Q4’13 bottom line of CEZ Distribution turns negative on lower tariff and increased provisions (NEGATIVE)

CEZ Distribution revenues in Q4’13 dropped 35.6% YoY on the back of the elimination of the green energy and cogeneration fees and the fess for stranded cost recovery for AES power plant from August 1st 2013 and the 10.9% YoY decline of the weighted-average distribution tariff. Other revenues also fell 30% as the company reintegrated lower amount of provisions in Q4’13. Q4’13 EBITDA fell 70.1% due to the decline of the tariff and the BGN 7.1m provisions for fines (mostly from SEWRC). On the positive side was the 5.9% decline of cost of hired services. Bottom line came to negative BGN 7.7m. 2013 revenues declined 7.2% YoY due to the elimination the fees described above, the c.5.8% lower weighted-average distribution tariff for the year and the 1.9% lower amount of the distributed electricity. On the cost side, the fees, which the company pays decreased by BGN 32.6m compared to BGN 35.7m decline of the collected fees. The cost of technological losses declined by 2.9% YoY as a result of the lower percentage losses - 11.98% vs 12.77 in 2012. Cost of materials also declined by 4.9% YoY while cost of hired services increased by 3.4% YoY. Other operating expenses surged by 185.7% due to the BGN 23.5m provisions for producers’ access fees (entirely provisioned) and the BGN 7.5m provisions for fines. 2013 EBITDA was down by 27.6% while bottom line fell 62%YoY to BGN 18m