The Directors of Copperbelt Energy Corporation PLC (“CEC”) are pleased to announce the release of the annual report for the year ended 31 December 2018. Below is an extract from the Chairman’s Statement:
The Board, working with management, reviewed the Company strategy, factoring in relevant changes in the external environment with potential impact on the business as well as internal capabilities and resources with significant value to the business.
Consistent with our 2017 approach, we continued to drive the strategy which includes optimising asset management, strengthening power sourcing and pricing, exploring business growth and enhancing our relationships and partnerships with key stakeholders. Performance against our strategy was on track particularly with regard to:
- Telecoms investment: we successfully divested the telecoms assets (our 50% stake in CEC Liquid Telecom), allowing us to solely focus on the power business going forward;
- Regional power trading: we continued to drive growth in this area and as a result, we successfully signed new long-term contracts with more mining customers in the DRC. Regional power trading provides the business with diversified and improved earnings;
- Network infrastructure modernisation: significant progress was made in modernising our network infrastructure aimed at improving the operational efficiency in the delivery of service; and
- Tariff adjustment: the tariff increase process was successfully concluded and implemented with all customers. We continue to be an active participant in the CoSS being undertaken by the ERB; which will underpin tariff discussions going forward.
The Board remains steadfast in actively monitoring operational performance and holding management accountable for the execution of the strategy in accordance with set performance benchmarks.
The Company enjoyed strong financial performance in 2018 with earnings growing by 8% on a year by year basis. We continue to focus on cost efficiencies and exploring business opportunities that not only enhance our service offering to the existing and new customers but are also important in sustaining profitable operations for the Company.
Reflecting the Board’s continued confidence in the future performance of the business and in line with our dividend policy of up to 50% payout ratio based on earnings, subject to the availability of cash, reserves and having provided adequately for working capital and other obligations, in March 2018, the Company paid out a cash dividend of US Cents 1.29 per ordinary share, totaling USD26 million, compared to US Cents 1.01 (total USD21 million in 2017).
Some of our shareholders actualised their notional valuation during the year when the Company’s share price reached a peak of ZMW2.10. The appreciation was as a result of the Zambian Transmission LLP offer for all the ordinary shares in the Company for a valuation of USD380 million exclusive of the 2018 dividend. Though the Zambian Transmission LLP offer could not close due to some conditions remaining unfulfilled, we believe, based on the offer price, that it provides a good benchmark and impetus for the Company to continue on a path of sustained growth and operational excellence to actualise its intrinsic value and continue to provide shareholders with a positive return on their investment. This should allow the Company to remain attractive to investors.
Looking to the future
The Company remains committed to creating sustained value for all stakeholders through successful execution of its strategy to provide long-term sustainable value. The Company is continuing to pursue opportunities in its key markets of Zambia and the DRC where balancing the need for short term profitability and long-term value creation will remain important. The launching into commercial operation, in 2019, of our DRC office should lend support to deepening our service offering in that market and opening up further opportunities for growth. On the home front, we will continue to pursue opportunities in generation and transmission that align with our core business, including participating in Government driven programmes such as GET FiT Zambia and Scaling Solar.
In 2017, we started working with other sector players aiming to achieve a tariff path that will help underpin IPP investments in the energy sector and support economic growth. Indeed, during 2018, we continued to work very closely with all players including the Government, ZESCO a