CEC | Release of HY2016 interim results
In compliance with the requirements of the Securities Act and the Listing Rules of the Lusaka Securities Exchange, Copperbelt Energy Corporation Plc announces its unaudited results for the period ended 30 June 2016.
CEC Plc profile
CEC Plc’s core business remains the supply of power to the mines based on the Copperbelt and in the Democratic Republic of Congo (DRC) in conjunction with that country’s state utility, SNEL. CEC Plc continues to wheel power through its network on behalf of ZESCO Ltd on the Copperbelt, and to operate an interconnector with the DRC.
CEC Plc has equity interests in the following entities, which make up the CEC Group:
- 45% indirect equity interest in Abuja Electricity Distribution Company (AEDC Plc) of Nigeria, a distribution company with franchise rights to supply and distribute power in four states, including the federal capital Abuja.
- 50% direct interest in CEC Liquid Telecommunication Limited (CEC Liquid Telecom), whose business is the provision of wholesale capacity and internet bandwidth to the Zambian market, and indirectly in its retail arm, Hai Telecommunications Limited.
- 20% indirect interest in North South Power Company Limited of Nigeria, a company that has a concession to operate the 600MW Shiroro hydro power station.
Financial highlights
- The Zambian businesses on a consolidated basis posted a profit of ZMW275 million (USD25.9 million) compared to ZMW225 million for the previous period. The increase in profitability is mainly attributed to increased power sales to the DRC mines and increased sales at the telecoms unit.
- Revenue at half year increased by 40% from ZMW2.252 million to ZMW3.776 million. This is mainly on account of increased power sales to the DRC mines.
- Net loss of ZMW1.669 million compared to a net loss of ZMW571 million the previous period. Net loss is mainly attributed to an exchange loss of ZMW1.140 million (USD107 million) arising from the devaluation of the Naira on USD borrowing and bad debt provision of ZMW516 million (USD52 million).
Dividends proposed and paid
In March 2016, the Company paid a total of ZMW163 million (USD16.4 million) in dividends.
Performance update
The macroeconomic environment in Nigeria continued to pose some challenges to the Group’s operations; as well as low commodity prices which impact on our customers’ liquidity and ability to meet their financial obligations. The depreciating Naira resulted in increased foreign exchange risk, translating into a loss of ZMW1.140 million.
Operationally on the Zambian end, the business continued to operate under the partial force majeure under the Bulk Supply Agreement with our main power supplier and the respective Power Supply Agreements with our mine customers. This entails that we can only access 70% of our power requirements from Zambian sources while the rest of our requirements have to be sourced outside of the country. It is expected that this regime will continue until year end. The challenges relating to low commodity prices on the global market have led to some of our customers scaling back on their operations with the effect that our power sales are down by about 16% in Zambia. We expect higher demand to return mid to end 2017 when projects that a number of our customers have been implementing begin to draw power. Further, loss of sales on the Zambian market during this period has been more than made up for through our power sales to the DRC market. In this regard, the business continued to grow on the international power trading segment.
In Nigeria, power generation was negatively affected by low gas supply, which impacted the allocation of power to AEDC. It is uncertain, at this stage, as to when the situation would normalize. Overall, the Nigerian power sector remains constrained on account of low liquidity, which is affecting all players across the value chain.
Health, Safety, Environment and Social (HSES)
During the period, the Zambian operations maintained satisfactory levels of performance in HSES and recorded nil fatality and no serious environmental incidents. At the Nigerian operations, Shiroro hydro power plant continued with its excellent performance as no reportable incidents were recorded in the period under review. At AEDC, the poor condition and construction standards of part of the distribution network continued to pose significant challenges with respect to the safety of both employees and the public. AEDC is working with industry regulators to identify and draw up programs for rectification of the worst parts of the network.
Overall, the Group carried out various HSES programmes intended to improve HSES performance; among them risk management and sustainability education, visible felt leadership programme, and contractor management and monitoring.
Projects update
The CECA SL thermal generation project has received support from stakeholders and is on course towards completion of the development phase. It is planned that financial close for the development of the first 50MW would be reached soon.
By Order of the Board
Julia C Z Chaila (Mrs.)
Company Secretary
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