Preliminary, non consolidated and not audited indicators of business performance of the Power company CEZ, a. s., in 2000.

CEZ back on track again, forgetting results of business performance in 1999. This especially thanks to the second half of the year 2000 with a profit jump up to 5.8 CZK milliards.

Total revenue	58,753 (CZK millions)
Sales of electricity	50,298 (CZK millions)
Total expenses	50,349 (CZK millions)
Fuel	12,645 (CZK millions)
Income before income taxes	8,404 (CZK millions)
Net income	5,846 (CZK millions)

"In the second half of last year we have introduced a number of rationalization projects to achieve remarkable increase in work productivity. If seen from the viewpoint of money earnings per employee, it increase by 5 % and, from the viewpoint of electricity production, its increase even made 18 percent. It had been the radical change in the management and organization chart of CEZ that firstly brought about decrease in number of management levels and secondly diminished number of management officers. We have also undertaken measures to come back to the domestic market as well as to keep our position on the market abroad. At present we find ourselves in the midst of transformation from merely a production company to a market oriented production corporation, and I can express my delight due to the fact that, in spite of these mainly long-term oriented measures, these measures have provided effect on the very business performance of the past year," said the Board Chairman and General Manager of CEZ, Mr. Jaroslav Mil, in his introductory speech.

"In the past year CEZ achieved a preliminary income after income taxes in the amount of 5.8 CZK milliard, i.e. by 3.7 CZK milliard more (170.6 % increase) in comparison with the year 1999. But this remarkable increase was significantly influenced by inter-yearly increase of CZK exchange rate, by decrease and change of our foreign currency debt structure as well as due to the fact that the comparison basis reflected the cancellation of retrofit project in Tusimice I . In spite of this, the influence of savings applied to other expenses very high and outstanding in respect to the results," stated Mr. Petr Voboril, the Executive Director for Finance and Administration.

Electricity sales incl. supporting services decreased by 0.7 CZK milliard (by 1.4 %) and amounted to 50.3 CZK milliard. Sales to distribution companies inter-yearly dropped by 9.7 percent (by 3,923 GWh) to the level of 36,565 GWh, while another influence on the process could be found also in lower electricity purchase for further sales being compensated by decrease of expenses. We succeeded to compensate this decrease by higher electricity exports that amounted to 12,429 GWh. Heat sales amounted to 1,604 CZK million and their inter-yearly decrease made 4.4 %. The total earnings of CEZ reached 58.8 CZK milliard showing an inter-yearly decrease of 1.5 %, mainly due to lower electricity sales, less outcome from operating reserves clearing, and drop in other income and earnings. In the contrary, financial revenues increased thanks to higher clearing results from exchange rate reserves.

Total expenses made 50.3 CZK milliard with an decrease in comparison with last year of 6.4 CZK milliard (by 11.3 %). The decrease of expenses was a result of mainly lower electricity purchase for further sales by 2.1 CZK milliard, due to lower costs of repairs and maintenance by 1.1 CZK milliard as well as other operating costs lower by 1 CZK milliard. This decrease was also influenced by one-time increase of expenses connected with the cancellation of retrofit project in Tusimice I the year before, now having no impact on last year results. In the sphere of financial costs there was a drop in realized exchange rate losses by 0.3 CZK milliard, in cost-related interest by 0.5 CZK milliard and in other

"We go after the trend of company expenses lowering so that we are able to withstand the competition environment which, just in the beginning of the liberalization process of the Czech electricity market, will get fully open next year. That is the reason for us to start the process of restructuring. The company transformation process has led to division of the production track into two parts division of conventional power stations and division of nuclear power stations. Primarily, the reason was the fact that requirements for process assurance in nuclear power stations had qualitatively been higher and such expensive processes used to get realized in conventional power stations as well. The division of conventional power stations has already been set up, the division of nuclear power stations shall fully come into being after successful operation of Temelin nuclear power station," stated Jaroslav Mil.

Investments consumed by 13.5 CZK milliard less in comparison with last year. In Temelin nuclear power station last year investment cost amounted to 9.7 CZK milliard. In total the investments in Temelin nuclear power station have consumed 89.7 CZK milliard. Financing of the Company during last year experienced no problems so that CEZ in time covered all its financial duties.

"Definitely the most remarkable occurrence of the past year had been the commencement of putting in operation the Unit 1 in Temelin nuclear power station. In this Summer we should start approximately one-year test operation of the Unit. In the same manner as it has been until now, we have to count with occurrence of problems, deviations and failures in the course of tests common during such phase and, not only in nuclear power stations, you can accumulate experience from starting process," said Petr Voboril, by completing further: "From the viewpoint of financial management of CEZ last year had been a break-through period due to the fact that creation of financial sources from operation activities firstly has overlapped investment needs. Vast investment program of couple past years, that incorporated mainly renovation and cleaning of coal fired power stations along with completion of Temelin nuclear power station, soon will come to its end."

"Therefore, CEZ starts creating free financial means and begins putting down its debt rate. Along with this, we can now think about paying dividends which had not yet been done and expectations are real that, due to approved management plan, the Board Chairman will suggest dividend pay during the General Meeting in June," completed Mr. Mil.

The demand for electricity inter-yearly increased by 2.8 % to the level of 52,292 GWh and, after the change of calculation methodology, the increase made 1.4 percent. The increase of consumption came visible in industry with inter-yearly increase by 6.7 % - i.e. real increase after the precision of calculation methodology equals 4.3 percent. In the contrary, consume by retail-sale consumers dropped by 2.5 %. This decrease happened due to last year's higher average temperature as well as due to increase of electricity prices for domestic use since January 2000 by 15 percent. The share of CEZ in covering the electricity demand in the Czech Republic came down from 72.9 % to 64.9 %. By more than a third this fall is a result of the change of methodology for calculation of the total electricity demand and due to the stop of purchase of electricity from the company Elektrarny Opatovice. This decrease on domestic market could be compensated by increased exports, as already stated above.

In the end, Jaroslav Mil remarked: "The new Power Price Order from January this year in a remarkable extend abolished so far existing discrimination of CEZ on the domestic electricity market while incorporating system service fee which CEPS gets from distributors for each kWh delivered to end users. Aside of CEZ, these services provide also next five electricity producers. Now no only CEZ is no more the only provider of such services, but the main thing is that providers of services are paid for all services done, which had not been the case earlier. In this manner the Czech Republic has accomplished a great step in the field of power sector towards conditions usual in developed western marketplaces. The main priority for this year we still have the privatization of CEZ. From the viewpoint of the time table such a goal appears ambitious but surely realizable. With respect to the state controlling the selling procedure, we would like to contribute to the task. That is why we do our best in favor of a transparent and fast process, so that no grounds for potential doubts could appear among the investors. The privatization or consolidation has been an ongoing process within the whole European power sector and any delay brings about only losses."

Ladislav Krizpress, spokesman of CEZ

17. 1. 2001