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CEZ GROUP
1INVESTMENT RECOMMENDATION TO DECEMBER 21, 2010 1
CFA INVESTMENT RESEARCH CHALLENGE
MARCH 3, 2011
MADRID
CZECHCEZ GROUP
22ASSUMPTIONS CEZ GROUP PEER GROUP COMPARISON
FINANCIAL ANALYSIS VALUATION INVESTMENT
RISKS RECOMMENDATION 2
CZECH REPUBLIC
•Technical University of Ostrava
CEZ GROUP
•European power utility
VALUATION
•2 phases DCF equity method
INVESTMENT RECOMMENDATION
CZECHVALUATION ASSUMPTIONS
33
VALUATION
Company profile
Industry profile
Financial analysis
Planned statements
Free cash flow prediction
Beta, cost of capital
ASSIGNMENT• Risk averse investor• Three years perspective• Valuation to 21.12.2010
TARGET PRICE 807 CZK• 2 phases DCF equity method• Investment risks• Actual issues
RECOMMENDATION HOLD
ASSUMPTIONS CEZ GROUP PEER GROUP COMPARISON
FINANCIAL ANALYSIS VALUATION INVESTMENT
RISKS RECOMMENDATION 3
CZECHCEZ AS INTERNATIONAL UTILITY
4
Source: Company data, Czech team 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
4ASSUMPTIONS CEZ GROUP PEER GROUP COMPARISON
FINANCIAL ANALYSIS VALUATION INVESTMENT
RISKS RECOMMENDATION 4
Iberdro
laEnel
Verbund
PGECEZ
Fortu
m EDPEDF
Tauron
E.ON
RWE
Centrica
0.05.0
10.015.020.025.030.035.040.045.050.0 EBITDA margin
Industry average 25,5
CZECHCOMPANY COMPARISON
5
Source: Czech team estimates, Reuters
5
RWE
Centrica EDF
Tauron
Verbund
PGE
Fortu
m
Iberdro
laE.O
NCEZ
EnelEDP
0.02.04.06.08.0
10.012.014.016.018.020.0 P/E
9,7x
Industry average 12,1x
RWE
Enel
Verbund
E.ON
Iberdro
la CEZEDF
EDP
Centrica
Fortu
m0
2
4
6
8
10
12
14Dividend yield
6,48%
RWE
Enel
Verbund
PGEE.O
N
Iberdro
la
Fortu
mTauro
nCEZ
EDP
Centrica EDF
02468
101214
EV/EBITDA
Industry average 7,6x
6x
43
Industry average 5,6%
ASSUMPTIONS CEZ GROUP PEER GROUP COMPARISON
FINANCIAL ANALYSIS VALUATION INVESTMENT
RISKS RECOMMENDATION 5Data to 21/12/2010
CZECHFINANCIAL ANALYSIS
66
Source: Company data, Czech team estimates
ASSUMPTIONS CEZ GROUP PEER GROUP COMPARISON
FINANCIAL ANALYSIS VALUATION INVESTMENT
RISKS RECOMMENDATION 6
EBIT/Assets
Revenues/Assets
Revenues/Current Assets
Equity/Assets
ROE
ROA
ROS
ROC
ROCE
EBITDA margin
-150%
50%
250%
20052006
CZECHFINANCIAL ANALYSIS
77
Source: Company data, Czech team estimates
ASSUMPTIONS CEZ GROUP PEER GROUP COMPARISON
FINANCIAL ANALYSIS VALUATION INVESTMENT
RISKS RECOMMENDATION 7
EBIT/Assets
Revenues/Assets
Revenues/Current Assets
Equity/Assets
ROE
ROA
ROS
ROC
ROCE
EBITDA margin
-150%
50%
250%
20052007
CZECHFINANCIAL ANALYSIS
88
Source: Company data, Czech team estimates
ASSUMPTIONS CEZ GROUP PEER GROUP COMPARISON
FINANCIAL ANALYSIS VALUATION INVESTMENT
RISKS RECOMMENDATION 8
EBIT/Assets
Revenues/Assets
Revenues/Current Assets
Equity/Assets
ROE
ROA
ROS
ROC
ROCE
EBITDA margin
-150%
50%
250%
20052008
CZECHFINANCIAL ANALYSIS
99
Source: Company data, Czech team estimates
ASSUMPTIONS CEZ GROUP PEER GROUP COMPARISON
FINANCIAL ANALYSIS VALUATION INVESTMENT
RISKS RECOMMENDATION 9
EBIT/Assets
Revenues/Assets
Revenues/Current Assets
Equity/Assets
ROE
ROA
ROS
ROC
ROCE
EBITDA margin
-150%
50%
250%
20052009
CZECHFINANCIAL ANALYSIS
1010
Source: Company data, Czech team estimates
ASSUMPTIONS CEZ GROUP PEER GROUP COMPARISON
FINANCIAL ANALYSIS VALUATION INVESTMENT
RISKS RECOMMENDATION 10
EBIT/Assets
Revenues/Assets
Revenues/Current Assets
Equity/Assets
ROE
ROA
ROS
ROC
ROCE
EBITDA margin
-150%
50%
250%
20052010
CZECHFINANCIAL ANALYSIS
1111
Source: Reuters, Bloomberg, Company data, Czech team estimates
2005 2006 2007 2008 2009 2010*05
101520253035
ROEEnel
CEZ
EDF
RWE
Iberdrola
E.ON
EnelCEZ
Centrica EDP
EDF
Tauron
RWE
Iberdro
la
Verbund
PGE
Fortu
mE.O
N02468
1012 ROA 2010*
ASSUMPTIONS CEZ GROUP PEER GROUP COMPARISON
FINANCIAL ANALYSIS VALUATION INVESTMENT
RISKS RECOMMENDATION 11
EBIT/Assets
Revenues/Assets
Revenues/Current Assets
Equity/Assets
ROE
ROA
ROS
ROC
ROCE
EBITDA margin
60%
80%
100%
20092010
TEAM E
1212
CZECHVALUATION BASE
2,0102,011
2,0122,013
2,0142,015
2,0162,017
2,0182,019
2,02020,00025,00030,00035,00040,000
Estimated free cash flows to equity (mil. CZK)
Source: Company data, Czech team estimates
2,010 2,011 2,012 2,013 2,014 2,015 2,016 2,017 2,018 2,019 2,020
-10.00%-8.00%-6.00%-4.00%-2.00%0.00%2.00%4.00%6.00%8.00%
10.00%
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 12
TEAM E
1313
TEAM EVALUATION
Ratio between phases of DCF equity
34%
66%
1. PHASE2. PHASE
Source: Company data, Czech team 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
700
750
800
850
900
950 max; 942
min; 741.5
Target price, 807
Market price, 772
Share price as for 21/12/2010 (in CZK per diluted share)
In 52 weeks
TEAM E
14
Volatility of exchange rate•Business with foreign countries
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
14
CZECHINVESTMENT RISKS
ASSUMPTIONS CEZ GROUP PEER GROUP COMPARISON
FINANCIAL ANALYSIS VALUATION INVESTMENT
RISKS RECOMMENDATION 14
CZECHPOWER PRICES
1515
30
50
70
90
Historical power prices (EUR)
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 202040
45
50
55
60
65
70
52 52 51 5254
56 5759
6163
65
PXEEEXČEZ
Estimated power prices (EUR)
Source: EEX, PXE, Czech team estimates
ASSUMPTIONS CEZ GROUP PEER GROUP COMPARISON
FINANCIAL ANALYSIS VALUATION INVESTMENT
RISKS RECOMMENDATION 15
CZECHACTUAL ISSUES
16
Development of subsidiary, taxed and bought emission allowances (mil. CZK)
2011E2012E
2013E2014E
2015E2016E
2017E2018E
2019E2020E
12
14
16
18
20
16
2011E2012E
2013E2014E
2015E2016E
2017E2018E
2019E2020E
4569.6 4636.8 40046344.8
9450
11969.9999999999
13964.9999999999
1596017955
19950Emission allowances - gift taxEmission allowances - buy
Estimated prices of emission allowances (EUR)
20002002
20042006
20082010E
2012E2014E
2016E2018E
2020E0
10
20
30
40
50
60
70 Dividend per share (CZK)
Source: Czech team estimates
ASSUMPTIONS CEZ GROUP PEER GROUP COMPARISON
FINANCIAL ANALYSIS VALUATION INVESTMENT
RISKS RECOMMENDATION 16
CZECHSENSITIVITY ANALYSIS
1717
Return on capital
Sales
-4,811 8,889
-766 4,290
Influence of 1% change of the factor to the value
of Equity (mil. CZK)
Dividends Emmision allowances SalesReturn on capital
-9% -5% -2% 0% 2% 5% 9%-100,000
-80,000
-60,000
-40,000
-20,000
0
20,000
40,000
60,000
80,000
100,000 Sensitivity of value to the factor (mil. CZK)
Return on capital SalesEmmision Allowances Dividends
Source: Czech team estimates
ASSUMPTIONS CEZ GROUP PEER GROUP COMPARISON
FINANCIAL ANALYSIS VALUATION INVESTMENT
RISKS RECOMMENDATION 17
CZECHSENSITIVITY ANALYSIS
1818
Source: Czech team estimates
ASSUMPTIONS CEZ GROUP PEER GROUP COMPARISON
FINANCIAL ANALYSIS VALUATION INVESTMENT
RISKS RECOMMENDATION 18
485 528 571 613 656 699 742 785 827 870 913 956 999 1041 1084 11270.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
18.0%
0.0% 0.5% 1.2%2.1%
4.3%
9.4%
13.2%
15.7% 16.4% 16.1%
10.3%
6.1%
2.6%
1.0% 0.7% 0.4%
Stock price
Prob
abili
ty
-50.00% -40.00% -30.00% -20.00% -10.00% 0.00% 10.00% 20.00% 30.00% 40.00%0.00%
20.00%
40.00%
60.00%
80.00%
100.00%
Probability density
Distribution function
Var 10 %
Continuous yield
Prob
abili
ty
VaR 10%
Mean 802
Variance 10122
Standard deviation 101
Min 487
Max 1126
Percentil VaR CVaR
1% -33,8% -38,8%
5% -20,6% -28,2%
10% -14,6% -22,8%
TEAM E
1919
CZECHSUMMARY
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
Uncertainity about allowances
Existing drop in dividends
Investment risks
ASSUMPTIONS CEZ GROUP PEER GROUP COMPARISON
FINANCIAL ANALYSIS VALUATION INVESTMENT
RISKS RECOMMENDATION 19
TEAM E
2020
CZECHSUMMARY
ASSUMPTIONS CEZ GROUP PEER GROUP COMPARISON
FINANCIAL ANALYSIS VALUATION INVESTMENT
RISKS RECOMMENDATION 20
TICKER NYSE
EURONEXT: CEZ
HOLD
TARGET PRICE:
807 CZK
Source: Czech team estimates
1/7/2010 20/8/2010 9/10/2010 28/11/2010 17/1/2011550
650
750
850
950
1050
1150
Date
CZK
Recommendation to 21 December 2010
TEAM E
TICKER NYSE EURONEXT: CEZ
HOLD
TARGET PRICE: 807 CZK21
CZECHRECOMMENDATION TO DECEMBER 21, 2010
ASSUMPTIONS CEZ GROUP PEER GROUP COMPARISON
FINANCIAL ANALYSIS VALUATION INVESTMENT
RISKS RECOMMENDATION 21
CZECH
APPENDIX
22
Source: Czech team estimates, Company data
CZECHAPPENDIX - HIGHLIGHTS
23
I/2007III/2007V/2007VII/2007IX/2007XI/2007I/2008III/2008V/2008VII/2008IX/2008XI/2008I/2009III/2009V/2009VII/2009IX/2009XI/2009I/2010III/2010V/2010VII/2010IX/2010XI/2010
0200400600800
1000120014001600 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: Czech team estimates, Company data, Eurostoxx50
CZECHAPPENDIX – INVESTMENT SUMMARY
24
2,010 2,011 2,012 2,013 2,014 2,015 2,016 2,017 2,018 2,019 2,0205,000
55,000
105,000
155,000
FCFE and EBITDA (mil CZK)
FCFE EBITDA
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
0500
100015002000250030003500400045005000
02004006008001000120014001600
EU50 : CEZ
EU50CEZ
EU50
(EU
R)
CEZ
(CZK
)
Source: Czech team estimates, Company data
CZECHAPPENDIX – STATEMENT OF CASH FLOW
25
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 500CASH 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 0 0 0 0 0CASH 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 797CASH 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: Czech team estimates, Company data
CZECHAPPENDIX – BALANCE SHEET (ASSETS)
26
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 0 0 0 0 0
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: Czech team estimates, Company data
CZECHAPPENDIX – BALANCE SHEET (LIABILITIES)
27
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 997Short 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: Czech team estimates, Company data
CZECHAPPENDIX – INCOME STATEMENT
28
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 585Heat 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: Czech team estimates, Company data
CZECHAPPENDIX – FREE CASH FLOW
29
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: Czech team estimates, Company data
CZECHAPPENDIX – VALUATION
30
DCF method2 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 - 2018 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
CZECHAPPENDIX
31
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, Czech team estimates
CZECHAPPENDIX
32
EAT/Equity
EBIT/Assets
Revenues/Assets
Revenues/Current Assets
Equity/Assets
ROE
ROA
ROS
ROC
EBITDA margin
0%
20%
40%
60%
80%
100%
2009 2010
20052007
20092011
20132015
20172019
0%
10%
20%
30%
40%
50% Rentability
ROCROSROEROA
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
0%
20%
40%
60%
80%
100% Financial stabilityTotal In-debtedness
Debt on Equity
Financial In-dependence