Copperbelt Energy Corporation (CEC) released their FY 2013 results which incoporated results from their Nigeria operations for the first time. Net profit came in at K457.6m, up 318.6% from the previous year. Revenue came in at K1.71bn, up 25.6% from the previous year.
Revenues were driven by K253m from CEC Africa (the company's international investment vehicle), an 80% increase in telecoms revenue and an 8% increase in electricity revenue. This would have been an impressive set of results except for the fact that CEC was headed for a FY 2013 loss of K258m had it not been for a ONE-OFF K716m gain on the bargain purchase of Abuja Electricity Distribution Company (AEDC).
The companys cost of sales increased by 41% leading to a year-over-year reduction of gross profit by 12.3% to K336m. Operating costs jumped by a whopping 81% driven primarily by an increase in group level staff costs (48%), higher group audit fees, provision for bad debt and project costs. Finance costs rose significantly from K332,000 in 2012 to K43m in FY 2013.
The company's revenue streams outside of Zambia are beginning to have a positive impact on their earnings and should continue to do so in a more consistent and predictable manner moving forward (obviously not to the extent of the one-off gain in FY 2013).
Proceeds from the companys K387m rights offer in Q1 2014 and $40m out of the $120 long term debt liability contracted in May 2014 were used to pay down short-term bridge financing facilities which had led to current liabilities exceeding current assets by K652m as of reporting date.
Ulitmately, CEC is still a growing company and will be prone to releasing earnings reports of this nature. One only has to look at their statement of cashflows where net cashflows used in investing activities increased from K221m in 2012 to K2.9bn in 2013. Their total non-current assets grew by 225% year-over-year to K4.1bn.
Trying to decipher this puzzle that is Zambia by using a variety of publicly available data (structured and unstructured) in conjunction with my own skill/experience. * * *