2021 ZAFFICO Annual Report

ZAMBIA FORESTRY AND
FOREST INDUSTRIES
CORPORATION PLC
ANNUAL
REPORT
2021
Zambia Forestry and Forest Industries Corporation PLC
CORPORATE INFORMATION
REGISTERED OFFICE
ZAFFICO PLC
Plot No. S/Ndola/10473093
Off Mufulira-Ndola Road
P.O. Box 71566, Dola Hill, NDOLA
Tel: +260 212 628 300
Email: info@zaffico.co.zm
Website: www.zaffico.co.zm
SPONSORING BROKER
Pangaea Securities Limited
1st Floor Pangaea Office Park
Great East Road
P.O. Box 30163, LUSAKA
Tel: +260 211 220 707/211 238 709/211 238 710
Email: info@pangaea.co.zm
Website: www.pangaea.co.zm
EXTERNAL AUDITORS
KPMG Chartered Accountants
6th Floor, Sunshare Towers
Cnr. Lubansenshi/ Katima Mulilo Roads
P.O. Box 31282 LUSAKA.
Tel: +260 211 372 900
Website: www.kpmg.com
TRANSFER SECRETARY
Corpserve Transfer Agents Limited
6 Mwaleshi Road
Olympia Park
Tel: +260 211 256 969/211 256 970/+260 950 968 435
Email: info@corpservezambia.com.zm
BANKERS
INDO Zambia Bank Limited
Head Office
Plot No. 6907, Cairo Road
Tel : +260 211 224 653/225 080/227 194
E-mail: izb@izb.co.zm
Website: www.izb.co.zm
Zambia Industrial Commercial Bank Limited

Central Park
Cnr Cairo/Church Road
Tel: +260 211 233 707
Email: info@zicb.co.zm
Website: www.zicb.co.zm
Zambia National Commercial Bank PLC

Plot 2118 2121
P.O. Box 33611, Chainda Place
Cairo Road, LUSAKA
Tel: +260 211 228 979/ 211 425 650-59/211 425 683-4
Website: www.zanaco.co.zm
2 Annual Report 2021

CONTENTS
ABBREVIATIONS 4
PROFILE 5
Vision 6
Mission Statement 6
Core Values 6
Our Products 7
Our Customers 8
FINANCIAL HIGHLIGHTS 9
BOARD OF DIRECTORS 12
EXECUTIVE MANAGEMENT 15
CHAIRPERSON’S REPORT 17
MANAGING DIRECTOR’S REPORT 19
CORPORATE GOVERNANCE 24
HEALTH AND SAFETY 27
ENVIRONMENTALLY FRIENDLINESS 28
CORPORATE SOCIAL RESPONSIBILITY 29
SUPPORT TO FOREST RANGERS FOOTBALL CLUB 30
STRATEGIC PARTNERSHIPS 31
HUMAN CAPITAL DEVELOPMENT 32
FINANCIAL STATEMENTS FOR THE YEAR ENDED 31
DECEMBER 2021 33
Directors’ Report 34-38
Statement of Directors’ Responsibilities in Respect of
Preparation of the Financial Statements 39
Independent Auditor’s Report 40-43
Statement of Financial Position 44
Statement of Profit or Loss and other Comprehensive Income 45
Statement of Changes in Equity 46-47
Statement of Cash Flows 48
Notes to the Financial Statements 49-89
Annual Report 2021 3

ABBREVIATIONS
AFD Agence Française de Développement
AGM Annual General Meeting

CBU Copperbelt University
CCA Chromated Copper Arsenate
CSR Corporate Social Responsibility
ESG Environmental, Social and Governance
GRZ Government of the Republic of Zambia
IAS International Accounting Standards
IDC Industrial Development Corporation
IFRS International Financial Reporting Standards
IPD Industrial Plantations Division
ISA International Standards of Auditing
LuSE Lusaka Securities Exchange
NAPSA National Pension Scheme Authority
NTEs Non-Traditional Exports
PLC Public Limited Company
WCFCB Workers’ Compensation Fund Control Board
ZAFFICO Zambia Forestry and Forest Industries Corporation
ZDA Zambia Development Agency
ZEMA Zambia Environmental Management Agency
ZICA Zambia Institute of Chartered Accountants
STATEMENT ON FORWARD-LOOKING INFORMATION
This Annual Report contains forward-looking statements about the Corporation’s performance and position. The words
such as “intends,” “aim,” “project,” “future,” “anticipates,” “estimates,” “plans,” “believes,” “expects,” “predicts,” “may,” “should,”
“will,” “could,” “would,” “target,” “set to” or similar terms, commonly identify such forward-looking statements. We believe
that while the forward-looking information contained herein is realistic at the time of publishing this report, actual results
in future may significantly differ from the results discussed in the forward-looking statements. The Corporation and its
Directors assumes no obligation to revise or update any forward-looking statements to reflect events or circumstances that
arise after the statements have been made.

PROFILE
Zambia Forestry and Forest Industries Corporation fencing and construction poles.
PLC (“ZAFFICO”) is the country’s largest exotic forestry
company whose mandate is to establish and manage The Corporation is listed on the Lusaka Securities
pine and eucalyptus plantations as well as harvest and Exchange (“LuSE”) and the stock trades under the
commercially process timber for supply to the local and symbol “ZFCO.” The Government of the Republic of
foreign markets. The Corporation was incorporated in Zambia (“GRZ”) through the Industrial Development
September 1982 following the commercialisation of the Corporation (“IDC”) holds 63% of the shares in the
Industrial Plantations Division (“IPD”) of the Forestry Corporation and institutional investors, general
Department under the then Ministry of Lands and Natural public and ZAFFICO employees holds 37% of the
Resources. Currently, ZAFFICO manages approximately remaining shares.
50,189 hectares of Pine, Eucalyptus and Gmelina
Plantations on the Copperbelt, Luapula, Muchinga, During 2021, the average number of permanent
Northern and North-Western Provinces. and fixed longer-term contract employees was
345. In addition, the average number of seasonal
ZAFFICO also operates a Pole Treatment Plant which was and short-term contracts employees was 11,591.
commissioned in 2018. The plant, located in Kalulushi on
the Copperbelt Province, produces about 140,000 treated
poles per year. The poles produced include transmission,
2% 3%
ZAFFICO manages
50,189 7%
hectares of
Plantations ZAFFICO PLC
63% Shareholding 25%
Structure 2021 average
Production capacity of labour force
140,000 11,936
treated poles per year
IDC NAPSA WCFCB ZSIC LIFE Other Investors,

ZAFFICO
Employees &
General Public
ZAFFICO Operational Areas
Our Head Office is located off

Mufulira-Ndola Road,
Dola Hill in Ndola

Vision Mission Statement
“A leading supplier of quality forest and “To establish and manage industrial exotic forest
agroforestry products in the region.” plantations and agroforestry products in order to
meet demand and maximise return on investment.”
Core Values
The following are the values that anchor our operations for the benefit of our customers and other stakeholders:
Team work Integrity Environmentally

Motivation Business Focus Reliability
Friendliness
We cooperate We put ZAFFICO’s We are a self- We recognise We are committed We commit to
with each other obligations above driven work force our obligation to to implement meeting the
and work to our personal determined to create value for and demonstrate expectations of
the best of our interests and deliver quality our Shareholders environmental our stakeholders.
abilities, despite conduct ourselves goods and service and we operate as friendly practices
any personal in a manner that is to the satisfaction a business entity. in all aspects of our
conflict that may beyond reproach. of all our business.
arise between stakeholders.
individuals to
foster unity of
purpose.

OUR PRODUCTS
OUR PRODUCTS
Pine roundwood: is used

Pine roundwood: is used
to produce sawn timber,
to produce sawn timber,
plywood, particle board
plywood, particle board
and
andother
otherengineered
engineered
wood
woodproducts
productsfor
for
industrial
industrialand
anddomestic
domestic
use
use
T
Eucalyptus
Eucalyptus roundwood:
roundwood:
is used to produce
is used to produce sawn sawn
timber, plywood,
timber, plywood, polespoles
F
andand other
other wood
wood products
products
for industrial and
for industrial and
domestic purposes
domestic purposes
R A CCA treated poles: are

CCA
usedtreated poles: are
for transmission,
D
used for transmission,
fencing and
fencing and
construction
construction
Creosote treated poles:

are used for
Creosote transmission,
treated poles:
fencing and construction
are used for transmission,
fencing and construction
Eucalyptus seedlings:
are used in botanical
Eucalyptus seedlings:
gardens, live fencing and
are used in botanical
establishment of forest
gardens, live fencing and
plantations
establishment of forest
plantations
Pine seedlings: are used

in botanical gardens, live
fencing and establishment
Pine seedlings: are used
of forest plantations
in botanical gardens, live
fencing and establishment
of forest plantations

OUR CUSTOMERS
Our customers are the centre of our success. ZAFFICO remains committed to
deliver products to the expectation of our customers and other stakeholders while
staying true to our values. Below are the Corporation’s key customers.
ELECTRICITY AND
COMMUNICATION
SAWMILLERS COMPANIES
CONSTRUCTION
COMPANIES COMMERCIAL
AND SMALL SCALE
FARMERS
MINING
COMPANIES WOOD PROCESSING
COMPANIES

FINANCIAL HIGHLIGHTS
Revenue Performance Gross Profit

400 366.6 300
Revenue (ZMW’ Million)
Gross Profit (ZMW’ Million)

350 251.2
250
300 283.3 208.8
250 200
200 150
150
100
100 29% 20%
Revenue 50 Gross Profit
50
Increase increase
0 0
2020 2021 2020 2021
Year Year
Net Profit After Tax Treated Poles Sales

2 1.875
1.8 100 92.8
1.6 90
Net Profit (ZMW’ Billion)
Sales (ZMW’ Million)

1.4 80
1.2 70
60
1 50
0.8 40
0.6 30
456%
0.4 20 16.7 Sales for
0.229 719% Treated Poles
0.2 10
increase increase
0 0
2020 2021 2020 2021
Year Year
Wood Volume Harvested Mukula Sales (Export) Earnings Per Share

5
4.69
400 35 4.5
336.9 29.9 4
350 30
Sales (ZMW’ Million)
3.5
Volume (‘000m3)
300 25
265.7 3
EPS (ZMW)
250 20 2.5
200
15 2
150 21% 525% 1.5
Wood 10 Mukula Sales 709%
100 1
4.8 (Export) 0.58
50 Volume Felled 5 EPS
decrease increase 0.5 increase
0 0 0
2020 2021 2020 2021 2020 2021
Year Year Year
Corporation’s Assets Shareholders’ Funds Treated

Poles Mukula
3.5 3.5 8%
Assets (ZMW’ Billion)
3.28 25%
Funds (ZMW’ Billion)
3 3 2.876
2.5 2.5 2021
2 2 Revenue
1.5 1.5 Contribution
1.228
167% 1.024
1 1 181%
0.5 Assets 0.5 Shareholders’
Increase Fund Increase
0 0 Roundwood
2020 2021 2020 2021 67%
Year Year


BOARD OF DIRECTORS
AND EXECUTIVE
MANAGEMENT
BOARD OF DIRECTORS
Mrs. Anne Doma Gray-Kunda

Board Chairperson
Anne Doma Gray-Kunda is a Legal Practitioner with over 25 years law practice experience.
She holds a Bachelor of Laws Degree (LLB) from the University of Zambia and is a Notary
Public as well as an Associate member of the Chartered Institute of Arbitrators. Anne is
pursuing a Master of Laws in Corporate Governance with the University of Cumbria in the
United Kingdom.
She has previously worked for private law firms which include Messrs Ellis & Co. and Messrs
Abha Patel & Associates. Anne also worked for Workers’ Compensation Fund Control
Board where she held senior management positions of Board Secretary/Legal Counsel and
Director Legal and Corporate Services. Presently she is the Managing Partner at Messrs. A
D Gray & Partners - Legal Practitioners, a law firm in Ndola.
Anne is currently a member of the Law Association of Zambia Governing Council, the
Zambia International Trade Fair Board of Trustees, Board of Governors for Mpelembe and
Fatima Girls Secondary Schools respectively. She previously served on the Audit and Risk
Committee of the Copperbelt University.
Ajay M. Vashee
Vice Board Chairperson
Ajay Manubhai Vashee is an Accountant and currently serves as Director of an Agricultural
Enterprise. Ajay has served as President and Trustee of the Zambia National Farmers’
Union and as President of the International Federation of Agriculture Producers. He was
the first President of the SADC Business Forum and Zambia Business Forum as well as a
member of the Economic Advisory Council of Zambia and the International Food and Trade
Policy Council. Ajay has also served on various Boards which include ZESCO, Agriculture
Commodity Exchange Limited, NATSAVE, Nitrogen Chemicals of Zambia Limited and
Mukuba Hotel Limited.
Chearyp Mkandawire-Sokoni
Board Member
Chearyp Mkandawire-Sokoni is the Chief Finance Officer of the Industrial Development
Corporation (IDC) and previously worked for Chloride Zambia Limited of the ART Group,
Copperbelt University, Audit Commission (UK) and KPMG (Malawi and Zambia).
She is a graduate of Advanced Management Program (AMP) of the Harvard University
Business School and a graduate of Master of Business Administration (MBA) of the
University of Edinburgh Business School. Her finance centric MBA covered Mergers &
Acquisitions, Investment Management & Securities Exchange. She has further studied
mergers, acquisitions and other corporate restructuring and Corporate Governance at
Harvard University.
Chearyp is a fellow of the Association of Chartered Certified Accountants (ACCA) and
Zambia Institute of Chartered Accountants (ZICA) with 22 years of post qualification
experience. She is an Advocate for ACCA and a member of the ACCA Africa Advocacy
Programme where she sits on the Accounting and Business Committee. She is also a member
of the Accounting and Finance Industry Insights Alumni Advisory Group of the University of
Edinburgh Business School. She is a ZICA accredited mentor for the Chartered Accountant
(CA) Zambia practical training and a member of the Society of Corporate Compliance and
Ethics (SCCE).

Dr. Elizabeth Catherine Lungu-Nkumbula

Board Member
Dr. Elizabeth Catherine Lungu-Nkumbula is the Board Chairperson of the Zambia
International Trade Fair and Mukuba Hotel Limited. She also served as Board Chairperson
at Mukuba Pension Trust and National Vocational Rehabilitation Centre and served as a
Director on a number of institutions, including Real Estate Investment Zambia PLC. Elizabeth
has held various key strategic senior management positions in the Zambia National Building
Society including Director- Banking Operations and was Pan African Building Society
Managing Director before her appointment as Commissioner/Chief Executive Officer of
Workers Compensation Fund Control Board. She holds a Doctor of Philosophy (PhD) in
Business Administration (Washington International University, USA) and Master’s Degree
in Business Administration (University of Lincoln and Humberside, UK). Elizabeth also
served as the first Zambian female President of the Agricultural and Commercial Society of
Zambia and Deputy President of the Royal Agricultural Society of the Commonwealth in the
United Kingdom.
Agnes Chakonta
Board Member
Agnes Chakonta is a Chartered Insurer and Pension Practitioner who holds a Bachelor of
Arts Degree from the University of Zambia, Master’s Degree in Business Administration
with Heriot Watt University (UK) and an Advanced Management Programme Certification
with Strathmore University, Kenya. Agnes is an Insurance Fellow of the Chartered Insurance
Institute of London (FCII) and of the Insurance Institute of Lusaka (FZII). She has worked
for Madison Life Insurance Company (Z) Limited for over 25 years and served in various
portfolios. Agnes is currently the Managing Director of Madison Life Insurance Company
Zambia Limited.
Christopher Kalimukwa Mwelo

Board Member
Christopher Kalimukwa Mwelo is a Chartered Management Accountant, an Economist and
a qualified Banker who holds a Bachelor of Arts Degree from the University of Zambia, a
Master of Business Administration in Strategic Planning from Heriot-Watt University and
an Advanced Diploma in Financial Services from the Institute of Bankers, South Africa.
Christopher is currently the Head of Global Markets and Treasury at Atlas Mara Zambia.
He previously served as Corporate and Treasury Head at Access Bank Zambia Limited and
Head of Global Markets at Stanbic Bank Zambia Limited. He has over 20 years banking
experience. Christopher is the Board Chairman of the Atlas Mara Staff Pension Trust Fund.

Utembele Simwinga
Board Member
Utembele Simwinga is a Chartered Accountant who holds a Master of Business
Administration Degree (MBA) from Edinburgh Business School, Herriot Watts University.
He is a Fellow of the Chartered Association of Certified Accountants (FCCA), the Zambia
Institute of Chartered Accountants (FZICA) and a member of the Institute of Directors
of Zambia. He previously served as a Chief Financial Officer for Banque Populaire Du
Rwanda in Rwanda. Utembele also worked for Standard Chartered Bank Zambia PLC
where he served in various portfolios. He has over 25 years’ experience in Finance and
Banking. Utembele is currently serving as Director of Finance for the National Pension
Scheme Authority.
Ignatius Makumba
Board Member
Ignatius Makumba is the Director of Forestry under the Ministry of Green Economy and
Environment with over 30 years of experience. He holds a Bachelor of Science degree
in Forestry (Copperbelt University, Zambia) and Master of Arts degree in Sustainable
International Development (Brandeis University, USA). He has closely worked with
the United Nations Food and Agriculture Programme, United Nations Environment
Programme and United Nations Development Programme supported Projects in Zambia
spanning over a period of more than ten years.
Ignatius was a member of the Experts Advisory Panel to review the analysis of the
educational materials for the “Legal aspects of implementing the Aichi Biodiversity
Targets 2011 - 2020 Project” under the auspices of the International Development
Organization/Centre for International Sustainable Development Law.
Mundia Mundia
Managing Director
Mundia Mundia is a senior executive with over 20 years’ experience in the private and
public sectors. He is a holder of a Bachelor’s Degree in Accounting from the Copperbelt
University and a Master’s in Business Administration from the Heriot-Watt University,
Edinburgh, Scotland. Mundia is a Fellow of both the Zambia Institute of Chartered
Accountants (ZICA) and the Association of Chartered Certified Accountants (ACCA). He
has worked for BP Southern Africa, Lafarge Zambia PLC and the Zambia Privatisation
Agency in various portfolios. Prior to joining ZAFFICO, he was Director of Finance for
Madison General Insurance Company Zambia Limited and has served on several boards
both in private and public sectors.

EXECUTIVE MANAGEMENT
Mundia Mundia
Managing Director
Profile under the Board of Directors
Wilbroad Katema
Director Human Resource
Wilbroad Katema is a qualified Human Resources specialist with over 29 years’
experience. He holds a Bachelor of Arts Degree in Public Administration and Sociology
from the University of Zambia. He also holds a Diploma in Personnel Management from
Evelyn Hone College of Applied Arts and Commerce. Wilbroad is a member of the Zambia
Institute of Human Resource Management (ZIHRM).
Matilda Sitali Mwansa

Director of Finance
Matilda Mwansa is a Chartered Management Accountant with over 20 years’ experience
in the public and private sectors. She holds a Master’s in Business Administration
(MBA) degree from ESAMI/Maastricht School of Management. She is a Fellow of the
Chartered Institute of Management Accountants (CIMA), Zambia Institute of Chartered
Accountants (ZICA) and Institute of Directors of Zambia (IoDZ).
Brian Kangombe Mutale

Director of Plantations
Brian Kangombe Mutale holds a Master’s Degree in Development Finance from
Stellenbosch University (Cape Town); a BSc. (Hons) Economics from University of
Zimbabwe and BSc. in Forestry from Copperbelt University (Kitwe). He is a member of
the Institute of Directors of Zambia (IoDZ) and a Fellow of the Chartered Institute of
Development Finance (CIDEF). He is also a Certified Balanced Scorecard Professional
(Strategic Planning) from Washington University College of Professional Studies. Brian
has over 18 years experience in both the public and private sectors. Prior to joining
ZAFFICO, Brian worked for the National Council for Construction (NCC), Citizens
Economic Empowerment Commission, Ministry of Agriculture and Wood Processing
Industries.

Mutengo Sindano
Director Business Development
Mutengo Sindano is an experienced Economist who holds a Bachelor’s Degree in
Agricultural Economics from the University of Zambia and a Master’s Degree in
Development Economics and Policy from the University of Reading (United Kingdom).
He has over 15 years of work experience as an Economic Planner and Policy Analyst.
Chanza Kephas Sikazwe

Corporation Secretary
Chanza Kephas Sikazwe is a Lawyer who holds a Bachelor of Laws Degree (LLB) from
the University of Zambia and a Master of Laws Degree in Commercial Law (LLM) from
the University of Cape Town (South Africa). He is a Member of the Law Association
of Zambia (LAZ) and served on the Council of LAZ between 2016 to 2018. He is an
Advocate of Superior Courts in Zambia with over 16 years of legal practice/post Bar
admission experience in both the public and private sectors. Chanza has worked
for various institutions which include the Bank of Zambia, the Attorney General’s
Chambers, Access Bank Zambia, Professional Insurance Corporation Zambia,
Christopher, Russell Cook & Co. and Solly Patel, Hamir & Lawrence.
Brian Jere
Director, Internal Audit
Brian Jere is a Chartered Accountant who holds a Bachelor’s Degree in Accountancy
from the Copperbelt University (Zambia). He has over 19 years’ experience
in Corporate Restructuring, Risk Management and Internal Audit. He was the
Chairperson of the Audit Committee for the Electoral Commission of Zambia. He
served as Senior Officer, Privatisation/Business Analyst for the Zambia Privatisation
Agency (ZPA) and Head of Audit and Risk for the Zambia Development Agency (ZDA)
and the Rural Electrification Authority (REA).

CHAIRPERSON’S REPORT
D
ear Shareholders,
Welcome to the 20th Annual General Meeting (“AGM”) for ZAFFICO
PLC. This is the 3rd AGM being held from the time the Corporation
was listed on the Lusaka Securities Exchange (LuSE). It is the third successive
year that the AGM is being held virtually following the outbreak of the
COVID-19 pandemic in 2019. The Board and Management wish to thank the
Shareholders for their unwavering support during this challenging period.
Although the COVID-19 pandemic continued to impact negatively on
key operations of the Corporation, 2021 was a success with a number of
milestones achieved as reflected in the positive financial results recorded
for the year ended 2021. The Board continued to provide oversight to
Management to ensure that key activities and programmes are implemented,
with the overall objective of enhancing Shareholder value.
Financial Performance Changes at Board Level

The Corporation’s financial performance remained robust During 2021, there were changes at Board level. In order to
in 2021 despite pandemic induced headwinds. Revenue adhere to Government policy, Mr. Ndashe Yumba resigned
growth remained solid following increased sales generated as a non-Executive Director of the Board effective 27 May
from treated poles and the export of Mukula logs prior to 2021. Mr. Ignatius Makumba was subsequently appointed as
the trade suspension in September 2021. The Corporation his replacement on 28 May 2021. Mr. Makumba reinforced
therefore recorded strong financial performance posting a the Board’s oversight over Management by bringing a depth
total revenue of ZMW366.6 million. of forestry experience to the Board. Further, I want to thank
Following the change in the valuation model of biological Mr. Kangwa David Bwalya, who served as the Managing
assets (Plantation-in-Formation) from the cost value model Director for the Corporation and Executive Director on the
to fair value model, the value of the plantations increased to Board from April 2020 until his resignation in September
ZMW2.875 billion. Consequently, the Corporation posted a 2021. The Corporation will remain indebted for his valuable
net profit of ZMW1.875 billion for the year. contribution. The Board also wishes to welcome Mr. Mundia
Mundia as the new Managing Director for ZAFFICO with
The Board is determined to ensure that the Corporation effect from 14 March 2022. With his vast experience,
maximises Shareholder return by enhancing the profitability the Board is positive that he will steer the Corporation to
of the Corporation in a sustainable manner, while at the greater heights in line with the goals and aspirations of the
same time declaring dividends in accordance with the Corporation.
Corporation Dividend Policy.
Capacity Building
Board Charter and Policies
In order to build capacity among Board Members, the
In 2021, the Board approved the following: Board attended a training in South Africa on Corporate
1. Board Charter in order to effectively guide the Board Governance. Furthermore, members of the Board attended
and Management on operations of the Board; a seminar on the role of the Board in Enterprise Risk
Management.
2. various policies to improve operational processes
and systems in order to enhance efficiency and Awards
effectiveness of operations by Management; and As a testament to the measurable progress over the last
3. key business decisions of the Corporation for the few years, ZAFFICO was recognised with four (4) Industrial
purpose of transforming and building the Corporation’s Development Corporation (IDC) awards during the IDC’s
long-term value for the benefit of the Shareholders. 5th Annual Group Conference. These awards recognise
various business performance parameters among them
Shareholder Enhancement, Profitability and Business

Growth. The Board is proud of the success of the Corporation forest management and sound decision-making.
and shall ensure that the Corporation performs even better
Conclusion
for the benefit of our Shareholders.
On behalf of the Board, I wish to thank the Shareholders
Outlook
for the support rendered to the Board during the past
While the Corporation’s overall performance was three years. We believe that the Corporation has grown
significantly strong in 2021, the Board is cognisant of the during this period as can be witnessed in the growth of net
sustainability of the Corporation given the depleting pine profit posted from year to year. Furthermore, the Board
wood stock that threatens future supply. In this regard, the wishes to take this opportunity to recognise the immense
Board will ensure that resources are channelled towards contribution of Management and staff in ensuring that
the scaling up of forest expansion programmes. It will also Shareholder value is enhanced as they execute the business
invest in initiatives that will further enhance long-term strategies for years to come.
value for the Shareholders in accordance with the 2020-
2024 Corporation Strategic Plan. Further, the Board will
consider Environmental, Social and Governance (ESG)
factors to mitigate risks and identify opportunities. The
Mrs. Anne Doma Gray-Kunda
Board will among other initiatives, also ensure that the
BOARD CHAIRPERSON
forestry inventory is conducted as it is key to sustainable
ZAFFICO PLC Board Chairperson and Management accepting an award during the 5th IDC Annual Group Conference

MANAGING DIRECTOR’S REPORT
the business were minimised.

In our continued pursuit of the sustainability agenda, a
total of 5,207 hectares of land was planted with pine and
eucalyptus in 2021 compared to 3,496 hectares of land
planted in 2020 representing an increase of 49% or 1,711
hectares.
Revenue Performance
Roundwood Sales
A total of ZMW243.8 million was realised from the sale of
roundwood in 2021 with ZMW213.3 million and ZMW25.6
million realised from the sale of pine and eucalyptus
roundwood respectively. The revenue realised from the sales
of pine roundwood decreased by 10% in 2021 compared to
2020 due to the reduction in the pine roundwood volume
harvested and sold in 2021. The reduction was in line with
the Corporation strategy of moving towards attaining
sustainable annual harvest level of 110,000m3. However,
roundwood remained the major source of revenue for
the Corporation in 2021 and contributed 67% of the
Corporation’s total revenue.
The sale of eucalyptus roundwood increased by 12.6% to
ZMW 25.6 million in 2021 from ZMW22.7 million in 2020.
The increase was due to the increase in the demand for
Overview Eucalyptus.
In the year under review, the Corporation delivered a Sale of Treated Poles
resilient operational and financial performance in the wake
The sale of treated poles significantly increased during the
of continued pandemic related headwinds. The 2020-2024
year under review. ZMW92.8 million was realised from
Strategic Plan continued to provide the strategic focus in the
the sale of treated poles in 2021 compared to ZMW16.7
implementation of activities, projects and programmes. In
million in 2020, representing 456% increase in revenue.
line with the Strategic Plan, a total revenue of ZMW366.64
The increase was primarily due to the increase in demand
million was realised in 2021 as compared to ZMW283.4
for treated poles from local customers. Revenue from the
million recorded in 2020 representing an increase in
sale of treated poles contributed 25% to the Corporation’s
revenue of 29% or ZMW83.3 million. The increase in
total revenue in 2021 compared to 6% in 2020.
revenue was largely driven by the significant growth in the
sale of treated poles and revenue realised from the export Export of Mukula
of legally harvested Mukula logs prior to the suspension of
In 2020, the Government of the Republic of Zambia (GRZ)
the trade by the Government in September 2021. Further,
granted authority to the Corporation to purchase legally
the gross profit increased to ZMW251.2 million in 2021
harvested Mukula logs from willing concession licence
from ZMW208.8 million in 2020 representing an increase
holders as well as holders of tree felling permits and
of 20% or ZMW42.4 million from the prior year.
subsequently, export the logs to markets abroad. Based
Although the overall performance of the Corporation on this authority, in 2021, a total of ZMW30 million was
was favourable, COVID-19 continued to adversely affect realised from the export of legally harvested Mukula logs
the business operations as some employees had to work compared to ZMW4.8 million in 2020 representing an
remotely and the Corporation had to put in place some increase of 525% or ZMW25.2 million. The realised revenue
operational restrictions. In line with the Government health from the export of Mukula formed part of the Corporation’s
guidelines, interventions such as the COVID-19 preventive revenue. The revenue realised from the export of Mukula
and surveillance measures were put in place in order to logs contributed 8% of the Corporation’s total revenue in
ensure the health and safety of employees and customers, 2021.
while maintaining the security and integrity of the business
Table 1 summarises the sources of revenue for 2021 and
operations. Consequently, the adverse impact of the
2020.
pandemic on the operational and financial performance of

Table 1: Summary of Revenue Performance for 2021 and 2020
(ZMW’000)
Product Description Change (%)
2021 2020
Pine saw log 213,334 236,861 -10
Eucalyptus Treated Poles 92,859 16,715 456
Mukula logs 29,994 4,799 525
Eucalyptus saw logs & untreated Poles 25,596 22,733 12.6
Miscellaneous 4,853 2,239 117
Total 366,636 283,347 29
Felled Wood Volume

Demand for roundwood has continued to be higher than the supply. During 2021, a total of 265,688m3 of roundwood was
felled compared to 336,893m3 felled in 2020 representing a reduction of 21% or 71,205m3. The reduction was significantly
attributed to the reduction in pine wood harvest to enable the Corporation move towards attaining the sustainable annual
pine roundwood harvest of 110,000m3.
Pine
A total of 223,296m3 of pine roundwood was felled in 2021 compared to 299,219m3 felled in 2020. The reduction of 25% or
75,923m3 was for reasons stated above.
Eucalyptus
During 2021, a total of 39,764m3 was felled compared to 36,996m3 felled in 2020 representing an increase of 7% or 2,768m3.
The increase in the volume felled was attributed to the increased demand for the treated poles from local customers. The
2021 eucalyptus volume harvested was slightly above the sustainable annual allowable cut of 37,000m3. This is attributed to
the clawback from the under harvest in 2017, 2018 and 2019.
Gmelina
A total of 2,628m3 was felled and sold in 2021 compared to 678m3 felled and sold in 2020. The increase of 288% or 1,950m3
was due to the increased demand of Gmelina following the reduction in pine wood volume allocation to customers.
Table 2 summarises the wood volume per tree specie felled in 2021 and 2020.
Table 2: Summary of Wood Volume Felled for 2021 and 2020
Wood Volume (m3)

Product Description Change (%)
2021 2020
Pine 223,296 299,219 -25
Eucalyptus 39,764 36,996 7
Gmelina 2,628 678 288
Total 265,688 336,893 -21
Expenditure
Operating Expenditure
The total operating expenditure during the year under review was ZMW361 million compared to ZMW93 million in 2020. The
siginificant increase in the operating expenses was due to the change in the accounting policy of the plantation-in-formation
to fair value from cost. Under the cost method, operating expenses amounting to ZMW175 million were capitalised in 2020
while no cost are required to be capitalised under the fair value method used in 2021. All the costs incurred during the year
are expensed. Further, adverse macroeconomic conditions including inflation adversely affected the operating expenditure.
Capital Expenditure
The Corporation expended a total of ZMW27 million on capital items in 2021. The main capital items purchased included
utility vehicles, plant and machinery and heavy -duty vehicles.
Assets, Equity and Liabilities
The total assets increased by ZMW2.052 billion to ZMW3.28 billion as at 31 December 2021 compared to ZMW1.228 billion
as at 31 December 2020, mainly due to increased investment and valuation of the plantations in formation.
The continued profitability trends have contributed to the increase in Shareholders’ funds to ZMW2.876 billion as at 31
December 2021 from ZMW1.024 billion as at end of 2020.

The Corporation continued to liquidate its liabilities the 2021 Statement of Profit and Loss.
including statutory obligations to ensure that it was
Future Prospects
compliant.
We shall continue to materially increase our investment
Profitability and Liquidity
in our technological capability with the aim of improving
The gross profit margin reduced to 69% during 2021 our efficiencies. To this end, the Corporation will invest in
compared to 74% in 2020 due to the increase in the cost of a Kiln-Dryer, among others, in 2022 to maximise efficiency
sales arising mainly from the cost of treated poles. in the production process of treated poles in line with the
anticipated demand for treated poles. The Corporation
Other income unrealised in 2021 include ZMW2.21
will also invest in mechanization for the purpose improving
billion from the gain on the valuation of the Corporation’s
efficiencies, financial performance, sustained results and
biological assets arising from the change in valuation
creating long-term value for Shareholders.
model from a cost value model which was used in 2020 to
a fair value model. Furthermore, the Corporation posted a Further, in 2022, the Corporation plans to conduct
net profit of ZMW1.875 billion compared to ZMW228.8 a comprehensive forest resource assessment of the
million generated in 2020 representing a growth of 720% Corporation’s forest plantation to aid in decision-making
or ZMW1.647 billion. in the sustainable management of the plantations.
Furthermore, the Corporation will migrate to a more
The liquidity position in 2021 remained strong reflecting
efficient business model of harvesting logs to promote
the Corporation’s ability to meet its obligation as and when
accountability and transparency while at the same time
they fall due.
improving Occupational Health and Safety in undertaking
Forest Plantation Establishment logging operations .
In accordance with the Corporation’s 2020-2024 Strategic In keeping with the transformation agenda and digitization
Plan and the need to sustainably guarantee future supply strategy for the Corporation aimed at enhancing
of renewable timber, 2,453 hectares of new exotic forest effectiveness and efficiency, the Corporation will in 2022
plantations were established in Luapula, Muchinga, digitise the risk and audit processes.
Northern and North-Western Provinces in 2021 compared
In addition, the Corporation will channel funds to research
to 1,150 hectares established in 2020 representing a growth
and development to formulate business ideas that will
of 113%. This represents the largest plantation expansion
maximise Shareholder value in line with the Corporation’s
in decades. In addition, 2,754 hectares of clearfelled areas
Strategic Plan while at the same time, continue to expand
was replanted on the Copperbelt Province compared to
its forest plantations, re-plant felled areas and sustainably
2,346 hectares re-planted in 2020 representing a growth
manage the existing plantations. Further, the Corporation
of 17% or 408 hectares from the prior year. To support the
will continue to prioritise the investment into professional
expansion programme and the replanting of clearfelled
development of the employees to ensure that the
areas to ensure future supply of timber, 9.2 million of pine
Corporation has a capable and well-managed workforce to
and eucalyptus seedlings were tended and raised for the
meet the challenges of the future.
2021 planting season.
The Corporation will also continue with stakeholder
The planting and replanting of the above stated areas was,
engagement in the sustainable management of its
however, delayed due to the late onset of the rainy reason.
plantations whilst providing feedback to ensure that the
Establishment of the Pine Seed Orchard interests of our stakeholders are taken into account in
decision-making.
In addition to forest plantation expansion and replanting of
clearfelled areas, 20 hectares of land was planted for the Appreciation
purpose of establishing a pine seed orchard in Kawambwa
I wish to thank the Board of Directors and Shareholders
District. The seed orchard will ensure that the Corporation
for the support rendered in the attainment of the 2021
reduces the reliance on imported pine seeds.
performance results. I also wish to thank the dedicated
Change in Valuation of Biological Assets service of our staff in the fulfilment of our goals aimed at
improving Shareholder value. Thank you for the warm
Biological assets (Plantation-in-formation) constitute
welcome and the rare privilege of leading ZAFFICO.
about 88% of the Corporation’s assets. Prior to 2021, the
measurement of biological assets was based on the cost
value model. However, in 2021, the Corporation’s biological
assets were measured at fair value less the costs to sell. The
net increment of ZMW2.21 billion resulting from the change Mundia Mundia
in the measurement from the cost value model to the fair MANAGING DIRECTOR
value model of the biological assets has been recognised in


ENVIRONMENTAL,
SOCIAL AND
GOVERNANCE
CORPORATE GOVERNANCE
Board of Directors and Management during Enterprise Risk Management Seminar
ZAFFICO was incorporated under then Companies Act, the corporate mandate and the day-to-day conduct of
Chapter 388 of the Laws of the Republic of Zambia. business by the Executive Management;
Currently, ZAFFICO operates under the Companies Act
2. Provide strategic direction to the Managing Director
No. 10 of 2017 of the Laws of Zambia. Following the listing
and executive management, identifying key risk areas
of the Corporation on stock market, the promotion of good
and key performance indicators of the Corporation’s
corporate governance is a requirement under the Lusaka
business, monitoring investment decisions, considering
Securities Exchange (“LuSE”) listing Rules and the Securities
significant risks and, where applicable, industry and
and Exchanges Act No. 41 of 2016. The Companies Act No.
regulatory standards; and
10 of 2017 also requires the Corporation to operate within
the tenets of good corporate governance. 3. Discharge its fiduciary duties in good faith, with due
care and in the best interest of the Corporation and
In order to ensure sound internal controls, accountability
stakeholders.
and transparency in the operations of the Corporation,
the governance structure of the Corporation consisting In accordance with the Board Charter, the Board established
of the Board, Committees of the Board and Management the following Committees to assist the Board in carrying out
is in place. The Board regard good corporate governance its functions but without abdicating its own responsibilities;
as key in achieving the Corporation’s objectives and the
1. Audit and Risk Management;
fulfilment of its corporate responsibilities, and is thus,
unreservedly committed to applying the core governance 2. Business Development;
principles of fairness, accountability, responsibility and 3. Staff and Administration; and
transparency in all of the Corporation’s business dealings
with its stakeholders. 4. Finance and Operations.
The Board is appointed by the Shareholders of the Each Committee has adopted terms of reference dealing with
Corporation in line with the Article 16.1 of the Articles the scope of its responsibility and relevant administrative
of Association, for a period of three years. The Board and procedural arrangements. The Committees are chaired
comprises of nine (9) Board members. The Articles of by an independent non-Executive Director and the majority
Association requires that the Chairperson of the Board to of the members are independent non-Executive Directors.
be an independent non-executive member of the Board. Furthermore, the Board has authority to establish sub
The Article also stipulate that the Managing Director committees and adhoc committees as the Board deems
shall be an executive member of the Board. The Board fit in order to achieve the strategic objectives of the
collectively contain a mix of qualifications, skills, experience Corporation. The Board and the Committees meets at least
and personalities necessary and appropriate to ensure the once quarterly.
attainment of the Corporation’s strategic objectives. As set
in the Board Charter, the following are the key roles and The Corporation’s senior management team consists of the
responsibilities of the Board: Managing Director, seven (7) Directors and two (2) Senior
Managers.
1. Overall stewardship of the Corporation and to oversee

Board and Committee Meetings
In 2021, the Board held a total of six (6) Board meetings. Further, the Audit and Risk Management Committee also held six
(6) Committee meetings, while a total of four (4) meetings were held by the Business Development Committee. A total of
four (4) meetings were held by the Staff and Administration Committee, while five (5) meetings were held by the Finance and
Operations Committee. The Adhoc Committee on Mukula held seven (7) meetings. An Adhoc Committee of the Board was
established with the mandate to oversee matters related and incidental to Mukula trading. The attendance by the Directors
at Board and Committee meetings was as follows:
Board ARM BD SA FO ADH

Member
H A H A H A H A H A H A
Non-Executive
Anne Doma Gray-Kunda 6 6 - - - - - - - - 7 7
Ajay M. Vashee 6 6 6 6 4 4 - - - - 7 7
Dr. Elizabeth C. Lungu-Nkumbula 6 6 - - - - 4 4 5 5 - -
Christopher Mwelo 6 6 - - - - 4 4 5 5 - -
Chearyp Mkandawire Sokoni 6 6 6 6 4 3 - - - - - -
Ndashe L. Yumba* 6 3 - - 4 2 4 2 - - - -
Utembele Simwinga 6 6 - - 4 3 - - 5 5 - -
Agnes Chakonta 6 6 6 6 - - 4 4 - - - -
Ignatius Makumba** 6 3 - - 4 2 4 2 - - - -
Executive
Kangwa David Bwalya*** 6 4 - - 4 3 4 3 5 3 7 6
Brian K. Mutale**** 6 2 - - 4 1 4 1 5 2 7 1
Key:
H = Number of meetings held during the year under review;

A = Number of meetings attended by the Director during the year under review
ARM = Audit and Risk Management Committee
BD = Business Development Committee
SA = Staff and Administration Committee
FO = Finance and Operations Committee
ADH = Adhoc Committee on Mukula
* = Director resigned on 27 May 2021
** = Director appointed on 28 May 2021
*** = Managing Director resigned on 13 September,2021
**** = Acting Managing Director was appointed on 13 September 2021
- = Not a Member
ZAFFICO PLC Board of Directors touring the Pole Treatment Plant

Risk Management created a Risk Unit under the Internal Audit Directorate.
ZAFFICO espouses the view that Enterprise Risk During the year under review, training on the role of the
Management (ERM) is a process-driven tool that enables Board in ERM was conducted. Further, risk awareness
visualization, assessment, and management of significant training was conducted for all employees. The training
risks that may adversely impact the attainment of strategic provided a platform to develop capacity to identify the risks
objectives at the same time maximize opportunities for that the Corporation was exposed to, their root causes,
enhancement in all operations of the Corporation. consequences and how these risks could be managed in
order for the Corporation to attain its objectives.
The Board realized the importance of cultivating a culture
of awareness to identify, assess and manage risks using the
ERM process. It is against this background that the Board
ZAFFICO PLC Board of Directors and Management during the Enterprise Risk Management Seminar

HEALTH AND SAFETY

COVID-19 Prevention Copperbelt Stations. Further, health and safety awareness
meetings were conducted with employees across stations
COVID-19 continued to impact negatively on the business
to educate them on; hazard reporting, injury management,
operation in 2021. Preventive measures such as the
accident prevention and reporting, and hazardous waste
engagement of the Ministry of Health to conduct on-site
management. As part of accident prevention measures,
COVID-19 testing and vaccination programmes across the
employees engaged in activities such as weeding, land
Corporation and, regular fumigation of office premises and
preparation, pilling, stumping and planting were sensitized
motor vehicles. In addition, the Corporation distributed
on the risks associated with their nature of work, accident
Personal Protective Equipment (PPE), held virtual meetings
reporting procedures and first-aid arrangements. In order
to minimise face-to-face interactions and allowed for some
to avoid accidents at logging sites, an in-house logging
employees to work remotely to minimise crowding of offices
training was conducted for seasonal employees and
to curb the spread of the disease. However, with all these
chainsaw operators. A total number 104 employees were
measures put in place, 74 employees tested positive for the
trained.
COVID-19 disease. 73 affected employees fully recovered
and reported back to work. Unfortunately, one employee The Corporation organized on-site screening for Diabetes,
died of COVID-19 related illness. Blood Pressure, HIV and eyesight for employees. In
addition, a fire-fighting drill exercise was conducted, by the
Other Occupational Health and Safety
Fire Brigade of Ndola City Council, to educate employees
ZAFFICO is committed to providing a safe and healthy on basic fire safety.
working environment for all employees, customers and
The Corporation is committed to ensure all its operations
other stakeholders. The Corporation’s potential risk areas
are conducted in a manner that does not compromise the
of operations are identified and measures are put in place
wellbeing of the environment. In this regard, the Corporation
to mitigate possible hazards.
managed its hazardous waste in an environmentally friendly
During the year under review, the Corporation recorded manner. A total of 500 empty containers of Tanalith Oxide
a total of 52 occupational accidents. 30 were minors, 20 were disposed of as approved by the Zambia Environmental
serious and two (2) fatalities. In an effort to improve injury Management Agency (ZEMA).
management and, enhance emergency response and
In order to progress towards a goal of no safety incidents,
preparedness at workplace, the Corporation facilitated
the Board will ensure that a robust safety management
training in advanced first-aid for 59 employees from the
system is implemented.
ZAFFICO employees during First-Aid training

ENVIRONMENTALLY FRIENDLINESS
In 2021, the Corporation continued to implement activities towards mitigating the effects of climate change. It has
and programmes aimed at promoting environmental been scientifically proven that forests act as a carbon sink
friendliness in accordance with one of its core values. and hence, the need to preserve and expand the area under
In collaboration with the Forestry Department under forest cover.
the Ministry of Green Economy and Environment, the
Further, the Corporation worked with selected schools in
Corporation commenced the restoration of Solwezi
Ndola district to promote tree planting. This was done as
National Forest that was degraded. In addition, the
a way of contributing towards meeting the green economy
Corporation continued to reforeste degraded Nkolemfumu
objectives linked to climate change policies, mainly through
and Kasama National Forest Reserves in Kasama. The
abatement of greenhouse gas emissions and expansion of
restoration of the areas is expected to contribute to the
renewable energy objectives.
future supply of timber, while at the same time contribute

CORPORATE SOCIAL RESPONSIBILITY
COVID-19 pandemic has brought economic stress and other challenges for many businesses globally. During the year under
review, the Corporation worked tirelessly to fulfil its fundamental responsibility of supporting its employees, customers,
clients and communities in areas such as conservation, education, health, sustainable forest management and environment
among others.
During the year under review, the Corporation continued to fulfil its Corporate Social Responsibility (“CSR”) in order to foster
the social betterment within the communities and area of operations. In fulfilling its CSR, the Corporation donated school
desks to Nsenya and Ray Primary Schools in Petauke and Kasapa School in Mushindamo. The Corporation also provided
support to the Ndola District Health office and various environmental initiatives such as tree planting and environmental
awards.
In additional, the Corporation supported the promotion of employee health and wellness. The Corporation participated in
the 2021 Nsobe fundraising run, Labour Day marathon and third edition of Ndola Fitness Squad marathon in Ndola. The
Corporation also supported and participated in the third Bangweulu Challenge Summerfest marathon in Samfya.

SUPPORT TO FOREST RANGERS FOOTBALL CLUB
The Corporation continued to provide support to Forest Rangers Football Club. The Corporation increased its oversight role
of Forest Rangers Football Club to ensure prudent utilisation of resources, transparency and accountability at the Club.

STRATEGIC PARTNERSHIPS
Stakeholder Collaboration plantations.

ZAFFICO regards building strategic partnerships vital to the The Corporation has various channels to solicit and respond
realisation of the Corporation’s goals and initiatives. During to customers’ feedback about the Corporation’s products
the year under review, the Corporation collaborated with and services. Regular meetings were held with sawmillers
the Zambia Institute of Chartered Accountants (“ZICA”) regarding how business would be conducted with them. In
to support the hosting of the 2021 ZICA Pre-Annual the year under review, exchange of ideas and information
General Meeting. This collaboration increased awareness was facilitated with employees through meetings,
about ZAFFICO, enhanced the brand visibility and created newsletter and social media among others.
awareness on the Corporation’s product lines especially the
Further, the Corporation has been engaging traditional
treated poles. Further, the Corporation collaborated with
leaders on the need to avail land to the Corporation for
the Zambia Development Agency (“ZDA”) and participated
the purpose of establishing plantations. Most land in
in a trade Mission to the Democratic Republic of the Congo
Zambia is held under the customary tenure, therefore,
(the Congo) whose objectives, among others, were to secure
the engagement of traditional leaders is key to enable the
market access for Zambian products in the Congo and
Corporation attain its expansion objective.
increase Non-Traditional Exports (“NTEs”) in the region. The
participation in the Congo trade mission culminated into The Corporation strives to maintain an open, ongoing
the securing of an order for the supply of 2,000 Chromated dialogue with regulators and policymakers. The Board
Copper Arsenate (CCA) poles and contributed towards the committed a significant amount of time to meeting with
Corporation’s revenue. policymakers to keep them informed about developments
in the Corporation’s business.
In addition, the Corporation continued with its strategic
partnership with Agence Française de Développement The Corporation also interacts with academicians and shares
(“AFD”) of the French Government with regard to information on matters pertaining to forest management.
the undertaking of a comprehensive forest inventory The Corporation has therefore signed a Memorandum of
assessment of the Corporation’s forest plantations. The Understanding (“MoU”) with the Copperbelt University on
collaboration culminated in the awarding of the contract knowledge exchange.
to Arbonaut Oy Limited of Finland in collaboration with
The Corporation communicates to Shareholders through
Environmental Tracking of Zambia to conduct the forest
annual reports, press releases, fillings and website updates.
plantation inventory in 2022 over a period of nine (9)
The Shareholders are also engaged through annual
months. Furthermore, the Corporation collaborated with
Shareholders’ meetings and other fora. These engagements
the Forestry Department to reforest the degraded and
provide the Corporation with useful feedback which is
deforested area in Solwezi.
considered when developing the Corporation’s strategic
Stakeholder Engagement direction.
ZAFFICO interacts with a wide range of stakeholders in In addition, the Corporation interacts with its key
establishing and management of its forest plantations. suppliers on a frequent basis through various channels
These stakeholders include customers and sawmillers, including phone and email. Through these interactions,
employees, traditional leaders, communities, regulators the Corporation engages in dialogue with the key suppliers
and policymakers, academicians, Shareholders and on issues of importance to the Corporation including the
suppliers with whom the Corporation engage on an ongoing Corporation’s ability to operate efficiently and effectively,
basis to share information about the Corporation’s strategy, deliver products that meet customers’ need, and manage
practices and performance. Communities are engaged in risk and apply appropriate controls.
areas of operations on the sustainable management of the

HUMAN CAPITAL DEVELOPMENT

Supporting employees’ professional development and career growth is important to the Corporation’s human capital
strategy. As part of this strategy, the Corporation invests in tools and resources that support professional development
and career growth as well as recognize the importance of investing in upskilling and reskilling of the Corporation’s existing
employees to ensure that the Corporation has talent needed to compete. This is key to advancing employees’ individual
growth and development while at the same time, fostering understanding and critical thinking about the Corporation’s
culture, organisation and values. As such, the Corporation has scaled up its effort to ensure employees have access to the
training and education they need to prepare them for the future work and pursue roles within the Corporation.
During the year under review, the Corporation invested ZMW961,197.80 in training employees. 40 security personnel
underwent basic police training at Kamfinsa School of Public Order and Maintenance (SPOM) in Kitwe, 10 Heavy Duty
Equipment operators attended a refresher course in CAT Equipment Operations and 34 members attended training in
Advanced First-Aid Training among others.
In addition to the training, the Corporation’s employees participated in Continuous Development Programmes organised by
various professional bodies among them; Engineering Institute of Zambia, Institute of Directors of Zambia, Law Association
of Zambia, Zambia Public Relations Association, Zambia Institute of Human Resources and Zambia Institute of Chartered
Accountants.

Zambia Forestry and Forest

Industries Corporation PLC
Financial Statements
for the year ended 31 December 2021

Directors’ Report
The Directors submit their report together with the audited financial statements for the year ended 31 December 2021,
which disclose the state of affairs of Zambia Forestry and Forest Industries Corporation PLC (“the Corporation”). The address
of its registered office is:
Stand No. S/Ndola/10473093
Dola Hill
P O Box 71566
NDOLA
Principal Activities
The principal activity of the Corporation is the establishment and management of exotic timber plantations from which
roundwood and other timber products are produced for sale.
Share Capital and Beneficial Ownership
The authorised share capital of the Corporation is ZMW100,000,000 representing 400,000,000 ordinary shares of ZMW0.25
each. The Corporation’s shareholding and beneficial ownership is presented as follows:
Number of Number of
Classification holders shares held %
Industrial Development Corporation 1 252,000,000 63%
Pension funds 8 133,502,812 33%
Others 1,146 14,497,188 4%
Total 1,155 400,000,000 100%
Financial Results and Dividends
The Corporation ‘s financial results were as follows:
2021 2020
ZMW ZMW
Revenue 366,636,254 283,347,230
Profit before tax 2,098,609,362 260,381,472

Income tax expense (223,167,546) (31,617,367)
Profit for the year 1,875,441,816 228,764,105
The net profit for the year was ZMW1,875,441,816 (2020: ZMW228,764,105). The Board of Directors has proposed a
dividend amounting to ZMW12,000,000 for the financial year ended 31 December 2021 (2020: ZMW37,049,572) as
disclosed at note 27(b) in the notes to the financial statements.

Directors’ Report (continued)

Directorate and Secretary
The Directors and Corporation Secretary who held office during the year and at the date of this report were as follows:
Ms. Anne Doma Gray-Kunda Chairperson

Mr. Ajay Manubhai Vashee Vice Chairperson
Ms. Chearyp Mkandawire-Sokoni Director
Mr. Christopher K. Mwelo Director
Dr. Elizabeth Lungu-Nkumbula Director
Ms. Agnes Chakonta Director
Mr. Utembele Simwinga Director
Mr. Mundia Mundia Managing Director (Appointed 14 March 2022)
Mr. Ignatius Makumba Director(Appointed 28 May 2021)
Mr. Ndashe Yumba Director (Retired 28 May 2021)
Mr. Kangwa D. Bwalya Managing Director (Resigned 13 September 2021)
Mr. Brian K. Mutale Acting Managing Director (Appointed 13 September 2021)
Mr. Chanza K. Sikazwe Corporation Secretary
Directors’ Interest and Loans
None of the Non- Executive Directors had any interest in any contract with the Corporation and neither had loans during the
current and previous years.
Management
The key management staff of the Corporation during the year and as at the date of this report were as follows:
Mr. Mundia Mundia Managing Director (Appointed 14 March 2022)

Mr. Kangwa D. Bwalya Managing Director (Resigned 13 September 2021)
Mr. Brian K. Mutale Director of Special Projects (Appointed 12 July 2021)
Mr. Brian K. Mutale Acting Managing Director (Appointed 13 September 2021)
Mr. Brian K. Mutale Director of Plantations (Appointed 16 February 2022)
Ms. Matilda Mwansa Director of Finance
Mr. Brian Jere Director Internal Audit
Mr. Chanza K. Sikazwe Corporation Secretary
Mr. Chota Ngalande Director of Plantations (Deceased 22 December 2021)
Mr. Mutengo Sindano Director Business Development
Mr. Wilbroad Katema Director Human Resource


Number of Employees and Remuneration
The total remuneration paid to permanent and fixed longer-term contract employees during the year amounted to
ZMW117,089,313 (2020: ZMW 96,028,958) as disclosed at note 12 of the notes to the financial statements. The average
number of permanent and fixed longer-term contract employees during the year were as follows:
Month Number Month Number

January 347 July 343
February 346 August 340
March 369 September 341
April 345 October 342
May 345 November 341
June 343 December 342
In addition, during the year, the average number of seasonal and short-term contracts employees was 11,591 (2020: 7,799).
Gifts and Donations
During the year, the Corporation made donations of ZMW13,984,162 (2020: ZMW15,185,890) to various organisations
and events. Included in these figures is the support to Forest Rangers Football Club. The contributions are included in the
administrative expenses as disclosed at note 12 in the notes to the financial statements.
Property, Plant and Equipment
Additions to property, plant and equipment during the year amounted to ZMW27,321,547 (2020: ZMW30,678,565) as
disclosed at note 19 in the notes to the financial statements. In the opinion of the Directors, the carrying value of property,
plant and equipment is not less than its recoverable amount.
Exports
The Corporation was granted timber export permits by the then Ministry of Lands and Natural Resources to export Mukula
logs. During the year, the value of Mukula logs exported by the Corporation was ZMW29,993,921 (2020: ZMW4,799,302) as
disclosed at note 8 in the notes to the financial statements. All the Mukula exported was purchased from concession licence
and felling permits holders.
In the year 2017, the Government appointed the Corporation as its agent to sell confiscated Mukula logs on its behalf. The sale
proceeds from the confiscated Mukula logs were earmarked for the recapitalisation of Kawambwa Tea Industries Limited.
The cumulative proceeds are held in a dedicated bank account whose balance was ZMW7,639,299 (2020: ZMW 17,709,786)
as disclosed at note 22 in the notes to the financial statements.
Related Party Transactions
The Corporation has a related party relationship with its Directors, senior management (key management and other
managers), the IDC (majority shareholder) and its group of companies. Details of the related party transactions are disclosed
at note 28 in the notes to the financial statements.
Directors’ Remuneration
Directors’ remuneration paid during the year was ZMW2,711,359 (2020: ZMW2,150,568), details of remuneration paid are
disclosed at note 28 in the notes to the financial statements.


Risk Management and Control
The Corporation is committed to ensuring that in the conduct of its operations, there will is an appropriate balance between
risk and reward, giving full and due consideration to the legitimate and fair expectations of all stakeholders, resources
constraints and sustainable developments. In this regard, risk management is an integral part of all the Corporation’s decision-
making processes, and enterprise risk management principles and procedures are adopted in the management of risks.
Compliance Function
The Corporation is listed on the Lusaka Securities Exchange (LuSE) and is required to comply with the Exchange’s Code of
Governance. Further the Directors confirm that the Corporation is not in violation of any laws and regulations that would
have a material adverse effect on the operations of the business.
Occupational Health and Safety
The Corporation recorded seventy-four (74) cases of COVID-19 infections among its employees, out of which 73 employees
fully recovered and only one employee died from such infection. The Corporation implemented COVID-19 preventive and
surveillance measures in accordance with Government’s health guidelines to keep employees safe, while maintaining the
security and integrity of the business operations by minimizing the adverse impact of the pandemic on the operational
and financial performance of the business. The Ministry of Health was engaged to conduct on-site COVID-19 testing and
vaccination programs across the Corporations on a regular basis. A total of 199 employees have been vaccinated against the
pandemic.
The Corporation is committed to ensuring all its operations are conducted in a manner that does not compromise the well-
being of the environment, in this regard, its hazardous waste is managed in an environmentally friendly manner.
In an effort to improve the safety culture of the corporation, health and safety awareness meetings were conducted with
employees across the stations to educate them on; hazard reporting, injury management, accident prevention and reporting,
and hazardous waste management. A fire-fighting drill was conducted by Ndola Fire Brigade to educate staff on basic fire
safety and how to operate fire-fighting equipment in cases of emergency. As part of accident prevention measures, Seasonal
workers engaged in activities such as weeding, land preparation, pilling, stumping and planting were inducted to sensitize
them on the risks associated with their nature of work, accident reporting procedures and First Aid arrangements. Further, an
in house logging training was conducted with 104 participants comprising seasonal workers and chainsaw operators.
The Corporation wellness activities included quarterly on-site screening for Diabetes, Blood Pressure, HIV and Eye sight for
employees.


Impact of the COVID-19 Pandemic on Business
On 11 March 2020, the World Health Organization declared the Coronavirus disease (COVID-19) a global pandemic. Many
governments are taking increasingly stringent steps to help contain the spread of the virus, including requiring self-isolation/
quarantine by those potentially affected, getting vaccinated, implementing social distancing measures, and controlling or
closing borders and “locking-down” cities/regions or even entire countries. The pandemic is an unprecedented challenge for
humanity and for the economy globally, and at the date of finalization of the financial statements its effects were subject to
significant levels of uncertainty.
While the COVID-19 pandemic impacted negatively on the operations of businesses globally and in Zambia, the overall
performance of the Corporation remained satisfactory. Nonetheless, the Corporation had to adjust its programmes and
activities to minimise the adverse impact of the pandemic on the operational and functional performance of its business.
The Corporation has continued to undertake various interventions to minimise exposure of employees and clients to
COVID-19 while at the same time ensuring compliance to Government’s health guidelines. Some of the interventions include
employee COVID-19 awareness, facilitation of social distancing in offices and other operating areas, provision of adequate
Personal Protective Equipment (PPE), encouraging employees to get vaccinated and mass testing for employees as well as
facilitation of medical care or allow for self-isolation for those who test positive.
The impact of the COVID-19 pandemic on the Corporation’s operations will continue to be closely monitored and assessed.
The Directors will continue to review and where necessary take measures to enhance safety and well-being of employees and
other stakeholders throughout the pandemic period. The Directors have assessed impact on the financial performance of the
Corporation and give assurance that the pandemic does not materially affect the going concern of the Corporation.
Other Material Facts, Circumstances and Events
The Directors are not aware of any material fact, circumstance or event which occurred between the accounting date, the
date of reporting, and the date of approval of these accounts, which might influence an assessment of the Corporation’s
financial position or the results of its operations.
Corporation Auditors and Remuneration
In accordance with the provision of the Articles of Association of the Corporation, the Auditors, Messrs KPMG Chartered
Accountants, will retire as Auditors of the Corporation at the forthcoming Annual General Meeting and, having expressed
willingness to continue in office, a resolution for their re-appointment and fixing their remuneration will be proposed at the
Annual General Meeting.
The Auditors’ remuneration for the year was ZMW959,000 (2020: ZMW 727,620).
By order of the Board
_____________________________________ _____________________________________
Director Director
Ndola
Date: 25 April 2022

Directors’ responsibilities in respect of the preparation of financial statements

The Companies Act No. 10 of 2017 of Zambia requires the Directors to prepare financial statements for each financial year
that give a true and fair view of the state of affairs of the Corporation as at the end of the financial year and of its financial
performance. It also requires the Directors to ensure that the Corporation keeps proper accounting records that disclose,
with reasonable accuracy, the financial position of the Corporation. They are also responsible for safeguarding the assets
of the Corporation. The Directors are further required to ensure the Corporation adheres to the corporate governance
principles or practices contained in Part VII’s Sections 82 to 122 of the Companies Act of Zambia.
The Directors are responsible for the annual financial statements, which have been prepared using appropriate accounting
policies supported by reasonable estimates, in conformity with International Financial Reporting Standards (IFRS) and the
requirements of the Companies Act and Securities Act of Zambia.
The Directors are also responsible for the maintenance of accounting records that may be relied upon in the preparation
of financial statements, and for such internal controls as the Directors determine necessary to enable the preparation of
financial statements that are free from material misstatement whether due to fraud or error.
The Directors are of the opinion that the financial statements set out on pages 44 to 89 give a true and fair view of the
state of the financial affairs of the Corporation and of its financial performance in accordance with International Financial
Reporting Standards (IFRS) and the Companies Act and Securities Act of Zambia. The Directors further report that they have
implemented and further adhered to the corporate governance principles or practices contained in Part VII’s Sections 82 to
122 of the Companies Act of Zambia.
Nothing has come to the attention of the Directors to indicate that the Corporation will not remain a going concern for at
least twelve months from the date of this statement.
Signed on behalf of the Board of Directors
_____________________________________ _____________________________________
Director Director

Zambia
Zambia Forestry
Forestry and Forest Industries
and Forest Industries Corporation
CorporationPLC
PLC
kpmg
KPMG Chartered Accountants Telephone +260 211 372 900
6th Floor Sunshare Towers, Telephonewww.kpmg.com
Website +260 211 372 900
6th Floor Sunshare Towers, Website www.kpmg.com
Cnr Lubansenshi / Katima Mulilo Roads,
Olympia Park,
Olympia Park,
P.O Box 31282
P.O Box 31282
Lusaka, Zambia
Lusaka, Zambia
Independent auditor’s report

To the shareholders of Zambia Forestry and Forest Industries Corporation Plc
To the Shareholders of Zambia Forestry and Forest Industries Corporation PLC
Report
Report onon
thethe audit
audit of theof the financial
financial statements
statements
Opinion
Opinion
We
We havehave audited
audited the financial
the financial statementsstatements of Zambia
of Zambia Forestry Forestry
and Forest and
Industries Forest Industries
Corporation Corporation
Plc (“the Corporation”) set
Plc (“the
out on pagesCorporation”) setcomprise
44 to 89, which out on the
pages 35 toof85,
statement whichposition
financial compriseas atthe statement2021,
31 December of financial position as
and the statements of
profit
at 31 or loss and other
December 2020,comprehensive income, changes
and the statements of profitinor
equity
lossand
andcash flows
other for the year then
comprehensive ended, and
income, the notes
changes to the
in equity
financial
and cashstatements, including
flows for the a summary
year ended, andofthe
significant
notes to accounting policies.
the financial statements, including a summary of significant
accounting policies.
In our opinion, these financial statements give a true and fair view of the financial position of Zambia Forestry and Forest
Industries Corporation Plc as at 31 December 2021, and of its financial performance and cash flows for the year then ended in
In our opinion, these financial statements give a true and fair view of the financial position of Zambia Forestry
accordance with International Financial Reporting Standards and in compliance with the requirements of the Companies Act
and Forest Industries Corporation Plc as at 31 December 2020, and of its financial performance and cash flows
and the Securities Act of Zambia.
for the year ended in accordance with International Financial Reporting Standards and in compliance with the
requirements of the Companies Act and the Securities Act of Zambia.
Basis for opinion
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 financial statements section of our report.
We
We conducted our audit
are independent of thein Corporation
accordance with International
in accordance with Standards on Auditing
the International Ethics(ISAs). Our Board
Standards responsibilities under
for Accountants’
those standards
International Code ofare further
Ethics described
for Professional in the Auditor’s
Accountants (includingResponsibilities for the audit
International Independence of the (IESBA
Standards) financial Statements
Code) together
section of ourrequirements
with the ethical report. We that are are
independent of the
relevant to our auditCorporation in statements
of the financial accordance with the
in Zambia, andInternational Ethics
we have fulfilled our
Standards Board for Accountants’ International Code of Ethics for Professional Accountants (including International
other ethical responsibilities in accordance with these requirements and the IESBA Code. We believe that the audit evidence
we have obtained
Independence is sufficient
Standards) and appropriate
(IESBA to provide
Code) together witha basis for our opinion.
the ethical requirements that are relevant to our audit of
the financial statements in Zambia, and we have fulfilled our other ethical responsibilities in accordance with
Key audit matter
these requirements and the IESBA Code. We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our opinion.
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial
statements of the current period. These matters were addressed in the context of our audit of the financial statements as a
Key audit
whole, andmatter
in forming our opinion thereon, and we do not provide a separate opinion on these matters.
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit
of the financial statements of the current period. These matters were addressed in the context of our audit of
financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion
on these matters.
KPMG Chartered Accountants a Zambian partnership, and member firm of Partners: A list of the partners is available at the above
the KPMG global organisation of independent member firms affiliated with mentioned address
KPMG International Limited a private English Company by guarantee.
All rights reserved.
30 40 Annual Report
Annual 2020
Report 2021
Zambia Forestry and Forest Industries Corporation PLC Zambia Forestry and Forest Industries Corporation PLC
kpmg
Valuation of biological assets6th Floor Sunshare Towers, Website www.kpmg.com
Olympia Park,
See note 6 use of judgementsP.Oand estimates, note 7 change in accounting policy, note 16 biological assets and note 36(e)
Box 31282
Lusaka, Zambia
significant accounting policies
Key audit matter How the matter was addressed in our audit
The Corporation’s biological assets comprised 88% of total Our audit procedures in this area included:

assets as at 31 December 2021, which include eucalyptus
and pine trees (standing timber) which are measured at fair
• With the involvement of our valuation expert, we
evaluated the appropriateness of the methodology and
value less estimated costs to sell. In the current year the
To the shareholders
Corporation of Zambia
changed its accounting policy fromForestry
accounting and Forest Industries Corporation Plc
assumptions used in the valuation model against the
requirements of IAS 41 Biological Assets (IAS 41) and
for the biological assets at cost to the fair value model
IFRS 13;
Report
resulting inon the audit
an increase in the of the financial
biological statements
assets of Kwacha
2.2 billion. • We evaluated the qualifications, competence,
Opinion independence and integrity of the independent external
Biological assets are measured at fair value in terms of level
valuer;
3 of the fair value hierarchy in terms IFRS 13, Fair value
We have audited
measurement (IFRS 13)the. financial statements of Zambia • WeForestry
evaluatedand Forest Industries
the Corporation’s inputs Corporation
such as the
Plc (“the Corporation”) set out on pages 35 to 85, whichdiscount comprise the
rate statement
which of financial
we verified position
against an as
external
The valuation requires complex measurements and
at 31 December 2020, and the statements of profit or loss and other
source andcomprehensive income,
for the yield rates, changes the
we recomputed in equity
rates
involves estimation uncertainty and was determined with
and
the cash flowsof
assistance foranthe year ended,
independent and the
external notes
valuer. tokey
The the financial
usingstatements,
internal data;including a summary of significant
accounting
inputs and policies.
assumptions involving significant estimation, • We recalculated the fair value of biological assets and
judgement and having the most significant impact on the compared it with management’s computation; and
Infair
our opinion, these financial statements give
value of the asset are the discount and yield rates.a true and fair view of the financial position of Zambia Forestry
and Forest Industries Corporation Plc as at 31 December• 2020, We assessed the adequacy of the disclosures,
and of its financial performance and cash flows
Given the transition required disclosures, complexity, including disclosures in the financial statements in
significant estimation and judgement involved in the accordance with the requirements of IAS 41, IFRS 13,
requirements of the Companies Act and the Securities Act of Zambia.
determination of the fair value of the biological assets, which IAS 1 Presentation of financial statements and IAS 8
required an increased audit effort we have determined the accounting policies, changes in accounting estimates
Basis for opinion and errors.
valuation of biological assets to be a key audit matter.
We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under
Other information
those standards are further described in the Auditor’s Responsibilities for the audit of the financial Statements
section of our
The directors arereport. We are
responsible independent
for the of the The
other information. Corporation in accordance
other information compriseswith
the the International
information Ethics
in the Annual
Standards
Report 2021 Board
whichfor Accountants’
includes International
the Directors’ Code
Report as of Ethics
required for Companies
by the ProfessionalAct
Accountants (including
of Zambia but International
does not include the
Independence and our(IESBA
Standards)
financial statements auditor’sCode) together
report thereon.with the ethical requirements that are relevant to our audit of
Our opinion
these on the financial
requirements and thestatements does not
IESBA Code. Wecover the that
believe otherthe
information and we we
audit evidence do not express
have an audit
obtained opinion orand
is sufficient any
form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so,
Key audit matter
consider whether the other information is materially inconsistent with the 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.
on these matters.
Responsibilities of the directors for the financial statements
The directors are responsible for the preparation of financial statements that give a true and fair view in accordance
with International Financial Reporting Standards and in compliance with the requirements of the Companies Act and the
Securities Act of Zambia, and for such internal control as the directors determine is necessary to enable the preparation of
financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements,

KPMG Chartered theAccountants
directors are partnership,
a Zambian responsible for assessing
and member firm of the Corporation’s
Partners: A list of the partnersability
is availableto continue
at the above as a
going concern, disclosing, as applicable,
KPMG Internationalmatters related
Limited a private Englishto goingby concern
Company guarantee. and using the going concern basis of accounting
unless the directors either intend to liquidate the Corporation or to cease operations, or have no realistic alternative but to
do so.
30 Annual Report 2020 Annual Report 2021 41

Zambia Forestry
Zambia Forestry and
and Forest
ForestIndustries
IndustriesCorporation
CorporationPLC
PLC
kpmg
6th Floor Sunshare Towers, Website www.kpmg.com
Auditor’s responsibilities for the audit of /the
Cnr Lubansenshi financial
Katima statements
Mulilo Roads,
Olympia Park,
P.O Box 31282
Lusaka, Zambiaassurance about whether the financial statements as a whole are free from material
Our objectives are to obtain reasonable
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
financial statements.
To the shareholders of Zambia Forestry and Forest Industries Corporation Plc
As part of an audit in accordance with ISAs, we exercise professional judgement and maintain professional scepticism
throughout the audit. We also:
Report on the audit of the financial statements
• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design
Opinion
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
We havefor oneaudited
resulting the financial
from error, statements
as fraud may involveof Zambia
collusion, Forestry
forgery, and omissions,
intentional Forest Industries Corporation
misrepresentations, or the
Plc (“the Corporation”)
override set out on pages 35 to 85, which comprise the statement of financial position as
of internal control.
at 31 December 2020, and the statements of profit or loss and other comprehensive income, changes in equity
• Obtain
and cash anfor
flows understanding of internal
the year ended, control
and the notesrelevant to the audit
to the financial in order including
statements, to design a
audit procedures
summary that are
of significant
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
accounting policies.
Corporation’s internal control.
In our opinion, these financial statements give a true and fair view of the financial position of Zambia Forestry
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related
and Forest Industries Corporation Plc as at 31 December 2020, and of its financial performance and cash flows
disclosures made by the directors.
requirements
• Concludeofonthe
theCompanies Act and
appropriateness the
of the Securities
directors’ Act
use of theofgoing
Zambia.
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
Basis for opinion
doubt on the Corporation’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 financial statements or, if such
We conducted our
disclosures areaudit in accordance
inadequate, with
to modify our International Standardsare
opinion. Our conclusions onbased
Auditing (ISAs).
on the auditOur responsibilities
evidence obtained upunder
to the
those date
standards are further
of our auditor’s described
report. However,infuture
the Auditor’s Responsibilities
events or conditions for the
may cause audit of thetofinancial
the Corporation cease toStatements
continue as
sectiona going
of our report. We are independent of the Corporation in accordance with the International Ethics
concern.
• EvaluateStandards)
Independence the overall (IESBA
presentation,
Code)structure
togetherand content
with of the financial
the ethical statements,
requirements including
that are the to
relevant disclosures,
our auditand
of
whether the financial statements represent the underlying transactions and events in a manner
the financial statements in Zambia, and we have fulfilled our other ethical responsibilities in accordance that achieveswith
fair
presentation.
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.
Key audit matter
We also provide the directors with a statement that we have complied with relevant ethical requirements regarding
Key audit matters
independence, are those matters
and communicate that,
with them allinrelationships
our professional judgement,
and other were
matters that ofreasonably
may most significance in to
be thought our audit
bear on
of the financial statements of the current period. These matters were addressed in the
our independence, and where applicable, actions taken to eliminate threats or safeguards applied. context of our audit of
on these
From matters.communicated with the directors, we determine those matters that were of most significance in the
the matters
audit of the 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.
3042 Annual Report

Annual 2020
Report 2021
Zambia Forestry and Forest Industries Corporation PLC Zambia Forestry and Forest Industries Corporation PLC
Zambia
Zambia Forestry
Forestry andand Forest
Forest Industries
Industries Corporation
Corporation PLCPLC
kpmg
kpmg
kpmg
From the matters communicated
6th Floor Sunshare Towers,
with the
Cnr Lubansenshi directors,
/ Katima
Telephone +260 211 372 900
Website www.kpmg.com
we determine those matters that were of most significance in the
Mulilo Roads,
Olympia Park,
audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters
P.O Box 31282
in our auditor’s report unlessLusaka,
law or regulation precludes public disclosure about the matter or when, in extremely rare
Zambia
Report
Report on on other
other
circumstances, legal
legal
we andand regulatory
regulatory
determine that requirements
requirements
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.
Companies
Companies ActAct of Zambia
of Zambia
Independent auditor’s
Report on other legal and report
regulatory requirements
In accordance
In accordance with
with Section
Section 259259
(3) (3) (a) the
(a) of of the Companies
Companies ActAct of Zambia
of Zambia (the(the Act),
Act), we we consider
consider andand report
report that:
that:
Companies Act of Zambia
To thethere
• • there
shareholders
is no
is no relationship,
of
relationship,
Zambia
interest
interest or debt
Forestry
or debt
we we have
have
and
with
with
Forest
thethe
Industries
Company;
Company; andand
Corporation Plc
In accordance with Section 259 (3) (a) of the Companies Act of Zambia (the Act), we consider and report that:
• Report
• there on
there
were the
were
no noaudit
serious ofbreaches
serious the financial
breaches of corporate statements
of corporate governance
governance principles
principles or practices
or practices by by
thethe directors.
directors. ThisThis
• there is no relationship, interest or debt we have with the Company; and
statement is made on the basis of the corporate governance provisions of the Act, Part VII
statement is made on the basis of the corporate governance provisions of the Act, Part VII – Corporate – Corporate
Opinion Governance
Governance of the
of the Companies
Companies ActAct of Zambia.
of Zambia.
• there were no serious breaches of corporate governance principles or practices by the directors. This statement
We is made
have on the basis
audited the of the corporate
financial governance
statements of provisions of the Act,and
Zambia Forestry Part VII – Corporate
Forest Governance
Industries of the
Corporation
Securities
Securities ActAct
of
Companies
ofAct
Zambia
Zambia of Zambia.
Plc (“the Corporation”) set out on pages 35 to 85, which comprise the statement of financial position as
InatIn31 December
accordance
accordance
Securities Act ofwith
2020,
with
Rule
Zambia
and
Rule18 18thethe
of ofstatements
the of(Accounting
Securities
Securities profit or lossand
(Accounting and other
and comprehensive
Financial
Financial Reporting
Reporting income, changes
Requirements)
Requirements) in (SEC
equity
Rules
Rules (SEC
and cash
Rules),
Rules), flows Instrument
for Instrument
Statutory
Statutory the yearNo.163
ended,
No.163and ofthe
of 1993, notes
1993,
we we toconsider
the financial
consider andand statements,
report
report that: including a summary of significant
that:
accounting
In accordancepolicies.
with Rule 18 of the Securities (Accounting and Financial Reporting Requirements) Rules (SEC Rules), Statutory
• TheThe
• Instrument statement
statement
No.163 of of of financial
financial
1993, position
position
we consider andand and statement
statement
report that: of profit
of profit or loss
or loss andand other
other comprehensive
comprehensive income
income werewere
In ourinopinion,
in these
agreement financial
with the statements
Corporation’s give a true
accounting
agreement with the Corporation’s accounting records; and and fair
records;view of
and the financial position of Zambia Forestry
and
• Forest Industries
The statement of Corporation Plcand
financial position as at 31 December
statement of profit2020,
or lossand of its comprehensive
and other financial performance andincash
income were flows
agreement
• for
• the year
We ended
have in accordance
obtained all the with International
information and Financial
explanations Reporting
which, toStandards
the best and
of
We have obtained all the information and explanations which, to the best of our knowledge and belief,
with the Corporation’s accounting records; and ourin compliance
knowledge with
and the
belief,
requirements
were
were of the Companies
necessary
necessary for for
thethe Act and
purposes
purposes of the Securities
of our
our audit. Act of Zambia.
audit.
• We have obtained all the information and explanations which, to the best of our knowledge and belief, were necessary
Basis for
foropinion
the purposes of our audit.
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 financial Statements
section of our report. We are independent of the Corporation in accordance with the International Ethics
KPMG Chartered Accountants 3 May 2022
KPMG
KPMG Chartered
Chartered
Independence Accountants
Accountants
Standards) 28 28
(IESBA Code) together with the ethical requirements that are relevant MayMay 2021
to2021
our audit of
Cheelo Hamuwele AUD/F001044
Key
Cheeloaudit
Cheelo matter
Hamuwele
Hamuwele AUD/F001044
AUD/F001044
Partner signing on behalf of the Firm
Partner
Partner signing
signing on behalf
on behalf of the
of the firmfirm
on these matters.
30 Annual Report 2020 Annual Report 2021 43

Statement of financial position

as at 31 December 2021
In Zambian Kwacha
Notes 2021 2020
ASSETS
Non – current assets
Biological assets 16 2,875,733,228 730,080,274
Property, plant and equipment 19 100,229,114 95,721,685
Intangible asset 17 272,332 424,209
Right of use asset 18(ii) 218,514 72,669
Deferred tax assets 15 - 3,400,542
2,976,453,188 829,699,379
Current assets
Inventories 20 24,017,914 35,092,397
Trade and other receivables 21 29,547,140 22,382,836
Amounts due from related parties 28(vi) 163,712,294 191,825,492
Cash and cash equivalents 22 86,054,261 149,334,676
303,331,609 398,635,401
Total assets 3,279,784,797 1,228,334,780
EQUITY AND LIABILITIES
Capital and reserves

Share capital 23 100,000,000 100,000,000
Share premium 24 126,694,476 126,694,476
Revaluation reserve 2,073,564 2,514,849
Retained earnings 2,635,208,521 794,996,735
Equity attributable to Shareholders 2,863,976,561 1,024,206,060
Non-current liabilities
Employee benefits 25 63,228,680 29,127,307
Deferred capital grant 26 3,097,570 4,097,570
Deferred tax liabilities 15 204,416,701 -
270,742,951 33,224,877
Current liabilities
Trade and other payables 27(a) 76,824,243 49,458,881
Amounts due to related parties 28(v) 7,227,011 17,291,017
Dividend payable 27(b) 15,981,006 40,213,727
Lease liability 18(iii) 245,795 154,839
Current tax liability 14(c) 44,787,230 63,785,379
145,065,285 170,903,843
Total liabilities 415,808,235 204,128,720
Total equity and liabilities 3,279,784,797 1,228,334,780
These financial statements were approved by the Directors on 25 April 2022 and signed on its behalf by:
_________________________ _______________________
Director Director
The notes on pages 49 to 89 are an integral part of these financial statements.

Statement of profit or loss and other comprehensive income

In Zambian Kwacha
2021 2020
Notes
Revenue 8 366,636,254 283,347,230

Cost of sales 9 (115,456,392) (74,497,752)
Gross profit 251,179,862 208,849,478
Other income 10 7,805,189 141,305,204
Recognition of fair value of biological asset 16 2,210,320,664 -
Administrative expenses 12 (361,171,696) (92,729,944)
Profit from operations 2,108,134,019 257,424,738
Finance income 13 3,715,398 12,771,302

Finance cost 13 (13,240,055) (9,814,568)
Net finance (cost) / income (9,524,657) 2,956,734
Profit before taxation 2,098,609,362 260,381,472

Income tax 14 (223,167,546) (31,617,367)
Other comprehensive income

Items that are or may be reclassified subsequently to profit or loss
Remeasurement of defined benefit liability 25 (26,484,000) (1,270,000)

Related tax 15 2,648,400 127,000
Total comprehensive income (23,835,600) (1,143,000)
Total comprehensive income for the year 1,851,606,216 227,621,105

Earnings per share
Basic earnings per share 34 4.69 0.58

Statement of changes in equity
46
In Zambian Kwacha
Share Share Revaluation Retained

capital premium reserves earnings Total
Balance at 1 January 2020 82,500,763 - 2,956,134 605,023,370 690,480,267

Total comprehensive income for the year
Annual Report 2021

Profit for the year - - - 228,764,105 228,764,105
Remeasurement of employee benefits (note 25(i)) - - - (1,270,000) (1,270,000)
Deferred tax on employee benefits (note 15) - - - 127,000 127,000
Amortisation of revaluation reserve (605,570) 605,570 -
Movement on deferred tax (note 15) - - 164,285 - 164,285
Transactions with owners recognised directly in equity

Issue of share capital 17,499,237 126,694,476 - - 144,193,713
Listing expenses - - - (1,203,738) (1,203,738)
Dividend (note 27(b)) - - - (37,049,572) (37,049,572)
Balance at 31 December 2020 100,000,000 126,694,476 2,514,849 794,996,735 1,024,206,060
Balance at 1 January 2021 restated 100,000,000 126,694,476 2,514,849 794,996,735 1,024,206,060

Total comprehensive income
Profit for the year - - - 1,875,441,816 1,875,441,816
Remeasurement of employee benefits (note 25(i)) - - - (26,484,000) (26,484,000)
Deferred tax on employee benefits - - - 2,648,400 2,648,400
Amortisation of revaluation reserve - - (605,570) 605,570 -
Movement on deferred tax (note 15) - - 164,285 - 164,285
Dividend paid (note 27(b)) (12,000,000) (12,000,000)
Balance at 31 December 2021 100,000,000 126,694,476 2,073,564 2,635,208,521 2,863,976,561
Statement of changes in equity (continued)

Retained Earnings
Retained earnings consist of brought forward recognised income, net of expenses, plus current year profit attributable to
Shareholders, less dividends paid.
The Corporation did not incur any listing expenses during the period (2020: ZMW 1,203,738). The listing expenses for 2020
relate to retention of advisors and specialized secretaries as a consequence of its public listing on the Lusaka Securities
Exchange on 12 February 2020.
Revaluation Reserve
The revaluation reserve comprises gains and losses on the revaluation of property, plant and equipment.
Share Premium
Share premium represents the amounts paid by Shareholders, over the nominal value, for their shares.

Statement of cash flows

In Zambian Kwacha
Notes 2021 2020
Cash flows from operating activities

Adjustments for non-cash items:
- Income tax 14 223,167,546 31,617,367
- Finance income 13 (3,715,398) (10,637,471)
- Depreciation on property, plant and equipment 19 22,814,118 22,306,515
- Depreciation on right of use asset 18 (ii) 145,502 145,108
- Amortisation of intangible assets 17 233,475 241,848
- Amortisation of grant 10 (1,000,000) (1,000,000)
- Gain on sale of motor vehicles 11 - (28,029)
- Harvested costs 16 (a) 65,605,730 63,289,082
- Volume gains 16 (a) (938,020) (2,966,439)
- Recognition of fair value of biological asset 16 (a) (2,210,320,664) -
(28,565,895) 331,732,086
Changes in working capital:
- Inventories 11,074,483 1,076,974
- Trade and other receivables (7,164,304) 14,182,899
- Amounts due from related parties 28,113,198 (163,510,141)
- Trade and other payables 27,365,362 (13,319,551)
- Amounts due to related parties (10,064,006) (14,138,859)
- Employee benefits 7,617,373 7,739,941
Cash generated from operations 28,376,211 163,763,349
Tax paid 14 (c ) (31,535,767) (2,094,417)

Net cash(used in)/generated from operating activities (3,159,556) 161,668,932
Investing activities
Interest received 13 3,715,398 10,637,471
Purchase of equipment 19 (27,321,547) (30,678,565)
Acquisition on plantation formation 12 - (175,698,107)
Acquisition on intangible assets 17 (81,598) (72,544)
Proceeds from sale of motor vehicles 11 - 220,000
Acquisition of right-of-use asset 18 (ii) (291,347) -
Net cash used in investing activities (23,979,094) (195,591,745)
Financing activities
Listing expenses - (1,203,738)
Proceeds from the issue of shares 24 - 144,193,713
Acquisition/(repayments) on lease liability 18(iii) 90,956 (91,811)
Payment of dividends 27 (36,232,721) (33,175,640)
Net cash (used in)/ generated from financing activities (36,141,765) 109,722,524
(Decrease)/increase in cash and cash equivalents (63,280,415) 75,799,711
Cash and cash equivalents at the beginning of the year 149,334,676 73,534,965
Cash and cash equivalents at end of year 22 86,054,261 149,334,676
Represented by:
Cash in hand and at bank 78,414,962 91,624,890
Fixed deposits - 40,000,000
Restricted funds 7,639,299 17,709,786
86,054,261 149,334,676

Notes to the financial statements

1 Corporate Information
Zambia Forestry and Forest Industries Corporation PLC (“the Corporation”) is incorporated in Zambia under the
Companies Act, No. 10 of 2017 as a public limited company in Zambia. The address of its registered office is:
Stand No. S/Ndola/10473093
Dola Hill
P O Box 71566
NDOLA
2 Principal Activities of the Corporation
The principal activity of the Corporation is the establishment and management of exotic timber plantations from
which roundwood and other timber products are produced for sale.
3 Shareholders
The Corporation was publicly listed on the Lusaka Securities Exchange on 12 February 2020.
The listing followed the Initial Public Offering (IPO) and third party sale of shares which resulted in increase of
Shareholders from two (Industrial Development Corporation and the Secretary to the Treasury, who held 99% and 1%
shares respectively) to 1,136 Shareholders.
4 Basis of Accounting
The financial statements are prepared in accordance with the requirements of the Companies Act and the Securities
Act of Zambia and International Financial Reporting Standards (IFRSs).
The financial statements have been prepared under the historic cost basis except where otherwise stated. They were
authorised for issue by the Corporation’s Board of Directors on 25 April 2022
The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting
estimates. It also requires Management to exercise its judgement in applying the Corporation’s accounting policies.
The areas involving a higher degree of judgement or complexity, or as areas where assumptions and estimates are
significant to the financial statements, are disclosed in note 6 to the financial statements.
Details of Corporation policies are included in note 36 to the financial statements.

Notes to the financial statements (continued)

4.1 Going Concern
Zambia Forestry and Forest Industries Corporation (ZAFFICO) PLC’s, main business focus is to establish and manage
industrial exotic forest and agroforestry products. Exotic forests are one of the major sources of livelihood for many
people in Zambia, especially on the Copperbelt. It is therefore important that exotic forests are established and
managed in a sustainable manner. In accordance with the Corporation strategic plan which runs for a period of five
years, from 2020 to 2024, the Corporation plans to improve the management of forest plantations, by establishing
new plantations and replanted cleared felled areas with high quality seedlings to ensure that the plantations are
stocked with superior timber for the future. The Corporation plans to expand forest plantations by 3,000 hectares,
on an annual basis, replant all clear felled areas by 3,000 hectares annually, establish 40 hectares of seed orchard,
procure equipment and machinery to support plantation activities, enhance stakeholder engagement and put in place
policies and procedures in order to improve efficiency, service delivery and maximise profits for the Shareholders.
The Corporation has continued to enhance sustainable wood harvesting by striving to equate wood cut per year
to annual allowable cut. Additionally, the Corporation has broadened its scope of diversification/value addition by
entering into related business ventures in order to increase the product range, provide additional revenue sources and
reduce over-reliance on roundwood in the long term. In pursuit of diversifying its product portfolio, the Corporation
plans to undertake a detailed analysis to determine the viability of venturing into sawmilling business to enhance
Shareholder value while at the same time ensure steady supply of timber to the local market. The Corporation plans
to import timber to supplement depleting stock.
Impact of the COVID-19 Pandemic on Business
On 11 March 2020, the World Health Organization declared the Coronavirus disease (COVID-19) a global pandemic.
Many governments are taking increasingly stringent steps to help contain the spread of the virus, including requiring
self-isolation/quarantine by those potentially affected, getting vaccinated, implementing social distancing measures,
and controlling or closing borders and “locking-down” cities/regions or even entire countries. The pandemic is an
unprecedented challenge for humanity and for the economy globally, and at the date of finalization of the financial
statements its effects were subject to significant levels of uncertainty.
Despite the COVI-19 pandemic negative impact on various businesses globally and in Zambia, it did not have a
significant impact on the operational and functional performance of its business.
The Corporation has continued to undertake various interventions to minimise exposure of employees and clients to
COVID-19 while at the same time ensuring compliance to Government’s health guidelines. Some of the interventions
include employee COVID-19 awareness, facilitation of social distancing in offices and other operating areas, provision
of adequate Personal Protective Equipment (PPE), encouraging employees to get vaccinated and mass testing for
employees as well as facilitation of medical care or allow for self-isolation for those who test positive.
The impact of the COVID-19 pandemic on the Corporation’s operations will continue to be closely monitored and
assessed. The Directors will continue to review and where necessary take measures to enhance safety and well-being
of employees and other stakeholders throughout the pandemic period. The Directors have assessed impact on the
financial performance of the Corporation and give assurance that the pandemic does not materially affect the going
concern of the Corporation.


5 Functional and Presentation Currency
These financial statements are presented in Zambian Kwacha (“the Kwacha”) which is the Corporation’s functional
currency. All amounts have been rounded to the nearest Kwacha, unless otherwise stated.
6 Use of Judgements and Estimates
In preparing these financial statements, Management has made judgements, estimates and assumptions that affect
the application of the Corporation’s accounting policies and the reported amounts of assets, liabilities, income and
expenses. Actual results may differ from these estimates.
a) Judgements
Information about judgements made in applying accounting policies that have the most significant effects on
the amounts recognised in the financial statements is included in the following notes:
§ Note 15 – recognition of deferred tax assets: availability of future taxable profit against which carry
forward tax losses can be used.
§ Note 16 – valuation of biological assets: whether the assets should be carried at cost or fair value.
b) Assumptions and estimation uncertainties
Information about assumptions and estimation uncertainties at 31 December 2021, that have a significant risk
of resulting in a material adjustment to the carrying amounts of assets and liabilities in the next financial year
is included in the following notes:
§ Note 16 – determining the fair value of biological assets on the basis of significant unobservable input:
§ Note 25 – measurement of defined benefits obligation: key actuarial assumptions; and
§ Note 32 – recognition and measurement of provisions and contingencies: key assumptions about the
likelihood and magnitude of an outflow of resources.
Measurement of fair value
A number of the Corporation’s accounting policies and disclosure require the measurement of fair values, for
both financial and non-financial assets and liabilities.
The Corporation has an established control framework with respect to the measurement of fair values.


6 Use of Judgements and Estimates (continued)
b) Assumptions and estimation uncertainties (continued)
When measuring the fair value of an asset or a liability, the Corporation uses market observable 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); and
§ 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 might be categorised in 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 significant to the entire measurement.
Further information about the assumptions made in measuring fair values is included in the following note:
§ Note 16 – determining the fair value of biological assets on the basis of significant unobservable input:
§ Note 25 – Deferred benefits: post- employment benefits; and
§ Note 29 – Financial instruments - fair value and risk management.
Estimates and judgements are continually evaluated and are based on historical experience and other factors
including experience of future events that are believed to be reasonable under the circumstances.
7 Changes in Significant Accounting Policies
During the year ended 31 December 2021, Management changed its accounting policy regarding the valuation of
biological assets. The change was made in order to provide Management with more useful and reliable information
about the value of the Corporation’s biological assets (Plantation in Formation) .
This change was carried out in accordance with IAS 8, Accounting Policies, Changes in Accounting Estimates and Errors
and applied prospectively. In the years before 2021, Management did not have adequate data to develop yield tables
or a management information system to predict average growth rates for each age group and species of Plantation in
Formation.
In addition, the Corporation is a dominant player in the growing and selling of exotic trees and there is no other local
market in the Country for identical or similar products so that a possible market price can be obtained. As a result, the
market tends to adopt the price as set by the Corporation.
The Corporation’s biological asset records were not sufficiently detailed to provide adequate information on the
valuation of the biological assets, therefore the change could not be applied retrospectively. Fair valuation of the
biological assets has only been achieved in the current year. The Corporation appointed independent external valuers
to determine the fair value of biological assets.
Accordingly, the adoption of the new policy has not been effected on the prior year. The effect on the current year is
an increase in the carrying amount of biological assets by ZMW 2,210,320,664 based on the valuation performed at
year end.


In Zambian Kwacha
8 Revenue
2021 2020
Pine saw logs 209,635,065 236,860,668

Eucalyptus treated logs 92,643,488 16,715,101
Eucalyptus untreated poles 3,872,832 57,789
Eucalyptus saw logs 25,597,523 22,674,852
Miscellaneous (Pine poles, Gmelina, salvage & firewood) 4,893,425 2,239,518
Mukula logs* 29,993,921 4,799,302
366,636,254 283,347,230
The Corporation generates revenue primarily from the sale of timber and related products to its customers.
All sales are earned at the point in time when the performance obligation has been met. This is in accordance with IFRS
15 Revenue from contracts with customers.
* All the sales for Mukula logs were exported in accordance with the permits obtained from the Ministry of Lands
and Natural Resources.
9 Cost of Sales
2021 2020
Stumpage Pine/Eucalyptus/Gmelina 64,130,460 61,339,254
Treated poles 42,605,066 12,007,366
Mukula 8,720,866 1,100,000
Seedlings - 51,132
115,456,392 74,497,752
10 Other Income
Sundry income * 6,775,692 140,258,394

Profit on disposal of assets (note 11) - 28,029
Service charges 29,497 18,781
Grant amortization (note 26) 1,000,000 1,000,000
7,805,189 141,305,204
* In 2020, sundry income included an amount of ZMW134,353,448, (VAT exclusive), in relation to compensation for
felled trees to pave way for the construction of the new Simon Mwansa Kapwepwe International Airport by the
Government of Republic of Zambia.
11 Profit on Disposal of Assets
2021 2020
Cost - 1,727,740
Less: accumulated depreciation - (1,535,769)
Net book value - 191,971
Sale proceeds - (220,000)
Gain on sale - (28,029)


In Zambian Kwacha
12 Administrative Expenses
2021 2020
Personnel expenses 117,089,313 96,028,958
Seasonal employee expenses 66,972,205 37,225,155
Short term contract employee expenses 21,224,663 18,935,889
Defined contribution plan (NAPSA) 7,547,159 5,813,394
Fuel and lubricants 15,005,412 13,735,414
Repairs and maintenance 15,906,526 10,584,381
Depreciation 22,493,797 21,883,195
Materials for operations 4,219,735 3,640,931
Directors' fees 2,711,359 2,150,568
Corporate social responsibility 13,984,162 15,185,890
General expenses 61,124,637 35,889,647
Insurance cost 12,892,728 7,354,629
361,171,696 268,428,051
Plantations in formation – Capitalised costs - (175,698,107)
361,171,696 92,729,944
* Under the cost model capitalised costs consisted of all expenses directly related to plantation management.
Additionally, 25% of all costs incurred at head office are capitalized to the PIF.
(see note 7 for details of change in accounting policy)
13 Net Finance Costs
Bank charges 2021 2020

Bank charges (3,432,909) (1,607,579)
Lease charge (47,709) (54,724)
Exchange losses (9,759,437) (8,152,265)
Finance costs (13,240,055) (9,814,568)
Interest receivable from banks 3,715,398 10,637,471

Exchange gains - 2,133,831
Finance income 3,715,398 12,771,302
Net finance income (9,524,657) 2,956,734


In Zambian Kwacha
14 Income Tax
a) Income tax expense in the income statement

2021 2020
Current tax expense 10,713,108 32,604,389
Prior year current tax under provision 1,824,510 -
Deferred tax expense /(credit) 210,064,973 (987,022)
Prior period deferred tax under provision 564,955 -
Income tax expense 223,167,546 31,617,367
b) Reconciliation of tax charge
Profit before income tax 2,098,609,362 260,381,472
Income tax using the Corporation's domestic tax rate 10% 209,860,936 10% 26,038,147
Non-deductible expenses 3,264,925 1% 3,170,341
Effect of income taxed at a lower rate 0% 7,652,220 1% 2,412,580
Current tax under provision - prior year 0% 1,824,510 -
Prior period deferred tax under provision 0% 564,955 -
Recognition of previously unrecognized provision 0% - 0% (3,701)
Total income tax expense 10% 223,167,546 12% 31,617,367
c) Tax liability reconciliation
Opening balance 63,785,379 33,275,407

Charge for the year 10,713,108 32,604,389
Prior year current tax under provision 1,824,510 -
Taxes paid during the year (31,535,767) (2,094,417)
44,787,230 63,785,379

56
In Zambian Kwacha
15 Deferred Tax
Net Balance at Recognised Recognised Balance Deferred Deferred

1-Jan-21 In income In equity 31-Dec-21 Tax Assets Tax Liabilities
Movement in temporary differences during the year
Property, plant and equipment - cost 5,078,805 777,465 - 5,856,270 - 5,856,270
Annual Report 2021

Right of use asset (8,217) 5,489 - (2,728) (2,728) -
Provision for stores deterioration (16,109) (57,734) - (73,842) (73,842) -
Provision for repatriation (229,400) 4,300 - (225,100) (225,100) -
Provision for leave days (540,731) 8,363 - (532,368) (532,368) -
Plantation in formation - volume gain 296,644 (296,644) - - - -
Provisions for bad debts (684,839) (95,889) - (780,728) (780,728) -
Unrealised exchange losses (815,226) (513,198) - (1,328,425) (1,328,425)

Unrealised exchange gain 213,383 (213,383) - - - -
Provision for terminal benefits (6,239,282) 3,449,282 - (2,790,000) (2,790,000) -
Revaluation of biological asset - 221,032,066 - 221,032,066 - 221,032,066
Employee benefits OCI (127,000) - (2,648,400) (2,775,400) (2,775,400) -
Amortisation on deferred tax (328,570) - (164,285) (492,855) (492,855) -
Tax losses - (13,470,189) - (13,470,189) (13,470,189) -
(3,400,542) 210,629,928 (2,812,685) 204,416,701 (22,471,635) 226,888,336
Net Balance at Recognised Recognised Balance Deferred Deferred

1-Jan-20 In income In Equity 31-Dec-20 Tax Assets Tax Liabilities
Movement in temporary differences during the year
Property, plant and equipment - cost 4,446,924 631,881 - 5,078,805 - 5,078,805
Right of use asset (2,887) (5,330) - (8,217) (8,217) -
Provision for stores deterioration (16,109) - - (16,109) (16109) -
Provision for repatriation (224,000) (5,400) - (229,400) (229,400) -
Provision for leave days (413,737) (126,994) - (540,731) (540,731) -
Plantation in formation volume gain 460,294 (163,650) - 296,644 - 296,644
Provisions for bad debts (764,048) 79,209 - (684,839) (684,839) -
Unrealised exchange losses (97,793) (717,433) - (815,226) (815,226) -
Unrealised exchange gain - 213,383.00 - 213,383 - 213,383
Provision for terminal benefits (5,346,594) (892,688) - (6,239,282) (6,239,282) -
Employee benefits OCI - - (127,000) (127,000) (127,000) -
Amortisation on deferred tax (164,285) - (164,285) (328,570) (328,570) -
(2,122,235) (987,022) (291,285) (3,400,542) (8,989,374) 5,588,832

In Zambian Kwacha
16 Biological Assets
(a) Reconciliation of carrying amounts
Note 2021
Balance at 1 January 2021 (cost model)* 730,080,274
Decrease arising from harvesting (65,605,730)

Recognition of fair value 10 2,210,320,664
Increase due to volume changes 938,020
Balance at 31 December 2021(fair value) * 2,875,733,228
2020
Balance as 1 January 2020 (cost model) * 614,704,810

Expenditure allocated during the year:
Operating expenses capitalized 175,698,107
790,402,917
Eliminated in respect of:

Volume gains 2,966,439
Harvested costs (63,289,082)
Balance as at 31 December 2020 (cost model) * 730,080,274
Pine Eucalyptus Total
Immature trees 131,354,187 62,002,621 193,356,808

Mature trees 1,387,831,106 1,294,545,314 2,682,376,420
Total 1,519,185,293 1,356,547,935 2,875,733,228
At 31 December 2021 Eucalyptus and Pine trees comprised approximately 50,189 hectares (2020; 48,903
hectares) of eucalyptus and pine tree plantations which ranged from newly established plantations to
plantations that were 55 years old.
* See note 7 for details of changes in policy
(b) Measurement of fair values

(i) Fair value hierarchy
The fair value measurements for the standing timber have been categorised as level 3 fair values
based on the inputs to the valuation techniques used.
(ii) Level 3 fair values

The following table shows a breakdown of the total gains(losses) recognised in respect of level 3
for value of Eucalyptus and Pine trees (standing timber).
2021 2020
Gain included in other income
Change in fair value (unrealised) 2,210,320,664 -


In Zambian Kwacha
16 Biological Assets (continued)
(c ) Risk management strategy related to agricultural activities
The Corporation is exposed to the following risks relating to its agriculture operations.
Regulatory risk
The Corporation is subject to Zambian laws and regulations that govern its operations. The Corporation
has established environmental policies and procedures in order to ensure compliance with the applicable
environmental laws.
Climate and other risks
The Corporation’s standing trees are affected by climatic changes, diseases and other natural forces. The
Corporation has processes in place like inspections and disease surveys to monitor and mitigate these risks.
The Corporation is also insured against natural disasters like fires and floods. In addition, it has replanted trees
in clear felled areas of about 3,000 hectares and established 45,000 hectares of seed orchard.
In order to ensure the Corporation advances towards the attainment of sustainable wood volume harvested,
the Corporation reduced the annual harvest of pinewood from 299,219m3 in 2020 to 239,000 m3 in 2021
representing a reduction of 20%. The reduction in harvest of pinewood has an impact on sales revenue.
(d) Valuation technique and significant unobservable inputs
The following table shows the valuation techniques used in measuring Level 3 fair values as well as the
significant unobservable inputs used.
Inter-relationship
between key
Key assumptions and significant unobservable inputs and
Type Valuation Technique unobservable inputs fair value measurement
Eucalyptus trees Discounted cash Estimated future trees’ realisation The estimated fair
flows: The valuation price per tree of Kwacha 400 to value would increase
model considers the Kwacha 500; and Risk-adjusted (decrease) if: the
present value of the annual discount rate of 24% to estimated tree prices
net cash flows expected 27%. were higher (lower);
to be generated by and the risk-adjusted
The immature trees are adjusted
the plantations. The discount rates were
for at a discount rate of 25.5%,
expected net cash flows lower (higher).
mean volume per stem (yield rate)
are discounted using a
of 0.2 and at an estimated price
risk-adjusted discount
Kwacha 643.
rate
A range of 0.15 to 1.68 was used as
the mean volume per stem (yield
rate) for the mature trees.
Pine trees Discounted cash Estimated future trees’ realisation The estimated fair
flows: The valuation price per tree of Kwacha 600 to value would increase
model considers the Kwacha 700; and Risk-adjusted (decrease) if: the
present value of the annual discount rate of 24% to 27%. estimated tree prices
net cash flows expected were higher (lower);
The immature trees are adjusted
to be generated by and the risk-adjusted
for at a discount rate of 25.5% mean
the plantations. The discount rates were
volume per stem (yield rate) of 0.52
expected net cash flows lower (higher).
and at an estimated price Kwacha
are discounted using a
950.
risk-adjusted discount
rate A range of 0.7 to 0.9 was used as the
mean volume per stem (yield rate)
for the mature trees.


In Zambian Kwacha
16 Biological Assets (continued)
e) Sensitivity analysis
A sensitivity analysis of a change in each of these assumptions is tabled below:
Biological assets value at different discount rate
Scenario Species
20% 23% 25.50% 27% 30%
+5% Eucalyptus 1,456,984,939 1,437,177,285 1,424,375,332 1,417,950,953 1,407,329,156

price Pines 1,731,811,813 1,643,603,834 1,595,144,558 1,573,415,607 1,541,356,266
increase Total Value 3,188,796,752 3,080,781,118 3,019,519,889 2,991,366,560 2,948,685,421
Eucalyptus 1,387,604,704 1,368,740,271 1,356,547,935 1,350,429,479 1,340,313,481
Base Pines 1,649,344,584 1,565,336,984 1,519,185,293 1,498,491,054 1,467,958,349
Total Value 3,036,949,288 2,934,077,255 2,875,733,228 2,848,920,533 2,808,271,830
5% Eucalyptus 1,318,224,469 1,300,303,258 1,288,720,538 1,282,908,005 1,273,297,807

price Pines 1,566,877,355 1,487,070,135 1,443,226,029 1,423,566,501 1,394,560,431
decrease Total Value 2,885,101,824 2,787,373,393 2,731,946,567 2,706,474,506 2,667,858,238
17 Intangible Assets
Cost
Balance at 1 January 2020 1 317 876
Additions 72 544
At 31 December 2020 1 390 420
Balance at 1 January 2021 1 390 420

Additions 81 598
At 31 December 2021 1 472 018
Amortisation
At 1 January 2020 724 363
Charge for the year 241 848
At 31 December 2020 966 211
Amortisation
At 1 January 2021 966 211
Balance at 31 December 2021 1 199 686
Carrying amount
At 31 December 2021 272 332
At 31 December 2020 424 209
The intangible asset represents the cost of accounting software that is amortised over the useful life estimated at
three years.


In Zambian Kwacha
18 Obligations Under Lease
The Corporation has one lease in relation to its office building and is restricted from entering into any sub-lease
arrangement for the property. The lease tenure is two years.
i) Recognised lease expense
Lease expenses are charged to the statement of profit or loss and other comprehensive income as follows:
2021 2020
Finance charges 47 709 54 724

Depreciation expense 145 502 145 104
193 211 199 828


In Zambian Kwacha
18 Obligations Under Lease (continued)
ii) Right-of-use assets
The right-of use asset is included in the same line item where the corresponding underlying assets would be
presented if they were owned.
Cost
Balance at 1 January 2020 290,369
At 31 December 2020 290,369
Balance at 1 January 2021 290 369

Additions 291,347
At 31 December 2021 581 716
Depreciation
At 1 January 2020 72,592
Charge for the year 145,108
At 31 December 2020 217,700
At 1 January 2021 217 700

At 31 December 2021 363 202
Carrying amount
At 31 December 2021 218,514
At 31 December 2020 72,669
iii) Lease liabilities
Lease liabilities are presented as in the statement of financial position as follows:
2021 2020
Current liabilities 245 795 154,839
Amounts recognised in statement of cash flows
Total cash inflow/(out-flow) for leases 90,956 (91,811)
iv) Extension options
Some property leases contain extension options exercisable by the Corporation up to one year before the end
of the non-cancellable contract period. Where practical, the Corporation seeks to include extension options
in new leases to provide operational flexibility. The extensions held are exercisable only by the Corporation
and not by the lessors. The Corporation assesses at lease commencement date whether it is reasonably
certain to exercise the options if there is a significant event or significant changes in circumstances within its
control.
The Corporation has estimated that the potential future lease payments, should it exercise the extension
option, would result in an increase in lease liability of ZMW 290,369.

62
In Zambian Kwacha
19 Property, Plant and Equipment
Machinery,
equipment,
Land and furniture and Capital work in
buildings fittings Motor vehicles progress Total
Annual Report 2021

Cost/revalued
Balance at 1 January 2020 11,548,814 80,259,830 78,269,116 3,717,677 173,795,437
Additions 197,955 9,464,417 20,205,724 810,469 30,678,565
Disposals - - (1,727,740) - (1,727,740)
At 31 December 2020 11,746,769 89,724,247 96,747,100 4,528,146 202,746,262
Balance at 1 January 2021 11,746,769 89,724,247 96,747,100 4,528,146 202,746,262

Additions - 11 678 633 13 308 985 2,333,929 27 321 547
At 31 December 2021 11,746,769 101,402,880 110,056,085 6,862,075 230,067,809
Depreciation
At 1 January 2020 738,794 39,402,754 46,112,283 - 86,253,831
Charge for the year 232,258 8,600,585 13,473,672 - 22,306,515
Disposals - - (1,535,769) - (1,535,769)
At 31 December 2020 971,052 48,003,339 58,050,186 - 107,024,577
At 1 January 2021 971,052 48,003,339 58,050,186 - 107,024,577

Charge for the year 234,113 9,019,745 13,560,260 - 22,814,118
Balance at 31 December 2021 1,205,165 57,023,084 71,610,446 - 129,838,695
Carrying amounts
At 31 December 2021 10,541,604 44,379,796 38,445,639 6,862,075 100,229,114
At 31 December 2020 10,775,717 41,720,908 38,696,914 4,528,146 95,721,685
A register of properties is maintained by the Corporation at its registered office and is available for inspection by the Shareholders.

In Zambian Kwacha
20 Inventories
2021 2020
Mechanical and technical stores 4,527,337 4,934,043

General stores 16,087,228 14,889,611
Treated poles stores 4,018,074 14,807,982
Work in progress 123,696 621,847
24,756,335 35,253,483
Provision for obsolescence* (738,421) (161,086)
24,017,914 35,092,397
Finished goods recognised as cost of sales amounted to ZMW115,456,392 (2020: ZMW 74,497,752).
*The provision for obsolescence relates to mechanical and technical equipment.
21 Trade and Other Receivables
2021 2020
Trade receivables 8,324,678 4,822,413

Allowance for expected credit loss (note 29(ii)) (4,379,903) (4,154,431)
3,944,775 667,982
Other receivables and prepayments 11,010,130 8,077,683
Employee receivables 14,592,235 13,637,171
29,547,140 22,382,836
The carrying amounts of the receivables and prepayments approximate their fair values due to their short-term
nature .
22 Cash and cash equivalents
2021 2020
Cash in hand and at bank* 86,054,261 109,334,676

Investment in bond ** - 40,000,000
86,054,261 149,334,676
* In the year 2017, the Government appointed the Corporation as an agent to sell confiscated Mukula logs on its
behalf. The sale proceeds from the confiscated Mukula logs were earmarked for the recapitalisation of Kawambwa
Tea Industries Limited based on a directive from the Government of the Republic of Zambia.
The cumulative proceeds are held in a dedicated bank account whose balance was ZMW7,639,299 (2020: ZMW
17,709,786). Expenditure returns are submitted to the Ministry of Finance and the Office of the Auditor General
detailing what the funds have been utilised on as and when the expenses are incurred (see note 28 (v ).
** During the year the bond Investment of ZMW 40,000,000 matured.


In Zambian Kwacha
23 Share Capital
Number of Ordinary Number of Ordinary share

ordinary shares share capital ordinary shares capital
Authorised 2021 2021 2020 2020
Ordinary shares of ZMW 0.25 each 400,000,00 100,000,000 400,000,000 100,000,000
Issued and fully paid
Ordinary shares of ZMW 0.25 each 400,000,000 100,000,000 400,000,000 100,000,000
Changes in authorised share capital

2021 2020
At 1 January 400,000,000 330,003,052
Issue of shares - 69,996,948
At 31 December 400,000,000 400,000,000
Changes in ordinary share capital
At 1 January 100,000,000 82,500,763

Issue of shares (see note 24) - 17,499,237
At 31 December 100,000,000 100,000,000
Rights of ordinary shares
Holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to vote at
general meetings of the Corporation.
24 Share Premium
2021 2020
At 1 January 126,694,476 -
Proceeds from subscribed shares ( 69,996,948 @ 2.06) - 144,193,713
Less nominal value of issued shares (69,996,948 @ 0.25) - (17,499,237)
At 31 December 126,694,476 126,694,476


In Zambian Kwacha
25 Employee Benefits
The Corporation contributes to the post-employment defined benefit plan which entitles a retired employee to
receive an annual pension payment. Staff retire at age 60 and are entitled to receive payments equal to 4 times the
annual pay for years of service that the employee provided.
The following table shows a reconciliation from the opening balances to the closing balances for the net defined
benefit (asset) liability and its components.
2021 2020
Defined benefit obligation 55,654,000 21,426,000

Total employee benefit Liability 55,654,000 21,426,000
(i) Movement in the defined benefit plan

liability at the beginning of year 21,426,000 13,740,000
current service cost 5,894,000 3,039,000
Interest cost on defined benefit obligation 8,495,000 5,594,000
Re-measurement recognised in other comprehensive income 26,484,000 1,270,000

Corporation contributions (6,645,000) (2,217,000)
Liability at year end 55,654,000 21,426,000
(ii) Provisions
Repatriation 2,251,000 2,294,000
Leave days 5,323,680 5,407,307
7,574,680 7,701,307
Employee benefit at end of year (i + ii)
63,228,680 29,127,307
Reasonably possible changes at the reporting date to one of the relevant actuarial assumptions, holding other
assumptions constant, would have affected the defined benefit obligation by the amounts shown below.
Sensitivity analysis ZMW % impact
Base 55,654,000
Salary inflation (+1%) 53,816,000 (3.3%)

Salary inflation (-1%) 57,710,000 3.7%
Discount rate (+1%) 57,909,000 4.1%
Discount rate (-1%) 53,628,000 (3.6%)
The following were the principal actuarial assumptions at the reporting date (expressed as weighted averages).
Actuary assumption 2021 2020
Discount rate 25.50% 35.40%

Salary inflation 14.00% 14.00%
Pre-retirement mortality assumption SA85-90 SA85-90


In Zambian Kwacha
26 Deferred Capital Grants
2021 2020
At 1 January 4,097,570 5,097,570

Amortisation (note 11) (1,000,000) (1,000,000)
At 31 December 3,097,570 4,097,570
Deferred capital grant relates to amounts received from the Government towards the setting up of plantations
in Luapula and Muchinga provinces. The grant is amortised over 10 years which is based on the useful life of the
machinery acquired.
27 Payables
(a) Trade and other payables
2021 2020
Trade payables 6,740,407 8,109,222
Payroll accruals 11,699,083 6,871,586
Mukula advance deposit * 41,398,167 -
Sundry payables and accrued expenses 16,986,586 34,478,073
Sundry payables and accrued expenses 76,824,243 49,458,881
* The Mukula advance deposit relate to advance payment made towards the purchase of Mukula logs by
customers.
(b) Dividend payable
2021 2020
At start of year 40,213,727 36,339,795
Dividend paid during the year (36,232,721) (33,175,640)
Dividend declared for 2020 - 37,049,572
Proposed dividend for 2021 12,000,000 -
15,981,006 40,213,727
28 Related Party Transactions
The Corporation has a related party relationship with its Directors, senior management (key management and other
managers), the IDC (majority Shareholder) and its group of companies.
i) Transactions with senior management personnel
2021 2020
Senior management compensation
Executive Directors’ remuneration 995,286 820,568
Other senior management 's remuneration 17,646,000 16,036,118
18,641,286 16,856,686
Loans to senior management personnel
At the start of year 541,187 615,209

Loans advanced 1,280,000 840,000
Loans repaid (540,269) (914,022)
At end of year 1,280,918 541,187
The above relates to housing and personal loans at an interest rate of 5% with a tenure period of 4 years.


In Zambian Kwacha
28 Related Party Transactions (continued)
ii) Transactions with Directors
There were no loans issued to Non-Executive Directors during the year (2020: nil)
Directors’ remuneration 2021 2020

Directors’ fees 1,619,665 1,462,364
Directors other expenses 1,091,694 688,204
2,711,359 2,150,568
Non-executive Directors fees
Agness Chakonta 187,333 111 000

Ajay Manubhai Vashee 224,500 194 734
Anne Doma Gray-Kunda 203,500 197 864
Chearyp Mkandawire-Sokoni 172,333 183 223
Christopher K. Mwelo 185,833 207 863
Dr Elizabeth Lungu-Nkumbula 189,500 191 236
Ndashe Yumba 71,060 154 113
Ignatius Makumba 90,273 -
Utembele Simwinga 169,333 97 500
Sub-total 1,493,665 1,337,533
Executive Directors fees

Kangwa D. Bwalya 126,000 124 831
Sub-total 126,000 124,831
Grand total of Directors’ fees 1,619,665 1,462,364

iii) Supply of goods and services from related parties
IDC – management services 9,937,169 9,378,962

ZESCO – electricity 933,730 1,032,819
ZSIC Life and ZSIC General – insurance cover 11,106,961 9,713,712
Mukuba Hotel – conference facilities 110,815 305,130
Zambia Daily Mail – advertising 541,492 626,956
Times of Zambia – advertising 355,174 446,407
ZAMTEL – internet - 46,264
22,985,341 21,550,250
iv) Supply of goods and services to related parties
ZESCO - treated poles 70,751,437 4,306,998

ZAMTEL – treated poles 1,400,146 395,170
Kawambwa Tea Industries Limited – treated poles 266,213 -
72,417,796 4,702,168
v) Amounts due to related party
Government of the Republic of Zambia 7,227,011 17,291,017

The amounts relate to funds held on behalf of the Government of the Republic of Zambia that have been
earmarked for the recapitalisation of the Kawambwa Tea Industries Limited as disclosed at note 22 in the
notes to the financial statements.


In Zambian Kwacha
28 Related Party Transactions (continued)
vi) Amounts due from related parties
2021 2020
Zambia Daily Mail 27,727 -
Industrial Development Corporation 17,455,995 30,466,715
ZESCO Limited 6,384,365 4,345,093
ZAMTEL Limited 1,111,432 2,244,395
Zambezi Cashews 5,612,271 -
Kawambwa Tea Industries Limited 627,762 361,550
Government of the Republic of Zambia 135,605,145 157,101,697
166,824,697 194,519,450
Expected credit allowance (3,112,403) (2,693,958)
163,712,294 191,825,492
Amounts due from Industrial Development Corporation relate to expenses that the Corporation incurred
on Zambezi Cashews Company Limited project and Kawambwa Tea Industries Limited on behalf of IDC.
ZESCO Limited and ZAMTEL Limited owe the Corporation for treated poles that were supplied to them.
The Government of the Republic of Zambia related amounts owed include ZMW155.85 million (gross) for
compensation of felled trees. The amount from Kawambwa Tea Industries Limited relates to management fees
and for treated poles that were supplied to it. Amount due from Zambezi Cahews Company Limited relates to
management fees and expenses incurred by the Corporation from November to December 2021.
29 Financial Risk Management
Overview
The Corporation has exposure to the following risks from its use of financial instruments:
§ credit risk;
§ market risk; and
§ liquidity risk
This note presents information about the Corporation’s exposure to each of the above risks, the Corporation’s
objectives, policies and processes for measuring and managing risk, and the Corporation’s management of capital.
Further quantitative disclosures are included throughout these financial statements.
i) Risk management framework
The Board of Directors has overall responsibility for the establishment and oversight of the Corporation’s risk
management framework.
The Corporation’s risk management policies are established to identify and analyse the risks faced by the
Corporation, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk
Management policies and systems are reviewed regularly to reflect changes in market conditions and the
Corporation’s activities.
The Audit and Risk Management Committee of the Board of Directors provides oversight to management
on compliance monitoring with the Corporation’s risk management policies and procedures and reviews
the adequacy of the risk management framework. The Corporation’s Internal Audit Department undertakes
regular as well as ad hoc reviews of the control environment and reports to the Audit and Risk Management
Committee on their findings.


In Zambian Kwacha
29 Financial Risk Management
ii) Credit risk
The credit risk is the risk of financial loss to the Corporation in the event that a customer or counterparty to a
financial instrument fails to meet its contractual obligations. The financial assets which potentially subject the
Corporation to credit risk consists mostly of the Corporation’s receivable due from customers, amounts due
from related parties and cash balances.
Trade receivables
The Directors believe the credit risk of trade receivables is low. The credit risk is managed by the careful
selective granting of credit taking into consideration customer’s financial position and past experience dealings
with the Corporation.
The Corporation does not require collateral in respect of trade receivables.
The carrying amount of financial assets represents the maximum credit exposure. The Corporation’s trade
receivables are very insignificant at 8% of the sales revenue. The credit facility is only extended to corporate
customers.
The Corporation’s exposure to credit risk is influenced mainly by the individual characteristics of each
customer. However, management also considers the factors that may influence the credit risk of its customer
base, including the default risk associated with the industry and or region in which customers operate.
The Audit and Risk Management Committee has established a Credit Policy under which each new customer
is analysed individually for creditworthiness before the Corporation’s standard payment and delivery terms
and conditions are offered. The Corporation’s review includes external ratings, if they are available, financial
statements, credit agency information, industry information and in some cases bank references. Sale volume
limits are established for each customer and reviewed quarterly. Any sales exceeding those limits are not
allowed under any circumstances.
The Corporation limits its exposure to credit risk from trade receivables by establishing a maximum payment
period of 30 and 90 days for customers. During the year ended 31 December 2021, the Corporation did not
have to extend any credit to any specific customers with liquidity constraints arising as a direct result of the
COVID-19 pandemic. This was because the demand for timber products was not adversely impact of the
outbreak of the COVID-19 pandemic.
Expected credit loss assessment for corporate customers
The Corporation uses a simplified impairment approach to determine the loss allowance for its corporate
customers because these do not carry significant financing component. The loss allowance is measured at
initial recognition and throughout the life of the receivable at an amount equal to lifetime expected credit
losses (ECL). The Corporation uses a provision matrix to measure the ECLs of the trade receivables.
Historical loss rates for each aging profile are calculated using a ‘roll rate’ method based on the probability of
receivable rolling from current to being written-off. The Roll rates for trade receivables moving from one time
bucket to another are calculated for each time bucket. The historical loss rates are calculated by multiplying
roll rates across all time buckets.
The historical rates are calculated based on actual credit loss experience over the past three years. The rates
are adjusted for forward looking estimates to reflect the impact of changes in business, financial and economic
conditions over the expected lives of the receivables. The impairment is calculated by multiplying the lifetime
expected loss rates with the gross carrying amount of trade receivables. The historical loss rates are adjusted
for inflation as it affects customers’ ability to pay. During the 2021 the historical rates were adjusted upwards
by increasing the inflation rate by 7% from 32% to 39%.


In Zambian Kwacha
29 Financial Risk Management (continued)
ii) Credit risk (continued)
The following table provides information about the exposure to credit risk and ECLs for trade receivables.
2021
Weighted-
average Gross carrying Loss Net carrying Credit-
loss rate amount allowance amount impaired
Current (not past due) 13% 4,059,336 ( 531,862) 3,527,474 No
1–30 days past due 21% 233,377 (49,672) 183,705 No
90–120 days past due 74% 914,249 (680,653) 233,596 No
More than 150 days past due 100% 3,117,716 (3,117,716) - Yes
8,324,678 (4,379,903) 3,944,775
2020
Weighted- average Gross carrying Net carrying Credit-

loss rate amount Loss allowance amount impaired
Current (not past due) 75% 2,018,562 ( 1,513,921) 504,641 No
1–30 days past due 82% 708,637 (581,082) 127,555 No
31–60 days past due 90% 234,600 (211,140) 23,460 No
90–120 days past due 95% 268,785 (256,459) 12,326 No
More than 150 days
100% 1,591,829 (1,591,829) - Yes
past due
4,822,413 (4,154,431) 667,982


In Zambian Kwacha
iii) Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates and interest rates which
will affect the Corporation’s income or the value of its holdings of financial instruments. The objective of
market risk management is to manage and control market risk exposures within acceptable parameters, while
optimising the return on risk.
Foreign exchange risk
The Corporation is exposed to foreign exchange risk arising from exchange rate fluctuations from trade
payables for the purchase of property, plant and equipment which are quoted in a foreign currency. These risks
are minimised by holding foreign currency bank balances.
Financial assets
The Corporation’s principal financial assets are cash, trade debtors and amounts due from related parties.
The Corporation maintains its cash balances with reputable banks in Zambia of high credit standing. Trade
receivables and amounts due from related parties are stated at their nominal value reduced by appropriate
allowances for estimated irrecoverable amounts.
Financial liabilities
The Corporation’s financial liabilities are trade payables. Financial liabilities are classified according to the
substance of the contractual arrangements entered into. Trade payables are stated at their nominal value.

72
In Zambian Kwacha
iii) Market risk (continued)
The table below shows the extent to which the Corporation has monetary assets and liabilities in currencies other than their local currency:
Annual Report 2021

At 31 December 2021 2020
USD Exposure
(ZMW) USD Exposure
ZMW equivalent ZMW Total ZMW (ZMW) equivalent ZMW Total
Financial assets
Cash and cash equivalents 27,772,773 58,281,488 86,054,261 122,821,408 26,513,268 149,334,676
Trade and other receivables less prepayments 18,537,010 - 18,537,010 14,305,153 - 14,305,153
Amounts due from related parties 163,712,294 - 163,712,294 191,825,491 - 191,825,491
Total financial assets 210,022,077 58,281,488 268,303,565 328,952,052 26,513,268 355,465,320
Trade and other payables (76,824,243) - (76,824,243) (49,458,881) - (49,458,331)
Amounts due to related parties (7,227,011) - (7,227,011) (17,291,017) - (17,291,017)
Net exposure 125,970,823 58,281,488 184,252,311 262,202,154 26,513,268 288,715,422
The Corporation activities expose it to variety of financial risks. The main risk faced by the Corporation relate to foreign exchange rates, the risk of default by counter-parties
to financial transactions and the availability of funds to meet business needs.
The following significant exchange rates applied during the year:
Average rate Spot rate at reporting date

2021 2020 2021 2020
USD 1 to ZMW 19.76 18.20 16.69 21.19


In Zambian Kwacha
iii) Market risk (continued)
Exchange rate Sensitivity analysis
A 10 percent strengthening/weakening of the United States Dollar against the Kwacha at 31 December would
have increased/ (decreased) equity and profit or loss. A positive/ (negative) number indicates an increase/
(decrease) in profit or loss where the Kwacha strengthens by 10% against the United States Dollar. For a 10%
weakening of the Kwacha against the United States Dollar, there would be an equal and opposite impact on
profit or loss as illustrated below. This analysis assumes that all other variables, in particular interest rates,
remain constant.
Strengthening Weakening
Equity Profit or loss Equity Profit or loss
31 December 2021
USD 5,828,149 5,828,149 (5,828,149) (5,828,149)
31 December 2020
USD 2,651,327 2,651,327 (2,651,327) (2,651,327)
iv) Liquidity risk
Liquidity risk is the risk that the Corporation will encounter difficulty in meeting the obligations associated
with its financial liabilities that are settled by delivering cash or another financial asset. The Corporation’s
approach to managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its
liabilities when they are due, under both normal and stressed conditions, without incurring unacceptable
losses or risking damage to the Corporation’s reputation.
The COVID-19 pandemic did not adversely impact the Corporation’s liquidity status and not expected to do so
in the near future. In 2021, the Corporation restricted credit facilities to its reputable corporate customers for
treated poles only and this is expected to be the case in 2022.
The table below analyses liabilities of the Corporation into relevant maturity based on the remaining period at
reporting date to the contractual maturity date.
The gross nominal inflow/(outflow) disclosed in the table below represents the contractual undiscounted cash
flows relating to the principal and interest on the financial liability.


In Zambian Kwacha
iv) Liquidity risk (continued)
Carrying Gross nominal Less than 1 Between 1 – 3

amount outflows year years
31 December 2021
Liabilities
Amount due to related parties 7,227,011 7,227,011 - 7,227,011
Dividend payable 3,981,105 3,981,105 3,981,105 -
Trade and other payables 76,824,243 76,824,243 76,824,243 -
Lease liability 245,793 245,793 245,793 -
Employee benefits 69,388,680 69,388,680 7,574,680 61,814,000
Total liabilities 157,666,832 157,666,832 88,625,821 69,041,011
Between
Carrying Gross nominal Less than 1 1–3
amount outflows year years
31 December 2020
Liabilities
Amount due to related parties 17,291,017 17,291,017 - 17,291,017
Dividend payable 40,213,727 40,213,727 40,213,727 -
Trade and other payables 49,458,881 49,458,881 49,458,881 -
Lease liability 154,839 154,839 154,839 -
Employee benefits 29,127,307 29,127,307 7,701,307 21,426,000
Total liabilities 136,245,771 136,245,771 97,528,754 38,717,017


In Zambian Kwacha
30 Capital Management
The Corporation’s objective when managing capital is to safeguard its ability to continue as a going concern so that it
can continue to provide returns for Shareholders and benefits for other stakeholders.
The Corporation sets the amount of capital in proportion to its overall financing structure. The Corporation manages
the capital structure and makes adjustments to it in the light of the economic conditions and the risk characteristic of
the underlying assets. In order to maintain or adjust the capital structure, the Corporation may adjust the amount of
the dividends paid to Shareholders, issue new shares, or sell assets to reduce debt.
The Board of Directors defines capital as total liabilities less cash and cash equivalents. Equity comprises all
components of equity. Its financial strategy in the short term is to minimise the level of debt in the business whilst
ensuring sufficient finances are available to continue the Corporation’s business activities.
There were no changes to what the corporation manages as capital from prior year. In addition, there were no
externally imposed capital requirements.
The Corporation’s capital structure at 31 December was as follows:
2021 2020
Total liabilities 403,808,236 204,128,720
Less: Cash and cash equivalents (86,054,261) (149,334,676)
Net debt 317,753,975 54,794,044
Equity 2,369,909,339 1,024,206,060

Net debt to equity ratio 0.13 0.05
31 Capital Commitments
Capital expenditure contracted for during the reporting period but not yet incurred is as follows:
2021 2020
Property, plant and equipment 40,968,392 14,691,479
32 Contingent Liabilities
There is a contingent liability estimated at ZMW 2.81 million (2020: ZMW 2.81 million) in respect of industrial
relations actions and ZMW142.10 million (2020: ZMW 6.76 million) in respect of non-industrial relations cases
involving the Corporation’s suppliers. The cited case actions are all currently before the courts of law.
33 Subsequent Events
In 2022, there has been significant progress in the development of vaccines against the coronavirus some of which
have been approved and are being distributed worldwide. On the other hand, in the first quarter of the year 2022
there was the Russia-Ukraine conflict. The ongoing geopolitical and international relations issue between the two
countries which began in February 2014 as part of an offshoot of the Revolution of Dignity sprang to life in the year
and in turn affected many sectors of the local and international markets including those in which the Corporation
invests.
There were no other subsequent events requiring adjustments of, or disclosure in, these financial statements.


In Zambian Kwacha
34 Earnings Per Share
Basic and diluted earnings per share
The calculation of the Corporation’s basic earnings per share at 31 December 2021 was based on the profit attributable
to ordinary Shareholders of ZMW 1,875,441,816 (2020: Profit ZMW 228,764,105) and weighted average number of
ordinary shares during the year ended 31 December 2021 of 400,000,000 (2020: 391,753,784).
2021 2020
Profit attributable to ordinary shares 1,875,441,816 228,764,105
Weighted average number of ordinary shares 400,000,000 391,753,784
Basic earnings per share (ZMW) 4.69 0.58
35 Operating Segments
The Corporation operates as a single reporting segment. The main activity of the Corporation is selling of exotic
timber. It operates in one geographic location (Zambia) and has no major single customers. The segment numbers are
the same as those disclosed in the primary financial statements.
36 Significant Accounting policies
The Corporation has consistently applied the following accounting policies to all period presented in these financial
statements.
Set out below is an index of significant accounting policies, the details of which are available on the pages that follow.
a) Revenue recognition
b) Property, plant and equipment
c) Financial instruments
d) Impairment
e) Biological assets
f) Inventory
g) Taxation
h) Employee benefits
i) Provisions
j) Dividend distribution
k) Share capital and reserves
l) Cash and cash equivalents
m) Expenses and cost of sales allocation
n) Leased assets
o) Earnings per share
p) Intangible assets
q) Net finance costs
r) Deferred capital grant


In Zambian Kwacha
36 Significant Accounting Policies (continued)
a) Revenue recognition
Revenue comprises the fair value of the consideration received or receivable for the sale of timber products
and timber in the ordinary course of the Corporation’s activities.
Revenue is shown net of Value Added Tax (VAT), rebates and discounts.
Revenue is measured based on the consideration specified in a contract with a customer. The Corporation
recognises revenue when it transfers control over goods to a customer.
Customers obtain control of timber products when the goods are dispatched from the Corporation’s
plantations. Invoices are generated and revenue is recognised at that point in time which the Corporation has
delivered products to the customer, the customer has full discretion over the channel and price to sell the
products, and there is no unfulfilled obligation that could affect the customers’ acceptance of the products.
Invoices are usually settled on a cash basis.
b) Property, plant and equipment
Property, plant and equipment are measured at revalued cost less depreciation. Revalued cost includes
expenditure that is directly attributable to the acquisition of the items as well as subsequent increases or
decreases on the measurement of the fair value of the assets by an independent valuer.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate,
only when it is probable that future economic benefits associated with the item will flow to the Corporation
and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the income
statement during the financial period in which they are incurred.
Increase in the carrying amount on revaluation of property, plant and equipment are credited to the revaluation
surplus in Shareholders’ equity. Decreases that offset previous increases of the same asset are charged against
fair value reserves directly in equity; all other decreases are charged to the income statement. Each year, the
difference between depreciation based on the asset’s original cost and revalued amount, net of any related
deferred income tax, is transferred from the revaluation surplus to retained earnings.
Depreciation is calculated to write off the cost of property, plant and equipment on a straight-line basis over
the expected useful lives of the assets concerned. The principal annual rates used for this purpose are;
Land Not depreciated

Buildings 20-33 years
Machinery and equipment 20 years
Furniture and fittings 3 years
Motor vehicles 4 years


In Zambian Kwacha
b) Property, plant and equipment (continued)
Capital working in progress is not depreciated
The assets’ residual values, depreciation methods and useful lives are reviewed at each reporting date and
adjusted if appropriate.
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying
amount is greater than its recoverable amount.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount. These are
included in the income statement in the other operating income. When revalued assets are sold, the amounts
included in the revaluation surplus relating to these assets are transferred to retained earnings.
Revaluation surplus
The surplus arising on the revaluation of properties is initially credited to a revaluation surplus, which is a
non-distributable reserve. A transfer is made (net of tax) from this reserve to retained earnings each year,
equivalent to the difference between the actual depreciation charge for the year and the depreciation charge
based on historical values, in respect of the re-valued assets.
If the asset’s carrying amount is decreased as a result of a revaluation, the decrease is recognised in other
comprehensive income to the extent of any credit balance existing in the revaluation surplus in respect of that
asset, thereafter the remaining decrease is recognised in profit or loss.
c) Financial instruments
(i) Recognition and initial measurement
Trade receivables issued are initially recognised when they are originated. All other financial assets and
financial liabilities are initially recognised when the Corporation becomes a party to the contractual
provisions of the instrument.
A financial asset (unless it is a trade receivable without a significant financing component) or financial
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 significant financing
component is initially measured at the transaction price.
ii. Classification and subsequent measurement
Financial assets
On initial recognition, a financial asset is classified as measured at amortised cost.


In Zambian Kwacha
c) Financial instruments (continued)
Financial assets are not reclassified subsequent to their initial recognition unless the Corporation changes its
business model for managing financial assets, in which case all affected financial assets are reclassified on the
first day of the first reporting period following the change in the business model.
A financial asset is measured at amortised cost 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 to hold assets to collect contractual cash flows; and
 its contractual terms give rise on specified dates to cash flows 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 Corporation 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.
Financial assets – Business model assessment
The Corporation makes an assessment of the objective of the business model in which a financial asset is held
at a portfolio level because this best reflects the way the business is managed, and information is provided
to management. The information considered includes: the frequency, volume and timing of sales of financial
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
The Corporation classified its financial assets at amortised cost.
Financial liabilities – Classification, subsequent measurement and gains and losses
Financial liabilities are classified as measured at amortised cost.
iii. Derecognition
Financial assets
The Corporation derecognises a financial asset when the contractual rights to the cash flows from the
financial asset expire, or it transfers the rights to receive the contractual cash flows in a transaction
in which substantially all of the risks and rewards of ownership of the financial asset are transferred
or in which the Corporation neither transfers nor retains substantially all of the risks and rewards of
ownership and it does not retain control of the financial asset.
The Corporation derecognises a financial liability when its contractual obligations are discharged or
cancelled, or expire. The Corporation also derecognises a financial liability when its terms are modified
and the cash flows of the modified liability are substantially different, in which case a new financial
liability based on the modified terms is recognised at fair value.
On derecognition of a financial liability, the difference between the carrying amount extinguished and
the consideration paid (including any non‑cash assets transferred or liabilities assumed) is recognised
in profit or loss.


In Zambian Kwacha
iii. Derecognition
Financial assets
The Corporation derecognises a financial asset when the contractual rights to the cash flows from the
financial asset expire, or it transfers the rights to receive the contractual cash flows in a transaction
in which substantially all of the risks and rewards of ownership of the financial asset are transferred
or in which the Corporation neither transfers nor retains substantially all of the risks and rewards of
ownership and it does not retain control of the financial asset.
The Corporation derecognises a financial liability when its contractual obligations are discharged or
cancelled, or expire. The Corporation also derecognises a financial liability when its terms are modified
and the cash flows of the modified liability are substantially different, in which case a new financial
liability based on the modified terms is recognised at fair value.
On derecognition of a financial liability, the difference between the carrying amount extinguished and
the consideration paid (including any non‑cash assets transferred or liabilities assumed) is recognised
in profit or loss.
Financial instruments and contract assets
The Corporation recognises loss allowances for ECLs on:
§ financial assets measured at amortised cost;
The Corporation measures loss allowances at an amount equal to lifetime ECLs.
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 financial asset has increased significantly since initial
recognition and when estimating ECLs, the Corporation 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 Corporation’s historical experience and informed
credit assessment and including forward‑looking information.
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 flows due to the entity in accordance
with the contract and the cash flows that the Corporation expects to receive). ECLs are discounted at
the effective interest rate of the financial asset.
Credit-impaired financial assets
At each reporting date, the Corporation assesses whether financial assets carried at amortised cost
and debt securities at FVOCI are credit‑impaired. A financial asset is ‘credit‑impaired’ when one or
more events that have a detrimental impact on the estimated future cash flows of the financial asset
have occurred.
Evidence that a financial asset is credit‑impaired includes the following observable data:


In Zambian Kwacha
36 Significant Acounting Policies (continued)

 significant financial difficulty 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 Corporation on terms that the Corporation would not
consider otherwise;
Presentation of allowance for ECL in the statement of financial position
Loss allowances for financial assets measured at amortised cost are deducted from the gross carrying amount
of the assets.
d) Impairment
i. Non-derivative financial assets
Financial instruments
The Corporation recognises loss allowances for ECLs on: financial assets measured at amortised cost;
The Corporation measures loss allowances at an amount equal to lifetime ECLs.
Loss allowances for trade receivables are always measured at an amount equal to lifetime ECLs.
When determining whether the credit risk of a financial asset has increased significantly since initial
recognition and when estimating ECLs, the Corporation 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 Corporation’s historical experience and informed
credit assessment and including forward‑looking information.
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 flows due to the entity in accordance
with the contract and the cash flows that the Corporation expects to receive). ECLs are discounted at
the effective interest rate of the financial asset.
Credit-impaired financial assets
At each reporting date, the Corporation assesses whether financial assets carried at amortised cost.
A financial asset is ‘credit‑impaired’ when one or more events that have a detrimental impact on the
estimated future cash flows of the financial asset have occurred.
Evidence that a financial asset is credit‑impaired includes the following observable data:
 significant financial difficulty 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 Corporation on terms that the Corporation would
not consider otherwise;
Presentation of allowance for ECL in the statement of financial position Loss allowances for financial assets
measured at amortised cost are deducted from the gross carrying amount of the assets.


In Zambian Kwacha
d) Impairment (continued)
ii. Non-financial assets
The carrying amounts of the Corporation’s non-financial assets, other than, inventories and deferred tax
assets are reviewed at each reporting date to determine whether there is any indication of impairment.
If any such indication exists, then the asset’s recoverable amount is estimated. For intangible assets that
have indefinite useful lives or that are not yet available for use, the recoverable amount is estimated
each year at the same time. An impairment loss is recognised if the carrying amount of an asset or its
related cash-generating unit (CGU) exceeds its estimated recoverable amount.
The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs
to sell. In assessing value in use, the estimated future cash flows are discounted to their present value
using a pre-tax discount rate that reflects current market assessments of the time value of money and
the risks specific to the asset or CGU. For the purpose of impairment testing, assets that cannot be
tested individually are grouped together into the smallest group of assets that generates cash inflows
from continuing use that are largely independent of the cash inflows of other assets or CGU.
The Corporation’s corporate assets do not generate separate cash inflows and are utilised by more than
one CGU. Corporate assets are allocated to CGUs on a reasonable and consistent basis and tested for
impairment as part of the testing of the CGU to which the corporate asset is allocated.
Impairment losses are recognised in profit or loss. Impairment losses recognised in respect of CGUs are
allocated first to reduce the carrying amount of any goodwill allocated to the CGU (group of CGUs), and
then to reduce the carrying amounts of the other assets in the CGU (group of CGUs) on a pro rata basis.
In respect of other assets, impairment losses recognised in prior periods are assessed at each reporting
date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed
if there has been a change in the estimates used to determine the recoverable amount. An impairment
loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount
that would have been determined, net of depreciation or amortisation, if no impairment loss had been
recognised.


In Zambian Kwacha
e) Biological assets
Applicable after 1 January 2021
Biological assets are valued at their fair values less estimated cost to sell determined by the directors.
Plantations in formation are revalued to fair value at each reporting date based on the estimated market value.
Net gains and losses arising from changes in fair value less estimated point of sale costs of biological assets are
recognised in the statement of profit or loss and other comprehensive income. When harvested, the fair value
at that date is transferred to cost of sales and the new fair value at year end is presented as a gain in profit or
loss.
Applicable before 1 January 2021
The biological assets for the Corporation consist of the Plantations in Formation (PIF). The IAS
41 establishes the accounting treatment for biological assets during their growth, degeneration, production
and procreation, and for the initial measurement of agricultural produce at the point of harvest.
The biological assets for the Corporation consists of the Biological assets. The IAS 41 establishes the accounting
treatment for biological assets during their growth, degeneration, production and procreation, and for the
initial measurement of agricultural produce at the point of harvest. The standard generally requires biological
assets to be measured at fair value less costs to sell. The gain on initial recognition of biological assets at
fair value less costs to sell, and changes in fair value less costs to sell of biological assets during a period, are
included in profit or loss. A gain on initial recognition (e.g. as a result of harvesting) of agricultural produce at
fair value less costs to sell are included in profit or loss for the period in which it arises. All costs related to
biological assets that are measured at fair value are recognised as expenses when incurred, other than costs to
purchase biological assets.
Biological assets within the scope of IAS 41 are measured on initial recognition and at subsequent reporting
dates at fair value less estimated costs to sell, unless fair value cannot be reliably measured.
The Biological assets cost include direct attributable expenses in the plantation management activities and a
further 25% of administrative costs. The valuation of plantations in formation is stated after deducting those
costs which relate to areas clear-felled and to the total volume of thinning in the year. The cost of timber
destroyed by fire and disease is eliminated from Plantations in Formation and charged to the income statement
in the year of damage.
It is considered normal to lose a limited amount of timber through the effects of disease and fire.
The Biological assets is valued at cost, but should circumstances change and fair value becomes reliably
measurable, a switch to fair value less costs to sell shall be adopted.


In Zambian Kwacha
f) Inventories
Inventories are stated at the lower of cost and net realisable value. Cost is determined on the weighted average
principle and includes all expenditure incurred in the normal course of business in bringing the goods to their
present location and condition. Net realisable value is the price at which the inventories can be realised in
the normal course of business after allowing for the costs of realisation. Provision is made for obsolete, slow-
moving and defective inventories.
The cost of standing timber transferred from biological assets is its fair value less costs to sell at the date of
harvest.
g) Taxation
Income tax expense comprises current and deferred tax. It is recognised in profit or loss except to the extent
that it related to items recognised directly in equity, in which case it is recognized in equity.
Deferred taxation liabilities are recognised for all taxable temporary differences. Temporary differences can
arise from the recognition for tax purposes of items of income or expense in a different accounting period from
that in which they are recognised for financial accounting purposes. The tax effect of these temporary timing
differences is computed by applying enacted statutory tax rates to any differences between carrying values
per the financial statements and their tax base and accounted for as deferred tax.
Deferred taxation assets are recognised for all deductible temporary differences to the extent that it is
probable that taxable profit will be available against which the deductible temporary differences can be
utilised.
h) Employee benefits
a) Defined contribution plan
A defined contribution plan is a pension plan under which the Corporation (employer), employee, or
both pays fixed contributions into a separate entity (a fund) on a regular basis (preferably monthly).
The plan is applicable to each individual employee. Individual accounts (pots) are set up for each
participating member and benefits are based on amounts credited to these individual accounts plus any
investment earnings on the money accrued in the account. The employer will have no further obligation
(legal or constructive) to pay further amounts if the fund has insufficient assets to pay all employee
benefits relating to current and prior service. Normally at the start of this plan, a determination of past
liability is done to determine the cost of past service in the hands of the employer.
Obligations for contributions to defined contribution plans are expensed as the related service is
provided. Prepaid contributions are recognised as an asset to the extent that a cash refund or a
reduction in future payments is available.


In Zambian Kwacha
h) Employee benefits (continued)
The Corporation makes mandatory contribution to the National Pension Scheme Authority (NAPSA), a
statutory defined contribution scheme, for its eligible employees as provided for by the National Pension
Scheme Act No, 40 of 1996 of the Laws of Zambia. Membership is compulsory and monthly contributions are
made by both employer and employees. The employer’s contribution is charged to profit or loss in the year in
which it arises.
b) Defined benefit plan
A defined benefit is where a promise has been made to employees (either by the employer or by a
pension plan), of future benefits relating to current and prior service, consequently the employer or
the pension plan has a constructive obligation to fund any shortfalls that could arise should there be
insufficient assets to pay all employee benefits relating to current and prior service.
The Corporation determines its estimated terminal benefits that is payable, to its employees upon
termination of employment, on an annual basis. The estimate is based on four (4) months of the
employee’s current basic pay multiplied by the number of years that employee has served.
Senior Management employees on four (4) years contract are entitled to gratuity at an annual rate of
35%.
The Corporation engaged a professional actuary, Alexander Forbes Financial Services (Pty) Limited, to
perform an actuarial valuation of the liability arising from the employee defined benefit plan. As of the
report date, the actuary had finalised the report and the provision was adjusted to agree to the report.
The assumptions to the valuation are developed by Management with the assistance of independent
actuary.
Discount factors are determined close to each year-end by reference to market yields of bonds that
are denominated in Kwacha and that have terms to maturity approximating to the terms of the related
pension obligation. Other assumptions are based on current actuarial benchmarks and Management’s
historical experience.
The significant actuarial assumptions for the determination of the defined benefit obligation are the
discount rate, the salary growth rate and the average life expectancy.
Other entitlements
The estimated monetary liability for employees’ annual leave entitlement is accrued as an expense at
the statement of financial position date.


In Zambian Kwacha
i) Provisions
A provision is recognised if, as a result of a past event, the Corporation has a present legal or constructive
obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be
required to settle the obligation.
Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current
market assessments of the time value of money and the risks specific to the liability. The winding of the discount
is recognised as a finance cost.
j) Dividend distribution
Dividend is payable subject to the solvency requirements of the Companies Act No. 10 of 2017 of the Laws of
the Republic of Zambia.
Dividend distribution to the Corporation’s Shareholders is recognised as a liability in the financial statements
in the period in which the dividends are proposed by the Corporation’s Board of Directors.
k) Share capital and reserves
Share capital represents the nominal value of ordinary shares that have been issued and paid up.
The revaluation reserve within equity comprises gains and losses due to the revaluation of property, plant and
equipment.
l) Cash and cash equivalents
Cash and cash equivalents include cash on hand, bank deposits and short term investment in bond or other
securities. Cash and cash equivalents are short term, highly liquid investments with insignificant risk of changes
in value.
m) Expenses and cost of sales allocation
All expenses are recognised based on invoice dates for services and stock issuance dates for stock items,
monthly accruals for staff costs and estimates such as depreciation and impairment for doubtful receivables.
Cost of sales
Direct costs such as staff costs, wages, electricity, chemicals, fertilizer, nursery, poles, stumpage pine, and
stores consumables, tools and implements, repairs and maintenance, relating to plantation management and
pole treatment are treated as cost of sales.
Administrative costs
Overhead costs incurred by support departments such as finance, audit, business development, human
resources, corporate services and administration are treated as administrative expenses.


In Zambian Kwacha
n) Leased assets
The Corporation assesses whether a contract is a lease for any new contracts entered into. IFRS 16 defines
a lease 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 definition, the Corporation assesses whether the contract meets the following criteria:
 The contract contains an identified asset, which is either explicitly identified in the contract or implicitly
specified by being identified at the time the asset is made available to the Corporation;
 The Corporation has the right to obtain substantially all of the economic benefits from use of the
identified asset throughout the period of use, considering its rights within the defined scope of the
contract; and
 The Corporation has the right to direct the use of the identified asset throughout the period of use.
The Corporation assess whether it has the right to direct ‘how and for what purpose’ the asset is used
throughout the period of use.
The Corporation assesses at contract inception whether a contract is, or contains, a lease. That is, if the contract
conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
The Corporation as a lessee applies a single recognition and measurement approach for all leases, except for
short-term leases and leases of low-value assets. The Corporation recognises lease liabilities to make lease
payments and right-of-use assets representing the right to use the underlying assets.
Right-of-use assets
The Corporation recognises right-of-use assets at the commencement date of the lease (i.e. the date the
underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated
depreciation and impairment losses, and adjusted for any re-measurement of lease liabilities. The cost of
right-of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred, and lease
payments made at or before the commencement date less any lease incentives received. Right-of-use assets
are depreciated on a straight-line basis over the shorter of the lease term and the estimated useful lives of the
assets.
The Corporation also assesses the right-to-use asset for impairment when such indicators exist.
Lease liabilities
Initially, the Corporation recognises lease liabilities measured at the present value of lease payments to be
made over the lease term. The lease payments include fixed payments (including in-substance fixed payments)
less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts
expected to be paid under residual value guarantees. Generally, the Corporation uses the average bank lending
rate at the lease commencement date because the interest rate implicit in the lease is not readily determinable.
After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest
and reduced for the lease payments made.


In Zambian Kwacha
n) Leased assets (continued)
In addition, the carrying amount of lease liabilities is re-measured if there is a modification, a change in the
lease term, a change in the lease payments (e.g. changes to future payments resulting from a change in an
index or rate used to determine such lease payments) or a change in the assessment of an option to purchase
the underlying asset. When the lease liability is re-measured, the corresponding adjustment is reflected in the
right-of-use assets, or the profit and loss if the right-to-use is already reduced to zero.
The Corporation has elected to account for short-term leases and leases of low-value assets using the practical
measures. Payments in relation to these are recognised as an expense in profit or loss on a straight-line basis
over the lease term.
The right-of-use assets have been included in property, plant and equipment and lease liabilities have been
included in obligations under lease on the statement of financial position.
o) Earnings per share
The Corporation presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS
is calculated by dividing the profit or loss attributable to ordinary Shareholders of the Corporation by the
weighted average number of ordinary shares outstanding during the period. Diluted EPS is determined by
dividing the profit or loss attributable to ordinary Shareholders by the weighted average number of ordinary
shares outstanding adjusted for the effects of all dilutive potential ordinary shares, which comprise convertible
redeemable cumulative preferred stock.
p) Intangible assets
Software acquired by the Corporation is measured at cost less accumulated amortisation and any accumulated
impairment losses. Subsequent expenditure on software assets is capitalised only when it increases the
future economic benefits of the asset to which it relates. All other expenditure is recognised in profit or loss
as incurred. Software is amortized on a straight-line basis in the profit or loss over its estimated useful life,
from the date on which it is available for use. The estimated useful life of software is three years. Amortisation
methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.
q) Net finance costs
Transactions in foreign currencies are translated to the respective functional currencies of the Corporation
at exchange rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign
currencies at the reporting date are retranslated to the functional currency at the exchange rate at that date.
The foreign currency gain or loss on monetary items is the difference between amortised cost in the functional
currency at the beginning of the year, adjusted for effective interest and payments during the year, and the
amortised cost in foreign currency translated at the exchange rate at the end of the year.
Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are
retranslated to the functional currency at the exchange rate at the date that the fair value was determined.
Non-monetary items in a foreign currency that are measured in terms of historical cost are translated using
the exchange rate at the date of the transaction. However, foreign currency differences arising on retranslation
are recognised in profit or loss.


In Zambian Kwacha
r) Capital grants
Capital grants represents the amounts received form the Government of the Republic of Zambia for the
setting up on plantations in variances provinces. These grants were used for the procurement of machinery
and equipment used in land preparation.
Capital grants are deferred and recognised in profit or loss in equal annual instalments over the expected
useful life of the related assets
37 New standards Issued but not yet Effective
A number of new standards are effective for annual periods beginning on or after 1 January 2021 and earlier
application is permitted, however, the Corporation has not early adopted the new or amended standards in preparing
these financial statements.
A) Deferred Tax related to Assets and Liabilities arising from a Single Transaction (Amendments to IAS 12)
The amendments narrow the scope of the initial recognition exemption to exclude transactions that give
rise to equal and offsetting temporary differences – e.g. leases. The amendments apply for annual reporting
periods beginning on or after 1 January 2023. For leases, the associated deferred tax asset and liabilities will
need to be recognised from the beginning of the earliest comparative period presented, with any cumulative
effect recognised as an adjustment to retained earnings or other components of equity at that date. For all
other transactions, the amendments apply to transactions that occur after the beginning of the earliest period
presented.
B) Other standards
The following amended standards and interpretations are not expected to have a significant impact on the
Corporation’s financial statements:
 Deferred Tax related to Assets and Liabilities arising from a Single Transaction (Amendments to IAS 12)
 Onerous Contracts – Cost of Fulfilling a Contract (Amendments to IAS 37).
 COVID-19-Related Rent Concessions (Amendment to IFRS 16). b
 Property, Plant and Equipment: Proceeds before Intended Use (Amendments to IAS 16).
 Annual Improvements to IFRS Standards 2018–2020.
 Reference to Conceptual Framework (Amendments to IFRS 3).
 Classification of Liabilities as Current or Non-current (Amendments to IAS 1).
 IFRS 17 Insurance Contracts and amendments to IFRS 17 Insurance Contracts.
 Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2).
 Definition of Accounting Estimates (Amendments to IAS 8).

Notes


HEAD OFFICE Tel: +260 212 628 300.

Off Mufulira-Ndola Road
P.O. Box 71566, Dola Hill,
NDOLA, ZAMBIA
“Timber is Our Business”

2021 ZAFFICO Annual Report

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2021 ZAFFICO Annual Report

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ZAMBIA FORESTRY AND

Zambia Industrial Commercial Bank Limited

Zambia National Commercial Bank PLC

2 Annual Report 2021

Annual Report 2021 3

AFD Agence Française de Développement

AGM Annual General Meeting

STATEMENT ON FORWARD-LOOKING INFORMATION

4 Annual Report 2021

IDC NAPSA WCFCB ZSIC LIFE Other Investors,

ZAFFICO Operational Areas

Our Head Office is located off

Annual Report 2021 5

Vision Mission Statement

Team work Integrity Environmentally

6 Annual Report 2021

Pine roundwood: is used

R A CCA treated poles: are

Creosote treated poles:

Pine seedlings: are used

Annual Report 2021 7

8 Annual Report 2021

Revenue Performance Gross Profit

Gross Profit (ZMW’ Million)

Net Profit After Tax Treated Poles Sales

Sales (ZMW’ Million)

Wood Volume Harvested Mukula Sales (Export) Earnings Per Share

Corporation’s Assets Shareholders’ Funds Treated

Annual Report 2021 9

10 Annual Report 2021

Mrs. Anne Doma Gray-Kunda

12 Annual Report 2021

Dr. Elizabeth Catherine Lungu-Nkumbula

Christopher Kalimukwa Mwelo

Annual Report 2021 13

14 Annual Report 2021

Profile under the Board of Directors

Matilda Sitali Mwansa

Brian Kangombe Mutale

Annual Report 2021 15

Chanza Kephas Sikazwe

16 Annual Report 2021

Financial Performance Changes at Board Level

Annual Report 2021 17

18 Annual Report 2021

MANAGING DIRECTOR’S REPORT

the business were minimised.

Annual Report 2021 19

Table 1: Summary of Revenue Performance for 2021 and 2020

Felled Wood Volume

Wood Volume (m3)

20 Annual Report 2021

Annual Report 2021 21

22 Annual Report 2021

Board of Directors and Management during Enterprise Risk Management Seminar

24 Annual Report 2021

Board and Committee Meetings

Board ARM BD SA FO ADH

H = Number of meetings held during the year under review;

ZAFFICO PLC Board of Directors touring the Pole Treatment Plant

Annual Report 2021 25

26 Annual Report 2021

HEALTH AND SAFETY