According to financial editor of EZ Martin Novek, it is necessary to calculate the total amount at the end of the year. But it is logical that the largest domestic energy company would probably take more for state coffers. Novk reported that the unprecedented increase in the prices of gas and electricity brought huge additional income to the company.
How would you like EZ Company’s quarterly results? Published on ThursdaySurprise vs?
The results were generated according to our assumptions. A lot of people are asking about the big drop compared to the first quarter of 2022. Between 2022 and 2023, although the average realized price of electricity increased, the course profit decreased by 60 percent.
what is that?
The most significant factor is the 7.4 billion kroner and, accordingly, the extraordinary, large-scale, specific profit of the year as a result of the trade division. Both are related to price increases in the year following Russia’s invasion of Ukraine.
For example, in the first quarter of 2022, there was a sale of payments. We did this to get Maroon money in the stock market (As a guarantee that the contract is actually executed, the company must match the price of the stock market, editor’s note). So we sold production permits for a whole year, but had to buy them for the rest of the year at the same price. Therefore, it is mainly a seasonal effect, when in some years the price of electricity is relatively stable, it does not work at all or does not work for the whole year.
There are two major reasons for the step. One of them is a tax on excess production income above a certain threshold in electricity prices. This is the case with our main nuclear power plants, which in the first quarter total less than ten billion crowns. The question of taxes on extraordinary profits amounting to twenty-nine billion crowns.
Throughout 2023, you can withdraw a hundred billion crowns from special taxes, but also from the classic tax on income and dividends. How did this estimate turn out to be true when electricity prices fell?
When we first assessed it in the spring, the prices were not at the end of the year. That is why we estimate between 30 and 40 billion kroner in additional taxes this year, and 44 billion kroner in dividends, which we have proposed at 117 K per share. The rest is additional tax on credit from 2022 and deposit on tax on credit from profits in 2023.
Latest Ministry of Finance ApprovedA substantial amount of the two extraordinary taxes is not estimated to be collected in aggregate. And this would be approximately 40 billion crowns for the entire company. So, it seems that only EZ will do it all.
I wouldn’t say that. Tax on excess income applies to energy companies and tax on proportionate profits applies to energy companies and some banks. Of course, it depends on their profit margin, and how someone improves them. We know many of our competitors have moved abroad to avoid paying taxes here, and of course we can’t. On the other hand, we will see how the tariffs will change by the end of 2023.
Minority shareholders should know that these two taxes are only for EZ. Do you feel the same way?
I don’t see it that way. I believe what is written in the law. It is only about EZ company, it is about group of charges, it is not written that there are energy companies and some banks. Yes, we are absolutely a highly profitable company and benefit greatly from high prices. Thus, taxes from excess production requirements and taxes from unequal profits are proportionate here, but not for other firms.
Minority shareholders are the same, and at first you raise the price by how much you will take, even in the press. For them, taking care of such a share, however small, is substandard.
When we talk about a state, we don’t just talk about it as an action. Deductions and tax on unbalanced profits are information not only for the state but also for other investors so that they know how high the state’s deductions are and how to build that into their investment models. Accordingly, they can decide how to fill their position in EZ. This is important information for everyone. Information about the economy and the improvement in cash flow for investors and directors is a question of high stakes.
How did coal-fired power plants perform in the first quarter, and are they profitable due to expensive emissions permits?
In contrast, the profit of emissions production sources rose from 7.8 billion to 11.2 billion kroner. Conversely, nuclear power plants fell from 13 to 11.1 billion crowns. The reason is that we sold the electricity for 2023 at a relatively high price in 2022, and at the same time we bought the permit, which was not cheap, but the cost of electricity was significant.
As for deductions from excess consumption of power plants, the ceiling is set for coal-fired power plants and not for nuclear power plants, meaning that coal-fired power plants do not have much catch. (A nuclear power plant must generate 90 percent of its use at more than 70 euros per MWh. For coal-fired power plants, the ceiling is set at 170 euros or 230 euros per MWh, depending on the size of the source, editor’s note )
Coal-fired power plants will not operate for five years this year. But in the coming years, the difference between the price of electricity and the price of the permit will be small, and a coal-fired power plant will have trouble covering the costs of coal, people and everything around it. That’s why access to coal-fired power plants will also change. I don’t operate permanently in baseload mode all year round, but more opportunistically, for example in winter.
In the near future, coal-fired power plants will have 300 hours of power, and that’s assumed forever. For the last two years, because of the energy crisis, they’ve been doing well, and they wouldn’t have been doing well if the world hadn’t gone into a certain conflict, which caused gas and electricity prices to rise.
Did you receive compensation from the STD for the price ceiling for houses and companies?
Yes, this applies to both EZ Prodej and ESCO. Similar to deductions from overproduction requirements and compensation, the process is based on deposits and subsequent recovery. Any compensation shall not cover only the difference between the purchase price of the selling companies and the fixed ceiling. So there is no impact on profit.
Mete ct specific sla?
At this time, this is just a problem and we will not publish it at this time.
Martin Novk
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