilisation of credit limits is regularly monitored.

The amount that best represents the Group’s and Company’s maximum exposure to credit risk at 31 March 2012 is made up as follows:

Group Company 2012 2011 2012 2011 Financial assets at fair value through profit or loss

347,370

355,292

347,370

355,292

Non-current asset held for sale - 529,018 - 529,018 Cash and cash equivalents 61,229 104,219 19,360 20,500 Trade and other receivables 946,537 785,223 969,908 682,366 Held to maturity investment securities 403,957 74,143 403,957 74,143 1,759,093 1,847,895 1,740,595 1,661,319

No collateral is held for any of the above assets. All receivables that are neither past due nor impaired are within their approved credit limits, and no receivables have had their terms renegotiated.

Ageing of trade and other receivables at the reporting date.

Group

2012 Gross Impairment Net

Neither due or impaired - - - Past due 30 - 60 days 262,458 61,690 200,768 Past due 61 – 90 days 54,139 2,358 51,781 Past due 91 - 120 days 18,852 8,612 10,240 Over 121 days 960,670 276,922 683,748 1,296,119 349,582 946,537


Neither due or impaired - - - Past due 30 - 60 days 21,204 20,228 976 Past due 61 – 90 days 3,105 128 2,977 Past due 91 - 120 days 781,270 - 781,270 Over 121 days 301,718 301,718 -

1,107,297 322,074 785,223


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60



Financial risk management (continued) Credit risk

Credit risk is managed on a Group basis. Credit risk arises from cash and cash equivalents, corporate bonds and deposits with banks, as well as trade and other receivables. Neither the Group nor the Company has any significant concentrations of credit risk. The Company credit controller assesses the credit quality of each customer, taking into account its financial position, past experience and other factors. Individual risk limits are set based on internal or external ratings in accordance with limits set by the Board. The utilisation of credit limits is regularly monitored.

The amount that best represents the Group’s and Company’s maximum exposure to credit risk at 31 March 2012 is made up as follows:

Group Company 2012 2011 2012 2011 Financial assets at fair value through profit or loss

347,370

355,292

347,370

355,292

Non-current asset held for sale - 529,018 - 529,018 Cash and cash equivalents 61,229 104,219 19,360 20,500 Trade and other receivables 946,537 785,223 969,908 682,366 Held to maturity investment securities 403,957 74,143 403,957 74,143 1,759,093 1,847,895 1,740,595 1,661,319

No collateral is held for any of the above assets. All receivables that are neither past due nor impaired are within their approved credit limits, and no receivables have had their terms renegotiated.

Ageing of trade and other receivables at the reporting date.

Group


Neither due or impaired - - - Past due 30 - 60 days 262,458 61,690 200,768 Past due 61 – 90 days 54,139 2,358 51,781 Past due 91 - 120 days 18,852 8,612 10,240 Over 121 days 960,670 276,922 683,748 1,296,119 349,582 946,537


Neither due or impaired - - - Past due 30 - 60 days 21,204 20,228 976 Past due 61 – 90 days 3,105 128 2,977 Past due 91 - 120 days 781,270 - 781,270 Over 121 days 301,718 301,718 -

1,107,297 322,074 785,223


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61



Company

2012 Gross Impairment Net Neither due or impaired - - - Past due 30 - 60 days 262,458 61,690 200,768 Past due 61 - 90 days 54,140 2,358 51,782 Past due 91 - 120 days 18,852 8,612 10,240 Over 121days 983,450 276,332 707,118 1,318,900 348,992 969,908

2011 Gross Impairment Net Neither due or impaired - - - Past due 30 - 60 days 20,228 20,228 - Past due 61 - 90 days - - - Past due 91 - 120 days 682,366 - 682,366 Over 121 days 298,347 298,347 -

1,000,941 318,575 682,366

The Group believes that unimpaired amounts that are past due more than 60 days are still collectable in full, based on historical payment behaviour and extensive analysis of customer’s credit risk. The impairment account in respect of trade and other receivable is used to record impairment losses unless the Group is satisfied that no recovery of the amount owing is possible, at that point the amount is written off against the financial assets.

The credit quality of the customers is assessed taking into account past performance and the utilisation of limits is regularly monitored.

The movement in the allowance for impairment in respect of trade and other receivables during the year was as follows:

Group 2012 2011

Balance at 1 April 322,074 333,116 Impairment loss recognised 27,508 16,314 Amounts written off - (27,356)

Balance at 31 March 349,582 322,074

Company 2012 2011

Balance at 1 April 318,575 327,957 Impairment loss recognised 30,417 18,465 Amounts written off - (27,847)

Balance at 31 March 348,992 318,575

As at 31 March 2012 an impairment loss of K109 billion and K160 billion relates to the receivables from Government and Maamba Collieries Zambia Limited respectively. The Government impaired receivables were inherited from ZCCM Limited by the Group in 2000.



62


Credit risk (continued) The Maamba Collieries impaired debt relates to working capital loans and other expenses paid on behalf of the Company by the Group. The remainder of the impairment loss at 31 March 2012 relates to several customers who bought metal stocks at the time of privatisations and have since failed to pay their outstanding balances. The Group believes that the unimpaired amounts that are past due by more than 30 days are still collectible, based on historical payment behaviour and extensive analysis of customer credit risk. Liquidity risk

Prudent liquidity risk management includes maintaining sufficient cash and marketable securities, and the availability of funding from an adequate amount of committed credit facilities. Due to the dynamic nature of the underlying businesses, Treasury maintains flexibility in funding by maintaining availability under committed credit lines.

Management monitors rolling forecasts of the Group’s liquidity reserve on the basis of expected cash flows.

Total

Less than

1 year

Between 1 and 2 years

Between 2

and 5 years

Over 5

years (a) Group

At 31 March 2012:

Financial liabilities

Borrowings 1,290,532 1,133,928 - - 156,604 Subordinated loan 865,445 865,445 - - - Trade and other payables 110,588 110,588 - - -

2,266,565 2,109,961 - - 156,604

Total

Less than 1 year



Over 5 years

At 31 March 2011 Financial liabilities


2,431,179 2,412,033 - - 19,146


57



62


Credit risk (continued) The Maamba Collieries impaired debt relates to working capital loans and other expenses paid on behalf of the Company by the Group. The remainder of the impairment loss at 31 March 2012 relates to several customers who bought metal stocks at the time of privatisations and have since failed to pay their outstanding balances. The Group believes that the unimpaired amounts that are past due by more than 30 days are still collectible, based on historical payment behaviour and extensive analysis of customer credit risk. Liquidity risk

Prudent liquidity risk management includes maintaining sufficient cash and marketable securities, and the availability of funding from an adequate amount of committed credit facilities. Due to the dynamic nature of the underlying businesses, Treasury maintains flexibility in funding by maintaining availability under committed credit lines.

Management monitors rolling forecasts of the Group’s liquidity reserve on the basis of expected cash flows.

Total

Less than

1 year


Between 2

and 5 years

Over 5

years (a) Group

At 31 March 2012:

Financial liabilities


2,266,565 2,109,961 - - 156,604

Total

Less than 1 year



Over 5 years

At 31 March 2011 Financial liabilities


2,431,179 2,412,033 - - 19,146


58



63


Total

Less than 1 year



Over 5 years

(b) Company

At 31 March 2012: Financial liabilities Borrowings 1,149,928 1,132,044 - - 17,884 Trade and other payables 57,918 57,918 - - - Subordinated loan 865,445 865,445 - - -

2,073,291 2,055,407 - - 17,884

Total

Less than 1 year



Over 5 Years

At 31 March 2011: Financial liabilities Borrowings 1,289,296 1,289,296 - - - Trade and other payables 74,414 74,414 - - - Subordinated loan 865,445 865,445 - - -

2,229,155 2,229,155 - - - Capital management

The Group’s and Company objectives when managing capital are to safeguard its ability to continue as a going concern in order to provide returns for shareholders and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to shareholders, issue new capital or sell assets to reduce debt.

The Group monitors capital on the basis of the gearing ratio. This ratio is calculated as net debt divided by total capital. Net debt is calculated as total borrowings less cash and cash equivalents. Total capital is calculated as equity plus net debt. The gearing ratios at 31 March 2012 and 2011 were as follows:

Group Company 2012 2011 2012 2011

Borrowings 1,290,532 1,446,341 1,149,928 1,289,296 Subordinated loan 865,455 865,445 865,445 865,445 Less: cash and cash equivalents (61,229) (104,219) (19,360) (20,500)

Net debt 2,094,758 2,207,567 1,996,013 2,134,241

Total equity 3,706,382 2,151,478 (50,504) (649,185)

Total capital 5,801,140 4,359,045 1,945,509 1,485,056

Gearing ratio 36.11% 50.65% 102.60% 143.71%



64


The interest rates used to discount estimated cash flows when applicable are based on the government yield curve at the reporting date plus an appropriate credit spread, and are as follows:

2012 2011

Loans and borrowings 8.9% 9.7% Fair value estimation

Disclosure of fair value measurements by level of the following fair value measurement hierarchy is as follows: Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1). Inputs other than quoted prices included within level 1 that are observable for the asset or

liability, either directly (that is, as prices) or indirectly (that is, derived from prices) (level 2). Inputs for the asset or liability that are not based on observable market data (that is, unobservable

inputs) (level 3).

The following table presents the Group’s assets and liabilities that are measured at fair value at 31 March 2012. Level 1 Level 2 Level 3 Total Assets Financial investments at fair value through profit or loss

– Equity securities 8,892 - 338,478 347,370 The following table shows a reconciliation from the beginning balances to the ending balances for fair value measurement in Level 3 of the fair value hierarchy: 2012 2011

At 1 April 355,292 253,734 Addition 7,904 - Fair value change (15,826) 101,558

At 31 March 347,370 355,292 Total gains or losses included in comprehensive income for the year in the above table are presented in the statement of comprehensive income.


59



64


The interest rates used to discount estimated cash flows when applicable are based on the government yield curve at the reporting date plus an appropriate credit spread, and are as follows:

2012 2011

Loans and borrowings 8.9% 9.7% Fair value estimation

Disclosure of fair value measurements by level of the following fair value measurement hierarchy is as follows: Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1). Inputs other than quoted prices included within level 1 that are observable for the asset or

liability, either directly (that is, as prices) or indirectly (that is, derived from prices) (level 2). Inputs for the asset or liability that are not based on observable market data (that is, unobservable

inputs) (level 3).

The following table presents the Group’s assets and liabilities that are measured at fair value at 31 March 2012. Level 1 Level 2 Level 3 Total Assets Financial investments at fair value through profit or loss

– Equity securities 8,892 - 338,478 347,370 The following table shows a reconciliation from the beginning balances to the ending balances for fair value measurement in Level 3 of the fair value hierarchy: 2012 2011

At 1 April 355,292 253,734 Addition 7,904 - Fair value change (15,826) 101,558

At 31 March 347,370 355,292 Total gains or losses included in comprehensive income for the year in the above table are presented in the statement of comprehensive income.


60



65


Fair values versus carrying amounts

Group

The fair values of financial assets and liabilities, together with the carrying amounts shown in the statement of financial position, are as follows:

2012 2011 Carrying

amount

Fair value Carrying

amount

Fair value Financial assets Financial assets at fair value through profit or loss

347,370

347,370

355,292

355,292

Cash and cash equivalents 61,229 61,229 104,219 104,219 Non-current assets held for sale - - 529,018 529,018 Trade and other receivables 946,537 946,537 785,223 785,223 Held to maturity investment securities

403,957

403,957

74,143

74,143

1,759,093 1,759,093 1,847,895 1,847,895 Financial liabilities Borrowings (1,290,532) (1,290,532) (1,446,341) (1,446,341) Subordinated loan (865,445) (865,445) (865,445) (865,445) Trade and other payables (110,588) (110,588) (119,393) (119,393)

(2,266,565) (2,266,565) (2,431,197) (2,431,197)

Net position (507,472) (507,472) (583,284) (583,284) Company

2012 2011 Carrying

amount

Fair value Carrying

amount

Fair value Financial assets Financial investments at fair value through profit or loss

347,370

347,370

355,292

355,292

Cash and cash equivalents 19,360 19,360 20,500 20,500 Non financial assets held for sale - - 529,018 529,018 Trade and other receivables 969,908 969,908 682,366 682,366 Held to maturity investment securities

403,957

403,957

74,143

74,143

1,740,595 1,740,595 1,661,319 1,661,319 Financial liabilities Borrowings (1,149,928) (1,149,928) (1,289,296) (1,289,296) Subordinated loan (865,445) (865,445) (865,445) (865,445) Trade and other payables (57,918) (57,918) (74,414) (74,414)

Total (2,073,291) (2,073,291) (2,229,155) (2,229,155)

Net position (332,696) (332,696) (567,836) (567,836)



66


The basis for determining fair values is disclosed in the respective accounting policy notes for each financial instrument.

The fair value of financial instruments traded in active markets is based on quoted market prices at the reporting date. A market is regarded as active if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service, or regulatory agency, and those prices represent actual and regularly occurring market transactions on an arm’s length basis. The quoted market price used for financial assets held by the Group is the current bid price. These instruments are included in level 1.

6 Critical accounting estimates and judgements Estimates and judgements are continually evaluated and are based on historical experience and

other factors, including experience of future events that are believed to be reasonable under the circumstances.

Going concern assumption

At 31 March 2012, the Company’s total liabilities exceeded its total assets by K51 billion (2011:

K649 billion. The ability of the Company to continue as a going concern is dependent on generation of future profits. The ability of the Company to continue as a going concern is also dependent upon the continued support of the Company’s major shareholder, the Government of the Republic of Zambia to enable the Company to settle its liabilities as and when they fall due. The Group’s projected cash requirements for the year to 31 March 2013 are to be financed from internally generated funds as well as loans. The consolidated financial statements have been prepared on the going concern basis, which assumes that the Company and its subsidiary will continue in operational existence for the foreseeable future. The Directors have obtained an undertaking from the major shareholder, the Government of the Republic of Zambia (GRZ), that the necessary financial and operational support will be made available for the 12 months following the date of signing of the consolidated financial statements. Based on the foregoing, it is the Directors’ view that it is appropriate for the consolidated financial statements to be prepared on a going concern basis. Trade and other payables continue to be settled in the normal course of business.

Property, plant and equipment Critical estimates are made by the directors in determining depreciation rates for property, plant and equipment. The rates used are set out in accounting policy 3.5(iv). An external, independent valuation company, having appropriate recognised professional qualifications and recent experience in the location and category of property being valued, values the Company’s property. The fair values are based on market values, being the estimated amount for which a property could be exchanged on the date of the valuation between a willing buyer and a willing seller in an arm’s length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion.


61



66


The basis for determining fair values is disclosed in the respective accounting policy notes for each financial instrument.

The fair value of financial instruments traded in active markets is based on quoted market prices at the reporting date. A market is regarded as active if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service, or regulatory agency, and those prices represent actual and regularly occurring market transactions on an arm’s length basis. The quoted market price used for financial assets held by the Group is the current bid price. These instruments are included in level 1.

6 Critical accounting estimates and judgements Estimates and judgements are continually evaluated and are based on historical experience and

other factors, including experience of future events that are believed to be reasonable under the circumstances.

Going concern assumption

At 31 March 2012, the Company’s total liabilities exceeded its total assets by K51 billion (2011:

K649 billion. The ability of the Company to continue as a going concern is dependent on generation of future profits. The ability of the Company to continue as a going concern is also dependent upon the continued support of the Company’s major shareholder, the Government of the Republic of Zambia to enable the Company to settle its liabilities as and when they fall due. The Group’s projected cash requirements for the year to 31 March 2013 are to be financed from internally generated funds as well as loans. The consolidated financial statements have been prepared on the going concern basis, which assumes that the Company and its subsidiary will continue in operational existence for the foreseeable future. The Directors have obtained an undertaking from the major shareholder, the Government of the Republic of Zambia (GRZ), that the necessary financial and operational support will be made available for the 12 months following the date of signing of the consolidated financial statements. Based on the foregoing, it is the Directors’ view that it is appropriate for the consolidated financial statements to be prepared on a going concern basis. Trade and other payables continue to be settled in the normal course of business.

Property, plant and equipment Critical estimates are made by the directors in determining depreciation rates for property, plant and equipment. The rates used are set out in accounting policy 3.5(iv). An external, independent valuation company, having appropriate recognised professional qualifications and recent experience in the location and category of property being valued, values the Company’s property. The fair values are based on market values, being the estimated amount for which a property could be exchanged on the date of the valuation between a willing buyer and a willing seller in an arm’s length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion.


62



67

6

Critical accounting estimates and judgements (continued)

In the absence of current prices in an active market, the valuations are prepared by considering the aggregate of the estimated cash flows expected to be received from renting out the property. A yield that reflects the specific risks inherent in the net cash flows then is applied to the net annual cash flows to arrive at the property valuation. In making its judgement, the Company considers information from a variety of sources including:

(i) current prices in an active market for properties of different nature, condition or location (or subject to different lease or other contracts), adjusted to reflect those differences;

(ii) recent prices of similar properties in less active markets, with adjustments to reflect any changes in economic conditions since the date of the transactions that occurred at those prices;

(iii) discounted cash flow projections based on reliable estimates of future cash flows, derived from the terms of any existing lease and other contracts and (where possible) from external evidence such as current market rents for similar properties in the same location and condition, and using discount rates that reflect current market assessments of the uncertainty in the amount and timing of the cash flows; and

(iv) Capital income projections based upon Company’s estimate of net market rental income which is assumed to be a level annuity in perpetuity, and a capitalisation rate derived from the analysis of market evidence. Reversions associated with short term leasing risk/costs, incentive and capital expenditure maybe deducted from the capitalised net income figure.

Receivables

Critical estimates are made by the directors in determining the recoverable amount of impaired receivables as disclosed under note 38(i).

Retirement benefit obligations Critical assumptions are made by the actuary in determining the present value of retirement benefit obligations, including the discount rate. The carrying amount of the provision and the key assumptions made in estimating the provision are set out in note 31.

Income taxes

The tax charged in the financial statements is subject to agreement with the Zambia Revenue Authority. When the final tax outcome upon agreement of assessments differs from the amounts initially recorded, such differences are adjusted in subsequent periods.

7 Segment reporting

The Group has two reportable segments, as described below, which are the Group’s strategic divisions. The strategic divisions offer difference proceeds and services, and are managed separately because they require different technology and marketing strategies for each of the strategic decision, the Group’s CEO (the Chief operating decision maker) reviews internal management reports or at least a quarterly basis. The following summary describes the operations in each of the Group’s reportable segments.

(1) Manufacturing of lime, mining and power distribution. (2) Investment business.

Information regarding the results of each reportable segment is included below. Performance is measured based on segment profit before tax, as included in the internal management reports that are reviewed by the Group’s CEO. Segment profit is used to measure performance as management. Believes that such information is the most relevant in evaluation the results of certain segments relation to other entities that operate which these industries. Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Segment capital expenditure is the total cost incurred to acquire segment assets that are expected to be used for more than one period.



68

7

Segment reporting (continued)

The segment results for the Group were as follows:

31 March 2012 2012

Investment business

Manufacturing, mining and

power distribution

Group total

Revenue – external 79,708 177,608 257,316

Total

79,708 177,608 257,316 Operating profit 361,301 5,992 367,293 Finance costs (22,238) (566) (22,804) Finance income 69,580 (1,796) 67,784 Share of profit of associates - 640,468 640,468

Profit before income tax 408,643 644,098 1,052,741 Income tax expenses 189,812 (4,743) 185,069

Profit for the year 598,455 639,355 1,237,810

31 March 2011

Investment business


power distribution

Group total


Total 159,513 208,549 368,062 Operating profit 121,299 380,185 501,484 Finance cost (9,565) (13,038) (22,603) Finance income 278,125 1,665 279,790 Share of profit of associates - 773,004 773,004

Profit before income tax 389,859 1,141,816 1,531,675 Income tax expenses (81,176) (19,023) (100,199)

Profit for the year 308,683 1,122,793 1,431,476 Revenue from one associate entity (Kansanshi Mining Plc) of the Group’s investment business represents approximately K39 billion (2011: K131 billion) of the Group’s total revenue.


63



68

7

Segment reporting (continued)

The segment results for the Group were as follows:

31 March 2012 2012

Investment business


power distribution

Group total


Total

79,708 177,608 257,316 Operating profit 361,301 5,992 367,293 Finance costs (22,238) (566) (22,804) Finance income 69,580 (1,796) 67,784 Share of profit of associates - 640,468 640,468

Profit before income tax 408,643 644,098 1,052,741 Income tax expenses 189,812 (4,743) 185,069

Profit for the year 598,455 639,355 1,237,810

31 March 2011

Investment business


power distribution

Group total


Total 159,513 208,549 368,062 Operating profit 121,299 380,185 501,484 Finance cost (9,565) (13,038) (22,603) Finance income 278,125 1,665 279,790 Share of profit of associates - 773,004 773,004

Profit before income tax 389,859 1,141,816 1,531,675 Income tax expenses (81,176) (19,023) (100,199)

Profit for the year 308,683 1,122,793 1,431,476 Revenue from one associate entity (Kansanshi Mining Plc) of the Group’s investment business represents approximately K39 billion (2011: K131 billion) of the Group’s total revenue.


64



69

7 Segment reporting (continued)

Group reconciliation of reported assets and liabilities 2012

Investment

business


power distribution

Group total

Assets

Total assets for reportable segments 618,290 - 618,290 Other assets (i) 1,336,176 89,978 1,426,154 Equity - accounted investees 347,370 3,914,850 4,262,220

Consolidated total assets 2,301,836 4,004,828 6,306,664 Liabilities

Total liabilities for reportable segments 2,186,450 206,319 2,392,769 Other liabilities (ii) 165,890 41,623 207,513

Consolidated total liabilities 2,352,340 247,942 2,600,282

2011

Investment

business


power distribution

Group total

Assets

Total assets for reportable segments 886,340 90,489 976,829 Other assets (i) 780,726 212,155 992,881 Equity – accounted investees 355,292 2,750,764 3,106,056




(i) Other assets consist of inventories, trade and other receivables, held to maturity investment securities, cash and cash equivalents, and assets classified as held for sale.

(ii) Other liability includes bank overdraft, tax liabilities, retirement benefits and liabilities classified as held for sale.

8 Revenue

Group Company 2012 2011 2012 2011 -

Dividends receivable (note 33(ii)) 79,708 159,513 79,708 159,513 Lime sales 177,608 208,549 - -

257,316 368,062 79,708 159,513


65



69

7 Segment reporting (continued)

Group reconciliation of reported assets and liabilities 2012

Investment

business


power distribution

Group total

Assets

Total assets for reportable segments 618,290 - 618,290 Other assets (i) 1,336,176 89,978 1,426,154 Equity - accounted investees 347,370 3,914,850 4,262,220




2011

Investment

business


power distribution

Group total

Assets

Total assets for reportable segments 886,340 90,489 976,829 Other assets (i) 780,726 212,155 992,881 Equity – accounted investees 355,292 2,750,764 3,106,056




(i) Other assets consist of inventories, trade and other receivables, held to maturity investment securities, cash and cash equivalents, and assets classified as held for sale.

(ii) Other liability includes bank overdraft, tax liabilities, retirement benefits and liabilities classified as held for sale.

8 Revenue

Group Company 2012 2011 2012 2011 -

Dividends receivable (note 33(ii)) 79,708 159,513 79,708 159,513 Lime sales 177,608 208,549 - -

257,316 368,062 79,708 159,513



70

9(a) Other income

Group Company 2012 2011 2012 2011

Gain on disposal of Equinox 273,339 - 273,339 - Gain on disposal of Maamba - 328,465 - - Gain on Lubambe Copper Mines Limited 84,935 - 84,935 - Reversal of environmental provision (note 32) 1,316 - 1,316 - Income from sale of mining rights - 24,086 - 24,086 Interest income from related parties 15,178 7,138 11,984 7,128 Management fee income 4,893 2,139 4,893 2,139 Profit on disposal of property, plant and equipment 1,964 - 1,964 -

381,625 361,828 378,431 33,353

On April 26, 2011, Barrick Canada Inc. (offeror), a wholly owned subsidiary of Barrick Gold Corporation, made an offer (as extended pursuant to the notice of extension dated June 2, 2012) (Offer) to purchase all of the issued and outstanding common shares of Equinox Minerals Limited (Equinox), including those common shares that are represented by CHESS Depositary Interests (CDIs) but other than the common shares directly or indirectly owned by the offerer or its affiliates (collectively, the Equinox Shares).

The offer was accepted by ZCCM Investments Holdings together with other Equinox shareholders who held, in aggregate, more than 96% of the outstanding Equinox shares. The profits realised from this transaction were K273 billion.

The gain on Lubambe Copper Mines Limited relates to the 5% free carried interest resulting from the acquisition of the 20% shareholding in Lubambe Copper Mines Limited.

9(b) Grant income Group Company 2012 2011 2012 2011

World Bank grants 12,144 10,956 - -

The grant income is from World Bank for the purposes of resettlement action plan under the Copperbelt Environmental Project.

10 Environmental expenses

Environmental expenses represent expenditures incurred in respect of meeting environmental remedial obligations arising from the operations of ZCCM Limited, the forerunner to the Company. Until 31 March 2011, the expenditure was financed by a loan from the World Bank and Nordic Development Fund. This was from April 2012 onwards financed by internally generated funds.

Group Company 2012 2011 2012 2011 Tailing dumps - 110 - 110 Resettlement acts 2,552 5,232 - 5,232 Expenses on Kabwe - 4,926 - 4,926 Consultancy costs - 1,425 - 1,425 Hazardous chemicals - 16,284 - 16,284 Works - 70 - 70

2,552 28,047 - 28,047


66



71

11 Administration expenses Group Company 2012 2011 2012 2011

Depreciation of property, plant and equipment 10,357 8,342 1,678 630 Auditors’ remuneration 720 820 425 369 Personnel expenses (note 12) 53,868 49,556 23,156 22,359 Other administration expenses 92,272 36,424 83,723 31,118

157,217 95,142 108,982 54,476

Other administrative expenses include legal expenses provision amounting to ZMK30 billion (2011: ZMK18 billion), cadastral surveys amounting to ZMK1 billion (2011: ZMK2 billion) and rental expenses amounting to ZMK1 billion (2011:ZMK1 billion).

12 Personnel expenses Group Company 2012 2011 2012 2011

Salaries and wages 45,358 41,013 21,660 20,881 Retirement benefit costs: Defined benefit scheme (note 31) 6,326 6,606 1,145 1,147 National Social Security Funds 2,184 1,937 351 331

53,868 49,556 23,156 22,359 13 Finance income / (expenses)

Group Company 2012 2011 2012 2011 Finance expenses: Exchange losses on revaluation of price participation receivable

(4,154)

(473)

(4,154)

(473)

Fair value adjustment financial asset at fair value through profit or loss

(16,814)

-

(16,814)

-

Interest expenses (1,836) (11,532) (1,270) (1,679) Net exchange losses - (10,598) - (7,413) Total finance expenses (22,804) (22,603) (22,238) (9,565)

Finance income: Fair value adjustment –financial assets at fair value

through profit or loss 988 274,579 988 274,579 Net exchange gains 59,387 - 61,183 - Interest income 7,409 5,211 7,409 3,546

Total finance income 67,784 279,790 69,580 278,125

Net finance income 44,980 257,187 47,342 268,560

14 Income tax expense Group Company 2012 2011 2012 2011

\

Current income tax 3,478 63,988 1,833 48,428 Deferred tax charge(note 29) (188,547) 36,211 (191,645) 32,748 Income tax (credit)/expense (185,069) 100,199 (189,812) 81,176



72

14

Income tax expense (continued)

The tax on the Group’s profit before income tax differs from the theoretical amount that would arise using the statutory income tax rate as follows:

Group Company 2012 2011 2012 2011

\

Profit before income tax 1,052,741 1,531,675 408,643 389,859 Less: share of post tax profits from associates

(640,468)

(733,004)

-

-

412,273 798,671 408,643 389,859

Tax calculated at rates applicable to profits

35%

144,296

35%

279,535

35%

143,025

35%

136,451

Tax effect of: Non deductible expenses (25%) (116,737) 0% (487) (26%) (118,843) 0% (641) Income taxed at a lower rate 0% (1,079) 0% (3,798) (1%) (2,445) (1%) (1,593) Reversals of fair value adjustment on financial assets at fair value through profit or loss

(40%)

(187,929)

(22%)

(172,932)

(41%)

(187,929)

-

Income not subject to tax (5%) (23,620) (0%) (2,119) (5%) (23,620) (15%) (53,041)

Income tax expense/(credit) (35%) (185,069) 13% 100,199 (38%) (189,812) 19% 81,176

Tax movement in the statement of financial position Group Company 2012 2011 2012 2011

\

Opening balance 1 April 110,620 48,477 100,337 53,754 Charge for the year 3,478 63,988 1,833 48,428 Tax paid (8,983) (1,845) (1,833) (1,845)

Closing balance 31 March 105,115 110,620 100,337 100,337

15 Earnings per share

Basic earnings per share are calculated by dividing the profit attributable to equity holders of the Company by the weighted average number of ordinary shares in issue during the year.

Group Company 2012 2011 2012 2011

Profit attributable to equity holders of the Company (K millions)

1,237,810

1,431,476

598,455

308,683

Weighted average number of ordinary shares in issue (millions)

89

89

89

89

Basic earnings per share (K) 13,908 16,084 6,724 3,468

There were no potentially dilutive shares outstanding at 31 March 2012 (2011: nil). Diluted earnings per share are therefore the same as basic earnings per share.

16 Dividends per share No dividends were declared in respect of the year ended 31 March 2012 (2011: nil).


67



71

11 Administration expenses Group Company 2012 2011 2012 2011

Depreciation of property, plant and equipment 10,357 8,342 1,678 630 Auditors’ remuneration 720 820 425 369 Personnel expenses (note 12) 53,868 49,556 23,156 22,359 Other administration expenses 92,272 36,424 83,723 31,118

157,217 95,142 108,982 54,476

Other administrative expenses include legal expenses provision amounting to ZMK30 billion (2011: ZMK18 billion), cadastral surveys amounting to ZMK1 billion (2011: ZMK2 billion) and rental expenses amounting to ZMK1 billion (2011:ZMK1 billion).

12 Personnel expenses Group Company 2012 2011 2012 2011

Salaries and wages 45,358 41,013 21,660 20,881 Retirement benefit costs: Defined benefit scheme (note 31) 6,326 6,606 1,145 1,147 National Social Security Funds 2,184 1,937 351 331

53,868 49,556 23,156 22,359 13 Finance income / (expenses)

Group Company 2012 2011 2012 2011 Finance expenses: Exchange losses on revaluation of price participation receivable

(4,154)

(473)

(4,154)

(473)

Fair value adjustment financial asset at fair value through profit or loss

(16,814)

-

(16,814)

-

Interest expenses (1,836) (11,532) (1,270) (1,679) Net exchange losses - (10,598) - (7,413) Total finance expenses (22,804) (22,603) (22,238) (9,565)

Finance income: Fair value adjustment –financial assets at fair value

through profit or loss 988 274,579 988 274,579 Net exchange gains 59,387 - 61,183 - Interest income 7,409 5,211 7,409 3,546

Total finance income 67,784 279,790 69,580 278,125

Net finance income 44,980 257,187 47,342 268,560

14 Income tax expense Group Company 2012 2011 2012 2011

\

Current income tax 3,478 63,988 1,833 48,428 Deferred tax charge(note 29) (188,547) 36,211 (191,645) 32,748 Income tax (credit)/expense (185,069) 100,199 (189,812) 81,176



72

14

Income tax expense (continued)

The tax on the Group’s profit before income tax differs from the theoretical amount that would arise using the statutory income tax rate as follows:

Group Company 2012 2011 2012 2011

\

Profit before income tax 1,052,741 1,531,675 408,643 389,859 Less: share of post tax profits from associates

(640,468)

(733,004)

-

-

412,273 798,671 408,643 389,859

Tax calculated at rates applicable to profits

35%

144,296

35%

279,535

35%

143,025

35%

136,451

Tax effect of: Non deductible expenses (25%) (116,737) 0% (487) (26%) (118,843) 0% (641) Income taxed at a lower rate 0% (1,079) 0% (3,798) (1%) (2,445) (1%) (1,593) Reversals of fair value adjustment on financial assets at fair value through profit or loss

(40%)

(187,929)

(22%)

(172,932)

(41%)

(187,929)

-

Income not subject to tax (5%) (23,620) (0%) (2,119) (5%) (23,620) (15%) (53,041)

Income tax expense/(credit) (35%) (185,069) 13% 100,199 (38%) (189,812) 19% 81,176

Tax movement in the statement of financial position Group Company 2012 2011 2012 2011

\

Opening balance 1 April 110,620 48,477 100,337 53,754 Charge for the year 3,478 63,988 1,833 48,428 Tax paid (8,983) (1,845) (1,833) (1,845)

Closing balance 31 March 105,115 110,620 100,337 100,337

15 Earnings per share

Basic earnings per share are calculated by dividing the profit attributable to equity holders of the Company by the weighted average number of ordinary shares in issue during the year.

Group Company 2012 2011 2012 2011

Profit attributable to equity holders of the Company (K millions)

1,237,810

1,431,476

598,455

308,683

Weighted average number of ordinary shares in issue (millions)

89

89

89

89

Basic earnings per share (K) 13,908 16,084 6,724 3,468

There were no potentially dilutive shares outstanding at 31 March 2012 (2011: nil). Diluted earnings per share are therefore the same as basic earnings per share.

16 Dividends per share No dividends were declared in respect of the year ended 31 March 2012 (2011: nil).


68



73

17 Property, plant and equipment

Group

Property

Plant, equipment,

furniture and

vehicles

Work in progress

Total Cost or revaluation Balance at 1 April 2010 11,270 67,545 9,594 88,409 Additions - 1,966 57,446 59,412 Disposals/Impairment (252) - - (252) Transfers 91 23,736 (23,827) - Revaluation 4,319 - - 4,319

Balance at 31 March 2011 15,428 93,247 43,213 151,888

Balance at 1 April 2011 15,428 93,247 43,213 151,888 Additions 950 2,531 171,755 175,236 Disposals - (696) - - (696) Transfers 1,646 22,114 (23,759) -

Balance at 31 March 2012 18,024 117,196 191,209 326,429

Accumulated depreciation and impairment losses

At 1 April 2010 53 38,060 - 38,113 Charge for the year 403 7,939 - 8,342 Depreciation write back (152) - - (152)

Balance at 31 March 2011 304 45,999 - 46,303

Balance at 1 April 2011 304 45,999 - 46,303 Charge for the period 800 9,558 - 10,358 Depreciation write back - (696) - (696)

Balance at 31 March 2012 1,104 54,861 - 55,965

Carrying amounts Balance at 31 March 2011 15,124 47,248 43,213 105,585 Balance at 31 March 2012 16,920 62,335 191,209 270,464 The net carrying value of motor vehicles included K 6.1 billion (2011: K3.61 billion) in respect of assets held under finance lease. The underlying assets are held as security for the finance lease obligation.



74

17 Property, plant and equipment (continued)

Company

Property

Plant, equipment, furniture and

vehicles

Work in progress

Total Cost or revaluation At 1 April 2011 5,780 8,870 528 15,178 Additions - 1,966 - 1,966 Revaluation surplus 4,319 - - 4,319

At 31 March 2011 10,099 10,836 528 21,463 At 1 April 2011 10,099 10,836 528 21,463

Additions - 2,316 1,058 3,374 Disposal - (696) - (696) Transfers - 528 (528) -

At 31 March 2012 10,099 12,984 1,058 24,141


At 1 April 2011 - 7,631 - 7,631 Charge for the year 152 478 - 630 Depreciation write back (152) - - (152)

At 31 March 2011 - 8,109 - 8,109

At 1 April 2011 - 8,109 - 8,109 Charge for the year 482 1,088 - 1,570 Depreciation write back - (696) - (696)

At 31 March 2012 482 8,501 - 8,983

Carrying amount At 31 March 2011 10,099 2,727 528 13,354

At 31 March 2012 9,617 4,483 1,058 15,158

Buildings were revalued in 2011, by the Government Valuation Department, an independent valuer. Valuations were made on the basis of the open market value. The carrying values of the properties were adjusted to their revalued amounts and the resultant surplus net of deferred income tax was credited to the revaluation surplus in shareholders’ equity.

The register showing the details of property, as required by section 193 of the Zambia Companies Act, is available for inspection during business hours at the registered office of the Company.

Fully depreciated plant and equipment as at 31 March 2012 amounted to K 8,013 million (2011: K6,009 million).

Capital work in progress was commissioned in September 2012, subsequent to the year end.

The revaluation reserve relates to the revaluation of property.

The carrying amount of property amounting to K1,711 million (2011;K1, 831 million) would have been recognised had the assets been measured using the cost model.


69



73

17 Property, plant and equipment

Group

Property

Plant, equipment,

furniture and

vehicles

Work in progress

Total Cost or revaluation Balance at 1 April 2010 11,270 67,545 9,594 88,409 Additions - 1,966 57,446 59,412 Disposals/Impairment (252) - - (252) Transfers 91 23,736 (23,827) - Revaluation 4,319 - - 4,319

Balance at 31 March 2011 15,428 93,247 43,213 151,888

Balance at 1 April 2011 15,428 93,247 43,213 151,888 Additions 950 2,531 171,755 175,236 Disposals - (696) - - (696) Transfers 1,646 22,114 (23,759) -

Balance at 31 March 2012 18,024 117,196 191,209 326,429


At 1 April 2010 53 38,060 - 38,113 Charge for the year 403 7,939 - 8,342 Depreciation write back (152) - - (152)

Balance at 31 March 2011 304 45,999 - 46,303

Balance at 1 April 2011 304 45,999 - 46,303 Charge for the period 800 9,558 - 10,358 Depreciation write back - (696) - (696)

Balance at 31 March 2012 1,104 54,861 - 55,965

Carrying amounts Balance at 31 March 2011 15,124 47,248 43,213 105,585 Balance at 31 March 2012 16,920 62,335 191,209 270,464 The net carrying value of motor vehicles included K 6.1 billion (2011: K3.61 billion) in respect of assets held under finance lease. The underlying assets are held as security for the finance lease obligation.



74

17 Property, plant and equipment (continued)

Company

Property

Plant, equipment, furniture and

vehicles

Work in progress

Total Cost or revaluation At 1 April 2011 5,780 8,870 528 15,178 Additions - 1,966 - 1,966 Revaluation surplus 4,319 - - 4,319

At 31 March 2011 10,099 10,836 528 21,463 At 1 April 2011 10,099 10,836 528 21,463

Additions - 2,316 1,058 3,374 Disposal - (696) - (696) Transfers - 528 (528) -

At 31 March 2012 10,099 12,984 1,058 24,141


At 1 April 2011 - 7,631 - 7,631 Charge for the year 152 478 - 630 Depreciation write back (152) - - (152)

At 31 March 2011 - 8,109 - 8,109

At 1 April 2011 - 8,109 - 8,109 Charge for the year 482 1,088 - 1,570 Depreciation write back - (696) - (696)

At 31 March 2012 482 8,501 - 8,983

Carrying amount At 31 March 2011 10,099 2,727 528 13,354

At 31 March 2012 9,617 4,483 1,058 15,158

Buildings were revalued in 2011, by the Government Valuation Department, an independent valuer. Valuations were made on the basis of the open market value. The carrying values of the properties were adjusted to their revalued amounts and the resultant surplus net of deferred income tax was credited to the revaluation surplus in shareholders’ equity.

The register showing the details of property, as required by section 193 of the Zambia Companies Act, is available for inspection during business hours at the registered office of the Company.

Fully depreciated plant and equipment as at 31 March 2012 amounted to K 8,013 million (2011: K6,009 million).

Capital work in progress was commissioned in September 2012, subsequent to the year end.

The revaluation reserve relates to the revaluation of property.

The carrying amount of property amounting to K1,711 million (2011;K1, 831 million) would have been recognised had the assets been measured using the cost model.


70



75

18 Intangible assets 2012 2011

Group and company

Computer software licences


Opening balance 1 April

Cost 479 455 Accumulated amortisation and impairment losses (318) (277)

Closing balance 31 March 161 178 At start of year 1 April 161 178 Additions 402 24 Amortisation (107) (41)

At end of year 456 161

At 31 March Cost 881 479 Accumulated amortisation and impairment losses (425) (318)

Carrying amounts 456 161 19 Investment in subsidiaries (at cost)

The Company’s interest in its subsidiary, which is unlisted was as follows:

Country of % interest Company incorporation held 2012 2011

Ndola Lime Company Limited Zambia 100 12 12

12 12

20 Investments in associates Group Company 2012 2011 2012 2011

At start of year 3,106,056 2,592,104 347,512 347,512 Share of profit 640,468 773,004 - - Additions 198,103 - 198,103 - Exchange differences 317,593 (259,052) - -

At end of year 4,262,220 3,106,056 545,615 347,512 Investments in associates are measured at cost in the Company’s statement of financial position.

71



75

18 Intangible assets 2012 2011

Group and company



Opening balance 1 April

Cost 479 455 Accumulated amortisation and impairment losses (318) (277)

Closing balance 31 March 161 178 At start of year 1 April 161 178 Additions 402 24 Amortisation (107) (41)

At end of year 456 161

At 31 March Cost 881 479 Accumulated amortisation and impairment losses (425) (318)

Carrying amounts 456 161 19 Investment in subsidiaries (at cost)

The Company’s interest in its subsidiary, which is unlisted was as follows:

Country of % interest Company incorporation held 2012 2011

Ndola Lime Company Limited Zambia 100 12 12

12 12

20 Investments in associates Group Company 2012 2011 2012 2011

At start of year 3,106,056 2,592,104 347,512 347,512 Share of profit 640,468 773,004 - - Additions 198,103 - 198,103 - Exchange differences 317,593 (259,052) - -

At end of year 4,262,220 3,106,056 545,615 347,512 Investments in associates are measured at cost in the Company’s statement of financial position.

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72



77

21(a) Financial investments at fair value through profit or loss (continued)

Financial investments at fair value through profit or loss include the following: Group and Company 2012 2011 Unlisted equities – at fair value - Equity securities in Zambia 338,478 355,292

Listed securities – at fair value -Equity securities – Investrust 8,892 -

347,370 355,292

2012 2011

Mopani Copper Mines Plc 181,865 126,358 Chibuluma Mines Plc 27,873 36,539 NFC Africa Mines Plc 128,740 94,210 Luanshya Copper Mines - 98,185 Investrust Bank 8,892 -

347,370 355,292

21(b) Non-current assets held-for-sale

Company and Group 2012 2011

Equity security - Equinox Minerals Limited - 529,018

22 Inventories Group

2012 2011

Finished goods 14,431 16,069

14,431 16,069


73



78

23 Trade and other receivables Group Company

2012 2011 2012 2011

Trade receivables 27,664 38,248 - - Dividend receivable 29,378 89,353 29,378 89,353 Other receivables * 476,943 422,436 390,027 354,486 Amounts due from related parties (note 33(v)) 266,713 57,685 404,074 57,527 Price participation receivable 495,421 499,575 495,421 499,575 1,296,119 1,107,297 1,318,900 1,000,941 Less: allowance for impairment (349,582) (322,074) (348,992) (318,575) 946,537 785,223 969,908 682,366

Other receivables analysis* Group Company

2012 2011 2012 2011

Government debtors 185,996 174,421 185,996 173,001 Metal debtors 122,488 115,364 122,488 117,619 Staff receivables 4,031 15,570 4,031 2,817 Other receivables 164,428 117,081 77,512 61,049 476,943 422,436 390,027 354,486

The carrying values approximated their fair values.

Price participation receivable

Price participation receivable represents Copper and Cobalt price participation due from Konkola Copper Mines (KCM) amounting to K495,421 million (US$91.7 million) compared to 2011: K499,575 million (US$111.8 million) to ZCCM-IH in accordance with the terms of the Copper and Cobalt Price Participation Agreements between the two companies signed when KCM acquired assets and operations from Zambia Consolidated Copper Mines Limited (now known as ZCCM-IH) in March 2000. The agreement requires KCM to pay to ZCCM-IH Copper and / or Cobalt payment calculated as 25% of the quantity in pounds (lbs) of Copper or Cobalt sold in a financial year multiplied by the amount by which the weighted average Copper or Cobalt price for such financial year exceeds the threshold of US$1.03/lb and US$75/lb for Copper and Cobalt respectively, amounts which are both subject to indexation. No Copper or Cobalt payment accrues when the production is zero. The aggregate payment in a financial year cannot exceed an annual limit of US$16 million or an aggregate limit of US$125 million, with these amounts being subject to indexation. KCM is not obliged to make payment to ZCCM-IH, if KCM does not make a distribution to shareholders in any particular year. However, the liability itself remains and will be paid in future years as and when any distributions are made. The allowance recognised has been discounted to take into account the expected timings of the various payments.

24 Held to maturity investment securities

The movement in investments in treasury bills and government bonds is as follows: Group and Company

2012 2011

Balance at 1 April 74,143 5,333 Matured investments (74,143) (5,333) Additions 403,957 74,143 Balance at 31 March 403,957 74,143

The above investments mature within one (1) year.


74



79

25 Cash and cash equivalents

For the purposes of the cash flow statement, cash and cash equivalents comprise the following:

Group Company 2012 2011 2012 2011 Cash and bank balances 61,229 104,219 19,360 20,500

26(a) Trade and other payables

Group

Company

2012 2011 2012 2011 Trade payables 28,072 25,648 - - Statutory liabilities 12,032 12,032 12,032 12,032 Other payables and accrued expenses * 70,484 81,713 45,886 62,382

110,588 119,393 57,918 74,414

The carrying amount of the payables and accrued expenses approximate to their fair values.

Other payables and accrued expenses analysis* Group Company 2012 2011 2012 2011 Staff payable 2,666 6,545 2,666 2,503 Sundry creditors 1,833 46,560 464 44,958 Accrued expenses 65,985 28,608 42,756 14,921

70,484 81,713 45,886 62,382

26(b) Provisions

Group Company 2012 2011 2012 2011 Provisions for legal cases 70,612 39,849 70,612 39,385 70,612 39,849 70,612 39,385

27 Share capital 2012 2011 Authorised “A” ordinary shares 540 540 “B” ordinary shares 360 360

90,000,000 ordinary shares of K10 each (millions) 900 900

Issued and fully paid “A” ordinary shares 539 539 “B” ordinary shares 354 354

89,296,428 ordinary shares of K10 (millions) 893 893

All shares rank equally with regards to the Company’s residual assets. The holders of the ordinary shares are entitled to receive dividend as declared from time to time, and are entitled to one vote per share at the meeting of the Company.



80

28 Other reserves Group

Revaluation reserve

Translation reserve

Total

At 31 March 2011 as previously stated 6,669 381,815 388,484 Prior year adjustment (65) - (65) At 1 April 2011 as restated 6,604 381,815 388,419 Currency translation –associates as restated - (259,052) (259,052) Revaluation surplus on property 4,471 - 4,471 Deferred tax on revaluation surplus (1,442) - (1,442) Amortisation of revaluation surplus (391) - (391)

At end of year 31 March 2011 9,242 122,763 132,005

Revaluation reserve

Translation reserve

Total

At 31 March 2011 as previously stated 9,184 151,134 160,318 Prior year adjustments 58 (28,371) (28,313) At 1 April 2011 as restated 9,242 122,763 132,005 Currency translation – associates - 317,593 317,593 Amortisation of revaluation surplus (443) - (443) Deferred tax on revaluation surplus 260 - 260

At 31 March 2012 9,059 440,356 449,415

28 Company Revaluation

reserve Fair value Reserve

Total

At 1 April 2010 as previously stated 3,592 - 3,592 Revaluation surplus on property 4,471 - 4,471 Deferred tax on revaluation surplus (1,565) - (1,565) Amortisation of revaluation surplus (384) - (384)

At 31 March 2011 6,114 - 6,114

Revaluation reserve Fair value

reserve Total

At 1 April 2011 6,114 - 6,114 Amortisation of revaluation surplus (362) - (362) Deferred tax on revaluation surplus 126 126

At 31 March 2012 5,878 - 5,878

Revaluation reserve The revaluation reserve arises from the periodic revaluation of property, plant and equipment, and represents the excess of the revalued amount over the carrying value of the property, plant and equipment at the date of revaluation. Deferred tax arising in respect of the revaluation of property, plant and equipment has been charged directly against revaluation reserves in accordance with IAS 12: Income Taxes.

Translation reserve The translation reserve arises from the translation of the results of the associated companies whose functional and presentation currency is the US dollar.


75



79

25 Cash and cash equivalents

For the purposes of the cash flow statement, cash and cash equivalents comprise the following:

Group Company 2012 2011 2012 2011 Cash and bank balances 61,229 104,219 19,360 20,500

26(a) Trade and other payables

Group

Company

2012 2011 2012 2011 Trade payables 28,072 25,648 - - Statutory liabilities 12,032 12,032 12,032 12,032 Other payables and accrued expenses * 70,484 81,713 45,886 62,382

110,588 119,393 57,918 74,414

The carrying amount of the payables and accrued expenses approximate to their fair values.

Other payables and accrued expenses analysis* Group Company 2012 2011 2012 2011 Staff payable 2,666 6,545 2,666 2,503 Sundry creditors 1,833 46,560 464 44,958 Accrued expenses 65,985 28,608 42,756 14,921

70,484 81,713 45,886 62,382

26(b) Provisions

Group Company 2012 2011 2012 2011 Provisions for legal cases 70,612 39,849 70,612 39,385 70,612 39,849 70,612 39,385

27 Share capital 2012 2011 Authorised “A” ordinary shares 540 540 “B” ordinary shares 360 360

90,000,000 ordinary shares of K10 each (millions) 900 900

Issued and fully paid “A” ordinary shares 539 539 “B” ordinary shares 354 354

89,296,428 ordinary shares of K10 (millions) 893 893

All shares rank equally with regards to the Company’s residual assets. The holders of the ordinary shares are entitled to receive dividend as declared from time to time, and are entitled to one vote per share at the meeting of the Company.



80

28 Other reserves Group

Revaluation reserve

Translation reserve

Total

At 31 March 2011 as previously stated 6,669 381,815 388,484 Prior year adjustment (65) - (65) At 1 April 2011 as restated 6,604 381,815 388,419 Currency translation –associates as restated - (259,052) (259,052) Revaluation surplus on property 4,471 - 4,471 Deferred tax on revaluation surplus (1,442) - (1,442) Amortisation of revaluation surplus (391) - (391)

At end of year 31 March 2011 9,242 122,763 132,005

Revaluation reserve

Translation reserve

Total

At 31 March 2011 as previously stated 9,184 151,134 160,318 Prior year adjustments 58 (28,371) (28,313) At 1 April 2011 as restated 9,242 122,763 132,005 Currency translation – associates - 317,593 317,593 Amortisation of revaluation surplus (443) - (443) Deferred tax on revaluation surplus 260 - 260

At 31 March 2012 9,059 440,356 449,415

28 Company Revaluation

reserve Fair value Reserve

Total

At 1 April 2010 as previously stated 3,592 - 3,592 Revaluation surplus on property 4,471 - 4,471 Deferred tax on revaluation surplus (1,565) - (1,565) Amortisation of revaluation surplus (384) - (384)

At 31 March 2011 6,114 - 6,114

Revaluation reserve Fair value

reserve Total

At 1 April 2011 6,114 - 6,114 Amortisation of revaluation surplus (362) - (362) Deferred tax on revaluation surplus 126 126

At 31 March 2012 5,878 - 5,878

Revaluation reserve The revaluation reserve arises from the periodic revaluation of property, plant and equipment, and represents the excess of the revalued amount over the carrying value of the property, plant and equipment at the date of revaluation. Deferred tax arising in respect of the revaluation of property, plant and equipment has been charged directly against revaluation reserves in accordance with IAS 12: Income Taxes.

Translation reserve The translation reserve arises from the translation of the results of the associated companies whose functional and presentation currency is the US dollar.


76



81

29 Borrowings Group Company 2012 2011 2012 2011 (i) The borrowings are made up as follows:

Non-current Bank borrowings 136,391 18,898 - - Other borrowings from related parties (note

33)

17,884

15,623

17,884

15,623 Finance lease (note 29(iii)) 2,329 248 - -

156,604 34,769 17,884 15,623 Current

GRZ and GRZ related borrowings (note 33) 1,132,044 1,273,673 1,132,044 1,273,673 Bank borrowings - 136,074 - - Finance leases (note 29(iii)) 1,884 1,825 - -

1,133,928 1,411,572 1,132,044 1,273,673

Total borrowings 1,290,532 1,446,341 1,149,928 1,289,296

GRZ and GRZ related borrowings comprise the following:

ZESCO loan 95,799 85,742 95,799 85,742 GRZ Loan 655,542 847,524 655,542 847,524 GRZ/World Bank Loan 368,381 328,085 368,381 328,085 ERIPTA Loan 12,322 12,322 12,322 12,322


The carrying amounts of short-term borrowings and lease obligations approximate to their fair value. Fair values are based on discounted cash flows using a discount rate based upon the borrowing rate that the directors expect would be available to the Group at the reporting date.

The terms of the long term borrowings are as detailed below:-

ZESCO loan The loan arises from the assumption by ZCCM-IH (under an agreement dated 28 February 2002 between ZCCM-IH, ZESCO and CEC) of debts due from Ramcoz to CEC of US$19,291,994 of which US$13,141,701 was owed by CEC to ZESCO at 28 February 2002. The liability carries no definite repayment terms. The loan is interest free, unsecured and has no repayment terms and conditions. Therefore it is payable on demand.

GRZ Loan

The relates loans advanced to the Company by the Government of the Republic of Zambia (GRZ) The liability carries no definite repayment terms. The loan is interest free, unsecured and has no repayment terms and conditions. Therefore, it is payable on demand.



82

29 Borrowings (continued)

GRZ/World Bank loans Under the protocol signed on 14 January 1999, between GRZ and the Company, an amount of up to US$68.5 million became available to the Company for the purpose of retrenching surplus employees and meeting environmental remedial obligations. This amount was initially received by GRZ from IDA and on lent to the Company. No interest is accrued in respect of these balances, the loan is unsecured and has no repayment terms and conditions.

ERIPTA loan The Economic Recovery and Investment Promotion Technical Assistance (ERIPTA) loan was taken over by the Government in 2001 and arises from the period prior to the disposal of ZCCM’s mining assets. This loan was intended to assist the Government in carrying out its economic reform under its Privatisation and Industrial Reform Programme and Economic Programme. The loan has not been removed from ZCCM-IH books due to the absence of an agreement between GRZ, ZCCM-IH and the financing partner regarding the takeover of the loan by GRZ. No interest has been accrued since 2001, the loan is unsecured and has no repayment terms and conditions.

Bank borrowings A bridge finance amounting to US$ 25 million (approximately K136 billion) was secured on short term basis and will be refinanced by the facility still under discussion with Standard Bank of South Africa. The loan attracts interest of 4.75% per annum. It is repayable in 60 months commencing 30 June 2013 and has charges over receivable from mines customers plus a fixed and floating charge over the Ndola Lime Company Limited’s assets.

Other borrowings In May 2005, the Board of Directors of Chambishi Metals Plc resolved to undertake a rights issue of 25,000,000 new shares at par value of US$1 per share. ZCCM-IH was offered 2,500,000 ordinary shares at a par value of US$1 representing 10% of the shareholding of the new shares to be issued. The ZCCM-IH subscription was converted into a deferred loan for 10 years to be serviced by dividend payments when due from Chambishi Metals Plc and Luanshya Copper Mines Plc. The loan carries interest at LIBOR + 3%.


77



81

29 Borrowings Group Company 2012 2011 2012 2011 (i) The borrowings are made up as follows:

Non-current Bank borrowings 136,391 18,898 - - Other borrowings from related parties (note

33)

17,884

15,623

17,884

15,623 Finance lease (note 29(iii)) 2,329 248 - -

156,604 34,769 17,884 15,623 Current

GRZ and GRZ related borrowings (note 33) 1,132,044 1,273,673 1,132,044 1,273,673 Bank borrowings - 136,074 - - Finance leases (note 29(iii)) 1,884 1,825 - -

1,133,928 1,411,572 1,132,044 1,273,673


GRZ and GRZ related borrowings comprise the following:

ZESCO loan 95,799 85,742 95,799 85,742 GRZ Loan 655,542 847,524 655,542 847,524 GRZ/World Bank Loan 368,381 328,085 368,381 328,085 ERIPTA Loan 12,322 12,322 12,322 12,322


The carrying amounts of short-term borrowings and lease obligations approximate to their fair value. Fair values are based on discounted cash flows using a discount rate based upon the borrowing rate that the directors expect would be available to the Group at the reporting date.

The terms of the long term borrowings are as detailed below:-

ZESCO loan The loan arises from the assumption by ZCCM-IH (under an agreement dated 28 February 2002 between ZCCM-IH, ZESCO and CEC) of debts due from Ramcoz to CEC of US$19,291,994 of which US$13,141,701 was owed by CEC to ZESCO at 28 February 2002. The liability carries no definite repayment terms. The loan is interest free, unsecured and has no repayment terms and conditions. Therefore it is payable on demand.

GRZ Loan

The relates loans advanced to the Company by the Government of the Republic of Zambia (GRZ) The liability carries no definite repayment terms. The loan is interest free, unsecured and has no repayment terms and conditions. Therefore, it is payable on demand.



82


GRZ/World Bank loans Under the protocol signed on 14 January 1999, between GRZ and the Company, an amount of up to US$68.5 million became available to the Company for the purpose of retrenching surplus employees and meeting environmental remedial obligations. This amount was initially received by GRZ from IDA and on lent to the Company. No interest is accrued in respect of these balances, the loan is unsecured and has no repayment terms and conditions.

ERIPTA loan The Economic Recovery and Investment Promotion Technical Assistance (ERIPTA) loan was taken over by the Government in 2001 and arises from the period prior to the disposal of ZCCM’s mining assets. This loan was intended to assist the Government in carrying out its economic reform under its Privatisation and Industrial Reform Programme and Economic Programme. The loan has not been removed from ZCCM-IH books due to the absence of an agreement between GRZ, ZCCM-IH and the financing partner regarding the takeover of the loan by GRZ. No interest has been accrued since 2001, the loan is unsecured and has no repayment terms and conditions.

Bank borrowings A bridge finance amounting to US$ 25 million (approximately K136 billion) was secured on short term basis and will be refinanced by the facility still under discussion with Standard Bank of South Africa. The loan attracts interest of 4.75% per annum. It is repayable in 60 months commencing 30 June 2013 and has charges over receivable from mines customers plus a fixed and floating charge over the Ndola Lime Company Limited’s assets.

Other borrowings In May 2005, the Board of Directors of Chambishi Metals Plc resolved to undertake a rights issue of 25,000,000 new shares at par value of US$1 per share. ZCCM-IH was offered 2,500,000 ordinary shares at a par value of US$1 representing 10% of the shareholding of the new shares to be issued. The ZCCM-IH subscription was converted into a deferred loan for 10 years to be serviced by dividend payments when due from Chambishi Metals Plc and Luanshya Copper Mines Plc. The loan carries interest at LIBOR + 3%.


78



83


Group Company 2012 2011 2012 2011 (ii) Subordinated loan 865,445 865,445 865,445 865,445

Since 1983 amounts due to certain of the Company’s lenders became payable to GRZ following arrangements between GRZ and the Governments of the countries in which those lenders are situated. These amounts described as the Paris Club loans were reported in the financial statements of ZCCM Limited up to 31 March 1998 as long term borrowings and as deferred liabilities. In February 1999, the Company and GRZ entered into an agreement whereby the Paris Club loans totalling US $ 311.3 million were consolidated into one loan denominated in Kwacha due to GRZ. Previously the loans were denominated in US Dollars, French Francs and Pounds Sterling. The agreement with GRZ provided for the subordination of the new loan to all other creditors of the Company. Accordingly At 31 March 2012 an amount of K865,445 million (31 March 2011: K865,445 million) was separately reported as a subordinated loan.

(iii) Finance leases

Finance lease liabilities – minimum lease repayments: Group 2012 2011

Not later than 1 year 2,203 2,410 Later than 1 year and not later than 5 years 2,526 248

4,729 2,658 Future finance charges (516) (585)

4,213 2,073

Finance leases The present value of finance lease liabilities may be analysed as: Group 2012 2011 Not later than 1 year 1,884 1,897 Later than 1 year and not later than 5 years 2,329 176

4,213 2,073



83


Group Company 2012 2011 2012 2011 (ii) Subordinated loan 865,445 865,445 865,445 865,445

Since 1983 amounts due to certain of the Company’s lenders became payable to GRZ following arrangements between GRZ and the Governments of the countries in which those lenders are situated. These amounts described as the Paris Club loans were reported in the financial statements of ZCCM Limited up to 31 March 1998 as long term borrowings and as deferred liabilities. In February 1999, the Company and GRZ entered into an agreement whereby the Paris Club loans totalling US $ 311.3 million were consolidated into one loan denominated in Kwacha due to GRZ. Previously the loans were denominated in US Dollars, French Francs and Pounds Sterling. The agreement with GRZ provided for the subordination of the new loan to all other creditors of the Company. Accordingly At 31 March 2012 an amount of K865,445 million (31 March 2011: K865,445 million) was separately reported as a subordinated loan.

(iii) Finance leases

Finance lease liabilities – minimum lease repayments: Group 2012 2011

Not later than 1 year 2,203 2,410 Later than 1 year and not later than 5 years 2,526 248

4,729 2,658 Future finance charges (516) (585)

4,213 2,073

Finance leases The present value of finance lease liabilities may be analysed as: Group 2012 2011 Not later than 1 year 1,884 1,897 Later than 1 year and not later than 5 years 2,329 176

4,213 2,073

ZCC

M In

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R

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31

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31

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12,

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19

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-

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213

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(15,

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9,48

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(19,

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144,

783

31

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1 M

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2

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s dur

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year

Pr

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1,67

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1,56

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(347

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3,

232

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nrea

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34,2

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(34,

299)

-

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19,9

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19

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n fo

r gra

tuity

and

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(865

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(865

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(13)

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(878

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in fi

nanc

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s at f

air v

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thro

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21

3,40

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31

5

(1,8

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3

54

(1

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ronm

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(15,

711)

-

-

(1

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(

15,7

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nrea

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hang

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-

(1

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629

-

(6

,003

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Tax

loss

es

-

-

-

-

(19,

482)

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482)

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7,73

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32,7

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880

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2,35

9

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180

60

,894



81

31

Retirement benefits

The amounts recognised in the statement of financial position are determined as follows: Group Company 2012 2011 2012 2011

Present value of unfunded obligations 37,941 33,881 4,670 5,418 Movement in the defined benefit obligation over the year is as follows:

Group Company 2012 2011 2012 2011

At start of year 33,881 32,072 5,418 5,938 Reversal of overprovision (1,638) - (1,638) - Charge for the period 7,397 4,961 991 247 Payments during the period (1,699) (3,152) (101) (767)

At the end of the year 37,941 33,881 4,670 5,418 The amounts charged to the total comprehensive income for the year are as follows:

Group Company 2012 2011 2012 2011

Current service cost 1,144 745 472 510 Interest cost 5,182 5,861 673 637 Actuarial losses/(gains) 1,071 (1,645) (154) (900)

Total employee benefit expense 7,397 4,961 991 247

Group Company 2012 2011 2012 2011

Charge to profit and loss (note 12) 6,326 6,606 1,145 1,147 Charge/(credit) to statement of comprehensive income

1,071

(1,645)

(154)

(900)

Total, included in employee benefit expense 7,397 4,961 991 247 The Group contributes to a non – contributory deferred benefit plan that provides pension benefits for employees on retirement. The plan entitles a retired employee to receive annual payment of final salary for each year of service that the employee provides.

ZCCM

Inve

stm

ents

Hol

ding

s Plc

80


81



81

31

Retirement benefits

The amounts recognised in the statement of financial position are determined as follows: Group Company 2012 2011 2012 2011

Present value of unfunded obligations 37,941 33,881 4,670 5,418 Movement in the defined benefit obligation over the year is as follows:

Group Company 2012 2011 2012 2011

At start of year 33,881 32,072 5,418 5,938 Reversal of overprovision (1,638) - (1,638) - Charge for the period 7,397 4,961 991 247 Payments during the period (1,699) (3,152) (101) (767)

At the end of the year 37,941 33,881 4,670 5,418 The amounts charged to the total comprehensive income for the year are as follows:

Group Company 2012 2011 2012 2011

Current service cost 1,144 745 472 510 Interest cost 5,182 5,861 673 637 Actuarial losses/(gains) 1,071 (1,645) (154) (900)

Total employee benefit expense 7,397 4,961 991 247

Group Company 2012 2011 2012 2011

Charge to profit and loss (note 12) 6,326 6,606 1,145 1,147 Charge/(credit) to statement of comprehensive income

1,071

(1,645)

(154)

(900)

Total, included in employee benefit expense 7,397 4,961 991 247 The Group contributes to a non – contributory deferred benefit plan that provides pension benefits for employees on retirement. The plan entitles a retired employee to receive annual payment of final salary for each year of service that the employee provides.


82



82

31 Retirement benefits (continued)

Critical assumptions are made by the actuary in determining the present value of retirement benefit obligation including the discount rate. The carrying amount of the provision and the key assumptions made in estimating the provision were as follows: 2012 2011

Discount rate 16.7% 15.5% Future salary increases 14.2% 13.0% Implied real return 2.2% 2.2%

The liability and actuarial assumptions are based on the actuarial valuation report as at 31 March 2012.

Historical information

Group 2012 2011 2010 2009

Present value of defined benefit obligation 37,941 33,881 32,072 59,024

Company

Present value of defined benefit obligation 4,670 5,418 5,938 6,499 The defined benefit obligations are unfunded. There are no separate assets held to meet the liability, with

the liability recognised in the statement of the financial position.

32 Provisions for environmental rehabilitation Group Company

2012 2011 2012 2011

At start of year as previously stated 55,703 10,042 44,889 - Prior year adjustment - 44,889 - 44,889 Reversals of over provision (1,316) - (1,316) - Expenses 2,552 772 - - Amount paid (1,347) - (1,037) -

55,592 55,703 42,536 44,889

Current 9,650 2,694 9,650 2,694 Non current 45,942 53,009 32,886 42,195

55,592 55,703 42,536 44,889

The year-end provision represents restoration, rehabilitation and environmental provisions for ZCCM-IH and Ndola Lime Company Limited. The provision represents the net present value of the best estimate of the expenditure required to settle the obligations to rehabilitate environmental disturbances caused by mining operations. Ndola Lime has a mining certificate ending in 2022 which has a life of 12 years (issued in February 2011) and as at 31 March 2012, the remaining period is 10 years. In addition, ZCCM – IH expects to incur these costs over a period of 4 years from the reporting date.

The provision has been recognised initially as a liability using a discount rate of 2.46% and an inflation rate of 2.65% being the US Dollar inflation rate. The liability for restoration, rehabilitation and environmental obligations for Group and Company was based on an undiscounted basis and an inflation factor of 2.65% is estimated to be approximately US$ 10,679,057 (approximately K55,592million) (2011;US$ 11,983,710 (approximately K55,703 million) and US$8,247,682 (approximatelyK42,536 million (2011;US$9,493,405 approximately K44 889million) respectively. Because of the long term nature of the liability the greatest uncertainty in estimating the provision is the cost that will be incurred. In particular, the Group has assumed that the site will be restored using technology and materials available currently.



83

33 Related party transactions

The Group is controlled by the Government of the Republic of Zambia through the Ministry of Finance and National Planning which owns 88% of the Company’s shares. No material sales or purchases of goods or services occurred with related parties during the year under review.

(i) Key management compensation 2012 2011 Salaries and other short-term employment benefits 17,754 8,834 Directors’ emoluments 2,611 1,369

20,365 10,203

Key management compensation relates to directors and the management committee (page 3).

(ii) Dividend income received from related parties

2012 2011

Kansanshi Mine 39,001 131,458 Copperbelt Energy Corporation 12,224 7,966 NFC Africa mining - 14,185 Chibuluma Mines 19,994 5,904 Konkola Copper Mine 8,489 - Total dividends receivables (note 8) 79,708 159,513

(iii) Borrowings from related parties

Other borrowings (amounts due to associated companies (note 29) 17,884 15,623 GRZ and GRZ related borrowing (note 29) 1,132,044 1,273,673

1,149,928 1,289,296

The terms and conditions of the above loans are disclosed under note 29 (i).

(iv) Amounts due from related parties Group Company

2012 2011 2012 2011 Maamba Collieries Limited 87,617 57,686 87,617 57,686 Lubambe Copper Mine Limited 179,096 - 179,096 - Ndola Lime Company Limited - - 137,361 - Total amounts due from related party (note 23) 266,713 57,686 404,074 57,686 Shareholder loans

(i) Maamba Collieries Limited As at 31 March 2012 , ZCCM –IH had committed to provide an amount of US$23.53 million as shareholder loans as part of its contribution towards the implementation of the Integrated Mining Project and the establishment of the 300MW Thermal Power plant project. As at year end a total amount of K87 billion (2011: K57.6 billion) was advanced by ZCCM-IH to Maamba Collieries Limited. The loan has no repayment terms and conditions and is interest free.

(ii) Ndola Lime Company Limited obtained US$ 26,000,000 (approximately ZMK137 billion) carrying interest at 5% per annum. It is repayable in 60 equal instalments which will commence on 30 September 2013. The loan is not secured.

(iii) Lubambe Copper Mines Limited On 15 September 2011, ZCCM – IH entered into an intercompany loan agreement with Lubambe Copper Mines Limited, for a cash call loan amount of US$60,000,000. The loan is not repayable until the mine’s commercial production commences. The outstanding principal is repayable after the expiry of the availability period in 12 equal quarterly instalments. The loan attracts an interest rate of Libor plus 5% and is not secured.


83



83

33 Related party transactions

The Group is controlled by the Government of the Republic of Zambia through the Ministry of Finance and National Planning which owns 88% of the Company’s shares. No material sales or purchases of goods or services occurred with related parties during the year under review.

(i) Key management compensation 2012 2011 Salaries and other short-term employment benefits 17,754 8,834 Directors’ emoluments 2,611 1,369

20,365 10,203

Key management compensation relates to directors and the management committee (page 3).

(ii) Dividend income received from related parties

2012 2011

Kansanshi Mine 39,001 131,458 Copperbelt Energy Corporation 12,224 7,966 NFC Africa mining - 14,185 Chibuluma Mines 19,994 5,904 Konkola Copper Mine 8,489 - Total dividends receivables (note 8) 79,708 159,513

(iii) Borrowings from related parties

Other borrowings (amounts due to associated companies (note 29) 17,884 15,623 GRZ and GRZ related borrowing (note 29) 1,132,044 1,273,673

1,149,928 1,289,296

The terms and conditions of the above loans are disclosed under note 29 (i).

(iv) Amounts due from related parties Group Company

2012 2011 2012 2011 Maamba Collieries Limited 87,617 57,686 87,617 57,686 Lubambe Copper Mine Limited 179,096 - 179,096 - Ndola Lime Company Limited - - 137,361 - Total amounts due from related party (note 23) 266,713 57,686 404,074 57,686 Shareholder loans

(i) Maamba Collieries Limited As at 31 March 2012 , ZCCM –IH had committed to provide an amount of US$23.53 million as shareholder loans as part of its contribution towards the implementation of the Integrated Mining Project and the establishment of the 300MW Thermal Power plant project. As at year end a total amount of K87 billion (2011: K57.6 billion) was advanced by ZCCM-IH to Maamba Collieries Limited. The loan has no repayment terms and conditions and is interest free.

(ii) Ndola Lime Company Limited obtained US$ 26,000,000 (approximately ZMK137 billion) carrying interest at 5% per annum. It is repayable in 60 equal instalments which will commence on 30 September 2013. The loan is not secured.

(iii) Lubambe Copper Mines Limited On 15 September 2011, ZCCM – IH entered into an intercompany loan agreement with Lubambe Copper Mines Limited, for a cash call loan amount of US$60,000,000. The loan is not repayable until the mine’s commercial production commences. The outstanding principal is repayable after the expiry of the availability period in 12 equal quarterly instalments. The loan attracts an interest rate of Libor plus 5% and is not secured.


84



84

34 Contingent liabilities

The Company is defending a number of cases involving ZCCM’s former employees and suppliers. Due to a large number of cases there is likelihood that some could involve a material liability. However, the quantum of the potential liability cannot be reliably estimated at their respective stages in the litigation processes.

The Company has made a full assessment of the total expenditure on environmental remedial obligations which may have to be incurred in respect of the Company’s past operations. However, in the conditions precedent to the privatisation sales agreements, the Government has given an undertaking to fund the residual environmental liabilities relating to the Company’s past operations.

The National Pension Scheme Authority (NAPSA) made an assessment of penalties from the year 2000 to 2008 for underpayment of contributions as a result of an error in the mode of calculation used to arrive at the contribution. The assessed liability amounting to K25.915 billion has not been included as a liability because Ndola Lime Company contested the liability and obtained a legal opinion from their lawyers who advised that it was unlikely that NAPSA would enforce the liability given the facts of the case. NAPSA has not made any subsequent claims of the assessment from 31 March 2012 to date of these financial statements.

35 Capital commitments

(i) Capital expenditure contracted for at the reporting date but not recognised in the financial statements is as follows:

2012 2011 Property, plant and equipment 7,328 6,462

Capital expenditure authorised by the board of directors at the reporting date but not yet contracted for is as follows:

2012 2011

Property, plant and equipment 12,330 2,263

(ii) Maamba Collieries Limited As at 31 March 2012, ZCCM –IH had committed to provide an amount of US$23.53 million as shareholder loans as part of its contribution towards the implementation of the Integrated Mining Project and the establishment of the 300MW Thermal Power plant project

36

Subsequent events Albidon Munali Nickel Project Subsequent to year end, on 8 November 2012 the Board of Albidon Limited (Albidon) announced a material resource down grade at its Munali Nickel Mine in Zambia. This followed a technical report prepared by Snowden Mining Industry Consultants (Snowden) which revealed that the mineralisation at the mine varied significantly in terms of width and continuity to what had previously been predicted by the geological and resource modelling, and this had led to a 25%decrease to the Indicated Resource tonnage and a 42% decrease in indicated metal contained, than what was understood to be the case in 2009.As a result of the above the Board of Albidon decided to place the Company under Care and Maintenance, subject to Zambia Revenue Authority agreement. During the Care and Maintenance period, Albidon would be exploring future options but could not confirm any future plans.



85

36

Subsequent events (continued)

Restructuring of ZCCM-IH Debt to GRZ

Subsequent to year end, 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 K1.9 trillion (US$ 400million).The debt restructuring will improve ZCCM-IH’s financial position while also enabling the raising of funding from the minority shareholders through a rights issue.

Restructuring of the legal department

Subsequent to year end, the Board of ZCCM-IH resolved to restructure and reorganise the legal department. The objective of the restructuring was to separate all legacy matters from current and future business so that the internal Legal Counsel would focus on current and future business while legacy matters could be handled by external legal counsel with the objective of downsizing the Legal department and reducing legal costs. As a result of the restructuring, the number of staff in the legal department reduced by 21 from 26 to 5.

Restructuring of environmental department

On 13 December 2012 the Board of ZCCM-IH resolved to restructure the Environmental department by incorporating Misenge Environmental and Technical t Services Limited (METS), a separate company to be owned 100% by ZCCM-IH .The objective of the restructuring is to allow ZCCM-IH to be more focussed on investment activities while MEMS would provide environmental management services to ZCCM-IH including taking over all outstanding and future environmental obligations for ZCCM-IH. The company’s services will be available to other clients outside ZCCM-IH in this way providing an opportunity to create more value. METS will take over all staff under the current Environment Department Currently the costs of the department are included in administration expenses. However during the coming year the company will be accounted for as a subsidiary of ZCCM-IH and its results will be consolidated.

Kariba Minerals Limited

Subsequent to the year end, the Board of ZCCM-IH approved a loan of US$ 1.25 million to Kariba Minerals Limited as part of a total loan of US$2.5 million to be provided by both ZCCM-IH and Gemfields Limited. The loan is intended to finance critical equipment to resuscitate KML’s operations.

Ndola Lime Company Limited

On 18 October 2012, ZCCM-IH and Ndola Lime signed a Loan agreement under which ZCCM –IH agreed to provide a 7 years Shareholders Loan of K132.6 billion at an interest rate of 14% per annum. The loan is to be used to finance the recapitalisation project at Ndola Lime intended to increase productive capacity to meet increased demand. As at 31 December 2012 the entire loan amount had been disbursed.

CNMC Luanshya Copper Mines Plc

On 04 December 2012 CNMC and ZCCM-IH were advised that the Government of the Republic of Zambia through the Ministry of Finance had exempted the transaction of transfer of 5% shareholding by CNMC Luanshya Copper Mines Plc from payment of Property transfer tax. This paved the way for the completion of share transfer modalities of an additional 5% shares to ZCCM-IH. On 18 December 2012 ZCCM-IH acknowledged the transfer of the shares. This will result in an increase in ZCCM-IH’s shareholding in CNMC Luanshya Copper Mine PLC from 15% to 20%.


85



84

34 Contingent liabilities

The Company is defending a number of cases involving ZCCM’s former employees and suppliers. Due to a large number of cases there is likelihood that some could involve a material liability. However, the quantum of the potential liability cannot be reliably estimated at their respective stages in the litigation processes.

The Company has made a full assessment of the total expenditure on environmental remedial obligations which may have to be incurred in respect of the Company’s past operations. However, in the conditions precedent to the privatisation sales agreements, the Government has given an undertaking to fund the residual environmental liabilities relating to the Company’s past operations.

The National Pension Scheme Authority (NAPSA) made an assessment of penalties from the year 2000 to 2008 for underpayment of contributions as a result of an error in the mode of calculation used to arrive at the contribution. The assessed liability amounting to K25.915 billion has not been included as a liability because Ndola Lime Company contested the liability and obtained a legal opinion from their lawyers who advised that it was unlikely that NAPSA would enforce the liability given the facts of the case. NAPSA has not made any subsequent claims of the assessment from 31 March 2012 to date of these financial statements.

35 Capital commitments

(i) Capital expenditure contracted for at the reporting date but not recognised in the financial statements is as follows:

2012 2011 Property, plant and equipment 7,328 6,462

Capital expenditure authorised by the board of directors at the reporting date but not yet contracted for is as follows:

2012 2011

Property, plant and equipment 12,330 2,263

(ii) Maamba Collieries Limited As at 31 March 2012, ZCCM –IH had committed to provide an amount of US$23.53 million as shareholder loans as part of its contribution towards the implementation of the Integrated Mining Project and the establishment of the 300MW Thermal Power plant project

36

Subsequent events Albidon Munali Nickel Project Subsequent to year end, on 8 November 2012 the Board of Albidon Limited (Albidon) announced a material resource down grade at its Munali Nickel Mine in Zambia. This followed a technical report prepared by Snowden Mining Industry Consultants (Snowden) which revealed that the mineralisation at the mine varied significantly in terms of width and continuity to what had previously been predicted by the geological and resource modelling, and this had led to a 25%decrease to the Indicated Resource tonnage and a 42% decrease in indicated metal contained, than what was understood to be the case in 2009.As a result of the above the Board of Albidon decided to place the Company under Care and Maintenance, subject to Zambia Revenue Authority agreement. During the Care and Maintenance period, Albidon would be exploring future options but could not confirm any future plans.



85

36

Subsequent events (continued)

Restructuring of ZCCM-IH Debt to GRZ

Subsequent to year end, 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 K1.9 trillion (US$ 400million).The debt restructuring will improve ZCCM-IH’s financial position while also enabling the raising of funding from the minority shareholders through a rights issue.

Restructuring of the legal department

Subsequent to year end, the Board of ZCCM-IH resolved to restructure and reorganise the legal department. The objective of the restructuring was to separate all legacy matters from current and future business so that the internal Legal Counsel would focus on current and future business while legacy matters could be handled by external legal counsel with the objective of downsizing the Legal department and reducing legal costs. As a result of the restructuring, the number of staff in the legal department reduced by 21 from 26 to 5.

Restructuring of environmental department

On 13 December 2012 the Board of ZCCM-IH resolved to restructure the Environmental department by incorporating Misenge Environmental and Technical t Services Limited (METS), a separate company to be owned 100% by ZCCM-IH .The objective of the restructuring is to allow ZCCM-IH to be more focussed on investment activities while MEMS would provide environmental management services to ZCCM-IH including taking over all outstanding and future environmental obligations for ZCCM-IH. The company’s services will be available to other clients outside ZCCM-IH in this way providing an opportunity to create more value. METS will take over all staff under the current Environment Department Currently the costs of the department are included in administration expenses. However during the coming year the company will be accounted for as a subsidiary of ZCCM-IH and its results will be consolidated.

Kariba Minerals Limited

Subsequent to the year end, the Board of ZCCM-IH approved a loan of US$ 1.25 million to Kariba Minerals Limited as part of a total loan of US$2.5 million to be provided by both ZCCM-IH and Gemfields Limited. The loan is intended to finance critical equipment to resuscitate KML’s operations.

Ndola Lime Company Limited

On 18 October 2012, ZCCM-IH and Ndola Lime signed a Loan agreement under which ZCCM –IH agreed to provide a 7 years Shareholders Loan of K132.6 billion at an interest rate of 14% per annum. The loan is to be used to finance the recapitalisation project at Ndola Lime intended to increase productive capacity to meet increased demand. As at 31 December 2012 the entire loan amount had been disbursed.

CNMC Luanshya Copper Mines Plc

On 04 December 2012 CNMC and ZCCM-IH were advised that the Government of the Republic of Zambia through the Ministry of Finance had exempted the transaction of transfer of 5% shareholding by CNMC Luanshya Copper Mines Plc from payment of Property transfer tax. This paved the way for the completion of share transfer modalities of an additional 5% shares to ZCCM-IH. On 18 December 2012 ZCCM-IH acknowledged the transfer of the shares. This will result in an increase in ZCCM-IH’s shareholding in CNMC Luanshya Copper Mine PLC from 15% to 20%.

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ZCCM Investment Holdings Plc


38 Prior year adjustments

Effect on the statement of financial position

Group 2010 Statement of changes

in equity

Current tax

liability

Deferred tax

liability

Property, plant and

equipment Balance at 31 March 2010 as previously stated 959,858

61,102 217,299 50,296

Current tax liability adjustment 12,625 (12,625) - - Deferred tax adjustment 2,537 - (2,537) - Other deferred tax adjustment (65) - 65 -

Balance at 31 March 2010 as restated 974,955 48,477 214,827 50,296

Effect on statement of financial position


in equity

Current tax

liability

Deferred tax

liability

Property, plant and

equipment

Trade a and other

receivables 31 March 2011 as previously stated 2,166,604

123,237 251,954 103,855

813,594

Borrowing costs (1) 1,730 - - 1,730 - Current tax liability adjustment (2) 12,617 (12,617) - - - Deferred tax adjustment (2) (1,857) - 1,857 - - Other deferred tax adjustment (2) 755 - (755) - - Over statement of dividend (3) (28,371) - - - (28,371)

2,151,478 110,620 253,056 105,585 785,223 Net effect on statement of changes in equity

2011 2010 Prior year adjustments: Borrowing costs 1,730 - Current tax liability adjustment 12,617 12,625 Deferred tax adjustment (1,857) 2,537 Other deferred tax adjustment 755 (65) Over statement of dividend (28,371) - (15,126) 15,097 Company

2011 Retained

earning Trade and

other receivables

31 March 2011 as previously stated (627,821) 710,737 Dividend income (3) (28,371) (28,371) Balance at 31 March 2011 as restated (656,192) 682,366

ZCCM

Inve

stm

ents

Hol

ding

s Plc

86


87

87



38 Prior year adjustments

Effect on the statement of financial position


in equity

Current tax

liability

Deferred tax

liability

Property, plant and

equipment Balance at 31 March 2010 as previously stated 959,858

61,102 217,299 50,296

Current tax liability adjustment 12,625 (12,625) - - Deferred tax adjustment 2,537 - (2,537) - Other deferred tax adjustment (65) - 65 -

Balance at 31 March 2010 as restated 974,955 48,477 214,827 50,296

Effect on statement of financial position


in equity

Current tax

liability

Deferred tax

liability

Property, plant and

equipment

Trade a and other

receivables 31 March 2011 as previously stated 2,166,604

123,237 251,954 103,855

813,594

Borrowing costs (1) 1,730 - - 1,730 - Current tax liability adjustment (2) 12,617 (12,617) - - - Deferred tax adjustment (2) (1,857) - 1,857 - - Other deferred tax adjustment (2) 755 - (755) - - Over statement of dividend (3) (28,371) - - - (28,371)

2,151,478 110,620 253,056 105,585 785,223 Net effect on statement of changes in equity

2011 2010 Prior year adjustments: Borrowing costs 1,730 - Current tax liability adjustment 12,617 12,625 Deferred tax adjustment (1,857) 2,537 Other deferred tax adjustment 755 (65) Over statement of dividend (28,371) - (15,126) 15,097 Company

2011 Retained

earning Trade and

other receivables

31 March 2011 as previously stated (627,821) 710,737 Dividend income (3) (28,371) (28,371) Balance at 31 March 2011 as restated (656,192) 682,366


88

88


Notes to the financial statements (continued) for the year ended 31 March 2012 (all amounts are in millions of Kwacha unless otherwise stated) 38 Prior year adjustments (continued) Company 2011

Net effect on statement of changes in equity

2011 Prior year adjustments: Dividend income 28,371

The prior year adjustment related to:

1) Borrowings on long term borrowings related to acquisition and construction of assets under Ndola Lime Company Limited (a subsidiary) recapitalisation project that meet the criteria of qualifying assets. These borrowing costs were expensed in prior periods and have now been capitalised as required by IAS23 “Borrowing Costs”.

2) Changes to prior period tax computation as a result of correction of tax rate applicable to Ndola Lime Company Limited.

3) Correction of overstatement of dividend income from Kansanshi Copper Mines Plc of ZMK 28 billion.


89

89

ZCCM Investments Holdings Plc Annual Report for the year ended 31 March 2012 CORPORATE INFORMATION Registered and Corporate Office

Mukuba Pension House 5309 Dedan Kimathi Road P O Box 30048 Lusaka 10101, Zambia

UK Registrars

CAPITA Registrars Limited Bourne House 34 Beckenham Road Beckenham Kent BR3 4TU England

Depository for American Shares

JP Morgan Chase & Co. 60 Wall Street New York, NY 10260-0060 USA

Joint Brokers for Lusaka Stock Exchange Listing

Stockbrokers Zambia Limited 2nd Floor Design House Dar Es Salaam Place Cairo Road P O Box 38956 Lusaka, Zambia

Pangaea/EMI Securities (Zambia) Limited 1st Floor, Lusaka Stock Exchange Building 2A Cairo Road P O Box 30163 Lusaka, Zambia

Auditors

KPMG Chartered Accountants First Floor, Elunda 2 Addis Ababa Roundabout P O Box 31282 Lusaka, Zambia


90

90

ZCCM Investments Holdings Plc Annual Report for the year ended 31 March 2012 CORPORATE INFORMATION (continued) Principal Bankers: Barclays Bank (Zambia) Plc Standard Chartered Bank (Zambia) Plc Zambia National Commercial Bank Plc Shareholder Contact Chabby Chabala Company Secretary Phone : +260 211 221023 Fax : +260 211 220727 Website: www.zccm-ih.com.zm E-mail : [email protected]

90

ZCCM Investments Holdings Plc Annual Report for the year ended 31 March 2012 CORPORATE INFORMATION (continued) Principal Bankers: Barclays Bank (Zambia) Plc Standard Chartered Bank (Zambia) Plc Zambia National Commercial Bank Plc Shareholder Contact Chabby Chabala Company Secretary Phone : +260 211 221023 Fax : +260 211 220727 Website: www.zccm-ih.com.zm E-mail : [email protected]


94

Investor Relations

ZCCM Investments Holdings Plc 2012 Annual report