CEZ's Consolidated Quarterly Report on Operational, Economic and Financial Results for 1st Quarter 2002, in accordance with IFRS

• Brief Report on Operational, Economic, and Financial Results January - March 2002
• Financial Statements

 

Brief Report on Operational, Economic, and Financial Results January - March 2002

Main Features

• Demand for electricity (15.0 TWh) decreased by 0.9%, but adjusted for developments in temperature the rising trend has continued
• There was a year-on-year considerable growth in imports via the independent transmission grid by 955 GWh
• Return on equity increased by 13.1%; earnings per share by 10%
• Year on year a decrease of total indebtedness (provisions excluded) by 1.4% and long-term indebtedness by 4.5%
• Salaries and wages went down by 4.6%
• The opening of the domestic electricity market, lowered demand for electricity and the state support of cogeneration resulted in an expected decrease in ČEZ''s share of the electricity wholesale market in the Czech Republic
• Net income was CZK 5.2 bn, an increase of CZK 0.4 bn (by 9.1%)
• The maximum load came to 10,225 MW (on 16 January 2002), 3.6% (379 MW) lower than in 2001
• The number of employees decreased by 1,083 (by 12.7%) year on year
• ČEZ is offering four other ''Rainbow Energy'' products
• Since 28 April the company has been managed from a new building at 2 Duhová Street, Praha 4; the registered office remains unchanged Prague, 30 April 2002

Income Statement in Accordance with International Financial Reporting Standards	31 March 2002		31 March 2001	Index 02/01
	CZK m	EUR m	CZK m
Operating revenues	15,684	504	16,210	96.8%
Operating expenses	9,995	321	10,053	99.4%
Fuel	3,123	100	3,607	86.6%
Purchased power and related services	2,168	70	1,802	120.3%
Depreciation and amortization	2,410	77	2,330	103.4%
Operating income	5,692	183	6,157	92.4%
Other expenses (income)	-134	-4	486	x
Income before income taxes	5,826	187	5,671	102.7%
Income taxes	652	21	930	70.1%
Net income	5,174	166	4,741	109.1%
	Unit	31 March 2002	31 March 2001	Index 02/01
Earnings per share (EPS)	CZK	8.8	8.0	110.0%
Price/earning ratio (P/E) */	1	4.7	7.6	61.8%
Return on equity (ROE) net */	%	6.9	6.1	113.1%
Return on total assets (ROA) net */	%	4.2	3.6	116.7%
Assets turnover */	1	0.25	0.25	100.0%
Total indebtedness (provisions excluded)	%	28.2	29.6	95.3%
Long-term indebtedness	%	17.9	22.4	79.9%
*/ For the last 12 months

Revenues, Expenses, Income

Our Income Statements, Balance Sheets, and Cash Flow Statements have been converted from Czech Accounting Standards to International Financial Reporting Standards (IFRS) and may differ significantly from the same data prepared according to Czech Accounting Standards. The figures presented include the fully consolidated data from ČEZ and ČEPS, and the data from the equity earnings of the affiliated company (37.21% of the profit came from Severočeské doly).

Net income

for the first quarter of 2002 amounted to CZK 5.2 bn, an increase of CZK 0.4 bn (9.1%) in comparison with the same period of 2001. While EBIT was lower by CZK 0.5 bn, EBT increased slightly by CZK 0.2 bn.

ČEZ’s turnoverwas CZK 15.7 bn in total, CZK 0.5 bn (3.2%) lower than in the same period of 2001.Operating expenses remained at the same level. Other income amounted to CZK 0.1 bn, an improvement on the other expenses of CZK 0.5 bn in the previous year. This resulted from exchange rate changes.Income taxes (CZK 0.7 bn) decreased by 29.9% (CZK 0.3 bn) in comparison with the same period of 2001. Earnings per share rose from CZK 8.0 to CZK 8.8 due to an increase in profits.The price-earnings ratio fell from 7.6 to 4.7 due to a decrease (by 24.6%) in share prices, while profits (for the last 12 months) increased by 21.1%.

The net return on equity

increased from 6.1% to 6.9% thanks to a rise in profits (for the last 12 months), partially compensated by an increase in the average equity. The net return on total assets increased (from 3.6% to 4.2%) as a result of a higher rise in profits (for the last 12 months) compared to a slight increase in the average value of total assets.

Assets turnoverremained at the same level. Total indebtedness (provisions excluded)decreased to 28.2%; long-term indebtedness also fell to 17.9%. At 31 March 2002the number of ČEZ employees stoodat 7,462 compared to 8,545 on 31 March 2001 - a 12.7% drop (1,083 employees) and compared to the beginning of 2002 a decrease by 90 employees (by 2.8%).

Sales of Electricity

On 1 January 2002 the wholesale electricity market opened up completely. ČEZ sells electricity to customers who have the right to choose their supplier, i.e. regional distribution companies, new traders, eligible customers, and ČEPS in order to cover transmission system losses. Other daily sales and settlements of balancing power for the activation of auxiliary services by the market operator are made.

Revenues from sales of electricity (CZK 14.1 bn) decreased by CZK 1.2 bn (7.9%) partially due to ČEZ''s competitively revised Rainbow Energy prices. The total amount of electricity sales remained almost at the same level year-on-year (Index 99.1 %). Sales of electricity in the Czech Republic decreased by 941 GWh (by 8.8%); exports of electricity were higher by 819 GWh (by 25.8%).

Demand for electricity in the Czech Republic, of 15 TWh, was down 134 GWh (0.9%) compared to the same period of 2001, due in part to extremely high temperatures in the first quarter of 2002. High voltage consumption decreased as a whole by 40 GWh (by 0.5%). Low voltage consumption decreased by 95 GWh (by 1.4%), of which in the commercial sector by 27 GWh (1.2%) and in the household sector by 68 GWh (by 1.6%), partially due, as mentioned, to higher temperatures in 2002 (by 1.8°C). If the temperature had been in line with the normal long-term temperature basis, the demand for electricity would have increased by 0.3%.

ČEZ power plants met 51.1% of the demand for electricity on the Czech market compared to 55.8% in the first quarter of 2001. This was due to an increase in imports by 645 GWh (72.2%) into the Czech Republic. ČEZ''s imports decreased by 41 GWh (15.9%), but the imports of other sector entities increased by 686 GWh (by 108%) and the imports via the independent transmission grid soared by 955 GWh. ČEZ’s share in meeting demand for electricity (including repurchased electricity from inland and abroad) went down to 58.3%.

Investment Programme

In total, capital investments amounted to CZK 1.0 bn; CZK 0.6 bn was spent on Temelín NPP. Test s on the 1^st unit of Temelín NPP with output 90-100% successfully continued. Since mid-January 2002, the 1^st unit of Temelín NPP has been operating with nominal output of 100%. In the second half of February the planned inspection of technological equipment started. This inspection comprised the replacement of valves (made in Germany) in the secondary part of the NPP. All work was finished on time, so the reactor was started up for the completion of the last part (dynamic tests) on 24 April. Following the completion of all remaining tests, a six-day tryout at nominal output is expected, plus eighteen months'' trial operation. During the tests in the first quarter of 2002, the net electricity generated by the first unit of Temelín NPP was 933 GWh. In the first half of March 2002 nuclear fuel was loaded into the second reactor of Temelín NPP, so this unit will be ready to begin activation tests at the beginning of May 2002.

Financing

Net cash provided by operating activities decreased to CZK 5.5 bn (by 19.5%). Given that only CZK 1.0 bn was spent on investments, combined with the effect of the better exchange rate of CZK, it was possible to reduce long-term borrowings by CZK 3.2 bn.

In January 2002, revolving credit totalling USD 70 m was renewed. The manager of the revolving credit is Sumitomo Mitsui Banking Corporation; the syndicate also consists of other international banks: Česká spořitelna, Citibank, Credit Lyonnais, Deutsche Bank, HSBC, ING Bank, Mizuho Bank, Sanpaolo IMI, and Magyar Kulkereskedelmi Bank.

Current credit rating for ČEZ from Moody’s ''Baa1'' with a stable outlook, from Standard&Poor’s ''BBB+'' with a stable outlook.

Other information

The most important current event is the beginning of gradual electricity market liberalization in the Czech Republic, initially for final customers with an annual consumption more than 40 GWh. Since the beginning of the year ČEZ and other producers have been selling their production in a fully competitive environment. Regional distributors and licensed traders have the same right to choose their supplier as newly categorized eligible consumers.

As a result, the wholesale market has been fully opened up for foreign and internal competitors. Importer access to the Czech market is now far easier than into neighbouring countries (considering the prohibition of Czech electricity exports to Austria, the need to re-export electricity imported to Poland and to the eastern federal states of Germany, and the high charge of using cross-border interconnectors to Germany). The company’s position is also encumbered as a result of the state’s unequal approach in its support of combined heat and power generation, whereby legal regulations specify the compulsory purchase of such cogeneration. When setting the advantageous minimum price, however, the Energy Regulation Office focused solely on the procurement of electricity not connected to the transmission grid. What is more, it gives preference to sources with an installed capacity of up to 5 MW.

Under Decree No. 250/2002, the Czech government approved the sale of the National Property Fund''s majority stake in five and minority stake in three regional distribution companies to ČEZ and, conversely, the sale of a majority stake in ČEPS from ČEZ to entities appointed by the state.

Since May, ČEZ has been offering four new electricity products to customers on the Czech market under its Rainbow Energy strategy. The Rainbow Energy portfolio now covers eleven products, which are offered to distributors, license holders and eligible customers.

In April, the ČEZ headquarters was relocated to a new building at 2 Duhová Street, Praha 4; the registered office remains unchanged. New phone number: +420-2-7113 1111, new fax number: +420-2-7113 2001

 

Financial Statements

Income Statement in Accordance with International Financial Reporting Standards (IFRS) (CZK m)	31 March 2002	31 March 2001
Operating revenues	15,687	16,210
Sales of electricity	14,141	15,358
Heat sales and other revenues	1,546	852
Operating expenses	9,995	10,053
Fuel	3,123	3,607
Purchased power and related services	2,168	1,802
Repairs and maintenance	381	421
Depreciation and amortization	2,410	2,330
Salaries and wages	943	988
Materials and supplies	337	353
Other operating expenses	633	552
Income before other expenses/income and income tax	5,692	6,157
Other expenses/income	-134	486
Interest income	-32	-51
Interest on debt, net of capitalized interest	97	168
Interest on nuclear provisions	374	366
Foreign exchange rate losses (gains)	-936	205
Other expenses/income, net	550	32
Income from associate	-187	-234
Income before income tax	5,826	5,671
Income taxes	652	930
Net income	5,174	4,741

Cash Flow in Accordance with International Financial Reporting Standards (IFRS) (CZK m)	31 March 2002	31 March 2001
Cash and cash equivalents at beginning of period	3,365	3,219
Operating activities:	5,481	6,811
- Income before income taxes	5,826	5,671
- Depreciation and amortization and asset write-offs	2,414	2,338
- Amortization of nuclear fuel	474	430
- Provision for nuclear decommissioning and fuel storage	205	170
- Changes in assets and liabilities	-1,281	-1,533
Investing activities	-1,040	-3,071
Financing activities	-1,430	-2,221
Net effect of currency translation in cash	-27	-42
Cash and cash equivalents at end of period	6,349	4,696

	31 March 2002	31 March 2001
Net electricity generation in the Czech Republic (GWh)	19,026	19,038
Electricity supply from ČEZ power plants - net (GWh)	12,753	12,804
Electricity sold by ČEZ in the Czech Republic (GWh)	9,747	10,688
- Electricity sold by ČEZ to REAS (GWh)	8,502	10,514
- Price of electricity sold to REAS (CZK/MWh)	922	1,003
ČEZ´s electricity exports (GWh)	3,992	3,172
ČEZ´s + ČEPS´s electricity imports (GWh)	217	258

Balance Sheet in Accordance with International Financial Reporting Standards (IFRS) (CZK m)	31 March 2002	31 Dec 2001
Assets	231,531	229,027
Fixed assets	215,097	216,306
Plant in service	180,466	180,069
Less accumulated provision for depreciation	94,728	92,431
Net plant in service	85,738	87,638
Nuclear fuel, at amortized cost	5,780	5,967
Construction work in progress	112,799	112,799
Investment in associate	5,705	5,518
Investments, net	3,984	4,110
Intangible assets, net	1,091	1,144
Current assets	16,434	12,721
Cash and cash equivalents	6,349	3,365
Receivables, net	4,501	3,933
Income tax receivable	0	0
Materials and supplies, net	2,523	2,489
Fossil fuel stock	590	657
Other current assets	2,471	2,277
Shareholders´ equity and liabilities	231,531	229,027
Shareholders´ equity	141,900	136,726
Stated capital	59,050	59,050
Retained earnings	82,850	77,676
Long-term liabilities	62,981	64,477
Long-term debt, net of amount due within one year	41,352	43,081
Accumulated provision for nuclear decommissioning and fuel storage	21,629	21,396
Deferred income taxes, net	10,130	9,870
Current liabilities	16,520	17,954
Short-term loans	0	514
Current portion of long-term debt	5,028	5,126
Trade and other payables	7,850	8,651
Income tax payable	857	953
Accrued liabilities	2,785	2,710

Consolidated Statement of Shareholders´ Equity in accordance with IFRS (CZK m)	Stated Capital	Retained Earnings	Total Equity
31 December, 2000, as previously reported	59,209	70,233	129,442
Net Income for period 1-3/2001		4,741	4,741
31 March, 2001	59,209	74,974	134,183
Effect of adopting IAS 39		-496	-496
Acquisition of treasury shares	-159		-159
Dividends declared		-1,184	-1,184
Net Income for period 4-12/2001		4,382	4,382
31 December, 2001	59,050	77,676	136,726
Net Income for period 1-3/2002		5,174	5,174
31 March, 2002	59,050	82,850	141,900

Capacity, Employees	31 March 2002	31 Dec 2001
ČEZ Installed capacity (MW)	10,146	10,146
Number of employees (pers)	7,462	7,552
Specific number of employees (pers/MW)	0.735	0.744

This report has not been audited.