• CEC reports strong half-year financial results, delivering profitability and growth.
  • Historic issues resolved, significantly de-risking the business and restoring balance sheet.
  • Focus on clean energy integration and strategic infrastructure investments for future growth.

Harare - CEC, a leading power utility company, has announced its impressive half-year financial results for the period ending June 30th, 2023. Against the backdrop of a robust growth strategy and a focus on resolving historic risks, the company demonstrated resilience and delivered on its profitability expectations and other financial metrics.

Under the leadership of CEO Owen Silavwe, CEC's performance was driven by the continued strength and growth of its power trading and transmission services business segments. However, the supply business in Zambia faced challenges due to a temporary decline in copper output, impacting demand. Despite this, the company remains optimistic about the future, with newly connected mines expected to ramp up demand in line with forecasts.

During the first half of the year, CEC made significant progress in addressing historic issues. It reached a solution with Konkola Copper Mines (KCM) to resolve the long-standing KCM payment default, resulting in a part reversal of the previously impaired amount of USD 171.6 million. Additionally, the company took an impairment of USD 35.4 million on its investment in the Kabompo Hydropower Project.

Furthermore, CEC made a one-off payment as part of a settlement related to the two-year period during which CEC and ZESCO operated without an agreement. While this exceptional payment led to a drop in cash generation from operations, it significantly de-risked the business and restored its balance sheet.

CEC remains committed to integrating clean energy into its generation portfolio. The company commissioned its flagship 34MW Riverside solar plant during the reporting period and is on track with the implementation of the 60MW Itimpi solar plant. These initiatives highlight CEC's dedication to playing a role in mitigating climate change.

In addition to clean energy integration, CEC is diligently pursuing other strategic infrastructure investments. The company commissioned a crucial transmission line to supply the 40MW Lonshi mine and has initiated expansion works on the existing Democratic Republic of Congo (DRC) Interconnector to achieve a usable capacity of 400MW.

CEC's commitment to safety, health, and the environment was evident in the strong performance of its Safety, Health, and Environment (SHE) department during the reporting period. The company achieved 1.187 million man-hours without a Lost Time Accident, reflecting its focus on embedding sustainable practices across all operations.

Looking ahead, CEC remains confident in a demand resurgence driven by an improved macroeconomic environment, increased mining activities, and favorable metal prices. The company will continue to prioritize investments in strategic infrastructure and technology to support its expansionary and sustainability strategy. Additionally, subsidiary CEC Renewables will receive green project financing to further invest in clean energy and meet the growing customer demand across markets.

For the six-month period ending June 30th, 2023, CEC reported revenues of USD 186.6 million, a 2% increase from the previous year, primarily attributed to regional and local power sales growth. The company's profit for the period soared to USD 113.0 million, reflecting a remarkable 277% increase from the prior period. This exceptional performance was bolstered by the settlement agreement with KCM, resulting in the immediate writeback of USD 171.6 million.

CEC's cash balance as of June 30th, 2023, stood at USD 83.7 million, with investments in capital expenditure and one-off payments. The writeback of previously impaired amounts significantly improved the company's net assets or shareholders' funds, reaching USD 444.5 million compared to USD 331.6 million in December 2022.

While no dividends were declared or paid during the period under review, CEC recognizes the importance of rewarding shareholders. The company's dividend policy aims for a payout of approximately 50% of earnings, subject to cash availability and reserves, after sufficiently providing for working capital and other obligations.

With a strong financial performance, resolution of historic issues, and a focus on clean energy integration, CEC is well-positioned to capitalize on future opportunities and contribute to the sustainable development of the power sector.