Foreign Equity Shares

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CEZ, a. s., is continuing towards the accomplishment of its plan to become number one on power markets in Central and South-Eastern Europe.

We are succesful within European energetics

The vision of CEZ Group is to become the leader on power markets in Central and South-Eastern Europe. Acquisitions of majority shares in three Bulgarian distribution companies, so called western group - Elektrorazpredelenie Stolichno AD, Elektrorazpredelenie Sofia Oblast AD and Elektrorazpredelenie Pleven AD, further the acquisition of the Bulgarian power plant Varna and success in the tender for the Romanian distribution company Electrica Oltenia have all contributed to the fulfillment of the vision. The market that CEZ Group regards as the strategic one in Central Europe is the neighbouring Poland, whose power industry has been a good partner of the Czech energetics for many years. In Poland, CEZ Group has bought majority shares in the upper Selsian power companies Elektrociepłownia Chorzów "ELCHO" Sp. z o.o. and Elektrownia Skawina S. A.

On top of that, CEZ Group is seeking opportunities in the regions to valorize its assets and consequently the property of shareholders of individual companies within CEZ Group, and to keep its competitive strength and long-term prosperity for all its members.

 

CEZ Group in Bulgaria

The acquisition in the value of several billion Czech crowns allowed ČEZ Group to take over 67 % share in three Bulgarian distribution companies - Electricity Distribution Company Sofia Oblast AD, Electricity Distribution Company Pleven AD and Electricity Distribution Company Stolichno AD from the Bulgarian state in 2005. This transaction resulted in the increase of ČEZ Group customers by 1.9 million. The total amount of electricity supplied by these three distribution companies to their customers per year is 8 TWh. In the area of 39 000 km2 the group supplies electric energy to more than 200 thousand companies and more than 1.7 million households. The companies have more than 3.7 thousand employees.
On2 November 2007 the merger of three Bulgarian distribution companies was registered in the Companies Register. As per that date Electricity Distribution Company Sofia Oblast AD and Electricity Distribution Company Pleven AD ceased to exist without liquidation and their overall property was transferred to their legal successor which is Electricity Distribution Company Stolichno AD. On 6 December 2007 the general meeting of the company decided on the change of the company name to CEZ Razpredelenie Bulgaria AD. The change was registered on 29 January 2008.


CEZ Razpredelenie Bulgaria AD

Strategic business targets include improvement of economic effectiveness, reliability of power supply and enhancement of competitive strength. Within the scope of its activities, it particularly attends to the measures securing reliable electric power supply through quality maintenance and advancement of the technical condition of the electric distribution network, necessary maintenance of installations and equipment, and development of the distribution network in accordance with the prognosis of economic development of the state and the presumed changes in electricity consumption in the region. The company intends to develop distribution networks in conformity with the development of the capital city and the other regions, and to increase quality of supplies of electricity and services according to the requirements of European standards. The investment program is focused on improvement of quality of electric power supply, reduction of technical and business losses and reduction of repair time. It also analyses services provided to customers, uses modern communication tools and attempts to maintain as high standard of services as possible. CEZ RazpredelenieBulgariaAD has approximately 3.7 thousand employees in total.

Further information is available at www.cez-rp.bg.

CEZ Bulgaria EAD

CEZ Bulgaria EAD was established in the middle of 2005 in order to represent ČEZ Group on the Bulgarian power market. The major activities of CEZ Bulgaria EAD are focused particularly on support of activities of ČEZ Group in Bulgaria. The main precondition of successful operation of ČEZ Group inBulgariais mutual cooperation and confidence of Bulgarian and Czech managers.

Quality of services is vital for the companies owned by ČEZ Group since customers are of a large importance in the conditions of a liberalized market. CEZ Bulgaria EAD attempts to attain the service level and quality necessary for satisfaction of customer requirements particularly in the current open market environment.

In order to allow continuous increasing in quality of its services and intensive development the company, the internal corporate policy of the international power group ČEZ focuses on development of its labour force potential. This policy is applied purposefully also in Bulgarian companies whose employees are provided with opportunities of further improvement and professional development, including higher requirements for work quality and effectiveness.

In 2006 reorganization of the company was initiated for the purpose of separation of activities connected with power supply from power distribution. The “unbundling” process was completed in January2007 inaccordance with the requirements of European Directive 2003/54/EC.
The first stage of the company restructuring was commenced on 1 September 2006 when the activities connected with provision of services in the area of human resources management, information technologies and public relations were centralized into CEZ Bulgaria EAD, and when the management accounting and the activities of relations management became coordinated - again by CEZ Bulgaria EAD.

The second stage of restructuring was completed on 3 January 2007, when all the other services - accounting, cash operations, management accounting, customer services, logistics, property management and legal services had been centralized into CEZ Bulgaria EAD. Centralization of services provision facilitated unification of processes in former three distribution companies in Bulgariaand resulted in introduction of a single management of process procedures.

The company has been also engaged in relations with Bulgarian institutions and other entities operating on the Bulgarian power market. Another important role of CEZ Bulgaria EAD is coordination of activities of all ČEZ companies in Bulgaria: CEZ Elektro BulgariaAD, currently the single distribution company CEZ Razpredelenie BulgariaAD, TEC Varna EAD, CEZ Laboratories EOOD and CEZ Trade Bulgaria EAD.

Further information is available at www.cez.bg.

CEZ Trade Bulgaria EAD

Sale of electricity to rightful customers and trading on the wholesale market are attended to by CEZ Trade Bulgaria EAD. It has obtained a licence to perform these activities from the Bulgarian State Commission for Power Engineering and Water Management. The aim of CEZ Trade Bulgaria EAD is to strengthen the stable position on the Bulgarian electricity market and to cooperate with other entities in the area of the electricity market development.

Further information is available at www.cez.bg.

CEZ Elektro Bulgaria AD

CEZ Elektro Bulgaria AD is a trading company established on the basis of the requirements arising from the change of the Power Act and from the European regulations relating to the accession of Bulgaria to the European Union (particularly Directive 2003/54/EC). The company was incorporated on 29 August 2006 with the capital amounting to 50,000 BGN. ČEZ a.s. owns 67 % of capital of CEZ Elektro BulgariaAD. The company possesses a licence for public electricity supply, granted by the Bulgarian regulatory body.

After completion of the “unbundling” when the company took over supply activities from respective distribution companies, CEZ Elektro Bulgaria AD pursues its activities in the territory of former three distribution companies owned by ČEZ – current CEZ Razpredelenie Bulgaria AD. CEZ Elektro BulgariaAD performs all the activities relating to purchase, sale and customer services.
For the sake of effective functioning and provision of quality services for its customers, CEZ Elektro BulgariaAD focuses particularly on accumulation of qualified and experienced human resources, and achievement of long-term positive financial results and economic activity. In 2007 the company initiated the process of introduction of non-cash payment for electric energy.

Further information is available at www.cez.bg.

CEZ Laboratories Bulgaria EOOD

The company was established and registered in July 2007 and has its registered office in Sofia. The subject of enterprise of the company is inspection of electrometers and switching devices, and maintenance of electrometers and tariff changeover switches.

The company was established by reason of the unbundling since it was necessary to separate the activities relating to electrometers from the distribution activity (distribution companies) and purchase of electrometers (CEZ Bulgaria EAD).

Further information is available at www.cez.bg.

Varna power plant - TEC Varna

At the beginning of October 2006 ČEZ completed acquisition of the Bulgarian black coal-fired power plant Varna
Varna power plant is situated in the north-eastern Bulgaria close to the Black Sea port having the same name so that its position constitutes a comparatively significant logistic advantage. Having the installed capacity of 1 260 MW (6 x 210 MW), it is the largest conventional power plant of ČEZ Group, which put Prunéřov II. power plant (5 x 210 MW) located in northern Bohemia, which was until then the largest resource, to the second place. Combusting imported black coal, Varnagenerated 3.73 TWh of electric energy in 2007.

Further information is available at www.cez.bg/varna.

 

Romania and CEZ Group

Romania Energy sector

In the fourth quarter of 2005, the privatization of the distribution company Electrica Muntenia Sud S.A. supplying electricity to the capital of Bucharest and the adjacent districts started. CEZ, a. s., became a qualified party interested in a 67.5 % share, the tender was finally won by other bidder though. The anticipated privatization of three remaining distribution companies, Electrica Muntenia Nord S.A., Electrica Transylvania Sud S.A. and Electrica Transylvania Nord S.A., with a total of 3.3 million customers did not start in 2006. The same is true for the privatization of the fuel-energy complexes Turceni, Rovinari and Craiova with the total installed capacity of 4,240 MW. The Romanian legislation postulates a separation of regulated activity from distribution from June 30, 2007.

CEZ Group Members in Romaina

The distribution company Electrica Oltenia S.A.  operated in Romania in 2006. On March 15, 2007, a selling company, CEZ Vanzare S.A., was detached (by the method similar to separation of companies defined by the Czech Commercial Code). The original company  Electrica Oltenia S.A. is now engaged only in electrical energy distribution. Its name has been changed to CEZ Distributie S.A.and its authorized capital and the nominal amount of shares have been reduced.

Another company which operates in the country is CEZ Romania S.R.L., which has the primary goal to provide maintenance and management services for CEZ Group members and which supports the acquisitions team in other prospective acquisitions. Until the independent company CEZ Trade was established in March 2007, Romania S.R.L. had also been engaged in electrical energy trading under the gained lincence. The year 2006 was the first year of its full operation. A partial centralization of shared services, which will be provided by CEZ Servicii S.A. and other companies within CEZ Group in Romania, namely within the scope negotiated by the minority shareholder of Electrica Oltenia S.A., Electrica S.A, is being prepared.

Further information is available at www.cez.ro.

 

CEZ Group´s Polish acquisitions

In Poland, CEZ Group operates through its trade agency CEZ Polsko based in Warsaw. The mission of the agency is to support acquisition processes and power trade in Poland.

CEZ Group confirmed its serious interest in the Polish power sector by its successful participation in the tender for a purchase of majority shares in the upper Selsian power companies Elektrociepłownia Chorzów “Elcho“ Sp. z o. o. and Elektrownia Skawina S. A.  CEZ Group ownes about a 75 % share in Skawina and Elcho through CEZ Silesia B. V. and CEZ Poland Distribution B. V.  This acquisition helped CEZ Power Group strengthen significantly its position in the area of its bituminous coal portfolio. In total, CEZ Group operates in Selsia 1,593 MW of installed electrical capacity. The generating capacity of the Skawina bituminous coal-fired plant,  including a little hydro-power plant in its territory, is 492 MW. Elcho produces combined electricity and heat in two modern units with the total generating capacity of 238 MW.

Additional information is available on the following websites:

 

Further foreign capital participations of the ČEZ Group

The Slovak Republic

In Slovakia the 100 % subsidiary of ČEZ, a. s. named ČEZ Slovensko, s.r.o. with the registered office in Bratislava was established in June 2007. Its objective is active participation in electricity trading. This company replaced the organizational unit of ČEZ, a. s.

The official pages of ČEZ Slovensko are available at www.cez.sk.

The Republic of Hungary

The objective of the acquisition of the Hungarian company CZ-2005 Magyarország Kft., whose trade name was later changed by ČEZ to CEZ Hungary Ltd., is to create better conditions for electricity trading in Hungary and to arrange an access to the Hungarian transmission system. Since March 2006 CEZ Hungary Ltd. has a valid license for electricity trading and has been participating in electricity trading on the Hungarian market on an active basis.

The Kingdom of the Netherlands

ČEZ, a. s. has six full-owned companies registered in the Netherlands. Through CEZ Finance B.V. established in 1994, ČEZ,
a .s. issued its foreign bonds before accession of the Czech Republic to the European Union. In December 2007 Transenergo International N.V. and CEZ MH B.V were incorporated. The other three companies – CEZ Silesia B.V., CEZ Chorzow B.V. and CEZ Poland Distribution B.V. – were acquired by ČEZ, a. s. in relation with the acquisition of shares in the Polish power engineering companies Elektrocieplownia Chorzow “ELCHO“ Sp. z o.o. and Elektrownia Skawina S.A. ČEZ, a. s. has taken over the model of ownership of the Polish power plants through these companies from the seller.

Kosovo

In July 2006 New Kosovo Energy L.L.C. was established in Kosovo. The main objective of the company is to create favorable conditions for acquisition activities to be performed by the ČEZ Group. In October 2006 ČEZ, a. s. obtained a license for electricity trading in Kosovo.

Serbia

Since 2006 ČEZ Srbija DOO has been operating in the Republic of Serbia, focusing particularly on search for acquisition opportunities. It has also obtained a license for electricity trading in Serbia.

The Russian Federation

In order to secure and implement investment activities in theRussian Federation, on 15 February 2006 ČEZ, a. s. purchased the 100 % business share in the company ZAO “TransEnergo”. On 6 February 2008 CEZ RUS OOO with the registered office inMoscow was incorporated in the Companies Register.

Bosnia and Herzegovina

On 22 December 2006 the joint venture NERS d.o.o., Gacko with the local partner Mješoviti Holding “Elektroprivreda” Republike Srpske Trebinje-Matićno preduzeće akcionarsko društvo Trebinje was incorporated. Its purpose is a transfer to the ownership and subsequent operation of the power plant Gacko I (300 MW) including the adjacent mine and further assets (such as the lime pit Ponikva), and construction of the new power plant Gacko II in the same area.

The Ukraine

In December 2006 ČEZ Ukraine CJSC with the 100 % share of ČEZ, a .s. was incorporated in theUkraine. The company was established for the purpose of the support for the projects of ČEZ, a. s. in the Ukraine.

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