CEZ's Consolidated Quarterly Report on Operational, Economic and Financial Results for 1st Half 2002, in accordance with IFRS
Main Features
- Electricity sales decreased by 1% in comparison with the same period last year, the decrease in domestic sales (by 6.4%) was compensated by an increase in electricity exports (by 14.4%)
- Net income amounted to CZK 6.7 bn, a decrease of CZK 0.2 bn (2.9%)
- Year-on-year operating revenues decreased by CZK 2 bn (6.6%), operating and other expenses decreased by CZK 1.8 bn (8.4%)
- Year-on-year operating revenues decreased by CZK 2 bn (6.6%), operating and other expenses decreased by CZK 1.8 bn (8.4%)
- Year-on-year operating revenues decreased by CZK 2 bn (6.6%), operating and other expenses decreased by CZK 1.8 bn (8.4%)
- During the first half of 2002 the specific number of employees to installed capacity decreased by 11% due to the increase in installed capacity and a reduction in the number of ČEZ employees by 176 (2.3%)
- The 10th annual general meeting approved payments of dividends and directors’ fees, as well as the sale of a majority stake (66%) in ČEZ’s subsidiary company ČEPS and the purchase of the National Property Fund’s stakes in regional distribution companies (REAS).All necessary agreements are signed with one exception (the sale of a 15% ČEZ stake in ČEPS to the Ministry of Labour and Social Affairs) and ČEZ applied to the antitrust office for approval of this transaction
Prague, 31 July 2002
| Income Statement in Accordance with International Financial Reporting Standards | 30 June 2002 | 30 June 2001 | Index 02/01 | |
|---|---|---|---|---|
| CZK m | EUR m | CZK m | ||
| Operating revenues | 27,717 | 947 | 29,684 | 93.4% |
| Operating expenses | 20,343 | 695 | 20,284 | 100.3% |
| Fuel | 6,207 | 212 | 6,922 | 89.7% |
| Purchased power and related services | 3,812 | 130 | 3,284 | 116.1% |
| Depreciation and amortization | 5,034 | 172 | 4,651 | 108.2% |
| Operating income | 7,374 | 252 | 9,400 | 78.4% |
| Other expenses (income) | -804 | -27 | 1,040 | x |
| Income before income taxes | 8,178 | 279 | 8,360 | 97.8% |
| Income taxes | 1,466 | 50 | 1,463 | 100.2% |
| Net income | 6,712 | 229 | 6,897 | 97.3% |
| Unit | 30 June 2002 | 30 June 2001 | Index 02/01 | |
| Earnings per share (EPS) | CZK | 11.4 | 11.6 | 98.3% |
| Price/earnings ratio (P/E) */ | 1 | 5.7 | 5.9 | 96.6% |
| Return on equity (ROE) net */ | % | 6.5 | 7.0 | 92.9% |
| Return on total assets (ROA) net */ | % | 3.9 | 4.2 | 92.9% |
| Assets turnover */ | 1 | 0.24 | 0.26 | 92.3% |
| Total indebtedness (provisions excluded) | % | 27.3 | 29.7 | 91.9% |
| Long-term indebtedness | % | 16.0 | 21.1 | 75.8% |
| */ For the last 12 months | ||||
Revenues, Expenses, Income
Our Income Statements, Balance Sheets, and Cash Flow Statements have been converted from Czech Accounting Standards to International Financial Reporting Standards (IFRS) and may differ significantly from the same data prepared according to Czech Accounting Standards. The figures presented include fully consolidated data from ČEZ and ČEPS, and data from the equity earnings of an affiliated company (37.21% of the profit came from Severočeské doly).
Net income for the first half of 2002 amounted to CZK 6.7 bn, a decrease of CZK 0.2 bn (2.7%) in comparison with the same period of 2001. While EBIT was lower by CZK 2.0 bn, EBT decreased slightly by CZK 0.2 bn. ČEZ’s turnover was CZK 27.7 bn in total, CZK 2.0 bn (6.6%) lower than in the same period of 2001. Operating expenses remained at the same level. Other income amounted to CZK 0.8 bn, an improvement of CZK 1.8 bn on last year, when other expenses of CZK 1.0 bn were recorded. This resulted from changes to the exchange rate of CZK. Income taxes (CZK 1.5 bn) reached the same level in comparison with the same period of 2001.
Earnings per share went down from CZK 11.6 to CZK 11.4 due to a decrease in profits. The price/earnings ratio fell from 5.9 to 5.7 due to a year-on-year decrease in share prices (by 4.1%) and profits (by 2.1%). The net return on equity decreased from 7.0% to 6.5% because of a decrease in profits (for the last 12 months) and an increase in average equity.
The net return on total assets decreased (from 4.2% to 3.9%) as a result of the decrease in profits (for the last 12 months) and an increase in the average value of total assets (by 3.7%). Assets turnover decreased to 0.24. Total indebtedness (provisions excluded) decreased to 27.3%; long-term indebtedness also fell, to 16.0%.
The specific number of employees to installed capacity decreased in the first half of 2002 to 0.662 (by 11%) due to the increase in installed capacity (by 1,000 MW) and a reduction in ČEZ's number of employees by 176 (2.3%) to 7,376.
Sales of Electricity
On 1 January 2002 the wholesale electricity market opened up completely. ČEZ sells electricity to customers who have the right to choose their supplier, i.e. regional distribution companies, ČEPS (in order to cover transmission system losses), new licensed traders and eligible customers. The market operator carries out other daily sales, settlements of balancing deviations and regulatory work for the activation of auxiliary services.
The total electricity sales of 25.9 TWh decreased year on year by 1%; the drop in domestic sales by 1,246 GWh (6.4%) was compensated by an increase in electricity exports by 975 GWh (14.4%).
The electricity generated in the company’s fossil power stations decreased by 2,654 GWh (13.9%); in contrast, the electricity generated in the nuclear power stations increased by 2,142 GWh (31.7%) due to generation in the 1st unit of Temelín Nuclear Power Station.
Hydro-power station output increased by 237 GWh (31.7%) owing to the favourable hydrologic conditions during the spring thaw of snow.
Revenues from sales of electricity (CZK 25.6 bn) decreased by CZK 2.1 bn (7.6%), in part due to ČEZ's competitively revised Rainbow Energy prices.
Investment Programme
In total, capital investments amounted to CZK 4.0 bn; CZK 0.9 bn was spent on Temelín Nuclear Power Station.
Since mid-January 2002, the 1st unit of Temelín Nuclear Power Station has been in operation with a nominal output of 100%, with the exception of the planned revision period from mid-February to nearly the end of April. After all tests had completed the 1st unit of Temelín Nuclear Power Station was put into commercial operation on 11 June 2002. From that day it has been depreciated and ČEZ’s installed capacity increased by 1,000 MW. During the first half of 2002 the 1st unit of Temelín Nuclear Power Station supplied 2,081 GWh of electricity to the grid, of which 386 GWh came from commercial operations.
In the first half of March 2002 nuclear fuel was loaded into the second reactor of Temelín Nuclear Power Station and in May 2002 the first fission reaction was initiated. On 25 June 2002 tests at 30% of capacity were started, but on 4 July the 2nd unit was shut down due to generator failure. The 2nd unit is due to be restarted in the first half of August.
Financing
Net cash provided by operating activities decreased to CZK 9.1 bn (by 18.7%). Only CZK 3.4 bn was spent on investments (CZK 3.6 bn lower than in the first half of 2001).
Current credit rating for ČEZ: from Moody’s - 'Baa1' with a stable outlook, from Standard & Poor’s - 'BBB+' with a stable outlook
Other information
Under Decree No. 250/2002, the Czech government approved the sale of the National Property Fund's majority stakes in five and minority stakes in three regional distribution companies to ČEZ and, conversely, the sale of a majority stake (66%) in ČEPS from ČEZ to OSINEK (51%) and the Ministry of Labour and Social Affairs (15%).
On 20 May 2002 the company held an extraordinary general meeting of shareholders to approve the above-mentioned sales. In the end, these transfers were thwarted by the National Property Fund, even though this was the shareholder requesting the meeting.
The transaction was ultimately approved at the 10th general meeting of shareholders, which took place on 11 June 2002, with two conditions - an additional valuation of ČEPS stock would be made by another expert, and both transactions would be executed simultaneously. Now only the contract of sale transferring 15% of ČEZ’s stake in ČEPS to the Ministry of Labour and Social Affairs remains to be signed, some of ČEZ's credits need to be restructured, and ČEZ has applied to the antitrust office for approval of this transaction (expected during the second half 2002).
The 10th annual general meeting also approved:
- payments of dividends totalling CZK 1.5 bn (CZK 2.5 per share) and directors’ fees;
- the possibility of issuing bonds in 2002 and 2003 up to CZK 15 bn to be able to realize the above-mentioned transaction;
- personnel changes to the Supervisory Board.
On 26 June 2002, ČEZ, a.s. was awarded the internationally recognized EMS (environmental management system) certificate, which is valid for all coal and hydro power stations. They account for 8,385 MW, 75 % of ČEZ’s installed capacity.
| Income Statement in Accordance with International Financial Reporting Standards (IFRS) (CZK m) | 30 June 2002 | 30 June 2001 |
|---|---|---|
| Operating revenues | 27,717 | 29,684 |
| Sales of electricity | 25,571 | 27,674 |
| Heat sales and other revenues | 2,146 | 2,010 |
| Operating expenses | 20,343 | 20,284 |
| Fuel | 6,207 | 6,922 |
| Purchased power and related services | 3,812 | 3,284 |
| Repairs and maintenance | 1,126 | 1,187 |
| Depreciation and amortization | 5,034 | 4,651 |
| Salaries and wages | 1,927 | 2,012 |
| Materials and supplies | 817 | 871 |
| Other operating expenses | 1,420 | 1,357 |
| Income before other expenses/income and income tax | 7,374 | 9,400 |
| Other expenses/income | -804 | 1,040 |
| Interest income | -78 | -107 |
| Interest on debt, net of capitalized interest | 159 | 266 |
| Interest on nuclear provisions | 749 | 732 |
| Foreign exchange rate losses (gains) | -4,213 | 358 |
| Other expenses/income, net | 2,812 | 115 |
| Income from associate | -233 | -324 |
| Income before income taxes | 8,178 | 8,360 |
| Income taxes | 1,466 | 1,463 |
| Net income | 6,712 | 6,897 |
| Cash Flow in Accordance with International Financial Reporting Standards (IFRS) (CZK m) | 30 June 2002 | 30 June 2001 |
|---|---|---|
| Cash and cash equivalents at beginning of period | 3,365 | 3,219 |
| Operating activities: | 9,082 | 11,166 |
| - Income before income taxes | 8,178 | 8,360 |
| - Depreciation and amortization and asset write-offs | 5,052 | 4,659 |
| - Amortization of nuclear fuel | 883 | 781 |
| - Foreign exchange loss (gain) | -4,213 | 357 |
| - Provision for nuclear decommissioning and fuel storage | 411 | 371 |
| - Changes in assets and liabilities | 1,362 | -1,697 |
| Investing activities | -3,364 | -6,988 |
| Financing activities | -2,919 | -2,804 |
| Net effect of currency translation in cash | -377 | -52 |
| Cash and cash equivalents at end of period | 5,787 | 4,541 |
| 30 June 2002 | 30 June 2001 | |
|---|---|---|
| Electricity supply from ČEZ power plants - net (GWh) | 24,333 | 24,543 |
| Electricity sold by ČEZ in the Czech Republic (GWh) | 18,167 | 19,413 |
| - Electricity sold by ČEZ to REAS (GWh) | 15,793 | 19,002 |
| - Price of electricity sold to REAS (CZK/MWh) | 879 | 951 |
| ČEZ´s electricity exports (GWh) | 7,733 | 6,758 |
| ČEZ´s electricity imports (GWh) | 413 | 454 |
| Capacity, Employees | 30 June 2002 | 30 Dec 2001 |
|---|---|---|
| ČEZ Installed capacity (MW) | 11,146 | 10,146 |
| Number of employees (pers) | 7,376 | 7,552 |
| Specific number of employees (pers/MW) | 0.662 | 0.744 |
| Balance Sheet in Accordance with International Financial Reporting Standards (IFRS) (CZK m) | 30 June 2002 | 30 June 2001 |
|---|---|---|
| Assets | 228,637 | 229,027 |
| Fixed assets | 214,329 | 216,306 |
| Plant in service | 237,525 | 180,069 |
| Less accumulated provision for depreciation | 97,190 | 92,431 |
| Net plant in service | 140,335 | 87,638 |
| Nuclear fuel, at amortized cost | 7,876 | 5,967 |
| Construction work in progress | 55,469 | 111,929 |
| Investment in associate | 5,617 | 5,518 |
| Investments, net | 3,887 | 4,110 |
| Intangible assets, net | 1,145 | 1,144 |
| Current assets | 14,308 | 12,721 |
| Cash and cash equivalents | 5,787 | 3,365 |
| Receivables, net | 3,441 | 3,933 |
| Income tax receivable | 6 | |
| Materials and supplies, net | 2,598 | 2,489 |
| Fossil fuel stock | 476 | 657 |
| Other current assets | 2,000 | 2,277 |
| Shareholders´ equity and liabilities | 228,637 | 229,027 |
| Shareholders´ equity | 141,970 | 136,726 |
| Stated capital | 59,062 | 59,050 |
| Retained earnings | 82,908 | 77,676 |
| Long-term liabilities | 58,537 | 64,477 |
| Long-term debt, net amount due within one year | 36,676 | 43,081 |
| Accumulated provision for nuclear decommissioning and fuel storage | 21,861 | 21,396 |
| Deferred income taxes, net | 9,720 | 9,870 |
| Current liabilities | 18,410 | 17,954 |
| Short-term loans | 514 | |
| Current portion of long-term debt | 4,563 | 5,126 |
| Trade and other payables | 10,563 | 8,651 |
| Income tax payable | 869 | 953 |
| Accrued liabilities | 2,415 | 2,710 |
| Consolidated Statement of Shareholders´ Equity in accordance with IFRS (CZK m) | Stated Capital | Retained Earnings | Total Equity |
|---|---|---|---|
| December 31, 2000, as previously reported | 59,209 | 70,233 | 129,442 |
| Net Income for period 1-6/2001 | 6,897 | 6,897 | |
| Dividends declared | -1,184 | -1,184 | |
| June 30, 2001 | 59,209 | 75,946 | 135,155 |
| Effect of adopting IAS 39 | -496 | -496 | |
| Acquisition of treasury shares | -159 | -159 | |
| Net Income for period 7-12/2001 | 2,226 | 2,226 | |
| December 31, 2001 | 59,050 | 77,676 | 136,726 |
| Additional paid-in capital | 12 | 12 | |
| Net Income for period 1-6/2002 | 6,712 | 6,712 | |
| Dividends declared | -1,480 | -1,480 | |
| June 30, 2002 | 59,062 | 82,908 | 141,970 |