CEZ's Consolidated Quarterly Report on Operational, Economic and Financial Results for 1st Three Quarters 2002, in accordance with IFRS
Main Features
- Electricity sales increased by 2.6% in comparison with the same period last year; the decrease in domestic sales (by 5.9%) was compensated by an increase in electricity exports (by 28.4%)
- Electricity demand in the Czech Republic lowered year on year (by 0.5%) from 39.1 TWh to 38.9 TWh
- The reduction in ČEZ?s electricity market share, as expected, was caused by the opening-up of the domestic electricity market, sinking demand, and the encouragement of cogeneration capacities
- Income before income taxes fell from CZK 11.0 bn to CZK 9.3 bn (by 14.9%) and net income amounted to CZK 6.5 bn, a decrease of CZK 2.4 bn (by 27.0%)
- Year-on-year operating revenues/electricity sales decreased by CZK 1.1 bn (2.7%); operating expenses increased by CZK 1.6 bn (5.4%) due to higher depreciation
- The power generated by the first unit of Temelín Nuclear Power Station in the period from January to September 2002 was 4.2 TWh
- The second unit of Temelín Nuclear Power Station is in outage in order to allow the replacement of a generator rotor
- From January to September 2002 the specific number of employees to installed capacity decreased by 12.2% due to an increase in installed capacity and a reduction in the number of ČEZ employees by 266 (by 3.5%)
- All the agreements for the sale of a majority stake (66%) in ČEZ?s subsidiary company ČEPS and for the acquisition of the National Property Fund?s stakes in regional distribution companies have been signed. ČEZ has applied to the Antitrust Office for approval of this transaction
- Material damage suffered by ČEZ because of the floods is estimated at more than CZK 800 m; hydro power plants on the Vltava river and the brown-coal-fired power plant in Mělník were hit hardest
- ČEZ established the Rainbow Power Foundation
Prague, 30 October 2002
| ncome Statement in Accordance with International Financial Reporting Standards | 30 Sep. 2002 | 30 Sep. 2001 | Index 02/01 | |
|---|---|---|---|---|
| CZK m | EUR m | CZK m | ||
| Operating revenues | 40,414 | 1,334 | 41,522 | 97.3% |
| Operating expenses | 31,566 | 1,042 | 29,935 | 105.4% |
| Fuel | 9,387 | 310 | 9,965 | 94.2% |
| Purchased power and related services | 5,296 | 175 | 4,451 | 119.0% |
| Depreciation and amortization | 8,088 | 267 | 6,962 | 116.2% |
| Operating income | 8,848 | 292 | 11,587 | 76.4% |
| Other expenses (income) | -472 | -16 | 632 | x |
| Income before income taxes | 9,320 | 308 | 10,955 | 85.1% |
| Income taxes | 2,795 | 92 | 2,016 | 138.6% |
| Net income | 6,525 | 215 | 8,939 | 73.0% |
| Unit | 30 Sep. 2002 | 30 Sep. 2001 | Index 02/01 | |
| Earnings per share (EPS) | CZK | 11.0 | 15.1 | 73.2% |
| Price/earnings ratio (P/E) */ | 1 | 8.3 | 3.3 | 249.0% |
| Return on equity (ROE) net */ | % | 4.8 | 8.0 | 60.0% |
| Return on total assets (ROA) net */ | % | 3.0 | 4.8 | 61.5% |
| Assets turnover */ | 1 | 0.24 | 0.26 | 95.6% |
| Total indebtedness (provisions excluded) | % | 26.6 | 28.6 | 93.1% |
| Long-term indebtedness | % | 16.2 | 20.3 | 79.7% |
| */ For the last 12 months | ||||
This report has not been audited.
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 period January to September 2002 amounted to CZK 6.5 bn, a decrease of CZK 2.4 bn (27.0%) in comparison with the same period of 2001. While EBIT was lower by CZK 2.7 bn, EBT decreased by CZK 1.6 bn. ČEZ?s turnover was CZK 40.4 bn in total, only CZK 1.1 bn (2.7%) lower than in the same period of 2001 due to lower electricity sales (prices of electricity). Operating expenses increased by CZK 1.6 bn (5.4%), mainly due to an increase in depreciation and amortization by CZK 1.1 bn as the first unit of Temelín Nuclear Power Station was put into commercial operation, and purchased power and related services were up by CZK 0.8 bn. Other income amounted to CZK 0.5 bn, an improvement of CZK 1.1 bn on the other expenses of CZK 0.6 bn reported in the year previous. This result was due to exchange rate changes in the CZK. Income tax (CZK 2.8 bn) increased by CZK 0.8 bn.
Earnings per share went down from CZK 15.1 to CZK 11.0 due to a decrease in profits. The price/earnings ratio increased from 3.3 to 8.3 due to a rise in share prices by 57.6% and a decrease in net profit for the last 12 months of 36.9%. The net return on equity decreased from 8.0% to 4.8% due to a fall in profits (for the last 12 months) and an increase in the average equity. The net return on total assets decreased (from 4.8% to 3.0%) as a result of a fall in profits (for the last 12 months) and an increase in the average value of total assets (by 2.7%). Assets turnover decreased to 0.24 . Total indebtedness (provisions excluded) decreased to 26.6%; long-term indebtedness also fell to 16.2%.
The specific number of employees to installed capacity decreased in the period from January to September 2002 to 0.654 (by 12.2%) due to an increase in installed capacity (by 1,000 MW) and a reduction in ČEZ staff numbers by 266 (3.5%) to 7,286. The year-on-year decrease was 440 employees.
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, ČEPS (in order to cover transmission system losses), new licensed traders, and eligible customers. Other daily sales, settlements of balancing deviation and power for the activation of auxiliary services by the market operator are made.
Demand for electricity in the Czech Republic, amounting to 38.9 TWh, was down 210 GWh (by 0.5%) compared with the same period of 2001. ČEZ power plants met 57.2% of the demand for electricity on the Czech market, compared with 59.3% in the same period of the previous year and ČEZ?s share in meeting demand for electricity (incl. power repurchased from the Czech Republic and abroad) went down from 65.7% to 63.2%.
The total electricity sales, of 38.5 TWh, increased 990 GWh (2.6%) year on year; the decrease in domestic sales of 1,673 GWh (5.9%) was compensated by an increase in electricity exports by 2,663 GWh (28.4%). Revenues from sales of electricity (CZK 37.8 bn) decreased CZK 1.2 bn (3.0%), in part due to ČEZ?s competitively revised Rainbow Power prices.
Investment Programme
In total, capital investments amounted to CZK 6.3 bn, i.e. a decrease of CZK 4.5 bn (41.7%) in comparison with the same period of the year previous.
The first unit of Temelín Nuclear Power Station was put into commercial operation in June. It has generated 4.2 TWh of electricity since January, 2 TWh of which was generated in the 3rd quarter (i.e. a load factor at a level of 91.2% in this quarter). Outage is planned for the end of the year in order to secure maximum utilization in January 2003, when the demand for electricity will culminate.
Nuclear fuel was loaded into the second unit of Temelín Nuclear Power Station in March and the first fission reaction was initiated in May. Tests prior to commercial operation were started by late May, with a nominal output of 30% as of June, but they had to be stopped in July because of a fault in a generator rotor. Following the replacement of the rotor, the unit achieved criticality in mid-August. A nominal output of 29% was reached, but then the defect surfaced again. The rotor will be replaced by early November 2002 and all tests should be completed during March 2003.
Financing
Net cash provided by operating activities decreased to CZK 3.4 bn (by 22.2%). Only CZK 5.5 bn was spent on investments (CZK 5.2 bn lower than in the first nine months of 2001). The total cash provided by financing activities decreased by CZK 0.9 bn, which can be attributed to changes in the exchange rate of the CZK. Payments of dividends started in August; total dividends payable amount to CZK 1.5 bn (CZK 2.5 gross per share).
| Moody's: | "Baa1" with a stable outlook |
| Standard & Poor´s: | "BBB+" with a stable outlook |
Other information
According to the government decision to modify the structure of the power sector and a decision made by ČEZ shareholders in June, a Share Purchase Agreement with the National Property Fund of the Czech Republic (NPF) to acquire a majority in five and a minority in three regional distribution companies was signed on 28 July 2002, along with a Share Sale Agreement with OSINEK to sell 51% of shares in ČEPS. The Share Sale Agreement with the Ministry of Labour and Social Affairs of the CzechRepublic to sell 15% of shares in ČEPS was signed on 19 August 2002. ČEZ has signed a Share Purchase Agreement with Czech Consolidation Agency to acquire 2% of Západočeská energetika. The finalization of this transactionis now subject to a decision by theAntitrust Office of the CzechRepublic, where negotiations are currently in progress. The approval of ČEZ's creditor banks is also necessary; negotiations are under way here too. In accordance with the concluded agreements, a new appraisal of ČEPS will be executed by the DARA expert institution, which has been appointed by a court. This appraisal will be based on an audit carried out by EY Audit Česká republika.
The operation of some brown-coal-fired and hydro power plants was negatively affected by floods in August. In the early morning on 13 August, part of the premises of Prunéřov power plant was flooded. Owing to flooding, operations at the hydro power plants Kořensko, Orlík, Štěchovice, Kamýk, and Vrané were stopped on 14 August;on the same day the power plant in Mělník was taken out of service as a precautionary measure, and was subsequently flooded the next day. 
The hydro-power plants on the river Vltava were put out of action, except for Lipno 1 and Slapy power plants, which meant that only 260 MW instead of the regular installed capacity 765 MW could be used. ČEZ has strenuously denied rumours that it helped to compound the adverse consequences of the flood, citing the fact that responsibility for water-flow management had been transferred, in accordance with operating regulations, to the state-owned company Povodí Vltavy one week before the flood (on 7 August). Temelín Nuclear Power Plant was not affected by the floods as it is situated on a hill.
The Rainbow Power Foundation was established in July. The foundation will be a new tool for ČEZ to promote charity, the arts, health care, education, science, and professional and amateur sport.
ČEZ started selling its electricity for 2003 in the third quarter of 2002. In all, 75% of all planned electricity on offer has been sold, of which more than 90% is intended for the domestic market.
Operating revenues
| Operating revenues | 40 414 | 41 522 |
|---|---|---|
| Sales of electricity | 37 761 | 38 913 |
| Heat sales and other revenues | 2 653 | 2 609 |
| Operating expenses | 31 566 | 29 935 |
| Fuel | 9 387 | 9 965 |
| Purchased power and related services | 5 296 | 4 451 |
| Repairs and maintenance | 2 258 | 2 236 |
| Depreciation and amortization | 8 088 | 6 962 |
| Salaries and wages | 2 838 | 2 895 |
| Materials and supplies | 1 279 | 1 304 |
| Other operating expenses | 2 420 | 2 122 |
| Income before other expenses/income and income tax | 8 848 | 11 587 |
| Other expenses/income | -472 | 632 |
| Interest income | -110 | -154 |
| Interest on debt, net of capitalized interest | 387 | 643 |
| Interest on nuclear provisions | 1 142 | 1 097 |
| Foreign exchange rate losses (gains) | -3 359 | -480 |
| Other expenses/income, net | 1 856 | 39 |
| Income from associate | -388 | -513 |
| Income before income taxes | 9 320 | 10 955 |
| Income taxes | 2 795 | 2 016 |
| Net income | 6 525 | 8 939 |
| Cash Flow in Accordance with International | 30 Sept | 30 Sept |
| Financial Reporting Standards (IFRS) (CZK m) | 2002 | 2001 |
| Cash and cash equivalents at beginning of period | 3 365 | 3 219 |
| Operating activities: | 11 736 | 15 090 |
| - Income before income taxes | 9 320 | 10 955 |
| - Depreciation and amortization and asset write-offs | 8 109 | 7 045 |
| - Amortization of nuclear fuel | 1 533 | 1 161 |
| - Foreign exchange loss (gain) | -3 359 | -480 |
| - Provision for nuclear decommissioning and fuel storage | 608 | 497 |
| - Changes in assets and liabilities | -599 | -1 681 |
| Investing activities | -5 466 | -10 664 |
| Financing activities | -3 819 | -4 742 |
| Net effect of currency translation in cash | -263 | -86 |
| Cash and cash equivalents at end of period | 5 553 | 2 817 |
| 30 Sept | 30 Sept | |
| 2002 | 2001 | |
| Electricity supply from ČEZ power plants - net (GWh) | 36 693 | 35 539 |
| Electricity sold by ČEZ in the Czech Republic (GWh) | 26 480 | 28 153 |
| - Electricity sold by ČEZ to REAS* (GWh) | 23 048 | 27 022 |
| - Price of electricity sold to REAS* (CZK/MWh) | 864 | 934 |
| ČEZ´s electricity exports (GWh) | 12 026 | 9 363 |
| ČEZ´s electricity imports (GWh) | 415 | 454 |
| Capacity, Employees | 30 Sept | 31 Dec |
| 2002 | 2001 | |
| ČEZ Installed capacity (MW) | 11 146 | 10 146 |
| Number of employees (pers) | 7 286 | 7 552 |
| Specific number of employees (pers/MW) | 0,654 | 0,744 |
This report has not been audited.
Balance Sheet
| Balance Sheet in Accordance withInternational | 30 Sept | 31 Dec | |
|---|---|---|---|
| Financial Reporting Standards (IFRS) (CZK m) | 2002 | 2001 | |
| Assets | 228 215 | 229 027 | |
| Fixed assets | 213 785 | 216 306 | |
| Plant in service | 238 285 | 180 069 | |
| Less accumulated provision for depreciation | 99 907 | 92 431 | |
| Net plant in service | 138 378 | 87 638 | |
| Nuclear fuel, at amortized cost | 7 904 | 5 967 | |
| Construction work in progress | 56 671 | 111 929 | |
| Investment in associate | 5 772 | 5 518 | |
| Investments, net | 3 941 | 4 110 | |
| Intangible assets, net | 1 119 | 1 144 | |
| Current assets | 14 430 | 12 721 | |
| Cash and cash equivalents | 5 553 | 3 365 | |
| Receivables, net | 3 222 | 3 933 | |
| Income tax receivable | 73 | ||
| Materials and supplies, net | 2 533 | 2 489 | |
| Fossil fuel stock | 579 | 657 | |
| Other current assets | 2 470 | 2 277 | |
| Shareholders´ equity and liabilities | 228 215 | 229 027 | |
| Shareholders´ equity | 141 783 | 136 726 | |
| Stated capital | 59 062 | 59 050 | |
| Retained earnings | 82 721 | 77 676 | |
| Long-term liabilities | 59 860 | 64 477 | |
| Long-term debt, net of current portion | 36 887 | 43 081 | |
| Accumulated provision for nuclear | |||
| decommissioning and fuel storage | 22 973 | 21 396 | |
| Deferred income taxes, net | 10 361 | 9 870 | |
| Current liabilities | 16 211 | 17 954 | |
| Short-term loans | 1 700 | 514 | |
| Current portion of long-term debt | 4 293 | 5 126 | |
| Trade and other payables | 7 547 | 8 651 | |
| Income tax payable | 953 | ||
| Accrued liabilities | 2 671 | 2 710 | |
| Consolidated Statement of Shareholders´ Equity | Stated | Retained | Total |
| in accordance with IFRS (CZK m) | Capital | Earnings | Equity |
| 31 December 2002, as previously reported | 59 209 | 70 233 | 129 442 |
| Net Income for period 1-9/2001 | 8 939 | 8 939 | |
| Dividends declared | -1 184 | -1 184 | |
| 30 September 2001 | 59 209 | 77 988 | 137 197 |
| Effect of adopting IAS 39 | -496 | -496 | |
| Acquisition of treasury shares | -159 | -159 | |
| Net Income for period 10-12/2001 | 184 | 184 | |
| 31 December 2001 | 59 050 | 77 676 | 136 726 |
| Additional paid-in capital | 12 | 12 | |
| Net Income for period 1-9/2002 | 6 525 | 6 525 | |
| Dividends declared | -1 480 | -1 480 | |
| 30 September 2002 | 59 062 | 82 721 | 141 783 |
This report has not been audited.