Cez As · PSECZ:CEZ
Cez As — Investor Presentation (April 2005)
37 slides from Cez As's investor presentation, Apr 1, 2005
Slide 1: ČEZ Group
c CEZ GROUP 1. 4. 2005
Slide 2: ČEZ Group Presentation
ČEZ GROUP PRESENTATION 1. 4. 2005 Published by Controlling department, ČEZ, a. s.
Slide 3: Table of Contents
TABLE OF CONTENTS Summary 3 Generation of electricity 14 Market – liberalization and integration 24 Mergers and acquisitions 32
Slide 4: Summary
SUMMARY ČEZ Group – one of the most important Czech companies
Slide 5: ČEZ Group Highlights
ČEZ GROUP HIGHLIGHTS Transformation of ČEZ to the international company Integration of ČEZ Group Project „VIZE 2008“ ČEZ established as Joint-Stock Company 1992 1998 2000 2003 2006 2008 energy market liberalization Desulphurization Renewal of generation sources NPP Temelín project 4
Slide 6: ČEZ Domestic Electricity Market Share Grows
ČEZ DOMESTIC ELECTRICITY MARKET SHARE GROWS ČEZ, a. s., domestic market share % 66.9 67.4 65.6 65.5 62.4 ČEZ Group strengthens its position of key supplier in the domestic wholesale market 2001 2002 2003 2004 2005E 5
Slide 7: ČEZ Exports Achieving Rising Prices All the Time
ČEZ EXPORTS ACHIEVING RISING PRICES ALL THE TIME ČEZ, a. s., electricity export Larger amount of TWh electricity was sold 18.7 in domestic market 16.0 16.7 14.7 12.1 2001 2002 2003 2004 2005E Export prices for the year 2005 Average price * are close to CZK/MWh prices of equivalent 860-900 products a
Slide 8: Market Capitalization of USD 11.3 Billion; Top 10 European Power Utilities
WITH CURRENT MARKET CAPITALIZATION OF USD 11.3 BILLION ČEZ BELONGS TO TOP 500 BIGGEST GLOBAL COMPANIES AND TOP 10 EUROPEAN POWER UTILITIES Market capitalization of ČEZ Group Top 10 European power utilities USD* billion Number of customers, million ČEZ Group ranks as 446th global company 1 EdF 46.7 1
Slide 9: One of the Most Profitable Utilities in Europe
ČEZ GROUP IS ONE OF THE MOST PROFITABLE UTILITIES IN EUROPE WITH STRONG PROFITABILITY GROWTH EBITDA margin, 2003 Operating profit percent CZK billion EnBW 9.6 + 48% 25.3 Electrabel 19.0 RWE 19.3 + 32% 17.1 E.ON 20.4 13.0 Vattenfall 22.2 Iberdrola 27.6 ČEZ 35.3 Group 2003 2004E 2005E Source: ČEZ, a.s
Slide 10: First Step: Acquisition of Distributors in Bulgaria and Romania
ČEZ ALREADY DID FIRST STEP WITH ACQUISITION OF DISTRIBUTORS IN BULGARIA AND ROMANIA Succesful acquisition Potential acquisition targets CZ RO BG Succesful acquisitions: Bulgaria (1.9 m customers, 7.8 TWh of electricity sold per year) - managerial team is already made-up - takeover on January 18, 2
Slide 11: Profitable Growth of ČEZ Group in Four Spheres
PROFITABLE GROWTH OF ČEZ GROUP WILL BE ACHIEVED IN FOUR SPHERES The Shareholders of ČEZ, a. s., share prices 420 as of December 31, 2004 400 Institutional opportunity to Investors 380 24.45% development value sources 67.61% 360 Custodians 340 3.23% 1 restructure / increase in value National Individu
Slide 12: ČEZ Group – Selected Key Performance Indicators
ČEZ Group – Selected Key Performance Indicators Market capitalization (ČEZ‘s shares) shares) Added value Index Index 1,00 1.00 0.76 0,76 0.91 0,911.44 1,44 2.57 2,57 3.37 Index 1,00 1.00 1,08 1.08 1,04 1.03 1,29 1.33 1.34 (exp. 2004: 1.65) 180 35 200 160 30 140 150 25 CZK bn 120 CZK bn CZK bn 100 20
Slide 13: Comparison of Selected European Power Corporations
Comparison of Selected European Power Corporations Total Debt / Total Assets Installed Capacity 2003 2003 50 45 120,000 40 100,000 35 30 80,000 MW % 25 60,000 20 15 40,000 10 20,000 5 0 0 Electrabel Electrabel Endesa Iberdrola Vattenfall EnBW ČEZ ČEZ E.ON Vattenfall Endesa ENEL EnBW E.ON RWE Iberdro
Slide 14: ČEZ Group Has Finance Capacity for Acquisition Growth
ČEZ GROUP HAS A FINANCE CAPACITY TO ACQUISITION GROWTH comparison of indebtedness with companies E.ON a RWE low indebtedness level together with positive debt 2.24 rating allow advantageous financing of future opportunities strong operational cash flow 0.72 (CZK bn 25 in the year 2003) is the ad
Slide 15: Generation of Electricity
GENERATION OF ELECTRICITY ČEZ Group is the biggest producer of electricity in the Czech Republic
Slide 16: Stable Share in Gross Electricity Production in the Czech Republic
ČEZ GROUP KEEPS A STABLE SHARE IN GROSS ELECTRICITY PRODUCTION IN THE CZECH REPUBLIC 80% 74% 74% 70% 71% 69% 70% 60% Power plants of ČEZ, a. s., cover 50% 62.9% of electricity demand in the 40% Czech Republic 30% 20% 2000 2001 2002 2003 2004 ČEZ Group keeps a stable share in gross electricity prod
Slide 17: ČEZ's Generation Capacity Structure Is Balanced
ČEZ‘S GENERATION CAPACITY STRUCTURE IS BALANCED Big advantage of ČEZ ČEZ‘s production capacity structure Group is diversified 60 power plants portfolio Hydro power plants 50 Diversified power 40 plants and their Nuclear power plants sufficient capacity TWh 30 minimize outage risk 20 Clean coal p
Slide 18: ČEZ Increases Effectiveness of Electricity Generation
ČEZ INCREASES EFFECTIVENESS OF ELECTRICITY GENERATION Number of employees of ČEZ, a.s. Value added per employee persons 250 000's CZK/person/month 196.1 200 Decreasing number of 152.4 150 employees directly bears on cost fall and productivity 100 growth 20,000 50 18,100 17,855 13,723 0 12,143 2003 2
Slide 19: Electricity Demand Increases; ČEZ Scans Opportunities for New Power Plants
ELECTRICITY DEMAND INCREASES, ČEZ SCANS OPPORTUNITIES TO BUILD NEW POWER PLANTS Electricity Demand in the Czech Republic Scenarios (GWh) 70,000 possible sources for filling 66,000 in the space after Reality (1993 – 2003) decommissioning of coal 62,000 ČEZ, a. s., scenario (2004 – 2010) power plants
Slide 20: ČEZ's Opportunities Are Mostly in New Coal Power Plants
ČEZ‘s OPPORTUNITIES ARE MOSTLY IN NEW COAL POWER PLANTS Coal Nuclear Gas Renewable Investment Retrofit New units in Temelín CHP Biomass Opportunities New power plant New power plant Small hydropower Wind Traditional No carbon dioxide Clear Good public Advantages generation
Slide 21: ČEZ Cut Down Ecological Impacts of Generation Significantly
ČEZ CUT DOWN ECOLOGICAL IMPACTS OF GENERATION SIGNIFICANTLY Desulphurization has 15 year cycle Costs for making generation eco-friendly were app. CZK 50 bn in recent years 11.5 1994 9.0 7.9 7.8 5.0 3.2 1.2 Next stage of 0.5 0.6 0.6 0.8 0.4 reconstruction is 1993 1994 1995 1996 1997 1998 1999 2000 20
Slide 22: Large Portion of Power Plants Will Need to Be Decommissioned
HOWEVER, LARGE PORTION OF ČEZ POWER PLANTS WILL NEED TO BE DECOMMISSIONED IN THE COMMING DECADE Age structure of ČEZ thermal blocks MW 2,800 2 800 Substantial portion of 2500 ČEZ thermal capacity 2000 approaches end of its life time 1,550 1,512 1500 Additionally, the emission limits on SOx, 1000
Slide 23: Available Lignite Could Supply Only Small Fraction of Capacity
CURRENTLY AVAILABLE LIGNITE COULD SUPPLY ONLY SMALL FRACTION OF THE EXISTING GENERATION CAPACITY ILLUSTRATIVE Lignite mining within the area set by Lignite mining beyond ecological limits ecological limits Capacity, MW Capacity, MW 6 000 6 000 Existing 5 000 Existing 5 000 plants 4 000 plants 4 000
Slide 24: World's Peak in Nuclear Power Plants Operation
ČEZ – WORLD‘S PEAK IN NUCLEAR POWER PLANTS OPERATION Unplanned Capability Loss Factor 8 7 6 5 % 4 3 2 1 0 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 NPP Dukovany average World average World median This factor expresses share of unplanned losses to achievable production. NP
Slide 25: Market – Liberalization and Integration
MARKET – LIBERALIZATION AND INTEGRATION ČEZ Group – relevant player both in Czech and European market
Slide 26: Electricity Price in Europe Grows; ČEZ Keeps Lower Increase
ELECTRICITY PRICE IN EUROPE GROWS, NONETHELESS, ČEZ KEEPS LOWER PRICE INCREASE THAN IN EUROPEAN UNION Year Baseload Offer in September – comparison of ČEZ‘s electricity price development in the wave of ČEZ and Europe privatization EUR/MWh CZK/MWh Profitability Yellow border Baseload 35 948 29 29 905
Slide 27: Czech Republic Has the Lowest Electricity Prices in the Region
THE CZECH REPUBLIC HAS THE LOWEST ELECTRICITY PRICES IN THE REGION AND THE DIFFERENCE CONSTANTLY GROWS Wholesale electricity prices for year 2005 in the Czech Republic and neighbouring countries export markets import markets + 15% + 25% + 25% + 21% + 10% Czech Slovakia Poland Germany Austria Hungary
Slide 28: Business Position Depends on Dynamics in Central Europe
BUSINESS POSITION OF ČEZ DEPENDS ON DYNAMICS IN CENTRAL EUROPE, WHERE THE CZECH REPUBLIC AND SLOVAK REPUBLIC REPRESENT „BUFFER AREA“ estimation of highest tradable volumes (TWh) and utilization of tradable capacity (%) in 2004 Germany unsymmetrical access to the Germany, Austria and Poland 6 .0 tr
Slide 29: ČEZ Group – Largest Group in the Czech Energy Market
ČEZ GROUP – LARGEST GROUP IN THE CZECH ENERGY MARKET ČEZ Group cca 100 companies including 5 regional distribution companies: SČE, SME, STE, VČE, ZČE serves cca 3.4 m customers Děčín Stable supply Hradec Králové Praha Value added in services (expert Ostrava Plzeň background) Brno Wide portfolio o
Slide 30: ČEZ Group – Market Position
ČEZ GROUP – MARKET POSITION ČEZ Group final consumer market share Basic Data 2004 Electricity sales (GWh) 67,803 Number of customers (million) 3.4 38% Installed capacity at the end of period (MW) 12,297 57% Number of employees at the end of period 17,855 Total assets (CZK bn) 272 E 5% Good results i
Slide 31: Project Vize 2008 Will Secure Full Integration of Group
PROJECT VIZE 2008 WILL SECURE FULL INTEGRATION OF GROUP IN THE CZECH REPUBLIC is the largest project in the Czech energy sector history goal of project Vize 2008 expected benefits savings of billions of restructuralization of Group crowns in costs and holding system of organization improvement
Slide 32: Main Activities: Generation, Trade and Distribution
MAIN ACTIVITIES OF ČEZ GROUP WILL BE GENERATION, TRADE AND DISTRIBUTION ČEZ Group mergers human public strategic risk administration ICT managerial finance & strategy sources relations purchasing management of regulaton strategy process acquisitions electricity generation trade distribution main act
Slide 33: Mergers and Acquisitions
MERGERS AND ACQUISITIONS ČEZ Group – eligible ambitions in the Central and East European countries
Slide 34: Central and Eastern Europe Represent Nonesuch Opportunity
CENTRAL AND EASTERN EUROPE REPRESENT NONESUCH OPPORTUNITY FOR ČEZ GROUP unique opportunity for ČEZ‘s expansion intimate knowledge of the territory contemporary opportunities at privatization of state-owned corporates small group of competitors at acquisitions financial power to merge opportu
Slide 35: ČEZ Group Expansion Plans
ČEZ GROUP EXPANSION PLANS Realized Acquisitions Bulgaria (distribution) Romania (distribution) Central Europe Proceeding Acquisitions Bulgaria (generation) Other opportunities Poland (generation) Southeast Europe Montenegro (generation+mining) Romania (generation+distribution) Macedoni
Slide 36: Successful Acquisitions in Bulgarian and Romanian Distribution
ČEZ – SUCCESSFUL ACQUISITIONS IN BULGARIAN AND ROMANIAN DISTRIBUTION Romania (51% share in EDC Oltenia will be owned by ČEZ, a. s.) number of customers: 1.36 m number of employees: 3,027 electricity sold annualy: 6.8 TWh sales revenue: 10.07 bn CZK power losses: 11.8 % Bulgaria (67% shares in 3 EDCs
Slide 37: Interest in Privatization of Romanian and Bulgarian Mines and Power Plants
ČEZ IS INTERESTED IN PRIVATIZATION OF ROMANIAN AND BULGARIAN MINES AND POWER PLANTS Romania (power plants + mines) TPP (mines) Installed capacity (MW) Turceni (Jilţ and Drăgoteşti) 1,980 (6x330) Rovinari (Rovinari) 1,320 (4x330) Rovinari Rovinari Craiova - Işalniţa+Craiova II 930 Berbeşti (Berbeşti)