Cez As · PSECZ:CEZ

Cez As — Debt Investor Presentation (November 2006)

30 slides from Cez As's debt investor presentation, November 2006

  1. Slide 1: CEZ Group Debt Investor Presentation

    CEZ Group Debt Investor Presentation November 2006

  2. Slide 2: Summary

    SUMMARY 1) CEZ overview and credit rating ratios 2) CEZ Financials 3) CEZ Strategy 1

  3. Slide 3: CEZ overview and credit rating ratios

    1) CEZ overview and credit rating ratios 2) CEZ Financials 3) CEZ Strategy 2

  4. Slide 4: CEZ Group is a major player in Central Europe

    CEZ GROUP IS A MAJOR PLAYER IN CENTRAL EUROPE Asset positions CEZ Group in Poland Target markets (75% share in Skawina, 89% in Elcho) Trading office ƒ electricity sales (TWh) 3.6 ƒ market share 2.4% ƒ installed capacity (MW) 830 CEZ Group in Romania ƒ market share 2.3% (51% share in EDC Oltenia) ƒ n

  5. Slide 5: CEZ has become a major player in Europe

    CEZ HAS BECOME A MAJOR PLAYER IN EUROPE Top 10 European power utilities Top 10 European power utilities Number of customers in Europe, million Market capitalization, USD bn, as of August 24, 2006 1 EdF 36,7 1 EDF 104,8 2 Enel 30,0 E.ON 88,2 2 3 E.ON 26,0 Enel 54,7 3 4 Endesa 23,0 RWE 51,3 4 5 RWE 19

  6. Slide 6: CEZ is the biggest company among the new EU member states

    CEZ IS THE BIGGEST COMPANY AMONG THE NEW EU MEMBER STATES Market capitalization of top 15 companies among the new EU member states* EUR billion 18 17 16 14 12 9.8 10 8.7 8.5 8 7.3 7.1 6 5.5 6 5.3 5.2 4.5 4.1 3.5 3.3 4 2.5 2 0 Z) ) U) PK Z) U) L) Z) BP U) Y) HM ) L) V) L) L) KA L) HU KG PL (C (C (P (

  7. Slide 7: CEZ Group is one of the most profitable utilities in Europe

    CEZ GROUP IS ONE OF THE MOST PROFITABLE UTILITIES IN EUROPE AND WILL REMAIN SO EBITDA margin, 2005 Percent CEZ Group’s outstanding performance is driven by a generation portfolio which has potential for further improvements: E.ON 17,7 ƒ Coal Supply RWE 19,9 ƒ long term framework agreement until 2050

  8. Slide 8: CEZ Group has an attractive low cost generation fleet and secured low fuel costs

    CEZ GROUP HAS A VERY ATTRACTIVE LOW COST GENERATION FLEET AND SECURED LOW FUEL COSTS CEZ Group generation capacity (2005) Annual production of CEZ Group MW TWh 100% of Utilization Completion of Temelín 12,297 generation 2005 nuclear power plant Hydro (river 3.4% 12% 2,000 MW accumulation 1 934 15.6%

  9. Slide 9: CEZ is a dominant player in all sectors of the Czech electricity market

    CEZ IS A DOMINANT PLAYER IN ALL SECTORS OF THE CZECH ELECTRICITY MARKET Lignite mining Generation Transmission Distribution Supply 5 out of 8 45% CEZ distribution 56% 22 million tons 72% companies 31.0 TWh 60.0 TWh 100% 62% of customers 62 TWh 55% Others 44% 27 million tons 28% 38% of customers 25.0

  10. Slide 10: CEZ's rating compared to its competitors

    CEZ’S RATING COMPARED TO ITS COMPETITORS ƒ S&P (A-, credit outlook „stable“) Aa1 - Standard & Poors upgraded CEZ’s credit rating to A- on October 2,2006 due to its strong financial performance and strong financial profile. Aa2 - Standard & Poors expects the rating should withstand a degree of increa

  11. Slide 11: CEZ and peer group secondary trading spreads on bond issues

    CEZ AND PEER GROUP SECONDARY TRADING SPREADS ON BOND ISSUES Utility Peers CEZ CEZ’s recent 80 Eurobond issue (EUR 500 mil., 7 years) met 70 with strong investor Repsol ‘14 demand, attracting Spread over Euro mid swaps (bp) 60 nearly 2.1 billion euros 50 of orders from 125 investors 40 CEZ ‘13 Vatten

  12. Slide 12: Strong credit ratings

    STRONG CREDIT RATINGS Source: Bloomberg, 17/10/06 11

  13. Slide 13: Capital structure analysis

    CAPITAL STRUCTURE ANALYSIS Despite growing indebtness CEZ will stay above targeted ratios Leverage FFO/Total De bt 40,0% 140,0% 33,4% 33,4% 114,9% 120,0% 108,9% 30,3% 30,0% 27,2% 100,0% 23,9% 76,2% 80,0% 69,0% 16,7% 17,8% 57,7% 20,0% 60,0% 47,1% 44,7% 40,0% 35 % 10,0% 20,0% 0,0% 0,0% 2005 2006 2007

  14. Slide 14: CEZ Financials

    1) CEZ overview and business profile 2) CEZ Financials 3) CEZ Strategy 13

  15. Slide 15: CEZ Group has a healthy balance sheet

    CEZ GROUP HAS A HEALTHY BALANCE SHEET ASSETS increase in cash and cash LIABILITIES CZK bn equivalents by CZK 7.8 bn, CZK bn in receivables by CZK 5.2 336.3 bn, mainly unbilled supply to 324.2 324.2 336.3 small customers of CEZ Prodej (CZK 3.1bn as a 350 350 ST liabilities result of a higher electric

  16. Slide 16: CEZ Group's debt structure

    CEZ GROUP’S DEBT STRUCTURE DEBT CZK mil. 6 780 Long Term Debt 1 558 8 338 11 264 Total Long Term Debt + Bonds in CZK 7 230 Short Term Debt 44 760 17 929 36 422 Total Short Term Debt Total Debt EUR USD CZK EUR/USD/CZK EUR CZK EUR/CZK Aggregate value * assuming CZK/EUR 28.495, CZK/USD 22.413 Source: C

  17. Slide 17: CEZ Group's debt structure after hedging

    CEZ GROUP’S DEBT STRUCTURE AFTER HEDGING DEBT CZK mil. CEZ’s foreign exchange Long Term Debt exposure on its debt is 27 % 6 780 8 338 Total Long Term 29 032 1 558 Debt + Bonds in CZK 40 705 Short Term Debt 49 043 Total Short Term Debt 2 506 9 167 Total Debt EUR USD CZK EUR/USD/CZK EUR CZK EUR/CZK Ag

  18. Slide 18: CEZ Group generates large operating cash-flow in excess of investment needs

    CEZ GROUP GENERATES LARGE OPERATING CASH-FLOW IN EXCESS OF INVESTMENT NEEDS Net cash provided by operating activities CZK billion 80 80 Other 2006 ƒ CZK 1.3 bn – IT – CEZ Data, sro 70 70 ƒ CZK 1.1 bn - other Mining 60 60 2006 ƒ CZK 2.0 bn –SD, a.s. 50 50 Distribution and sales - foreign 2006 40 40 ƒ

  19. Slide 19: CEZ Group has very strong free cash-flow and additional borrowing capacity

    CEZ GROUP HAS VERY STRONG FREE CASH-FLOW - COMBINED WITH ADDITIONAL BORROWING CAPACITY WHICH CAN BE USED TO FINANCE INTERNATIONAL GROWTH BY UP TO EUR 6.0 BILLIONS Free cash flow of CEZ Group (cumulative) EUR million Free Cash for acquisitions ~ 4,000 6,000 Free Cash for acquisitions net of executed/

  20. Slide 20: Nuclear provisions

    NUCLEAR PROVISIONS CZK 78.9 bn Discounted by 2.5% Interim storage real discount rate 7.4 of spent fuel Temelín 13.7 decommissioning Dukovany CZK 35.9 bn 15.6 decommissioning as stated in BS at December 31, 2005 Annual increase by 4.5% (discount rate 2.5% + estimated inflation effect 2.0%) Final stor

  21. Slide 21: CEZ Strategy

    1) CEZ overview and business profile 2) CEZ Financials 3) CEZ Strategy 20

  22. Slide 22: CEZ Group has launched four key strategic initiatives

    TO ACHIEVE IT’S VISION CEZ GROUP HAS LAUNCHED FOUR KEY STRATEGIC INITIATIVES TO BE A POWER MARKET LEADER IN CENTRAL AND SOUTHEASTERN EUROPE Integration and Plant M&A operational portfolio expansion excellence development (2004-08) (2007-20) (2004-10) Performance oriented culture Source: CEZ 21

  23. Slide 23: Vision 2008: reorganize into a transparent holding structure

    WITHIN THE PROJECT “VISION 2008” CEZ GROUP WILL REORGANIZE ITSELF INTO A TRANSPARENT HOLDING STRUCTURE … CEZ CEZ Group ƒ Generation Project ƒ Generation ƒ Wholesale trading “Vision 2008” ƒ Wholesale trading ƒ Sales Distribution company 5 CEZ Prodej CEZ Distribuce Distribution company 4 ƒ sales ƒ dis

  24. Slide 24: Almost EUR 100 million in annual savings

    … AND ACHIEVE ALMOST EUR 100 MILLION IN ANNUAL SAVINGS Gross costs saving* in 2004-08 total annual cost savings EUR million related to the “Vision 2008” project are to reach CZK 2.9 bn by 2008, i.e. ~10% of 258 2004 operating costs in the supply and distribution segment (excluding 95 purchased elect

  25. Slide 25: Future plant fleet built mainly around modern lignite plants

    CEZ INTENDS TO BUILD ITS FUTURE PLANT FLEET MAINLY AROUND MODERN TECHNOLOGY LIGNITE PLANTS Coal Nuclear Gas Renewables Environ- ƒ acceptable emissions ƒ no emissions ƒ low emissions ƒ limited/no emissions mental if modern technology ƒ nuclear risk ƒ no resources impact adopted depletion Competitive

  26. Slide 26: Plans for lignite plants renewal and expansion in other fuels

    CEZ HAS FINALIZED PLANS FOR LIGNITE PLANTS RENEWAL AND IS DEVELOPING STRATEGY TO EXPAND ITS CAPACITY IN OTHER FUELS Capacity Removal of mining limits MW Current limits 7 000 Retrofits Existing plants 6 000 5 000 ƒ CEZ can only maintain existing capacity untill 2035 4 000 ƒ other fuels considered to

  27. Slide 27: Capex for lignite plants renewal will reach CZK 125bn

    CAPEX FOR LIGNITE PLANTS RENEWAL WILL REACH CZK 125BN* AND BRING 14-25% EFFICIENCY UPLIFT Project overview ƒ Highly efficient and Expected CAPEX – conservative scenario environmentally friendly CZK bn ƒ Highly profitable 20 2008-15: Main Assets Renewal Period ƒ Secured fuel – low risk 18 16 Retrofit

  28. Slide 28: CEZ Group aims to grow in generation and distribution/supply

    CEZ GROUP AIMS TO GROW BOTH IN GENERATION AND DISTRIBUTION/SUPPLY Realized acquisitions ƒ Bulgaria (distribution) – 1.9 million cust. Central Europe ƒ Romania (distribution) – 1.4 million ƒ Poland (generation) – 810 MW ƒ Bulgaria (generation) – 1,260 MW On-going acquisitions ƒ Ukraine (distribution)

  29. Slide 29: ... and is best positioned to succeed

    … AND IS BEST POSITIONED TO SUCCEED Price per customer in privatizations of CEE power distribution companies EUR/customer 1,212 1200 1000 800 707 600 515 483 2006 2004 2005 400 270 222 230 243 217 200 Slovakia 2002 Bulgaria 2005 Romania 0 RWE EdF E.ON E.ON CEZ EVN ENEL CEZ Enel VSE SSE ZSE NE Gr. NW

  30. Slide 30: Fixed income investor relations contacts

    FIXED INCOME INVESTOR RELATIONS CONTACTS CEZ, a. s. Duhova 2/1444 14 053 Praha 4 Czech Republic www.cez.cz Jan Hajek Bronislav Cerny Corporate Finance Department Corporate Finance Department Fixed Income Investor Relations Shares and dividends administration Phone:+420 211 042 687 Phone:+420 211 042

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