CEZ Group

The energy company ČEZ is thinking about selling its Počerady and Chvaletice power stations. Neither power station has undergone modernisation, and their future operation will require an investment into reducing emissions to meet the emission limits applicable from 2016. The main reason behind the considered sale of both power stations is the uncertainty of coal supplies after 2013 due to as yet inconclusive negotiations with the fuel supplier, Czech Coal.

The facility which can supply solar-generated electricity to 3840 households is built in one of EU’s poorest regions.

The CEZ Group’s year-on-year earnings increased by four billion crowns (7%) to attain a level of CZK 60.8 billion. Operating profit prior to depreciation (EBITDA) decreased year-on-year by CZK 0.3 billion (1%) to CZK 26.3 billion and net profit decreased by CZK 2.8 billion (16%) to CZK 14.4 billion. The main reason behind the year-on-year decrease in profit was the unfavourable tariff decision adopted by the Albanian regulator, combined with extraordinary derivative and exchange rate profits during the first quarter of 2011. Over the course of this year, the ČEZ Group expects to see a year-on-year increase in net profit to CZK 41 billion.

CEZ Energy intends to consider the possibility of a strategic partnership in the completion of the Temelín Nuclear Power Station. It is usual in Europe that nuclear projects are built and subsequently operated by consortiums of several companies; the French EdF, several times larger than CEZ, is also implementing the Flamanville project in a consortium with Enel. CEZ has received bids from several interested parties and, since a partnership sounds logical, CEZ has decided to select the potential partner in a transparent tender. Given the fact that the selection of a supplier for the completion of Temelín is carried out pursuant to the Public Contract Act and that the information in this public contract is highly confidential, the partnership will probably be formed after the contract with the selected supplier is signed, which is expected to happen in 2013.

The Net Profit of the CEZ Group exceeded the expected all-year figures by CZK 0.7 billion, reaching CZK 40.8 billion. The CEZ Group significantly surpassed last year’s planned figures in Operating Profit Before Depreciation (EBITDA), which exceeded the plan by CZK 2.5 billion and reached more than CZK 87.3 billion. Although the Operating Profit for 2011 is by 1.7% lower than in 2010, CEZ eventually delivered a higher profit to its shareholders than planned.

The contractual relationships between CEZ and Skoda Power have been at arm’s length and set in a usual formal manner, including provisions on liquidated damages. Having examined the documentation pertaining to CEZ’s contracts for Skoda Power, Internal Audit found no evidence of informal relations that would indicate any improper, unethical or corrupt conduct.

Prague, 23 November 2011 – A project named Grid4EU, aimed at the development of smart grids in the European Union, has been launched officially. It is so far the largest demonstration project in power engineering supported by the European Union. Six European energy companies are taking part in it – including CEZ Group.

The CEZ Group has today announced its financial results for the first three quarters of 2011 and its expected all-year figures. As expected, CEZ’ Operating Profit Before Tax declined by 6.9% year on year to CZK 62.4 billion. This is due to lower effective prices of electricity resulting from the economic crisis, which reduced the forward contract prices in 2008 – 2010 when the CEZ Group sold its power to be generated in 2011. Another negative factor was a lower hedging CZK/EUR exchange rate due to the ongoing appreciation of the crown toward the euro but also a lower amount of power generated by hydro power stations due to deteriorated hydrological conditions. These negative factors were countered by measures aimed to optimize the use of production sources and a greater gross margin as well as the generation of power from renewable sources, primarily in foreign countries.

CEZ has today handed over an Invitation to Submit Bid with the relevant Tender Documentation to the three candidates that have qualified for the tender for the public contract of “Completion of the Temelin Nuclear Power Plant”.

At today’s session the Board of Directors of CEZ elected Mr. Martin Novak as its Vice- Chairman.