Obligation CZE 2.845% ( XS0447067843 ) en JPY

CZE

100 % ⇌

Republique tcheque

XS0447067843 ( en JPY )

2.845% par an ( paiement semestriel )

08/09/2039

Prospectus brochure de l'obligation CEZ XS0447067843 en JPY 2.845%, échéance 08/09/2039

1 000 000 000 JPY

8 000 000 000 JPY

08/09/2026 ( Dans 151 jours )

CEZ est une importante société énergétique tchèque, principalement active dans la production et la distribution d'électricité et de chaleur.

L'Obligation émise par CZE ( Republique tcheque ) , en JPY, avec le code ISIN XS0447067843, paye un coupon de 2.845% par an.
Le paiement des coupons est semestriel et la maturité de l'Obligation est le 08/09/2039

Level: 4 From: 4 Wednesday, March 18, 2009 17:08 eprint1 4101 Intro
BASE PROSPECTUS
CEZ, a. s.
(incorporated with limited liability in the Czech Republic)
4,000,000,000
Euro Medium Term Note Programme
Under this 4,000,000,000 Euro Medium Term Note Programme (the Programme), CEZ, a. s. (the Issuer
or CEZ) may from time to time issue notes (the Notes) denominated in any currency agreed between the
Issuer and the relevant Dealer (as defined below).
The maximum aggregate nominal amount of all Notes from time to time outstanding under the Programme
will not exceed 4,000,000,000 (or its equivalent in other currencies calculated as described in the Amended
and Restated Programme Agreement described herein), subject to increase as described herein.
The Notes may be issued on a continuing basis to one or more of the Dealers specified under "Overview of
the Programme" and any additional Dealer appointed under the Programme from time to time by the Issuer
(each a Dealer and together the Dealers), which appointment may be for a specific issue or on an ongoing
basis. References in this Base Prospectus to the relevant Dealer shall, in the case of an issue of Notes being
(or intended to be) subscribed by more than one Dealer, be to all Dealers agreeing to subscribe such Notes.
An investment in Notes issued under the Programme involves certain risks. For a discussion of these
risks see "Risk Factors".
Application has been made to the Commission de Surveillance du Secteur Financier (the CSSF) in its
capacity as competent authority under the Luxembourg Act dated 10 July 2005 on prospectuses for securities
to approve this document as a base prospectus.
Application has also been made to the Luxembourg Stock Exchange for Notes issued under the Programme
to be admitted to trading on the Luxembourg Stock Exchange's regulated market and to be listed on the
Official List of the Luxembourg Stock Exchange. The Programme provides that Notes may be listed or
admitted to trading, as the case may be, on such other or further stock exchanges or markets as may be agreed
between the Issuer and the relevant Dealer. The Issuer may also issue unlisted Notes and/or Notes not
admitted to trading on any market.
Notice of the aggregate nominal amount of Notes, interest (if any) payable in respect of Notes, the issue price
of Notes and any other terms and conditions not contained herein which are applicable to each Tranche (as
defined under "Terms and Conditions of the Notes") of Notes will be set out in a final terms document (the
Final Terms) which, with respect to Notes to be listed on the Luxembourg Stock Exchange will be filed with
the CSSF.
The Issuer may agree with any Dealer that Notes may be issued in a form not contemplated by the Terms
and Conditions of the Notes herein, in which event a supplemental Prospectus, if appropriate, will be made
available which will describe the effect of the agreement reached in relation to such Notes.
Arrangers
BNP PARIBAS
Citi
The date of this Base Prospectus is 19 March 2009.

Level: 4 From: 4 Wednesday, March 18, 2009 17:08 eprint1 4101 Intro
This Base Prospectus comprises a base prospectus for the purposes of Article 5.4 of Directive
2003/71/EC (the Prospectus Directive) and application has been made to the Commission de
Surveillance du Secteur Financier for this document to be approved as such. The Issuer, having made
all reasonable enquiries confirms that this Prospectus contains all information regarding the Issuer,
the Issuer and its subsidiaries taken as a whole (CEZ GROUP), the electricity industry in the Czech
Republic and the Notes which is (in the context of the issue of the Notes) material; that such
information is true and accurate in all material respects and is not misleading in any material respect;
that any opinions, estimates, or intentions expressed in this Prospectus on the part of the Issuer are
honestly held or made and are not misleading in any material respect; that this Prospectus does not
omit to state any material fact necessary to make such information, opinions, estimates or intentions
(in such context) not misleading in any material respect; that this Prospectus does not contain any
untrue statement of a material fact or omit to state any material fact necessary to make the statements
in this Prospectus, in the light of the circumstances under which they were made, not misleading; and
that all proper enquiries have been made to ascertain and to verify the foregoing.
Without prejudice to the foregoing, the Issuer (the Responsible Person) accepts responsibility
for the information contained in this Base Prospectus. The information contained in this Base
Prospectus is in accordance with the facts and does not omit anything likely to affect the import of
such information. The obligations of the Issuer are not in any way guaranteed by, or otherwise backed
by the credit of, the Czech Republic or any agency, ministry or political subdivision thereof.
Subject as provided in the applicable Final Terms, the only persons authorised to use this Base
Prospectus in connection with an offer of Notes are the persons named in the applicable Final Terms
as the relevant Dealer or the Managers, as the case may be.
Copies of Final Terms will be available from the registered office of the Issuer and the specified
office set out below of each of the Paying Agents (as defined below).
This Base Prospectus is to be read in conjunction with all documents which are deemed to be
incorporated herein by reference (see "Documents Incorporated by Reference"). This Base Prospectus
shall be read and construed on the basis that such documents are incorporated and form part of this
Base Prospectus.
The Dealers have not independently verified the information contained herein. Accordingly, no
representation, warranty or undertaking, express or implied, is made and no responsibility or liability
is accepted by the Dealers as to the accuracy or completeness of the information contained or
incorporated in this Base Prospectus or any other information provided by the Issuer in connection
with the Programme. No Dealer accepts any liability in relation to the information contained or
incorporated by reference in this Base Prospectus or any other information provided by the Issuer in
connection with the Programme.
Nothing contained in this Base Prospectus is or should be relied upon as a promise or
representation of future results or events. No person is or has been authorised by the Issuer to give any
information or to make any representation not contained in or not consistent with this Base Prospectus
or any other information supplied in connection with the Programme or the Notes and, if given or
made, such information or representation must not be relied upon as having been authorised by the
Issuer or any of the Dealers.
Neither this Base Prospectus nor any other information supplied in connection with the
Programme or any Notes (a) is intended to provide the basis of any credit or other evaluation or (b)
should be considered as a recommendation by the Issuer or any of the Dealers that any recipient of
this Base Prospectus or any other information supplied in connection with the Programme or any
Notes should purchase any Notes. Each investor contemplating purchasing any Notes should make its
own independent investigation of the financial condition and affairs, and its own appraisal of the
creditworthiness, of the Issuer. Neither this Base Prospectus nor any other information supplied in
connection with the Programme or the issue of any Notes constitutes an offer or invitation by or on
behalf of the Issuer or any of the Dealers to any person to subscribe for or to purchase any Notes.
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Level: 4 From: 4 Wednesday, March 18, 2009 17:08 eprint1 4101 Intro
Neither the delivery of this Base Prospectus nor the offering, sale or delivery of any Notes shall
in any circumstances imply that the information contained herein concerning the Issuer is correct at
any time subsequent to the date hereof or that any other information supplied in connection with the
Programme is correct as of any time subsequent to the date indicated in the document containing the
same. The Dealers expressly do not undertake to review the financial condition or affairs of the Issuer
during the life of the Programme or to advise any investor in the Notes of any information coming to
their attention.
The Notes have not been and will not be registered under the United States Securities Act of
1933, as amended, (the Securities Act) and are subject to U.S. tax law requirements. Subject to certain
exceptions, Notes may not be offered, sold or delivered within the United States or to, or for the
account or benefit of, U.S. persons (see "Subscription and Sale").
This Base Prospectus does not constitute an offer to sell or the solicitation of an offer to buy any
Notes in any jurisdiction to any person to whom it is unlawful to make the offer or solicitation in such
jurisdiction. The distribution of this Base Prospectus and the offer or sale of Notes may be restricted
by law in certain jurisdictions. The Issuer and the Dealers do not represent that this Base Prospectus
may be lawfully distributed, or that any Notes may be lawfully offered, in compliance with any
applicable registration or other requirements in any such jurisdiction, or pursuant to an exemption
available thereunder, or assume any responsibility for facilitating any such distribution or offering. In
particular, no action has been taken by the Issuer or the Dealers which is intended to permit a public
offering of any Notes or distribution of this Base Prospectus in any jurisdiction where action for that
purpose is required. Accordingly, no Notes may be offered or sold, directly or indirectly, and neither
this Base Prospectus nor any advertisement or other offering material may be distributed or published
in any jurisdiction, except under circumstances that will result in compliance with any applicable laws
and regulations. Persons into whose possession this Base Prospectus or any Notes may come must
inform themselves about, and observe, any such restrictions on the distribution of this Base Prospectus
and the offering and sale of Notes. In particular, there are restrictions on the distribution of this Base
Prospectus and the offer or sale of Notes in the United States, the European Economic Area (including
the United Kingdom and the Czech Republic) and Japan, see "Subscription and Sale".
This Base Prospectus has been prepared on the basis that any offer of Notes in any Member
State of the European Economic Area which has implemented the Prospectus Directive (each, a
Relevant Member State) will be made pursuant to an exemption under the Prospectus Directive, as
implemented in that Relevant Member State, from the requirement to publish a prospectus for offers
of Notes. Accordingly any person making or intending to make an offer in that Relevant Member State
of Notes which are the subject of an offering contemplated in this Base Prospectus as completed by
final terms in relation to the offer of those Notes may only do so in circumstances in which no
obligation arises for the Issuer or any Dealer to publish a prospectus pursuant to Article 3 of the
Prospectus Directive or supplement a prospectus pursuant to Article 16 of the Prospectus Directive, in
each case, in relation to such offer. Neither the Issuer nor any Dealer have authorised, nor do they
authorise, the making of any offer of Notes in circumstances in which an obligation arises for the
Issuer or any Dealer to publish or supplement a prospectus for such offer.
This Programme is not a bond programme under the Act of the Czech Republic No. 190/2004
Coll., on Bonds, as amended (the Bonds Act) (section 13 et seq.) and shall not be subject to the
approval of the Czech National Bank. The issue of Notes under the Programme will not be an "issue
of bonds in the Czech Republic" as defined in section 2(4) of the Bonds Act and such issue of Notes will
only be notified to the Czech National Bank as a foreign issue under section 3(3) of the Bonds Act.
All references in this document to U.S. dollars and U.S.$ refer to United States dollars and to
Czech crowns, CZK and Kc refer to the lawful currency for the time being of the Czech Republic. In
addition, all references to euro, EUR and refer to the currency introduced at the start of the third
stage of European economic and monetary union pursuant to the Treaty establishing the European
Community, as amended.
3

Level: 4 From: 4 Wednesday, March 18, 2009 17:08 eprint1 4101 Intro
Certain figures included in this Base Prospectus have been subject to rounding adjustments;
accordingly, figures shown for the same item of information presented in different tables may vary
slightly, and figures shown as totals in certain tables may not be an arithmetical aggregate of the
figures preceding such totals.
4

Level: 4 From: 4 Wednesday, March 18, 2009 17:08 eprint1 4101 Intro
CONTENTS
Clause
Page
Risk Factors ..................................................................................................................................
6
Overview of the Programme ........................................................................................................
19
Documents Incorporated by Reference ........................................................................................
23
Technical Terms and Presentation of other Data ..........................................................................
24
Form of the Notes ........................................................................................................................
26
Applicable Final Terms ................................................................................................................
28
Terms and Conditions of the Notes ..............................................................................................
40
Use of Proceeds ............................................................................................................................
65
Description of the Issuer ..............................................................................................................
66
Management..................................................................................................................................
111
Taxation ........................................................................................................................................
119
Subscription and Sale....................................................................................................................
123
General Information......................................................................................................................
126
In connection with the issue of any Tranche of Notes, the Dealer or Dealers (if any) named as
the Stabilising Manager(s) (or persons acting on behalf of any Stabilising Manager(s)) in the
applicable Final Terms may over-allot Notes or effect transactions with a view to supporting the
market price of the Notes at a level higher than that which might otherwise prevail. However, there is
no assurance that the Stabilising Manager(s) (or persons acting on behalf of a Stabilising Manager)
will undertake stabilisation action. Any stabilisation action may begin on or after the date on which
adequate public disclosure of the terms of the offer of the relevant Tranche of Notes is made and, if
begun, may be ended at any time, but it must end no later than the earlier of 30 days after the issue
date of the relevant Tranche of Notes and 60 days after the date of the allotment of the relevant
Tranche of Notes. Any stabilisation action or over-allotment must be conducted by the relevant
Stabilising Manager(s) (or persons acting on behalf of any Stabilising Manager(s)) in accordance with
all applicable laws and rules.
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RISK FACTORS
The Issuer believes that the following factors may affect its ability to fulfil its obligations under the
Notes. All of these factors are contingencies which may or may not occur and the Issuer is not in a position
to express a view on the likelihood of any such contingency occurring.
In addition, factors which are material for the purpose of assessing the market risks associated with
the Notes are also described below.
The Issuer believes that the factors described below represent the principal risks inherent in investing
in the Notes, but the inability of the Issuer to pay interest, principal or other amounts on or in connection
with the Notes may occur for other reasons and the Issuer does not represent that the statements below
regarding the risks of holding the Notes are exhaustive. Prospective investors should also read the detailed
information set out elsewhere in this Prospectus and reach their own views prior to making any investment
decision.
Factors that may affect the Issuer's ability to fulfil its obligations under the Notes
These risk factors are structured into the five following categories: (A) Issuer Ownership; (B)
Regulatory risk factors; (C) Business risk factors; (D) Operational risk factors; and (E) Market risk factors.
(A)
Issuer Ownership
Future privatisation of the Issuer could have a material adverse effect on the Issuer's business and
financial condition
The minority government formed by the winner of the last parliamentary elections in 2006, the Civic
Democratic Party, decided on 19 March 2007 to sell up to 7% of the Czech Ministry of Finance's stake in
CEZ. Approximately 1.3% of this was sold by 31 December 2008.
There can be no assurance that this or any future government will not ultimately seek to undertake the
full privatisation of CEZ resulting in the sale of its entire shareholding in CEZ. Such privatisation could have
a material adverse effect on CEZ GROUP's business, dividend policy, financial condition and results of
operation. Nevertheless, the Issuer believes that the government has no current intention to fully privatise
CEZ.
The majority shareholder may pursue decisions that reflect Czech government policy
Following cancellation of certain treasury shares CEZ purchased in the course of a share buy back
program the Czech MoF holds 69.37% of all shares in CEZ as of 12 February 2009 and has the power to
nominate and elect two-thirds of the members of CEZ's Supervisory Board. CEZ's Supervisory Board elects
members to the Board of Directors. Consequently, certain of CEZ's decisions may reflect Czech Government
policy. CEZ can give no assurance that these decisions will not adversely affect its business, prospects,
financial condition or results of operations.
(B)
Regulatory risk factors
Future regulation and legal requirements could have a significant adverse effect on CEZ GROUP's
business and its profitability
As an owner and operator of nuclear and coal-fired power plants and owner of electricity distribution
businesses, CEZ GROUP is subject to extensive governmental and other regulations. CEZ GROUP is subject
to, among others things, nuclear safety, electricity market and environmental regulations of the Czech
Republic, the EU and other governmental authorities. Future regulation and legal requirements by the Czech
Government or the EU may require significant changes in CEZ GROUP's business or otherwise affect its
business in ways that CEZ GROUP cannot predict. Any new regulations that cause CEZ GROUP to
restructure or otherwise change its business may have a material adverse effect on its business prospects,
results of operations and financial condition.
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Accordingly, if the transmission prices or related financial conditions change, CEZ can give no
assurance that the possible increase in transmission prices would not adversely affect its business, prospects,
financial condition or results of operations. Furthermore, CEZ GROUP can give no assurance that the
specific regulatory or other relationship that actually develops with respect to the transmission of electricity
will not adversely affect its business, prospects, financial condition or results of operations.
The separation of electricity distribution from electricity generation and supply required by law may
limit CEZ's ability to exercise full control over distribution companies
Under Czech law and EU regulatory requirements, the distribution of electricity must have been
separated and independent from the generation of electricity by 1 January 2007. The process of separation,
called "unbundling", is outlined in Act No. 458/2000 Coll., on energy (the New Energy Act) and in the
relevant EU directives (2003/54/EC and 2004/8/EC). The unbundling process commenced in other countries
as well (including Bulgaria and Romania).
To ensure the required level of independence, management responsible for the electricity distribution
business must be separate from management responsible for electricity generation and supply business, and
appropriate measures must be taken to prevent professional conflicts of interest between persons responsible
for electricity distribution and generation and supply businesses, and consequently the control over
electricity distribution companies exercised by its shareholders is restricted. After having complied with
these requirements, CEZ could encounter difficulties in the control of its distribution companies, despite
being their major shareholder. Consequently, CEZ's business, prospects, financial condition or results of
operations may be adversely influenced by the above legal limitations of its control over distribution
companies.
State support for selected power generation sources could adversely affect the portion of CEZ GROUP's
business subject to regulated prices
The New Energy Act requires distribution companies to purchase certain amounts of electricity from
environmentally friendly "co-generation", "small hydro", "decentralised" or "renewable" facilities. This
approach leads to significantly higher state support for small generation sources or those that are connected
directly to the distribution grids. CEZ GROUP, however, operates large plants and transmits a major portion
of its electricity to the transmission grid and thus cannot take full advantage of Czech Government support
for otherwise comparable power generation sources. Similar support for selected power generation sources
also exists on other markets, where CEZ GROUP operates generating facilities or considers their acquisition
or construction. While CEZ GROUP believes that these purchases by the distribution companies will remain
an insignificant portion of overall electricity purchases by supply/distribution companies, it can provide no
assurance that this will in fact be the case and that its electricity sales to supply companies will not decrease
as a result and will not adversely affect its business, prospects, financial condition or results of operations.
The costs charged for radioactive waste disposal may increase
Under Czech law, CEZ is required to contribute funds to a Nuclear Account administered by the MoF
based on the amount of electricity CEZ GROUP produces in its nuclear power plants. This fund is used by
the Radioactive Waste Repository Authority (the Repository Authority) to centrally organise, supervise and
undertake responsibility for all final disposal facilities and deposition of nuclear waste therein. CEZ can give
no assurance that the government will not increase the contributions which the Nuclear Act requires CEZ to
pay into the Nuclear Account. Additionally, if the cash amounts accrued in the Nuclear Account are not
sufficient to pay the final disposal costs, CEZ may be required to pay additional amounts.
The amounts CEZ has to keep in a special escrow account for future decommissioning of CEZ
GROUP's nuclear power plants and for decommissioning and reclamation of mines and mining
damages may increase; CEZ GROUP may become liable for increased costs of future decommissioning
Under Czech law, CEZ GROUP is required to keep funds in a special escrow account based on the
expected costs of future decommissioning of its nuclear power plants. These funds can be used only for such
7

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decommissioning and only with the permission of the Repository Authority. CEZ GROUP is also required
to keep funds for obligations to decommission and reclaim mines at the end of their operating lives.
CEZ GROUP can give no assurance that its contributions to the special escrow accounts will not
increase as a result of increased expected costs of decommissioning or other factors determining the amount
of its annual contributions. Additionally, if the cash amounts accrued in the special escrow account are not
sufficient to pay the decommissioning costs, CEZ GROUP may be required to pay additional amounts.
A failure to comply with, or the incurrence of liabilities under, environmental, health and safety laws
and regulations to which CEZ GROUP is subject, or a failure to obtain or maintain required
environmental, health and safety regulatory approvals, could adversely affect CEZ GROUP's business
or its ability to trade profitably.
CEZ GROUP is subject to various environmental and, health and safety laws and regulations
governing, amongst other things: (i) the generation, storage, handling, release, use, disposal and
transportation of hazardous and radioactive materials; (ii) the emission and discharge of hazardous materials
into the ground, air or water; and (iii) the decommissioning and decontamination of its facilities and the
health and safety of the public and its employees. Regulators in the Czech Republic administer these laws
and regulations. CEZ GROUP is also required to obtain environmental and safety permits from various
governmental authorities for its operations. Certain permits require periodic renewal or review of their
conditions and CEZ GROUP cannot predict whether it will be able to renew such permits or whether material
changes in permit conditions will be imposed. Therefore, CEZ GROUP may not have been or may not at all
times in the future be, in complete compliance with such laws, regulations and permits. Violations of these
laws, regulations or permits could result in plant shutdowns, fines and/or litigation being commenced against
CEZ GROUP or other sanctions. Other liabilities under environmental laws, including clean-up of
radioactive or hazardous substances, can be costly to discharge. Environmental liabilities or failure to comply
with environmental laws could also lead to negative publicity and significant damage to CEZ GROUP's
reputation. Environmental and health and safety laws are complex, change frequently and have tended to
become more stringent over time. Whilst CEZ GROUP has budgeted for future capital and operating
expenditures to comply with current environmental and health and safety laws, it is possible that any of these
laws will change or become more stringent in the future. Therefore, CEZ GROUP's costs of complying with
current and future environmental and health and safety laws, and its liabilities arising from past or future
releases of, or exposure to, radioactive or hazardous substances, could adversely affect CEZ GROUP's
business or its operating or financial performance.
CEZ GROUP could incur unforeseen tax penalties and/or sanctions
Changing interpretations of tax regulations by the tax authorities, harmonisation of Czech and EU tax
development, extended time periods relating to overdue liabilities and the possible imposition of penalties
and other sanctions result in tax risk for a Czech company such as CEZ.
(C)
Business risk factors
Political developments in the Czech Republic could negatively impact economic conditions in the Czech
Republic and CEZ GROUP's business
The last general election for the Chamber of Deputies took place in June 2006. These parliamentary
elections resulted in an equal division of the 200 parliamentary seats between leftist parties (the Czech Social
Democratic Party and Communists) with 100 seats and a block consisting of the Civic Democratic Party, a
centre-right party, Christian Democrats and Greens also with 100 seats. A centre-right government, which
was subsequently created, will still face the risk that its proposals submitted to the parliament will be rejected
by the equivalent power of the leftist parties. This situation may lead to early elections.
The above factors may have an adverse effect on the overall stability of the Czech Republic and
consequently on CEZ GROUP's economic and financial situation. CEZ GROUP can give no assurance that
any new government will continue the energy, economic, fiscal, and regulatory policies of former
governments. Nor can there be any assurance that any changes in such policies will not have a material
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adverse effect on CEZ GROUP's business, prospects, financial condition or result of operations. Moreover,
any potential change in the government may affect the structure of the presidium of the MoF and/or the
structure of CEZ's Supervisory Board and CEZ's Board of Directors.
CEZ GROUP's strategies may not be successful
In order to fulfil the CEZ business vision "To be the leader in the electricity markets of Central and
South-eastern Europe", CEZ GROUP has identified three key pillar initiatives in its long-term strategy:
Operational Excellence; Plant Portfolio Renewal; and International Expansion (see "Description of the
Issuer - Strategy and Initiatives" below).
In pursuit of these three pillar initiatives in the areas of electricity generation, distribution and supply,
CEZ is facing many inherent risks relating to its business, such as the development of electricity demand in
the Czech Republic and in Europe, development of electricity prices, development of future generation and
distribution costs, development of the infrastructure for export and import of electricity within Europe, future
structure and strength of the competition within and outside the Czech Republic, political development
within Europe, EU legal and regulatory requirements and the credibility of future CEZ partners for building
the business within Central and South-eastern Europe.
The failure by CEZ GROUP to successfully implement any of its key strategies could adversely affect
CEZ's business, prospects, financial condition or results of operations.
Liberalisation of the electricity market in the Czech Republic could adversely affect CEZ's business
CEZ GROUP competes in the retail electricity market and the wholesale electricity market. The
wholesale market has been liberalised since 2002. With respect to the retail market in the Czech Republic,
"eligible final customers" choose their electricity supplier and freely negotiate prices. Since 1 January 2005,
all final customers except for households have been classed as "eligible final customers". Households
became "eligible final customers" as of 1 January 2006, when the Czech retail electricity market became
fully liberalised. In the final stage of market liberalisation, all suppliers have the right to offer their electricity
and all customers have the right to choose their electricity supplier at their own discretion (see "Description
of the Business of CEZ GROUP Liberalisation of the Czech Electricity Market"). CEZ GROUP has direct
access to 61%1 of the final customers in the Czech retail electricity market. On the other hand, the remaining
39% of the Czech retail electricity market is served by supply companies outside CEZ GROUP, which are
free to choose on the wholesale market suppliers to cover the demand of their customers. As a consequence
of liberalisation, the customers may purchase electricity from suppliers other than those within CEZ
GROUP, which might reduce CEZ GROUP revenues. CEZ GROUP can provide no assurance that decisions
of the independent supply companies or final customers will not adversely affect its business, prospects,
financial condition or results of operations.
There are risks associated with international operations
CEZ is highly active in the mergers and acquisitions activity in Central and South-eastern Europe (see
"CEZ GROUP's strategies may not be successful" above). CEZ GROUP will continue to evaluate
opportunities abroad and may expand its investments in these countries or in new markets. There are certain
risks inherent in doing business on an international level, such as unexpected changes in regulatory
requirements, default of joint-venture partners, trade barriers including import and export controls, tariffs,
customs, duties, difficulties in staffing and managing foreign operations, longer payment cycles, problems in
collecting accounts receivable, political instability, expropriation, nationalisation, war and other political
risks, fluctuations in currency exchange rates, foreign exchange controls which restrict or prohibit
repatriation of funds, technology export and import restrictions or prohibitions and potentially adverse tax
consequences, any of which could adversely impact the success of CEZ GROUP's international operations.
1
As of 31 December 2007, source ERO.
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Risks associated with capacity expansion
CEZ's current power capacity mix predominantly consists of coal and nuclear. In view of this, CEZ
seeks diversification of its portfolio by building gas-fired power plants. However, CEZ lacks experience in
building and running gas-fired facilities, which could expose the company to risks from an operational
perspective. The lack of a diversified gas supply in the region is another risk related to gas-fired generation
capacities. So far Gazprom is the only major gas supplier in the region, which exposes CEZ to potential
source dependency and the associated risk of gas price increases as decided by the major supplier, leading
to higher operational expenses.
Risks associated with the deliveries of coal from Mostecká uhelná, a.s.
In 2005, CEZ concluded framework agreement with Mostecká uhelná spolecnost, a.s., successor
(now Mostecká uhelná a.s.), which is a major entity of Czech Coal Group, for the long-term purchase of coal.
The Czech Coal Group has rejected this agreement, and CEZ therefore has taken legal steps against
the Czech Coal Group with the aim to uphold the long-term coal purchase contract. CEZ has also asked
Office for the Protection of Competition not to allow Mostecká uhelná a.s. to contribute its mines into a
prospective joint venture with a third party, because part of the coal is subject of the litigation.
The future outcome of the legal proceedings is unknown at the moment and its results, as well as any
potential delays in coal deliveries may adversely affect CEZ GROUP's business, prospects, financial
condition or results of operations. Currently the coal from Mostecká uhelná a.s. is purchased under a
medium-term contract until 2012.
Risks associated with the Temelín nuclear power plant litigation
In ongoing litigation before Austrian courts based on suits filed by Austrian persons (demanding
cease-and-desist from generating alleged ionizing radiation from Temelín Nuclear Power Station),
deliberations in the period in question centered on whether Austrian courts have jurisdiction over the dispute.
In this matter, the Supreme Court in Vienna asked the European Court of Justice in Luxembourg (the "ECJ")
for an interpretation of the Brussels Convention on Jurisdiction and the Enforcement of Judgments in Civil
and Commercial Matters (the "Brussels Convention"). In its "preliminary issue proceedings," the ECJ
decided that the relevant provisions of the Brussels Convention do not support the Austrian courts'
jurisdiction over the matter. Despite this ECJ decision, the Supreme Court in Vienna issued a decision that
jurisdiction is given by internal Austrian law. Based on this decision, the matter was returned to the Linz
Regional Court, as the court of first instance. On 20 December 2007, this court issued a resolution
announcing that, on the basis of an expert opinion prepared at the behest of CEZ, a. s. by Professors
Schroeder and Weber from the University of Innsbruck, it is opening proceedings on the preliminary issue
before the ECJ, as it has doubts concerning the applicability of Section 364(a) of the Austrian Civil Code. In
connection with the litigation before the ECJ four standpoints of Austria, Czech Republic, Poland and
European commission were submitted. The public hearing should take place during 2009. The results of
these litigations are out of CEZ's control and could adversely affect CEZ GROUP's business, prospects,
financial condition or results of operations.
Risks associated with the renewable power plants
The energy business environment is strongly influenced by the EU ambition to increase the share of
renewable energy resources, which was confirmed by approval of the "EU climate package" in 2008.
According to this package CEZ GROUP is effectively forced, through economic incentivisation, to reflect it
within its own strategy. The implementation of this strategy or impact of this external strategy on CEZ
competitors or suppliers may seriously affect CEZ GROUP's business, prospects, financial condition or
results of operations.
10

Document Outline

4101 Intro
4101 Section 01
4101 Section 02
4101 Section 03
4101 Section 04
4101 Section 05
4101 Section 06
4101 Section 07
4101 Section 08