CEC releases Consolidated Audited Results for the Financial Year Ended 31 December 2023
Managing Director, Owen Silavwe, commented:
“I am thrilled to present our strong business performance for 2023. The Group has continued to make progress in the delivery of its strategic priorities which should steadily translate into value for our stakeholders. As evidenced by the key performance statistics presented herein, we continue to deliver on our operational and financial performance. Our own generation, third-party sources and power network are managed efficiently, enabling the delivery of safe and reliable power supply and transmission services to our customers. Our strong financial performance alongside the debt writeback arising from the settlement of the previously impaired receivables (one off impact equal to USD121 million writeback) has fully restored the Group’s balance sheet and set a great stage for further growth of the business. We believe a combination of financial discipline and efficient allocation of capital should see us maintain a strong and resilient balance-sheet going forward and support the realization of our targeted business opportunities.
Our pursuit for operational excellence and efficient growth has been firmly anchored on fostering a safe and healthy working environment, evidenced by our relentless efforts to maintain best-in-class safety performance leading to an achievement of 2.3 million-man hours without a Lost Time Accidents, an impressive 21% improvement over the previous year.
We remain focused on achieving our strategy for the period up to 2027, by placing priority on our set key objectives over this period which are themed around optimizing performance, strengthening our sourcing and contractual arrangements, enhancing organizational capabilities, and ultimately pursuing sustainable growth. We will aim to make investments in a number of prioritized projects forming part of our strategy during this period. In this regard, USD45.4 million was invested in both infrastructure modernization and new expansion projects during the year. Investments made extend to renewable energy projects (Solar PV plants to be specific), phase one of the voltage support equipment to make available additional transmission capacity in order to facilitate increased transfer flows on the DRC Interconnector which should underpin increased regional power trading as well as continued investments in infrastructure upgrade and modernization of our power network.
In pursuit of the energy transition agenda with the aim of enhancing sustainable power sourcing, we commissioned our 34MW Riverside Solar PV plant, and made significant progress in the construction of the first phase 60MW Itimpi Solar PV Plant, with completion expected in the first half of 2024. In promoting sustainable and responsible finance, we registered with the Securities and Exchange Commission and listed on the Lusaka Securities Exchange, Zambia’s debut USD200 million Green Bond whose proceeds will partly be directed towards the refinancing of the above two solar PV projects. The first tranche equivalent to USD53.5 million of the Green Bond issued during the year was overly subscribed, a position which gives impetus to the future fundraising plans in support of the attainment of our generation target of 200MW of solar PV by end 2025. To achieve this, we will be commencing the construction of the second phase 126MW Itimpi Solar PV project in 2024. This will be funded through issuance of further tranches under the Green Bond.
We look ahead resolute in our pursuit of quality and sustainable growth which is at the centre of increasing value delivery to all our stakeholders. The continued improvement in the business environment, the anticipated increase in foreign direct investments in the mining sector in both Zambia and DRC, coupled with government’s determined efforts to create a private sector led economy, is highly supportive of a well-executed growth agenda over the coming years. Prudent capital allocation will be key as we pursue growth opportunities in the market. As always, we aim to maintain a disciplined approach to our investments, effectively manage our risks and ultimately ensure consistent and progressively increased rewards to our stakeholders.”
Financial Highlights
Revenue increased to USD382.3 million (2022: USD374.4 million) signalling an increase of 2% underpinned by the local power sales and the regional power sales which increased 5% and 2% respectively. On the other hand, wheeling revenues reduced by 8% driven by the discount which was part of the negotiations that gave rise to the Debt Settlement Agreement.
The profit for the year at USD137.6 million, represents an increase of 171% from USD50.8 million in 2022. The increase in earnings is as a result of the net impact (USD136.2 million), of the one-off debt writeback and the impairment of the Kabompo costs. The balance sheet has been restored to its historical levels.
Investment spend of USD45.4 million was made during the year in prioritised projects such as the renewable solar projects, transmission assets and in modernising its infrastructure. Further, and as part of the sustainable financing for its projects, a green bond of USD53.5 million was issued and listed on the Lusaka Securities Exchange.
Cash balance as at 31 December 2023 was USD108.9 million (2022: USD83.3 million).
The Company declared and paid an interim dividend of USD55.2 million, which represents a 10% increase over the 2022 dividend distribution of USD50.4 million.
Cautionary on Forward-looking Information
This summary results announcement contains financial and non-financial forward-looking statements about the Company’s performance and position. We believe that while all forward-looking information contained herein is realistic at the time of publishing this report, actual results in future may differ from those anticipated. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause CEC’s actual results, performance or achievements to differ materially from the anticipated results, performance or achievements expressed or implied by these forward-looking statements. Although CEC believes that the expectations reflected in these forward-looking statements are reasonable, no assurance can be given that such expectations will prove to have been correct. We take no obligation to revise or update these forward-looking statements to reflect events or circumstances that arise after the statements have been made.
About the Company
CEC’s core business is the supply of power to the copper mines in the Copperbelt Province of Zambia and the DRC. CEC provides the transmission use of system and wheels power through its network on behalf of ZESCO Ltd and other users in Zambia and the Southern Africa Power Pool. The Company operates a transmission interconnection with the DRC. CEC has six incorporated subsidiaries – CEC-Kabompo Hydro Power Limited (CEC-KHPL), CEC DRC Sarl, CEC-InnoVent South, InnoVent-CEC North, CEC Renewables Limited and Power Dynamos Sports Limited (PDSL). CEC-KHPL is the special purpose vehicle through which CEC has been pursuing the development of the Kabompo Gorge hydroelectric power project in Mwinilunga District of the North-Western Province of Zambia, while CEC-DRC Sarl is a special purpose vehicle incorporated to secure the power trading segment and grow the Company’s interest in the DRC market. CEC-InnoVent South and InnoVent-CEC North are joint ventures through which the Company intends to develop two solar PV projects in Kitwe. PDSL is a special purpose vehicle which runs Power Dynamos Football Club.
By Order of the Board
Julia C Z Chaila (Mrs.)
Company Secretary
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