Copperbelt Energy Corporation Managing Director Managing Director Owen Silavwe has described as remarkable the company’s 2021 performance.
According to its Audited Results for the Financial Year Ended 31 December 2021, CEC saw its profitability increased to US$51.2 million from the US$ 5.6 million recorded in 2020 on the back of significantly lower levels of impairment loss of US$12.6 million in 2020.
Due to the effect of the change in tax rate from 35% to 30% on deferred liability which impacted the deferred tax charge for the year, the company reduced the tax charge US$9.2 million.
Cash costs increased to US$36.1 million from US$ 30.1 million recorded in 2020 on account of the higher than usual number of court cases the Company was involved in.
Commenting on the results, Mr. Silavwe said the general improvement in collections had a positive impact on the liquidity position, resulting in an adjusted cash flow from operations of US$ 75.5 million in 2020 to US$ 71.4 million and an adjusted cash balance of US$ 92.6 million in 2020 to US$ 83.0 million.
The year-end balance was boosted by prudent working capital management and the restricted cash position.
On delivering shareholder value, Mr Silavwe said delivering shareholder value is a top priority for the Company and that the firm targets is to deliver a sustained level of reward to shareholders through dividend distribution.
“We declared and paid an interim dividend of US$ 37.4 million in 2020 and US$ 34.1 million in 2021 to shareholders. Over the last five years, CEC has returned about US$ 149.5 million to its shareholders and circa US$ 234.0 million in taxes to the national treasury.”
“I am happy to note that the overall performance of the Company in 2021 was remarkable. This is on the back of our strategy to stabilise the business in the short term from the headwinds we have faced over the last three years, while building a strong foundation for consistent performance and steady growth over the medium to long term. We navigated legislative and regulatory threats to deliver strong operational and financial performance,” he said.
He added, “Through broad-based efforts, we engaged constructively with all relevant stakeholders, continuously evaluated all available options and took appropriate and timely action. We did very well in the execution of our strategic priorities, which are: optimizing performance, strengthening power sourcing and contractual arrangements, enhancing relationships and communication, growing organisational capabilities and pursuing sustainable growth.”
“With a significant decline in impairments, our earnings grew 814% year over year. This underscores the significant progress we are making in executing our strategy. The combination of strong copper prices over the foreseeable future, expected demand growth across all business segments and the ongoing integration of renewables and our drive towards a clean energy future is inspiring sustaining business performance and powering growth.
And Mr Silavwe says it is gratifying that the new Minister of Energy Peter Kapala took the decision to revoke SI 24 of 2021 which he said was important in restoring CEC’s property and commercial rights over its power infrastructure.
“Following the quashing of Statutory Instrument No. 57 of 2020 (SI 57 of 2020), a fresh SI (SI 24 of 2021) was passed in April 2021, redeclaring CEC’s transmission and distribution lines as common carrier. This prompted CEC to, again, seek judicial review to defend its property rights. The arbitral proceedings instituted by ZESCO in 2019 in respect of some payment disputes were concluded during the year. From ZESCO’s demand claim of USD54.2 million, the sole arbitrator in his final ruling awarded a total of USD16.4 million consisting of principal and interest to ZESCO. CEC has since settled this amount.”
Mr. Silavwe said KCM continues to be indebted to the Company with the outstanding debt standing at USD168.0 million as at year-end.
“We have taken steps to recover the money owed by commencing arbitration proceedings in line with the contractual provisions,” he said.
On the singing of a new Bulk Power Supply Agreement, Mr Silavwe said he expects a new agreement to be in place as soon as possible in 2022.
“I am also glad to report that post 2021, CEC and the new ZESCO management have jointly and publicly expressed their commitment to work constructively to agree new commercial terms and execute a new contract to guide their business relationship going forward. We see the renewed engagement with ZESCO offering a window of opportunity for the parties to refocus the negotiations and successfully close on the successor agreement to the BSA. It is expected that the new agreement will be signed as soon as possible in 2022.”
And people got good dividend. Very well done.
Just drag KCM to court. A balance of over $160 million!
Good indicators of performance However the impairment Reviews are good but not so of they appear permanent The Balancesheet is particularly revealing as to the value of reinvestments and group capital decisions especially if those in Impairments permanently impair the growth of the business and segment’s See the Growth in revenues and profits within the sector and ultilities and long-term forward looking sense iesting in MVAs and capacity within the grid framework See the eps , dividends growth your ebitda etc can we say we are undervalued. The reinvestments for cash flows that matter most??
Good indicators of performance However the impairment Reviews are good but not so of they appear permanent The Balancesheet is particularly revealing as to the value of reinvestments and group capital decisions especially in issues of Energy security especially if those in Impairments permanently impair the growth of the business and segment’s See the Growth in revenues and profits within the sector and ultilities and long-term forward looking sense iesting in MVAs and capacity within the grid framework See the eps , dividends growth your ebitda etc can we say we are undervalued. The reinvestments for cash flows that matter most??