Czech Republic Segment

General conditions in the Czech Republic

In the first half of the reporting period in particular, the favourable economic development in the Czech Republic was reflected in a positive trend in sales and an increasing volume of orders in services business, while from March 2020 COVID-19 restrictions were also felt in the Czech Republic Segment. There were no significant changes as part of the annual adjustment of the pricing regime in the Czech Republic, which focuses on the appropriate profit of operating and infrastructure companies. Due to weather conditions, sales in the heating business were slightly impaired as the winter was milder than the previous year's.

Competition on the labour market continued to be at a high level in the first six months, not least due to the positive economic development in the Czech Republic. However, due to the economic impact of the COVID-19 pandemic, there were some initial signs in the second half of the year that job security in the infrastructure business is definitely a positive argument in competition on the labour market.

The Czech koruna remained largely constant against the euro during the 2019/2020 fiscal year until COVID-19 restrictions were imposed and, after a weaker performance in the second half of the fiscal year, stabilised towards the end of the reporting period at a slightly lower level than in the first half of 2019/2020.

Business development in the Czech Republic Segment

In the 2019/2020 fiscal year, the Czech Republic Segment generated stable sales revenues of EUR 160.5 million in its water and heating business (previous year: EUR 160.0 million).

The operating result amounted to EUR 9.8 million in the reporting period (previous year: EUR 10.9 million). The 10.1% decline in EBIT in the Czech Republic Segment is mainly attributable to a decline in demand and temporary factory closures in regions with higher industrial sales volumes as a result of the COVID-19 pandemic. The developments of water and waste water were in line with the long-term seasonal fluctuation margins.

Due to the higher than average temperatures and resulting lower sales volumes in the reporting period, the income generated by the heat-related business in the Czech Republic was slightly lower than in the previous year.

Stable development in the Czech Republic

In the Czech Republic Segment, a total of 47.5 million m³ of drinking water and 44.3 million m³ of waste water were invoiced in the reporting period.

Like every year, fee negotiations with the municipal contracting parties were scheduled for numerous operator contracts in the water business during the reporting period. Smaller bidding procedures additionally took place in a number of supply areas. The number of operating or concession agreements and heat supply agreements has remained constant since the beginning of the fiscal year.

VaK Zapy s.r.o., which was acquired on 6 December 2019, is based in the municipality of Zapy, about 30 km west of Prague. 23 employees provide services in the field of maintenance, repair and overhaul of water supply systems for 15 towns and municipalities and waste water management systems for 23 municipalities. More than 700,000 m³ of drinking water are supplied to customers each year. The operating area borders on that of the Energie AG subsidiary VAK Beroun a.s. to the north-west, and on that of Energie AG Kolín a.s. to the east.

In the areas of research, development and innovation, the focus in the reporting period was on reducing non-revenue water as well as on digitalising operations and customer services. Significant development steps were taken in each of these areas. In the smart water meter sector, the application “Water under Control”, developed by ČEVAK a.s., České Budějovice, is a trend-setting solution for water customers and suppliers; it is also currently being tested in Austria in the scope of a pilot project.

The heat sales volume in the Czech Republic amounted to 171 GWh in the reporting period, which is lower than the previous year's level (175 GWh).