Hello, everyone. And welcome to First Quarter 2025 Conference Call. It's my pleasure to welcome Martin Novak and Pavel Cyrani, who will walk you through the presentation as usual, and then after that, I'll open the floor for questions. Now I'm handing over to Martin.

Good afternoon, and good morning. I will start with, overview of our financial results, where our operating revenue, achieved, or reached CZK 93.4 billion, which is an improvement year-on-year or quarter-on-quarter of 7%. Our EBITDA important number achieved CZK 43 billion, improvement of 7% as well. Net income and adjusted net income are very close, CZK12.8 billion and CZK12.7 billion, decline of 6% versus first quarter 2024. Our CapEx has reached almost CZK7 billion, which is slight decline of 6%. Our important slide actually on Page 4. This demonstrates the changes in our EBITDA compared to first quarter of 2024. There is actually one negative factor and three positive factors. The negative factor clearly decline of power prices. As you know, power prices are steadily declining with our straightforward three year hedging policy that is on Slide 14, I guess. You can see actually average achieved prices and the volume of electricity that we actually sold. So this actually leads not only to steep decline but to gradual decline and negative impact is actually CZK5.5 billion quarter-on-quarter. Positive impact is coming from Distribution grade, about CZK1.5 billion coming from Czech power Distribution, CZK800 million is coming from higher revenue due to higher CapEx in the previous years. And, CZK600 million is coming from so called correction factors, which is actually leveling up 2023 numbers that are now actually being passed back to us. And it's in total about CZK1.5 billion of positive impact. By far the largest positive number is coming from GasNet, EBITDA of GasNet, which is our stake in Czech gas Distribution that controls 80% of gas market is CZK4.3 billion. It's a full first quarter 2025 EBITDA because actually we only included this company into our numbers as of September 1st. So clearly in first quarter 2024, there was nothing actually to compare it with. So CZK4.3 00,000,00 is 100% variance. In sales segment CZK2.2 billion. We actually had a few factors. One is lower purchase prices and also stabilization of the market or payment to the market operator for various different volumes that originally planned, after the market that got there, you guys got stabilized. And there is also an effect of sale of commodity of electricity that we actually purchased for our customers to be delivered in first quarter 2024. But due to warm winter, it wasn't delivered, so we had to resell it back on the open market at the lower profit, which is not the case of this year. So this is CZK2.2 billion on the sales segment. CZK300 million is actually also coming from our ESCO activities. So this is the key variance in EBITDA. When we go to next slide, you can see actually our line items below EBITDA. The most significant is actually depreciation and amortization, which is CZK5.8 billion or 66% higher. There are two effects. One is actually the fact that, we decided to speed-up coal asset depreciation and we started on October 1st to better match utilization of the power plants. So, it's no more kind of straight-line depreciation, but it's accelerated depreciation that pretty much follows the amount of hours to be for the plants to be utilized. So now in 2025, 2026, 2027, it will be more. Towards the end of decade, it will be less. So last year, in first quarter, we did not have this extra depreciation of CZK2.2 billion which we have today. So that's one of the effects and another effect in depreciation is actually including GasNet. Again, as we include, consolidated into EBITDA, we also consolidated into other line items including depreciation, which is CZK2.7 billion. Other items are pretty much in line with what was reported, what is probably mentioning to know this actually sale of Polish assets, and other income and expenses. So CZK1 billion is actually a profit achieved on sale of our Polish power plants earlier during the first quarter at the February. So now the assets are handed over to the new owners and they do not impact our numbers in any way since February. Next slide. You can see operating numbers, so maybe we can skip that. Those are volumetric data, which might be of interest, but there is no significant deviation. So, let's go to important slides, #7. We actually also signed a contract on April 30th with Czech government where we decided, agreed to transfer 80% of shares in the company Elektrárna Dukovany II which is a new nuclear project in Dukovany. To state, shares were transferred in May 6th. The purchase price is CZK3.6 billion and it is actually a function of the cost spent and also the previous agreements. So the full value of the cost actually spent so far is CZK4.5 billion. So, 80% is CZK3.6 billion. We are keeping stake of 20%. The reason why we actually did it and why we keep the stake is that, it allows us to help the company to support the company from strategic point of view and not only through standard SLA agreements that are fully supporting the company from kind of day-to-day operational, stuff like accounting and IT and financing, advice and all those things. But we, as a shareholder, are also sitting on the Board of the company and are able to provide some strategic direction. Although the company is fully staffed, there's more than 200 people working in there, so it's not an empty shell by far not. It's a full scale company that is able to carry on the task that, it was set up for. There is another side effect, that, all the future debt that will be accepted by the company from the government, as part of returnable financial assistance will not be consolidated on our balance sheet and this is very important factor, actually that will impact our future balance sheet. So, we will not see up to CZK 400 billion actually consolidated into our ratios. So, that's a big news, I would say, for us. Then next slide, important news, we actually approved as a Board of Directors our proposal of dividend of CZK 47 per share or 80% of adjusted net income to be approved at the shareholder meeting, which will be held on June 23rd. So the date is also final. We actually analyzed our ability to pay the dividend and our financial strength and we don't see any issue to pay 80%, which is on a top upside of the of provided range, as it is quite usual in our case. We always try to provide maximum dividend that we can afford. So, 80% is our proposal and is perfectly within the range. We will see how shareholders approach that. We assume that, this could be a reasonable proposal. Next slide, we have information about our change in our financial outlook and guidance for 2025. We increased our EBITDA guidance from CZK125 billion to CZK130 billion to CZK127 billion to CZK132 billion. We are keeping our net income actually on the same level, CZK25 billion to CZK29 billion. You can see actually the main year year over year effects on EBITDA and also selected assumptions, which are listed on the right side. And also, risks and opportunities, obviously, the largest risk is utilization of our power plants. So that's the key to our success. So, now I switch to generation mining segment. Generation mining segment in our EBITDA is split into zero emission generating facilities or clean energy, that includes nuclear and renewables. So, this segment made actually 11% less, but the biggest part coming from renewables, 39% decline due to very, very dry winter. So our renewables hydro plants are actually running on a much lower output than a year ago. Then we also had a timing of actually nuclear assets outage or scheduled outages in the marine and Dukovany, so another CZK1.5 billion down. But, on a year-on-year basis, we expect a significant increase in Power Generation, as you will see later on from nuclear assets. Emission generating facilities, CZK2.7 billion, which is 53% decline. There are mainly price effects, as I've already mentioned, for entire Power Generation segment, and then a few positive effects actually that you can see in the explanation. So, overall Generation segment was down CZK5.5 billion, but vast majority is actually attributable to prices. Mining segment, slight improvement mainly due to sales to external parties, where the winter was colder compared to 2024, so there was a higher demand for coal. Nuclear and renewable generation, next slide. This is what I was talking about. We had a flat generation in nuclear in volume terms. We had decline actually in renewables due to especially hydro situation in 2025, and on the opposite of better-than-expected or better-than-average hydro situation in 2024. Full year, we would expect actually to increase fairly significantly nuclear generation to 31.6 terawatt hours, close to our target of 32 terawatt hours. This is mainly due to shorter scheduled outages of the main nuclear power plant and Unit B2 will be this year without schedule outage. And this is the main reason for increased generation. Renewables should flat or be almost flat actually year-on-year on 3.6 terawatt hours. Generation from coal, we had a higher 24% generation, from coal. Again, due to colder winter compared to, last, year first quarter. But, year-on-year, it should be flat, 14.1 terawatt hours from coal. Very little from Poland. You can see 0.2 terawatt hours and this is it. It will not change any longer, because we don't have the assets in our balance sheet. We successfully disposed them and gas generation is expected to be somewhat lower than last year, 1.5 terawatt hours. Last but very important slide is actually update on our hedging as of March 31st. You can see that for 2026, we two-thirds sold for 2027, and one-third to 2028, and 12% we just started selling for 2029. Average achieved price is EUR 94, down to EUR 70. Corresponding prices of carbon credits actually are on the right side that we always buy whenever we sell coal electricity, we buy actually appropriate amount of carbon credits. So that's all for this segment. And now I will hand over to Pavel to go through Distribution and Sales segments.

Okay. Thank you, Martin, and hello everyone. Let's start with the Distribution. We see a significant growth year-on-year of more than 50%. It's mostly driven by the inclusion of GasNet. But at the same time, we see also some good operational results both for GasNet, even if you look at it on a standalone basis, which you see on the down left corner or if you look at such as Distribution, the actual Distribution. What we already observe is, we observe the increase of allowed revenues through historically increased investments in Distribution asset driven to some degree by the energy crisis we have been through, which called for increased investments in both electrical and gas grid. There's also a degree of correction factors coming from those extraordinary years of 2023. And last but not least, and this is more for guys, we also see higher distributed volume of both gas and electricity. So all these things combined together, mean that we see a pretty significant growth also on the individual company's side. In terms of demand or distributed volume growth, it's basically driven by two things. Number one, winter of '25 was significantly colder than winter of '24. So what you see is you see a 12% growth in gas, which is mostly linked to temperature and also the residential customer consumption, which is mostly linked to heating. Now in terms of the small business and large customers, in electricity, they are less affected by cold weather and they are more linked to the general economic growth. The good news is that, we see also an adjusted consumption, climate adjusted consumption to grow in gas by 2.9%. Take it as an estimate, obviously all these adjustments are just models, but still we see in our models that there is underlying growth both in gas and also in electricity 0.7%. So after several years of consumption drops, we see now first signs of recovery and increase. If we move on and look at the Sales segment, again, in terms of Q1 year-on-year, almost 90% growth. There are some underlying good things happening. Our retail company, sales per day, was able to manage a lower cost of deviations both through stabilization of the market and also by improving their prediction and trading capabilities. We also see the effect of the colder winter of '25. And then, in terms of sales per say, you should not extrapolate this first quarter by multiplying by four, as there are some things that are simply linked to the winter and that will not kind of repeat itself in the further quarters, where there is kind of less deviation, less consumption in terms of because of the weather. We also see a good development in the escrow companies, although it's linked to the invoicing cycle, which is more like happening at the end of the year. So the development is not linear. There will be more profit coming in the next part of the year. In terms of the volumes, again, similar to what we discussed under the Distribution segment, we see growth, growth that is both driven or mainly driven by the colder winter, but also with the signs of recovery of the economy and consumption in general. And also the energy services revenue growth top-line, we had a somewhat slower first quarter, but again, it's more linked to the exact situation in the individual projects and the way we invoice them. We still expect a 7% growth in the full year, as we expect the invoicing and to do that also, the operating profit to catch-up in the following part of the year. And with this, I think we are at the end.

Yes. So this concludes the presentation and we are now ready to take our questions. If you have a question, just raise your hand through the teams and I will call your name, then you can unmute yourself and ask your questions. Our first question, comes from Arthur Sitbon from Morgan Stanley. Arthur, you can go ahead.

Hello. Can you hear me? Yes. I imagine you can hear me.

Yes.

Okay. Great. Thank you. Two questions. The first one is just on the moving parts of your guidance. Obviously, you increased the EBITDA guidance, but not the net income guidance. As I understand, part of that is linked to the indication on depreciation and amortization. I think you were indicating CZK50 billion at the full year results, now CZK55 billion. I'm just wondering what led to that difference in such a short time, because I understand the accelerated depreciation on coal, but I think that was already known at full year results. So just if you could come back on that, that would be helpful. The second question is, more broadly speaking about the Group structure and the future of CEZ. I think there were there were press articles, recently, suggesting that, potentially under a different government, there could be a plan to nationalize CEZ. I was wondering, if there is anything tangible at the moment on that. What would be the rationale to to do so? I think in the past, it was potentially to have the financing of new nuclear, but it seems you found another solution for that. So any update on the topic would be quite helpful, actually. Thank you very much.

So, on the first question regarding depreciation, there is higher depreciation than originally anticipated on GasNet assets. Everything was based on estimates actually, towards the end of the year. There is also higher depreciation on nuclear assets, where we have quite a lot of CapEx in the past. So, this is something that we can actually see the effects. And it's important to know that, despite the growing EBITDA, we are still subject to Windfall tax actually in 2025. So it kind of eats up a lot from especially power generator as CEZ, who is the main actually payer of the Windfall tax. So the impact of Windfall tax numbers is bigger than other subsidiaries. So that's why we are not actually moving net income range corresponding, which will be corresponding to EBITDA increase or EBITDA range increase. So, this is for me. And now I hand over to Pavel.

In terms of the group structure, it's really difficult to comment. We've read the discussion. You have to understand now we are in the middle of a election campaign. We have the elections have been announced for the 3rd and 4h, October, by the President. And, these ideas about, buying out the minority trust holders from CEZ are being mentioned by some of the parties, as a part of the election campaign, and it's really difficult to comment. And from this perspective, it's also difficult to comment what the rationale is, and how it's linked to financing of nuclear and so forth and so on. I think with this one, you and, as well, us will have to wait until the election and then see who actually forms the government and then what is the strategy for the group structure.

Thank you very much for the comment. Maybe just as a follow-up question then, if it's difficult to comment on this particular topic as part of the political campaign, are there other measures, that as part of the political campaign are being highlighted by the by the various parties? I'm thinking, obviously, you have Windfall tax at the moment. I don't know if there is any strong position, the strong stance on the topic or anything else that that would be particularly relevant to your business?

Not really. Beyond what is the general, discussion in the public, across Europe, and that is the Green Deal, how it should be implemented? Should we have ETS2 immediately or later, and how it should be with nuclear and with gas, and what is the taxonomy deadlines, and then should we ban the cars sales. These general discussions are obviously ongoing also here, but there's no specific topic related to CEZ that would be, explicitly mentioned other than the idea by some of the parties about the increasing government ownership to 100%.

And on Windfall text, there's just no discussion. Everybody counts on this to be ended by the end of this year and that's it. And also, no news.

We have the next question from Anna Webb.

Hi. Thank you for taking my question. I've got a question on the kind of investment profile. So, obviously, with the sale of the new nuclear, you've freed up a lot of CapEx from the end of the decade onwards. So just kind of wondering at a high level where you see the best opportunities to reinvest this? And kind of related to that, I guess, Distribution, is an area where you've invested with the acquisition of GasNet and also with quite attractive returns, announced for the next period, especially, compared to other European countries. So how much could you ramp up CapEx there versus what you've got in the current plan? And then, also sort of into the 2030s, anything you can add there would be great. Thank you.

Thank you for the question. Actually, disposing project of new nuclear plant in Dukovany is not bringing us new funds to be invested, but it's preserving the old funds to be invested actually. So should we actually not be able to divest it, we would have to significantly cut on our plants, significantly reduce them because our debt capacity will be pretty stretched actually with more than CZK400 billion of debt sitting on our balance sheet. Although financing will be provided by state at 0%. It would impair all that capacity for sure. So by selling disposing the stake, we are just able to do what we wanted to do anyway. And our CapEx plans are pretty heavy. Actually by the end of the decade, we will be spending more than CZK400 billion actually. And we will be reaching by the February, our target of CZK3.5 billion net debt-to-EBITDA. So everything that needs to be done, meaning, refurbishing our heat plants and converting them to gas, distribution investments into both power and gas distribution, building renewables, then decommissioning coal plants, working on the project of CCGTs. All those things will be done and very importantly, investing into prolonging our lifetime of our current nuclear assets, which is very important. All those things can be done according to the plan. If we kept the nuclear project on our balance sheet, we would have to reduce the extent significantly. So it's not that we will have more money to invest.

Can I just quickly follow-up on that? Is there any scope to increase the investment in distribution, or do you feel that with the current investment plan, you wouldn't want to leverage to go any higher or sort of into the 2030s? I guess, is there any scope to increase there or not?

Look, number one, Distribution as a segment is a distribution where we put most money out of all the other segments. So it's like a number one segment in terms of CapEx. It's roughly CZK150 billion over the next six years, including 2025, with around CZK25 billion, a year. And with this, I think we are investing well beyond depreciation, so we'll be growing our rep significantly. If you ask and as you pointed out, the returns are good. They do justify the investments, and the investments is needed, because after all, all this energy strategy is based to a large degree on electrification. So, like, using more electricity and in Czech Republic also gas while replacing oil and coal, in various applications. Now could we invest more? Probably, it would not be as wise, because after all, the regulator is obviously does look at the returns and all that, but the regulator also look at the tariffs. And I think with these investments and with the assumed growth in the consumption, we should be able to, keep the tariff growth at a manageable level for the consumers, so they will not go away from us, from electricity and gas. So I think it's set quite correctly. Now where the jury is out a little bit is on renewables, because we have done our share in investing and preparing investment into photovoltaics. Now, the government approved acceleration plans, acceleration zones for wind, but they still need to go through the parliament, the acceleration zones, and it will not be this parliament. It will be only the parliament, which will come from the election. So, that's one area where we may invest more, if if this actually goes through. Also, please know that unlike the photovoltaic, wind does have a kind of PPA type of auctions also in Czech Republic, so that would be an interesting investment area as long as you can permit it in the installation zones. That's number one. And number two, is kind of gas and battery backup, and the government is preparing, all kinds of markets and schemes. There is a discussion about the capacity market. The capacity market in general as a tool, is now was now approved as a part of one of the laws that just passed through the parliament. And, there's already some kind of work being launched on notifying it and actually put again in place. So that would be an area where we could invest more if there was a capacity market for backup gas. And also with the battery prices going down and various schemes being prepared for the batteries, that could be an area where we invest more beyond what we originally thought maybe a year ago or so.

We can take the next question from Jan Raška from Fio.

Good afternoon. Can you hear me?

Yes. We can hear you.

Good afternoon. First, congratulations to strong results for Q1. And, I have a question regarding to power prices. What is your actual average realization power price and sold volumes for this year as of the March. At the end of 2024, you released EUR 117 per megawatt hour. Is there any change compared to the December? Thank you.

Yes. So, I think our estimate is now somewhere at EUR 120 to EUR 125 per megawatt hour. I think, it is included in on Slide 9, in the middle section. So that's our estimate for this year.

Next question from Piotr Dzieciolowski from Citi.

Good afternoon. It's Piotr Dzieciolowski from Citi. I wanted to ask you a couple of questions. So first one on the disposal of the nuclear 80% of the nuclear program project. Can you tell us what happens with the liabilities? I remember you had the liability on the EUR 1.7 billion in case you have the some slippages in the delivery of the project. Do you receive them pro rata and also on the remuneration? Is it also that you keep your small equity stake in it and it'll be provided some sort of a CFD on the back of it? I'm just trying to understand what's your role when you say, you're going to keep a operational role in the project. What's happening there? So that's question number one. Second, can you explain what, this delay in the starting of a project has been caused by the basis of the EDF protest and what EU commission may look into the standard? And the final question I have on your assessment of your ability to pay the dividend. You said you will be 3.5x net debt-to-EBITDA by the end of a decade. So, what type of -- do you think there's a risk in case of a downturn of the power prices? I'm not sure what this, leverage ratio was based on in terms of power prices. But do you think there is a chance you will have to revisit the 60% to 80% payout ratio to facilitate some of these investments? Thank you very much.

So the first question actually, you correctly remember that, original setup was such that we were liable. Should there be any issue caused by us for additional EUR 1.7 billion contingent equity? This is now gone. There is no contingent equity from any partners. So that's a fairly good news actually from a risk point of view. So, we are now keeping our 20% stake that is valued at CZK 900 million. And the plant will have such a contract with the government after it is up and running and producing power that should allow us to get a return of now equity of about around 10%. So basically fairly, immaterial amount in our numbers, but on the other hand no risk either. So, that's the first. Second, EDF filed actually complaint or made a legal action, at the court, asking the courts to review the fairness of the of the tender, claiming that the Korean offer is way too cheap, kind of, or unrealistically low, and that it couldn't be built without state support. It is actually a law action against anti-monopoly office, not against us. But as a result of it, we are not allowed to sign the contract. This was actually decided on May 6th. We hope that -- and we the company, not we, but the company will actually file an appeal to higher level of court. Hopefully, it will be resolved or we will see some action within weeks because this is important thing. From EU Commission, we received a letter from, French commissioner, but it's not an official kind of resolution or any action. It's just kind of a letter of a commissioner asking for making sure that, the competition is fair and that's all it is. Also, there was no legal action taken against the project. So, that's where we are today. And, of course, you will see all the situation will evolve. With ability of payment of dividend, you know that, we have a range of 60% to 80%. For very simple calculation and modeling purposes, we use dividend payout of 70% as a middle of the range and this is actually included in our guidance. And of course, everything depends the kind of amount of dividend or number of crowns per share, depends on the future profits on the power prices, and that's very hard to predict at all. But we plan for paying 60% to 80%, meaning 70% dividend payout ratio by the end of the decade, where actually our plans are kind of being shared. So that's it.

Thank you very much. Can I ask a follow-up question on this, leverage ratio? You said you will be at the 3.5x net debt-to-EBITDA by the end of a decade with a CZK400 billion CapEx. Can I please ask, what is the assumption for the power price embedded within this ratio? And is it net debt-to-EBITDA or economic net debt-to-EBITDA?

It's net debt-to-EBITDA. So really financial and debt-to-EBITDA, and our EBITDA that we actually published in our investor relation materials is somewhere between CZK90 billion and CZK100 billion.

And this is based on the base load power prices in 2030 between EUR 67 and EUR 80, which gives you the range between CZK90 billion and CZK100 billion EBITDA.

And carbon credits of around EUR 80, EUR 83.

So this is basically roughly where the forwards still are.

That's very helpful. Thank you very much.

We we might still have a question from, Anna Webb, a follow-up. Is it that follow-up, Anna?

No. Nothing from me. Thank you.

Okay. Alright. So then I'm, handing over to Andrzej Rembelski.

Hello. I have a question regarding CapEx for the Nuclear segment. For the 2025-2030 period, the projected annual spending now stands at CZK20 billion, where, if I recall correctly, the previous version of the strategy indicated around, CZK10 billion per year. So could you please comment on the reason behind this increase?

It is actually mainly increase in nuclear fuel, that has increased significantly, over past few years, and it is depreciated as CapEx. And also, it's an effect of inflation that is definitely playing role in servicing CapEx improvements of the plants, but mainly fuel.

Now Petr Bártek.

Good afternoon. Thank you for taking my question. Actually, if you could talk a little bit about the price spreads between Germany and Czech. They seem to be kind of skyrocketing lately. So what's your view on that? And, maybe what would be your longer-term view, after the energy transition or change in Czech Republic is finished? We have more gas plant power plants after 2030. What's the plan for the connection with Germany, in terms of grids? Where would you see the spreads also in the long run? And then, what are your estimates for your power price premium to the base load? With the changing structure of assets with more money to us, and so on? Where do you see it? Thank you.

I'll start with the first question. In terms of the spreads, yes, we expect the spreads to grow somewhat, for a few more years with until Czech Republic also decommissions all or most of its lignite stations, and replaces it with coal, builds more renewables, and then it should then, probably reduce. As soon as we have, basically, a similar type of power plant composition in the country, then the spreads, should basically close down again. Also, the network grid operator is planning to increase the connection to Germany, and again, that should contribute to decreasing spreads. And now the speed of this will depend on the speed of the new power plant, build up gas, renewable, and also the connection. In terms of, the premium, now the question is, like, I'm sure I understand the question, because, it very much depends on the type of asset. If you look at the solar, it has a negative premium to the base load. If you look at nuclear, then it's basically base load. And if you look at the peaking gas stations, it has a pretty -- it can have a the transformer inventory. It can have a very significant premium. So we see the value of of flexibility increasing over time, but it's difficult to give it a specific price tag.

I can give you more detail. I was asking, about the, you know, the average prices which you report. For the last two years, you reported, ever rising prices above the hedged base load price. I think the premium was 4% or more. This is a lot of time. Maybe if you have any timing for the new grid connections with Germany from the TSO. Is there any plan?

It is included in plan? I'm not sure exactly, before the end of the decade, but it's more question that you should direct to them.

It seems we have no further questions, so I will conclude this call, and I'm always available for further discussions, on one-on-one basis. So thank you very much, for the participation, and, goodbye.

Goodbye. Thank you. Bye.