Good afternoon, ladies and gentlemen, and welcome to the Copperbelt Energy Corporation Half Year Earnings Presentation for the year ended 30 June 2025. All participants will be in listen-only mode, and participants have the opportunity to submit questions at any time from the footer of the presentation slides of the webcast. Please also note that this presentation is being recorded. I would now like to hand over to Ms Verona Mwila-Nkolola, Head of Corporate Communications and Investor Relations. Please go ahead, Verona.

I further wish to bring to your attention the usual disclaimer related to forward-looking information, which is published in our presentation. I will now hand over to our Chief Executive Officer, Mr Owen Silavwe, to begin this afternoon’s presentation. Thank you.

Thank you, Verona, and good afternoon, investors. Welcome to this discussion about our business. I will start the discussion. And by way of starting, I want to start by discussing the business environment, and I’ll focus on basically two things discuss about our business environment, but let me just focus on these two things.

And first, I want to speak to the current issue of the market redesign that’s going on in Zambia. And as we stand today, the law guiding the market redesign in Zambia was enacted on 19 July 2024. This is through Statutory Instrument Number 40 of 2024. And the aim here is to liberalise the market, further open it up for more players and enhance the competition.

So some of the things to note about the work that is going on is that the market itself is intended to be premised on the Southern African Power Pool, which is the SAPP competitive market platform. And the intention, as usual, is to implement it in a phased manner.

Where things stand today, there is development of various tools and documents that will support the operations of the market. That is currently going on. And this is being done through the support of the various consultants that have been retained, as well as the participation of the stakeholders.

As one of the key stakeholders in this industry, we are actively participating in the process, and we think that it’s important that we have an input in the market tools and documents. And this would include things like standardising the agreements, developing the procedures and guidelines, as well as the intentions to relook at the legal framework itself, as well as the regulatory framework.

So yes, this is an important piece of work where we as a business need to make sure that we actively participate and interpret the implication of this on the business, and therefore design actions that need to be implemented.

The second aspect is an issue that has been with us, starting last year. This is the supply gap. And as everybody knows here, our country generally is predominantly hydro, and therefore we are prone to weather changes. We obviously started off with a huge supply gap last year. Coming into this year, with the relatively good rains that we received, the situation improved somewhat, but the problem is still with us.

So as things stand, we’ve got a deficit of around 600 MW. And this implies that the measures that have been put in place across the economy obviously continue. Things like demand management interventions through demand curtailment for large power users like the mines, those are still in place. And therefore, from our perspective, we need to be able to find solutions that close the gap and enable us to continue meeting the full requirements of our customers.

On the positive side, it’s been noted that productivity by the mining sector, generally you’ll see this, I think, across Africa, I think has been on the rise. And in particular, in Zambia, between last year and this year, just looking at the first half of the year, we’ve seen an 18% improvement in productivity.

I will move on to the next slide, where I begin to talk about operational sustainability. And I think this conversation starts with the commitments that we’ve made as a business to be extremely relevant to ensuring that we protect the environment, we contribute to protecting the environment in general. And therefore, we want to do things in a way that is aligned with principles of sustainability.

And to start with, you will note that in terms of our carbon emissions and our carbon offsets, our carbon emissions with respect to H1 2025 have gone down, whereas our carbon offsets have also gone up. This also speaks to some of the projects that we are undertaking with respect to energy transition, and those projects will be continuing, and I will be speaking to some of those in a while.

In terms of the safety and wellness of our employees, again, we continue to implement a number of measures across the organisation to make sure that our operations obviously are safe as possible, both for our own employees, our contractors, as well as the equipment itself in general.

So what you will note is that for the first half of this year, I’m happy to report that we’ve had zero fatalities, and we’ve made a huge improvement in terms of the lost time accidents, which is something that we’re hoping to extend as the operations continue, going into the second half of the year and going forward.

In terms of other things that we’re doing with respect to sustainability, we’re happy to report that we did produce our first integrated report in 2024. And we’re implementing a number of projects that are meant to continue reducing our carbon emissions.

One of these projects is the pilot project that we are doing to convert the fuel that our gas turbine alternators use. We’ve been using diesel. And this year, we commenced on a project to convert one of them to begin using LPG. That project we hope to commission by year end. And if we are successful, then we should be able to add that to the rest of our gas turbine alternators. I spoke to about our continuing projects in the area of energy transition.

When I move on, when I talk about the network assets and their health status, we obviously do follow a programme, which is our rolling ten-year CAPEX programme. In terms of that programme, we’ve continued to increase our spend, with a targeted spend for this year of $26 million. And we are quite happy with the progress that we are making with respect to renewing and modernising our assets, as well as adopting digital technology in the way we do things.

I want to move on and speak to the commercial sustainability of the business. Based on the productivity improvements, in fact, expansions that we are seeing both in Zambia as well as the rest of the region, particularly with respect to the mining customers, what you will see is that our sales in the first half of this year have done pretty well, with a 30% growth, whereas if you look at our regional sales, we also had or recorded a growth of 48%. Whereas, in international wheeling, again, we see a growth rate of 64% for the H1.

So I think across all our business segments, we are seeing very good growth rates. Obviously, this speaks to the growth rates of the industry as well as our pipeline conversion in terms of new demand, which again is being supported by the expansionary programme that we’ve got in terms of the infrastructure.

And when I move on to the next slide, I speak a little bit to that. So what you’ll see is this year, we’ve ramped up our investment, particularly targeting renewables. I described critical transmission infrastructure as well as the asset modernisation and optimisation that I spoke to.

And in this respect, you will see that just in the first half of this year alone, we spent about $51 million, compared to about $20 million that we did spend last year. So you see that there’s been quite a huge ramp-up in spend, and this speaks to some of the growth that we are seeing, as well as the growth that we anticipate to see going forward.

Obviously, when we do this, we have to make sure that this is done efficiently and in a disciplined manner in as far as capital allocation is concerned, because that’s the only way that we ensure that we continue to have these quality assets as well as earnings growth as a business, which is important, of course, to our investors in ensuring that the CEC as a business remains attractive going forward.

In terms of the projects, just to speak to a few. Under renewables, we are currently focused on three key projects that we are implementing. These are the 136 MW, which are the phase two of the Itimpi project. If you remember, we did commission the phase one of this project, which is the 60 MW. So we’re working on the 136 MW, which we’re hoping to commission in Q1 of next year.

We’ve got a small project, 12.5 MW, it’s called Fitula, which we are working on with one of our customers. And this is probably something that you’ll be hearing a lot more often from us, as we partner with our customers to do some of these required renewable projects that will help us to power the future of the power requirements.

GET FiT, which is a 25 MW project under the GET FiT programme that’s been promoted by the Government. That project has advanced, as we expect to reach a financial close within Q3. I think I’ll leave it at this point. I think it’s important that we do speak to the financial performance as well. And therefore, I will invite our Chief Financial Officer to give us an update in terms of the performance on our financials. Thank you.

And we’ll start with revenue. What you see in the revenue parameter, that for the half year last year, we were at $227.8 million. This year, we are at $360 million, showing an increase of about 58%, which is a very good performance. But to help put these numbers into context, then we tried to provide you with what we call the LTM, or Last-Twelve-Months numbers. Other analysts refer to that as the Trailing-Twelve-Months numbers.

And you will see there that if we just speak to June this year, going back to July last year, again, you see an increase there from $423.5 million to $680 million, thereabout. Again, you’ll see that on a Twelve-Months Trailing period, we see a 61% increase. Overall, you’ll see that when we look at the half year numbers, even our average growth rate is way above 20% over the period.

Now, we can undertake the same assessment for the other profitability metrices, whether it’s gross profit or earnings before interest, tax, depreciation and amortisation, commonly referred to as EBITDA. Again, you see significant growth there of about 27%. And when we get to the earnings themselves, the profit after tax on a half yearly basis, we see a 42% increase in the half year numbers from $43.2 million to $61.5 million. I guess in summary, I want to highlight that the performance for the first half of 2025 was reasonably good.

And then if we try to further diversify that by business line, again, you see that we are making strides to try and reduce the concentration, whether it’s from a customer perspective, the customer, or try and reduce the concentration from a country perspective or from a business line perspective.

Now, as you will note, we’ve got a couple of business lines, mainly three. One is where third parties use our infrastructure or where we trade power in the region or where we sell power or trade power for local consumption. So overall, I think we are quite happy with the strides that we have made in the first half of the year as we are slowly hitting the strategic objectives that we’ve set for ourselves.

Moving on to undertake the assessment from a liquidity perspective, from a cash flow perspective, what are the key parameters that we’re trying to look at? I think the Managing Director did indicate that for the first half of the year, one of the key highlights is the fact that we did spend over $50 million in investments.

One of the issues that I want to speak to, which directly relates to that, is the fact that for the last two years, we’ve been operating the interconnector that is there between Zambia and the Democratic Republic of DRC, which we operate. And that project was commissioned during the first half of this year. And by commissioning that project in the first half of the year, one of the things that we will see is increased trade between the two countries, showing signs that the investments that are being made are slowly yielding fruit.

The next aspect, from a liquidity perspective, is to highlight that if you look at the solvency, the business still has sufficient cash flows to continue operating as a going concern. But the last point to indicate is that if you look at the free cash flows, because of our investments profile, you’ll see that for this year, we did get into some of the brought-forward reserves, cash reserves, as highlighted in the graph shown.

Just moving on to look at more ratios that speak to the solvency of the business, and just to highlight how well prepared the balance sheet of this business is as it relates to the growth that is being earmarked, you will see that the current ratio is quite significantly higher than what is deemed to be acceptable, which is just a one-to-one. We are at 2.8. That shows that the business, at a glance of it, is relatively solvent.

And that filters through the gearing of the business. For an infrastructure business like ours, there is an expectation of the level of gearing that we should have. We can see that we have sufficient headroom to bring on the appropriate debt instruments to finance the projects that we’ve planned, and that we’ve got a reasonable pipeline for the projects that should anchor our strategic objectives going forward.

The last point I want to speak to here is the fact that if we look at the returns and rewards to our shareholders, in line with our dividend policy, we want to be seen, not just be seen, but we want to practise as a business that is very predictable, a business that provides not just the reward through stock movements or appreciation coming through the assessment of the quality of the earnings, but also a business that rewards our shareholders through distributions.

So for the first half, whereas we did not distribute anything, we have highlighted and we are showing there a distribution of $63.4 million, which speaks to the notice which has already gone out. The board did approve a dividend payout of 3.9 cents per share, relative to the 3.7 which we had last year, signifying an increase of 5%.

Thank you very much, Mutale. So investors, I think before we close the presentation, it’s important that I share with you some of the priorities that the business is focused on. And starting this conversation, I think I did mention the market redesign that’s taking place in Zambia.

So adopting that new market and strengthening our power sourcing is one of our key focus areas. And from a business perspective, it’s important that we do come up with measures that we implement at pace to ensure that the business adjusts to the developments in our markets.

As we do this, we obviously need to continue strengthening our power supply portfolio. And we keep talking about this point, because as we expand our demand pipeline, we need to make sure that we’ve got power to meet that demand pipeline as well. And in terms of sources, this obviously includes our own sources, as well as the third party sources that we get to sign.

From an energy transition perspective, we are expanding, or we continue to expand our solar generation portfolio. I’ve spoken to three projects that we are implementing, and I think before year end, we’ll probably be speaking to more projects that we intend to implement.

From a sort of infrastructure expansion and modernisation, that remains a key priority for the business. The power that is generated, wherever it’s generated, needs to be moved to the sites where it’s required to be consumed. So we need to clear that linkage, from an infrastructure perspective, between the power sources and the demand centres.

And going forward, I think it’s very clear that both public as well as private capital will be required for this. As CEC, we believe that we can play a critical role in this. As you know, one of our strengths is operating transmission infrastructure. So we think we are well positioned to continue making investments where this infrastructure is required.

Lastly, it’s obviously just disciplined management of our financial resources, particularly that we are making decisions to allocate capital to projects. So those decisions obviously need to be made as efficiently as possible, ensuring that the returns are obviously reasonable with respect to any of those projects that we get involved in, as well as how we are accessing the required capital for those projects.

If you look at the sales, our sales in Zambia have grown by 30%. From our regional business, we’ve seen a 48% growth in sales. And again, talking about our energy transition projects, as I said, we are focused on our own projects that we are implementing, but we’re also focused on projects that we’ll be implementing with third parties through joint ventures.

And lastly, I did talk about our intended investments in unlocking transmission infrastructure. This of course includes interconnectors, as well as certain critical transmission corridors, where we believe that investments are required to allow the moving of power from generation sources to load centres. So I’ll close the presentation at that point. Thank you so much.

I will now go into the questions. CEC is effectively becoming an independent power producer with its solar investments. How is this regulated, and what price does CEC receive? The second question is, is CEC going to get an internationally recognised credit rating?

Perhaps we could begin with the first two, as there may be a required response on the second comment. I shall pass them. So I will pass the first question on the independent power producer and how we regulate our pricing to the MD, and the question on a recognised credit rating to our CFO.

The second one is, our balance sheet is too summarised. Yes, maybe I can also comment to that. Unfortunately, we are guided by the SEC and the LuSE guidance on what balance sheet and P&L lines we should show as part of this release. However, the point is noted, and we’ll continue to engage other key stakeholders to try and see if we can provide more information to help with the analysis required.

Now, sometimes we find that the parameters that are used as a result of that starting point which I mentioned sometimes impact on the company’s rating, that are operating in respective countries. However, one of the things that we try to do as CEC, and which we’ve tried to do, I think, from 2017 thereabout, is that we did bring through the credit agencies, which took us through the process, the credit rating process itself.

Now, what you note for a regulated business like CEC is that the power of the rating itself comes from the regulation, comes from the country itself, but also, there is a big component on the business itself. So what we’ve tried to do over the last few years is that we have retained what we call a shadow rating of ourselves as a business, based on the principles that we’ve discussed with the credit rating agencies that we had engaged back then.

And from a board perspective, they try and follow those parameters. So you will see that if we limit it to the balance sheet, for example, we try to ensure that whatever we do, we don’t fall outside the sort of ratios that are required to boost your credit rating.

Okay. Thank you, CFO. So the other question is, CEC is effectively becoming an independent power producer with its solar investments. How is this regulated, and what price does CEC receive? The other question is, is CEC going to get dual listing in London or Johannesburg?

And from the CEC perspective, we do believe that it’s strategic that we play a key role in the adoption of distributed generation technology. And obviously, solar technology is the technology that we’ve started with, being the pioneer of that technology in this country, and the investments that we’ve made and continue to make in that respect.

In terms of whether this industry is regulated, yes, it is. And the regulation basically is mostly at two levels, which is, one is project investment itself. You need your project to be approved, and your project needs to be licenced. That’s one. And then two, the PPAs that you enter into, together with their contents, that also needs to be approved by the regulator.

So in terms of obviously the margins that businesses end up making with respect to these projects, that really depends where the power is sold, as well as what sort of contracts, as well as usage for that power. So from our strategy, we see solar technology as an important part of our strategy.

With respect to a dual listing, it’s something that as a business we continue to look at. We haven’t made any decisions as things stand yet, but it’s something that we continue toying with. At an appropriate time, if we do make a decision to do that, certainly the market will get to know about it. Thank you.

So we now have an additional question from Situmbeko Mubano. And her question is, I note the good performance reported for the first half of 2025, and this is commendable. Should we expect this to continue in the second half of the year? I also note the improved demand from the mines. How ready is the company to provide the additional power requirements as operations at some of the mines stabilise and demand for power continues to increase? Mr Silavwe, would you like to respond to this question?

And basically, our approach is to look at multi-suppliers. So we create this supply portfolio that constitutes sources from within the country, regional sources, as well as our own sources as CEC. So that’s one side of the equation. And as long as transmission capacity is available in the region, then we’ll make sure that we move that power to wherever it’s required.

Now, one has just to obviously understand that CEC is a member of SAPP. We are quite well abreast with the processes in SAPP. And we’ve, over the years, developed important relationships with other utilities, and that obviously allows us to enter into, whether it’s short-term, medium-term, long-term contracts, whatever is required. And we’ll continue to do our best in the area of ensuring that we’ve got access to adequate power, but also have access to adequate transmission capacity within the region. Thank you.

Thank you. I will read the last two questions again for you, Mr Silavwe. DRC doubling capacity, what percentage will the DRC be of your business, when done? And the other question is, is Kabompo going to be completed?

Okay, thank you for that. With respect to DRC, we did speak to that as part of our presentation, that we have embarked on doubling the capacity of the existing interconnector. And we called that project the phase one of our intended expansion of the interconnection to the DRC. So the phase one works have been done. And because of the amount of power that is being exchanged between the two markets, Zambia and the DRC, you will note that actually that capacity has already been used up.

The second phase of this project is to establish a second interconnection, and works on that project have started. We are hopeful that we could conclude that by the end of next year. And then further interconnection requirements will obviously follow thereafter.

With respect to Kabompo, it’s a project that started some time back, and it seems to have stalled at some point. This project, in the end, we had made the decision to do it through what was called the GET FiT Small Hydro, because Kabompo is a relatively small hydro project. If you do it as a baseload, it’s just about 20 MW. So we had submitted it as one of the projects that would have competed under the Small Hydro government programme.

If you remember, both the GET FiT Solar and the GET FiT Small Hydro programmes were suspended after the country defaulted. The GET FiT Solar has come back. And under that programme, we are doing our 25 MW solar plant, which, as we reported, is scheduled to reach financial goals by end of September this year.

And we are quite hopeful that GET FiT Small Hydro programme will come back. And hopefully, under that programme, we’ll again submit Kabompo project. And if we do well, then we should get to a point where we implement Kabompo. Thank you.

The second question is, several retail investors are interested in trading the green bond notes, and have been unable to purchase them, despite them being listed. Given how tightly held the bonds have been, will later tranches be open to a pool of retail investors to satisfy the appetite of smaller investors? Mr Silavwe, perhaps since we had you on the floor, speaking to DRC, would you like to take the DRC question? And then, Mr Mukuka, just take the question on the bonds.

The next question. So, the DRC expansion. So the current works have been concluded. The works were commissioned in the first half of this year, and the line has been upgraded as of this first half. And the doubling of the capacity that Mr Silavwe spoke to, that is now operational.

The next phases of the lines will involve the construction of totally new lines into the DRC. CEC is looking at some of those, but there are also other players who are looking to put up lines into the DRC. And this is public information, so one can look at it. Thank you.

For those questions that we are unable to respond to during this call, we will certainly respond to them after the call from our Investor Relations Communications desk. Thank you to all attendants for participating in this earnings call this afternoon. We will now proceed to end the meeting this afternoon, and I will hand over to Irene to do the closing for us.