All major energy corporations in Europe have over the past few years been creating adjustments to long-term energy assets. Between 2010 and June 2013, each of the companies of RWE, Enel, Vattenfall and E.On created temporary adjustments or wrote off goodwill at CZK 90 to 200 bn, i.e., 3 to 15% of their fixed assets. In the case of ČEZ, including the expected figures for H2 2013, the total adjustments account for 2.5% of the CEZ Group’s fixed assets.  “The expected all-year financial results of ČEZ reflect the current situation in the European energy sector. The fact that this crisis has impacted on our performance later and less severely than on our European rivals is a sign of our successful strategy of forward-selling electricity for years ahead and our emphasis on internal cost reductions. We have been one of a few energy corporations that have been able to maintain a reasonable level of debt, which is evidenced by our stable rating by Standard & Poor’s. Our company is one of the few European energy firms that has been able to maintain its historically highest rating of A-,” says Daniel Beneš, Chairman of the Board of Directors and CEO.

“With the purpose of finding possible solutions of the present-day crisis in the European energy sector, we are the only company from Central and Eastern Europe that has joined an initiative of the top energy firms, which jointly attempt at stirring up a discussion among producers, investors and political officials of Member States and the European Union as such. The fact that the otherwise major rivals have united in a common effort poses sufficient evidence of how serious the situation is, and we just do not want to watch idly,” Daniel Beneš added. The purpose of the initiative is to propose such measures that would ensure reliable supply  of power and gas, ensure stability and clear rules for all market players and, more importantly, ensure that the energy sector is based on free competition and not on stimulating the construction of specific types of energy sources.

In view of the energy sector developments, the CEZ Group has also updated its strategy. After successfully fulfilling its “Secure Fuels” initiative and the objectives of the “Performance” initiative, the strategy for the following period has been specified in the form of seven strategic programs. The “New Nuclear Sources” program aims at ensuring the financial feasibility of building Units 3 and 4 of the Temelín Nuclear Power Plant, whereas the “Long-Term Operation of the Dukovany Nuclear Power Plant” program focuses on maintaining the existing units in operation at least until 2025. In respect of our foreign assets, the “Asset Consolidation” program aims at maximizing the cash flow into ČEZ. We also continue with our “Renewable Sources” program, which aims at optimizing our existing portfolio and developing attractive projects. At the same time, we look for new business opportunities outside the classic power generation and distribution business, focusing on the end customer. For this reason, we have introduced the “New Energy Sector” program, which follows up on our former “Regional Energy Sector” strategic initiative. In this respect, we have also founded ČEZ Nová energetika (ČEZ New Energy), a subsidiary that is supposed to serve as an incubator for our new activities. Our ongoing effort to improve our internal efficiency is carried out under the “Performance and Entrepreneurship” program, which aims at encouraging entrepreneurial spirit within the company and boosting financial management while achieving additional cost reductions and systemically improving the performance and efficient work of our employees.

The “Customer Orientation” program is a major strategic pillar, the purpose of which is to improve customer experience and perception of the ČEZ brand and to use new products to capitalize on our customer portfolio. As an example of how actively this program is implemented, we can mention ČEZ’ entry in the mobile telephony business. Since October 15, 2013, more than 13,000 clients have opted for a product from “Mobile by ČEZ”. ČEZ was also very early in offering its customers a significant and instant reduction of their electricity bills by up to 20% if the customers agree to have their prices fixed until 2015. Nearly 280,000 customers have made use of this offer. We have also seen a rise in the number of our clients who take gas from us, with the number of points of consumption exceeding 310,000.

Table: CEZ Group's financial results for Q1-Q3 2013

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