 COMPANY MISSION AND PROFILE |
Prazska energetika, a.s. (PRE, a.s.) is a company with a rich tradition dating back over one hundred years. On the 1st September 1897 " Elektricke podniky kralovskeho mesta Prahy " (Electrical Works of the Royal Capital of Prague) was founded, a company which Prazska Energetika, a.s. considers to be its direct legal predecessor. At that time, this company provided all the electricity production for the capital city ; construction, maintenance and operation of all electric tram routes, electric lighting in the sreets and at home and of course power distribution to large industrial companies, small businesses and households.
During the first half of this century the company underwent reorganisation and restructuring many times, survived two world wars, the communist period and in 1990 Prazske energeticke zavody became an independent state-owned company. On 1st January 1994 a joint-stock company Prazska energetika, a.s. was created in its current form.
Prazska energetika, a.s. is a regional power distribution company supplying power to the Prague metropolitan area and the town of Roztoky near Prague. The company provides electricity to all industrial companies, businesses and households in a region covering approximately 500 km2 and with over 1.3 million inhabitants. The main priority of company management and staff is to convert a previously technocratic organisation to a modern commercially oriented power company which is capable of rapidly adapting itself to the changing demands of its customers. This effort is focused significantly on, apart from others, the annual implementation of the " Strategic Corporate Plan " which always sets out the company's principal direction and future development for a period of five years. The main goal for all employees is to significantly improve the quality of all services provided, prepare the company for the future competitive environment in the energy sector, increase the company's capital, to continually improve financialindicators and last but not least to change the approach and attitude of employees to their work and to customers.
| MEDIUM-TERM COMPANY STRATEGY |
In April 1999 the company's medium-term business plan was updated for the years 2000 to 2004. Despite taking into account the state of prepared legislation with regard to the government timeframe for the correction of electricity prices this plan does not take into consideration the existence of an open electricity market in the Czech Republic. However, it is conceived as the systematic preparation for operation in an open market. Preparation will concern human potential, the management methods of individual activities including the setting of standards and setting new interfaces within the company and paying thorough attention to efficiency of individual activities.
In the field of operations the company will, by the year 2000, attain a 40% reduction in failure rates on EHT and HT lines and a 12% reduction on LT lines company compared to 1998. By the year 2001 the remaining 3 and 6 kV network will be replaced by the 22 kV system. The construction of the telecommunications system for voice and data transmissions will be completed, the dispatching system for technical and commercial management of the network will be improved. Over the next five years 5,000 million CZK will be invested in the field of distribution. Capital expenditure in all other areas, i.e. commercial, administration and information technology, will exceed 1,000 million CZK. Total capital expenditure will reach 6,066 million CZK.
The structure of the planned capital expenditure is based on an expected growth in electricity sales. The sales plan forecast, for the period 1998 to 2004, a 5% growth in the power supplied to large industrial customers, almost 9% growth to small businesses and a 20% growth in the supply to households. Experience over the past few years has shown that forecasting growth in demand is very difficult. The growth in demand will depend not only on economic growth but also, for the population, on price increases. In order for the company to be well prepared for the progressive deregulation of the market it will continually improve its customer services. A Call-Centre will be built to improve relations with small customers. In the field of sales and operations standard services will be introduced. The company will pay more attention to the field of providing consultancy. Customer magazines and information brochures will continue to be published.
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The greatest uncertainty can be expected in the development of prices, which apply both to the end user and to the purchase price between the producer CEZ, a.s. and PRE, a.s. This is because state administration will continue to decide on prices, despite the fact that a long-term government timeframe has not existed up to now regarding the correction of distored prices. There are many possible price development scenarios so the currently most probable one was chosen. This scenario also predicts planned economic results. If the fixed assets are not revalued, the predicted annual profit after tax will be similar to the last two years. This will allow a progressive increase in dividents up to 8% in 2004. Hence, for the duration of the whole period dividents will be comparable to interest on money deposited in banks. The medium-term company strategy predicts a growth of 22% of the percentage of external capital in proportion to total equity capital.
The company in its medium-term strategy also considers the fostering of new quality realtions concerning regional, public and civic matters. Following on, it does not rule out financial or other types of support for events with humanitarian character.
The required financial resources will continue to be directed to environmental protection and the liquidation of ecological burdens from the past.
The results from previous years give a guarantee that the company's aims will be fulfilled: above all to reliably satisfy our customer's requirements by providing quality supplies of electrical power along with a wide range of services to a high professional level, guaranteed by binding standards.
| BUSINESS ACTIVITIES |
The company's business activities are directed mainly to business in the same or similar professions.
 During 1998 Prazska energetika, a.s. was a majority shareholder in the following companies |
PREmont Lhotka, a.s.
The registered capital of the entity is 72 million CZK. The company is 100% owned by Prazska energetika, a.s. The main business activities are the construction of equipment for the distribution of electricity, 110, 22 and 1 kV cable lines, 110 and 22 kV distribution stations, transformer substations, distribution boards, performing electrical installation work, repairs to 22 and 1 kV external lines, renting transformer stations to construction sites etc.
PREleas, a.s.
Is a joint-stock company owned 100% by PRE, a.s. Registered capital 10 million CZK. Main business activity is the leasing and renting of technology and technological plant.
Cejchovna elektromeru Praha, a.s. (CEP, a.s.)
Is an entity owned 100% by PRE, a.s. The company was founded on 1st July 1998, main business activities are assembly, repair and maintenance of electricity meters. Registered capital 35 million CZK.
CEP, a.s. founded as a subsidiary company on 4th January 1999 CEP - elektromerova sluzba, s.r.o., with registered capital of 125,000 CZK. Shareholder structure is 52% CEP, a.s., 48% individual owners. Main business activity is the provision of installation work for PRE, a.s. electricity meter services.
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| During 1998 Prazska energetika, a.s. was a minority shareholder in the following companies |
Aliatel, a.s.
Is a company whose main business activities are the implementation and operation of telecommunications networks and the provision of telecommunications services utilising the spare capacity of the data network created by REAS for operations management.
The company's registered capital is 486 million CZK ; PRE, a.s. owns a 8.3% share of this entity.
At the General Meeting in February 1999 it was decided that all shareholders will guarantee, up to the value of their shareholding, a 34 million USD loan to this company.
PEAS, a.s.
The registered capital of this company is 10 million CZK. Shareholders of this entity are Czechpol, s.r.o., with 34%, PRE, a.s. and 5 other distribution companies each with a 11% share. The main activities of this joint-stock company are trading with imported electricity and the production of electricity using its own sources.
At the General Meeting held on 30th March 1999 the sale of the small hydroelectric power stations at Mezibori, Smirice and Sec for 227 million CZK was agreed. The sale was then realised.
Investicni fond energetiky, a.s.
Is an entity with the aim of accruing spare financial resources of legal and individual entities and managing the financial resources of fund. The registered capital is 80,802 million CZK ; the management of the entity is run by the investment company Region, a.s.
In 1999 it should become an open fund.
PRE, a.s. also owns minor shareholdings in the following entities:
SME, a.s., JCE, a.s., SCE, a.s., ZCE, a.s., JME, a.s., VCE, a.s. and STE, a.s.
The total return on financial investments for 1998 was 15.6 million CZK |
