Hello, everyone, and welcome at CEZ Group Financial Results Conference Call for the first half of 2025. Martin Novak, Chief Financial Officer, will walk you through the presentation. And then we will open the floor to the questions. We also have Ludek Horn, Head of Trading, just in case you have some questions on the power market here. Now, I'm handing over to Martin.

Thank you. Good afternoon. Good morning, everybody. So let's start with the presentation. On the first slide or Slide #3, we can see actually overall financial results where our EBITDA has reached almost CZK 74 billion, which is an increase of CZK 4.7 billion or 7%. Adjusted net income of CZK 16.7 billion and net income, CZK 16.5 billion, which is down the 21 respectively, 22% year-on- year. Our CapEx has grown by about 11% to CZK 22.8 billion. Important Slide #4 actually shows a difference between first half of 2024 and first half of 2025. There are a few factors, actually, a few negative factors, a few positive factors. The first negative factor is actually a decline in power prices, which has an effect of CZK 6.4 billion year-on-year decline as prices tend to go down even in the future. So this is about one -- this is about CZK 6.4 billion. Technically speaking, it's actually CZK 7.3 billion and then there is some effect of different scheduling of nuclear plant outages, which is a positive effect. But overall, this segment is impacted by power prices, which is CZK 6.4 billion negative. Trading down CZK 2.1 billion. Again, it's not a loss. Actually, it's a lower profit as volatility of the market is lower and lower month-by-month, basically, trading achieved very reasonable result of CZK 1.9 billion. However, in the first 6 months of last year, it was CZK 3.9 billion. Then distribution actually segment is up by CZK 3 billion mainly due to higher allowed revenues, thanks to increased investments in distribution assets of CZK 1.6 billion, higher distributed electricity volume, CZK 0.5 billion and mainly higher other allowed revenues and correction factors, which is CZK 0.8 billion. Important -- by far, the largest actually positive impact of this first half is actually a consolidation of GasNet, which is gas distribution that we acquired actually as of September 1, 2024. So it does not show in 2024 numbers at all. So entire EBITDA is actually variant and it is CZK 6.4 billion for first 6 months of 2025. Sales segment shows also improvement both on sales, retail and large customer sales the commodity purchase prices were lower compared to the previous times or previous period and we also had CZK 1.3 billion effect of undelivered commodities due to warmer weather in first half. So actually, in first half 2024 we had a commodity that we did not deliver to customers. We had to return it or sell it back forever. It did not happen this year. So this is EBITDA variance, looking actually at net income. There is actually a decline, as I said, of 22% or 21%, respectively. By far, the highest and basically the only main charge is actually depreciation. GasNet is impacting our EBITDA. It's also impacting our line items below EBITDA, including depreciation. So part of it actually is related to GasNet about CZK 5.1 billion out of CZK 10.5 billion variance and the remaining part is basically attributable to accelerated depreciation on coal assets that we adopted as of October 1, 2024. So again, the accelerated depreciation was not in the results of first half 2024. The adopted accelerated depreciation because of the fact that core plans seem to be discontinued around 2030. So we switched from a straight-line method of depreciation to accelerated method when we are basically simply set copying the amount of hours it actually produce power. So in 2025, '26, it will be definitely more 2029 or 2030. That's probably -- those are the main effects actually on our net income. On the next slide, you have some operating results, volumetric data, which you can go through, we can actually skip that and go to Slide #7, where you can see our financial outlook. We actually increased our EBITDA target by CZK 5 billion. We keep actually the range of CZK 5 billion, but it is all increased by CZK 5 billion. So now our EBITDA estimate is actually CZK 132 billion to CZK 137 billion. Adjusted net income was actually we actually increased the bottom of the range to CZK 26 billion. So now the new range is CZK 26 billion to CZK 30 billion. The main causes of our EBITDA target change are actually listed on the right of the -- side of the chart. So it is, I would say, almost equal -- it has almost equal effect. It has higher power prices than we expected in our last guidance. So especially the power prices of the power or the power prices. So the power that we had unsold actually or did not sell for 2025 and still have some available for peaks and optimization and so on. We are also saving on fixed operating expenses. We are -- we have higher settlement of electricity, not invoiced to end customers, higher revenues from distribution and connection fees and lower purchase cost for commodities in sales segment. You can see also assumptions on which our estimate is based. So you can see power generation 44 to 46 terawatt hours. Power prices in Czech Republic, EUR 121, EUR 125 per megawatt hour. Emission allowance is EUR 79 to EUR 83 million. Depreciation that we already mentioned, CZK 55 billion, out of which CZK 9 billion is GasNet and windfall tax of CZK 29 billion to CZK 33 billion. On next slide, you can actually see significant events in nuclear energy development as we, I think, already discussed in May, we managed to sell 80% share in the new nuclear project to the government. As of April 30, the transaction was settled actually on May 5. The purchase price was CZK 3.6 billion, which is 80% of original investment of CZK 4.5 billion. We are not consolidating anything from other than equity methods consolidation. So we don't do full consolidation of this investment as we are basically financial investor with provided stake, but we have no obligation to furnish any cash or anything in the future. There was also an agreement concluded between the new nuclear project, the company, Dukovany 2 and Korean KHN company to build actually 2 units, each of them 1,063 megawatts. Another milestone, actually Great British Energy Nuclear selected Rolls- Royce SMR is supplier of small modular reactors. We completed its investment in U.K. based SMR developer and acquired a stake of approximately 20%. So this was actually an important milestone, now actually the company where, we hold 20% stake and start working on the project to deliver 3 units to British government. And at the same time, we are doing preparatory work for first SMR or also SMR actually in the Czech Republic internally, the new plant location. So that's the new nuclear plant, current nuclear facility. So there are some highlights as well that relate to actually current facilities, I think the most important one is increase of Dukovany installed capacity by 14 megawatts per unit. So this 4x14 megawatts that we have now more in total, Dukovany power plant is 4x524 megawatts of installed capacity. On Slide #10, actually, you can see some information on transformation of the heating industry or heat supply -- the heat delivery business. We have -- basically, our power plants are also serving the heat plants or heat locations. And you can see actually individual power plants and the way we treat it. I think the most important is actually Melnik, which is about 30 kilometers out of Prague supplying City of Prague with heat. Today, it is actually through using coal fire plant. We started construction of largest actually heat plant and it will be gas fired or gas- powered, 266 megawatts of electricity and 183 heat megawatts actually will be installed near Prague. The construction has already started. We also started construction of our waste to energy facility that should process 320,000 tons of waste per year. Generation Mining segment in more detail is actually on Slide 12. You can see that the segment actually in total has earned CZK 46.5 billion, which is 15% less. Actually, the largest negative variance is coming from emission-generating facilities where we are actually 51% down compared to first quarter -- first half of 2024. Again, the details are described on the chart -- on the slide, actually on the right side. Clearly, we can see an effect of decreasing power prices, increasing carbon credits in our emission generation facilities. And on slide -- on next slide, actually, you can see the charts of our nuclear and renewable generation. It is increase in nuclear generation year-on- year of 6%. We would like to keep that actually for full year where we are targeting almost at 32 terawatt hours to be produced mainly due to extension of fuel cycles and modifications of outage plan. So we will have more kind of running hours in 2025 versus 2024. We have increased capacity in Dukovany. So I already described and shorter scheduled outages of Temelin nuclear plant. Renewables were down 17%, mainly due to natural conditions in 2024 when we had enough snow and water, which was not the case actually in 2025, and therefore, we expect that our power generation from renewables will be 7% lower on a year-on-year basis. But for full year our clean energy generation will then be 5% higher, 35.2 terawatt hours. Fossil fuels, meaning coal and natural gas generation was 12% up on first 6 months compared to last year. We expect it to be 4% down, mainly due to decline in our Polish assets, obviously, that we don't have any more. We only had the 5 -- first 5 weeks of 2025, which we disposed them, so we will be missing 0.9 terawatt hours from those assets and our power generation from coal should be -- should remain flat, although it was 13% up due to colder winter in 2025 compared to 2024. Hedging, very important slide of market risk. So this is actually on Slide 15, where you can see our average achieved prices, those are mainly -- or those are baseload prices that we are selling at our forward electricity. So EUR 95 for 2026, going to EUR 71 for 2029, we are 73% sold as of June 30, actually for 2026. The same chart on the right side relates to carbon credits. You can see that the spread between power price and carbon credit is significantly narrower in 2028 and 2029 than it is today. So this will be a pressure on the economics of the coal plants for sure. Then the next segment, last few slides, actually on distribution and sales. Distribution segment has a significant increase of actually in total of 90%. They made EUR 9.4 billion. But clearly, it is EUR 6.4 billion coming from GasNet, gas distribution, which we did not actually have in our numbers in 2024. And there is an increase in distribution -- power distribution actually of CZK 3 billion, mainly due to higher allowed revenues due to increased CapEx in the past of CZK 1.6 billion higher distributed volume of CZK 0.5 billion and then higher other allowed revenues and correction factors of CZK 0.8 billion. Comparing numbers for GasNet, should we have actually the company in our numbers, they would have made or they did make actually in the first half of 2024, CZK 5.7 billion. So now actually, they are 14% better than in the past -- in past -- in the past year. Year-over-over development of GasNet distribution electricity distribution. On the left side, we have a chart of actually electricity distribution on our territory which is 2% higher. But when you adjust it by climate and calendar, it is 1% higher. Gas distribution is actually 11% higher, but climate adjusted 2% higher as I said, the winter of 2025 was colder than '24. Sales numbers -- sales segment numbers actually are on Page 19 where we have a significant improvement in CEZ Prodej, which is our retail customers company and delivered actually or earned CZK 4.5 billion on EBITDA, which is CZK 3.2 billion more than in the first half of 2024. ESCO companies are about 35% higher, and they are both providing EBITDA from sales to commodities in Czech Republic, which is 77% increase and then Energy Services, both abroad and in the Czech Republic. CEZ Prodej or the retail organization actually had a lower acquisition of commodity cost. They had actually effect of sales of undelivered commodities due to warmer weather in the first half of 2024, which had a negative effect of EUR 1.3 billion at the time now. Actually, it's not there, so it's a positive variance. They had also higher volumes of delivered to end user customers -- deliveries to end user customers called weather CZK 0.2 billion. And those are the main variances actually. Volume of electricity and gas sold a number of customers. So I think we -- for first half of the year, we are actually up by 8%, 17% in natural gas, 3% in electricity. Clearly and obviously, it's also a function of the weather. Number of customers is stagnating, but we acquired a few hundred thousands of customers during collapse of a few retail organizations in 2021 and then later '22. So the move in electricity of 1% is relatively immaterial, and we have 4% more customers actually on natural gas. Revenues from sales of energy services, which is ESCO activities, we had 8% decline, which is mainly year-on-year temporary effects, timing effects of big contracts in 2024. But overall, for the year, we expect 7% increase in all countries that we operate in. So this is all, then there is more information in the annexes. But now I think we can switch actually to Q&A session.

[Operator Instructions] So we have a first question from Anna Webb.

Two for me. The first one is the on reports that E.ON would potentially be selling their gas grid in Czechia. I know you probably won't be able to comment on the specific transaction. But more generally, would you be interested in M&A and grids to increase your exposure there? I mean, you've already done the GasNet deal? And I guess, would there be a rationale to expand there? I mean the returns look pretty attractive for the next regulatory period versus other European countries. And if you were to expand the gas distribution grid in the country, would there be synergies from that if you were kind of almost the sole operator of gas distribution. Anything you can comment on a high level, that would be great. The second question is a bit more high level on power prices long term. I think you hedged a very small amount of 2029 at just over EUR 70 per megawatt hour. Is that kind of where you see power prices settling long term? And how do you think about the upside, downside to long-term power prices given, maybe downward pressure from gas prices but also a lot of discussion around whether there could be new demand in Europe from data centers, et cetera. So any views you have on the kind of long-term outlook for the power market would be great.

Okay. So first question on gas grid. This is an ongoing transaction, and we don't provide any comments, any speculations, any ideas on how we view this in detail. So we cannot really comment on anything on E.ON sale of their distribution assets. Hedging prices, we have sold just a little for 2029. It's not taking a position. It's really doing a straightforward hedging and 2029 is now available actually. So we are actually really selling our power that we are about to deliver or we intend to deliver a straight line with no speculative -- with not taking speculative point of view. For a speculative point of view, we have actually trading that is one of our segments that we report, but this is really straightforward linear hedging as it becomes available. We have actually Ludek Horn, who is Head of our Trade Inc. Also he may tell you any point of view -- from speciality point of view rather than from a straightforward hedging point of view?

Okay. It's very hard to predict what the prices to look like in the future because as you know, these prices are connected with the prices of natural gas and EUA and both of these commodities are dependent prices of these commodities are dependent on other factors. So on the long term, we expect that the prices will slightly go down and we don't see any reason for the prices going up. It would be a result of extraordinary events like the word somewhere in the world and so on.

Perfect. And can I just ask -- and I appreciate you can't comment on the E.ON transaction, but I guess more generally, do you see -- do you see balance sheet headroom for potential M&A, whether that be kind of like more generally, I suppose?

Well, generally, of course, with our net debt to EBITDA of, I think, 1.3% now is definitely headroom, but we don't say that it would be necessarily aiming at this assessment also. We can see headroom for and we do actually M&A transactions in ESCO. However, they are quite smaller sizes, but related to gas, we really say nothing.

We can take the next question from Arthur Sitbon.

It's just one question on the EBITDA guidance increase. You flagged, you identified a few drivers of the increase in the presentation. And, obviously, they are not so noticeable at the net income level because of the corporate tax surcharge in 2025. I was wondering if any of these drivers would still be noticeable in 2026 when potentially the drop through to net income would be more significant.

This is really -- those drivers are actually drivers between our original estimate from May, the 15th and now August the 7th. So those are things that actually have caused the guidance to move. So it's really -- I'm just looking at it. It might happen that there might be higher power prices that we think or that we now actually see, yes, it could be fixed operating expenses, again, there could be, but it's really a matter of comparison. So that we really are comparing our original guidance. It's not that we are comparing with it last year or with anything else. So some of them might be -- if you ask about our EBITDA level, just very simply, again, we don't provide any guidance on EBITDA, it's too early yet. We would normally do it in spring of next year. But with declining power prices, of course, there will be a pressure on our EBITDA. That's clear. On the other hand, windfall tax, and this is something that you touched on should be attributable to 2025 only. So as of 2026, there should be no windfall tax effect, which would be probably, by far, the largest factor.

We can take the next question from Emanuele Oggioni.

Can you hear me now?

Yes, we can hear you.

The first one is on GasNet. I think based on H1 results and your updated guidance, you can reach CZK 13 billion of this year. So you can confirm this? And the second -- and the second question related to GasNet is the guidance for -- or at least the moving -- the qualitative moving part for 2026. And this is basically the first argument. The second question is on the sales segment. Still, the -- they've provided a positive outlook, and we noticed that the higher profitability of CZK 1.1 billion, CZK 1.4 billion per quarter in Q1 and Q2 was primarily related to the lower -- not only the lower cost of commodity, but also the lower cost of deviation after the regulation of the market. So I think this could be a structural -- a more structural profitability for at least for 2025, so for the remaining part of the year. And my question is in particularly focused on still on '26 if this higher profitability could be replicated also in 2026 or what are the moving parts? And then I have also a third question on the capacity market scheme. If you can update on this subject that is currently under discussion.

Okay. So GasNet actually, I think -- they are more -- not really aiming at CZK 13 billion. I think their target is something like CZK 11 billion for 2025 rather than CZK 13 billion. So I would not really multiply the result by 2. So that's -- and partly -- again, they are distribution company. So most of the revenues they get during the winter, which is first quarter of the year. So then in sales segment, yes, lower cost of deviations after the market we liberalized the deviation cost was higher than it is today after it is stabilized. So we could think that it could last for longer than just 2025. It's perfectly true. And then capacity payments, actually, there was a law approved allowing for capacity payments for CCGT plants. So -- this is basically the key condition for us to be able to build gas plants making electricity and not heat and power as it is today. However, it needs to be actually designed. The scheme needs to be designed by Ministry of Industry and notified with EU, and it's not done yet. So they are working on it and have no really detailed schedule available now, so...

When you expect more clarity on this?

I have no information on that.

Okay. If I may also follow-up on GasNet. Indeed, in your slides, you increased by CZK 1 billion contribution and only for GasNet and the overall contribution, the overall increased improvement in -- compared with the previous guidance for the distribution business unit. I think, it's not only driven will not be driven only by the electricity improvement if I may. So probably CZK 1 billion more compared with the old guidance, so CZK 11 billion could be achieved based on your slides or CZK 8 billion increase compared with EUR 7 billion of the previous quarter guidance for GasNet, if I'm correct.

Yes, you are right. We previously guided for GasNet add CZK 7 billion. Now we are giving the range CZK 7 billion to CZK 8 billion. So clearly, there is some upside risk, but not the main driver for increasing guidance in the distribution segment is coming from the electricity part. And I think we answer everything. So we can now take the question from Piotr Dzieciolowski from Citi.

I have a couple of them. So the first 1 I want to talk about SMR. There was an article today that you may be building 1 in Czech Republic. So can you tell us, if you know already like what could be the amount of CapEx? And when could this CapEx take place? That's maybe the first question. I have a couple of ones, but I think 1 by 1 would be easier, maybe.

So regarding SMRs, yes, you're right. the first -- our first project, which would be second after the British project would be actually Temelin. We don't communicate any numbers on CapEx because the scheme would probably be very similar to the 1 that is today, meaning the state financing as it is for the big units and I think the size of the SMI is developed by actually 470 megawatts. So this is where we are aiming at with installed capacity.

Okay. And I understand. I just wanted to also follow up about your comment about the net debt of being 1.3 and having room for further M&A action. I just wanted to ask whether you're thinking about is kind of on a going-forward basis and whether you should not add different liabilities? And how would you -- what type of power price you would use to feel comfortable at getting leverage because my numbers suggest you are quite leverage going above 3x on the forward-looking basis, but I just wanted to cross-check what comes on your estimates as a kind of economic net debt to EBITDA when the power prices normalize?

So you're right. Our target actually is about 3.5x net debt to EBITDA. It used to be 3x, but with actually adding GasNet, it provides more stability in our earnings because of the distribution asset. So now it's actually 3.5x. I think Moody's actually have issued new opinion on our rating. So we keep the rating and it went from negative to positive after we disposed nuclear project from our books, new project of Dukovany 2 and we are planning to reach that level sometimes by the end of the decade because as you know, we have notably heavy -- our CapEx program ahead of us of about CZK 400 billion that needs to be invested during a short period of time. So on a theoretical question, is there any headroom for M&A, yes, there is, especially now and 3.5x net debt to EBITDA target. And should we be getting over it, we would probably change our CapEx plans or postpone them or modify them in some way. The power prices that we are using are mainly those that you can see on forward. So that's the best indication of what we have today.

Okay. And I have 1 more question about Dukovany project. Apparently, you have a 49% stake in the Slovak. So is this an active project or and you're going to sell it? Or what's -- is there any financial involvement there? And if you sell it, how much money would you get back?

I think there are some discussions going on with Slovak government, and that's all we can say, actually.

Okay. Can I squeeze in last one? Sorry to ask some. So one last question was we clearly haven't discussed the takeover speculation about chest, but assuming such an event takes place, what do you see -- do you see any positive elements for the company itself that the new ownership structure with 100% government? Would that help the company operate anyhow from your perspective as a management.

Again, it's a theoretical question that we can hear now before elections, but I would really leave it after the elections. It would have both advantages or advantages advantage would be as we can see it on our -- on other companies that are 100% state-owned, they have a significant rating uplift from being state-owned, great examples, EDF that has uplift of many notches compared to being an independent company, for example. So that could be, for example, positive. But I think it's too early to discuss the positives and negatives now.

Next question from Oleg Galbur.

I have 2 questions, both on your 2025 updated guidance. First, can you please elaborate on your full year EBITDA guidance for the sales segment, which, if I'm not wrong, implies a strong decline of the segment's EBITDA in the second half of the year. So I was wondering what are the underlying assumptions behind this guidance? And secondly, can you tell us if you stick to your original CapEx guidance for this year, which, if I'm not wrong, was it CZK 70 billion?

Yes, so we do stick on our original CapEx guidance of CZK 70 billion. That's correct. Of course, it can be a few percent more or less as the year develops and some projects may be actually sliding into next year. But generally, it's a correct number. Full year sales segment, I think they actually have an impact of one-off payment or settlement of the losses in distribution grade with distribution. And also there is about CZK 1.5 billion, I think, charge you have to pay for compared to last year also -- so that's what it is.

Okay. So this is the CZK 1.3 billion that we can see here on the slide, yes, Proceeds from litigations or...

Yes.

Bram Buring.

Yes, can you hear me?

Yes.

I left this one for the end, but nevertheless. So in one of the business dailies this morning, the Vice Chair of Andrej Babiš party said that regulated part of power bills is out of control. Heat considered ideal if they cut transmission and distribution costs by 50%, more about CZK 550 billion. So within the context of CEZ legislation as it stands like this. What will be impact, if any, on JSB and on CEZ and the other distribution companies, the government was to decide to save CZK 50 billion on these tariffs?

Don't forget that we are less than 2 months before elections and also that's important to realize. The regulatory framework was actually -- is defined by Energy Regulatory Office, which is independent body. So government really does not have much force how to change that. We don't have a system of ruling the country with President decrees or Prime Minister resolutions. And so that's what it is. That's clear.

Maybe I would only add, just for your recollection, when government had thought the renewable surcharges in customer bills, we're getting the control, the measure they took to relief the end-user bills was to finance part of subsidies from the budget and the state budget, and this is something that is being used. So that's 1 example from the history when government had used some tools they had. But that had a neutral impact on the operations and the distributors and the companies operating in the sector.

Because I noted that this idea as well as the privatization of CEZ, neither of those things are included in the party's electro platform, not mentioned at all.

Jan Raška has question. You can unmute yourselves.

Now, can you hear me?

Yes, we can hear you.

We see good operating results of GasNet in the second quarter. But what about final results, if you can more elaborate in a noncontrolling interest, you released lost almost CZK 300 million. So is that loss related to GasNet, I understand it correctly?

Yes. So we do -- we actually adjust our adjusted net income by noncontrolling interest. So we fully consolidate on an EBITDA level and then on the net income basis, we actually have to take out whatever is attributable to the minority shareholders. This is what we are asking.

I would only add that basically -- the cash net assets to be revalued as part of the acquisition and consolidation process, and that led to the increase of the depreciation on consolidated books while for the regulatory purposes, this is just stand-alone depreciation, which is lower, is being used. So the company is basically remains highly free cash flow generative, but in our consolidated accounts, we are using our depreciation and therefore, low contribution to the consolidated net income. We have the next question from Petr Bartek.

Congratulations to the great results, very nice ones. And follow-up to the GasNet consolidation question. In terms of cash flows, our dividend payments from GasNet to its owners. So it would be paid from the stand-alone profits. So there would be a cash flow even though the consolidated number looks like at 0 or minus.

Exactly, exactly. Yes.

Okay. So for -- in terms of cash flow, there will be some 50% outflow to the second part of owners, yes.

Yes, 45%, I guess, yes, we are 55% and they're 45%, I think.

Maybe one more question to the distribution business. If I look correctly. So in this year, you now expect some CZK 2 billion to CZK 4 billion increase in the electricity distribution. Is that sustainable? Or how much of that was due to the colder weather. Yes, that would be it.

Yes. I think when we look at the distribution segment explanation in the distribution side, I think it's -- the CZK 1.6 billion out of those CZK 3 billion is attributable to higher revenues from more CapEx, something is called weather, of course, not probably like CZK 0.5 billion, which is highly distributed volume of electricity. And then there are higher connection fees of, let's say, CZK 0.8 billion, which is actually a higher demand for power connection, both power deliveries, but also offtake, for example, from photovoltaics and renewables. And also, there's a structure of those CZK 3 billion. So adding CZK 3 billion every year is probably not a reasonable assumption.

Okay. It seems there are no further questions. So thank you, everyone, for taking part in this call. And Investor Relations department, as always, is available for your follow-up questions and detailed discussions on our forecasts, et cetera. Thank you very much.

Thank you. Goodbye.