Interim / Quarterly Report • Aug 31, 2016
Interim / Quarterly Report
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2016
Headquartered in the Czech Republic, CEZ Group is an integrated energy conglomerate with operations in a number of Central and Southeastern European countries and Turkey. Its core business is the generation, distribution, trade in, and sales of electricity and heat, trade in and sales of natural gas, coal extraction, and energy services. CEZ Group companies employ over 26,000 people.
The largest shareholder of the Group's parent company, ČEZ, a. s., is the Czech Republic with a nearly 70% stake in the Company's stated capital (as at May 27, 2016). ČEZ, a. s. shares are traded on the Prague and Warsaw stock exchanges and included in the PX and WIG-CEE exchange indices.
CEZ Group's mission is to provide safe, reliable, and positive energy to its customers and society as a whole; its goal is to bring innovations for resolving energy needs and to help improve the quality of life. Its strategy reflects the major transformation of Europe's energy market. CEZ Group wants to operate its power assets as efficiently as possible and adapt to the growing share of decentralized and zeroemission generation. Another of its priorities is to offer its customers a wide range of products and services in synergy with the sale of electricity and gas. Its third priority is to invest actively in promising energy assets with focus on the Central European region and in support for advanced technologies in an early stage of development.
CEZ Group companies in the Czech Republic extract and sell coal, generate and distribute electricity and heat, and trade in electricity and other commodities. They sell commodities such as electricity, heat, and natural gas to end-use customers, offer them electricity generation and storage facilities, and provide them with other services, especially in relation to energy savings. Their power generation portfolio consists of nuclear, coal-fired, gas-fired, hydroelectric, photovoltaic, wind, and biogas facilities.
CEZ Group's activities abroad consist mainly of electricity distribution, generation, trading, and sale. CEZ Group is the owner or co-owner of generation and distribution assets in Poland, Romania, Bulgaria, Turkey, and Slovakia. CEZ Group's subsidiaries in the Netherlands and Ireland are ownership intermediaries and companies providing its financing.
In many European countries, CEZ Group trades in electricity and other commodities on wholesale markets. Besides the Czech Republic, CEZ Group sells electricity or natural gas to end-use customers in Romania, Bulgaria, Turkey, Hungary, Poland, and Slovakia, in particular.
CEZ Group's business activities are governed by strict ethical standards that include responsible behavior toward employees, society, and the environment. In its business activities, CEZ Group embraces the principles of sustainable development, supports energy efficiency, promotes new technologies, and creates an environment for employees' professional growth. Its corporate culture emphasizes safety, continuous growth in internal efficiency, and support for innovation in order to increase CEZ Group's value.
| Statutory Declaration of Persons Responsible for the CEZ Group Half-Year Report 4 | |
|---|---|
| Selected Indicators of CEZ Group 5 | |
| Shares 6 | |
| Selected Events 9 | |
| Developments in Relevant Energy Markets 11 | |
| External Conditions in the Energy Business 12 | |
| CEZ Group Strategic Objectives 13 | |
| Financial Performance of CEZ Group 14 | |
| CEZ Group Capital Expenditures 29 | |
| Commodities Procured and Sold by CEZ Group 30 | |
| CEZ Group in the Czech Republic 33 | |
| Mining 36 | |
| Generation 37 | |
| Distribution 42 | |
| Sales 43 Other Activities 45 |
|
| CEZ Group in Poland 47 | |
| CEZ Group in Bulgaria 49 | |
| CEZ Group in Romania 51 | |
| CEZ Group in Turkey 53 | |
| CEZ Group in Slovakia 55 | |
| Countries with Limited Presence 56 | |
| Changes in CEZ Group Ownership Interests 57 | |
| General Meeting of ČEZ, a. s 59 | |
| Changes in ČEZ, a. s. Governance Bodies 60 | |
| Litigation and Other Proceedings 61 | |
| Contacts 68 | |
| Abbreviations 70 | |
| Methods Used to Calculate Indicators Unspecified in IFRS 71 | |
| CEZ Group Interim Consolidated Financial Statements 75 | |
| Identification of ČEZ, a. s. 95 |
Selected Indicators of CEZ Group in Accordance with IFRS
| Unit | H1 2015 | H1 2016 | 2016/2015 index | |
|---|---|---|---|---|
| (%) | ||||
| Installed capacity as at June 30 | MW | 15,926 | 15,920 | 100.0 |
| Electricity generated (gross) | GWh | 32,235 | 31,804 | 98.7 |
| Electricity sold 1) | GWh | 19,197 | 18,561 | 96.7 |
| Heat sold 1) | TJ | 13,055 | 13,431 | 102.9 |
| Gas sold 1) | GWh | 3,837 | 4,223 | 110.1 |
| Workforce headcount as at June 30 | persons | 25,748 | 26,080 | 101.3 |
| Operating revenues | CZK millions | 104,524 | 98,903 | 94.6 |
| of which: sales of electricity and related services |
CZK millions | 90,458 | 84,654 | 93.6 |
| EBITDA | CZK millions | 35,524 | 33,098 | 93.2 |
| EBIT | CZK millions | 21,300 | 17,998 | 84.5 |
| Net income | CZK millions | 15,414 | 13,797 | 89.5 |
| Adjusted net income2) | CZK millions | 15,432 | 14,770 | 95.7 |
| Earnings per share ̶ basic | CZK / share | 28.8 | 25.5 | 88.5 |
| Dividend per ČEZ, a. s. share (gross) 3) | CZK / share | 40.0 | 40.0 | 100.0 |
| Net cash provided by operating activities | CZK millions | 28,676 | 25,893 | 90.3 |
| Capital expenditures (CAPEX) 4) | CZK millions | (13,409) | (13,268) | 98.9 |
| Investments 5) | CZK millions | - | (42) | |
| Total assets | CZK millions | 602,686 7) | 611,060 | 101.4 |
| of which: property, plant, and equipment 6) CZK millions | 421,364 7) | 417,976 | 99.2 | |
| Equity (including non-controlling interests) | CZK millions | 272,155 7) | 264,418 | 97.2 |
| Net debt 2) | CZK millions | 131,083 | 124,418 | 94.9 |
| Return on Equity, net (ROE) 2) | % | 8.0 | 7.3 | 91.3 |
| Net debt / EBITDA 2) | 1 | 1.93 | 1.99 | 103.1 |
1) Sales to end-use customers (outside CEZ Group).
2) Definition on the page 71—73
3) Aw arded in a given year to be paid out of the previous year's income.
4) Additions to property, plant, and equipment and intangibles.
5) Acquisition of subsidiaries and joint ventures, net of cash acquired.
6) Property, plant, and equipment (including nuclear fuel and construction w ork in progress).
7) As at December 31, 2015
During its revision of European energy companies' credit ratings in connection with an ongoing decrease in electric power prices, Standard & Poor's Credit Market Services Europe Limited reaffirmed ČEZ's long-term rating of A– with a stable outlook on February 26, 2016. The rating remained unchanged in H1 2016.
Moody's Investors Service Ltd., also revising European energy companies' credit ratings in connection with decreasing electric power prices, lowered its long-term credit rating of ČEZ, a. s. by one notch to Baa1 with a stable outlook (from the previous A3 with a stable outlook) on April 6, 2016.
Both credit rating agencies are included in the list of credit rating agencies pursuant to Regulation (EC) No. 1060/2009 of the European Parliament and of the Council, as amended by Regulation (EU) No. 513/2011 of the European Parliament and of the Council and Regulation (EU) No. 462/2013 of the European Parliament and of the Council. When selecting credit rating agencies, ČEZ, a. s. complies with Article 8d of the above-mentioned Regulation.
Five CEZ Group companies have publicly traded shares.
As at June 30, 2016, the stated capital of ČEZ, a. s. totaled CZK 53,798,975,900. The company's stated capital comprises 537,989,759 shares with a par value of CZK 100.
Structure of Shareholders—by Entity Type (%)
| Share in | Share in | Share in | Share in | |
|---|---|---|---|---|
| stated capital | voting rights | stated capital | voting rights | |
| as at June 5, 2015 1) | as at May 27, 2016 2) | |||
| Legal entities, total | 93.06 | 93.01 | 90.26 | 90.19 |
| of which: Czech Republic | 69.78 | 70.27 | 69.78 | 70.27 |
| ČEZ, a. s. | 0.70 | 0.70 | ||
| Other legal entities | 22.58 | 22.74 | 19.78 | 19.92 |
| Private individuals, total | 6.94 | 6.99 | 9.74 | 9.81 |
1) Date of record for participation in the 23rd Annual General Meeting.
2) Date of record for participation in the 24th Annual General Meeting.
Entities with a share amounting to at least 1% of the stated capital of ČEZ, a. s., as registered in the Central Securities Depository on May 27, 2016, included:
On June 16, 2016, BlackRock, Inc. delivered a notice of its share in voting rights pursuant to Section 122(1) of the Capital Market Undertakings Act. According to the notice, its share in the voting rights is 1.19%; its share in the stated capital is 1.21%.
These entities have rights pursuant to Section 365 et seq. of the Business Corporations Act.
To cover claims arising out of the Company's stock option plan, 3,755,021 treasury shares, representing 0.70% of the stated capital were held on the asset account of ČEZ, a. s. with the Central Securities Depository at the beginning of 2016.
No stock option plan beneficiary claimed the grant of any share options of ČEZ, a. s. during H1 2016.
The balance of treasury shares had not changed by June 30, 2016, and there were 3,755,021 treasury shares, i.e. 0.70% of the stated capital, registered on the asset account of ČEZ, a. s. with the Central Securities Depository on that date.
The share price was CZK 444 at the beginning of 2016, reaching a half-year low of CZK 364 on February 24, a half-year high of CZK 461 on April 29, and closing the half-year at CZK 414.
The General Meeting held on June 3, 2016 decided to pay a dividend of CZK 40 per share before tax. The share in profits awarded to the shareholders of ČEZ, a. s. is CZK 21,519,590 thousand in total, of which CZK 21,369,390 thousand is to be paid out, representing 77.3% of the adjusted consolidated net income and 104.0% of the consolidated net income. The dividend on treasury shares held by the Company at the record date, i.e. the difference between the amounts above, is included in retained earnings. Entities that were shareholders of ČEZ on the record date, i.e. June 9, 2016, are entitled to the dividend.
The dividend is payable on August 1, 2016 and can be claimed until July 31, 2020.
The company's shares, whose ISIN is CZ0008041787, are admitted to trading on the Prague Stock Exchange's regulated market. On March 31, 2016, the common dematerialized shares of ČEZ, a. s. were exchanged for the common materialized shares of ČEZ Obnovitelné zdroje, s.r.o., in the amount of 136,544 shares, and the common dematerialized shares of ČEZ, a. s. were exchanged for the common materialized shares of ČEZ Korporátní služby, s.r.o., in the amount of 6,301 shares. The exchange of shares did not result in any change in the shareholders' stakes.
As at June 30, 2016, ČEZ, a. s. held a 99.596% stake in the company; the other shareholders were ČEZ Obnovitelné zdroje, s.r.o. with a 0.386% stake and ČEZ Korporátní služby, s.r.o. with a 0.018% stake in the company's capital.
The company's shares are traded freely on the stock exchange. A portion of the shares representing a 25.3% stake in the company's capital has been traded on the Istanbul stock exchange since July 3, 2000. The ISIN is TRAAKENR91L9. The shares are not traded on any other public markets. ČEZ, a. s. held a 37.4% stake in the company's capital as at June 30, 2016.
The company's shares have been traded on the BSE stock exchange (Българска Фондова Борса) since October 29, 2012. Their ISIN is BG1100024113. The shares are not traded on any other public markets. As at June 30, 2016, ČEZ, a. s. held a 67% stake and the second largest shareholder, the Chimimport group, held a 24.86% stake in the company's capital.
The company's shares have been traded on the BSE stock exchange (Българска Фондова Борса) since October 29, 2012. Their ISIN is BG1100025110. The shares are not traded on any other public markets. As at June 30, 2016, ČEZ, a. s. held a 67% stake and the second largest shareholder, the Doverie group, held a 11.96% stake in the company's capital.
Unit 4 of the Dukovany Nuclear Power Plant resumed operation.
Wholesale prices of electricity in the Czech Republic are linked to prices in Germany due to the close interconnection of these two markets. Electricity prices are influenced by the following factors in particular:
The prices of electricity with delivery in 2017 fell by 20% in early 2016, hitting a many-year low of 20.7 EUR/MWh in mid-February. We witnessed a similar drop in oil prices over the same period, which adversely affected the sentiment on all commodity markets. Coal prices were no exception and, together with a concurrent slump in the prices of emission allowances, were the main cause of the fall in the prices of electricity. However, coal prices started to rise in the second half of February due to lower production in Indonesia and China, helping overturn the trend in the prices of electricity, which closed the first half-year at a level of 27 EUR/MWh. Unlike coal prices, the market in emission allowances did not get any positive fundamental signal, so their prices remain very low. They closed the half-year at 4.5 EUR/t.
Wholesale Price of Electricity (2017 Year Band)
Prices of Emission Allowances (2017 Forward Contracts)
In February, the European Commission published a package of new rules and strategies to implement the Energy Union, focusing primarily on natural gas (a proposal for a security of natural gas supply regulation, a proposal for a decision on intergovernmental agreements in energy, a communication concerning the liquefied natural gas and gas storage strategy, and a communication containing the EU's heating and cooling strategy).
A noteworthy non-legislative document is the Heating and Cooling Strategy, which focuses on removing barriers to decarbonization in buildings and industry. From the perspective of the preparation of new EU legislation, the strategy will be important for a revision of the energy efficiency directive and the directive on the energy performance of buildings.
On April 11, 2016, the EU Council adopted its decision on the European Union's ratification of the Paris Agreement concluded under the United Nations Framework Convention on Climate Change. In view of the EU's efforts to ensure an integrated internal market in electricity and the security of supply, a very important piece of legislation was passed in April. It is the network code on requirements for grid connection of generators, adopted in the form of Commission Regulation 2016/631 of April 14, 2016. It lays down detailed conditions for grid connection of power-generating facilities, namely synchronous power-generating modules, power park modules and offshore power park modules, to the interconnected system. In addition to the detailed conditions for grid connection of generating facilities, it contains regulatory aspects, including the obligations of transmission system operators and owners of generating facilities.
Directive 2003/87/EC of the European Parliament and of the Council establishing a scheme for greenhouse gas emission allowance trading within the Community and amending Council Directive 96/61/EC is being revised at the moment. The revision aims to speed up CO2 emission reduction within the EU ETS emission allowance trading system, to change the rules to protect industry against "carbon leakage" (enterprises relocating to other parts of the world due to increased costs resulting from the EU's excessively strict legislation concerning greenhouse gas emissions), and to utilize supporting funds and define rules for free allowances for the electricity sector.
The European energy sector is facing a period of major changes and increased pressure on the wholesale price of electricity. The European Union's policy continues to endeavor to reduce emissions in electricity generation. The prices of global energy commodities are falling to many-year lows. The market deformed by the constant creation of new regulatory measures lacks the necessary stability for making long-term, market-based investment decisions. Global commodity markets keep experiencing technological revolution concerning the extraction of oil and shale gas. The success of the extraction technology in the U.S. was directly reflected in the drop of oil prices, which fell to its 12-year low. Although oil prices have stabilized at around 50 USD/bbl in recent months, market disequilibrium and high levels of stockpiles limit further growth.
The development in oil prices was also reflected in the prices of other energy commodities—hard coal and natural gas. In light of recent investments in increasing mining and transportation capacities worldwide and the slow growth in global demand, world coal and gas markets will remain sufficiently supplied in the next few years. As a result, fuel prices should remain at lower levels than in past years.
Europe's energy sector in early 2016 continued to be burdened with market and regulatory uncertainties and declining commodity prices, resulting in further decrease in electricity prices in the wholesale market, which however registered a correction in the second quarter, getting back to the levels of the beginning of 2016. Renewables, decentralized solutions, and comprehensive customer products are increasingly coming to the fore.
The development in 2016 thus fully validated the assumptions behind CEZ Group's strategy, which reacted to these trends already in the fall of 2014, when it also updated its mission and vision. CEZ Group's mission is to provide safe, reliable, and positive energy to its customers and society as a whole. Its vision is to bring innovations for resolving energy needs and help improve the quality of life.
The practical fulfillment of CEZ Group's strategy pivots on three strategic priorities, under which CEZ Group focuses primarily on the following activities:
II. Offer customers a wide range of products and services addressing their energy needs
III. Strengthen and consolidate our position in Central Europe
To accelerate the fulfillment of our strategy and to direct more capacities toward development activities, we changed our method of management and established two teams, Operations and Development, with effect from January 1, 2016.
The Operations team focuses fully on efficient use of CEZ Group's conventional energy assets, mining, and ancillary services.
The Development team actively seeks new opportunities in renewables, decentralized energy, distribution, sales of energy commodities, and related services.
The management change involved bolstering segment management across the countries that CEZ Group operates in. A segment is a functionally autonomous part of CEZ Group that serves a single part of the value chain in the energy sector and is within the purview of individual members of the ČEZ, a. s. Board of Directors. As part of the change to the management of CEZ Group, segments became the primary units responsible for activities across countries and for achieving the ambitious financial targets with effect from January 1, 2016. Moreover, they allow better sharing of relevant best practices regardless of geographic boundaries.
As at June 30, 2016, the consolidated CEZ Group comprised a total of 113 companies, with 99 companies fully consolidated and 14 associates and joint ventures consolidated using the equity method.
The companies of the consolidated accounting unit of CEZ Group are divided into six operating segments.
ČEZ, a. s. Areál Třeboradice, a.s. CEZ Chorzów S.A. CEZ Skawina S.A. CEZ Srbija d.o.o. CEZ Towarowy Dom Maklerski sp. z o.o. CEZ Trade Romania S.R.L. ČEZ Teplárenská, a.s. Elektrárna Dětmarovice, a.s. Elektrárna Dukovany II, a. s. Elektrárna Mělník III, a. s. Elektrárna Počerady, a.s. Elektrárna Temelín II., a.s. Elektrárna Tisová, a.s. Energetické centrum s.r.o. Energocentrum Vítkovice, a. s. Energotrans, a.s. TEC Varna EAD Tepelné hospodářství města Ústí nad Labem s.r.o. AK-EL Kemah Elektrik Üretim ve Ticaret A.S. *) AK-EL Yalova Elektrik Üretim A.S. *) Akenerji Dogal Gaz Ithalat Ihracat ve Toptan Ticaret A.S. *) Akenerji Elektrik Enerjisi Ithalat Ihracat ve Toptan Ticaret A.S. *) Akenerji Elektrik Üretim A.S. *) CM European Power Slovakia, s.r.o. *) Egemer Elektrik Üretim A.S. *)
CEZ Distributie S.A. CEZ Razpredelenie Bulgaria AD ČEZ Distribuce, a. s. ČEZ Distribuční služby, s.r.o. Sakarya Elektrik Dagitim A.S. *)
A.E. Wind S.A. Baltic Green I sp. z o.o. Baltic Green II sp. z o.o. Baltic Green III sp. z o.o. Baltic Green IV sp. z o.o. Baltic Green V sp. z o.o. Baltic Green VI sp. z o.o. Baltic Green VII sp. z o.o. Baltic Green VIII sp. z o.o. Baltic Green IX sp. z o.o. Baltic Green Construction sp. z o.o. Bara Group EOOD CEZ Erneuerbare Energien Beteiligungs GmbH CEZ Erneuerbare Energien Verwaltungs GmbH ČEZ Obnovitelné zdroje, s.r.o. ČEZ OZ uzavřený investiční fond a.s. ČEZ Recyklace, s.r.o. Eco-Wind Construction S.A. Elektrownie Wiatrowe Lubiechowo sp. z o.o. Farma Wiatrowa Leśce sp. z o.o. Farma Wiatrova Wilkołaz-Bychava sp. z o.o. Free Energy Project Oreshets EAD M.W. Team Invest S.R.L. Mega Energy sp. z o.o. Ovidiu Development S.R.L. TMK Hydroenergy Power S.R.L. Tomis Team S.A. ČEZ Energo, s.r.o. *)
CEZ Elektro Bulgaria AD CEZ ESCO Polska sp. z o.o. CEZ Magyarország Kft. CEZ Slovensko, s.r.o. CEZ Trade Bulgaria EAD CEZ Trade Polska sp. z o.o. CEZ Vanzare S.A. ČEZ Energetické služby, s.r.o. ČEZ ESCO, a.s. ČEZ Prodej, s.r.o. ČEZ Solární, s.r.o. ČEZ Zákaznické služby, s.r.o. Energie2 Prodej, s.r.o. ENESA a.s. EVČ s r.o. Sakarya Elektrik Perakende Satis A.S.*)
| Mining | Other |
|---|---|
| Severočeské doly a.s. LOMY MOŘINA spol. s r.o. *) |
Centrum výzkumu Řež s.r.o. CEZ Bulgaria EAD CEZ Bulgarian Investments B.V. CEZ Deutschland GmbH CEZ ESCO Poland B.V. CEZ Finance Ireland Ltd. CEZ ICT Bulgaria EAD CEZ International Finance B.V. CEZ International Finance Ireland Ltd. CEZ MH B.V. CEZ Poland Distribution B.V. CEZ Polska sp. z o.o. CEZ Produkty Energetyczne Polska sp. z o.o. CEZ Romania S. A. CEZ Silesia B.V. CEZ Ukraine LLC ČEZ Bohunice a.s. ČEZ Energetické produkty, s.r.o. ČEZ ENERGOSERVIS spol. s r.o. ČEZ ICT Services, a. s. ČEZ Inženýring, s.r.o. ČEZ Korporátní služby, s.r.o. ČEZ Nová energetika, a.s. EGP INVEST, spol. s r.o. MARTIA a.s. PRODECO, a.s. Revitrans, a.s. SD – Kolejová doprava, a.s. Shared Services Albania Sh.A. ŠKODA PRAHA a.s. ŠKODA PRAHA Invest s.r.o. Telco Pro Services, a. s. ÚJV Řež, a. s. |
Akcez Enerji A.S.*)
CM European Power International B.V.*)
Jadrová energetická spoločnosť Slovenska, a. s.*)
*) Joint venture
CEZ Group Net Income Breakdown (CZK Billions)
EBITDA decreased by CZK 2.4bn year-on-year to CZK 33.1bn. Net income (after-tax income) decreased by CZK 1.6bn year-on-year to CZK 13.8bn.
Main causes for the year-on-year decrease in net income included, in particular, a decrease in the realization prices of generated electricity, repayment of debts (from 2010) by Správa železniční dopravní cesty (SŽDC) on the basis of a court decision in 2015, and additions to impairments of property, plant, and equipment in Romania. Main positive effects included foreign exchange effects on the financial performance of joint ventures in Turkey, higher profit on commodity trading, and resumed allocation of green certificates for Fântânele Vest and Cogealac.
Adjusted net income (refer to the indicator's calculation and definition on pages 71 and 73 in this Half-Year Report) decreased by CZK 0.7bn year-on-year. In H1 2016, net income was adjusted for the negative effect of additions to the impairments of property, plant, and equipment at the Romanian wind parks amounting to CZK 1.0bn.
Operating revenues decreased by CZK 5.6bn year-on-year primarily due to a decrease in revenue from sales of electricity and related services (CZK -5.8bn). Other operating revenues decreased (CZK -1.2bn) primarily due to repayment of debts (from 2010) by Správa železniční dopravní cesty (SŽDC) on the basis of a court decision in 2015.
A positive year-on-year effect was produced by commodity derivative trading (CZK +1.6bn) and revenue from sales of gas, coal, heat, and other sales (CZK +1.4bn), which increased year-on-year primarily due to an increased amount of gas sold.
Operating expenses decreased by CZK 0.7bn year-on-year primarily due to decreased purchase costs of energy and related services (CZK +1.8bn), relating to lower market prices of purchased
commodities, especially electricity. The decrease in operating expenses was partially offset by higher impairments of property, plant, and equipment in Romania (CZK -1.0bn).
Other income (expenses) increased income by CZK 1.2bn year-on-year primarily due to better financial performance by joint ventures in Turkey (CZK +1.0bn), resulting mostly from a positive change in the TRY/USD exchange rate. There was also a positive effect of the level of debt on interest expense (CZK +0.5bn).
CEZ Group Cash Flows (CZK Billions)
Cash flows from operating activities decreased by CZK 2.8bn year-on-year primarily due to a decrease in earnings before taxes (CZK -2.1bn). Other items decreased cash flows from operating activities year-on-year (CZK -0.7bn).
The year-on-year change in assets and liabilities had a negative effect (CZK -2.7bn). This was caused primarily by a year-on-year change in the balance of payables and receivables (CZK -2.8bn), change in the inventory of emission allowances (CZK -2.7bn), and change in the balance of payables and receivables from derivatives including options (CZK -1.6bn). By contrast, there was a positive effect of a decrease in term deposits with more than 6-month maturity and liquid securities (CZK +3.3bn) and a decrease in the other items of change in assets, equity, and liabilities (CZK +1.0bn), primarily taxes and fees other than income tax.
Adjustments to earnings before taxes had a positive effect (CZK +1.8bn), primarily changes in provisions (CZK +2.0bn), impairments of tangible and intangible fixed assets (CZK +1.0bn), and the non-cash impact of the better financial results of joint ventures in Turkey (CZK -1.0bn).
The positive balance of interest expenses and income (CZK +0.7bn) and higher dividends received (CZK +0.2bn) were almost offset by higher income tax paid (CZK -0.7bn).
Cash used in investing activities increased by CZK 4.7bn year-on-year primarily due to a purchase of bonds in H1 2016 (CZK -4.7bn) and a higher year-on-year increase in restricted financial assets (CZK -0.4bn). There was a positive effect of change in liabilities attributable to capital expenditure (CZK +0.3bn).
Net cash flow from financing activities, including the net effect of currency translation in cash, increased by CZK 16.1bn year-on-year. The main reason was a year-on-year increase in the balance of proceeds from and repayments of borrowings (CZK +16.4bn). The year-on-year lower balance of payments of and increases in other long-term liabilities (CZK -0.6bn) was partially offset by the positive net effect of currency translation in cash (CZK +0.3bn).
The value of CEZ Group's consolidated assets, equity and liabilities increased by CZK 8.4bn to CZK 611.1bn in H1 2016.
Structure of CEZ Group Assets (CZK Billions)
The value of property, plant, and equipment, nuclear fuel, and construction work in progress decreased by CZK 3.4bn. A decrease in net property, plant, and equipment of CZK 8.5bn was partially offset by an increase in construction work in progress of CZK 4.9bn and an increase in nuclear fuel inventory of CZK 0.2bn.
An increase in other non-current assets CZK 7.5bn was most significantly affected by an increase in available-for-sale securities of CZK 6.0bn, including a purchase of bonds (CZK +4.7bn) and positive revaluation of MOL Nyrt. shares (CZK +1.4bn). There was also an increase in financial assets with limited disposal rights of CZK 1.0bn and in long-term receivables from derivative trading of CZK 0.7bn. Conversely, the deferred tax asset decreased, bringing other non-current assets down by CZK 0.5bn.
Current assets increased by CZK 4.3bn to CZK 113.9bn in H1 2016. There was an increase in cash and cash equivalents of CZK 8.5bn and in income tax receivables CZK 2.3bn. By contrast, there was a decrease of CZK 1.6bn in short-term receivables from derivative trading including options, CZK 1.6bn in emission allowances, CZK 1.4bn in liquid securities and short-term deposits, and CZK 1.2bn in net receivables, in particular trade receivables, and inventories of fossil fuels and materials decreasing by CZK 0.6bn.
Structure of CEZ Group Equity and Liabilities (CZK Billions)
Equity, including non-controlling interests, decreased by CZK 7.7bn to CZK 264.4bn.
Net income generated in H1 2016 increased equity by CZK 13.8bn, while dividends declared (excluding dividends on treasury shares) decreased equity by CZK 21.4bn. Other comprehensive income decreased equity by CZK 0.2bn, with the negative effect of cash flow hedging (CZK -1.6bn) partially offset by the positive effect of change in the fair value of available-for-sale securities (CZK +1.4bn).
Long-term liabilities increased by CZK 10.9bn to CZK 247.8bn primarily due to an increase in liabilities arising out of issued bonds of CZK 6.7bn, long-term bank loans of CZK 1.9bn, and deferred tax liability increase of CZK 2.3bn.
Short-term liabilities increased by CZK 5.2bn to CZK 98.9bn due to an increase in liabilities to shareholders on account of the decision to pay dividends of CZK 21.3bn. The increase was offset by a decrease in trade payables including advances of CZK 4.6bn, a decrease in the current portion of long-term debt incl. short-term bank loans of CZK 4.1bn, a decrease in unbilled goods and services of CZK 2.5bn, a decrease in provision on emission allowances of CZK 2.2bn, a decrease in income tax payables of CZK 1.4bn and other liabilities of CZK 1.2bn.
Net comprehensive income decreased by CZK 5.3bn year-on-year to CZK 13.6bn.
There was a negative effect of a year-on-year decrease in other comprehensive income of CZK 3.7bn and decrease in net income of CZK 1.6bn.
Other comprehensive income was affected primarily by cash flow hedging, which decreased it by CZK 5.9bn year-on-year. Other comprehensive income was increased year-on-year by CZK 0.9bn by deferred tax associated with other comprehensive income, CZK 0.8bn by foreign exchange translation differences in equity, and CZK 0.3bn by available-for-sale securities in equity.
| H1 2015 | H1 2016 | |
|---|---|---|
| Long-term debt, net of current portion | 157.4 | 154.2 |
| Current portion of long-term debt | 11.4 | 2.9 |
| Short-term borrowings | 1.5 | 4.8 |
| Financial debt | 170.3 | 162.0 |
| Cash and cash equivalents | (20.0) | (22.0) |
| Highly liquid financial assets | (19.2) | (15.6) |
| Net debt | 131.1 | 124.4 |
| EBITDA (as in preceding 12 months) | 68.1 | 62.7 |
| Net debt / EBITDA | 1.93 | 1.99 |
| Operating | Operating | Total | EBITDA | EBIT | Income tax | Net income | CAPEX | Workforce | |
|---|---|---|---|---|---|---|---|---|---|
| revenues other | intersegment | operating | headcount | ||||||
| than | revenues | revenues | as at | ||||||
| intersegment | June 30 | ||||||||
| revenues | |||||||||
| (CZK millions) (CZK millions) (CZK millions) (CZK millions) (CZK millions) (CZK millions) (CZK millions) (CZK millions) | (persons) | ||||||||
| Generation−Traditional Energy | |||||||||
| H1 2015 | 27,009 | 18,632 | 45,641 | 17,370 | 9,049 | (1,557) | 25,526 | 7,673 | 6,672 |
| H1 2016 | 25,578 | 15,915 | 41,493 | 14,787 | 6,460 | (1,061) | 18,015 | 7,736 | 6,613 |
| Gneration−New Energy | |||||||||
| H1 2015 | 1,811 | 449 | 2,260 | 1,373 | 520 | (15) | 255 | 38 | 73 |
| H1 2016 | 1,790 | 344 | 2,134 | 1,858 | 115 | (134) | (61) | (1) | 76 |
| Distribution | |||||||||
| H1 2015 | 15,258 | 15,746 | 31,004 | 9,827 | 6,909 | (1,264) | 5,607 | 4,183 | 7,681 |
| H1 2016 | 14,500 | 15,041 | 29,541 | 9,997 | 7,027 | (1,296) | 5,590 | 4,379 | 7,807 |
| Sales | |||||||||
| H1 2015 | 57,604 | 3,288 | 60,892 | 3,695 | 3,679 | (713) | 3,106 | 13 | 1,679 |
| H1 2016 | 53,729 | 2,732 | 56,461 | 3,207 | 3,210 | (561) | 2,742 | 15 | 1,840 |
| Mining | |||||||||
| H1 2015 | 2,096 | 2,461 | 4,557 | 2,013 | 803 | (143) | 1,128 | 670 | 2,682 |
| H1 2016 | 2,170 | 2,389 | 4,559 | 2,008 | 783 | (135) | 1,402 | 634 | 2,675 |
| Other | |||||||||
| H1 2015 | 746 | 8,771 | 9,517 | 1,245 | 339 | (68) | 568 | 4,325 | 6,961 |
| H1 2016 | 1,136 | 8,230 | 9,366 | 1,238 | 400 | (113) | 855 | 3,876 | 7,069 |
| Elimination | |||||||||
| H1 2015 | (49,347) | (49,347) | 1 | 1 | 0 | (20,776) | (3,493) | - | |
| H1 2016 | (44,651) | (44,651) | 3 | 3 | 0 | (14,746) | (3,371) | - | |
| Consolidated | |||||||||
| H1 2015 | 104,524 | 104,524 | 35,524 | 21,300 | (3,760) | 15,414 | 13,409 | 25,748 | |
| H1 2016 | 98,903 | 98,903 | 33,098 | 17,998 | (3,300) | 13,797 | 13,268 | 26,080 |
Segments and Their Contributions to CEZ Group's Overall Financial Performance
The segmentation of CEZ Group changed in 2016. As opposed to the previous geographical segmentation into Central and Southeast Europe, it now accentuates segmentation according to the value chain (mining, generation, distribution, sales, and other activities). Generation is divided into traditional and new energy, according to the type of generating facilities prevailing in a given company. New energy consists primarily of renewable generation, while traditional energy includes mainly generation by conventional nuclear and coal-fired facilities.
CEZ Group's biggest segment, Generation—Traditional Energy, saw its EBITDA decrease by CZK 2.6bn. A decrease in EBITDA in the Czech Republic of CZK 2.5bn was primarily due to lower realization prices of generated electricity including the effect of revaluation of commodity derivatives (CZK -3.2bn), and to a decrease in the volume and change in the structure of production (CZK -0.3bn) and lower revenue from ancillary services (CZK -0.2bn). Conversely, there was a positive effect of higher revenue from commodity trading (CZK +0.8bn) and effect of the USD/EUR exchange rate on oil-linked contract hedging (CZK +0.4bn).
The EBITDA of the Generation—New Energy segment grew by CZK 0.5bn primarily due to resumed allocation of green certificates for the Fântânele Vest and Cogealac wind parks in Romania.
Production in the Czech Republic decreased by 0.3 TWh (-1.0%) year-on-year. A decrease in production occurred at nuclear power plants (-1.0 TWh) in connection with extended outages at the Dukovany Nuclear Power Plant (due to weld inspections). Conversely, a growth in production at coalfired facilities of 0.5 TWh was primarily due to the completion of the comprehensive renovation of the Prunéřov Power Plant and the operation of a new facility at the Ledvice 4 Power Plant during its construction. The Počerady CCGT plant also increased its production by 0.2 TWh. The volume of production at power plants in Poland did not change significantly year-on-year, reaching 1.4 TWh. Sales of heat generated by CEZ Group's plants increased by 0.4 thousand TJ year-on-year due to higher production in the Chorzów power plant.
The EBITDA of the Distribution segment increased by CZK 0.2bn year-on-year primarily due to better performance by the Czech distribution. Electricity distribution in the Czech Republic grew in EBITDA by CZK 0.4bn year-on-year in connection with an increase in the distributed amount of electricity of 0.25 TWh. A decrease in EBITDA in Romania of CZK 0.4bn was primarily due to a decrease in regulated prices and a lower amount of electricity distributed. Higher connection revenue and overhead reduction in the Bulgarian distribution resulted in an increase of CZK 0.1bn in EBITDA.
The Sales segment is down CZK 0.5bn year-on-year due the non-recurring payment of SŽDC debts (from 2010) to ČEZ Prodej based on a court decision in H1 2015, which then contributed CZK 1.1bn. A positive effect was produced primarily by ČEZ Prodej's higher gross margin (CZK +0.5bn) affected by decreased costs of purchased gas and electricity and a higher amount of delivered gas in connection with continued acquisition of new customers.
The gross margin on electricity sales changed slightly positively in all countries of operations despite decreasing or stagnating volumes of sales (Czech Republic -0.5 TWh, Romania -0.1 TWh, Bulgaria -0.1 TWh). Electricity sales did well in Poland, increasing by 0.1 TWh year-on-year thanks to the acquisition of new customers. Gas sold to end-use customers increased in volume by 0.4 TWh (+9%), especially in the segment of residential and commercial retail customers in the Czech Republic.
The Mining segment's performance was fully comparable to H1 2015; its EBITDA was CZK 2.0bn and sale reached 10 million tons, which represented a year-on-year decrease of 0.1 million tons (-1%) in connection with a slight decrease in demand for thermal coal.
The Other segment also performed similarly to H1 2015 and its EBITDA was also CZK 1.2bn.
Overview of Receivables from and Liabilities to Related Parties (CZK Millions)
| Receivables | Payables | ||||
|---|---|---|---|---|---|
| as at December | as at June 30, | as at December | as at June 30, | ||
| 31, 2015 | 2016 | 31, 2015 | 2016 | ||
| Akcez Enerji A.S. | 10 | 6 | |||
| CM European Power International B.V. | 86 | 2 | |||
| CM European Power Slovakia s.r.o. | 494 | 420 | |||
| ČEZ Energo, s.r.o. | 127 | 21 | 35 | 5 | |
| LOMY MOŘINA spol. s r.o. | 14 | 21 | 17 | ||
| OSC, a.s. | 24 | 32 | 13 | ||
| Výzkumný a zkušební ústav Plzeň s.r.o. | 58 | 55 | 3 | ||
| Others | 31 | 16 | 49 | 14 | |
| Total | 806 | 558 | 140 | 49 |
Sales, Purchases, and Other Information—Related Parties (CZK Millions)
| Sales to related parties | Purchases from related parties | |||
|---|---|---|---|---|
| H1 2015 | H1 2016 | H1 2015 | H1 2016 | |
| Akcez Enerji A.S. | 17 | 14 | ||
| Akenerji Elektrik Üretim A.S. | 18 | 16 | ||
| ČEZ Energo, s.r.o. | 147 | 136 | 158 | 23 |
| In PROJEKT LOUNY ENGINEERING s.r.o. | 5 | 13 | 5 | 9 |
| LOMY MOŘINA spol. s r.o. | 5 | 5 | 83 | 91 |
| OSC, a.s. | 54 | 42 | ||
| Teplo Klášterec s.r.o. | 31 | 32 | ||
| Výzkumný a zkušební ústav Plzeň s.r.o. | 68 | 1 | 1 | 1 |
| Others | 59 | 32 | 45 | 29 |
| Total | 350 | 249 | 346 | 195 |
Interest and Revenue from Shares of Profit Received—Related Parties (CZK Millions)
| Interest and other financial | Income from received shares of | |||
|---|---|---|---|---|
| income | profit | |||
| H1 2015 | H1 2016 | H1 2015 | H1 2016 | |
| Akcez Enerji A.S. | 13 | |||
| CZ European Power Slovakia s.r.o. | 7 | 5 | 108 | |
| LOMY MOŘINA spol. s r.o. | 20 | 14 | ||
| OSC, a.s. | 21 | 24 | ||
| Others | 2 | |||
| Total | 22 | 5 | 149 | 38 |
As at August 9, 2016, CEZ Group expected its consolidated 2016 EBITDA to reach CZK 58bn.
The expectations echo, in particular, a year-on-year decrease in wholesale electricity prices, the course of energy sector regulation in Europe, and an expected increase in the generation of traditional electricity.
The major causes of the year-on-year change in financial performance are listed below to indicate CEZ Group's expected economic situation in 2016.
EBITDA is expected to decrease by CZK 7.1bn year-on-year (i.e. by 10.9% of the actual 2015 figure).
An expected decrease in the Generation—Traditional Energy segment's EBITDA of CZK 5.4bn is negatively affected by market and regulation (CZK -7.9bn), primarily the effect of decreased electricity realization prices including currency hedging (CZK -6.7bn), lower allocation of emission allowances (CZK -0.7bn), and lower revenue from ancillary services for ČEPS (CZK -0.4bn); conversely, there is a positive effect of increased production at coal-fired power plants (CZK +2.0bn) as well as higher revenue from commodity trading (CZK +0.7bn). The Generation—New Energy segment expects a year-on-year growth of CZK 1.0bn primarily due to resumed allocation of green certificates for Fântânele Vest and Cogealac. The Distribution segment expects a year-on-year decrease of CZK 0.4bn primarily due to a negative effect of correction factors in Romania. The Sales segment expects a year-on-year decrease of CZK 2.3bn primarily due to extraordinary income from the repayment of SŽDC's debt in 2015 and the settlement of unbilled electricity in the Czech Republic in 2015. Adjusted net income expected by CEZ Group is at the level of CZK 18bn, while the 2015 figure was CZK 27.7bn.
Risks to the above prediction of 2016 income as seen by CEZ Group are, in particular, lower availability of generating facilities, developments in the energy sector's regulatory and legislative conditions, and changes in exchange rates (especially the Turkish lira against the U.S. dollar).
The 2016 adjusted net income of the parent company, ČEZ, a. s., is expected to be approximately CZK 13bn, the bulk of which consists of dividends received from subsidiaries.
Capital expenditure expected by CEZ Group in 2016 is approximately CZK 34bn, with a majority planned to be invested in production and distribution assets in the Czech Republic.
No major changes are expected in the overall structure of assets from which the 2016 income will be generated.
Concerning cash flows, CEZ Group anticipates that it will be able to cover planned investment and financial expenditures, including dividends, from cash flows generated by operating activities. For this reason, no major change in CEZ Group's net debt is expected in 2016.
| (S&P/Moody's) Traded since |
September 17, 2008 |
September 8, 2009 |
October 19, 2009 |
November 4, 2009 |
April 16, 2010 | June 28, 2010 | — | — | February 17, 2011 |
|---|---|---|---|---|---|---|---|---|---|
| Market | Bourse de Luxembourg |
Bourse de Luxembourg |
Bourse de Luxembourg |
Bourse de Luxembourg |
Bourse de Luxembourg |
Bourse de Luxembourg |
— | — | Bourse de Luxembourg |
| Administrator | Deutsche Bank Luxembourg S.A., Deutsche Bank AG |
Deutsche Bank Luxembourg S.A., Deutsche Bank AG |
Deutsche Bank Luxembourg S.A., Deutsche Bank AG |
Deutsche Bank Luxembourg S.A., Deutsche Bank AG |
Deutsche Bank Luxembourg S.A., Deutsche Bank AG |
Deutsche Bank Luxembourg S.A., Deutsche Bank AG |
— | — | Deutsche Bank Luxembourg S.A., Deutsche Bank AG |
| Manager | Citigroup Global Markets Limited |
Citigroup Global Markets Limited |
BNP Paribas, Société Générale, The Royal Bank of Scotland plc, Erste Group Bank AG |
Citigroup Global Markets Limited |
Bayerische Landesbank, Erste Group Bank AG, HSBC Bank plc, Société Générale, UniCredit Bank AG |
Citigroup Global Markets Limited, Crédit Agricole Corporate and Investment Bank, Deutsche Bank AG, London Branch, Erste Group Bank AG, The Royal Bank of Scotland plc |
— | — | Crédit Agricole Corporate and Investment Bank |
| Face value | JPY 1,000,000,000 |
JPY 1,000,000,000 |
EUR 50,000 | EUR 50,000 | EUR 50,000 | EUR 50,000 | EUR 500,000 | EUR 500,000 | JPY 100,000,000 |
| Issued as | Dematerialized bearer |
Dematerialized bearer |
Dematerialized bearer |
Dematerialized bearer |
Dematerialized bearer |
Dematerialized bearer |
Global Depository Receipt |
Global Depository Receipt |
Dematerialized bearer |
| Maturity | 2038 | 2039 | 2021 | 2019 | 2025 | 2020 | 2030 | 2023 | 2023 |
| Interest | 3.005% | 2.845% | 5.00% | 6M Euribor + 1.25% |
4.875% | 4.500% | 4.500% | 4.75% | 2.160% |
| Volume | JPY 12bn | JPY 8bn | EUR 750m | EUR 50m | EUR 750m | EUR 750m | EUR 40m | EUR 40m | JPY 11.5bn |
| Issue date | 2008 | September 8, 2009 |
October 19, 2009 |
November 4, 2009 |
April 16, 2010 | November 29, 2010 |
January 31, 2011 |
February 17, 2011 |
|
| ISIN | XS0384970652 September 17, | XS0447067843 | XS0458257796 | XS0462797605 | XS0502286908 | XS0521158500 June 28, 2010 | XF0000NS9FM8 | XF0000NS9TZ1 | XS0592280217 |
| Issuer | ČEZ, a. s. | ČEZ, a. s. | ČEZ, a. s. | ČEZ, a. s. | ČEZ, a. s. | ČEZ, a. s. | ČEZ, a. s. | ČEZ, a. s. | ČEZ, a. s. |
| Security | 7th Eurobond issue 1) |
12th Eurobond issue 1) |
13th Eurobond issue 2) |
14th Eurobond issue |
19th Eurobond issue |
20th Eurobond issue 3) |
(Namensschuldver schreibungen) 1st NSV |
(Namensschuldver schreibungen) 2nd NSV i |
21st Eurobond issue 4) i |
| Issue rating (S&P/Moody's) |
A−/Baa1 | A−/Baa1 | —/— | —/— | A−/Baa1 | A−/Baa1 | A−/Baa1 | A−/Baa1 | A−/Baa1 | —/— |
|---|---|---|---|---|---|---|---|---|---|---|
| Traded since | May 3, 2011 | — | December 5, 2011 |
— | April 3, 2012 | April 3, 2012 | August 8, 2012 | Luxembourg August 20, 2012 | September 3, 2012 |
— |
| Market | Bourse de Luxembourg |
— | Bourse de Luxembourg |
— | Bourse de Luxembourg |
Bourse de Luxembourg |
Bourse de Luxembourg |
Bourse de | Bourse de Luxembourg |
— |
| Administrator | Deutsche Bank Luxembourg S.A., Deutsche Bank AG |
Deutsche Bank Luxembourg S.A., Deutsche Bank AG |
Deutsche Bank Luxembourg S.A., Deutsche Bank AG |
— | Citibank, N.A., London Branch |
Citibank, N.A., London Branch |
Deutsche Bank Luxembourg S.A., Deutsche Bank AG |
Deutsche Bank Luxembourg S.A., Deutsche Bank AG |
Deutsche Bank Luxembourg S.A., Deutsche Bank AG |
— |
| Manager | Česká spořitelna, a.s. |
Barclays Bank plc | UBS Limited | Commerzbank AG | Barclays Bank plc, Citigroup Global Markets Inc., Goldman Sachs International, SG Americas Securities, LLC |
Barclays Bank plc, Citigroup Global Markets Inc., Goldman Sachs International, SG Americas Securities, LLC |
UBS Limited | UBS Limited | UniCredit Bank AG | 8) Eurobonds in the amount of EUR 20m were issued in November 2012 and added to the EUR 60m issue of September 3, 2012. The volume of the issue increased to EUR 80m. UniCredit Bank AG |
| Face value | bearer CZK 5,000,000 | EUR 100,000 | EUR 100,000 | EUR 1,000,000 |
USD 200,000 | USD 200,000 | EUR 100,000 | EUR 100,000 | EUR 100,000 | EUR 500,000 |
| Issued as | Dematerialized | Dematerialized bearer |
Dematerialized bearer |
Global Depository Receipt |
Dematerialized bearer |
Dematerialized bearer |
Dematerialized bearer |
Dematerialized bearer |
Dematerialized bearer |
Global Depository Receipt |
| Maturity | 2023 | 2021 | 2021 | 2032 | 2022 | 2042 | 2042 | 2047 | 2047 | 2047 |
| Interest | 4.600% | 2.15% * CPI Index Ratio |
4.102% | 4.7% | 4.25% | 5.625% | 4.375% | 4.5% | 4.383% | 4.27% |
| Volume | CZK 1.25bn | EUR 100m | EUR 50m | EUR 40m | USD 288.594m | USD 300m | EUR 50m | EUR 50m | EUR 80m | EUR 61m |
| Issue date | May 3, 2011 | December 5, 2011 |
April 2, 2012 | April 3, 2012 | April 3, 2012 | August 20, 2012 |
September 3, 2012 |
December 10, 2012 |
||
| ISIN | XS0622499787 | XS0635263394 June 21, 2011 | XS0713866787 | XF0000B03489 | US157214AA57 | US157214AB31 | XS0814711775 August 8, 2012 | XS0818793209 | XS0822571799 | XFCA00H08349 XFCA00H08356 XFCA00H08364 |
| Issuer | ČEZ, a. s. | ČEZ, a. s. | ČEZ, a. s. | ČEZ, a. s. | ČEZ, a. s. | ČEZ, a. s. | ČEZ, a. s. | ČEZ, a. s. | ČEZ, a. s. | ČEZ, a. s. |
| Security | 22nd Eurobond issue |
24th Eurobond issue 5) |
25th Eurobond issue |
(Namensschuldver schreibungen) 3rd NSV issue |
1st US bond issue 4), 6), 7) |
2nd US bond issue 4), 6) |
26th Eurobond issue |
27th Eurobond issue |
28th Eurobond issue 8) |
5) Using a swap, the inflation-linked coupon was fixed at a value that ensures an effective fixed interest expense for ČEZ regardless of changes in inflation. 6) The issue was sold within a non-public bond offer to qualified institutional buyers pursuant to Rule 144A of the United States Securities Act of 1933, as amended ("Securities Act") and outside the United States to certain non-US entities pursuant to Regulation S 7) Issue partially bought back in November 2015; original volume of issue was EUR 700m. of the Securities Act. (Namensschuldver schreibungen) 4th NSV issue 9) |
| Issue rating (S&P/Moody's) |
—/— | A−/Baa1 | A−/Baa1 | A−/Baa1 | A−/Baa1 | |
|---|---|---|---|---|---|---|
| Traded since | — | June 5, 2013 | April 2, 2014 | November 27, 2014 |
February 5, 2016 |
|
| Market | — | Bourse de Luxembourg |
Freiverkehr Börse Frankfurt (Open Market) |
Bourse de Luxembourg |
Bourse de Luxembourg |
|
| Administrator | — | Deutsche Bank Luxembourg S.A., Deutsche Bank AG |
The Bank of New York Mellon, London Branch |
Deutsche Bank Luxembourg S.A., Deutsche Bank AG |
Deutsche Bank Luxembourg S.A., Deutsche Bank AG |
|
| Manager | Citigroup Global Markets Limited |
Commerzbank Aktiengesellschaft, Deutsche Bank AG, London Branch, Erste Group Bank AG, ING Bank N.V., The Royal Bank of Scotland plc, Banca IMI S.p.A., Crédit Agricole Corporate and Investment Bank |
Barclays Bank Plc., Deutsche Bank AG, London Branch, HSBC Bank plc, Société Générale Corporate & Investment Banking |
Citigroup Global Markets Limited |
Mitsubishi UFJ Securities International plc, Citigroup Global Markets Ltd., HSBC Bank plc. BNP Paribas |
13) Eurobonds in the amount of EUR 99m were issued on March 14, 2016 and added to the issue of February 5, 2016 and February 9, 2016. The volume of the issue increased to EUR 200m. 12) Eurobonds in the amount of EUR 15m were issued on February 9, 2016 and added to the EUR 86m issue of February 5, 2016. The volume of the issue increased to EUR 101m. ČEZ, a. s. has not issued any bonds convertible into its own shares. Under the issue terms, the bonds are not guaranteed by the State or by any bank. |
| Face value | EUR 1,000,000 |
EUR 100,000 | EUR 100,000 | EUR 100,000 | EUR 100,000 | |
| Issued as | Global Depository Receipt |
Dematerialized bearer |
Dematerialized bearer |
Dematerialized bearer |
Dematerialized bearer |
|
| Maturity | 2038 | 2028 | 2017 | 2017 | 2018 | |
| Interest | 3.55% | 3.00% | 0% | 3M Euribor + 0.35% |
3M Euribor + 0.55% |
|
| Volume | EUR 30m | EUR 500m | EUR 470.2m | EUR 45m | EUR 200m | |
| Issue date | March 26, 2013 |
June 5, 2013 | April 2, 2014 | November 27, 2014 |
February 5, 2016 |
|
| ISIN | XS0920182374 XS0920710570 |
XS0940293763 | XS1027633434 | XS1144490080 | XS1354388982 | The 32nd Eurobond issue was issued under the EMTN program in February and March 2016. 10) The volume of the issue was divided into two receipts. |
| Issuer | ČEZ, a. s. | ČEZ, a. s. | CEZ MH B.V. |
ČEZ, a. s. | ČEZ, a. s. | |
| Security | (Namensschuldver schreibungen) 5th NSV issue 10) |
30th Eurobond issue |
Issue of guaranteed into MOL shares 11) bonds convertible |
31st Eurobond issue |
32nd Eurobond issue 12), 13) |
11) Bond issue guaranteed by ČEZ, a. s. |
Capital Expenditures (CZK Millions)
| H1 2015 | H1 2016 | |
|---|---|---|
| Additions to property, plant, and equipment and other non-current assets, including capitalized interest |
15,246 | 19,501 |
| Additions to property, plant, and equipment | 13,151 | 12,971 |
| of which: nuclear fuel procurement | 2,007 | 2,517 |
| Additions to intangibles | 258 | 297 |
| Additions to long-term financial assets | 401 | 5,125 |
| Change in balance of liabilities attributable to capital expenditure |
1,436 | 1,108 |
| Financial investments 1) | - | 42 |
| Capital expenditures, total | 15,246 | 19,543 |
1) Acquisition of subsidiaries and joint venture, net of cash acquired.
Additions to Property, Plant, and Equipment and Intangibles (CAPEX), by Type (CZK Millions)
| H1 2015 | H1 2016 | |
|---|---|---|
| Nuclear plants (including fuel procurement) | 3,793 | 3,567 |
| Coal-fired and CCGT plants | 3,976 | 4,172 |
| of which: new-build | 1,536 | 1,449 |
| renewal and other | 2,440 | 2,723 |
| Hydro plants other than renewables | 29 | 20 |
| Renewables | 102 | 8 |
| Electricity distribution | 4,135 | 3,999 |
| Heat distribution | 40 | 42 |
| Mining | 682 | 626 |
| Information systems | 424 | 342 |
| Other | 228 | 493 |
| Total | 13,409 | 13,268 |
The total 2016 capital expenditure on CEZ Group's non-current assets is expected to be approximately CZK 34bn.
Electricity Procured and Sold (GWh)
| H1 2015 | H1 2016 2016/2015 index | ||
|---|---|---|---|
| (%) | |||
| Electricity procured | 28,844 | 28,558 | 99.0 |
| Generation | 32,235 | 31,804 | 98.7 |
| In-house and other consumption, including | (3,391) | (3,245) | 95.7 |
| pumping in pumped-storage plants | |||
| Sold to end-use customers | (19,197) | (18,561) | 96.7 |
| Wholesale balance | (7,111) | (7,704) | 108.3 |
| Sold in the wholesale market | (99,630) | (93,860) | 94.2 |
| Purchased in the wholesale market | 92,519 | 86,156 | 93.1 |
| Grid losses | (2,536) | (2,293) | 90.4 |
| Czech Republic | Poland | Bulgaria | Romania | Total | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| H1 2015 | H1 2016 | H1 2015 | H1 2016 | H1 2015 | H1 2016 | H1 2015 | H1 2016 | H1 2015 | H1 2016 | ||
| 15,294 Nuclear |
14,322 | 15,294 | 14,322 | ||||||||
| 13,292 Coal |
13,811 | 1,147 | 1,184 | 14,439 | 14,995 | ||||||
| 1,227 Hydro |
1,102 | 6 | 6 | 30 | 49 | 1,263 | 1,156 | ||||
| 164 Biomass |
252 | 207 | 165 | 371 | 417 | ||||||
| 71 Photovoltaic |
67 | 3 | 3 | 74 | 70 | ||||||
| 5 Wind |
4 | 696 | 567 | 701 | 571 | ||||||
| 92 Natural gas |
272 | 92 | 272 | ||||||||
| 1 Biogas |
1 | 1 | 1 | ||||||||
| 30,146 Total |
29,830 | 1,360 | 1,354 | 3 | 3 | 726 | 616 | 32,235 | 31,804 | ||
| Electricity Sold to End-Use Custo | Wh) mers (G |
||||||||||
| Czech Republic | Poland | Bulgaria | Romania | Other countries | Total | ||||||
| H1 2015 | H1 2016 | H1 2015 | H1 2016 | H1 2015 | H1 2016 | H1 2015 | H1 2016 | H1 2015 | H1 2016 | H1 2015 | H1 2016 |
| 5,246 Large end-use customers |
4,814 | 850 | 918 | 1,447 | 1,666 | 434 | 379 | 1,438 | 1,363 | 9,414 | 9,139 |
| 1,231 Retail ̶ commercial |
1,152 | 1,166 | 951 | 451 | 424 | 45 | 55 | 2,893 | 2,581 | ||
| 3,720 Residential |
3,732 | 2,285 | 2,196 | 818 | 843 | 67 | 69 | 6,890 | 6,840 | ||
| 10,197 Total |
9,698 | 850 | 918 | 4,898 | 4,813 | 1,703 | 1,645 | 1,550 | 1,487 | 19,197 | 18,561 |
| Czech Republic | Poland | Bulgaria | Romania | Other countries | Total | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| H1 2015 H1 2016 H1 2015 | 2016 Ī |
H1 2015 | H1 2016 | H1 2015 | 2016 $\frac{1}{1}$ |
H1 2015 | H1 2016 | H1 2015 | H1 2016 | |||
| arge end-use customers | 5,246 | 4,814 | 350 | 918 | 1,447 | 1,666 | 434 | 379 | ,438 | 363 | 9,414 | 9,139 |
| Retail-commercial | 1,231 | 1,152 | 1,166 | 951 | 451 | 424 | 45 | 55 | 2,893 | 2,581 | ||
| Residential | 3,720 | 3,732 | 2,285 | 2,196 | 818 | 843 | 67 | 89 | 6,890 | 6,840 | ||
| Total | 10,197 | 9.698 | 50 | 918 | 4,898 | 4,813 | 1,703 | 1,645 | 1,550 | 1,487 | 19,197 | 18,561 |
Heat Supplied and Sold (TJ)
| Heat supplied for heating purposes |
External heat sales (outside CEZ Group) |
|||
|---|---|---|---|---|
| H1 2015 | H1 2016 | H1 2015 | H1 2016 | |
| Czech Republic | 12,540 | 12,195 | 10,162 | 10,166 |
| Poland | 2,944 | 3,328 | 2,893 | 3,265 |
| CEZ Group, total | 15,484 | 15,523 | 13,055 | 13,431 |
Natural Gas Procured and Sold (GWh)
| H1 2015 | H1 2016 2016/2015 index (%) |
||
|---|---|---|---|
| Procured | 51,675 | 64,789 | 125.4 |
| of which: external suppliers | 51,467 | 64,579 | 125.5 |
| OTE | 208 | 210 | 100.9 |
| Removed from storage | 2,485 | 2,157 | 86.8 |
| Sold | (52,461) | (64,792) | 123.5 |
| of which: trading | (48,438) | (60,342) | 124.6 |
| external large end-use customers | (1,278) | (1,363) | 106.7 |
| medium-sized end-use customers | (304) | (349) | 114.7 |
| small end-use customers | (474) | (587) | 124.0 |
| residential | (1,781) | (1,923) | 108.0 |
| OTE | (186) | (226) | 121.8 |
| Placed in storage | (1,141) | (1,319) | 115.6 |
| Consumed in-house | (557) | (834) | 149.7 |
During H1 2016, amendments to some regulations implementing Act No. 458/2000 Sb., on business conditions and state administration in the energy sectors and on amendments to some acts ("Energy Act"), and Act No. 165/2012 Sb., on supported energy sources ("SES Act"), were being completed, in relation to extensive amendments to those acts passed in 2015.
Changes affected the following regulations implementing the Energy Act:
• Decree No. 82/2011 Sb., on electricity metering and the method for determining damages in case of unauthorized consumption, unauthorized supply, unauthorized transmission, or unauthorized distribution of electricity
The decree amendment primarily responds to newly introduced option for customers with lower consumption to have a higher-level meter installed at their service point (for "smart" metering) and specifies a new type of metering, "M". In addition, it lays down rules for the determination of damages in case of unauthorized consumption.
• Decree No. 16/2016 Sb., on conditions for connection to the electricity system
The new decree responds to simplification of conditions for the operation of small generation facilities of up 10 kW, which are not required to hold an electricity generation license issued by the ERO, and introduces a procedure for the simplified connection of microsources. The decree also lays down uniform general rules for the connection of electricity market participants' facilities to transmission or distribution systems while taking account of the specifics of methods for the connection of different electricity market participants' facilities to the electricity system.
• Decree No. 8/2016 Sb., on the details of licensing for doing business in the energy sectors
The new decree takes into consideration changes implemented by the new Civil Code while also responds to simplification of procedure in the notification of changes to operated facilities by the operators of power and gas supply systems.
• Decree No. 70/2016 Sb., on the billing of supplies and related services in the energy sectors
The new decree expands the scope of required information to be included in bills for supplies and related services, e.g. including information on the average price in the billing period.
Regulations implementing the Supported Sources Act were also changed; specifically, the following new decrees were promulgated:
• Decree No. 9/2016 Sb., on procedures for the registration of support with the market operator and the implementation of some other provisions of the Supported Energy Sources Act (Registration Decree)
The new decree responds to cancellation of support for biomethane and support for decentralized electricity generation while taking account of previous experience with the operation of the support registration and recording system.
• Decree No. 37/2016 Sb., on electricity from high-efficiency combined heat and power generation and electricity from secondary sources
The decree provides a more detailed definition of a cogeneration unit and more detailed specification of its system boundaries with effect from January 1, 2017. Operators whose generating facilities will not meet the definition will have to apply for a new CHP electricity generation certificate for the cogeneration unit in question.
The decree also specifies a more detailed procedure for the determination of the amount of supported CHP electricity and reflects new EU legislation, specifically Commission Regulation (EU) 2015/2402 of October 12, 2015 reviewing harmonized efficiency reference values for separate production of electricity and heat in application of Directive 2012/27/EU of the European Parliament and of the Council and repealing Commission Implementing Decision 2011/877/EU.
• Decree No. 145/2016 Sb., on the reporting of electricity and heat from supported sources and the implementation of some other provisions of the Supported Energy Sources Act (Supported Source Energy Reporting Decree)
The new regulation responds to new, more detailed laws applicable to metering required for the determination of relevant supported amounts (i.e. the metering of electricity and heat and related amounts of fuel) as well as the introduction of a new operating support for heat, newly regulating, among other things, the commissioning procedure for heat generating facilities.
Furthermore, the decree combines some information reported in different reports, reducing the total number of reports to be submitted.
The first half of 2016 was a period when the 2015 amendment to the Energy Act was first applied in practice. From the perspective of the business environment in the energy sector, the most noticeable innovations are the possibility of electricity "autoproduction" at "microsources" (generating facilities of up to 10 kW of installed capacity) without a license granted by the ERO under the Energy Act and the possibility of "simplified connection" of such "microsources."
In the former case, an "autoproducer" customer can operate a facility of up to 10 kW primarily to cover their own consumption without a license, just on the basis of a connection agreement. Such an agreement will include reserved input capacity for consuming electricity from the distribution grid, which the customer already has, as well as reserved output capacity that should match the installed capacity of the autoproduction facility. In such a case, the "autoproducer" does not have to obtain a license from the ERO and even does not have to become a business entity with all the associated negative consequences for the "autoproducer" (e.g. such persons will be entitled to unemployment benefits if they become unemployed). In their agreement with a trader, the "autoproducer" will make arrangements for the purchase of the portion of electricity that the "autoproducer" does not produce on their own as well as the responsibility of any deviation relating to electricity generated in-house and, most importantly, the handling of electricity that the "autoproducer" generates but does not consume at a given moment.
In the latter case, the possibility only applies to sources with nominal alternating phase current of up to 16 A (10 A under certain conditions) per phase, connected to a point of consumption at the lowvoltage level. The possibility is conditional on meeting a number of conditions. These include preventing electricity supply to the distribution system at any moment, grid impedance measured at the source's interconnection point being less than the limit value of reference impedance published by the distribution system operator, and installing a meter to measure consumption and any "unauthorized" supply at the interconnection point. If the conditions are met, the "autoproducer" does not have to request connection from the operator; the "autoproducer" just has the source connected and notifies the operator before commissioning. This is followed by updating the connection agreement, which will however state zero reserved capacity.
For the sake of completeness, it should be noted that the two new possibilities can be combined, if relevant requirements are met.
Both new possibilities should contribute to further development in decentralized energy and generation as mentioned in the updated State Energy Policy approved in 2015.
The first half of 2016 has already shown that traders are starting to exploit the new opportunities and offer their "autoproducer" customers products that allow taking advantage especially of the "autoproduction" without a license, often combined with government subsidies under the "New Green for Savings" program. Under the program, applicants can get investment subsidies but only under certain conditions including being able to consume 70% of their autoproduction at their point of consumption (e.g. family house).
The CEZ Group company engaged in brown coal mining is Severočeské doly. It produced approximately 9,993,000 tons of coal in H1 2016. This is a slight year-on-year decrease of approximately 109,000 tons of coal, due to lower consumption by both CEZ Group companies and external customers.
Lower deliveries of sized coal to external customers were largely due to the warm winter.
Coal Sales, by Customer (Thousands of Tons)
In the first half of 2016, Severočeské doly invested CZK 658m in capital construction. The major part of its capital investment program comprised projects to ensure the progress of extraction in its two mines. The structure of capital investment consists primarily of deliveries, renovation, and upgrades of mining equipment and dressing and crushing plants and construction of stabilization measures and water management structures.
The most important projects completed in the first half of 2016 include the Belt Conveyor Stacker Renovation and the Tripper Electrics Renovation at the Bílina Mine. A major capital investment and operational project named High-Capacity Disposal Site Upgrade was accepted for pilot operation and the upgrade of a belt conveyor was completed at the Nástup Tušimice Mines.
Electricity production at CEZ Group's generating facilities in the Czech Republic in H1 2016 totaled 29,830 GWh, i.e. 316 GWh (-1.0%) less than in the same period of 2015.
Nuclear power plants' total electricity production decreased by 973 GWh year-on-year; while the Temelín Nuclear Power Plant produced 1,353 GWh more thanks to an increase in achievable capacity in H1 2016, the Dukovany Nuclear Power Plant produced 2,326 GWh less primarily due to outages for weld inspections.
Coal-fired power plants' production increased by 607 GWh year-on-year primarily due to the operation of the comprehensively renovated Prunéřov II plant and the new Ledvice 4 unit. The Počerady II CCGT plant produced 180 GWh of electricity more due to a lower gas price in comparison with 2015.
A 125GWh year-on-year decrease in production was recorded by hydropower plants. Other facilities generated approximately the same amount of electricity as in H1 2015.
The safety of operated nuclear facilities is our priority. During the first half of 2016, both ČEZ, a. s. nuclear power plants were operated in compliance with applicable nuclear energy legislation, fulfilling the conditions of valid licenses.
In January, both nuclear power plants' physical security systems were switched from mode 1, which they had been put into due to intensified safety measures after terrorist attacks in Paris, to the standard mode. In March, both nuclear power plants' physical security systems were switched over to mode 1 again in reaction to terrorist attacks in Brussels.
In February, ČEZ, a. s. asked the SONS to resume administrative proceedings concerning the licensing of future operation of Unit 1, which was suspended at the end of 2015 due to reviews of weld X-ray documentation. The unit was put into operation after the results of the inspections of welded joints were submitted, and on March 30, 2016, ČEZ, a. s. received a renewed operating license for Unit 1 for an indefinite period of time, conditional on meeting a number of defined conditions.
Preparations for submitting an application for Unit 1 further operating license culminated early this year. A unique tightness and pressure test of the unit's gas-tight enclosure, which is performed once every ten years, was carried out during an outage. For the first time ever, the test was performed at 130 kPa, which is one of the highest levels of overpressure among power plants worldwide. The test proved that the unit is in very good condition, meeting the conditions for further, long-term, safe operation.
Capital investment projects to upgrade the power plant and enhance its operational safety, resulting from stress testing, were completed, including e.g. the completion of seismic resistance enhancements to building structures or the connection of new seismic-resistant forced-draft towers for the cooling of service water system. A newly reconstructed main entrance and gate, upgraded to improve the power plant's physical protection, were put into operation.
The first secret exercise was carried out in May to test the operation of a backup site for the emergency response board in Moravský Krumlov and the preparedness of the members of the emergency response board. The State Labor Inspection Office carried out its annual audit of electrical and gas technology, transportation (both on-site and by rail), and construction activities. The audit confirmed compliance with the criteria of the Safe Enterprise program.
In early June, there was a full-site emergency response exercise supervised by inspectors from the SONS, including the simulation of a multi-unit event and staff sheltering, which tested the preparedness of the power plant and its staff for such an event that might theoretically occur.
In late June, there was a mission of the IPSART (International Probabilistic Safety Assessment Review Team) of the International Atomic Energy Agency (IAEA), conducted to thoroughly check newly updated models for the probabilistic safety assessment (PSA) of the Dukovany Nuclear Power Plant. The mission confirmed that the PSAs are prepared and documented in accordance with recognized methodologies by qualified personnel with adequate quality to be usable in a wide range of risk-informed applications. The experts also made several suggestions for improvement.
In April, the power plant underwent the State Labor Inspection Office's annual audit concerning construction preparation and execution, chemicals, oil management, the wastewater treatment plant, and generating and operating systems (gas, pressure, machinery), which were found in compliance with the "Safe Enterprise" program.
Practicing the use of new equipment acquired under the National Action Plan continued in May, e.g. by verifying the operability of a backup emergency response center in České Budějovice or checking the preparedness of emergency response board members with secret calls.
The documentation and X-ray images of welds at the Dukovany Nuclear Power Plant were reviewed from September 2015 to January 2016 in order to check the results of past tests whose evaluation was not completely conclusive. Some documentation of X-ray tests was found to be of low quality, mostly in respect of low-diameter pipes used for the measurement of process parameters. The findings did not apply to the key components of the primary circuit such as the reactor pressure vessel or the pressurizer. On the grounds of the findings from the Dukovany Nuclear Power Plant, ČEZ, a. s. also reviewed the X-ray image documentation at the Temelín Nuclear Power Plant, finding similar deficiencies in the quality of the documentation of X-ray tests. However, some welded joints there were tested in the past using other non-destructive methods whose results are of adequate quality.
Even though the high level of nuclear safety had not been compromised, the internal inquiry committee recommended taking a number of measures. The main objective is greater labor efficiency with emphasis on better and more consistent performance of control processes. Based on findings from the weld documentation reviews and experience with the process of applying for a new license for the long-term operation of Dukovany Unit One, CEZ Group is hiring new experts. The nuclear power plants will have about a hundred new employees. An important role will be played by ÚJV Řež, CEZ Group member company, which has replaced contractors for selected non-destructive tests in the nuclear power plants since June 1, 2016. Other systemic measures were taken on the basis of the internal inquiry in the issues, such as the introduction of a third generation of contracts with contractors (guaranteeing e.g. limitation of subcontractor chains), a new comprehensive contractor performance
control system, or measures aimed at simplifying the management structure and enhancing internal controls.
Summing up the weld inspections at generating facilities:
The total number of welds reviewed was approximately 13,000 at the Dukovany Nuclear Power Plant and approximately 8,500 at the Temelín Nuclear Power Plant. Welds that could not be reviewed due to low-quality X-ray images were subjected to new imaging.
Deficiencies found at Unit 1 of the Dukovany Nuclear Power Plant were remedied and the relicensing administrative proceedings were completed on March 30, 2016 by the issuance of a decision permitting further operation of the Dukovany Nuclear Power Plant's Unit 1. Urgent deficiencies at Unit 2 of the Dukovany Nuclear Power Plant were remedied during an outage in the first quarter of 2016. A Safety Status Assessment was prepared in regard to the other deficiencies, demonstrating that Unit 2 can be operated safely until the next outage. Similar work was started at Unit 3 of the Dukovany Nuclear Power Plant in April. Urgent deficiencies at Unit 4 of the Dukovany Nuclear Power Plant were remedied during an outage in H1 2016. A Safety Status Assessment was prepared in regard to the other deficiencies, demonstrating that Unit 4 can be operated safely until the next outage. Follow-up work will also be carried out at all units of the Dukovany Nuclear Power Plant during planned unit outages in 2016 and 2017; this will provide the power plant with complete confidence and inputs to be used in the documentation of the facilities' status in relicensing applications.
Inspections of welds at the Temelín Nuclear Power Plant were also performed during unit operation if possible and especially during a Unit 2 outage started in June. Follow-up work at Unit 2 and similar work at Unit 1 of the Temelín Nuclear Power Plant will be carried out during outages in 2016 and 2017.
In the first six months of 2016, a total of 10,166 TJ of heat generated by CEZ Group's facilities in the Czech Republic was delivered to customers, which is almost the same amount as in 2015 (increase of 4 TJ).
CZK 3,567m was invested in nuclear power plants in the first half, of which CZK 2,517m was used to purchase nuclear fuel.
The reconstruction of the main entrance and gate to the Dukovany Nuclear Power Plant site was completed. In particular, turnstiles were replaced with new ones with maximum stopping capacity and the gateway to the secured area was fitted with a new gate and roadblock. There were also ongoing nuclear safety enhancement projects resulting from the events at the Fukushima nuclear power plant. Preparatory, implementation and completion work was also carried out under capital construction projects aimed at upgrading, stabilizing, securing, and improving the efficiency of generation in relation to the planned extension of operation.
There was continued implementation of projects fulfilling requirements from the National Action Plan for Safety Enhancement, relating to stress tests following the events at the Fukushima nuclear power plant, as well as other capital construction projects relating to technology upgrade and renovation.
Preparations were underway for the construction of a multi-purpose hall for working with and handling of nuclear fuel packaging, which will also allow, in compliance with required legislation, long-term storage of special handling equipment.
Work under the "New Nuclear Power Plant at Dukovany" project included geological and hydrogeological surveys of the intended construction site and its neighborhood and environmental surveys of areas that might be affected during the construction or operation of the new nuclear power plant. Documents needed for the start of the process of comprehensive environmental impact assessment of the planned construction of new units were delivered to the Ministry of the Environment. Work under the "New Nuclear Power Plant at Temelín" included mostly activities to fulfill the conditions defined in the issued EIA statement and the issued siting permit.
To prepare for various alternatives of investor and financing arrangements, the General Meeting of ČEZ, a. s. approved the spin-off of assets related to the new nuclear power plant projects into separate subsidiaries, Elektrárna Temelín II, a. s. and Elektrárna Dukovany II, a. s. on June 3, 2016.
On June 15, 2016, the Government of the Czech Republic appointed ing. Ján Štuller as the Government Representative for nuclear energy for a period of four years. The Government Representative's responsibilities include negotiations with key stakeholders, such as potential contractors and strategic investors for the new nuclear power plants, and representatives of the European Commission.
Preparatory, designing, and implementing work, in particular, was underway during the first half of 2016 to support projects relating to long-term disposal of coal combustion byproducts (CCBs) from new and comprehensively renovated plants. Other capital projects included, in particular, investment in the renovation of technology and maximization of operational safety and generation efficiency, such as investment in coal crushers at the Poříčí site.
After the renovation was completed, based on successful integration testing, all three units were accepted from the contractor on June 10, June 30, and July 15, 2016, respectively. They then commenced pilot operation. Defects and arrears are being remedied. The main reasons for a partial delay in the comprehensive renovation were administrative and technical obstacles, including a change in design. The renovation of the generating units brings increase in the installed capacity of each of the 3 units from an original 210 to 250 MWe, enhancing their efficiency in combination with heat generation to over 40% and improving all emission parameters by 60% on average.
Unit commissioning and adjustment continues. Due to persisting difficulties accompanying the commissioning of the unit, caused by complications in boiler slag extraction and excessive fly ash behind electrostatic precipitators, the unit will undergo necessary modifications and its acceptance date will thus be postponed. The new unit is expected to be completed no sooner than in 2017.
Standard capital investment projects were undertaken at hydro power plants, investing in plant upgrades and generation efficiency improvement in line with the approved renovation program, such as the general overhaul of turbine generator 1 at the Lipno power plant and preparatory work for the general overhaul of turbine generator 4 at the Kamýk power plant.
As at June 30, 2016, CEZ Group operated generating facilities with a total installed capacity of 13,351 MW in the Czech Republic. The total installed capacity of its nuclear power plants at Dukovany and Temelín was 4,290 MW. Coal-fired power plants and heating plants have a capacity of 6,967 MW, hydroelectric and pumped-storage power plants have 1,960 MW, and other power plants with renewable energy sources have 134 MW.
In comparison with the first half of the past year, there was only one change in installed capacity in the Czech Republic, namely a decrease of 7 MW at the Tisová II power plant's generating unit 6.
Selected Information Concerning the Performance of the Generation Segments in the Czech Republic
| Unit | Generation— Traditional Energy |
Generation— New Energy |
Total | ||||
|---|---|---|---|---|---|---|---|
| H1 2015 | H1 2016 | H1 2015 | H1 2016 | H1 2015 | H1 2016 | ||
| Electricity generation | GWh | 29,944 | 29,630 | 202 | 201 | 30,146 | 29,830 |
| Heat supply | TJ | 10,129 | 9,810 | 0 | 0 | 10,129 | 9,810 |
| Installed capacity | MW | 13,157 | 13,150 | 201 | 201 | 13,358 | 13,351 |
The 2016 production of CEZ Group's facilities in the Czech Republic is expected to be 59.1 TWh, i.e. 2.4 TWh more than the production in 2015. Nuclear power plants are expected to generate 26.4 TWh; coal-fired, gas-fired and CCGT plants 29.8 TWh; and other plants 2.9 TWh.
CEZ Group's electricity distribution business in the Czech Republic is taken care of by ČEZ Distribuce, a. s., which distributed 17.6 TWh of electricity to customers in H1 2016. This is an increase of 0.25 TWh over the comparable period of the previous year. The deliveries increased most significantly at the medium-voltage level due to increased consumption by corporate customers but also at the lowvoltage level primarily due to an increased number of customers using heating tariffs. A slight decrease was registered at the high-voltage level.
Capital expenditures of ČEZ Distribuce amounted to CZK 3.3bn in H1 2016. They went primarily into distribution networks at all voltage levels as well as transformer station reconstructions. Approximately CZK 0.9bn of the above amount was allocated to construction projects initiated at customers' requests.
The Distribution Czech Republic Segment Redesign strategic program continues as scheduled. As at July 1, 2016, 836 metering employees were transferred from ČEZ Distribuční služby to ČEZ Distribuce. The remaining staff of around 1,700 will be transferred as at January 1, 2018. The implementation of the program, i.e. integration of metering activities, will bring approximately CZK 200m a year by streamlining performed activities and achieving synergistic effects; the strategic program will also ensure compliance with legal and regulatory requirements.
CEZ Group offered end-use customers in the Czech Republic the following commodities and related services in H1 2016:
CEZ Group sells electricity in the Czech Republic largely through ČEZ Prodej, s.r.o., which sold a total of 9.6 TWh to end-use customers outside of CEZ Group in H1 2016 (CEZ Group's total was 9.7 TWh). A decrease of 0.5 TWh from the same period in 2015 was primarily due to the non-renewal of a contract with a major customer.
In H1 2016, the company managed to add the most new connection points among all suppliers, over 10,000 (i.e. 26.4% of the net overall market growth), reaching around 395,000 connection points. ČEZ Prodej thus became the second largest gas supplier in the Czech Republic in terms of connection points.
CEZ Prodej's success in selling gas to end-use customers is based on relevant services as well as financially advantageous terms for its customers. Prices of natural gas supplies to large end-use customers by ČEZ Prodej and ČEZ Energetické služby are derived from the most favorable prices/products in the wholesale market at the moment. In April and May 2016, ČEZ Prodej responded to changes in market prices by lowering the price of its ČEZ with Reward, ČEZ with Guarantee, Comfort, and Praktik product lines.
In H1 2016, ČEZ Prodej, s.r.o. supplied its end-use customers with an aggregate total of 3.1 TWh of natural gas (including 2.9 TWh supplied to end-use customers outside CEZ Group).
Besides ČEZ Prodej, s.r.o., considerably smaller amounts of natural gas were sold to end-use customers by ČEZ Energetické služby, s.r.o., which supplied 18.5 GWh in H1 2016 (including 0.2 GWh to end-use customers outside CEZ Group).
ČEZ Prodej is a fully-fledged mobile virtual network operator (MVNO) with its own offer of mobile telephony products. In terms of the scope of its services, it belongs to the medium-sized MVNO category. With over 72,000 active SIM cards, ČEZ Prodej is one of the largest MVNOs in the Czech Republic.
Starting in March 2016, ČEZ Prodej expanded its services for customers to include financial credit services, provided in collaboration with Essox s.r.o., a subsidiary of Komerční banka a.s. These consist of extending credit to purchase selected energy solutions for households, nonpurpose credit, and credit cards.
ČEZ ESCO wants to be the first choice for those who are interested in the installation or operation of a local source of energy or distribution grid and want to consume energy in an efficient and thrifty manner. Its offer for decentralized energy consolidates CEZ Group's expert and sales capacity in energy savings, decentralized sources, lighting, and other energy products and services. It concentrates on creating personalized offers for business customers, small and midsize businesses, and the public sector. The individual products are provided by ČEZ Prodej, ČEZ Energo, ČEZ Energetické služby, EVČ, ENESA, and other companies, which are gradually integrated into the ČEZ ESCO group.
In photovoltaics, CEZ Group announced its offer of turnkey rooftop solar energy systems for both businesses and residential customers at the end of October 2015. Based on this, ČEZ Solární (CEZ Group member company) delivered 1,200 offers for rooftop photovoltaic installations to its customers.
EPC (Energy Performance Contracting) projects, under which investment in the customer's installation is covered by resulting energy savings, continued for example with energy upgrades at the Prague National Theater's studios or an extensive savings program for the Prague Congress Center.
CEZ Group does not expect any major changes by the end of 2016 in comparison with planned electricity supplies, which are approximately the same as the actual result of 2015. The amount of supplies and the market share in the retail segment are expected to stabilize in spite of the highly competitive environment due to our optimized retention activities and continued acquisition of new customers. These efforts have been supported by lowering the price of some product lines and actively approaching customers whose fixed-term contracts are about to expire.
On the market in natural gas, CEZ Group expects to deliver to their customers in the Czech Republic approximately 0.63 TWh of gas more in 2016 than it did in 2015. Sales are expected to grow primarily in the residential and corporate client segments.
The ČEZ Electromobility project continues to develop in line with the project outline for 2016–2017, which was approved by Company management in January 2016. The project keeps focusing primarily on building a public charging infrastructure network and offering related products. It also involves other complementary activities related to electric mobility.
The number of fast-charging stations increased to 15 by July 1, 2016 and 21 by August 11, 2016. The numbers of standard charging stations was 48 and 46, respectively. The installation of other charging stations is prepared so as to cover major populated areas and the most important roads in dozens of places throughout the whole Czech Republic. Negotiations continue with partners among private companies, commercial entities, and municipalities that have sites suitable for the construction of the charging station network. As the offer of electric vehicles on the Czech market grows and the capacity of vehicle batteries increases (to offer greater driving range), collaboration with vehicle vendors is intensifying.
CEZ Group has almost thirty electric vehicles in its fleet and is testing them actively. Testing the regular use of electric vehicles continues in collaboration with partners—in the first half of the year, this involved e.g. long-term testing of two electric utility vehicles by Czech Postal Service.
In February 2016, CEZ Group in collaboration with ARRIVA PRAHA s.r.o. and PASSERINVEST GROUP, a.s. put two electric buses of SOR brand into regular operation in Prague.
In collaboration with selected car manufacturers, ČEZ has prepared a special vehicle acquisition offer intended exclusively for public administration bodies.
There is ongoing collaboration with selected regions and ministries, especially in regard of the implementation of a strategic framework for the development of clean mobility in line with the National Action Plan for Clean Mobility.
ČEZ Nová energetika, under the brand name of INVEN CAPITAL, seeks opportunities for investment in smaller to midsize innovative businesses operating in Europe's new energy sector. The objective is to generate long-term value through active collaboration with portfolio companies and their founders.
In the first half of 2016, an investment was made in tado GmbH, a Bavarian technology company doing business in smart temperature control for homes based on the user's location and habits. The smart thermostats it offers are compatible with most boilers in Europe and can also control airconditioning units. Furthermore, they allow offering customers additional services such as online offers of boiler repairs. Another investment made in this period was in the Environmental Technologies Fund, a renowned London-based fund focusing on investments in fast growing companies in the sector of clean technologies. CEZ Group expects the investment to bring a return of 20–25% and provide it with access to unique investment opportunities and know-how.
In 2016, ČEZ continues its partnership with Czech ICT Incubator @ Silicon Valley, a contest organized by Czech ICT Alliance. In this contest, with ČEZ playing the role of one of the expert jurors, startups compete for participation in and mentoring by Runway, a prestigious Silicon Valley incubator. Applications for the third round organized in March were sent by 23 promising startups from the Czech Republic, from which the jury, after two rounds of selection, chose two winners: BattSwap, a company offering fast battery swap solutions for electric vehicles, and Lumitrix, a company manufacturing compact systems for long-term outdoor projection (video mapping).
Rockstart, an Amsterdam-based startup accelerator where ČEZ is a partner, organized the first round of its Smart Energy program in the first half of 2016. A total of 10 startups received 180 days of intensive mentoring, allowing them to work on their business models, seek partners and customers, or hire new members for their teams. The whole program is finished with a conference named Smart Energy Demo Day, where the startups present their ideas and successes to potential investors.
CEZ Group companies provide their services within CEZ Group as well as to customers in the free market. By doing so, they aptly complement CEZ Group's core business and create the necessary conditions for all of CEZ Group's activities.
The company offers a wide range of ancillary services. It offers its customers purchases and leases of means of transportation and mechanization; fleet administration services; the administration and operation of non-energy property, including movables; and personnel services, including payroll accounting and administrative services (operation of mail rooms, archives, receptions, etc.).
The company provides information and telecommunications services within CEZ Group, based on a consolidated application and technology architecture. This includes, for example, enterprise resource planning (ERP) systems, customer sales promotion systems interconnected with customer service and analytical tools, as well as trading systems for electricity and other commodities. Its portfolio of telecommunication services includes voice and data services as well as the operation of independent radio networks for technology operation and crew dispatch.
The Polish energy market is almost fully liberalized. Wholesale market prices are based on market conditions. The only regulated electricity tariffs are those for households. Distribution fees are also regulated. Prices in the heat market are based on a tariff system and each change in prices requires approval by the Energy Regulatory Office.
Generation of renewable energy is supported through a system of green certificates. Support for biomass, biogas, co-combustion, wind energy, and other renewables has been amended by the Renewable Energy Sources Act of 2015. The Act presents a new support mechanism, an "auction system", which intends to reduce the cost of support for renewable energy generation.
An act on investment in wind farms, related to the development of the wind energy sector, came into effect on July 16, 2016. Pursuant to the Act, a wind turbine (together with its foundation, tower, and technology) will be deemed to be a building as defined by building law. This change can result in a significant increase in property tax paid by wind farm operators. In addition, the location of a wind farm will have to be identified in a local zoning plan, which is to specify the maximum total height of a wind turbine. The Act also introduces rules concerning the minimum distance between a wind turbine and residential buildings or sites of high natural value, which must be equal to or greater than ten times the wind turbine height. In respect of wind farm operations, only repairs and necessary maintenance are allowed; activities aimed to increase wind farm productivity are prohibited.
This effectively postponed the first expected auctions; the law also poses a threat to the implementation of wind park projects throughout Poland, including CEZ Group's projects developed by Eco-Wind Construction.
Regulations concerning energy efficiency were adopted to support energy savings and activities related to energy efficiency. Reducing energy consumption will be supported by a system of white certificates.
Coal-fired power plants generated 1,349 GWh of electricity in H1 2016, i.e. 5 GWh less than in the same period of 2015. As at June 30, 2016, the Borek Szlachecki small hydropower plant with an installed capacity of 885 kW produced 3.0 GWh of electricity and the Skawinka small hydropower plant generated 2.7 GWh of electricity.
In H1 2016, the Chorzów and Skawina power plants in Poland supplied 3,265 TJ of heat, i.e. 372 TJ (13%) more than in the same period of 2015.
CEZ Group companies made capital expenditures of CZK 37m in Poland in H1 2016. The largest portion of the capital expenditures went to an overhaul of boilers and the connection of Turbine Generator 3 at the Skawina power plant.
As at June 30, 2016, CEZ Group companies owned power plants with a total installed capacity of 680.9 MW in Poland: coal-fired power plants with 678.4 MW and hydropower plants with 2.5 MW.
Selected Information Concerning the Performance of the Generation Segments
| Unit | Generation— Traditional Energy |
Generation— New Energy |
Total | ||||
|---|---|---|---|---|---|---|---|
| H1 2015 | H1 2016 | H1 2015 | H1 2016 | H1 2015 | H1 2016 | ||
| Electricity generation | GWh | 1,360 | 1,354 | - | - | 1,360 | 1,354 |
| Heat supply | TJ | 2,893 | 3,265 | - | - | 2,893 | 3,265 |
| Installed capacity | MW | 681 | 681 | - | - | 681 | 681 |
CEZ Group power plants in Poland are projected to generate 3.0 TWh of electricity in 2016.
Heat sales are expected to total approximately 5,800 TJ in 2016.
Electricity is sold to end-use customers in Poland by CEZ Trade Polska sp. z o.o., which also started to supply natural gas to end-customers in 2016.
The company supplied 918 GWh of electricity to its customers in H1 2016, which is a year-on-year increase of 68 GWh. The company also supplied 30 GWh of natural gas in H1 2016.
The total amount of electricity sold to end-use customers in 2016 is expected to be 1,917 GWh, i.e. 305 GWh more than in 2015. The estimated amount of natural gas supplied in 2016 is 70 GWh. CEZ Group will continue to sell electricity and gas with the aim of increasing its market share during 2016.
CEZ ESCO Polska has operated on the Polish market since May; just like its counterpart in the Czech Republic, it will offer businesses, municipalities, and public institutions optimization of energy utilization as well as a wide range of energy services, from the installation and operation of cogeneration units or photovoltaic installations to energy audits, consulting, and comprehensive turnkey energy solutions.
Households and businesses connected to the low-voltage grid are generally supplied at regulated prices using a system of quotas in accordance with the Energy Act and decisions of the regulatory authority—the Energy and Water Regulatory Commission (EWRC). Since April 1, 2016, these customers have been able to enter the open market and get electricity supply contracts at unregulated prices in relation to the introduction of Standardized Load Profiles (SLPs) and the regulator's publication of supplier switching guidelines. However, the successful completion of liberalization, previously identified by the EWRC as one of its main tasks for 2016, is put at significant risk by lack of secondary legislation, the existence of cross subsidization, and the government's pressure on keeping residential energy prices low.
Electricity producers started to offer electricity by means of electronic tenders, which help create an electricity spot market in the country. The Independent Bulgarian Energy Exchange (IBEX) started its full operation on January 19, 2016.
On June 30, 2016, the EWRC published a price decision with effect from July 1, 2016. It also announced that it was not expecting the residential market to become completely open yet, at least not during the current price period, which will last until June 30, 2017.
An amendment to the Energy Market Rules entered into effect on November 20, 2015. New rules were adopted for opening the market to low-voltage customers, in particular for distribution companies, which are allowed to create and use load profiles for their customers and must, together with sales companies, create profile use guidelines and publish them mandatorily. Eight Standardized Load Profiles (SLPs) were presented by the EWRC on January 29, 2016 and subsequently approved by it.
On March 19, 2014, the EWRC initiated a new procedure for revoking the electricity trading license of CEZ Elektro Bulgaria. The initiation of the procedure is the result of Bulgarian authorities' long-term inactivity in matters concerning RES support regulation in 2012 and 2013. There is no current progress in the procedure in spite of constant appeals for its cessation, including interventions by the European Commission.
The Varna coal-fired power plant did not generate any electricity in 2016 because its operation was suspended at January 1, 2015 due to non-compliance with environmental limits set down in the integrated permit. The situation in Bulgaria's energy sector and the current state of related legislation do not allow making a positive return on investment in necessary modifications.
The photovoltaic power plant in Oreshets generated 3.1 GWh of electricity in H1 2016, which is 5% less than in the same period of H1 2015.
The completed Bara biomass gasification power plant was not put into commercial operation in 2016 due to a change in support as the amended law canceled support in the form of a feed-in tariff for biomass-to-electricity projects.
No capital construction was carried out in H1 2016.
CEZ Group has an installed capacity of 1,266.7 MW in Bulgaria: 1,260 MW in the coal-fired Varna Power Plant, 5 MW in the photovoltaic Oreshets Power Plant, and 1.7 MW in the Bara Group's biomass gasification power plan.
Selected Information Concerning the Performance of the Generation Segments
| Unit | Generation— Traditional Energy |
Generation— New Energy |
Total | ||||
|---|---|---|---|---|---|---|---|
| H1 2015 | H1 2016 | H1 2015 | H1 2016 | H1 2015 | H1 2016 | ||
| Electricity generation | GWh | - | - | 3.2 | 3.1 | 3.2 | 3.1 |
| Heat supply | TJ | - | - | - | - | - | - |
| Installed capacity | MW | 1,260.0 | 1,260.0 | 5.0 | 6.7 | 1,265.0 | 1,266.7 |
The photovoltaic Oreshets Power Plant is expected to generate 5.9 GWh of electricity in 2016. The Varna and Bara power plants are not expected to operate.
In Bulgaria, electricity is distributed by CEZ Razpredelenie Bulgaria AD, which distributed a total of 4,692 GWh of electricity to end-use customers in H1 2016, i.e. 113 GWh less year-on-year. The decrease was due to warmer winter months.
A total of CZK 387m was spent on capital construction in Bulgaria in H1 2016. Similarly to the same period of 2015, capital expenditures were aimed primarily at improving distribution grid quality, replacing electric meters, critical infrastructure in Sofia, and new connections to the distribution grid. In addition, CZK 153bn was spent on mandatory buyouts of distribution assets.
CEZ Trade Bulgaria EAD sold 1,527 GWh of electricity to end-use customers on the free market in H1 2016, i.e. 281 GWh (+22.6%) more year-on-year. The increase was due to successful acquisition of new customers switching from the regulated market to the free market.
The sales company CEZ Elektro Bulgaria AD sold a total of 3,287 GWh of electricity to end-use customers in H1 2016, which was a decrease of 366 GWh (10%) year-on-year. The decrease was due to a warmer winter and lower sales to corporate customers at the medium-voltage and low-voltage levels, some of whom switched to a different seller on the free market.
CEZ Elektro Bulgaria AD expects to sell 6,053 GWh of electricity and CEZ Trade Bulgaria EAD expects to sell 3,458 GWh of electricity in 2016.
The energy market in Romania is undergoing gradual liberalization. Full market liberalization in the corporate customer segment was completed in 2013 and should be completed for households in 2017. Liberalization of the sales segment continues during 2016 according to the specified schedule.
Renewable generation in Romania is supported through "green certificates." The Romanian government amended the renewables support program in July 2013, with the result that the negotiability of a portion of allocated green certificates was suspended. Wind parks can temporarily trade in just one of two certificates allocated per generated MWh. The withheld certificates should be traded by wind parks from January 1, 2018 until the end of 2020.
Temporary accreditations approved on September 2, 2015 entitled the Fântânele Vest and Cogealac wind parks to receive support for 12 months in the form of green certificates, getting one certificate per MWh while the other certificate remains deferred until 2018–2020. In April 2016, the regulatory authority approved a 12-month renewal of the temporary accreditation until September 2017. What was crucial for the allocation of support in the long term was the completion of the formal notification process by the European Commission (more specifically, its Directorate-General for Competition—DG COMP). Romanian authorities sent formal notifications concerning the two wind farms to the European Commission in February 2016. The European Commission (DG COMP) completed the process of approving state aid for renewable electricity generation and approved the individual notifications for the Fântânele Vest and Cogealac wind parks on June 3, 2016. On the basis of this approval by the European Commission (DG COMP), the wind parks are now entitled to be part of the renewable generation support program in accordance with applicable legislation and obtain green certificates for the electricity they generate. For 2016, this means support amounting to two green certificates – one allocated and one deferred.
Tariffs for the regulated sector of distribution and sales, with effect from January 1, 2016, were published by the Romanian regulatory authority in the second half of December 2015. The Romanian regulatory authority decreased CEZ Distributie's average distribution tariff by 11%. It decreased the tariffs of other distribution companies in a similar manner despite the fact that the distribution tariff calculation methodology effective at the beginning of the regulatory period set the limit of a year-onyear change in an average tariff to ±7%. However, the regulatory authority changed the tariff calculation methodology just before its new price decision, removing the 7% limit by its unilateral decision. CEZ Distributie filed a complaint against the above-mentioned decision with a court on January 18, 2016, simultaneously filing an appeal with the regulatory authority. The regulatory authority dismissed the appeal. The court of first instance decided in favor of the company. The decision has not become effective yet.
The Fântânele and Cogealac wind parks generated 567 GWh of electricity in H1 2016, which was a decrease of 129 GWh year-on-year. The lower production was due to worse weather conditions and generation restrictions imposed by the semi-state-owned transmission system operator in order to regulate the transmission system.
Small hydropower plants operated by TMK Hydroenergy Power S.R.L. at Reşiţa produced 49 GWh of electricity.
Minor capital expenditures of CZK 0.3m were made in respect of the Fântânele and Cogealac wind parks and the small hydropower plants owned by Hydroenergy Power S.R.L.
As at June 30, 2016, CEZ Group companies in Romania owned generating facilities with an installed electricity generation capacity of 622 MW (600 MW in wind parks, 22 MW in hydro plants).
Selected Information Concerning the Performance of the Generation Segments
| Unit | Generation— Traditional Energy |
Generation— New Energy |
Total | ||||
|---|---|---|---|---|---|---|---|
| H1 2015 | H1 2016 | H1 2015 | H1 2016 | H1 2015 | H1 2016 | ||
| Electricity generation | GWh | - | - | 726 | 616 | 726 | 616 |
| Heat supply | TJ | - | - | - | - | - | - |
| Installed capacity | MW | - | - | 622 | 622 | 622 | 622 |
The annual amount expected to be generated in 2016 is 1,167 GWh for wind parks and 90 GWh for hydropower plants.
The CEZ Group company that distributes electricity in Romania is CEZ Distributie S.A., which distributed a total of 3,162 GWh of electricity in H1 2016, which was a slight decrease of 35 GWh yearon-year.
Capital expenditures of CZK 624m were aimed primarily at distribution assets and new electricity meters.
CEZ Vanzare S.A. sold 1,645 GWh of electricity to end-use customers in H1 2016, which was a decrease of 58 GWh year-on-year. This was primarily due to lower sales to customers among industrial enterprises.
The total annual sales of electricity are expected to amount to 3,316 GWh.
The exchange rate of the Turkish lira against the U.S. dollar was below the 2015 year-end level during virtually all the first half of the year, although it kept slightly fluctuating. However, it varied over a narrow range throughout H1 2016, as compared to the significant weakening against the U.S. dollar in 2015.
The prices of electric power in Turkey decreased in Q1 year-on-year, primarily due to greater generation at hydropower plants. They grew slightly in Q2 to levels higher than those of 2015 in connection with greater demand.
Transmission charges legislation was amended during the first half of the year, which will result in increased transmission charges. Other amendments to legislation concerned renewable energy sources and allowed providing ancillary services also to sources that receive support. Selected hydropower plants owned by Akenerji will thus be able to generate additional revenue from ancillary services.
In electricity distribution and sales, negotiations concerning amendments to the conditions of the new regulatory period starting on January 1, 2016 were held in H1 2016 with the regulatory authority. After its prevailingly negative decision, a formal action was filed with a court.
In late June/early July, internal political instability in Turkey escalated after a defeated coup by a portion of the Turkish military. The exchange rate of the Turkish lira reacted with a short-term weakening to a many-year low but returned almost to its previous values later. Standard & Poor's responded to the political uncertainty in the country by lowering its credit rating. CEZ Group is monitoring the situation in the country in cooperation with its Turkish partner; however, it believes it is still too early to draw any conclusions from it. The generation, sales, and distribution assets continue to generate cash as planned.
The total electricity production of the Akenerji group in H1 2016 was 1,710 GWh, including 607 GWh generated by hydropower plants, 1,082 GWh by gas-fired plants, and 21 GWh by wind parks. This is a decrease of 178 GWh from 2015, when 1,888 GWh was generated in H1 (989 GWh by hydropower plants, 878 GWh by gas-fired plants, and 20 GWh by wind parks).
TRY 13.6m (approx. CZK 114m) was invested in electricity generation, primarily in the extension of the wind park at Ayyıldız.
Electricity is generated by Akenerji Elektrik Üretim A.Ş. and its subsidiaries. Akenerji owns one older, shut-down, gas-fired power plant, one modern CCGT plant, one wind park, and eight hydropower plants. The installed capacity of power plants co-owned by CEZ Group in Turkey totals 1,208 MW, with 289 MW in hydro plants, 904 MW in CCGT plants, and 15 MW in wind parks. Sales decreased year-on-year due to the sale of the Akocak hydropower plant.
The total amount of generated electricity is expected to be 3.7 TWh. The year-on-year decrease is due to expected lower generation at hydro and gas-fired power plants.
Electricity is distributed in Turkey by regulated regional distribution companies. One of them is Sakarya Elektrik Dagıtım A.Ş. (SEDAŞ), indirectly controlled by ČEZ and its Turkish partner AKKÖK (through their joint venture Akcez Enerji A.Ş.). The volume of electricity distributed to end-use customers in H1 2016 was 4,341 GWh, which represented an increase of 4.5% over the same period of 2015.
TRY 21.1m (approx. CZK 178m) was invested in distribution. The investments were primarily aimed at increasing capacity and efficiency of grid.
Sakarya Elektrik Perakende Satis A.Ş. (SEPAŞ), a sales company controlled through the joint venture Akcez Enerji A.Ş., sells electricity to end-use customers mostly in the SEDAŞ distribution area. The amount of electricity sold in H1 2016 was 4,196 GWh, which was a 9.5% increase year-on-year. The increase was due partially to higher demand and partially to acquiring new eligible customers.
The expectations for 2016 are 8.7 TWh of electricity distributed and 8.9 TWh of electricity sold.
CEZ Group directly owns a 24.5% stake (and indirectly, through a group of joint ventures with MOL, a 25.5% stake) in a heating plant at the Slovnaft refinery (CM European Power Slovakia s.r.o.).
Process steam and electricity at the Slovnaft refinery are produced by CM European Power Slovakia, s. r. o., which belongs to a group of joint ventures of ČEZ and MOL. It delivered 2,468 TJ of heat and generated 250 GWh of electricity in H1 2016.
The project for an 850MW CCGT plant at the Slovnaft site has been temporarily suspended due to unfavorable prices of electricity and gas, which do not guarantee any return on the investment.
Jadrová energetická spoločnosť Slovenska, a. s., in which 49% of shares are held by ČEZ, a. s. through ČEZ Bohunice a.s. and 51% of shares are held by JAVYS, a Slovak state-owned company, participates actively in the creation of zoning documentation in the municipality of Jaslovské Bohunice, primarily for the purposes of completing land acquisition. The final version of the zoning documentation was published on the municipality's notice board until July 6, 2016 and is to be discussed and approved by the municipal council of Jaslovské Bohunice.
As part of the EIA process, the Ministry of the Environment of the Slovak Republic received the Expert Review of Proposed Activities and a Proposal for the Final Opinion – New Nuclear Power Plant at Jaslovské Bohunice on March 14, 2016. On April 15, 2016, the Ministry issued its final opinion, in which it recommends undertaking the proposed activities. The final opinion is valid for 7 years after the date of issue.
Regulation, financing, and return risks remain present in the project.
CEZ Slovensko, s.r.o. continued to sell electricity and natural gas to the large end-use customer segment and the small end-use customer segment, i.e. residential and SME customers, in H1 2016. Total H1 2016 deliveries in all customer segments amounted to 875 GWh of electricity, an amount similar to that of the same period of 2015, and 1,250 GWh of natural gas with a year-on-year increase of 129 GWh (+11.5%).
The amount of electricity delivered to the large and small end-use customer segments in 2016 is expected to be similar to that of 2015, while a slight increase is expected for the total amount of natural gas delivered. We will continue to actively pursue growth in our market share.
CEZ Group has only limited operations in some countries where it is present. These include countries where activities are still under development or have already been wound down, as well as countries where no energy-related business activities are pursued.
Germany continues to be a priority market under CEZ Group's updated strategy, focusing on strengthening its position in renewables in the Central European region.
A step toward the implementation of the renewables development strategy is collaboration with Aquila Capital, Germany's leading manager of assets in renewable energy sources. Aquila Capital is seeking potential opportunities for CEZ Group to invest in wind farms—both in shares in already operated wind farms and in projects with an approved form of support awaiting construction. The volume of investment under this collaboration will be within the single-digit hundreds of millions of euros within five years and the total capacity could reach about 120 MW. In the first half of the year, Aquila Capital presented 4 projects with a total capacity of 118 MW meeting the conditions of the collaboration. All the projects involved wind farms that are either already in operation or to be connected to the grid in 2016.
In H1 2016, CEZ Group analyzed and internally valued a number of onshore and offshore wind projects and biomass projects with a total installed capacity exceeding 1,000 MW. It also analyses biomethane plants, currently it concerns projects with a capacity of 1,450 Nm3 /h.
In Hungary, CEZ Magyarország Kft. sold 613 GWh of electricity to end-use customers in H1 2016, which was a decrease of 36 GWh (-5.5%) from the same period of 2015.
The total volume delivered in 2016 is expected to be lower than that of 2015. We will continue to actively pursue growth in our market share.
Another installment of EUR 21.1m (approx. CZK 570m) under the Settlement Agreement with Albania was duly paid on July 25, 2016. ČEZ, a. s. has already received EUR 52.8m out of the total of EUR 95m. Further payments are planned to be made in yearly installments until 2018.
CEZ Group operates on the wholesale electricity market in Serbia. Acquisition activities have been wound down since 2010.
CEZ Group has no actual business operations in these countries. The subsidiaries located in these countries are holding or financing companies.
April 15—CEZ International Finance Ireland Ltd. went into liquidation
February 6—Taidana Limited, which had been in liquidation since late 2014, ceased to exist
March 31—Minor changes were made to the stakes of the existing owners (ČEZ, a. s. and CEZ Poland Distribution B.V.) in Ovidiu Development S.R.L. and Tomis Team S.A.; both companies remain wholly owned by CEZ Group companies
January 9—JESS Invest, s. r. o. ceased to exist
The 24th Annual General Meeting of ČEZ, a. s. was held on June 3, 2016. Among other things, the General Meeting:
The dividend is CZK 40 per share before tax.
| Petr Polák | Co-opted by the Supervisory Board with effect from February 25, 2016 (Confirmed by the General Meeting on June 3, 2016) |
|---|---|
| Vladimír Kohout | Elected by the General Meeting with effect from June 3, 2016 |
| Ondřej Landa | Elected by the General Meeting with effect from June 3, 2016 |
| Šárka Vinklerová | Elected by the General Meeting with effect from June 3, 2016 |
| František Vágner | Elected by the General Meeting with effect from June 3, 2016 |
The Supervisory Board elected Ondřej Landa as its vice-chairman at its meeting held on June 23, 2016.
| Vladimír Vlk | Resigned from the Supervisory Board with effect from February 25, 2016 |
|---|---|
| Petr Blažek | Vice-Chairman of the Supervisory Board from June 26, 2015 to June 3, 2016 |
| Member of the Supervisory Board from June 12, 2015 to June 3, 2016 | |
| Jan Sixta | Member of the Supervisory Board from June 12, 2015 to June 3, 2016 |
| Jiří Tyc | Member of the Supervisory Board from June 27, 2014 to June 3, 2016 |
| Lukáš Wagenknecht | Member of the Supervisory Board from June 27, 2014 to June 3, 2016 |
| Otakar Hora | Member of the Audit Committee since June 3, 2016 |
|---|---|
| ------------- | -------------------------------------------------- |
| Lukáš Wagenknecht | Vice-Chairman of the Audit Committee from July 10, 2014 to June 3, 2016 |
|---|---|
| Member of the Audit Committee from June 27, 2014 to June 3, 2016 |
| Martin Novák | Vice-Chairman of the Board of Directors since October 20, 2011 |
|---|---|
| Re-elected with effect from May 22, 2012 | |
| Re-elected with effect from May 23, 2016 | |
| Member of the Board of Directors since May 21, 2008 | |
| Re-elected with effect from May 22, 2012 | |
| Re-elected with effect from May 23, 2016 |
approx. CZK 56m with accessories thereof. Another lawsuit is heard by the District Court in Sokolov and ČEZ, a. s. is seeking the recovery of unjust enrichment (overpayment) received by SU in connection with payments for brown coal deliveries from June to December 2011, amounting to approx. CZK 77m with accessories thereof. Neither the Regional Court in Pilsen nor the District Court in Sokolov has yet decided the respective case. In addition, ČEZ, a. s. filed a lawsuit with the District Court in Sokolov claiming approx. CZK 342m with accessories thereof as a contractual penalty based on a ship-or-pay obligation in relation to brown coal deliveries in 2011. The case has not been decided yet either. Furthermore, ČEZ, a. s. filed an action against SU with the District Court in Sokolov in March 2015, seeking approx. CZK 206m with accessories thereof in damages arising from ČEZ, a. s. being forced to pay the cost of transportation of thermal brown coal to the Tisová Power Plant from January 2012 to December 2014, while the cost should have been paid by SU under the long-term thermal brown coal sales contract. The case is heard by the District Court in Sokolov and has not been decided yet. In late 2015, ČEZ, a. s. filed a lawsuit with the District Court in Sokolov claiming approx. CZK 430m with accessories thereof as a contractual penalty based on a ship-or-pay obligation in relation to brown coal deliveries in 2012. The case has not been decided yet. In connection with the above, ČEZ, a. s. also was or is the subject of proceedings conducted by the Office for the Protection of Competition and the Specialized Tax Office; the Specialized Tax Office case is now in the stage of review by administrative courts. Furthermore, SU filed an action against ČEZ, a. s. in February 2016, claiming approx. CZK 1,054m with accessories thereto. SU claims that ČEZ, a. s. was acting unlawfully when paying a price lower than the allegedly usual price for brown coal deliveries in 2010 through 2013. It claims price top-up and a contractual penalty. This case is currently heard by the District Court in Sokolov and has not been decided yet.
October 1, 2013 and that it was billed for said price component without legal title by ČEZ Distribuce, a. s. The case is pending; its outcome is impossible to predict.
On July 12, 2016, CEZ Group formally filed a Request for Arbitration with the International Centre for Settlement of Investment Disputes (ICSID), officially commencing international investment arbitration against the Republic of Bulgaria under the Energy Charter Treaty on the grounds of non-protection of CEZ Group's investment. It decided to do so after a number of interventions by Bulgarian authorities injuring CEZ companies' business in Bulgaria and as a result of a long-term, non-improving critical situation in the country's energy market. The claim amounts to hundreds of millions of EUR.
ČEZ repeatedly called upon the Bulgarian government to improve the existing situation speedily and compensate incurred losses. It sent the Bulgarian government a Notice of Dispute in November 2015, in which it asked for amicable settlement and reserved the right to commence investment arbitration. The Bulgarian party did not take the opportunity to settle the dispute amicably in the time provided.
| CEZ Group Spokespeople |
||
|---|---|---|
| Ladislav Kříž | [email protected] | +420 211 042 383 |
| Barbora Půlpánová | [email protected] | +420 211 042 603 |
| Roman Gazdík | [email protected] | +420 211 042 456 |
| List of Area Contacts in the Czech Republic |
https://www.cez.cz/en/cez group/media/contacts.html |
|
| Information Centers | https://www.cez.cz/en/contacts/information centers.html |
|
| Virtual Power Plant Tours |
http://virtualniprohlidky.cez.cz/cez-virtualni prohlidky/ |
|
| Investor Relations | ||
| Barbara Seidlová | [email protected] | +420 211 042 529 |
| Tereza Goeblová | [email protected] | +420 211 042 391 |
| Website | www.cez.cz | |
| Pavel Foršt | [email protected] | +420 211 043 362 |
| Martin Schreier | [email protected] | +420 211 042 612 |
| ČEZ Foundation | www.nadacecez.cz | +420 211 046 720 |
| Customer Care Line in the Czech Republic Mailing address: ČEZ Zákaznické služby, s.r.o. Guldenerova 2577/19 326 00 Plzeň |
[email protected] | +420 371 100 100 +420 840 840 840 Fax: +420 371 102 008 |
| Customer Care Line in Bulgaria |
[email protected] | 0700 10 010 (when calling from Bulgaria) Fax: +359 (0)28 959 667 |
| Customer Care Line in Hungary |
[email protected] | +36 1 266 9324 Fax: +36 1 266 9331 |
| [email protected] | 0251 929 (when calling from Romania) Fax: 0248 524 834 |
|---|---|
| [email protected] [email protected] |
0850 888 444 (when calling from Slovakia) 0850 777 555 (when calling from Slovakia) |
| www.cez.cz/cs/sluzby-pro-zakazniky/cez online.html |
|
| www.cez.cz/cs/odpovedna firma/ombudsman.html |
No phone contact |
| [email protected] | +359 (0) 28 958 450 Fax: +359 (0) 28 959 770 |
| CHP | Combined heat and power |
|---|---|
| EIA | Environmental Impact Assessment |
| ERO | Energy Regulatory Office |
| EU ETS | EU Emission Trading System |
| ISIN | International Securities Identification Number |
| RES | Renewable energy sources |
| SONS | State Office for Nuclear Safety |
Totals and subtotals in this Half-Year Report can differ from the sum of partial values due to rounding.
In accordance with ESMA guidelines, ČEZ provides detailed information on indicators that are not reported as standard in IFRS statements or the components of which are not directly available from standardized statements (financial statements). Such indicators represent supplementary information in respect of financial data, providing report users with additional information for their assessment of the economic situation and performance of CEZ Group or ČEZ. In general, these indicators are also commonly used in other commercial companies, not only in the energy sector.
| Indicator | |
|---|---|
| Net Debt | Purpose: The indicator shows the real level of a company's financial debt, i.e. the nominal amount of debt less cash, cash equivalents, and highly liquid financial assets held by the company. The indicator is primarily used to assess the overall appropriateness of the company's level of debt, i.e. for example in comparison with selected corporate profit or balance sheet indicators. |
| Definition: Long-Term Debt, Net of Current Portion + Current Portion of Long-Term Debt + Short-Term Borrowings − (Cash and Cash Equivalents + Highly Liquid Financial Assets) |
|
| Adjusted Net Income (After-Tax Income, Adjusted) |
Purpose: This is a supporting indicator primarily for investors, creditors, and shareholders that allows interpreting achieved financial results with the exclusion of extraordinary, usually non-recurring effects that are generally unrelated to ordinary financial performance and value creation in a given period. |
| Definition*): Net income (after-tax income) +/− additions to and reversals of impairments of property, plant, and equipment and intangible assets including goodwill +/− loss/profit from sale of subsidiaries +/− other extraordinary effects that are generally unrelated to ordinary financial performance in a given year and value creation in a given period +/− effects of the above on deferred and current tax |
|
| Dividend per Share (Gross) | Purpose: The indicator reflects a shareholder's right to the payment of a share in a joint-stock company's profit (usually for the past year) corresponding to the holding of one share. The subsequent payment of the share in profit is usually subject to taxes, which may be different for different shareholders; therefore, the value before taxes is reported. |
| Definition: Dividend awarded in the current year, before taxes, per outstanding share (paid in the reported year from the profit of prior periods). |
|
| EBITDA (EBIT Before Depreciation and Amortization, Impairments, and Asset Sales) |
Purpose: This is an important economic indicator showing a business's operating efficiency comparable to other companies, as it is unrelated to the company's depreciation and amortization policy and capital structure or tax treatment. It is one of the fundamental indicators used by companies to set their key financial and strategic objectives. |
| Definition: Earnings Before Taxes and Other Expenses and Revenues + Depreciation and Amortization +/− Impairments of Property, Plant, and Equipment and Intangible Assets Including Goodwill (including Write-Off of Canceled Investments) and Sales of Property, Plant, and Equipment and Intangible Assets |
| Indicator | |
|---|---|
| Net Debt / EBITDA | Purpose: This indicates a company's capability to decrease and pay back its debt as well as its ability to take on additional debt to grow its business. The indicator shows approximately how long it would take for a company to pay back its debt out of its primary source of operating cash flow. CEZ Group uses this indicator primarily to assess the adequacy of its capital structure to the structure and stability of its expected cash flows. Definition: Net Debt / EBITDA. Where EBITDA is the running total for the past 12 months, i.e. EBITDA generated from July 1 of the previous year to June 30, and Net Debt is the level at the end of the period, i.e. at June 30. |
| Return on Equity (ROE), Net | Purpose: This indicator is the ratio of generated income to shareholders' capital invested in a company. It allows investors to compare the appreciation of their investment (ROE achieved in a prior period) to their expectations. |
| Definition: Net Income Attributable to Parent Company Shareholders / Average Equity Attributable to Parent Company Shareholders. Net Income is the running total for the past 12 months, i.e. the amount of Net Income generated from July 1 of the previous year to June 30. Equity is the average value of the current period and the period 12 months ago, i.e. the average of values at June 30. |
*) Definition applied since January 1, 2016
Most of the components used in the calculation of an indicator are directly shown in financial statements, published in this Half-Year Report on page 75. The components of calculations that are not included in the financial statements are usually shown directly in a company's books and are defined as follows:
| CZK millions | June 30, 2015 | June 30, 2016 |
|---|---|---|
| Short-term equity securities available-for-sale | 2,096 | 0 |
| Short-term debt securities held-to-maturity | 6,931 | 3,601 |
| Short-term deposits | 9,444 | 7,110 |
| Long-term deposits | 11 | 0 |
| Long-term debt securities available-for-sale | 681 | 4,839 |
| Highly liquid financial assets in total | 19,164 | 15,550 |
| Adjusted Net Income (After-Tax Income, Adjusted) Unit | H1 2015 | H1 2016 | |
|---|---|---|---|
| Net income | CZK millions | 15,414 | 13,797 |
| Impairments of property, plant, and equipment and intangible assets including goodwill |
CZK millions | 21 | 973 |
| Effects of the additions to or reversals of impairments on deferred and current tax |
CZK millions | (3) | 0 |
| Profit (loss) from sale of subsidiaries and joint ventures |
CZK millions | 0 | 0 |
| Other extraordinary effects | CZK millions | 0 | 0 |
| Adjusted net income | CZK millions | 15,432 | 14,770 |
CEZ Group Interim Consolidated Financial Statements
INTERIM CONSOLIDATED FINANCIAL STATEMENTS PREPARED IN ACCORDANCE WITH INTERNATIONAL FINANCIAL REPORTING STANDARDS AS OF JUNE 30, 2016
| Note | June 30, 2016 |
December 31, 2015 |
|
|---|---|---|---|
| Assets | |||
| Property, plant and equipment: | |||
| Plant in service Less accumulated depreciation and impairment |
724,326 (412,800) |
719,633 (399,608) |
|
| Net plant in service | 311,526 | 320,025 | |
| Nuclear fuel, at amortized cost Construction work in progress |
13,213 93,237 |
12,997 88,342 |
|
| Total property, plant and equipment | 417,976 | 421,364 | |
| Other non-current assets: | |||
| Investment in joint-ventures Restricted financial assets Investments and other financial assets, net Intangible assets, net Deferred tax assets |
9,255 19,018 29,559 20,139 1,173 |
9,239 18,059 22,598 20,164 1,631 |
|
| Total other non-current assets | 79,144 | 71,691 | |
| Total non-current assets | 497,120 | 493,055 | |
| Current assets: | |||
| Cash and cash equivalents Receivables, net Income tax receivable Materials and supplies, net Fossil fuel stocks Emission rights Other financial assets, net Other current assets Total current assets |
21,996 44,845 2,723 8,701 781 1,883 29,702 3,309 113,940 |
13,482 46,003 436 8,577 1,554 3,456 32,728 3,395 109,631 |
|
| Total assets | 611,060 | 602,686 |
| Note | June 30, 2016 |
December 31, 2015 |
|
|---|---|---|---|
| Equity and liabilities | |||
| Equity: | |||
| Equity attributable to equity holders of the parent: | |||
| Stated capital Treasury shares Retained earnings and other reserves |
53,799 (4,246) 210,420 |
53,799 (4,246) 218,340 |
|
| Total equity attributable to equity holders of the parent |
259,973 | 267,893 | |
| Non-controlling interests | 4,445 | 4,262 | |
| Total equity | 264,418 | 272,155 | |
| Long-term liabilities: | |||
| Long-term debt, net of current portion Provisions Deferred tax liabilities Other long-term liabilities |
6 | 154,167 60,617 24,383 8,591 |
145,575 60,525 22,053 8,679 |
| Total long-term liabilities | 247,758 | 236,832 | |
| Current liabilities: | |||
| Short-term loans Current portion of long-term debt Trade and other payables Income tax payable Provisions Accrued liabilities |
7 6 |
4,848 2,948 73,781 199 5,614 11,494 |
223 11,696 58,010 1,606 8,219 13,945 |
| Total current liabilities | 98,884 | 93,699 | |
| Total equity and liabilities | 611,060 | 602,686 |
| Note | 1-6/2016 | 1-6/2015 * | 4-6/2016 | 4-6/2015 * | |
|---|---|---|---|---|---|
| Sales of electricity and related services Sales of gas, coal, heat and other |
84,654 | 90,458 | 41,662 | 44,220 | |
| revenues | 13,515 | 12,122 | 5,120 | 4,625 | |
| Other operating income | 734 | 1,944 | 238 | 1,483 | |
| Total revenues and other operating income |
98,903 | 104,524 | 47,020 | 50,328 | |
| Gains and losses from commodity derivative trading, net Fuel Purchased power and related services Repairs and maintenance Depreciation and amortization Impairment of property, plant and equipment and intangible assets including goodwill Salaries and wages Materials and supplies Emission rights, net |
8 | 683 (6,371) (42,627) (1,617) (14,161) (973) (8,946) (2,067) 546 |
(913) (6,364) (44,397) (1,577) (14,298) (21) (8,643) (1,916) 243 |
(794) (2,816) (21,191) (1,012) (7,092) (971) (4,588) (1,107) 359 |
45 (2,665) (22,347) (900) (7,104) (83) (4,399) (1,008) 202 |
| Other operating expenses | (5,372) | (5,338) | (2,777) | (2,796) | |
| Income before other income (expenses) and income taxes |
17,998 | 21,300 | 5,031 | 9,273 | |
| Interest on debt, net of capitalized interest Interest on provisions Interest income Foreign exchange rate gains (losses), net Other financial expenses Other financial income Share of profit (loss) from joint-ventures |
(1,117) (746) 171 (681) (317) 1,762 27 |
(1,608) (843) 226 (562) (338) 1,955 (956) |
(560) (373) 95 (729) 74 1,673 (305) |
(795) (421) 116 (169) (238) 1,778 54 |
|
| Total other income (expenses) | (901) | (2,126) | (125) | 325 | |
| Income before income taxes | 17,097 | 19,174 | 4,906 | 9,598 | |
| Income taxes | (3,300) | (3,760) | (1,065) | (1,747) | |
| Net income | 13,797 | 15,414 | 3,841 | 7,851 | |
| Net income attributable to: | |||||
| Equity holders of the parent Non-controlling interests |
13,629 168 |
15,375 39 |
3,753 88 |
7,860 (9) |
|
| Net income per share attributable to equity holders of the parent (CZK per share) |
|||||
| Basic Diluted |
25.5 25.5 |
28.8 28.8 |
7.0 7.0 |
14.7 14.7 |
* The way of presentation was changed (see Note 2.2.b). The prior year figures were changed accordingly to provide comparative information on the same basis and they do not fully correspond to the interim consolidated financial statements as of June 30, 2015.
| Note | 1-6/2016 | 1-6/2015 * | 4-6/2016 | 4-6/2015 * | |
|---|---|---|---|---|---|
| Net income | 13,797 | 15,414 | 3,841 | 7,851 | |
| Other comprehensive income - items that may be reclassified subsequently to statement of income or to assets: |
|||||
| Change in fair value of cash flow hedges recognized in equity Cash flow hedges reclassified to statement |
(1,288) | 5,914 | (2,924) | 1,297 | |
| of income Change in fair value of available-for-sale |
(264) | (1,611) | (859) | 1,529 | |
| financial assets recognized in equity Available-for-sale financial assets |
1,447 | 1,149 | (244) | 20 | |
| reclassified from equity Translation differences - subsidiaries Translation differences - joint-ventures |
(1) (266) (16) |
(16) (480) (739) |
- (398) 37 |
(16) (915) (720) |
|
| Translation differences reclassified from equity Share on other equity movements of joint |
(102) | (1) | (35) | - | |
| ventures | 25 | (17) | 5 | 7 | |
| Deferred tax related to other comprehensive income |
9 | 287 | (660) | 728 | (318) |
| Net other comprehensive income that may be reclassified to statement of income |
|||||
| or to assets in subsequent periods | (178) | 3,539 | (3,690) | 884 | |
| Total comprehensive income, net of tax | 13,619 | 18,953 | 151 | 8,735 | |
| Total comprehensive income attributable to: |
|||||
| Equity holders of the parent Non-controlling interests |
13,438 181 |
18,983 (30) |
52 99 |
8,788 (53) |
* The way of presentation was changed (see Note 2.2.b). The prior year figures were changed accordingly to provide comparative information on the same basis and they do not fully correspond to the interim consolidated financial statements as of June 30, 2015.
| ONSOLIDATED STATEMENT OF CHANGES IN EQUITY | ||
|---|---|---|
| EZ GROUP | OR THE SIX MONTHS ENDED JUNE 30, 2016 |
| in CZK Millions | Note | Attributable to equity holders of the parent | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Available- | ||||||||||
| Stated capital |
Treasury shares |
difference Transla- tion |
Cash flow hedge reserve |
and other for-sale reserves |
Retained earnings |
Total | controlling interests Non- |
Total equity |
||
| December 31, 2014 | 53,799 | (4,382) | (7,350) | (7,972) | 1,849 | 225,364 | 261,308 | 4,543 | 265,851 | |
| Other comprehensive income Net income |
- - |
- - |
(1,150) - |
3,485 - |
1,290 - |
15,375 (17) |
15,375 3,608 |
(69) 39 |
15,414 3,539 |
|
| Total comprehensive income | - | - | (1,150) | 3,485 | 1,290 | 15,358 | 18,983 | (30) | 18,953 | |
| Sale of treasury shares Share options Dividends |
- - - |
- 136 - |
- - - |
- - - |
- - 16 |
(21,370) (68) - |
(21,370) 68 16 |
(4) - - |
(21,374) 68 16 |
|
| Acquisition of non-controlling interests Transfer of exercised and forfeited share options within equity |
- - |
- - |
- 19 |
- - |
(44) - |
(166) 44 |
(147) - |
(145) - |
(292) - |
|
| Put options held by non-controlling interest |
- | - | - | - | - | 143 | 143 | 149 | 292 | |
| June 30, 2015 | 53,799 | (4,246) | (8,481) | (4,487) | 3,111 | 219,305 | 259,001 | 4,513 | 263,514 |
| OF CHATED STATEMENT OF CHANGES IN EQUIT | OR THE SIX MONTHS ENDED JUNE 30, 2016 | |
|---|---|---|
| EZ GROUP |
| continued | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Note | Attributable to equity holders of the parent | |||||||||
| Stated capital |
Treasury shares |
difference Transla- tion |
Cash flow hedge reserve |
and other Available- for-sale reserves |
Retained earnings |
Total | controlling interests Non- |
Total equity |
||
| December 31, 2015 | 53,799 | (4,246) | (9,500) | (86) | 3,242 | 224,684 | 267,893 | 4,262 | 272,155 | |
| Other comprehensive income Net income |
- - |
- - |
(397) - |
(1,257) - |
1,438 - |
13,629 25 |
13,629 (191) |
168 13 |
13,797 (178) |
|
| Total comprehensive income | - | - | (397) | (1,257) | 1,438 | 13,654 | 13,438 | 181 | 13,619 | |
| Share options Dividends |
5 | - - |
- - |
- - |
- - |
- 12 |
(21,369) - |
(21,369) 12 |
(8) - |
(21,377) 12 |
| Transfer of forfeited share options Acquisition of subsidiaries within equity |
4 | - - |
- - |
- - |
- - |
(21) - |
- 21 |
- - |
- 9 |
- 9 |
| Put options held by non-controlling interest |
- | - | - | - | - | (1) | (1) | 1 | - | |
| June 30, 2016 | 53,799 | (4,246) | (9,897) | (1,343) | 4,671 | 216,989 | 259,973 | 4,445 | 264,418 |
| Note | 1-6/2016 | 1-6/2015 * | |
|---|---|---|---|
| Operating activities: | |||
| Income before income taxes | 17,097 | 19,174 | |
| Adjustments to reconcile income before income taxes to net cash provided by operating activities: Depreciation and amortization Amortization of nuclear fuel |
14,161 1,887 |
14,298 1,822 |
|
| Gain on non-current asset retirements, net Foreign exchange rate losses (gains), net |
(50) 681 |
(288) 562 |
|
| Interest expense, interest income and dividend income, net Provisions Impairment of property, plant and equipment and intangible |
345 (2,673) |
705 (4,690) |
|
| assets including goodwill Valuation allowances and other adjustments Share of (profit) loss from joint-ventures |
8 | 973 (559) (27) |
21 (477) 956 |
| Changes in assets and liabilities: Receivables Materials, supplies and fossil fuel stocks Receivables and payables from derivatives Other current assets Trade and other payables Accrued liabilities |
1,217 590 875 2,964 (5,560) (1,652) |
5,650 674 2,504 1,989 (5,689) (3,949) |
|
| Cash generated from operations | 30,269 | 33,262 | |
| Income taxes paid Interest paid, net of capitalized interest Interest received Dividends received |
(3,873) (1,227) 147 577 |
(3,146) (2,009) 232 337 |
|
| Net cash provided by operating activities | 25,893 | 28,676 | |
| Investing activities: | |||
| Acquisition of subsidiaries and joint-ventures, net of cash acquired |
4 | (42) | - |
| Disposal of subsidiaries and joint-ventures, net of cash disposed of Additions to non-current assets, including capitalized interest Proceeds from sale of non-current assets Loans made Repayment of loans Change in restricted financial assets |
177 (19,501) 173 (3) 160 (912) |
310 (15,246) 267 (30) 60 (562) |
|
| Total cash used in investing activities | (19,948) | (15,201) |
* The way of presentation was changed (see Note 2.2.b). The prior year figures were changed accordingly to provide comparative information on the same basis and they do not fully correspond to the interim consolidated financial statements as of June 30, 2015.
| Note | 1-6/2016 | 1-6/2015 * | |
|---|---|---|---|
| Financing activities: | |||
| Proceeds from borrowings Payments of borrowings Proceeds from other long-term liabilities Payments of other long-term liabilities Dividends paid to Company's shareholders Dividends paid to non-controlling interests Sale of treasury shares |
27,908 (24,701) 30 (648) (48) (7) - |
45,507 (58,731) 42 (79) (44) (4) 68 |
|
| Total cash provided by (used in) financing activities | 2,534 | (13,241) | |
| Net effect of currency translation in cash | 35 | (308) | |
| Net increase (decrease) in cash and cash equivalents | 8,514 | (74) | |
| Cash and cash equivalents at beginning of period | 13,482 | 20,095 | |
| Cash and cash equivalents at end of period | 21,996 | 20,021 | |
| Supplementary cash flow information |
Total cash paid for interest 3,563 4,482
* The way of presentation was changed (see Note 2.2.b). The prior year figures were changed accordingly to provide comparative information on the same basis and they do not fully correspond to the interim consolidated financial statements as of June 30, 2015.
ČEZ, a. s. ("ČEZ" or "the Company") is a Czech joint-stock company, owned 69.8% (70.3% of voting rights) at June 30, 2016 by the Czech Republic represented by the Ministry of Finance. The remaining shares of the Company are publicly held. The address of the Company's registered office is Duhová 2/1444, Praha 4, 140 53, Czech Republic.
The Company is a parent company of the CEZ Group ("the Group"). Main business of the Group is the production, distribution, trade and sale of electricity and heat, trade and sale of natural gas and coal mining.
The interim consolidated financial statements for the six months ended June 30, 2016 have been prepared in accordance with IAS 34 and have not been audited by an independent auditor. The interim consolidated financial statements do not include all the information and disclosures required in the annual financial statements, and should be read in conjunction with the Group's annual financial statements as of December 31, 2015.
The accounting policies adopted in the preparation of the interim consolidated financial statements are consistent with those followed in the preparation of the Group's annual financial statements for the year ended December 31, 2015, except for as follows. The Group has adopted the following new or amended and endorsed by EU IFRS and IFRIC interpretations as of January 1, 2016:
The impact of the adoption of standards or interpretations (or their annual improvements respectively) on the financial statements or performance of the Group is described below:
The amendments to IAS 1 Presentation of Financial Statements clarify, rather than significantly change, existing IAS 1 requirements.
The amendments clarify:
These amendments did not have a significant impact to the Group, but will assist in applying judgment when meeting the presentation and disclosure requirements.
Amendments to IAS 19 Defined Benefit Plans: Employee Contributions The amendments to IAS 19 are intended to simplify the accounting for contributions that are independent of the number of years of employee service, for example, employee contributions that are calculated according to a fixed percentage of salary. The amendments did not have a significant impact on Group's financial statements.
The amendments will allow entities to use the equity method to account for investments in subsidiaries, joint-ventures and associates in their separate financial statements. Entities already applying IFRS and electing to change to the equity method in its separate financial statements will have to apply that change retrospectively. For first-time adopters of IFRS electing to use the equity method in its separate financial statements, they will be required to apply this method from the date of transition to IFRS. These amendments do not have any impact on the Group's financial statements.
Amendments to IFRS 11 Joint Arrangements: Accounting for Acquisitions of Interests in joint operation The amendments to IFRS 11 require that a joint operator accounting for the acquisition of an interest in a joint operation, in which the activity of the joint operation constitutes a business must apply the relevant IFRS 3 principles for business combinations accounting. The amendments also clarify that a previously held interest in a joint operation is not remeasured on the acquisition of an additional interest in the same joint operation while joint control is retained. In addition, a scope exclusion has been added to IFRS 11 to specify that the amendments do not apply when the parties sharing joint control, including the reporting entity, are under common control of the same ultimate controlling party.
The amendments apply to both the acquisition of the initial interest in a joint operation and the acquisition of any additional interests in the same joint operation and are prospectively effective. These amendments will affect eventual future relevant transactions.
In December 2013 the IASB issued a collection of amendments to IAS and IFRS in which they focused on areas of inconsistency in IFRSs and IASs or where the clarification of wording was required. The following standards were amended:
The annual improvements had no significant impact on the Group's financial statements.
Annual Improvements to IFRSs 2012 - 2014
In September 2014 the IASB issued a collection of amendments to IAS and IFRS in which they focused on areas of inconsistency in IFRSs and IASs or where the clarification of wording was required. The following standards were amended:
The annual improvements had no significant impact on the Group's financial statements.
The way of presentation of the financial statements was changed In the consolidated financial statements as of December 31, 2015. The main goal of the changes was to enhance relevancy of information contained on the face of the financial statements and reflect the developments in the best practice of financial reporting in the industry with regard to all IFRS requirements. As a result, reclassifications for the prior period have been made to provide fully comparative information on the same basis. The following table summarizes the effect of reclassifications on prior period presented (in CZK millions):
| Reclassifications 1-6/2015 |
|
|---|---|
| Consolidated statement of income: | |
| Gains and losses from electricity, coal and gas derivative trading, net 1) Sales of gas, coal, heat and other revenues Other operating income |
934 (1,249) 1,944 |
| Total revenues and other operating income | 1,629 |
| Gains and losses from commodity derivative trading, net 1) Purchased power and related services Emission rights, net Other operating expenses |
(913) 100 4 (820) |
| Income before other income (expenses) and income taxes | - |
| Other income (expenses), net Other financial expenses Other financial income |
(1,617) (338) 1,955 |
| Total other income (expenses) | - |
| Net income | - |
| EBITDA | - |
| Consolidated statement of comprehensive income: | |
| Translation differences Translation differences - subsidiaries Translation differences - joint-ventures |
1,219 (480) (739) |
| Other comprehensive income, net of tax | - |
| Total comprehensive income, net of tax | - |
| Consolidated statement of cash flows: | |
| Net cash provided by operating activities | 33 |
| Total cash used in financing activities | (33) |
| Net increase in cash and cash equivalents | - |
1) The headline of the line Gains and losses from commodity derivative trading, net was changed (formerly Gains and losses from electricity, coal and gas derivative trading, net). This line is not presented as part of Total revenues and other operating income.
The seasonality within the segments Generation - Traditional Energy, Generation - New Energy, Distribution and Sales usually takes effect in such a way that the revenues and operating profits of these segments for the 1st and 4th quarters of a calendar year are slightly higher than the revenues and operating profits achieved in the remaining period.
On January 6, 2016 the Group acquired a 26% interest in ENESA a.s. Total interest of CEZ Group in ENESA is 75 % since this date. ENESA specializes in complex solutions for energy savings in public buildings and industrial plants.
On February 10, 2016 the Group acquired a 100% interest in ČEZ Solární, s.r.o. which constructs photovoltaic power plants.
On June 22, 2016 the Group acquired a 100% interest in Energie2 Prodej, s.r.o. which is a supplier of electricity and gas to all types of companies, organizations, households and public sector in the Czech Republic.
The fair values of acquired identifiable assets and liabilities as of the date of acquisition were as follows (in CZK millions):
| ENESA | ČEZ Solární | Energie2 Prodej |
|
|---|---|---|---|
| Share of the Group | 75% | 100% | 100% |
| Property, plant and equipment Intangible assets, net Deferred tax assets Materials and supplies, net Receivables, net |
14 - - 29 27 |
4 - 2 17 7 |
- 86 - - 123 |
| Cash and cash equivalents | 5 | 10 | 13 |
| Long-term debt, net of current portion Current portion of long-term debt Other long-term liabilities Trade and other payables Accrued liabilities |
- - - (39) - |
(1) (1) - (2) (3) |
- - (87) (91) (1) |
| Total net assets | 36 | 33 | 43 |
| Share of net assets acquired | 27 | 33 | 43 |
| Goodwill Negative goodwill |
6 - |
3 - |
- (24) |
| Total purchase consideration | 33 | 36 | 19 |
| Less: | |||
| Cash and cash equivalents in the subsidiary acquired Interest acquired in previous periods |
(5) (18) |
(10) - |
(13) - |
| Cash outflow on acquisition of the subsidiary |
10 | 26 | 6 |
If the combinations had taken place at the beginning of the year 2016, net income for CEZ Group as of June 30, 2016 would have been CZK 13,824 million and the revenues and other operating income from continuing operations would have been CZK 98,982 million. The amounts of goodwill recognized as a result of the business combinations comprise the value of expected synergies arising from the acquisitions.
On June 3, 2016 the Annual Shareholders Meeting of ČEZ, a. s. approved the dividends per share of CZK 40.0. The total amount of dividend approved amounts to CZK 21,369 million.
Long-term debt at June 30, 2016 and December 31, 2015 is as follows (in CZK millions):
| June 30, 2016 |
December 31, 2015 |
|
|---|---|---|
| 3.005% Eurobonds, due 2038 (JPY 12,000 million) | 2,845 | 2,466 |
| 2.845% Eurobonds, due 2039 (JPY 8,000 million) | 1,898 | 1,645 |
| 5.000% Eurobonds, due 2021 (EUR 750 million) | 20,288 | 20,203 |
| 6M Euribor + 1.25% Eurobonds, due 2019 (EUR 50 million) | 1,352 | 1,347 |
| 3M Euribor + 0.35% Eurobonds, due 2017 (EUR 45 million) | 1,207 | 1,198 |
| 3M Euribor + 0,55% Eurobonds, due 2018 (EUR 200 milion) | 5,407 | - |
| 4.875% Eurobonds, due 2025 (EUR 750 million) | 20,270 | 20,188 |
| 4.500% Eurobonds, due 2020 (EUR 750 million) | 20,233 | 20,140 |
| 2.160% Eurobonds, due 2023 (JPY 11,500 million) | 2,735 | 2,372 |
| 4.600% Eurobonds, due 2023 (CZK 1,250 million) | 1,248 | 1,248 |
| 3.625% Eurobonds, due 2016 (EUR 340 million) | - | 9,176 |
| 2.150%*IR CPI Eurobonds, due 2021 (EUR 100 million) 1) | 2,713 | 2,702 |
| 4.102% Eurobonds, due 2021 (EUR 50 million) | 1,353 | 1,347 |
| 4.250% U.S. bonds, due 2022 (USD 289 million) | 7,003 | 7,111 |
| 5.625% U.S. bonds, due 2042 (USD 300 million) | 7,254 | 7,368 |
| 4.375% Eurobonds, due 2042 (EUR 50 million) | 1,331 | 1,325 |
| 4.500% Eurobonds, due 2047 (EUR 50 million) | 1,331 | 1,325 |
| 4.383% Eurobonds, due 2047 (EUR 80 million) | 2,170 | 2,162 |
| 3.000% Eurobonds, due 2028 (EUR 500 million) | 13,384 | 13,325 |
| 4.500% registered bonds, due 2030 (EUR 40 million) | 1,064 | 1,060 |
| 4.750% registered bonds, due 2023 (EUR 40 million) | 1,075 | 1,070 |
| 4.700% registered bonds, due 2032 (EUR 40 million) | 1,079 | 1,075 |
| 4.270% registered bonds, due 2047 (EUR 61 million) | 1,628 | 1,621 |
| 3.550% registered bonds, due 2038 (EUR 30 million) Exchangeable bonds, due 2017 (EUR 470.2 million) 2) |
810 | 807 |
| 12,550 | 12,420 | |
| Total bonds and debentures | 132,228 | 134,701 |
| Less: Current portion | - | (9,176) |
| Bonds and debentures, net of current portion | 132,228 | 125,525 |
| Long-term bank and other loans: | ||
| Total long-term bank and other loans | 24,887 | 22,570 |
| Less: Current portion | (2,948) | (2,520) |
| Long-term bank and other loans, net of current portion | 21,939 | 20,050 |
| Total long-term debt | 157,115 | 157,271 |
| Less: Current portion | (2,948) | (11,696) |
| Total long-term debt, net of current portion | 154,167 | 145,575 |
1) The interest rate is based on inflation realized in Eurozone Countries (Harmonized Index of Consumer Prices – HICP) and is fixed through the closed swap to the rate 4.553% p. a.
2) Bonds are exchangeable for ordinary shares of MOL Hungarian Oil and Gas PLC. The bonds carry no interest and the separation of embedded conversion option resulted in effective interest rate of 1.43% p. a.
Short-term loans at June 30, 2016 and December 31, 2015 are as follows (in CZK millions):
| June 30, 2016 |
December 31, 2015 |
|
|---|---|---|
| Short-term bank loans Bank overdrafts |
4,557 291 |
40 183 |
| Total | 4,848 | 223 |
At each reporting date, the Group assesses whether there is any indication that an asset may be impaired or that previously recognized impairment losses (except for goodwill) may no longer exist or may have decreased. The result of the assessment made at June 30, 2016 was that certain assets might have been impaired. In such case, the Group reviews the recoverable amounts of the assets to determine whether such amounts continue to exceed the assets' carrying values. If not, the Group recognizes impairment loss directly in profit or loss in the line item of Impairment of property, plant and equipment and intangible assets including goodwill.
The Group recognized for first six months ended June 30, 2016 the total amount of impairment loss of CZK 997 million. The line item Impairment of property, plant and equipment and intangible assets including goodwill also includes gain from write-off of negative goodwill resulting from the acquisition of the company Energie2 Prodej, s.r.o. (see also Note 4) amounting to CZK 24 million.
The impairment loss in the amount of CZK 997 million is related to impairment of property, plant and equipment of cash-generating unit Romanian wind power farms. The impairment was caused especially by decrease in expected wholesale prices of electricity.
Information about breakdown by operating segments is included in Note 10.
Tax effects relating to each component of other comprehensive income are the following (in CZK millions):
| 1-6/2016 | 1-6/2015 | |||||
|---|---|---|---|---|---|---|
| Before tax amount |
Tax effect |
Net of tax amount |
Before tax amount |
Tax effect |
Net of tax amount |
|
| Change in fair value of cash flow hedges recognized in |
||||||
| equity | (1,288) | 244 | (1,044) | 5,914 | (1,124) | 4,790 |
| Cash flow hedges reclassified to statement of income |
(264) | 51 | (213) | (1,611) | 306 | (1,305) |
| Change in fair value of available-for-sale financial |
||||||
| assets recognized in equity | 1,447 | (8) | 1,439 | 1,149 | 154 | 1,303 |
| Available-for-sale financial assets reclassified from equity |
(1) | - | (1) | (16) | 4 | (12) |
| Translation differences - subsidiaries |
(266) | - | (266) | (480) | - | (480) |
| Translation differences - joint | ||||||
| ventures | (16) | - | (16) | (739) | - | (739) |
| Translation differences reclassified from equity |
(102) | - | (102) | (1) | - | (1) |
| Share on other equity movements of joint-ventures |
25 | - | 25 | (17) | - | (17) |
| Total | (465) | 287 | (178) | 4,199 | (660) | 3,539 |
The Group reports its result based on operating segments which are defined especially with respect to the nature of the products and services and with regard to regulatory environment. The Group has identified six reportable segments on this basis:
This definition of the operating segments is a result of organizational changes in corporate governance of the Group which have been made effective since January 1, 2016. The segments are defined across the countries that CEZ Group operates in now. Segment is a functionally autonomous part of CEZ Group that serves a single part of the value chain in the energy sector and is within the purview of individual members of the ČEZ, a. s. Board of Directors. The segment information for previous periods of the year 2015 has been adjusted to provide fully comparative information on the same basis.
The Group accounts for intersegment revenues and transfers as if the revenues or transfers were to third parties, that is, at current market prices or where the regulation applies at regulated prices.
The Group evaluates the performance of its segments based on earnings before interest, taxes, depreciation and amortization (EBITDA). The reconciliation of EBITDA to income before other income (expenses) and income taxes summarizes the following table (in CZK millions):
| 1-6/2016 | 1-6/2015 | |
|---|---|---|
| Income before other income (expenses) and income | ||
| taxes (EBIT) | 17,998 | 21,300 |
| 14,298 | ||
| intangible assets including goodwill | 973 | 21 |
| Gains and losses on sale of property, plant and | ||
| equipment, net * | (95) | |
| EBITDA | 33,098 | 35,524 |
| Depreciation and amortization Impairment of property, plant and equipment and |
14,161 (34) |
* Gains on sale of property, plant and equipment are presented in the statement of income as part of the line item Other operating income. Losses on sale of property, plant and equipment are presented in the statement of income as part of the line item Other operating expenses.
30, 201 6 and 2015 and at December 31, 201 5(in CZK millions):
| 0, 2016: 3 June |
Traditional Energy ration - Gene |
Energy ration - Gene New |
Distribu tion |
Sales | Mining | Other | Combined | Elimination | Consoli- dated |
|---|---|---|---|---|---|---|---|---|---|
| income - other than intersegment Revenues and other operating |
25,578 | 1,790 | 14,500 | 53,729 | 2,170 | 1,136 | 98,903 | - | 98,903 |
| Revenues and other operating income - intersegment |
15,915 | 344 | 15,041 | 2,732 | 2,389 | 8,230 | 44,651 | (44,651) | |
| Total revenues and other operating income |
41,493 | 2,134 | 29,541 | 56,461 | 4,559 | 9,366 | 143,554 | (44,651) | 98,903 |
| EBITDA | 14,787 | 1,858 | 9,997 | 3,207 | 2,008 | 1,238 | 33,095 | 3 | 33,098 |
| Depreciation and amortization | (8,312) | (747) | (2,972) | (21) | (1,228) | (881) | (14,161) | - | (14,161) |
| equipment and intangible assets Impairment of property, plant and including goodwill |
1 | (996) | (8) | 24 | 1 | 5 | (973) | - | |
| EBIT | 6,460 | 115 | 7,027 | 3,210 | 783 | 400 | 17,995 | 3 | 17,998 |
| Interest on debt and provisions | (1,622) | (172) | (189) | (6) | (94) | (176) | (2,259) | 396 | (1,863) |
| Interest income | 460 | - | 23 | 7 | 5 | 72 | 567 | (396) | |
| Share of profit (loss) from joint-ventures | (11) | 20 | 27 | 94 | 2 | (105) | 27 | - | |
| Income taxes | (1,061) | (134) | (1,296) | (561) | (135) | (113) | (3,300) | - | (3,300) |
| Net income | 18,015 | (61) | 5,590 | 2,742 | 1,402 | 855 | 28,543 | (14,746) | 13,797 |
| Identifiable assets | 254,172 | 26,534 | 107,487 | 493 | 20,894 | 9,516 | 419,096 | (1,120) | 417,976 |
| Investment in joint-ventures | 2,833 | 547 | 1,097 | 257 | 172 | 4,349 | 9,255 | - | 9,255 |
| Unallocated assets | 183,829 | ||||||||
| Total assets | 611,060 | ||||||||
| Capital expenditure | 7,736 | (1) | 4,379 | 15 | 634 | 3,876 | 16,639 | (3,371) | 13,268 |
| 0, 2015: 3 June |
Traditional Energy ration - Gene |
Energy ration - Gene New |
Distribu tion |
Sales | Mining | Other | Combined | Elimination | Consoli- dated |
|
|---|---|---|---|---|---|---|---|---|---|---|
| income - other than intersegment Revenues and other operating |
27,009 | 1,811 | 15,258 | 57,604 | 2,096 | 746 | 104,524 | - | 104,524 | |
| Revenues and other operating income - intersegment |
18,632 | 449 | 15,746 | 3,288 | 2,461 | 8,771 | 49,347 | (49,347) | - | |
| Total revenues and other operating income |
45,641 | 2,260 | 31,004 | 60,892 | 4,557 | 9,517 | 153,871 | (49,347) | 104,524 | |
| EBITDA | 17,370 | 1,373 | 9,827 | 3,695 | 2,013 | 1,245 | 35,523 | 1 | 35,524 | |
| Depreciation and amortization | (8,317) | (854) | (2,924) | (16) | (1,211) | (976) | (14,298) | - | (14,298) | |
| CEZ Group Interim Consolidated Financial Statements | equipment and intangible assets Impairment of property, plant and including goodwill |
- | - | (9) | - | - | (12) | (21) | - | (21) |
| EBIT | 9,049 | 520 | 6,909 | 3,679 | 803 | 339 | 21,299 | 1 | 21,300 | |
| Interest on debt and provisions | (2,248) | (275) | (149) | (1) | (101) | (150) | (2,924) | 473 | (2,451) | |
| Interest income | 511 | 1 | 25 | 5 | 7 | 150 | 699 | (473) | 226 | |
| Share of profit (loss) from joint-ventures | (654) | 25 | 88 | 142 | 3 | (560) | (956) | - | (956) | |
| Income taxes | (1,557) | (15) | (1,264) | (713) | (143) | (68) | (3,760) | - | (3,760) | |
| Net income | 25,526 | 255 | 5,607 | 3,106 | 1,128 | 568 | 36,190 | (20,776) | 15,414 | |
| Capital expenditure | 7,673 | 38 | 4,183 | 13 | 670 | 4,325 | 16,902 | (3,493) | 13,409 | |
| December 31, 2015: | Traditional Energy ration - Gene |
Energy ration - Gene New |
Distribu tion |
Sales | Mining | Other | Combined | Elimination | Consoli- dated |
|
| Identifiable assets | 256,633 | 28,212 | 105,982 | 367 | 21,480 | 9,754 | 422,428 | (1,064) | 421,364 | |
| Investment in joint-ventures | 2,835 | 527 | 1,066 | 388 | 184 | 4,239 | 9,239 | - | 9,239 | |
| Unallocated assets | 172,083 | |||||||||
| Total assets | 602,686 | |||||||||
| 93 |
On July 27, 2016 the Group issued zero coupon bonds due in October 2016 in the total nominal amount of EUR 130 million. The issue price represented 99.9977% of the nominal amount.
Identification of ČEZ, a. s.
ČEZ, a. s. Duhová 2/1444 140 53 Praha 4 Czech Republic
Registered in the Commercial Register kept by the Municipal Court in Prague, Section B, File 1581
| Established: | 1992 |
|---|---|
| Legal form: | Joint-stock company |
| ID No.: | 452 74 649 |
| VAT ID No.: | CZ45274649 |
| Bankers: | KB Praha 1, acc. No. 71504011/0100 |
| Phone: | +420 211 041 111 |
Fax: +420 211 042 001 Internet: www.cez.cz E-mail: [email protected]
Closing date of the 2016 Half-Year Report: August 22, 2016
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