Czech Republic Segment

General conditions in the Czech Republic

In the water business, the favourable macroeconomic data were reflected in a positive sales development and in increasing services business order volumes until the outbreak of the COVID-19 pandemic. 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 in the Czech Republic was milder than the previous year's.

Competition on the labour market continued to be felt, not least due to the positive economic development in the Czech Republic. Due to the COVID-19 pandemic, developments are expected here that cannot yet be assessed, but in which job security in the infrastructure business is likely to play a positive role.

The Czech Koruna remained largely stable against the Euro during the 2019/2020 fiscal year until COVID-19 restrictions were imposed, but weakened significantly in the last few weeks of the reporting period.

Business development in the Czech Republic Segment

Sales revenues in the Czech Republic Segment totalled EUR 83.2 million in the water and district heating sectors in the 2019/2020 fiscal year, thus increasing by 1.8% compared with the previous year. EBIT amounted to EUR 7.2 million in the reporting period (previous year: EUR 8.3 million).

The sales developments of water and waste water are in line with the long-term seasonal fluctuation margins. Service sales revenues were above the previous year's level. Moreover, growth was achieved in construction assembly services and in wholesale revenues.

Due to the higher than average temperatures and resulting lower sales volumes in the reporting period, the sales revenues generated in the heating business in the Czech Republic were slightly lower than in the previous year.

The 13.3% decline in EBIT in the Czech Republic Segment was mainly due to a significant increase in personnel expenses as a result of ongoing competition on the labour market.

Stable development in the Czech Republic

In the Czech Republic Segment, a total of 23.6 million m³ of drinking water and 22.4 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 sewage disposal 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 first half of the 2019/2020 fiscal year continued to be 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 being tested in Austria in the scope of a pilot project.

The heat sales volume in the Czech Republic amounted to 128 GWh in the reporting period, remaining approximately at the previous year's level (132 GWh).