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Copperbelt Energy Corporation Plc2018-06-12T10:01:51+00:00

The Copperbelt Energy Corporation Plc (CEC), a member of SAPP and listed on the Lusaka Stock Exchange, is an independent power transmission and quality electricity distribution company with interests in Zambia and sub-Saharan Africa, including optic fibre based telecommunications. As a developer of energy infrastructure in Africa, CEC is respected in the region for its skills in designing and operating transmission systems and its status as an emerging independent power generating company.

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Fundamentals

The CEC Businesses

Corporate Enquiries

1st Floor Abacus Square, Stand No. 2374/B
Thabo Mbeki Road, Lusaka, Zambia
Phone: +260 212 244956
info@cec-head-office.com
www.cecinvestor.com

Operations Enquiries

23rd Avenue, P O Box 20819
Nkana East, Kitwe, Zambia
Phone: +260 212 244556
info@cec-head-office.com
www.cecinvestor.com

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Recent Conference Call

Extract from 2017 annual report

The Company continued to be listed on the LuSE and has 50% direct shareholding in CEC Liquid Telecommunications Limited, a joint venture company registered and domiciled in Zambia. CEC Liquid Telecom wholly owns Hai Telecommunications Limited.

During the financial year ending 31st December 2016, adjusted EBITDA was K888.12 million (US$90 million) compared to K520.35 million (US$80 million) the previous period posting an increase of 12.5% average. The increase in adjusted EBITDA is attributed to increased power trading income and the aggressive cost management initiatives, which impacted positively on the results.

Revenue at K3,503.14 million (US$355 million) was equivalent to the revenue in 2015 despite a drop of about 15% in domestic power supplies which had an equivalent reduction in domestic power sales from K2,743.3 million (US$278 million) to K2,180.83 (US$221 million.)

The increase in power trading supplies resulted in an overall increase of 86% in power trading revenue, which compensated for the drop in domestic power sales. Overall, domestic power sales remain the prime revenue source contributing 62% of the total revenue down from 78% the previous year, with power trading revenue increasing from 18% the previous year to 34% of total revenue.

The demand for electricity is expected to increase following plans to ramp up production on account of NFCA’s South East body project, MCM’s Synclinorium and KCM’s Konkola Deep Mining Project.

CEC Liquid Telecom continues to outperform past financial and operational results. Revenue at K207.23 (US$21 million) grew at 17% while gross margin and EBITDA increased by 10% and 33% respectively. The above financials are based on consolidated results of CEC Liquid Telecom incorporating Hai. The company, during the year, secured long term funding to support its expansion projects; mainly new backhaul bandwidth fibre connecting Zambia to Botswana and Namibia. This enables the creation of a robust network, reinforcing the strategy of operating the Zambian network as a regional hub. Further, the business commissioned its first investment in LTE spectrum, a wireless solution for provision of connectivity solutions as an alternative to fibre solution. Further investments are planned in this area to grow the business and realize the expected market disruption.

Effective 30th December 2016, CEC Africa was separated from the CEC Group and is now a sister company to CEC Plc rather than its wholly owned subsidiary. At an EGM held on 9th December 2016, the shareholders, on the proposal of the board, resolved to dividend out CEC Africa as a distribution to the shareholders of CEC. Hence, a dividend in specie of CEC Africa from CEC Plc to its shareholders was made. The effect of that transaction is that both CEC Plc and CEC Africa are now held by the same shareholders. The action was premised on the assumption that shareholders must be allowed to measure the performance of the two entities separate from each other as they face very different risks, and to enable the shareholders retain any upside that may occur in CEC Africa in the future.

The future business outlook for CEC Plc is positive, with growth expected to be derived from the increase in local power supply demand arising from the commissioning of new mine projects currently under construction.

The positive outlook in the copper price demand forecast has further ignited mining activities in Zambia and the DRC, creating an opportunity for increased demand. Lastly, growth is expected to come from the strategy around power trading and focus on the DRC mining supplies market in addition to the support for industry-wide cost reflective tariffs.

During the year, the Company paid out two dividends to its ordinary shareholders, the first being a cash dividend of K161.84 million (US$16.4 million) paid in the first quarter of 2016. The second dividend was a dividend in specie of CEC Africa of K9.68 (US$1). This dividend was paid on 30th December 2016.

The CEC Board on Tuesday, 7th February 2017 recommended an interim dividend of US Cents 1.29 per ordinary share, which translates to 12.80 Ngwee (K0.1280) per share, using the Bank of Zambia mid-rate applicable on the date of declaration. The dividend was paid to the shareholders registered in the share register of the Company at the close of business on Friday, 3rd March 2017.

Download 2017 Annual Report

Extract from 2016 annual report

The operating environment did not fundamentally differ from 2015 in that the market was undersupplied on the generation side and the prices of commodities on the global markets, particularly copper, were sluggish. Shareholders will recall that during the last review period, our supplier, ZESCO, could only meet 70% of our requirements owing to a generation deficit that hit the country mid-year. In turn, the Company could only supply 70% of its customers’ needs from Zambian sources. That our business has a direct link with copper mining means that what impacts our customers affects us directly. Hence, mines’ power demand registered a fall of 15% in 2016 compared to the previous year. Energy sales at 3,521GWh (2015: 4,092GWh) were lower than in the prior period as were capacity sales of 453MW (2015: 532MW). While the inadequate power supply was covered by our ability to source supplementary power from the region, low copper prices meant that our customers somewhat operated with caution , leading some of them to put a lid on some aspects of their operations and planned expansions.

Our response to these challenges speaks to the innovative spirit of the business and its resilience, exhibited over the years, to come through difficult episodes with a positive outcome. The dent on our financial performance that should be the inevitable result of such a drop in demand was made up for by our continued impressive performance in power trading.

On the telecoms side, CEC Liquid Telecom continues to make positive strides, growing its revenue by 17% over the previous period. Bringing to the market new products and services that are appreciated by the consumers is what will help it keep its competitive edge. I’m pleased to report that during the review period, CEC Liquid Telecom extended its national long haul fibre from Livingstone to Kazungula and Katima Mulilo, allowing for direct access to Botswana, Namibia and the sea cables; thereby increasing data availability, capacity and speeds in the country. CEC Liquid Telecom also rolled out 4G LTE infrastructure with faster connectivity speeds for more rewarding user experiences and launched Lite Speed, a high speed wireless internet network service. At year end, CEC Liquid Telecom had grown its fibre footprint alongside inner town roads and highways to 5,000km.

Download 2016 Annual Report

Energy & Coal

Significant investment in the power sector through a Company that supplies power to all the major mines in Zambia.