Within CEZ’s conference call to 2Q13 results, CFO M. Novak said that regarding possible impairment he does not expect anything like we have seen in many other companies (power producers) and if there is some imparment as a result of an regular annual testing at CEZ, it would be immaterial. Novak also mentioned distribution units in Bulgaria and Romania among candidates for impairment testing. / Although we have some doubts about „immateriality“ of the potential impairmant of selected assests as e.g. a value of CEZ share (67%) on fixed assets of the Bulgarian distribution should around 5 bln. CZK and this value has been significantly deteriorating, the statement may be POSITIVE for short-term trading with CEZ shares as CFO did not mentioned any concerns for some significant impairment related to a new (unprofitable) 17 bln. CZK CCGT in Pocerady. /
Sales Director Alan Svoboda calculated that the company will sell electricity for an average of 44-45 EUR/MWh next year, lowering its gross margin by as much as 5 bln. CZK. It has already sold 72% of next year’s production for 46 EUR/MWh and 53% of its 2015 production for 42.5 EUR/MWh. / With respect to a recent baseload electricity price development – this should be expected and priced-in, therefore NEUTRAL in our view.