CEC HY2017 financial results
We are pleased to release the 2017 interim results for the period ended 30 June 2017. Below are excerpts from the results.
I. Introduction
CEC’s core business remains the supply of power to the mines based on the Copperbelt and in the recent years, the Company has extend its power supply services to a number of mining companies in the Democratic Republic of Congo (DRC) where it works with SNEL (DRC’s state owned utility) to deliver reliable power to mining customers. CEC continues to wheel power through its network on behalf of ZESCO Ltd (ZESCO) on the Copperbelt, and to operate an interconnection between Zambia and the DRC…
II. Financial Highlights
- Revenue at half year increased by 3% in United States Dollar (USD) terms but was 9% lower in Zambian Kwacha (ZMW) terms from ZMW1,914 million to ZMW1,749 million compared to the same period in 2016 mainly due to the appreciation of the Kwacha against the Dollar.
- The average exchange rate for the six months ended 30 June 2017 was K9.54 (2016: K10.70) to the USD, an appreciation of 11%. The closing rate on 30 June 2017 was K9.14 (2016: K10.48).
- The Company has recorded a profit after tax, for the period, of ZMW211 million compared to a profit of ZMW256 million in 2016. The 18% drop in profit is mainly attributed to currency (ZMW) appreciation, which has resulted in increased Kwacha operational costs such as labour.
- Power trading margin increased by 11% in USD terms compared to 2016, however, due to ZMW appreciation, the margin reduced by 1% in ZMW terms.
- The new tariffs for 2017 were implemented effective 1 January 2017 to all the mines except for one mine which has continued to resist the increment, hence, the increase in payables of 11%.
III. Dividends Proposed and Paid
In March 2017, the Company paid a dividend of ZMW200 million (USD21 million), which translated to 12.80 Ngwee (ZMW0.1280) per share. In 2016, a dividend of ZMW163 million (USD16.4 million), translated to 11.36 Ngwee (ZMW0.1136) per share, was declared and paid.
IV. Performance Update
Overall, the business performance was strong and positive on the back of increased international power sales. With the power availability situation in the country having improved substantially and commodity prices including that of copper showing an uptrend, we expect that our customers will begin to demand more power post half year 2017, with a return to full recovery anticipated towards the backend of 2018. Consistent with our projections, the sales to June 2017 at 1,672GWh were 5% less than the energy sales for the same period in 2016 (1,768GWh)…
V. Health, Safety, Environment and Social (HSES)
Our commitment to HSES excellence at both operations and project levels remained at the core of our Company values. During the period, man-hours without a system based lost time accident extended from 1.457 million hours at the end of 2016 to 2.255 million hours. From an environmental sustainability perspective, our legal compliance to all environmental obligations continues to be satisfactory. The Company received the 2017 Environment Award conferred by the Zambia Environmental Management Agency in recognition of its overall contribution to sustainable environmental practices which underpin our business strategy.
VI. Telecoms Business
The performance of CEC Liquid Telecom and its retail arm, Hai, for the half year was very strong and ahead of budget. Revenue grew by 27% compared to the same period last year. Strong performance is on the back of sustained customer uptake across wholesale, enterprise and retail products. CEC Liquid Telecom commenced and continues to make impressive progress in the roll out of its 4G LTE service to all the ten provinces in-country. Retail internet penetration is expected to drive growth for the business as the company delivers quality services to the Zambian population.
VII. Outlook
The Company expects to continue working on its strategy aimed at market consolidation including its enhanced power sourcing strategy. The Company will actively participate and support intentions by the Government to diversify the country’s energy mix, increase electricity access and develop a strategy to deliver on a more robust tariff mechanism. The Company has also already commenced the execution of a 1MW grid scale solar project located in close proximity to the Copperbelt University (CBU) which is targeted for commissioning at the end of 2017. In addition to building internal capacity, it has been agreed with the CBU that CEC will make the solar plant available to CBU, as part of the Company’s CSR programme, for training of solar engineers.
With respect to the upward adjustment of tariffs, CEC expects that the 2017 tariff will be fully implemented before the close of the year.
By Order of the Board
Julia C Z Chaila (Mrs.)
Company Secretary
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