The joint-stock company ČEZ, a. s. was incorporated by registration in the Commercial Register maintained by the Municipal Court in Prague, Part B, insert 1581, on May 6, 1992, as a going concern. The principal shareholder is the Czech Republic, acting through the Ministry of Finance of the Czech Republic, which is charged with administering the equity stake.
Its core businesses encompass the generation, distribution, and trading of electricity, the generation and distribution of heat, and trading in natural gas. A detailed description of the Company’s core businesses can be found in the Articles of Association and in the Commercial Register.
Key Figures of ČEZ, a. s. (IFRS)
Units 2008 2009 Index 2009/2008 (%)
Electricity generated (gross) GWh 60,922 60,610 99.5
Installed capacity MW 12,231 12,300 100.6
Balance of electricity sold and procured1) GWh 55,400 54,917 99.1
Heat sold TJ 8,901 9,411 105.7
Operating revenues CZK millions 110,297 119,205 108.1
Operating expenses (excluding depreciation and amortization) CZK millions 48,407 53,303 110.1
EBITDA CZK millions 61,890 65,902 106.5
EBIT CZK millions 48,855 52,975 108.4
Net income CZK millions 47,118 45,427 96.4
Dividend per share (gross)2) CZK/share 40.0 50.0 125.0
Total assets CZK millions 392,593 444,698 113.3
Equity CZK millions 154,927 177,460 114.5
Financial debt CZK millions 84,290 131,356 155.8
Return on Equity (ROE), net % 30.9 27.3 88.3
Return on Assets (ROA), net % 13.3 10.9 82.0
Net debt/EBITDA 1 1.03 1.77 171.8
Current ratio % 79.8 85.8 107.5
Work force head count at December 31 persons 6,196 6,230 100.5
1)Sold to end customers + sold to cover grid losses + wholesale balance. 2)Approved in the given year.
ČEZ, a. s. Financial Performance Commentary
Revenues, Expenses, Income
In 2009 ČEZ, a. s. posted EBITDA of CZK 65.9 billion, up CZK 4.0 billion (+6.5%) from the year before. Net income was down CZK 1.7 billion (–3.6%) due to a worsening of the financial result.
Operating revenues climbed CZK 8.9 billion (+8.1%), thanks in particular to sales of electricity one year or more in advance. Almost all electricity generated in 2009 was already sold in 2008, at a time of high prices. At the same time, the Company’s commodity trading surplus increased – by CZK 2.9 billion to CZK 6.4 billion. Another factor contributing to EBITDA growth was production optimization, which means that generation was cut back at times when it was less expensive to purchase electricity in the marketplace. As a result, production volume fell by 0.3 TWh (–0.5%), coal-fired power plants produced 1.5 TWh less, while nuclear and hydro power plants saw their output rise by 0.6 TWh and 0.6 TWh, respectively.
Despite lower generation in coal-fired power plants, fuel expenses rose slightly (by CZK 0.7 billion), due in particular to the fact that the price of coal is linked to electricity prices in the previous year. Higher repair and maintenance expenses were caused by a year-on-year increase in the scope of power plant shutdowns and repairs. Wages and salaries were up on wage increases pursuant to the Collective Agreement and, further, the creation of a provision for employee benefits, primarily retirement-related. Trading in emission rights ended the year with a loss of CZK 0.6 billion, for a year-on-year drop of CZK 2.3 billion. Compared to the previous year, an extraordinary gain realized in 2008 from the “JI/CDM” program, i.e. the replacement of European EUA emission rights with cheaper credits from projects implemented outside European Union Member States, had a fundamental impact. Following the clarification of rules for emission rights auctions after 2012, ČEZ, a. s. also reviewed its medium term hedging strategy of acquiring emission rights and moved a portion of the rights purchased for this period out of the hedging accounts.
Other Expenses and Income
Other expenses and income was down CZK 6.3 billion in year-on-year terms, reaching a level of CZK 1.8 billion. Despite a higher need for financing, interest expenses were kept under control, rising by CZK 0.1 billion, while on the other hand effective utilization of cash caused interest revenues to increase by CZK 0.1 billion. Gains and losses on sales of subsidiaries, associates and joint-ventures were down CZK 0.8 billion from the previous year – in 2008 this item was positively impacted by the sale of I & C Energo a. s. Other financial income (expenses), net was down CZK 5.3 billion, due primarily to a CZK 4.5 billion decrease in the derivatives trading result and the creation of a valuation allowance on financial assets relating to a CZK 3.0 billion decline in the value of goodwill in the Polish subsidiaries. Another factor in the decrease was a CZK 0.7 billion drop in revenues from short-term securities as surplus cash was moved into higher-performing instruments. On the other hand, 2009 saw dividends received grow by CZK 2.5 billion. In 2009 other income was up CZK 0.4 billion, primarily on higher revenues from bank guarantees provided within CEZ Group.
Income taxes were lower by CZK 0.5 billion compared to the previous year. This can be attributed primarily to the lower income result.
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Financial Performance of ČEZ, a. s. ČEZ, a. s.
EBITDA (CZK billions)
65.9
Electricity generated, gross (GWh)
Structure of Assets and Capital
Total assets were up CZK 52.1 billion year-on-year to CZK 444.7 billion.
Non-current assets were up CZK 61.4 billion from one year ago, to reach a value of CZK 355.1 billion. In net terms, the value of property, plant and equipment fell CZK 6.1 billion year-on-year as the pace of depreciation was faster than the rate at which new assets were put into use. In 2009 there was growth in additions to property, plant and equipment as construction work in progress, including advances paid, increased by CZK 18.8 billion. Other non-current assets increased by CZK 49.6 billion over the previous year, primarily on higher financial investments in 2009.
Current assets were down in 2009, by CZK 9.3 billion to CZK 89.6 billion, primarily on a CZK 6.0 billion drop in cash and cash equivalents, including short-term securities, and a CZK 12.2 billion decrease in derivative receivables, which was offset on the equity and liabilities side by a CZK 13.7 billion decrease in derivative liabilities. On the other hand, short-term lendings to companies in the Group were up CZK 11.1 billion.
Equity rose CZK 22.5 billion in 2009, to reach CZK 177.5 billion. Net income generated in 2009 contributed CZK 45.4 billion to the equity increase. Afterwards, the increase was made lower by the approved CZK 26.7 billion dividend. Changes in equity related to the hedging accounts increased equity by CZK 3.5 billion.
Long-term liabilities grew CZK 48.9 billion to CZK 154.0 billion, primarily on new bond issues and an increase in long-term bank loans.
The deferred tax liability rose slightly (by CZK 0.1 billion) to CZK 8.7 billion.
Current liabilities were down CZK 19.4 billion to CZK 104.5 billion. The decline in current liabilities was caused by several opposing factors. These were, primarily, a CZK 13.7 billion drop in derivative payables, which on the assets side was offset by a CZK 12.2 billion decrease in derivative receivables, and a CZK 5.5 billion reduction in payables to suppliers.
Cash Flows
Net cash provided by operating activities was up CZK 18.3 billion in 2009. Contributing to the growth was income before income taxes after adjustments to reconcile income before income taxes to net cash provided by operating activities, which was up CZK 4.8 billion – the principal positive factors here were a CZK 2.5 billion increase in dividends received and a CZK 12.3 billion change in working capital due in particular to lower receivables from PXE trading resulting from a decline in market prices and continual cash settlement on the PXE. Income taxes paid in 2009 were up CZK 1.6 billion, lowering net cash provided by operating activities.
Cash used in investing activities was up CZK 66.4 billion, primarily on a CZK 33.0 billion increase in financial investments (new acquisitions), a CZK 21.6 billion increase in investments in non-current assets, and a CZK 12.5 billion net increase in lending within CEZ Group.
Cash flows provided by financing activities were up CZK 52.0 billion. Here the main factors were a CZK 44.6 billion increase in borrowings and other long-term obligations, net, and a CZK 12.4 billion decrease in share buy-back expenditures following the 2008 buy-back. A CZK 5.3 billion increase in dividends paid in 2009 had an opposing effect.
Comprehensive Income
Comprehensive income, net of tax, was up CZK 10.1 billion from the previous year, to CZK 48.9 billion. Within that figure, net income was down CZK 1.7 billion to CZK 45.4 billion while changes in equity increased comprehensive income by CZK 11.8 billion. The biggest factor in the latter increase was a stronger Czech Koruna against the Euro: the overall change in the fair value of cash-flow hedge instruments, transfer of cash-flow hedges from equity to the income statement, and deferred taxes from these transactions, taken together, increased net income by CZK 12.2 billion in year-on-year terms.
ČEZ, a. s. Financing
Borrowings and Their Maturity a) Long-term Loans
Creditor Currency Maximum Valuation Maturity Collateral
loan amount in of debt at given currency December 31, 2009 (millions) (CZK millions)
European Investment Bank CZK 3,058 941 Sep 16, 2013 none
European Investment Bank EUR 200 5,293 Nov 12, 2019 none
European Investment Bank EUR 100 1,323 Jan 12, 2020 none
Long-term loans, total 7,557
of which: current portion 235
Long-term loans, net of current portion 7,322
b) Short-term Loans
Indebtedness at December 31, 2009 (CZK millions)
Short-term bank loans 6,953
Negative balance facilities 1,054
Current portion of long-term loans 235
Other short-term financing 4,611
Short-term loans, total 12,853
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