CEZ's Consolidated Quarterly Report on Operational, Economic and Financial Results for 2001, in accordance with IFRS
Main Features
- Demand for electricity (53.8 TWh) increased by 2.8%
- ČEZ power plants' share in the electricity wholesale market increased from 57.4% to 58.9%; ČEZ's share (including repurchased electricity) increased from 64.9% to 65.6%
- Net income was CZK 9.1 bn, an increase of CZK 1.9 bn (by 26.1%)
- Maximum load reached 10,604 MW (on 13 December 2001), 4.7% (476 MW) higher than in 2000
- The number of employees decreased by 1,243 (by 14.1%)
- Operating activities exceeded investment requirements, allowing a sum of CZK 6.6 bn to be used for the reduction of the long-term debt
- Tests of the 1st unit of Temelín Nuclear Power Station up to 100% power levels in January 2002; the fuel for the 2nd reactor was loaded at the beginning of March 2002
Prague, 17 April 2002
| Income Statement in Accordance with International Financial Reporting Standards | 31 Dec 2001 | 31 Dec 2000 | Index 01/00 | |
|---|---|---|---|---|
| CZK m | EUR m | CZK m | ||
| Operating revenues | 56,597 | 1,770 | 52,692 | 107.4% |
| Operating expenses | 41,684 | 1,303 | 39,837 | 104.6% |
| Fuel | 13,220 | 413 | 12,800 | 103.3% |
| Purchased power and related services | 6,389 | 200 | 5,436 | 117.5% |
| Depreciation and amortization | 9,336 | 292 | 9,349 | 99.9% |
| Operating income | 14,913 | 466 | 12,855 | 116.0% |
| Other expenses (income) | 1,621 | 51 | 2,254 | 71.9% |
| Income before income taxes | 13,292 | 416 | 10,601 | 125.4% |
| Income taxes | 4,169 | 130 | 3,364 | 123.9% |
| Net income | 9,123 | 285 | 7,237 | 126.1% |
| Unit | 31 Dec 2001 | 31 Dec 2000 | Index 01/00 | |
| Earnings per share (EPS) | CZK | 15.5 | 12.2 | 127.0% |
| Price/earning ratio (P/E) | 1 | 5.0 | 8.3 | 60.2% |
| Return on equity (ROE) net | % | 6.9 | 5.8 | 119.0% |
| Return on total assets (ROA) net | % | 4.0 | 3.3 | 121.2% |
| Assets turnover | 1 | 0.25 | 0.24 | 104.2% |
| Total indebtedness (provisions excluded) | % | 29.8 | 30.9 | 96.4% |
| Long-term indebtedness | % | 18.8 | 22.5 | 83.6% |
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 data presented include the fully consolidated data from ČEZ and ČEPS, and the data from equity earnings of the affiliated company (37.21% of the profit came from Severočeské doly). In 2001 the Company adopted International Accounting Standard IAS 39, Financial Instruments: Recognition and Measurement. Following the introduction of IAS 39, all derivative financial instruments have been recognized as assets or liabilities. The opening balance of retained earnings as at 1 January 2001 has been adjusted. Prior year comparative figures have not been restated.
Net income for 2001 amounted to CZK 9.1 bn, an increase of CZK 1.9 bn (26.1%) in comparison with the previous year. This improvement resulted from higher EBIT (by CZK 2.1 bn) and a better exchange rate for the Czech crown (by CZK 2.3 bn). The exchange rate losses in 2000 were CZK 0.2 bn, while the current exchange rate gains are CZK 2.1 bn.
ČEZ’s turnover was CZK 56.6 bn in total, CZK 3.9 bn (7.4%) higher than in 2000.
Operating expenses came to CZK 41.7 bn and were CZK 1.8 bn (4.6%) higher than in 2000.
Other expenses decreased to CZK 1.6 bn (by CZK 0.6 bn) compared with the previous year. This resulted, as mentioned, from 
exchange rate changes, as well as from changes in the foreign currency portion of the debt (a decrease of CZK 2.3 bn), while other expenses, net increased by CZK 1.7 bn due to the adoption of IAS Standard 39.
Income taxes (CZK 4.2 bn) increased by 23.9% (CZK 0.8 bn) compared with the year 2000.
Earnings per share rose from 12.2 CZK to 15.5 CZK due to an increase in profits. The price earnings ratio fell from 8.3 to 5.0 due to a decrease (by 23.3%) in share prices, while profits increased by 26.1%. The net return on equity increased from 5.8% to 6.9% thanks to a rise in profits, partially compensated by a slight increase in the average equity. The net return on total assets increased (from 3.3% to 4.0%) as a result of a higher rise in profits compared to a slight increase in the average value of total assets. Assets turnover remained at the same level. Total indebtedness ( provisions excluded) decreased to 29.8%; long-term indebtedness also fell, to 18.8%.
At 31 December 2001 the number of ČEZ employees stood at 7,552 compared to 8,795 on 31 December 2000 - a 14.1% drop (1,243 employees).
Sale of Electricity
Revenues from sales of electricity (CZK 53.3 bn) increased by CZK 3.6 bn (7.3%) for several reasons, e.g. a change of the fee and the calculation base for auxiliary services. REAS (the regional distribution 
companies) now pay ČEPS fees which are higher and which are charged on all electricity delivered by them to the final consumers (and not, as was the case in 2000, just on electricity sold by ČEZ to REAS). The sale of electricity to regional distribution companies was 36,942 GWh, an increase of 377 GWh (1.0%). Exports of electricity 12,122 GWh were lower by 2.5%. ČEZ succeeded in eliminating almost completely the impact of the E.ON contract cancellation and the bankruptcy of ENRON at the end of 2001.
Demand for electricity in the Czech Republic of 53.8 TWh was up compared to 2000 by 1,483 GWh (2.8%). High voltage consumption increased as a whole by 827 GWh (by 2.6%). Low voltage consumption rose by 655 GWh (by 3.1%), of which in the commercial sector by 3.4% and households by 3.0%, partially due to the fact that temperatures were lower in 2001 by 1.1°C.
ČEZ power plants met 58.9% of the market demand for electricity in the Czech Republic compared to 57.4% in the previous year. This was due to an increase in ČEZ sales in the Czech electricity market and a decline in the production and consumption of other domestic producers. ČEZ's share in meeting demand for electricity (including repurchased electricity from inland and abroad) went up by 0.7% to 65.6%.
Investment Programme
In total, capital investments amounted to CZK 15.2 bn, CZK 6.2 bn less than in the previous year.
In 2001 CZK 4.3 bn was spent on Temelín NPP. At the end of 2001 tests on the 1st unit with output of 90% continued and in January 2002 all these tests were successfully finished; based on permission from the State Office for Nuclear Safety the reactor output was put up to 100%. The planned inspection of technological equipment and replacement valves (made in Germany) in the secondary part of the NPP began in the second half of February 2002. At the beginning of March 2002 nuclear fuel was loaded into the second reactor of Temelín NPP.
Financing
In 2001 ČEZ fulfilled all its financial commitments. Net cash provided by operating activities slightly increased to CZK 21.8 bn (by 0.4%). Given that only CZK 15.2 bn was spent on investments, this made possible to reduce long-term borrowings by CZK 6.6 bn despite the fact that CZK 1.2 bn was paid to shareholders in dividends (arranged by Česká spořitelna).
In January 2002 revolving credit totalling USD 70 m was renewed. The manager of the revolving credit is Sumitomo Mitsui Banking Corporation.
| Current credit rating for ČEZ | from Moody’s | |
|---|---|---|
| from Standard&Poor’s | - 'BBB+' with a stable outlook. |
Other information
The government of the Czech Republic decided, under Decree No. 967/2000 of 4 October 2000, to privatize ČEZ and six regional distribution companies. None of the potential investors fulfilled requirements set by the Czech government, so the tender was cancelled.
The government then adopted a new strategy enabling ČEZ to acquire a majority in five and a minority stake in three regional distribution companies by the transfer of shares from the National Property Fund and, conversely, the transfer of a majority stake in ČEPS from ČEZ to the National Property Fund.
A very important event in 2002 was the first phase of electricity market liberalization in the Czech Republic for final consumers with an annual consumption of more than 40 GWh (including REAS), which has opened up the market fully for producers.
The coal power plants at Tušimice, Chvaletice, Počerady, and Dětmarovice, and Dukovany Nuclear Power Plant were awarded the internationally recognized Environmental Management System Certificate.
By the end of 2001, ČEZ had signed sale contracts for 90% of expected electricity production for the Czech market, thanks especially to the successful Rainbow Power strategy
| Income Statement in Accordance with International Financial Reporting Standards (IFRS) (CZK m) | 31 Dec 2001 | 31 Dec 2000 |
|---|---|---|
| Operating revenues | 56,597 | 52,692 |
| Sales of electricity | 53,300 | 49,675 |
| Heat sales and other revenues | 3,297 | 3,017 |
| Operating expenses | 41,684 | 39,837 |
| Fuel | 13,220 | 12,800 |
| Purchased power and related services | 6,389 | 5,436 |
| Repairs and maintenance | 3,476 | 3,316 |
| Depreciation and amortization | 9,336 | 9,349 |
| Salaries and wages | 3,946 | 3,793 |
| Materials and supplies | 1,851 | 1,954 |
| Other operating expenses | 3,466 | 3,189 |
| Income before other expenses/income and income tax | 14,913 | 12,855 |
| Other expenses/income | 1,621 | 2,254 |
| Interest income | -177 | -188 |
| Interest on debt, net of capitalized interest | 796 | 1,015 |
| Interest on nuclear provisions | 1,463 | 1,265 |
| Foreign exchange rate losses (gains) | -2,110 | 216 |
| Other expenses/income, net | 2,009 | 265 |
| Income from associate | -360 | -319 |
| Income before income tax | 13,292 | 10,601 |
| Income taxes | 4,169 | 3,364 |
| Net income | 9,123 | 7,237 |
| Cash Flow in Accordance with International Financial Reporting Standards (IFRS) (CZK m) | 31 Dec 2001 | 31 Dec 2000 |
|---|---|---|
| Cash and cash equivalents at beginning of period | 3,219 | 4,357 |
| Operating activities: | 21,762 | 21,674 |
| - Income before income taxes | 13,292 | 10,601 |
| - Depreciation and amortization and asset write-offs | 9,429 | 9,406 |
| - Amortization of nuclear fuel | 1,644 | 1,630 |
| - Provision for nuclear decommissioning and fuel storage | 387 | 398 |
| - Changes in assets and liabilities | 913 | -461 |
| Investing activities | -15,155 | -21,308 |
| Financing activities | -6,372 | -1,490 |
| Net effect of currency translation in cash | -89 | -14 |
| Cash and cash equivalents at end of period | 3,365 | 3,219 |
| 31 Dec 2001 | 31 Dec 2000 | |
|---|---|---|
| Net electricity generation in the Czech Republic (GWh) | 68,797 | 67,762 |
| Electricity supply from ČEZ power plants - net (GWh) | 47,961 | 46,761 |
| Electricity sold by ČEZ in the Czech Republic (GWh) | 38,721 | 37,394 |
| - Electricity sold by ČEZ to REAS (GWh) | 36,942 | 36,565 |
| - Price of electricity sold to REAS (CZK/MWh) | 948 | 933* |
| ČEZ´s electricity exports (GWh) | 12,122 | 12,429 |
| ČEZ´s + ČEPS´s electricity imports (GWh) | 828 | 814 |
| Balance Sheet in Accordance with International Financial Reporting Standards (IFRS) (CZK m) | 31 Dec 2001 | 31 Dec 2000 |
|---|---|---|
| Assets | 229,027 | 222,260 |
| Fixed assets | 216,306 | 211,384 |
| Plant in service | 180,069 | 177,181 |
| Less accumulated provision for depreciation | 92,431 | 84,228 |
| Net plant in service | 87,638 | 92,953 |
| Nuclear fuel, at amortized cost | 5,967 | 5,764 |
| Construction work in progress | 111,929 | 103,591 |
| Investment in associate | 5,518 | 5,225 |
| Investments, net | 4,110 | 2,935 |
| Intangible assets, net | 1,144 | 916 |
| Current assets | 12,721 | 10,876 |
| Cash and cash equivalents | 3,365 | 3,219 |
| Receivables, net | 3,933 | 4,032 |
| Income tax receivable | 0 | 0 |
| Materials and supplies, net | 2,489 | 2,268 |
| Fossil fuel stock | 657 | 712 |
| Other current assets | 2,277 | 645 |
| Shareholders´ equity and liabilities | 229,027 | 222,260 |
| Shareholders´ equity | 136,726 | 129,442 |
| Stated capital | 59,050 | 59,209 |
| Retained earnings | 77,676 | 70,233 |
| Long-term liabilities | 64,477 | 70,606 |
| Long-term debt, net of amount due within one year | 43,081 | 49,704 |
| Accumulated provision for nuclear decommissioning and fuel storage | 21,396 | 20,902 |
| Deferred income taxes, net | 9,870 | 8,057 |
| Current liabilities | 17,954 | 14,155 |
| Short-term loans | 514 | 1,104 |
| Current portion of long-term debt | 5,126 | 4,703 |
| Trade and other payables | 8,651 | 5,035 |
| Income tax payable | 953 | 643 |
| Accrued liabilities | 2,710 | 2,670 |
| Consolidated Statement of Shareholders´ Equity in accordance with IFRS (CZK m) | Stated Capital | Retained Earnings | Total |
|---|---|---|---|
| 31 December 1998 | 59,209 | 58,706 | 117,915 |
| Net Income - 1999 | 4,290 | 4,290 | |
| 31 December 1999 | 59,209 | 62,996 | 122,205 |
| Net Income - 2000 | 7,237 | 7,237 | |
| 31 December 2000, as previously reported | 59,209 | 70,233 | 129,442 |
| Effect of adopting IAS 39 | -496 | -496 | |
| 1 January 2001, as restated | 59,209 | 69,737 | 128,946 |
| Net Income - 2001 | 9,123 | 9,123 | |
| Acquisition of treasury shares | -159 | -159 | |
| Dividends declared | -1,184 | -1,184 | |
| 31 December 2001 | 59,050 | 77,676 | 136,726 |
| Capacity, Employees | 31 Dec 2001 | 31 Dec 2000 |
|---|---|---|
| ČEZ Installed capacity (MW) | 10,146 | 10,146 |
| Number of employees (pers) | 7,552 | 8,795 |
| Specific number of employees (pers/MW) | 0.744 | 0.867 |
*/ The 2000 price is adjusted for the subsequent change in the transfer and control service fee, which regional distribution companies have paid directly to ČEPS, a. s. since 2001.