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ZCCM-IH's Minority shareholders press release

Our company ZCCM-IH has issued its annual Report 2016 only one year late

Here is our reading and analysis of the report :

- ZCCM lost in the past 2 years more than ZMK 3,899m (USD 740m).

- The company's net cash has dropped by ZMK 248m (USD 47m) in 2 years.

- Ndola Lime Company ("NLC") cash-flow losses and outstanding loans are endangering future of
ZCCM. NLC owes to Standard Bank of South Africa ZMK 282m (USD 53m) which ZCCM has

- ZCCM is haemorrhaging severely, losing cumulatively in the past 2 years more than ZMK 3,899m
(USD 740m). Along with the stagnated revenues and poor dividends stream, the company had to write
off more than ZMK 1,509m (USD 287m) of bad account receivables in 2015, and in 2016 the company
recognized a loss of over ZMK 2,210m (USD 420m) due to associate companies' losses.

The global Copper prices has been falling in the years 2011-2016 by more than 50%, which affected
both the company's results directly, and indirectly by the recession in the Zambian economy.
Subsequently, ZCCM has recognized an impairment of over ZMK 1,204m (USD 229m) in the years

Though the macro-economic influences might explain some of the deterioration in the company's
results, ZCCM's inability to manage its wholly owned subsidiaries, has led the company into an actual
cash-flow deficit. From a surplus of ZMK 62m (USD 12m) net cash in March 2014, the company
exhausted its resources to a deficit of ZMK 186m (USD 35m) by March 2016. In real terms - this is far
worse than any equity losses from its minority holdings.

Looking at the ZCCM's performance in the past 3 years, it seems that the company does not have any
real feasible strategy, nor applies one, and it is dragged to put good money after bad money.

Inter alia, the company has been pouring capital into Ndola Lime Company ("NLC"), a wholly owned
subsidiary, in hope to reorganize its failing operations. Along with a ZMK 282m (USD 53m) debt to
Standard Bank of South Africa, ZCCM converted in 2016 its shareholders loans to NLC in a total of
ZMK 659m (USD 125m), effectively giving up the opportunity to see its loans back.

In the lack of resources, due to poor decisions over recent years, ZCCM cannot navigate its way in a
bear market and expend its operations to new opportunities. The company must outline and execute a
clear strategy, to give the market positive signals about the future to come.
Our company is in a very bad state. When some people see a huge value in our company, we can note
that the performance of our company has deteriorated compared to 2015 and that ZCCM-IHs current
liabilities exceeded current assets which indicates a liquidity risk. It is interesting to note also that the
only the only meaningful income we are expecting for the 2017 fiscal year is coming from the law suit
against KCM, and if we would not get these funds we would probably be in a risk of insolvency.

Concerning our old assets :

Our wholly owned subsidiary Ndola Lime is on its way to go under and without the financial support of
the mother company, it will have probably be liquidated a long time ago. We must remember that this
company was making profit a few years ago!

What to think about our company ZCCM-IH underwriting the issuance of shares of Investrust Bank
Plc? Why did we invest in such a lame duck. What a waste of money.

Concerning our new assets :

Our CEO Dr Pius Kasolo has been appointed 1st October 2014, and promised us to change our
company. He promised that he will strengthen our Investment department which was looking like a
desert. The investment department is the core department of our company as we are an investment
company. The work has been done, and the investment department is now filled with people selected
not by merit but by prodigy.

Where did we make new investments? During that period, we have been investing only in a new office
building for our company.

During the same period, we missed quite a few interesting opportunities such as :
- Zambeef,
- Zamefa,
- Grizzli mining,

The CEO, Dr. Pius Kasolo spends half of his time outside Zambia - so It's no wonder the company is
doing so poorly.

The financial markets are totally aware of these issues: the share price, on the only real market i.e.
Euronext Paris, has been performing poorly - and there is an arbitrage of over 50% between the LuSE
price and the Euronext price - in favour of the LuSE, which is a sign that the LuSE market is not a real

The only time the gap started to narrow and the share price had increased significantly was when in the
end of April 2017 it was announced that a foreign investor were ready to buy a substantial share in
The failure to conclude the deal with Sapir Capital, combined with the publication of disastrous results,
led to significant decrease in the price of the shares traded on the Euronext in just one month e.g. Euro
2.50 to 1.80

Do not make the mistake of thinking that this is a question that concerns only the Zambians, it is false !
This issue is of interest to all shareholders in France and the United States as well as to global financial
organizations such as the World Bank and the IMF, as the GRZ is the biggest shareholder of the
company, and therefore has a lot to gain or in this case to lose from the poor performance of one of its
main assets.

Zambia is in the spotlight and the international community is paying attention to what is going on in the

We do not understand why some members of the Board and the management want to punish the
company and its shareholders by having such poor management of the company.

These people are doing everything to destroy the flagship of the Zambian economy.

It is time for the same Zambian Government to open its eyes and to recognize that this company is
badly managed.

In according to the regulations of the LuSE the annual report should have been issued within 3 months
of fiscal year end i.e. 30 June 2016. Now we are having an AGM for FY 2016 on the 14th of July 2017
when it should have been for the 2017 Annual Report. BTW as of today we still did not get any update
re the timing of the release of FY 2017 reports and its going to be late as well the only question is by
how long.

We must blame both management and Board who are ineffective. I would like to know the position of
the regulatory bodies about that huge delay.

It is urgent for our company to be managed in a professional way, as a real public company, respectful
of the good corporate governance rules and respectful all its shareholders.

This is a sine qua non condition for this company to be successful.

It is urgent that they realize that they must work in the general interest of the country and all Zambians.

The only way for it to happen is for a real change in the company's management.

Kind Regards

Philippe BIBARD

Spokeperson of the ZCCM-IH's minority shareholders Phicube Group