CEZ's Consolidated Quarterly Report on Operational, Economic and Financial Results for 2002, in accordance with IFRS
Main Features
- The new ČEZ Group was formed as of April 1, 2003.
- ČEZ sold the highest quantity of electricity in its history in 2002. Total amount of electricity sold was by 2.8% over 2001. Lower domestic electricity sales were compensated by increased export.
- Demand for electricity in the CzechRepublic was down by 0.2% compared to year 2001. Taking average temperatures into account, the demand for electricity would have grown by 0.4%.
- In spite of a total opening of the wholesale electricity market in the Czech Republic to competition, ČEZ power plants’ share in supply of electricity in the Czech Republic reached 56.6% (down only 2.3%).
- Net income was CZK 8.4 bn, which represents a decrease of CZK 0.7 bn.
- Unit One of Temelín Nuclear Power Station generated 5.4 TWh of electricity. Unit Two has supplied electricity to the grid since late December 2002 and was put into commercial operation as of April 18, 2003.
- Two out of seven of ČEZ´s top executives are foreign citizens.
- An extraordinary General Meeting took place on February 24, 2003. It approved the sale of the Náchod Heating Power Station.
Prague, April 23, 2003
| Income Statement in Accordance with International Financial Reporting Standards | 2002 | 2001 | Index 02/01 | |
|---|---|---|---|---|
| CZK m | EUR m | CZK m | ||
| Operating revenues | 55,578 | 1,759 | 56,055 | 99% |
| Operating expenses | 44,324 | 1,403 | 41,377 | 107% |
| Fuel | 12,894 | 408 | 13,220 | 98% |
| Purchased power and related services | 7,328 | 232 | 6,389 | 115% |
| Depreciation and amortization | 11,721 | 371 | 9,366 | 125% |
| Operating income | 11,254 | 356 | 14,678 | 77% |
| Other expenses (income) | -542 | -17 | 1,386 | x |
| Income before income taxes | 11,796 | 373 | 13,292 | 89% |
| Income taxes | 3,375 | 107 | 4,169 | 81% |
| Net income | 8,421 | 266 | 9,123 | 92% |
| Unit | 2002 | 2001 | Index 02/01 | |
|---|---|---|---|---|
| Earnings per share (EPS) | CZK | 14.3 | 15.5 | 92% |
| Price/earnings ratio (P/E) | 1 | 6.5 | 5.0 | 129% |
| Return on equity (ROE) net | % | 6.0 | 6.9 | 88% |
| Return on total assets (ROA) net | % | 3.7 | 4.0 | 90% |
| Assets turnover | 1 | 0.24 | 0.25 | 97% |
| Total indebtedness (provisions excluded) | % | 26.7 | 29.8 | 90% |
| Long-term indebtedness | % | 15.4 | 18.8 | 82% |
Revenues, Expenses, Income
Our Income Statements, Balance Sheets, and Cash Flow Statements have been conver-ted 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 structure of data was changed due to changes in consolida-tion and 2001 data were adjusted to allow for year-to-year comparison. The figures presented include the fully consolidated data from ČEZ and ČEPS, and a portion of the earnings of an affiliated company (Severočeské doly) using the equity method (ČEZ share 37.21%).
Net income for 2002 amounted to CZK 8.4 bn, a decrease of CZK 0.7 bn (7.7%) in comparison with the previous year. While EBIT was lower by CZK 3.4 bn, EBT decreased by CZK 1.5 bn. ČEZ’s turnover was CZK 55.6 bn in total, only CZK 0.5 bn lower than in 2001 mainly due to lower electricity prices on the liberalized wholesale market. Operating expenses increased by CZK 2.9 bn (7.1%), mainly due to an increase in depreciation and amortization by CZK 2.4 bn as Unit One of Temelín Nuclear Power Station was put into commercial operation. The cost of purchased power and related services was up by CZK 0.9 bn and repairs and maintenance costs increased by CZK 0.4 bn. On the other hand, fuel costs decreased by CZK 0.3 bn (despite an increase in total production) due to a portion of coal plant generation being moved to Unit One of Temelín. Other expenses/income amounted to CZK 0.5 bn on the income side, an improvement of CZK 1.9 bn over the expense of CZK 1.4 bn reported in 2001. This result was due to changes in CZK exchange rates. Income tax (CZK 3.4 bn) declined by CZK 0.8 bn. The decrease was mainly due to investment tax relief related to the start-up of Temelín (CZK 1.2 bn). On the other hand, the deferred tax expense increased by CZK 0.6 bn to reflect the planned sale of ČEPS in 2003. Earnings per share went down from CZK 15.5 to CZK 14.3 due to a decrease in profits. The price/earnings ratio increased from 5.0 to 6.5 due to a rise in share prices by 19.3% and a decrease in net profit by 7.7%. The net return on equity decreased from 6.9% to 6.0% due to lower profits and growing equity. The net return on total assets decreased (from 4.0% to 3.7%) as a result of lower profits and an increase in the average value of total assets (by 2.0%). Assets turnover decreased slightly to 0.24. Total indebtedness (provisions excluded) decreased to 26.7% (from 29.8%); long-term indebtedness also fell to 15.4% (from 18.8%).
The number of employees to installed capacity ratio decreased during 2002 to 0.650 (by 12.6%) due to an increase in installed capacity (by 1,000 MW) and a reduction of employees by 302. ČEZ´s aim is to reduce this indicator to 0.53 during the next two years, which would place ČEZ among the top Europeanelectric utilities using comparable generation technologies.
Sales of Electricity
ČEZ sold the highest quantity of electricity in its history in 2002. Total amount of electricity sold, at 52,253 GWh, rose year-on-year by 1,410 GWh (2.8%). In monetary terms, electricity sales CZK 52.9 bn were lower due to revision of our Rainbow Power prices to maintain competitive advantage.
Demand for electricity in the CzechRepublic, amounting to 53.7 TWh, was down by 105 GWh (0.2%) compared to year 2001. If the temperatures in both years had been in line with the long-term average, electricity demand would have grown by 0.4%. Industrial consumption (wholesale and ?other’ and electricity generated and consumed in industrial facilities, excl. consumption in pump storage power stations) decreased overall by 106 GWh (0.3%). Small customer consumption remained at the same overall level as in 2001, with small business consumption up by 118 GWh (1.6%) and household consumption down by 117 GWh (0.8%), the main reason being lower demand for heating (year-to-year higher average temperature by 0.8°C).
A slight reduction in domestic electricity sales was compensated by higher export (by 3,886 GWh). ČEZ power plants met 56.6% of the demand for electricity in the CzechRepublic compared to 58.9% in 2001.
Investment Programme
In total, capital investments amounted to CZK 9.9 bn, i. e. a decrease by CZK 6.0 bn (by 37.8%) compared to the previous year.
Unit One of Temelín Nuclear Power Station has been successfully put into operation. It generated a total of 5.4 TWh of electricity in 2002, 3.7 TWh of which was generated during its commercial operation (since June 11, 2002). A planned outage for changing nuclear fuel has been underway since the beginning of February 2003.
Unit Two of Temelín received authorities´ permission to continue preparing for commercial operation, after faults in a generator rotor were rectified. It has supplied electricity to the grid since late December 2002. Since then, the unit underwent testing prior to commercial operation (up to 75% of nominal output until 25 February 2003 and up to 100% of nominal output thereafter). On 18 April 2003 the testing was completed and Unit Two commenced commercial operation.
Financing
Net cash provided by operating activities decreased by CZK 2.8 bn to CZK 19.0 bn (12.8%). The total cash used in financing activities increased by CZK 0.5 bn to CZK 6.9 bn.
Current credit rating for ČEZ:
| from Moody’s | - 'Baa1' with a stable outlook, |
| from Standard & Poor’s took place in April 2003). | 'BBB+' with a positive outlook (the change from stable to positive outlook |
Other information
The new ČEZ Group was formed on 1 April 2003. The transfer of the shares of REAS to ČEZ was realized on that day (thus making ČEZ the majority shareholder in five and minority in three of the regional distribution companies) and, simultaneously, a 66% share in ČEPS was transferred to acquirers controlled by the State (OSINEK, Ministry of Social Affairs).
The deal was completed after the Chairman of the Antitrust Office issued a decision on ČEZ’s appeal, in which he confirmed his initial decision on the deal structure (i.e. sale of minority stakes in ČEPS and in three REAS and the sale of one of the acquired majority stakes) but mitigated certain accompanying conditions.
An extraordinary General Meeting took place on 24 February 2003, where the sale of a heating power station in Náchod (north-east Bohemia) was approved, five members of the Supervisory Board were changed, and a revision to the terms of an acquisition of treasury shares was approved. The flood in August 2002 caused CZK 600 m in damages to ČEZ´s property (all numbers in this paragraph according to Czech accounting standards). The hydro power plants Orlík and Štěchovice are still out of order. The expected insured benefit amounts to CZK 500 m. Total losses caused by the floodwith an influence on pre-taxincome come to CZK 300 m.
| Income Statement in Accordancewith International Financial Reporting Standards (IFRS) (CZK m) | 2002 | 2001 |
|---|---|---|
| Operating revenues | 55 578 | 56 055 |
| Sales of electricity | 52 938 | 53 300 |
| Heat sales and other revenues | 2 640 | 2 755 |
| Operating expenses | 44 324 | 41 377 |
| Fuel | 12 894 | 13 220 |
| Purchased power and related services | 7 328 | 6 389 |
| Repairs and maintenance | 3 847 | 3 476 |
| Depreciation and amortization | 11 721 | 9 366 |
| Salaries and wages | 3 854 | 3 946 |
| Nuclear decommissioning and fuel storage | ||
| Materials and supplies | 1 838 | 1 851 |
| Costs of ash storage, air and water pollution and environmental claims | ||
| Other operating expenses/income, net | 2 842 | 3 129 |
| Income before other expense/income and income tax | 11 254 | 14 678 |
| Other expenses/income | -542 | 1 386 |
| Interest income | -149 | -177 |
| Interest on debt, net of capitalized interest | 582 | 796 |
| Interest on nuclear provisions | 1 532 | 1 463 |
| Foreign exchange rate losses (gains) | -3 340 | -2 110 |
| Other expenses/income, net | 1 330 | 1 774 |
| Income from associate | -497 | -360 |
| Income before income taxes | 11 796 | 13 292 |
| Income taxes | 3 375 | 4 169 |
| Net income | 8 421 | 9 123 |
| Cash Flow in Accordance with International Financial Reporting Standards (IFRS) (CZK m) | 2001 | |
|---|---|---|
| Cash and cash equivalents at beginning of period | 2 280 | 2 922 |
| Operating activities: | 18 983 | 21 762 |
| - Income before income taxes | 11 796 | 13 292 |
| - Depreciation and amortization and asset write-offs | 11 735 | 9 429 |
| - Amortization of nuclear fuel | 2 071 | 1 644 |
| - Foreign exchange rate loss (gain) | -3 340 | -2 110 |
| - Provision for nuclear decommissioning and fuel storage | 641 | 387 |
| - Changes in assets and liabilities | 107 | 913 |
| Investing activities | -9 917 | -15 943 |
| Financing activities | -6 902 | -6 372 |
| Net effect of currency translation in cash | -219 | -89 |
| Cash and cash equivalents at end of period | 4 225 | 2 280 |
| 2002 | 2001 | |
|---|---|---|
| Electricity supply from ČEZ power plants - net (GWh) | 49 891 | 47 961 |
| Electricity sold by ČEZ in the Czech Republic (GWh) | 36 245 | 38 721 |
| - Electricity sold by ČEZ to REAS (GWh) | 31 466 | 36 942 |
| - Price of electricity sold on domestic market (CZK/MWh) | 905 | 949 |
| ČEZ´s electricity exports (GWh) | 16 008 | 12 122 |
| Capacity, Employees | Dec 31 2002 | Dec 31 2001 |
|---|---|---|
| ČEZ Installed capacity (MW) | 11 146 | 10 146 |
| Number of employees (pers) | 7 250 | 7 552 |
| Specific number of employees (pers/MW) | 0,650 | 0,744 |
| Balance Sheet in Accordance with International Financial Reporting Standards (IFRS) (CZK m) | Dec 31 2002 | Dec 31 2001 |
|---|---|---|
| Assets | 231 465 | 229 027 |
| Fixed assets | 216 112 | 217 391 |
| Plant in service | 242 338 | 180 252 |
| Less accumulated provision for depreciation | 103 355 | 92 614 |
| Net plant in service | 138 983 | 87 638 |
| Nuclear fuel, at amortized cost | 7 931 | 5 967 |
| Construction work in progress | 56 513 | 111 929 |
| Investment in associate | 5 880 | 5 518 |
| Investments and other financial assets, net | 5 631 | 5 195 |
| Intangible assets, net | 1 174 | 1 144 |
| Current assets | 15 353 | 11 636 |
| Cash and cash equivalents | 4 225 | 2 280 |
| Receivables, net | 4 117 | 3 933 |
| Income tax receivable | 1 994 | |
| Materials and supplies, net | 2 464 | 2 489 |
| Fossil fuel stock | 618 | 657 |
| Other current assets | 1 935 | 2 277 |
| Shareholders´ equity and liabilities | 231 465 | 229 027 |
| Shareholders´ equity | 143 675 | 136 726 |
| Stated capital | 59 041 | 59 050 |
| Retained earnings | 84 634 | 77 676 |
| Long-term liabilities | 59 595 | 64 477 |
| Long-term debt, net of current portion | 35 729 | 43 081 |
| Accumulated provision for nuclear | ||
| decommissioning and fuel storage | 23 866 | 21 396 |
| Deferred income taxes, net | 12 541 | 9 870 |
| Current liabilities | 15 654 | 17 954 |
| Short-term loans | 514 | |
| Current portion of long-term debt | 4 235 | 5 126 |
| Trade and other payables | 8 934 | 8 651 |
| Income tax payable | 256 | 953 |
| Accrued liabilities | 2 229 | 2 710 |
| Consolidated Statement of Shareholders´ Equity in accordance with IFRS (CZK m) | Stated Capital | Retained Earnings | Total Equity |
|---|---|---|---|
| December 31, 1999 | 59 209 | 62 996 | 122 205 |
| Net income - 2000 | 7 237 | 7 237 | |
| December 31, 2000, as previously reported | 59 209 | 70 233 | 129 442 |
| Effect of adopting IAS 39 | -496 | -496 | |
| December 31, 2000, 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 | |
| December 31, 2001 | 59 050 | 77 676 | 136 726 |
| Additional paid-in capital | 12 | 12 | |
| Net Income - 2002 | 8 421 | 8 421 | |
| Acquisition of treasury shares | -181 | -181 | |
| Sale of treasury shares | 160 | 17 | 177 |
| Dividends declared | -1 480 | -1 480 | |
| December 31, 2002 | 59 041 | 84 634 | 143 675 |
Audited Results according to International Financial Reporting Standards.