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«SENS ANNOUNCEMENT (the “Notice” or “Announcement”) ISSUER COPPERBELT ENERGY CORPORATION PLC (“CEC”) [Incorporated in the Republic of ...»

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SENS ANNOUNCEMENT

(the “Notice” or “Announcement”)

ISSUER

COPPERBELT ENERGY CORPORATION PLC (“CEC”)

[Incorporated in the Republic of Zambia]

Company registration number: 39070

Share Code: CEC

ISIN: ZM0000000136

Authorised by: Julia C Z Chaila – Company Secretary

SPONSOR

Stockbrokers Zambia Limited

[Founder Member of the Lusaka Securities Exchange] [Regulated and licensed by the Securities and Exchange Commission of Zambia] Contact Number: +260-211-232456 Website: www.sbz.com.zm APPROVAL

The captioned Notice or Announcement has been approved by:

i. the Lusaka Securities Exchange ii. the Securities and Exchange Commission iii. Stockbrokers Zambia Limited

RISK WARNING

The Notice or Announcement contained herein contains information that may be of a price sensitive nature.

Investors are advised to seek the advice of their investment advisor, stockbroker, or any professional duly licensed by the Securities and Exchange Commission of Zambia to provide securities advice.

ISSUED: 23 March 2016

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 2015 In compliance with the requirements of the Securities Act and the Listing Rules of the Lusaka Stock Exchange, Copperbelt Energy Corporation Plc announces its audited results for the year ended 31 December 2015.

Summary consolidated statement of profit or loss and other comprehensive income for the year ended 31 December 2015 Audited Year Audited Year ended ended 31 Dec 2015 31 Dec 2014 ZMW’000 ZMW’000 Revenue 5,322,432 3,575,885 Share of (loss)/profit in associate (17,553) (5,076) Other income 297,467 90,132 (Loss)/profit before interest and tax (1,304,511) (615,816) Net finance costs (397,334) (303,371) Income tax expense (199,793) (90,334) (Loss)/profit after tax (1,901,638) (1,009,521) Other comprehensive

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 The Group made positive strides in most respects as it continues to focus on stabilizing its operations in Nigeria and growing its Zambian operations.

 Revenue for the Group has increased by 49% in Zambian Kwacha (ZMW) terms compared to the year 2014. This is mainly due to the results being translated from United States Dollars (USD) to ZMW where the depreciation of the Kwacha positively impacted on the results. In USD terms, revenue increased by 6%.

 The Group has recorded a net loss of ZMW1.902 million compared to a loss of ZMW1.009 million last year. The Group loss is attributed to high Aggregate Technical Commercial and Collection (ATC&C) losses at Abuja Electricity Distribution Plc (AED Plc) in Nigeria as well as a one-time impairment loss on Property, Plant and Equipment.

 CEC Plc entity revenues increased 33% from ZMW1,797m to ZMW2,685m and the Company’s gross profit, at ZMW746 million, increased 37% compared to prior year.

The increase is attributed to the depreciation in the Kwacha. The Zambian business also increased its supplies of power to customers in the Democratic Republic of Congo (DRC), which positively impacted on the results.

 The business plan of AED Plc provides for a five-year turnaround period and, so far, management is broadly on track to meet the various performance targets.

Additionally, the business improved its billing efficiency during the year, which led to a steady increase in energy billed.

II. CEC Plc Profile

CEC’s core business remains the supply of power to the mines based on the Copperbelt and more recently is supplying certain mining companies in the DRC in conjunction with that country’s state utility, SNEL. CEC continues to wheel power through its network on behalf of ZESCO Ltd on the Copperbelt, and to operate an interconnector with the DRC.

In addition to power supply, CEC Plc has interests in the telecommunications sector, with a 50% joint venture interest in CEC Liquid Telecommunication Limited (CEC Liquid Telecom), whose business is the provision of wholesale capacity and internet bandwidth to the Zambian market. During the year, CEC Liquid Telecom also took on the provision of IP connectivity and internet services, including corporate connectivity solutions and a host of other ICT services, following its acquisition of Realtime Technology Alliance Africa Limited (now renamed “Hai Telecommunications Limited”).

CEC Plc has incorporated two subsidiaries, CEC-Kabompo Hydro Power Limited (CECKHPL) and CEC Africa Investments Limited (CEC Africa). CEC-KHPL is a special purpose vehicle through which CEC Plc is developing the 40MW Kabompo Gorge hydroelectric power project in Mwinilung’a District of the North-Western Province of Zambia.

CEC Africa has a 75% interest in KANN Utility Company Limited (KANN), which in turn has a 60% interest in AED Plc of Nigeria. AED Plc has a franchise for distributing electricity in four states, comprising the Federal Capital Territory of Abuja, Niger, Kogi and Nasarawa.

Serving 133,014 sq. km with a population of at least 10.5 million people in 2.3 million households, AED Plc covers a relatively lightly populated area dominated by the Federal Capital. It has around 700,000 customers and an average electrification rate of 27%.





CEC Africa also has a 100% interest in CEC Africa Hydro Investments Limited of Mauritius, which in turn owns 20% of North South Power Company Limited (NSP) of Nigeria, the company that holds a 30-year concession to operate and maintain the 600MW Shiroro hydroelectric power plant (Shiroro).

III. Dividends proposed and paid During the year under review, the Company paid a total sum of dividends of ZMW89.863 million (USD14million).

–  –  –

Despite the headwinds that we faced in our operating environment both in Zambia and Nigeria, the overall performance for 2015 has not significantly been impacted. In Zambia, in particular, CEC Plc delivered a solid performance on the back of strong growth in international power sales. While the power shortage that begun during the year, coupled with falling commodity prices on the global market, eventually impacted the local power sales especially in the final quarter of the year, our international power sales to the DRC remained strong, enabling the Company to more than make up for the potential revenue loss that it faced.

In Nigeria, our investments continued to face similar challenges including broader sector liquidity shortage on account of below cost tariffs in addition to the large capital injection required to spur operational improvements. The year, however, ended on a positive note as during the final quarter, the Nigerian Electricity Regulatory Commission (NERC) made pronouncements aimed at moving the applicable tariffs in the sector towards cost reflectivity. This move by NERC is critical for the viability of the electricity sector in general and that of our investments in particular as it will inject much needed liquidity into the market. Together with operational improvements that we are already implementing, these factors lay a firm foundation for strong business performance for CECA in the near future.

V. Health, Safety, Environment and Social

During the year, we continued to pursue our vision of achieving excellence in health, safety, environment and social (HSES) performance across the Group. The Company clocked 5.57 million man hours without a system related lost time accident. Such an incident last occurred in 2010. This is a commendable record. The Company also recorded improvements in a number of safety metrics in comparison to the previous year. These included reduced numbers of total lost time accidents and of severity of injuries sustained from lost time accidents.

At AED Plc, implementation of a number of HSES programmes continued, and we are beginning to see compliance becoming an integral part of business operations. The goal is to attain HSES excellence.

Even with all the progress made thus far, a lot more work still remains to be done to improve on our safety performance metrics at AED Plc, including continued reduction of both third party and employee fatalities, which fell by 30% in 2015 compared to 2014.

Specific initiatives geared towards fatality prevention include continuous network infrastructure improvements, access restriction of unauthorized persons to company facilities, increased community awareness of risks associated with company infrastructure, dedicated customer service centres where faults are reported for quick resolution and continued implementation of the AED Plc Fatality Prevention Plan.

VI. Zambian Operations

In 2015, the drought experienced during the 2014/2015 rainy season imposed generation constraints, whose consequences continue to be felt nationwide. While the Company was able to deliver all power requirements of its mine customers in Zambia from local sources in the first 9 months of the year, the worsening power situation forced ZESCO Limited (ZESCO), our major power supplier, to declare a force majeure under the Bulk Supply Agreement (BSA), thereby reducing their obligation to meet our needs to 70% of our full power requirements.

We in turn declared a force majeure on our customers in accordance with the Power Supply Agreements, which led to a reduction in the power we could supply them from Zambian sources to 70% of their requirements. We, however, managed to enter into alternative supply arrangements with our customers under which we sourced power from entities within the Southern African Power Pool (SAPP) to make up for a large portion of the 30% reduction which we could not supply from Zambian sources. As this power came at a higher price than the locally sourced power, our customers had a choice as to how much of this power they wished to access. To close the 30% supply gap, most of the customers employed a combination of internal operational efficiency improvements and accessing the power we made available from SAPP sources.

Alongside the power supply challenges, our customers grappled with falling commodity prices on the global market. We saw the combination of the unfavourable copper prices and the effects of the power deficit drive a shift in focus by most of the mines to cost cutting and efficiency improvements at their existing operations while investments in already committed projects continued.

Year-on-year, energy sales to our customers declined by about 3% reducing from 4,208GWh in 2014 to 4,092GWh in 2015. Going into 2016, we anticipate an average reduction in power uptake by the mines of between 10% to 15%. Domestic wheeling, which is the provision of transmission services to ZESCO for the power it supplies to its domestic, industrial and commercial customers on the Copperbelt, also declined by about 4% year-onyear on account of the load shedding program instituted to manage the power deficit.

Despite the above challenges the Company, on the whole, delivered an improved financial performance on the back of the international power sales business segment that continues to post good growth, recording an income growth of more than 100% over 2014.

The tariff increment of about 29% passed by the Energy Regulation Board (ERB) in April 2014 remained an unresolved matter of dispute before the courts of law. However, towards the end of the year, the Government through the Ministry of Energy and Water Development commenced a fresh tariff adjustment process through which a uniform tariff of 10.35 USc/kWh to all mines in Zambia was announced. The main cost driver for this increase in tariffs is the increasing cost of providing electricity to customers; mostly driven by new sources of power which cost a lot more than the power from legacy power stations.

Implementation of the new uniform tariff is being undertaken in 2016.

VII. Nigerian Operations

2015 continued to be a challenging year for the Nigerian operations but it ended on several positive notes. The below expectation financial performance of the Nigerian Electricity Supply Industry (NESI) was a drag on both of our operating assets. During the fourth quarter, however, several regulatory pronouncements signalled the long awaited commencement of an electricity market guided by cost reflective tariff planning principles.

This is expected to inject much needed liquidity into the sector, which will positively affect the profitability of the distribution companies and the cash flows to the generation entities.

During the year, the strategy was reviewed to focus more on stabilizing existing operations, away from a more growth-oriented strategy. This strategy refocus is necessary to allow the company an opportunity to build up capability for a future, sustainable growth programme within two to three years. Under the new strategic focus, CECA will first concentrate on turning around the operations of AED Plc and establishing steady cash flows from NSP.

At AED Plc, business infrastructure investments continued to be made including in ICT systems to support new billing and vending platforms. The year also saw the launch of a Super Vendor Program through which resellers are being recruited to increase the footprint of vending points from 50 to over 300 initially, which should result in increased customer accessibility. The major development for AED Plc was the approval by the NERC of the company’s ten-year tariff plan in the fourth quarter, after protracted negotiations. This plan has set AED Plc on a path to commercial viability.

Operations at NSP were stable during 2015, with hydrologically imposed generation constraints at Shiroro Hydro Power Plant, in the first eight months of the year, giving way to above normal generation in the last quarter, following record water inflows during the months of August and September. The year ended with about a 20% shortfall on planned generation. With the foreseen improvements in the liquidity of the NESI, the NSP shareholders’ focus will be to ensure that some cash begins to flow upstream at the earliest.

VIII. Projects Update



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