Cec 2009 Ar

Annual Report 2009
COPPERBELT ENERGY CORPORATION PLC
Annual Report 2009
Mission
We are committed to: Supply reliable energy and high quality services to meet our customers unique and changing needs efficiently and proactively through robust infrastructure, diverse power sources and professional teams Increase value for our shareholders through responsible and transparent corporate conduct, innovation and investing prudently
Vision
To be the leading Zambian investor, developer and operator of energy infrastructure in Africa by providing innovative solutions and building strategic partnerships through committed professional teams
Corporate Values
Being honest in all our dealings Supporting each other Building good team relationships Being open to new ideas Developing a can do attitude
Corporate Profile
History and Operations
The Copperbelt Energy Corporation Plc (CEC) is a Zambian electricity utility whose core business is the supply of power to the mining industry and transmission for national utilities, ZESCO Limited of Zambia and SNEL of the Democratic Republic of Congo, through the Zambia Congo interconnector, the Zambian part of which CEC owns. For over half a century, the company has been a supplier of choice to Zambias mining companies in the mineral-rich Copperbelt province. While that is still the stronghold of the business, CEC is increasingly looking outside of the Copperbelt and beyond the core business for new business opportunities. Listed on the Lusaka Stock Exchange since January 2008; CEC, the first and only private sector utility to attain full Southern African Power Pool (SAPP) membership, is fast positioning itself as a developer of energy infrastructure in Africa and is well respected in the region for its skills in designing and operating transmission systems. A licensed carrier of telecommunications traffic using broadband optic fibre, CEC has made significant inroads in the telecoms business; moving from a carrier of carriers only to a competitive retail sector player through a joint venture with Realtime Zambia a partnership that combines CECs strong fibre network management skills and Realtimes experience in delivering fibre and wireless communication solutions across Zambia, especially to corporates.
Infrastructure
CEC owns and operates 884 kilometres of 220kV and 66kV transmission lines, 540 kilometres of optic fibre on power lines, 38 major substations and 80MW of gas turbine generation. To ensure high quality of supply, the network has a number of reliability enhancing features that include a high degree of network redundancy, stand-by generation, a well equipped control centre and multiple sourcing points.
Growth Strategy
CECs focus is on activities and opportunities that create value for the company and its investors. To achieve that, we continue to build appropriate partnerships that provide us with the necessary support to pursue and participate in viable new business opportunities.
Contents
Chairmans Report Managing Director Operations Report Managing Director for Corporate Development & CFOs Report Operational / Financial Highlights Directors Report Statement on Corporate Governance Statement Of Directors Responsibilities Report of the Independent Auditors to the members of Copperbelt Energy Corporation Plc Statement of Comprehensive Income Statement of Changes In Equity Statement of Financial Position Statement Cash flow Notes to the Financial Statement Directors CEC Management Team Corporate Contact Information Bankers and Auditors
5 10 14 18 20 25 27 28 29 30 31 32 33 62 63 64 64
Chairmans Report
I am delighted to report an encouraging performance for the business for the period ended 31st December 2009. The year under review coincided with a worldwide economic downturn, but I am glad to report that despite the challenges, which I will outline later in the report, the Company fared well and posted improved earnings compared to the previous year. Commendable progress was also made in the area of new business identification and development. effectively mitigate the impact of the disease on employees and the Company. The prevalence survey was also undertaken to track changes in HIV and AIDS prevalence within the Company since the last survey was conducted in 2005. A key objective of this follow-on survey was to help the Company understand the factors responsible for changes in disease prevalence within the four-year period between the two surveys. Staff uptake was commendably high at 84%; and results disseminated to staff show a drop in prevalence levels from 33% in 2005 to 23% in 2009. As our contribution to the malaria fight, we proactively continued to provide mosquito nets and repellants to all employees, and partnered with other organisations in the Indoor Residual Spraying exercise for 2009. Our SHE performance for the year was good. We recorded zero fatal incidents and an improvement in near-miss and safety meeting statistics. Unfortunately, we had four lost time accidents (LTAs), compared to zero during the 2008 period. All four were minor LTAs and all corrective and preventive action measures raised in the incident investigation reports have since been implemented.
Safety, Health and Environment (SHE)

The priority we have placed on SHE in all of our business practices and operations is clearly paying dividends. Managers SHE visibility tours enabled our senior managers to demonstrate their active involvement in identifying and preventing hazards / incidents at various CEC work sites, thus leading the SHE cultural change and implementing the SHE Improvement Action Plan, as we envisaged prior to the start of the year. In early June, an HIV prevalence survey was conducted for all willing staff. The essence of the survey was to help the Company to develop an accurate understanding of the profile of HIV and AIDS in our workplace and to help plan for appropriate programs on prevention, treatment, care and support. Ultimately, this will help us to
Chairmans Report
Business Performance Highlights

Copper prices exhibited a downward trend from the last quarter of 2008 and continued to slide until the end of the first quarter of 2009. A dip of more than 50% in the price of copper during this period, from well over $8,000 per tonne to lower than $3,000 per tonne caused loss of business confidence amongst some of our mining customers. Consequently, three mining operations were placed under care and maintenance while other operations instituted cut-backs in production. The effect of low copper prices on our customers caused a reduction of 18% in the Companys capacity sales; from an average of 532MW during 2008 to an average 436MW in 2009. An improving global economic and financial environment stimulated a resurgence in copper prices from April 2009, and prices had recovered to $6,000 per tonne by June 2009. The recovery has since been steady, resulting in the resumption of activity at CNMC Luanshya Copper Mine (formerly Luanshya Copper Mines Plc) and Chambishi Metals Plc. Konkola Copper Mines Plc continues to invest in its operations by expanding both its mining and smelting capacity. It is important to note that through these and other challenges, the Companys level of service to our valued customers remained uncompromised throughout the year. The quality of our electricity supply was reliable and the Company undertook further investments to improve the resilience of its network, such as an investment in power factor correction equipment. Last year, we reported the awarding of rights by the Zambian Government to conduct a detailed feasibility study into the development of the Kabompo Gorge Hydro-electric Power Project in North-Western Province to a CEC led consortium. The feasibility study is now complete, and the final report is expected at the end of February 2010.
The Company has made a joint application with Zesco for concessionary funding to facilitate the electrification of a number of towns in NorthWestern Province, thereby increasing access to electricity and eliminating the need for a number of expensive diesel generators operated by Zesco. Also worth noting in 2009 was the formation of a telecommunications joint venture with Realtime Technology Alliance Africa (Realtime), which saw the Company investing $2.0m in Realtime to acquire a 50% stake in the company. The venture has succeeded in combining the fibre network management skills of the Company with Realtimes experience in providing network services to corporate customers. A team of CEC staff completed a consultancy assignment, looking at transmission system management, in The Gambia earlier in the year. A significant achievement during the year was the Companys attainment of the of full SAPP (Southern African Power Pool) membership. This milestone, reached in November 2009, gives the Company the status of a fully-fledged utility in SAPP. What makes this even more significant is the fact that CEC becomes the first and only private sector utility with full SAPP membership and we are being expected to play an active role in challenging the norms with an infusion of new ideas.
Chairmans Report
Business Environment
Of particular concern to the Company was the low copper price, and how our customers were affected beginning the last quarter of 2008. Although copper prices started to pick up from the second quarter of 2009, the impact was not felt in terms of higher capacity sales to our customers until the third quarter of 2009. The Company emerged from the situation more knowledgeable and aware of some of the vulnerabilities to the core business. At the same time, the experience helped underscore more strongly our desire and need to grow the business outside of the traditional customer base on the Copperbelt. As a mark of our resilience, the Company did not lay off staff during the downturn but instead was able to get their support in instituting measures to significantly reduce operating costs. The Company remained able to continue meeting its obligations to Zesco under the Bulk Supply Agreement. These economic challenges, trying as they were, did not prevent the Company from delivering value to its shareholders and pursuing a vision of diversified growth and the creation of other income streams. These and other developments have clearly demonstrated our ability to withstand harsh
economic conditions and still perform well. Net profit for 2009 was $11.9m, 18% higher than $10.1m achieved in 2008.
Stakeholder Relations
The Company has consistently stressed its objective of increasing shareholder value and our performance in 2009 was no different. In 2009, we paid out two interim dividends in April and September, marking the second straight year since going public in January 2008 that we have paid out two dividends in a year. The CEC share price traded close to the listing price of 440 Kwacha per share through most of the year, and closed the year at 430 Kwacha per share. We understand the need to increase shareholder value, and we intend to grow the earnings and the assets of the Company through investment in viable energy infrastructure projects that generate a return that will be attractive to investors. I am glad to report that we have addressed most of the communication difficulties that were experienced with some of our shareholders in the first year after listing, which were mostly due to the incorrect recording of some shareholder details at the time of listing. Some challenges still remain, but we are continually perfecting our systems. There are investor relations offices in both Kitwe and Lusaka where individual shareholder queries can be addressed. I encourage all of our shareholders and stakeholders to make use of the website www.cecinvestor.com which has been especially designed to provide relevant information about the Company.
Corporate Responsibility and Sustainability

In September, the Company and the environmental consultant on the Kabompo Gorge Hydro project, D.H. Engineering, undertook an environmental scoping and impact assessment (ESIA) exercise in Solwezi and Mwinilunga. The meetings were
Chairmans Report
attended by Government departments and agencies represented in the province; concerned individuals; quasi-government bodies and civil society organisations. The objective of the scoping meetings was to collect views and concerns from all stakeholders and to use these views as a basis for carrying out the environmental and social base line survey required to apply for Environmental Council of Zambia consent to proceed with the project. During the year we refurbished the lecture and computer facilities at the University of Zambias School of Electric and Electronic Engineering; making good on our commitment to help improve the Schools standards over a three-year period. The priority we place on matters of SHE is not limited to the CEC workplace alone, and we have endeavoured to demonstrate SHE excellence in all facets of our operations and business practices. An example of this was our undertaking to relocate a total of 8 families in Chililabombwe, whose houses were found to be in contravention of the safety requirements relating to settlements near the Companys transmission lines. In compensation, the Company has constructed better housing units for the affected families, upgrading them from one and two-roomed structures with ablution facilities outside to two and three-bed roomed houses, each with toilet and bath facilities inside.
A structural refurbishment of the Arthur Davies Stadium, home of the Power Dynamos Football Club, which is sponsored by the Company, was undertaken in 2009. The stadium will be ready for use on commencement of the new football season in March 2010. A fitness centre and gym for staff and the wider community has also been completed at Ravens Country Club. We continued to support the Mulenga Community School of Kitwes Mulenga Township, one of our communitys less privileged areas. The Company will continue its support for the community in 2010, focusing particularly in the areas of youth, health, education and sport.
Chairmans Report
Appointments / Changes to the Board

At the Annual General Meeting of the members of the Company held on 17th April 2009, three non-executive Directors (Munakupya Hantuba, Emmanuel Mutati and Jonathan Muke) were reappointed to serve on the CEC Board of Directors. I heartily welcome back the three members and look forward to receiving the continued benefit of the expertise and knowledge that they bring to our Board. In the fourth quarter of the year, ZCCM-IH made changes to its board representation, retiring William Musama and John Kaite and appointing Irene Lombe Ngandwe and Standwell Mapara in their stead. On behalf of the Company, I convey our gratitude for the service to the Board rendered by both William Musama and John Kaite. I equally welcome the two new members and anticipate the value and experience our board will gain from them.
Board Operation
Our board adhered to the highest standards of
The future - local children attended the ESIA scoping meeting at Kanyikezhi School
Corporate Governance and conducted itself above reproach by ensuring compliance to the Lusaka Stock Exchange established Code of Corporate Governance. Our board self-monitors its conduct and compliance against this code and other identified standards that are found relevant to the operations of the Company.
tariffs to cost reflective levels to ensure that sustainable investments can be undertaken in new capacity. This provides an opportunity for the Company to participate in the growth of the energy sector outside of its traditional business on the Copperbelt. The Company is currently evaluating opportunities to invest in transmission and generation projects in Zambia and surrounding countries. To support the proposed growth, we are investing in our people to introduce new skills in such areas as the management of hydro schemes and project financing. A number of managers have been placed on a training and development programme that places them in a strong position to take business leadership roles in future. Furthermore, we have developed contacts with a number of international development banks with a view to develop structures for the financing of new projects.
Business Outlook
Copper prices have recovered stimulating a recovery of investment into the mining sector, both for the Companys customers on the Copperbelt and other mining operations that operate in other provinces of Zambia. The capital investments by the mines over the last decade have ensured that many of Zambias copper producers are internationally competitive, which in turn improves the resilience of the Companys business model in case of future downturns. For our core business, we expect a steady improvement in sales to the mines as new mining and ore processing operations are brought into production. Outside of the core business, it is widely acknowledged that there are shortages in generation and transmission capacity both within Zambia and the SADC region. To stimulate further investment in the required infrastructure, the regulatory authorities are supportive of increasing
Conclusion
We have a lot be proud of as CEC and I believe the future looks bright and solid; not least because energy is at the core of the development of any countrys economy and Zambia is no exception. We are excited by our immediate and future prospects in this sector, both in Zambia and in other countries within Africa. Our staff remains highly skilled and motivated. Certainly, we can look to the future with confidence and anticipation.
Hanson Sindowe Executive Chairman
Chairmans Report
Managing Director Operations Report

Power System Performance
Electricity demand by our customers is driven by a number of factors, which include economic activity, business growth and energy efficiency. The economic down turn, which led to low copper prices, resulted in the scaling down of operations by some of our customers. In the first half of 2009, we saw three mining companies being placed under care and maintenance and a cutback at a number of mining shafts. The net effect of this on our business was a reduction in capacity sales to the mining customers of 18% from 532MW in 2008 to 436MW in 2009. Therefore, the major challenge for the core business was to keep the Companys operating and capital costs within sustainable levels in line with the reduced power sales and cash inflows, whilst not compromising on the Companys ability to maintain the quality and reliability of power supplies. The Company instituted a number of cost saving measures, which included freezing of all recruitment and curtailment of non-essential expenditure. During the latter part of the year, the price of copper began to pick up and there was a recovery in mining activity, with activity re-commencing at Luanshya Copper Mines following the take-over by China NonFerrous Metal Mining Company - Luanshya Copper Mines and at Chambishi Metals. There was also continued investment by Konkola Copper Mines Plc (KCM) to expand both its mining and smelting capacity.
Power Purchase & Sales

Zesco continued to provide CEC with electrical energy under the bulk supply agreement and supply from Zesco accounted for 99.99% of the total requirement with the remainder supplied from the Companys Gas Turbine Alternators. The quality and reliability of the supply of electricity from Zesco was better during 2009 than it had been the previous year. However, there were occasional generation shortfalls due to generator outages on the Zesco system and CEC was called upon to reduce its demand to mitigate the shortfalls. As highlighted above, the demand for electricity from our customers reduced in 2009 and sales of energy totaled 3,338 GWh compared to 3,981GWh the previous year. The system load factor remained at 80%. In addition to CECs role of transmitting and supplying power to the mining sector, CEC also undertakes domestic wheeling on behalf of Zesco and international wheeling. During the year, the international wheeling of power from the Congolese utility, SNEL, was mainly dictated by the power import
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requirements of the Frontier Mine (supplied by SNEL utilizing the CEC network), ZESA in Zimbabwe and ESKOM in the Republic of South Africa. A total of 438 GWh was wheeled from the Congo while 41 GWh was wheeled into the Congo and 182 GWh was wheeled to the Frontier Mine through the 220kV Congo interconnector. Domestic wheeling on behalf of Zesco totaled 1,611 GWh compared to 1,576 GWh in 2008. The Company adhered to all of its maintenance programs throughout the year. In addition, the Company increased its ability to monitor the equipment connected to the power system through enhancements to the SCADA system. As a result of the above, power system performance during the year was good with few incidents having occurred. Occasional equipment failure was experienced, mainly due to lightning or the age of equipment. The majority of incidents, which did impact on the CEC system, were externally caused. The most significant of these incidents was a national blackout that occurred on 15th June 2009, caused by a failure on the Zesco system. The Companys response to this was excellent with supply rapidly being made available to all of our customers through the GTAs and imported SNEL power. However, a few challenges were experienced in, firstly, synchronizing the machines to the grid and then maintaining synchronism with the grid whenever the voltage of the incoming power from the Congo dropped too low.
Based on the performance of the GTAs during the power blackout and numerous customer engagements to witness machine runs, the level of customer confidence in the GTAs has improved. Throughout the year, all six of CECs GTAs were available for service and plant availability was at 98.7% compared to 97.5% in 2008 and reliability at 90% from 88% the previous year. This improvement was as a result of numerous equipment upgrades carried out over the past few years, aimed at enhancing performance and confidence in the machines. On the whole, the system capacity continued to be firm. However, CEC has identified that with the numerous expansion projects being carried out by our customers, there are a number of areas on the CEC
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Unfortunately, the phenomenon of extremely high voltages was once again experienced when Zesco restored power to the Copperbelt following the blackout of 15th June. This occurs when the power is first restored by Zesco via the long transmission lines from the south of the country and before the loads on the CEC system can be reconnected i.e. under extremely lightly loaded conditions. These extremely high voltages are of great concern as, apart from the ageing of insulation which results, catastrophic failure can occur to critical items of equipment. Joint CEC and Zesco technical teams are examining the problem in order to find the best solution.
network where transformer capacity will need to be reinforced. The power factor correction project, which commenced in 2008 in conjunction with our customers, progressed steadily throughout the year. The study phase of the project identified the need to install compensation equipment that does not only provide reactive support but also filters impurities (often called harmonics) out of the system. Contractors have been engaged and they have since commenced detailed design works as well as the placement of orders for equipment. Project completion is currently forecasted to be June 2010. The Company noted an increase in cases of theft and vandalism of the Companys installations from 17 in 2008 to 31 in 2009 and this remains a major cause of concern. The increase was attributed to numerous incidents of theft of steel members from CECs pylons. Repairs were carried out on the vandalized equipment and, as a result, the security of the power system was not compromised. We are happy to report that the Company was accorded full membership of the Southern Africa Power Pool (SAPP) in November 2009. Our membership will enhance the status and influence of the company within the SADC region, and provide a basis for undertaking projects on a regional basis, including power trading and investment in transmission and generation facilities that have a regional impact.
Core Business Expansion

The $35m CEC Northern Area Expansion Project, which was aimed at expanding the CEC network to supply new mining operations and the new smelter for KCM, was executed smoothly with no major incidents or delays recorded. All new equipment for the project was successfully installed and commissioned by year end. The commissioning of the 220kV equipment at our Michelo substation has helped improve system stability and reliability in that area. The whole project was executed in a safe and environmentallyfriendly manner and in compliance with all statutory regulations. The Company is expected to take over ownership of the assets from KCM during 2010. During implementation, it was observed that the location of some houses was in breach of safety regulations in terms of safety clearance along the wayleave. It was, therefore, necessary that they be demolished and the inhabitants relocated to a safer area. As a result, eight houses were constructed for the affected households. This was done in consultation with both the Environmental Council of Zambia and the affected households. The Muliashi project, which was shelved in 2008, was resurrected in 2009 by the new owners of Luanshya Mine. The implementation of the Muliashi project is tentatively planned for 2010 with a forecast demand of 30MW when fully developed.
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Various other projects are at a developmental stage.
Customer Relations
Good relationships were maintained with CECs mining customers and other stakeholders during the year. This was accomplished through regular monthly interactive meetings and communication with industry-wide bodies. The global copper price showed a steady upward trend throughout the year, exceeding the $6,000 per tonne mark by year end. Consequently, total mines power consumption showed a very slow but steady upward trend from the third quarter of 2009.
performance. Tool Box Safety Talks were identified as an extremely important part of achieving a safe working environment. Specific training was conducted for frontline supervisors and mechanisms for measuring compliance have been put in place. A company-wide Good Housekeeping Assessment was undertaken to ensure that CEC maintains good order in the workplace. Awards were issued to sections that achieved excellence in this area.
Safety, Health & Environment

In 2009, the Company embarked on a program called the SHE Improvement Action Plan to ensure that all employees strive for continuous improvement and address previous areas of concern. This programme is intended to ensure that all employees take responsibility for SHE issues at all times. As a result, the following actions were undertaken: Change in reporting priorities SHE issues to be reported/discussed before all other issues at management and operational meetings at all levels within the organization. Conducting of SHE management visibility tours 192 action items were identified during such tours. Progress on the action items is being tracked at management level. SHE training for Directors and Management was conducted issues raised during the training have been incorporated in the SHE Improvement Action Plan and progress is being tracked. Review of the SHE reward system in order to become a more effective driver of improved
Our safety performance continues to be maintained at a satisfactory level. There were no fatalities during the year. However, four lost time accidents were recorded compared to zero in 2008. This increase is of concern and will be a focus area for 2010. There was a reduction in the number of system breaches and permit withdrawals, from four and six respectively in 2008 to three for both parameters in 2009. Road traffic accidents increased (10 in 2008, 11 in 2009) while road traffic incidents reduced (40 in 2008 versus 39 in 2009). The Company has maintained good performance in environmental management and complied with all statutory requirements for reporting and license renewals.
Employee Welfare
Cordial employee relations were maintained companywide throughout the year. We are happy to report that, even with the challenges of economic uncertainty that the business experienced, retrenchment of staff was not required. The Rollback Malaria and HIV and AIDS workplace programmes achieved positive results. Uptake of voluntary counseling and testing (VCT) improved, mainly because of the VCT day that was specifically dedicated to encouraging employees to undertake tests and to know their status.
Neil Croucher Managing Director - Operations
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Managing Director for Corporate Development & CFOs Report

Second Interconnector between Zambia and the Democratic Republic of Congo (DRC)
An Infrastructure Development Agreement was signed in October through which CEC and the Congolese utility SNEL have agreed to construct a new dual circuit 220 kV transmission line between DRC and Zambia that will facilitate the transfer of 550MW of firm power from DRC to Zambia. Tenders for the lines and substation equipment were issued and adjudicated in February 2010. Construction and commissioning are expected to be complete by the second quarter of 2011. The total project cost, including internal costs that have accumulated during the design and development of the line is expected to be $16.2m, which has been funded by CEC through its existing corporate debt facilities. The funding for SNEL has been provided through a World Bank facility afforded to the Government of the DRC as part of the banks Southern Africa Power Market Programme. CEC is earning a return on this investment through receiving power available for export from SNEL, which can be on-sold to utilities and large electricity users within Southern Africa. The transmission line will be fitted with 48 Core OPGW optical fibre that will facilitate the connection of Katanga Province to the CEC and Zesco fibre networks. This fibre will be used to enhance operational communications between the utilities, and to provide a basis for linking telecoms providers in Katanga Province to telecoms providers in Zambia.
Kabompo Gorge Hydro Power Project

CEC was awarded the right to undertake the feasibility study for the development of a medium sized hydro station at Kabompo Gorge in North-Western Province in the final quarter of 2008 through the Office for Promoting Private Power Investment, the branch of the Ministry of Energy and Water Development responsible for facilitating the development of power projects in the private sector. The feasibility study was undertaken during 2009, utilising consultants from the Amanzi Consortium (comprising Gibb and Knight Piesold) for the power station and hydro scheme design; and D.H. Engineering Consultants for the environmental and social impact assessment (ESIA). The power station study encompassed detailed studies of the hydrological, topographical and geotechnical aspects of the site by relevant experts and the optimization of the site design.
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The ESIA encompassed a thorough review of the impact of the proposed project on the local community, a review of the National Heritage Conservation Commission and consultations with the local Chiefs and Government departments. The terms of reference for the study were approved by the Environmental Council of Zambia, and a number of public hearings were held at the project site and neighbouring communities. A forestry inventory and assessment of valuable trees was undertaken in conjunction with the Forestry Department. It is expected that the detailed power station design and tendering process will be undertaken during 2010, with a view to commencing construction during 2011. The pre-feasibility study for the site estimated that the station would comprise a 34MW power station, a dam wall 65m in height, an underground power station and a 4km tunnel. The final design parameters will be confirmed once the detailed design has been completed. The final design for the scheme will take into account the optimal balance for peak and off-peak power that will be generated by the station, based on the requirements of the Zambian and regional power market. The North-Western Province of Zambia currently has limited access to electricity, with the majority of towns having no access to the main electricity grid, and some of the towns being supplied through diesel generators that are expensive to run. CEC recognizes that the proposed development of a new power station in the province should facilitate greater access to electricity within the province. Initiatives have, therefore, been taken to identify sources of funding for an electrification programme that will benefit the local people.
providing fibre connectivity to the business community operating in the main commercial centres in Zambia. Realtime purchases bulk bandwidth from Zesco and CEC, who provide a fibre backbone service between the main commercial centres in Zambia. Realtime provides its customers with internet access and Virtual Private Networks, operates a resilient national network and provides radio and VSAT access where fibre has not yet been installed. CEC seconded a number of senior managers into the Joint Venture. The business is operating at arms length from the fibre backbone network operated by CEC on the Copperbelt, which has a separate Carrier of Carriers License. CECs network connects all of the main towns on the Copperbelt and is 540km in length, with a ring topology. The key customer base for the network is the mining companies, commercial banks and cellular service providers.
Future Developments
A number of countries in Southern Africa have interconnected power grids that enable power to flow, for example, from the Inga Power station in the DRC through to South Africa. Zambia is at the centre of this interconnected grid network, and new transmission and generation projects, therefore, have both a national and regional impact. There are, however, two fundamental challenges that face the region as a whole. The first relates to a shortage of generation to meet demand from households, industry, agriculture and mines. The effects of this shortage were last felt in 2008 when there was widespread load shedding throughout the region that was partly alleviated in 2009 due to a curtailment in economic activity, resulting in reduced demand for electricity. The second challenge relates to the limited capacity of the transmission network in Southern Africa that prevents power flowing within the region to the extent necessary to alleviate imbalances in the demand and supply of power within different countries and provinces. CECs future growth strategy is based on seeking concessions to develop generation and transmission projects that will have a positive impact in the region.
Telecommunications Joint Venture

CEC signed a Joint Venture Agreement with RTAA (Pty) Limited and completed the acquisition of 50% shares in Realtime Technology Alliance Africa Ltd. for $2.0m in July 2009, following regulatory consent from the Zambia Competition Commission to proceed with the transaction. Realtimes key customer focus is in
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The migration towards cost reflective tariffs in the region is expected to ensure that the investments will provide sufficiently attractive investment returns.
level of debt of the company on which interest was payable during the year. The company entered into a hedging arrangement during the year that fixed the rate of exchange from dollars into Kwacha at a rate of 5,502 for a portion of the Companys Kwacha requirements. As this rate was more favourable than the spot rate for much of the year, an exchange gain of $1.3m was recorded. Earnings increased by 18% to $11.9m from $10.1m the previous year.
Financial Report
The Financial Statements have been prepared in accordance with International Financial Reporting Standards, and accounting policies are consistent with those applied in previous periods.
Statement of Comprehensive Income for the Year Ended 31st December 2009
Revenue reduced by 13% to $154.2m. The decrease was due to a 15% reduction in sales to the mines, totaling $142.8m compared to $167.9m the previous year. However, there was a compensating 30% increase in domestic wheeling income to $10.6m, largely as a result of the commencement of supplies to the Frontier Mine. Cost of sales, which mainly comprise purchases from Zesco under the Bulk Supply Agreement decreased by 13% to $111.8m. The Gross Profit decreased by 14% to $42.4m. Other income increased by 176% to $6.1m, largely due to a reduction in obligations to refund customers for the costs of connection assets that were pre-financed by customers, but also due to an increase in sundry revenue and telecoms revenue. Operating costs reduced by 11% overall to $30.7m compared to the previous year operating costs of $34.4m. Within operating costs, there was an 18% reduction in personnel costs to $10.7m and a 36% reduction in stores and maintenance costs to $1.7m. However, there was a 67% increase in other operating costs from $4.9m to $8.3m. Included within other operating costs were a number of non-recurring costs including $1.6m expenditure on undertaking the feasibility study of the Kabompo Gorge hydro project, and $2.0m of non-recurring legal costs. Interest payable decreased by 33% to $1.8m due to a reduction in US LIBOR, and a reduction in the average
Statement of Changes in Equity for the Year Ended 31st December 2009
The opening equity of $39.6m was increased by $3.7m to $43.3m due to a prior year adjustment arising from a clarification of tax provisions relating to previous years tax liabilities. Equity increased through the creation of a revaluation reserve of $113.1m and profit for the year of $11.9m, reduced by dividends declared and paid of $10.0m. The closing equity was $158.3m, an increase of 300%.
Statement of Financial Position as at 31st December 2009

The Company undertook a revaluation of property and its primary transmission equipment during the year, which resulted in an increase in value of $9.9m
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for property and $103.2m for primary transmission equipment. The increase has been reflected in the balance sheet through an increase in the value of property, plant and equipment, with a corresponding increase in equity through the creation of a revaluation reserve of $113.1m. The value of property plant and equipment increased from $125.4m at 31st December 2008 to $236.2m at 31st December 2009, an increase of 90%. The movement was mainly attributable to the revaluation in fixed assets of $113.1m, $7.3m of capital expenditure and a depreciation charge of $9.6m. Trade and other receivables reduced by 9% to $30.7m, which demonstrates an improving trend in the collection of receivables from customers. Trade and other payables reduced by 22% to $24.6m as the Company made progress in reducing creditor days, and maintaining current on payments to Zesco. Total interest bearing loans at 31st December 2009 totaled $39.3m comprising outstanding amounts on facilities with: (i) Citibank and DEG, under a general corporate facility to fund capital expenditure of $26.1m at 31st December 2009, of which $5.9m plus accrued interest will be repayable during the financial year ended 31st December 2010; African Life Financial Services, to fund capital expenditure and working capital, of $10.0m at 31st December 2009; and Development Bank of Southern Africa, related to the cost of constructing a substation to supply power to Chambishi Metals, of $3.2m at 31st December 2009.
at the previous year end (restated for a prior year adjustment). The increase was attributable to the creation of a revaluation reserve arising from the revaluation of property, plant and equipment and an increase of $1.9m in retained earnings following the declaration of dividends for the year. Overall, total assets had increased by 53% to $274.7m at 31st December 2009 compared to $179.0m at the previous year end.
Net cash inflows from operating activities increased by 12% from $10.4m to $11.7m. Investing activities included expenditure of $7.3m on property, plant and equipment, and an investment of $2.0m in the Realtime telecommunications joint venture. The debt obligations of the Company were reduced by $7.0m through repayments of facilities with DEG, Citibank and DBSA. A total dividend payment of $10.0m was made during the year. The cash balance at 31st December 2009 was $2.3m compared to $16.3m at the previous year end.
Share Price Performance

The CEC share price at 31st December 2009 quoted on the Lusaka Stock Exchange (LuSE) was 430 Kwacha per share compared to 450 Kwacha per share at the previous year end, a decrease of 4%. In comparison, the LuSE all share index recorded an increase of 10.07% in local currency terms and 14.61% in US Dollar terms. The dividend yield, expressed in Kwacha as a percentage of the share price at the year end was 13%.
(ii)
(iii)
Equity increased to $158.3m compared to $43.3m
Michael Tarney Managing Director Corporate Development & CFO
Statement of Cash Flows for the Year Ended 31st December 2009
17
Operational / Financial Highlights

Load 600 500 400 300 Load 70 60 50 40 30 No of Days 20 10 2005 2006 2007 YEAR 2008 2009 2005 2006 2007 Year 2008 2009 Debtor Days
200 (MW) LOAD 100 0
Acid Test Ratio 1.40 1.20 1.00 0.80 0.60 Times 0.40 0.20 0.00 2005 2006 2007 Year 2008 2009
60,000 50,000 40,000 30,000 20,000 Gross Profit 10,000 2005
Gross profit
2006
2007 Year
2008
2009
Return on Assets 7% 6% 5% 4% 3% 2% Return on Assets 1% 0% 2005 2006 2007 Year 2008 2009
35,000 30,000 25,000 20,000 15,000 EBITDA 10,000 5,000 0 2005
EBITDA
2006
2007 Year
2008
2009
18
Earnings Per Share 1.40 1.20 1.00 0.80 0.60 EPS in Cents 0.40 0.20 2005 2006 2007 Year 2008 2009 200,000 180,000 160,000 140,000 120,000 100,000 80,000 US$`000 60,000 40,000 20,000 0 2005 2006
Revenue
Revenue
2007 YEAR
2008
2009
Profit Before Interest and Tax 25,000 20,000 15,000 10,000 US$`000 5,000 0 2005 2006 2007 Year 2008 2009 PBIT
Copper Price Trend

10,000.0 8,000.0
usd/ton
6,000.0 4,000.0 2,000.0
2008 2009
June
March
July
Feb
April
Aug
Sept
May
Nov
Jan
Oct
Dec
19
Directors Report
The Directors have pleasure in submitting to the shareholders their report and the financial statements for the year ended 31 December 2009. The Companys principal business is the generation, transmission, distribution and sale of electricity and telecommunication service provision. In the quest to develop the telecommunication business, the Company signed a joint venture agreement with RTAA (Proprietary) Limited on 11th February 2009 to acquire a 50% interest in Realtime Technology Alliance Africa Limited (Realtime).
Capital Expenditure
CECs capital expenditure programme has been developed in line with the Companys strategy of minimizing business risks, enhancing customer satisfaction and ensuring future business activities. In this regard, the major categories of expenditure include emergency generation equipment, transmission and distribution equipment, protection and metering equipment, safety health and environmental (SHE) equipment, IT, vehicles and communication and control equipment. Through its continuous capital expenditure programme, CEC achieves continued refurbishment of the Gas Turbine Alternators (GTAs) to improve reliability of standby power plant. Replacement of system assets that have reached the end of their useful lives is undertaken to meet required high standards of SHE compliance.
Directors Report
Financial results
The turnover for the year was US$154 million (2008: US$177 million). The gross profit was US$42 million (2008: US$49 million). The Table below presents a financial summary of key indicators for the five year period to 2009. Key Statistics Sales ($000) Gross profit ($,000) Profit before interest and taxes ($,000) Acid test ratio (Times) Return on equity EBITDA ($,000) Total assets ($,000) Earnings per share (Cents) Return on assets Net profit ($,000) Equity ($,000) Current assets ($,000) Inventory ($,000) Current liabilities ($,000) 2009 154,169 42,371 19,126 0.95 8% 28,682 274,711 1.19 4.4% 11,920 158,273 36,500 3,506 34,847
2008 177,486 49,526 17,222 1.26 26% 26,419 178,977 1.01 5.7% 10,143 39,573 53,579 3,443 39,786
2007 131,746 38,746 13,306 1.24 16% 22,152 150,745 0.73 4.6% 7,251 45,630 35,151 1,307 26,149
2006 127,280 37,383 12,745 0.67 12% 21,293 131,453 0.79 6.0% 7,915 65,680 17,395 1,136 24,332
2005 122,164 36,367 15,240 0.74 12% 24,202 136,505 0.82 6.0% 8,241 68,021 19,746 1,028 25,206
20
In addition to its planned capital expenditure for the maintenance, renewal and refurbishment of its network and associated facilities CEC undertook further projects related to (i) rehabilitation of Arthur Davies Stadium (US$574,000), (ii) telecommunication optic fibre installation (US$257,000), (iii) procurement of heavy equipment for way leave roads rehabilitation (US$725,000) and (iv) procurement of critical system spares (US$700,000). The total capital expenditure for the year was US$7.332 million.
a year; in March and August. Dividends of US$4,000,000 and US$6,000,000 were paid on 3rd April and 25th September 2009 respectively. Retained profit taken to reserves at 31 December 2009 was US$11.920m.
Operations
During the year all purchases of electrical power were from ZESCO Limited under the Bulk Supply Agreement. Electricity supplies from this source accounted for 99.99% of the total requirements. The balance was supplied from the Companys Gas Turbine Generating plants. A supply shortfall to CEC was however experienced during the year due to generator outages leading to nationwide load shedding measures that were put in place by ZESCO. CEC on its part was called upon by ZESCO to reduce its demand from time to time to help mitigate the situation. Sales of electrical energy to CEC customers totalled 3,339 GWh, a reduction from 3,981 GWh sales the previous year due to the low commodity prices on the international market The total energy import into the network was 5,061 GWh of which 3,450 GWh was the Company purchases while 1,611 GWh was wheeled for ZESCO. International wheeling was mainly dictated by the power export requirements from SNEL in DRC to Frontier Mine, ZESA in Zimbabwe and ESKOM in RSA. The operations of the Companys high-voltage transmission and distribution system were maintained to a satisfactory standard. Further a satisfactory security of supply from ZESCO was generally maintained throughout the year. However, there were two major occurrences resulting in interruptions of supply, one arising from the ZESCO system during the month of June and the other from the DRC/SNEL network in September. Thefts and vandalism of the Companys installations continued to be a major cause of concern. There was an increase in the number of theft/vandalism cases on
Insurance
The Company has insured its operational assets against all significant business risks. The Company also maintains insurance for its Directors in respect of their duties as Directors of the Company. Besides the foregoing, the Company has cover for employers liability, public and product liability, group personal accident, motor vehicle insurance and group life assurance. These policies are renewable and run from 1st May to 30th April of the following year.
Dividends and transfer to reserves

The policy of the Company in respect of the payment of dividends is a matter to be determined by the Board in accordance with the principles outlined below: (i) (ii) (iii) (iv) The Companys actual accumulated profits arising from the business of the Company in respect of each year after: provision of working capital as determined by the Board; transfer to reserves as in the opinion of the Board ought reasonably to be made; service of all debts and full compliance with any financing agreements to which the Company is party at the relevant time of payment; and taking into account the interests of the shareholders in minimizing taxation liabilities, shall be distributed by the Company to the shareholders by way of dividend.
The Company has a policy of declaring dividends twice
Directors Report
21
CECs electrical installations. The Company continued to put in place stringent security measures to ensure that the security of the power system is not compromised
Zambian Energy Corporation (Ireland) Limited ZCCM Investments Holdings PLC Private Individuals/ Institutions Government of the Republic of Zambia (Golden Share)
520,000,000 200,000,000 280,000,000 1 Special Share
Directors
The Directors who served during the year and at the date of this report were as follows: Hanson Sindowe Helen Tarnoy Peter Mumba Neil Croucher Michael Tarney Chairperson Deputy Chairperson
Average number and remuneration of employees

The total remuneration of employees during the year amounted to US$10.7 million (2008: US$13 million) and the average total number of employees was as follows: Month January February March April Number 367 353 363 360 353 353 344 355 354 356 356 351 355
Directors Report
Irene L. Ngandwe Standwell C. Mapara Abel Mkandawire Jean Madzongwe Emmanuel Mutati Munakupya Hantuba Jonathan M Muke William S. Musama John K. Kaite
Appointed on 18 /11/2009 Appointed on 18 /11/2009
Retired on 18 /11/ 2009 Retired on 18 /11/ 2009
May June July August September October November December Average
With the exception of Stanbic Bank Limited ,who are bankers for the Company, and Madison General Insurance Company Limited, who provide insurance services in which companies Hanson Sindowe and Abel Mkandawire are Directors respectively, the Company did not enter into contracts with any Company where a Director has material interests.
Share Capital
The authorised share capital of the Company is US$100,001, divided as follows: 1,000,000,000 Ordinary shares of a par value of US $0.0001 each 1 Special Share of US $1.00 held in the Company by the Government of the Republic of Zambia As at 31 December 2009, the shareholding was as follows:
The decrease in employee numbers in December reflected the non renewal of contracts for contractual employees whose duties related to capital projects as there was a reduction in capital activities in the year 2009.
Power Sports Limited

The process of liquidating Power Sports Limited, a subsidiary of CEC and sponsors of Power Dynamos Football Club was concluded during 2009. CEC has, however, continued to sponsor Power Dynamos Football Club through a process of direct funding.
22
Industrial Relations
A sound industrial relations climate continued to prevail in the Company during the year and no work stoppages were experienced. Cordial relations continued to be maintained with the Mine workers Union of Zambia (MUZ).
with the completion of works in the Democratic Republic of Congo. An environmental impact assessment and environmental management plan were prepared and have been implemented in line with local and international regulations. The Company was granted the right to undertake a feasibility study to develop the Kabompo Gorge hydro site in the 4th quarter of 2008. The study formally commenced in 2009, and the final report is expected by the end of February 2010. The study comprised a detailed assessment of the hydrological, topographical and geological aspects of the site, an environmental impact assessment and a number of meetings with the affected communities and Government institutions in North Western Province. If the final report demonstrates that the project is viable, it is expected that the detailed site design, tendering and financing process for the project will be undertaken during 2010. The Company signed a joint venture agreement with RTAA (Proprietary) Limited on 11th Feb 2009 to acquire a 50% interest in Realtime Technology Alliance Africa Limited (Realtime). The transaction was completed in July 2009. The Company has secured regulatory consent from Zambia Competition Commission in respect of the joint venture. Realtime specializes in installing fibre in metropolitan areas in Zambia. The Company also extended its own fibre network on the Copperbelt that is subject to a separate Carrier of Carriers license.
Developments
The fall in the copper price to below US$3,000 per metric tonne at the end of the 4th quarter of 2008 resulted in a number of the mining operations supplied by CEC being placed under care and maintenance during 2009. However, a recovery of copper prices to more than US$6,000 per metric tonne by mid2009 resulted in a re-commencement of mining development activity, and a number of the operations placed under care and maintenance had recommenced operations by the 4th quarter of 2009. Transmission assets to a value of US$35m have been commissioned in CECs Northern Area to facilitate the supply of power to Konkola Copper Mines (KCM) for the supply of power to a new smelter at Nchanga, and new deep mine at Konkola. The assets were financed by KCM and remained in the ownership of KCM at the year end, but are expected to be transferred to CEC in 2010 following signature of the final hand-over certificate by the prime contractor, ABB Finland. CEC has signed an agreement with KCM to re-pay the cost of the assets over a number of years provided that threshold targets for the incremental sale of electricity from CEC to KCM are achieved. A number of families were required to be relocated as a result of the construction of a new transmission line in Konkola, and the Company constructed alternative accommodation for the affected families in the vicinity. The Company completed agreements with Congolese utility SNEL and its financier, the World Bank to commence construction of the Zambian section of a dual circuit 220kV interconnector between Zambia and the Democratic Republic of Congo. The construction of the line has been advertised for international competitive tender and the project is expected to cost US$16.2m. Construction of the project is expected to commence by mid-2010, and commissioning of the line is expected by the second quarter of 2011 to coincide
The Company has a department responsible for identifying new projects, and is currently undertaking an evaluation of opportunities in the supply of power to mines on the Copperbelt and elsewhere, the construction of transmission, generation and telecommunications infrastructure and the provision of operations and maintenance services.
Gifts and Donations

The Company continued to undertake social activities with the key focus areas being education, sport and health. In addition CEC undertook social activities following a request from the Kitwe City Council which included construction of a bus shelter and speed humps in Central Street. The refurbishment of lecture and computer facilities
Directors Report
23
in the Electric and Electronic Department of the University of Zambia was completed at a cost of US$35,000. Repair works at the Arthur Davies Stadium were also undertaken during the year. A project to construct a fitness center and gym for employees and wider community was completed and commissioned during the year In addition, renovations were made to the Mulenga Community School of Kitwes Mulenga Township, one of our communitys less privileged areas. Monetary and material donations were also given to worthy causes. The total cost for donations in 2009 was US$16,471.
prevalence survey was conducted by Afya Mzuri and the key findings of the survey were communicated to all employees. The Company renewed its membership as a Global Development Alliance partner, a partnership that aims at developing and implementing effective workplace HIV/AIDS programmes. The Company continued with its roll back malaria programme of spraying homes in most parts of Kitwe in collaboration with the Kitwe District Management Team and other organisations and also distributed mosquito nets to employees.
Environmental Matters
The Company was granted all environmental permits and licences relevant to the Companys business operations by the Environmental Council of Zambia following acceptable pre-license verification inspections. The Company achieved 100% compliance with the statutory emission limits for its emergency generation plant. The relevant environmental requirements relating to the 2nd DRC Zambia Interconnector and the Kabompo Hydro Power Projects were adequately met. Construction of eight houses for resettlement of households that were in contravention of the safety requirements relating to settlement near CECs transmission line in the Northern Area Expansion project was completed during the year.
Directors Report 24
Safety and Health Matters

The key safety and health focus for the Company during the year was to change the SHE Culture. This was implemented through the SHE Improvement Action Plan that was developed from the SHE Training for Managers and Directors. The improvement plan was undertaken in order to ensure that the Company achieves world-class SHE standards through continuous improvement in SHE Management, proactive follow through of previous areas of concern and that it increases ownership of SHE issues amongst all employees. There were no major SHE incidents recorded during the year.
In the area of health, CEC continued with its wellness programme throughout the organization. A HIV
Statement on Corporate Governance

for the year ended 31 December 2009
Statement on Corporate Governance
In recognition of the importance of conducting its affairs with integrity, in accordance with generally accepted good corporate practice, CEC remains resolute in its commitment to the principles of integrity, openness and accountability. The Company fully supports the principles of good corporate governance espoused in the Lusaka Stock Exchange (LuSE) Corporate Governance Code (which Code is in line with internationally accepted norms). CEC has in this regard, adopted the practice of annual Board Assessment outlined in the LuSE Corporate Governance Code. This enables the Board to assess the performance of both the Board as a body and that of its individual Directors. The Company has also developed a number of policies and procedures aimed and entrenching good Corporate Governance practices, which have resulted in the development and implementation of: (a) (b) (c) CEC Code of Ethics. Insider Trading policy and Guidelines. Conflict of interest policy and Guidelines. of Corporate Governance. The Board has considerable depth of knowledge and experience collectively gained from both the public and private sectors and also represents the respective shareholding groups. During the year two Directors representing ZCCM-IH, Messrs William Musama and John Kaite retired from the Board and were replaced by Mr Standwell Mapara and Mrs Irene Ngandwe. These changes were with effect from 18 November 2009.
Board Committees
The Board has established committees to oversee various aspects of the Companys business and operations. The Board has delegated its authority on certain defined areas to these committees. The committees are comprised of Executive Directors, Non-Executive Directors and Senior Management. The meetings of the respective committees are chaired by a Non -Executive Director. Reports of committee meetings are submitted at each Board meeting.
Executive Committee
The Board of Directors has an Executive Committee whose role is to oversee the major operations of the business including key customer issues, stakeholder management, financial performance, capital projects and management issues. The Committee comprises six members and is chaired by Helen Tarnoy, the Deputy Chairperson of the Board.
In December 2009, Corporate Governance Policy sensitization was conducted for employees at all levels of the Company. During the year under review the Board membership comprised twelve Directors, three of whom were Executive Directors and the others were Non Executive Directors. The Board has three independent Non Executive Directors in its membership whose appointment is undertaken by all Shareholders. The Board has an Executive Chairperson and a Non Executive Deputy Chairperson in accordance with the Companys Articles of Association and the LuSE Code
Audit Committee
During the year under review the Audit Committee provided valuable oversight on the effectiveness of the Companys financial reporting, internal control policies, risk management systems, compliance management systems,
Statement on Governance
25
and the internal audit function. The Audit Committee reviewed and endorsed the CEC Financial Statements for approval by the Board and recommendation to the Shareholders. The Committee comprises three Non-Executive Directors. Appropriate members of Senior Management attend committee meetings. The committee is chaired by Jonathan Muke.
of regulatory and environmental milestones regarding the CEC Expansion Projects i.e. the KEP Relocation Action Plan and the Kabompo Hydro Power Generation ESIA Programme. The Committee attended a workplace HIV/AIDS information dissemination workshop that was delivered by Afya Mzuri during the August 2009 meetings.
Remuneration and Employee Development Committee

The Committee oversees employee remuneration and Mine Workers Union of Zambia (MUZ) wage negotiations, key organisational changes, pension scheme arrangements and employee development policies. Key issues addressed by the committee during the year include introduction of the mentorship programme, benchmarking of salaries and labour cost containment. The Committee comprises four members and is chaired by Munakupya Hantuba.
Nominations Committee
The Committee is tasked with the responsibility of considering appointments to the Board and making recommendations for approval of the three independent Directors, whose appointments are undertaken by the Shareholders. The Committee is chaired by the Chairperson of the Board, Hanson Sindowe and comprises Executive and Non Executive Directors. During the year, the committee met to discuss the reappointment of the three independent Directors to the Board.
Statement on Governance
Safety, Health and Environment Committee

The Committees role is to review the safety, health and environmental performance of CEC, ensure development of and compliance with best practice and all applicable legislation, and to review the quality of reporting of safety, health and environmental issues. The Committee comprises three Non-Executive Directors and four members of Senior Management including the Managing Director. The Chairman of the Committee is Emmanuel Mutati. During the year under review, the committee examined and endorsed the 2008 SHE Performance Report. The Committee reviewed and approved the 2009 Corporate SHE performance Targets. The Committee further examined all the significant SHE incidents during the quarter under review and the all the action plans necessary to fully close out the matters. The Committee approved and monitored on a quarterly basis, the implementation of the SHE Improvement Action Plan aimed at changing the CEC SHE Culture and the Managers SHE Visibility and Inspections Strategy aimed at demonstrating management commitment to SHE and as a tool for proactive SHE Incident identification and prevention. The Committee also monitored the achievement and delivery of a number
Auditors
At the last Annual General Meeting of the shareholders of the Company, Messrs Grant Thornton were appointed as auditors of the Company. In accordance with the Companys Articles of Association, Messrs Grant Thornton will retire as auditors of the Company at the conclusion of the forthcoming Annual General Meeting. Messrs Grant Thornton offer themselves for reelection. By order of the Board
Julia C Z Chaila Company Secretary Lusaka Date: 17 February 2010
26
Statement of Directors Responsibilities

Section 164 (6) of the Companies Act 1994 Cap 388 of the Laws of Zambia requires the Directors to prepare financial statements for each financial year, which give a true and fair view of the financial position of Copperbelt Energy Corporation PLC and of its financial performance and its cash flows for the year then ended. In preparing such financial statements, the directors are responsible for: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement; selecting appropriate accounting policies and applying them consistently; making judgements and accounting estimates that are reasonable in the circumstances; and preparing the financial statements in accordance with International Financial Reporting Standards, and on the going concern basis unless it is inappropriate to presume that the Company will continue in business. accuracy at any time, the financial position of the Company and enable them to ensure that the financial statements comply with the Companies Act 1994. They are also responsible for safeguarding the assets of the Company hence taking reasonable steps for the prevention and detection of fraud and other irregularities. The Board of Directors confirms that in their opinion (a) the financial statements give a true and fair view of the financial position of Copperbelt Energy Corporation PLC as of 31 December 2009, and of its financial performance and its cash flows for the year then ended; at the date of this statement, there are reasonable grounds to believe that the Company will be able to pay its debts as and when these fall due; and the financial statements are drawn up in accordance with International Financial Reporting Standards.
(b)
(c)
The directors are responsible for keeping proper accounting records, which disclose with reasonable
This statement is made in accordance with a resolution of the Directors.
Signed at Lusaka on 17 February 2010
Director Director Hanson Sindowe Michael J. Tarney
Director Jonathan Muke
Statement of Directors responsibilities
27
Report of the Independent Auditors to the members of

Copperbelt Energy Corporation Plc
Report on the Financial Statements
Report of Independent Auditors of the members of CEC
We have audited the accompanying financial statements of Copperbelt Energy Corporation PLC which comprise the statement of financial position as at 31 December 2009, and income statement, statement of comprehensive income, statement of changes in equity, and statement of cash flows for the year then ended, and a summary of significant accounting policies and other explanatory notes. the effectiveness of the entitys internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by trustees, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. In our opinion, the financial statements give a true and fair view of the financial position of Copperbelt Energy Corporation PLC as of 31 December 2009, and of its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards.
Directors responsibility for the financial statements

As described on page 27, the Directors are responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.
Opinion
Report on Other Legal and Regulatory Requirements
Auditors responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors judgement, including the assessment of the risks of material misstatement of the financial statements. In making those risk assessments, the auditor considers internal control relevant to the entitys preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on
In our opinion, the financial statements of Copperbelt Energy Corporation PLC as of 31 December 2009 have been properly prepared in accordance with the Companies Act 1994, and the accounting and other records and registers have been properly kept in accordance with the Act.
Chartered Accountants
Wesley M Beene Partner Lusaka Date: 26 February 2010
28
Statement Of Comprehensive Income

Notes Revenue 5 2009 US$000 154,169 (111,798) 42,371 6,132 (30,697) 17,806 1,065 (1,815) (750) 2008 US$000 177,486
Gross profit Other operating income Operating expenses 6 7
49,526 2,222 (34,378) 17,370 964 (2,709) (1,745)
Results from operating activities Finance income Finance expense 9 10
Net finance cost
Profit before tax Income tax expense 11(a)
17,056 (5,994) 11,062 1,320
15,625 (5,385) 10,240 (148) 51 10,143
Profit for the year Other Comprehensive Income: gross gains/ (loss) on cash flow hedges Income tax relating to other comprehensive income Total comprehensive income for the year 11(a)
(462) 11,920
Earnings per share Weighted basic and diluted earnings per share (cents)
12
1.19
1.01
Statement of Comprehensive Income
Cost of sales
(127,960)
29
Statement of Changes In Equity

Share Share Revaluation Retained capital premium reserve earnings Total US$000 US$000 US$000 US$000 US$000 Balance at 1 January 2008 As previously stated Prior year adjustment (a) As restated Comprehensive income for the year Dividend paid Balance at 31 December 2008 100 - 100 - - 100 148 - 148 - - 148 - - - - - - 45,382 3,700 49,082 10,143 (16,200) 43,025 45,630 3,700 49,330 10,143 (16,200) 43,273
Statement of Changes of Equity
Balance at 31 December 2008 As previously stated Prior year adjustment As restated Revaluation increase Comprehensive income for the year Dividend paid Balance at 31 December 2009 100 - 100 - - - 100 148 - 148 - - 148 - - - 113,080 - 113,080 39,325 3,700 43,025 - 11,920 (10,000) 44,945 39,573 3,700 43,273 113,080 11,920 (10,000) 158,273
(a) (b) (c) (d)
The prior year adjustment is in respect of a prior period error in the computation of the company tax losses in the period since 1 April 2002 which was over stated by US$3.7 million (note 22). Retained earnings are the carried forward recognised income, net of expenses, of the company plus current years profit attributable to shareholders. The share premium relates to the excess amounts received on the issue of share capital net of pre-incorporation costs. The revaluation reserve represents change in value for Land and Building and Primary Transmission Network. Land and Building increased in value by US$9,876,000 following a revaluation by external valuers. Primary Transmission Network increased in value by US$103,204,000 following a revaluation by Internal valuers using Depreciated Replacement costs. The Replacement costs were provided by independent suppliers of the various components of the Primary Transmission Network.
30
Statement of Financial Position

as at 31 December 2009
2009 Notes US$000 ASSETS Non-current assets Property, plant and equipment 13(a) 236,211 Investments in subsidiaries 14 - Investments in joint venture 15 2,000 238,211 Current assets Inventories 16 3,506 Trade and other receivables 17 30,695 Cash and cash equivalents 18 2,299 36,500 Total assets 274,711 EQUITY AND LIABILITIES Equity Issued capital 19 100 Share premium 148 Revaluation Reserve 113,080 Retained earnings 44,945 158,273 Non-current liabilities Interest-bearing loans 20 32,103 Non current trade and other payables 21 13,266 Provisions 22 - Deferred employee benefits 23 2,809 Deferred tax liability 11(e) 33,413 81,591 Current liabilities Current portion of interest-bearing loans 20 7,159 Trade and other payables 24 24,575 Amounts due to related party 25(i) 1,430 Tax payable 11(c) 1,683 34,847 Total liabilities 116,438 Total equity and liabilities The financial statements on pages 29 to 61 were approved by the Board of Directors on 17 February 2010 and were signed on its behalf by: 274,711 2008 2007 US$000 US$000 Restated Restated 125,395 3 - 125,398 3,443 33,822 16,314 53,579 178,977 115,591 3 115,594 1,307 16,372 17,472 35,151 150,745
100 148 - 43,025 43,273 39,262 18,800 3,300 1,955 32,601 95,918 7,059 31,491 - 1,236 39,786 135,704 178,977
100 148 49,082 49,330 32,597 4,690 3,300 2,093 32,586 75,266 2,703 20,868 2,578 26,149 101,415 150,745
) H Sindowe ) Director ) ) J Muke ) Director ) ) M Tarney ) Director
Statement of Financial Position
31
Statement Cash flow

Cash flow from operating activities Profit before taxation Depreciation Interest expense Interest income Profit on disposal of assets Cash inflows before working capital changes Decrease/(increase) in trade and other receivables Increase in inventories 2009 US$000 18,376 9,556 1,815 (1,065) (89) 28,593 3,127 (63) (5,486) (4,154) 22,017 (2,297) (8,062) 11,658 2008 US$000 15,477 9,197 2,709 (964) (53) 26,366 (15,501) (2,136) 10,623 (136) 19,216 (2,579) (6,265) 10,372
Statement Cash Flow
(Decrease)/increase in payables Decrease in provisions Interest paid Income tax paid Net cash inflows on operating activities Investing activities Acquisition of property, plant and equipment Investment in a joint venture Proceeds from disposals of assets Interest received Net cash outflows from investing activities Financing activities Repayment of loans Loans received Dividends paid Net cash outflow from financing activities Net decrease in cash and cash equivalents Cash and cash equivalents at 1 January Exchange loss Cash and cash equivalents at 31 December Represented by: Bank balances and cash Bank overdrafts
(7,332) (6,883) (2,000) 132 98 859 702 (8,341) (6,083) (6,959) - (10,000) (16,959) (13,642) 16,314 (373) 2,299 2,299 - 2,299 (3,979) 15,000 (16,200) (5,179) (890) 17,472 (268) 16,314 16,314 16,314
32
Notes to the Financial Statement

- 31 December 2009
1.

The Company
Copperbelt Energy PLC is a company domiciled in Zambia. The companys principal business is the generation, transmission, distribution and sale of electricity.
The principal accounting policies applied by the company in the preparation of these financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated. (a) Basis of presentation The financial statements are prepared in accordance with International Financial Reporting Standards (IFRS). The financial statements are presented in accordance with IAS 1 presentation of financial statements (Revised 2007). The company has elected to present the Statement of Comprehensive Income in one statement. They have been prepared under the historic cost convention, as modified by the revaluation of financial assets and liabilities at fair value through profit and loss. The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the companys accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in note 3. (i) Amendments to published standards effective in 2009 In 2009, the following new and revised standards and interpretations became effective for the first time and have been adopted by the company where relevant to its operations. The comparative figures have been restated as required, in accordance with the relevant requirements: IFRS 2 (amendments) IFRS 3 (amendments) IFRS 8 IAS 1 (revised) IAS 16 (amendment) IAS 19 (amendment) IAS 21 (amendments) IAS 27 (amendments) IAS 31 (amendments) IAS 32 (amendments) IAS 36 (amendments) - - - - - - - - - - - Share based payments Consolidated and separate financial statements Operating segments Presentation of financial statements Property, plant and equipment Employee benefits Borrowing costs Consolidated and separate financial statements Interest in joint venture Financial instruments Presentation Impairment of assets
2.
Principal accounting policies
33
Notes to the Financial Statements - 31 December 2009 (Continued)

2. Principal accounting policies (continued) (a) Basis of presentation (continued) (ii) Interpretations to published standards that are not yet effective and have not been early adopted by the company: The following new interpretations to existing standards have been published and are mandatory for the companys accounting periods beginning on or after 1 January 2009 or later periods but the company has not early adopted or are not relevant for the companys operations: Standard or Interpretation IFRS 5 IFRIC 16 (iii) Non current assets held for sale and discontinued operations (amendments) Hedges of a net investment in a foreign Operation (amendments) Effective for reporting periods starting on or after
1 July 2009 1 October 2009
Interpretations to published standards that are not yet effective: The following interpretation and amendments to existing standards have been published and are mandatory for the companys accounting periods beginning on or after 1 January 2010 or later periods or are not relevant for the companys operations: Effective for reporting period starting on or after 1 January 2010 1 January 2010 1 January 2010 1 January 2010 1 January 2010
Standard or Interpretation IAS 1 IAS 7 IAS 17 IAS 39 IFRS 8 Presentation of financial statements (amendments) Statement of cash flows (amendments) Leases (amendments) Financial instruments (amendments) Operating segments (amendments)
Based on the companys current business model and accounting policies, management does not expect material impact on its financial statements when the standards or interpretations become effective. The directors have assessed the relevance of these amendments and interpretations with respect to the companys operations and concluded that they may not be relevant to the company based on the current operations. (b) Revenue recognition Revenue in respect of supply of electricity is recognised upon delivery of power for a given period to customers.
34

2. Principal accounting policies (continued) (c) Property, plant and equipment Property, plant and equipment are stated at historical cost less depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items. Subsequent costs are included in the assets carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the company and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the income statement during the financial period in which they are incurred. If a revaluation is undertaken, increases in the carrying amount arising on revaluation of property, plant and equipment are credited to the revaluation surplus in shareholders equity. Decreases that offset previous increases of the same asset are charged against fair value reserves directly in equity; all other decreases are charged to the income statement. Each year, the difference between depreciation based on the revalued carrying amount of the asset charged to the income statement and depreciation based on the assets original cost, net of any related deferred income tax, is transferred from the revaluation surplus to retained earnings. Depreciation is calculated to write off the cost of property, plant and equipment on a straight line basis over the expected useful lives of the assets concerned. The principal annual rates used for this purpose are: Properties Transmission and Distribution Network Motor vehicles Office equipment, furniture and fittings Capital work in progress is not depreciated. The assets residual values and useful lives are reviewed at each balance sheet date and adjusted if appropriate. An assets carrying amount is written down immediately to its recoverable amount if the assets carrying amount is greater than its recoverable amount. Gains and losses on disposals are determined by comparing the proceeds with the carrying amount. These are included in the income statement in the other operating income. When revalued assets are sold, the amounts included in the revaluation surplus relating to these assets are transferred to retained earnings. % 2 1.5 8.33 20 20
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2. Principal accounting policies (continued) (d) Financial assets The company classifies its investments into the following categories: financial assets at fair value through income, debtors and receivables, held-to-maturity financial assets and available-for-sale financial assets. The classification depends on the purpose for which the investments were acquired. Management determines the classification of its investments at initial recognition and re-evaluate this at every reporting date. (i) Financial assets at fair value through income This category has two sub-categories: financial assets held for trading and those designated at fair value through profit or loss at inception. A financial asset is classified into the financial assets at fair value through income category at inception if acquired principally for the purpose of selling in the short term, if it forms part of a portfolio of financial assets in which there is evidence of short term profit taking, or if so designated by management. Financial assets designated as at fair value through profit or loss at inception are those that are: held in internal funds to match investment contracts liabilities that are linked to the changes in fair value of these assets. The designation of these assets to be at fair value through profit or loss eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise from measuring assets or liabilities or recognising the gains and losses on them on different bases; managed and whose performance is evaluated on a fair value basis. Assets that are part of these portfolios are designated upon initial recognition at fair value through profit or loss.
(ii)
Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market other than those that the company intends to sell in the short term or that it has designated as at fair value through income or available for sale. Loans and receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. A provision for impairment of debtors and receivables is established when there is objective evidence that the company will not be able to collect all amounts due according to their original terms Held-to-maturity financial assets Held-to-maturity financial assets are non-derivative financial assets with fixed or determinable payments and fixed maturities other than those that meet the definition of debtors and receivables that the companys management has the positive intention and ability to hold to maturity. These assets are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. A provision for impairment is established when there is objective evidence that the company will not be able to collect all amounts due according to their original terms. Available-for-sale financial assets Available-for-sale financial assets are non-derivative financial assets that are either designated in this category or not classified in any of the other categories.
(iii)
(iv)
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2. Principal accounting policies (continued) (d) Financial assets (continued) Financial assets are derecognised when the rights to receive cash flows from them have expired or where they have been transferred and the company has also transferred substantially all risks and rewards of ownership. Available-for-sale financial assets and financial assets at fair value through profit or loss are subsequently carried at fair value. Loans and receivables and held-to-maturity financial assets are carried at amortised cost using the effective interest method. Realised and unrealised gains and losses arising from changes in the fair value of the financial assets at fair value through profit or loss category are included in the income statement in the period in which they arise. Unrealised gains and losses arising from changes in the fair value of non-monetary securities classified as available for sale are recognised in equity. When securities classified as available for sale are sold or impaired, the accumulated fair value adjustments are included in the income statement as net realised gains or losses on financial assets. Interest on available-for-sale securities calculated using the effective interest method is recognised in the income statement. Dividends on available-for-sale equity instruments are recognised in the income statement when the companys right to receive payments is established. The fair values of quoted investments are based on current bid prices. If the market for a financial asset is not active, the company establishes fair value by using valuation techniques. (e) Impairment of assets (i) Financial assets carried at amortised cost The company assesses at each balance sheet date whether there is objective evidence that a financial asset or group of financial assets is impaired. A financial asset or group of financial assets is impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that have occurred after the initial recognition of the asset (a loss event) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated. Objective evidence that a financial asset or group of assets is impaired includes observable data that comes to the attention of the company about the following events: significant financial difficulty of the issuer or debtor; a breach of contract, such as a default or delinquency in payments; it becoming probable that the issuer or debtor will enter bankruptcy or other financial reorganisation; or observable data indicating that there is a measurable decrease in the estimated future cash flow from a group of financial assets since the initial recognition of those assets, although the decrease cannot yet be identified with the individual financial assets in the company, including: adverse changes in the payment status of issuers or debtors in the company; or national or local economic conditions that correlate with defaults on the assets in the company.
The company first assesses whether objective evidence of impairment exists individually
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2. Principal accounting policies (continued) (e) Impairment of assets (continued) (i) Financial assets carried at amortised cost (continued) for financial assets that are individually significant. If the company determines that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, it includes the asset in a group of financial assets with similar credit risk characteristics and collectively assesses them for impairment. Assets that are individually assessed for impairment and for which an impairment loss is or continues to be recognised are not included in a collective assessment of impairment. If there is objective evidence that an impairment loss has been incurred on debtors and receivables or held-to-maturity investments carried at amortised cost, the amount of the loss is measured as the difference between the assets carrying amount and the present value of estimated future cash flows (excluding future credit losses that have been incurred) discounted at the financial assets original effective interest rate. The carrying amount of the asset is reduced through the use of an allowance account, and the amount of the loss is recognised in the income statement. If a held-to-maturity investment or a loan has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under contract. If in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed by adjusting the allowance account. The amount of the reversal is recognised in the income statement. (ii) Financial assets carried at fair value The company assesses at each balance sheet date whether there is objective evidence that an available-for-sale financial asset is impaired. If any such evidence exists for available-for-sale financial assets, the cumulative loss measured as the difference between the acquisition cost and current fair value, less any impairment loss on the financial asset previously recognised in profit or loss is removed from equity and recognised in the income statement. Impairment losses recognised in the income statement on equity instruments are not subsequently reversed. The impairment loss is reversed through the income statement, if in a subsequent period the fair value of a debt instrument classified as available for sale increases and the increase can be objectively related to an event occurring after the impairment loss was recognised in profit or loss. Impairment of other non-financial assets Assets that have an indefinite useful life, for example land, are not subject to amortisation and are tested annually for impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the assets carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an assets fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units).
(iii)
(f)
Inventories Inventories are stated at the lower of cost and net realisable value. Cost is calculated on a weighted average basis and includes all expenditure incurred in bringing the inventories to their present location and condition. Net realisable value is the price at which inventory can be realised in
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Principal accounting policies (continued) (f) Inventories (continued) the normal course of business and takes into account all directly related costs to be incurred in marketing, selling and distribution. Provision is made for obsolete, slow moving and defective inventories. (g) Cash and cash equivalents Cash and cash equivalents include cash in hand, deposits held at call with banks, other short-term highly liquid investments and balances held with banks. Borrowings Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the income statement over the period of the borrowings using the effective interest method. Borrowing costs Borrowing costs, being interest payable on loans directly attributable to the acquisition, production or construction of qualifying assets that need a substantial period of time to get ready for their intended use are capitalised. Short/long term indebtedness Short term indebtedness includes all amounts due to be repaid within twelve months from the date of the balance sheet, including instalments due on loans of longer duration. Long term indebtedness represents all amounts repayable more than twelve months from the date of the balance sheet. Taxation Income tax expense represents the sum of the tax currently payable and deferred tax. Tax currently payable is based on the results for the year as adjusted for items which are non-assessable or disallowed for tax purposes. Deferred taxation liabilities are recognised for all taxable temporary differences. Temporary differences can arise from the recognition for tax purposes of items of income or expense in a different accounting period from that in which they are recognised for financial accounting purposes. The tax effect of these temporary timing differences is computed by applying enacted statutory tax rates to any differences between carrying values per the financial statements and their tax base, and accounted for as deferred tax. Deferred taxation assets are recognised for all deductible temporary differences to the extent that it is probable that taxable profit will be available against which the deductible temporary differences can be utilised. (l) Foreign currencies (i) Functional and presentation currency Items included in the financial statements are measured using the currency of the primary economic environment in which the company operates (the functional currency). The financial statements are presented in United States Dollars, which is also the companys functional currency.
(h)
(i)
(j)
(k)
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2. Principal accounting policies (continued) (l) (ii) Foreign currencies (continued) Transactions and balances Other currency transactions are translated into the functional currency using the rates of exchange prevailing at the date of transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year end exchange rates of monetary assets and liabilities denominated in other foreign currencies are recognised in the income statement. Translation differences on non-monetary items, such as equity at fair value through profit and loss, are reported as part of the fair value gain or loss. Translation differences on nonmonetary items, such as equities classified as available-for-sale financial assets, are included in fair value reserve in equity.
(m)
Employee benefits (i) Pension obligations All local employees below 55 years are registered with the statutory defined contribution pension scheme. A defined contribution scheme is a pension plan under which the company pays fixed contributions into a separate entity (a fund) and will have no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees benefits relating to employee service in the current and prior periods. For the defined contribution scheme, the company makes mandatory contributions to the National Pension Scheme Authority. These contributions constitute net periodic costs and are charged to the income statement as part of staff costs in the year to which they relate. The company has no further obligation once the contributions have been paid. Secondly, there is a defined contribution pension scheme, the assets of which are held in a separate trustee-administered fund. The pension scheme is funded by contributions to the pension scheme. The contributions by the company are charged to the income statement in the period to which the contributions relate. The company contributes 10.7% and the employees 5% of the employees basic salary towards the scheme. (ii) Deferred employee benefits The expected costs of providing post-retirement benefits under defined benefits arrangements relating to employees service during the period are charged to the statement of income. Any actuarial assumptions are recognized immediately in the statement of income. In all cases, the pension costs are assessed in accordance with the advice of independent qualified actuaries but require the exercise of significant judgements in relation to assumptions for future salary and pension increases, long term price inflation and investment returns. While management believes the assumptions used are appropriate, a change in assumptions would impact the earnings of the company.
(n)
Provisions Provisions are recognised when: the company has a present legal or constructive obligation as a result of past events; it is more likely than not that an outflow of resources will be required to settle the obligation; and the amount has been reliably estimated. Provisions are not recognised for future operating losses. Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small.
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2. Principal accounting policies (continued) (o) Dividend distribution Dividend distribution to the companys shareholders is recognised as a liability in the financial statements in the period in which the dividends are approved by the companys shareholders. Investments Investments are stated at cost. (q) Environmental costs The company is subject to various regulations and environmental costs are charged to the income statement as they are incurred. Ordinary shares Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares and share options are recognised as a deduction from equity, net of any tax effects. Earnings per share The company presents weighted basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by diving the profit or loss attributable to the shareholders of the company by the weighted average number of ordinary shares outstanding during the period. Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding for the effects of all dilutive potential ordinary shares, which comprise convertible notes and share options granted to employees. Lease of land Leases of land are classified as operating leases on the basis that although land has infinite economic life and the right to use the land passes on acquisition, ownership has a fixed lease term of 99 years, or the unexpired portion thereof. Upfront payments made to obtain the right to use the land are capitalised as a lease prepayment and recognised on a straight line basis over the unexpired portion of the lease as an operating lease expense. Segment reporting A segment is a distinguishable component of the company that is engaged either in providing products or services within a particular economic environment (geographical segment), which is subject to risks and rewards that are different from those of other segments. Segment revenue is based on the geographical location of customers.
(p)
(s)
(t)
(u)
3.
Critical accounting estimates and judgements

The company makes estimates and assumptions that affect the reported amounts of assets and liabilities within the next financial year. Estimates and judgements are continually evaluated and based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. In the process of applying the companys accounting policies, management has made judgements in determining:
(r)
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(a) (b) (c) (d) the classification of financial assets; whether assets are impaired; estimation of provision and accruals; and recoverability of trade and other receivables.
4.
Management of financial risk

4.1 Financial risk The company is exposed to a range of financial risks through its financial assets and financial liabilities. The most important components of this financial risk are interest rate risk and credit risk. These risks arise from open positions in interest rate and business environments, all of which are exposed to general and specific market movements.
The company manages these positions with a framework that has been developed to monitor its customers and return on its investments. 4.1.1 Credit risk The company has exposure to credit risk, which is the risk that a counter party will be unable to pay amounts in full when due. The key area where the company is exposed to credit risk is amounts due from customers. The companys exposure to credit risk is influenced mainly by individual characteristics of each customer. The demographics of the companys customer base, including the default risk of the industry and country, in which customers operate, has less of an influence on credit risk. Approximately 36% of the companys revenue is attributable to sales transactions with a single customer. The company enters into Agreements with new customers, each customer is analysed individually for creditworthiness before credit terms and conditions are offered. The companys review includes trade references from other suppliers, when available, and in some cases bank references. Credit limits are established for each customer, which represents the maximum open amount without requiring approval from the senior management; these limits are reviewed annually. Customers that fail to meet the companys benchmark creditworthiness may transact with the company only on a cash basis. All the companys customers have been transacting with the company for over five years, and losses have occurred infrequently. In monitoring customer credit risk, customer supplies are within the predetermined credit limits, and further supplies are restricted if amounts remain outstanding for more than 60 days regardless of the amount. Trade and other receivables relate mainly to the companys mining customers and other legal entity customers that account for 99% and 1% respectively. Customers that are graded as high risk are those for whom outstanding amounts exceed 60 days, and such customers are placed on a restricted customer list, and future electricity supplies are restricted. The company does not require collateral for trade and other receivables. The company establishes an allowance for impairment that represents its estimate of incurred losses in respect of trade and other receivables. The main component of this allowance relates to individually significant exposures, and a collective loss component is established for groups of similar assets in respect of losses that have been incurred but not yet identified. The collective loss allowance is determined based on historical data of payment of statistics for similar financial assets.
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4. Management of financial risk (continued) Financial risk (continued) 4.1.2 Liquidity risk Liquidity risk is the risk that the company will not be able to meet its financial obligations as they fall due. The companys approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the companys reputation. The company uses activity-based costing to cost its products and services, which assist it in monitoring cash flow requirements and optimizing its cash return on investments. Typically the company ensures that it has sufficient cash on demand to meet expected operational expenses for a period of 60 days, including the servicing of financial obligations; this excludes the potential impact of extreme circumstances that cannot reasonably be predicted, such as natural disasters. 4.1.3 Market risk Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the companys income or the value of its financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimizing the return. Currency risk The company is exposed to risk on sales, purchases and borrowings that are denominated in a currency other than the functional currency of the company, namely the US Dollar. The currencies in which these transactions are primarily denominated are the Zambian Kwacha and South African Rand. In respect of other monetary assets and liabilities denominated in foreign currencies, the company ensures that the risk is kept to an acceptable level by matching assets and liabilities in the balance sheet. Net exposure is kept to an acceptable level by denominating recognized trade receivables in United States Dollars. 4.1.5 Interest rate risk The company is exposed to interest rate risk to the extent of the balance of the bank accounts and loans. Capital management The Boards policy is to maintain a strong capital base so as to maintain creditor and market confidence and to sustain future development of the business. The Board of Directors monitors the key financial performance indicators of the company. The Board reviews the statutory accounts by comparing the actual results against budget and prior year. The companys target is to achieve growth in respect of sales, gross profit and profit before tax. There were no changes in the companys policy to capital management during the year.
4.1.4
4.1.6
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2009 US$000 142,841 10,612 497 219 154,169 2008 US$000 167,927 8,143 759 657 177,486
5.

Revenue by business segment

Electricity transmission Wheeling domestic Wheeling international Rural electrification
6.
Capital charge Telecoms income Write back of provision no longer required Sundry income
Other operating income
1,498 332 3,786 516 6,132
1,660 284 278 2,222
Depreciation Personnel and staff related costs (note (8)) Non-executive directors fees and benefits Auditors remuneration audit services Tax services Insurance costs Stores and maintenance Football expenses Bad debts provision Other operating expenses
7.
Operating expenses
9,556 10,700 117 46 9 1,467 1,667 414 (1,546) 8,265 30,697
9,197 13,087 161 22 8 1,338 2,623 441 2,553 4,948 34,378
8.

Personnel and staff related costs

Salaries and wages Retirement benefits Pension contributions and similar costs Other staff costs (overtime, shift differential, housing and bonuses)
6,127 538 1,230 2,805 10,700
8,277 371 1,517 2,922 13,087
9.
Finance income
Interest on overdue debtors Bank interest
871 194 1,065
580 384 964
10.
Finance expenses
Interest on bank loans Interest on overdue creditors
1,625 190 1,815
2,688 21 2,709
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2009 US$000 2008 US$000
11.
Income tax expense

(a)
Charge for the year: Income tax on taxable profit @ 35% (2008 @ 35%) Deferred taxation
5,644 812 6,456
5,319 15 5,334
(b)
Reconciliation of the tax charge: Profit before taxation 18,376 15,477
173 (18) (238) 5,334 2,578 5,319 (396) (6,265) 1,236
(c)
Movement in taxation payable account: At the beginning of the year Charge for the year (note 11(a)) Exchange differences Release of Provision Payments made during the period At the end of the year
1,236 5,644 (435) 3,300 (8,062) 1,683
(d)
Income tax assessments have not yet been agreed with the Zambia Revenue Authority (ZRA) for the period ended 31 December 2009. A self-assessment system for income tax was introduced for periods subsequent to 31 March 2004. Income tax returns have been filed with the ZRA for the period ended 31 December 2009. Quarterly tax returns for the year ended 31 December 2009 were made on the due dates during the year. 2009 US$000 32,639 774 33,413 2008 US$000 32,650 (49) 32,601
(e) Deferred taxation This represents: Accelerated tax allowances Unrealised exchange losses Analysis of movement: At the beginning of the year Provision made during the year (note 11(a)) At the end of the year
32,601 812 33,413
32,586 15 32,601
Taxation at current rate on accounting profit 6,432 Permanent differences: Disallowable expenses - Profit on disposal of assets (31) Timing differences: Capital allowances and depreciation 55 Tax charge 6,456
5,417
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12.

Earnings per share
The calculation of earnings per share is based on: Retained profit for the year attributable to ordinary shareholders; and Number of ordinary shares outstanding during the year. 2009 US$000 Retained profit for the year attributed to ordinary shareholders 11,920 Number of ordinary shares The company has no additional potential shares outstanding. 1,000,000,000
2008 US$000 10,143 1,000,000,000
Diluted earnings per share The calculation of diluted earnings per share was based on the profit attributable to ordinary shareholders of US$11,920,000 (2008: US$10,143,000) and a weighted average number of ordinary shares. The denominator used in the calculation for the Basic Earnings per Share (EPS) is 1,000,000,000 for both 2009 and 2008.
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13.
Property, plant and equipment
(a)
Summary
Total US$000 192,604 19,102 (600) 211,106 7,332 47,555 (403) 265,590
77,013 9,198 (500) 85,711 9,553 (65,525) (360) 29,379
Transmission & Transmission & Equipment Capital Distribution Distribution fixtures & Motor work-in Buildings network (Primary) network (Secondary) fittings vehicles progress US$000 US$000 US$000 US$000 US$000 US$000 Cost/valuation At 1 January 2008 10,737 122,704 42,070 5,143 4,725 7,225 Additions - - - - - 19,102 Transfers from CWIP 859 9,147 6,987 1,182 579 (18,754) Disposals - - (105) - (495) - At 31 December 2008 11,596 131,851 48,952 6,325 4,809 7,573 Additions - - - - - 7,332 Surplus on valuation 7,745 39,810 - - - - Transfers from CWIP 1,061 4,936 1,606 847 790 (9,240) Disposals - - - - (403) - At 31 December 2009 20,402 176,597 50,558 7,172 5,196 5,665 Depreciation At 1 January 2008 1,615 52,558 15,866 4,273 2,701 - Charge for the year 253 5,459 2,415 394 677 - Disposals - - (74) - (426) - At 31 December 2008 1,868 58,017 18,207 4,667 2,952 - Charge for the year 263 5,377 2,787 516 610 - Depreciation no longer required (2,131) (63,394) - - - - Disposals - - - - (360) - At 31 December 2009 - - 20,994 5,183 3,202 - Net book value At 31 December 2009 20,402 176,597 29,564 1,989 1,994 5,665 At 31 December 2008 9,728 73,384 30,745 1,658 1,857 7,573
236,211 125,395
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13. Property, plant and equipment (continued)
(b) A schedule listing the properties as required by Section 164 and the Second Schedule of the Companies Act, Cap 388 of the Laws of Zambia is available for inspections by Members or their duly authorised representatives at the registered office of the company. Included in cost of property, plant and equipment are fully depreciated assests amounting to US$9.02 million (2008: US$7.6 million). The notional depreciation not charged in these financial statements on these assets amounts to US$504,000 (2008: US$425,000). The transfer of some of the title to property, transferred from ZCCM Investment Holdings (ZCCM IH) has not yet been concluded, but is in progress. Capital borrowings: interest amounting to US$254,000 (2008: US$100,000) was capitalized to property, plant and equipment calculated at the rate of 2.5% plus LIBOR. At 31 December 2009 the companys properties were revalued by Bitrust Real Estate, Rainbow Surveys Limited and Sherwood Greene registered valuers on the basis of realizable market value. The companys primary transmission assets were revalued internally on the basis of depreciated replacement cost. The surplus on revaluation totaling US$113,080,000 was transferred to a revaluation reserve. The company has vehicles valued at US$1,507,361 (2008 : US$Nil) under operating leases with Barclays Bank (Z) Ltd. These assets have not been capitalised in the companys books and are therefore, not included as part of property, plant and equipment. 2009 US$000 2008 US$000
(a)
(b)
(c) (d)
(e)
14. Investments in subsidiaries

At cost At the beginning of the period Disposed during the year At the end of the period Disposal of investment Proceeds on disposal of investments Net value of investment disposed Gain on disposal of investment 3 (3) - 3 3
(a)
- -
he disposal represents the voluntary liquidation of Power Sports Limited the sponsors of Power Dynamos T Football club.
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2009 US$000 2008 US$000
15.
Investment in joint venture

At cost At the beginning of the year Acquired during the year (a) At the end of the year - 2,000 2,000 -
(a)
The company interest in a joint venture is as follows:
16. Inventories Fuel Spares and consumables 17. Trade and other receivables Trade receivables Less: impairment of debt Prepayments and deposits Other receivables (a) (a) Employee share ownership plan
2009 2008 US$000 US$000 2,875 631 3,506 27,309 (3,192) 24,117 554 6,024 30,696 2,823 620 3,443 30,214 (4,737) 25,477 563 7,782 33,822
The company approved in 2007 a Share Ownership Plan (ESOP) to allow members of staff to purchase shares in the company at the time of floatation of these company shares. The plan allowed the members of staff to obtain the loans to enable them to purchase shares. The other receivables include US$4.08 million (2008: US$4.8 million) due from employees under the ESOP. The companys exposure to credit, currency and impairment losses related to trade and other receivables are disclosed in note
(f )
18 months to 31 Dec. Interest Country of Assets Liabilities Revenue loss net Name Incorporation US$ US$ US$ US$ US$ Realtime Technology Alliance Africa Zambia 2,909 2,791 3,647 (1,204) 50 2,909 2,791 3,647 (1,204) 50 (b) The company reports its interest in the joint venture using the proportionate consolidation. The companys share of the assets, liabilities, income and expenses of the joint venture are combined with equivalent items in the consolidated financial statements on a line by line. The joint venture financial statements which was acquired on July 2009 have not been consolidated to these financial statements since this is a first year of operation for the joint venture.
49

2009 US$000 2,291 8 2,299 2008 US$000 16,300 14 16,314
18.
Cash and cash equivalents

Bank balances Petty cash
The companys exposure to interest rate risk and sensitivity analysis for financial assets and liabilities are disclosed in note 26.
2009 US$000
2008 US$000
19.
Share capital
Authorized 1,000,000,000 (2008: 1,000,000,000) Ordinary shares of 0.01 US cents each (2008: 0.01 US cents each) 1 Special Share of 1 US Dollar Issued and fully paid 1,000,000,000 (2008: 1,000,000,000) Ordinary shares of 0.01 US cents each (2008: 0.01 US cents each) 1 Special Share of 1 US Dollar (a)
100 -
100 -
100 -
100 -
The rights relating to the Special Share include the right to convene, receive notice for and attend any general meeting of the company or any meeting of any class of shareholders of the company and to add items to the agenda.
50

20. Interest bearing loans
At the beginning of the year Received during the year Payments during the year Amounts due within one year At the end of the year 2009 US$000 46,321 - (7,059) 39,262 (7,159) 32,103 2008 US$000 35,300 15,000 (3,979) 46,321 (7,059) 39,262
Due to: Development Bank of South Africa (DBSA) (note a) Citibank N. A. London, Citibank Zambia and DEG (note b) African Life Financial Services (note c) 3,200 26,062 10,000 39,262 4,300 32,021 10,000 46,321
This relates to the contractual terms of the companys interest bearing loans and borrowings which are measured at amortised cost. The details of the companys exposure to interest rate, foreign currency and liquidity risk is in note 26.
51

payment US$000 2009 2008 Capital Interest Principal US$000 US$000 Capital Interest US$000 Principal US$000 payment US$000
Less than 1 year More than 1 year
7,159 32,103 39,262
1,879 - 1,879
7,159 32,103 39,262
7,059 39,262 46,321
2,948 - 2,948
7,059 39,262 46,321
(a)
The DBSA loan of US$3.2 million bears interest of LIBOR plus 1.9%. The loan is secured on the COSAK sub-station at Chambishi Metals PLC. The principal is repayable in 22 instalments commencing 31 December 2001 and will be fully repaid in 2012.
(b)
The Citibank N. A. London, Citibank Zambia and DEG loan of US$26,061,565 is made up of three tranches (A (US$5,600,000)/ B (US$12,000,000)/ C (US$8,461,539). Tranche A loan bears an interest of LIBOR plus 2.3%, while tranches B and C bear interest at LIBOR plus 2.5%. Tranche A is repayable in 9 equal instalments to end by December 2012, while tranches B and C are repayable in 13 equal instalments to end by December 2014. The US$10 million African Life Financial Services loan bears interest of LIBOR plus 2.5% and will be fully repaid by 2014. The loan has a five year grace period and will be repaid in four semi annual instalments commencing in September 2012.
(c)
52

2009 US$000 904 12,362 13,266 2008 US$000 4,690 14,110 18,800
21.
Non - current trade and other payables

Mopani Copper Mines (note (a)) First Quantum Mining and Operations (note (b)) (a)
(b)
The First Quantum Mining and Operations (FQM) long term creditor relates to the procurement of transmission assets in Ndola area from FQM. The credit is interest free and repayment is over ten years. The assets were acquired in December 2008. At the inception of the agreement, the company recognised an asset and liability at an amount equal to the fair value of the equipment. The companys exposure to currency and liquidity risk related to trade and other payables is disclosed in note 26.
(c)
2009 US$000
2008 US$000
22.
Provisions
At the beginning of the year As previously stated Prior year adjustments (a) As restated Provision used or released during the year (b) At the end of the year
3,300 - 3,300 (3,300) -
7,000 (3,700) 3,300 3,300
The provision was made for the tax liabilities for the years prior to 30 April 2002 which were under dispute. (a) The prior year adjustment relate to the over provision.
Following the agreement of tax returns for tax periods 1998/99 to 2007/08, CEC paid $3.3m in October 2009 in respect of the estimated tax liabilities which was under dispute for tax assessments for the tax years from 1998/1999 to 2003/2004
The Mopani Copper Mines (MCM) long term creditor relates to the procurement of upstream transmission assets in Mufulira from MCM. The credit is interest free and repayment is based on achieving milestones for the sale of electricity through these assets. In the year under review no repayment was made (2008: US$ nil). The reduction in liability to MCM represents write back of liability amounting to US$3,786,000 as result of non achievement of agreed power consumption levels. At the inception of the agreement, the company recognized an asset and liability at an amount equal to the fair value of the equipment.
53

23. Deferred employee benefits
The company has established a defined contribution pension scheme for its employees, membership of which is compulsory. In addition, the company provides further benefits to its employees based on the salary of each employee on retirement. The companys obligations, based on overall retirement benefits, are accounted for as a defined benefit scheme. (i) Actuarial assumptions An actuarial valuation was carried out for the financial year ended December 2009. Assumptions for the Actuarial Valuation are as below: Retirement benefit valuation done as per Table A shown below. Salary increases have been assumed at 10%. Investment returns will exceed future inflation by 4% per annum. Discount rate of 10% has been used on future cash flows. Mortality is assumed as per actuarial assumptions. Withdrawals have been put at a rate of 12.5% at age 20 reducing to nil at age 50 and thereafter. Table A Age 20 25 30 35 40 45 50 55 Annual rate 12.5% 10.0% 7.5% 7.5% 5.0% 2.5% 0.0% 0.0%
Normal retirement age for the company is 55 years.
54

23.

Deferred employee benefits (continued)

(ii) The amounts recognised in the balance sheet are as follows: 2009 US$000 2,809 2,809 2,809 2008 US$000 1,955
Present value of unfunded obligation Recognized liability for defined benefit obligation Total employee benefits (iii) Movement in the present value of retirement/redundancy obligations
1,955
At the beginning of the year Retirement provisions Exchange (gain)/Loss Benefits paid At the end of the year Expense recognized in the income statement Current service costs
2009 US$000 1,955 541 740 (427) 2,809
2008 US$000 2,093 809 (480) (467) 1,955
(iv)
179 179
329 329
24.

Trade and other payables

Trade creditors Accrued expenses Other creditors Social security and PAYE 21,423 969 1,724 459 24,575 29,810 632 597 452 31,491
1,955
55

25. Related party transactions
On 27 October 2006, Cinergy Zambia BV and National Grid Zambia BV (companies incorporated in the Netherlands) holding 77% shareholding of the company, passed resolutions to change their names to Zambian Power BV and Zambian Transmission BV. The two entities were subsequently acquired by Zambia Energy Corporation (Netherlands) BV. ZCCM Investments Holdings PLC and individual shareholders continue to own shares in the company.
The following transactions were carried out with related parties: (i) Amounts due from/(to) related parties (ii) Zambia Energy Corporation
2009 US$000 (1,430)
2008 US$000 100
The amount due to Zambia Energy corporation has since been paid post the balance sheet date. Directors remuneration A listing of the members of the Board of Directors is included in the Directors report. During the year, Directors received cash remuneration for services rendered to the company of US$117,076 (2008: US$161,176).
(iii)
Executive management remuneration (Executive management team, excluding directors (shown in (ii) above)) 2009 US$000 1,539 25 - 1,564 2008 US$000 1,350 61 1,411
Short-term employment benefits Post employment benefits Other long term benefits Termination benefits - Total remuneration (iv) Individual shareholders
Three shareholders of the company are also executive directors. The company pays salaries and provides other benefits to three of the individual shareholders that are in employment with the company. (v) Zambian Energy Corporation Limited Two of the Zambian Energy Corporation Limited representatives on the companys Board are also executive directors. Both executive directors are also individual shareholders in the company. The
56

company pays salaries and provides other benefits to the two members that are in employment with the company. (vi) Transactions with joint ventures During the year CEC invoiced Realtime Technology Alliance Africa Limited (RTAA) US$353,091 for usage of the Fibre Assets. The company also advanced RTAA US$295,420. For services rendered, the company was invoiced by RTAA US$150,011. The net outstanding balance at the balance sheet date was US$366,419
Exposure to currency, interest rate, credit and liquidity risk arises in the normal course of the companys business. (i) Credit risk Exposure to credit risk The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the reporting date was: Carrying amount 2009 2008 US$000 US$000 30,695 2,299 32,994 33,822 16,314 50,136
Trade and other receivables Cash and cash equivalents
US$000 Domestic DRC
The maximum exposure to credit risk for trade receivables at the reporting date by geographic region was: Carrying amount 2009 2008 US$000 23,702 415 24,117 25,428 97 25,525
The companys most significant customer, Konkola Copper Mines accounts for US$13,373,342 of the trade receivables carrying amount at 31 December 2009 (2008: US$10,338,173).
26.
Financial instruments
57

26. Financial instruments (continued) (ii) Impairment losses The aging of trade receivables at the reporting date was: Days Gross amount US$000 14,392 7,277 170 5,470 27,309 2009 Impaired Net amount amount US$000 US$ - - - 3,192 3,192 14,392 7,277 170 2,278 24,117 Gross amount US$000 14,687 4,324 3,344 7,859 30,214 2008 Impaired Net amount amount US$000 US$ - - - 4,737 4,737 14,687 4,324 3,344 3,122 25,477
0 21 22 45 46 59 Over 60
The movement in the allowance for impairment in respect of trade receivables during the year was as follows: 2009 2008 US$000 US$000 At the beginning of the year 4,737 2,184 Impairment loss charged - 2,553 Write back of impairment loss (1,545) At the end of the year 3,192 4,737 The collectability of receivables is assessed at the balance sheet date and specific allowances are made for any doubtful receivables based on a review of all outstanding amounts at the year end. Bad debts are written off during the year in which they are identified. (i) Liquidity risk The following are the contractual maturities of financial liabilities: 31 December 2009: Carrying Contractual Within 1 to 2 2 to 5 amount cash flows 1 year years years US$000 US$000 US$000 US$000 US$000 Non-derivative Financial liabilities Loans 39,262 39,262 7,159 9,559 14,569 Trade payables 34,690 34,690 21,423 - 13,266 Other payables Total 4,582 78,534 4,582 78,534 4,582 33,164 - 9,559 - 27,835 Longer than 5 years US$000 7,955 - 7,955
58

26. Financial instruments (continued) 31 December 2008: Carrying Contractual Within 1 to 2 2 to 5 amount cash flows 1 year years years US$000 US$000 US$000 US$000 US$000 Non-derivative Financial liabilities Loans 46,321 46,321 7,059 7,158 19,876 Trade payables 48,610 48,610 29,957 - 18,800 Other payables 1,681 1,681 1,681 - - Total 96,612 96,612 38,697 7,158 38,676 (iv) Longer than 5 years US$000 12,228 12,228
Currency risk Exposure to currency risk The companys exposure to foreign currency risk was as follows based on notional amounts: 2009 US$000 80 161 (4,299) (4,058) 2008 US$000 340 1,129 (2,064) (595)
Trade receivables Other receivables Other payables Balance sheet net exposure The following significant exchange rates applied during the year:
2009 ZMK US$1 5,047
Average rate 2008 ZMK 3,745
59

26. Financial instruments (continued) (v) Fair values Fair values versus carrying amounts The fair values of financial assets and liabilities, together with carrying amounts shown in the balance sheet are as follows: 31 December 2009 At fair value through income statement Designated Classified Held to Fair value On initial as held maturity Loans and Recognition for trading investments receivables US$000 US$000 US$000 US$000 Financial assets Receivables Other receivables 27,309 Cash and cash equivalents - - - 2,299 Total financial assets - - - 29,608 Financial liabilities Loans Trade payables Other payables Total financial liabilities Net position - - - - - - - - - - - - - - - (39,262) (21,423) (4,582) (65,267) (35,659)
for each class US$000 24,117 2,299 26,416 (39,262) (21423) (4,582) (65,267) (38,851)
60

26. Financial instruments (continued) (v) Fair values (continued) 31 December 2008 At fair value through income statement Designated On initial Recognition US$000 Financial assets Receivables - Other receivables - Cash and cash equivalents - Total financial assets - Financial liabilities Loans Trade payables Other payables Total financial liabilities Net position - - - - -
- - - - - - - - -
- - - - - - - - -
30,214 7,782 16,314 54,310 (46,321) (29,810) (1,681) (77,812) (23,502)
25,477 7,782 16,314 49,573 (46,321) (29,810) (1,681) (77,812) (28,239)
27.
Capital commitments
Capital commitments authorised and contracted for by the directors as at 31 December 2008 amounted to US$2,165,000 (2008: US$2,764,000). And capital expenditure authorised but not contracted for was US$nil (2008: US$nil).
28.

Contingent liabilities
There were no known contingent liabilities at 31 December 2009 (2008: US$nil).
29.
Events subsequent to the balance sheet date

There has not arisen since the end of the financial year any item, transaction or event of a material and unusual nature likely, in the opinion of the Board of Directors of the company to affect substantially the operations of the company, the results of its operations or state of affairs of the company in the subsequent financial years.
Classified as held for trading US$000
Held to Fair value maturity Loans and investments receivables US$000 US$000
for each class US$000
61
Directors
Hanson Sindowe Executive Chairman Member: Audit Committee
Directors
Helen Tarnoy
Non - Executive Deputy Chairperson of the Board Member : Audit Committee
Neil Croucher
Executive Member: Executive Committee, Remuneration Committee and SHE Committee
Abel Mkandawire
Emmanuel Mutati
Non Executive Chairman: SHE Committee
Non Executive Member: Remuneration & ED committee Chairman: SHE Committee
Munakupya Hantuba
Non Executive Chairman: Remuneration
Irene Ngandwe
Non Executive Member: Executive Committee
Jean Madzongwe
Non Executive Member : Audit Committee
Jonathan Muke
Non Executive Chairman : Audit Committee
Michael Tarney
62
Executive Member : Executive Committee, Audit Committee, Remuneration &ED Committee,
Standwell Mapara
Non Executive Member: Remuneration Committee
Peter Mumba
(Former PS Ministry of Energy & Water Development)
Julia C Z Chaila
Company Secretary/Director Legal Services
CEC Management Team

Hanson Sindowe Executive Chairman Neil Croucher Managing Director Operations Michael Tarney Managing Director Corporate Development & Chief Financial Officer Humphrey Mulela Director of Operations Julia C Z Chaila Company Secretary/Director Legal Services
Aaron Botha Director Kabompo Project Silvester Hibajene Strategy & Regulation Director Roland Lwiindi Director International Projects
CEC Management Team
Patson Jila Projects Director
63
Corporate Contact Information

OPERATIONS HEAD OFFICE
Copperbelt Energy Corporation PLC 23rd Avenue P O Box 20819 Nkana East Kitwe Phone : Fax : 260 212 244556 260 212 244040
Corporate Contact Information
CORPORATE HEAD OFFICE

Copperbelt Energy Corporation PLC 37B Cheetah Road Post Net 145 P/Bag E835 Kabulonga Lusaka Phone : Fax : 260 211 261647 260 211 261640
BANKERS
Stanbic Bank Corner Obote Avenue P O Box 21600 Kitwe Citibank Zambia Ltd Citibank House South End Cha cha cha Road P O Box 30037 Lusaka Citibank London CitiGroup Center Canada Square Canary Wharf E145LB London
SHAREHOLDER CONTACT DETAILS

Julia C Z Chaila Company Secretary/Director Legal Services Phone : Fax : 260 212 244274 260 212 244212
Clara M Musama Investor Relations Manager Phone : Fax : 260 212 244916 260 211 261640
AUDITORS
Grant Thornton 5th Floor Mukuba Pension House Dedan Kimathi Road P O Box 30885 Lusaka
Website : www.cecinvestor.com E-mail : info@cec.com.zm
64
66

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Annual Report 2009

COPPERBELT ENERGY CORPORATION PLC

Annual Report 2009

COPPERBELT ENERGY CORPORATION PLC

COPPERBELT ENERGY CORPORATION PLC

COPPERBELT ENERGY CORPORATION PLC

COPPERBELT ENERGY CORPORATION PLC

Safety, Health and Environment (SHE)

COPPERBELT ENERGY CORPORATION PLC

Business Performance Highlights

COPPERBELT ENERGY CORPORATION PLC

Corporate Responsibility and Sustainability

COPPERBELT ENERGY CORPORATION PLC

Appointments / Changes to the Board

COPPERBELT ENERGY CORPORATION PLC

Hanson Sindowe Executive Chairman

COPPERBELT ENERGY CORPORATION PLC

Managing Director Operations Report

Managing Director Operations Report

Power Purchase & Sales

COPPERBELT ENERGY CORPORATION PLC

Managing Director Operations Report

COPPERBELT ENERGY CORPORATION PLC

Core Business Expansion

Managing Director Operations Report

COPPERBELT ENERGY CORPORATION PLC

Various other projects are at a developmental stage.

Safety, Health & Environment

Neil Croucher Managing Director - Operations

Managing Director Operations Report

COPPERBELT ENERGY CORPORATION PLC

Managing Director for Corporate Development & CFOs Report

Managing Director for Corporate Development & CFOs Report

Kabompo Gorge Hydro Power Project

COPPERBELT ENERGY CORPORATION PLC

Telecommunications Joint Venture

Managing Director for Corporate Development & CFOs Report

COPPERBELT ENERGY CORPORATION PLC

Managing Director for Corporate Development & CFOs Report

Statement of Financial Position as at 31st December 2009

COPPERBELT ENERGY CORPORATION PLC

Share Price Performance

Equity increased to $158.3m compared to $43.3m

Michael Tarney Managing Director Corporate Development & CFO

Managing Director for Corporate Development & CFOs Report

COPPERBELT ENERGY CORPORATION PLC

Operational / Financial Highlights

Operational / Financial Highlights

200 (MW) LOAD 100 0

COPPERBELT ENERGY CORPORATION PLC

Copper Price Trend

6,000.0 4,000.0 2,000.0

Operational / Financial Highlights

COPPERBELT ENERGY CORPORATION PLC

COPPERBELT ENERGY CORPORATION PLC

Dividends and transfer to reserves

The Company has a policy of declaring dividends twice

COPPERBELT ENERGY CORPORATION PLC

520,000,000 200,000,000 280,000,000 1 Special Share

Average number and remuneration of employees

Appointed on 18 /11/2009 Appointed on 18 /11/2009

Retired on 18 /11/ 2009 Retired on 18 /11/ 2009

May June July August September October November December Average