Cez As · PSECZ:CEZ
Cez As — H1 2005 Earnings Presentation
24 slides from Cez As's earnings presentation, Aug 31, 2005
Slide 1: ČEZ Group 1st Half 2005 Results
EZ GROUP 1st HALF 2005 RESULTS UNAUDITED CONSOLIDATED ACCORDING TO IFRS Prague, August 31, 2005
Slide 2: Group's Economic Performance in 1st Half 2005
GROUP´S ECONOMIC PERFORMANCE IN 1st HALF 2005 The price of EZ shares on the Prague Stock Exchange grew from CZK 341 to CZK 471 in H1 2005. The price later rose to its all time high to close at CZK 605 on August 30. Market capitalization stands at EUR 12.1 bn. EZ Group EBIT grew by 43.6% to CZK 16.1
Slide 3: CEZ Stock Has Significantly Out-Performed the Czech Market and European Utilities
CEZ STOCK HAS SIGNIFICANTLY OUT-PERFORMED THE CZECH MARKET AS WELL AS EUROPEAN UTILITIES CEZ Prices of shares and share indices* Percent PX50 Current price BBG EUR 180% Utilities Index CZK 605.3** 170% 160% 150% Price on Jan 3, 2005 CZK 340.7 140% 130% 120% 110% 100% 2005 February January2005 2005 M
Slide 4: EBIT Increased Y-o-Y by 44% to CZK 16.1 bn
EBIT INCREASED Y-O-Y BY 44 % TO CZK 16.1 bn, INCREASE OF CZK 4.9 bn Index 1st half 1st half Diff. (in CZK millions) 05/04 2004 2005 05-04 (%) Revenues 50,510 60,742 10,232 120.3 Main impacts Sales of electricity 46,614 57,502 10,888 123.4 higher margins Heat sales and other revenues 3,896 3,240 -655
Slide 5: Net Income Grew Year-on-Year by 39%
NET INCOME GREW YEAR-ON-YEAR BY 39 % TO CZK 11 bn (INCREASE OF CZK 3.1 bn) Index 1st half 1st half Diff. (in CZK millions) 05/04 2004 2005 05-04 (%) Income before other expense/income and 11,209 16,100 4,891 143.6 income taxes Other expenses/income 1,063 2,273 1,210 213.9 Interest on debt, net of ca
Slide 6: We Increase Our Full 2005 Net Income Forecast
WE INCREASE OUR FULL 2005 NET INCOME FORECAST FROM CZK 15.6 bn TO CZK 16.1 bn CZK m 18 0.46 0.45 0.59 16 1.00 14 12 10 + CZK 0.5 bn 8 + 3.2% 16.1 15.6 14.1 6 4 2 0 04 n ) s s t) la s e n s s 20 a te m ca E (p e ns ti e gai re M 0 5 r iv r s / O de xp he (fo C 20 .e ot s se 5 IN E on lo 0 M fin d 20
Slide 7: ROE Increased by 34% Year-on-Year
ROE INCREASED BY 34% YEAR-ON-YEAR Return on Equity (net) % 10 9 8 7 + 33.9% 6 6.3 5 4 4.7 3 2 1 0 1st half of 2004 1st half of 2005 6
Slide 8: Balance Sheet Remains Robust
BALANCE SHEET REMAINS ROBUST ASSETS Mainly increase in cash EQUITY & LIABILITIES Increase especially in CZK bn and cash equivalents by CZK bn liabilities from 8.8 CZK bn dividends declared 280.8 295.9 280.8 295.9 300 300 26.5 Current liabilities 38.5 22.7 23.0 20.3 250 22.4 250 16.0 30.7 29.9 29.4 D
Slide 9: Cash Flow from Operating Activities Increased
CASH FLOW FROM OPERATING ACTIVITIES INCREASED CZK bn Other 30 Annual Interest paid, net of interest increase: capitalized + 8.2% 25 Income taxes paid Increase in cash flow from operating Foreign exchange rate loss/gain, activities in the 1st 20 net half 2005 is mainly Interest expense, interest inco
Slide 10: Debt Ratios Remain Best in the Branch
DEBT RATIOS REMAIN BEST IN THE BRANCH % Limit for Total Indebtedness is 50% (limit results from current loan agreements) 50 45 40 35 30 25 27.6 28.3 20 15 15.3 14.8 10 5 0 30. 6. 2004 30. 6. 2005 Long-term indebtedness Total indebtedness with provisions excluded 9
Slide 11: ČEZ Group Increased Utilization of Power Plants with Lower Costs
EZ GROUP INCREASED UTILIZATION OF POWER PLANTS WITH LOWER COSTS Gross electricity generation TWh 30.8 30.5 35 Hydro power 1.1 1.1 plants 30 (3.6% ) (3.6% ) Hydro – favorable 25 11.5 Nuclear 12.3 hydrological conditions, all (37.3% ) power plants (40.3% ) power plants broken during 20 flood in 2002 a
Slide 12: Electricity Consumption in the Czech Republic Is Growing
ELECTRICITY CONSUMPTION IN THE CZECH REPUBLIC IS GROWING + 2.2% year-on-year growth in electricity consumption in the Czech republic + 2.3% year-on-year growth in EZ Group´s domestic sales TWh 28.8 29.5 30 EZ Group share on 25.0 25.6 25 supply to the end users in the Czech Republic 20 15 EZ Group´s
Slide 13: Revenues from Electricity Sales Increase Mainly Due to Higher Price
REVENUES FROM ELECTRICITY SALES INCREASE MAINLY DUE TO HIGHER PRICE Electricity sales incl. auxilliary services CZK bn 79.5 92.7 111.6 120 100 Bulgaria CZK 11 bn 2nd half 80 Slowdown in sales 60 growth is caused by structural changes in the domestic market. 40 1st half Trading through 57.5 public ma
Slide 14: Virtual Power Plant Auction Met with High Demand
VIRTUAL POWER PLANT AUCTION MET WITH HIGH DEMAND FINAL PRICE 15.1% ABOVE 2005 LEVEL CEZ held Virtual Power Plant auction on August 3; the auction had been ordered by Antitrust Office in relation to acquisiton of shares in Severoceska energetika. The auctioned volume of electricity (c. 3.2 TWh in 200
Slide 15: Domestic Wholesale Electricity Prices in 2006 to Grow by 14.3%
DOMESTIC WHOLESALE ELECTRICITY PRICES IN 2006 TO GROW BY 14.3% On August 12 – 22 CEZ held wholesale auction for electricity supplies in 2006. The auction has again met with high demand. The total electricity sales, including contracts that have been concluded through the Virtual Power Plant, has inc
Slide 16: Gap Between Electricity Prices in the Czech Republic and Abroad
GAP BETWEEN ELECTRICITY PRICES IN THE CZECH REPUBLIC AND ABROAD LEAVES ROOM FOR FURTHER DOMESTIC PRICE INCREASE Wholesale electricity prices (baseload) 2000 index 260 +24.0% EEX Forward 2006 240 43.5 EUR/MWh 220 200 180 160 140 +15.1% Czech Republic 2006 120 35.1 EUR/MWh +11.4% 100 80 60 2000 2001 2
Slide 17: Overview of Key Subsidiaries Unconsolidated H1 2005 Results
OVERVIEW OF KEY SUBSIDIARIES UNCONSOLIDATED H1 2005 RESULTS EZ, a. s. and ER Company ER ER electricity EZ S E SME STE V E Z E Sofia Name Pleven Stolichno distribution Oblast companies Sales 33,770 6,207 7,708 6,726 6,421 4,408 1,570 1,573 2,863 EBIT 10,931 889 1,037 879 833 638 67 160 280 EBITDA 17,
Slide 18: Strategic Initiatives
STRATEGIC INITIATIVES Vision and corporate targets Integration M&A Plant and expansion portfolio operational renewal excellence (2004-8) (2004-10) (2007-20) Performance-oriented culture 17
Slide 19: Strategic Initiatives - Summary
STRATEGIC INITIATIVES - SUMMARY Integration and operational excelence Vision 2008 on track. Unbundling to be implemented by the of 2005. EZ, a. s. intends to squeeze out minority shareholders from four out of its five Czech distribution companies. Squeeze outs proceed as planned. M&A expansion EZ, a
Slide 20: Acquisition Targets in Central Europe
ACQUISITION TARGETS IN CENTRAL EUROPE Poland 1.Privatization of Zespół Elektrowni Dolna Odra SA (power plants Dolna Odra, Pomorzany and Szczecin) Dolna Odra (up to 85%) Installed capacity (MW) 1 950 On August 19 CEZ submitted another bid in Sales (2004, TWh) 5.6 this transaction; the Polish governme
Slide 21: Acquisition Targets in Southeast Europe
ACQUISITION TARGETS IN SOUTHEAST EUROPE Bulgaria Generation We placed bids for the power plants Varna and Russe. EZ´s bid was second behind the Russian company RAO in both cases. However, according to a decision of the Bulgarian Antitrust Office it is not possible to sell both power plants to one bi
Slide 22: The Acquisition of EDC Oltenia Is Almost Complete
THE ACQUISITION OF EDC OLTENIA IS ALMOST COMPLETE AND INTEGRATION HAS STARTED Acquisition of distribution in Romania 51% share in EDC Oltenia*, adjacent to the Bulgarian EDCs Status CEZ Group selected as a tender winner SPA signed; settlement expected in 9/2005 Strong CEZ management team on the grou
Slide 23: Integration of the Bulgarian EDCs Is Progressing Faster Than Expected
THE INTEGRATION OF THE BULGARIAN EDCs IS PROGRESSING FASTER THAN EXPECTED Status Acquisition of distribution in Bulgaria Control gained faster than expected thanks to tight project 67% in three EDC management Corporate governance changes to secure control over all three EDCs Team of 3 observers quic
Slide 24: Fast Integration Brings Early Results
FAST INTEGRATION BRINGS EARLY RESULTS Energy losses were reduced by ~10% in all three EDCs during the first half of 2005 Coordination of selected activities among EDCs already delivered first cost savings All three EDCs adopted international accounting standards CEZ is the only one of all distributi