CEC 2024 Integrated Annual Report
LETTER FROM THE CHAIRPERSON
On behalf of the Board of Directors, I am pleased to present CEC’s first Integrated Report, a significant milestone in our journey toward greater transparency, accountability, and value creation. This report reflects our commitment to integrating financial performance with ESG considerations, ensuring that we generate long-term sustainable value for all our stakeholders.
This integrated report not only highlights our financial achievements but also provides insight into how we are embedding sustainability into our decision-making processes.We recognise that our long-term success depends on our ability to balance profitability with environmental stewardship and social impact. By aligning our operations with international best practices in integrated reporting, we aim to provide stakeholders with a holistic view of our value creation strategy.
The year under review was marked by notable challenges, particularly the effects of the drought on the rainfall pattern, which led to load management in the country and existing regional power shortages. These factors put immense pressure on power supply stability and increased the need for innovative solutions to ensure continued service delivery. Despite these difficulties, CEC demonstrated resilience by implementing strategic measures that allowed us to maintain reliable power supply to our customers. Our ability to navigate these obstacles underscores the strong operational framework and long-term sustainability focus of the Company.
Delivering value to our shareholders remains at the forefront of our priorities. This is evidenced by the 8.8% increase in our dividend payout for 2024, reflecting our commitment to rewarding investors for their continued confidence in CEC. Beyond financial returns, our focus on executing our long-term strategy continues to create lasting value.
The sound execution of the Company’s strategy led to the achievement of key milestones in 2024 amongst them, the commissioning of our second Solar PV Plant in Itimpi with a generation capacity of 60 MWp, reinforcing our commitment to renewable energy expansion. Additionally, we successfully issued the second tranche of our Green Bond under our subsidiary, CEC Renewables, raising US$ 96.7 million. This funding will support further renewable energy projects, strengthening our sustainable energy portfolio and ensuring long-term value creation for stakeholders.
Sustainability remains a fundamental pillar of our business strategy. As part of our ESG commitments, we have continued to modernise our infrastructure with a focus on integrating environmentally friendly solutions. Our investments in solar generation including the upcoming second phase of our Itimpi Solar PV Plant which will have a generation capacity of 136 MWp, reinforce our commitment to sustainability.
Investments in new technology have played a critical role in enhancing operational efficiency and reducing our environmental footprint. We remain on track to achieve our sustainability ambitions by 2027, with a firm commitment to further investment in green energy, energy efficiency improvements, and the reduction of our carbon footprint across our operations.
Our expansion strategy continues to yield positive results, with increased customer acquisition in both the Zambian and DRC markets. As demand for reliable and sustainable power grows, the Company has made significant investments in generation and transmission infrastructure to meet both current and future customer needs.
Infrastructure modernisation remains a key focus area, with targeted investments in solar power generation and improved transmission capacity. The commissioning of new energy projects, coupled with improved power delivery mechanisms, will ensure that CEC remains a preferred energy partner to industries.
Financial Performance
Our financial performance in 2024 reflects both strong revenue growth and prudent financial management. We recorded a revenue of US$ 547.7 million, a 43% increase compared to 2023, driven by growth in regional and local power sales.
While revenue grew significantly, our profit of US$ 96.9 million was 30% lower than in 2023, largely due to one-off transactions. These included the writeback of previously impaired receivables from KCM and the impairment of our investment in the Kabompo Hydropower Project. Despite this, our balance sheet remains strong, positioning us well for future investments and continued financial stability.
Commitment to Shared Value Creation
We continue to place a strong emphasis on creating shared value for all stakeholders. This is achieved through strategic partnerships, supplier payments, CSR initiatives, statutory contributions to government, and fulfilling financial obligations to lenders.
A key milestone in 2024 was the coupon payment of US$ 5.2 million by our subsidiary, CEC Renewables, on the initial US$ 53 million Green Bond tranche issued in 2023. This reflects our ability to meet financial obligations while driving sustainable growth. Additionally, our commitment to community development was underscored by our investment in CSR initiatives, totalling US$ 2 million. Notably, we handed over a refurbished ward and newly constructed paediatric ICU to the Kitwe Teaching Hospital at a cost of US$ 0.3m, demonstrating our dedication to uplifting healthcare services in our operating communities.
Corporate Governance and Leadership Changes
Strong corporate governance remains the foundation of our business. The Board continues to uphold principles of transparency, accountability, and ethical conduct in all aspects of our operations. Effective governance structures have enabled us to oversee strategic investments, risk management, and employee welfare.
In 2024, we bade farewell to three esteemed Board members, Mr Derek Chime, Mr Munakupya Hantuba, and Mr Tisa Chama who retired on 2nd April 2024, 1st September 2024, and 27th November 2024, respectively. We are grateful for their invaluable contributions and leadership, which have significantly shaped CEC’s strategic direction. Their presence will be greatly missed, and we extend our best wishes for their future endeavours. We welcome to the Board Mrs Mukwandi Chibesakunda and Mr Christoper Mubemba and look forward to their impactful contributions to the Board.
Business Outlook and Industry Opportunities
As we approach the conclusion of our strategic period up to 2027, we remain confident in our strategic direction and the opportunities ahead. The recent reforms in the Zambian energy sector, particularly the introduction of open access, present new growth prospects that CEC is well-positioned to capitalise on. Our subsidiaries, CEC Renewables and CEC DRC Sarl, continue to explore new market opportunities and expand their reach.
The increasing demand for renewable energy, the resolution of the mine ownership in Zambia and the expansion of the mining sector in the DRC offer promising opportunities. CEC Renewables expertise in developing solar power plants, coupled with the success of our Green Bond issuances, places us in a strong position to drive sustainable growth. Additionally, our investments in increasing the transfer capacity of the DRC interconnector and enhancing risk management frameworks will support continued success in this high-growth market.
The overall performance of CEC in 2024 has been commendable, and we remain optimistic about achieving further milestones as we approach the conclusion of our strategic period.
Conclusion and Appreciation
On behalf of the Board, I would like to extend my sincere gratitude to the management team and staff of CEC for their unwavering dedication and commitment to excellence. I also wish to express appreciation to our shareholders, customers, investors, and business partners for their continued support and confidence in our vision.
As we move forward, we remain focused on innovation, sustainable growth, and value creation. We look forward to another year of success and progress, driven by our commitment to powering industries with reliable and sustainable energy.
LONDON MWAFULILWA
Board Chairperson
