"I am happy that in the first six months we were successful at facing the adverse trends in the European energy sector, and that ČEZ still maintains a relatively low level of debt, which is confirmed by the A- rating of Standard & Poor’s with a stable outlook," says Daniel Beneš, Chairman of the Board of Directors and Chief Executive Officer. In response to the developments in the European market and higher business risks, ČEZ's rivals have had to write-off assets of considerable value. "We have so far managed to cope with the new situation by cutting costs internally, although the pressure we face is great and the situation gets worse as the regulatory conditions in Southeast Europe keep changing," Beneš added.

For example, ČEZ has reduced its costs by simplifying its system of auxiliary services by merging its subsidiaries, which represents over half a billion Czech crowns in cost savings. On July 1, ČEZ Distribuční služby merged with ČEZ Měření, and ČEZ Logistika is going to follow on November 1; their joint headquarters will be in Hradec Králové. The same centralisation approach has already been implemented in the case of Corporate Services in Ostrava and Customer Care Services in Plzen. At the same time, ČEZ is going to capitalise on its large customer base and, starting in autumn this year, offer its customers cellular network services on top of its standard range of electricity and gas. "We are still looking for ways to improve the services provided to our customers, and also for business growth opportunities," says Alan Svoboda, Sales Division Director. A Uniform Control System project has been completed in the distribution sector, which has improved the management of and cooperation among regions in the territory covered by ČEZ Distribuce; for example, this will bring benefits when outages occur as a result of natural catastrophes.

In Q2 2013, the CEZ Group continued to renew its production portfolio. The construction of a combined-cycle plant in Počerady is nearly completed; boiler pressure tests have been successful at a new 660 MW unit at the Ledvice Power Plant; and the unit reconstruction at the Prunéřov Power Plant progresses as planned. In early August, ČEZ received a letter from the European Commission announcing that the Chvaletice Power Plant may be transferred to Litvínovská uhelná on September 2. That date will thus put a definite end to the European Commission's investigation of ČEZ by means of settlement, under which ČEZ agreed to divest one of its coal power plants.

At the same time, the tender continues for the construction of two new units at the Temelín Nuclear Power Plant. Detailed negotiations with both bidders were held in late July, with additional rounds to follow in September and October 2013. However, in view of the currently difficult situation in the energy sector, it does not pay off to build low-emission power plants without any form of subsidies. The regulatory and legislative conditions of such major investments first need to be defined more precisely. "We cannot make such a strategic decision without making sure it is consistent with a finally approved National Energy Strategy of the Czech Republic and without basic parameters of return on investment being defined. This means that the final decision to execute a contract with the supplier will be made at a later date than originally planned," explains Martin Novák, Vice-chairman of the Board of Directors and Chief Financial Officer.

Table: CEZ Group's financial results for H1 2013

                                                                                          (CZK bn)         Y-o-y change in %