CEZ A.S.

Quarterly Report • May 10, 2022

CEZ GROUP

INTERIM CONSOLIDATED FINANCIAL STATEMENTS

PREPARED IN ACCORDANCE WITH INTERNATIONAL FINANCIAL REPORTING STANDARDS AS OF MARCH 31, 2022

CEZ GROUP CONSOLIDATED BALANCE SHEET AS OF MARCH 31, 2022

	Note	March 31, 2022	December 31, 2021
ASSETS:
Plant in service Less accumulated depreciation and impairment		856,963 (493,456)	856,189 (487,211)
Net plant in service		363,507	368,978
Nuclear fuel, at amortized cost Construction work in progress, net		12,153 23,611	13,096 21,009
Total property, plant and equipment		399,271	403,083
Investments in associates and joint-ventures Restricted financial assets, net Other non-current financial assets, net Intangible assets, net Deferred tax assets	5	3,869 20,125 12,964 23,294 10,232	3,916 20,804 11,805 23,677 10,719
Total other non-current assets		70,484	70,921
Total non-current assets		469,755	474,004
Cash and cash equivalents, net Trade receivables, net Income tax receivable Materials and supplies, net Fossil fuel stocks Emission rights Other current financial assets, net Other current assets, net	6 5	51,972 141,465 905 14,557 437 16,269 655,234 17,179	26,640 137,432 397 13,372 574 19,534 497,295 13,674
Total current assets		898,018	708,918
Total assets		1,367,773	1,182,922

CEZ GROUP CONSOLIDATED BALANCE SHEET AS OF MARCH 31, 2022

continued

	Note	March 31, 2022	December 31, 2021
EQUITY AND LIABILITIES:
Stated capital Treasury shares Retained earnings and other reserves		53,799 (1,406) 112,593	53,799 (1,423) 108,722
Total equity attributable to equity holders of the parent		164,986	161,098
Non-controlling interests		1,731	1,742
Total equity		166,717	162,840
Long-term debt, net of current portion Provisions Other long-term financial liabilities	7 8	100,435 117,045 50,695	95,924 117,072 35,219
Deferred tax liability Other long-term liabilities		13,627 30	12,839 32
Total non-current liabilities		281,832	261,086
Short-term loans Current portion of long-term debt Trade payables Income tax payable Provisions Other short-term financial liabilities Other short-term liabilities	9 7 8	13,737 19,574 77,729 1,921 22,558 770,216 13,489	25,310 16,647 85,928 2,249 18,253 601,027 9,582
Total current liabilities		919,224	758,996
Total equity and liabilities		1,367,773	1,182,922

CEZ GROUP CONSOLIDATED STATEMENT OF INCOME FOR THE THREE MONTHS ENDED MARCH 31, 2022

	Note	1-3/2022	1-3/2021
Sales of electricity, heat, gas and coal Sales of services and other revenues Other operating income		52,632 18,298 5,067	39,878 18,336 861
Total revenues and other operating income	10	75,997	59,075
Gains and losses from commodity derivative trading Purchase of electricity, gas and other energies Fuel and emission rights Services Salaries and wages Material and supplies Capitalization of expenses to the cost of assets and change in own inventories Depreciation and amortization Impairment of property, plant and equipment and intangible assets Impairment of trade and other receivables	11	13,091 (17,633) (11,526) (6,613) (7,108) (2,863) 1,516 (7,548) - 223	(1,110) (15,683) (6,590) (5,847) (7,072) (2,428) 937 (6,681) (2,051) 84
Other operating expenses		(1,347)	(1,399)
Income before other income (expenses) and income taxes		36,189	11,235
Interest on debt Interest on provisions Interest income Share of profit (loss) from associates and joint		(849) (644) 306	(1,142) (502) 115
ventures Impairment of financial assets Other financial expenses Other financial income		528 (522) (2,487) 893	12 (24) (53) 778
Total other income (expenses)		(2,775)	(816)
Income before income taxes		33,414	10,419
Income taxes		(6,691)	(2,033)
Net income		26,723	8,386
Net income (loss) attributable to:
Equity holders of the parent Non-controlling interests		26,725 (2)	8,404 (18)
Net income per share attributable to equity holders of the parent (CZK per share):
Basic Diluted		49.8 49.8	15.7 15.7

CEZ GROUP CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE THREE MONTHS ENDED MARCH 31, 2022

	Note	1-3/2022	1-3/2021
Net income		26,723	8,386
Change in fair value of cash flow hedges Cash flow hedges reclassified to statement of		(41,710)	(5,707)
income Change in fair value of debt instruments Disposal of debt instruments Translation differences – subsidiaries Translation differences – associates and joint ventures Disposal of translation differences Share on other equity movements of associates and joint-ventures Deferred tax related to other comprehensive	12	14,669 (784) (1) (239) (54) (19) (4) 5,288	(518) (944) (2) (399) (1) 6,607 - 1,363
income Net other comprehensive income that may be
reclassified to statement of income or to assets in subsequent periods		(22,854)	399
Change in fair value of equity instruments		1	-
Net other comprehensive income not to be reclassified from equity in subsequent periods		1	-
Total other comprehensive income, net of tax		(22,853)	399
Total comprehensive income, net of tax		3,870	8,785
Total comprehensive income attributable to:
Equity holders of the parent Non-controlling interests		3,893 (23)	8,818 (33)

CEZ GROUP CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE THREE MONTHS ENDED MARCH 31, 2022

	Note	Attributable to equity holders of the parent
		Stated capital	Treasury shares	Transla tion difference	Cash flow hedge reserve	Debt instru ments	Equity instruments and other reserves	Retained earnings	Total	Non controlling interests	Total equity
Balance as at January 1, 2021		53,799	(2,845)	(11,777)	(7,110)	874	(1,022)	201,952	233,871	4,692	238,563
Net income Other comprehensive income		- -	- -	- 6,222	- (5,042)	- (766)	- -	8,404 -	8,404 414	(18) (15)	8,386 399
Total comprehensive income		-	-	6,222	(5,042)	(766)	-	8,404	8,818	(33)	8,785
Sale of treasury shares Exercised and forfeited share		-	107	-	-	-	-	(63)	44	-	44
options		-	-	-	-	-	(5)	5	-	-	-
Sale of non-controlling interests Put options held by non		-	-	-	-	-	-	(5)	(5)	799	794
controlling interests		-	-	(1)	-	-	-	(5)	(6)	6	-
Balance as at March 31, 2021		53,799	(2,738)	(5,556)	(12,152)	108	(1,027)	210,288	242,722	5,464	248,186

CEZ GROUP CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE THREE MONTHS ENDED MARCH 31, 2022

continued

	Note	Attributable to equity holders of the parent
		Stated capital	Treasury shares	Transla tion difference	Cash flow hedge reserve	Debt instru ments	Equity instruments and other reserves	Retained earnings	Total	Non controlling interests	Total equity
Balance as at January 1, 2022		53,799	(1,423)	(4,637)	(67,212)	(647)	(1,721)	182,939	161,098	1,742	162,840
Net income Other comprehensive income		- -	- -	- (291)	- (21,903)	- (635)	- 1	26,725 (4)	26,725 (22,832)	(2) (21)	26,723 (22,853)
Total comprehensive income		-	-	(291)	(21,903)	(635)	1	26,721	3,893	(23)	3,870
Sale of treasury shares Exercised and forfeited share		-	17	-	-	-	-	(10)	7	-	7
options Acquisition of non-controlling		-	-	-	-	-	(1)	1	-	-	-
interests		-	-	-	-	-	-	(1)	(1)	1	-
Put options held by non controlling interests		-	-	(4)	-	-	-	(7)	(11)	11	-
Balance as at March 31, 2022		53,799	(1,406)	(4,932)	(89,115)	(1,282)	(1,721)	209,643	164,986	1,731	166,717

CEZ GROUP CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE THREE MONTHS ENDED MARCH 31, 2022

OPERATING ACTIVITIES: Income before income taxes 33,414 10,419 Adjustments of income before income taxes to cash generated from operations: Depreciation and amortization 7,548 6,681 Amortization of nuclear fuel 1,036 1,034 (Gains) and losses on non-current asset retirements (63) (162) Foreign exchange rate loss (gain) 2,437 (520) Interest expense, interest income and dividend income 539 1,024 Provisions 4,797 1,887 Impairment of property, plant and equipment and		Note	1-3/2022	1-3/2021
	intangible assets		-	2,051
Valuation allowances and other non-cash expenses and
income 15,454				(7,535)
Share of (profit) loss from associates and joint-ventures (528)				(12)
Changes in assets and liabilities:
Receivables and contract assets (13,888)				(5,782)
Materials, supplies and fossil fuel stocks (1,013) 1,031
Receivables and payables from derivatives (18,025) 5,282
Other assets 3,786				(10,678)
Trade payables (5,255) 3,219
Other liabilities 4,246				(919)
Cash generated from operations 34,485 7,020
Income taxes paid (963)				(980)
Interest paid, net of capitalized interest (315)				(586)
Interest received 248 99
Dividends received 1 1
, Net cash provided by operating activities 33,456 5,554
INVESTING ACTIVITIES:
Acquisition of subsidiaries, associates and joint-ventures,
net of cash acquired 4.1 (132) 11
Disposal of subsidiaries, associates and joint-ventures,
net of cash disposed of - 21,171
Additions to non-current assets, including capitalized
interest (6,585)				(7,155)
Proceeds from sale of non-current assets 531 57
Loans made (1)				(288)
Repayment of loans 15 272
Change in restricted financial assets (106) 114
Net cash provided by (used in) investing activities (6,278) 14,182

CEZ GROUP CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE THREE MONTHS ENDED MARCH 31, 2022

continued

	Note	1-3/2022	1-3/2021
FINANCING ACTIVITIES:
Proceeds from borrowings		70,672	29,102
Payments of borrowings		(72,123)	(30,845)
Payments of lease liabilities		(183)	(191)
Proceeds from other long-term liabilities		28	17
Payments of other long-term liabilities		(5)	(62)
Dividends paid to Company's shareholders		(26)	(29)
Sale of treasury shares		8	44
(Acquisition) sale of non-controlling interests, net		(1)	794
Net cash used in financing activities		(1,630)	, (1,170)
Net effect of currency translation and allowances in cash		(216)	(12)
Net increase in cash and cash equivalents		25,332	18,554
Cash and cash equivalents at beginning of period		26,640	10,169
Cash and cash equivalents at end of period		51,972	, 28,723
Supplementary cash flow information:

Total cash paid for interest 352 620

CEZ GROUP NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS AS OF MARCH 31, 2022

1. The Company

ČEZ, a. s. ("ČEZ" or "the Company") is a Czech joint-stock company, owned 69.8% (69.9% of voting rights) at March 31, 2022 by the Czech Republic represented by the Ministry of Finance. The remaining shares of the Company are publicly held. The address of the Company's registered office is Duhová 2/1444, Praha 4, 140 53, Czech Republic.

The Company is a parent company of the CEZ Group ("the Group"). Main business of the Group is the generation, distribution, trade and sale of electricity and heat, trade and sale of natural gas, provision of complex energy services and coal mining.

2. Summary of Significant Accounting Policies

2.1. Financial Statements

The interim consolidated financial statements for the three months ended March 31, 2022 have been prepared in accordance with IAS 34 and have not been audited by an independent auditor. The interim consolidated financial statements do not include all the information and disclosures required in the annual financial statements and should be read in conjunction with the Group's annual financial statement as of December 31, 2021.

2.2. Changes in Accounting Policies

Adoption of New IFRS Standards in 2022

The accounting policies adopted in the preparation of the interim consolidated financial statements are consistent with those followed in the preparation of the Group's annual financial statement as of December 31, 2021.

As of January 1, 2022, the Group did not adopt any new International Financial Reporting Standard that would have a significant impact on Group's interim consolidated financial statements.

3. Seasonality of Operations

The seasonality within the segments Generation, Distribution and Sales usually takes effect in such a way that the revenues and operating profits of these segments for the 1st and 4th quarters of a calendar year are slightly higher than the revenues and operating profits achieved in the remaining period.

4. Changes in the Group Structure

The following table summarizes the cash flows related to acquisitions in first three months of 2022 (in CZK millions):

Cash outflow on acquisition of the subsidiaries	138
Cash outflow on investments in joint-ventures	1
Payments of payables from acquisitions of previous periods	17
Less:
Cash and cash equivalents acquired on acquisition of the subsidiaries	(24)
Total cash outflows on acquisition	132

4.1. Acquisitions of Subsidiaries in the First Three Months of 2022

On January 20, 2022, the Group acquired a 100% interest in the company Hermos Signaltechnik GmbH, which focuses on measurement and control services.

On February 24, 2022, the Group acquired a 100% interest in the company ELIMER, a.s., which provides comprehensive services in the field of electrical installations (i.e. design, implementation, service and maintenance of high-current and low-current electrical installations).

The fair values of acquired identifiable assets and liabilities and the purchase considerations have been stated provisionally and could be adjusted in the subsequent period. The following table presents the current best estimate of fair values of acquired identifiable assets and liabilities as of the date of acquisition (in CZK millions):

	ELIMER, a.s.	Other	Total
Share of the Group being acquired	100%	100%
Property, plant and equipment, net	9	2	11
Other non-current financial assets, net	35	-	35
Another non-current assets	1	4	5
Cash and cash equivalents	24	-	24
Trade receivables, net	95	2	97
Materials and supplies, net	17	6	23
Another current assets	22	-	22
Long-term debt, net of current portion	(3)	(1)	(4)
Another non-current liabilities	(7)	(1)	(8)
Trade payables	(90)	-	(90)
Other short-term financial liabilities	(11)	-	(11)
Another current liabilities	(4)	(3)	(7)
Total net assets	88	9	97
Share of net assets acquired	88	9	97
Goodwill	136	4	140
Total purchase consideration	224	13	237
Liabilities from acquisition of the subsidiary	(96)	(3)	(99)
Cash outflow on acquisition in 2022	128	10	138
Less: Cash and cash equivalents in the subsidiary acquired	(24)	-	(24)
Cash outflow on acquisition in 2022, net	104	10	114

If the acquisitions had taken place at the beginning of the year 2022, net income for CEZ Group as of March 31, 2022 would have been CZK 26,719 million and the revenues and other operating income from continuing operations would have been CZK 76,060 million. The amounts of goodwill recognized as a result of the business combinations comprise the value of expected synergies arising from the acquisitions.

From the acquisition date, the newly acquired subsidiaries have contributed the following balances to the Group's statement of income (in CZK millions):

	ELIMER, a.s.	Other	Total
Revenues and other operating income Income before other income (expense) and	50	2	52
income taxes	1	-	1
Net income	1	-	1
Net income attributable:
Equity holders of the parent	1	-	1
Non-controlling interests	-	-	-

5. Other Financial Assets, Net

The overview of other financial assets, net at March 31, 2022 and December 31, 2021 is as follows (in CZK millions):

	March 31, 2022			December 31, 2021
	Non-current assets	Current assets	Total	Non-current assets	Current assets	Total
Term deposits	1	6	7	-	-	-
Other financial receivables Receivables from sale of subsidiaries, associates	3,237	313	3,550	2,156	288	2,444
and joint-ventures	2,412	-	2,412	2,399	-	2,399
Investment in finance lease	204	43	247	211	44	255
Total financial assets at amortized cost	5,854	362	6,216	4,766	332	5,098
Equity financial assets – investments in Inven
Capital, SICAV, a.s., ČEZ sub-fund	2,621	-	2,621	2,538	441	2,979
Commodity and other derivatives	325	653,949	654,274	212	495,139	495,351
Total financial assets at fair value through profit
or loss	2,946	653,949	656,895	2,750	495,580	498,330
Veolia Energie ČR, a.s.	599	-	599	599	-	599
Other financial assets	342	-	342	343	-	343
Total equity financial assets	941	-	941	942	-	942
Fair value of cash flow hedge derivatives	3,223	923	4,146	3,347	884	4,231
Debt financial assets	-	-	-	-	499	499
Total financial assets at fair value through other
comprehensive income	4,164	923	5,087	4,289	1,383	5,672
Total	12,964	655,234	668,198	11,805	497,295	509,100

The increase of short-term receivables from commodity derivatives in the first three months of 2022 is mainly due to the high volatility of the market prices of emission rights, electricity and gas.

6. Emission Rights

The composition of emission rights and green and similar certificates at March 31, 2022 and December 31, 2021 (in CZK millions):

	March 31, 2022			December 31, 2021
	Non current	Current	Total	Non current	Current	Total
Emission rights for own use Emission rights held for trading Green and similar certificates	- - -	10,218 5,940 111	10,218 5,940 111	160 - -	13,424 6,042 68	13,584 6,042 68
Total	-	16,269	16,269	160	19,534	19,694

7. Long-term Debt

Long-term debt at March 31, 2022 and December 31, 2021 is as follows (in CZK millions):

	March 31,	December
	2022	31, 2021
3.005% Eurobonds, due 2038 (JPY 12,000 million)	2,161	2,302
2.845% Eurobonds, due 2039 (JPY 8,000 million)	1,442	1,536
4.875% Eurobonds, due 2025 (EUR 750 million)	19,117	19,263
2.160% Eurobonds, due in 2023 (JPY 11,500 million)	2,079	2,210
4.600% Eurobonds, due in 2023 (CZK 1,250 million)	1,302	1,288
4.375% Eurobonds, due 2042 (EUR 50 million)	1,235	1,246
4.500% Eurobonds, due 2047 (EUR 50 million)	1,234	1,243
4.383% Eurobonds, due 2047 (EUR 80 million)	2,000	2,017
3.000% Eurobonds, due 2028 (EUR 725 million)	18,391	18,627
0.875% Eurobonds, due 2022 (EUR 269 million)	6,580	6,692
0.875% Eurobonds, due 2026 (EUR 750 million)	18,196	18,502
4.250% U.S. bonds, due 2022 (USD 266 million)	5,964	5,897
5.625% U.S. bonds, due 2042 (USD 300 million)	6,718	6,621
4.500% Registered bonds, due 2030 (EUR 40 million)	979	987
4.750% Registered bonds, due 2023 (EUR 40 million)	982	1,036
4.700% Registered bonds, due 2032 (EUR 40 million)	1,018	1,026
4.270% Registered bonds, due 2047 (EUR 61 million)	1,487	1,500
3.550% Registered bonds, due 2038 (EUR 30 million)	729	764
Total bonds and debentures	91,614	92,757
Less: Current portion	(17,381)	(13,911)
Bonds and debentures, net of current portion	74,233	78,846
Long-term bank loans and lease liabilities:	28,395	19,814
Less: Current portion	(2,193)	(2,736)
Long-term bank loans and lease payables, net of current portion	26,202	17,078
Total long-term debt	120,009	112,571
Less: Current portion	(19,574)	(16,647)
Total long-term debt, net of current portion	100,435	95,924

8. Other Financial Liabilities

Other financial liabilities at March 31, 2022 and December 31, 2021 are as follows (in CZK millions):

	March 31, 2022
	Long-term liabilities	Short-term liabilities	Total
Payables from non-current assets purchase Other	141 963	- 508	141 1,471
Financial liabilities at amortized cost	1,104	508	1,612
Cash flow hedge derivatives Commodity and other derivatives Liabilities from put options held by non-controlling interests Contingent consideration from the acquisition of	48,422 405 290 474	64,128 705,168 291 121	112,550 705,573 581 595
subsidiaries Financial liabilities at fair value	49,591	769,708	819,299
Total	50,695	770,216	820,911

	December 31, 2021
	Long-term liabilities	Short-term liabilities	Total
Payables from non-current assets purchase Other	32 598	- 417	32 1,015
Financial liabilities at amortized cost	630	417	1,047
Cash flow hedge derivatives Commodity and other derivatives Liabilities from put options held by non-controlling interests Contingent consideration from the acquisition of	33,257 573 295	49,287 550,910 294	82,544 551,483 589
subsidiaries	464	119	583
Financial liabilities at fair value	34,589	600,610	635,199
Total	35,219	601,027	636,246

The increase of short-term liabilities from commodity derivatives in the first three months of 2022 is mainly due to the high volatility of the market prices of emission rights, electricity and gas.

9. Short-term Loans

Short-term loans at March 31, 2022 and December 31, 2021 are as follows (in CZK millions):

	March 31, 2022	December 31, 2021
Short-term bank and other loans Bank overdrafts	13,667 70	25,282 28
Total	13,737	25,310

10. Revenues and Other Operating Income

The composition of revenues and other operating income for the first three months ended March 31, 2022 and 2021 is as follows (in CZK millions):

	1-3/2022	1-3/2021
Sales of electricity:
Sales of electricity to end customers Sales of electricity through energy exchange and other	19,621	15,168
organized markets	25,210	603
Sales of electricity to traders	10,145	8,764
Sales to distribution and transmission companies	136	134
Other sales of electricity	2,226	8,220
Effect of hedging – presales of electricity	(14,130)	(202)
Effect of hedging – currency risk hedging	(390)	272
Total sales of electricity	42,818	32,959
Sales of gas, coal and heat:
Sales of gas	4,888	2,584
Sales of coal	1,146	870
Sales of heat	3,780	3,465
Total sales of gas, coal and heat	9,814	6,919
Total sales of electricity, heat, gas and coal	52,632	39,878
Sales of services and other revenues:
Distribution services	9,416	12,046
Other services	8,068	5,792
Rental income	38	42
Revenues from goods sold	330	164
Other revenues	446	292
Total sales of services and other revenues	18,298	18,336
Other operating income:
Gain on sale of emission rights for own use	4,278	397
Granted green and similar certificates	50	397
Contractual fines and interest fees for delays	252	85
Gain on sale of property, plant and equipment	61	47
Gain on sale of material	39	42
Other	387	290
Total other operating income	5,067	861
Total revenues and other operating income	75,997	59,075

Revenues from contracts with customers for the three months ended March 31, 2022 and 2021 were CZK 85,412 million and CZK 58,102 million, respectively, and can be linked to the above figures as follows:

	1-3/2022	1-3/2021
Sales of electricity, heat, gas and coal Sales of services and other revenues	52,632 18,298	39,878 18,336
Total revenues	70,930	58,214
Adjustments: Effect of hedging – presales of electricity Effect of hedging – currency risk hedging Rental income	14,130 390 (38)	202 (272) (42)
Revenues from contracts with customers	85,412	58,102

11. Gains and Losses from Commodity Derivative Trading

The composition of gains and losses from commodity derivative trading for the three months ended March 31, 2022 and 2021 is as follows (in CZK millions):

	1-3/2022	1-3/2021
Electricity derivative trading:
Sales Purchases Purchases and sales of cross-border capacities 1) Changes in fair value of derivatives	81,550 (101,144) 91 20,378	59,801 (61,378) - (3,055)
Total gains (losses) from electricity derivative trading	875	(4,632)
Other commodity derivative trading:
Gain from gas derivative trading Gain (loss) from oil derivative trading Gain (loss) from coal derivative trading Gain from emission rights derivative trading	11,686 4 (1) 527	118 (33) 19 3,418
Total gains and losses from commodity derivative trading	13,091	(1,110)

1) Purchases of cross-border capacities were not considered as commodity derivatives until June 30, 2021, and were recognized on the line Purchase of electricity, gas and other energies. Sales of cross-border capacities were recognized on the line Sales of services and other revenues. From July 1, 2021, these contracts are considered as commodity derivatives in accordance with the business strategy.

12. Income Taxes

Tax effects relating to each component of other comprehensive income are the following (in CZK millions):

	1-3/2022			1-3/2021
	Before tax amount	Tax effect	Net of tax amount	Before tax amount	Tax effect	Net of tax amount
Change in fair value of cash flow hedges Cash flow hedges reclassified	(41,710)	7,925	(33,785)	(5,707)	1,085	(4,622)
to statement of income	14,669	(2,787)	11,882	(518)	98	(420)
Change in fair value of debt instruments Disposal of debt instruments	(784) (1)	150 -	(634) (1)	(944) (2)	180 -	(764) (2)
Translation differences – subsidiaries	(239)	-	(239)	(399)	-	(399)
Translation differences – associates and joint ventures	(54)	-	(54)	(1)	-	(1)
Disposal of translation differences	(19)	-	(19)	6,607	-	6,607
Share on other equity movements of associates and joint-ventures	(4)	-	(4)	-	-	-
Change in fair value of equity instruments	1	-	1	-	-	-
Total	(28,141)	5,288	(22,853)	(964)	1,363	399

13. Segment Information

The Group reports its result using four reportable operating segments:

• Generation
• Distribution
• Sales
• Mining

The segments are defined across the countries in which CEZ Group operates. Segment is a functionally autonomous part of CEZ Group that serves a single part of the value chain of the Group. In 2022 company ČEZ Teplárenská, a.s. was moved from the Generation segment to the Sales segment. The transfer took place in connection with the update of the corporate strategy and concept of the heating industry and with the regard to the predominant business activity of this company. Data by segments for the previous period of 2021 were adjusted to be comparable.

The Group accounts for intersegment revenues and transfers as if the revenues or transfers were to third parties, that is, at current market prices or where the regulation applies at regulated prices.

In segment reporting, IFRS 16 is applied to external leases from the Group's perspective, but it is not applied to leases between individual operating segments, although in some cases the asset is leased to another segment internally.

The Group evaluates the performance of its segments based on earnings before interest, taxes, depreciation and amortization (EBITDA). The reconciliation of EBITDA to income before other income (expenses) and income taxes summarizes the following table (in CZK millions):

	1-3/2021
	11,235
	6,681
-	2,051
	(47)
43,676	19,920
	1-3/2022 36,189 7,548 (61)

* Gains on sale of property, plant and equipment are presented in the statement of income as part of the line item Other operating income. Losses on sale of property, plant and equipment are presented in the statement of income as part of the line item Other operating expenses.

The following tables summarize segment information by operating segments for the three months ended March 31, 2022 and 2021 and at December 31, 2021 (in CZK millions):

March 31, 2022:

	Gene	Distribu				Elimina	Consoli
	ration	tion	Sales	Mining	Combined	tion	dated
Revenues and other operating
– income other than intersegment Revenues and other operating	33,166	9,418	32,119	1,294	75,997	-	75,997
– income intersegment	26,407	67	3,774	2,129	32,377	(32,377)	-
Total revenues and other operating income Thereof:	59,573	9,485	35,893	3,423	108,374	(32,377)	75,997
Sales of electricity, heat, gas and
coal	51,589	-	28,930	3,061	83,580	(30,948)	52,632
Sales of services and other revenues	3,317	9,394	6,601	335	19,647	(1,349)	18,298
Other operating income	4,667	91	362	27	5,147	(80)	5,067
EBITDA	36,746	5,164	(150)	1,922	43,682	(6)	43,676
Depreciation and amortization Impairment of property, plant and	(5,097)	(1,603)	(472)	(376)	(7,548)	-	(7,548)
equipment and intangible assets	-	(3)	(1)	4	-	-	-
EBIT	31,680	3,576	(621)	1,560	36,195	(6)	36,189
Interest on debt and provisions	(1,363)	(192)	(68)	(71)	(1,694)	201	(1,493)
Interest income	248	66	151	42	507	(201)	306
Share of profit (loss) from associates
and joint-ventures	6	515	20	(13)	528	-	528
Income taxes	(5,665)	(653)	(77)	(296)	(6,691)	-	(6,691)
Net income	22,897	2,799	(218)	1,252	26,730	(7)	26,723
Identifiable assets Investment in associates and joint Identifiable assets	257,779	118,827	10,341	12,330	399,277	(6)	399,271
ventures	2,816	-	284	769	3,869	-	3,869
Unallocated assets							964,633
Total assets							1,367,773
Capital expenditure	1,334	2,737	299	313	4,683	(30)	4,653

March 31, 2021:

	Gene ration	Distribu tion	Sales	Mining	Combined	Elimina tion	Consoli dated
Revenues and other operating – income other than intersegment Revenues and other operating – income intersegment	20,947 11,076	12,038 131	25,111 1,903	979 1,777	59,075 14,887	- (14,887)	59,075 -
Total revenues and other operating income Thereof: Sales of electricity, heat, gas and	32,023	12,169	27,014	2,756	73,962	(14,887)	59,075
coal Sales of services and other revenues Other operating income	29,051 2,088 884	10 12,054 105	21,602 5,211 201	2,460 287 9	53,123 19,640 1,199	(13,245) (1,304) (338)	39,878 18,336 861
EBITDA Depreciation and amortization Impairment of property, plant and	9,413 (4,021)	6,370 (1,503)	2,597 (429)	1,540 (728)	19,920 (6,681)	- -	19,920 (6,681)
equipment and intangible assets EBIT Interest on debt and provisions	(517) 4,880 (1,532)	(1,545) 3,340 (239)	9 2,201 (74)	2 814 (46)	(2,051) 11,235 (1,891)	- - 247	(2,051) 11,235 (1,644)
Interest income Share of profit (loss) from associates and joint-ventures	339 (5)	8 (39)	14 66	1 (10)	362 12	(247) -	115 12
Income taxes Net income	(877) 3,521	(628) 2,400	(372) 1,832	(156) 633	(2,033) 8,386	- -	(2,033) 8,386
Capital expenditure	1,412	2,909	251	278	4,850	(8)	4,842
December 31, 2021:	Gene ration	Distribu tion	Sales	Mining	Combined	Elimina tion	Consoli dated
Identifiable assets Investment in associates and joint	262,531	117,650	10,514	12,400	403,095	(12)	403,083
ventures Unallocated assets	2,861	-	273	782	3,916	-	3,916 775,923
Total assets							1,182,922

14. War in Ukraine

Since February 24, 2022, there has been a military conflict in Ukraine. The Group continuously evaluates the potential impacts, including the effects of the consequent sanctions, that have been imposed on the Russian Federation, and takes adequate measures. The impacts on the CEZ Group in the medium term will depend on the further development of the war in Ukraine, on the specific form and duration of sanctions against the Russian Federation and their consequences for European and Czech energy sector. As the main risks for the Group are considered the potential impacts on ensuring the maintenance of generation facilities, securing gas purchases for end customers, nuclear fuel supply, and further with restrictions on the execution of payments and the risk that Russian companies will not be able to fulfill other concluded contracts or make financial settlements according to previously concluded contracts and agreed financial instruments. The Group has the highest credit exposure from the concluded commodity contracts for the purchase of electricity and gas from the company Gazprom Marketing & Trading with the seat in the United Kingdom, when, as at March 31, 2022, the fair value of commodity derivatives for the purchase of electricity was CZK 4,000 million and for the gas purchase was CZK 2,130 million. The Group also has a significant credit exposure from commodity gas contracts from Gazprom Export with the seat in the Russian Federation, when, as at March 31, 2022, the fair value of commodity derivatives for gas purchase was CZK 1,809 million.

The Bundesnetzagentur (German regulatory authority responsible for maintaining and promoting competition in the markets for electricity, gas, telecommunications, postal and rail markets) was appointed fiduciary of the German company Gazprom Germania GmbH, the parent company of Gazprom Marketing & Trading, by the Federal Ministry of Economic Affairs and Climate Action.

15. Events after the Balance Sheet Date

On April 6, 2022, under the established Euro Medium Term Note Programme, the Group issued its first EUR 600 million 2.375% sustainability-linked notes due 2027. In case CEZ Group does not meet its GHG Emission Intensity target from electricity and heat production of 0.26 t CO2e/MWh by December 31, 2025, this will result in a 0.75% step up in coupon due in 2027.

On April 15, 2022, a resolution came into force, cancelling the securing of receivables of ČEZ Obnovitelné zdroje, s.r.o., secured on the CNB's account in connection with the investigation of possible criminal activity in obtaining a license to operate the Vranovská Ves photovoltaic power plant. The police authority, which was entrusted with the implementation of this resolution, asked the competent court to issue new resolution on the issuance of the case and determine the entitled person, to whom the secured funds in the amount of CZK 1.1 billion will be released.