CEZ A.S.

Interim / Quarterly Report • Aug 10, 2023

CEZ GROUP

INTERIM CONSOLIDATED FINANCIAL STATEMENTS

PREPARED IN ACCORDANCE WITH INTERNATIONAL FINANCIAL REPORTING STANDARDS AS OF JUNE 30, 2023

CEZ GROUP CONSOLIDATED BALANCE SHEET AS OF JUNE 30, 2023

	Note	June 30, 2023	December 31, 2022
ASSETS:
Plant in service Less accumulated depreciation and impairment		910,054 (519,093)	903,545 (505,564)
Net plant in service		390,961	397,981
Nuclear fuel, at amortized cost Construction work in progress, net		11,914 30,348	11,993 25,145
Total property, plant and equipment		433,223	435,119
Investments in associates and joint-ventures Restricted financial assets, net Other non-current financial assets, net Intangible assets, net Deferred tax assets	5	3,690 23,507 25,704 24,543 912	3,743 21,561 16,715 24,423 50,432
Total other non-current assets		78,356	116,874
Total non-current assets		511,579	551,993
Cash and cash equivalents, net Trade receivables, net Income tax receivable Materials and supplies, net Fossil fuel stocks, net Emission rights Other current financial assets, net Other current assets, net	6 5	125,290 75,252 1,697 20,934 2,328 6,835 131,048 19,767	36,609 167,346 896 23,790 1,551 29,668 278,509 17,018
Total current assets		383,151	555,387
Total assets		894,730	1,107,380

CEZ GROUP CONSOLIDATED BALANCE SHEET AS OF JUNE 30, 2023

continued

	Note	June 30, 2023	December 31, 2022
EQUITY AND LIABILITIES:
Stated capital Treasury shares Retained earnings and other reserves		53,799 (1,334) 170,975	53,799 (1,334) 206,421
Total equity attributable to equity holders of the parent		223,440	258,886
Non-controlling interests		1,382	1,375
Total equity		224,822	260,261
Long-term debt, net of current portion Provisions	8	120,948 149,007	140,234 146,094
Other long-term financial liabilities Deferred tax liability Other long-term liabilities	9	14,282 35,229 29	39,618 13,768 31
Total non-current liabilities		319,495	339,745
Short-term loans Current portion of long-term debt Trade payables Income tax payable Provisions Other short-term financial liabilities Other short-term liabilities	10 8 9	26,833 27,589 47,417 15,247 18,243 193,295 21,789	53,056 8,856 84,713 16,525 30,923 294,631 18,670
Total current liabilities		350,413	507,374
Total equity and liabilities		894,730	1,107,380

CEZ GROUP CONSOLIDATED STATEMENT OF INCOME FOR THE SIX MONTHS ENDED JUNE 30, 2023

	Note	1-6/2023	1-6/2022	4-6/2023	4-6/2022
Sales of electricity, heat, gas and coal Sales of services and other revenues Other operating income		127,858 39,185 2,654	88,578 36,163 5,779	54,686 19,580 2,051	35,946 17,865 712
Total revenues and other operating income	11	169,697	130,520	76,317	54,523
Gains and losses from commodity derivative trading Purchase of electricity, gas and other	12	5,931	15,787	5,194	2,696
energies Fuel and emission rights Services Salaries and wages Material and supplies Capitalization of expenses to the cost of		(41,167) (19,608) (16,539) (16,984) (8,322)	(31,185) (20,853) (13,783) (14,957) (6,572)	(20,515) (7,978) (9,102) (9,037) (4,379)	(13,552) (9,327) (7,170) (7,849) (3,709)
assets and change in own inventories Depreciation and amortization Impairment of property, plant and equipment and intangible assets Impairment of trade and other receivables		3,033 (17,014) (221) (47)	2,607 (15,163) (28) 235	1,617 (8,657) (235) (188)	1,091 (7,594) (28) 12
Other operating expenses	13	(13,441)	(2,379)	(2,017)	(1,032)
Income before other income (expenses) and income taxes		45,318	44,229	21,020	8,061
Interest on debt Interest on provisions Interest income Share of profit (loss) from associates and joint-ventures		(3,758) (3,647) 4,021 493	(1,752) (1,289) 994 596	(1,767) (1,823) 2,370 108	(903) (645) 688 68
Impairment of financial assets Other financial expenses Other financial income		34 (676) 2,286	(547) (1,753) 1,213	269 (121) (378)	(25) 734 320
Total other income (expenses)		(1,247)	(2,538)	(1,342)	237
Income before income taxes		44,071	41,691	19,678	8,298
Income taxes		(21,790)	(8,089)	(8,218)	(1,403)
Net income		22,281	33,602	11,460	6,895
Net income attributable to:
Equity holders of the parent Non-controlling interests		22,230 51	33,634 (32)	11,458 2	6,925 (30)
Net income per share attributable to equity holders of the parent (CZK per share):
Basic Diluted		41.4 41.4	62.7 62.7	21.3 21.3	12.9 12.9

CEZ GROUP CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE SIX MONTHS ENDED JUNE 30, 2023

	Note 1-6/2023 1-6/2022			4-6/2023	4-6/2022
Net income		22,281	33,602	11,460	6,895
Change in fair value of cash flow hedges Cash flow hedges		53,830	(109,900)	6,306	(68,190)
reclassified to statement of income Change in fair value of debt		15,312	31,260	4,623	16,591
instruments Disposal of debt instruments		1,060 24	(1,703) (1)	560 1	(919) -
Translation differences – subsidiaries Translation differences –		(122)	(74)	255	165
associates and joint ventures		(327)	(10)	(202)	44
Disposal of translation differences Share on other equity		(15)	(17)	(15)	2
movements of associates and joint-ventures		(60)	(10)	1	(6)
Deferred tax related to other comprehensive income	14	(49,548)	15,267	(7,586)	9,979
Net other comprehensive income that may be reclassified to statement of income or to assets in subsequent periods		20,154	(65,188)	3,943	(42,334)
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		20,154	(65,187)	3,943	(42,334)
Total comprehensive income, net of tax		42,435	(31,585)	15,403	(35,439)
Total comprehensive income attributable to:
Equity holders of the parent Non-controlling interests		42,399 36	(31,545) (40)	15,388 15	(35,422) (17)

CEZ GROUP CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE SIX MONTHS ENDED JUNE 30, 2023

	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		- -	- -	- (93)	- (63,698)	- (1,379)	- 1	33,634 (10)	33,634 (65,179)	(32) (8)	33,602 (65,187)
Total comprehensive income		-	-	(93)	(63,698)	(1,379)	1	33,624	(31,545)	(40)	(31,585)
Dividends Sale of treasury shares Exercised and forfeited share		- -	- 69	- -	- -	- -	- -	(25,767) (37)	(25,767) 32	(14) -	(25,781) 32
options Acquisition of non-controlling		-	-	-	-	-	(3)	3	-	-	-
interests Put options held by non		-	-	-	-	-	-	(115)	(115)	(4)	(119)
controlling interests		-	-	(2)	-	-	-	64	62	37	99
Balance as at June 30, 2022		53,799	(1,354)	(4,732)	(130,910)	(2,026)	(1,723)	190,711	103,765	1,721	105,486

CEZ GROUP CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE SIX MONTHS ENDED JUNE 30, 2023

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, 2023		53,799	(1,334)	(5,177)	(22,258)	(1,675)	(2,020)	237,551	258,886	1,375	260,261
Net income Other comprehensive income		- -	- -	- (448)	- 19,794	- 884	- -	22,230 (61)	22,230 20,169	51 (15)	22,281 20,154
Total comprehensive income		-	-	(448)	19,794	884	-	22,169	42,399	36	42,435
Dividends Acquisition of subsidiaries	7	- -	- -	- -	- -	- -	- -	(77,838) -	(77,838) -	(9) (3)	(77,847) (3)
Acquisition of non-controlling interests Disposal of non‑controlling		-	-	-	-	-	-	(3)	(3)	(23)	(26)
interests Put options held by non		-	-	1	-	-	-	(11)	(10)	11	1
controlling interests		-	-	(1)	-	-	-	7	6	(5)	1
Balance as at June 30, 2023		53,799	(1,334)	(5,625)	(2,464)	(791)	(2,020)	181,875	223,440	1,382	224,822

CEZ GROUP CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE SIX MONTHS ENDED JUNE 30, 2023

	Note	1-6/2023	1-6/2022
OPERATING ACTIVITIES:
Income before income taxes		44,071	41,691
Adjustments of income before income taxes to cash generated from operations:
Depreciation and amortization		17,014	15,163
Amortization of nuclear fuel		1,861	1,949
(Gains) and losses on non-current asset retirements		22	(122)
Foreign exchange rate loss (gain)		195	1,652
Interest expense, interest income and dividend income		(274)	748
Provisions		(9,872)	1,621
Impairment of property, plant and equipment and
intangible assets		221	28
Other non-cash expenses and income		14,621	32,093
Share of (profit) loss from associates and joint-ventures		(493)	(596)
Changes in assets and liabilities:
Receivables and contract assets		83,666	114
Materials, supplies and fossil fuel stocks		2,245	(9,761)
Receivables and payables from derivatives		(10,865)	(32,469)
Other assets		28,116	9,974
Trade payables		(35,865)	(21,853)
Other liabilities		3,023	4,332
Cash from operations		137,686	44,564
Income taxes paid		(2,468)	(1,607)
Interest paid, net of capitalized interest		(4,629)	(2,242)
Interest received		4,010	980
Dividends received		31	7
Net cash flow from operating activities		134,630	41,702
INVESTING ACTIVITIES:
Acquisition of subsidiaries, associates and joint-ventures,
net of cash acquired	4	(513)	(2,029)
Disposal of subsidiaries, associates and joint-ventures,
net of cash disposed of		11	(8)
Additions to non-current assets, including capitalized
interest		(18,993)	(14,634)
Proceeds from sale of non-current assets		222	772
Loans made		(153)	(13)
Repayment of loans		20	280
Change in restricted financial assets		(1,168)	(1,381)
Total cash used in investing activities		(20,574)	(17,013)

CEZ GROUP CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE SIX MONTHS ENDED JUNE 30, 2023

continued

	Note	1-6/2023	1-6/2022
FINANCING ACTIVITIES:
Proceeds from borrowings Payments of borrowings Payments of lease liabilities Proceeds from other long-term liabilities Payments of other long-term liabilities Dividends paid to Company's shareholders Dividends paid to non-controlling interests Sale of treasury shares (Acquisition) sale of non-controlling interests, net		66,366 (88,144) (362) 38 (2,444) (133) (7) - (25)	102,438 (107,716) (335) 58 (7) (71) (13) 32 (119)
Net cash used in financing activities		(24,711)	(5,733)
Net effect of currency translation and allowances in cash		(664)	(77)
Net increase in cash and cash equivalents		88,681	18,879
Cash and cash equivalents at beginning of period		36,609	26,640
Cash and cash equivalents at end of period		125,290	45,519
Supplementary cash flow information:
Total cash paid for interest		4,914	2,415

CEZ GROUP NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2023

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 June 30, 2023 by the Czech Republic represented by the Ministry of Finance. The remaining shares of the Company are held by legal persons and individuals and they are traded on stock exchange markets in Prague and Warsaw. 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"). CEZ Group is a vertically integrated energy group that is among the largest economic entities in the Czech Republic and Central Europe. The main business of the Group is the generation, distribution, trade and sale in the field of electricity and heat, coal mining, trading in commodities and providing of complex energy services, distribution, trade and sale in the field of natural gas and providing of electronic communications.

2. Summary of Significant Accounting Policies

2.1. Financial Statements

The interim consolidated financial statements for the six months ended June 30, 2023 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, 2022.

2.2. Changes in Accounting Policies

Adoption of New IFRS Standards in 2023

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, 2022.

As of January 1, 2023, 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 the first six months of 2023 (in CZK millions):

Cash outflow on acquisition of the subsidiaries Cash outflow on acquisitions of the subsidiaries, which were not part of	305
consolidation	105
Cash contributions to joint-ventures	85
Payments of payables from acquisitions of previous periods	52
Less:
Cash and cash equivalents acquired on acquisition of the subsidiaries	(34)
Total cash outflows on acquisitions	513

4.1. Acquisitions of Subsidiaries in the First Six Months of 2023

On January 31, 2023, the Group acquired a 100% interest in the company Web4Soft Internet s.r.o. which focuses on providing high speed internet connection.

On March 28, 2023, the Group acquired a 75% interest in the German company GESPA GmbH which focuses on services in the field of installation of rooftop photovoltaic power plants, electromobility and recharging station infrastructure.

On April 20, 2023, the Group acquired a 100% interest in the German companies Elektro Hofmockel GmbH & Co. Elektroanlagen KG and Elektro Hofmockel Verwaltungsgesellschaft mbH (managing company) which focus on services in the field automatization of treatment of wastewater. Industrial companies and municipalities are the main customers.

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, which are part of the business combination transaction, as of the date of acquisition (in CZK millions):

	Web4Soft Internet	GESPA	Hofmockel entities	Total
Share of the Group being acquired	100 %	75 %	100 %
Property, plant and equipment, net	17	2	23	42
Other non-current assets	-	28	112	140
Cash and cash equivalents	9	13	12	34
Materials and supplies, net	3	9	132	144
Trade receivables	-	5	5	10
Other current assets	1	2	3	6
Long-term debt, net of current portion	-	-	(7)	(7)
Other long-term payables	-	(8)	(34)	(42)
Trade payables	(1)	(23)	(24)	(48)
Other short-term financial payables	-	(39)	(8)	(47)
Other current liabilities	(1)	(1)	(137)	(139)
Total net assets	28	(12)	77	93
Share of net assets acquired	28	(9)	77	96
Goodwill	36	78	198	312
Total purchase consideration	64	69	275	408
Liabilities from acquisition of the
subsidiary	(1)	(68)	(34)	(103)
Cash outflow on acquisition in 2023	63	1	241	305
Less: Cash and cash equivalents in the subsidiary acquired	(9)	(13)	(12)	(34)
Cash outflow in 2023, net	54	(12)	229	271

If the acquisitions had taken place at the beginning of the year 2023, net income for CEZ Group as of June 30, 2023 would have been CZK 22,279 million and the revenues and other operating income from continuing operations would have been CZK 169,808 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):

	Web4Soft Internet	GESPA	Hofmockel entities
Revenues and other operating income Income before other income (expense) and	13	23	43
income taxes	3	(6)	6
Net income	3	(6)	5
Net income attributable:
Equity holders of the parent	3	(4)	4
Non-controlling interests	-	(2)	1

5. Other Financial Assets, Net

The overview of other financial assets, net at June 30, 2023 and December 31, 2022 is as follows (in CZK millions):

	June 30, 2023			December 31, 2022
	Non-current assets	Current assets	Total	Non-current assets	Current assets	Total
Term deposits Other financial receivables Receivables from sale of subsidiaries, associates	3 5,973	353 39	356 6,012	- 2,728	100 31	100 2,759
and joint-ventures Investment in finance lease	- 194	2,478 46	2,478 240	- 200	2,450 46	2,450 246
Total financial assets at amortized cost	6,170	2,916	9,086	2,928	2,627	5,555
Equity financial assets – investments in Inven Capital, SICAV, a.s., ČEZ sub-funds Commodity and other derivatives	4,255 277	- 112,786	4,255 113,063	3,840 446	- 262,159	3,840 262,605
Total financial assets at fair value through profit or loss	4,532	112,786	117,318	4,286	262,159	266,445
Veolia Energie ČR, a.s. Other financial assets	709 396	- -	709 396	709 178	- -	709 178
Total equity financial assets	1,105	-	1,105	887	-	887
Fair value of cash flow hedge derivatives Investments in progress Debt financial assets	13,894 3 -	8,320 - 7,026	22,214 3 7,026	8,612 2 -	3,971 - 9,752	12,583 2 9,752
Total financial assets at fair value through other comprehensive income	15,002	15,346	30,348	9,501	13,723	23,224
Total	25,704	131,048	156,752	16,715	278,509	295,224

The decrease of short-term commodity derivatives in the first six months of 2023 is caused by physical delivery of the commodity or by the financial settlement. The decrease in the first six months of 2023 is also influenced by volatility of the market prices of emission rights, electricity and gas. With this decrease is connected the decrease of payables from commodity and other derivatives, which is disclosed in Note 9.

6. Emission rights

The composition of emission rights and green and similar certificates at June 30, 2023 and December 31, 2022 (in CZK millions):

	June 30, 2023			December 31, 2022
	Non current	Current	Total	Non current	Current	Total
Emission rights for own use	5	3,029	3,034	-	23,093	23,093
Emission rights held for trading	-	3,651	3,651	-	6,408	6,408
Green and similar certificates	-	155	155	-	167	167
Total	5	6,835	6,840	-	29,668	29,668

Non-current emission rights for own use are part of intangible assets.

7. Equity

On June 26, 2023, the Shareholders Meeting of ČEZ, a. s., approved the dividends per share before tax of CZK 145. The total amount of dividend approved for distribution to shareholders net of treasury shares amounts to CZK 77,837 million.

8. Long-term Debt

Long-term debt at June 30, 2023 and December 31, 2022 is as follows (in CZK millions):

	June 30, 2023	December 31, 2022
3.005% Eurobonds, due 2038 (JPY 12,000 million)	1,823	2,071
2.845% Eurobonds, due 2039 (JPY 8,000 million)	1,216	1,382
4.875% Eurobonds, due 2025 (EUR 750 million)	17,962	18,694
2.160% Eurobonds, due in 2023 (JPY 11,500 million)	-	1,988
4.600% Eurobonds, due in 2023 (CZK 1,250 million)	-	1,288
4.375% Eurobonds, due 2042 (EUR 50 million)	1,217	1,209
4.500% Eurobonds, due 2047 (EUR 50 million)	1,215	1,207
4.383% Eurobonds, due 2047 (EUR 80 million)	1,967	1,957
3.000% Eurobonds, due 2028 (EUR 725 million)	17,454	18,024
0.875% Eurobonds, due 2026 (EUR 750 million)	17,783	17,978
2.375% Eurobonds, due 2027 (EUR 600 million)	14,234	14,628
5.625% U.S. bonds, due 2042 (USD 300 million)	6,589	6,824
4.500% Registered bonds, due 2030 (EUR 40 million)	965	958
4.750% Registered bonds, due 2023 (EUR 40 million)	-	1,006
4.700% Registered bonds, due 2032 (EUR 40 million)	957	995
4.270% Registered bonds, due 2047 (EUR 61 million)	1,463	1,456
3.550% Registered bonds, due 2038 (EUR 30 million)	716	741
Total bonds and debentures	85,561	92,406
Less: Current portion	(734)	(5,725)
Bonds and debentures, net of current portion	84,827	86,681
Long-term bank and other loans, lease liabilities:	62,976	56,684
Less: Current portion	(26,855)	(3,131)
Long-term bank and other loans, lease payables, net of current
portion	36,121	53,553
Total long-term debt	148,537	149,090
Less: Current portion	(27,589)	(8,856)
Total long-term debt, net of current portion	120,948	140,234

9. Other Financial Liabilities

Other financial liabilities at June 30, 2023 and December 31, 2022 are as follows (in CZK millions):

	June 30, 2023
	Long-term liabilities	Short-term liabilities	Total
Payables from non-current assets purchase Payables to owners for profit distribution Other	314 - 953	- 78,192 1,584	314 78,192 2,537
Financial liabilities at amortized cost	1,267	79,776	81,043
Cash flow hedge derivatives Commodity and other derivatives Liabilities from put options held by non-controlling interests Contingent consideration from the acquisition of subsidiaries	11,822 284 499 410	15,857 97,393 - 269	27,679 97,677 499 679
Financial liabilities at fair value	13,015	113,519	126,534
Total	14,282	193,295	207,577

	December 31, 2022
	Long-term liabilities	Short-term liabilities	Total
Payables from non-current assets purchase Other	366 1,484	- 3,009	366 4,493
Financial liabilities at amortized cost	1,850	3,009	4,859
Cash flow hedge derivatives Commodity and other derivatives Liabilities from put options held by non-controlling interests Contingent consideration from the acquisition of	36,757 161 509	45,714 245,658 -	82,471 245,819 509
subsidiaries	341	250	591
Financial liabilities at fair value	37,768	291,622	329,390
Total	39,618	294,631	334,249

The decrease of short-term commodity derivatives in the first six months of 2023 is caused by physical delivery of the commodity or by the financial settlement. The decrease in the first six months of 2023 is also influenced by volatility of the market prices of emission rights, electricity and gas. With this decrease is connected the decrease of receivables from commodity and other derivatives, which is disclosed in Note 5.

10. Short-term Loans

Short-term loans at June 30, 2023 and December 31, 2022 are as follows (in CZK millions):

	June 30, 2023	December 31, 2022
Bank loans	2,896	4,805
Other loans	23,802	48,230
Bank overdrafts	135	21
Total	26,833	53,056

11. Revenues and Other Operating Income

The composition of revenues and other operating income for the first six months ended June 30, 2023 and 2022 is as follows (in CZK millions):

	1-6/2023	1-6/2022
Sales of electricity:
Sales of electricity to end customers Sales of electricity through energy exchange and other	61,424	36,213
organized markets	26,992	43,488
Sales of electricity to traders	19,704	18,171
Sales to distribution and transmission companies	91	253
Other sales of electricity	6,305	5,555
Effect of hedging – presales of electricity	(15,894)	(31,205)
Effect of hedging – currency risk hedging	919	(410)
Total sales of electricity	99,541	72,065
Sales of gas, coal and heat:
Sales of gas	17,407	8,704
Sales of coal	3,798	2,323
Sales of heat	7,112	5,486
Total sales of gas, coal and heat	28,317	16,513
Total sales of electricity, heat, gas and coal	127,858	88,578
Sales of services and other revenues:
Distribution services	17,944	17,786
Other services	18,694	16,685
Rental income	90	86
Revenues from goods sold	559	656
Other revenues	1,898	950
Total sales of services and other revenues	39,185	36,163
Other operating income:
Gain on sale of emission rights	-	4,292
Granted green and similar certificates	64	81
Contractual fines and interest fees for delays	759	284
Gain on sale of property, plant and equipment	186	142
Gain on sale of material	181	92
Other	1,464	888
Total other operating income	2,654	5,779
Total revenues and other operating income	169,697	130,520

Revenues from contracts with customers for the six months ended June 30, 2023 and 2022 were CZK 181,928 million and CZK 156,270 million, respectively, and can be linked to the above figures as follows:

	1-6/2023	1-6/2022
Sales of electricity, heat, gas and coal Sales of services and other revenues	127,858 39,185	88,578 36,163
Total revenues	167,043	124,741
Adjustments: Effect of hedging – presales of electricity Effect of hedging – currency risk hedging Rental income	15,894 (919) (90)	31,205 410 (86)
Revenues from contracts with customers	181,928	156,270

12. Gains and Losses from Commodity Derivative Trading

The composition of gains and losses from commodity derivative trading for the six months ended June 30, 2023 and 2022 is as follows (in CZK millions):

	1-6/2023	1-6/2022
Gain (loss) from electricity derivative trading	5,178	(1,319)
Gain (loss) from gas derivative trading	(307)	13,356
Gain (loss) from oil derivative trading	(7)	2
Gain (loss) from coal derivative trading	21	(1)
Gain from emission rights derivative trading	1,046	3,749
Total gains and losses from commodity derivative trading	5,931	15,787

Reported gains and losses from derivative trading consist of trades with commodities for the purpose of speculative trading, but also trades concluded for the purpose of hedging the gross margin from electricity generation, where changes in their fair value do not enter the hedge accounting scheme mainly due to the uncertainty of the hedged deliveries of electricity from generation sources (where the expected deliveries of electricity may not be produced eventually, but trading positions on electricity and related positions for emission allowances and fuels will be closed, e.g. for deliveries from the Počerady CCGT power plant). Given the high volatility of commodity market prices, these trades have a significant impact on reported gains and losses from derivative trading.

13. Other Operating Expenses

Other operating expenses for the six months ended June 30, 2023 and 2022 are as follows (in CZK millions):

	1-6/2023	1-6/2022
Change in provisions	1,597	1,073
Levy on revenues above price caps	(11,149)	-
Other taxes and fees	(1,459)	(1,456)
Other	(2,430)	(1,996)
Total other operating expenses	(13,441)	(2,379)

14. Income Taxes

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

		1-6/2023			1-6/2022
	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	53,830	(39,424)	14,406	(109,900)	20,873	(89,027)
Cash flow hedges reclassified to statement of income	15,312	(9,923)	5,389	31,260	(5,931)	25,329
Change in fair value of debt instruments	1,060	(191)	869	(1,703)	325	(1,378)
Disposal of debt instruments Translation differences –	24	(10)	14	(1)	-	(1)
subsidiaries Translation differences –	(122)	-	(122)	(74)	-	(74)
associates and joint-ventures Disposal of translation	(327)	-	(327)	(10)	-	(10)
differences Share on other equity movements of associates and	(15)	-	(15)	(17)	-	(17)
joint-ventures Change in fair value of equity	(60)	-	(60)	(10)	-	(10)
instruments	-	-	-	1	-	1
Total	69,702	(49,548)	20,154	(80,454)	15,267	(65,187)

15. 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.

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):

	1-6/2023	1-6/2022
Income before other income (expenses) and income
taxes (EBIT)	45,318	44,229
Depreciation and amortization	17,014	15,163
Impairment of property, plant and equipment and
intangible assets	221	28
Gains and losses on sale of property, plant and
equipment, net1)	(185)	(140)
EBITDA	62,368	59,280

1) 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 Group follows and analyses results of individual segments also based on the ratio of Gross margin, which is defined as follows (in CZK millions):

	1-6/2023	1-6/2022
Operating income	169,697	130,520
Gains and losses from commodity derivative trading	5,931	15,787
Purchase of electricity, gas and other energies	(41,167)	(31,185)
Fuel and emission rights	(19,608)	(20,853)
Services	(16,539)	(13,783)
Capitalization of expenses to the cost of assets and
change in own inventories	3,033	2,607
Levy on revenues above price caps1)	(11,149)	-
Other2)	(2,034)	(734)
Gross margin	88,164	82,359

1) Levy on revenues above price caps is part of the statement of income line-item Other operating expenses (Note 13).

2) Other includes relevant part of the material costs (part of the statement of income line-item Material and supplies) and excludes part of the statement of income line-item Services, which refers to repair and maintenance services and other services that have rather overhead nature.

The following tables summarize segment information by operating segments for the six months ended June 30, 2023 and 2022 and at December 31, 2022 (in CZK millions):

June 30, 2023:

	Gene ration	Distribu tion	Sales	Mining	Combined	Elimina tion	Consoli dated
Revenues and other operating
income – other than intersegment Revenues and other operating	47,537	17,890	100,161	4,109	169,697	-	169,697
income – intersegment	78,245	131	14,104	5,788	98,268	(98,268)	-
Total revenues and other operating income Thereof:	125,782	18,021	114,265	9,897	267,965	(98,268)	169,697
Sales of electricity, heat, gas and coal	118,169	-	95,177	9,225	222,571	(94,713)	127,858
Sales of services and other revenues	6,846	17,872	17,262	637	42,617	(3,432)	39,185
Other operating income	767	149	1,826	35	2,777	(123)	2,654
Revenues and other operating income, including result from
commodity derivative trading	131,976	18,021	114,616	9,897	274,510	(98,882)	175,628
Total sales of electricity, including the result of electricity trading1)	101,678	-	72,819	-	174,497	(69,778)	104,719
Gross margin	57,707	14,047	11,302	9,679	92,735	(4,571)	88,164
EBITDA	45,489	9,004	3,164	5,649	63,306	(938)	62,368
Depreciation and amortization	(11,398)	(3,568)	(1,070)	(978)	(17,014)	-	(17,014)
Impairment of property, plant and equipment and intangible assets	(1)	(7)	-	(213)	(221)	-	(221)
EBIT	34,213	5,462	2,103	4,478	46,256	(938)	45,318
Interest on debt and provisions	(6,838)	(613)	(206)	(329)	(7,986)	581	(7,405)
Interest income	3,242	366	657	337	4,602	(581)	4,021
Share of profit (loss) from associates and joint-ventures	(27)	177	390	(47)	493	-	493
Income taxes	(19,592)	(991)	(294)	(875)	(21,752)	(38)	(21,790)
Net income	21,428	4,467	2,565	3,661	32,121	(9,840)	22,281
Identifiable assets	275,934	129,594	11,809	16,085	433,422	(199)	433,223
Investment in associates and joint-ventures Identifiable assets	2,563	-	427	700	3,690	-	3,690
Unallocated assets							457,817
Total assets							894,730
Capital expenditure	7,975	7,178	1,073	820	17,046	(118)	16,928

1) The item contains the line Total sales of electricity (Note 11) and the line Gain (loss) from electricity derivative trading (Note 12).

June 30, 2022:

	Gene ration	Distribu tion	Sales	Mining	Combined	Elimina tion	Consoli dated
Revenues and other operating income – other than intersegment	50,489	17,783	59,626	2,622	130,520	-	130,520
Revenues and other operating income – intersegment	45,033	173	7,301	3,594	56,101	(56,101)	-
Total revenues and other operating income Thereof:	95,522	17,956	66,927	6,216	186,621	(56,101)	130,520
Sales of electricity, heat, gas and coal	83,330	-	52,490	5,534	141,354	(52,776)	88,578
Sales of services and other revenues	6,991	17,800	13,782	615	39,188	(3,025)	36,163
Other operating income	5,201	156	655	67	6,079	(300)	5,779
Revenues and other operating income, including result from
commodity derivative trading	111,272	17,956	66,965	6,215	202,408	(56,101)	146,307
Total sales of electricity, including the result of electricity trading1)	67,005	-	41,809	-	108,814	(38,068)	70,746
Gross margin	57,097	13,995	8,049	6,205	85,346	(2,987)	82,359
EBITDA	45,962	9,542	729	3,113	59,346	(66)	59,280
Depreciation and amortization	(10,096)	(3,282)	(1,020)	(765)	(15,163)	-	(15,163)
Impairment of property, plant and equipment and intangible assets	(10)	(10)	(16)	8	(28)	-	(28)
EBIT	35,932	6,296	(303)	2,370	44,295	(66)	44,229
Interest on debt and provisions	(2,770)	(383)	(146)	(143)	(3,442)	401	(3,041)
Interest income	803	170	310	112	1,395	(401)	994
Share of profit (loss) from associates and joint-ventures	(12)	549	94	(35)	596	-	596
Income taxes	(6,335)	(1,145)	(165)	(444)	(8,089)	-	(8,089)
Net income	33,234	4,923	(17)	1,934	40,074	(6,472)	33,602
Capital expenditure	3,881	6,613	927	739	12,160	(78)	12,082
	Gene	Distribu				Elimina	Consoli
December 31, 2022:	ration	tion	Sales	Mining	Combined	tion	dated
Identifiable assets Investment in associates and joint-ventures	281,176 2,630	125,898 -	11,751 451	16,458 662	435,283 3,743	(164) -	435,119 3,743
Unallocated assets							668,518
Total assets							1,107,380

1) The item contains the line Total sales of electricity (Note 11) and the line Gain (loss) from electricity derivative trading (Note 12).