PRAGUE 1 INVESTMENT RECOMMENDATION TO DECEMBER 21, 2010 1 - - PowerPoint PPT Presentation

TEAM E

CEZ GROUP

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INVESTMENT RECOMMENDATION TO DECEMBER 21, 2010 1

CFA INVESTMENT RESEARCH CHALLENGE FEBRUARY 1, 2011 PRAGUE

TEAM E

VALUATION ASSUMPTIONS

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2

VALUATION

Company profile Industry profile Financial analysis Planned statements Free cash flow prediction Beta, cost

• f capital

ASSIGNMENT

• Risk averse investor
• Three years perspective
• Valuation to 21.12.2010
• Investment recommendation

TARGET PRICE 807 CZK

• Valuation based on 2 phases DCF equity method
• Value drivers
• Investment risks
• Actual issues

RECOMMENDATION HOLD

ASSUMPTIONS CEZ GROUP PEER GROUP COMPARISON FINANCIAL ANALYSIS VALUATION INVESTMENT RISKS RECOMMENDATION

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TEAM E

CEZ AS INTERNATIONAL UTILITY

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Source: Company data, Team E research

MAJOR ELECTRICITY PRODUCER IN THE CZECH REPUBIC 74% of market 70% MoF 32.707 emp ONE OF TEN BIGGEST EUROPEAN POWER UTILITIES 65,3 TWh 17 countries 60 plants PRODUCTION BASED ON LIGNITE AND NUCLEAR POWER 45% lignite 42% nuclear 13% other 44% OF REVENUES IN POWER PRODUCTION 39% distribution 4% mining 14% other

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ASSUMPTIONS CEZ GROUP PEER GROUP COMPARISON FINANCIAL ANALYSIS VALUATION INVESTMENT RISKS RECOMMENDATION

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0.0 10.0 20.0 30.0 40.0 50.0

EBITDA margin

Industry average 25,5

TEAM E

COMPANY COMPARISON

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Source: Team E estimates, Reuters

4 0.0 5.0 10.0 15.0 20.0

P/E

9,7x Industry average 12,1x

2 4 6 8 10 12 14

Dividend yield

6,48%

2 4 6 8 10 12 14

EV/EBITDA

Industry average 7,6x 6x 43 Industry average 5,6% ASSUMPTIONS CEZ GROUP PEER GROUP COMPARISON FINANCIAL ANALYSIS VALUATION INVESTMENT RISKS RECOMMENDATION

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Data to 21/12/2010

TEAM E

FINANCIAL ANALYSIS

5 5

Source: Company data, Team E estimates

ASSUMPTIONS CEZ GROUP PEER GROUP COMPARISON FINANCIAL ANALYSIS VALUATION INVESTMENT RISKS RECOMMENDATION

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0% 50% 100% 150% 200% 250% EBIT/Assets Revenues/Assets Revenues/Current Assets Equity/Assets ROE ROA ROS ROC ROCE EBITDA margin 2005 2006

TEAM E

FINANCIAL ANALYSIS

6 6

Source: Company data, Team E estimates

ASSUMPTIONS CEZ GROUP PEER GROUP COMPARISON FINANCIAL ANALYSIS VALUATION INVESTMENT RISKS RECOMMENDATION

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0% 50% 100% 150% 200% 250% EBIT/Assets Revenues/Assets Revenues/Current Assets Equity/Assets ROE ROA ROS ROC ROCE EBITDA margin 2005 2006

TEAM E

FINANCIAL ANALYSIS

7 7

Source: Company data, Team E estimates

ASSUMPTIONS CEZ GROUP PEER GROUP COMPARISON FINANCIAL ANALYSIS VALUATION INVESTMENT RISKS RECOMMENDATION

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0% 50% 100% 150% 200% 250% EBIT/Assets Revenues/Assets Revenues/Current Assets Equity/Assets ROE ROA ROS ROC ROCE EBITDA margin 2005 2007

TEAM E

FINANCIAL ANALYSIS

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Source: Company data, Team E estimates

ASSUMPTIONS CEZ GROUP PEER GROUP COMPARISON FINANCIAL ANALYSIS VALUATION INVESTMENT RISKS RECOMMENDATION

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0% 50% 100% 150% 200% 250% EBIT/Assets Revenues/Assets Revenues/Current Assets Equity/Assets ROE ROA ROS ROC ROCE EBITDA margin 2005 2008

TEAM E

FINANCIAL ANALYSIS

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Source: Company data, Team E estimates

ASSUMPTIONS CEZ GROUP PEER GROUP COMPARISON FINANCIAL ANALYSIS VALUATION INVESTMENT RISKS RECOMMENDATION

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0% 50% 100% 150% 200% 250% EBIT/Assets Revenues/Assets Revenues/Current Assets Equity/Assets ROE ROA ROS ROC ROCE EBITDA margin 2005 2009

TEAM E

FINANCIAL ANALYSIS

10 10

Source: Company data, Team E estimates

ASSUMPTIONS CEZ GROUP PEER GROUP COMPARISON FINANCIAL ANALYSIS VALUATION INVESTMENT RISKS RECOMMENDATION

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0% 50% 100% 150% 200% 250% EBIT/Assets Revenues/Assets Revenues/Current Assets Equity/Assets ROE ROA ROS ROC ROCE EBITDA margin 2005 2010

TEAM E

FINANCIAL ANALYSIS

11 11

Source: Reuters, Bloomberg, Company data, Team E estimates

5 10 15 20 25 30 35 2005 2006 2007 2008 2009 2010*

ROE

Enel CEZ EDF RWE Iberdrola E.ON 2 4 6 8 10 12

ROA 2010*

ASSUMPTIONS CEZ GROUP PEER GROUP COMPARISON FINANCIAL ANALYSIS VALUATION INVESTMENT RISKS RECOMMENDATION

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75% 80% 85% 90% 95% 100%

EBIT/Assets Revenues/Assets Revenues/Current Assets Equity/Assets ROE ROA ROS ROC ROCE EBITDA margin

2009 2010

TEAM E

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TEAM E

VALUATION BASE

20,000 25,000 30,000 35,000 40,000

Estimated free cash flows to equity (mil. CZK)

Source: Company data, Team E estimates

• 10.00%
• 8.00%
• 6.00%
• 4.00%
• 2.00%

0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 2,010 2,011 2,012 2,013 2,014 2,015 2,016 2,017 2,018 2,019 2,020

Relative changes of chosen value drivers

Y.oY.change of EBITDA margin Y.oY.change of sales Y.oY.change of dividends Y.oY.change of Price Y.oY.change of EAT

ASSUMPTIONS CEZ GROUP PEER GROUP COMPARISON FINANCIAL ANALYSIS VALUATION INVESTMENT RISKS RECOMMENDATION

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TEAM E

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TEAM E

VALUATION

Ratio between phases of DCF equity

34% 66%

• 1. PHASE
• 2. PHASE

Source: Company data, Team E estimates

Phase 1 : 2011 - 2017 Phase 2 : 2018 - ∞ Levered β 0,99 0,99 Rm 6,29% 6,99% Rf 3,64% 4,00% Re 6,26% 8,50% g 1,49% Values in mil. CZK Value of phase 1 148 795 Continuing value (perpetuity) 436 668 Value of phase 2 285 405 TOTAL VALUE 434 201 Number of issued shares (pieces) 537 989 759 VALUE OF SHARE (in CZK) 807,080 Enterprise value 532 200 Indebtness 32,61%

ASSUMPTIONS CEZ GROUP PEER GROUP COMPARISON FINANCIAL ANALYSIS VALUATION INVESTMENT RISKS RECOMMENDATION

13 Ratio between phases of DCF equity

max, 942 min, 741.5 700 750 800 850 900 950

Target price, 807 Market price, 772

Share price as for 21/12/2010 (in CZK per diluted share)

In 52 weeks

TEAM E

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Volatility of exchange rate Possible drop in rating

• Possible

price increase of debt

Unstable political situation

• In the Czech

Republic and in other countries

Low power prices

• Contra high

fixed costs

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TEAM E

INVESTMENT RISKS

ASSUMPTIONS CEZ GROUP PEER GROUP COMPARISON FINANCIAL ANALYSIS VALUATION INVESTMENT RISKS RECOMMENDATION

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TEAM E

POWER PRICES

15 15 30 50 70 90 1/1/2005 1/1/2006 1/1/2007 1/1/2008 1/1/2009 1/1/2010

Historical power prices (EUR)

52 52 51 52 54 56 57 59 61 63 65 40 45 50 55 60 65 70 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 PXE EEX ČEZ

Estimated power prices (EUR)

Source: EEX, PXE, Team E estimates

ASSUMPTIONS CEZ GROUP PEER GROUP COMPARISON FINANCIAL ANALYSIS VALUATION INVESTMENT RISKS RECOMMENDATION

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TEAM E

ACTUAL ISSUES

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Development of subsidiary, taxed and bought emission allowances (mil. CZK)

12 13 14 15 16 17 18 19 20 16 4569.6 4636.8 4004 6344.8 9450 11970 13965 15960 17955 19950 Emission allowances - gift tax Emission allowances - buy

Estimated prices of emission allowances (EUR)

10 20 30 40 50 60 70

Dividend per share (CZK)

Source: Team E estimates

ASSUMPTIONS CEZ GROUP PEER GROUP COMPARISON FINANCIAL ANALYSIS VALUATION INVESTMENT RISKS RECOMMENDATION

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TEAM E

SENSITIVITY ANALYSIS

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• 4,811

8,889

• 766

4,290

Return on capital

Influence of 1% change of the factor to the value of Equity (mil. CZK)

Dividends Emmision allowances Sales Return on capital

• 100,000
• 80,000
• 60,000
• 40,000
• 20,000

20,000 40,000 60,000 80,000 100,000

• 9%
• 5%
• 2%

0% 2% 5% 9%

Sensitivity of value to the factor (mil. CZK)

Return on capital Sales Emmision Allowances Dividends

Source: Team E estimates

ASSUMPTIONS CEZ GROUP PEER GROUP COMPARISON FINANCIAL ANALYSIS VALUATION INVESTMENT RISKS RECOMMENDATION

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TEAM E

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TEAM E

SUMMARY

TICKER NYSE EURONEXT: CEZ

HOLD

TARGET PRICE: 807 CZK

Good stable company with Czech political support Majority of indexes around industry average or higher Reasonable financial analysis indicators Stable production of free cash flow UNDERVALUED Necessity of cutting down costs Uncertainty about allowances Existing drop in dividends Investment risks

ASSUMPTIONS CEZ GROUP PEER GROUP COMPARISON FINANCIAL ANALYSIS VALUATION INVESTMENT RISKS RECOMMENDATION

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TEAM E

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TEAM E

SUMMARY

ASSUMPTIONS CEZ GROUP PEER GROUP COMPARISON FINANCIAL ANALYSIS VALUATION INVESTMENT RISKS RECOMMENDATION

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550 650 750 850 950 1050 1/7/2010 20/8/2010 9/10/2010 28/11/2010 17/1/2011 CZK Date

Target price 807 CZK / Share to 21 December 2010 TICKER NYSE EURONEXT: CEZ

HOLD

TARGET PRICE: 807 CZK

Source: Team E estimates

TEAM E

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TEAM E

SUMMARY

ASSUMPTIONS CEZ GROUP PEER GROUP COMPARISON FINANCIAL ANALYSIS VALUATION INVESTMENT RISKS RECOMMENDATION

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TICKER NYSE EURONEXT: CEZ

HOLD

TARGET PRICE: 807 CZK

Extreme Extremely pesimistic Very pesimistic Pesimistic Neutral Optimistic Very optimistic Extremely optimistic Extreme

20 40 60 80 100 120

209.56 239.44 299.19 508.32 807.08 1404.6 1822.6 1942.37 2002.12

Source: Team E estimates

TEAM E

TICKER NYSE EURONEXT: CEZ

HOLD

TARGET PRICE: 807 CZK

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TEAM E

RECOMMENDATION TO DECEMBER 21, 2010

ASSUMPTIONS CEZ GROUP PEER GROUP COMPARISON FINANCIAL ANALYSIS VALUATION INVESTMENT RISKS RECOMMENDATION

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TEAM E

APPENDIX

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Source: Team E estimates, Company data

TEAM E

APPENDIX - HIGHLIGHTS

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200 400 600 800 1000 1200 1400 1600 I/2007 III/2007 V/2007 VII/2007 IX/2007 XI/2007 I/2008 III/2008 V/2008 VII/2008 IX/2008 XI/2008 I/2009 III/2009 V/2009 VII/2009 IX/2009 XI/2009 I/2010 III/2010 V/2010 VII/2010 IX/2010 XI/2010

CEZ stock price (CZK)

Market profile

52 Week Price Range 950,00 – 736,00 Average Daily Volume 490 953,30 Beta 0,99 Dividend Yield (Estimated) 6,48% Shares Outstanding 537 989 759 Market Capitalization 415 059 Institutional Holdings 79,86 % Insider Holdings 0,84% Book Value per Share 1 018,94CZK Debt to Total Equity 35% Return on Equity 21%

Source: Team E estimates, Company data, Eurostoxx50

TEAM E

APPENDIX – INVESTMENT SUMMARY

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5,000 55,000 105,000 155,000 2,010 2,011 2,012 2,013 2,014 2,015 2,016 2,017 2,018 2,019 2,020

FCFE and EBITDA (mil CZK)

FCFE EBITDA 200 400 600 800 1000 1200 1400 1600 1000 2000 3000 4000 5000 I/2007 III/2007 V/2007 VII/2007 IX/2007 XI/2007 I/2008 III/2008 V/2008 VII/2008 IX/2008 XI/2008 I/2009 III/2009 V/2009 VII/2009 IX/2009 XI/2009 I/2010 III/2010 V/2010 VII/2010 IX/2010 XI/2010

CEZ (CZK) EU50 (EUR) EU50 : CEZ

EU50 CEZ

Source: Team E estimates, Company data

TEAM E

APPENDIX – STATEMENT OF CASH FLOW

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2010E 2011E 2012E 2013E 2014E 2015E 2016E 2017E 2018E EAT 47 163 44 259 42 877 45 790 49 149 50 320 52 861 55 655 58 669 Amortization 22 634 22 860 23 089 23 320 23 553 23 788 23 500 23 500 23 500 CASH GENERATED FROM OPERATIONS 69 797 67 119 65 966 69 109 72 702 74 109 76 361 79 155 82 169 CAPEX 67 751 59 610 61 468 45 723 47 706 33 380 35 000 35 000 50 000 ∆ Current assets 6 168 774

• 456

5 744 8 960 6 319 6 193 6 297 6 564 ∆ Current liabilities 7 011 880

• 518

6 529 10 185 7 183 7 039 7 158 7 462 ∆ Working capital

• 843
• 105

62

• 785
• 1 225
• 863
• 847
• 860
• 897

Financial investments 8 078 3 035 2 300 426 CASH USED IN INVESTING ACTIVITIES 74 986 62 539 63 830 45 363 46 481 32 516 34 153 34 139 49 103 Dividends 28 520 25 940 24 342 23 583 25 184 27 032 27 676 29 073 30 610 Part payment of debts 5 797 5 797 5 797 5 797 5 797 5 797 5 797 5 797 5 797 CASH USED IN FINANCING ACTIVITIES 34 317 31 736,51 30 139 29 379 30 981 32 829 33 473 34 870 36 407 DIFFERENCE OF CASH FLOW

• 39 506
• 27 156
• 28 003
• 5 633
• 4 760

8 763 8 734 10145

• 3 341

Net debts 39 506 27 157 28 003 5 634 4 760

• 8 763
• 8 734
• 10 146

3 341 Condition of debts 190 519 211 879 234 086 233 922 232 886 218 325 203 794 187 851 185 395

Statement of Cash Flows (in millions CZK)

Source: Team E estimates, Company data

TEAM E

APPENDIX – BALANCE SHEET (ASSETS)

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Balance Sheet (in millions CZK)

2009 2010E 2011E 2012E 2013E 2014E 2015E 2016E 2017E 2018E ASSETS 530 259 584 179 621 702 659 626 687 773 720 886 736 796 754 489 772 286 805 351 NON-CURRENT ASSETS 414 955 462 707 499 457 537 836 560 239 584 392 593 984 605 484 616 984 643 484 Plant in service 509 618 577 369 636 979 698 447 744 170 791 876 825 256 860 256 895 256 945 256 Less accumulated provision for depreciation 266 377

• 289 011 -311 871 -334 960 -358 280 -381 833 -405 621 -429 121 -452 621 -476 121

Net plant in service 243 241 288 358 325 108 363 487 385 890 410 043 419 635 431 135 442 635 469 135 Nuclear fuel, at amortized cost 5 439 6 000 6 000 6 000 6 000 6 000 6 000 6 000 6 000 6 000 Construction work in progress 80 125 80 125 80 125 80 125 80 125 80 125 80 125 80 125 80 125 80 125 Investment in associates and jointventures 17 250 17 400 17 400 17 400 17 400 17 400 17 400 17 400 17 400 17 400 Investments and other financial assets 49 423 50 000 50 000 50 000 50 000 50 000 50 000 50 000 50 000 50 000 Intangible assets, net 18 653 20 000 20 000 20 000 20 000 20 000 20 000 20 000 20 000 20 000 Deferred tax assets 824 824 824 824 824 824 824 824 824 824 CURRENT ASSETS 115 304 121 472 122 246 121 790 127 534 136 494 142 812 149 005 155 302 161 867 Cash and cash equivalents 26 727 38 537 43 258 42 333 47 884 56 429 61 815 67 083 72 449 78 063 Receivables, net 47 347 41000 37000 37500 38000 38500 39000 39500 40000 40500 Materials and supplies, net 4 959 5 224 5 258 5 238 5 485 5 870 6 142 6 408 6 679 6 962 Fossil fuel stocks 2 944 3 101 3 121 3 110 3 256 3 485 3 646 3 804 3 965 4 133 Emission rights 1 212 1 400 1 400 1 400 700 Other financial assets 29 706 29800 29800 29800 29800 29800 29800 29800 29800 29800 Other current assets 2 409 2 409 2 409 2 409 2 409 2 409 2 409 2 409 2 409 2 409

Source: Team E estimates, Company data

TEAM E

APPENDIX – BALANCE SHEET (LIABILITIES)

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Balance Sheet (in millions CZK)

2009 2010E 2011E 2012E 2013E 2014E 2015E 2016E 2017E 2018E EQUITY AND LIABILITIES 530 259 584 179 621 702 659 626 687 773 720 886 736 796 754 489 772 286 805 351

TOTAL EQUITY

206 675 219 861 235 146 251 381 273 162 297 127 320 415 345 599 372 181 400 240 Equity attributable to equity holders of the parent 200 361 214 361 229 646 245 881 267 662 291 627 314 915 340 099 366 681 394 740 Stated capital 53 799 53 799 53 799 53 799 53 799 53 799 53 799 53 799 53 799 53 799 Treasury shares

• 5 151
• 4 600
• 4 600
• 4 600
• 4 600
• 4 600
• 4 600
• 4 600
• 4 600
• 4 600

Retained earnings and other reserves 151 713 165 162 180 447 196 682 218 463 242 428 265 716 290 900 317 482 345 541 Non controlling interests 6 314 5 500 5 500 5 500 5 500 5 500 5 500 5 500 5 500 5 500 TOTAL LIABILITIES 323 584 364 317 386 557 408 245 414 611 423 759 416 382 408 890 400 105 405 111 LONG-TERM LIABILITIES 177 181 211 238 232 598 254 805 254 641 253 605 239 044 224 513 208 570 206 114 Long-term debt, net of current portion 118 921 152 630 173 990 196 197 196 033 194 997 180 436 165 905 149 962 147 506 Accumulated provision for nuclear decommissioning and fuel storage 37 152 37 500 37 500 37 500 37 500 37 500 37 500 37 500 37 500 37 500 Other long-term liabilities 21 108 21 108 21 108 21 108 21 108 21 108 21 108 21 108 21 108 21 108 DEFERRED TAX LIABILITY 15 335 15 000 15 000 15 000 15 000 15 000 15 000 15 000 15 000 15 000 CURRENT LIABILITIES 131 068 138 079 138 959 138 441 144 970 155 155 162 337 169 376 176 535 183 997 Short term loans and current portion of long-term debt 37 889 37 889 37 889 37 889 37 889 37 889 37 889 37 889 37 889 37 889 Trade and other payables 78 212 87 670 88 550 88 032 94 561 107 250 116 436 125 077 133 518 142 005 Accurated liabilities 14 967 12 520 12 520 12 520 12 520 10 016 8 013 6 410 5 128 4 103

Source: Team E estimates, Company data

TEAM E

APPENDIX – INCOME STATEMENT

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Income statement (in millions CZK)

2 009 2010E 2011E 2012E 2013E 2014E 2015E 2016E 2017E 2018E REVENUES 196 352 206 855 208 173 207 397 217 179 232 436 243 196 253 742 264 466 275 644 Sales of electricity 173 494 188 050 189 248 188 543 197 453 211 305 221 088 230 674 240 423 250 585 Heat sales and other revenues 22 858 18 805 18 925 18 854 19 744 21 131 22 109 23 067 24 042 25 059 Operating costs 128 153 118 155 116 577 116 142 121 620 130 164 136 190 142 095 148 101 154 361 Gift tax 4 570 4 637

Allowances 4 004 6 345 9 450 11 970 13 965 15 960 OPERATING COSTS AFTER ALLOWANCES

128153 118 155 121 146 120 779 125 624 136 509 145 640 154 065 162 066 170 321 Amortization 22 876 22 634 22 860 23 089 23 320 23 553 23 788 23 500 23 500 23 500 EBITDA 97 075 88 700 87 026 86 618 91 555 95 927 97 556 99 676 102 400 105 323 EBIT 68 199 66 066 64 166 63 529 68 235 72 374 73 768 76 176 78 900 81 823 Interests 3 303 7 841 9 526 10 594 11 704 11 696 11 644 10 916 10 190 9 393 EBT 64 946 58 226 54 640 52 935 56 531 60 678 62 124 65 260 68 710 72 431 Income tax 13 091 11 063 10 382 10 058 10 741 11 529 11 803 12 399 13 055 13 762 EAT 51 855 47 163 44 259 42 877 45 790 49 149 50 320 52 861 55 655 58 669 Dividends 26 899 28 520 25 940 24 342 23 583 25 184 27 032 27 676 29 073 30 610 EAR 24 956 18 642 18 319 18 535 22 207 23 965 23 288 25 185 26 582 28 059

Source: Team E estimates, Company data

TEAM E

APPENDIX – FREE CASH FLOW

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FCFF 2010E 2011E 2012E 2013E 2014E 2015E 2016E 2017E 2018E EAT 47 163 44 259 42 877 45 790 49 149 50 320 52 861 55 655 58 669 ODPISY 22 634 22 860 23 089 23 320 23 553 23 788 23 500 23 500 23 500 změna ČPK

• 843
• 106

62

• 785
• 1 225
• 864
• 847
• 861
• 897

INV 67 751 59 610 61 468 45 723 47 706 33 380 35 000 35 000 50 000 úroky 7 841 9 526 10 594 11 704 11 696 11 644 10 916 10 190 9 393 úroky(1-t) 6 351 7 716 8 581 9 480 9 474 9 432 8 842 8 254 7 608 FCFF 9 240 15 331 13 017 33 652 35 695 51 024 51 049 53 270 40 674 FCFE 2 010 2 011 2 012 2 013 2 014 2 015 2 016 2 017 2 018 EAT 47 163 44 259 42 877 45 790 49 149 50 320 52 861 55 655 58 669 Odpisy 22 634 22 860 23 089 23 320 23 553 23 788 23 500 23 500 23 500 ČPK

• 843
• 106

62

• 785
• 1 225
• 864
• 847
• 861
• 897

INV 67 751 59 610 61 468 45 723 47 706 33 380 35 000 35 000 50 000 Saldo U 33 709 21 360 22 206

• 163
• 1 037
• 14 560
• 14 531
• 15 943
• 2 456

FCFE 36 598 28 975 26 642 24 009 25 184 27 032 27 676 29 073 30 610

Free cashflow (in millions CZK)

Source: Team E estimates, Company data

TEAM E

APPENDIX – VALUATION

30

DCF method

2 010 2 011 2 012 2 013 2 014 2 015 2 016 2 017 2 018 Free cash flow to the equity 36 598 28 975 26 642 24 009 25 184 27 032 27 676 29 073 30 610 Discounted free cash flow 27266,7 23594,0 20008,4 19751,2 19950,7 19222,1 19002,3 Values in CZK Phase 1 : 2011 - 2017 Phase 2 : 2018 and more Value od phase 1 148 795 Levered β 0,99 Levered β 0,99 Continuing value (perpetuity) 436 668 Re 6,26% Re 8,50% Value od phase 2 285 405 Rm 6,29% Rm 6,99% Total value 434 201 Rf 3,64% Rf 4,00% Number of issued shares 537989759 CZ/A 32,61% CZ/A 23,02% Value of share 807,080 E/A 37,64% E/A 49,70% Counted growth in the second phase was 1,49% based on planned growth of sales

Source: ČEPS

TEAM E

APPENDIX

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STATE TRANSMISSION SYSTEM PLAN FACT

Germany 50 Hertz Trans.

• 3720 GWh
• 1400 GWh

TenneT

• 4077 GWh
• 6321 GWh

Poland PSE Operator

• 726 GWh

5849 GWh Slovakia SEPS

• 5229 GWh
• 5825 GWh

Austria APG

• 1997 GWh
• 6599GWh

Czech Republic ČEPS

• 14297 GWh
• 14296GWh

Cross-border power flows (2009)

DE - 51,14€/MWh SK – 49,15€/MWh HU - 51,05€/MWh PL – 50,25€/MWh

Source: Comapny data, Team E estimates

TEAM E

APPENDIX

32

0% 20% 40% 60% 80% 100%

EAT/Equity EBIT/Assets Revenues/Assets Revenues/Current Assets Equity/Assets ROE ROA ROS ROC EBITDA margin 2009 2010 0% 10% 20% 30% 40% 50% 2005 2006 2007 2008 2009 2010 2011 2012

2013 2014 2015 2016 2017 2018 2019 2020

Rentability

ROC ROS ROE ROA

0% 20% 40% 60% 80% 100% 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Financial stability

Total Indebtedness Debt on Equity Financial Independence