Copperbelt Energy Corporation Plc FY 2013 financial results


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Copperbelt Energy Corporation Limited leading Energy company listed on the Lusaka Stock Exchange has released its Full Year Results.Check out insights into this company in their presentation which appears below
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Copperbelt Energy Corporation Plc FY 2013 financial results

  1. 1. Copperbelt Energy Corporation Plc [Incorporated in the Republic of Zambia] Company registration number: 39070 Share Code: CEC ISIN: ZM0000000136 [“CEC”] SUMMARY CONSOLIDATED AUDITED RESULTS FOR THE YEAR ENDED 31 DECEMBER 2013 In compliance with the requirements of the Securities Act and the Listing Rules of the Lusaka Stock Exchange, Copperbelt Energy Corporation PLC announces the audited results for the year ended 31st December 2013 (Full Year Results). Summary Consolidated Statement of Comprehensive Income for the year ended 31st December 2013 Audited 31 Dec 2013 Audited 31 Dec 2012 K’000 K’000 Revenue 1,706,730 1,358,747 Other operating income 38,987 51,285 Gain on bargain purchase 716,027 - Share of profit from Associates 9,206 - Profit before interest and tax 599,949 158,271 Net finance costs (43,308) (332) Income tax expense (86,370) (48,617) Profit attributed to shareholders 457,644 109,322 Earnings per share (Kwacha) 0.46 0.11
  2. 2. Summary Consolidated Statement of Financial Position as at 31st December 2013 31 Dec 2013 31 Dec 2012 K’000 K’000 Total non-current assets 4,088,048 1,255,275 Total current assets 572,591 351,250 Total Assets 4,660,639 1,606,525 Total equity 2,476,010 935,658 Total non-current liabilities 960,478 319,228 Total current liabilities 1,224,151 351,639 Total Equity and Liabilities 4,660,639 1,606,525 Summary Consolidated Statement of cash flows for the year ended 31st December 2013 Year to 31 Dec 2013 Year to 31 Dec 2012 K’000 K’000 Net cash flows from operating activities 1,495,600 141,279 Net cash flows used in investing activities (2,908,727) (221,171) Net cash flows on financing activities 1,052,088 (76,804) Net decrease in cash and cash equivalents (361,039) (156,696) Cash and cash equivalents at 1 January 20,876 78,882 Effects of exchange rate changes on the balance of cash held in foreign currency 451,778 98,750 Cash and cash equivalents at 31 Dec December 111,615 20,876 CEC GROUP PROFILE The Copperbelt Energy Corporation PLC (“The Company”) is an independent power generation, transmission and distribution company, with interests in closely linked
  3. 3. businesses in Zambia and the African region, including optic fibre based telecommunications. The Group now comprises the Company and its direct shareholding in three companies:  Realtime Technology Alliance Africa Zambia Limited (Realtime Zambia) (50% joint venture);  CEC Liquid Telecommunications Limited (50% joint venture) ; and  CEC Africa Investments Limited (CECA) - Mauritius (100% subsidiary). CECA is the vehicle through which CEC Plc undertakes international investments in the power sector in sub-Saharan Africa to achieve its vision of becoming a leading investor, developer and operator of energy infrastructure in Africa. During the year ended 31 December 2013, CECA made the following investments:  75% equity investment in KANN Utility Company Limited, a Nigerian investment holding company, which during the year acquired 60% equity interest in the Abuja Electricity Distribution Company (AEDC), also a Nigerian Company.  100% equity investment in CEC Lenux Investments Limited, a Mauritian Investment Company, which during the year acquired 20% equity interest in North South Power Limited, a company holding a 30 year concession in the operation of Shiroro Hydro Electric Plc. Financial Report Significant issues worth noting as the financials are presented:  This is the first year of incorporating the results from the Nigeria investments.  The Group reported a profit of K458 million, which includes a one-off gain of K716 million arising from the gain on bargain purchase on the acquisition of the subsidiary, AEDC; without which the Group would have recorded a loss of K258 million.  At the reporting date, the Group’s current liabilities exceeded the current assets by K652 million. During the year, the Company entered into various bridge financing arrangements in order to provide inter-company loans to CEC Africa Investments Limited to complete the acquisition of a 60% interest in AEDC through KANN Utility Company Limited and a 20% interest in North South Power Company Limited (the Concessionaire for the Shiroro Hydroelectric Power Station concession) through CEC Lenux Investments Limited. At 31st December, total borrowings were K569 million, of which K514 million was repayable within 12 months. These bridge finance facilities were a significant contributing factor to Net Current Liabilities for the Group. This matter was addressed through (i) raising additional equity funds for the Company through a Rights Offer approved by the Shareholders in July 2013, that closed in March 2014 raising a total of
  4. 4. K387.5m and (ii) entering into a new long term debt facility with a consortium of six international banks in June 2014 for a total of $120 million. The funding raised from the Rights Offer and the new debt facility was sufficient to re-pay all bridge finance and short term debt facilities of the Company. Financial Results The Group’s total revenue increased by 26%, mainly due to K253 million revenue from CEC Africa and the 80% increase in telecoms revenue against an increase of 8% in the electricity revenue. However, the Group’s cost of sales increased by 41% resulting in a reduction in the Group’s gross profit from K383 million in 2012 to K336 million. This reduction was further compounded by a 24% reduction in other income and 81% increase in operating costs. The increase in operating costs was mainly due to an increase in staff costs at Group level (48%); higher Group audit fees; provision for bad debts and Group project costs. However, the Group operating loss of K116 million was mitigated by a one-off gain of K716 million on CEC Africa’s purchase of the assets in the AEDC. As a consequence, the Group net profit increased from K158 million in 2012 to K600 million in 2013. The Group’s finance costs increased from K332,000 in 2012 to K43 million in 2013. This increase was due to the financing costs relating to the borrowing by The Group for investment. The Group’s total assets grew from K1,606 million to K4,661 million. This growth was mainly on the acquisition of the transmission and distribution assets of AEDC (K2,442 million). The Group has increased its return on equity – 18% (2012:12%); return on assets – 10% (2012:7%) and Earnings per share – K0.46 (2012: K0.11). Significant events subsequent to the reporting date i. On 27 December 2013, a Rights Offer was made by way of renounceable Rights on the basis of 5 Rights Offer Shares for every 8 CEC shares held by Qualifying Shareholders on the Record Date, Friday 31 January 2014, for subscription at a price of ZMW0.62 per Rights Offer Share. The rights offer closed on 7th March, 2014 and the gross proceeds for all the rights followed was K387,500 thousand. These proceeds were utilised towards the servicing of the short term facilities from Standard Bank South Africa. ii. In May 2014, The Company entered into $120 million long term debt of which $90 million was drawn down in June 2014. Of this drawdown, a further $40 million went to the repayment of the short term debt held at 31st December 2013. In addition, other short term liabilities were also repaid, while part of the proceeds are being invested in approved Zambian projects that include the second Zambia-DRC
  5. 5. 220kV Interconnector, Kabompo Hydroelectric Power and the Biomass generation projects. iii. The Company is majority owned by Zambian Energy Corporation (Ireland) Limited (“ZECI”), which holds 52% shareholding, whilst the balance of 48% is held by various institutional and retail investors. ZECI is wholly owned by Zambian Energy Corporation Limited (“ZECL”), a Zambian private limited company. ZECL and its shareholders undertook an internal reorganization involving changes in its ownership but no changes in the level of ZECI’s 52% ownership of CEC shares. As part of the internal reorganisation of ZECL, Batoka Energy Holdings (Ireland) Limited (“Batoka Ireland”) acquired 40% of ZECL, which was held by the minority shareholders of ZECL (the “ZECL Minority Shareholders”) Namely, the Development Bank of Southern Africa (“DBSA”) with 20%, Netherlandse Financierings-Maatschappij Voor Ontwikkelingsladen NV (“FMO”) with 18% and Aldwych Zambia Investments Limited (“AIL”) with 2% (collectively the “Minority Shareholders”). This acquisition was financed by way of an exchangeable bond issued to Standard Chartered Private Equity Limited. The Securities and Exchange Commission of Zambia (“SEC”) formally advised the Company that the internal reorganisation of ZECL, resulted in an obligation on Batoka Ireland to make a mandatory offer to CEC shareholders under the Takeovers Rules. Therefore, as directed by the SEC, Batoka Ireland undertook a mandatory offer to the minority shareholders of CEC to acquire the shares in CEC not owned by ZECI, pursuant to Rule 56 of the Takeovers Rules. The mandatory offer by Batoka Ireland to the minority shareholders of CEC opened on 05 May 2014 and closed on 30 May 2014. The net result was that after the conclusion of the mandatory offer process, the shareholding in CEC had not changed at all. Zambian Energy Corporation (Ireland) Limited (“ZECI”) still holds 52% shareholding whilst the balance of 48% is still held by various institutional and retail investors. For its part, Batoka Ireland still holds the 40% shareholding that it acquired in ZECL after the restructuring of ZECL. Accordingly, the mandatory offer did not reduce the free float of CEC, which still exceeds 25% and is fully compliant with the requirements of the LuSE Listing Rules. iv. Consequential to the change in shareholding at ZECL, there were changes in the Board of Directors after 31st December 2013. Mrs Jean Madzongwe and Mr Klaas Bleeker retired from the Board of Directors of the Company on 18th March 2014 and were replaced by Mr Ronald Tamale and Mr Kanad Virk, nominees from Standard Chartered Private Equity Limited . On the same date, Mr Munakupya Hantuba a non-executive Director was appointed Vice-Chairperson of the Board. Future Prospects
  6. 6. The Group is well positioned as a developer of infrastructure in Africa and respected for its skills in designing and operating transmission systems. The CEC Group looks to continue to grow and diversify, whilst maintaining strong earnings and a healthy financial position. Dividends Proposed and Paid During the year, a dividend of K20 million was proposed and paid, which represented a dividend of K20 per share. By Order of the Board Julia C Z Chaila (Mrs.) Company Secretary