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FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16
OF THE SECURITIES EXCHANGE ACT OF 1934
For the month of March 2006
Commission File Number 333-7182-01
CEZ, a. s.
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(Translation of registrant's name into English)
c/o Duhova 2/1444
140 53 Prague 4
Czech Republic
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(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports
under cover Form 20-F or Form 40-F.
Form 20-F [X] Form 40-F [ ]
Indicate by check mark if the registrant is submitting the Form 6-K in paper as
permitted by Regulation S-T Rule 101(b)(1): ____
Indicate by check mark if the registrant is submitting the Form 6-K in paper as
permitted by Regulation S-T Rule 101(b)(7): ____
Indicate by check mark whether by furnishing the information contained in this
Form, the registrant is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes [ ] No [X]
If "Yes" is marked, indicate below the file number assigned to the registrant in
connection with Rule 12g3-2(b): 82- ________
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The following information was filed by CEZ, a. s. in Czech language with the
Prague Stock Exchange as required by its rules and regulations:
CEZ GROUP BRIEF REPORT ON OPERATIONAL, ECONOMIC
AND FINANCIAL RESULTS FOR THE YEAR 2005
PRELIMINARY, CONSOLIDATED, NON-AUDITED RESULTS IN ACCORDANCE
WITH INTERNATIONAL FINANCIAL REPORTING STANDARDS
MAIN FEATURES
o Net income grew 56.3% to CZK 22.3 billion (up CZK 8.0 billion), thanks in
part to the acquisitions of Severoceske doly a.s. (which contributed CZK
1.7 billion to the bottom line) and Electrica Oltenia (whose negative
goodwill write-off improved CEZ Group net income by another CZK 1.7
billion).
o EBIT was up 48.7% (CZK 9.6 billion) year-on-year to CZK 29.4 billion, CZK
2.1 billion of which can be attributed to Severoceske doly a. s.
o CEZ, a. s. qualified as one of the five finalists in the privatization of
Electrica Muntenia Sud S.A.
o An agreement to purchase majority stakes in the Polish power companies
Elcho (89% stake) and Skawina (75% stake) from U.S.-based PSEG Global was
signed in January 2006. These acquisition targets represent total installed
generating capacity of 810 MW (220 MW + 590 MW).
o On 22 February 2006, the Bulgarian privatization agency invited CEZ, a. s.
to enter into exclusive negotiations on the purchase of the Varna Power
Station. Exclusive negotiating status was granted for a period of 60 days.
o The shares of CEZ, a. s. gained 116.1% on the Prague Stock Exchange in 2005
(going from CZK 341 to CZK 736 per share), and their closing price on March
17 was CZK 819.
o On 15 March 2006, CEZ, a. s. bid in a tender for a 90% equity stake in the
distribution company A.D. Elektrostopanstvo na Makedonia (AD ESM).
2005 2004 Index Index
---------------- ----------------- 05/04 05/04
CZK m GWh CZK m GWh (CZX) (GWh)
- ----------------------------------------------- ------- ------ -------- ------- ------- ------
Revenues 125,083 102,670 121.8%
Sales of electricity 115,949 74,432 92,183 67,662 125.8% 110.0%
End-user sales 43,747 39,966 26,748 31,670 163.6% 126.2%
Sales to distribution companies 16,790 16,089 13,542 14,866 124.0% 108.2%
Domestic traders, market operator, other* 13,260 10,195 10,115 8,183 131.1% 124.6%
Export 8,257 8,183 10,309 12,943 80.1% 63.2%
Change of FV of derivatives - sale of -576 0
electricity
Ancillary and distribution services 34,471 31,470 109.5%
Heat sales, sale of coal and other revenues 9,134 10,487 87.1%
------- ------- -------
Operating expenses 95,663 82,885 115.4%
Fuel 9,010 9,305 96.8%
Purchased power and related services 37,474 26,519 141.3%
of which, e.g.: Purchased electricity 26,109 25,123 14,472 14,121 180.4% 177.9%
Depreciation and amortization 20,737 19,842 104.5%
Operating income (EBIT) 29,420 19,785 148.7%
EBITDA 50,157 39,627 126.6%
Other expenses (+) and revenues (-) 2,097 1,284 163.3%
Income before income taxes (EBT) 27,323 18,501 147.7%
Income taxes 5,025 4,233 118.7%
Net income 22,298 14,268 156.3%
Net income attributable to equity holders of 21,452 13,213 162.4%
the parent
Net income attributable to minority interests 846 1,055 80.2%
Index
Unit 2005 2004 05/04
- ----------------------------------------------- ------- -------- ------- ------
Price earnings ration (P/E) 1 20.0 15.3 130.9%
Return on equity (ROE) net % 12.3 7.9 155.5%
Return on invested capital (ROIC) % 7.9 5.8 136.2%
EBITDA margin % 40.1 38.6 103.9%
EBIT margin % 23.5 19.3 122.0%
Total indebtedness (provisions excluded) % 27.5 28.8 95.6%
Long-term indebtedness % 14.1 17.7 79.3%
* of which, earmarked for export: 6,703 GWh in 2005 and 5,885 GWh in 2004
The data for 2005 and 2004 in the table above are presented in conformity with
the principle of pooling of interests. Since both CEZ, a. s. and Severoceske
doly a. s. were controlled by the Czech National Property Fund, the consolidated
results for 2005 and 2004 are presented as if CEZ, a. s. had controlled
Severoceske doly a.s and its subsidiaries in both years.
At the end of December 2005, CEZ Group consisted of 36 fully consolidated
companies and 5 companies consolidated by the equity method. The consolidated
group increased mainly by the inclusion of three Bulgarian electricity
distribution companies at the beginning of the year. Romania-based Electrica
Oltenia S.A. was acquired in the fourth quarter and was consolidated only for
this period of 2005.
REVENUES, EXPENSES, INCOME
Electricity sales increased by 25.8%, driven mainly by end-user sales, which
were up by CZK 17.0 bn. Of this amount, the Bulgarian distribution companies
contributed CZK 11.8 bn and the Romanian company Electrica Oltenia CZK 2.6 bn.
External sales of coal totaled CZK 2.7 bn, down by 8.2% from the previous year.
At least 78% of the coal produced by CEZ Group member Severoceske doly a.s. in
2005 was consumed by CEZ Group power plants.
EBIT was up for the year (by 48.7%) thanks to higher electricity prices in both
the Czech Republic domestic market and Central European export markets. The
Bulgarian and Romanian CEZ Group members contributed CZK 803 million and CZK 70
million, respectively, to the EBIT figure. In Central Europe, the impact of
higher electricity prices outweighed lower sales volumes by 3.1%. Electricity
export revenues, including proprietary trading outside of the Czech Republic,
were down by 19.9% (CZK 2.1 bn) but volumes decreased at a much higher rate (by
36.8%), due in part to higher export through domestic traders. Ancillary and
distribution services revenues were up CZK 3.0 bn (9.5%).
Expenses rose by CZK 12.8 bn (15.4%). The main factors driving the increase were
higher purchases of power and related services (up CZK 11.0 bn) and personnel
expenditures (up CZK 2.1 bn, or 18.1%), corresponding to the growing number of
CEZ Group employees. Another significant factor was CO2 permit arbitrage,
allowing optimization of electricity generation and generating CZK 1.1 bn in net
sales. There was also a CZK 0.3 billion (3.2%) reduction in fuel expenses, which
is attributable to lower electricity production in nuclear power plants reducing
nuclear fuel consumption. The higher power purchases already mentioned above
were reduced by a CZK 0.8 billion change in the real value of derivatives
related to purchases of electricity. Also reduced were repairs and maintenance
expenses (by CZK 0.6 bn, or 13.2%) as well as material costs (down CZK 0.6
billion, or 13.1%). Other operating expenses rose by CZK 1.5 bn, due especially
to other services expenses (up CZK 1.2 billion).
In the finance area, the CZK 0.8 billion year-on-year increase in expenses was
primarily due to lower interest income (CZK 0.3 bn), lower revenues from
securities and shares sold (CZK 0.5 bn), lower income from associates (CZK 0.6
bn) and a loss on sales of subsidiaries and associates (CZK 0.2 bn). Higher
foreign exchange rate losses (CZK 2.0 bn) were largely off-set by financial
derivatives (CZK 1.8 bn). A negative goodwill write-off (see next paragraph) had
a positive impact on income (CZK 1.7 bn).
Net income of CEZ Group rose by 56.3% to CZK 22.3 bn, thanks in part to the
acquisitions of Severoceske doly a.s. (which contributed CZK 1.7 billion to the
bottom line) and Electrica Oltenia (whose negative goodwill write-off improved
CEZ Group net income by CZK 1.7 billion). Net income attributable to the parent
company's shareholders increased by CZK 8.2 bn (62.4%), while net profit
attributable to minority shareholders decreased by CZK 0.2 bn due to CEZ, a. s.
increasing its stakes in its subsidiaries.
THE NUMBER OF EMPLOYEES of CEZ Group (fully consolidated 36 companies) reached
29,905, a year-on-year increase of 7,137 persons (31.3%). This growth
corresponded to the acquisition of Bulgarian and Romanian companies (which added
4,693 and 2,969 employees, respectively). Central European companies reported a
net decrease of 525 employees for the year. In accordance with the pooling of
interests principle, Severoceske doly a.s. was treated as if it had been a
member of CEZ Group in both 2004 and 2005.
SALES OF ELECTRICITY
Overall, 2005 CEZ Group sales volume was 74.4 TWh, of which Czech companies
accounted for 65.5 TWh (including exports), Bulgarian companies 7.9 TWh, and
Romanian (fourth quarter only) 1.0 TWh.
CZECH REPUBLIC
CZECH REPUBLIC ELECTRICITY DEMAND for the entire year 2005 was 57.7 TWh, which
corresponds to year-on-year growth of 1.3 TWh (2.3%). CEZ GROUP SHARE IN FINAL
CONSUMPTION fell 2.2% to 54.7% due to a change in classification of our
customers.
Czech CEZ Group members sold 65.5 TWh of electricity, 57.4 TWh in the Czech
market and 8.1 TWh for export. The new opportunity of arbitrage between
generation/sales of electricity and the sale of CO2 emissions permits had a
significant impact. Total sales were down by 2.1 TWh (5.0%) from 2004. Of the
decline, 4.8 TWh was attributable to lower exports while sales in the Czech
market rose by 2.6 TWh (4.8%).
Electricity generation volume in 2005 reached a total of 60.0 TWh, which is down
2.1 TWh (3.4%) year-on-year. Mainly as a result of lower availability of Temelin
Nuclear Power Station, nuclear power plants generated 24.7 TWh (41.2% of total
generation), or 1.6 TWh less than in 2004. Overall output of fossil power
stations, at 33.1 TWh (55.2% of total generation), was down by 0.9 TWh.
Generation in hydro power plants grew by 0.4 TWh to 2.2 TWh (3.6% of total
generation). Besides CO2 permit arbitrage, lower power station availability is
the principal reason for the decrease in generation.
BULGARIA
In the year 2005, the three Bulgarian distribution companies belonging to CEZ
Group sold an aggregate total of 7,937 GWh of electricity, contributing CZK 11.8
bn to revenues.
ROMANIA
The Romanian distribution company Electrica Oltenia SA sold 4,170 GWh of
electricity in 2005, generating CZK 10.3 bn in revenues. Only the results for
the fourth quarter were consolidated, however (953 GWh of electricity sold,
contributing CZK 2.6 bn to Group revenues).
INVESTMENT PROGRAM
Additions to property, plant and equipment in 2005 totalled CZK 15.7 billion,
down CZK 1.3 bn (7.4%). In Dukovany, construction of a spent nuclear fuel
storage facility was completed. At Temelin Nuclear Power Station, authorities
issued a positive use permit decision on Unit 1 on 15 December 2005. Use permit
proceedings on Unit 2 will take place in 2006. In November 2005 a business plan
for a new 660 MW generating unit at the Ledvice Power Station was approved with
commissioning planned for late 2011. February 2006 saw the approval of a
business plan for a comprehensive upgrade of the Prunerov II Power Station (4 x
200 MW), to follow directly after completion of the comprehensive upgrade of
Tusimice II.
Distribution companies invested in the distribution grid (building substations,
renovation of voltage lines and cables, and installing electric metering
devices). The main purposes for such investments were to reduce transmission and
trade losses, increase the security of power supply, and connect new customers
to grid. At Severoceske doly a.s., the capacity of a sewage treatment plant was
increased and a new digging-wheel excavator was assembled.
FINANCING
NET CASH PROVIDED BY OPERATING ACTIVITIES reached CZK 43.9 billion for an
increase of CZK 7.3 billion (19.8%) compared to 2004. Contributing to the rise
were, in particular, income before taxes (up CZK 8.8 billion), foreign exchange
rate losses/gains (up CZK 2.0 bn) and fixed asset retirements (up CZK 1.3 bn),
while income taxes paid contributed CZK 1.0 bn. Negative factors included a CZK
6.2 billion change in the balance of assets and liabilities (receivables and
other current assets in particular) and provisions for doubtful accounts,
environmental claims and other adjustments (down CZK 0.9 bn).
Total cash used in INVESTING ACTIVITIES (CZK 24.0 billion) was down year-on-year
by CZK 6.5 billion (21.4%). The principal capital outlays went on property,
plant and equipment (CZK 15.7 bn) and acquisitions of subsidiaries and
associates (CZK 12.3 bn).
Net cash flow from FINANCING ACTIVITIES was an outflow of CZK 11.9 bn, compared
to an outflouw of CZK 1.9 bn in 2004. The main reason was a CZK 14.5 bn
year-on-year decrease in proceeds from borrowings, while payments of borrowings
decreased by only CZK 6.1 bn. Dividends paid increased y-o-y by CZK 0.8 bn to
CZK 7.0 bn.
CEZ, A. S. RATINGS:
Standard & Poor's: "BBB+" with positive outlook (increase from stable outlook as
of May 2005) Moody's: "A2" with stable outlook (up from "A3" as of September
2005)
OTHER INFORMATION
o As of 1 January 2006, the Czech Republic electricity market was completely
opened to competition, with all final customers including households now
eligible to choose their supplier.
o On 11 January 2006, CEZ, a. s. made its first trades in CO2 emissions
permits on the ECX exchange in Amsterdam.
o On 31 January 2006, CEZ, a. s. submitted a binding bid to purchase a stake
in Electrica Muntenia Sud S.A. and as of 7 March 2006 CEZ, a. s. qualified
as one of five finalists in the privatization of Electrica Muntenia Sud
S.A.
o On 8 February 2006, CEZ, a. s. opened a commercial representation office in
Slovakia, with the objective of developing CEZ Group's commercial
relationships in the Slovak market.
o Based on a post-acquisition audit, CEZ, a. s. paid an additional EUR 15.5
million for Electrica Oltenia S.A.. This is the last payment under the
privatization agreement and represents CEZ's share in the increase in net
assets. This brings the total amount paid by CEZ, a. s. for Electrica
Oltenia S. A. to EUR 166.5 million.
o On 14 February 2006, the Securities Commission approved the squeeze-out of
minority shareholders from Severoceske doly a.s. by CEZ, a. s.
o On 26 January 2006, Zdenek Hruby became the new Chairman of the Supervisory
Board and Jiri Havel, who resigned from the Supervisory Board, was replaced
by Zdenek Trojan.
o Daniel Benes and Tomas Pleskac joined the Board of Directors of CEZ, a. s.
to replace outgoing members Petr Voboril and Radomir Lasak. Board member
Jire Borovec was elected Vice Chairman of the Board of Directors.
o On 15 March 2006, CEZ, a. s. bid in a tender for a 90% equity stake in the
distribution company A.D. Elektrostopanstvo na Makedonia (AD ESM).
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
CEZ, a. s.
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(Registrant)
Date: March 21, 2006
By: /s/ Libuse Latalova
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Libuse Latalova
Head of Finance
Administration