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.

The CEC Businesses

Corporate Enquiries

2nd Floor, GreenCity
Stand 2374 on Kelvin Siwale 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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Extract from 2018 annual report

During the financial year ending 31st December 2017, revenue of K 3,724 million (US$390 million) (2016:
K3,503 million (US$355 million) was recorded driven mostly by the increase to the end-user mining tariff. Adjusted Earnings Before Interest Tax Depreciation and Amortisation (EBITDA) was K964 million (US$101 million) [(2016: K923.54 million (US$90 million)].

As at 31 March 2018, the Company had cash and cash equivalents of K645 million (US$68 million) compared to total borrowings of K835 million (US$88 million) out of which K133 million (US$14 million) is payable in 2018. The Company’s net current assets as at that date was K664 million (US$70 million). Based on the financial forecast, it is expected that the working capital of the business over the next 12 months will be positive and that the Company will be profit-making during the same period.

The telecoms subsidiaries (CEC Liquid Telecom and Hai Telecoms) has been expanding its market share in the wholesale and retail segments and have been profitable two years consecutively; exhibiting potential for further growth prospects. The CEC board further recognises that the Company is primarily a power business and that there is need to continuously review its strategy around its continued investment in the telecoms operations going forward.

On 23 January 2018, the Company received a firm intention by Zambian Transmission LLP to buy all the shares in the capital of CEC. The board considered the offer and appointed an Independent Committee of the Board to consider the offer. The offer was sent, through an offer document to all shareholders, with an offer period commencing 20 February 2018.

Total Dividend paid for 2017 was K209 million (US$21 million) [(2016: K161.8 (US$16.4 million)].

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.

Energy & Coal

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