“The sale price is lower than the value of the cost of removing the assets in question from the consolidation of the CEZ Group,” says CEZ spokeswoman Alice Horakova, adding that it is therefore necessary to create a provision. The CEZ’s financial report for the first nine months then states: “A provision will be recognized for the date of classification as held for sale. The current assumption of the amount of the provision is 8.1 billion crowns. “
The creation of a provision will affect the profit of the semi-state energy colossus. “The creation of provisions is part of the income statement for the accounting period, ie it will affect CEZ Group’s net profit for the fourth quarter of 2020,” says Horáková.
However, analysts do not expect the accounting operation to affect, for example, the payment of dividends. “CEZ will probably report an accounting loss, but it will not affect the dividend,” says Petr Bártek, an analyst at Česká spořitelna, about the impact of the sale.
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Michal Šnobr, an analyst at J&T Banka and a minority shareholder of ČEZ, expressed a similar opinion, according to whom “the consequences are currently accounting. It is crucial for shareholders that this will not affect the adjusted net profit, which is adjusted for accounting operations. “
There are several factors behind the depreciation of an investment. “The expected provision is due to the historical development of the Romanian exchange rate against the koruna and negative regulatory interventions in Romania in the past (especially interventions in the regulation of renewables),” adds Horáková. CEZ itself states in the financial report that the accumulated loss from exchange rate conversions is 5.5 billion crowns.
In addition, Romania has in the past limited state support to the 600-megawatt CEZ wind farm. This makes it Europe’s largest offshore wind farm.
State aid has been reduced through so-called green certificates. The Romanian Government has reduced their price and also suspended the allocation of part of the certificates. CEZ thus collected less money for the electricity produced. “This caused the return to be lower than expected at the beginning of the investment,” points out Šnobr.
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According to him, the investment turned out to be disproportionately high. As a result, in CEZ’s Romanian business, “there were repairs almost every year.” For example, in 2014, ČEZ reduced the value of the wind farm by an astronomical sum of 6.6 billion crowns.
However, the sale of Romanian assets will contribute to the inflow of money into the energy group’s coffers. “It will have a very positive effect on cash flow in 2021, when the transaction is expected to be settled and the entire sale price paid,” Horáková emphasizes.
CEZ should collect less than one billion euros for the sale of Romanian assets. The buyer is the Australian company Macquarie Infrastructure and Real Assets, which owns, for example, Czech Radiocommunications in the Czech Republic.
The result can therefore be a decent dividend, because in addition to money for Romanian assets, CEZ could also collect money from the sale of Bulgarian distribution companies. According to Šnobr, the dividend could reach sixty crowns per share. Last year, ČEZ paid the divident 34 crowns per share.
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