Economic results of the CEZ Power Company for the first half of 2002

The profit generated by EEZ increased by 56 per cent and reached the amount of 7.2 billion CZK

In the first half of this year, the EEZ Power Company generated a net profit of 7.2 billion CZK, which translates into an increase by 2.6 billion CZK, i.e. by 56%, in comparison with the same period last year. The expected downturn in takings for sold electricity, caused by the full opening of the market (which is especially painful for EEZ because the other producers abundantly benefit from the advantages of regulated prices of compulsory electricity purchase) was more than compensated by growing financial revenues. This trend is a continuation of the first quarter of this year, during which the company's profit increased by 55 per cent.

We managed to overcome the difficulties related to the uneven opening of the market with electricity at the beginning of this year. We expected the revenues for electricity to shrink, mainly as a result of the reduced prices of electricity that we began to offer to our customers in the framework of the Rainbow Electricity commercial programme. The operational performance was also influenced by the launch of the first block of Temelin Nuclear Power Plant, which was put into trial operation at the end of the term. The overall results were then very positively influenced by appreciating Czech crown, and partly also by unrepeatable methodological modifications of Czech accounting standards, to make them compatible with current international standards. Strong Czech crown was the essential driving force fuelling the growth of EEZ revenues by 6.4 billion CZK and a perceptible increase of the company's profit in the first half of the year said Mr Petr Vobooil, the company Chief Executive for Finances and Administration.

The total volume of sold electricity remained almost unchanged in comparison with last year (an index of 99 %). However, the takings from sold electricity, including back-up services, decreased for a number of reasons. Partly due to the more cost-effective range of products offered within the Rainbow Energy scheme, taking into account the fact that the first block of the Temelin was not put into trial operation until the beginning of June, when the takings from electricity produced before this date (amounting to 1.4 billion CZK) were drawn from the profit and loss account and transferred incorporated into the investment budget of the construction. The volume of electricity sold in the Czech market dropped by 6.4 % and the export of electricity, on the other hand, increased by 14.4 %. A positive trend perceptible on the domestic market is the fact that the volume of electricity sold directly to the purchasing entities, not through distribution companies, increased by more than 700 %. Czech consumers of EEZ electricity now include not only distributors, but also dealers and authorised customers.

Total costs, minus the income tax, amounted to 25.2 billion CZK, which is identical with the last year. Operation costs were reduced by 0.6 billion CZK, especially due to decreased expenditure on traditional fuel, resulting from the phasedout production of coal-fired power plants. The number of staff was downsized by 619, in comparison with last year, so the company now employs 7 376 people. This resulted in reducing the personnel costs of EEZ by 5 per cent. In the remaining part of the year the results of the year will not be supported by the methodological change and it is highly improbable that the crown will further appreciate. We believe that thanks to the products of our commercial programme we will be able to rely on improved operational performance, indicated by the trend of the second quarter.

We have to comment on the freshly publicised statement of the Chairman of the Energy Regulation Authority, Mr Brychta, quoted in the Monday issue of the magazine EURO. His opinion that our prices for the domestic market did not decrease, and the prices which Mr Brychta mentioned (from 930 to 940 CZK/MWh of power electricity) are in sharp contrast with the following facts:

the average price of power electricity generated by EEZ for REAS amounted to 879 CZK/MWh in the first half of this year, compared to 951 CZK/MWh in the same period of 2001,

the Regulation Authority reduced the price of systemic services paid by end customers in addition to every consumed MWh by 169 CZK/MWh to 157.90 CZK/MWh, in comparison with the last year (EEZ is competing for a share in the coverage of these services on an independent market with back-up services, and the size of its share does not really matter),

the Regulation Authority increased the price for transmission to such an extent that the price of one transmitted MWh in the first half of this year amounted to 87 CZK/MWh, compared to 77 CZK/MWh in the first half of the last year.

This means that the average price decreased by 73 CZK/MWh, i.e. by 6.1 %. These average values may differ in relation to which distributor used our price offer and to what extent he preferred the offers of our competitors. This is fully within the competence of their shareholders.

It is surprising that the Chairman of Energy Regulation Authority publicises such misleading information, when his office has access to all the relevant data. Once the interconnection with the distribution companies has been established, EEZ is prepared to let even the households benefit from the reduced prices. The Rainbow Electricity programme creates necessary space for this to take effect.

	(mil. CZK)	compared to last year
Total revenues	34 049	+ 10,2 %
Total costs	25 222	+ 0,0 %
Gross profit before taxation	8 827	+ 54,9 %
Net profit after taxation	7 223	+ 55,9 %

For more details please see the Web Page: http://193.86.119.25/cze/firma/akcionari/hospodareni

Ladislav Kriz, CEZ Press Officer.

31. 7. 2002