THE UNIVERSITY OF ZAMBIA

GRADUATE BUSINESS SCHOOL

Mfumbaika Maluba

GSB902961

Corporate Finance (MAF5110)

09th January, 2022

Final Research Report

About Copperbelt Energy Corporation Plc (CEC)

The Copperbelt Energy Corporation Plc (CEC), a member of the SAPP and a significant
provider of energy infrastructure in Africa, is a Zambian-incorporated power transmission,
generation, distribution, and supply corporation that is well-known for its expertise in developing
and running transmission networks. CEC is one of the region's leading international power
traders, owning, operating, and maintaining power transmission, generation, and distribution
assets serving consumers in Zambia and the DRC. (Our Profile, 2021)
CEC has been a long-time supporter of Zambia's mining industry. According to About CEC
(2021), their history is a testament to CEC’s ability to provide the dependability and power
solutions required to ensure that their customers can continue to operate, grow, and expand their
businesses. CEC's unmatched track record and experience provide the assurance that new and
current mining operations require. Because CEC has been a stable and dependable partner in
energy - the key to unlocking the country's development – Zambia has remained a top copper
mining country. (About CEC, 2021).

Corporate Governance
Corporate governance is an important part of an organization that establishes a collection of
rules, laws, policies, and processes that affect the organization's operations and choices. A good
corporate governance framework is beneficial to an organization's performance. An
organization's risk appetite and risk management should be determined by a well-defined risk
profile.
CEC is dedicated to openness, honesty, and responsibility in corporate governance, and has
embraced the Lusaka Securities Exchange (LuSE) Code of Corporate Governance for listed and
quoted companies.
The role of your board is to develop a long-term strategy, and strong corporate governance
guarantees that behavior is ethical, legal, and transparent.
The Company's Articles of Association call for a 12-member Board of Directors. The Managing
Director is the only executive director on the Board. The Board's role and responsibilities are
clearly defined in its Charter. The Board's major responsibility is to offer strategic direction to
the company as well as effective oversight of management and performance. The Board has
formed a number of Committees to aid in the performance of its mission, each with unique tasks
and responsibilities in critical areas.
Quarterly meetings of the Board and Committees are held, with special or additional meetings
convened as needed. Each director receives briefing materials at least seven days before each
meeting. The Company Secretary is in charge of managing the timely completion and
distribution of Board meeting agendas and briefing material, as well as ensuring compliance with
Board procedures and any laws governing Board operations. The Company Secretary also
provides governance advice to the Board of Directors. At all Board and Committee meetings, the
Chief Financial Officer is present. Senior executives who have been designated to attend
Committee sessions are also present. This allows senior executives to participate in board
deliberations at the Committee level, as well as for directors to meet with them and engage with
them on topics of mutual interest. (How We Are Governed, 2021)
The Board and Governance Policies
Conflict of Interest Policy
A Conflict-of-Interest policy is in place at the company to help directors and employees disclose
any conflicts of interest.

Insider Trading Policy

According to the Company's Insider Trading Policy, directors, key management personnel,
officers, and employees are prohibited from dealing in the Company's securities during closed
periods between the Company's half-year (30th June) and annual reporting (31st December)
periods and the relevant results, or while in possession of price sensitive information not yet
released to the market.

Board of Directors
The Board has a non-executive Chairman and a non-executive Deputy Chairman, as required by
the Company's Articles of Association and the LuSE Code of Corporate Governance. The CEC
Board of Directors meets four times a year, with the ability to organize additional board meetings
on short notice if necessary.
Committees
To oversee the Company's activities, the CEC Board of Directors has formed a number of sub-
committees, each of which is chaired by a non-executive Director.
It has delegated authority to an Executive Committee in some topics relating to continuing
operational difficulties. The Executive Committee meets with management on a regular basis to
ensure that management actions have the approval, support, and input of the Board of Directors.
The Committee's main responsibility is to ensure that the Company's Health, Safety,
Environment & Social (HSES) management is in line with its overall business strategy and
directed toward meeting its promises and duties in these areas. The Committee is made up of
four non-executive directors, two executive directors, and three senior management members.
Committee Memberships
 Mr. Derek Chime (Chairperson)
 Mrs. Caroline Sinkamba (Secretary)
 Mr. London Mwafulilwa
 Mr. Mabvuto Chipata
 Mr. Thomas Featherby
 Mr. Christopher Nthala

Management
The majority of CEC's senior executives are based in Kitwe, the company's operational
headquarters. When dealing with numerous stakeholders, the Company has a local presence with
a corporate office in Lusaka.
Operations, maintenance, commercial and business development, human and organizational
resources, legal, risk and HSES, corporate communication, supply chain management, and
finance are the core responsibilities of the company management. The senior management
profiles are listed below.
 Owen I. Silavwe - Managing Director
 Mutale Mukuka - Chief Financial Officer
 Christopher Nthala - Chief Operating Officer
 Julia Chaila - Chief Legal Counsel/Company Secretary
 Vincent Nyirenda - Chief Projects Officer
 Titus Chongo Mwandemena - Chief Commercial Officer
 John Simachembele - Chief Human Resources Officer
It is also important to note that because CEC is listed on the Lusaka Securities Exchange it has to
comply with the LUSE corporate governance code.
Stockholder Analysis
The following analysis provides information on the number of shares outstanding and how
frequently shares are bought and sold.
Implied Market Cap: K4.306b
Shares outstanding: 1.63b
CEC shareholding consists of private shareholders, institutional investors and others as seen by
the ownership breakdown below.

CEC’s Risk Profile

The principal risk faced by CEC was the covid-19 pandemic. The COVID-19 pandemic's effects
and threats infiltrated all aspect of the Company's activity, according to the CEC 2020 Annual
Report (2022), but they weren't the only problems it faced. The company also had to deal with
the following risks:

i. The BSA will expire on March 31, 2020, unless a renewal or successor agreement is
reached with ZESCO. The BSA underpins major business arrangements between the
three firms, such as CEC providing wheeling services to ZESCO for its Copperbelt
clients, ZESCO supplying power to CEC, and the three companies providing
international wheeling to each other.
 ii. The Minister of Energy declaring the Company's entire transmission and distribution
lines as common carrier through the promulgation of SI 57 on May 29, 2020, and the
ERB unilaterally imposing a subeconomic transmission tariff as a result.
iii. The USD153.1 million debt owed by KCM and unpaid at year-end.
iv. The PSA between KCM and the Company expiring on May 31, 2020, with no agreement
in place to support KCM's requirement to remain connected to the CEC network and to
assist the provision of transmission services to ZESCO, allowing them to transmit power
to KCM via the CEC network.

Capital Structure Choices

CEC capital structure being the particular combination of debt and equity used by the company
to funds its ongoing operations and continue to grow comprises of the following breakdown.

CEC Past Debt and Equity Data (USD Millions)

Date Total Total Cash & Short-Term

Equity Debt Investments

6/30/2021 327.96 - 105.89

3/31/2021 327.96 - 105.89

12/31/2020 302.47 50.04 83.04

12/31/2019 353.63 79.59 77.9

12/31/2018 371.02 81.21 85.79

CEC has been debt free for a while now compared to 5year ago.
Below are some of the highlights that were picked from the CEC Audited Results for the
Financial Year Ended 31 December 2020.

 Revenue: 9% down to USD370.9m

 Adjusted EBITDA: 19% up to USD108.2m

 M/H LTAs: 32% up to 8.275M

 Dividends: 10% up to USD34.1m

  Cash costs: 23% down to USD27m

The Board of Directors defined capital as equity plus cash less borrowings, and its short-term
financial strategy was to reduce debt while ensuring sufficient funds are available to maintain the
company’s business activities.

Dividend Policy
CEC's dividend (13.22%) is higher than the bottom 25% of dividend payers in the Zambian
Market (2.01%). CEC's dividend (13.22%) is in the top 25% of dividend payers in the Zambian
Market (11.96%). The Directors of Copperbelt Energy Corporation Plc on Thursday, 9th
September 2021 approved the payment of an interim dividend of US Cents 2.3 per ordinary
share, which translates to ZMW0.3727 per share. The exchange rate applicable is the Bank of
Zambia mid-rate on the date of declaration. (CEC Notice of Dividend Payment, 2022).

Stock Price Monitoring

Copperbelt Energy Corporation Plc is listed on the Lusaka Securities Exchange (LUSE) under
the Utilities industry. Through LUSE the share prices are monitored daily.
Suggestions for Improving CEC In the Future

Copperbelt Energy Corporation Plc should continue to research and develop goods that
outperform its competitors in terms of digital capabilities. CEC is known for being a trailblazer
when it comes to developing novel goods, yet the majority of its offerings lack great digital
capabilities. Considering the fact the company holds an innovation hub every year, they should
consider inviting schools, universities and other individuals with innovative solutions and ideas
to come forward and showcase them.

References
About CEC. (2021, December 12). Retrieved from COPPERBELT ENERGY: https://cecinvestor.com/about-
cec/

CEC 2020 Annual Report. (2022, January 05). Retrieved from Copperbelt Energy:
https://cecinvestor.com/cec-2020-annual-report/

CEC Notice of Dividend Payment. (2022, January 06). Retrieved from Copperbelt Energy:
https://cecinvestor.com/cec-notice-of-dividend-payment-3/#:~:text=NOTICE%20IS%20HEREBY
%20GIVEN%20that,3727%20per%20share.

How We Are Governed. (2021, December 22). Retrieved from COPPERBELT ENERGY:
https://cecinvestor.com/how-we-are-governed/committees/

Our Profile. (2021, December 12). Retrieved from COPPERBELT ENERGY: https://cecinvestor.com/our-
profile/