CEZ (CEZ) Status update summary

Strategic rationale and structure optimization

• Proposal to optimize ownership and governance by creating a dedicated subsidiary for the customer segment, including supply, distribution, trading, energy services, and telecom businesses, with the Board of Directors' approval and decision at the General Meeting on June 1, 2026.

• The move aims to highlight the growing importance of regulated and stable activities, expected to represent about 50% of EBITDA in 2026 and increase further.

• Separation is intended to improve efficiency, governance, and allow differentiated financing for generation versus customer businesses, aligning with the strategic direction set in 2022.

• The new structure will provide flexibility for future financing, potential compliance with government-initiated shareholder actions, and readiness to respond to market opportunities and risks.

• Clearer segmentation will allow for more precise KPIs and enhanced transparency in market valuation.

Minority stake sale and financial implications

• Management seeks a mandate to sell up to 49% of the new subsidiary, retaining at least 51% and management control at all times, with sale options including public offering, direct sale, or a combination.

• Proceeds from any sale could be used for share buybacks or other purposes, depending on shareholder decisions, and could attract investors focused on regulated, lower-risk assets.

• The new subsidiary is expected to have its own financial policy and potentially higher leverage due to stable, regulated cash flows.

• Debt allocation and credit ratings for both parent and subsidiary will be managed to maintain financial health and flexibility.

• Board will consider market conditions and investment opportunities before any sale.

Asset allocation and operational details

• The customer segment subsidiary will include electricity and gas distribution (ČEZ Distribuce, GasNet), supply (ČEZ Prodej), trading, energy services (ČEZ ESCO, Elevion), and telco services, with non-Czech renewables remaining with the parent.

• Retail is included in the new entity as it aligns with customer-focused management, with existing market-based transactions between retail and generation continuing.

• Trading typically generates around CZK 2 billion EBITDA in normal years, with telco contributing low hundreds of millions.

• The process of establishing the subsidiary is targeted for Q1 2027, after which the sale process may begin, subject to General Meeting approval.

• Board will decide on the form, scope, and timing of the transfer, including possible debt transfer.