There has been speculations and misleading comments about CEZ’s dividends increase following Milan Urban, Minister for Trade&Industry, comments on extra dividends to finance flood damages suggesting total dividends of CZK15-17 per share including the extra CZK5 per share for dividends. We spoke to the company for clarifications: CEZ already announced that it plans to revise its dividend policy this year, which should assume c50% of unconsolidated net income, i.e. CZK15 per share from net income in 2005. This represents an increase of CZK5 per share against the previous dividend policy, which would imply dividends of CZK10 per share to be paid this year. The increase of CZK5 per share represents the extra CZK2bn for the state to be used for floods damages.
As we already informed any dividend must be approved by CEZ's general meeting for which an invitation must be sent 30 days ahead. CEZ holds its AGM on May 23. The decision is expected to be made before invitation for AGM is sent, i.e. before April 23. We see the news rather neutral for today’s trading as it has already been priced in and reiterate our Hold recommendation.