Economic results of the CEZ Power Company for the first quarter of 2002

The profit generated by CEZ increased by 55 per cent and reached the amount of 5.1 billion CZK

In the first quarter of this year, the CEZ Power Company generated a net profit of 5.1 billion CZK, which translates into an increase by 1.8 billion CZK, i.e. by 55%, in comparison with the same period last year. The company generated this profit in spite of the anticipated decrease in takings from selling electricity, resulting from the fact that the market had been fully (100%) opened for electricity producers. CEZ managed to achieve this by cutting costs and, more importantly, by higher financial revenues which increased especially because of the appreciation of the Czech crown.

As we had anticipated, full opening of the electricity market brought about a decrease in our takings from sold electricity. This is related to the lower prices which we prepared for the customer this year, and which are being offered in the commercial programme entitled Rainbow Electricity. The operation result was also influenced by the fact that the Temelin Nuclear Power Plant, which is much more cost-effective to run, has not been put into a full-scale operation as yet. However, the economic result was positively influenced especially by the appreciation of the domestic currency. This was the main factor thanks to which the financial revenue of CEZ increased by 2.7 billion CZK, which also led to an increase of the overall revenues and in consequence resulted in considerably higher profit generated by our company,? said Petr Voboril, the company Chief Executive for Finances and Administration.

The overall output of sold electricity remained on the same level as it was last year (index 99 %). However, the revenues from sold electricity, including backup services, were reduced by a number of factors. Firstly, they dropped because of the attractively priced electricity offered in the Rainbow Electricity package. This has to be taken into consideration, along with the fact that Temelin NPP has not yet been put into a trial operation, which means that revenues (amounting to approximately 800 million CZK) from the sold output of electricity generated in this power plant are a part of the investment budget, but are not a part of the profit and loss account. Another significant factor resided in the fact that the weather was quite warm in the first quarter of this year, which means that there was only a limited domestic demand for more expensive products. The volume of electricity sold in the domestic market decreased by 8,8 % and the volume of exported electricity, on the other hand, rose by 25,8 %. There is a clearly perceptible positive trend in the domestic market, where the volume of electricity sold to business entities outside distribution companies rose by more than 700%. This means that CEZ is now supplying electricity not only to distributors, but also to dealers and authorised customers.

Total costs, after deducting the income tax, amounted to 13.3 billion CZK, which translates into a decrease by 0.5 billion (3,3 %) compared to last year. Running costs were reduced even more by 0.6 billion CZK, which was due to cutting the cost of purchased fuel, resulting from the downsize production of coal-fired power plants. The number of employees was scaled down by 1 083 to 7 462, which resulted in trimming the personnel-related expenses of CEZ by 5 per cent.

The overall demand for electricity in the Czech Republic in the first quarter of this year amounted to 15TWh, i.e. it dropped by 0.9 % in comparison with the same period last year. This was due to the extreme rise in temperatures in the first quarter of the year. However, CEZ is convinced that the long-term trend of growing demand will continue. If there had not been such an extreme rise in temperatures (the average temperatures over this period were 1.8^oC warmer than in the first quarter of the last year), the demand would have increased by 0.3 % in comparison with the last year. Industrial consumption decreased by 0.5 % and retail consumption by 1.4 %.

We believe that our new products, offered in the framework of the Rainbow Electricity programme, will significantly improve our operational outcome throughout the year,? concluded Petr Voboril, and added: In addition to our active commercial policy, we are currently also focusing on completing the linkage between CEZ and the commercial network, i.e. with distribution companies. This process, which is being carried out in compliance with governmental policy, should model the structure of the Czech power industry according to the standard western European structure, where all major companies do not only own the production and distribution facilities, but mostly also the suppliers of fuel and transmission networks. This type of ownership structure is typical i.e. for Germany. In not too distant future it will also be introduced in Austria, where they are currently implementing a process which should lead to mergers between distribution companies, so that the newly arisen entity will own three quarters of the market, and further negotiations might lead to a merger with the major Austrian electricity producer. This is the same scenario which should eventually take place in the Czech Republic.

For further details see the relevant Web Page: http://193.86.119.25/eng/about/IR/perfonmance/qreports

Ladislav Kriz, CEZ Press Officer

30. 4. 2002