1. Copperbelt Energy Corporation PLC and its Subsidiaries Annual Report 2011 1 Copperbelt Energy Corporation PLC Annual Report 2011 and its Subsidiaries

2. Copperbelt Energy Corporation PLC and its Subsidiaries 2 Annual Report 2011

3. Copperbelt Energy Corporation PLC and its Subsidiaries Annual Report 2011 3 Copperbelt Energy Corporation PLC and its Subsidiaries Contents Business Overview 4 Mission, Vision, Values 5 About CEC and its Subsidiaries 7 Statement from the Executive Chairman 9 Report from the Managing Director Operations 14 Report from the Managing Director Corporate Development 16 Report from the Chief Financial Officer 18 The Companys Financial and Operational Highlights 20 Corporate Responsibility Report Financial Statements 22 Directors Report 30 Statement on Corporate Governance 33 Statement of Directors Responsibilities 34 Report of the Independent Auditors to the members of Copperbelt Energy Corporation PLC and its Subsidiaries 36 Consolidated Statement of Comprehensive Income 37 Company Statement of Comprehensive Income 38 Consolidated Statement of Changes in equity 39 Company Statement of Movements in Equity 40 Consolidated Statement of Financial Position 42 Consolidated Statement of Cash Flow 43 Company Statement of Cash Flows 44 Notes to the Financial Statements Supplementary Information 77 Directors 78 CEC Senior Management 79 2011 Winners 80 Bankers 80 Auditors 80 Corporate Contact Information

4. Copperbelt Energy Corporation PLC and its Subsidiaries 4 Annual Report 2011 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 Values Being honest in all our dealings Supporting each other Building good team relationships Being open to new ideas Developing a can do attitude Mission,Vision,Values

5. Copperbelt Energy Corporation PLC and its Subsidiaries Annual Report 2011 5 Group Financial Highlights US$ Turnover US$ Profit after tax US Cents Earnings per share CEC The Copperbelt Energy Corporation PLC (CEC) is an independent power transmission and distribution company with interests in closely linked businesses in Zambia and the African region, including optic fibre based telecommunications. A member of the Southern African Power Pool and listed on the Lusaka Stock Exchange, CEC has a deep insight into the mining industry, enabling it to provide quality electricity and other power products and services to the majority of the mines in Zambia. Well positioned as a developer of energy infrastructure in Africa and respected in the region for its skills in designing and operating transmission systems, CEC envisions itself as an emerging independent power generating company, with some strategic generating projects in the pipeline. Over 50 years of experience in supplying power to the mines Circa 900 kilometres of 220kV and 66kV transmission lines 520 kilometres of optic fibre on power lines 2010 12.6million 2011 19.8million 2010 1.26 2011 1.98 2010 170million 2011 201million AboutCEC About CEC and its Subsidiaries cables that connect the rest of the world. CEC Liquid CEC Liquid Telecom is a Joint Venture Company formed by Copperbelt Energy Corporation Plc (CEC) and Liquid Telecommunications Holdings Ltd incorporated on 20th May 2011. CEC Liquid owns and operates a national long haul broadband fibre based backbone from Chirundu to Kasumbalesa. Its business is the provision of competitive high quality/product services through wholesaling of national and international fiber bandwidth capacity, terrestrial internet bandwidth, and lease of dark fibre for both short and long haul, locally and internationally, with access to submarine fiber cables. The CEC Liquid Telecoms market segment is in the wholesale segment and the infrastructure is neutral and operated in a non- exclusive manner in Zambia, Zimbabwe, Lesotho, Botswana and South Africa. 38 High Voltage substation and dedicated control centre 80MW embedded thermal generation Power transmission for national utilities Zambia and the Democratic Republic of Congo Owns Zambian part of the Zambia DRC Interconnector line Accounts for 50% of power consumed in Zambia Realtime Technology Alliance Africa Zambia Ltd (RTAA) RTAA is an internet service provider (ISP) and focuses on a niche market of corporate customers. Its core business comprises provision of high speed internet services and private leased circuits using optic fibre technology. RTAA has been operational in Zambia for 10 years and in the Sub Sahara region for 30 years. The company has successfully implemented ICT connectivity projects from design to operation using the national and metropolitan fibre loops. RTAAs JV with CEC has enabled the company to become the largest optic fibre network provider in Zambia. It is also connected to submarine fibre

6. Copperbelt Energy Corporation PLC and its Subsidiaries 6 Annual Report 2011

7. Copperbelt Energy Corporation PLC and its Subsidiaries Annual Report 2011 7 Statement from the Executive Chairman Hanson Sindowe I am pleased to present the first Annual Report for the Copperbelt Energy Corporation PLC Group. The CEC Group comprises the core Company and two telecommunications companies. In previous years, we have reported only the CEC Company results. This first Group report is a landmark achievement as we strive to grow and diversify. Over the last five years, we have proactively and aggressively pursued a business growth strategy which would not only see us as an emerging independent power producer and developer of electricity infrastructure but also diversifying into other business sectors. The diversification has grown from leasing out our optic fibre network for telecoms into investment in telecoms companies. In addition to our investment in Realtime, during the year, we entered into a joint venture with Liquid Telecommunications Holdings Limited of Mauritius for the creation of a new entity CEC Liquid Telecommunications Limited (CEC Liquid). During the year, the Group achieved significant growth, with Group revenue growing by 18%. There was an increase in both the electricity stream as well as from the telecoms stream. The electricity revenue increase was a combination of an increase in electricity tariffs as well as an increase in energy consumption by the mines from 481MW in 2010 to 498MW. The increase in tariffs arose out of the need for expansion in the electricity sector. The level of the tariff increase was accepted by all our mining customers with the exception of Konkola Copper Mines PLC (KCM) who requested for a lower increase. At the year-end, this had not been resolved and discussions around this have continued into 2012. The increase in telecoms revenue was mainly from the bringing in of the new telecoms company. Consequently, the shareholders worth in earnings per share has increased by 57%. StatementfromExecutiveChairman

8. Copperbelt Energy Corporation PLC and its Subsidiaries 8 Annual Report 2011 Safety, Health and Environment Performance on this front in 2011 was much improved over 2010. A comparison of various parameters shows that 2011 was demonstrably a better year with an above-target performance in key proactive measures such as the Toolbox Safety Talk, and a clean sheet in relation to both fatal incidents and serious environmental incidents. Rather than make us complacent, this commendable performance will spur us to raise the bar in these and other areas where our performance was not as good. These include non-system lost time accidents, no matter how minor, which in some cases may be necessitated by road traffic incidents and accidents. Business Development The Company continued to move cautiously yet firmly, implementing various core business expansion projects with our customers, while keeping an eye on the overall global economic and financial barometer. With respect to non-core business projects, exciting developments were seen in 2011. Significant progress was made in developing the 40MW Kabompo Gorge Hydro project, with a debt advisor and arranger for the project appointed. We look forward to reaching financial close in the latter part of 2012. Our renewables plant commenced production during the year under review and has been producing blended bio-diesel for our vehicle fleet, reducing our fuel costs. I am pleased to inform you that the business delivered shareholder value and we were able to pay out two dividends during the year. The total paid out in 2011 was US$12.29 million [2010: US$10 million], representing an increase of 23 percentage points. Our stock performance on the Lusaka Stock Exchange was better during the reporting period than the comparative period, averaging a share price of K650 [2010: 600] through the year and closing at an impressive K700 [2010: K615]. Board Operation During the year, two independent Directors, Emmanuel Mutati and Jonathan Muke, retired from the CEC board after serving the maximum number of terms allowed in accordance with the Companys Articles of Association. They were replaced by Edson Hamakowa and Pius Maambo. The Special Shareholders representative, Teddy Kasonso, also retired. A replacement for him had not been appointed by the year end. The ZCCM-IH representative, Irene Ngandwe, resigned from the board to take up an appointment with the Company as its Chief Financial Officer. William Musama has since been appointed to represent ZCCM-IH. I welcome all the new members and look forward to the valued contributions that they will, no doubt, bring to the board as the Company seeks to engage effectively with new issues and opportunities. Conclusion We are optimistic that your Company will deliver another successful set of results in 2012, from which you, our valued shareholders, will gain. I wish to end by thanking all our shareholders for the support rendered throughout 2011, and the employees who have continued to work with professionalism and commitment to deliver the performance we are presenting in this report. Hanson Sindowe StatementfromExecutiveChairman

9. Copperbelt Energy Corporation PLC and its Subsidiaries Annual Report 2011 9 T he Copperbelt Energy Corporation PLC (CEC) yet again recorded good performance in its safety targets for the year. Notable improvements were achieved in the delivery of the toolbox safety talks, a strategy aimed at proactively addressing task-specific safety concerns leading to the identification and consideration of SHE precautions for each particular task before commencement. Report from the Managing Director Operations Neil F. Croucher 1. Safety, Health and Environment (SHE) The good performance was further demonstrated by the zero fatal incidents and zero serious environmental incidents recorded during the year under review. We, unfortunately, recorded two lost time accidents (LTAs) against a target of zero for the year, although these were relatively minor and were non-power system related. The CEC business operations obviously impacts on its stakeholders. Therefore, in line with the Companys SHE policies, CEC carried out SHE sensitisation programmes in areas where CEC infrastructure is located. To achieve this important strategy, the Company developed and implemented a community/ public SHE sensitisation and education programme for high voltage (HV) transmission infrastructure. With respect to environmental matters, CEC complied with all regulatory requirements. The Company successfully renewed all its 19 operational licences. The licenses, valid for the period 1st January to 31st December 2012, covered air emissions, transportation and disposal of municipal waste, generation of hazardous waste, transportation of hazardous waste and storage of hazardous waste. 2. Power Trading The business continued to be dominated by the following key activities: Power sales to the mines Power wheeling within Zambia (Domestic wheeling) Power wheeling regionally (International wheeling) 2.1. Power Sales to the Mines This is by far CECs largest business area, involving power ReportfromtheManagingDirectorOperations

10. Copperbelt Energy Corporation PLC and its Subsidiaries 10 Annual Report 2011 sales to the copper mines on the Copperbelt. It is underpinned by the Bulk Supply Agreement (BSA) under which CEC sources, from ZESCO, the power it sells to the mines. Power sales to the mines are done under Power Supply Agreements (PSA) signed with each mine. The BSA and PSA constitute back-to-back agreements aligned on key terms necessary to ensure consistent service delivery to customers. In addition to commercial terms, the agreements stipulate the amount of power to be delivered on a quarterly basis as well as the minimum service delivery standards to be achieved. During the year CECs mine customers included: Konkola Copper Mines PLC (KCM) Mopani Copper Mines PLC (MCM) NFC Africa Mining (NFCA) CNMC Luanshya Copper Mines (CLM) Chambishi Metals PLC (CMP) Konnoco Zambia Limited (Konnoco) Chibuluma Mines (ChibCo) The mine customers, put together, consumed a total of 3,744 GWh during 2011. This represents an overall energy sales increase on a year-on-year basis of about 3%, compared to 3,640 GWh consumed in 2010. Similarly, capacity sales to the mines in both average and peak terms, increased by about 2.5% - from 470MW and 481MW in 2010 to 486MW and 498MW in 2011 respectively. The system load factor was 83%. This marginal increase in demand is against a backdrop of a sluggish global economy that characterised 2011, following from the economic downturn that began in 2008. On the technical front, performance of the interconnected CEC and ZESCO system was generally good. Power delivery was in line with agreed technical specifications at all times, apart from the two occasions when the country experienced national black- outs. These incidents happened on 15 September 2011 and 9 November 2011, when major faults at ZESCOs Leopards Hill substation and Kabwe substation respectively, caused the system to collapse; affecting the majority of the country, including the Copperbelt. In the post-incident phase, the established joint technical committee (JTC) of CEC and ZESCO held working sessions to review the incidents and come up with short and long term measures to address these challenges. Most of the short term measures have either been already implemented or currently being implemented, so as to considerably lessen the chances of recurrence of such incidents in the future. In the unlikely event of a recurrence, measures have been adopted to ensure that emergency supplies from CECs Gas Turbine Alternators will timeously and reliably be available as well as ensuring that the power system is efficiently and rapidly restored as soon as conditions permit. From a system losses perspective, CEC monitors and manages the system to ensure the quantum of power losses incurred on the system on a monthly basis conform to international best practice. For the year under review, system losses averaged 2.9%. This compares well with previous years, when similar levels of loss were recorded. CEC undertook numerous other measures aimed at modernising and improving operations of its power network. Notable of these is the completion of the project to install 90MVARs of Capacitors on the system so as to enhance voltage regulation capability and loss management. Secondly, the Company reviewed the lightning performance of its power system. The review was undertaken by an independent consultant. Overall, the report noted that the CEC system is well designed to handle lightning strikes and recommended areas where it would be beneficial to install additional surge diverters. The CEC fleet of Gas Turbine plant, which is used to supply emergency power, was fully available for most of the year. On the few occasions when individual GTAs were unavailable, these were for short durations and during planned maintenance. 2.2 Domestic Wheeling Domestic wheeling involves the use of CECs transmission infrastructure to transport power on behalf of ZESCO from the bulk supply points on the Copperbelt to the numerous downstream substations at which ZESCO receives the power for onward supply to its, mostly, non-mine customers on the Copperbelt. This service is provided in line with provisions of the BSA. This business area forms an integral part of our business and during 2011 its performance was within expectation. Wheeled energy volumes were about 1,578 GWh compared to 1,660 GWh in 2010. While the Company has not witnessed much growth in ReportfromtheManagingDirectorOperations

11. Copperbelt Energy Corporation PLC and its Subsidiaries Annual Report 2011 11 domestic wheeling during the previous years, some level of growth driven by associated growth of the mining sector is expected in the coming years. This is evidenced by some of the expansion needs that are beginning to arise at some of CECs power delivery points to ZESCO. The number of planned and on-going housing projects and those involving construction of commercial centres further indicates likely growth in this business area. 2.3 International Wheeling International wheeling is another important business area for CEC. This involves the transmission of power through CECs 220kV power assets linking Zambia to the Democratic Republic of Congo (DRC), and through ZESCO to the rest of the Southern African Power Pool (SAPP) market. This interconnection allows CEC to get involved in wheeling or transmission of some of the power traded within the SAPP. At the moment, power volumes wheeled by CEC under international wheeling remain highly supressed due to the lack of tradable power amongst SAPP countries as well as transmission constraints being experienced by some member utilities. In normal times, substantial amounts of power flow from the DRC through the CEC and ZESCO systems to countries south of Zambia. This is not withstanding that the demand for power in the region is high for purposes of meeting internal short falls, as well as being able to access clean hydro power as a substitute for part of the power generated using coal fired plants. With a number of regional projects currently underway to address both generation and transmission constraints, it is expected that there will be considerable improvement in the power flows under international wheeling in the next two to four years. During 2011, minimal volumes under international wheeling were achieved. A total of 124 GWh of energy was wheeled in 2011 compared to 108 GWh in 2010,representinganincreaseof 15%. 3. Tariff Review The tariff review process that commenced in 2010 was finalised during 2011. This process took place at two levels, namely negotiations of power purchase tariffs with ZESCO and the tariffs at which CEC sells power to its mining customers. The process culminated in the adjustment of the ZESCO tariffs to CEC and the CEC tariffs to the mines by about 30%, effective January 2011. The above tariff increment, while representing a positive initial step in moving tariffs to cost reflectivity, does not fully address this requirement. For example, it is well understood that power from new generation stations will cost much more than the current tariffs. To begin to address some of these challenges, CEC supports a broader strategy to undertake a nation-wide cost of service study in order to profile a forward looking multi-year tariff plan to fully take into account the current cost of supplying power, and determine for future years a tariff that will reflect a mix of existing and new generation stations. CEC believes such an approach will be useful in guiding all stakeholders in the industry; including policy makers, regulators, utilities and customers, and in providing a transparent approach to power tariffs. 4. Cost of Service Study As part of its business objectives for 2011, CEC undertook a cost of service study (COSS) in order to get an understanding of how its prevailing tariffs compare to economic tariff levels. The study focussed on CECs component of the tariff. In the long-run, the purpose is to establish a CEC cost of service that would: maintain an appropriate level of reinvestment in system assets for the foreseeable future sustain Company operations in perpetuity ensure the Company earns a reasonablereturnoninvestedassets The study was based on typical regulatory revenue requirement approaches for utility assessment of tariffs. Such studies are also important in informing strategies for evaluating cost profiles of possible sources of generation and their impact on the tariffs. The results of the COSS demonstrated, in general, that CECs current tariffs are below cost and will need to be adjusted to move towards cost reflectivity. As an initial step to addressing this observation, a tariff adjustment of about 30% was agreed with CECs customers for the year 2011. The Company plans to work with all stakeholders to agree future tariff adjustments that will further close the gap as well as take into account the cost of the much needed power from new generation stations. 5. Core Business Expansion Expansion projects continue to ReportfromtheManagingDirectorOperations

12. Copperbelt Energy Corporation PLC and its Subsidiaries 12 Annual Report 2011 characterise the mining sector, supported by copper demand and prices on the global market that have been sustained at reasonably good levels during 2011. This has also continued to encourage exploration works and establishment of new mines in the country. A number of CECs customers are either planning or are already implementing expansion projects that should result in additional power demand in the coming years. During 2011, CEC made significant progress in implementing projects aimed at meeting the additional power needs of its mining customers. Projects that are at various implementation stages include: 5.1 Muliashi Project In 2010, CNMC Luanshya Copper Mines (CLM) commenced the development of its Muliashi mine project involving the establishment of an open pit mine and associated copper ore processing infrastructure. To support these developments, CEC embarked on the construction of power infrastructure (the Muliashi project) required to supply power to the new mine. This followed the signing of a Connection Agreement between CEC and CLM, which set terms for financing of the required power infrastructure. Significant progress was made during 2011 on the Muliashi project with partial (phase 1) commissioning of the project achieved at the end of the year. Commissioning of phase 1 makes adequate power available for CLM to start the testing and commissioning of mine infrastructure at the Muliashi site. Commissioning of the remaining aspects of the power project (phase 2) is scheduled for completion before the end of quarter one in 2012. From a power demand perspective, the Muliashi project will add about 30 40 MW to CECs power sales. 5.2 Konnoco Project The Konnoco project requires CEC to develop power supply infrastructure for Konnoco mine and involves the construction of a 60MVA, 66/11kV substation at the Konkola mine site, a single feed 66kV transmission line and associated upgrade works at CECs 220/66kV Michelo substation, which forms the main power supply hub for Chililabombwe town. Implementation of the Konnoco project with an estimated total capital cost of US$10.5 million, which commenced in January 2010, has progressed considerably with full commissioning expected to be completed in March 2012. Works currently being implemented by Konnoco constitute phase 1 of the Konkola North mine development involving underground mining and concentrator operations, which at peak will require a total power demand of about 30MW. It is expected that demand ramp up in 2012 should add about half this amount of power to CECs power sales, with the rest coming in during 2013. Konnoco is jointly owned by Africa Rainbow Minerals (ARM) of South Africa, Vale of Brazil and Zambias ZCCM-IH (Zambia Consolidated Copper Mines Investment Holdings). 5.3 Synclinorium Project Mopani Copper Mines PLC (MCM), CECs second largest customer, has embarked on the development of a new mine shaft at its Nkana plant in Kitwe. The new mine shaft is important in that, not only will it increase the production capacity of the mine, it will also significantly extend its life by at least 25 years. I am happy to report that contractual arrangements between CEC and MCM regarding the power supply to the new mine shaft and associated mineral processing plants were completed during the year under review. Supply of power to the new shaft will require upgrade of part of the existing CEC power system that supplies power to MCM. The process for the procurement of a contractor has commenced with the engineering, procurement and construction (EPC) contract expected to be in place in April 2012. Construction works for the Synclinorium project are expected to take 10 to 12 months. Once fully operational, the new plant shall add about 15 to 20MW to CECs power sales. 5.4 NFC South East Ore Body Non-Ferrous Mining Africa (NFCA) is another of CECs existing customers that has embarked on the development of a new underground mine (the South-East Ore Body) located at the Mukulumpe area along the Kitwe-Chingola road. Power supply to the South- East Ore Body requires the establishment of significant new ReportfromtheManagingDirectorOperations

13. Copperbelt Energy Corporation PLC and its Subsidiaries Annual Report 2011 13 power infrastructure to meet the projected demand of the new shaft and associated copper processing plants currently estimated at about 50MW. I am pleased to announce that associated contractual agreements between CEC and NFCA to support construction of the required works and supply of power to the new mine were finalised during the fourth quarter of 2011. It has been agreed to undertake the power project in two phases, with phase 1 involving construction of power facilities for purposes of supplying construction power. This phase of the project was completed in 2011, thus allowing the customer to commence sinking of the mine shafts. Phase 2 of the project will involve the construction of high capacity power infrastructure to provide power required during commercial operation of the mine. With the above expansion projects going live, CEC expects the load to grow significantly, by about 40% in the next three or four years. There are, however, power generating capacity constraints in Zambia that still remain a concern with the proposed load growth on the horizon. It is, therefore, important for all the new generating projects in Zambia to be developed as quickly as possible to address the shortage. The power generation deficit is one of the reasons why CEC is also diversifying its business by developing the Kabompo Gorge project and looking into other generating methods like coal fired plant. CECs desire is to attain a situation where it always meets customer power requirements. 6. Customer Relations The Company had a number of engagements with its stakeholders at different levels. This interaction yielded positive results. 7. Employee Relations CEC ensured that cordial relations were maintained throughout the organisation during the year under review. Neil F. Croucher ReportfromtheManagingDirectorOperations

14. Copperbelt Energy Corporation PLC and its Subsidiaries 14 Annual Report 2011 Report from the Managing Director Corporate Development Michael J. Tarney Shortages in generation and transmission capacity within the Southern African Development Community (SADC) region are limiting economic growth in a number of countries and in the mining sector in particular. As CECs core customer base is mining based, the long term success of CEC is linked to investments in infrastructure that supports mining projects through the provision of reliable base load power. This, in turn, leads to efficient mining production. Some of the key developments during the year are detailed below: Kabompo Gorge Hydro Project Significant progress was made in developing the 40MW Kabompo Gorge Hydro project during the year. The project is situated in Mwinilunga District of North- Western Zambia, and is in close proximity to the emerging copper mining industry of North- Western Province. An international tender was placed to identify interested and qualified contractors to undertake the project through an expression of interest, following which a short list of five contractors was selected to submit a full bid. The final bid responses are due to be received by March 2012, and a preferred contractor identified by June 2012. Following the submission of a full Environmental and Social Impact Assessment to the Zambia Environmental Management Authority (ZEMA) during the year, the project was approved by ZEMA, subject to compliance with a number of conditions, which have been incorporated into the project. The environmental standards adopted for the project are compliant with both local standards, and the Equator Principles that have been established for projects of this nature by the World Bank Group. Key risks associated with the project include geological risk associated with adverse ground conditions encountered during construction, particularly in relation to the dam foundation and tunnelling, and hydrological risk associated with variations in rainfall experienced as a result of climate change. Commercial structures have been devised to mitigate the effects of these risks should worst case scenarios ReportfromtheManagingDirectorCorporate Development C EC continually seeks to expand its footprint in the region through investment in strategic regional energy projects in generation and transmission. In addition, over the last two years, CEC has expanded its interests in telecommunications and launched a business unit, still in its infancy, to focus on the development of renewable energy projects utilising the latest international technology, coupled with Zambias abundant natural resources.

15. Copperbelt Energy Corporation PLC and its Subsidiaries Annual Report 2011 15 ReportfromtheManagingDirector CorporateDevelopment materialise during or after construction. Standard Bank has been appointed as debt advisor and arranger for the project. The debt financing process, which commenced during the first quarter of 2012, involved presenting a fully structured project to a range of international financial institutions from commercial banks to development finance institutions and export credit agencies, with a view to obtaining the most appropriate and cost effective debt terms. A capital intensive project of this nature will require debt tenors of up to fifteen years. The project is scheduled to reach financial close during the latter half of 2012, with construction commencing during 2013 and project commissioning during the latter half of 2015. Luapula Hydro Projects Feasibility studies have commenced for different hydro schemes along the river which, based on pre-feasibility studies already completed, are capable of accommodating at least five different hydro schemes with an estimated generation capacity of around 800MW. It is expected that rights to the power will be shared between Zambia and the DRC (Democratic Republic of Congo), as the river lies along an international border. Telecommunications Developments During the year, the Company agreed to form a joint venture with Liquid Telecommunications Holdings Limited of Mauritius on a 50/50 basis under the name of CEC Liquid Telecommunications Limited (CEC Liquid). Following receipt of statutory approvals, CEC transferred its Network Services Licence to CEC Liquid with effect from 1st November 2011. The new company will be capitalised with assets of approximately $30m to be contributed in equal proportions by the JV partners. This comprises in the case of CEC, metropolitan fibre networks in a number of commercial centres throughout Zambia and an Indefeasible Right of Use over surplus capacity on CECs fibre network on the Copperbelt. In the case of Liquid Telecom, a fibre cable linked to Zimbabwe through Chirundu laid through to Lusaka and the Copperbelt. The coming together of the two partners, each with established strengths in the development of fibre infrastructure, has enabled a wider range of services to be offered to customers, with the link through Chirundu comprising only the second international fibre link into Zambia following the commissioning of a fibre link through Namibia in 2009. The new operation is expected to earn revenues in excess of $10m during its first year of operation, and is developing plans to provide fibre access to a wider range of customers in the main population centres. Whilst CEC Liquid has been focussed on the roll-out of infrastructure, RTAA has continued to establish a strong presence serving the corporate sector in Zambia. There are strong synergies between RTAA (which is licensed to sell to all customers) and CEC Liquid (which can only sell to other licensed entities). Renewables A bio-diesel refinery has been established in Kitwe. The refinery is fully commissioned and is providing blended bio-diesel for a number of vehicles in CECs fleet in Kitwe. The production target for 2012 is 600,000 litres. The plant capacity is 1,000,000 litres and it is capable of producing bio-diesel from a number of sources including castor, jatropha and tallow. Consideration will be given to increasing production once the business case is proven. A feasibility study was commenced during the year for the construction of a bio-mass generation plant using wood plantations and wood waste on the Copperbelt. The feasibility was funded through a grant from the Energy and Environment Partnership with Southern & Eastern Africa, funded by the Governments of Finland and Austria, and is being undertaken jointly with the Copperbelt Forestry Company. The project will be considered for investment during 2012. CEC will continue to evaluate and invest in projects that are beneficial to its customers, employees, shareholders and the Government and people of Zambia, and other countries in which the Company seeks to establish operations. Michael J. Tarney

16. Copperbelt Energy Corporation PLC and its Subsidiaries 16 Annual Report 2011 Report from Chief Financial Officer Irene L. Ngandwe The Group posted positive growth in the year under review. Group turnover increased by 18% from US$170million to US$201million, with increases in both the electricity and telecommunications income streams. The increase in the electricity turnover was attributed to increases in both the electricity load uptake by The Companys customers as well as an increase in tariffs over and above the price index adjustment. This tariff adjustment was negotiated and accepted by most of The Companys customers, however one of the major customers did not accept this increase, consequently the financial results do not include the effects of the increase to this customer. Telecommunications income increased by 39% mainly due to an increase in sales by RTAA, coupled with the introduction of a new company CEC Liquid to the Groups telecom operations. The Group had a gross profit margin of 27% with The Company maintaining its 27% profit margin and the telecoms companies posting gross profit of 37% and 56% respectively. The Groups other operating income increased substantially from US$5.1 million in 2010 to US$20.2million. This was mainly due to a one-off arbitration award of US$11.3million in favour of The Company. The Groups operating expenses were maintained with a growth of 10% mainly by most costs being contained within an average 10% increment and a reduction in other operating expenses. The Group posted a net profit for the year of $19.8million, against The Companys net profit of US$20.6million. The dilution of The Groups net profit was due to losses incurred by both Telecoms companies. This is the second T his is the first year of producing consolidated financial results, incorporating CEC and its joint venture Realtime Technology Alliance Africa (RTAA) Zambia Limited (50%) and subsidiary CEC Liquid Telecommunication Limited (CEC Liquid) (100%). ReportfromtheChiefFinancialOfficer

17. Copperbelt Energy Corporation PLC and its Subsidiaries Annual Report 2011 17 year that RTAA is incurring losses, mainly attributed to high operating expenses. In acknowledging the loss and the effect on RTAAs net worth, The Company has made a provision reducing the value of its investment by 50%. This was CEC Liquids first year of operation and it incurred high set up costs, however, profits are expected in 2012 and thereafter. The Groups net financing cost reduced by 30% due to a significant increase in bank interest income as well as on trade debtors, mitigating the increase in bank interest on loans. The Groups total assets grew by 12% with significant growth in trade and other receivables as well as in cash and cash equivalents. The increase in trade receivables was mainly due to the higher tariffs in 2011 and includes $5.5million tariffs arrears which will be paid in 2012. Trade debtor days reduced from an average 62days in 2010 to 45days in 2011. The increase in other receivables was mainly attributed to the $11.3million due from the arbitration award. The increase in tariffs also extended to a similar increment in trade payables. It is worth noting that although The Groups current liabilities ($68.8million) were higher than the current assets ($$66.6million) leaving the Group in a net current liability position of $2.2million, this will not affect the Groups going concern. The higher Group liability position is arising out of RTAA which has had liquidity challenges and requires capital injection. This situation is being actively addressed. The Company was in a net current asset position of $2.5million unlike the position at the end of 2010 when it was in a net current liability position of $7.2million. The $10million financing facility from Citibank which was anticipated in 2010 was received in 2011. The Group had a positive year and financial growth is anticipated in the coming year. Irene L. Ngandwe ReportfromtheChiefFinancialOfficer

18. Copperbelt Energy Corporation PLC and its Subsidiaries 18 Annual Report 2011 TheCompanysFinancialOperationalHighlights The Companys Financial and Operational Highlights 0 50,000 100,000 150,000 200,000 250,000 2006 2007 2008 2009 2010 2011 US$`000 YEAR Revenue Profit Before Interest and Tax Return on Assets Gross Profit Earnings Per Share Debtor Days

19. Copperbelt Energy Corporation PLC and its Subsidiaries Annual Report 2011 19 TheCompanysFinancialOperationalHighlights Acid Test Ratio Load Growth

20. Copperbelt Energy Corporation PLC and its Subsidiaries 20 Annual Report 2011 Corporate Responsibility Report I nvesting in the community remains key to CECs business agenda and sustainability strategy. We believe our business will benefit from contributing to the development of communities near to and those far from us. In 2011, our responsibility agenda looked inward and outward in efforts, we believe, will result in positive incremental changes in our communities. Charity begins at work, hence, improving and enhancing the aesthetic quality of the primary place of business for the Company equally enhances the appearance of the surrounding community and hopefully sets a standard to which other businesses and residential properties alike will aspire to. That is one way we contribute to keeping our country clean and healthy. CEC erected and donated to the Kitwe City Council a total of six bus shelters in various parts of Kitwe. These are meant to ease the difficulties faced by the travelling public, especially during periods of wet and hot weather, as they wait to board buses and also eliminates the danger of running across traffic because the shelter is on the other side of the road. More shelters will be put up in 2012 in other identified areas. A total investment of K98,555,678 [US$19,311] went into erecting and rehabilitating the shelters. Health is one of the priority areas of CEC community support and in 2011, the Company drilled a borehole with associated overhead tank to help provide clean and safe water to the mini-hospital built by the community in Ndeke. CEC commends and encourages such progressive community efforts and considers the K59,548,600 [US$11,910] it cost to put up the borehole a worthy investment that will contribute to better the communitys health. For years, CEC has partnered with the Zambia Police Service in many ways to help combat crime in and around our communities. Our assistance is not restricted to our installations, plant or property; but extends to areas of Police operations that serve the larger community. CEC, in 2011, rehabilitated and improved upon the Ndeke Police Post, which the Company donated to the Police Service some years back. As the Company plans the construction of its first hydro- electric power generation plant at Kabompo gorge, CEC has constructed three bridges in North-Western Province to improve the areas passability. A total of K280,494,950 [US$56,099] was spent on this developmental project. Site preparation activities also commenced during the year, with eight prefabricated containers installed. Two will be used as offices while the remaining six are for accommodation purposes. Construction of two by two bedroom houses at the project site also commenced during the year. Our support to the development of sport in the country continued and was even higher in 2011. Power Dynamos Football Club remains the largest beneficiary of our sports support budget, with a total of US$538,000 having been spent on the team during the 2011 season. CEC considers this money well spent as the team took three major victories during the year the season opener Charity Shield, the Barclays Cup and were crowned the MTN-FAZ Super Division champions for 2011. Another US$20,000 was spent on other sports that included rugby, karate, basketball, badminton and boxing. The company also got involved with a unique fundraising initiative, partnering with a British charity to sponsor a British national, with links to Zambian community schools, in his epic bicycle ride from Africa to Europe, ending at the 2012 Olympic Games. The funds raised will be used to fund feeding programmes and to CorporateResponsibilityReport

21. Copperbelt Energy Corporation PLC and its Subsidiaries Annual Report 2011 21 build and develop community schools in Zambia. Balls were also distributed to disadvantaged schools in Kenya and Zambia during the journey. The rest of the Companys corporate responsibility investment worth US$28,000 went towards education, industry support, cultural support through traditional ceremonies, cash and material donations to various community causes, and environmental protection through tree planting. The noteworthy undertaking in that regard being the Companys planting of about 50,000 tree seedlings at Ichimpe Forest Nursery. Continuing programs and projects supported in 2011 included the University of Zambia capacity building and infrastructure improvement support. A false roof was constructed at UNZAs School of Electric and Electronic Engineering at a cost of US$20,831. The Companys social investment in 2011 was, therefore, wide reaching and impacted our communities in a manner, we believe, can be built on for sustainability. CorporateResponsibilityReport

22. Copperbelt Energy Corporation PLC and its Subsidiaries 22 Annual Report 2011 FinancialStatements Directors Report The Directors have pleasure in submitting their report on the Groups activities and its consolidated financial statements for the year ended 31 December 2011. This is the first year that consolidated financial statements for The Group are being presented. 1. The Group Copperbelt Energy Corporation PLC, (The Company) has shareholding in two companies, Realtime Technology Alliance Africa (RTAA) Zambia Limited and CEC Liquid Zambia Limited, this shareholding now constituting The Group. At the year-end, The Companys shareholding in RTAA was 50% based on a joint venture agreement entered into with RTAA (Proprietary) Limited on 11th February 2009. In March 2011, a joint venture agreement was entered into with Liquid Telecommunications Holdings Limited of Mauritius with the intention of forming a joint venture company in Zambia, CEC Liquid, which was duly incorporated on 12 May 2011 and commenced operations in the latter part of the year. At the year end, however, this was still a 100% subsidiary of The Company as Liquid Telecommunications had not yet been completed the prerequisite requirements. 2. Principal activities The principal activities of The Group are the generation, transmission, distribution and sale of electricity and telecommunication service provision. The Companys core business remains the transmission, distribution, generation and sale of electricity primarily on the Copperbelt, whilst its subsidiaries focus on telecommunications. Realtime Technology Alliance Africa(RTAA) Zambia Limiteds principal activity is as an internet service provider (ISP), whilst CEC Liquids principal activities are the provision of wholesale capacity and internet bandwidth to Zambia Information and Communications Technology Authority (ZICTA) licensed private and public operations. 3. Share Capital The authorised and issued and fully paid share capital of the group is: Number of shares Value Authorised Issued US$ The Company 1,000,000,0000 1,000,000,000 100,000 RTAA 5,000,000 4,000,000 862 CEC Liquid 10,000,000 5,000,001 1,000

23. Copperbelt Energy Corporation PLC and its Subsidiaries Annual Report 2011 23 FinancialStatements Directors Report (Continued) for the year ended 31 December 2011 4. Financial Results This is the first year of producing consolidated financial results, highlights of the financial performance of the Group are tabulated below, the consolidated results have incorporated 50% of RTAA and 100% of CEC Liquid. Key Statistics Consolidated The Company RTAA CEC Liquid (six months) Revenue ($000) 200,985 197,539 5,528 681 Gross profit ($,000) 54,206 52,801 2,048 380 Profit/(Loss) before interest and taxes ($,000) 34,456 35,205 (604) (447) Acid test ratio (Times) 1.00 0.98 0.39 2.14 Return on equity (%) 12% 12% 0 0 EBITDA ($,000) 48,832 48,877 (182) (405) Total assets ($,000) 308,775 307,995 2,367 4,043 Earnings per share (Cents) 1.98 2.06 0 0 Return on assets (%) 6.42% 6.70% (28%) (11%) Net profit/(loss) ($,000) 19,830 20,613 (672) (447) Equity ($,000) 167,525 169,315 (258) (446) Current assets ($,000) 66,586 68,218 860 1,387 Inventory ($,000) 3,973 3,933 79 0 Current liabilities ($,000) 68,837 65,746 2,232 649 5. Capital Expenditure The Groups capital expenditure programme has been developed in line with the Groups strategy of minimizingbusinessrisks,enhancingcustomersatisfactionandensuringthesustainabilityof businessactivities. 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. The Company The objectives of the Companys capital expenditure programme are to: (a) ensure compliance with local and international best practice on matters related to safety, health and environment; (b) replace systems assets that have reached the end of their lives; and (c) maintain adequate provision of standby power through refurbishment of the Companys Gas Turbine Alternators (GTAs). In addition to its planned capital expenditure for the maintenance, renewal and refurbishment of its network and associated facilities the Company undertook further projects related to (i) installation of transmission line for NFCA South East ore body project of US$1.1million, (ii) overhauling of Avon engine US$1.1million, (iii) feasibility studies and preparatory works on the Kabompo Hydro project site US$1.6million. The total capital expenditure for the year was US$13.512 million.

24. Copperbelt Energy Corporation PLC and its Subsidiaries 24 Annual Report 2011 FinancialStatements Directors Report (Continued) for the year ended 31 December 2011 5. Capital expenditure (continued) Subsidiaries RTAAs capital expenditure for the year was US$821,938. CEC Liquids major categories of expenditure in addition to the setting up equipment, included setting up its Head Office and Network Operations Centre, its total expenditure was $2.7million. 6. Insurance The Group has insured its operational assets against all significant business risks. The Group also maintains insurance for its Directors in respect of their duties as Directors of the Group. Besides the foregoing, the Group has cover for employers liability, public and product liability, group personal accident, motor vehicle insurance and group life assurance. 7. Dividends and transfer to reserves The policy of the Group in respect of the payment of dividends is a matter to be determined by the individual company Boards in accordance with the principles outlined below: The Companys actual accumulated profits arising from the business of the Company in respect of each year after: - (i) provision of working capital as determined by the Board; (ii) transfer to reserves as in the opinion of the Board ought reasonably to be made; (iii) service of all debts and full compliance with any financing agreements to which the Company is party at the relevant time of payment; and (iv) 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. TheCompanyhasapolicyof declaringdividendstwiceayear;inMarchandAugust.Dividendsof US$4.2million and US$8.1million were paid on 15th April and 7th October, 2011 respectively. Company retained profit taken to reserves at 31 December 2011 was US$20.996 million. Neither RTAA nor CEC Liquid declared dividends in the year. RTAA had accumulated losses of $605,190 for the year whilst CEC Liquid also had accumulated losses of $289,769. 8. Developments Expansionary projects continue to characterise the mining sector supported by copper demand and prices on the global market that have been sustained at reasonably good levels during 2011. This has also continued to encourage exploration works and establishment of new mines in the country. A number of the Companys customers are either planning or are already implementing expansion projects that should result in additional power demand in the coming years. The projects are at various stages of implementation. RTAA did not undertake any major developments in the year. CEC Liquids focus on development is on the build of the optic fibre network.

25. Copperbelt Energy Corporation PLC and its Subsidiaries Annual Report 2011 25 FinancialStatements Directors Report (Continued) for the year ended 31 December 2011 9.Directors The Directors who served during the year and at the date of this report were as follows: The Company Executive Directors Hanson Sindowe - Chairperson Neil Croucher - Managing Director - Operation Michael Tarney - Managing Director Corporate Development Non-executive Directors Jean Madzongwe - Deputy Chairperson Standwell C Mapara Abel Mkandawire Munakupya Hantuba Robert Chestnutt William Musama - Appointed on 16 November 2011 Teddy J Kasonso - Retired on 16 November 2011 Irene L Ngandwe - Resigned on 1st August 2011 Independent Non-executive Directors Jonathan Muke - Retired on 25 March 2011 Emmanuel Mutati - Retired on 25 March 2011 Pius H Mambo - Appointed on 25 March 2011 Edson M Hamakowa - Appointed on 25 March 2011 Key Management The following held key management positions in The Group as at the report date: Function The Company RTAA CEC Liquid Chief Executive Officer Hanson Sindowe Samson Longwe Garth Schooling Chief Operations Officer Neil Croucher Evans Silavwe Jonathan Soko ManagingDirectorCorporate Development Michael Tarney Ken Hyslop n/a Chief Financial Officer Irene L Ngandwe Mwape Chilufya Bright Tembo Company Secretary Julia C Z Chaila Clara K Mvula Mevis K Chisanga 10 Directors Interests in Contracts With the exception of Madison General Insurance Company Limited, who provide insurance services and Standard Chartered Bank Zambia PLC who are the Companys bankers in which Abel Mkandawire and Edson Hamakowa are Directors respectively, the Company did not enter into contracts with any Company where a Director has material interests, whether directly or indirectly, existed either at the end of the year or at any time during the year.

26. Copperbelt Energy Corporation PLC and its Subsidiaries 26 Annual Report 2011 FinancialStatements Directors Report (Continued) for the year ended 31 December 2011 11. Directors Interests As at 31 December 2011 the interests of the Directors of the Company in the shares of the Company as recorded in the register and on the Lusaka Stock Exchange were as follows:- Name of Director 2011 2010 Name of Director Direct Indirect Direct Indirect 000s shares 000s shares 000s shares 000s shares Hanson Sindowe 2,092 110,802 3,092 83,792 Neil Croucher 4,581 - 4,000 - Michael Tarney 1,230 61,513 549 34,502 Abel Mkandawire - 56,584 - 29,574 Munakupya Hantuba 19 - - - Emmanuel Mutati 46 - 46 - 7,968 228,899 7,687 147,868 12. Directors Fees and remuneration The Company paid US$0.778 million to Executive Directors and US$0.139 million to Non-Executive Directors. RTAA paid US$0.003 million to its Directors. CEC Liquid did not pay Directors fees in the period under review. There were no loans made to Directors or any outstanding loans from Directors at the year end. Members of the Board were not entitled to any form of defined pension benefits from The Company. 13. Significant shareholding in The Company Zambian Energy Corporation (Ireland) Limited 52% ZCCM Investments Holdings PLC 20% Apart from the holdings above, The Company has not been notified at 25 February 2012 of any interest of 5 percent or more in its share capital.

27. Copperbelt Energy Corporation PLC and its Subsidiaries Annual Report 2011 27 FinancialStatements Directors Report (Continued) for the year ended 31 December 2011 14.Operations The Company The operations of the Companys high-voltage transmission and distribution system were maintained to a satisfactory standard during the period under review. A satisfactory security of supply from Zesco was also maintained throughout the review period. Stringent security measures that have been employed have been effective and have resulted in a significant reduction in the theft and vandalism of company installations. The total energy import into the network was 5,431.55 GWh of which 3,852.12GWh was the Company purchases while 1,579.42 GWh was wheeled for Zesco. Sales of electrical energy to the Company customers totaled 3,422.78 GWh compared with 3,640.17GWh the previous year. The customers average Maximum Demand increased to 481.19MW from 469.56MW while the system load factor reduced to 83.0%. International wheeling for Zesco was mainly dictated by the power import requirements from Zesco by SNEL in DRC. A total of 91.27 GWh was wheeled from Congo while 441.38GWh was wheeled to Congo and 16.33 GWh was wheeled to Frontier through the 220kV Congo inter-connector. RTAA RTAA is an internet service provider (ISP) and focuses on a niche market of corporate customers. Its core business comprises provision of high speed internet service and private leased circuits using optic fibre technology. During the year 2011, the performance of RTAA was rather satisfactory with a steady increase in sales however cost of sales for the industry was high impacting on the overall performance. Its network remained stable during the year as it utilised optic fibre technology for most of its services. RTAA is soon expected to realize positive returns following access to cheaper bandwidth provided within The Group. CEC Liquid Focus during this period of establishment has been on setting a solid foundation based on international carrier grade processes and procedures, recruitment of qualified people, purchase and installation of appropriate equipment and introduction of the necessary monitoring systems. Processes have been formulated, documented and assigned to the relevant management for Network Field Operations and the Network Operations Centre. Optic fibre networks have been constructed between and within main commercial centres in Zambia. A 5 Gbps link into Zimbabwe via Chirundu has been established for international traffic. A fibre network from Lusaka to Ndola linking into the existing CEC network has also been completed. CEC Liquid established an MPLS (Multi Protocol Label Switching) network with core routers in Lusaka and Kitwe. This has been linked into the Liquid Telecom Group International MPLS network.

28. Copperbelt Energy Corporation PLC and its Subsidiaries 28 Annual Report 2011 FinancialStatements Directors Report (Continued) for the year ended 31 December 2011 15.Employees The total remuneration of employees during the year amounted to The Company US$15.8 million (2010: US$14.5 million) RTAA US$1.3million (2010: US$ 1.4million) CEC Liquid US$537,758 (2010: nil) The Group US$17.6million (2010: US$15.9million) The average total number of employees was as follows: Month Number The Company RTAA CEC Liquid January 359 50 - February 358 48 - March 358 46 - April 359 50 - May 358 53 - June 358 54 - July 356 53 - August 356 53 5 September 358 52 9 October 359 50 14 November 360 51 14 December 360 51 16 Average 358 51 12 Power Dynamos Football Club The Company continues to sponsor Power Dynamos Football Club through a direct funding, funding during the year was US$538,000. 16. Industrial Relations A sound industrial relations climate prevailed in the Group during the year and no work stoppages were experienced. The Company will continue to pursue proactive dialogue and partnership with the Mineworkers Union of Zambia (MUZ). There were no unionised employees in either RTAA or CEC Liquid. 17. Safety and Health Matters The Group has formal safety and health policies that have been approved by the Board to ensure a safe working environment. Health and safety standards are regularly reviewed and updated to ensure that improvements conform with best practices. A very good safety performance was achieved in 2011

29. Copperbelt Energy Corporation PLC and its Subsidiaries Annual Report 2011 29 FinancialStatements Directors Report (Continued) for the year ended 31 December 2011 18. Environmental Matters The Company has a formal environmental policy in place that has been approved by the Board which prescribes the procedures and practices to be followed by the Company in environmental matters. The Company is licenced by Zambia Environmental Management Agency (ZEMA) which monitors and regulates its performance. There were no legal actions or fines imposed on the Company by the regulatory agency. During the year under review, the Company recorded zero serious environmental incidents. The Environmental Impact Statement report (EIS) relating to the Kabompo Gorge Hydro Power Generation Project was finalised and submitted to ZEMA for review. The project was approved and a Decision Letter issued. As part of its corporate social responsibilities the Company approved sponsorship of a Tree Nursery Development project in the Ichimpe Area to be developed in collaboration with the Forestry Department. 19. Gifts and donations During the year the Group made the following donations in support of various community initiatives and charitable causes. The Company - US$128,000; RTAA - US$ 1,416; CEC Liquid - US$ Nil 20. Other material facts, circumstances and events The Directors are not aware of any material facts, circumstances or events which occurred between the accounting date and the date of this report which might influence an assessment of the companys financial position or the results of its operation. 21.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 have offered themselves for re-election.

30. Copperbelt Energy Corporation PLC and its Subsidiaries 30 Annual Report 2011 FinancialStatements Directors Report (Continued) Statement on Corporate Governance for the year ended 31 December 2011 The Company In recognition of the importance of conducting its affairs with integrity, in accordance with generally accepted good corporate practice, the Company 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) The Company 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 Companys corporate governance philosophy encompasses not only regulatory and legal requirements such as those under the LuSE Corporate Governance Code but also several voluntary practices at a high level of business ethics, effective supervision and enhancement of shareholders value. 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 comprise 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 Jean Madzongwe, the Deputy Chairperson of the Board. Audit Committee The Audit Committee provides oversight on the effectiveness of the Companys financial reporting systems as well as risk management, compliance management and other internal control activities in the Company. The Committee comprises four members, who are all Non-Executive Directors and is chaired by William Musama. Remuneration and Employee Development Committee The Committee oversees employee remuneration and Mineworkers Union of Zambia (MUZ) wage negotiations, key organisational changes, management and leadership development, pension scheme arrangements, training and employee development policies. The Committee comprises five members and is chaired by Edson Hamakowa.

31. Copperbelt Energy Corporation PLC and its Subsidiaries Annual Report 2011 31 FinancialStatements Directors Report (Continued) Statement on Corporate Governance for the year ended 31 December 2011 The Company (Continued) Safety, Health and Environment (SHE) Committee The Committees key mandate is to ensure that management of SHE matters in the Company is aligned with the overall business strategy of the Company and is geared towards attainment of its commitments and obligations in these fields. The Committee comprises of three Non-Executive Directors and five members of senior management including the two Company Managing Directors. The Chairman of the Committee is Pius Haangoma Maambo. Business Development Committee The Committee is responsible for reviewing the Companys new business development projects and related matters. The Committee comprises of six 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. By order of the Board Julia C Z Chaila Company Secretary Date: 23 February 2012

32. Copperbelt Energy Corporation PLC and its Subsidiaries 32 Annual Report 2011 FinancialStatements CECs Compliance Status to LuSE Code of Corporate Governance Rules The LuSE Corporate Governance Framework has 99 principles grouped into 16 categories. As at 31 December 2011, CECs compliance with the LuSE Corporate Governance Code had increased to 96% from 88% at the end of 2010. The summary of the compliance status is indicated in the chart while brief details of areas that are not fully compliant or inapplicable are given below. 1. AREAS OF PARTIAL COMPLIANCE There are only two areas of partial compliance. The areas deal with implementation of a long-term incentive program for management. Implementation of these issues will be concluded in 2012. 2. AREAS THAT ARE NOT APPLICABLE There are two areas that are not applicable to CEC: i). The requirement for the roles of the chairperson and chief executive officer to be performed by separate persons; and ii). The requirement that where share options have been granted to Non-Executive Directors, the Board must obtain the prior approval of share owners and meet the specific requirements of the Companies Act. This first requirement is optional and the CEC Board opted for the alternative of having an Executive Chairperson and a Non-Executive Vice Chairperson while in the second instance, CEC has not granted any share options to its Non-Executive Directors. 96% 2% 2% 100 % Co mplian t Pa rtial Co mplian ce Not Applic ab le

33. Copperbelt Energy Corporation PLC and its Subsidiaries Annual Report 2011 33 FinancialStatements Statement of Directors Responsibilities Section 164 (6) of the Companies Act 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 its subsidiaries 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 whether due to fraud or error; 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 Group will continue in business. The Directors are responsible for keeping proper accounting records, which disclose with reasonable accuracy at any time, the financial position of the Group and enable them to ensure that the financial statements comply with the Companies Act Cap 388. They are also responsible for safeguarding the assets of the Group hence taking reasonable steps for the prevention and detection of fraud and other irregularities. The Directors confirm that in their opinion (a) the financial statements give a true and fair view of the financial position of Copperbelt Energy Corporation PLC and its subsidiaries as of 31 December 2011, and of its financial performance and its cash flows for the year then ended; (b) at the date of this statement, there are reasonable grounds to believe that the Group will be able to pay its debts as and when these fall due; and (c) the financial statements are drawn up in accordance with International Financial Reporting Standards. This statement is made in accordance with a resolution of the directors. Signed at Lusaka on 23 February 2012 DirectorDirector Director Hanson Sindowe Michael J. Tarney William Musama

34. Copperbelt Energy Corporation PLC and its Subsidiaries 34 Annual Report 2011 REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF COPPERBELT ENERGY CORPORATION PLC AND ITS SUBSIDIARIES Report on the Financial Statements We have audited the accompanying financial statementsof Copperbelt Energy Corporation PLC and its Subsidiaries which comprise the statement of financial position as at 31 December 2011, and 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. Directors responsibility for the financial statements As described on page 33, the Directors are responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation and fair presentation of financial statements that are free from material misstatement; whether due to fraud or error. 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 about 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 whether due to fraud or error. 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 the effectiveness of the Groups internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by Directors, 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. Grant Thornton 5th Floor, Mukuba Pension House Dedan Kimathi Road P O Box 30885 Lusaka, Zambia T +260 (211) 227722-8 F +260 (211) 223774 E gt@gt.com.zm Partners Edgar Hamuwele (Managing) Christopher Mulenga Victor Mweene Morgan MacheletaChartered Accountants Wesley Beene Rodia MusondaZambian Member of Grant Thornton International

35. Copperbelt Energy Corporation PLC and its Subsidiaries Annual Report 2011 35 FinancialStatements REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF COPPERBELT ENERGY CORPORATION PLC AND ITS SUBSIDIARIES (CONTINUED) Opinion In our opinion, the financial statements give a true and fair view of the financial position of Copperbelt Energy Corporation PLC and its Subsidiaries as of 31 December 2011, and of its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards. Report on Other Legal and Regulatory Requirements In our opinion, the financial statements of Copperbelt Energy Corporation PLC and its Subsidiaries as of 31 December 2011 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: 27 February 2012

36. Copperbelt Energy Corporation PLC and its Subsidiaries 36 Annual Report 2011 FinancialStatements Consolidated Statement of Comprehensive Income For the year ended 31 December 2011 2011 2010 Notes US$000 US$000 Revenue 5 200,985 169,780 Cost of sales (146,779) (122,866) Gross profit 54,206 46,914 Other operating income 6 20,184 5,125 Operating expenses 7 (39,934) (36,319) Results from operating activities 34,456 15,720 Finance income 8 1,035 599 Finance expense 9 (1,426) (1,159) Net finance cost (391) (560) Profit before tax 34,065 15,160 Income tax expense 10(a) (14,235) (4,996) Profit for the year 19,830 10,164 Other Comprehensive Income: Gross gains on cash flow hedges - - 3,834 Income tax relating to other comprehensive income 10(a) - (1,342) Total comprehensive income for the year 19,830 12,656 Earnings per share Weighted basic and diluted earnings per share (cents) 11 1.98 1.26

37. Copperbelt Energy Corporation PLC and its Subsidiaries Annual Report 2011 37 FinancialStatements FinancialStatements Company Statement of Comprehensive Income For the year ended 31 December 2011 2011 2010 Notes US$000 US$000 Revenue 5 197,539 167,294 Cost of sales (144,738) (121,438) Gross profit 52,801 45,856 Other operating income 6 20,181 5,125 Operating expenses 7 (37,777) (35,213) Results from operating activities 35,205 15,768 Finance income 8 1,035 599 Finance expense 9 (1,392) (1,144) Net finance cost (357) (545) Profit before tax 34,848 15,223 Income tax expense 10(a) (14,235) (4,996) Profit for the year 20,613 10,227 Other Comprehensive Income: Gross gains on cash flow hedges - - 3,834 Income tax relating to other comprehensive income 10(a) - (1,342) Total comprehensive income for the year 20,613 12,719 Earnings per share Weighted basic and diluted earnings per share (cents) 11 2.06 1.27

38. Copperbelt Energy Corporation PLC and its Subsidiaries 38 Annual Report 2011 FinancialStatements FinancialStatements ConsolidatedStatementofChangesinEquityfortheyearended31December2011 Total attributableShare ShareShareRevaluationRetainedtotheattributable capitalpremiumreserveprofitsparenttotheJVTotal US$000US$000US$000US$000US$000US$000US$000 Balanceat1January2010100148113,08044,001157,329641157,970 Releaseoftheextradepreciation--(886)886--- Comprehensiveincomefortheyear---12,65612,656(1,585)11,071 Totalcomprehensiveincomefortheyear--(886)13,54212,656(1,585)11,071 Transactionwiththeowners Dividendspaid---(10,000)(10,000)-(10,000) Balanceat31December2010100148112,19447,543159,985(944)159,041 Releaseoftheextradepreciation--(3,346)3,346--- Comprehensiveincomefortheyear---19,83019,83022620,056 Totalcomprehensiveincomefortheyear--(3,346)23,17619,83022620,056 Transactionwiththeowners Dividendspaid---(12,290)(12,290)-(12,290) Balanceat31December2011100148108,84858,429167,525(718)166,807 (a)Retainedearningsarethecarriedforwardrecognisedincome,netofexpenses,oftheGrouppluscurrentyearsprofitattributabletoshareholders. (b)Thesharepremiumrelatestotheexcessamountsreceivedontheissueofsharecapitalnetofpre-incorporationcosts.

39. Copperbelt Energy Corporation PLC and its Subsidiaries Annual Report 2011 39 FinancialStatements Company Statement of Movements in Equity For the year ended 31 December 2011 Share Share Revaluation Retained capital premium reserve earnings Total US$000 US$000 US$000 US$000 US$000 Balance at 31 December 2009 100 148 113,080 44,945 158,273 Release of extra depreciation - - (886) 886 - Comprehensive income for the year - - - 12,719 12,719 Total comprehensive income - - (886) 13,605 12,719 Transactions with the owners Dividend paid - - - (10,000) (10,000) Balance at 31 December 2010 100 148 112,194 48,550 160,992 Release of extra depreciation - - (3,346) 3,346 - Comprehensive income for the year - - - 20,613 20,613 Total comprehensive income - - (3,346) 23,959 20,613 Transactions with the owners Dividend paid - - - (12,290) (12,290) Balance at 31 December 2011 100 148 108,848 60,219 169,315 (c) Retained earnings are the carried forward recognised income, net of expenses, of the Company plus current years profit attributable to shareholders. (d) The share premium relates to the excess amounts received on the issue of share capital net of pre- incorporation costs. FinancialStatements

40. Copperbelt Energy Corporation PLC and its Subsidiaries 40 Annual Report 2011 FinancialStatements Consolidated Statement of Financial Position as at 31 December 2011 2011 2010 Notes US$000 US$000 ASSETS Non-current assets Property, plant and equipment 12(a) 242,186 239,848 242,186 239,848 Current assets Inventories 14 3,973 3,518 Trade and other receivables 15 47,168 24,076 Amount due from related party 16(i) 44 31 Cash and cash equivalents 17 15,404 9,136 66,589 36,761 Total assets 308,775 276,609 EQUITY AND LIABILITIES Equity Issued capital 18 100 100 Share premium 148 148 Revaluation reserves 108,848 112,194 Retained profits 58,429 47,543 Total attributable to the owners 167,525 159,985 Amounts attributable to the Joint Venture (718) (944) 166,807 159,041 Non-current liabilities Interest-bearing loans 19 23,264 24,961 Non current trade and other payables 20 10,270 11,289 Deferred employee benefits 21 5,094 3,946 Deferred tax liability 10(e) 34,503 33,057 73,131 73,253 Current liabilities Current portion of interest-bearing loans 19 9,991 7,183 Trade and other payables 22 48,759 35,282 Amount due to related party 16(ii) 2,339 11 Tax payable 10(c) 7,748 1,839 68,837 44,315 Total liabilities 141,968 117,568 Total equity and liabilities 308,775 276,609 The financial statements on pages 36 to 76 were approved by the Board of Directors on 23 February 2012 and were signed on its behalf by: )H Sindowe ) Director ) )W Musama )Director ) )M Tarney )Director FinancialStatements

41. Copperbelt Energy Corporation PLC and its Subsidiaries Annual Report 2011 41 FinancialStatements Company Statement of Financial Position as at 31 December 2011 2011 2010 Notes US$000 US$000 ASSETS Non-current assets Property, plant and equipment 12(b) 238,776 239,269 Investments in joint venture and subsidiary 13 1,001 2,000 239,777 241,269 Current assets Inventories 14 3,933 3,462 Trade and other receivables 15 49,327 24,060 Cash and cash equivalents 17 14,958 8,794 68,218 36,316 Total assets 307,995 277,585 EQUITY AND LIABILITIES Equity Share capital 18 100 100 Share premium 148 148 Revaluation Reserve 108,848 112,194 Retained earnings 60,219 48,550 169,315 160,992 Non-current liabilities Interest-bearing loans 19 23,186 24,944 Non-current trade and other payables 20 10,151 11,180 Deferred employee benefits 21 5,094 3,946 Deferred tax liability 10(e) 34,503 33,057 72,934 73,127 Current liabilities Current portion of interest-bearing loans 19 9,991 7,159 Trade and other payables 22 47,807 34,468 Amounts due to related party 23(i) 200 - Tax payable 10(c) 7,748 1,839 65,746 43,466 Total liabilities 138,680 116,593 Total equity and liabilities 307,995 277,585 The financial statements on pages 36 to 76 were approved by the Board of Directors on 23 February 2012 and were signed on its behalf by: )H Sindowe ) Director ) ) W Musama ) Director ) ) M Tarney ) Director FinancialStatements

42. Copperbelt Energy Corporation PLC and its Subsidiaries 42 Annual Report 2011 FinancialStatements Consolidated Statement of Cash Flows For the year ended 31 December 2011 2011 2010 US$000 US$000 Cash flow from operating activities Profit before taxation 34,065 18,994 Depreciation 13,926 10,877 Interest expense 1,426 1,159 Interest income (1,035) (599) Loss on disposal of assets 8 29 Cash inflows before working capital changes 48,390 30,460 Increase in inventories (455) (12) (Increase)/decrease in trade and other receivables (23,092) 6,830 Increase in trade and other payables 11,634 6,816 Increase in amount due from related party (13) - Increase/(decrease) in amount due to related party 2,328 (27) Interest paid (1,426) (1,159) Income tax paid (6,877) (6,534) Net cash inflows on operating activities 30,489 36,374 Investing activities Acquisition of property, plant and equipment (16,622) (13,959) Proceeds from disposals of assets 697 615 Interest received 1,035 599 Net cash outflows from investing activities (14,890) (12,745) Financing activities Repayment of loans (8,989) (7,221) Loan received 10,100 95 Dividends paid (12,090) (10,000) Net cash outflow from financing activities (10,979) (17,126) Net decrease in cash and cash equivalents 4,620 6,503 Cash and cash equivalents at 1 January 9,136 2,288 Exchange loss 1,648 345 Cash and cash equivalents at 31 December 15,404 9,136 Represented by: Bank balances and cash 15,404 9,136 FinancialStatements

43. Copperbelt Energy Corporation PLC and its Subsidiaries Annual Report 2011 43 FinancialStatements Company Statement of Cash Flows For the year ended 31 December 2011 2011 2010 US$000 US$000 Cash flow from operating activities Profit before taxation 34,849 19,057 Depreciation 13,672 10,690 Other non cash item (101) - Interest expense 1,392 1,144 Interest income (1,035) (599) Profit on disposal of assets 10 (23) Cash inflows before working capital changes 48,787 30,269 (Increase)/decrease in inventories (471) 44 (Increase)/decrease in trade and other receivables (25,267) 6,635 Increase in payables 12,309 8,463 Increase in provisions (1,148) (1,137) Interest paid (1,092) (1,305) Income tax paid (6,877) (6,534) Net cash inflows on operating activities 26,241 36,435 Investing activities Acquisition of property, plant and equipment (12,411) (13,761) Proceeds from disposals of assets 665 36 Investment in subsidiary 1 - Interest received 1,035 599 Net cash outflows from investing activities (10,710) (13,126) Financing activities Repayment of loans (8,925) (7,159) Receipts from loans 10,000 - Dividends paid (12,090) (10,000) Net cash outflow from financing activities (11,015) (17,159) Net increase in cash and cash equivalents 4,516 6,150 Cash and cash equivalents at 1 January 8,794 2,299 Exchange loss 1,648 345 Cash and cash equivalents at 31 December 14,958 8,794 Represented by: Bank balances and cash 14,958 8,794 14,958 8,794 FinancialStatements

44. Copperbelt Energy Corporation PLC and its Subsidiaries 44 Annual Report 2011 NotestotheFinancialStatements Notes to the Financial Statements - 31 December 2011 1. The Group The principal activities of The Group are the generation, transmission, distribution and sale of electricity and telecommunication service provision. 2. Principal accounting policies The principal accounting policies applied by the Group in the preparation of these financial statements are set out below. These policies have been consistently applied to all the periods presented, unless otherwise stated. (a) Basis of consolidation The consolidated financial statements include the financial statements of the parent Company and its subsidiary companies made up to the end of the financia