Annual Report • Oct 20, 2023
Annual Report
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INTEGRATED ANNUAL REPORT For the year ended 31st December 2022 Investing SMARTLY www.zccm-ih.com.zm INTEGRATED ANNUAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc CONTENTS PAGE About this report 1 About us 2 Our values 3 Our investments 4 - 9 Our strategy and KPI’s 10 FY 2022 Group performance highlights 11 - 12 Operating environment 13 - 15 Risk management 16 -18 Chairperson’s statement 20 - 23 Report of the directors 24 - 32 Chief Executive Ofcer’s statement 34 - 35 Executive management team 36 Operations report Subsidiary companies’ performance 37 - 39 Associate companies’ performance 40 - 43 Other investee companies’ performance 43 Climate related nancial disclosures 44 - 45 Sustainability report 46 - 49 Directors’ responsibilities in respect of the preparation of the consolidated and separate annual nancial statements 50 Independent auditor’s report 51 - 55 Annual nancial statements Consolidated statement of nancial position 56 Company statement of nancial position 57 Consolidated statement of prot or loss and other comprehensive income for the year ended 58 Company statement of prot or loss and other comprehensive income for the year ended 59 Consolidated statement of changes in equity for the year ended 60 Company statement of changes in equity for the year ended 61 Consolidated statement of cash ows for the year ended 62 - 63 Separate statement of cash ows for the year ended 64 Notes to the annual nancial statements 65 - 183 Corporate information 185 Appendix 186 - 189 1 INTEGRATED ANNUAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc Investing SMARTLY ABOUT THIS REPORT The Integrated Annual Report for the year ended 31 December 2022 provides a holistic view of ZCCM Investments Holdings Plc (“the Company or ZCCM-IH”) and its subsidiaries (“the Group”) business model, how the Company is managed and how it manages its investment portfolio. This report therefore provides a complete analysis of our business to satisfy the information needs of key stakeholders that will use the Integrated Report. The information presented aims to provide our various stakeholders with a good understanding of the nancial, human, social, environmental and economic impacts of ZCCM-IH to enable them to evaluate our ability to create sustainable value for our stakeholders. FRAMEWORK The Financial Statements set out on in the Annual Report have been prepared in accordance with International Financial Reporting Standards (IFRS). Our Integrated Report is prepared in accordance with the Zambia Companies Act and the listing requirements of the three stock markets on which ZCCM-IH is listed namely: Primary market – Lusaka Securities Exchange, and Secondary markets – Paris Euronext Access and London Stock Exchange. SCOPE AND BOUNDARY This report outlines who we are, what we do and how we create value, providing insights into our structure, strategy, objectives, performance, governance, and future viability. The report provides an overview of the operations and performance of all businesses in which ZCCM-IH is invested. The scope of this report relates to ZCCM-IH as an investment holding Company and as a Group encompassing its subsidiaries and associate investee Companies activities and material matters arising from its investment activities. Material developments beyond the reporting period up to the date of publishing of this report have been included. MATERIALITY This report provides information on all those matters that we believe could substantively affect value creation at ZCCM-IH. Written primarily for current and prospective investors, the report is of interest to any stakeholder who wishes to make an informed assessment of ZCCM-IH’s ability to create value over time. This report presents the identied material information through a clearly structured narrative. Additional information not material for this report, but of interest for other purposes, are provided on our website. Value over time. This report presents the identied material information through a clearly structured narrative. Additional information not material for this report, but of interest for other purposes, are provided on our website. 2 INTEGRATED ANNUAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc Investing SMARTLY ABOUT US ZCCM Investments Holdings Plc (ZCCM-IH) is a premier diversied mining investment and operations Company, with signicant and focused interests in Zambia’s mining and energy sectors. The Group’s portfolio commodity mix includes copper, gold, amethyst, manganese, limestone, coal and electric power energy. The shareholding structure is as follows: the Industrial Development Corporation Ltd (IDC) holds 60.3%, Government of the Republic of Zambia (GRZ) holds 17.3%, National Pension Scheme Authority (NAPSA) holds 15% and the remaining 7.4% is held by private investors. The geographical spread of the minority shareholders, who number over 4,000, cover countries in Europe, Africa, the Caribbean, Australia, Asia and the USA. OUR VISION “To be a world class investment holding Company with a focus on mining”. This vision’s underlining aspiration of being world class entails that: ■Our global competitiveness edge is driven by our value propositions, extensive and deep industry knowledge and technical expertise in mining, nancial and investment management; ■We uphold the highest institutional standards in Environmental, Social and Governance principles and Transparency; and that, ■We have a resilient organisational structure that thrives on a high-performance culture that has exceptional employee skill sets and talent management practices. OUR MISSION “To be a transformative Company with an investment agenda that benets all our stakeholders”. ■The underlining and fundamental aspect of our mission is transformation. This entails that: Our strategy is informed by ambition that is focused, innovative, agile and adaptable to the changing environment; ■We are driven by creating and maximising value through value addition and beneciation of commodities within our portfolio; and, ■We build sustainability in all aspects through commodity diversication that will lead to sustained business growth. The Company has a primary listing on the Lusaka Securities Exchange, and secondary listings on the – Euronext Access Paris and London Stock Exchange under ISIN number ZM0000000037 on all listings. 60.3% 17.3% 15% 7.4% IDC GRZ NAPSA PRIVATE INVESTORS 3 INTEGRATED ANNUAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc Investing SMARTLY OUR VALUES Our vision and mission are espoused and supported by our core values which are deeply ingrained principles guiding all of our Company’s actions. The following values serve as our corporate cultural cornerstones: INTEGRITY TEAMWORK RESPECT TRANSPARENCY & ACCOUNTABILITY ENVIRONMENTAL, SOCIAL & GOVERNANCE AWARENESS ABOUT US (continued) 4 INTEGRATED ANNUAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc Investing SMARTLY S/N ASSET NAME % INTEREST PRODUCT/SERVICE STATUS 1Mopani Copper Mines Plc 100 Copper cathode and anode slimes Operational 2 Limestone Resources Ltd 100 Supplier of limestone products Operational 3 Ndola Lime Company 100 Supplier of limestone products Winding up 4Nkandabwe Coal Mine Ltd 100 Coal Mining Winding up 5Misenge Environmental and Technical Services Ltd 100 Services to the mining sector Operational 6Kariba Minerals Ltd 100 Amethyst Mine Operational 7Mushe Milling Ltd (in liquidation) 100 Milling Operational 8 Kabundi Resources Ltd 100 Manganese Mining Development 9 Investrust Bank Plc 71.4 Commercial bank Operational 10 Zambia Gold Company Ltd 51 Gold Mining, Exploration and Trading Development/ Exploration 11 Central African Cement Ltd 49 Cement and Thermal power energy Development 12 Rembrandt Properties Ltd 49 Real Estate Development 13 Consolidated Gold Company Ltd 45 Gold Processing Operational 14 Maamba Collieries Limited 35 Supplier of coal and generator of 300Mw thermal power Operational 15 Copperbelt Energy Corporation Plc 24.1 Distribution network to large-scale copper mines on the Copperbelt in Zambia Operational 16 Konkola Copper Mines Plc (in liquidation) 20.6 Copper cathode, copper-cobalt alloys and anode slimes Operational 17 CNMC Luanshya Copper Mines Plc 20 Copper concentrates and copper cathode Operational 18 Kansanshi Mine Plc 20 Copper concentrate, smelter, Copper anode, copper cathode and Gold Dore Operational 19 Lubambe Copper Mine Plc 20 Copper concentrates Operational 20 Copper Tree Minerals Limited 15.6 Copper cathode Development 21 NFCA Africa Mining Plc 15 Copper concentrates Operational 22 Chibuluma Mines Plc 15 Copper concentrates Operational 23 Chambishi Metals Plc 10 Copper cathode and cobalt metal Processing Care and maintenance 24 Oranto Petroleum Limited 10 Oil and gas Exploration OUR INVESTMENTS ABOUT US (continued) ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc 5Investing SMARTLY OUR INVESTMENTS(continued) ZCCM - IH Mining Assets Technical Services Manufacturing/ Processing Financial Services Real Estate Energy Assets Mopani Copper Mines Plc Limestone Resources Ltd Ndola Lime Company Ltd Nkandabwe Coal Mine Chibuluma Mines Plc CNMC Luanshya Copper Mines Plc Kansanshi Mine Plc Konkola Copper Mines Plc Lubambe Copper Mine Plc Kariba Minerals Ltd NFCA Africa Mining Plc Kabundi Resources Ltd Zambia Gold Company Ltd Lubambe Copper Mine Plc Copper Tree Minerals Limited Misenge Environmental and Technical Services Ltd Consolidated Gold Company Ltd. Chambishi Metals Plc Mushe Milling Ltd Central African Cement Limited Investrust Bank Plc Rembrandt Properties Ltd Maamba Collieries Limited Copperbelt Energy Corporation Plc Oranto Petroleum Ltd ABOUT US (continued) List of investments as per sector: 6 INTEGRATED ANNUAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc Investing SMARTLY CURRENT PORTFOLIO SECTORIAL CONTRIBUTION - % PORTFOLIO VALUE CREATION SNAPSHOT 2026 TARGETED SECTORIAL CONTRIBUTION - % The current portfolio as per sectoral investment value contribution is illustrated in the gure below; The pie chart’s further show the direction the Company intends to take as per Strategic Plan 2020-2026 to extract value through diversication (into other minerals) of its current Portfolio. OUR INVESTMENTS(CONTINUED) ABOUT US (continued) Mining Extraction Energy Real Estate 78% 21% 1% Energy Manufacturing 7% 1% Mining Extraction 92% 7 INTEGRATED ANNUAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc Investing SMARTLY 2026 TARGETED SECTORIAL CONTRIBUTION - % COMPANY INTEREST(%) VALUE CREATION Mopani Copper Mines Plc 100 • ZCCM-IH engaged Rothschild & Co South Africa (Pty) Ltd (“Rothschild & Co”) to assist with the strategic review of Mopani for the purposes of sustainability, expansion and growth. • Provided Corporate Guarantee of up to US$45 million for Mopani’s working capital facilities. • Successfully completed the 45-day bi-annual smelter shutdown in September 2022 for maintenance, refurbishment of critical components and replacement of refractory bricks. Limestone Resources Ltd 100 • Provided capital support to restart operations of Vertical Kiln number 2. • Was able to bring back customers lost during period of non-production. • Won a competitive public tender to supply lime products to all of CNMC’s Group companies. • Continued to improve the technical and nancial performance of the company. Misenge Environmental and Technical Services Ltd 100 • Provided ZMW45.323 million equity recapitalisation to purchase new equipment and ramp up business development function to take on new client base and raise revenue streams from its various business units. • Proactively monitoring ZCCM-IH’s historical environmental statutory obligations. • Commenced accreditation process to enhance quality of analytical services offered Kariba Minerals Ltd 100 • Amethyst Mining and value addition by making jewellery. • Successfully conducted ISO 9001:2015 training for supervisors in production, procurement, sales and marketing. • Upgraded the KML website to include integration of the online sales, new look and feel, improved corporate social responsibility reports. • Commenced processing of tumbled amethyst through the Gemstone Lapidary Centre in Ndola. • Completed construction of retail outlet at the new Kenneth Kaunda International Airport. The agship store was opened in the last quarter of 2022. Mushe Milling Ltd 100 • Provided working capital support during the year to assist the Company navigate through a challenging operating environment. ZCCM-IH’s plans to divest from this investment are still underway. Kabundi Resources Ltd 100 • Commenced own mining operations aimed at boosting revenue. • Continued to engage local artisanal mining cooperatives to partner in mining activities. • Produced a total of 14,098 tonnes of manganese in 2022. • Secured additional funding from shareholder to expand exploration activities and acquire mining equipment. OUR INVESTMENTS(continued) ABOUT US (continued) 8 INTEGRATED ANNUAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc Investing SMARTLY COMPANY INTEREST(%) VALUE CREATION Zambia Gold Company Ltd (ZGC) 51 • Demonstrated ability to drive business growth through portfolio synergies. • Sold 62.02 Kg of gold dore to Bank of Zambia in 2021 with no sales recorded in 2022. • The suspension of mining operations at Kasenseli in October 2021 and throughout 2022 have affected the business as follows: a. No gold production with Kasenseli being the main source of gold production. b. No sales to Bank of Zambia as the offtake agreement was put on hold due to the suspension. c. No exploration advancement at Kasenseli • ZGC is still engaging all stakeholders to facilitate the opening of the mine in 2023 nancial year. • ZGC continues to explore its Rufunsa licence to increase sources of gold production. • ZGC continues to partner with third party licence holder for exploration and development activities. Rembrandt Properties Ltd 49 • The hotel opened softly to the general public on 1st June 2022 with conferences and the restaurant all kicking off at the same time as the hotel commenced operations. • The project is more than 95% complete, and since September 2022, the Tenant (Urban Hotel Lusaka) has been grossing an average of ZMW2.5 million from operating the property. • Loan with ZANACO has been sanitized after ZCCM-IH made good on the called guarantee after default by Rembrandt. • Improved economic sentiment promises to anchor sustainability, though credit default risk continues to be a huge downside. Maamba Collieries Limited 35 • Arbitral Tribunal (London) issued the Consent Award to MCL on 13th December 2022, which will see ZESCO pay US$447 million to Maamba by 31st August 2023. • ZESCO have demonstrated commitment to repaying the outstanding arrears, having paid US$29million in December 2022 in addition to US$750k monthly. Copperbelt Energy Corporation Plc 24.1 • Since the signing of the New Bulk Supply Agreement with ZESCO, CEC’s performance has continued to improve. • Recorded a Prot after tax of ZMW 866.4 million (US$46.6 million.) • Set groundwork to expand its renewable energy business unit consisting of hydroelectric, solar and biodiesel energy. • Completed its agship 33MW solar PV generation plant in Kitwe. • The share price closed the year at ZMW3.78 from an opening price of ZMW2.65. OUR INVESTMENTS (continued) ABOUT US (continued) 9 INTEGRATED ANNUAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc Investing SMARTLY COMPANY INTEREST(%) VALUE CREATION Konkola Copper Mines Plc 20.6 • Assisted with sustainability of the mine’s operations by facilitating funding initiatives. CNMC Luanshya Copper Mines Plc 20 • Produced 55,598 tonnes of copper in 2022 compared to 57,223 tonnes of copper output in 2021. • Paid an interim dividend of US$40 million in 2022 due to improved protability. • Exploring its mining sites so as to increase its depleting life of mine NFC Mining Africa Plc 15 • Produced 67,559 tonnes of copper output in 2022. • Retained earnings continued to be positive following the completion of the Southeast Ore Body (SEOB). Kansanshi Mining Plc 20 • Negotiated the conversion of ZCCM-IH’s dividend rights to royalty rights with predictable and stable cashows • Paid dividends of US$243 million during the year to shareholders. • Advanced plans to commence execution of the S3 expansion project to maintain and increase production given the declining ore grades. • Announced plans to set up new solar power generating infrastructure to supplement load base and reduce total energy costs Lubambe Copper Mine Ltd 20 • Announced Kobold US$ 150 million investment in Lubambe for exploration on the high value Extension project and for operations expected to be completed in Q1 of 2023 • The extension project shall be transferred into a licence with ZCCM-IH still returning 20% in both existing and new licence for the extension project area. This transaction was completed subsequent to the year end. • Produced 17,310 tonnes in payable copper against a budget of 20,955 Chibuluma Mines Plc 15 • Effectively under care and maintenance with Lian Chao and Yue Ventures Limited (LC&Y) mining on behalf of Chibuluma • Royalties continue to be paid by LC&Y to Chibuluma throughout 2022 • The company received a total of US$0.26 million in royalty revenue against a budget of US$0.23 Million. • Third party pursuing exploration that use advanced technology in exploration to obtain value on its depleted ore resources OUR INVESTMENTS (continued) ABOUT US (continued) ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc 10 Investing SMARTLY S/N STRATEGIC GOAL/PILLAR KEY TARGETS PERFORMANCE PROGRESS 1Extract, and where possible, add value to our current portfolio • Income growth of ZMW 1,117.4 million annually • Recorded total income of ZMW5,451million in 2022. 2 Investment in greeneld and brown-eld mining and mining related ventures across a diverse range of minerals. • Commodity diversication to include cobalt, gold, manganese and other base metals, gemstones, limestone,phosphate and rare earth minerals; • Value addition downstream and exploration upstream; and • Energy – to support sustainability of mining operations. • Increased exploration investment and expenditure to ZMW18.89 million in 2022 from ZMW5.7 million in 2021. • Kariba Minerals Ltd processing high grade amethyst into jewellery. 3 Achieve operational and nancial excellence • Portfolio return (NAV growth) above the higher benchmark or 40%; and • Operating costs to be below: 40% of total Income • NAV per share movement was ZMW 153.8 in 2021 to ZMW153.5 in 2022. • Operating costs were maintained at 7.5% of total income in 2022. 4 Generate greater shareholder value by ensuring price discovery on our stock exchange listings • Improve liquidity of ZCCM-IH shares by 20% annually across the 3 stock listings: and • Consistency in dividend pay-outs to shareholders with a dividend pay-out ratio of 35%. • Initiated process to migrate from Access to Growth Platform on the Euronext Stock Exchange to promote liquidity for shareholders. • Proactive steps taken to enhance stakeholder engagement. • Boosted ZCCM-IH visibility both local and globally. • Total dividend of ZMW387 million and ZMW336 million declared for 2022 and 2021 respectively. OUR STRATEGY AND KPIs The year ended 31 December 2022 marked the third year of our six-year (2020 – 2026) strategy period (SP). The key pillars underpinning ZCCM-IH SP period and performance progress as at 31 December 2022 are set out below: Table: 2020 – 2026 Strategic pillars Total income comprises revenue from contracts with customers, other income, investment income and nance income for the company. ABOUT US (continued) ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc 11Investing SMARTLY Revenue ZMW12.0 billion ROA -7.7% Net Loss -ZMW3.8 billion Loss for this year EPS -ZMW23.54 FY 2022 GROUP PERFORMANCE HIGHLIGHTS RETURNS 31-Mar-18 31-Mar-19 31-Dec-19 31-Dec-20 31-Dec-21 31-Dec-22 Total Returns (ZMW Mn) 926 2,458 1,605 8,428 -8,144 -4,815 Return on Opening Equity (%) 12% 28% 15% 67% -38.8% -37.61% Earnings per share (ZMW) 5.25 2.79 1.91 13.91 -78.19 -23.54 FINANCIAL POSITION Total Assets (ZMW Mn) 10,332 13,412 15,248 23,296 46,818 48,919 Net Asset Value (ZMW Mn) 8,940 11,025 12,630 21,004 12,809 7,909 NAV Per Share ZMW 55.6 68.56 78.54 130.62 79.66 49.18 Current Ratio 1.67 0.9 0.83 1.17 1.25 1.11 Cash and Cash Equivalents (ZMW Mn) 339 74 57 181 185 329 GEARING Debt (ZMW Mn) 134 104 - 171 25,414 29,029 Debt to equity % 1.50% 0.94% 0.00% 0.81% 66.49% 78.59% Net Cash (Debt) to Equity %0% 0.30% 0.00% 0.00% 66.33% 78.40% ROA: Return on Assets, is computed as prot for the year expressed as a percentage of closing total assets for the year EPS: Earning Per Share, is computed as prot for the year divided by total number of issued shares 12 INTEGRATED ANNUAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc Investing SMARTLY FY 2022 GROUP PERFORMANCE HIGHLIGHTS (CONTINUED) Dividend policy During its 78th Meeting held on 29 March 2018, the ZCCM-IH Board amended the Company Dividend Policy and remained in effect. The ZCCM-IH Policy now states that the Company may pay a minimum of 35% of the unconsolidated Net Prot after Tax (NPAT) for any nancial year in which a positive unconsolidated NPAT was recorded. In addition the policy states that all dividends declarations will consider the companies Free Cash Flows and Investments needs. The following table shows the Company’s historical dividend declaration; Year Dividend Declared ZMW Per Share Total Dividend 2022 Dec 2.41 ZMW387 million 2021 Dec 2.09 ZMW336 million 2020 Dec 0.53 ZMW 85 million 2019 Dec 0.33 ZMW 53 million 2019 March 0.33 ZMW 53 million 2018 March 0.61 ZMW 98 million 2017 March 0.84 ZMW 135 million 2015 March 1.56 ZMW 251 million ABOUT US (continued) 13 INTEGRATED ANNUAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc Investing SMARTLY OUR OPERATING ENVIRONMENT Global Economy Forecasting institutions have retained relatively positive growth estimates for 2022, mainly based on better performance in the rst half of the year; estimates for 2023 were also made less dire. In its latest Economic Outlook report (November), the OECD, for example, estimates 3.1% global GDP growth in 2022 and 2.2% in 2023. The year further signalled new hope for global growth following 2021’s coronavirus caused downturn. This was tied to the development and widespread deployment of COVID-19 vaccines and collective effort by citizens and stakeholders to voluntarily get vaccinated. Furthermore, majority of the developed countries in the EU, Asia, US and Australia ofcially reopened their borders for business and re-declared the virus from “pandemic to endemic” status. The year further marked a seminal moment on the global markets despite the rise of new variants by the speed at which Western Countries could produce, obtain, and ship out Vaccines to the more vulnerable countries. High energy prices and supply chain bottlenecks spurred on record high ination. The pandemic continued to reinforce the importance of environmental, social, and governance engagement, and this year marked a seminal moment on the pathway to net zero. This was shown by the reafrmation of the Paris Agreement by 200 countries at The UN Climate Change Conference in Glasgow (COP26). The objective around the mining sector is to achieve a ‘Net Zero’ carbon emission by 2050 by increasing the supply of Base Metals such as Copper, cobalt and lithium. This will enable a sustainable transition of energy requirements from the current traditional forms of energy sources (coal and oil) to renewable sources such as solar, wind, and hydro powered hybrid models. The London Metals Exchange (LME) three month or 3M Copper, reported a closing price of US$8,372 per tonne as at 30th December 2022. In China, the loosening of COVID-19 restrictions, along with additional support to the property market, has buoyed sentiment and is expected to lift rened copper demand going into 2023. Mined copper output from Latin America remains disrupted by environmental, social and governance issues, but with smelters in China entering an extended period of care and maintenance, we expect a concentrate surplus of 233,000 tonnes in 2023. Gold was the most popular asset of 2022 in the midst of the turbulence caused by the war in Ukraine, historic ination and high interest rate hikes. Gold helped investors to limit their losses for the year to about 1.5%, compared with >19% for the S & P 500 index and 10% for US Government Bonds. In December, gold reached a 6-month high. Chinese imports of Russian gold jumped up to a 5 year high as Beijing seeks to reduce its dependence on the US dollar. The price received further support towards the end of the month as the dollar weakened. The DRC announced plans to formalize the artisanal mining sector and intends to build a renery in Bukavu in 2023 and also signed an agreement with the UAE, where most of the gold ends up, after being smuggled through Rwanda and Uganda. China increased its gold holdings by 32tonne in November, its rst increase in 3 years, to a total holding of 1,980tonne. The near-term picture for the U.S. economy is mixed, as softer ination in November was met with declining manufacturing activity. Purchasing mangers’ indexes dipped into contractionary territory for the rst time since May 2020, and non-farm payrolls increased against expectations. Following the December Federal Open Market Committee meeting, Chairman Jerome Powell signaled that interest rates will rise further in 2023 and remain high for longer, as the Fed targets an eventual 2% ination rate. This heightens the risk of a recession in 2023, with a possible rise in unemployment set to test the Fed’s resolve to stick to its ination target. We nevertheless forecast U.S. rened copper demand growth for 2023 at 1.5%, due to renewable energy deployment and near-sourced electric vehicle manufacturing, as supported by the Ination Reduction Act, which was signed in August. ABOUT US (continued) 14 INTEGRATED ANNUAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc Investing SMARTLY Zambian Economy Africa’s second largest copper hotspot Zambia ended 2022 with a plethora of positives ranging from a stronger condence standing in the international market to attainment of a landmark target, consensus with the International Monetary Fund (IMF) Staff Mission team on a US$1.4 billion Extended Credit Facility (ECF). The Zambian Kwacha continued to be vulnerable to the US dollar. In September 2022, the currency was the world’s best performing against the US dollar, rallying over 18.5% from January the same year. A range of monetary and scal measures appeared to be behind the economy’s strength. The Kwacha’s performance had been rmly supported by two strong pillars in the economy, and thus the continuous support by the central bank throughout the year. On the other side, local Forex market was sustained by project funding. So far, this year, the central bank has substantially pumped slightly above US$1.3 billion into the domestic Forex market. The local unit started getting stable and stronger after the International Monetary Fund (IMF) came on board around August 2022, when its executive board approved a US$ 1.4 billion facility in favor of Zambia to restore the country’s economic stability and drive development. Annual ination for December 2022 slightly increased to 9.9 percent from 9.8 percent recorded in November 2022. The slight increase of year-to-year ination is attributed to the movement in prices of non-food items. Furthermore, the year-on-year ination rate took a massive tumble as it reduced to 9.9% from 16.4% as at December 2021. This is depicted in the gure 2 below. Figure 2: Annual Ination December 2021 – December 2022 16.4 15.1 14.2 13.1 11.5 10.2 9.7 9.9 9.8 9.9 9.7 9.8 9.9 0 2 4 6 8 10 12 14 16 18 Annual Inflation December 2021 – December 2022 ABOUT US (continued) OUR OPERATING ENVIRONMENT (continued) 15 INTEGRATED ANNUAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc Investing SMARTLY Figure 3: Total Trade, November (2022 and 2021) Cumulative trade for the period January to November 2022 was ZMW319.9 billion while that of 2021 for the same period was ZMW331.6 billion, representing a 3.5 percent decrease as shown in gure 3 above. The total value of exports via all modes of transport for the period January to November 2022 was ZMW182.4 billion. In terms of volume, the total volume of exports was 8.7 million Mt. With regards to Imports, total value of Imports via all modes of transport for the same period was ZMW137.4 billion. In terms of volumes, a total of 5.4 million Mt of imports was recorded. Furthermore, the country recorded a trade surplus of ZMW2.77 billion in November 2022 compared to a surplus of ZMW2.84 billion in October 2022. Export earnings from rened copper in November 2022 increased by 12.0 percent to ZMW10.6 billion from ZMW9.5 billion in October 2022. Export volumes in November 2022 increased by 6.6 percent to 83.4 thousand metric tonne from 78.2 thousand metric tonne in October 2022. Copper production dropped by 4.67% in 2022, from 800,695.8 tonnes in 2021, to 763,28715 tonnes. The country’s cobalt production also dropped by 21.83% during the same period, with 247 tonnes of cobalt produced in 2021, and 316 tonnes produced the previous year. 25.7 27.2 51.4 81.1 55.7 300 350 SOURCE : ZamStats , 2022 Note: Total Trade = (Exports + Imports) 250 200 150 100 50 0 87.5 114.4 116.4 148.0 148.0 181.3 178.6 215.0 207.1 246.1 234.9 273.8 262.8 300.7 290.3 331.6 319.9 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov ABOUT US (continued) OUR OPERATING ENVIRONMENT(continued) KEY 2021 2022 16 INTEGRATED ANNUAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc Investing SMARTLY RISK MANAGEMENT ZCCM-IH just like any other business is faced with numerous risks, some of which are implicit for our business while others are ancillary. To ensure that we can deliver on our vision, strategic objectives and operating guidance depends on our ability to effectively identify and appropriately respond to the risks that may prevent us from achieving our objectives. As such, the implementation of the Enterprise Risk Management Framework is considered as an integral part of the institution’s Business Strategy and is essential to its success. ZCCM-IH is committed to ensuring robust risk management practices for successful mitigation against existing and emerging risks that are complex and continuously changing. Our risk management process offers a tiered structure approach that includes: • Identifying and describing the existing risks (and establishing the tools to identify new risks) • An investment management process that entails the incorporation of risk identication, mitigation, and tracking measures monthly at Company and Group level • An extensive and thorough pre-investment due diligence process • Establishing control and governance structures, including proper structuring of three lines of defence model at Company and Group level • Establishing the conditions for the institution to prevent the formation of new unwanted risks. • Creation of an appropriate “risk culture” and risk governance at Company and Group level. Further, the Risk Management function ensures alignment between risk management and strategy for efcient operations. As such, risk management is central to our investment decision-making processes. Main Risks Our business is subject to inherent risks in nancial, regulatory, strategic, and operational areas among others. The risks described below are not the only ones facing ZCCM-IH, but describe some of our key sources of uncertainty and critical risk management activities: Key focus areas: • Strategy/Stakeholder engagement: risks arising from uncertainties that may impact the achievement of our strategic objectives and stakeholders. • Investments: risks arising from events and uncertainties that may impact our investment activities. • Financial: risks arising from events related to nancial reporting, funding, liquidity, and credit. • Operations: risks arising from our business, that have the potential to impact operational performance, people and environment. • Compliance: risks arising from non-compliance ABOUT US (continued) 17 INTEGRATED ANNUAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc Investing SMARTLY KEY RISK TYPE RISK DESCRIPTION RISK MANAGEMENT AND MITIGATION Strategic risk Strategic risk arises from the design and implementation of our business model, the key decisions made in relation to investment and capital allocation, as well as uncertainties and untapped opportunities embedded in our strategic intent and how well they are executed. It also arises from the negative impact that can result from the deterioration of the Groups reputation among stakeholders and the public, resulting in: revenue loss, litigation, regulatory sanctions, and decline in share price. • Alignment of subsidiary strategic plans to group strategy. • Strategy reviews for all businesses are conducted periodically. • Appointment of representatives on subsidiary boards to ensure oversight. • Ensuring that the group only invests in opportunities that have been extensively tested, reviewed and approved by the investments committee. The testing phase includes stress testing of the models, considerations of a legal, tax and risk opinion to validate the business case. Financial Risk Financial risk is an inherent part of our business, and it arises from: • Signicant changes in the market prices of the minerals which has a direct impact on the cash ows. • Currency uctuations also affect the nancial performance of our investments. • Limited access to affordable capital required to fund exploration and identied investment opportunities especially those that require signicant • Capital outlay. The implementation of risk management process on all investments and subsidiary matters to provide assessment and identication of emerging and on-going risks with corresponding information and advice on how to manage these risks. This allows business/investment decisions to take all relevant risks adequately into account. Compliance Risk Compliance risk is ZCCM-IH’s potential exposure to legal penalties, nancial forfeiture, and material loss, resulting from failure to act in accordance with industry laws and regulations, internal policies or prescribed best practices • Ensure compliance by facilitating the regular identication, mitigation and reporting of compliance risk. • Regular review of applicable legislation, policy direction and other relevant documentation, such as budgets to execute directives and resolutions Investment risk This is the risk of incurring nancial losses in ZCCM-IH’s portfolio in pursuit of returns. This risk would arise from; • Under-performance by investee companies; • non-performing shareholder loans and advances; and • Investment concentration risk. Change in the political, economic, social factors and economic outlook. The Group’s portfolio focus approach includes business review meetings. The key agenda in each of these meetings is to assess the management of all the key risks that the asset is exposed to. The Group also seeks to, as much as possible, diversify its investments by investing in a diverse range of minerals. ABOUT US (continued) RISK MANAGEMENT(continued) 18 INTEGRATED ANNUAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc Investing SMARTLY KEY RISK TYPE RISK DESCRIPTION RISK MANAGEMENT AND MITIGATION Operational risk A failure of key processes, systems and/or people comes at additional operating costs to ZCCM-IH, thereby reducing overall operational efciency and effectiveness. • Establishment of clear policies and processes. • Embracing and fostering a culture of diversity and inclusivity which encourages staff to be innovative and be supportive of each other. • Monitoring compliance with the policies and processes • Clear goal setting and performance management • A people driven approach to managing the enabling technology and ensuring that system support is available at all times. This includes technology allowing staff to work remotely as may be needed from time to time. Three Lines of Defence Model In 2021 ZCCM-IH implemented the three lines of defence model which is an accepted regulated framework designed to facilitate an effective risk management system. This was done by revising the Company’s Organizational Structure where the Risk Management function was split from the former Risk and Internal Audit Directorate and is now a stand-alone function. The Audit Committee of the Board and the main Board provide oversight and guidance on the improvement of risk management. The Risk Function is tasked with the implementation of the Enterprise Risk Management Framework by facilitating risk management enterprise wide and inculcating a risk culture. The 3 lines of defence model implemented by the Company are: ■Risk Owners: The rst line of defence (which includes operational departments ie Investments, Human Resources, Information Technology, Procurement, etc) is provided by front line staff and operational management. The systems, internal controls, control environment, policies and culture developed and implemented by these business units is crucial in anticipating and managing operational and non-nancial risks. ■Risk Oversight: The second line of defence is provided by the risk management function. This function provides the oversight using tools, systems, and advice necessary to support the rst line in identifying, managing and monitoring risks Risk Assurance: ■ The third line of defence is provided by the internal audit function. This function provides a level of independent assurance that the risk management and internal control framework is working as designed. This model is used because it provides a standardised and comprehensive risk management process that claries roles and provides guidance for effective risk management and governance. Risk Culture The Board sets the tone and inuences the risk management culture. All strategic, business and investments decisions are made with due consideration of the related risks and mitigants. The risk culture is fostered by periodic risk register reviews by a cross functioning Risk Coordinators Committee. This initiative reviews the risk registers and status of the mitigating controls. We are further developing a robust Risk Management Training Program especially operational risk management with the objective to foster risk awareness and understanding across the institution to strengthen the risk management. ABOUT US (continued) RISK MANAGEMENT(continued) 19 INTEGRATED ANNUAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc Investing SMARTLY 19Investing SMARTLY 20 INTEGRATED ANNUAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc Investing SMARTLY CHAIRPERSON’S STATEMENT I am pleased to share with you the performance of ZCCM Investments Holdings Plc (ZCCM-IH) as a Company and that of its investee companies during the nancial year ended 31 December 2022. While the incidences of COVID-19 slackened as the year progressed, the effects of the pandemic continued to be felt worldwide. Economies were opening slowly and cautiously with many countries recording low, no or negative growth. The energy crisis experienced world over resulting in increased energy costs coupled with the war in Ukraine put pressure on all sectors of world economies. Copper prices remained reasonably sustained with an average gain of around 5% over 2021 closing at $ 8,372 per tonne as at 31st December 2022. During 2022, we focused our efforts on stabilising operations at our key asset, Mopani Copper Mines Plc (Mopani). In order to sustain Mr. Kakenenwa Muyangwa ZCCM-IH BOARD CHAIRPERSON operations at Mopani, we facilitated working capital mobilisation to a tune of $45 million. We appointed Rothschild & Co, South Africa (Pty) Ltd to help spearhead the process of nding a strategic equity partner to enable Mopani to operate at its optimum level and sustainably. We expect the process of nding an ideal strategic partner will be nalised within 2023. The Company continued to devise alternative and predictable methods of value extraction such as the Company royalty transaction with Kansanshi Mining Plc which was nalised in 2023. Performance at Group level was severely impacted by the underperformance of Mopani resulting in a loss of ZMW 3.79 billion (US$ 222.03 million). On a positive note, Company performance improved with a prot for the year of ZMW 4.26 billion up from ZMW1.68 billion recorded in 2021. The improved performance was due to increased quantum of dividend receipts from investee companies. The overall performance of the Company and its investees was positively affected by the sustained copper prices recorded during the year. Loss before Tax 4,000 2,000 - (2,000) (4,000) (6,000) (8,000) (10,000) (12,000) (14,000) Loss for the year Investee Companies share of prot Dec 2021 Dec 2022 Group Performance - ZMW Million (12,639) (12,573) 1,603 3,005 (3,536) (3,786) 21 INTEGRATED ANNUAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc Investing SMARTLY CHAIRPERSON’S STATEMENT (CONTINUED) The Group’s retained earnings as at 31 December 2022 were negative at ZMW11.94 billion (2021: ZMW8.31s billion negative). The movement in retained earnings is attributable to the recorded Group loss of ZMW3.76 billion (2021: ZMW12.57 billion loss). The Company’s retained earnings remained positive at ZMW7.40 billion (2021: ZMW3.22 billion). Group Company Returned Earnings Dec 2022 Returned Earnings Dec 2021 Returned Earning - ZMW Million (11,936) 7,398 (8,307) 3,224 (15,000) (10,000) (5,000) - 5,000 10,000 22 INTEGRATED ANNUAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc Investing SMARTLY While the performance of Mopani continued to be a source of concern, its value lies in its mineral reserve which when explored, mined and processed will signicantly change the company’s outlook as well as potentially contribute to positive group performance. Our efforts in the coming years will be to ensure the company’s performance improves by undertaking major capital projects which will lead to mine development. We will achieve positive developments through partnership with a suitable equity and technical partner. The operations of Zambia Gold Company Limited continued to be hampered by the suspension of its key asset, Kasenseli mine. I am hopeful that the strategic engagements we have made with key stakeholders will help us reach nality to all the issues leading to our realisation of our objective of creating this company to harness the gold resources that Zambia has. With the price of gold increasing, we believe that the gold sector can help add enormous value to ZCCM-IH’s portfolio and contribute to resource mobilisation primarily for Zambia. In 2020, we announced that we were undertaking group reorganisation with the Industrial Development Corporation (IDC) to ensure that both our entities beneted from strategy alignment. Following consultations, the rationalisation proposal has since been revisited and will not be proceeding as earlier envisaged. However, we will be working to remodel our portfolio to ensure we deliver shareholder value. This remodelling will involve us taking drastic but well thought out decisions so that we have an attractive portfolio which improves shareholder value. We will be communicating details of the actions that your Board will be taking to ensure you are informed as we seek your support. We have continued to undertake steady steps in determining ways we can participate in the mineral value chain. In this regard, we have been conducting research on the feasibility of establishing a precious metals plant. The work accomplished this far, shows that much can be achieved through a well set out mineral value chain. Our Technical and Investments Team is working towards nalising the feasibility study which is expected to be completed in the third quarter of 2023. We recognise the importance of culture in achieving strategic goals. We can only achieve our strategic goals with the right attitude and engaging in a high-performance culture. In 2022, the Company worked with a consultant to review corporate cultural barriers and nd ways of untangling these to promote positivity and improve performance. I am glad that we have since set ourselves very clear targets which will improve overall Company performance by redening our culture to that which we want to be as expected by our stakeholders. We will strive to live the new culture and continue monitoring our performance through this lens. CHAIRPERSON’S STATEMENT (CONTINUED) Strategic Developments Non-performing shareholder loans and advances continues to be one of the major business risks identied. To mitigate this risk, shareholders may wish to know that a rigorous monitoring framework was implemented. This risk and others are regularly under review and various engagements with respective parties being undertaken. Another major business risk that we continued to face in 2022 was the unpredictable nature of dividend income. To mitigate this risk, various strategies have been highlighted in the 2026 SP to enhance income diversication. We are also impacted by growing geopolitical tensions and macroeconomic uncertainty that could potentially impact global growth and affect market volatility and sentiment. The ongoing conict in Ukraine has contributed to inationary pressures for key inputs across our value chain. As a risk mitigation we continue to diversify our portfolio of markets and jurisdictions to reduce exposure to specic geopolitical events Major Company Risks in 2022 23 INTEGRATED ANNUAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc Investing SMARTLY The ZCCM-IH share price on the three stock exchanges closed as follows, with an inclusion of the respective market capitalisation using the issued share capital: During the year, the Company had four (4) changes in terms of exiting non-executive directors, one (1) change in the ofce of the executive director (Chief Executive Ofcer) and four (4) changes for new appointments at different times. I wish to thank the directors that retired from the Board during the year, for the service rendered to the Company. At the same time, I am condent that the new directors appointed in the year, together with the colleagues they joined on the Board will live up to the huge expectations of the shareholders and the nation at large. The mining sector is generally expected to see strong demand in the short to medium term and in particular, copper prices are envisaged to remain current high level going forward. With a focus on mining and mining related activities, ZCCM-IH stands ready to seize the opportunities that lie ahead in the mining sector. The Company will continue to undertake exploration for gold and copper as these minerals are critical to value creation. ZCCM-IH will use a three-pronged strategy in this regard, that is forging strong value enhancing partnerships/joint ventures, invigorate the exploration activities in brown and greeneld areas and a push for new licences for minerals of its interest as identied in the Company’s 2026 Strategic Plan. I once again express gratitude to my fellow Board members for their tenacity and unwavering support in setting strategic direction for the Company. I remain very proud of our achievements and direction we are taking to improve shareholder value. To Management, I wish to reiterate the need for us to work as a team and remain thankful for your commitment and hard work. Importantly, I am grateful to the shareholders for their support rendered to everyone connected to and at ZCCM-IH during the 2022 nancial year. Mr. Kakenenwa Muyangwa ZCCM INVESTMENTS HOLDINGS Plc - BOARD CHAIRPERSON Capital Market Directorate Changes Outlook Acknowledgement Market Capitalisation 31 December 2022 31 December 2021 Stock Exchange Number of Shares Share price Market Capitalisation Share Price Market Capitalisation Lusaka Securities Exchange 149,888,015 ZMW 37.98 ZMW5,692,746,809.70 ZMW 37.98 ZMW5,692,746,809.70 Euronext Access 10,619,577 EUR 1.40 EUR 14,867,407.80 EUR 0.94 EUR 9,982,402.38 London Stock Exchange 292,694 US$ 1.65 US$ 482,945.10 US$ 1.65 US$ 482,945.10 TOTAL 160,800,286 CHAIRPERSON’S STATEMENT (CONTINUED) 24 INTEGRATED ANNUAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc Investing SMARTLY The Directors submit their report together with the audited nancial statements for the year ended 31 December 2022, which disclose the state of affairs of ZCCM Investments Holdings Plc (‘the Company’) and its subsidiaries (together “the Group”). REPORT OF DIRECTORS Mr. Kakenenwa Muyangwa Board Chairperson | Non-Executive Director Mr. Brian Nalishuwa Non - Executive Director Mr. Philippe G. Taussac Non - Executive Director Mr. Moses Smart Nyirenda Non - Executive Director Mrs. Masitala Nanyangwe Mushinga Non - Executive Director Bishop John Mambo Non-Executive Director Mr. Muyangwa Muyangwa Non - Executive Director Dr. Ndoba Joseph Vibetti Executive Director/Chief Executive Ofcer 25 INTEGRATED ANNUAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc Investing SMARTLY Forward Right - Ms. Dolika R Banda ZCCM Investments Holdings Board Chairperson (Touring CEC Solar Power Plant - Friday, 03 June 2022) 26 INTEGRATED ANNUAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc Investing SMARTLY 120,000,000 A” Ordinary Shares of ZMW 0.01 each; and 80,000,000 B” Ordinary Shares of ZMW 0.01 each Class “A” Ordinary Shares and Class “B” Ordinary Shares all rank pari passu in all respects. During the year, the issued share capital remained unchanged at 160,800,286 shares with a nominal value of ZMW1, 608,003 as detailed below: Number of shares Amount ZMW At beginning and end of year 160,800,286 1,608,003 The authorised share capital of the Company remained unchanged at ZMW2,000,000 divided as follows: As at 31 December 2022, Mr Philippe G. Taussac (Non-Executive Director and Chairperson of the Investments Committee of the Board) had 160,589 shares. Changes To Senior Management During the year 2022, the Company welcomed Mrs Betty C Meleki, the Chief Human Resources and Administration ofcer. She was appointed on 7 March 2022. Subsequent to the year end, the Company declared a dividend in relation to the 2021 and 2022 nancial year end of ZMW2.09 and ZMW2.41 per share respectively. Principal Activities ZCCM –IH (“the Company’’) is an investments holdings Company which has a primary listing on the Lusaka Securities Exchange and secondary listings on the London and Euronext Paris Stock Exchanges. The Company has the majority of its investments held in the copper mining sector of Zambia. The Company’s focus going forward will include the following: • Developing and implementing investments strategies and aligning Company operations towards maximizing of shareholder value in the mining sector; • Monitoring the performance of investee companies to ensure they consistently declare reasonable dividends and ensure Company growth; • Ensuring effective representation on the Boards of the investee companies; • Establishing and securing joint venture partnerships for projects assessed to be viable; • Establishing metal streaming arrangements; • Establishing a royalty model to maximize shareholder value; and • Supply chain participation (including management contracts), where expertise in the Technical Directorate will be applied to leverage this line of business. REPORT OF THE DIRECTORS (CONTINUED) Share Capital Shareholding By Directors Dividends 27 INTEGRATED ANNUAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc Investing SMARTLY REPORT OF THE DIRECTORS (CONTINUED) During the year and up to signing date of this report, the following were changes in the directorate: Changes in the Directorate NAME OF DIRECTOR NATURE OF CHANGE Ms Dolika E S Banda (Board Chairperson) Appointed on 13 December 2021 and resigned on 5 May 2023 Mr. Kakenenwa Muyangwa (Board Chairperson) Appointed on 5 May 2023 Mr Moses Smart Nyirenda (Non – Executive Director/ Remuneration Committee Chairman) Appointed on 13 December 2021 Mr Gregory Kabwe (Non – Executive Director/ Audit Committee Chairman) Appointed on 13 December 2021 and retired on 2 March 2023 Mrs. Masitala Nayangwe Mushinga (Non – Executive Director/ Audit Committee Chairman) Appointed on 7 March 2023 Bishop John Mambo (Non – Executive Director) Appointed on 13 December 2021 Dr. Ndoba J Vibetti (Executive Director/ Chief Executive Ofcer) Appointed on 1 February 2023 Mr Brian Nalishuwa (Non-Executive Director) Appointed on 7 December 2022 Mr Muchindu Kasongola (Non-Executive Director) Appointed on 24 August 2022 and retired on 25 November 2022 Mr Muyangwa Muyangwa (Non – Executive Director/ Investment Committee) Appointed on 1June 2022. Mr Yollard Kachinda (Non-Executive Director/ Remuneration Committee Chairman) Retired on 6 April 2022 Mr Mabvuto T Chipata (Executive Director/ Chief Executive Ofcer) Retired on 30 March 2022 Mr M Kaluba (Non-Executive Director) Resigned on 17 August 2022 AUDIT COMMITTEE REMUNERATION COMMITTEE Ms. Masitala N Mushinga (Chairperson) (appointed on 7 March 2023). Mr Moses Nyirenda (Chairman) Bishop John H Mambo (appointed on 13 December 2021) Mr Tisa Chama (Acting Chief Executive Ofcer from 30 March 2022 to 31 January 2023) Mr Philippe G Taussac Mr Bishop H Mambo Mr Vincent Nyambe (Co-opted member) Mr. Ronnie Kamanya (appointed on 26 April 2022 & Retired on 1 June 2022) Mr Brian Nalishuwa (appointed on 7 December 2022) Mr Muyangwa Muyangwa (appointed on 1 June 2022) Mr. Gregory Kabwe (Chairman) (retired on 2 March 2023) Mr Gregory Kabwe (retired on 2 March 2023) Dr Ndoba J. Vibetti (Chief Executive Ofcer/ Appointed 1 February 2023 Mr Mabvuto Chipata (retired on 30 March 2022) Mr. Mateyo C Kaluba (Chairman) (resigned on 17 August 2022) Mr Y Kachinda (Chairman; retired 6 April 2022) INVESTMENTS COMMITTEE Mr Philippe G Taussac (Chairman) Mr Moses S Nyirenda Non-Executive Member Mr Tisa R Chama Acting Chief Executive Ofcer (appointed on 30 March 2022) Mr Brian Musonda Chief Investments Ofcer Mr Charles Mpundu Co-opted Member Mr Basil Nundwe Co-opted Member (retired in 2022) Mr Albert Halwampa Co-opted Member (appointed on 14 February 2022) Mr Ronnie Kamanya Non-Executive Member (appointed on 26 April 2022 & Retired on 1 June 2022) Mr Mabvuto T Chipata Chief Executive Ofcer (retired on 30 March 2022) Mr Yollard Kachinda Non-Executive Member retired on 6 April 2022) Mr Mateyo C Kaluba Non-Executive Member (retired on 17 August 2022) Mr Muchindu Kasongola Appointed on 24 August 2022 & retired on 25 November 2022 28 INTEGRATED ANNUAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc Investing SMARTLY REPORT OF THE DIRECTORS (CONTINUED) BOARD COMMITTEE’S FUNCTIONS (CONTINUED) Director’s Participation in Meetings Record of attendance of Board and Committee meetings held during the period to 31 December 2022. Board Meetings: Name of Director 01/02/22 22/02/22 09/03/22 23/03/22 05/04/22 26/04/22 06/05/22 21/06/22 04/08/22 26/08/22 13/09/22 28/09/22 05/10/22 12/10/22 17/10/22 03/11/22 05/11/22 14/11/22 18/11/22 07/12/22 22/12/22 Ms Dolika Banda, (Chairperson) √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ Mr Moses Nyirenda √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ Mr Gregory Kabwe √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ X√X Mr Bishop John Mambo √ √ √ √ √ √ √ √ √ √ √ √ X√√√X√ √ √ √ Mr Mabvuto T Chipata √ √ √ X • • • • • • • • • • • • • • • • • Mr. Yollard Kachinda √ √ √ √ √ • • • • • • • • • • • • • • • • Mr. Mateyo C Kaluba √ √ √ X√X X X X • • • • • • • • • • • • Mr Philippe G Taussac √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ Mr Muchindu Kasongola • • • √ √ √ √ √ √ √ √ √ √ √ √ X X X X • • Mr Muyangwa Muyangwa • • • • • • • • √ √ X√X X X √X√X√ √ Mr Ronnie Kamanya • • • • • √ √ √ • • • • • • • • • • √• • Mr Brian Nalishuwa • • • • • • • • • • • • • • • • • • • √ √ The committee provides oversight on the effectiveness of the Group’s operational and nancial reporting systems and accuracy of information, and that the Group’s published Financial Statements represent a true and fair reection. The specic terms of reference include: ■ Reviewing and appraising the soundness of risk management, internal controls, and the reliability and integrity of nancial, managerial, and operating data. ■ Ascertaining compliance with the ZCCM-IH Group policies and procedures. ■ Evaluating asset safeguards and accountability. ■ Evaluating the economy and efciency with which resources are employed. ■ Reviewing operations or programs to assess whether they are being carried out as planned and whether results are consistent with established objectives. ■Providing advice to management regarding the adequacy and effectiveness of controls regarding major decisions. Audit Committee √ X • In attendance Not in attendance Not a member on stated date of meeting KEY 29 INTEGRATED ANNUAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc Investing SMARTLY To adequately supervise and monitor the investment function of the Company, the Investments Committee of the Board’s duties and responsibilities shall be: ■ To evaluate and approve or disapprove and refer all approved investments to the full Board. ■ To evaluate and recommend to the Board on the disinvestments. ■ To periodically review each investment in terms of performance against benchmark returns for the Company. ■ To guide management on the activities of the Management Investment Committee and ensure they comply with the laid down procedures. ■ To advise the Board and guide management on investment-related issues. ■ To circulate for information, quarterly reports to the Board and through the Chairman present on matters therein, if necessary; and, ■To determine the amount to be invested in a period Meeting Attendance Meeting Attendance Investments Committee Name Of Director 27/01/22 15/02/22 15/06/22 04/10/22 Mr Mateyo C Kaluba (Chairman) √ √ X X Mr Philippe G Taussac √ √ √ √ Mr Gregory Kabwe √ √ √ √ Mr Vincent Nyambe √ √ √ √ Mr Bishop John Mambo √ √ √ √ Mr Mabvuto Chipata √ √ • • Mr Muchindu Kasongola • • √ √ Name of Director 14/02/22 16/03/22 03/05/22 14/06/22 04/08/22 24/08/22 03/10/22 14/10/22 02/11/22 05/12/22 Mr Philippe G Taussac (Chairman) √ √ √ √ √ √ √ √ √ √ Mr. Moses Nyirenda √ √ √ √ √ √ √ √ √ √ Mr. Albert Halwampa √ √ √ X√ √ √ X√ √ Mr Mateyo C Kaluba √ X X X X • • • • • Mr Charles Mpundu √ √ √ √ √ √ X X X X Mr Basil Nundwe √ √ √ X X √ √ √ √ √ Mr. Yollard Kachinda √ √ • • • • • • • • Mr Mabvuto T Chipata √ √ • • • • • • • • Mr Muchindu Kasongola •√ √ √ √ √ √ √ X • Mr Muyangwa Muyangwa • • • √ √ √ √ X X Mr Ronnie Kamanya • • √ √ • • • • • • √ √ X X • • In attendance In attendance Not in attendance Not in attendance Not a member on stated date of meeting Not a member on stated date of meeting KEY KEY REPORT OF THE DIRECTORS (CONTINUED) BOARD COMMITTEE’S FUNCTIONS (CONTINUED) 30 INTEGRATED ANNUAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc Investing SMARTLY The committee is responsible for formulating remuneration policies and principles that promote the success of the Company. More specically, the Remuneration Committee’s terms of reference include: ■ Determine and agree with the Board the framework or broad policy for the remuneration of the Chief Executive and such other members of the executive management as it is designated to consider. ■ Determine targets for any performance-related pay schemes operated by the Company. ■ In determining such remuneration packages, give due regard to the prevailing compensation levels in comparable commercial organizations. ■ Be exclusively responsible for establishing the selection criteria, selecting, appointing, and setting the terms of reference for any remuneration consultants who advise the committee. ■ Report the frequency of, and attendance by members at, remuneration committee meetings in the annual report. ■ Make the committee’s terms of reference publicly available. These should set out the committee’s delegated responsibilities and be reviewed and, where necessary, update annually. Remuneration Committee √ X • In attendance Not in attendance Not a member on stated date of meeting KEY REPORT OF THE DIRECTORS (CONTINUED) BOARD COMMITTEE’S FUNCTIONS (CONTINUED) Name of Director 11/02/22 07/06/22 15/06/22 13/09/22 29/09/22 07/10/22 Mr Yollard Kachinda (Chairman) √• • • • • Mr. Moses Nyirenda √ √ √ √ √ √ Mr Bishop John Mambo √ √ √ √ √ X Mr Ronnie Kamanya •√ √ • • • Mr Gregory Kabwe √ √ √ √ √ √ Mr Muyangwa Muyangwa • • • X √ √ Mr Mabvuto T Chipata √• • • • • 2022 2021 Item ZMW ZMW Executive Director’s Fees 231,760 848,472 Executive Director’s Emoluments 841,791 4,239,651 Non-executive Director’s Fees 9,265,431 7,258,208 Total 10,338,982 12,346,331 Meeting Attendance Renumeration Policies Board of Directors’ fees and emoluments. 31 INTEGRATED ANNUAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc Investing SMARTLY The total amount paid as remuneration to employees during the year amounted to ZMW2,145.92 million (2021: ZMW1,562 million) for the Group and ZMW129.35 million (2021: ZMW108.8 million) for the Company. The average number of employees was as follows: Health and safety are a top priority in the Group. In order to maintain productivity, the Group ensured a healthy environment by providing the following to employees: • Periodic Health Talks to educate and sensitise employees on various health issues. • Medical services with some medical facilities • Subscription to the gym to ensure wellness. • Work-Life Balance by ensuring that employees took annual leave to refreshen their minds. • Hand sanitisers, fumigation of ofces buildings and generally a clean environment to prevent contraction and spread of the Covid-19 virus. The Group ensured a safe working environment by observing the following: • Adherence to laws and regulations governing safety at places of work. • Provision of rst aid kit • Availability of trained rst aiders and re marshals. • Serviceable re extinguishers Average number and remuneration of employees REPORT OF THE DIRECTORS (CONTINUED) Month Company SUBSIDIARIES GROUP Month Company Subsidiaries Group Jan 2022 89 6,386 6,475 Jul 2022 104 6,529 6,633 Feb 2022 91 6,435 6,526 Aug 2022 105 6,529 6,634 Mar 2022 91 6,418 6,509 Sept 2022 107 6,593 6,700 Apr 2022 96 6,450 6,546 Oct 2022 107 6,588 6,695 May 2022 95 6,487 6,582 Nov 2022 107 6,586 6,693 Jun 2022 100 6,496 6,596 Dec 2022 106 6,582 6,688 HEALTH AND SAFETY EMPLOYEE ENVIRONMENT STAFF EXPENSES 31 December 2022 ZMW’000 31 December 2021 ZMW’000 Subsidiaries Companies ZCCM-IH 2,016,565 129,353 1,453,252 108,765 2,145,918 1,562,017 32 INTEGRATED ANNUAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc Investing SMARTLY REPORT OF THE DIRECTORS (CONTINUED) ZCCM-IH activities are streamlined by the full utilisation of its Management and Board via committees that are guided by its Corporate Governance Policies. Being a publicly listed entity, ZCCM-IH Corporate Governance Policies are in line with various codes of conduct required by the regulatory authorities of the stock markets the Company is listed on. The Group continued to operate by enforcing good corporate governance practices contained in Sections 82 to 122 of Part VII of the Companies Act No.10 of 2017 of Zambia, and the Lusaka Securities Exchange (LuSE) Corporate Governance (CG) Code, publicly available on the Company’s website and from the LuSE upon request. The Companies diversity policy is embedded in the Human Resource Policy under the clause titled “Equal Opportunity, Diversity and Positive Action”, which states in part that, “ZCCM-IH will provide equal employment opportunity to the Zambian nationals on the basis of merit without unlawful discrimination on the basis of age, gender, colour, tribe, disability, race or religion”. The Company’s internal controls are implemented amongst others through its Internal Control Policy as approved by the Board in 2019 and incorporates guidance aligned to requirement of the Securities Act of 2016 related to the Company’s internal controls. The Company also maintains a Business Risk Register (BRR) which identies the risks affecting the various aspects of ZCCM-IH strategic and operational areas and how these risks are to be mitigated. The BRR is monitored on a regular basis by Management and the Audit Committee and reported to the Board. Further to this, the Company has formally adopted the OECD principles of Corporate Governance. The separation of powers between the Directors and Management on one hand and the Chairman of the Board and the Chief Executive Ofcer on the other was strictly adhered to. All Directors except the Chief Executive Ofcer on the Board were non-executive during the nancial period. The Board of Directors is committed to sound corporate governance and the management of environmental and social issues. Towards the achievement of this commitment, the Board has continued to put in place appropriate governance policies. This is enshrined in ZCCM-IH’s Strategic Plan for the period 2020 to 2026 by committing to enhancing its Environmental, Social, and Governance (ESG) adherence. CORPORATE GOVERNANCE 33 INTEGRATED ANNUAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc Investing SMARTLY Forward Front - Mr. Tisa R Chama ZCCM Investments Holdings CTO (Touring KAGEM Emerald Mine - Tuesday, 31 May 2022) 34 INTEGRATED ANNUAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc Investing SMARTLY CHIEF EXECUTIVE OFFICER’S STATEMENT In 2022 we focused on progressing our strategy and delivering against our four strategic goals to build a stronger ZCCM-IH for the long term. Despite a challenging environment, we achieved a favourable nancial performance at company level. This was due, in part to the strong foundations of our business, its’ world class assets, diversied commodities, and deep industry knowledge that our people possess. At Group level, we recorded a loss arising from the underperformance of Mopani Copper Mines Plc largely due to liquidity challenges. Mopani is a signicant component of the Group, and a resolution to its challenges will remain a key focus area. In as much as we made considerable progress in working towards transforming our business for the future through reshaping our portfolio, simplifying our corporate performance appraisal framework and enhancing our corporate culture, there is lots more to do. Our aim is to continue the positive performance recorded in the past years at company level to lter through to Group level as well. Dr Ndoba J. Vibetti ZCCM-IH CEO STRATEGY Three years into our 2026 Strategic Plan, the early evidence of progress against our set objectives for this period is heartening. For the two-year period, the Company has achieved: income of ZMW7.82 billion; prot of ZMW5.93 billion; average yield of 12%; averaged cost to income ratio of 25%; and implemented a new organisational design to streamline our corporate structure. It gives us condence that we have a truly exciting improvement journey for the remaining years of the strategic plan. In 2022 alone, we managed to maintain operating costs at 18% of total income against a target of 40%; recorded total income of ZMW5.45 billion against a target of ZMW1.2 billion; and increased exploration costs by over 300% from ZMW5.7 million in 2021 to ZMW18.89 million in 2022. This was achievable thanks to our highly capable, diverse, engaged people across ZCCM-IH, who have continued to show tremendous resilience in the face of the multiple challenges from by the external environment. Going forward, our strategy will be informed by a deep analysis of the interplay of global megatrends, explored through the lens of plausible scenarios. These set the context for our industry and underpin our investment choices on how we operate. Our success relies on our ability to strengthen our resilience to the physical, societal and economic effects of various local and global factors while building partnerships and capabilities that will enable us to secure new opportunities. Environmental, Social and Governance (ESG) Shareholders and investors are becoming more ESG-conscious in their investment behaviours, taking into consideration a range of sustainability themes beyond carbon footprint, including biodiversity, water consumption, waste generation and social-economic impact. This is helping to drive a holistic shift towards increasingly transparent, sustainable and circular value chains in the mining sector. As such, during the year, we embarked on the process to develop our ESG framework. This will set milestones, as well as goals with specied ESG metrics, to be communicated annually to all our stakeholders. Our aspiration is to build a better world for all of our stakeholders. We aim to create social value, which is the positive contribution ZCCM-IH makes to society: our people, partners, the economy, the environment and local communities for the mutual benet of our stakeholders. We view this as fundamental to our long-term success and a competitive advantage that will support growth. Further, we aim to strengthen our resilience to changing market fundamentals and pursue new opportunities and partnerships that help deliver strong returns and growth options for our business and reduce our environmental footprint. Sustainability for us, is integral to how we contribute to social value creation. It is core to our strategy and will sit at the heart of everything we do. 35 INTEGRATED ANNUAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc Investing SMARTLY CHIEF EXECUTIVE OFFICER’S STATEMENT (CONTINUED) Stakeholder Engagement We are a business committed to regularly engaging with our shareholders. We strongly believe their views make us a better business and we welcome their feedback. We held our rst stakeholder open day during the year, and we intend to regularly meet with our shareholders across the three markets on which we are listed to discuss a range of strategy and governance topics including our approach to environment, social and governance matters. We are passionate about strengthening our relationships with our shareholders, local communities and other partners to incorporate a broad range of views in our decision making. Further, we are committed to contributing to society through engagement and advocacy on important issues, and by supporting targeted development areas to benet the communities where we operate. Building a thriving corporate culture Following the cultural transformation programme we undertook during the year, our focus is on embedding the right culture which is such a critical enabler for achieving our strategic objectives and to creating the future organisation that we all wish to see. More broadly, we are embedding a change in mindset and behaviours throughout the organisation, with the implementation of the RITTE (Respect, Integrity, Teamwork, Transparency, and Efciency) culture being absolutely crucial to driving this change. Achieving culture change will take time, but we are heading in the right direction. Everything we aspire to achieve should be underpinned by our people feeling emotionally safe, empowered, included and respected. This is what led to a review of the company culture to ensure we create a work environment where everyone can be at their best. Changing our culture is key to achieving each of our four objectives. When people feel respected and valued, they feel empowered to be their best selves and bring their best ideas. One of the key learnings from the past few years is that how we achieve our strategy is just as important as what we achieve. As our strategy has evolved, so has the need for an appropriate culture to better support it. By driving delivery of our key objectives in a manner consistent with our values and behaviours and which advance our culture change agenda, we are condent that we will see great progress towards our strategic ambitions. Seizing opportunities The shift to electric vehicles and renewable energy will require more copper, nickel, lithium, manganese among others, to decarbonise society, but developing new mines is becoming more challenging. We are therefore strategically thinking long term to harness the right opportunities, while also keeping the shorter-term initiatives operational. In this regard, in 2022 we increased exploration investment and expenditure with a view to develop new mines in the future. Looking Ahead Being a mining focused investment holding company, we want to have a leaner, more agile and efcient ZCCM-IH, with a portfolio aligned to the global megatrends, and better positioned to grow value. By diversifying our commodity portfolio to include critical minerals, we are actively participating within our social contract required for a decarbonised world. As we enter 2023, we will need to maintain a keen eye on near-term opportunities and risks, while always creating sufcient time and space to capture key strategic opportunities as they emerge for the longer term. Without doubt, there is considerable work ahead – to improve the consistency of our performance, to anticipate and respond to a shifting competitive landscape, to create a safe and empowering culture, and to continue to strengthen our partnerships. But as we all look to the future, we have a clear purpose, an ambitious strategy, and I am condent that we have all of the right ingredients in place – best people in the industry, world-class assets, diversied commodity portfolio, strong balance sheet and strategic partnerships. Acknowledgement Let me end by thanking the management team and all the employees who delivered for the company and its shareholders during the year. Dr Ndoba Vibetti Chief Executive Ofcer 36 INTEGRATED ANNUAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc Investing SMARTLY EXECUTIVE MANAGEMENT TEAM DR NDOBA VIBETTI CHIEF EXECUTIVE OFFICER MR CHARLES MJUMPHI COMPANY SECRETARY MR BRIAN MUSONDA CHIEF INVESTMENTS OFFICER MR SHEPHERD MWANZA CHIEF INTERNAL AUDIT OFFICER MS CHILANDU SAKALA CHIEF FINANCIAL OFFICER MR MUKUKA KANGWA CHIEF INFORMATION AND TECHNOLOGY OFFICER MS LOISA MBATHA CORPORATE AFFAIRS MANAGER MS MWAKA MWAMULIMA RISK MANAGER MR LOMBE MBALASHI CHIEF LEGAL OFFICER MR TISA R. CHAMA CHIEF TECHNICAL OFFICER MS BETTY MELEKI CHIEF HUMAN RESOURCE AND ADMINISTRATION OFFICER MR GIFT ZULU PROCUREMENT MANAGER 37 INTEGRATED ANNUAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc Investing SMARTLY S/N PORTFOLIO COMPANY 2022 PERFORMANCE REVIEW ASubsidiary Companies 1Mopani Copper Mines Plc For the year ended 31st December 2022, Mopani Copper Mines (MCM) recorded cumulative net revenue of ZMW11.85 billion (US$695.26 million), (2021:ZMW14.16 billion (US$877.38 million)). The net loss for the year under review was ZMW5.05 billion (US$296.36 million), (2021:ZMW76.82 billion prot (US$3.90 billion)). During the year under review, MCM produced a total of 72,694 tonnes of nished copper (2021: 87,618 tonnes). The smelter underwent a 45-day shutdown from August 2022 to September 2022 for maintenance, refurbishment of critical components and replacement of refractory bricks. The maintenance works set up the smelter to operate for another two-year campaign. ZCCM-IH engaged Rothschild & Co, a globally renowned investment bank, in June 2022 to assist with the strategic review of Mopani for the purposes of sustainability, expansion and growth. Rothschild & Co undertaking the assessment in two phases. Under Phase 1, Rothschild & Co. will undertake the restructuring of Mopani in a phased approach with assistance from appropriate legal and technical advisors to maintain Mopani as a going concern and build resilience. Under Phase 2, Rothschild & Co will assist ZCCM-IH in nding a Strategic Equity Partner. During the year under review, ZCCM-IH continued to support MCM by providing Corporate Guarantee of up to US$45 million to various banks for the provision of Mopani’s working capital facilities from various banks. There were no dividends declared during the period under review (December 2021: Nil). 2 Zambia Gold Company Limited (ZGC) Zambia Gold Company Limited (ZGC) reported revenue of ZMW 0.03 million (2021: ZMW 68.29 million) for the year ended 31 December 2022. During the period under review, no Gold sales were made during the year (2021: 62.02 Kg) due to the suspension of mining activities at Kasenseli Gold Mine by the Mines Safety Department (MSD). Net loss recorded for the period was ZMW 51.57 million (2021: net loss of ZMW 0.59 million). For the year under review, ZGC did not produce any gold due to the suspension of mining activities at Kasenseli which is the main source of gold production against a budget of 339.3 kg. ZGC has formulated an action plan to address the issues raised by MSD which were conditions set for lifting the suspension. ZGC has also engaged key stakeholders to facilitate and accelerate the opening of the Mine. The action plan has since been completed and submitted to key stakeholders. ZGC shall continue conducting exploration activities on its other licences and partnership with third party licence holders. ZGC launched the value addition business model in line with its strategic mandate of developing the gold sub-sector. There were no dividends declared during the period under review (December 2021: Nil). OPERATIONS REPORT PORTFOLIO PERFORMANCE REVIEW SUBSIDIARY COMPANIES 38 INTEGRATED ANNUAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc Investing SMARTLY S/N PORTFOLIO COMPANY 2022 PERFORMANCE REVIEW ASubsidiary Companies 3 Limestone Resources Limited (LRL)/ Ndola Lime Company Limited Limestone Resources Limited (LRL) was barely operational for the most part of the year as both primary kilns (VK1 and VK2) were not functional. The collapse of refractory bricks on VK1 in 2021 had not yet been resolved while the historical fuel system challenges on VK2 were only resolved in July 2022. These works included multiple modications to have the kiln operate using coal as the fuel, a much cheaper commodity than Heavy Fuel Oil in the original design. ZCCM-IH provided working capital funding to ignite and commission the kiln in August 2022 and the Kiln was red up in September 2022. Even though the kiln is operational, it takes several months to attain stability in quality and production as different operating parameters are monitored and observed, and adjustments made accordingly. Further, LRL was not adequately capitalised for a long time and therefore continued to experience underperformance of its operating plant and equipment. ZCCM-IH continued to support the Company for its turnaround strategies. As a result of only being productive for the last 3 months of the year, LRL’s performance was substantially impacted, recording revenue of only ZMW26.8 million (2021: ZMW 119 million). The loss for the year was ZMW90.78 million (2021: ZMW39.7 million). There were no dividends declared during the period under review (December 2021: Nil) 4Investrust Bank PLC Investrust generated revenue of ZMW 150.8 million(2021: ZMW170.7 million) and net loss for the year was ZMW2.6 million (2021: ZMW15.1 million in prot). For the twelve-month period ended 31st December 2022, the Bank’s nancial performance exhibited signs of improvement despite the inadequate capital. The Bank recorded a decline in bottom line income compared to the prior period. The decline in bank performance was largely attributed to the Bank’s inadequate capital which had a negative ripple effect on its ability to make advances and loans, attract deposits and invest in new IT infrastructure. ZCCM-IH, alongside other key stakeholders in Investrust, continued to strategize on the best possible option to recapitalise the Bank in order to make it competitive and enable it to play its rightful role in the Zambian nancial sector. The Bank’s share price on the Lusaka Securities Exchange closed the period under review at ZMW25 (2021: ZMW15). There were no dividends declared during the period under review (December 2021: Nil). 5 Misenge Environmental and Technical Services Limited (METS) Misenge Environmental and Technical Services Limited (METS) generated a total of ZMW 4.93 million in revenue for the year ended 31st December 2022 (2021: ZMW17.11 million). METS reported a net loss of ZMW4.39 million (2021: ZMW2.51 million prot) During the period under review, METS continued the implementation of its Strategic Turnaround and Marketing Plan. ZCCM-IH capitalised the company with ZMW45.323 million during the year. Management also made steady efforts to raise capital for equipment and develop non-ZCCM-IH business relationships for the formation of strategic alliances and partnerships in the provision of environmental services. There were no dividends declared during the period under review (December 2021: Nil) OPERATIONS REPORT (CONTINUED) SUBSIDIARY COMPANIES (CONTINUED) 39 INTEGRATED ANNUAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc Investing SMARTLY S/N PORTFOLIO COMPANY 2022 PERFORMANCE REVIEW ASubsidiary Companies 6Kariba Minerals Limited (KML) For the year ended 31st December 2022, Kariba Minerals Limited (KML) reported total revenues of ZMW23.04 million (2021: ZMW26.12 million) with a net loss of ZMW5.19 million (2021: ZMW7.4 million net prot). During the period under review, KML produced a total of 1,503.58 tonnes of amethyst which comprised of 327 tonnes medium and high grade, and 1,175.76 tonnes commercial grade (2021: 1,044.70 tonnes – 306 tonnes medium and high grade, and 837.88 tonnes commercial grade.) The retail store at the Kenneth Kaunda International Airport was completed during the year. The Company has prepared a turnaround plan that is envisaged to tackle some of the bottlenecks in mining, production, process and marketing thereby transforming the company from loss making to prot making. There were no dividends declared during the nancial year under review (2021: Nil). 7 Mushe Milling Company Limited Mushe Milling Limited (MML) earned a total of ZMW 38.93 million in revenue for the year ended 31 December 2022 (2021: ZMW38.15 million). MML recorded a net loss of ZMW16.4 million (2021: ZMW48.14 million loss). The Company remained undercapitalised with a negative equity position and current liabilities in excess of ZMW6.5 million. Due to its consistent weak nancial position, only minimal debt amounts could be settled by the Company during the period and operations were halted due to MML’s inability to purchase its own maize stock. There were no dividends declared during the period under review (2021: Nil). Subsequent to year end, was placed under liquidation. 8Kabundi Resources Limited) For the year ended 31 December 2022, Kabundi Resources Limited (KRL) reported total revenues of ZMW13.64 million (2021: ZMW 5.58 million) with a net prot of ZMW5.5 million (2021: ZMW 1.95 million net loss). Kabundi Resources Limited (KRL) began its own mining operations to try and boost revenues in addition to the existing royalty arrangement that had been in place since inception. A total of 26,133 tonnes of manganese was produced during the year ended 31st December 2022. In the period under review, Kabundi made progress with phase 2 which included starting own mining and conducting additional exploration activities. This was made possible through additional funding that was provided by the shareholders. During the period under review KRL continued its mining activities on Three (3) sites namely “Kabundi A & B” and also in Ntenge where KRL had acquired another mining license. Going forward, the Company’s focus will be to acquire mining equipment and further Kabundi paid management fees totalling ZMW 0.9 million to ZCCM-IH in the period under review. There were no dividends declared during the period under review (December 2021: Nil). 9 Nkandabwe Coal Mine Limited. Nkandabwe Coal Mine Limited remained inactive during the year as the Company is winding up, which is planned to be concluded in 2023. OPERATIONS REPORT (CONTINUED) SUBSIDIARY COMPANIES (CONTINUED) 40 INTEGRATED ANNUAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc Investing SMARTLY S/N PORTFOLIO COMPANY 2022 PERFORMANCE REVIEW BAssociate Companies 10 Maamba Collieries Limited (MCL) Maamba Collieries Limited (MCL) reported total revenue of ZMW4.75 billion (US$278.68 million) for the year ended 31 December 2022 ((2021: ZMW3.96 billion (US$201.71 million)) and had a prot after tax of ZMW1.53 billion (US$89.95 million) ((2021: -ZMW222.03million net loss (2021: US$11.28 million net loss)). During the period under review, MCL continued to experience liquidity challenges because of delayed payments from ZESCO which stood at ZMW10.97 billion (US$606.79 million) as 31st December 2022. The Company undertook semi-annual maintenance shut down and forced shut down of unit 1 of the 150 MW thermal power units between 25 May 2022 and 7 June 2022. Nevertheless, plant availability was more than 85% for each of the rst nine months of FY2022- 2023.The Company has a positive outlook in the medium to long term after the Arbitral Tribunal issued the Consent Award to MCL on 13 December 2022, which will see ZESCO pay US$447 million to MCL by 31 August 2023. There were no dividends declared during the year under review (2021: Nil). Arbitration Proceedings against ZESCO The Arbitral Tribunal issued the Consent Award on 13th December 2022. Through the settlement, MCL and ZESCO have agreed to irrevocably withdraw all their respective claims brought in the arbitration. The settlement has been recorded in the form of an enforceable nal consent award signed and issued by the Arbitral Tribunal on 14th December 2022. The issuance of the nal consent award ended the arbitration. The Consent Arbitral Award has since been registered in the High Court of Zambia for any further course of action that the claimants could pursue The Consent Award provides that from the total unpaid arrears under the PPA and TA as at 31st October 2022 of US$ 578.06 million, ZESCO will pay to MCL the Agreed Settlement Amount of US$447.56 million after MCL agreed to give ZESCO a discount of US$60 million on the interest portion of the arrears and ZESCO agreed to take on the responsibility of the VAT due on the total arrears amounting to US$70.5 million. Details of the Settlement as per Arbitration As part of the Settlement ZESCO will pay 50 percent of the Agreed Settlement Amount being US$ 223.78 million as follows: a. US$ 10 million to be paid no later than 29th December, 2022; b. US$ 20 million to be paid by 31st March, 2023; and c. the remainder by 30th April, 2023. ZESCO shall pay the remaining balance of the Agreed Settlement Amount no later than 31st August 2023. In addition, ZESCO shall continue to pay an additional US$ 750,000 every month towards liquidating the Agreed Settlement Amount. Should ZESCO default on any of these payment terms, the entire amount outstanding at the time of default will become payable to MCL immediately. ZESCO will indemnify MCL on demand for any liability on the VAT and any penalties and interest that may be paid by MCL in respect of the VAT. ZESCO has, in the meantime, discharged a few payments as per the terms of the Award, leaving a balance amount of US$ 414.56 million to be paid under the Award, as of 31 March 2023. There were no dividends declared during the year under review (2021: Nil). ASSOCIATE COMPANIES OPERATIONS REPORT (CONTINUED) 41 INTEGRATED ANNUAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc Investing SMARTLY S/N PORTFOLIO COMPANY 2022 PERFORMANCE REVIEW BAssociate Companies 11 Konkola Copper Mines Plc (KCM) KCM’s challenges continued during the year as the fundamental problems surrounding the underdevelopment of the Konkola Deep Mining Project (KDMP) remained unresolved, resulting in the Company reporting low production from own sources and therefore having to rely on third- party copper concentrates to feed its Smelter. As a result, nished copper production was also negatively impacted. Due to the legal circumstances surrounding the mine, KCM continued to be under the control of the Provisional Liquidator. There were no dividends declared during the year under review (2021: Nil). 12 Kansanshi Mining Plc (Kansanshi) 2022 was an operationally challenging year for Kansanshi on two main fronts, geology and hydrology. As the mine has gone deeper and the oxides are depleted, grades have deteriorated from an average of 1.0% in 2021 to 0.6% through 2022. This has signicantly affected recoveries of both copper and gold. Similarly, mining at depth has increased water levels in the pit at a faster than anticipated rate, which also slowed down production. The challenges above resulted in substantial production declines. Copper produced was 146,282 tonnes, a sharp drop from 202,159 tonnes in 2021. Similarly, gold for the year was 109,617 ounces, declining from 128,199 ounces in 2021. For the year ended 31 December 2022, Kansanshi recorded revenue of ZMW25.98 billion (US$1.52 billion)(2021: ZMW39.57 billion (US$2.01 billion)). Net prot over the period also substantially reduced to ZMW2.62 billion (US$153.93 million) from ZMW12.09 billion (US$614.26 million) in 2021. The S3 expansion, which involves the setting up of an additional brand-new concentrator to address the challenge of the depleting oxides that have led to a reduction in ore grades and ultimately production volumes as the mine goes deeper and transitions into a predominantly sulphide mine from an oxide mine is scheduled to commence in 2023. The new concentrator will ensure that the mine has sufcient capacity to process additional lower grade ore to produce desired copper and gold production volumes. On 1st December 2022, ZCCM-IH and First Quantum Minerals reached an agreement where some of ZCCM-IH’s dividend rights would be converted to a 3.1% gross revenue life of mine royalty. The transaction is subject to the fullment of several conditions, including shareholder approval. It is expected to be completed in the rst quarter of 2023. Dividends declared and paid during the year ended 31 December 2022 amounted to US$1.27 billion (2021: US$184 million). 13 Consolidated Gold Company of Zambia Limited (CGCZ) Consolidated Gold Company of Zambia Limited (CGCZ) is a joint venture partnership between ZCCM-IH (45%) and Karma Mining Services and Rural Development (55%). Incorporated in the year 2020, this Special Purpose Vehicle is focused on developing a gold processing and trading hub in Zambia. During the year ended 31 December 2022, the Company produced 50.7kg (2021: 46.6kg) of gold majority of which was sold to Zambia Gold Company. Income for the year ended 31 December 2022 was ZMW50.81 million (2021: loss of ZMW 44.97 million). CGCZ recorded a loss for the year of ZMW8.76 million (2021: -ZMW10.22 million). Due to persistent lack of prots as a result of the Company’s lack of control of the supply of gold feedstock, the ZCCM-IH Board approved a divestment from CGCZ. ZCCM-IH will still recover its initial investment of US$1.568 million over a period of three years. ASSOCIATE COMPANIES (CONTINUED) OPERATIONS REPORT (CONTINUED) 42 INTEGRATED ANNUAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc Investing SMARTLY S/N PORTFOLIO COMPANY 2022 PERFORMANCE REVIEW BAssociate Companies 14 Copperbelt Energy Corporation Plc (CEC) During the year ended 31 December 2022, CEC reported total revenue of ZMW6.34 billion (US$374.44 million), (2021: ZMW6.74 billion (US$342.52 million)) and prot after tax of ZMW1.68 billion (US$98.71 million), (2021: ZMW1.01 billion (US$51.25 million)). The Bulk Supply Agreement between CEC and ZESCO that expired on 31 March 2020 was renewed after the year end on 7 April 2022. This delay negatively impacted the business’ margins and performance. Nonetheless, CEC proved to be a resilient business and continued to thrive and diversify its operations in spite of the challenges faced. Further, CEC successfully contested Statutory Instrument (SI) No.57 of 2020 that declared its transmission and distribution lines as common carrier. The declaration was quashed by the high court and replaced by SI No. 24 of 2021. The court did not pronounce itself on the said SI, as the new government took the decision to repeal the SI No. 24 of 2021. This action has fully restored CEC’s commercial rights over it’s own infrastructure. For the year under review, the CEC share price opened at ZMW 1.10 per share and closed at ZMW 1.95. Based on the period-to- 30 September 2021 performance, CEC management did not budget for any dividend payment. However due to unexpected improvements in nancial performance. The Company declared and paid a dividend of US$ 50.37 million with ZCCM-IH receiving US$ 10.3 million (2021: US$9 million). 15 Rembrandt Properties Limited Rembrandt Properties Limited (Rembrandt) is a Special Purpose Vehicle between ZCCM-IH (49%), Urban Brands Asset Management (25.5%) and Sims Capital Ltd (25.5%). Rembrandt was specically formed to develop the Leopards Square Hotel, a 74-key (room) hotel. In addition to ZCCM-IH equity contribution, the Company raised about US$2.2million in equity contribution from the other Shareholders and debt nance from ZANACO. The project faced several setbacks to completion among them, Covid-19 pandemic, delayed disbursement of loan proceeds and property redesign after the initial anchor tenant Food Lovers left the building. The building is about 95% complete; awaiting completion of the four (4) ground oor rooms, nine (9) upper deck rooms and a sky bar and circa US$200k to take the building to 100% completion. The project, nevertheless, went on soft opening to the general public on 1 June 2022 with conferences and the restaurant all kicking off at the same time as the hotel commenced operations. Since September 2022, the Tenant (Urban Hotel Lusaka) has been grossing an average of ZMW2.5 million per month from operating the property. There were no dividends paid during the year under review (2021: Nil). 16 Lubambe Copper Mine Limited Lubambe Copper Mine Limited (Lubambe) reported total revenue of ZMW 2.38 billion (US$ 139.72 million) (2021: 2.9 billion (US$148.60 million)). Over the same period, the Company recorded a loss of ZMW1.83 billion (US$ 107.12 million), (2021: loss of ZMW1.81 billion (US$ 92.0 million)). Lubambe’ s road to recovery was a challenging one for the period under review as problems of poor ground conditions, dewatering challenges, effectts of Covid-19 and high ore dilution persisted. Management changed its mining methods and mine plan following completion of the SRK technical report. Production performances improved in the second half of 2022. Lubambe produced 17,310 tonnes in payable copper against a budget of 20,955 tonnes. Subsequent to the year end, Lubambe announced the US$ 150 million investment by Kobold which shall be used for exploration activities for the Extension project, debt restructuring and operations of the business. The Extension project area shall be transferred into a new licence under a new company, MIingomba Mining Limited. ZCCM-IH still retaining 20% in both existing mine license and new license for the Extension Project area. The transaction was completed subsequent to year end. Lubambe existing license has remaining life of the mine of circa 7 years and there is need to explore business opportunities. There were no dividends paid during the year under review (2021: Nil). ASSOCIATE COMPANIES (CONTINUED) OPERATIONS REPORT (CONTINUED) 43 INTEGRATED ANNUAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc Investing SMARTLY DR NDOBA VIBETTI CHIEF EXECUTIVE OFFICER S/N PORTFOLIO COMPANY 2022 PERFORMANCE REVIEW BAssociate Companies 17 CNMC Luanshya Copper Mines Plc (CLM) For the year ended 31 December 2022, CLM recorded revenue of ZMW 7.95 billion (US$ 466.26 million), (2021: ZMW 10.17 billion (US$ 516.69 million)). The drop in year-on-year revenue was attributable to a slight reduction in copper prices and production. CLM produced a total of 55,597 tonnes of copper for the year under review compared to copper output of 57,786 tonnes produced in the 2021 nancial year. For the year ended 31 December 2022, the Company recorded a prot of ZMW1.68 billion (US$ 99.71 million) (2021: ZMW2.83 billion (US$ 143.71 million)). Due to the positive equity position, the Company declared dividends of ZMW 1.63 million (US$ 80 million) with ZMW 0.31 million (US$16 million) paid to ZCCM-IH (2021: Nil). SN PORTFOLIO COMPANY 2022 PERFORMANCE REVIEW COther Companies 18 NFC Africa Mining Plc (NFCA) For the year ended 31 December 2022, NFCA reported revenue of ZMW9.90 billion (US$548.46 million), (December 2021: ZMW 10.26 billion (US$616.23 million)) and prot after tax of ZMW 1.01 billion (US$56.01 million)(December 2021: ZMW 2.0 billion (US$119.69 million)). There were no dividends paid during the year ended 31 December 2022 (2021: Nil). 19 Chibuluma Mines Plc Chibuluma remains on lease to LC & Y with no operations of its own as the life of mine has been depleted. The company received a total of US$ 0.26 million in royalty revenue against a budget of US$ 0.23 Million. The company is currently exploring potential areas that would be deemed viable for renewed mining and has engaged Kobold Metals of the USA to apply their advanced Articial Intelligence technology to enhance chances of discovery. 20 Chambishi Metals Plc During the period under review, Chambishi continued to be under care and maintenance due to lack of feedstock for the plant and other Strategic reasons. There were no dividends paid during the year under review (2021: Nil). ASSOCIATE COMPANIES (CONTINUED) OTHER INVESTEE COMPANIES OPERATIONS REPORT (CONTINUED) 44 INTEGRATED ANNUAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc Investing SMARTLY CLIMATE RELATED FINANCIAL DISCLOSURES The ZCCM-IH Plc’s Board remains committed to the Company’s progress in implementing our approach to climate change which aligns with our broader approach to responsible mining. Alongside our Annual Report, we are providing a summary report on approach and contribution to sustainable and responsible mining. The Board recognizes the importance of maintaining a strategy that remains resilient to the risks and opportunities of the evolving energy transition and encourages to continue our focus on progressing towards achieving reduced net emissions in future. These potential initiatives/opportunities range from renewable power purchases and on-site renewable power generation, through to energy storage systems, operational efciency initiatives and electrication. Our carbon abatement initiatives have also advanced and during the period 2023 to the end of 2026, our planning includes partnering with stakeholders to set up at least one solar power plant to supply power to one of our mines. Once this is successfully set up, we intend to execute a Joint Venture energy investment vehicle with one of our stakeholders and to develop a large-scale renewable energy infrastructure to service the Copperbelt mining and industrial sectors. This initiative addresses the non-reliability of power supply in the Zambian copper belt area (power outage during dry seasons and costs) and reduces GHG emissions which will progressively position the Zambian mining sector, not only as a government revenues contributor, but also as sustainable source of energy. As the world shifts from fossil fuels to other sources of energy and governments and consumers continue to embrace renewable energy, energy storage, electric vehicles and other decarbonising technologies, demand for the rened metals that enable these transitions is expected to keep growing. It is anticipated that the energy transition will be non-linear across time and geography. The global transition from fossil fuels to battery power will require metals such as copper, nickel, cobalt, vanadium, and zinc. The ZCCM-IH Plc 2023 – 2026 revised strategic plan recognises the low-cost transition metals, hence providing resources that will increase the portfolio of these metals which is well positioned to provide the commodities important to the decarbonisation of the global economy. Across our business, we are prioritising investment in metals that support the low-carbon transition, we are cognisant of the fact that these commodities will need to be available in large amounts for the transition to progress. The cumulative copper decit by 2030 is expected to increase, illustrating the opportunity for ZCCM-IH Plc’s copper business. The current level of mining sources needs to increase to take advantage of the expected increase in demand, the 2023 -2026 strategic plan has also set aside resources for exploration activities inclusive of the low carbon minerals which points to our contribution to the energy transition necessary for global decarbonisation. KEY DRIVERS OF OUR ENVIRONMENTAL APPROACH Global Limit to Temperature Rise: Efforts to limit global temperature rises will impact fossil fuel demand increasing the momentum to decarbonise the global economy as nations are increasingly coordinating efforts aimed at reducing greenhouse gas emissions, including IEA’s target of net zero emissions by the end of 2050. The Paris Agreement aims to hold the increase of global average temperatures to well below 2°C above pre- industrial levels and to pursue efforts to limit temperature increase to 1.5°C above pre-industrial levels. Higher commodity prices and resource scarcity increase the likelihood of mineral portfolio concentration: Widespread adoption of renewable energy sources as a means of decarbonising energy supply creates signicant new demand for the current key enabling commodities, including copper, nickel, and cobalt. The quantum of potential new demand is generally of a size that is large relative to the current annual production and known dened global resources of that commodity. 45 INTEGRATED ANNUAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc Investing SMARTLY CLIMATE RELATED FINANCIAL DISCLOSURES (continued) Demand for the commodities we produce: Decarbonisation demand, population growth and industrialisation of developing economies has an impact on commodity demand. The industrialisation and urbanisation of developing economies over almost two decades has driven signicant growth in commodity demand. China’s rapid growth over this period now means that it accounts for up to half of global demand for many commodities. All potential decarbonisation pathways require signicantly more non-fossil fuel commodities. OUR RESPONSE TO THESE DRIVERS We recognise our responsibility to contribute to the global effort to achieve the goals of the Paris Agreement by decarbonising our own operational footprint. We believe that our contribution should take a holistic approach and have considered our commitment through Joint Venture energy investment vehicles with one of our stakeholders and to develop a large-scale renewable energy infrastructure to service the Copperbelt mining and industrial sectors. Energy transition metals/commodities such as copper, nickel, cobalt, zinc, and vanadium could become substantially more important given their role in the technologies / infrastructure that underpin low or no carbon energy sources. We are prioritising exploration activities towards these transition metals and diversication of our portfolio of metals, is likely to mitigate the nancial impact of a negative demand shift in the event of substitution of a particular commodity. Our market research teams continue to assess the underlying demand for our commodities as well as the new materials that could impact current renewable technology solutions. 46 INTEGRATED ANNUAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc Investing SMARTLY Over the last ve years, ESG and sustainability performance have moved to mainstream thinking for investors and stakeholders. The global paradigm shift towards this way of thinking about value creation and a greater than ever focus on organisational accountability, disclosure and transparency of environmental, social and governance (ESG) performance, is reshaping the mining landscape. This in turn is demanding a shift change from mere reporting practices to rmly embedding these issues into organisational culture, strategy and process. In this regard, ZCCM-IH is repositioning to align itself in this direction in order to create value and improve lives through sustainable and responsible investments by responsibly managing our environment, undertaking social investments and good governance practices. We intend to start providing updates on our economic, health and safety, environmental and social issues, activities and performance that are of greatest interest, importance and impact to our internal and external stakeholders on local, regional and global levels. ZCCM-IH is focused on delivering sustainable value for our people, all stakeholders and host communities, now and in the future. Delivering on our commitments is a key pillar of our business strategy. We believe the protection of the health and wellbeing of our people, environmental stewardship and being a catalyst for sustainable economic empowerment in our host communities are not just the right things to do, they create value for our business and all our stakeholders. We believe that ESG has become the platform and criteria to evaluate and communicate broadly about sustainability practices, which is a business imperative and not just a nice thing to do. For us we consider that ESG is a more integrated and holistic perspective on a company’s performance that not only encompasses but goes well beyond corporate responsibility. As such, we will endeavour to align the interest of shareholders and other stakeholders in a way we have never done historically. Guided by ESG, we will care about what the company is doing, about the footprint it leaves locally and how it is discharging the responsibilities of contractors, consultants, and others it employs. Through this lens, the decisions of the company will be geared to support nancial resiliency as well as create sustainable value for the business and all its stakeholders. The chart below shows our four main objectives in this regard: SUSTAINABILITY REPORT Our Approach ZCCM-IH ESG Corporate Strategies key objectives Business resilience Growth Risk mitigation Long term value creation opportunities 47 INTEGRATED ANNUAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc Investing SMARTLY As we look to fully integrate ESG strategy in all we do, we resolutely believe that we must deliver long-term value to all stakeholders, not just shareholders. This entails us operating responsibly and managing and mitigating our impacts on the wider environment, including the biophysical, social and cultural environment. We also believe that fundamental sustainability concepts such as building climate resilience, responsibly managing water use, protecting biodiversity and poverty eradication are inextricably linked and are best managed holistically. At the foundation of our approach to holistic and integrated sustainability management is a robust ESG Policy and strategy we are developing. This will set out the steps we will take to deliver against the strategy and will commit us to support the socio-economic development of our host communities and the country at large. In the interim, we are committed to: ■ Full compliance with all relevant legislation and regulations including listing rules on the three stock markets our stock is listed: LuSE, Euronext Access and LSE. ■ Effective management, with Board and Executive level oversight, of our social and environmental performance at both Group and Company level. ■ Transparent communication and engagement in relation to our sustainability performance with internal and external stakeholders. ■ Strive for continual improvement in our performance, with Board and Executive oversight of this performance. ■ Moving forward, we will: ■ Consider the social and environmental impacts of our operations in our decision-making. All new projects and signicant modications to existing operations must include environmental and social impact assessment studies and management plans. ■ Respect the human rights of all individuals impacted by our operations, including employees, contractors and external stakeholders. ■ Protect the health, safety and wellbeing of our employees. ■ Support socio-economic development as an integral part of our contribution to local communities, including through the prioritisation of local workers and vendors. ■ Be transparent in our relationships with host communities, government authorities, and the public and other key stakeholders. ■ Conduct our business with integrity through our absolute opposition to corruption, and through requiring our contractors to conduct their businesses ethically and responsibly as a condition of doing business with us. In carrying out this, we will: ■ Establish environmental, social, health and safety management systems in line with international and industry best practice that help us identify and manage signicant business risks and opportunities. ■ Report on our performance annually using the relevant ESG frameworks for sustainability reporting. ■Train our employees and contractors about their responsibilities for ensuring the effective implementation of the ESG activities. ■ Conduct periodic reviews of our performance against these activities to ensure it addresses the needs of our host communities in which we operate, and to ensure we full our commitments. The ESG Policy and strategy being nalised will be applicable to the entire workforce of ZCCM-IH and its subsidiaries. We prioritise human capital The long-term sustainability of our rm is heavily dependent on our people. We make a deliberate effort to unify culture, encourage innovation, ensure that we are developing, retaining, and recruiting the best talent, align employee incentives and risk taking with those of the rm, and to incorporate inclusion and diversity into all levels of our business. We are also committed to protecting human rights, which we do through policies that seek to provide equal treatment and are dedicated to providing a safe and healthy working environment for all employees. SUSTAINABILITY REPORT (continued) 48 INTEGRATED ANNUAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc Investing SMARTLY Social sustainability Pursuant to our commitment to our stakeholders, ZCCM-IH makes concerted investments in the host communities where we operate (as a company, as a Group and our investee associates), through our community enhancement initiatives, local procurement opportunities and the stakeholder agreements concluded with our host governments, host communities, local entrepreneurs and employees among others. Long term We appreciate the long-term, shared value yielded by sustainable development, as well as the organisational benets, which include risk reduction, greater shareholder demand, improved valuation, and an advantageous cost of capital. We therefore welcome the opportunity to embrace exemplary ESG practices as an integral part of our culture, core purpose and strategy. We recognize that maintaining our social license to operate is dependent upon our ability to honour our commitments and improve our ESG integration and performance. We perceive good governance as a competitive advantage, and we strive to maintain the highest standards of ethics, corporate governance, honesty, and accountability in all that we do. We believe that the foundations of corporate citizenship and respect for human rights are essential drivers of the pursuit of the underlying business objective of building shared value. As such, we embrace an intrinsic sense of respect for fundamental human rights, and afrm our commitment to prevent, mitigate and remediate negative human rights impacts. We are committed to aligning our operations with universal principles on human rights, labour, environment, and anti-corruption, and to take actions that advance societal goals. We are determined to build our repute that showcases and establishes ZCCM-IH as a leading example of responsible environmental stewardship, transformative social performance, and ethical, transparent governance in Zambia in the mining space. ZCCM-IH will strive to push the envelope of our ESG agenda, reafrm our commitment to all our stakeholders and look forward to a bright future of shared prosperity. Our aim is to take action to contribute to a more equitable, nancially resilient future for all. ZCCM-IH’s environmental related activities continued to be managed through the wholly owned subsidiary, Misenge Environmental and Technical Services Limited (METS). Some of the major activities undertaken by METS during the year included the following: Routine Radiation Surveillance of the Radiation Waste Storage Building (RWSB) and the Uranium Tailings Engineered Disposal Cell (UTEDC) continued throughout the year. This is a statutory requirement by the Radiation Protection Authority to ensure compliance. Routine monitoring of environmental liabilities in Chingola (OB4, OB18, OB19, Mimbula Overburden Dumps), Kitwe (OB53) on the Copperbelt Province and Kabwe (Open Pit No, 5 and 6) in Central Province continued throughout the year. Routine monitoring of environmental liabilities in Mufulira district on the Copperbelt Province were discontinued in March 2020 following the transfer of TD8 and TD10 to the Ministry of Mines and Minerals Development. Monitoring of children affected by lead poisoning continued through the Integrated Case Management (ICM) activities in Kabwe. This included medical reviews and where necessary clinical assessment at clinics in Makululu, Kasanda and Chowa Health Centres. Other activities involved home visitations and environmental assessments at homes in the lead affected areas to investigate the causes of persistently high lead levels in blood in some children. SUSTAINABILITY REPORT (continued) 49 INTEGRATED ANNUAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc Investing SMARTLY SUSTAINABILITY REPORT (continued) Sampling of underground water efuent from the Ore Shaft at the former ZCCM Ltd Kabwe Mine to test for statutory compliance in terms of water quality continued during the period under review. All parameters were found to be in compliance to ZEMA industrial water efuent standards. During the period review, security surveillance at the Radioactive Waste Storage Building in Kalulushi continued. ZCCM-IH installed three additional cameras in a bid to improve on technological security in order to deter unauthorised personnel entry and eliminate threats to national and global security. METS engaged the contractor in charge of the security at the RWSB to ensure that the newly installed cameras were congured to the existing system to operationalize them. However, the recommendation from the contractor engaged by Golden Security Services (GSS) of South America is that ZCCM-IH should have its own system to run the cameras. Following the submission of the Resettlement Action Plan (RAP) implementation reports to ZEMA for review and clearance in 2021, ZEMA expressed satisfaction with the implementation of the Kabundi RAP. However, the Agency expressed concern on the two Project Affected Persons (PAPs) who were yet to be resettled and compensated (one could not be identied and the other one was sitting on state land). ZEMA had directed that during the period under review, ZCCM-IH should ensure that the two PAPs were compensated. ZCCM-IH made every effort and one PAP was located and compensated while the other one could still not be found despite the compensation package being ready. 50 INTEGRATED ANNUAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc Investing SMARTLY The Companies Act, 2017 of Zambia requires the Directors to prepare the consolidated and separate annual nancial statements for each nancial year that give a true and fair view of the state of affairs of the Group and Company as at the end of the nancial year and of its nancial performance. It also requires the Directors to ensure that the Group and Company keeps proper accounting records that disclose, with reasonable accuracy, the nancial position of the Group and Company. They are also responsible for safeguarding the assets of the Group and Company. The Directors are further required to ensure the Group and Company adheres to the corporate governance principles or practices contained in Sections 82 to 122 of Part VII of the Companies Act, 2017 of Zambia. The Directors accept responsibility for the consolidated and separate annual nancial statements, which have been prepared using appropriate accounting policies supported by reasonable estimates, in conformity with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB) and the requirements of the Companies Act, 2017 of Zambia. The Directors further accept responsibility for the maintenance of accounting records that may be relied upon in the preparation of consolidated and separate annual nancial statements, and for such internal controls as the Directors determine necessary to enable the preparation of the consolidated and separate annual nancial statements that are free from material misstatement whether due to fraud or error. The Directors are of the opinion that the consolidated and separate annual nancial statements set out on pages 56 to 183 give a true and fair view of the state of the nancial affairs of the Group and Company and of its nancial performance in accordance with IFRS as issued by the IASB and the requirements of the Companies Act, 2017 of Zambia. The Directors further report that they have implemented and further adhered to the corporate governance principles or practices contained in Sections 82 to 122 of Part VII of the Companies Act, 2017 of Zambia. We draw your attention to Note 4a of these nancials which indicate that during the year ended 31 December 2022, the Group made a loss for the year of ZMW3,785 million (2021: loss for the year ofZMW12,573 million). As of 31 December 2022, the Group had accumulated loss of ZMW11,936 million (2021: retained loss of ZMW8,307 million). At the date of reporting the Group current assets exceeded its current liabilities by ZMW 1,328 million (2021: ZMW 2,065 million ), and its total assets exceed total liabilities by ZMW 7,909 million (2021: ZMW 12,809 million). Furthermore, Mopani Copper Mines Plc, the group’s most signicant subsidiary has material uncertainty on going concern on account of operating losses and the need for funding to meet working capital and core capital requirements. In addition, the majority of the Group’s non-current liabilities relate to borrowings of Mopani. The loan is guaranteed by ZCCM-IH and if Mopani fails to pay back the loan, ZCCM-IH would be required to full the loan obligations refer to note 4 (a) for details. These events or conditions indicate that a material uncertainty exists that may cast signicant doubt on the Group’s ability to continue as a going concern. There was no material non- compliance matter identied and the Group and Company are able to pay its liabilities as when the fail due . Therefore, the Directors consider the going concern basis of preparation to be appropriate for at least twelve months from the date of these annual nancial statements. Other than the above, nothing has come to the attention of the Directors to indicate that the Group and Company will not remain a going concern for at least twelve months from the date of these annual nancial statements. Signed on behalf of the Board of Directors, Dr. Ndoba Vibetti Mr. Kakenenwa Muyangwa DATE: 25 August 2023 DATE: 25 August 2023 DIRECTORS’ RESPONSIBILITIES IN RESPECT OF THE PREPARATION OF CONSOLIDATED AND SEPARATE ANNUAL FINANCIAL STATEMENTS 51 INDEPENDENT AUDITOR’S REPORT TO THE SHAREHOLDERS PricewaterhouseCoopers, PwC Place, Stand No 2374, Thabo Mbeki Road, P.O. Box 30942, Lusaka, Zambia T: +260 (0) 211 334000, F: +260 (0) 211 256474, www.pwc.com/zm A list of Partners is available from the address above Independent auditor’s report , Report on the audit of the Consolidated and separate annual financial statements Our Opinion In our opinion, the consolidated financial statements of ZCCM Investments Holdings Plc(the “Company”) and its subsidiaries (together the “Group”) give a true and fair view of the consolidated financial position of the Group as at December 31, 2022, and its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board (IASB) and the requirements of the Companies Act, 2017 of Zambia and the Securities Act, 2016 of Zambia. What we have audited ZCCM Investments Holdings Plc’s consolidated and separate annual financial statements on pages 56 to 183 comprise: ● the consolidated and separate statements of financial position as at 31 December 2022; ● the consolidated and separate statements of profit or loss and other comprehensive income for the year then ended; ● the consolidated and separate statements of changes in equity for the year then ended; ● the consolidated and separate statements of cash flows for the year then ended; and ● the notes to the consolidated and separate annual financial statements, including a summary of significant accounting policies and other explanatory information. Basis for opinion We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the consolidated and separate annual financial statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Independence We are independent of the Group and Company in accordance with the International Code of Ethics for Professional Accountants (including International Independence Standards) issued by the International Ethics Standards Board for Accountants (IESBA Code). We have fulfilled our other ethical responsibilities in accordance with the IESBA Code. 52 REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS (continued) Report on the audit of the Consolidated and separate annual financial statements (continued) Material Uncertainty Relating to Going Concern We draw attention to note 4a in the annual consolidated financial statements, which indicate that the Group incurred a loss before tax of ZMW3.5 billion during the year ended 31 December 2022 and, as of that date, the Group had accumulated losses of ZMW 11.9 billion. Furthermore, as stated in Note 4a, the group’s most significant subsidiary has operating losses and needs funding to meet working capital and core capital requirements. These events or conditions, along with other matters as set forth in Note 4a, indicate that a material uncertainty exists that may cast significant doubt on the Group’s ability to continue as a going concern. Our opinion is not modified in respect of this matter. Key audit matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated and separate annual financial statements of the current period. These matters were addressed in the context of our audit of the consolidated and separate annual financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Key audit matter How our audit addressed the key audit matter Valuation of non current assets (Property, plant and equipment, Investment in associates and financial assets) Refer to Note 4: Use of estimates and judgements, Note 17: Property, plant and equipment, Note 24 (d): Valuation of investment in associates, and Note 25: Financial instruments at fair value through profit and loss The Group’s property, plant and equipment (PP&E) carrying value was ZMW12.4 billion as of 31 December 2022 covering multiple cash generating units (CGUs) of the Group. Furthermore, investments in associates amounting to ZMW15.1 billion stated in the Company’s financial statements. The above stated balances represented 78% of the total non-current assets. We considered this a key audit matter due to the significance of the balances stated above and subjectivity in applying procedures to evaluate audit evidence relating to the significant judgments made by management in its assessment of indicators of impairment. We evaluated management’s assessment of indicators of impairment, which included the following: ● We held discussions with management on the Life of Mine Models (LOM) to understand how management views the technological changes, efficiency impact, and regulatory changes (Taxes and Electricity), and related impact; ● Assessed changes in LOM commodity prices and discount rates, by comparing to external market and industry data and changes in production, operating costs and capital expenditures by considering the current and past performance of the CGUs and evidence obtained in other areas of the audit, as applicable; ● Assessed the competence of management's experts used in reviewing the LOM model by checking their independence, membership status and level of qualification; ● Assessed the completeness of external or internal factors that could be considered as indicators of impairment of the Company’s PP&E, by considering evidence obtained in other areas of the audit. ● For investments valued using the market approach, we agreed the prices of the listed shares to the Lusaka Securities Exchange lists. ● For investments in associates we do not directly audit, we engaged their auditors and reviewed their work papers. ● We reviewed the disclosures made on the assumptions and the sensitivities which draw attention to the more significant areas of judgment sensitive to change. 53 REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS (continued) Report on the audit of the consolidated and separate annual financial statements (continued) Other information The Directors are responsible for the other information. The other information comprises the Annual Report but does not include the consolidated and separate annual financial statements and our auditor’s report thereon. Our opinion on the consolidated and separate annual financial statements does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the consolidated and separate annual financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the consolidated and separate annual financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Responsibilities of the Directors for the consolidated and separate annual financial statements The Directors are responsible for the preparation of the consolidated and separate annual financial statements that give a true and fair view in accordance with IFRS as issued by the IASB and the requirements of the Companies Act, 2017 of Zambia and the Securities Act, 2016 of Zambia, and for such internal control as the Directors determine is necessary to enable the preparation of consolidated and separate annual financial statements that are free from material misstatement, whether due to fraud or error. In preparing the consolidated and separate annual financial statements, the Directors are responsible for assessing the Group’s and Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the consolidated and separate or to cease operations, or have no realistic alternative but to do so. The Directors are responsible for overseeing the Group’s and Company’s financial reporting process. Auditor’s responsibilities for the audit of the consolidated and separate annual financial statements Our objectives are to obtain reasonable assurance about whether the consolidated and separate annual financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated and separate annual financial statements. As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also: ● Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. 54 Report on the audit of the consolidated and separate annual financial statements (continued) ● Obtain an understanding of internal control relevant to the audit 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 Group’s and Company ’s internal control. ● Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Directors. ● Conclude on the appropriateness of the Directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s and Company ’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated and separate annual financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the consolidated and separate to cease to continue as a going concern. ● Evaluate the overall presentation, structure and content of the consolidated and separate annual financial statements, including the disclosures, and whether the consolidated and separate annual financial statements represent the underlying transactions and events in a manner that achieves fair presentation. ● Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the Group annual financial statements. We are responsible for the direction, supervision and performance of the Group audit. We remain solely responsible for our audit opinion. We communicate with the Directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide the Board of Directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied. From the matters communicated with the Board of Directors, we determine those matters that were of most significance in the audit of the consolidated and separate annual financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS INDEPENDENT AUDITOR’S REPORT TO THE SHAREHOLDERS 55 REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS INDEPENDENT AUDITOR’S REPORT TO THE SHAREHOLDERS Report on other legal and regulatory requirements The Companies Act, 2017 of Zambia The Companies Act, 2017 of Zambia requires that in carrying out our audit of ZCCM Investments Holdings Plc, we report on whether: ɺӂ as required by section 259 (3)(a), there is a relationship, interest or debt which, ourselves, as the Group and Company Auditor, have in the Group and Company; ɺɺӂ as required by section 259 (3)(b), there are serious breaches by the Group’s and Company’s Directors, of corporate governance principles or practices contained in Sections 82 to 122 of Part VII of the Companies Act, 2017 of Zambia; and ɺɺɺӂ in accordance with section 250 (2), as regards loans made to a Group or Company Officer (a director, group or Company secretary or executive officer of the group or company), the Group or Company does not state the: ● particulars of any relevant loan made during the financial year to which the accounts apply, including any loan which was repaid during that year; or ● amount of any relevant loan, whenever made, which remained outstanding at the end of the financial year. In respect of the foregoing requirements, we have no matters to report. The engagement partner on the audit resulting in this independent auditor’s report is Charity Mulenga. PricewaterhouseCoopers Chartered Accountants Lusaka 2023 Charity Mulenga Practicing Certificate Number: AUD/F000945 Partner signing on behalf of the firm Date: 8th September 2023 ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc 56 Investing SMARTLY CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2022 Note 2022 2021 ZMW’000 ZMW’000 Assets Property, plant and equipment 17 12,484,907 12,857,452 Exploration and evaluation asset 18 51,437 38,989 Intangible assets 19 3,148,325 3,212,334 Investment property 21 200,751 192,227 Investment in associates 24 15,174,862 17,067,159 Financial assets at fair value through prot or loss 25 1,252,400 1,458,000 Trade and other receivables 27 2,931,539 1,330,438 Environmental Protection Fund 28 94,433 87,130 Deferred income tax assets 36 122,852 340,848 Total non-current assets 35,461,506 36,584,577 Inventories 26 4,921,366 4,651,886 Trade and other receivables 27 762,831 3,264,975 Term deposit 29 5,340,202 653,742 Cash and cash equivalents 30 329,173 184,625 11,353,572 8,755,228 Assets held for sale 22 2,103,761 1,478,611 Total current assets 13,457,333 10,233,839 Total assets 48,918,839 46,818,416 Equity Share capital 33(i) 1,608 1,608 Share premium 33(iii) 2,089,343 2,089,343 Other reserves 34 17,800,836 19,045,488 Accumulated losses (11,936,251) (8,306,818) Equity attributable to shareholders 7,955,536 12,829,621 Non-controlling interest (46,729) (20,716) Total equity 7,908,807 12,808,905 Liabilities Borrowings 35 27,476,859 24,546,001 Retirement benets 37 182,940 96,287 Provisions for environmental rehabilitation 38 1,221,068 1,198,814 Total non-current liabilities 28,880,867 25,841,102 Borrowings 35 864,411 797,566 Bank Overdraft 30 688,120 70,449 Trade and other payables 31 7,451,177 4,796,508 Provisions 32 487,689 378,746 Current income tax liabilities 14 190,143 202,563 Retirement benets 37 139,131 244,001 9,820,671 6,489,833 Liabilities directly associated with assets classied as held for sale 22 2,308,494 1,678,576 Total current liabilities 12,129,165 8,168,409 Total liabilities 41,010,032 34,009,511 Total equity and liabilities 48,918,839 46,818,416 The notes on pages 65 to 183 are an integral part of these consolidated and separate nancial statements. The consolidated nancial statements were approved and authorised for issue by the Board of Directors on 25th August, 2023 and signed on its behalf by: ……………………………........ …………………………................ Director Director ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc 57Investing SMARTLY COMPANY STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2022 Note 31 December 2022 ZMW’000 31 December 2021 ZMW’000 Assets Property, plant and equipment 17 90,471 78,439 Intangible assets 19 3,377 2,537 Investment property 21 200,751 192,227 Investments in subsidiaries 23 405,051 327,939 Investment in associates 24 16,256,411 20,603,089 Financial assets at fair value through P&L 25 1,252,400 1,458,000 Trade and other receivables 27 958,162 676,478 Deferred income tax asset 258,966 468,109 Total non-current assets 19,425,589 23,806,818 Inventories 26 16,427 22,034 Trade and other receivables 27 173,829 197,844 Term deposits 29 5,340,202 632,992 Cash and cash equivalents 30 45,586 81,498 5,576,044 934,368 Assets held for sale 22 145,700 430,977 Total current assets 5,721,744 1,365,345 Total assets 25,147,333 25,172,163 Equity Share capital 33(i) 1,608 1,608 Share premium 33(iii) 2,089,343 2,089,343 Other reserves 34 15,191,294 19,417,205 Retained earnings 7,397,607 3,224,038 Equity attributable to shareholders 24,679,852 24,732,194 Liabilities Retirement Benet Obligations 37 9,275 10,256 Provisions for environmental rehabilitation 38 39,357 79,931 Non-current liabilities 48,632 90,187 Borrowings 35 - 1,135 Trade and other payables 31 121,005 116,883 Provisions 32 108,686 29,528 Current income tax liabilities 14 189,158 202,236 Current liabilities 418,849 349,782 Total liabilities 467,481 439,969 Total equity and liabilities 25,147,333 25,172,163 The Company nancial statements were approved and authorised for issue by the Board of Directors on 25Th August 2023 and signed on its behalf by: …………………………… ………………………........... Director Director The notes on pages 65 to 183 are an integral part of these consolidated and separate nancial statements. ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc 58 Investing SMARTLY CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2022 Note 2022 ZMW’000 2021 ZMW’000 Continuing operations Revenue from contracts with customers 711,959,354 14,395,493 Net interest Income from loans and advances/ Financial Instruments Financial Instruments 110,779 138,272 Fees and commissions 39,998 32,441 Cost of sales 11 (14,709,114) (14,231,033) Gross (loss)/prot (2,598,983) 335,173 Net investment income 8 47,893 13,042 Other income 9 189,238 236,722 Fair value adjustment on nancial asset at fair value through prot or loss 25 (205,600) 1,166,000 Impairment of goodwill on acquisition 23(ii) - (14,851,790) Net impairment losses/(recovery) on nancial assets 10 (8,131) 63,317 Administration expenses 11 (749,743) (1,740,199) Operating loss (3,325,326) (14,777,735) Finance income 13 452,441 482,706 Finance costs 13 (2,266,287) (1,348,751) Net nance costs 13 (1,813,846) (866,045) Share of prot of equity-accounted investees, net of tax 24(a) 1,603,143 3,004,542 Loss before income tax (3,536,029) (12,639,238) Income tax credit/(expense) 14 (249,504) 66,476 Loss for the year (3,785,533) (12,572,762) Other comprehensive income Items that will never be reclassied to prot or loss Revaluation surplus on transfer of property, plant and equipment 17 12,480 - Deferred income tax on revaluation reserve 36 (3,746) - Remeasurements of post-employment benet obligations 37 204,217 (105,270) Deferred income tax on post-employment benet obligations 36 (28) (1,297) Equity-accounted investees- share of other comprehensive income 24 11,123 52,304 224,046 (54,263) Items that are or may be reclassied to prot or loss Foreign currency translation differences - equity - accounted investees 24(a) 1,361,754 (4,384,250) Foreign currency translation differences - equity - subsidiaries investees 34 (2,615,140) 8,867,760 (1,253,386) 4,483,510 Other comprehensive income, net of tax (1,029,340) 4,429,247 Total comprehensive income (4,814,873) (8,143,515) Loss attributable to: Owners of the Company (3,759,520) (12,576,411) Non-controlling interests (26,013) 3,649 Loss for the year (3,785,533) (12,572,762) Total comprehensive income attributable to: Owners of the Company (4,788,860) (8,147,163) Non-controlling interests (26,013) 3,648 Total comprehensive income (4,814,873) (8,143,515) Earnings per share Basic and diluted earnings per share (ZMW) 15 (23.54) (78.19) The notes on pages 65 to 183 are an integral part of these consolidated and separate nancial statements. ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc 59Investing SMARTLY COMPANY STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2022 Note 31 December 2022 ZMW’000 31 December 2021 ZMW’000 Investment income 84,916,309 968,137 Revenue from contracts with customers 7 778 79,837 Cost of sales 11 (2,130) (77,707) Other income 9 88,203 35,581 Fair value adjustment on nancial asset at fair value through prot or loss 25 (205,600) 1,166,000 Net impairment losses/(recovery) on nancial assets 10 (543) 42,816 Administration expenses 11 (742,731) (372,917) Operating prot 4,054,286 1,841,747 Finance income 13 446,047 75,229 Finance costs 13 (5,284) (327,216) Net nance income/(cost) 13 440,763 (251,987) Prot before tax 4,495,049 1,589,760 Income tax expense/(credit) 14 (236,321) 86,158 Prot for the year 4,258,728 1,675,918 Other comprehensive income Items that will never be reclassied to prot or loss Revaluation surplus on property, plant and equipment 17 12,480 - Deferred income tax on revaluation reserve 36 (3,746) - Remeasurements of post-employment benet obligations 37 94 3,705 Deferred income tax on remeasurements of post- employment benet obligations 36 (28) (1,297) Fair value change in Investments in subsidiaries measured at fair value through other comprehensive income 22/23 112,033 4,624 Fair value change in Investments in associates measured at fair value through other comprehensive income 24 (4,346,678) (63,717) Other comprehensive income, net of tax (4,225,845) (56,685) Total comprehensive income 32,883 1,619,233 Earnings per share Basic and diluted earnings per share (ZMW) 15 26.48 10.42 The notes on pages 65 to 183 are an integral part of these consolidated and separate nancial statements. INTEGRATED ANNUAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc 60Investing SMARTLY CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2022 ZMW’000 Note Share capital Share premium Revaluation reserve Translation reserve Non-controlling interests Retained earnings Total Balance at 1 January 2021 1,608 2,089,343 269,106 14,292,014 (24,365) 4,376,711 21,004,417 Loss for the year - - - - 3,649 (12,576,411) (12,572,762) Other comprehensive income On acquisition of subsidiary - - - - - - - Currency translation – equity accounted investees 24 - - - (4,384,250) - - (4,384,250) Currency translation of foreign denominated subsidiaries - - - 8,867,760 8,867,760 Remeasurements of post-employment benet obligations 37 - - - - - (105,270) (105,270) Share of associates other comprehensive income 24 - - - - - 52,304 52,304 Deferred tax on remeasurements of post-employment benet obligations 36 - - - - - (1,297) (1,297) Total comprehensive income - - - 4,483,510 3,649 (12,630,674) (8,143,515) Transfer of excess depreciation - - (221) - - 221 - Deferred tax on transfer of excess depreciation - - 66 - - - 66 Deferred tax on transfer of excess depreciation 36 - - 1,013 - - - 1,013 Transaction with owners of the Company – Distributions Dividends - - - - - (53,076) (53,076) Balance at 31 December 2021 1,608 2,089,343 269,964 18,775,524 (20,716) (8,306,818) 12,808,905 Loss for the year - - - - (26,013) (3,759,520) (3,785,533) Other comprehensive income Currency translation – equity accounted investees 24(a) - - - 1,361,754 - - 1,361,754 Currency translation of foreign denominated subsidiaries - - - (2,615,140) - - (2,615,140) Revaluation surplus on property plant and equipment - - 12,480 - - - 12,480 Deferred tax on revaluation reserve - - (3,746) - - - (3,746) Remeasurements of post-employment benet obligations 37 - - - - - 204,217 204,217 Share of associates other comprehensive income 24(a) - - - - - 11,123 11,123 Deferred tax on remeasurements of post-employment benet obligations 36 - - - - - (28) (28) Total comprehensive income - - 8,734 (1,253,386) (26,013) (3,544,208) (4,814,873) Transaction with owners of the Company – Distributions Dividends - - - - - (85,225) (85,225) Balance at 31 December 2022 1,608 2,089,343 278,698 17,522,138 (46,729) (11,936,251) 7,908,807 Retained earnings are the brought forward recognised income, net of expenses, of the Group plus current period prot or loss attributable to shareholders. The notes on pages 65 to 183 are an integral part of these consolidated and separate nancial statements. INTEGRATED ANNUAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc 61Investing SMARTLY COMPANY STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2022 Note Share capital Share Premium Revaluation reserve Fair value reserve Retained earnings Total ZMW’000 ZMW’000 ZMW’000 ZMW’000 ZMW’000 ZMW’000 Balance at 1 January 2021 1,608 2,089,343 19,892 19,455,548 1,598,567 23,164,958 Prot for the year - - - - 1,675,918 1,675,918 Other comprehensive income Change in fair value of investments in subsidiaries 23 - - - 4,624 -4,624 Change in fair value of investments in associates 24 - - - (63,717) -(63,717) Remeasurements of post-employment benet obligations 37 - - - - 3,705 3,705 Deferred tax on remeasurements of post-employment benet obligations -(1,297) (1,297) Total comprehensive income - - - (59,093) 1,678,326 1,619,233 Transfer of excess depreciation - - (221) - 221 - Deferred tax on transfer of excess depreciation 36 - - 1,079 - - 1,079 Transactions with owners of the Company – distributions Dividends - - - - (53,076) (53,076) Balance at 31 December 2021 1,608 2,089,343 20,750 19,396,455 3,224,038 24,732,194 Prot for the year - - - - 4,258,728 4,258,728 Other comprehensive income Revaluation surplus on property plant and equipment - - 12,480 - - 12,480 Deferred tax on revaluation surplus 36 - - (3,746) - - (3,746) Change in fair value of investments in subsidiaries 23 - - - 112,033 -112,033 Change in fair value of investments in associates 24 - - - (4,346,678) -(4,346,678) Remeasurements of post-employment benet obligations 37 - - - - 94 94 Deferred tax on remeasurements of post-employment benet obligations (28) (28) Total comprehensive income - - 8,734 (4,234,645) 4,258,794 32,883 Transactions with owners of the Company – distributions Dividends - - - - (85,225) (85,225) Balance at 31 December 2022 1,608 2,089,343 29,484 15,161,810 7,397,607 24,679,852 Retained earnings are the carried forward recognised income, net of expenses, of the Company plus current period prot or loss attributable to shareholders. The notes on pages 65 to 183 are an integral part of these consolidated and separate nancial statements. ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc 62 Investing SMARTLY CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER 2022 Notes 2022 ZMW’000 2021 ZMW’000 Cash ows from operating activities Loss before tax (3,536,029) (12,639,238) Adjustments for: Depreciation 17,18 1,769,302 1,469,278 Amortisation 19 66,813 72,680 Prot/(loss) on disposal of property, plant and equipment 11(9) 22 (738) Interest income from related parties and term deposits 8,13 (351,898) (303,189) Interest expense 35 1,523,989 701,512 Exchange difference on borrowings -(33,077) Impairment of goodwill on acquisition of a subsidiary -14,851,790 Impairment of assets 339 - Gain on debt write off (3,995) - Change in fair value on nancial assets at fair value through prot or loss 25 205,600 (1,166,000) Fair value change on investment property 21 (8,465) (5,337) Dened benets expense 37 168,173 82,614 Share of prot of equity – accounted investees, net of tax 24 (1,603,143) (3,004,542) Unrealised foreign currency gain 39,851 37,397 (1,729,441) 63,150 Change in: Inventories (269,480) (875,840) Trade and other receivables 1,128,978 (1,920,773) Trade and other payables and provisions 2,227,309 3,123,172 Assets and liabilities held for sale 59,245 51,791 Provision for environmental rehabilitation (20,977) 124,500 Cash generated from operating activities 1,395,634 566,000 Interest paid 35 (14) (11,573) Tax paid 14 (46,217) (39,949) Retirement benet paid 37 (7,340) (4,212) Dividends paid (85,225) (53,076) Net cash from operating activities 1,256,838 457,190 Cash ows from investing activities Interest received 8,13 253,191 235,128 Dividend received 24 4,868,317 956,437 Acquisition of property and equipment 17 (1,338,234) (809,933) Acquisition of intangible assets 19 (2,804) (2,808) Proceeds on disposal of property, plant and equipment 3,069 937 Acquisition of investment property 21 (59) (2,973) Cash from acquisition of subsidiary - 6,337 Cash from asset write off (3) - Investments in exploration and evaluation asset 18 (3,794) (26,939) Proceeds from term deposits 29 653,742 194,369 Investments in term deposits 29 (5,340,202) (653,742) Net cash used in investing activities (906,777) (103,187) Cash ows from nancing activities ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc 63Investing SMARTLY Notes 2022 ZMW’000 2021 ZMW’000 Repayment of borrowings 35 (698,833) (402,694) Net cash used in nancing activities (698,833) (402,694) Net decrease in cash and cash equivalents (348,772) (48,691) Effects of translation of cash and cash equivalents (28,538) (2,816) Effect of movement in exchange rates on cash held (39,851) (37,397) Cash and cash equivalents at 1 January 336,101 425,005 Cash and cash equivalents at 31 December 30 (81,060) 336,101 Included in the statement of nancial position (358,947) 114,176 Included in assets held for sale 22 277,887 221,925 Cash and cash equivalents at 31 December (81,060) 336,101 The notes on pages 65 to 183 are an integral part of these consolidated and separate nancial statement CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER 2022 (CONTINUED) ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc 64 Investing SMARTLY SEPARATE STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER 2022 Note 2022 ZMW’000 2021 ZMW’000 Cash ows from operating activities Prot before tax 4,495,049 1,589,760 Adjustments for: Depreciation 17 12,005 12,565 Amortisation 19 1,816 978 Prot/(loss) on disposal of property, plant and equipment 9(a) 22 (248) Fair value changes of nancial assets at fair value through prot or loss 25 205,600 (1,166,000) Impairment of investments in subsidiaries 22(a)/23 418,821 - Dened benets expense 37 3,154 4,979 Fair value change on investment property 21 (8,465) (5,337) Interest expense 35 14 8,872 Exchange difference on borrowings - (33,077) Interest receivable on loan and held to maturity investments 13,8 (145,334) (84,538) Unrealised foreign currency gain 39,851 37,397 5,022,533 365,351 Change in: Inventory 5,607 (8,291) Trade and other receivables (158,962) 450,318 Trade and other payables 4,122 14,333 Provisions 79,158 (90,188) Assets held for sale (12,244) (38,620) Provision for environmental rehabilitation (40,574) 13,336 Cash generated from operating activities 4,899,640 706,239 Interest paid (14) (11,573) Tax paid 14 (44,030) (30,840) Dividends paid (85,225) (53,076) Retirement benet paid 37 (4,041) (1,810) Net cash from (used in) operating activities 4,766,330 608,940 Cash ows from investing activities Interest received 13,8 46,627 16,477 Acquisition of property, plant and equipment 17 (13,370) (12,150) Acquisition of intangible assets 19 (2,656) (2,766) Acquisition of investment property 21 (59) (2,973) Proceeds on disposal of property, plant and equipment 1,791 445 Proceeds from term deposits 29 632,992 194,369 Investments in term deposits 29 (5,340,202) (632,992) Acquisition of investments in subsidiary 23 (86,379) (46,637) Net cash ows (used in)/from investing activities (4,761,256) (486,227) Cash ows from nancing activities Repayment of borrowings 35 (1,135) (124,457) Net cash used in nancing activities (1,135) (124,457) Increase/(decrease) in cash and cash equivalents 3,939 (1,744) Effect of movement in exchange rates on cash held (39,851) (37,397) Cash and cash equivalents at 1 January 81,498 120,639 Cash and cash equivalents at 31 December 30 45,586 81,498 The notes on pages 65 to 183 are an integral part of these consolidated and separate nancial statements ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc 65Investing SMARTLY 1. Reporting entity ZCCM Investments Holdings Plc (the “Company” or “ZCCM – IH”) is domiciled in Zambia. The Company’s registered ofce is at Stand No. 16806, Alick Nkhata Road, Mass Media Complex Area, P.O Box 30048, Lusaka. These consolidated annual nancial statements comprise the Company, its subsidiaries and investments in associates (together referred to as the ‘Group’). The principal activity of the Company is to manage the Zambian Government’s stake in the mining sector, as the Zambian Government through the Industrial Development Corporation (IDC), is the principal shareholder of the Company. The Company’s shares are listed on the Lusaka Securities Exchange (LuSE), the London Stock Exchange and Euronext. 2. Basis of preparation The Consolidated annual nancial statements are prepared in compliance with International Financial Reporting Standards (“IFRS”). The measurement basis applied is the historical cost basis, except where otherwise stated in the accounting policies below. The Consolidated annual nancial statements are presented in Zambian Kwacha (ZMW), rounded to the nearest thousand. In accordance with the Companies Act, 2017 of Zambia, the annual nancial statements for the year ended 31 December 2022 have been approved for issue by the Directors. Reference to “annual nancial statements” in this report refers to the Consolidated annual nancial statements. The preparation of Consolidated annual nancial statements in conformity with IFRS requires the use of estimates and assumptions. It also requires the Directors to exercise judgement in the process of applying the Group’s accounting policies. The areas involving higher degree of judgement or complexity, or where assumptions and estimates are signicant to the Consolidated annual nancial statements are disclosed in Note 4. 3. Functional and presentation currency These Group and Company annual nancial statements are presented in Zambian Kwacha. The functional currency for the Company is Zambian Kwacha. All amounts presented in Kwacha have been rounded to the nearest thousand, unless otherwise indicated. Several of the Company’s equity investments prepare nancial statements in US Dollars, which is their functional currency, due to the nature of the industry in which they operate. This has resulted in a foreign currency translation reserve at the consolidated level. More detail is included in note 23 and 24. 4. Use of estimates and judgements In preparing these nancial statements, management has made judgements, estimates and assumptions that affect the application of the Group’s and Company’s 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 estimates are recognised prospectively. NOTES TO THE FINANCIAL STATEMENTS in thousands of Kwacha ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc 66 Investing SMARTLY a. Judgements Information about judgements made in applying accounting policies that have the most signicant effects on the amounts recognised in the consolidated and separate nancial statements are included in: • Note 17 – impairment of property, plant and equipment. In assessing impairment of property, plant and equipment management estimates the recoverable amount of each asset or cash generating unit based on expected future cash ows and uses an interest rate to discount them. Estimation uncertainty relates to assumptions about future operating results and the determination of a suitable discount rate. Assets amounting to ZMW 339,000 were impaired during the year. At 31 December 2022, the Group recorded the equity value of ZMW7.9 billion (2021: ZMW12.8 billion) which is higher than the market value of ZMW 5.7 billion (2021: ZMW 5.7 billion). Management has determined that the disparity in value between the recorded equity and the market value is not indicative of the impairment of Group or company assets. Further management has assessed that the stock market is still growing with limited market activity therefore not reective of the Company or Group value. • Going Concern Assumption These nancial statements have been prepared on a going concern basis. During the year ended 31 December 2022, the Group made a loss after tax of ZMW3.79 billion (2021: ZMW12.57 billion). As of 31 December 2022, the Group had accumulated loss of ZMW11.94 billion (2021: ZMW8.31 billion). As of that date the groups current assets exceeded current liabilities by ZMW1.33 billion (2021: ZMW2.07 billion) and total assets exceeded total liabilities by ZMW7.91 billion (2021: 12.81 billion. Furthermore, Mopani Copper Mines Plc (“MCM” or “Mopani”), the group’s most signicant subsidiary has material uncertainty on going concern on account of operating losses and the need for funding to meet working capital and core capital requirements. In addition, the majority of the Group’s non-current liabilities relate to borrowings of Mopani. The loan is guaranteed by ZCCM-IH and in the event that Mopani fails to pay back the loan, ZCCM-IH would be required to full the loan obligations. Currently, Mopani has been servicing the facility in line with the repayment as set out under note 35 of the report. There are no compliance issues identied These events or conditions indicate that a material uncertainty exists that may cast signicant doubt on the Group’s ability to continue as a going concern. The Directors consider the going concern basis of preparation to be appropriate based on the mitigating factors below: Mitigating factors • ZCCM-IH has secured working capital funding for Mopani amounting to K950 million (US$ 43 million) from various nancial institutions. • Management’s recent change of shareholder agreements in 2022 with certain investee companies i.e., Kansanshi Mining PLC, from dividend model to royalty model. This agreement is expected to result into more cashows for the group, at an annual average receipts of ZMW1.06 billion (US$48 million), spanning over a 25 year estimated life of mine from 2021. NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) in thousands of Kwacha 4. Use of estimates and judgements ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc 67Investing SMARTLY • The management and Board of ZCCM-IH have been working with a team of consultants, Rothschild & Co., South Africa (Pty) Ltd (“Rothschild & Co.”) to assist ZCCM-IH with the strategic review of Mopani Copper Mines Plc (“MCM” or “Mopani”) to ensure its sustainability and continued development. In 2011, Mopani embarked on expansion projects to sink new deeper, higher capacity and economical shafts to access the resource in the deep areas that would otherwise not have been easily and economically available. These projects are at various stages of completion and are expected to increase the Life of Mine (LOM) by at least 25 years. • The Group has engaged consultants to support the process of raising capital of ZMW 7.72 billion (US$ 350million) to complete the expansion projects and so far the work is in advanced stages and as of July 2023, ZCCM-IH the ultimate parent entity, the Zambian Government indicated to have shortlisted potential bidders and aim to complete the selection process in 2023. Once the expansion projects are completed, the Group will be able to ramp up its production and achieve protable, efcient, and sustainable operations which will result in the Group recording prots by 2026 to 2028, if copper prices range between US$6,500 and US$8,400 per tonne. Copper prices as at December 2022 was US$ 8,386 per tonne. The Directors have therefore formed a judgement that the Going concern assumptions remains applicable to the Group and Company for at least 12 months from the signing date of the nancial statements.. This basis assumes that the funds will be available to nance future operations, and that the realisation of the assets and settlement of liabilities, contingent obligations and commitments will occur in the ordinary course of the business. • Note 22 – Assets held for sale. Management has continued to classify Investrust Bank Plc and Mushe Milling as entities held for sale despite the sale not happening within 12 months from the date they were classied as held for sale in 2020. Following the change of government, there was a shift in IDC’s strategy which contributed to the restructuring and reorganization deal not to go through despite earlier agreements which indicated otherwise. The change in strategy on the side of IDC was beyond any of the parties’ control and has been treated as a non-adjusting post balance sheet event. ZCCM-IH Plc, the Board is committed to divest from these investments and actively searching for buyers. • Note 23, 24 and 25 – Determining the fair values of investment in subsidiaries, associates and nancial assets at fair value through prot or loss on the basis of signicant unobservable inputs. Valuation of the Group’s unquoted investments is an area of judgement which involves the use signicant estimates and assumptions. Management uses various valuation techniques when determining the fair values of unquoted investee companies whose outcome is dependent on several signicant unobservable inputs and assumptions as disclosed under Note 23, 24 and 25. • Note 23 – acquisition of subsidiary: Fair valuation of the consideration transferred, and fair value of the assets acquired, and liabilities assumed, is an area of judgement which involves the use signicant estimates and assumptions. Management uses various valuation techniques when determining the fair values of the assets acquired and liabilities assumed. Where the acquisition of a subsidiary that occurs during the period is incomplete, management recognises the fair values of the amounts of assets, liabilities, non-controlling interests, or items of consideration on a provisional basis and continues to re measure until the earlier of the receipt of information that is needed or after one year from the date of acquisition. NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) in thousands of Kwacha 4. Use of estimates and judgements (Continued) a. Judgements (continued) ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc 68 Investing SMARTLY • Note 45 (a) iv – consolidation: whether the Company has signicant inuence over an investee or de facto control over an investee. Management has reassessed its involvement in Rembrandt Properties Limited (49%) and Consolidated Gold Company Limited (45%) in accordance with IFRS 10’s control denition and guidance. It has concluded it has signicant inuence but not outright control. In making its judgement, management considered the following: • Company’s voting rights – the Company’s voting rights are limited to 49% and 45% respectively but in relation to the dispersion of the voting rights held by other shareholders the Company has a signicant right; and • Relative size – in relation to the extent of recent participation by those shareholders in general meetings, the Company is deemed to have signicant inuence over the investees • Further, management has reassessed its involvement in Central African Company Limited (49%) in accordance with IFRS 10’s control denition and guidance. It has concluded it has de facto control in the Company. In making its judgement, management considered the following: • ZCCM-IH’s representation on the board of the investee Company • Appointment of key management staff • Number of voting rights. • Following the above assessment, management has determined that the Company’s involvement in all its investee companies in accordance with IFRS 10’s control denition and guidance has not changed from prior year except for Mopani Copper Mines Plc. Uncertain Tax Position regarding Mopani Copper Mines loan forgiveness modication As part of the share purchase Agreement (SPA) between ZCCM-IH and Glencore International AG, the Company’s loans/debt with Glencore were amended and restated as at 31 March 2021 to ZMW33.12 billion (US$ 1.5b billion). This loan modication was in fullment of the Agreement for the Government of the Republic of Zambia through ZCCM- IH to buy Glencore’s 90% shareholding in return for US$1.00 consideration and US$1.5 billion debt. The resulting debt forgiveness amount was credited to pre- acquisition prots. The tax treatment for this gain is uncertain on the basis that the Zambian Income Tax does not have an express provision that directly deal with the matter. There is equally no judicial precedence from the Tax Appeals Tribunal or a higher court where concrete guidance can be found. The Directors have consulted widely in this transaction related gain and have not accrued for the estimated ZMW13.02 billion (US$590 million) tax that would arise in the unlikely event that the transaction was interpreted as taxable. b. Assumptions and estimation and uncertainties Information about assumptions and estimation uncertainties that have a signicant risk of resulting in a material adjustment in the year ended 31 December 2022 is included in the following notes: • Notes 23 – acquisition of subsidiary: fair value of the consideration transferred, and fair value of the assets acquired and liabilities assumed; • Notes 23, 24 and 25 – measurement of fair value of investee companies; key assumptions about discounted cash ow assumptions; • Note 37 – measurement of dened benet obligations: key actuarial assumptions; • Note 32 and 38 – recognition and measurement of provisions and contingencies: key assumptions about the likelihood and magnitude of an outow of resources; NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) in thousands of Kwacha 4. Use of estimates and judgements (Continued) ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc 69Investing SMARTLY • Note 42 – measurement of ECL allowance for trade receivables and contract assets: key assumptions in determining the weighted-average loss rate and the valaution of VATreceivable; and • Note 45(j) - impairment test of intangible assets and goodwill: key assumptions underlying recoverable amounts. c. Measurement of fair values A number of the Group’s accounting policies and disclosures require the measurement of fair values, for both nancial and non-nancial assets and liabilities. The Group has an established control framework with respect to the measurement of fair values. Signicant valuation issues are reported to the Group Audit Committee. This includes the Group nance team that has overall responsibilities for overseeing all signicant fair value measurement including level 3 fair values and reports directly to the Chief Financial Ofcer (CFO). The nance team regularly reviews signicant unobservable inputs and valuation adjustments. If third party information arises such as broker quotes or pricing services, used to measure fair values, then the nance team assesses the evidence obtained from third parties to support the conclusion that such valuations meet the requirement of IFRS, including the level in the fair value hierarchy in which such valuations should be classied. When measuring the fair value of an asset or a liability, the Group uses observable market data as far as possible. Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows: • Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities. • Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices). • Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs). If the inputs used to measure the fair value of an asset or a liability fall into different levels of the fair value hierarchy, then the fair value measurement is categorised in its entirety in the same level of the fair value hierarchy as the lowest level input that is signicant to the entire measurement. The Group recognises transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred. Determination of ore reserves and life of mine plan Reserves are estimates of the amount of product that can be economically and legally extracted from the group’s properties. Estimating the quantity and/or grade of reserves requires the size, shape and depth of ore bodies or elds to be determined by analysing geological data such as drilling samples. Following this, the quantity of ore that can be extracted in an economical manner is calculated using data regarding the life of mine plans and forecast sales prices (based on current and long-term historical average price trends). NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) in thousands of Kwacha 4. Use of estimates and judgements (Continued) b. Measurement of fair values ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc 70 Investing SMARTLY A majority of the groups’ property, plant and equipment associated with its mining subsidiaries are depreciated over the estimated lives of the assets on a units-of-production basis. This also includes the timing of repayments of life of mine linked borrowings. The calculation of the units-of-production rate, and therefore the annual depreciation expense could be materially affected by changes in the underlying estimates which are driven by the life of mine plans. Changes in estimates can be the result of actual future production differing from current forecasts of future production, expansion of mineral reserves through exploration activities, differences between estimated and actual costs of mining and differences in the commodity prices used in the estimation of mineral reserves. Changes in the proven and probable reserves estimates may impact the carrying value of property, plant and equipment, asset retirement obligation provision, recognition of deferred income tax amounts and depreciation expense amount. Further information about the assumptions made in measuring fair values is included in the following notes: • Note 21 - Investment property • Note 23 – Investment in subsidiaries; and • Note 24 – Investment in associates. • Note 42- nancial instruments. 5. New or revised Standards or Interpretations 5.1 New and amended standards adopted by the Company and Group The Group adopted the applicable new, revised or amended standards for the nancial reporting periods commencing on or after 1 January 2022. The amendments to accounting standards below, effective for the reporting period 1 January 2022 did not have any material impact on the Group’s accounting policies and required no retrospective adjustments to the annual nancial statements of the Group. Property, Plant and Equipment: Proceeds before intended use – Amendments to IAS 16. The amendment to IAS 16 Property, Plant and Equipment (PP&E) prohibits an entity from deducting from the cost of an item of PP&E any proceeds received from selling items produced while the entity is preparing the asset for its intended use. It also claries that an entity is ‘testing whether the asset is functioning properly’ when it assesses technical and physical performance of the asset. The nancial performance of the asset is not relevant to this assessment. Entities must disclose separately the amounts of proceeds and costs relating to items produced that are not an output of the entity’s ordinary activities. Onerous Contracts – Cost of Fullling a Contract Amendments to IAS 37. The amendment to IAS 37 Provisions, Contingent Liabilities and Contingent Assets, claries that the direct costs of fullling a contract include both the incremental costs of fullling the contract and an allocation of other costs directly related to fullling contracts. Before recognising a separate provision for an onerous contract, the entity recognises any impairment loss that has occurred on assets used in fullling the contract. NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) in thousands of Kwacha 4. Use of estimates and judgements (Continued) c. Measurement of fair values (continued) ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc 71Investing SMARTLY Annual Improvements to IFRS Standards 2018–2020. The following improvements were nalised in May 2020: • IFRS 9 Financial Instruments – claries which fees should be included in the 10% test for derecognition of nancial liabilities; • IFRS 16 Leases – amendment of illustrative example 13 to remove the illustration of payments from the lessor relating to leasehold improvements, to remove any confusion about the treatment of lease incentives; • IFRS 1 First-time Adoption of International Financial Reporting Standards – allows entities that have measured their assets and liabilities at carrying amounts recorded in their parent’s books to also measure any cumulative translation differences using the amounts reported by the parent. This amendment will also apply to associates and joint ventures that have taken the same IFRS 1 exemption. 5.2 New and amended standards not yet adopted by the Group. Certain new accounting standards and interpretations have been published that are not mandatory for 31 December 2022 reporting periods and have not been early adopted by the Group. These standards are not expected to have a material impact on the entity in the current or future reporting periods and on foreseeable future transactions. Classication of Liabilities as Current or Non-current – Amendments to IAS 1 The narrow-scope amendments to IAS 1 Presentation of Financial Statements clarify that liabilities are classied as either current or non-current, depending on the rights that exist at the end of the reporting period. Classication is unaffected by the entity’s expectations or events after the reporting date (e.g., the receipt of a waiver or a breach of covenant). The amendments also clarify what IAS 1 means when it refers to the ‘settlement’ of a liability. The amendments could affect the classication of liabilities, particularly for entities that previously considered management’s intentions to determine classication and for some liabilities that can be converted into equity. They must be applied retrospectively in accordance with the normal requirements in IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors. Since approving these amendments, the IASB has issued an exposure draft proposing further changes and the deferral of the amendments until at least 1 January 2024. NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) in thousands of Kwacha 5. New or revised Standards or Interpretationss (Continued) 5.1 New and amended standards not yet adopted by the Group (continued) ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc 72 Investing SMARTLY Disclosure of Accounting Policies – Amendments to IAS 1 and IFRS Practice Statement 2 The IASB amended IAS 1 to require entities to disclose their material rather than their signicant accounting policies. The amendments dene what is ‘material accounting policy information’ and explain how to identify when accounting policy information is material. They further clarify that immaterial accounting policy information does not need to be disclosed. If it is disclosed, it should not obscure material accounting information. To support this amendment, the IASB also amended IFRS Practice Statement 2 Making Materiality Judgements to provide guidance on how to apply the concept of materiality to accounting policy disclosures. Denition of Accounting Estimates – Amendments to IAS 8 The amendment to IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors claries how companies should distinguish changes in accounting policies from changes in accounting estimates. The distinction is important, because changes in accounting estimates are applied prospectively to future transactions and other future events, whereas changes in accounting policies are generally applied retrospectively to past transactions and other past events as well as the current period. Deferred Tax related to Assets and Liabilities arising from a Single Transaction – Amendments to IAS 12 The amendments to IAS 12 Income Taxes require companies to recognise deferred tax on transactions that, on initial recognition, give rise to equal amounts of taxable and deductible temporary differences. They will typically apply to transactions such as leases of lessees and decommissioning obligations, and will require the recognition of additional deferred tax assets and liabilities. The amendment should be applied to transactions that occur on or after the beginning of the earliest comparative period presented. In addition, entities should recognise deferred tax assets (to the extent that it is probable that they can be utilised) and deferred tax liabilities at the beginning of the earliest comparative period for all deductible and taxable temporary differences associated with: • right-of-use assets and lease liabilities, and; • decommissioning, restoration and similar liabilities, and the corresponding amounts recognised as part of the cost of the related assets. The cumulative effect of recognising these adjustments is recognised in retained earnings, or another component of equity, as appropriate. IAS 12 did not previously address how to account for the tax effects of on-balance sheet leases and similar transactions and various approaches were considered acceptable. Some entities may have already accounted for such transactions consistent with the new requirements. These entities will not be affected by the amendments. Sale or contribution of assets between an investor and its associate or joint venture – Amendments to IFRS 10 and IAS 28. The IASB has made limited scope amendments to IFRS 10 Consolidated Financial Statements and IAS 28 Investments in Associates and Joint Ventures. The amendments clarify the accounting treatment for sales or contribution of assets between an investor and their associates or joint ventures. They conrm that the accounting treatment depends on whether the non-monetary assets sold or contributed to an associate or joint venture constitute a ‘business’ (as dened in IFRS 3 Business Combinations). NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) in thousands of Kwacha 5. New or revised Standards or Interpretationss (Continued) 5.2 New and amended standards not yet adopted by the Group (continued) ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc 73Investing SMARTLY Sale or contribution of assets between an investor and its associate or joint venture – Amendments to IFRS 10 and IAS 28. Where the non-monetary assets constitute a business, the investor will recognise the full gain or loss on the sale or contribution of assets. If the assets do not meet the denition of a business, the gain or loss is recognised by the investor only to the extent of the other investor’s interests in the associate or joint venture. The amendments apply prospectively. In December 2015, the IASB decided to defer the application date of this amendment until such time as the IASB has nalised its research project on the equity method. 6. Operating segments a. Basis for segmentation The Group has three operational reportable segments, as described below, which are the Group’s strategic operations. The strategic operation offer different products and services and are managed separately because they require different technology and marketing strategies. The Group’s management committee, consisting of the Chief Executive Ofcer, the Chief Financial Ofcer, Chief Investment Ofcer, Chief Legal Ofcer, Chief Internal Audit Ofcer, Chief ICT Ofcer, Chief Human Resource and Administration Ofcer, Chief Technical Ofcer, and Company Secretary, examines the group’s performance from an operations perspective and has identied three reportable segments of its business: 1. Investments – This comprises of only ZCCM-IH. This is premiere diversied mining investments and operations Company whose majority owner is Industrial Development Corporation (IDC). The Company’s focused interests are investments in Zambia’s mining and energy sectors. 2. Mining and processing – This comprise of entities actively in the exploration activities, mining of minerals and processing to nished products. The minerals mined include copper, gold, amethyst, manganese, and limestone. 3. Technical services – This comprises the entity involved in the provision of environmental consultancy services, analytical services, surveying services and radiation safety. This Company has been maintained as a separate segment because of its value to the ZCCM-IH subsidiaries in monitoring of its environmental activities. The Group is exposed to customer concentration risk as it’s signicant component, Mopani Copper Mines has one major customer. Refer to note 35 for further information on sales arrangements. NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) in thousands of Kwacha 5. New or revised Standards or Interpretationss (Continued) 5.2 New and amended standards not yet adopted by the Group (continued) INTEGRATED ANNUAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc 74Investing SMARTLY The Group’s Chief Executive Ofcer and the management committee reviews internal reports of each division at least quarterly. December 2022 Segment Entity Country of operations Total revenue Revenue from Zambia Revenue from foreign countries Total segment assets Non-current assets Current assets Investments ZCCM-IH Plc Zambia 778 778 - 311,026 294,599 16,427 Mining and processing Mopani Copper Mine Plc Zambia 11,854,038 1,211,286 10,642,752 17,076,373 12,239,693 4,836,680 Mining and processing Limestone Resources Limited Zambia 26,843 12,377 14,466 103,943 75,826 28,117 Mining and processing Kabundi Resources Limited Zambia 13,635 13,635 -8,855 8,741 114 Mining and processing Zambia Gold Company Limited Zambia 31 31 - 118,459 90,958 27,501 Mining and processing Kariba mineral Limited Zambia 23,038 -23,038 39,639 27,112 12,527 Technical Services Misenge Zambia 4,932 4,932 5,220 5,220 - Others Others Zambia 38,925 38,925 -112,941 61,720 51,221 Total from segments 11,962,220 1,281,964 10,680,256 17,776,456 12,803,869 4,972,587 Less consolidation adjustments (2,866) (2,866) - - - - Consolidated balance 11,959,354 1,279,098 10,680,256 17,776,456 12,803,869 4,972,587 Note: Segment assets exclude nancial instruments, deferred tax assets/liabilities and employee benet assets Revenue from foreign countries is distributed as follows: NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) in thousands of Kwacha 6 Operating segments (Continued) a. Basis for segmentation (continued) ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc 75Investing SMARTLY Country Foreign revenue - ZMW Switzerland 10,642,752 Malawi 14,325 Democratic Republic of Congo 114 Zimbabwe 27 India 23,038 Total 10,680,256 b. Information about reportable segments Information recorded on each reportable segment is set out below. Segment prot before tax, as included in internal management reports reviewed by the Group’s Chief Executive Ofcer is used to measure performance because management believes that such information is the most relevant in evaluating the results of the respective segments relative to other entities that operate in the same industries. Only one segment meets the 10% reportable segment criteria per IFRS 8- Segment Reporting. Management has disclosed two additional segments as it deems the additional disclosure useful to users of nancial statements. NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) in thousands of Kwacha 6 Operating segments (Continued) a. Basis for segmentation (continued) 75Investing SMARTLY INTEGRATED ANNUAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc 76Investing SMARTLY The segment results for the Group were as follows: December 2022 Investments Mining and processing Technical services ZCCM-IH ZMW’000 Mopani Copper Mine Plc ZMW’000 Limestone Resources Limited ZMW’000 Zambia Gold Company Limited ZMW’000 Kariba minerals Limited ZMW’000 Kabundi Resources Limited ZMW’000 Central African Cement ZMW’000 Misenge Environmental and Technical Services Limited ZMW’000 Others Consolidation Adjustments ZMW’000 Consolidated ZMW’000 Segment assets Opening balance 295,237 20,428,487 61,970 114,795 38,852 10,627 -2,972 110,220 8,663 21,071,823 Additions 16,085 1,320,011 235 7,167 - 189 - 2,722 6,778 -1,353,187 Movement in inventory (5,607) 271,828 (412) -3,557 114 - - (258) -269,222 Property plant and equipment Revaluation 12,480 - - - - - - - - - 12,480 Increase in environmental asset - - 58,128 - - - - - - - 58,128 Disposal (1,813) (1,279) - - - - - - - - (3,092) Depreciation and amortisation (13,821) (1,797,870) (15,978) (3,503) (2,770) (1,736) -(474) (7,293) 7,330 (1,836,115) Fair value change 8,465 - - - - - - - - - 8,465 Impairment of PPE - - - - - (339) - - - - (339) Closing balance 311,026 20,221,177 103,943 118,459 39,639 8,855 - 5,220 109,447 15,993 20,933,759 Equity accounted investees 16,256,411 - - - - - - - - (1,081,549) 15,174,862 Other assets 8,579,896 2,870,637 55,874 3,849 10,100 52,932 15 48,292 1,994,314 (805,691) 12,810,218 Total assets 25,147,333 23,091,814 159,817 122,308 49,739 61,787 15 53,512 2,103,761 (1,871,247) 48,918,839 - Segment liabilities 157,318 2,110,355 - - - - - 1,213 - - 2,268,886 Other liabilities 310,163 35,963,451 103,165 30,225 54,356 1,616 -17,782 2,353,162 (92,774) 38,741,146 Total liabilities 467,481 38,073,806 103,165 30,225 54,356 1,616 - 18,995 2,353,162 (92,774) 41,010,032 - Cashows from operating activities 4,766,330 1,994,127 (74,408) (28,508) (5,113) 7,237 -(1,223) 59,245 (5,460,849) 1,256,838 Cashows from investing activities (4,761,256) (697,698) (235) (6,855) - 150 - (2,723) -4,561,840 (906,777) Cashows from nancing activities (1,135) -97,380 1,547 445 41,174 -45,224 -(883,468) (698,833) NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) in thousands of Kwacha 6 Operating segments (Continued) b. Information about reportable segment (continued) INTEGRATED ANNUAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc 77Investing SMARTLY The segment results for the Group were as follows: December 2022 Investments Mining and processing Technical services ZCCM-IH ZMW’000 Mopani Copper Mine Plc ZMW’000 Limestone Resources Limited ZMW’000 Zambia Gold Company Limited ZMW’000 Kariba minerals Limited ZMW’000 Kabundi Resources Limited ZMW’000 Central African Cement ZMW’000 Misenge Environmental and Technical Services Limited ZMW’000 Others Consolidation Adjustments ZMW’000 Consolidated ZMW’000 Segment assets Opening balance 295,237 20,428,487 61,970 114,795 38,852 10,627 -2,972 110,220 8,663 21,071,823 Additions 16,085 1,320,011 235 7,167 - 189 - 2,722 6,778 -1,353,187 Movement in inventory (5,607) 271,828 (412) -3,557 114 - - (258) -269,222 Property plant and equipment Revaluation 12,480 - - - - - - - - - 12,480 Increase in environmental asset - - 58,128 - - - - - - - 58,128 Disposal (1,813) (1,279) - - - - - - - - (3,092) Depreciation and amortisation (13,821) (1,797,870) (15,978) (3,503) (2,770) (1,736) -(474) (7,293) 7,330 (1,836,115) Fair value change 8,465 - - - - - - - - - 8,465 Impairment of PPE - - - - - (339) - - - - (339) Closing balance 311,026 20,221,177 103,943 118,459 39,639 8,855 - 5,220 109,447 15,993 20,933,759 Equity accounted investees 16,256,411 - - - - - - - - (1,081,549) 15,174,862 Other assets 8,579,896 2,870,637 55,874 3,849 10,100 52,932 15 48,292 1,994,314 (805,691) 12,810,218 Total assets 25,147,333 23,091,814 159,817 122,308 49,739 61,787 15 53,512 2,103,761 (1,871,247) 48,918,839 - Segment liabilities 157,318 2,110,355 - - - - - 1,213 - - 2,268,886 Other liabilities 310,163 35,963,451 103,165 30,225 54,356 1,616 -17,782 2,353,162 (92,774) 38,741,146 Total liabilities 467,481 38,073,806 103,165 30,225 54,356 1,616 - 18,995 2,353,162 (92,774) 41,010,032 - Cashows from operating activities 4,766,330 1,994,127 (74,408) (28,508) (5,113) 7,237 -(1,223) 59,245 (5,460,849) 1,256,838 Cashows from investing activities (4,761,256) (697,698) (235) (6,855) - 150 - (2,723) -4,561,840 (906,777) Cashows from nancing activities (1,135) -97,380 1,547 445 41,174 -45,224 -(883,468) (698,833) NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) in thousands of Kwacha 6 Operating segments (Continued) The segment results for the Group were as follows: December 2022 Investments Mining and processing Technical services ZCCM-IH ZMW’000 Mopani Copper Mine Plc ZMW’000 Limestone Resources Limited ZMW’000 Zambia Gold Company Limited ZMW’000 Central African Cement ZMW’000 Kabundi Resources Limited ZMW’000 Kariba minerals Limited ZMW’000 Misenge Environmental and Technical Services Limited ZMW’000 Others Consolidation Adjustments ZMW’000 Consolidated ZMW’000 Revenue from external customers: Sales 778 11,854,038 26,843 31 - 13,635 23,038 -38,925 -11,957,288 Services - - - - - - - 2,066 - - 2,066 Total revenue from external customers 778 11,854,038 26,843 31 - 13,635 23,038 2,066 38,925 - 11,959,354 Inter-segment revenue - - - - - - 2,866 -(2,866) - Total segment revenue 778 11,854,038 26,843 31 - 13,635 23,038 4,932 38,925 (2,866) 11,959,354 Consolidated revenue 778 11,854,038 26,843 31 - 13,635 23,038 4,932 38,925 (2,866) 11,959,354 Interest income 145,334 - - 340 - - - - 206,224 -351,898 Interest expense (14) (2,060,039) (155) (439) - - (1,304) -(102,198) 96,387 2,067,762 Net (impairment)/recovery of nancial assets (543) -(1,616) - - - - 71 5,800 (11,843) (8,131) Depreciation and amortisation expense (13,821) (1,797,870) (15,978) (3,503) -(1,736) (2,770) (474) (6,945) 6,982 1,836,115 Other income/(expenses) 4,363,315 (13,049,069) (97,067) (36,763) -(6,687) (26,256) (8,874) (159,324) (4,517,691) (13,538,416) Total prot/ (loss) before tax for reported segments 4,495,049 (5,052,940) (87,973) (40,334) - 5,212 (7,292) (4,345) (17,518) (4,429,031) (5,139,172) Income tax credit/(expense) (236,321) -(2,811) (11,231) - 294 2,099 (49) (1,485) -(249,504) Share of prot of equity accounted investees - - - - - - - - - 1,603,143 1,603,143 Consolidated prot for the year 4,258,728 (5,052,940) (90,784) (51,565) - 5,506 (5,193) (4,394) (19,003) (2,825,888) (3,785,533) b. Information about reportable segments (continued) INTEGRATED ANNUAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc 78Investing SMARTLY NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) in thousands of Kwacha 6 Operating segments (Continued) b. Information about reportable segment (continued) December 2021 Investments Technical services Mining and processing ZCCM-IH Mopani Copper Mine Plc Limestone Resources Limited Zambia Gold Company Limited Central African Cement Kabundi Resources Limited Kariba minerals Limited Misenge Environmental and Technical Services Limited Others Consolidation Adjustments Consolidated ZMW’000 ZMW’000 ZMW’000 ZMW’000 ZMW’000 ZMW’000 ZMW’000 ZMW’000 ZMW’000 ZMW’000 ZMW’000 Revenue from external customers: Sales 20,428 14,116,217 118,995 68,283 -5,575 26,115 -38,145 14,393,758 Services - - - - - - - 1,735 - - 1,735 Total revenue from external customers 20,428 14,116,217 118,995 68,283 - 5,575 26,115 1,735 38,145 - 14,395,493 Inter-segment revenue 59,409 - - - - - 15,379 - - 74,788 Total revenue from reportable segments 79,837 14,116,217 118,995 68,283 - 5,575 26,115 17,114 38,145 14,470,281 Consolidated revenue 79,837 14,116,217 118,995 68,283 - 5,575 26,115 17,114 38,145 (74,788) 14,395,493 Interest income 968,137 - - - - - - - 968,137 Interest expense 84,538 - - 1,374 - - - - (32) 85,808 Net impairment of nancial assets (8,872) (991,301) - - - - (1,599) (32) (10,796) 32 (1,012,568) Depreciation and amortisation expense 42,816 -(1,525) 269 - - 699 (72) (9,846) 30,976 63,317 Depreciation and amortisation expense (13,543) (1,500,450) (6,795) (16,145) (2,763) (2,771) (342) (7,812) 8,663 (1,541,958) Other Income/(expenses) 436,847 (13,051,691) (150,160) (48,543) (730) (3,973) (22,906) (14,012) (22,242) (15,724,671) (28,602,081) Total prot/ (loss) before tax for reported segments 1,589,760 (1,427,225) (39,485) 5,238 (730) (1,161) (462) 2,656 (12,551) (15,759,820) (15,643,780) Income tax credit/(expense) 86,158 (292) (5,830) -(790) 7,897 (150) (20,517) -66,476 Share of prot of equity accounted investees - - - - - - - - - 3,004,542 3,004,542 Consolidated prot for the year 1,675,918 (1,427,225) (39,777) (592) (730) (1,951) 7,435 2,506 (33,068) (12,755,278) (12,572,762) INTEGRATED ANNUAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc 79Investing SMARTLY NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) in thousands of Kwacha 6 Operating segments (Continued) b. Information about reportable segment (continued) December 2021 Investments Technical services Mining and processing ZCCM-IH Mopani Copper Mine Plc Limestone Resources Limited Zambia Gold Company Limited Central African Cement Kabundi Resources Limited Kariba minerals Limited Misenge Environmental and Technical Services Limited Others Consolidation Adjustments Consolidated ZMW’000 ZMW’000 ZMW’000 ZMW’000 ZMW’000 ZMW’000 ZMW’000 ZMW’000 ZMW’000 ZMW’000 ZMW’000 Revenue from external customers: Sales 20,428 14,116,217 118,995 68,283 -5,575 26,115 -38,145 14,393,758 Services - - - - - - - 1,735 - - 1,735 Total revenue from external customers 20,428 14,116,217 118,995 68,283 - 5,575 26,115 1,735 38,145 - 14,395,493 Inter-segment revenue 59,409 - - - - - 15,379 - - 74,788 Total revenue from reportable segments 79,837 14,116,217 118,995 68,283 - 5,575 26,115 17,114 38,145 14,470,281 Consolidated revenue 79,837 14,116,217 118,995 68,283 - 5,575 26,115 17,114 38,145 (74,788) 14,395,493 Interest income 968,137 - - - - - - - 968,137 Interest expense 84,538 - - 1,374 - - - - (32) 85,808 Net impairment of nancial assets (8,872) (991,301) - - - - (1,599) (32) (10,796) 32 (1,012,568) Depreciation and amortisation expense 42,816 -(1,525) 269 - - 699 (72) (9,846) 30,976 63,317 Depreciation and amortisation expense (13,543) (1,500,450) (6,795) (16,145) (2,763) (2,771) (342) (7,812) 8,663 (1,541,958) Other Income/(expenses) 436,847 (13,051,691) (150,160) (48,543) (730) (3,973) (22,906) (14,012) (22,242) (15,724,671) (28,602,081) Total prot/ (loss) before tax for reported segments 1,589,760 (1,427,225) (39,485) 5,238 (730) (1,161) (462) 2,656 (12,551) (15,759,820) (15,643,780) Income tax credit/(expense) 86,158 (292) (5,830) -(790) 7,897 (150) (20,517) -66,476 Share of prot of equity accounted investees - - - - - - - - - 3,004,542 3,004,542 Consolidated prot for the year 1,675,918 (1,427,225) (39,777) (592) (730) (1,951) 7,435 2,506 (33,068) (12,755,278) (12,572,762) 79Investing SMARTLY 79Investing SMARTLY INTEGRATED ANNUAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc 80Investing SMARTLY Investments Technical services Mining and processing ZCCM-IH Mopani Copper Mine Plc Limestone Resources Limited Zambia Gold Company Limited Central African Cement Kabundi Resources Limited Kariba minerals Limited Misenge Environmental and Technical Services Limited Others Consolidation Adjustments Consolidated ZMW’000 ZMW’000 ZMW’000 ZMW’000 ZMW’000 ZMW’000 ZMW’000 ZMW’000 ZMW’000 ZMW’000 ZMW’000 Revenue from external customers: Sales 20,428 14,116,217 118,995 68,283 -5,575 26,115 -38,145 14,393,758 Services - - - - - - - 1,735 - - 1,735 Total revenue from external customers 20,428 14,116,217 118,995 68,283 - 5,575 26,115 1,735 38,145 - 14,395,493 Inter-segment revenue 59,409 - - - - - 15,379 - - 74,788 Total revenue from reportable segments 79,837 14,116,217 118,995 68,283 - 5,575 26,115 17,114 38,145 14,470,281 Consolidated revenue 79,837 14,116,217 118,995 68,283 - 5,575 26,115 1,735 38,145 (74,788) 14,395,493 Interest income 968,137 - - - - - - - 968,137 Interest expense 84,538 - - 1,374 - - - - (32) 85,808 Net impairment of nancial assets (8,872) (991,301) - - - - (1,599) (32) - 32 (1,012,568) Depreciation and amortisation expense 42,816 -(1,525) 269 - - 699 (72) (9,846) 30,976 63,317 Depreciation and amortisation expense (13,543) (1,500,450) (6,795) (16,145) (2,763) (2,771) (342) (7,812) 8,663 (1,541,958) Other Income/(expenses) 436,847 (13,051,691) (150,160) (48,543) (730) (3,973) (22,906) (14,012) (22,242) (15,724,671) (28,602,081) Total prot/ (loss) before tax for reported segments 1,589,760 (1,427,225) (39,485) 5,238 (730) (1,161) (462) 2,656 (12,551) (15,759,820) (15,643,780) Income tax credit/(expense) 86,158 (292) (5,830) -(790) 7,897 (150) (20,517) -66,476 Share of prot of equity accounted investees - - - - - - - - - 3,004,542 3,004,542 Consolidated prot for the year 1,675,918 (1,427,225) (39,777) (592) (730) (1,951) 7,435 2,506 (33,068) (12,755,278) (12,572,762) NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) in thousands of Kwacha 6 Operating segments (Continued) b. Information about reportable segment (continued) INTEGRATED ANNUAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc 81Investing SMARTLY Investments Technical services Mining and processing ZCCM-IH Mopani Copper Mine Plc Limestone Resources Limited Zambia Gold Company Limited Central African Cement Kabundi Resources Limited Kariba minerals Limited Misenge Environmental and Technical Services Limited Others Consolidation Adjustments Consolidated ZMW’000 ZMW’000 ZMW’000 ZMW’000 ZMW’000 ZMW’000 ZMW’000 ZMW’000 ZMW’000 ZMW’000 ZMW’000 Revenue from external customers: Sales 20,428 14,116,217 118,995 68,283 -5,575 26,115 -38,145 14,393,758 Services - - - - - - - 1,735 - - 1,735 Total revenue from external customers 20,428 14,116,217 118,995 68,283 - 5,575 26,115 1,735 38,145 - 14,395,493 Inter-segment revenue 59,409 - - - - - 15,379 - - 74,788 Total revenue from reportable segments 79,837 14,116,217 118,995 68,283 - 5,575 26,115 17,114 38,145 14,470,281 Consolidated revenue 79,837 14,116,217 118,995 68,283 - 5,575 26,115 1,735 38,145 (74,788) 14,395,493 Interest income 968,137 - - - - - - - 968,137 Interest expense 84,538 - - 1,374 - - - - (32) 85,808 Net impairment of nancial assets (8,872) (991,301) - - - - (1,599) (32) - 32 (1,012,568) Depreciation and amortisation expense 42,816 -(1,525) 269 - - 699 (72) (9,846) 30,976 63,317 Depreciation and amortisation expense (13,543) (1,500,450) (6,795) (16,145) (2,763) (2,771) (342) (7,812) 8,663 (1,541,958) Other Income/(expenses) 436,847 (13,051,691) (150,160) (48,543) (730) (3,973) (22,906) (14,012) (22,242) (15,724,671) (28,602,081) Total prot/ (loss) before tax for reported segments 1,589,760 (1,427,225) (39,485) 5,238 (730) (1,161) (462) 2,656 (12,551) (15,759,820) (15,643,780) Income tax credit/(expense) 86,158 (292) (5,830) -(790) 7,897 (150) (20,517) -66,476 Share of prot of equity accounted investees - - - - - - - - - 3,004,542 3,004,542 Consolidated prot for the year 1,675,918 (1,427,225) (39,777) (592) (730) (1,951) 7,435 2,506 (33,068) (12,755,278) (12,572,762) December 2021 Investments Mining and processing Technical services ZCCM-IH ZMW’000 Mopani Copper Mine Plc ZMW’000 Limestone Resources Limited ZMW’000 Zambia Gold Company Limited ZMW’000 Nkandabwe Coal Mine Limited ZMW’000 Kariba minerals Limited ZMW’000 Kabundi Resources Limited ZMW’000 Central African Cement ZMW’000 Misenge Environmental and Technical Services Limited ZMW’000 Others Consolidation Adjustments ZMW’000 Consolidated Segment assets ZMW’000 Opening balance 277,461 -52,772 38,780 -47,349 10,941 -2,421 99,821 -529,545 Acquisition of subsidiary - 20,343,093 - - - - - - - - - 20,343,093 Additions 17,889 741,310 10,730 68,606 - 76 2,449 - 893 17,125 -859,078 Movement in inventory 8,291 844,534 5,263 23,554 -(5,802) - - - 1,086 -876,926 Disposal (198) - - - - - - - - - - (198) Depreciation and amortisation (13,543) (1,500,450) (6,795) (16,145) -(2,771) (2,763) -(342) (7,812) 8,663 (1,541,958) Fair value change 5,337 - - - - - - - - - - 5,337 Closing balance 295,237 20,428,487 61,970 114,795 - 38,852 10,627 - 2,972 110,220 8,663 21,071,823 Equity accounted investees 20,603,089 - - - - - - - - - (3,535,930) 17,067,159 Other assets 4,273,837 3,760,838 124,484 37,639 35,605 4,563 15 11,261 1,368,391 (907,202) 8,679,434 Total assets 25,172,163 24,189,325 186,454 152,434 3 44,457 15,190 15 14,233 1,478,611 (4,434,469) 46,818,416 Segment liabilities 119,715 1,411,505 - - - - - - 1,897 - - 1,533,117 Other liabilities 320,254 30,295,857 71,983 17,858 38,404 43,882 1,699 -18,677 1,678,576 (10,796) 32,476,394 Total liabilities 439,969 31,707,362 71,983 17,858 38,404 43,882 1,699 - 20,574 1,678,576 (10,796) 34,009,511 Cashows from operating activities 608,940 1,279,446 8,378 11,215 -7,869 2,097 (730) (1,185) 51,791 (1,510,631) 457,190 Cashows from investing activities (486,227) (754,567) (10,240) (69,264) -(76) (2,492) -(893) -1,220,572 (103,187) Cashows from nancing activities (124,457) -1,410 43,095 -(1,894) 2,292 730 (148) -(323,722) (402,694) * Segment assets exclude nancial instruments, deferred tax assets/liabilities and employee benet assets. i. Other assets consist trade and other receivables, term deposits, cash and cash equivalents. ii. Other liability includes tax liabilities, retirement benets, environmental liability and legal provision. ii. Elimination adjustments relate to intersegment transactions. The adjustment to other liabilities relates to the elimination of shareholder loans and the reclassication of deferred tax liabilities NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) in thousands of Kwacha 6 Operating segments (Continued) b. Information about reportable segment (continued) Group reconciliation of reported assests and liabilities ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc 82 Investing SMARTLY 7. Revenue from contracts with customers Group Company 31 Dec 2022 31 Dec 2021 31 Dec 2022 31 Dec 2021 Sales of goods transferred at a point in time 12,396,118 14,769,856 778 79,837 Realisation charges (i) (438,830) (376,098) Services transferred over time 2,066 1,735 - - Total balance 11,959,354 14,395,493 778 79,837 8. Investment income/(expenses) Group Company 31 Dec 2022 31 Dec 2021 31 Dec 2022 31 Dec 2021 Dividends receivable - - 4,868,317 956,437 Interest income 46,967 13,042 46,627 11,700 Royalty income 1,365 - 1,365 - investment income - - 4,916,309 968,137 Investments expenses Interest expense (439) - - - Net investment income 47,893 13,042 4,916,309 968,137 9. Other (expenses)/income Group Company 31 Dec 2022 31 Dec 2021 31 Dec 2022 31 Dec 2021 Management fees and commissions - 223 5,944 8,923 Fair value adjustment- investment property (note 21) 8,465 5,337 8,465 5,337 Forex trading 13,379 15,132 - - Fair value adjustment- inventory (5,607) -(5,607) - Rental income 10,193 10,632 10,334 10,774 Gain on disposal of property, plant and equipment (22) 738 (22) 248 Debt write off 3,995 - - - Sundry income (ii) 158,835 204,660 69,089 10,299 Tatal balance 189,238 236,722 88,203 35,581 i. Realisation charges Realisation charges relates to deductions from the purchase price in line with the sales agreement which includes freight and transportation costs. ii .Sundry income Sundry income mainly includes income such as core shed viewing/sampling and sale of scrap. NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) in thousands of Kwacha ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc 83Investing SMARTLY 10. Net impairment losses on nancial assets Movements on the provision for impairment of loans and receivables are as follows: Group Company 31 Dec 2022 31 Dec 2021 31 Dec 2022 31 Dec 2021 Balance at 1 Jan 1,127,128 1,228,645 1,646,147 1,695,601 Impairment recognised 12,235 45,794 4,748 81,272 Impairment recovery (4,104) (109,111) (4,205) (124,088) Net impairment (release)/expense recognised 8,131 (63,317) 543 (42,816) Included in assets held for sale (5,800) (31,627) -(65) Receivables written off (41,500) (6,573) (478,487) (6,573) Balance at 31 Dec 1,087,959 1,127,128 1,168,203 1,646,147 11. Expenses by nature Prot/(loss) before income tax is stated after charging: Group Company 31 Dec 2022 31 Dec 2021 31 Dec 2022 31 Dec 2021 Cost of sales Inventory movements 5,855,702 6,212,909 2,130 77,707 Mining and mineral processing costs 4,714,825 3,876,795 - - Employee costs 1,784,005 1,259,808 - - Depreciation and amortisation 1,813,582 1,515,948 - - Other cost of sales 541,000 1,365,573 - - Total balance 14,709,114 14,231,033 2,130 77,707 Administration expenses Depreciation and amortisation 38,529 26,010 13,821 13,543 Auditors’ remuneration 2,922 3,196 985 859 Employee costs 361,913 1,292,822 129,353 108,765 Environmental consultancy expenses - - 2,564 7,473 Provision for environmental rehabilitation (46,568) 128,771 (47,273) 28,104 Impairment of investments in subsidiaries (note 22(a)/23 - - 418,821 - Corporate and administration expenses ((i) below) 392,947 - 224,460 214,173 Legal expenses 151,300 Investment expenses 138,100 Total balance 749,743 1,740,199 742,731 372,917 Other administration expenses Corporate and administration expenses mainly include Mopani’s administration cost of ZMW100 million, (2021: ZMW982 million), legal expenses ZMW115 million (2021: ZMW76.3 million) and investment expenses ZMW30.1 million (2021: ZMW80.1 million). NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) in thousands of Kwacha ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc 84 Investing SMARTLY NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) in thousands of Kwacha 12. Personnel expenses Group Company 31 Dec 2022 31 Dec 2021 31 Dec 2022 31 Dec 2021 Salaries and wages 1,972,612 1,475,917 123,000 101,668 Retirement benet costs: Dened benet scheme (note 37) 168,173 82,614 3,154 4,979 Mukuba Pension Scheme 1,791 972 1,791 972 National Social Security Funds 3,342 2,514 1,408 1,146 Total expense 2,145,918 1,562,017 129,353 108,765 13. Finance income and nance costs Group Company 31 Dec 2022 31 Dec 2021 31 Dec 2022 31 Dec 2021 Interest on borrowings (2,067,762) (1,012,568) (14) (8,872) Exchange differences (179,633) (321,912) (5,270) (318,344) Unwinding of discount on site restoration (18,892) (14,271) - - Finance costs (2,266,287) (1,348,751) (5,284) (327,216) Interest income from associate companies 98,809 72,838 98,707 72,838 Exchange differences 353,632 409,868 347,340 2,391 Finance income 452,441 482,706 446,047 75,229 Net nance income 1,813,846 866,045 440,763 251,987 14. Income tax expense Group Company 31 Dec 2022 31 Dec 2021 31 Dec 2022 31 Dec 2021 Amounts recognised in prot or loss: Current income tax (35,282) (27,985) (30,952) (27,295) Deferred income tax charge (note 37) (214,222) 94,461 (205,369) 113,453 Income tax expense (249,504) 66,476 (236,321) 86,158 The tax on the Group and Company prot before income tax differs from the theoretical amount that would arise using the statutory income tax rate as follows: ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc 85Investing SMARTLY 14. Income tax expense (Continued) Group Company 31 Dec 2022 31 Dec 2021 31 Dec 2022 31 Dec 2021 (Loss)/prot before income tax (3,536,029) (12,639,238) 4,495,049 1,589,760 Less: share of prot from equity accounted associates (1,603,143) (3,004,542) - - Total balance (5,139,172) (15,643,780) 4,495,049 1,589,760 Tax calculated at rates applicable to prots @ 30% (2021: 35%) Tax effect of: (1,541,752) (5,475,323) 1,348,515 556,416 Non-deductible expenses 3,227,820 5,727,489 324,370 (323,932) Income taxed at a lower rate (1,432,905) (315,580) (1,432,905) (315,580) Effect of change in the deferred tax rate (3,659) (3,062) (3,659) (3,062) Tatal income tax expense 249,504 (66,476) 236,321 (86,158) * Income taxes at lower rate relates to rental income and dividends taxed at 15% and 0% respectively. Dividend income received from Zambian mines is subject to zero tax. Dividend taxed at 0% tax rate amounted to ZMW4.62 billion (2021: ZMW810.65 million). Current income tax movement in the statement of nancial position Group Company 31 Dec 2022 31 Dec 2021 31 Dec 2022 31 Dec 2021 Opening balance 1 Jan 202,563 214,527 202,236 205,781 Charge for the year 35,282 27,985 30,952 27,295 Tax paid (46,217) (39,949) (44,030) (30,840) Included in assets held for sale (1,485) - - - Closing balance 190,143 202,563 189,158 202,236 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) in thousands of Kwacha ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc 86 Investing SMARTLY 15. Earnings per share a. Basic earnings per share The calculation of basic earnings per share has been calculated based on prot or loss attributable to ordinary shareholders and weighted average number of ordinary shares outstanding. i. Prot/(loss) attributable to ordinary shareholders (basic) 31-Dec 31-Dec 2022 2021 Group Loss attributable to ordinary shareholders (3,785,533) (12,572,762) Company Prot attributable to ordinary shareholders 4,258,728 1,675,918 ii. Weighted average number of shares (basic) 31 Dec 2022 31 Dec 2021 Opening balance at 1 January 160,800,286 160,800,286 Closing balance 160,800,286 160,800,286 The weighted average number of shares is determined by taking the number of additional shares issued and multiplying by the number of days the new shares were in issue over the reporting period. b. Diluted earnings per share There were no potentially dilutive shares outstanding at 31 December 2022 (2021: nil). Diluted earnings per share are therefore the same as basic earnings per share. 16. Dividends per share Subsequent to the year end, a dividend of ZMW2.41 per share was declared for the year ended 31 December 2022 results (2021: ZMW 2.09 per share). NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) in thousands of Kwacha ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc 87Investing SMARTLY NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) in thousands of Kwacha 17. Property, plant and equipment Reconciliation of carrying amount (continued) Group Land and buildings Plant and equipment Vertical and Rotary Kilns Mine Development Motor Vehicles Work in progress Total Cost or valuation Balance at 1 January 2021 106,794 72,250 - - 102,859 111,383 393,286 Acquisition through business combination 509,762 9,895,577 -1,916,830 442,062 577,087 13,341,318 Additions 3,894 39,443 - - 21,030 745,566 809,933 Transfers - 2,470 - 330,534 33,289 (366,293) - Disposal (6,253) - - - (199,878) - (206,131) Balance at 31 December 2021 614,197 10,009,740 - 2,247,364 399,362 1,067,743 14,338,406 Balance at 1 January 2022 614,197 10,009,740 - 2,247,364 399,362 1,067,743 14,338,406 Additions 178 5,311 - - 9,637 1,323,108 1,338,234 Transfers 116,503 123,954 -668,991 194,592 (1,104,040) - Revaluation 8,007 - - - - - 8,007 Increase in environmental asset - - 101,015 - - - 101,015 Disposal - (283) - - (9,484) - (9,767) Balance at 31 December 2022 738,885 10,138,722 101,015 2,916,355 594,107 1,286,811 15,775,895 Accumulated depreciation and impairment losses Balance at 1 January 2021 11,180 28,958 - - 74,742 111,383 226,263 Charge for the year 144,522 1,039,541 - 221,540 55,021 - 1,460,624 Disposal (6,253) - - - (199,680) - (205,933) Balance at 31 December 2021 149,449 1,068,499 - 221,540 (69,917) 111,383 1,480,954 Balance at 1 January 2022 149,449 1,068,499 - 221,540 (69,917) 111,383 1,480,954 Charge for the year 101,575 845,250 8,081 587,799 235,251 - 1,777,956 Impairment - - - - 339 - 339 Decrease in environmental asset - - 42,887 - - - 42,887 Eliminated on revaluation (4,473) - - - - - (4,473) Disposal - (136) - - (6,539) - (6,675) Balance at 31 December 2022 246,551 1,913,613 50,968 809,339 159,134 111,383 3,290,988 Carrying amounts Balance at 31 December 2021 464,748 8,941,241 - 2,025,824 469,279 956,360 12,857,452 Balance at 31 December 2022 492,334 8,225,109 50,047 2,107,016 434,973 1,175,428 12,484,907 ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc 88 Investing SMARTLY NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) in thousands of Kwacha 17. Property, plant and equipment (Continued) i. Impairment Property, plant and equipment are reviewed for impairment in accordance with note 45 (j)(ii). Assets amounting to ZMW 339,000 were impaired during the year. The asset impaired relates to a motor vehicle for Kabundi Resources Limited that was involved in an accident during the year. ii. Assets pledged as security Refer to note 40 (vii) for information on non-current assets pledged as security by the Group. iii. Leased plant and equipment The Group did not have any assets under lease as at 31 December 2022 (2021: nil). iv. Borrowing costs There were no borrowing costs included in property, plant and equipment during the period (2021: nil) in respect of the construction works. The borrowing costs at group level mostly relates to Mopani Copper Mine Plc and do not qualify for capitalisation. v. Work in progress Work in progress relates to the Group’s property plant and equipment in transit and under construction. Company Land and buildings Plant and equipment Motor vehicles Work in progress Total Cost or revaluation Balance at 1 January 2021 58,665 20,222 35,452 987 115,326 Additions 1,034 7,149 3,967 -12,150 Disposal - - (3,781) - (3,781) Balance at 31 December 2021 59,699 27,371 35,638 987 123,695 Balance at 1 January 2022 59,699 27,371 35,638 987 123,695 Additions -2,109 5,707 5,554 13,370 Disposal - (283) (4,983) - (5,266) Revaluation 8,007 - - - 8,007 Balance at 31 December 2022 67,706 29,197 36,362 6,541 139,806 Accumulated depreciation and impairment losses Balance at 1 January 2021 2,409 14,422 18,456 987 36,274 Charge for the year 1,381 3,810 7,374 - 12,565 Disposal - - (3,583) - (3,583) Balance at 31 December 2021 3,790 18,232 22,247 987 45,256 Balance at 1 January 2022 3,790 18,232 22,247 987 45,256 Charge for the year 1,406 4,430 6,169 - 12,005 Eliminated on revaluation (4,473) - - - (4,473) Disposal - (136) (3,317) - (3,453) Balance at 31 December 2022 723 22,526 25,099 987 49,335 Carrying amount Balance at 31 December 2021 55,909 9,139 13,391 - 78,439 Balance at 31 December 2022 66,983 6,671 11,263 5,554 90,471 ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc 89Investing SMARTLY Revaluation Buildings were revalued on 31 December 2022, by independent registered valuers, Sherwood Greene. Valuations were made based on the Open Market Value. The Company revalue land and buildings every three years. 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 carrying values of property, plant and equipment approximates their fair values. Revaluations are done with sufcient regularity to ensure that the carrying amount does not differ materially from the fair value. The register showing the details of property, as required by section 30 of the Companies Act, 2017 of Zambia, is available for inspection during business hours at the registered ofce of the Company. The carrying amounts of revalued land and buildings were stated on the historical cost basis, the amounts would be as follows: 31 Dec 2022 31 Dec 2021 ZMW,000 ZMW,000 Land and buildings Cost 38,489 38,489 Accumulated depreciation (5,257) (3,332) Net book amount 33,232 35,157 18. Exploration and evaluation asset Reconciliation of carrying amount Group Cost ZMW’000 Balance at 1 January 2021 22,428 Additions 26,939 Balance at 31 December 2021 49,367 Balance at 1 January 2022 49,367 Additions 3,794 Balance at 31 December 2022 53,167 Accumulated depreciation and impairment losses Balance at 1 January 2021 1,724 Charge for the year 8,654 Balance at 31 December 2021 10,378 Balance at 1 January 2022 10,378 Depreciation adjustment ( 8 , 6 5 4 ) Balance at 31 December 2022 1,724 Carrying amount Balance at 31 December 2021 38,989 Balance at 31 December 2022 51,437 Exploration and evaluation assets represent costs capitalized by the Group in relation to diamond drilling, laboratory analysis of drilling core samples, geochemical and geophysical studies as well as costs incurred in acquisition of rights to explore the license area in Kasenseli, Mwinilunga district. The site has been deemed to possess commercial reserves. NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) in thousands of Kwacha 17. Property, plant and equipment (Continued) ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc 90 Investing SMARTLY A total of 128 kilograms of gold has been recovered from commencement of exploration in June 2020. (This amount has been recognised as revenue in the preceding years in accordance with Note 45 (m). The project is still in its exploration stage and is yet to reach its full commercial production level. The Group classies exploration and evaluation assets as tangible assets. The depreciation adjustment relates to a reversal of overstated depreciation in prior years for the exploration and evaluation asset for Zambia Gold Limited. The error has been adjusted in the current year at group level as the amount is not signicant for the group. The following are the income and expenses, assets, liabilities, and operating and investing cash ows arising from the exploration and evaluation asset: 19. Intangible assets The Group’s and Company’s intangible assets relate to brand, mine rights and acquired computer software programmes. Reconciliation of carrying amount: Group Company Cost Mineral Rights Computer software Total Group intangible assets Computer software Balance at 1 January 2021 - 3,895 3,895 3,547 Additions -2,808 2,808 2,766 Acquisition through business combination (note 23) 3,281,457 3,281,457 - Balance at 1 31 Dec 2021 3,281,457 6,703 3,288,160 6,313 Balance at 1 January 2022 3,281,457 6,703 3,288,160 6,313 Additions -2,804 2,804 2,656 Balance at 31 December 2022 3,281,457 9,507 3,290,964 8,969 Amortisation Balance at 1 January 2021 - (3,146) (3,146) (2,798) Amortisation (71,692) (988) (72,680) (978) Balance at 31 December 2021 (71,692) (4,134) (75,826) (3,776) Amortisation (64,861) (1,852) (66,713) (1,816) Balance at 31 December 2022 (136,653) (5,986) (142,639) (5,592) Carrying amount Balance at 31 December 2021 3,209,765 2,569 3,212,334 2,537 Balance at 31 December 2022 3,144,804 3,521 3,148,325 3,377 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) in thousands of Kwacha 18. Exploration and evaluation asset (Continued) ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc 91Investing SMARTLY NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) in thousands of Kwacha 20. Goodwill The movements in the net carrying amount of goodwill are as follows: 31 Dec 2022 31 Dec 2021 ZMW’000 ZMW’000 Gross carrying amount At 1 Jan - - Acquired through business combination (Note 23(d)) -14,862,341 At 31 Dec - 14,862,341 Impairment At 1 Jan - - Impairment loss recognised - 14,862,341 At 31 Dec - 14,862,341 Carrying amount at 31 December - - Goodwill is monitored by management at the Group level and management considers the whole business (investee company) to be one cash generating unit (CGU). The computation of the recoverable amounts for the purposes of Goodwill testing is done on the higher of fair value less cost to sell basis or value in use calculations using a discounted cashow. Market participants in the mining industry generally use Discounted Cashows (DCF) to determine fair value. TheThe key assumptions for the fair value using discounted cashow (DCF) method calculations are those regarding the discount rates, growth rates and expected changes to selling prices and direct costs. Management estimates discount rates using post-tax rates that reect current market assessments of the time value of money and the risks specic to the CGUs. Mopani Copper Mine CGU On 31 March 2021, the ZCCM-IH Shareholders approved the ZCCM-IH’s acquisition of the remaining 90% interest in Mopani held by Carlisa Investments Corp (“Carlisa”) for a US$1 consideration and ZMW 33.1bn (US$1.50 billion) in Transaction Debt. The acquisition of 90% of the issued shares in Mopani Copper Mine Plc will result in ZCCM-IH being the holder of 100% of the issued shares in the Company. As at 31 March 2021, Goodwill amounting to ZMW14,862 million was recognized. The goodwill is attributable Mopani’s strong position as a Grade A copper producer in the mining industry and other factors such as assembled workforce. Refer to the table that includes a summary of Key assumptions as at that date. ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc 92 Investing SMARTLY NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) in thousands of Kwacha 20. Goodwill (Continued) Below are the key assumptions used in the calculation of the CGU recoverable value: Assumptions as at 31 March, 2021. Cash generating unit Method used and assumptions Mopani Copper Mine Plc • Method Used to determine recoverable amount: Fair Value less cost to Sell using discounted cashow method (DCF) • Assumptions as at 31 March 2021. • WACC impact Excluding SRP -computations for the assets under consideration implied a WACC ranging from 13.71% to 15.96%. The WACC applied for the analysis had been based on the low range of 13+++.71% to determine the high end of our valuation range. • WACC impact including SRP -Included 1.5-2% specic risk premium to cater for risk of inferred resources being included in LOM valuation and capex funding uncertainty. • CAPEX of ZMW 7,834m (US$355.3m) was used which was aligned with the status of expansion projects at valuation date. • Copper prices were obtained from Glencore publications. • Tax adjustments which had been adjusted for the impact of disallowed interest expenses. • Outside LoM Resources- Included outside LoM resources as a terminal value in the model. The resources used for the outside LoM is the reserves in the competent person report. As as 31 December 2021, an impairment test was conducted by comparing the carrying amount with the recoverable amount. The recoverable amount was computed by discounting the CGU’s free cashows using a WACC range of 15% - 16.7% adjusted for market and specic risk over the life of mine. The recoverable amount signicantly dropped to nil. Several economic factors deteriorated during the intervening period to year end caused by the country default on its national debt. An impact of this deterioration was a change in the country risk premium from around 8.31% to around 16.11%. As a result, the directors determined that the carrying amount of goodwill for Mopani Copper Mines Plc exceeded the recoverable amount. Accordingly, the full amount of ZMW14,862 million relating to goodwill relating to Mopani Copper Mine Plc, was impaired totally as at 31 December 2021. ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc 93Investing SMARTLY Assumptions as at 31 December, 2021. Cash generating unit Method used and assumptions Mopani Copper Mine Plc Method Used to determine recoverable amount: Fair Value less cost to Sell The Fair Value of Mopani Copper Mines Plc was determined using a discounted cashow method. Key Assumptions Commodity price assumptions and Mineral Royalty Tax For the period between 2022 and 2024, the average copper and gold price used were obtained from a sample of investment banks. From 2025 onwards, a at rate of US$3.95 /lb copper and US$1,631/oz gold was used. • The Mineral Royalty Tax for copper (a sliding scale – between 10% - 5.5%, with the higher bands being: 10% for Cu price over US$4.08/lb, 8.5% for price between US$4.08/lb – US$3.4/lb and 7.5% for prices between US$3.4 – US$2.72/lb) is assumed to be 8.5% over the LOM. • The MRT for cobalt revenue, which is xed, remains at 8.0%. Cash ow period Life of mine (LOM) was estimated to be 19 years. Growth Rate The growth rate was based on the spread of the proven and probable mineral ore reserves as determined by the mine plan which incorporates mining methods applicable at each stage of the cashow. Net working capital The forecast net working capital movements for were from 2022 to 2045 Depreciation Forecast depreciation for Mopani from 2022 to 2045 were provided. Operating costs and protability Operating cost forecasts for Mopani were obtained from the Mopani LOM. The operating costs were categorised as mining, processing, technical, corporate, general administration, royalties and other costs. Net debt As at 31 December 2021, Mopani had ZMW 86m (US$ 3.9m) drawn in overdraft, a long-term obligation of ZMW 33bn (US$1.5 billion) to Glencore and cash amounting to ZMW 103.9m (US$4.7m). Free Cash Flows The free cash ow for Mopani is the cash generated from operations, less capex and adjusted for working capital movements. WACC Capital structure Mopani’s equity value was nil, with signicant long-term debt of ZMW 33bn (US$1.5 billion). To calculate a levered beta for Mopani, a target debt-to-equity ratio derived from a peer group of mining companies was applied. This ratio was utilized when determining the relevered beta for the cost of equity calculation. WACC The cost of equity has been calculated based on: A risk-free rate of 1.5%, which is the yield on the ten-year U.S. treasury-bond. An equity market risk premium of 16.1% for Zambia, comprised of a country risk premium and a market premium. Target capital structure assumes 85.7% equity, and 14.3% debt; Unlevered beta of 0.95 based on a peer group of mining companies remains the same Foreign Exchange Effects on Goodwill. As goodwill was recognized and fully impaired in the same nancial year, there was no recognized effects of changes in foreign exchange rate at the end of the reporting period. During the year 2022, there was no goodwill that was recognised. NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) in thousands of Kwacha 20. Goodwill (Continued) ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc 94 Investing SMARTLY i. Reconciliation of carrying amounts Group Company 31 Dec 2022 31 Dec 2021 31 Dec 2022 31 Dec 2021 Balance at 1 January 192,227 183,917 192,227 183,917 Additions 59 2,973 59 2,973 Change in fair value (Note 9) 8,465 5,337 8,465 5,337 Closing balance 200,751 192,227 200,751 192,227 ii. Amounts recognised in prot or loss for investment properties. Group Company 31 Dec 2022 31 Dec 2021 31 Dec 2022 31 Dec 2021 Rental income from operating leases (note 9) 10,193 10,632 10,334 10,774 Direct operating expenses from property that generated rental income (2,287) (3,744) (2,287) (3,744) Net Rental Income 7,906 6,888 8,047 7,030 iii. Leasing arrangements The investment properties are leased to tenants under operating leases with rentals payable quarterly. Lease income from operating leases where the group is a lessor is recognised in income on a straight-line basis over the lease term. There are no variable lease payments that depend on an index or rate. Where considered necessary to reduce credit risk, th e group may obtain three months rental deposit for the term of the lease. Minimum lease payments receivable on leases of investment properties are as follows: Group and Company 31 Dec 2022 31 Dec 2021 Within 1 year 6,837 6,935 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) in thousands of Kwacha 21. Investment property ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc 95Investing SMARTLY 21. Investment property (Continued) iv. Measurement of fair value Investment properties, principally ofce buildings and residential apartments, are held for long-term rental yields. They are carried at fair value. Changes in fair values are presented in prot or loss as part of other income. Fair value hierarchy The fair value of investment property for the Company was determined, as at 31 December 2022 by Sherwood Green Property Consultants, who are sufciently independent property valuers, having appropriate recognised professional qualications and recent experience in the location and category of the property being valued. The fair value measurement for investment property of ZMW201 million (2021: ZMW 192 million) has been categorised as a Level 3 fair value based on the inputs to the valuation technique used. Valuation techniques and signicant unobservable inputs The following table shows the valuation technique used in measuring the fair value of investment property, as well as the signicant unobservable inputs used Valuation technique Signicant unobservable inputs Inter-relationships between Key unobservable inputs and fair value measurement The valuation technique used is the Discounted Cash Flows. This valuation method considers the present value of net cash ows to be generated from the property, taking into account expected rental growth rate, void periods, occupancy rate, lease incentive costs sum as rent-free periods and other costs not paid by tenants. The expected net cash ows are discounted using risk adjusted discount rates. Among other factors, the discount rate estimation considers the quality of a building and its location (prime vs secondary) tenant credit quality • Expected market rental growth (3 - 5%. Weighted average 4%) (2022: 4%, 2021: 4%) • Void periods (average 6 months after the end of each lease) (2022: 6 months, 2021: 6 months) • Occupancy rate (90- 95%, weighted average 90%) (2022: 90%, 2021: 90%) • Rent-free periods (1-month period on new leases) (2022: 1 month, 2022: 1 month) • Risk-adjusted discount rates (10% - 10.5%. weighted average 10%) (2022: 10% 2021: 10%). • The estimated fair value would increase or (decrease) if: • expected market rental growth were higher (lower); • void periods were shorter (longer); • the occupancy rate were higher (lower): • Rent-free periods were shorter (longer); or • The risk-adjusted discount rate were lower (higher). NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) in thousands of Kwacha ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc 96 Investing SMARTLY NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) in thousands of Kwacha 22. Assets classied as held for sale a. Description Reconciliation of carrying amount for the Company; Company Dec-22 Dec-21 Balance at 1 Jan 430,977 392,357 Additions 12,244 38,620 Impairment (386,007) - Change in fair value 88,486 - Balance at 31 Dec 145,700 430,977 The Board of ZCCM Investments Holdings Plc approved management’s plan to exit from Investrust Bank Plc and Mushe Milling Company Limited. On 18th October 2022, the Board of ZCCM-IH approved a plan to liquidate Mushe Milling Company Limited. b. The fair value and net assets of the investments to be disposed of are as follows: 31 Dec 2022 Group Company Assets Liabilities Fair value Investrust Bank Plc 2,097,750 (2,249,997) 145,700 Mushe Milling Company Limited 6,011 (58,497) - Total 2,103,761 (2,308,494) 145,700 31 Dec 2021 Group Company Assets Liabilities Fair value Investrust Bank Plc 1,456,954 (1,606,593) 343,214 Mushe Milling Company Limited 21,657 (71,983) 87,763 Total 1,478,611 (1,678,576) 430,977 c. Financial performance and cash ow information The nancial performance and cash ow information presented for the year ended 31 December 2022. Investrust Bank Plc Mushe Milling Company Total 31 Dec 2022 31 Dec 2022 31 Dec 2022 Revenue 206,224 38,925 245,149 other income 53,471 18 53,489 Cost of sales and expenses (260,818) (55,338) (316,156) Loss before income tax (1,123) (16,395) (17,518) Income tax expense (1,485) - (1,485) Loss for the year (2,608) (16,395) (19,003) Loss attributable to non-controlling interest (746) - (746) Net cash outow from operating activities (4,874) (1,569) (6,443) Net cash outow from investing activities (342) - (342) Net cash inow from nancing activities - 1,969 1,969 Net cash (out)/in ow (5,216) 400 (4,816) ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc 97Investing SMARTLY NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) in thousands of Kwacha 22. Assets classied as held for sale (Continued) d. Assets and liabilities of disposal group classied as held for sale The following assets and liabilities were reclassied as held for sale as at 31 December 2022; Investrust Bank Plc Mushe Milling Company Total Assets classied as held for sale Property, plant, and equipment 51,327 5,296 56,623 Intangible assets 1,603 -1,603 Financial assets at fair value through prot or loss 584 - 584 Trade and other receivables 811,725 -811,725 Term deposits 829,211 -829,211 Inventories 51,077 144 51,221 Other assets 74,907 -74,907 Cash and cash equivalents 277,316 571 277,887 Total assets of disposal group held for sale 2,097,750 6,011 2,103,761 Liabilities directly associated with assets classied as held for sale Borrowings -(32,387) (32,387) Trade and other payables (2,249,997) (26,110) (2,276,107) Total liabilities directly associated with assets classied as held for sale (2,249,997) (58,497) (2,308,494) Net liabilities held for sale (152,247) - (204,733) Accumulated non-controlling Interest (36,129) 52,486 (36,129) The nancial performance and cashow information presented for the year ended 31 December 2021; Investrust Bank Plc Mushe Milling Company Total 31 Dec 2021 31 Dec 2021 31 Dec 2021 Revenue 217,309 38,145 255,454 other income 47,772 483 48,255 Cost of sales and expenses (250,008) (66,211) (316,219) Prot/(loss) before income tax 15,073 (27,583) (12,510) Income tax expense - (20,427) (20,427) Prot/(loss) for the year 15,073 (48,010) (32,937) Prot attributable to non-controlling interest 4,311 - 4,311 Net cash inow/(outow) from operating activities 301,528 (27,703) 273,825 Net cash outow from investing activities (5,104) (57) (5,161) Net cash inow/(outow)from nancing activities (16,089) 51,711 35,622 Net cash in ow 280,335 23,951 304,286 ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc 98 Investing SMARTLY NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) in thousands of Kwacha 22. Assets classied as held for sale (Continued) d. Assets and liabilities of disposal group classied as held for sale (Continued) The following assets and liabilities were reclassied as held for sale as at 31 December 2021; Investrust Bank Plc Mushe Milling Company Total Assets classied as held for sale Property, plant, and equipment 51,669 5,469 57,138 Intangible assets 1,603 -1,603 Financial assets at fair value through prot or loss 584 - 584 Trade and other receivables 416,097 1,060 417,157 Term deposits 653,818 -653,818 Inventories 51,077 402 51,479 Other assets 74,907 -74,907 Cash and cash equivalents 207,199 14,726 221,925 Total assets of disposal group held for sale 1,456,954 21,657 1,478,611 Liabilities directly associated with assets classied as held for sale Borrowings -(44,749) (44,749) Trade and other payables (1,606,593) (27,234) (1,633,827) Total liabilities directly associated with assets classied as held for sale (1,606,593) (71,983) (1,678,576) Net liabilities held for sale (149,639) (50,326) (199,965) Accumulated non-controlling Interest (35,383) - (35,383) For segment reporting purposes, the 2 companies included in the disposal group above, were classied under investments segment as part of other assets. 23. Investment in subsidiaries The following are considered when determining whether the Company has control over the investee companies: • ZCCM-IH’s representation on the board of the investee company • Appointment of key management staff • Number of voting rights. Currently all subsidiaries are wholly owned by ZCCM-IH save for Zambia Gold Company Limited and Central African Cement Company Limited. The two companies are in their development stages. During this period, ZCCM-IH appoints key management personnel for the two investee companies, funds and exercises control over their operations and activities. ZCCM-IH is deemed to exercise control over the two entities. ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc 99Investing SMARTLY Set out below is a list of subsidiaries, which are listed and unlisted; December 2022 Company Country of incorporation Principal place of business Held % Interest Opening carrying amount Addition Impairment Change in fair value Closing carrying amount Mopani Copper Mine Plc Zambia Kitwe 100 - - - - Misenge Environmental and Technical Services Zambia Kalulushi 100 - 45,323 -45,323 Nkandabwe Coal Mines Limited Zambia Sinazeze 100 - - - - Kariba Minerals Limited Zambia Mapatizya 100 32,814 -(32,814) - - Kabundi Resources Limited Zambia Serenje 100 20,959 41,421 -23,547 85,927 Limestone Resources Limited Zambia Ndola 100 172,553 - - - 172,553 Zambia Gold Company limited Zambia Lusaka 51% 100,176 (365) - - 99,811 Central African cement Company limited Zambia Lusaka 49% 1,437 - - - 1,437 327,939 86,379 (32,814) 23,547 405,051 December 2021 Company Country of incorporation principal place of business Held % Interest Opening carrying amount Addition Change in fair value Closing carrying amount Mopani Copper Mine Plc Zambia Kitwe 100 - - - - Misenge Environmental and Technical Services Zambia Kalulushi 100 - - - - Nkandabwe Coal Mines Limited Zambia Sinazeze 100 - - - - Kariba Minerals Limited Zambia Mapatizya 100 32,814 - - 32,814 Kabundi Resources Limited Zambia Serenje 100 14,043 2,292 4,624 20,959 Limestone Resources Limited Zambia Ndola 100 172,553 - - 172,553 Zambia Gold Company limited Zambia Lusaka 51% 56,560 43,616 -100,176 Central African cement Company limited Zambia Lusaka 49% 708 729 - 1,437 276,678 46,637 4,624 327,939 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) in thousands of Kwacha 23. Investment in subsidiaries (Continued) ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc 100 Investing SMARTLY NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) in thousands of Kwacha 23. Investment in subsidiaries (Continued) a. Reconciliation of carrying amounts Company 31 Dec 2022 31 Dec 2021 Balance at 1 January 327,939 276,678 Additions 86,379 46,637 Change in fair through other comprehensive income 23,547 4,624 Impairment (32,814) Closing Balance 405,051 327,939 In line with the accounting policy for investments in subsidiaries, to carry all its Investments at fair value, the Company performs annual fair value of its Investments in subsidiaries and fair value gain/(loss) is recognised. The fair value gain/(loss) is recognised in the other comprehensive income (OCI). During the year, a fair value gain of ZMW23.5 million was recognised (2021: ZMW 4.6 million). Valuation techniques used are disclosed in note 23. b. Measurement of fair value Valuation technique and signicant unobservable inputs The following table shows the valuation technique used in measuring the fair value of investment in subsidiaries as well as the signicant unobservable inputs used. Subsidiary Valuation technique Signicant unobservable inputs and key assumptions Inter-relationship between Key unobservable inputs and fair value measurement Mopani Copper Mine plc Nkandabwe Coal Mine Limited Misenge Environmental and Technical Services. Kariba Minerals Limited Kabundi Resources Limited Discounted cash ows: It is an income approach to valuation and the most widely used valuation methodology. It computes the value of a business by calculating the present value of anticipated future cash ows generated by the business. The expected net cash ows are discounted using risk adjusted discount rates. There has been no changes to the valuation technique applied in the prior year Target capital structure Debt to total capitalisation (2022: 21%, 2021: 0%). Equity to total capitalisation (2022:79%, 2021: 100%) Cost of debt Cost of debt (2022: 7%, 2021: 7%) Effective tax rate (2022: 30 %, 2021: 30%) After tax cost of debt (2022: 4.9%, 2021: 4.9%) Cost of equity Risk free rate (2022: 3.9 %, 2021: 1.51%) Market risk premium (2022: 26.7%, 2021:16.11%) Levered beta (2022: 0.98, 2021: 0.95). Mineral Royalty tax is assumed at 7.5%. (2021: 7.5%) The estimated fair value would change in response to the changes in the factors below: Equity to total capitalisation Cost of debt were lower The cost of equity Coal/limestone/ manganese sales prices. Capital Expenditure Limestone Resources Limited Zambia Gold Company Limited Central African Cement Company Limited Cost approach Actual expenditure incurred during developmental stages The estimated fair value would increase (decrease) if: Expenditure is higher/ (lower) ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc 101Investing SMARTLY Valuation technique and signicant unobservable inputs Investments in subsidiaries have been measured at fair value as follows: Company Company investments in subsidiaries analysis 31-Dec 31-Dec 2022 2021 Mopani Copper Mine Plc - - Misenge Environmental and Technical Services 45323 - Kariba Minerals Limited -32,814 Kabundi Resources Limited 85,927 20,959 Limestone Resources Limited 172,553 172,553 Zambia Gold Company Limited 99,811 100,176 Central African Cement Company Limited 1,437 1,437 Total 405,051 327,939 Fair value hierarchy The fair value measurement for the Company’s investment in subsidiaries of ZMW405 million (2021: ZMW328 million) has been categorised as a level 3 fair value based on the inputs to the valuation technique used. The following table shows a reconciliation from the opening balances to the closing balances for level 2 and 3 fair values. December 2022 Level 3 Total Balance at 1 January 327,939 327,939 Additions 86,379 86,379 Change in fair value (9,267) (9,267) Balance at 31 December 405,051 405,051 December 2021 Level 3 Total Balance at 1 January 276,678 276,678 Additions 46,637 46,637 Change in fair value 4,624 4,624 Balance at 31 December 327,939 327,939 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) in thousands of Kwacha 23. Investment in subsidiaries (Continued) b. Measurement of fair value (Continued) ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc 102 Investing SMARTLY NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) in thousands of Kwacha 23. Investment in subsidiaries (Continued) c. Non-controlling interest (continued) The Group includes three subsidiaries, Investrust Bank Plc, Zambia Gold Company Limited and Central Cement Company Limited, with material non-controlling interests (NCI): Name Proportion of ownership interests and voting rights held by the NCI Total comprehensive income allocated to NCI Accumulated NCI 31 Dec 2022 31 Dec 2021 31 Dec 2022 31 Dec 2021 31 Dec 2022 31 Dec 2021 Investrust Bank Plc 28.6% 28.6% (746) 4,311 (36,129) (35,383) Zambia Gold Company Limited 49% 49% (25,267) (290) (9,867) 15,400 Central cement company limited 51% 51% - (372) (733) (733) Total (26,013) 3,649 (46,729) (20,716) Summarised nancial information for Investrust Bank Plc, Zambia Gold Company limited and Central Cement Company Limited, before intragroup eliminations, is set out below: 31 Dec 2022 31 Dec 2022 31 Dec 2022 Investrust Bank Plc Zambia Gold Company Limited Central African Company Limited Non-current assets 56,424 90,958 - Current assets 2,041,326 31,350 15 Total assets 2,097,750 122,308 15 Non-current liabilities - 16,448 - Current liabilities 2,249,997 13,777 - Total liabilities 2,249,997 30,225 - Equity attributable to owners of the parent (108,704) 46,962 7 Equity attributable non-controlling interests (43,543) 45,121 8 Revenue 259,695 574 - Loss for the year attributable to owners of the parent (1,862) (26,298) Loss for the year attributable to NCI (746) (25,267) - Loss for the year (2,608) (51,565) - Net cash used in operating activities (4,874) (28,508) - Net cash used in investing activities (342) (6,855) - Net cash from nancing activities - 1,547 - Net cash in/(out)ow (5,216) (33,816) - ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc 103Investing SMARTLY 31 Dec 2021 31 Dec 2021 31 Dec 2021 Investrust Bank Plc Zambia Gold Company Limited Central African Company Limited Non-current assets 56,766 87,952 - Current assets 1,400,188 64,474 15 Total assets 1,456,954 152,426 15 Non-current liabilities - 5,337 - Current liabilities 1,606,593 12,521 - Total liabilities 1,606,593 17,858 - Equity attributable to owners of the parent (114,256) 119,176 7 Equity attributable non-controlling interests (35,383) 15,392 8 Revenue 217,309 70,299 - Prot/(loss) for the year attributable to owners of the parent 10,762 (302) (358) Prot/(loss) for the year attributable to NCI 4,311 (290) (372) Prot/(loss) for the year 15,073 (592) (730) Net cash from/(used) in operating activities 301,528 11,215 (730) Net cash used in investing activities (5,104) (69,264) - Net cash from nancing activities (16,089) 43,095 730 Net cash in/(out)ow 280,335 (14,954) - d. Acquisition of subsidiary Mopani Copper Mines Plc On 31 March 2021, ZCCM-IH successfully acquired additional 90% stake and voting rights in Mopani Copper Mine Plc at total consideration of US$1. Mopani is one of the oldest and largest copper and cobalt mines in Zambia and the acquisition has signicantly increased the group’s market share in the mining industry. ZCCM-IH having control of Mopani, is an opportunity for ZCCM-IH and its shareholders to extract the full value from the valuable underlying investment. This is in line with the ZCCM-IH’s strategic plan to extract better value from its underlying investments and remedy some of the previous challenges associated with minority shareholding held in investee companies. NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) in thousands of Kwacha 23. Investment in subsidiaries (Continued) d. Acquisition of subsidiary (continued) ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc 104 Investing SMARTLY Details of the purchase consideration, the net assets acquired, and goodwill are as follows: Purchase consideration ZMW ‘000 Cash consideration for acquisition of 90% stake (US$ 1) - Total consideration - Other Terms of the Acquisition On completion of the transaction, the remaining debt in MCM from the Glencore International AG Facility (GIAG) and Carlisa Facility was ZMW 33.1 billion (US$1.5billion), with the excess being waived as part of this transaction. Interest under the remaining debt would be capitalised for the rst three years after completion, and thereafter would be payable quarterly at LIBOR + 3% (subject to a switch to an equivalent interest rate based on Secured Overnight Financing Rate (“SOFR”)). The principal outstanding under the remaining debt would be repayable under a dual mechanism as follows: • 3% of gross revenue of the MCM group from 2021-2023 (inclusive), and 10 -17.5% of gross revenue of the MCM group thereafter; and • 33.3% of EBITDA less taxes (limited to taxes in line with previous year’s), changes in working capital, capital expenditure, royalty payments to Government of the Republic of Zambia (“GRZ”) and interest and principal (calculated under the rst mechanism) payments in respect of the Remaining Debt, is at the end of each quarter required to be paid. Repayment of principal (together with accrued interest) would be additionally be required in the event of an occurrence of certain other early prepayment events. These would include certain change of control events in respect of MCM, proceeds from capital raising or disposals and sales of product other than those pursuant to the Offtake Agreements, amongst others. If ZCCM IH ceases to control MCM or the GRZ ceases to control ZCCM IH, the Lenders may, at any time thereafter cancel the facilities and declare all loans, together with accrued interest, immediately due and payable. Control is specied as GRZ maintaining 50% shareholding in ZCCM IH and ZCCM IH maintaining 75% shareholding in MCM, with control of operations and appointment of directors. ZCCM shall guarantee the obligations of MCM under the GIAG Facility and the Carlisa Facility. After completion of the Transaction, Glencore will retain offtake rights in respect of a portion of MCM’s copper production until the Remaining Debt has been repaid in full. NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) in thousands of Kwacha 23. Investment in subsidiaries (Continued) d. Acquisition of subsidiary (Group) (continued) ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc 105Investing SMARTLY NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) in thousands of Kwacha 23. Investment in subsidiaries (Continued) d. Acquisition of subsidiary (Group) (continued) ii. Identiable assets acquired and liabilities assumed The following table summarises the recognised fair value amounts of assets acquired, and liabilities assumed at the date of acquisition: ZMW’000 Cash and cash equivalents 6,337 Trade and other receivables 2,152,412 Deferred tax asset on temporary difference arising on business combination 1,185,160 Environmental Protection Fund 115,506 Inventories 3,720,319 Property, plant and equipment 13,341,318 Mineral Rights ( Note 19) 3 , 2 8 1 , 4 5 7 Brand intangible (Note 19) 1,507,223 Trade and other payables (1,931,889) Provisions (Note 32) (976,753) Borrowings(Note 35) (33,121,500) Deferred Tax Asset on fair Value uplift regarding Business Combination up to the extent of DTL (1,185,160) Retirement benets ( Note 37) (223,990) Provisions for environmental rehabilitation (1,215,007) Net identiable liabilities acquired (14,851,790) Less fair value of pre-existing equity interest @ 10% interest - Goodwill 14,851,790 Net assets acquired - Trade and other receivables The fair value of the Trade and other receivables as at the acquisition date was ZMW2,152m this included third party receivables, Glencore receivables and other third party receivables. The carrying value of the Trade and other Receivables was assumed to be equal to the FV as per valuation report done on 31 March 2021. This is due to the short term nature of the receivables. All amounts were deemed as collectable, and any amounts deemed as not collectable were written off prior to the acquisition date. Provisions and Retirement Benets Long-term provisions include rehabilitation and restoration provision and retirement benet provision. Inventories Inventory includes warehouse inventory, process inventory, slime stock and metal stock. Inventory was measured at the lower of cost and net realisable value. Based on information provided, carrying amounts reected net realisable value therefore no adjustment was required. Property, plant and equipment Property, plant, and equipment (“PPE”) is made up of the Capital projects underway and other categories disclosed. PPE has been adjusted for economic obsolescence. This is primarily because of the enterprise value of Mopani being less than the PPE value of ZMW 13,320 m (US$600m). ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc 106 Investing SMARTLY NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) in thousands of Kwacha 23. Investment in subsidiaries (Continued) ii. Identiable assets acquired and liabilities assumed (Continued) Mining Rights The value of the mining right of ZMW3,281million (US$149 million) is based on a resource multiple approach. The outside LoM resources had been included in the model as a terminal value. The resources used for the outside LoM is the reserves in the competent person report and the resources as per the model. Identiable assets acquired and liabilities assumed. Borrowings Borrowings included amount related to Glencore advances. Customer Relationship The Glencore Customer relationships was not considered in PPA as it was assessed that the relationship would not yield any unique, identiable, and measurable future economic benets. Deferred tax liability The deferred tax liability arising on fair value uplifts on business combinations has been recognized. The following table shows the valuation technique used in measuring the fair value of the business acquired as well as the signicant unobservable inputs used. Valuation technique Signicant unobservable inputs and key assumptions The DCF method calculates the value of a business from its expected free cash ow at the rm required rate of return (discount rate or “WACC”), using mid period discounting (as the cash ows are assumed to be earned semi- annually). • Risk-free rate 0.1% • Rating based Default Spread 11.6% • Country risk premium 10.6% • Synthesized risk-free rate range 10.7% to 11.7% • Beta range 0,88 to1,13 • Market risk premium range 5.5% to 6.0% • Cost of equity excluding risk premiums 16.9% to 17.9% • Specic risk premium 1.5% to 2.0% • Cost of equity 17.5% to 19.91% • Cost of debt 2.5% to 3.5% • Tax 30.0% • WACC: range 13.71% to 15.37% • For the period between 2022 and 2024, the average copper and gold price used were obtained from a sample of investment banks. From 2025 onwards, a at rate of US$3.95 /lb copper and US$1,631/oz gold was used.TT • The Mineral Royalty Tax (MRT) for copper (a sliding scale – between 10% - 5.5%, with the higher bands being: 10% for Cu price over US$4.08/lb, 8.5% for price between US$4.08/lb – US$3.4/lb and 7.5% for prices between US$3.4 – US$2.72/lb) is assumed to be 8.5% over the LOM. • The MRT for cobalt revenue, which is xed, remains at 8.0 ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc 107Investing SMARTLY iii. Contingent consideration There was no contingent consideration related to the transaction. iv. Contingent liabilities of Mopani A provision of ZMW 376,430,730 (US$20,852,000) was recognised on the acquisition of Mopani Copper Mines Plc. This provision relates to litigation claims as a result of cancellation of previous service providers’ contracts. The signicant portion of the provision related to this case, Group Five Zambia Limited vs. Mopani Copper Mines Plc In this case, Group Five Zambia Limited has led a notication with the International Chamber of Commerce International Court of Arbitration relating to a dispute they have with Mopani regarding alleged non-payment of contractual amounts for works executed on the newly constructed Concentrator at Nkana Mines Site. The claim is for amounts well over US$6,000,000. Mopani is defending these claims. As at 1 April 2021, It was unlikely that courts would rule this case against Mopani and there has been no change in this position up to the date of approval of these nancial statements. Mopani had the following legal/ arbitration proceeding considered material at the date of acquisition for which the probability of an adverse outcome was very low resulting into no provision being made, ERB tariffs of 2014 - The Energy Regulation Board (ERB) awarded an electricity tariff increase to ZESCO applicable to all mining companies with effect from 2 April 2014. The ERB communicated a 28.8% increase of tariffs under the Bulk Supply Agreement (BSA) between ZESCO and the CEC. This tariff was applicable for the period between April 2014 to December 2015. The mines have contested this tariff increase and commenced an action in the High Court by way of Judicial Review. As at 31 December 2021, the matter was still pending determination in the High Court. Pursuant to the ERB directive, ZESCO had invoiced the CEC on the basis of the new tariffs and the CEC, in turn, invoiced its mining customers on the same basis. The value of potential claims against the Mopani Copper Mines (MCM) that would likely result from an unfavourable outcome as at 31 December 2021 is estimated at ZMW 1,646 million (US$99 million (2020: US$99 million)). A tariff was agreed amongst the parties in 2017 and was effective on that date onwards with a prospective application. Therefore, the contingent amount remains at the disclosed amount since 2017 of US$99 million until the uncertainty is resolved by the courts. As regards the ERB tariffs of 2014 matter, the consent judgement subsequently issued in October 2022 in favour of mopani, was already mutually agreed upon through an out-of-court discussions at the time of Mopani’s acquisition by ZCCM- IH on 31 March 2021, As such, management assessed the fair value of any contingency to be nil, so did not recognize a provision related to this contingent liability. For the contingent liabilities above, due to the nature of the contingent liabilities, • There were no amounts reversed unused. • There were no discounted amount arising from the passage of time. • There were no expected reimbursements. • There were no probabilities provided as the full claim value were considered for initial recognition. vi. Revenue and prot contribution The acquired business contributed revenues of ZMW14.49 billion and net loss of ZMW 1.43 billion to the Group for the period from 1 April to 31 December 2021. NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) in thousands of Kwacha 23. Investment in subsidiaries (Continued) d. Acquisition of subsidiary (Group) (continued) ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc 108 Investing SMARTLY vi. Purchase consideration – cash outow Outow of cash to acquire subsidiary, net of cash acquired 2021 ZMW’000 Cash consideration - Less: Balances acquired Cash 6,337 Bank overdraft - Net inow of cash – investing activities 6,337 vii. Acquisition-related costs Acquisition-related costs of ZMW55.1 million that were not directly attributable to the issue of shares are included in administrative expenses in the statement of prot or loss and in operating cash ows in the statement of cash ows. viii. Fair Value of derecognised 10% stake in Mopani The fair value assessment of the 10% shareholding conducted as at acquisition date resulted in a nil value. 24. Investment in associates a. Reconciliation of carrying amounts Group Company 2022 2021 2022 2021 Balance at 1 January 17,067,159 19,351,000 20,603,089 20,666,806 Share of prot of equity accounted associates 1,603,143 3,004,542 - - Share of other comprehensive income 11,123 52,304 - - Dividend received (4,868,317) (956,437) - - Change in fair value (unrealised) - - (4,346,678) (63,717) Currency translation adjustment 1,361,754 (4,384,250) - - Total balance 15,174,862 17,067,159 16,256,411 20,603,089 Investments in associates are measured at fair value in the Company’s statement of nancial position. In the consolidated nancial statements, investments in associates are equity - accounted. The decrease in fair value from ZMW 20.60 million to ZMW16.26 million is largely on account of reduced forecasted copper prices in the long term as compared to prior year projections, in addition to the receipt of US$195 million one off dividend from Kansanshi Mine Plc during the year. NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) in thousands of Kwacha 23. Investment in subsidiaries (Continued) d. Acquisition of subsidiary (Group) (continued) ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc 109Investing SMARTLY NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) in thousands of Kwacha 24. Investment in associates (Continued) a. Reconciliation of carrying amounts (Continued) Name Nature of relationship Principal place of business Ownership interest Fair value of ownership interest ZMW’ million Functional currency Konkola Copper Mines Plc Strategic way of promoting Zambian participation in the mining sector Zambia 20.60% Nil US$ Kansanshi Mining Plc Strategic way of promoting Zambian participation in the mining sector Zambia 20% 11,036 US$ Copperbelt Energy Corporation Plc Strategic way of promoting Zambian participation in the power and energy sector Zambia 24.1% 1,481 US$ CNMC Luanshya Copper Mining limited Strategic way of promoting Zambian participation in the mining sector Zambia 20% 744 US$ Maamba Collieries Limited Strategic way of promoting Zambian participation in the mining sector Zambia 35% 2,966 US$ Lubambe Copper Mines Limited Strategic way of promoting Zambian participation in the mining sector Zambia 20% Nil US$ Rembrandt Properties Limited Diversication of investments in real estate Zambia 49% 20 ZMW Zambia Consolidated Gold Company Limited Strategic way of promoting Zambian participation in Gold mining and processing Zambia 49% 10 ZMW The following are considered when determining the level of control or inuence over the investee companies: i. ZCCM-IH’s representation on the Board of the investee company ii. Appointment of key management staff ii. Number of voting rights iv. Currently ZCCM-IH appoints directors in line with its percentage holding on all the Boards of its associates, and as such it exercise’s signicant inuence over them. Many of the investee companies have United States Dollars (US$) as their functional currency, due to the nature of the mining industry, although all investee companies are domiciled in Zambia. INTEGRATED ANNUAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc 110Investing SMARTLY NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) in thousands of Kwacha 24. Investment in associates (Continued) b. Investment in associates’ analysis (continued) Group Summary of nancial information for material equity accounted investees. Where the equity accounted value is zero, no further losses are recognised by ZCCM-IH as there is no obligation to settle any liabilities. The equity accounted value was zero for Konkola Copper Mines Plc and Lubambe Copper Mines Limited as at 31 December 2022. There was no prot or loss from discontinued operations. Summary of nancial information for material equity accounted investees. Dec-22 Investee companies Accounting year end Country of incorporation % interest held Assets Current Non- Current Assets Liabilities Current Liabilities Non-Current Assets Current Revenues Prot/ (Loss) Share of prot/ (loss) Share of prot/ (loss) not recognised Share of net assets ZMW’000 ZMW’000 ZMW’000 ZMW’000 ZMW’000 ZMW’000 ZMW’000 ZMW’000 ZMW’000 ZMW’000 Kansanshi Mining Plc 31-Dec Zambia 20.0% 19,373,853 47,737,850 (2,260,408) (9,994,207) 54,857,088 25,982,597 2,624,472 524,894 -10,971,418 Copperbelt Energy Corporation Plc 31-Dec Zambia 24.1% 2,731,650 9,224,557 (3,103,983) (2,866,881) 5,985,343 6,384,202 866,413 208,806 -1,442,468 CNMC Luanshya Copper Mine Plc 31-Dec Zambia 20.0% 3,454,653 3,027,188 (2,441,601) (1,058,147) 2,982,093 7,949,648 1,683,023 336,605 596,419 Maamba Collieries Limited 31-Mar Zambia 35.0% 12,192,257 8,669,716 (4,760,267) (10,052,793) 6,048,913 4,751,431 1,533,668 536,784 -2,117,120 Lubambe Copper Mines Limited 31-Dec Zambia 20.0% 1,374,664 4,203,226 (2,192,239) (14,071,280) (10,685,629) 2,382,201 (1,826,317) -(365,263) - Rembrandt Properties Ltd 31-Dec Zambia 49.0% 14 150,305 (27,126) (51,818) 71,375 - - - - 34,974 Consolidated Gold 31-Dec Zambia 45.0% 521 36,554 (9,380) -27,695 50,810 (8,768) (3,946) -12,463 39,127,612 73,049,396 (14,795,004) (38,095,126) 59,286,878 47,500,889 4,872,491 1,603,143 (365,263) 15,174,862 The nancial statements of the Company and associates used in the preparation of the current consolidated nancial statements have the same reporting date of 31 December except for Maamba and Konkola Copper Mine. For the two-investee companies with different reporting date from that of the Company, their nancial information has been adjusted to align to the reporting date of the consolidated nancial statements. INTEGRATED ANNUAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc 111Investing SMARTLY Group Summary of nancial information for material equity accounted investees. Dec-21 Investee companies Accounting year end Country of incorporation % Interest held Current Assets Non-Current Assets Current Liabilities Non- Current Liabilities Net asset value Revenues Prot/ (Loss) Share of prot/ (loss) Share of prot/ (loss) not recognised Share of net assets Konkola Copper Mines Plc 31-Mar Zambia 20.60% 9,109,490 22,586,680 (36,431,613) (16,699,923) (21,435,366) 27,318,364 (9,825,055) - (2,023,961) - Kansanshi Mining Plc 31-Dec Zambia 20.00% 39,146,273 45,664,111 (5,555,093) (10,000,479) 69,254,812 39,569,003 12,086,497 2,417,299 - 13,850,962 Copperbelt Energy Corporation Plc 31-Dec Zambia 24.10% 2,968,272 8,275,915 (2,726,269) (3,027,286) 5,490,632 6,739,600 1,008,402 243,025 - 1,323,242 CNMC Luanshya Copper Mine Plc 31-Dec Zambia 20.00% 2,817,153 2,673,993 (2,308,325) (1,050,179) 2,132,642 10,166,621 2,827,764 426,528 139,025 426,528 Maamba Collieries Ltd 31-Mar Zambia 35.00% 9,477,432 8,427,195 (7,230,778) (6,590,970) 4,082,879 3,968,892 (222,030) (77,711) - 1,429,008 Lubambe Copper Mines Ltd 31-Dec Zambia 20.00% 1,081,606 3,662,298 (1,815,775) (13,112,013) (10,183,884) 2,923,911 (1,810,259) - (362,052) - Rembrandt Properties Ltd 31-Dec Zambia 49.00% 1,690 140,986 (22,223) (78,578) 41,875 - - - - 20,519 Consolidated Gold Company Ltd 31-Dec Zambia 45.00% 11,380 35,582 (9,406) - 37,556 44,965 (10,221) (4,599) - 16,900 Totals 64,613,296 91,466,760 (56,099,482) (50,559,428) 49,421,146 90,731,356 4,055,098 3,004,542 (2,246,988) 17,067,159 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) in thousands of Kwacha 24. Investment in associates (Continued) b. Investment in associates’ analysis (continued) Group Summary of nancial information for material equity accounted investees. Where the equity accounted value is zero, no further losses are recognised by ZCCM-IH as there is no obligation to settle any liabilities. The equity accounted value was zero for Konkola Copper Mines Plc and Lubambe Copper Mines Limited as at 31 December 2022. There was no prot or loss from discontinued operations. Summary of nancial information for material equity accounted investees. Dec-22 Investee companies Accounting year end Country of incorporation % interest held Assets Current Non- Current Assets Liabilities Current Liabilities Non-Current Assets Current Revenues Prot/ (Loss) Share of prot/ (loss) Share of prot/ (loss) not recognised Share of net assets ZMW’000 ZMW’000 ZMW’000 ZMW’000 ZMW’000 ZMW’000 ZMW’000 ZMW’000 ZMW’000 ZMW’000 Kansanshi Mining Plc 31-Dec Zambia 20.0% 19,373,853 47,737,850 (2,260,408) (9,994,207) 54,857,088 25,982,597 2,624,472 524,894 -10,971,418 Copperbelt Energy Corporation Plc 31-Dec Zambia 24.1% 2,731,650 9,224,557 (3,103,983) (2,866,881) 5,985,343 6,384,202 866,413 208,806 -1,442,468 CNMC Luanshya Copper Mine Plc 31-Dec Zambia 20.0% 3,454,653 3,027,188 (2,441,601) (1,058,147) 2,982,093 7,949,648 1,683,023 336,605 596,419 Maamba Collieries Limited 31-Mar Zambia 35.0% 12,192,257 8,669,716 (4,760,267) (10,052,793) 6,048,913 4,751,431 1,533,668 536,784 -2,117,120 Lubambe Copper Mines Limited 31-Dec Zambia 20.0% 1,374,664 4,203,226 (2,192,239) (14,071,280) (10,685,629) 2,382,201 (1,826,317) -(365,263) - Rembrandt Properties Ltd 31-Dec Zambia 49.0% 14 150,305 (27,126) (51,818) 71,375 - - - - 34,974 Consolidated Gold 31-Dec Zambia 45.0% 521 36,554 (9,380) -27,695 50,810 (8,768) (3,946) -12,463 39,127,612 73,049,396 (14,795,004) (38,095,126) 59,286,878 47,500,889 4,872,491 1,603,143 (365,263) 15,174,862 The nancial statements of the Company and associates used in the preparation of the current consolidated nancial statements have the same reporting date of 31 December except for Maamba and Konkola Copper Mine. For the two-investee companies with different reporting date from that of the Company, their nancial information has been adjusted to align to the reporting date of the consolidated nancial statements. ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc 112 Investing SMARTLY NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) in thousands of Kwacha 24. Investment in associates (Continued) b. Investment in associates’ analysis (continued) Company Summary of fair values for equity accounted investees held by the Company: % Interest 31 Dec 2022 % Interest 31 Dec 2021 Copperbelt Energy Corporation Plc c(i) 24.1 1,480,987 24.1 1,038,258 Kansanshi Mining Plc c(ii) 20.0 11,036,000 20.0 15,799,000 Konkola Copper Mines Plc c(v) 20.6 -20.6 - Lubambe Copper Mine Limited c(vi) 20.0 -20.0 - Maamba Collieries Limited c(iii) 35.0 2,965,600 35.0 2,203,000 CNMC Luanshya Copper Mines Plc c(iv) 20.0 744,000 20.0 1,513,000 Rembrandt Properties Limited 49.0 20,324 49.0 20,324 Consolidated Gold Company Limited 49.0 9,500 49.0 29,507 16,256,411 20,603,089 c. Measurement of fair value Fair value hierarchy The fair values of the Company’s investment in associates were determined by Imara Corporate Finance, an external independent fair valuation expert, having appropriate recognised professional qualications and experience. The independent valuers provide the fair value of the Company’s associates annually. The fair value moved from ZMW20.6 billion in Dec 2021 to ZMW16.26 billion in December 2022. The fair value measurement for the Company’s investment in associates of ZMW14.78 billion (2021: ZMW19.56 billion) has been categorised as a level 3 fair value based on the inputs to the valuation technique used (see Note 5). For Copperbelt Energy Corporation Plc, ZMW1.48 billion (2021: ZMW1.04 billion) has been categorised as a level 2 based on the level of activity in the market which is deemed to be insufcient i.e., shares are not traded sufciently for it to be classied as a level 1 fair value (see note 2). ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc 113Investing SMARTLY NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) in thousands of Kwacha 24. Investment in associates (Continued) c. Measurement of fair value (continued) The following table shows a reconciliation from the opening balances to the closing balances for level 2 and 3 fair values. Level 2 Level 3 Total Balance at 1 January 2022 Kansanshi Mining Plc - 15,799,000 15,799,000 Copperbelt Energy Corporation Plc 1,038,258 -1,038,258 CNMC Luanshya Copper Mine Plc - 1,513,000 1,513,000 Maamba Collieries Limited -2,203,000 2,203,000 Rembrandt Properties Ltd - 20,324 20,324 Consolidated Gold Company Limited - 29,507 29,507 Sub Total 1,038,258 19,564,831 20,603,089 Fair value movement Kansanshi Mining Plc -(4,763,000) (4,763,000) Copperbelt Energy Corporation Plc 442,729 -442,729 CNMC Luanshya Copper Mine Plc -(769,000) (769,000) Maamba Collieries Limited -762,600 762,600 Consolidated Gold Company Limited - (20,007) (20,007) Sub Total 442,729 (4,789,407) (4,346,678) Balance at 31 December 2022 Kansanshi Mining Plc - 11,036,000 11,036,000 Copperbelt Energy Corporation Plc 1,480,987 -1,480,987 CNMC Luanshya Copper Mine Plc - 744,000 744,000 Maamba Collieries Limited -2,965,600 2,965,600 Rembrandt Properties Ltd - 20,324 20,324 Consolidated Gold Company Limited - 9,500 9,500 Total balance 1,480,987 14,775,424 16,256,411 ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc 114 Investing SMARTLY NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) in thousands of Kwacha 24. Investment in associates (Continued) c. Measurement of fair value (continued) Level 2 Level 3 Total Balance at 1 January 2021 Kansanshi Mining Plc - 15,276,000 15,276,000 Copperbelt Energy Corporation Plc 430,975 430,975 CNMC Luanshya Copper Mine Plc - 1,125,000 1,125,000 Maamba Collieries Limited - 3,785,000 3,785,000 Rembrandt Properties Ltd - 20,324 20,324 Consolidated Gold Company Limited - 29,507.00 29,507 430,975 20,235,831 20,666,806 Fair value movement Kansanshi Mining Plc - 523,000 523,000 Copperbelt Energy Corporation Plc 607,283 - 607,283 CNMC Luanshya Copper Mine Plc - 388,000 388,000 Maamba Collieries Limited - (1,582,000) (1,582,000) 607,283 (671,000) (63,717) Balance at 31 December 2021 Kansanshi Mining Plc - 15,799,000 15,799,000 Copperbelt Energy Corporation Plc 1,038,258 -1,038,258 CNMC Luanshya Copper Mine Plc - 1,513,000 1,513,000 Maamba Collieries Limited -2,203,000 2,203,000 Rembrandt Properties Ltd - 20,324 20,324 Consolidated Gold Company Limited - 29,507 29,507 1,038,258 19,564,831 20,603,089 INTEGRATED ANNUAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc 115Investing SMARTLY Associate Valuation technique Signicant unobservable inputs and key assumptions Inter-relationship between Key unobservable inputs and fair value measurement Kansanshi Mining Discounted cash ows: It is an income approach to valuation and the most widely used valuation methodology. It computes the value of a business by calculating the present value of anticipated future cash ows generated by the business. The expected net cash ows are discounted using risk adjusted discount rates. Relative valuation: The relative valuation methodology values a company using market- based multiples, including operational and asset- based metrics • Target participation capital structure - Debt to total capitalisation (2022:21.0%, 2021:14.3%). - Equity to total capitalisation (2022:79.0%, 2021:85.7%) • Cost of debt - Cost of debt (2022: 8.0%, 2021: 13.4%) - Effective tax rate (2022: 30%, 2021: 30%) - After tax cost of debt (2022: 5.6%, 2020: 9.4%) • Cost of equity - Risk free rate (2022: 3.88%, 2021: 1.51%) - Market risk premium (2022: 10.29%, 2021: 16.11%) - Levered beta (2022: 0.98, 2021: 0.95). - Cost of equity (2022:16.8%, 2021: 16.8%) - WACC (2022: 14.45%, 2021: 15.75%) • Key assumptions considered were as follows: - Mineral Royalty tax is assumed as follows for copper (a sliding scale – from 4% to 10%, with the higher bands being: 10% for Cu price over US$9,000/t. Mineral royalty is treated as deductible from income tax from 2023 onwards. - The MRT for gold revenue is assumed at a xed rate of 6% and is treated as deductible from income tax from 2023 onwards. - Copper prices is projected at US$8,080 per tonne in 2023 and steadily increase to US$8,550 per tonne in 2024. Gold prices projected at US$1,796/oz in 2023 and to steadily decrease to US$1,780/ oz in 2024. After 2024, Copper and Gold prices projected at at rate of US$1.717/oz and US$9,085 per tonne respectively. - Capex expenditure has been projected at US$3.1 billion over the life of mine budget incorporating the S3 expansion. - Life of mine was estimated to be 23 years. The estimated fair value would increase/(decrease) if: • Equity to total capitalisation were (lower)/higher • Cost of debt were higher/(lower) • The cost of equity were higher /(lower). • If the copper price reduced/ increased the fair value would be higher/(lower). NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) in thousands of Kwacha 24. Investment in associates (Continued) c. Measurement of fair value (continued) Valuation technique and signicant unobservable inputs The following table shows the valuation technique used in measuring the fair value of investment in a ssociates as well as the signicant unobservable inputs used. The following table shows the valuation technique used in measuring the fair value of the investment in associates as well as the signicant of observation inputs used. INTEGRATED ANNUAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc 116Investing SMARTLY NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) in thousands of Kwacha 24. Investment in associates (Continued) c. Measurement of fair value (continued) Associate Valuation technique Signicant unobservable inputs and key assumptions Inter-relationship between Key unobservable inputs and fair value measurement Maamba Collieries Discounted cash ows: It is an income approach to valuation and the most widely used valuation methodology. It computes the value of a business by calculating the present value of anticipated future cash ows generated by the business. The expected net cash ows are discounted using risk adjusted discount rates. There has been no changes to the valuation technique applied in the prior year. Relative valuation: The relative valuation methodology values a company using market- based multiples, including operational and asset- based metrics. • Target participation capital structure - Debt to total capitalisation (2022: 36.7%, 2021: 39%). - Equity to total capitalisation (2022:63.4%, 2021: 61%) • Cost of debt - Cost of debt (2022: 10.20%, 2021: 13.38%) - Effective tax rate (2022:30 %, 2021: 30%) - After tax cost of debt (2022: 7.28%, 2021: 8.70%) • Cost of equity - Risk free rate (2022:3.88 %, 2021: 1.51%) - Market risk premium (2022: 26.7 %, 2021:16.1%) - Levered beta (2022: 0.34, 2021: 0.65) - Cost of equity (2022: 16.6%, 2021: 11.6%) - WACC (2022: 13.20, 2021: 11.17%) • The assumptions considered were as follows: - PPA is valid until 2036 - The MRT on coal is projected at 5% throughout the forecast period - Plant Availability is assumed to be 88.81%. For the years 2025, 2029 and 2033, plant availability is reduced by 10.38% to allow for major rehabilitation works. - Projected to produce an annual average of 1.9 million MWH - Projected to mine an annual average of 350,000 tonnes of high-grade coal - Projected to mine an annual average of 1.5 million tonnes of thermal coal The estimated fair value would increase /(decrease) if: • Equity to total capitalisation were (lower)/higher • Cost of debt were (higher)/lower • The cost of equity were (lower)/higher • Coal sales prices increase/ decrease. • Capital Expenditure increase/decrease The following table shows the valuation technique used in measuring the fair value of investment in associates as well as the signicant unobservable inputs used. INTEGRATED ANNUAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc 117Investing SMARTLY Associate Valuation technique Signicant unobservable inputs and key assumptions Inter-relationship between Key unobservable inputs and fair value measurement CNMC Luanshya Copper Mines Plc Discounted cash ows: It is an income approach to valuation and the most widely used valuation methodology. It computes the value of a business by calculating the present value of anticipated future cash ows generated by the business. The expected net cash ows are discounted using risk adjusted discount rates. • Target participation capital structure - Debt to total capitalisation (2022: 21.00%, 2021: 16.30%) - Equity to total capitalisation (2022: 79.00%, 2021: 83.70%) • Cost of debt - Cost of debt (2022: 7.00%, 2021: 7.00%) - Effective tax rate (2022: 30%, 2021: 30%) - After tax cost of debt (2022: 4.90%, 2021: 4.90%) • Cost of equity - Risk free rate (2021: 3.88%, 2021: 1.51%) - Market risk premium (2022: 13.19%, 2021: 16.11%) - Levered beta (2022: 1.16, 2021: 1.06). - Cost of equity (2022:19.21%, 2021:18.56%) - WACC (2022: 16.21%, 2021: 16.65%) • Key assumptions considered were as follows: - Mineral Royalty tax is assumed as follows for copper (a sliding scale – from 4% to 10%, with the higher bands being: 10% for Cu price over US$9,000/t. Mineral royalty is treated as deductible from income tax from 2023 onwards. - The MRT for gold revenue is assumed at a xed rate of 6% and is treated as deductible from income tax from 2023 onwards. - Copper prices is projected at US$8,080 per tonne in 2023 and steadily increase to US$8,550 per tonne in 2024. Gold prices projected at US$1,796/oz in 2023 and to steadily decrease to US$1,780/ oz in 2024. After 2024, Copper and Gold prices projected at at rate of US$1.717/oz and US$9,085 per tonne respectively. - Capex expenditure has been projected at US$ 177 million over the life of mine - Life of mine was estimated to be 3 years. The estimated fair value would increase/ decrease if: • Equity to total capitalisation were lower/higher • Cost of debt were lower/ higher • The cost of equity were lower/higher. • If the copper price reduced/ increased the fair value would be lower/higher. NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) in thousands of Kwacha 24. Investment in associates (Continued) c. Measurement of fair value (continued) ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc 118 Investing SMARTLY NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) in thousands of Kwacha 24. Investment in associates (Continued) c. Measurement of fair value (continued) i. Copperbelt Energy Corporation Plc (CEC) CEC is listed on Lusaka Securities Exchange (LuSE) and consequently the valuation was based on the spot price and has been categorised as level 2 as shown below: Mark to market 31-Dec 31-Dec 2022 2021 Details Spot price per share at 31 December (ZMW) 3.78 2.65 Number of issued shares owned 391,795,562 391,795,562 Market value (ZMW’000) 1,480,987 1,038,258 ii. Kansanshi Mining Plc A sensitivity analysis table of the equity value, which is based on the discount rate and long-term average copper price over the life of mine indicating reasonably possible changes at the reporting date to one of the relevant valuation assumptions, holding other assumptions constant, would have affected the value of the investment by the amounts shown below: 2022 Equity Value Sensitivity Analysis Long-Term Average Copper Price (US$/lb) 3.71 3.91 4.12 4.33 4.53 WACC 13.0% 10,024,000 11,026,000 12,028,000 13,031,000 14,033,000 13.7% 9,613,000 10,563,000 11,513,000 12,463,000 13,413,000 14.5% 9,232,000 10,134,000 11,036,000 11,938,000 12,840,000 15.2% 8,880,000 9,737,000 10,594,000 11,451,000 12,308,000 15.9% 8,554,000 9,369,000 10,184,000 10,999,000 11,815,000 The equity value ranges from ZMW9,737 million (2021: ZMW15,287 million) to ZMW12,463 million (2021: ZMW16,232 million) with the calculated equity value being ZMW11,036 million (2021: ZMW15,799 million). 2021 Equity Value Sensitivity Analysis Long-Term Average Copper Price (US$/lb) 2.67 2.82 2.97 3.12 3.27 WACC 14.1% 15,397,000 15,795,000 16,194,000 16,452,000 16,843,000 14.9% 15,239,000 15,614,000 15,989,000 16,232,000 16,600,000 15.7% 15,092,000 15,445,000 15,799,000 16,027,000 16,374,000 16.5% 14,954,000 15,287,000 15,620,000 15,835,000 16,163,000 17.3% 14,824,000 15,139,000 15,453,000 15,636,000 15,966,000 2021 The equity value ranges from ZMW15,287 million (2020: ZMW14,829 million) to ZMW16,232 million (2020: ZMW15,460 million) with the calculated equity value being ZMW15,799 million (2020: ZMW15,276 million). ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc 119Investing SMARTLY NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) in thousands of Kwacha 24. Investment in associates (Continued) c. Measurement of fair value (continued) iii. Maamba Collieries Limited A sensitivity analysis table of the equity value, which is based on the discount rate over the life of power plant indicating reasonably possible changes at the reporting date to one of the relevant valuation assumptions, holding other assumptions constant, would have affected the value of the investment by the amounts shown below: 2022 MRT AND ERB FEES 5.13% 5.42% 5.70% 5.99% 6.27% WACC 11.9% 3,236,000 3,235,000 3,233,000 3,231,000 3,229,000 12.5% 3,099,000 3,098,000 3,096,000 3,094,000 3,093,000 13.2% 2,969,000 2,967,000 2,965,600 2,964,000 2,962,000 13.9% 2,845,000 2,843,000 2,842,000 2,840,000 2,838,000 14.5% 2,726,000 2,725,000 2,723,000 2,722,000 2,720,000 The equity value ranges from ZMW2,843 million (2021: ZMW2,088 million) to ZMW3,094 million (2021: ZMW 2,324 million) with the calculated equity value being ZMW2,966 million (2021: ZMW2,203 million). MRT AND ERB FEES 10% 7.2% 5.7% 4.2% 5.0% WACC 9.7% 2,456,000 2,451,000 2,451,000 2,447,000 2,447,000 10.2% 2,333,000 2,329,000 2,329,000 2,324,000 2,324,000 10.7% 2,206,000 2,206,000 2,203,000 2,202,000 2,198,000 11.3% 2,088,000 2,088,000 2,084,000 2,084,000 2,080,000 11.8% 1,970,000 1,970,000 1,966,000 1,966,000 1,966,000 The equity value ranges from ZMW2,088 million (2020: ZMW892 million) to ZMW2,324 million (2020: ZMW 3,437 million) with the calculated equity value being ZMW2,203 million (2020: ZMW3,785 million) iv. CNMC Luanshya Copper Mines Plc A sensitivity analysis table of the equity value, which is based on the discount rate over the life of mine indicating reasonably possible changes at the reporting date to one of the relevant valuation assumptions, holding other assumptions constant, would have affected the value of the investment by the amounts shown below: ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc 120 Investing SMARTLY 2022 Equity Value Sensitivity Analysis Long-Term Copper Price (US$ / lb) 3.72 3.91 4.12 4.33 4.54 WACC 14.6% 557,000 655,000 759,000 862,000 971,000 15.4% 552,000 649,000 751,000 854,000 961,000 16.2% 547,000 643,000 744,000 845,000 951,000 17.0% 543,000 637,000 737,000 836,000 941,000 17.9% 538,000 631,000 729,000 827,000 930,000 The equity value ranges from ZMW637 million (2021: (ZMW 1,352 million)) to ZMW854 million (2021: ZMW 1,654 million) with the calculated equity value being ZMW744 million (2021: ZMW1,513 million). 2021 Equity Value Sensitivity Analysis Long-Term Copper Price (US$ / lb) 2.67 2.82 2.97% 3.12 3.27 WACC 12.6% 1,409,000 1,524,000 1,646,000 1,728,000 1,854,000 14.6% 1,354,000 1,462,000 1,577,000 1,654,000 1,773,000 16.6% 1,303,000 1,405,000 1,513,000 1,587,000 1,698,000 18.6% 1,256,000 1,352,000 1,454,000 1,524,000 1,629,000 20.6% 1,212,000 1,303,000 1,400,000 1,465,000 1,565,000 The equity value ranges from ZMW1,352 million (2020: ZMW914 million) to ZMW1,654 million (2020: ZMW1,265 million) with the calculated equity value being ZMW1,513 million (2020: ZMW1,125 million). v. Konkola Copper Mines Plc (KCM) The equity value is nil (negative equity value is limited to a zero-value due to the limited liability nature of the investee company) (2021: nil). vi. Lubambe Copper Mine Limited The equity value is nil (negative equity value is limited to a zero-value due to the limited liability nature of the investee company) (2021: nil). NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) in thousands of Kwacha 24. Investment in associates (Continued) c. Measurement of fair value (continued) iv. CNMC Luanshya Copper Mines Plc(continued) ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc 121Investing SMARTLY NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) in thousands of Kwacha 25. Financial assets at fair value through prot or loss a. Reconciliation of carrying amounts Group and Company 31 Dec 2022 31 Dec 2021 Balance at 1 January 1,458,000 292,000 Changes in fair value (unrealised) (205,600) 1,166,000 1,252,400 1,458,000 Financial assets at fair value through prot or loss include the following: Group and Company 31 Dec 2022 31 Dec 2021 Unlisted equities – at fair value Chibuluma Mines Plc b(i) - - Chambishi Metals PLC b(ii) - - NFC Africa Mine PLC b(iii) 1 252,400 1,458,000 1,252,400 1,458,000 b. Measurement of fair value Fair value hierarchy The fair value for the Company’s nancial investments at fair value through prot or loss was determined by IMARA Corporate Finance, an external independent valuer, having appropriate recognised professional qualications and recent experience of the nancial investments being valued. The independent valuers provide the fair value of these investments annually. The fair value measurement for the Company’s investments of ZMW 1.25 billion (2021: ZMW1.46 billion) has been categorised as a level 3 fair value based on the inputs to the valuation technique used. ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc 122 Investing SMARTLY Level 2 and 3 fair value The following table shows a reconciliation from the opening balances to the closing balances for level 2 and 3 fair values. 31 Dec 2022 Level 2 Level 3 Total Balance at 1 January - 1,458,000 1,458,000 Net change in fair value - (205,600) (205,600) Balance at 31 December 1,252,400 1,252,400 31 Dec 2021 Level 2 Level 3 Total Balance at 1 January - 292,000 292,000 Net change in fair value - 1,166,000 1,166,000 Balance at 31 December - 1,458,000 1,458,000 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) in thousands of Kwacha 25 Financial assets at fair value through prot or loss (continued) b. Measurement of fair value (continued) INTEGRATED ANNUAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc 123Investing SMARTLY Associate Valuation technique Signicant unobservable inputs and key assumptions Inter-relationship between Key unobservable inputs and fair value measurement NFC Africa Mining Plc Discounted cash ows: It is an income approach to valuation and the most widely used valuation methodology. It computes the value of a business by calculating the present value of anticipated future cash ows generated by the business. The expected net cash ows are discounted using risk adjusted discount rates. There has been no changes to the valuation technique applied in the prior year Relative valuation: The relative valuation methodology values a company using market-based multiples, including operational and asset-based metrics • Target participation capital structure Debt to total capitalisation (2022: 21.0%, 2021: 14.3%%). Equity to total capitalisation (2022: 79.0%, 2020: 85.7%%) • Cost of debt - Cost of debt (2022: 10.0%, 2021: 13.4%) - Effective tax rate (2022:30 %, 2021: 30%) - After tax cost of debt (2022: 7.0 %, 2021: 9.4%) • Cost of equity - Risk free rate (2022:3.90 %, 2021: 1.51%) - Market risk premium (2022:13.2%, 2021:16.1%) - Levered beta (2022: 1.16, 2021: 1.06) - Cost of equity (2022: 19.2%, 2021: 18.5%) - WACC: (2022: 16.6%, 2021: 17.2%) • The assumptions considered were as follows: - Mineral Royalty tax is assumed as follows for copper (a sliding scale – from 4% to 10%, with the higher bands being: 10% for Cu price over US$9,000/t. Mineral royalty is treated as deductible from income tax from 2023 onwards. - The MRT for gold revenue is assumed at a xed rate of 6% and is treated as deductible from income tax from 2023 onwards. - Copper prices is projected at US$8,080 per tonne in 2023 and steadily increase to US$8,550 per tonne in 2024. Gold prices projected at US$1,796/oz in 2023 and to steadily decrease to US$1,780/ oz in 2024. After 2024, Copper and Gold prices projected at at rate of US$1.717/oz and US$9,085 per tonne respectively. - Capex is projected at US$12.5 million annually throughout the life of mine - Copper prices is projected at US$8,080 per tonne in 2023 and steadily increase to US$9,085 per tonne in 2024. Gold prices projected at US$1,796/t oz in 2023 and to steadily decrease to US$1,780/t oz in 2024. After 2024, Copper and Gold prices projected at at rate of US$1.717/lb and US$1,9,085/oz respectively. - Life of mine: 13 years • The estimated fair value would increase/ decrease if: • Equity to total capitalisation were lower/ higher • Cost of debt were lower/ higher • The cost of equity were lower/higher. • If the copper price reduced/ increased the fair value would be lower/higher. NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) in thousands of Kwacha 25 Financial assets at fair value through prot or loss (continued) b. Measurement of fair value (continued) Valuation technique and signicant unobservable inputs The following table shows the valuation technique used in measuring the fair value of investment in associates as well as the signicant unobservable inputs used.Measurement of fair value (continued) Level 2 and 3 fair value ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc 124 Investing SMARTLY i. Chibuluma Mines Plc The equity value is nil (negative equity value is limited to a zero-value due to the limited liability nature of the investee company) (2021: nil). ii. Chambishi Metals Plc The equity value is nil (negative equity value is limited to a zero-value due to the limited liability nature of the investee company) (2021: nil). iii. NFC Africa Mines Plc A sensitivity analysis table of the equity value, which is based on the discount rate and long-term average copper price over the life of mine indicating reasonably possible changes at the reporting date to one of the relevant valuation assumptions, holding other assumptions constant, would have affected the value of the investment by the amounts shown below: 2022 Equity Value Sensitivity Analysis Long-Term Average Copper Price (US$/lb) 3.71 3.91 4.12 4.33 4.53 3.71 WACC 12.0% 1,451,000 1,584,000 1,716,000 1,849,000 1,981,000 13.3% 1,240,000 1,353,000 1,467,000 1,580,000 1,694,000 14.0% 1,057,000 1,155,000 1,252,000 1,350,000 1,447,000 14.7% 899,000 983,000 1,067,000 1,151,000 1,235,000 16.2% 760,000 833,000 906,000 979,000 1,052,000 The equity value ranges from ZMW 983 million (2021: ZMW 1,220 million) to ZMW1,580 million (2021: ZMW1, 746 million) with the calculated equity value being ZMW1,252 million (2021: ZMW1,458 million). 2021 Equity Value Sensitivity Analysis Long-Term Average Copper Price (US$/lb) 3.02 3.18 3.35 3.52 3.69 WACC 13.2% 1,662,000 1,771,000 1,880,000 1,989,000 2,098,000 15.2% 1,467,000 1,560,000 1,653,000 1,746,000 1,840,000 17.2% 1,298,000 1,378,000 1,458,000 1,538,000 1,618,000 19.2% 1,151,000 1,220,000 1,290,000 1,359,000 1,428,000 21.2% 1,023,000 1,083,000 1,143,000 1,203,000 1,262,000 The equity value ranges from ZMW1,220 million (2020: ZMW 116 million) to ZMW1,746 million (2020: ZMW 469 million) with the calculated equity value being ZMW1,458 million (2020: ZMW292 million). NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) in thousands of Kwacha 25 Financial assets at fair value through prot or loss (continued) b. Measurement of fair value (continued) ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc 125Investing SMARTLY 26. Inventories Group Company 31 Dec 2022 31 Dec 2021 31 Dec 2022 31 Dec 2021 Consumable stores 764,324 655,909 - - Production stock 4,062,702 3,887,509 - - Stockpiles 39,112 51,248 - - Gold nuggets 43,928 49,535 16,427 22,034 Gemstones 11,300 7,685 - - Balance at 31 December 4,921,366 4,651,886 16,427 22,034 Assets pledged as security Refer to note 40 (vii) for information on current assets pledged as security by the Group. 27. Trade and other receivables Group Dec 2022 Current Gross Expected credit loss Net Trade receivables 367,646 (6,557) 361,089 Dividend receivable 186,381 (78,174) 108,207 Prepayments 150,653 (152) 150,501 VAT receivable 5,358 (170) 5,188 Other receivables 143,088 (40,903)) 102,185 Amounts due from related parties (note 39b (iii)) 36,830 (1,169) 35,661 Price participation receivable (see note below) 9,182 (9,182) - Total current recievables 899,138 (136,307) 762,831 Non-current Other receivables and prepayments 3,659,482 (1,595,766) 2,063,716 Amounts due from related parties (note 39b(iii)) 1,819,475 (951,652) 867,823 Total non-current recievables 5,478,957 (2,547,418) 2,931,539 Total balance 6,378,095 (2,683,725) 3,694,370 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) in thousands of Kwacha ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc 126 Investing SMARTLY NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) in thousands of Kwacha 27 Trade and other receivables (continued) Group Dec 2021 Current Gross Expected credit loss Net Trade receivables 818,792 (6,114) 812,678 Dividend receivable 78,066 (78,066) - Prepayments 177,149 -177,149 VAT receivable 3,559,250 (1,595,766) 1,963,484 Other receivables 205,783 (78,089) 127,694 Amounts due from related parties (note 39b (iii)) 184,436 (466) 183,970 Price participation receivable (see note below) 9,182 (9,182) - Total current recievables 5,032,658 (1,767,683) 3,264,975 Non-current Other receivables and prepayments 653,960 -653,960 Amounts due from related parties (note 39b(iii)) 1,631,582 (955,104) 676,478 Total non-current recievables 2,285,542 (955,104) 1,330,438 Total receivables balance 7,318,200 (2,722,787) 4,595,413 The carrying values of trade and other receivables approximates their fair values. Assets pledged as security Refer to note 40 (vii) for information on current assets pledged as security by the Group. VAT receivables Valued Added Tax (“VAT”) receivable balance of ZMW3.6 billion relates to Mopani. Of this balance, A time value of money adjustment of ZMW1,595 million has been recognised given the long-term nature of VAT refunds. Management deems the gross VAT receivable is fully recoverable based on ZRA verication procedures conducted up as at the end of the nancial year. An assessment of output tax amounting to US$362 million (ZMW3.6 billion) had been raised by ZRA. The assessment covers the years 2011, 2012 and the rst quarter of 2013. The basis of assessment is that the Company has not provided all the evidence that was required under the old Rule 18 of the VAT (General) Rules to prove an export and in particular the requirement to submit customs import certicates from the country of nal destination. As a consequence, all sales of metal that were zero rated in the returns have been standard rated by assessment by ZRA. In 2015, VAT Rule 18 was subsequently amended to allow exporters to submit transit documents issued by the customs authority in the country of transit of the goods instead of import certicates from the country of nal destination, as proof of export for purposes of VAT zero rating. The amendment was with effect from 23 February 2015. As a result, the Company has been able to claim and receive VAT refunds claimed after 1 March 2015. A provision for impairment has not been raised in respect of the VAT recoverable relating to Mopani Plc, as management believe that the amount is fully recoverable, and discussions are ongoing with Government and the tax authorities. ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc 127Investing SMARTLY Company December 2022 Current Gross Expected credit loss Net Trade receivables 547 (233) 314 Dividend receivable 186,381 (78,174) 108,207 Prepayments 2,199 (152) 2,047 VAT receivable 2,450 (170) 2,280 Other receivables * 65,725 (40,903) 24,822 Amounts due from related parties (note 39b(iii)) 123,896 (87,737) 36,159 Price participation receivable (see note below) 9,182 (9,182) - Total current assets 390,380 (216,551) 173,829 Non-current Amounts due from related parties (note 39b(iii)) 1,909,814 (951,652) 958,162 Total balance 2,300,194 (1,168,203) 1,131,991 Company December 2021 Current Gross Expected credit loss Net Trade receivables 1,408 (1,408) - Dividend receivable 78,066 (78,066) - Prepayments 1,743 -1,743 VAT receivable 1,387 (107) 1,280 Amounts due from related parties (note 39b(iii)) 88,895 (78,089) 10,806 Price participation receivable (see note below) 708,206 (524,191) 184,015 Other receivables * 9,182 (9,182) - Total current assets 888,887 (691,043) 197,844 Non-current Amounts due from related parties (note 39b(iii)) 1,631,582 (955,104) 676,478 Total balance 2,520,469 (1,646,147) 874,322 Other receivables analysis Group 31 Dec 22 31 Dec 21 Gross Impairment Net Gross Impairment Net Government receivables - - - 7,223 (7,223) - Staff receivables 12,264 (1,004) 11,260 9,645 (824) 8,821 Management fees receivable 11,974 (11,650) 324 13,297 (12,745) 552 Other sundry debtors 118,850 (28,249) 90,601 175,618 (57,297) 118,321 Total balance 143,088 (40,903) 102,185 205,783 (78,089) 127,694 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) in thousands of Kwacha 27 Trade and other receivables (continued) ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc 128 Investing SMARTLY Company 31 Dec 2022 31 Dec 2021 Gross Impairment Net Gross Impairment Net Government receivables - - - 7,223 (7,223) - Staff receivables 12,264 (1,004) 11,260 9,645 (824) 8,821 Management fees receivable 11,974 (11,650) 324 13,297 (12,745) 552 Other Sundry debtors 41,487 (28,249) 13,238 58,730 (57,297) 1,433 Total balance 65,725 (40,903) 24,822 88,895 (78,089) 10,806 The carrying values approximated their fair values due to the low impact of discounting. 28. Environmental Protection Fund Group 31 Dec 2022 31 Dec 2021 Environmental Protection Fund Deposit 94,433 87,130 94,433 87,130 Environmental Protection Fund deposit relates to the subsidiary Mopani Copper Mine Plc with regards to the Company’s environmental and restoration costs for decommissioning and closure costs to be incurred by the Company for the closure of the Nkana and Mufulira mines. The Mines and Minerals Regulations, 1998 (Statutory Instrument No.102 of 1998) provide for the payment of contributions by mine owners into the Environmental Protection Fund designed to provide for environmental restoration of defunct sites. The Company contributes into the Environmental Protection Fund and the contributions paid into the Fund are based on the environmental assessment carried out by environmental experts. The funds are not accessible and are only available at the time of restoration. Ndola Lime Company Limited/ Limestone Resources Limited have not made any contributions towards the environmental protection funds. The contributions are only due based on the assessment made by the government department in line with the Act. In this case, they was no assessment in 2021 and therefore no payment has been made. Assessment is due in 2022. However, both entities have recognised Asset Retirement Obligation (ARO) liabilities which are driven by the company and are signicantly material than the assessments done by the mining department of the government. This is done in line with IAS 37. Assets pledged as security Refer to note 40 (vii) for information on current assets pledged as security by the Group. NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) in thousands of Kwacha 27 Trade and other receivables (continued) ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc 129Investing SMARTLY 29. Term deposits Term deposits relate to xed deposits placed in various banks. The movement in term deposits is as follows: Group Company 31 Dec 2022 31 Dec 2021 31 Dec 2022 31 Dec 2021 Current Balance at 1January 653,742 194,369 632,992 194,369 Matured during the period (653,742) (194,369) (632,992) (194,369) Additions 5,340,202 653,742 5,340,202 632,992 Total 5,340,202 653,742 5,340,202 632,992 A lien/charge in the sum of US$550,000 was created over the term deposit as security for the payment of an overdraft facility and a balance is included in the total of ZMW5,340,202 (2021: ZMW653,742 thousand). The Company performs the Expected Credit loss (ECL) on term deposits. Based on the assessment, the ECL was considered immaterial for both 2022 and 2021. 30. Cash and cash equivalents For the purposes of the cash ow statement, cash and cash equivalents comprise the following: Group Company 31 Dec 2022 31 Dec 2021 31 Dec 2022 31 Dec 2021 Cash and bank balances 328,970 184,464 45,560 81,473 Cash in hand 203 161 26 25 Cash and cash equivalents in the statement of nancial position 329,173 184,625 45,586 81,498 Bank overdraft (688,120) (70,449) - - Cash and cash equivalents (358,947) 114,176 45,586 81,498 Under assets held for sale 277,887 221,925 - - Cash and cash equivalents at 31 Dec (81,060) 336,101 45,586 81,498 Bank overdrafts Mopani Copper Mines Plc The Company has overdraft facilitates with Zambia National Commercial Bank Plc amounting to US$10 million, Ecobank amounting to US$15 million, Indo Zambia Bank amounting to US$5 million, Atlas Mara Bank amounting to US$10 million and Zambia Industrial Commercial Bank amounting to US$2.8 million. The overdraft facilities are secured by unconditional corporate guarantee from ZCCM Investment Holdings Plc. The overdraft facilities carry interest rate at 10%. Kariba Minerals Limited The overdraft facility has a limit of US$ 500,000 and attracts interest at 12% per annum. The overdraft is secured by a cash cover provided by ZCCM-IH. The fair value of the corporate guarantees above was immaterial, thus nil value (2021 nil) was recognised.As at 31 December,2022 the ECL on the two guarantees was assessed to be nil (2021: nil), as there was no adverse conditions that existed. Assets pledged as security Refer to note 40 (vii) for information on current assets pledged as security by the Group. NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) in thousands of Kwacha ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc 130 Investing SMARTLY NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) in thousands of Kwacha 31. Trade and other payables Current Group Company 31 Dec 2022 31 Dec 2021 31 Dec 2022 31 Dec 2021 Trade payables 2,828,762 1,417,719 - - Concentrate purchases 2,782,359 2,380,447 - - Statutory liabilities 1,290,633 614,785 1 1 Other payables and accrued expenses 549,423 383,557 121,004 116,882 Total balance 7,451,177 4,796,508 121,005 116,883 Concentrate purchases relates to costs accrued for purchases of third party concentrates by Mopani Copper Mine Plc The carrying amount of the current payables and accrued expenses approximate their fair values due to the short-term nature and low impact of discounting. Statutory liabilities relate to Pay As You Earn (PAYE), National Pension Scheme Authority (NAPSA), Mineral Royalty Tax and Value Added Tax (VAT). Other payables and accrued expenses analysis Group Company 31 Dec 2022 31 Dec 2021 31 Dec 2022 31 Dec 2021 Staff payables 406,177 305,307 4,327 3,175 Dividends received in advance 10,724 10,724 10,724 10,724 Treasury security deposits 2,649 -2,649 - Dividend payable 87,531 2,270 87,531 2,270 Accrued expenses 731 41,807 731 41,807 Sundry payables 41,611 23,449 15,042 58,906 Total balance 549,423 383,557 121,004 116,882 Dividends received in advance relates to dividends received from investee companies which are not payable but will be offset against future dividends ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc 131Investing SMARTLY NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) in thousands of Kwacha 32. Provisions Group Company 31 Dec 2022 31 Dec 2021 31 Dec 2022 31 Dec 2021 Provisions for legal cases (i) 85,332 10,332 85,332 10,332 Provisions – others (ii) 402,357 368,414 23,354 19,196 Closing balance 487,689 378,746 108,686 29,528 Legal provision Opening balance 10,332 72,685 10,332 72,685 Addition 76,400 -76,400 - Amounts used during the period (1,400) (691,785) (1,400) (62,353) Acquired through business combinations (Note 23d) -976,753 - - Closing balance 85,332 357,653 85,332 10,332 Provisions other Opening balance 378,746 48,492 19,196 47,031 Addition 85,564 35,571 28,913 33,674 Amounts used during the period (61,953) (62,970) (24,755) (61,509) Closing balance 402,357 21,093 23,354 19,196 Total provision closing balance 487,689 378,746 108,686 29,528 i. Legal provision arises mainly from a number of legal cases involving the Group. These cases relate to various legacy matters of the old ZCCM Limited, mostly relating to employee cases and sale of houses. Legal provisions amounts are premised on claims against the Company before the courts of law and the likelihood of matter going in favour of the claimant as determined by the legal team. Legal provisions are payable within 12 monthsLegal provision arises mainly from a number of legal cases involving the Group. These cases relate to various legacy matters of the old ZCCM Limited, mostly relating to employee cases and sale of houses. Legal provisions amounts are premised on claims against the Company before the courts of law and the likelihood of matter going in favour of the claimant as determined by the legal team. Legal provisions are payable within 12 months. ii. Provisions others comprises provisions for consultancy fees regarding various investments projects, as well as staff related provisions which includes gratuity and leave pay. Provisions others are payable within 12 months. Gratuity disclosed as part of provisions is based on the employee contracts and is xed per contract as a rate of the total salary (known percentage of the agreed basic salary in the contract). The payment of the gratuity is also known (as end of contract). Therefore, both the timing and cost to the company is known with certainty at every reporting date. ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc 132 Investing SMARTLY NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) in thousands of Kwacha 33. Share capital and premium i. Ordinary shares Group and Company Class A shares Class B shares Total 31 Dec 2022 31 Dec 2021 31 Dec 2022 31 Dec 2021 31 Dec 2022 31 Dec 2021 Balance at 31 Dec 969 969 639 639 1,608 1,608 Class “A” Ordinary Shares and Class “B” Ordinary Shares all rank pari passu in all respects. Holders of these shares are entitled to dividends as declared from time to time and are entitled to one vote per share. The Company has authorised class A and B shares of 96,976,669 and 63,873,617 respectively of ZMW0.01 each. Both class A and B shareholders have a right to vote, appoint directors, chairperson and receive a dividend. ii. Number of shares In thousands of shares Class A shares Class B shares Total shares 31 Dec 2022 31 Dec 2021 31 Dec 2022 31 Dec 2021 31 Dec 2022 31 Dec 2021 In issue at 31 December – fully paid 96,927 96,927 63,873 63,873 160,800 160,800 Authorised – par value ZMW0.01 120,000 120,000 80,000 80,000 200,000 200,000 iii. Share premium Class A shares Class B shares Total 31 Dec 2022 31 Dec 2021 31 Dec 2022 31 Dec 2021 31 Dec 2022 31 Dec 2021 Ordinary shares 1,259,407 1,259,407 829,936 829,936 2,089,343 2,089,343 1,259,407 1,259,407 829,936 829,936 2,089,343 2,089,343 ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc 133Investing SMARTLY 34. Other reserves i. Revaluation reserve The revaluation reserve arises from the periodic revaluation of items 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. The reserves are non-distributable to the shareholders and are recognised net of deferred income tax. 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. ii. Translation reserve The translation reserve arises from the translation of the results of the investments in subsidiaries and equity accounted investees whose functional and presentation currency is the US Dollar. Subsidiary translation reserve for the year were as follows; ZMW’000 ZMW’000 31 Dec 2022 31 Dec 2021 Trade and other receivables 230,243 (841,427) Environmental Protection Fund 7,303 (28,376) Cash and cash equivalents (28,538) (2,816) Borrowings (note 35) (2,172,561) 8,193,471 Retirement benets (note 37) (25,167) 80,568 Provisions for environmental rehabilitation (note 38) (86,118) 314,215 Trade and other payables (511,192) 973,936 Provisions (note 32) (29,110) 178,189 Total (2,615,140) 8,867,760 iii. Fair value reserve Fair value reserve comprises the cumulative net change in the fair value through other comprehensive income nancial assets until the assets are derecognised or impaired. The reserves are distributable upon realisation. Where a revalued nancial asset is sold, the portion of the reserve that relates to that nancial asset, which is effectively realised, is reduced from the investment revaluation reserve and is recognised in prot or loss. Where a revalued nancial asset is impaired, the portion of the reserve that relates to that nancial asset is recognised in retained earnings. (See note 45 (d (iii)). NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) in thousands of Kwacha ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc 134 Investing SMARTLY Group Company 31 Dec 2022 31 Dec 2021 31 Dec 2022 31 Dec 2021 Current Borrowings 864,411 797,566 - 1,135 Non-current Borrowings 27,476,859 24,546,001 - - Total borrowings 28,341,270 25,343,567 - 1,135 Group Company 31 Dec 2022 31 Dec 2021 31 Dec 2022 31 Dec 2021 Opening balance 25,343,567 161,370 1,135 161,370 Acquisition of subsidiary (note 23(d)(ii)) -33,121,500 - - Repayments (698,833) (402,694) (1,135) (124,457) Interest - expense 1,523,989 701,512 14 8,872 Exchange differences - (33,077) -(33,077) Interest paid (14) (11,573) 14 (11,573) Exchange difference due to translation (included in reserves) (note 34 (ii)) 2,172,561 (8,193,471) - - Closing balance 28,341,270 25,343,567 - 1,135 Group Company 31 Dec 2021 31 Dec 2022 31 Dec 2021 31 Dec 2022 Glencore Plc 28,341,270 25,342,432 - - CNCM Luanshya - 1,135 - 1,135 Closing balance 28,341,270 25,343,567 - 1,135 Glencore International AG / Carlisa facility Mopani has historically been funded by shareholder loans from Carlisa and other members of the Glencore group. As of 31 December 2020, the total shareholder loan was ZMW 71.509 billion (US$4.3 billion). Before the acquisition of Mopani’s 90% stake from Glencore in March 2021, the shareholder loans agreements were amended, such that the remaining debt in Mopani was reduced to ZMW 24.945 billion (US$1.5 billion.) The amended debt to Carlisa and Glencore key terms and conditions are summarised below: The facilities include the following parties: • Mopani as a borrower • Glencore International AG (GIAG) as a lender in respect of the GIAG facility • Carlisa as a lender in respect of the Carlisa facility • ZCCM-IH as a guarantor The facility has a balance of ZMW 28.341 billion (2021: ZMW 25.342 billion) as of 31 December 2022 with repayment period ending 2035 or any such later date as agreed amongst the Parties in writing from time to time. ZCCM-IH has guaranteed the obligations of Mopani under the GIAG and Carlisa facility. Interest is capitalised for the rst 3 years and thereafter payable quarterly at Libor plus 3%. NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) in thousands of Kwacha 35 Borrowings (continued) Glencore International AG / Carlisa facility (continued) ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc 135Investing SMARTLY The facilities include the following parties: The facility is repayable under a dual mechanism • 3% of gross revenue of the Mopani group from 2021- 2023, and 10% to 17.5% of gross revenue of Mopani thereafter. • 33.3% of EBITDA less taxes, changes in working capital,capital expenditure, royalty payment to Government of the Republic of Zambia (GRZ) for that quarter. Repayment of principal (together with accrued interest) may additionally be required in the event of an occurrence of certain other early repayment events. These include certain change of control events in respect of Mopani, proceeds from capital raising or disposal and sales of product other than those pursuant to the offtake agreements, amongst others. The Group is complying to the above terms. If ZCCM-IH ceases to control Mopani or the GRZ ceases to control ZCCM-IH, the lenders may, at any time thereafter cancel the facilities and declare all loans, together with accrued interest, immediately due and payable. Security The facility is secured by rst ranking xed and oating charge over all assets and undertakings of Mopani ZCCM-IH shares in Mopani. Other terms and conditions Glencore has retained offtake rights in respect of a portion of Mopani’s production of copper cathode and cathode slimes for the duration of the loan facilities (price based on the London Metal Exchange / London Market Association market pricing for metals) until the loan is repaid in full. CNMC Luanshya Copper Mines Plc (CNMC Luanshya) loan facility On 1 October 2020, CNMC Luanshya Copper Mines Plc advanced a loan facility to ZCCM-IH totalling US$7,500,000 at an interest rate of 7% per annum. This loan is payable over a period of three (3) years and attracts an interest rate of 7% per annum. The loan is payable through future dividend payable by CNMC Luanshya to ZCCM-IH within the tenure of the loan. As of 31 December 2022, total loan outstanding balance was nil (2021: US$ 68,901 inclusive of interest). 36. Deferred income tax Group Deferred income tax assets are recognised for provisions to the extent that the future related tax benets will be realised. There were no unrecognised deferred tax assets during the period. The deferred tax asset have been recognised only to the extent that it is probable that future taxable prots will be available against which the temporary differences will be utilised. Subject to agreement with the Zambia Revenue Authority, the Group has estimated tax losses of approximately ZMW 468million (2021: ZMW517.33 million) deferred tax losses relates to ZCCM-IH the holding Company and are recoverable. ZCCM-IH company has forecasted that sufcient taxable prots will be available to utilises the recognised tax losses. Management has premised the projections on the recent change of shareholder agreements with certain investee companies, from dividend model, (subjected to 0% income tax rate) to the royalty model, (subjected to 30% income tax rate.) The tax losses are available to be carried forward for a period of not more than 5 years from the charge year in which they were incurred, for set off against future taxable prot from the same source as follows: Deferred income tax was calculated using the enacted income tax rate of 30% (2021: 30%). Tax loss analysis 2022 2021 ZMW'000 ZMW'000 2021 tax losses available until 2026 261,822 261,822 2020 tax losses available until 2025 184,593 184,593 2019 tax losses available until 2023 22,574 51,027 2018 tax losses available until 2022 - 19,886 Total 468,989 517,328 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) in thousands of Kwacha 35 Borrowings (continued) Glencore International AG / Carlisa facility (continued) INTEGRATED ANNUAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc 136Investing SMARTLY NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) in thousands of Kwacha 36 Deferred Income Tax (continued) Group (continued) Group Balance 1 Jan 2021 Recognised in Business Combianation Recognised in prot or loss Recognised OCI Balance 31 Dec 2022 Recognised in prot or loss Recognised in OCI Balance 31 Dec 2022 Movement in temporary differences during the year Deferred tax asset Provision for gratuity and leave pay (2,627) (207) -(2,834) (66) -(2,900) Change in investment property 9,039 (9,039) - - - - - Other provisions (22,218) 7,358 -(14,860) 2,022 -(12,838) Bad debt Provision (489,130) 99,597 -(389,533) 129,983 -(259,550) Legal Provision (25,439) 22,339 -(3,100) (22,428) -(25,528) Environmental provision (23,308) (671) -(23,979) 12,172 -(11,807) Unrealised exchange losses (5,867) (104,255) -(110,122) 22,497 -(87,625) Supply chain tax losses - - - - (405) (405) Tax losses (89,859) (67,113) -(156,972) 20,641 -(136,331) Recognition of deferred tax asset relating to Business combination fair value uplifts up to DTL (1,185,160) (1,185,160) -(1,185,160) Total deferred tax asset (649,409) (1,185,160) (51,991) - (1,886,560) 164,416 - (1,722,144) Deferred tax liability Property, plant, and equipment (8,888) 29,088 -20,200 15,523 -35,723 Property, plant, and equipment – Revaluation 15,655 (7,897) (1,079) 6,679 (9,189) 3,746 1,236 Unrealised exchange gains 382,204 (62,726) -319,478 43,206 -362,684 Employee provision 13,833 (935) 1,297 14,195 266 28 14,489 Recognition of deferred tax liabilities (DTL) relating to Business combination fair value uplifts. 1,185,160 1,185,160 -1,185,160 Total deferred tax asset liability 402,804 1,185,160 (42,470) 218 1,545,712 49,806 3,774 1,599,292 Deferred tax asset/liability (246,605) - (94,461) 218 (340,848) 214,222 3,774 (122,852) INTEGRATED ANNUAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc 137Investing SMARTLY Group Balance 1 Jan 2021 Recognised in Business Combianation Recognised in prot or loss Recognised OCI Balance 31 Dec 2022 Recognised in prot or loss Recognised in OCI Balance 31 Dec 2022 Movement in temporary differences during the year Deferred tax asset Provision for gratuity and leave pay (2,627) (207) -(2,834) (66) -(2,900) Change in investment property 9,039 (9,039) - - - - - Other provisions (22,218) 7,358 -(14,860) 2,022 -(12,838) Bad debt Provision (489,130) 99,597 -(389,533) 129,983 -(259,550) Legal Provision (25,439) 22,339 -(3,100) (22,428) -(25,528) Environmental provision (23,308) (671) -(23,979) 12,172 -(11,807) Unrealised exchange losses (5,867) (104,255) -(110,122) 22,497 -(87,625) Supply chain tax losses - - - - (405) (405) Tax losses (89,859) (67,113) -(156,972) 20,641 -(136,331) Recognition of deferred tax asset relating to Business combination fair value uplifts up to DTL (1,185,160) (1,185,160) -(1,185,160) Total deferred tax asset (649,409) (1,185,160) (51,991) - (1,886,560) 164,416 - (1,722,144) Deferred tax liability Property, plant, and equipment (8,888) 29,088 -20,200 15,523 -35,723 Property, plant, and equipment – Revaluation 15,655 (7,897) (1,079) 6,679 (9,189) 3,746 1,236 Unrealised exchange gains 382,204 (62,726) -319,478 43,206 -362,684 Employee provision 13,833 (935) 1,297 14,195 266 28 14,489 Recognition of deferred tax liabilities (DTL) relating to Business combination fair value uplifts. 1,185,160 1,185,160 -1,185,160 Total deferred tax asset liability 402,804 1,185,160 (42,470) 218 1,545,712 49,806 3,774 1,599,292 Deferred tax asset/liability (246,605) - (94,461) 218 (340,848) 214,222 3,774 (122,852) NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) in thousands of Kwacha 36 Deferred Income Tax (continued) Company Deferred Tax on Foreign Currency Reserve The translation reserves which arise from consolidation (reporting) are not recognised. There is no group tax registration in Zambia, hence translation reserves will not result in any tax obligations at any time. All taxes recognised at group level are a summation of individual entity’s tax obligations/claims Deferred income tax assets are recognised for provisions to the extent that the future related tax benets will be realised. There were no unrecognised deferred tax assets during the period. Company Balance 1 Jan 2021 Recognised in prot or loss Recognised OCI Balance 31 Dec 2021 Recognised in prot or loss Recognised OCI Balance 31 Dec 2022 Movement in temporary differences during the year Property, plant and equipment (1,668) (9) -(1,677) (4,433) -(6,110) Property, plant and equipment – Revaluation 7,088 -(1,079) 6,009 -3,746 9,755 Unrealised exchange gains 381,263 (62,955) -318,308 43,206 -361,514 Provision for gratuity and leave pay (2,660) (207) -(2,867) (66) -(2,933) Change in investment property 9,039 (9,039) - - - - - Other provisions (8,696) 7,405 -(1,291) 895 - (396) Bad debt Provision (593,460) 99,597 -(493,863) 129,983 -(363,880) Legal Provision (25,439) 22,339 -(3,100) (22,428) -(25,528) Employee provision (3,777) (597) 1,297 (3,077) 266 28 (2,783) Environmental provision (23,308) (671) -(23,979) 12,172 -(11,807) Unrealised exchange Losses (3,829) (104,255) -(108,084) 31,677 -(76,407) Tax losses (89,427) (65,061) -(154,488) 14,097 -(140,391) (354,874) (113,453) 218 (468,109) 205,369 3,774 (258,966) ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc 138 Investing SMARTLY 37. Retirement benets Group dened contribution plan A dened contribution plan is a pension plan under which the Group pays xed contributions into the fund. The Group has no legal or constructive obligations to pay further contributions if the fund does not hold sufcient assets to pay all employees the benets relating to employee service in the current and prior years. The Company’s contributions to the dened contribution schemes are charged to prot or loss in the year to which they relate. The Group has no further obligation once contributions have been paid. Group dened contribution obligation Under the terms of employment, permanent employees of the Group are entitled to post employment gratuity benets. The benets are dened benet in nature based on the members’ length of service and their salary at the earlier of retirement or death or termination from employment. This scheme is unfunded, and the Group only pays a benet upon retirement of an individual qualifying for the benet. The regulator, Pensions and Insurance Authority, does not regulate gratuity schemes such as this one. However, companies that opt to provide an additional and separate unfunded gratuity benet for their employees are required to operate within the governing covenants and agreements with their employees. Taxation of this scheme falls under the framework and administration of this arrangement, including decisions as to whether to prefund the benet costs or amend the arrangement design. The Group’s accrued liability in respect of each employee is the present value of the benets in respect of service completed to the valuation date but based on projected earnings to retirement or date of payment. The total accrued liability (or the required provision) at the valuation date is a summation of the accrued liability in respect of each employee. Key risks The plan typically exposes the Group to actuarial risks such as: interest rate risk, salary risk and liquidity risk. Interest rate risk The plan liabilities are calculated using a discount rate set with reference to Zambian government bond yields. A decrease in government bonds will increase the plan liabilities. Salary risk The present value of the dened benet plan liability is calculated by reference to the future salaries of plan participants. As such, an increase in the salary of the plan participants will increase the plan’s liability. Liquidity risk The plan is unfunded. There is a risk that resources might not be available when needed to pay the benets that have become due. a. The amounts recognise in the statement of nancial position are determined as follows: Group Company 31 Dec 2022 31 Dec 2021 31 Dec 2022 31 Dec 2021 Present value of unfunded obligations 322,071 340,288 10,256 10,256 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) in thousands of Kwacha ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc 139Investing SMARTLY NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) in thousands of Kwacha 37 Retirement benets (continued) ii. Group dened contribution obligation (continued) b. Movement in the dened benet obligation over the year is as follows; Group Company 31 Dec 2022 31 Dec 2021 31 Dec 2022 31 Dec 2021 Balance at 1 January 340,288 13,194 10,256 10,792 Acquisition of subsidiary - 223,990 - - Charge for the period – expense 168,173 82,614 3,154 4,979 Charge for the period – other comprehensive income (204,217) 105,270 (94) (3,705) Benets paid during the year (7,340) (4,212) (4,041) (1,810) Discontinued operation - - - - Translation 25,167 (80,568) - - Closing balance – 31 December 322,071 340,288 9,275 10,256 Non-current liability 182,940 96, 287 9,275 10,256 Current liability 139,131 244, 001 - - Total balance 322,071 340 288 9,275 10,256 c. Recognised in prot or loss Group Company 31 Dec 2022 31 Dec 2021 31 Dec 2022 31 Dec 2021 Current service cost 165,823 78,719 804 1,084 Interest cost 2,350 3,895 2,350 3,895 Personnel expenses (note 12) 168,173 82,614 3,154 4,979 d. Recognised in equity Group Company 31 Dec 2022 31 Dec 2021 31 Dec 2022 31 Dec 2021 Experience adjustment (307,622) 548 5,476 548 Financial assumptions 103,405 104,722 (5,570) (4,253) Total (204,217) 105,270 (94) (3,705) ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc 140 Investing SMARTLY NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) in thousands of Kwacha 37 Retirement benets (continued) Group dened benet plans a. Actuarial assumptions Critical assumptions are made by the actuary in determining the present value of retirement benet obligation including the discount rate. The carrying amount of the provision and the key assumptions made in estimating the provision were as follows: Group Company 31Dec 2022 31 Dec 2021 31 Dec 2022 31 Dec 2021 Discount rate 27.75% 26% 25.40% 26% Future salary increases 10.0% 11.7% 11% 18.4% The liability and actuarial assumptions are based on the actuarial valuation report as at 31 December 2022. b. Sensitivity analysis The results of the actuarial valuation are sensitive to changes in the nancial assumptions than changes in the demographic assumptions. In preparing the sensitivity analysis of the results to the discount rate used, the actuarial relied on calculations of the duration of the liability. Based on this methodology, the results of the sensitivity analysis are summarized in the table below: Group Company 31 Dec 2022 31 Dec 2021 31 Dec 2022 31 Dec 2021 Present value of obligation Present value of obligation Present value of obligation Present value of obligation ZMW’000 ZMW’000 ZMW’000 ZMW’000 1% increase in discount rate (4,188) (4,883) (479) (652) 1% decrease in discount rate 5,567 5,381 528 734 1% increase in salary rate 5,289 6,010 604 780 1% decrease in salary rate (4,874) (5,516) (551) (719) Since all the benets payable under the plan are salary related, the sensitivity of the liability to a change in the salary escalation assumption is not expected to be materially different. Effect on Company cash ows The arrangement is unfunded and the Company pays benets from general revenues as and when they arise. The timing of the benet payments from the plan will be inuenced by the age at which employees retire from the Company. ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc 141Investing SMARTLY 38. Provisions for environmental rehabilitation Group Company 31 Dec 2022 31 Dec 2021 31 Dec 2022 31 Dec 2021 Balance at 1 January 1,198,814 173,522 79,931 66,595 Acquisition of subsidiary - 1,215,007 - - Charge for the year (46,568) 128,771 (47,273) 28,104 Decrease in environmental provison charged to environmental assets (42,887) - - - Exchange movement 6,699 (17,933) 6,699 (14,159) Unwinding of discount 18,892 14,271 - - Payment - (609) -(609) Translation - included in reserves 86,118 (314,215) - - Balance at 31 December 1,221,068 1,198,814 39,357 79,931 The year-end balance represents restoration, rehabilitation and environmental provisions for the Company and its subsidiaries Mopani Copper mine Plc, Limestone Company Limited (Limestone) and Kariba Minerals Limited (Kariba). The Company’s provision is as a result of inherited environmental obligations from the old ZCCM Limited combined with environmental disturbances from mining operations at Mopani, Limestone and Kariba. The provisions have been assessed to cost ZMW1.22 billion as at 31 December 2022 as compared to ZMW1.98 billion as at 31 December 2021. The increase of ZMW22.25 million is largely on account of exchange differences. The provision represents the best estimate of the expenditure required to settle the obligations to rehabilitate environmental disturbances caused by mining operations. Mining Companies are expected to make contributions to the Environmental Protection Fund, controlled by the Department of Mines and Mineral Development. Contributions made towards the fund reduces the environmental provision obligation. At the end of useful life of the mine, Mining Companies are obligated to rehabilitate the damage to the environment and all payments made to the Environmental Protection Fund will be reimbursed towards this rehabilitation. The valuation for the environmental restoration provision at 31 December 2022 for the Company and subsidiaries were performed by independent consultants. Assumptions The following assumptions were taken into account: Ination rate of 6.5% (2021: 7%), Discount rate of 3.99% (2021:1.26%) and time to settle of 5 to 25 years when cashows are expected to be incurred. Based on this assessment, there was an increase in the liability for ARO and remediation on an undiscounted basis after an ination factor of 6.5% (2021: 7%) of approximately ZMW 1.22 billion (US$55.62 million) ZMW1.198 billion (2021: US$67.64 million). The discount factor of 3.99% was applied in 2022 (2021: 1.26%). The increase in the restoration provision in the current year is principally attributable to exchange movements. The changes in cash ow estimates result from new Net Present Value ( NPV) estimates of the asset retirement obligation. An impact of a 10% movement in the ination rate results into ZMW356.54 million (2021: ZMW371.50 million) change in the retirement and remediation liability while a 10% movement in the discount rate results into a ZMW 292.54 million (2021: ZMW 85.41 million) change in the liability and corresponding mineral properties asset. For each mining area, the ARO cash outows have been estimated to occur after the end of the mining over a period which is between 5 to 25 years. NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) in thousands of Kwacha ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc 142 Investing SMARTLY NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) in thousands of Kwacha 39. Related party transactions a. Parent and ultimate controlling party The Group is controlled by the Government of the Republic of Zambia through the Zambian Industrial Development Corporation (IDC) (60.3%) and Ministry of Finance (17.2%) which owns a total of 77.5% of the Company’s shares. b. Related party transactions i. Dividend paid to parent Company Name Type Ownership interest Place of incorporation 31 Dec 2022 31 Dec 2021 ZMW million ZMW million Industrial Development Corporation Ultimate parent entity and controlling party 60.3% Zambia 51.0 32.0 ii. Key management personnel compensation Key management compensation relates to Director’s in the Company and its subsidiaries. Directors’ emoluments include sitting allowances and salaries. iii. Dividend income from related parties Company Relationship 31 Dec 2022 31 Dec 2021 Kansanshi Mines – Associate 4,370,267 676,760 CNMC Luanshya Copper Mines Plc – Associates 250,282 133,892 Copperbelt Energy Corporation – Associate 195,988 145,785 NFC Africa Mining Plc – Other investee 51,780 - Total dividends (note 7) 4,868,317 956,437 2022 2021 Item ZMW ZMW Executive Director’s Fees 231,760 848,472 Executive Director’s Emoluments 841,791 4,239,651 Non-executive Director’s Fees 9,265,431 7,258,208 Total 10,338,982 12,346,331 ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc 143Investing SMARTLY iv. Interest income from related parties Company Relationship 31 Dec 2022 31 Dec 2021 Maamba Collieries Limited – Associate 77,936 42,111 Konkola Copper Mines Plc – Associates 7,305 21,773 Mushe Milling Company limited – Held for sale 8,623 8,234 Staff loans 908 673 Limestone Resources 2,461 - Rembrandt Properties Limited (Associate) 1,474 - Misenge Environmental & Technical Services Limited (subsidiary) - 47 Total interest income (Note 13) 98,707 72,838 v. Management fees income from related parties Company Relationship 31 Dec 2022 31 Dec 2021 Lubambe Copper Mines – Associate - 223 Misenge Environmental & Technical Services Limited (subsidiary) 32 12 Kariba Minerals Limited (subsidiary) 127 95 Kabundi Resources Limited (subsidiary) 942 450 Zambia Gold Company Limited (subsidiary) 4,843 8,143 Total management fees (note 9) 5,944 8,923 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) in thousands of Kwacha 39. Related party transactions (continued) b) Related party transactions ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc 144 Investing SMARTLY NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) in thousands of Kwacha 39. Related party transactions (continued) b) Related party transactions (continued) vi. Trade revenue from related parties Company Relationship 31 Dec 2022 31 Dec 2021 Limestone Resources Limited– Subsidiary -52,751 Mushe mailing Company limited – Held for sale - 26,516 Total revenue - 79,267 vii. Amounts due from related parties (continued) Group 2022 Relationship Gross Impairment Carrying amount Maamba Collieries Limited (i) Associate 1,082,168 (250,159) 832,009 Lubambe Copper Mine Limited (ii) Associate 701,493 (701,493) - Konkola Copper Mines Plc (vii) Associate 35,697 (36) 35,661 Consolidated Gold Company Limited Associate 1,133 (1,133) - Rembrandt Associate 35,814 - 35,814 Sub total 1,856,305 (952,821) 903,484 Price participation receivable Associate 9,182 (9,182) - Dividends receivable Dividends receivable from Konkola Copper Mine Plc. Associate 186,381 (78,174) 108,207 Sub total 195,563 (87,356) 108,207 Total amounts due from related parties 2,051,868 (1,040,177) 1,011,691 Group 2021 Relationship Gross Impairment Carrying amount Maamba Collieries Limited (i) Associate 930,089 (253,611) 676,478 Lubambe Copper Mines Limited (ii) Associate 701,493 (701,493) - Konkola Copper Mines Plc (vii) Associate 184,154 (184) 183,970 Consolidated Gold Company limited Associate 282 (282) - Sub total 1,816,018 (955,570) 860,448 Price participation receivable Associate 9,182 (9,182) - Dividends receivable from Konkola Copper Mine. Associate 78,066 (78,066) - Sub total 87,248 (87,248) - Total amounts due from related parties 1,903,266 (1,042,818) 860,448 ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc 145Investing SMARTLY NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) in thousands of Kwacha 39. Related party transactions (continued) b) Related party transactions (continued) vii . Amounts due from related parties (continued) Company December 2022 Relationship Gross Impairment Carrying amount Kariba Minerals Limited (iv) Subsidiary 5,839 (5,839) - Limestone resources limited Subsidiary 137,189 (46,850) 90,339 Misenge Environmental and Technical Services Limited (vi) Subsidiary 4,816 (4,318) 498 Nkandabwe Coal Mine (v) Subsidiary 7,845 (7,845) - Mushe Milling Company Limited (viii) Subsidiary 66,448 (66,448) - Maamba Collieries Limited (i) Associate 1,082,168 (250,159) 832,009 Lubambe Copper Mine Limited (ii) Associate 701,493 (701,493) - Konkola Copper Mine Plc (vii) Associate 35,697 (36) 35,661 Consolidated Gold Company Limited Associate 1,133 (1,133) - Rembrandt (ix) Other investee 35,814 - 35,814 Sub total 2,078,442 (1,084,121) 994,321 Price participation receivable Associate 9,182 (9,182) - Dividends receivable: Associate 186,381 (78,174) 108,207 195,563 (87,356) 108,207 Total amounts due from related parties 2,274,005 (1,171,477) 1,102,528 Company December 2021 Relationship Gross Impairment Carrying amount Ndola Lime Company Limited (iii) Subsidiary 436,985 (436,985) - Kariba Minerals Limited (iv) Subsidiary 5,839 (5,839) - Limestone resources limited Subsidiary 46,850 (46,850) - Misenge Environmental and Technical Services Limited (vi) Subsidiary 4,535 (4,490) 45 Nkandabwe Coal Mine (v) Subsidiary 7,845 (7,845) - Mushe Milling Company Limited (viii) Subsidiary 55,856 (21,780) 34,076 Maamba Collieries Limited (i) Associate 930,089 (253,611) 676,478 Lubambe Copper Mine Limited (ii) Associate 701,493 (701,493) - Konkola Copper Mine Plc (vii) Associate 184,154 (184) 183,970 Consolidated Gold Company Limited Associate 282 (282) - Sub total 2,373,928 (1,479,359) 894,569 Price participation receivable (KCM) Associate 9,182 (9,182) - Dividends receivable: (KCM) Associate 78,066 (78,066) - 87,248 (87,248) - Total amounts due from related parties 2,461,176 (1,566,607) 894,569 ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc 146 Investing SMARTLY i. Mamba Collieries Limited (MCL) On 17 June 2015, ZCCM –IH entered into an inter-company loan agreement for a cash advance of ZMW321.15 million (US$26.345 million) as part of its contribution towards the implementation of the Integrated Mining Project and the establishment of the 300MW Thermal Power plant project. The loan attracts an interest rate of 6 % per annum. The principal and interest accrued is repayable in 5 annual instalments commencing in one year after the commercial operational date of 27 July 2017. This loan is subordinated to the third-party lenders who have nanced the Maamba project. On 25 March 2019, ZCCM-IH advanced a short-term liquid support of ZMW 220.5 million (US$10 million) to MCL payable within 60 days from the date of disbursement, and when Maamba receives payment for its power sales to ZESCO. This shareholder loan is subordinated to the project nance loans and is unsecured and interest is charged at 6% per annum. In 2020 nancial year, ZCCM-IH Plc instituted legal proceedings against MCL in the Lusaka High Court seeking the payment plus damages and interest. This matter was on 16 November 2022, withdrawn from court by ZCCM-IH, and the parties agreed to settle this matter ex-curia. The above loans are subordinated to the nancier’s loans of Maamba project and are payable after the nancial close date when all project nance loans are repaid by 2026. Management has assessed the sufciency of the provision for impairment on the loan receivable, based on Maamba’s loan repayment performance relating to all project nance loans, as well as its nancial performance, and has determined that there are no indicators for additional impairment provision. ii. Lubambe Copper Mine Limited On 15 September 2012, ZCCM-IH entered into an inter-company loan agreement with Lubambe Copper Mine Limited, for a cash call loan amounting to ZMW926.44 million (US$76 million). The loan attracts an interest rate of Libor plus 5% and is not secured. The loan was to be repaid in twelve equal quarterly instalments, none of which were made. This loan is fully impaired iii. Ndola Lime Company Limited The total loans and advances due from Ndola Lime Company Limited, including interest amounts was ZMW436 million (2019: ZMW436 million) which is fully impaired as per liquidation court order iv. Kariba Minerals Limited On 22 January 2019, ZCCM-IH advanced a loan to Kariba Minerals Limited amounting to ZMW5.84 million (US$489,520) for the purchase of equipment. The loan attracts an interest rate of 6 % per annum. The loan has a moratorium of two years. This loan is fully impaired. v. Nkandabwe Coal Mine Limited ZCCM – IH advanced a loan to Nkandabwe Coal Mine of ZMW7,845 million is recoverable from Ministry of Finance through a debt swap arrangement. Under this arrangement ZCCM-H, will recover the Nkandabwe loan from dividend payable to Ministry of Finance. Subsequently, the outstanding amount has been recovered in full. vi. Misenge Environmental and Technical Services Limited The loans totalling ZMW4.4 million is interest free with quarterly repayments of ZMW156,678. After year end, a total of ZMW313,356 was paid. NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) in thousands of Kwacha 39. Related party transactions (continued) b) Related party transactions (continued) vii . Amounts due from related parties (continued) ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc 147Investing SMARTLY vii. Konkola Copper Mine Plc (KCM) Following the High Court order to appoint a provisional liquidator for KCM, ZCCM-IH advanced ZMW166.57 million (US$10 million) to KCM through the liquidator. Further, on 23rd August 2019, ZCCM-IH advanced a loan of ZMW208.21 million (US$12.5 million) to KCM. The US$12.5 million loan attracted an interest rate of 6 % per annum. As at 31 December 2021, a combined loan total of ZMW184,154 million (US$11.06 million) was still outstanding. Subsequent to the year end the US$12.5 million loan with accrued interest was fully paid. Price Participation fees are variable amount, if any, to be credited to the seller as an additional income based on variations in the Payable Copper Price, if, as and when reected in Benchmark Reference Terms from time to time. The price participation fees are recognised once conditions indicate that additional income is to be received, based on prevailing prices over the agreed period, and that its been agreed with other parties involved, in this case the buyer. viii. Mushe Milling Company On 12 December 2019, ZCCM-IH and Mushe Milling Company Limited entered into a loan facility agreement amounting to ZMW20.48 million. The facility attracts interest computed as the Bank of Zambia average commercial lending rate plus 2% per annum. Payment of interest to commence six months from the date of the facility. The principal repayment of the loan has a moratorium of 12 months, thereafter, the principal to be paid in 24 equal monthly instalments. The loan is fully impaired. ix. Rembrandt On 1 September 2022, ZCCM-IH advanced a secured term loan facility of ZMW29,500,000 for the purposes of improving the Company’s working capital. The loan is payable in full on 30th August 2023, and attracts interest of 364 day Bank of Zambia treasury bill yield rate prevailing on 1st September 2022, plus margin of 1%. The loan is secured by the proportionate shares of the other shareholders of Rembrandt, Urban Brands and Sims Capital of 12,5% each. 40. Contingent liabilities i. Nava Bharat (Singapore) PTE Ltd (NBS) Equity Contribution on behalf of ZCCM-IH ZCCM-IH, being a co-owner of Maamba Collieries Limited (MCL) with Nava Bharat (Singapore) PTE Ltd (NBS), was in 2017 required to contribute ZMW 162 million (US$9.75 million) in form of a shareholder loan towards Maamba’s Base Project Equity according to its shareholding ratio of 35%. However, NBS contributed the whole amount including the ZMW 215 millon (US$9.75million) share for ZCCM-IH. As a result, it was resolved that ZCCM-IH refunds NBS, interest free, the excess contribution through offset of ZMW 27.1 million (US$1.23 million) interest payment which was due to ZCCM-IH from Maamba on the initial outstanding shareholder loan of 31 May 2015. The balance of ZMW 141.68 million (US$8.52 million) was to be paid by Maamba to NBS from future dividends of Maamba, payable to ZCCM-IH. ZMW 27.1 million (US$1.23 million) was paid to NBS in 2017, however, no dividends have been received from Maamba since 2017 to settle the balance. ZCCM-IH has determined that in the absence of dividends from Maamba it has no present obligation to settle the outstanding balance. For this reason, ZMW 187.9million (US$8.52 million) due to NBS has not been recognised in these nancial statements. NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) in thousands of Kwacha 39. Related party transactions (continued) b) Related party transactions vii . Amounts due from related parties (continued) ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc 148 Investing SMARTLY ii. Konkola Copper Mines Plc US$10 million Corporate Guarantee ZCCM Investments Holdings Plc has provided a Corporate Guarantee to Zambia National Commercial Bank Plc (“ZANACO”) for the amount of ZMW 220 million (US$10 million) (the “Transaction”). The provision of ZMW 220 million (US$10 million) Corporate Guarantee to ZANACO Plc by ZCCM-IH is for working capital to Konkola Copper Mines Plc (“KCM”). Provision of ZMW 220 million (US$10 million) Corporate Guarantee to ZANACO Plc is valid until 31 December 2022 comprising • A ZMW 176 million (US$8 million) Standby Letter of Credit (“SBLC”) by ZANACO Plc in favour of Tragura, the suppliers of copper concentrates to KCM and buyers of the nished copper, and. • A ZMW 44.10 million (US$2 million) overdraft facility. • Promissory note issued in favour of ZCCM-IH by Ministry of Finance for the Corporate Guarantee. The fair value of the corporate guarantees above was nil as there was no premium that was paid. As at 31 December,2022 the ECL on the two guarantees was assessed to be immaterial. iii. Mopani contingent liabilities Glencore International AG (the previous majority shareholder) decided on 8 April 2020 to place the Mopani operations under care and maintenance in the wake of the COVID-19 situation and other persistent operational challenges. This resulted in termination of contracts with all contractors. As a result of these terminations, three of the contractors commenced action against the Company in the International Court of Arbitration of the International Chamber of Commerce. The Directors are of the view that material losses will arise in respect of these claims at the date of these nancial statements and a provision hasbeen made. For Group consolidation, Those legal claims for which no provision was recognised as of 31 March 2021, were appropriately considered for IFRS 3 recognition. Refer to Note 23 d) ii). iv. In addition, the Company had contingent liabilities estimated at ZMW 19.96 million (US$1.2 million) relating to contractor and other claims against the Company. No provision has been made in these nancial statements as the Directors do not consider that there is any probable loss that will arise following the nalisation of these matters. v. Transfer pricing case (2012 to 2017) In October 2020, the Company received a report from the Zambia Revenue Authority (ZRA) relating to assessments for alleged transfer pricing breaches for sales between 2012 to 2017. The report highlighted additional tax to be paid by Mopani amounting to ZMW917 million (US$54.8 million). In November 2020, Mopani responded to ZRA and objected to the additional tax indicated in the audit report. Following this objection and discussions management had with ZRA, the amount for additional tax to be paid was reduced to ZMW640 million (US$38.3 million). On 7 April 2021, ZRA issued an assessment to the amount of K281 million (US$16.8 million) to which Mopani has formally objected through their tax experts. On this basis, Directors believe that no provision is required as at 31 December 2022 as the matter is currently in progress with ZRA for resolution. NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) in thousands of Kwacha 40. Contigent liabilities (continued) ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc 149Investing SMARTLY vi. Assets pledged as security The carrying amounts of assets pledged as security for current and non-current borrowings are: 31 Dec 2022 31 Dec 2021 Non-current assets Notes Property, plant, and equipment 17 12,239,693 35,741,549 Intangible assets 19 4,579,133 4,673,727 Trade and other receivables 27 2,063,716 552,946 Environmental protection fund 28 94,433 87,130 18,976,975 41,055,352 Current assets Inventories 26 4,836,680 4,564,852 Trade and other receivables 27 552,904 3,042,293 Term deposits 29 9,026 8,328 Cash and cash equivalents 30 159,584 78,469 Total current assets 5,558,194 7,693,942 41. Commitments Capital expenditure authorised by the Board of directors at the reporting date but not yet contracted for is as follows: Group Company 31Dec 2022 31Dec 2021 31Dec 2022 31 Dec 2021 Property, plant, and equipment 337,519 155,859 35,118 27,450 337,519 155,859 35,118 27,450 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) in thousands of Kwacha 42. Financial risk management ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc 150 Investing SMARTLY The Group has exposure to the following risks arising from nancial instruments: • Market risk (see (a)) • Credit risk (see (b)) • Liquidity risk (see (c)) Risk management framework The Company’s Board of directors has overall responsibility for the establishment and oversight of the Group’s risk management framework. The Board of directors has established the audit and risk committee, which is responsible for developing and monitoring the Group’s risk management policies. The committee reports quarterly to the Board of directors on its activities. The Group’s risk management policies are established to identify and analyse the risks faced by the Group, to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reect changes in market conditions and the Group’s activities. The Group, through its training and management standards and procedures, aims to maintain a disciplined and constructive control environment in which all employees understand their roles and obligations. The Group audit committee oversees how management monitors compliance with the Group’s risk management policies and procedures and reviews the adequacy of the risk management framework in relation to the risks faced by the Group. The Group audit committee is assisted in its oversight role by internal audit. Internal audit undertakes both regular and ad hoc reviews of risk management controls and procedures, the results of which are reported to the audit committee. c. Market risk Market risk is the risk that changes in market prices such as foreign exchange rates, interest rates and equity prices – will affect the Group’s income or the value of its holdings of nancial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return. i. Exposure to currency risk The Group is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the US dollar. The Group is affected by foreign exchange movements because it has assets and income which are denominated in currencies other than the Company’s functional currency, which is the Zambian Kwacha. Management’s policy to manage foreign currency risk is to hold both functional and foreign currency xed deposits with various banks which act as a natural hedge for foreign currency obligations. Hedging techniques such as currency swap are also used to manage currency risk. The Group did not enter into any transactions that required currency swap technique during the year and the prior year. NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) in thousands of Kwacha 42. Financial risk management (continued) ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc 151Investing SMARTLY The summary quantitative data about the Group’s exposure to foreign currency risk at the end of the reporting period, expressed in Zambian Kwacha is detailed in the table below. Group Dec 2022 ZMW equivalent of US$ and other foreign currencies US$ Amounts Cash and cash equivalents (416,884) (23,093) Trade and other receivables 3,592,226 198,988 Term deposits 5,047,459 279,599 Assets held for sale 358,285 19,847 Borrowings (28,341,270) (1,569,936) Trade and other payables (7,609,551) (421,523) Liabilities directly associated with assets classied as held for sale (356,138) (19,728) Net exposure (27,725,873) (1,535,846) Group Dec 2021 ZMW equivalent of US$ and other foreign currencies US$ Amounts Cash and cash equivalents 85,438 5,129 Trade and other receivables 4,550,140 273,175 Term deposits 506,340 30,399 Assets held for sale 248,840 14,940 Borrowings (25,343,567) (1,521,542) Trade and other payables (5,088,232) (305,480) Liabilities directly associated with assets classied as held for sale (254,297) (15,267) Net exposure (25,295,338) (1,518,646) The summary quantitative data about the Company’s exposure to foreign currency risk at the end of the reporting period, expressed in Zambian Kwacha is detailed in the table below. Company Dec 2022 ZMW equivalent of US$ and other foreign currencies US$ Amounts Cash and cash equivalents 28,668 1,588 Financial assets at fair value through comprehensive income 16,226,587 898,855 Trade and other receivables 867,670 48,064 Term deposits 5,047,459 279,599 Trade and other payables (178) (10) Net exposure 22,170,206 1,228,096 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) in thousands of Kwacha 42. Financial risk management (continued) a. Market risk (continued) i. Exposure to currency risk (continued) ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc 152 Investing SMARTLY Dec 2021 ZMW equivalent of US$ and other foreign currencies US$ Amounts Cash and cash equivalents 70,107 4,209 Financial assets at fair value through comprehensive income 20,553,258 1,233,948 Trade and other receivables 860,448 51,658 Term deposits 506,340 30,399 Borrowings (1,135) (68) Trade and other payables (87,363) (5,245) Net exposure 21,901,655 1,314,901 The following signicant exchange rates have been applied during the year: Average rate Reporting date spot rate 31 Dec 2022 31 Dec 2021 31 Dec 2022 31 Dec 2021 Kwacha US$ 1 17.0500 19.6765 18.0525 16.6565 Sensitivity analysis A 10 percent strengthening of the Kwacha against the US Dollar at 31 December 2022 would have increased (decreased) equity and prot or loss by the amounts shown below. This analysis assumes that all other variables, in particular interest rates, remain constant and ignores any impact of forecast sales and purchases. The analysis is performed on the same basis for 31 December 2021. Equity and prot or loss Group Company 31 Dec 2022 ZMW (2,772,587) 2,217,021 31 Dec 2021 ZMW (2,529,534) 2,190,165 A 10 percent weakening of the Kwacha against the US Dollar at 31 December 2022 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. The Group’s operations are subject to cash ow variability due to the risk of interest rate uctuations to the extent that interest-earning assets (including investments) and interest-bearing liabilities mature or reprice at different times and/or in differing amounts. In the case of oating rate assets and liabilities the Group is also exposed to basis risk, which is the difference in repricing characteristics of the various oating rate indices. Asset-liability risk management activities are conducted in the context of the Group’s sensitivity to cash ow variability attributable to interest rate changes. NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) in thousands of Kwacha 42. Financial risk management (continued) a. Market risk (continued) i. Impairement of nancial assets (continued) INTEGRATED ANNUAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc 153Investing SMARTLY NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) in thousands of Kwacha 42. Financial risk management (continued) a. Market risk (continued) i. Exposure to current risks (continued) Group 31 December 2022 31 December 2021 Total Zero rate instruments Floating rate instruments Fixed rate instruments Total Zero rate instruments Floating rate instruments Fixed rate instruments Assets Cash and cash equivalents 329,173 - - 329,173 184,625 - - 184,625 Trade and other receivables 1,366,758 463,274 -903,484 1,800,820 940,372 -860,448 Term deposits 5,340,202 - - 5,340,202 653,742 - - 653,742 Total assets 7,036,133 463,274 - 6,572,859 2,639,187 940,372 - 1,698,815 Liabilities Borrowings (28,341,270) -(28,341,270) -(25,343,567) -(25,342,432) (1,135) Bank overdraft (688,120) -(688,120) (70,449) Trade and other payables (5,611,121) (5,611,121) - - (1,757,250) (1,757,250) - (70,449) Liabilities directly associated with assets classied as held for sale (2,308,494) (2,308,494) - - (1,678,576) (1,678,576) - - Total liabilities (36,949,005) (7,919,615) (28,341,270) (688,120) (28,849,842) (3,435,826) (25,342,432) (71,584) Gap (29,912,872) (7,456,341) (28,341,270) 5,884,739 (26,210,655) (2,495,454) (25,342,432) 1,627,231 The interest rate gap is measured on an ongoing basis to assess the impact of the exposure after which corrective measures are deliberated. These may include contract renegotiation and use of money market options to hedge against signicant change in variable interest rates. Trade and other receivables/payables, excludes prepayments and statutory obligations and contract liabilities respectively. Statutory liabilities are imposed by law while contract liabilities represent an obligation to deliver a good or service rather than cash or other assets in settlement. Therefore, these do not meet the denition of nancial instruments and have been excluded from the table above ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc 154Investing SMARTLY NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) in thousands of Kwacha 43. Financial risk management (continued) a. Market risk (continued) i. Exposure to currency risk (continued) Company 31 December 2022 31 December 2021 Total Zero rate instruments Floating rate instruments Fixed rate instruments Total Zero rate instruments Floating rate instruments Fixed rate instruments Assets Cash and cash equivalents 45,586 - - 45,586 81,498 - - 81,498 Trade and other receivables 860,493 11,051 -849,442 1,295,154 48,850 -1,246,304 Term deposits 5,340,202 - - 5,340,202 632,992 - - 632,992 Total assets 6,246,281 11,051 - 6,235,230 2,009,644 48,850 - 1,960,794 Liabilities Borrowings - - - - (1,135) - - (1,135) Trade and other payables (105,231) (105,231) - - (47,277) (47,277) - - Total liabilities (105,231) (105,231) - - (48,412) (47,277) - (1,135) Gap 6,141,50 94,180 - 6,235,230 1,961,232 1,573 - 1,959,659 Trade and other receivables/payables, excludes prepayments and statutory obligations and contract liabilities respectively. Statutory liabilities are imposed by law while contract liabilities represent an obligation to deliver a good or service rather than cash or other assets in settlement. Therefore, these do not meet the denition of nancial instruments and have been excluded from the table above ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc 155Investing SMARTLY Risks arising from the interest rate benchmark reform The key risks for the Group arising from the transition are: • Interest rate basis risk: There are two elements to this risk as outlined below: If the bilateral negotiations with the Group’s counterparties are not successfully concluded before the cessation of IBORs, there are signicant uncertainties with regard to the interest rate that would apply. This gives rise to additional interest rate risk that was not anticipated when the contracts were entered into and is not captured by our interest rate risk management strategy. For example, in some cases the fallback clauses in IBOR loan contracts may result in the interest rate becoming xed for the remaining term at the last IBOR quote. The Group is working closely with all counterparties to avoid this from occurring, however if this does arise, the Group’s interest rate risk management policy will apply as normal and may result in closing out or entering into new interest rate swaps to maintain the mix of oating rate and xed rate debt Interest rate risk basis may arise if a non-derivative instrument held to manage the interest risk on the non-derivative instrument transition to alternative benchmark rates at different times. The Group will monitor this risk against its risk management policy which has been updated to allow for temporary mismatches of up to 12 months and transact additional basis interest rate swaps if required. Liquidity risk: There are fundamental differences between IBORs and the various alternative benchmark rates which the Company will be adopting. IBORs are forward looking term rates published for a period (e.g. 3 months) at the beginning of that period and include an inter- bank credit spread, whereas alternative benchmark rates are typically risk-free overnight rates published at the end of the overnight period with no embedded credit spread. These differences will result in additional uncertainty regarding oating rate interest payments which will require additional liquidity management. The Group’s liquidity risk management policy has been updated to ensure sufcient liquid resources to accommodate unexpected increases in overnight rates. Accounting: If transition to alternative benchmark rates for certain contracts is nalised in a manner that does not permit the application of the reliefs introduced in the Phase 2 amendments, this could lead to volatility in the prot or loss if nonderivative nancial instruments are modied or derecognised. The Group is aiming to agree changes to contracts that would allow IFRS 9 reliefs to apply. Litigation risk: If no agreement is reached to implement the interest rate benchmark reform on existing contracts, (e.g., arising from differing interpretation of existing fallback terms), there is a risk of prolonged disputes with counterparties which could give rise to additional legal and other costs. The Group is working closely with all counterparties to avoid this from occurring. NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) in thousands of Kwacha 42. Financial risk management (continued) a. Market risk (continued) i. Exposure to currency risk (continued) ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc 156 Investing SMARTLY NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) in thousands of Kwacha 42. Financial risk management (continued) b. Market risk (continued) i. Exposure to currency risk (continued) The following table summarises the non-derivative nancial instruments held by the Group that feature cash ows that will be affected by the interest rate benchmark reform. It does not include the Group’s xed rate nancial instruments because cashows on those instruments are not affected by the interest rate benchmark reform. Non-derivative nancial instrument prior to transition Maturity Entity Nominal in currency “US$000” Total Nominal “US$ 000” Hedge accounting Description Transition progress for the nonderivative nancial instruments Term loans linked to US$ LIBOR 2035 Mopani Copper Mines 1,500,000 1,500,000 Not applicable Borrowings To transition in 2023 Term loans linked to US$ LIBOR Ongoing Lubambe Copper Mines 76,000,000 76,000,000 Not Applicable Intercompany loan Receivable To transition in 2023 Ongoing Tragura 40,000,000 40,000,000 Not Applicable Loan advance- Payable through copper Purchases To transition in 2023 Cash ow sensitivity analysis of variable rate instrument A reasonable possible change of 100 basis points in interest rates at the reporting date would have increased /(decreased) equity and prot or loss by the amounts shown below. This analysis assumes that all other variables, in particular foreign currency exchange, remain constant. Group Effect in thousands of Kwacha Increase Decrease 31 Dec 2022 Variable rate instruments 28,341 (28,341) 31 Dec 2021 Variable rate instruments 25,342 (25,342) Company Effect in thousands of Kwacha Increase Decrease 31 Dec 2022 Variable rate instruments - - 31 Dec 2021 Variable rate instruments - - The Group’s investments in corporate term deposits, all of which are xed rate and are measured at amortised cost exposes the Group to cash ow interest rate risk. The tenure of the investments is mostly less than 1 year. At 31 December 2022, an increase/decrease of 100 basis points would have resulted in a decrease/increase in the Consolidated and separate post tax prot and equity of ZMW5,340 million (December 2021: ZMW0.63 million). ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc 157Investing SMARTLY i. Price risk The Group is exposed to equity securities price risk because of investments in quoted and unquoted shares classied as nancial assets at fair value through prot or loss. To manage its price risk arising from investments in equity and debt securities, the Group diversies its portfolio, in accordance with limits set by the Group. All quoted shares held by the Group are traded on the Lusaka Securities Exchange. Further, management of the Group monitors the proportion of equity securities in its investment portfolio based on market indices. Material investments within the portfolio are managed on an individual basis and all buy and sell decisions are approved by the Investment Committee of the Board. The primary goal of the Group’s investment strategy is to maximise investment returns and to improve its returns in general. Management is assisted by external advisers in this regard. At 31 December 2022, if the LUSE Index had increased/decreased by ve percent with all other variables held constant and all the Group’s equity instruments moved according to the historical correlation to the index, consolidated equity and prot or loss would have been ZMW81.33 million (2021: ZMW51.91 million) higher/lower. ii. Commodity price risk General corporate hedging unrelated to any specic project is not undertaken by the Group. The Group also does not issue or acquire derivative instruments for trading purposes. The Group is subject to price risk from uctuations in the market prices of copper. The impact of a 10% movement on commodity prices with all other variables held constant, consolidated equity and prot or loss would have been ZMW 1.9 billion higher/lower (2021: ZMW1.41 billion higher/lower) b. Credit risk Credit risk is the risk of nancial loss to the Group if a customer or counterparty to a nancial instrument fails to meet its contractual obligations and arises principally from the Group’s from cash and cash equivalents, term deposits with banks, as well as trade and other receivables. Credit risk is managed on a Group basis. The Group’s exposure to credit risk is inuenced mainly by the individual characteristics of each counterparty. However, management also considers the factors that may inuence the credit risk of its counterparty base, including the default risk associated with the industry. i. Risk management The Group through risk and audit committee has established a credit procedure under which each new customer or counterparty is analysed individually for creditworthiness before the Group’s standard payment and delivery terms and conditions are offered. The Group’s review includes external ratings, if they are available, nancial statements, credit agency information, industry information and in some cases bank references. Sale limits are established for each customer and monitored regularly by line management. ii. Security To limit the amount of credit exposure to nancial institution for term deposits, the Group obtains collateral from nancial institutions which are rated “B” and below. As at 31 December 2022, ZMW571.60 million (December 2021: ZMW220.45 million) of term deposits, collateral was held in the form of treasury bills. Due to the short-term nature of collateral held for term deposits, their carrying amounts approximates their fair values. No collateral is obtained as security for trade and other receivables. Instead, the Group requests for advance payments where necessary to reduce credit risk on some customers. To limit the amount of credit exposure to nancial institution for term deposits, the Group obtains collateral from nancial institutions which are rated “B” and below. As at 31 December 2022, ZMW571.60 million (December 2021: ZMW220.45 million) of term deposits, collateral was held in the form of treasury bills. Due to the short-term nature of collateral held for term deposits, their carrying amounts approximates their fair values. No collateral is obtained as security for trade and other receivables. Instead, the Group requests for advance payments where necessary to reduce credit risk on some customers. NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) in thousands of Kwacha 42. Financial risk management (continued) b. Market risk (continued) i. Exposure to currency risk (continued) ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc 158 Investing SMARTLY NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) in thousands of Kwacha 42. Financial risk management (continued) b. Credit risk (continued) ii. Security (continued) The amount that best represents the Group’s and Company’s maximum exposure to credit risk at 31 December 2022 is made up as follows: Group Company 31-Dec 2022 31-Dec 2021 31-Dec 2022 31-Dec 2021 Cash and cash equivalents 329,173 184,625 45,586 81,498 Trade and other receivables 1,367,143 1,800,820 849,442 1,246,304 Term deposits and other nancial assets at amortised costs 5,340,202 653,742 5,340,202 632,992 7,036,518 2,639,187 6,235,230 1,960,794 iii. Impairment of nancial assets The Group applies the Simplied Approach to assess and measure expected credit losses (ECLs) for cash and cash equivalents, nancial instruments at amortised costs and contract assets. The simplied approach entails recognising the ECL on the lifetime of the balance due to the Group. It involves the calculation of the loss rates to categories of the third parties that is then applied to the balance. The categorization is done both per unique characteristics and time the balances outstanding. The loss rates is derived using the Croup’s own historical credit loss experience and adjust for both current and forward-looking information. The information is evaluated for its appropriateness in light of market changes so as to remain relevant and provide valid assessment results. To calculate ECL, trade and other receivables are grouped based on shared credit risk characteristics and the days past due. The Group’s historical credit loss experience does not indicate signicantly different loss patterns for the various customer segments. In calculating the expected credit loss rates, the Group considers historical loss rates for each category of customers. Historical loss rates are adjusted to reect current and forward-looking information on macroeconomic factors affecting the ability of the customers to settle the receivables. The Group has identied long term consensus copper price of $3/lb or 6,615/ MT, gross domestic product projected growth of 4% for Zambia, ination rate for Zambia projected to trend around 8% and 10%, The group considers these factors in which it sells its goods and services to be the most relevant and, accordingly, adjusts the historical loss rates based on expected changes in these factors. The Group’s historical credit loss experience does not show signicantly different loss patterns for the various customer segments. Therefore, the grouping of trade receivables is not disaggregated into further risk proles other than days past due. There were no changes in the estimation techniques or signicant assumptions made as at the reporting period. ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc 159Investing SMARTLY The loss allowance as at reporting date was determined as follows: Group 31 December 2022 Gross Lifetime expected credit loss Net Estimated rate of Default (%) Not due 3,928,200 (253,993) 3,674,207 6.47 Past due 30 - 60 days 12,218 (798) 11,420 6.53 Past due 61 – 90 days 4,893 (303) 4,590 6.19 Past due 91 - 120 days 5,792 (1,639) 4,153 28.30 Over 121 days 2,426,992 (2,426,992) - 100.00 6,378,095 (2,683,725) 3,694,370 31 December 2021 Gross Lifetime expected credit loss Net Estimated rate of Default (%) Not due 4,841,390 (255,625) 4,585,765 5.28 Past due 30 - 60 days 8675 (4,163) 4,512 47.99 Past due 61 – 90 days 26,671 (26,027) 644 97.59 Past due 91 - 120 days 47,767 (43,275) 4,492 90.60 Over 121 days 798,038 (798,038) - 100.00 5,722,541 (1,127,128) 4,595,413 Company Dec 2022 Gross Lifetime expected credit loss Net Estimated rate of Default (%) Not due 1,383,953 (253,085) 1,130,868 18.29 Past due 30 - 60 days 1,340 (686) 654 51.19 Past due 61 - 90 days 655 (303) 352 46.26 Past due 91 - 120 days 713 (596) 117 83.59 Over 121days 913,533 (913,533) -100.00 2,300,194 (1,168,203) 1,131,991 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) in thousands of Kwacha 42. Financial risk management (continued) b. Credit risk (continued) iii. Impairment of nancial assets (continued) ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc 160 Investing SMARTLY NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) in thousands of Kwacha 42. Financial risk management (continued) b. Credit risk (continued) iii. Impairment of nancial assets (continued) Dec 2021 Gross Lifetime expected credit loss Net Estimated rate of Default (%) Not due 1,128,944 (254,717) 874,227 22.56 Past due 30 - 60 days 4,054 (4,051) 399.93 Past due 61 - 90 days 26,048 (26,027) 21 99.92 Past due 91 - 120 days 42,303 (42,232) 71 99.85 Over 121days 1,319,120 (1,319,120) - 100.00 2,520,469 (1,646,147) 874,322 The movement in expected credit loss in respect of trade and other receivables during the year was as follows: Group 31 Dec 2022 31 Dec 2021 Balance at 1 January 1,127,128 1,228,645 Recognised expected credit loss 5,938 35,948 Recovery of impairment loss (3,962) (109,111) Classied to assets held for sale -(21,781) Written off (41,502) (6,573) Closing balance 31 Dec 1,087,602 1,127,128 The movement in expected credit loss in respect of trade and other receivables during the year was as follows: Company 31 Dec 2022 31 Dec 2021 Balance at 1 January 1,646,147 1,695,601 Impairment recognised 4,749 81,272 Recovery (4,205) (124,088) Classied to assets held for sale -(65) Written off (478,488) (6,573) Closing balance 31 Dec 1,168,203 1,646,147 As at 31 December 2022 an expected credit loss of ZMW4.75 million was recognised in the Company mainly relating to supply chain receivables and management fees receivable. These amounts have been impaired in accordance with the Company’s expected credit loss model. Trade receivables are written off when there is no reasonable expectation of recovery. Indicators that there is no reasonable expectation of recovery include, amongst others, the failure of a debtor to engage in a repayment plan with the Group. The write off is approved by the Board of Directors. The ZMW478.49 million written off during the year mainly relates to Ndola Lime Company Limited which was liquidated in 2020. Impairment losses on trade receivables are presented as net impairment losses within operating prot. Subsequent recoveries of amounts previously written off are credited against the same line item. ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc 161Investing SMARTLY The loss allowance recognised is categorised as follows: Group Company 2022 2021 2022 2021 ZMW’000 ZMW’000 ZMW’000 ZMW’000 Performing debtors 2,494 370 1,403 5,787 Non-performing debtors 46,851 35,578 48,013 75,485 49,345 35,948 49,416 81,272 Cash and cash equivalents While cash and cash equivalents are also subject to the impairment requirements of IFRS 9, the identied impairment loss was immaterial. To limit the amount of credit exposure to nancial institution for cash and cash equivalent, cash and cash equivalents are held with banks which are rated A. Term deposits and other nancial assets Term deposits and other nancial assets at amortised cost relate to staff debtors are considered to have a low risk of default and the counterparts have a strong capacity to meet their contractual cash ow obligations in the near term. c. Liquidity risk Liquidity risk is the risk that the Group will encounter difculties in meeting the obligations associated with its nancial liabilities that are settled by delivering cash or another nancial asset. The Group’s approach to managing liquidity is to ensure, as far as possible, that it will have sufcient liquidity to meet its liabilities when they are due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group’s reputation. Management monitors rolling forecasts of the Group’s liquidity reserve on the basis of expected cash ows. The Group maintains the level of its cash ow and cash equivalents and other highly marketable debt investments at an amount in excess of expected cash outows on nancial liabilities through cash ow forecasts. i. Financing arrangements The Group had no undrawn borrowing facilities at the end of the reporting period (2020: Nil). ii. Maturities of nancial liabilities The following are the remaining contractual maturities of nancial liabilities at the reporting date. The amounts are gross and undiscounted and include estimated interest payments and exclude the impact of netting agreements. Balances due within 12 months equal their carrying balances as the impact of discounting is not signicant. NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) in thousands of Kwacha 42. Financial risk management (continued) b. Credit risk (continued) iii. Capital management (continued) ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc 162 Investing SMARTLY NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) in thousands of Kwacha 42. Financial risk management (continued) c. Liquidity risk (continued) Group Carrying amount Contractual amount Within 1 year 2 -5 years At 31 December 2022 Financial liabilities Borrowings 28,341,270 28,341,270 -28,341,270 Overdraft 688,120 688,120 688,120 - Trade and other payables 5,611,121 5,611,121 5,611,121 - Liabilities directly associated with assets classied as held for sale 2,308,494 2,308,494 2,308,494 - 36,949,005 36,949,005 8,607,735 28,341,270 At 31 December 2021 Financial liabilities Borrowings 25,343,567 25,343,567 1,135 25,342,432 Overdraft 70,449 70,449 70,449 Trade and other payables 1,757,250 1,757,250 1,757,250 - Liabilities directly associated with assets classied as held for sale 1,678,576 1,678,576 1,678,576 - 28,849,842 28,849,842 3,507,410 25,342,432 Company Carrying amount Contractual amount Within 1 year 2 - 5 years At 31 Dec 2022: Financial liabilities Trade and other payables 105,231 105,231 105,231 - 105,231 105,231 105,231 - Carrying amount Contractual amount Within1 year 2 - 5 years At 31 Dec 2021: Financial liabilities Borrowings 1,135 1,135 1,135 - Trade and other payables 47,277 47,277 47,277 - 48,412 48,412 48,412 - ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc 163Investing SMARTLY The scope of the Group management framework covers the Group’s total equity reported in its nancial statements. The Group’s and Company objectives when managing capital are to safeguard their 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 Group may adjust the number of dividends paid to shareholders, issue new capital or sell assets to reduce debt. The Board’s policy is to implement a sound nancial strategy that ensures nancial independence and maintains adequate capital to sustain the long terms objectives of the Group and to meet its operational and capital budget. The Group monitors capital on the basis of the average gearing ratio in the industry, in Zambia which currently stands at below 50% of equity. 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 Dec 2022 and 31 Dec 2021 were as follows: Group Company 31 Dec 2022 31 Dec 2021 31 Dec 2022 31 Dec 2021 Borrowings 28,341,270 25,343,567 -1,135 Bank overdraft 688,120 70,449 - - Less: cash and cash equivalents (329,173) (184,625) (45,586) (81,498) Net debt 28,700,217 25,229,391 (45,586) (80,363) Total equity 7,908,807 12,808,905 24,679,852 24,732,194 Total capital 36,609,024 38,038,296 24,634,266 24,651,831 Gearing ratio 78.40% 66.33% 0% 0% The interest rates used to discount estimated cash ows when applicable are based on the government yield curve at the reporting date plus an appropriate credit spread, and are as follows: 31 Dec 2022 31 Dec 2021 Loans and borrowings 12.21% 15.75% There has been no change in management of capital during the year. iv. Fair value estimation The Group classies its nancial assets in the following measurement categories: i. those to be measured subsequently at fair value (either through OCI or through prot or loss): and ii. those to be measured at amortised cost. The classication depends on the entity’s business model for managing the nancial assets and the contractual terms of the cash ows. For assets measured at fair value, gains and losses will either be recorded in prot or loss or OCI. Financial liabilities are recorded initially at fair value and subsequently measured at amortised cost using the effective interest rate method except for derivative instruments that continue to be measured at fair value. The fair value of the nancial assets and liabilities carried at amortised cost including cash and cash equivalents, trade and other receivables, term deposits, borrowings and trade and other payables are considered to approximate their respective carrying values due to their short-term nature and negligible credit losses. NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) in thousands of Kwacha 42. Financial risk management (continued) c. Liquidity risk (continued) iii. Capital management ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc 164 Investing SMARTLY NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) in thousands of Kwacha 42. Financial risk management (continued) c. Liquidity risk (continued) Fair value estimation (continued) Group – 2022 Financial assets at FVTPL Financial liabilities at FVTPL Financial assets at amortised cost Financial liabilities at amortised cost Financial assets at fair value through prot or loss 1,252,400 - - - Cash and cash equivalents - - 329,187 - Trade and other receivables - - 1,370,921 - Term deposits - - 5,340,202 - Assets classied as held for sale 2,103,761 - - - Financial liabilities Borrowings - - - (28,341,270) Bank overdraft - - - (688,120) Trade and other payables - (5,611,992) - - Liabilities directly associated with assets classied as held for sale - (2,353,162) - - 3,356,161 (7,965,154) 7,040,310 (29,029,390) Group – 2021 Financial assets at FVTPL Financial liabilities at FVTPL Financial assets at amortised cost Financial liabilities at amortised cost Financial assets at fair value through prot or loss 1,458,000 - - - Cash and cash equivalents - - 184,625 - Trade and other receivables - - 1,800,820 - Term deposits - - 632,992 - Assets classied as held for sale 1,478,611 - - - Financial liabilities Borrowings - - - (25,341,297) Bank overdraft - - - (70,449) Trade and other payables - (1,757,250) - - Liabilities directly associated with assets classied as held for sale (1,678,576) - - Total balance 2,936,611 (3,435,826) 2,618,437 (25,411,746) ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc 165Investing SMARTLY NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) in thousands of Kwacha 42. Financial risk management (continued) c. Liquidity risk (continued) Fair value estimation (continued) Company – 2022 Financial assets at FVTPL/OCI Financial liabilities at FVTPL Financial assets at amortised cost Financial liabilities at amortised cost Financial assets at fair value through prot or loss 1,252,400 - - - Investments in associates 16,256,411 - - - Investments in subsidiaries 405,051 - - - Cash and cash equivalents - - 45,586 - Trade and other receivables - - 860,493 - Term deposits - - 5,340,202 - Assets classied as held for sale 145,700 - - - Financial liabilities Trade and other payables - (105,231) - - Total balance 18,059,562 (105,231) 6,246,281 - Company – 2021 Financial assets at FVTPL Financial liabilities at FVTPL Financial assets at amortised cost Financial liabilities at amortised cost - - - - Financial assets at fair value through prot or loss 1,458,000 - - - Investments in associates 20,603,089 - - - Investments in subsidiaries 327,939 - - - Cash and cash equivalents - - 81,498 - Trade and other receivables - - 1,295,154 - Term deposits - - 632,992 - Assets classied as held for sale 430,977 - - - Financial liabilities Borrowings - - - (1,135) Bank overdraft - - - - Trade and other payables - (47,277) - - Total balance 22,820,005 (47,277) 2,009,644 (1,135) Valuation techniques and sensitivity analysis are included in note 23, 24 and 24. The fair value of the nancial assets and liabilities carried at amortised cost including cash and cash equivalents, trade and other receivables, term deposits, borrowings and trade and other payables are considered to approximate their respective carrying values due to their short-term nature and negligible credit losses. ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc 166 Investing SMARTLY NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) in thousands of Kwacha 43. Subsequent events i. Konkola Copper Mines Plc Court proceeding Winding Up Proceedings (Lusaka Proceedings). Following the decision by the High Court to deny Vedanta Resources Holdings Limited (“Vedanta”) application to stay the Lusaka Proceedings on 7 August 2019, Vedanta appealed to the Court of Appeal against the said decision. On 20 November 2020, the Court of Appeal overturned the decision of the High court and stayed the liquidation proceedings, referring the parties to arbitration. ZCCM-IH appealed to the Supreme Court against the decision of the Court of appeal on 7 September 2021. The Supreme Court, in a Ruling dated 22 March 2022, declined to hear the appeal. The decision was based on the fact that the matters that ZCCM-IH sought to have the Supreme Court hear and determine had already been dealt with in the Partial Final Award delivered on 7 July 2021 in Arbitration. By this Ruling, the Court of Appeal’s decision staying the liquidation proceedings and referring the parties to Arbitration remains unvacated. Arbitral Proceedings (South African Proceedings) The hearing of the arbitration is suspended by agreement of the parties pending negotiations to settle the dispute excuria. Konkola Copper Mines Plc (KCM) separation of Business Units After the year end, KCM was split into two separate Business Units to improve operational and nancial efciencies. The split was done by way of formation of two subsidiary companies, namely KCM Smelter Co Limited, and KCM Mineral Resources Limited, with two Separate Management structures and employee arrangements. Both companies are currently wholly owned by KCM. ii. First Quantum Minerals Limited (FQM) Arbitration Proceedings On 11 November 2019, Kansanshi Holdings Limited (“KHL”) led a Request for Arbitration in London against ZCCM-IH (as Respondent) and Kansanshi Mining Plc (KMP) (as Nominal Respondent). These Arbitration proceedings were strictly condential as between the parties. On 29 January 2021, the Tribunal made certain decisions in a Partial Final Award and reserved some matters for resolution in a Final Award. On 12 January 2022, the Tribunal delivered a Final Award by Consent, thereby disposing of the said proceedings. The arbitration has, therefore, been concluded. 44. Basis of measurement The consolidated and separate nancial statements have been prepared on the historical cost basis except for the following items which are measured on an alternative basis on each reporting date. Items Measurement basis Financial assets at fair value through prot or loss Investments in associates (Company) Retirement benets Investment property Investment in subsidiary Fair value Fair value Present value of the dened obligation revaluation Fair value Fair value 45. Signicant accounting policies The Group has consistently applied the following accounting policies to all policies to all periods presented in these nancial statements. Certain comparative amounts in the statement of prot or loss and OCI have been re-presented, to ensure consistency (see Note 7,8 and 13). Set out below is an index of the signicant accounting policies, the details of which are available on the pages that follow: ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc 167Investing SMARTLY NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) in thousands of Kwacha 45. Signicant accounting policies (continued) (a) Basis of consolidation (b) Foreign currency (c) Discontinued operation (d) Financial instruments (e) Property, plant and equipment (f) Investment property (g) Intangible assets (h) Assets held for sale (i) Inventory (j) Impairment (k) Employee benets (l) Provisions (m) Revenue from contracts with customers (n) Investments income (o) Finance income and costs (p) Exploration costs (q) Income tax (r) Earnings per share (s) Segment reporting (t) Leases (u) Share capital (v) Dividend (w) Mine Developments (x) Environmental restoration a. Basis of consolidation Business combinations The Group accounts for business combinations using the acquisition method when control is transferred to the Group. The consideration transferred in the acquisition is generally measured at fair value, as are the identiable net assets acquired. Any goodwill that arises are tested annually for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired. Any gain on a bargain purchase is recognised in prot or loss immediately. Transaction costs are expensed as incurred, except if they are related to the issue of debt or equity securities. The consideration transferred does not include amounts related to the settlement of pre-existing relationships. Such amounts are generally recognised in prot or loss. Any contingent consideration payable is measured at fair value at the acquisition date. If the contingent consideration is classied as equity, then it is not remeasured and settlement is accounted for within equity. Otherwise, subsequent changes in the fair value of the contingent consideration are recognised in prot or loss. If share-based payment awards (replacement awards) are required to be exchanged for awards held by the acquiree’s employees (acquiree’s awards) and relate to past services, then all or a portion of the amount of the acquirer’s replacement awards is included in measuring the consideration transferred in the business combination. This determination is based on the market-based value of the replacement awards compared with the market-based value of the acquiree’s awards and the extent to which the replacement awards relate to pre-combination service. Common control transaction are accounted for as below : The transferee incorporates the assets and liabilities of the existing entity at their pre-combination carrying amounts without fair value uplift. This is on the basis that there is no substantive economic change. In essence, the combination of the two entities reects the results and nancial position of the existing business. All that changes is the structure of the group. ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc 168 Investing SMARTLY NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) in thousands of Kwacha 45 Signicant accounting policies (continued) a. Basis of consolidation (continued) i. Business combinations (continued) No new goodwill is recorded. Any difference between the cost of the transaction and the carrying value of the net assets is recorded in equity. This applies whether the consideration was for shares or cash. The Group’s nancial statements include the transferee full-year results (including comparatives), even though the transaction might have occurred part of the way through the year, or incorporate the results from the date when the entity joined the group, where such a date is later. The common control has no impact on the entities within the ZCCM-IH group. However, this would affect the wider group i.e changes outside the ZCCM- IH group. ii. Subsidiaries Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The nancial statements of subsidiaries are included in the consolidated nancial statements from the date on which control commences until the date when control ceases. In the separate nancial statements, investments in subsidiaries are classied as fair value through other comprehensive income (OCI). iii. Non-controlling interests (NCI) The group recognises non-controlling interests in an acquired entity either at fair value or at the noncontrolling interest’s proportionate share of the acquired entity’s net identiable assets. This decision is made on an acquisition-by-acquisition basis. Changes in the Group’s interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions. The Group attributes total comprehensive income or loss of subsidiaries between the owners of the parent and the non-controlling interests based on their respective ownership interests. iv. Loss of control When the Group loses control over a subsidiary, it derecognises the assets and liabilities of the subsidiary, and any related Non-controlling interests (NCI) and other components of equity. Any resulting gain or loss is recognised in prot or loss. Any interest retained in the former subsidiary is measured at fair value when control is lost. v. Interest in equity accounted investees The Group’s interest in equity accounted investees comprise interests in associates. Associates are those entities in which the Group has signicant inuence, but not control or joint control over the nancial and operating policies. Interests in associates are accounted for using the equity method. They are initially recognised at cost, which includes transaction costs. Subsequent to initial recognition, the consolidated nancial statements include the Group’s share of the prot or loss and other comprehensive income, after adjustments to align the accounting policies with those of the Group, from the date that signicant inuence commences until the date that signicant inuence ceases. vi. Interest in equity accounted investees (continued) In the separate nancial statements investments in associates is subsequently measured at fair value. These are classied as fair value through other comprehensive income. When the Group’s share of losses exceeds its interest in an equity-accounted investee, the carrying amount of the investment, including any long-term interests that form part thereof 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. ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc 169Investing SMARTLY NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) in thousands of Kwacha 45 Signicant accounting policies (continued) a. Basis of consolidation (continued) vii. Transactions eliminated on consolidation Intra-group balances and transactions, fair value changes recognised in respect of its investment in subsidiaries and associates, and any unrealised income and expenses arising from intra group transactions, are eliminated. 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. viii. Remeasurement of previously held equity interest – Step up Acquisition A step acquisition occurs when a shareholder obtains control over an entity by acquiring an additional interest in that entity. If that entity is a business, the group’s previously held equity interest is remeasured to fair value at the date the controlling interest is acquired. The remeasurement of the previously-held equity interest is recognized in Prot or loss. Any amounts previously recorded in other comprehensive income relating to the investee is reclassied and included in the calculation of the gain or loss as of the acquisition date. ix. Reporting date The nancial statements of the Company and subsidiaries used in the preparation of the current consolidated nancial statements have the same reporting date of 31 December. When the end of the reporting date of the Company is different from that of the subsidiary or associates, the Company consolidates the nancial information of the subsidiaries or associates using the most recent nancial statements of the subsidiaries or associates adjusted for the effects of signicant transactions or events that occur between the date of those nancial statements and the date of the consolidated nancial statements. x. Price Participation Fee Price Participation fees are variable amount, if any, to be credited to the seller as an additional income based on variations in the Payable Copper Price, if, as and when reected in Benchmark Reference Terms from time to time. The price participation fees are recognised once conditions indicate that additional income is to be received, based on prevailing prices over the agreed period, and that its been agreed with other parties involved, in this case the buyer. b. Foreign currency 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 are translated to the functional currency at the exchange rate at the reporting date. Non-monetary assets and liabilities that are measured at fair value in foreign currency are translated to the functional currency at the exchange rate when the fair value was determined. Non-monetary items that are measured based on historical cost in a foreign currency are translated at the exchange rate at the date of the transaction. Foreign currency differences are generally recognised in prot or loss and presented within nance costs. However, foreign currency differences arising from the translation of the following items are recognised in other comprehensive income: • An investment in equity securities designated as at FVOCI (except on impairment, in which case foreign currency differences that have been recognised in other comprehensive income are reclassied to prot or loss). Foreign currency differences which arise on the translation of investee companies (which have a different functional currency) are recognised in other comprehensive income and accumulated in the foreign currency translation reserve. ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc 170 Investing SMARTLY NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) in thousands of Kwacha 45 Signicant accounting policies (continued) c. Discontinued operation A discontinued operation is a component of the Group’s business, the operations and cash ows of which can be clearly distinguished from the rest of the Group and which: • represents a separate major line of business or geographic area of operations; • is part of a single co-ordinated plan to dispose of a separate major line of business or geographic area of operations; or • is a subsidiary acquired exclusively with a view to resale. Classication as a discontinued operation occurs at the earlier of disposal or when the operation meets the criteria to be classied as held-for-sale. When an operation is classied as a discontinued operation, the comparative statement of prot or loss and OCI is re-presented as if the operation had been discontinued from the start of the comparative year. d. Financial instruments i. Recognition and initial measurement Trade receivables and debt securities issued are initially recognised when they are originated. All other nancial assets and nancial liabilities are initially recognised when the Group becomes a party to the contractual provisions of the instrument. A nancial asset (unless it is a trade receivable without a signicant nancing component) or nancial liability is initially measured at fair value plus, for an item not at FVTPL, transaction costs that are directly attributable to its acquisition or issue. A trade receivable without a signicant nancing component is initially measured at the transaction price. ii. Classication and subsequent measurement Financial assets On initial recognition, a nancial asset is classied as measured at: amortised cost; FVOCI – debt investment; FVOCI – equity investment; or FVTPL. Financial assets are not reclassied subsequent to their initial recognition unless the Group changes its business model for managing nancial assets, in which case all affected nancial assets are reclassied on the rst day of the rst reporting period following the change in the business model. Financial assets are measured at amortised cost if the assets meet the following conditions (and are not designated as FVTPL): • they are held within a business model whose objective is to hold the nancial assets and collect its contractual cash ows; • its contractual terms give rise on specied dates to cash ows that are solely payments of principal and interest on the principal amount outstanding. A debt investment is measured at FVOCI if it meets both of the following conditions and is not designated as at FVTPL: • it is held within a business model whose objective is achieved by both collecting contractual • cash ows and selling nancial assets; and • its contractual terms give rise on specied dates to cash ows that are solely payments of principal and interest on the principal amount outstanding. On initial recognition of an equity investment that is not held for trading, the Group may irrevocably elect to present subsequent changes in the investment’s fair value in OCI. This election is made on an investment-by-investment basis. All nancial assets not classied as measured at amortised cost or FVOCI as described above are measured at FVTPL. On initial recognition, the Group may irrevocably designate a nancial asset that otherwise meets the requirements to be measured at amortised cost or at FVOCI as at FVTPL if doing so eliminates or signicantly reduces an accounting mismatch that would otherwise arise. Financial assets – Business model assessment The Group makes an assessment of the objective of the business model in which a nancial asset is held at a portfolio level because this best reects the way the business is managed and information is provided to management. The information considered includes: ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc 171Investing SMARTLY NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) in thousands of Kwacha 45 Signicant accounting policies (continued) d. Financial instruments (continued) ii. Classication and subsequent measurement • the stated policies and objectives for the portfolio and the operation of those policies in practice. These include whether management’s strategy focuses on earning contractual interest income, maintaining a particular interest rate prole, matching the duration of the nancial assets to the duration of any related liabilities or expected cash outows or realising cash ows through the sale of the assets; • how the performance of the portfolio is evaluated and reported to the Group’s management. • the risks that affect the performance of the business model (and the nancial assets held within that business model) and how those risks are managed. • how managers of the business are compensated – e.g. whether compensation is based on the fair value of the assets managed or the contractual cash ows collected; and • the frequency, volume and timing of sales of nancial assets in prior periods, the reasons for such sales and expectations about future sales activity Financial assets that are held for trading or are managed and whose performance is evaluated on a fair value basis are measured at FVTPL. Financial assets – Assessment whether contractual cash ows are solely payments of principal and interest For the purposes of this assessment, ‘principal’ is dened as the fair value of the nancial asset on initial recognition. ‘Interest’ is dened as consideration for the time value of money and for the credit risk associated with the principal amount outstanding during a particular period of time and for other basic lending risks and costs (e.g. liquidity risk and administrative costs), as well as a prot margin In assessing whether the contractual cash ows are solely payments of principal and interest, the Group considers the contractual terms of the instrument. This includes assessing whether the nancial asset contains a contractual term that could change the timing or amount of contractual cash ows such that it would not meet this condition. In making this assessment, the Group considers: • contingent events that would change the amount or timing of cash ows; • terms that may adjust the contractual coupon rate, including variable-rate features; • prepayment and extension features; and • terms that limit the Group’s claim to cash ows from specied assets (e.g. non-recourse features). Financial assets – Subsequent measurement and gains and losses Financial assets at FVTPL These assets are subsequently measured at fair value. Net gains and losses, including any interest or dividend income, are recognised in prot or loss. Financial assets at amortised cost These assets are subsequently measured at amortised cost using the effective interest method. The amortised cost is reduced by impairment losses. Interest income, foreign exchange gains and losses and impairment are recognised in prot or loss. Any gain or loss on derecognition is recognised in prot or loss. Debt investments at FVOCI These assets are subsequently measured at fair value. Interest income calculated using the effective interest method, foreign exchange gains and losses and impairment are recognised in prot or loss. Other net gains and losses are recognised in OCI. On derecognition, gains and losses accumulated in OCI are reclassied to prot or loss. Equity investments at FVOCI These assets are subsequently measured at fair value. Dividends are recognised as income in prot or loss unless the dividend clearly represents a recovery of part of the cost of the investment. Other net gains and losses are recognised in OCI and are never reclassied to prot or loss. Financial liabilities – Classication, subsequent measurement and gains and losses Financial liabilities are classied as measured at amortised cost or FVTPL. A nancial liability is classied as at FVTPL if it is classied as held-for-trading, it is a derivative or it is designated as such on initial recognition. Financial liabilities at FVTPL are measured at fair value and net gains and losses, including any interest expense, are recognised in prot or loss. Other nancial liabilities are subsequently measured at amortised cost using the effective interest method. Interest expense and foreign exchange gains and losses are recognised in prot or loss. Any gain or loss on derecognition is also recognised in prot or loss. ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc 172 Investing SMARTLY iii. Derecognition Financial assets The Group derecognises a nancial asset when the contractual rights to the cash ows from the nancial asset expire, or it transfers the rights to receive the contractual cash ows in a transaction in which substantially all of the risks and rewards of ownership of the nancial asset are transferred or in which the Group neither transfers nor retains substantially all of the risks and rewards of ownership and it does not retain control of the nancial asset The Group enters into transactions whereby it transfers assets recognised in its statement of nancial position, but retains either all or substantially all of the risks and rewards of the transferred assets. In these cases, the transferred assets are not derecognised. Financial liabilities The Group derecognises a nancial liability when its contractual obligations are discharged or cancelled, or expire. The Group also derecognises a nancial liability when its terms are modied and the cash ows of the modied liability are substantially different, in which case a new nancial liability based on the modied terms is recognised at fair value. On derecognition of a nancial liability, the difference between the carrying amount extinguished and the consideration paid (including any non-cash assets transferred or liabilities assumed) is recognised in prot or loss. iv. Offsetting Financial assets and nancial liabilities are offset and the net amount presented in the statement of nancial position when, and only when, the Group currently has a legally enforceable right to set off the amounts and it intends either to settle them on a net basis or to realise the asset and settle the liability simultaneously. No set offs have been effected in these nancial statements. e. Property, plant and equipment i. Recognition and measurement All items of property, plant and equipment are measured at cost save for land and buildings are which are measured at revalued amounts for the Company. For subsidiaries, property plant and equipment are measured at cost less accumulated depreciation and others at revalued amounts as applicable (see note 17 for full disclosure). Cost includes capitalised borrowing costs, less accumulated depreciation, and any accumulated impairment losses. If signicant 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. Any gain or loss on disposal of an item of property, plant and equipment is recognised in prot or loss. 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. 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 costs incurred in relation to the construction up to the reporting date. Capital work in progress is not depreciated. The Group’s policy is to revalue regularly to ensure that the carrying amount does not differ materially from the fair value. The revaluation differences are recognised in other comprehensive income and accumulated in equity “revaluation reserve” unless the revaluation difference represents the reversal of a revaluation decrease previously recognised as an expense, in which case the revaluation difference is recognised in prot or loss. 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 revaluation surplus included in equity is transferred directly to retained earnings when the asset is used by the Group. The amount of the surplus transferred is the difference between depreciation charge based on the revalued carrying amount of the assets and the depreciation charge based on the original cost. NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) in thousands of Kwacha 45 Signicant accounting policies (continued) d. Financial instruments (continued) ii. Classication and subsequent measurement (continued) Financial assets (continued) ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc 173Investing SMARTLY NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) in thousands of Kwacha 45 Signicant accounting policies (continued) e. Property, plant and equipment (continued) i. Recognition and measurement (continued) 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 prot or loss. When revalued assets are sold, any related amount included in the revaluation reserve is transferred to retained earnings. ii. Subsequent expenditure Subsequent expenditure is capitalised only if it is probable that future economic benets associated with the expenditure will ow to the Group and its cost can be measured reliably. The costs of the day- to-day servicing of property, plant and equipment are recognised in prot or loss as incurred. iii. Depreciation Depreciation is calculated to write off the cost of items of property, plant and equipment less their estimated residual values using the straight-line method over their estimated useful lives, and is generally recognised in prot or loss. 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 20 years Leasehold land and buildings Life of mine Vehicles 3 - 5 years Plant, equipment and furniture 3 - 7 years Vertical kiln 15 years Rotary kiln 12 years Mineral properties Unit of production method Mine Development Unit of production method Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate. iv. Reclassication to investment property When the use of a property changes from owner-occupied to investment property, the property is remeasured to fair value and reclassied accordingly. Any gain arising on this remeasurement is recognised in prot or loss to the extent that it reverses a previous impairment loss on the specic property, with any remaining gain recognised in other Comprehensive Income (OCI) and presented in the revaluation reserve. Any loss is recognised in prot or loss. However, to the extent that an amount is included in the revaluation surplus for that property, the loss is recognised in other comprehensive income and reduces the revaluation surplus within equity. f. Investment property Investment property is property held to earn rental income or capital appreciation or for both, but not for sale in the ordinary course of business, use for the production or supply of goods or services or for administrative purposes. Investment property is initially measured at cost and subsequently at fair value with any change therein recognised in the prot or loss. Any gain or loss on the disposal of investment property (calculated as the difference between the net proceeds and the carrying amount of the item) is recognised in prot or loss. When investment property that was previously classied as property, plant and equipment is sold, any related amount that is included in the revaluation reserve is transferred to retained earnings. ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc 174 Investing SMARTLY NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) in thousands of Kwacha 45 Signicant accounting policies (continued) g. Goodwill and Intangible assets i. Recognition and measurement Goodwill Goodwill on acquisitions of subsidiaries is included in intangible assets. Goodwill is measured at cost less accumulated impairment losses. Goodwill is not amortised but it is tested for impairment annually, or more frequently if events or changes in circumstances indicate that it might be impaired, and is carried at cost less accumulated impairment losses. Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation is made to those cash-generating units or groups of cash-generating units that are expected to benet from the business combination in which the goodwill arose. The units or groups of units are identied at the lowest level at which goodwill is monitored for internal management purposes, being the operating segments. Intangible assets Intangible assets that are acquired by the Group and have nite useful lives are measured at cost less any accumulated amortisation. The group’s intangible assets comprises acquired computer software programmes. Costs associated with maintaining software programmes are recognised as an expense as incurred. ii. Subsequent expenditure Subsequent expenditure is capitalised only when it increases the future economic benets embodied in the specic asset to which it relates. All other expenditure, including expenditure on internally generated goodwill and brands, are recognised in prot or loss as incurred. iii. Amortisation and impairment Goodwill Goodwill has an indenite useful life are not subject to amortisation and are tested annually for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs of disposal and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identiable cash inows which are largely independent of the cash inows from other assets or groups of assets (cash-generating units). Non-nancial assets other than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at the end of each reporting period. Intangible assets Amortisation is calculated to write off the cost of intangible assets less their estimated residual values using the straight-line method over their estimated useful lives and is recognised in prot or loss. The estimated useful lives of the Group’s computer software is three to ve years. Amortisation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate. iv. Derecognition Intangible assets are derecognised when an asset is sold, exchanged or abandoned and therefore, removed from the statement of nancial position. h. Assets held for sale Non-current assets, or disposal groups comprising assets and liabilities, are classied as held-for sale if it is highly probable that they will be recovered primarily through sale rather than through continuing use. Such assets, or disposal groups, are generally measured at the lower of their carrying amount and fair value less costs to sell. Any impairment loss on a disposal group is allocated rst to goodwill, and then to the remaining assets and liabilities on a pro rata basis, except that no loss is allocated to inventories, nancial assets, deferred tax assets, employee benet assets or investment property, which continue to be measured in accordance with the Group’s other accounting policies. Impairment losses on initial classication as held-for-sale or held-for distribution and subsequent gains and losses on remeasurement are recognised in prot or loss. Once classied as held-for-sale, intangible assets and property, plant and equipment are no longer amortised or depreciated, and any equity-accounted investee is no longer equity accounted. ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc 175Investing SMARTLY i. Inventories Inventories are measured at the lower of cost and net realisable value. The cost of inventories is based on the rst-in, rst-out principle. In the case of manufactured inventories, cost includes an appropriate share of production overheads based on normal operating capacity. j. Impairment i. Non-derivative nancial assets Financial instruments and contract assets • The Group recognises loss allowances for ECLs on: • nancial assets measured at amortised cost; • debt investments measured at FVOCI; and • contract assets. The Group measures loss allowances at an amount equal to lifetime ECLs, except for the following, which are measured at 12-month ECLs: • debt securities that are determined to have low credit risk at the reporting date; and • other debt securities and bank balances for which credit risk (i.e. the risk of default occurring over the expected life of the nancial instrument) has not increased signicantly since initial recognition. Loss allowances for trade receivables and contract assets are always measured at an amount equal to lifetime ECLs. When determining whether the credit risk of a nancial asset has increased signicantly since initial recognition and when estimating ECLs, the Group considers reasonable and supportable information that is relevant and available without undue cost or effort. This includes both quantitative and qualitative information and analysis, based on the Group’s historical experience and informed credit assessment and including forward-looking information. The Group assumes that the credit risk on a nancial asset has increased signicantly if it is more than 30 days past due. The Group considers a nancial asset to be in default when: the debtor is unlikely to pay its credit obligations to the Group in full, without recourse by the Group to actions such as realising security (if any is held); or the nancial asset is more than 90 days past due. Lifetime ECLs are the ECLs that result from all possible default events over the expected life of a nancial instrument. 12-month ECLs are the portion of ECLs that result from default events that are possible within the. 12 months after the reporting date (or a shorter period if the expected life of the instrument is less than 12 months). The maximum period considered when estimating ECLs is the maximum contractual period over which the Group is exposed to credit risk. Measurement of ECLs ECLs are a probability-weighted estimate of credit losses. Credit losses are measured as the present value of all cash shortfalls (i.e. the difference between the cash ows due to the entity in accordance with the contract and the cash ows that the Group expects to receive). ECLs are discounted at the effective interest rate of the nancial asset. Credit-impaired nancial assets At each reporting date, the Group assesses whether nancial assets carried at amortised cost and debt securities at FVOCI are credit-impaired. A nancial asset is ‘credit-impaired’ when one or more events that have a detrimental impact on the estimated future cash ows of the nancial asset have occurred. Evidence that a nancial asset is credit-impaired includes the following observable data: • signicant nancial difculty of the borrower or issuer; • a breach of contract such as a default or being more than 90 days past due; • the restructuring of a loan or advance by the Group on terms that the Group would not consider otherwise; • it is probable that the borrower will enter bankruptcy or other nancial reorganisation; or • the disappearance of an active market for a security because of nancial difculties. NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) in thousands of Kwacha 45 Signicant accounting policies (continued) ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc 176 Investing SMARTLY NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) in thousands of Kwacha 45 Signicant accounting policies (continued) j. Impairment (continued) i. Non-derivative nancial assets Presentation of allowance for ECL in the statement of nancial position Loss allowances for nancial assets measured at amortised cost are deducted from the gross carrying amount of the assets. For debt securities at FVOCI, the loss allowance is charged to prot or loss and is recognised in OCI Write-off The gross carrying amount of a nancial asset is written off when the Group has no reasonable expectations of recovering a nancial asset in its entirety or a portion thereof. ii. Non-nancial assets At each reporting date, the Group reviews the carrying amounts of its non-nancial assets (other than, investment property, inventories and deferred tax assets) to determine whether there is any indication of impairment. Non-nancial assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. If any such indication exists, then the asset’s recoverable amount is estimated. For impairment testing, assets are grouped together into the smallest group of assets that generates cash inows from continuing use that are largely independent of the cash inows of other assets or CGUs. The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to sell. Value in use is based on the estimated future cash ows, discounted to their present value using a pre-tax discount rate that reects current market assessments of the time value of money and the risks specic to the asset or CGU. An impairment loss is recognised if the carrying amount of an asset or CGU exceeds its recoverable amount. Impairment losses are recognised in prot or loss. They are allocated rst to reduce the carrying amount of any goodwill allocated to the CGU, and then to reduce the carrying amounts of the other assets in the CGU on a pro rata basis. Determining whether goodwill is impaired requires an estimation of the present value of future cash ows generated from the cash generating units to which the goodwill has been allocated. The present value calculation requires an estimation of the future cash ows expected to arise and a suitable discount rate in order to calculate present value. An impairment loss in respect of goodwill is not reversed. For other assets, 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. ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc 177Investing SMARTLY k. Employee benets i. Short -term employee benets Short term-employee benets are expensed as the related service is provided. A liability is recognised for the amount expected to be paid if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee, and the obligation can be estimated reliably. ii. Dened contribution plans Obligations for contribution to dened contribution plans are expensed in the prot or loss as the related service is provided. Prepaid contributions are recognised as an asset to the extent that a cash refund or reduction in future payments is available. The Group and all its employees also contribute to the National Pension Scheme Authority, which is a dened contribution scheme. Amounts recognised as an expense during the year were ZMW1.4 million (31 March 2019: ZMW 2.4 million) iii. Dened benet plans The Group provides for retirement benets (i.e. a dened benet plan) for all permanent employees in accordance with established pension scheme rules as well as the provisions of Statutory Instrument No. 119 of the Laws of Zambia. A dened benet plan is a post-employment benet plan other than a dened contribution plan. The cost of providing the dened benet plan is determined annually using the Projected Unit Credit Method, with actuarial valuations being carried out at the end of each reporting period. The discount rate is required to be determined with reference to the corporate bond yield. However, due to the non-availability of an active developed market for corporate bonds the discount rate applicable is the yield at the reporting date on the Government of the Republic of Zambia’s bonds that have maturity dates approximating the terms of the Group’s obligations and that are denominated in the same currency in which the benets are expected to be paid. The dened benet obligation recognised by the Group, in respect of its dened benet pension plan, is calculated by estimating the amount of future benet that employees have earned in return for their service in the current and prior periods and discounting that benet to determine its present value, then deducting the fair value of any plan assets. When the calculations above result in a benet to the Group, the recognised asset is limited to the net total of any cumulative unrecognised actuarial losses and past service costs and the present value of any economic benets available in the form of any refunds from the plan or reductions in future contributions to the plan. An economic benet is available to the Group if it is realisable during the life of the plan or on settlement of the plan liabilities. Actuarial gains and losses arising from changes in actuarial assumptions are charged or credited to other comprehensive income when they arise. These gains or losses are recognised in full in the year they occur. Past service costs are recognised immediately in the prot or loss, unless the changes to the pension plan are conditional on the employees remaining in service for a specied period (the vesting period). In this case, the past-service costs are amortised on a straight line basis over the vesting period. iv. Other entitlements Some employees are on xed term contracts and 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. NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) in thousands of Kwacha 45 Signicant accounting policies (continued) ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc 178 Investing SMARTLY l. Provisions and contingent liabilities Provisions are determined by discounting the expected future cash ows at a pre – tax rate that reects current market assessment of the time value of money and the risks specic to the liability. The unwinding of the discount is recognised as nance cost. 1. Environmental rehabilitation and restoration In accordance with applicable legal requirements, a provision for site restoration in respect of contaminated land, and the related expense, is recognised when the land is contaminated. Changes in the measurement of an existing decommissioning, restoration and similar liability that result from changes in the estimated timing or amount of the outow of resources embodying economic benets required to settle the obligation, or a change in the discount rate, is accounted for in accordance with; changes in the liability alter the revaluation surplus or decit previously recognised on that asset, so that: • a decrease in the liability is (subject to (b)) be recognised in other comprehensive income and increase the revaluation surplus within equity, except that it is recognised in prot or loss to the extent that it reverses a revaluation decit on the asset that was previously recognised in prot or loss; • an increase in the liability is recognised in prot or loss, except that it shall be recognised in other comprehensive income and reduce the revaluation surplus within equity to the extent of any credit balance existing in the revaluation surplus in respect of that asset. • in the event that a decrease in the liability exceeds the carrying amount that would have been recognised had the asset been carried under the cost model, the excess is recognised immediately in prot or loss. • a change in the liability is an indication that the asset may have to be revalued in order to ensure that the carrying amount does not differ materially from that which would be determined using fair value at the end of the reporting period. Any such revaluation is taken into account in determining the amounts to be recognised in prot or loss or in other comprehensive income under If a revaluation is necessary, all assets of that class are revalued. The adjusted depreciable amount of the asset is depreciated over its useful life. Therefore, once the related asset has reached the end of its useful life, all subsequent changes in the liability shall be recognised in prot or loss as they occur. This applies under both the cost model and the revaluation model. 2. Financial guarantee contracts Financial guarantee contracts are recognised as a nancial liability at the time the guarantee is issued. The liability is initially measured at fair value and subsequently at the higher of: • the amount determined in accordance with the expected credit loss model under IFRS 9 Financial Instruments, and the amount initially recognised less, where appropriate, the cumulative amount of income recognised in accordance with the principles of IFRS 15 Revenue from Contracts with Customers. The fair value of nancial guarantees is determined based on the present value of the difference in cash ows between the contractual payments required under the debt instrument and the payments that would be required without the guarantee, or the estimated amount that would be payable to a third party for assuming the obligations. Where guarantees in relation to loans or other payables of associates are provided for no compensation, the fair values are accounted for as contributions and recognised as part of the cost of the investment. 3. Contingent liabilities All possible obligations whose outcomes are dependent on whether some uncertain future event occurs, or a present obligation but payment is not probable, or the amount cannot be measured reliably are considered as Contingent liabilities. These contingent liabilities are reviewed on a regular basis and were appropriate an estimate is made of the potential nancial impact on the Group. As at 31 December 2021 and 2020, no potential liability was recognised. NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) in thousands of Kwacha 45 Signicant accounting policies (continued) ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc 179Investing SMARTLY m. Revenue from contracts with customers Revenue is measured based on the consideration specied in a contract with a customer. The Group recognises revenue when it transfers control over a good or service to a customer. The following provides information about the nature and timing of the satisfaction of performance obligations in contracts with customers, including signicant payment terms, and the related revenue recognition policies. Type of product/ service Nature and timing of satisfaction of performance obligations, including signicant payment terms Revenue recognition policies Sale of goods Customers obtain control of the products when the goods are delivered. Invoices are generated and revenue is recognised at that point in time. Invoices are payable within 30 days. Revenue is recognised in the period in which the Group has delivered products to the customer, the customer has full discretion over the channel and price to sell the products, and there is no unfullled obligations that could affect the customers’ acceptance of the products. Delivery does not occur until the products have been accepted by the customers. Type of product/ service Nature and timing of satisfaction of performance obligations, including signicant payment terms Revenue recognition policies Services rendered The Group is involved in provision of environmental consultancy services, analytical services, surveying services and radiation safety. Revenue from providing services is recognised in the accounting period in which the services are rendered. Revenue from providing services is recognised in the accounting period in which the services are rendered. For xed-price contracts, revenue is recognised based on the actual service provided to the end of the reporting period as a proportion of the total services to be provided, because the customer receives and uses the benets simultaneously. Contract assets primarily relate to the Group’s right to consideration for the work completed but not billed at the reporting date on the customer contracts. The Group had no contract assets as at year end. Contract liabilities primarily relate to the advance consideration received from the customer for which revenue is recognised when the goods and services are provided. The Group had no contract liabilities as at year end. n. Investment income and expenses The Group’s investments income and expenses costs include: • Dividends receivables; • Interest income; and • Interest expense. Dividends are recognised as revenue 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. Interest income or expense is recognised using the effective interest method. o. Finance income and nance costs The Group’s nance income and nance costs include • Gain or loss on nancial assets at fair value through prot or loss; • The foreign currency gain or loss on nancial assets and nancial liabilities; • Unwinding income or expense on price participation fees; • Unwinding expense on environmental provision; and • Borrowing costs. All borrowing costs are recognised in the prot or loss using the effective interest method. Borrowing costs attributable to xed assets during construction are capitalised NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) in thousands of Kwacha 45 Signicant accounting policies (continued) ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc 180 Investing SMARTLY p. Exploration costs The Group is involved in exploration and evaluation of mineral resources including, oil and gas and other similar non – regenerative resources in specic license areas where the Group has legal rights. This process also involves the determination of both the technical feasibility and commercial viability of extracting the mineral resource. General exploration and associated costs incurred in connection with exploration and evaluation of mineral resources before the technical feasibility and commercial viability of extracting a mineral resource is demonstrable, are expensed in the period in which they are incurred. Exploration and associated costs for projects which are commercially viable, and it is considered that future economic benets will ow to the Company are capitalised. Accounting for exploration and evaluation expenditures Exploration and evaluation expenditures are measured at cost on initial recognition. Costs directly associated with commercially viable exploration project are capitalised until the determination of reserves is evaluated. If it is determined that commercial discovery has not been achieved, these costs are charged to expenses. Depreciation of exploration and evaluation assets Exploration and evaluation asset are depreciated using a straight-line method over a period of ve years. q. Income tax Income tax expense comprises current and deferred tax. It is recognised in prot or loss except to the extent that it relates to a business combination, or items recognised directly in equity or in OCI. i. Current tax Current tax comprises the expected tax payable or receivable on the taxable income or loss for the year and any adjustment to the tax payable or receivable in respect of previous years. The amount of current tax payable or receivable is the best estimate of the tax amount expected to be paid or received that reects uncertainty related to income taxes. It is measured using tax rates enacted or substantively enacted at the reporting date. Current tax also includes any tax arising from dividends. ii. Deferred tax Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for nancial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for: • temporary differences on the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable prot or loss;` • temporary differences related to investments in subsidiaries and associates to the extent that the Group is able to control the timing of the reversal of the temporary differences and it is probable that they will not reverse in the foreseeable future; and • taxable temporary differences arising on the initial recognition of goodwill Deferred tax assets are recognised for unused tax losses, unused tax credits and deductible temporary differences to the extent that it is probable that future taxable prots will be available against which they can be used. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benet will be realised; such reductions are reversed when probability of future taxable prot improves. Unrecognised deferred tax assets are reassessed at each reporting date and recognised to the extent that it has become probable that future taxable prots will be available against which they can be used. NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) in thousands of Kwacha 45 Signicant accounting policies (continued) ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc 181Investing SMARTLY Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, using tax rates enacted or substantively enacted at the reporting date. The measurement of deferred tax reects the tax consequences that would follow the manner in which the Company expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities. For this purpose, the carrying amount of investment property measured at fair value is presumed to be recovered through sale, and the Group has not rebutted this presumption. 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 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 their tax assets and liabilities will be realised simultaneously. iii. Tax exposures In determining the amount of current and deferred tax, the Group considers the impact of tax exposures, including whether additional taxes and interest may be due. This assessment relies on estimates and assumptions and may involve a series of judgements about future events. New information may become available that causes the Group to change its judgement regarding the adequacy of existing tax liabilities; such changes to tax liabilities would impact tax expense in the period in which such a determination is made r. 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 prot or loss attributable to ordinary shareholders of the Group 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 prot 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. s. 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 and for which discrete nancial information is available. All operating segments’ operating results are reviewed regularly by the Group’s Chief Executive Ofcer to make decisions about resources to be allocated to the segment and to assess its performance. t. Leases i. The Group as a lessee A lease is dened as ‘a contract, or part of a contract, that conveys the right to use an asset (the underlying asset) for a period of time in exchange for consideration’. To apply this denition the Group assesses whether the contract meets three key evaluations which are whether: • the contract contains an identied asset, which is either explicitly identied in the contract or implicitly specied by being identied at the time the asset is made available to the Group • the Group has the right to obtain substantially all of the economic benets from use of the identied asset throughout the period of use, considering its rights within the dened scope of the contract • the Group has the right to direct the use of the identied asset throughout the period of use. The Group assess whether it has the right to direct ‘how and for what purpose’ the asset is used throughout the period of us NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) in thousands of Kwacha 45 Signicant accounting policies (continued) q. Income tax (continued) ii. Deferred tax (continued) ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc 182 Investing SMARTLY Measurement and recognition of leases as a lessee At lease commencement date, the Group recognises a right-of-use asset and a lease liability in the consolidated statement of nancial position. The right-of-use asset is measured at cost, which is made up of the initial measurement of the lease liability, any initial direct costs incurred by the Group, an estimate of any costs to dismantle and remove the asset at the end of the lease, and any lease payments made in advance of the lease commencement date (net of any incentives received). The Group depreciates the right-of-use assets on a straight-line basis from the lease commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The Group also assesses the right-of-use asset for impairment when such indicators exist. At the commencement date, the Group measures the lease liability at the present value of the lease payments unpaid at that date, discounted using the interest rate implicit in the lease if that rate is readily available or the Group’s incremental borrowing rate. Lease payments included in the measurement of the lease liability are made up of xed payments (including in substance xed), variable payments based on an index or rate, amounts expected to be payable under a residual value guarantee and payments arising from options reasonably certain to be exercised. Subsequent to initial measurement, the liability will be reduced by lease payments that are allocated between repayments of principal and nance costs. The nance cost is the amount that produces a constant periodic rate of interest on the remaining balance of the lease liability. Payments under leases can also change when there is either a change in the amounts expected to be paid under residual value guarantees or when future payments change through an index or a rate used to determine those payments. The lease liability is remeasured only when the adjustment to lease payments takes effect and the revised contractual payments for the remainder of the lease term are discounted using an unchanged discount rate. Except for where the change in lease payments results from a change in oating interest rates, in which case the discount rate is amended to reect the change in interest rates. The remeasurement of the lease liability is dealt with by a reduction in the carrying amount of the right-of-use asset to reect the full or partial termination of the lease for lease modications that reduce the scope of the lease. Any gain or loss relating to the partial or full termination of the lease is recognised in prot or loss. The right-of-use asset is adjusted for all other lease modications. The Group has elected to account for short-term leases and leases of low-value assets using the practical expedients. Instead of recognising a right-of-use asset and lease liability, the payments in relation to these are recognised as an expense in prot or loss on a straight-line basis over the lease term. The Group as a lessor As a lessor the Group classies its leases as either operating or nance leases. A lease is classied as a nance lease if it transfers substantially all the risks and rewards incidental to ownership of the underlying asset, and classied as an operating lease if it does not. NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) in thousands of Kwacha 45 Signicant accounting policies (continued) t. Leases (continued) ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc 183Investing SMARTLY NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) in thousands of Kwacha 45 Signicant accounting policies (continued) u. Share capital Ordinary shares Incremental costs directly attributable to the issue of ordinary shares, net of any tax effects, are recognised as a deduction from equity. v. Dividends Dividend distribution to the Company’s shareholders is recognised as a liability in the Company’s annual nancial statements in the period in which the dividends are approved by the Company’s shareholders. When dividends are proposed they are presented in a separate column in the statement of changes in equity. w. Mine development costs Exploration and associated costs relating to non-specic projects or properties are expensed in the period in which they are incurred. Signicant property acquisition costs and development costs relating to specic properties for which economically recoverable reserves are believed to exist are deferred until the project to which they relate is sold, abandoned, or placed into production. No costs are deferred on a property believed to be impaired in value. Mine development and property acquisition costs, including costs incurred during production to expand ore reserves within existing mine operations, are deferred, and amortised over the life of the mines. Reviews are undertaken regularly to evaluate the carrying values of operating mines and development properties. If it is determined that the net recoverable amount is signicantly lower than the carrying value, and the impairment in value is likely to be permanent, a write-down to the net recoverable amount is made by a charge to prot or loss. x. Environmental restoration Provision is made for costs associated with the restoration and rehabilitation of mining sites as soon as the obligation to incur such costs arises. Such restoration and closure costs are typical of the extractive industry and are normally accrued to reect the Company’s obligations at that time. Additional disturbances that arise due to further development/construction at the mine are recognised as additions or charges to the corresponding assets and rehabilitation liability when they occur. Changes in the estimated timing of rehabilitation or changes to the estimated future costs are dealt with prospectively by recognising an adjustment to the rehabilitation liability and a corresponding adjustment to the asset to which it relates, if the initial estimate was originally recognised as part of an asset measured in accordance with IAS 16. If the related asset is measured using the revaluation model, a decrease in the liability shall be recognised in other comprehensive income and an increase in the liability shall be recognised in prot or loss, except that it shall be recognised in other comprehensive income. Any reduction in the rehabilitation liability and, therefore, any deduction from the asset to which it relates, may not exceed the carrying amount of that asset. If it does, any excess over the carrying value is taken immediately to the statement of prot or loss and other comprehensive income. Over time, the discounted liability is increased for the change in present value based on the discount rates that reect current market assessments and the risks specic to the liability. The periodic unwinding of the discount is recognised in the statement of prot or loss and other comprehensive income as part of nance costs. For closed sites, changes to estimated costs are recognised immediately in the statement of prot or loss and other comprehensive income. The Company is required to make contributions to the government for future rehabilitation work relating to its production activities. The contributions are based on an environmental assessment that is performed by environmental auditors. The Company records a liability for the future contributions to be made to the government based on the environmental disturbances incurred to date per the environmental auditor’s assessment with a corresponding charge to prot or loss. ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc 184 Investing SMARTLY NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) in thousands of Kwacha Appendix CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2022 (Unaudited) 31-Dec 2022 31-Dec 2021 US$’000 US$’000 Assets Property, plant and equipment 756,962 777,599 Exploration and evaluation asset 2,767 2,077 Intangible assets 189,407 192,953 Investment property 11,120 11,541 Investment in associates 840,596 1,024,655 Financial assets at fair value through prot or loss 69,375 87,533 Trade and other receivables 162,390 79,875 Environmental Protection Fund 5,231 5,231 Deferred tax assets 6,805 20,463 Non-current assets 2,044,653 2,201,927 Inventories 295,855 280,927 Trade and other receivables 42,255 196,018 Assets held for sale 116,536 88,771 Term deposit 295,815 39,248 Cash and cash equivalents 18,235 11,084 Current assets 768,696 616,048 Total assets 2,813,349 2,817,975 Equity Share capital 132 132 Share premium 171,398 171,398 Other reserves 934,253 954,557 Retained earnings (561,555) (348,685) Equity attributable to shareholders 544,228 777,402 Non-controlling interest (2,589) (1,244) Total Equity 541,639 776,158 Liabilities Borrowings 1,522,053 1,473,659 Trade and other payables - - Retirement benets 10,134 5,781 Provisions for environmental rehabilitation 67,640 71,973 Non-current liabilities 1,599,827 1,551,413 Borrowings 47,883 47,883 Bank overdraft 38,118 4,230 Trade and other payables 412,750 287,966 Liabilities associated with assets classied as held for sale 127,877 100,776 Provisions 27,015 22,739 Current tax liabilities 10,533 12,161 185 INTEGRATED ANNUAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc Investing SMARTLY CORPORATE INFORMATION Registered and Corporate Ofce Stand No. 16806 Alick Nkhata Road Mass Media Complex Area P O Box 30048 Lusaka 10101, Zambia UK Registrars Link Asset Service Bourne House 34 Beckenham Road Beckenham Kent BR3 4TU United Kingdom Brokers for Lusaka Securities Exchange Listing Stockbrokers Zambia Limited 32 Lubu Road Longacres P O Box 38956 Lusaka, Zambia Auditors PricewaterhouseCoopers Zambia (PWC) PWC Place, Stand No. 2374 Thabo Mbeki Road PO. Box 30942 Lusaka, Zambia CORPORATE INFORMATION (continued) Principal Bankers: Barclays Bank (Zambia) Plc Standard Chartered Bank (Zambia) Plc Zambia National Commercial Bank Plc Transfer Secretaries Corpserve Transfer Agents Limited Mwaleshi Road, Olympia Park P O Box 37522 Lusaka 10101, Zambia Phone: + 260 211 256969/70 Fax : +260 211 256975 Email: [email protected] Shareholder Contact Chabby Chabala Company Secretary Monica Mwananshiku Chikonde Acting Corporate Services Manager Loisa Mbatha Kakoma Public Relations Manager Phone : +260 211 221023/228833 Fax : +260 211 220727 E-mail : [email protected] Website: www.zccm-ih.com.zm Appendix 186 INTEGRATED ANNUAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc Investing SMARTLY CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2022 (Unaudited) 31-Dec 31-Dec 2022 2021 US$’000 US$’000 Assets Property, plant and equipment 756,962 777,599 Exploration and evaluation asset 2,767 2,077 Intangible assets 189,407 192,953 Investment property 11,120 11,541 Investment in associates 840,596 1,024,655 Financial assets at fair value through prot or loss 69,375 87,533 Trade and other receivables 162,390 79,875 Environmental Protection Fund 5,231 5,231 Deferred tax assets 6,805 20,463 Non-current assets 2,044,653 2,201,927 Inventories 295,855 280,927 Trade and other receivables 42,255 196,018 Assets held for sale 116,536 88,771 Term deposit 295,815 39,248 Cash and cash equivalents 18,235 11,084 Current assets 768,696 616,048 Total assets 2,813,349 2,817,975 Equity Share capital 132 132 Share premium 171,398 171,398 Other reserves 934,253 954,557 Retained earnings (561,555) (348,685) Equity attributable to shareholders 544,228 777,402 Non-controlling interest (2,589) (1,244) Total Equity 541,639 776,158 Liabilities Borrowings 1,522,053 1,473,659 Trade and other payables - - Retirement benets 10,134 5,781 Provisions for environmental rehabilitation 67,640 71,973 Non-current liabilities 1,599,827 1,551,413 Borrowings 47,883 47,883 Bank overdraft 38,118 4,230 Trade and other payables 412,750 287,966 Liabilities associated with assets classied as held for sale 127,877 100,776 Provisions 27,015 22,739 Current tax liabilities 10,533 12,161 Retirement benets 7,707 14,649 Current liabilities 671,883 490,404 Total liabilities 2,271,710 2,041,817 Total equity and liabilities 2,813,349 2,817,975 Appendix 187 INTEGRATED ANNUAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc Investing SMARTLY Appendix SEPARATE STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2022 (Unaudited) 31-Dec 31-Dec 2022 2021 US$’000 US$’000 Assets Property, plant and equipment 7,408 6,702 Intangible assets 198 149 Investment property 11,120 11,541 Investments in subsidiaries 22,437 19,688 Investment in associates 900,507 1,236,940 Financial assets at fair value through P&L 69,375 87,533 Deferred tax assets 14,345 28,104 Trade and other receivables 53,076 40,613 Non-current assets 1,078,466 1,431,270 Inventory 830 1,159 Trade and other receivables 9,629 11,878 Assets held for sale 8,071 25,874 Term deposit 295,815 38,003 Cash and cash equivalents 2,525 4,893 Current assets 316,870 81,807 Total assets 1,395,336 1,513,077 Equity Share capital 132 132 Share premium 171,398 171,398 Other reserves 758,033 1,120,039 Retained earnings 439,877 195,093 Equity attributable to shareholders 1,369,440 1,486,662 Liabilities Deferred tax liabilities - - Retirement benets 514 616 Provisions for environmental rehabilitation 2,180 4,799 Non-current liabilities 2,694 5,415 Borrowings - 68 Trade and other payables 6,703 7,017 Provisions 6,021 1,773 Current tax liabilities 10,478 12,142 Current liabilities 23,202 21,000 Total liabilities 25,896 26,415 Total equity and liabilities 1,395,336 1,513,077 188 INTEGRATED ANNUAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc Investing SMARTLY Appendix CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2022 31-Dec 31-Dec 2022 2021 US$’000 US$’000 Revenue from customer with contracts 701,428 731,608 Net Interest Income from loans and advances Financial Instruments 6,497 7,027 Fees and commissions 2,346 1,649 Cost of sales (862,705) (723,250) Gross (loss)/prot (152,434) 17,034 Investment income 2,835 663 Investment expenses (26) - Net investment income 2,809 663 Other income 11,099 12,031 Fair value adjustment nancial asset at fair value through prot or loss (12,059) 59,258 Impairment of goodwill on acquisition -(754,798) Net impairment losses on nancial assets (477) 3,218 Administration expenses (43,973) (88,440) Operating loss (195,035) (751,034) Finance income 26,536 24,532 Finance costs (132,920) (68,546) Net nance costs (106,384) (44,014) Share of prot of equity-accounted investees, net of tax 94,026 152,697 Loss before tax (207,393) (642,351) Income tax (expense)/credit (14,634) 3,378 Loss for the year (222,027) (638,973) Other comprehensive income Items that will never be reclassied to prot or loss Revaluation on property, plant and equipment 732 - Deferred tax on revaluation reserve (220) - Actuarial gain on dened benet pension plans 11,978 (5,350) Deferred tax on dened benet actuarial loss (2) (66) Equity-accounted investees- share of other comprehensive income 652 2,658 13,140 (2,758) Items that are or may be reclassied to prot or loss Foreign currency translation differences - equity - accounted investees 79,868 (222,816) Foreign currency translation differences - Subsidiaries investees (153,381) 450,677 (73,513) 227,861 Other comprehensive income, net of tax (60,373) 225,103 Total comprehensive income (282,400) (413,870) 189 INTEGRATED ANNUAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2022 ZCCM Investments Holdings Plc Investing SMARTLY Appendix CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2022 31-Dec 31-Dec 2022 2021 US$’000 US$’000 Revenue from customer with contracts 701,428 731,608 Net Interest Income from loans and advances Financial Instruments 6,497 7,027 Fees and commissions 2,346 1,649 Cost of sales (862,705) (723,250) Gross (loss)/prot (152,434) 17,034 Investment income 2,835 663 Investment expenses (26) - Net investment income 2,809 663 Other income 11,099 12,031 Fair value adjustment nancial asset at fair value through prot or loss (12,059) 59,258 Impairment of goodwill on acquisition -(754,798) Net impairment losses on nancial assets (477) 3,218 Administration expenses (43,973) (88,440) Operating loss (195,035) (751,034) Finance income 26,536 24,532 Finance costs (132,920) (68,546) Net nance costs (106,384) (44,014) Share of prot of equity-accounted investees, net of tax 94,026 152,697 Loss before tax (207,393) (642,351) Income tax (expense)/credit (14,634) 3,378 Loss for the year (222,027) (638,973) Other comprehensive income Items that will never be reclassied to prot or loss Revaluation on property, plant and equipment 732 - Deferred tax on revaluation reserve (220) - Actuarial gain on dened benet pension plans 11,978 (5,350) Deferred tax on dened benet actuarial loss (2) (66) Equity-accounted investees- share of other comprehensive income 652 2,658 13,140 (2,758) Items that are or may be reclassied to prot or loss Foreign currency translation differences - equity - accounted investees 79,868 (222,816) Foreign currency translation differences - Subsidiaries investees (153,381) 450,677 (73,513) 227,861 Other comprehensive income, net of tax (60,373) 225,103 Total comprehensive income (282,400) (413,870) Appendix SEPARATE STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2022 (Unaudited) 31-Dec 31-Dec 2022 2021 US$’000 US$’000 Investment income 288,347 49,203 Revenue from contracts with customers 46 4,057 Cost of sales (125) (3,949) Other income 5,173 1,808 Fair value adjustment nancial asset at fair value through prot or loss (12,059) 59,258 Net impairment losses on nancial assets (32) 2,176 Administration expenses (43,562) (18,952) Operating prot 237,788 93,601 Finance income 26,161 3,823 Finance costs (310) (16,630) Net nance income 25,851 (12,807) Prot before tax 263,639 80,794 Income tax (expense)/credit (13,860) 4,379 Prot for the year 249,779 85,173 Other comprehensive income Items that will never be reclassied to prot or loss Revaluation of property, plant and equipment 732 - Deferred tax on amortisation of revaluation reserve (220) - Actuarial (loss)/gain on dened benet pension plans 6 188 Deferred tax on dened benet actuarial/(loss) gain (2) (66) Investments in subsidiaries – net change in fair value 6,571 235 Investments in associates – net change in fair value (254,937) (3,238) Deferred tax on fair value change on investments in subsidiaries - - Deferred tax on fair value change on investments in associates - - Other comprehensive income, net of tax (247,850) (2,881) Total comprehensive income 1,929 82,292 CONTACT US Email: [email protected] or Call: 260 211 – 221 023 / 388 000 / 228 833 VISIT US ZCCM-IH Ofce Park Stand No. 16806, Alick Nkhata Road Mass Media Complex Area P.O Box 30048, Lusaka, 10101
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