CEZ A.S.

Quarterly Report • May 11, 2023

CEZ GROUP

INTERIM CONSOLIDATED FINANCIAL STATEMENTS

PREPARED IN ACCORDANCE WITH INTERNATIONAL FINANCIAL REPORTING STANDARDS AS OF MARCH 31, 2023

CEZ GROUP CONSOLIDATED BALANCE SHEET AS OF MARCH 31, 2023

In CZK Millions

	Note	March 31, 2023	December 31, 2022
ASSETS:
Plant in service Less accumulated depreciation and impairment		904,495 (511,795)	903,545 (505,564)
Net plant in service		392,700	397,981
Nuclear fuel, at amortized cost Construction work in progress, net		11,037 28,759	11,993 25,145
Total property, plant and equipment		432,496	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	3,648 21,918 23,708 24,036 1,190	3,743 21,561 16,715 24,423 50,432
Total other non-current assets		74,500	116,874
Total non-current assets		506,996	551,993
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	89,481 110,152 1,361 18,600 2,399 26,925 161,848 25,331	36,609 167,346 896 23,790 1,551 29,668 278,509 17,018
Total current assets		436,097	555,387
Total assets		943,093	1,107,380

CEZ GROUP CONSOLIDATED BALANCE SHEET AS OF MARCH 31, 2023

continued

	Note	March 31, 2023	December 31, 2022
EQUITY AND LIABILITIES:
Stated capital Treasury shares Retained earnings and other reserves		53,799 (1,334) 233,440	53,799 (1,334) 206,421
Total equity attributable to equity holders of the parent		285,905	258,886
Non-controlling interests		1,384	1,375
Total equity		287,289	260,261
Long-term debt, net of current portion Provisions	7	143,667 147,556	140,234 146,094
Other long-term financial liabilities Deferred tax liability Other long-term liabilities	8	19,659 19,820 29	39,618 13,768 31
Total non-current liabilities		330,731	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	9 7 8	31,217 6,260 59,491 15,913 34,348 150,213 27,631	53,056 8,856 84,713 16,525 30,923 294,631 18,670
Total current liabilities		325,073	507,374
Total equity and liabilities		943,093	1,107,380

CEZ GROUP CONSOLIDATED STATEMENT OF INCOME FOR THE THREE MONTHS ENDED MARCH 31, 2023

In CZK Millions

	Note	1-3/2023	1-3/2022 (adjusted*)
Sales of electricity, heat, gas and coal Sales of services and other revenues Other operating income		73,172 19,605 603	52,632 18,298 5,067
Total revenues and other operating income	10	93,380	75,997
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	11	737 (20,652) (11,630) (7,437) (7,947) (3,943)	13,091 (17,633) (11,526) (6,613) (7,108) (2,863)
change in own inventories Depreciation and amortization Impairment of property, plant and equipment and		1,416 (8,357)	1,516 (7,569)
intangible assets Impairment of trade and other receivables Other operating expenses	12	14 141 (11,424)	- 223 (1,347)
Income before other income (expenses) and income taxes		24,298	36,168
Interest on debt Interest on provisions Interest income		(1,991) (1,824) 1,651	(849) (644) 306
Share of profit (loss) from associates and joint ventures Impairment of financial assets Other financial expenses Other financial income		385 (235) (555) 2,664	528 (522) (2 487) 893
Total other income (expenses)		95	(2,775)
Income before income taxes		24,393	33,393
Income taxes		(13,572)	(6,686)
Net income		10,821	26,707
Net income attributable to:
Equity holders of the parent Non-controlling interests		10,772 49	26,709 (2)
Net income per share attributable to equity holders of the parent (CZK per share):
Basic Diluted		20.1 20.1	49.8 49.8

* Some figures were adjusted due to the final valuation of Belectric Group companies and company ELIMER, a.s., at fair value on the date of acquisition and do not correspond to the amounts stated in the interim consolidated financial statements as of March 31, 2022.

CEZ GROUP CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE THREE MONTHS ENDED MARCH 31, 2023

In CZK Millions

	Note	1-3/2023	1-3/2022 (adjusted*)
Net income		10,821	26,707
Change in fair value of cash flow hedges Cash flow hedges reclassified to statement of 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 income	13	47,524 10,689 500 23 (377) (125) - (61) (41,962)	(41,710) 14,669 (784) (1) (239) (54) (19) (4) 5,288
Net other comprehensive income that may be reclassified to statement of income or to assets in subsequent periods		16,211	(22,854)
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		16,211	(22,853)
Total comprehensive income, net of tax		27,032	3,854
Total comprehensive income attributable to:
Equity holders of the parent Non-controlling interests		27,011 21	3,877 (23)

* Some figures were adjusted due to the final valuation of Belectric Group companies and company ELIMER, a.s., at fair value on the date of acquisition and do not correspond to the amounts stated in the interim consolidated financial statements as of March 31, 2022.

CEZ GROUP CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE THREE MONTHS ENDED MARCH 31, 2023

In CZK Millions

	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	26,709 (4)	26,709 (22,832)	(2) (21)	26,707 (22,853)
Total comprehensive income		-	-	(291)	(21,903)	(635)	1	26,705	3,877	(23)	3,854
Sale of treasury shares Exercised and forfeited share		-	17	-	-	-	-	(10)	7	-	7
options		-	-	-	-	-	(1)	1	-	-	-
Acquisition of non-controlling interests Put options held by non		-	-	-	-	-	-	(1)	(1)	-	(1)
controlling interests		-	-	(4)	-	-	-	(7)	(11)	11	-
Balance as at March 31, 2022 (adjusted*)		53,799	(1,406)	(4,932)	(89,115)	(1,282)	(1,721)	209,627	164,970	1,730	166,700

* Some figures were adjusted due to the final valuation of Belectric Group companies and company ELIMER, a.s., at fair value on the date of acquisition and do not correspond to the amounts stated in the interim consolidated financial statements as of March 31, 2022.

CEZ GROUP CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE THREE MONTHS ENDED MARCH 31, 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		- -	- -	- (473)	- 16,347	- 426	- -	10,772 (61)	10,772 16,239	49 (28)	10,821 16,211
Total comprehensive income		-	-	(473)	16,347	426	-	10,711	27,011	21	27,032
Dividends Sale of non-controlling		-	-	-	-	-	-	-	-	(4)	(4)
interests		-	-	-	-	-	-	(7)	(7)	7	-
Put options held by non controlling interests		-	-	(5)	-	-	-	20	15	(15)	-
Balance as at March 31, 2023		53,799	(1,334)	(5,655)	(5,911)	(1,249)	(2,020)	248,275	285,905	1,384	287,289

CEZ GROUP CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE THREE MONTHS ENDED MARCH 31, 2023

In CZK Millions

			1-3/2022
	Note	1-3/2023	(adjusted*)
OPERATING ACTIVITIES:
Income before income taxes		24,393	33,393
Adjustments of income before income taxes to cash
generated from operations:
Depreciation and amortization		8,357	7,569
Amortization of nuclear fuel		1,037	1,036
(Gains) and losses on non-current asset retirements		(29)	(63)
Foreign exchange rate loss (gain)		362	2,437
Interest expense, interest income and dividend income		337	539
Provisions		5,156	4,752
Impairment of property, plant and equipment and
intangible assets		(14)	-
Other non-cash expenses and income		6,827	15,445
Share of (profit) loss from associates and joint-ventures		(385)	(528)
Changes in assets and liabilities:
Receivables and contract assets		46,081	(13,584)
Materials, supplies and fossil fuel stocks		4,203	(1,083)
Receivables and payables from derivatives		(6,980)	(18,025)
Other assets		5,098	3,761
Trade payables		(23,019)	(5,131)
Other liabilities		9,071	3,955
Cash from operations		80,495	34,473
Income taxes paid		(1,302)	(950)
Interest paid, net of capitalized interest		(1,733)	(315)
Interest received Dividends received		1,637 -	248 1
		,
Net cash flow from operating activities		79,097	33,457
INVESTING ACTIVITIES:
Acquisition of subsidiaries, associates and joint-ventures,
net of cash acquired	4	(166)	(132)
Disposal of subsidiaries, associates and joint-ventures,
net of cash disposed of		7	-
Additions to non-current assets, including capitalized
interest		(9,501)	(6,586)
Proceeds from sale of non-current assets		146	531
Loans made		(51)	(1)
Repayment of loans		10	15
Change in restricted financial assets		55	(106)
Total cash used in investing activities		(9,500)	(6,279)

CEZ GROUP CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE THREE MONTHS ENDED MARCH 31, 2023

continued

			1-3/2022
	Note	1-3/2023	(adjusted*)
FINANCING ACTIVITIES:
Proceeds from borrowings		45,337	70,672
Payments of borrowings		(61,014)	(72,123)
Payments of lease liabilities		(201)	(183)
Proceeds from other long-term liabilities		8	28
Payments of other long-term liabilities		(17)	(5)
Dividends paid to Company's shareholders		(105)	(26)
Dividends paid to non-controlling interests		(4)	-
Sale of treasury shares		-	8
(Acquisition) and sale of non-controlling interests, net		-	(1)
Net cash used in financing activities		(15,996)	(1,630)
Net effect of currency translation and allowances in cash		(729)	(216)
Net increase in cash and cash equivalents		52,872	25,332
Cash and cash equivalents at beginning of period		36,609	26,640
Cash and cash equivalents at end of period		89,481	51,972
Supplementary cash flow information:

Total cash paid for interest 1,837 352

* Some figures were adjusted due to the final valuation of Belectric Group companies and company ELIMER, a.s., at fair value on the date of acquisition and do not correspond to the amounts stated in the interim consolidated financial statements as of March 31, 2022.

CEZ GROUP NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS AS OF MARCH 31, 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 March 31, 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 three months ended March 31, 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 three months of 2023 (in CZK millions):

Cash outflow on acquisition of the subsidiaries	63
Cash outflow on acquisitions of the subsidiaries, which were not part of consolidation	105
Payments of payables from acquisitions of previous periods	7
Less:
Cash and cash equivalents acquired on acquisition of the subsidiaries	(9)
Total cash outflows on acquisition	166

4.1. Acquisitions of Subsidiaries in the First three 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.

The fair values of acquired identifiable assets and liabilities and the purchase consideration 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
Share of the Group being acquired	100 %
Property, plant and equipment, net Cash and cash equivalents Materials and supplies, net Another current assets	17 9 3 1
Trade payables Another current liabilities	(1) (1)
Total net assets	28
Share of net assets acquired	28
Goodwill	36
Total purchase consideration	64
Liabilities from acquisition of the subsidiary	(1)
Cash outflow on acquisition in 2023	63
Less: Cash and cash equivalents in the subsidiary acquired	(9)
Cash outflow on acquisition in 2023, net	54

If the acquisition had taken place at the beginning of the year 2023, net income for CEZ Group as of March 31, 2023 would have been CZK 10,821 million and the revenues and other operating income from continuing operations would have been CZK 93,382 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
Revenues and other operating income Income before other income (expense) and	5
income taxes Net income	1 1
Net income attributable: Equity holders of the parent Non-controlling interests	1 -

5. Other Financial Assets, Net

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

	March 31, 2023			December 31, 2022
	Non-current assets	Current assets	Total	Non-current assets	Current assets	Total
Term deposits	1	449	450	-	100	100
Other financial receivables Receivables from sale of subsidiaries, associates	2,694	87	2,781	2,728	31	2,759
and joint-ventures	-	2,463	2,463	-	2,450	2,450
Investment in finance lease	192	45	237	200	46	246
Total financial assets at amortized cost	2,887	3,044	5,931	2,928	2,627	5,555
Equity financial assets – investments in Inven
Capital, SICAV, a.s., ČEZ sub-funds	4,198	-	4,198	3,840	-	3,840
Commodity and other derivatives	509	142,281	142,790	446	262,159	262,605
Total financial assets at fair value through profit
or loss	4,707	142,281	146,988	4,286	262,159	266,445
Veolia Energie ČR, a.s.	709	-	709	709	-	709
Other financial assets	300	-	300	178	-	178
Total equity financial assets	1,009	-	1,009	887	-	887
Fair value of cash flow hedge derivatives	15,101	7,165	22,266	8,612	3,971	12,583
Unfinished investments	4	-	4	2	-	2
Debt financial assets	-	9,358	9,358	-	9,752	9,752
Total financial assets at fair value through other
comprehensive income	16,114	16,523	32,637	9,501	13,723	23,224
Total	23,708	161,848	185,556	16,715	278,509	295,224

The decrease of short-term commodity derivatives in the first three months of 2023 is caused by physical delivery of the commodity or by the financial settlement. The decrease 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 8.

6. Emission Rights

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

	March 31, 2023	December 31, 2022
Emission rights for own use Emission rights held for trading Green and similar certificates	20,804 5,975 146	23,093 6,408 167
Total	26,925	29,668

7. Long-term Debt

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

	March 31, 2023	December 31, 2022
3.005% Eurobonds, due 2038 (JPY 12,000 million)	1,944	2,071
2.845% Eurobonds, due 2039 (JPY 8,000 million)	1,297	1,382
4.875% Eurobonds, due 2025 (EUR 750 million)	18,423	18,694
2.160% Eurobonds, due in 2023 (JPY 11,500 million)	-	1,988
4.600% Eurobonds, due in 2023 (CZK 1,250 million)	1,302	1,288
4.375% Eurobonds, due 2042 (EUR 50 million)	1,191	1,209
4.500% Eurobonds, due 2047 (EUR 50 million)	1,189	1,207
4.383% Eurobonds, due 2047 (EUR 80 million)	1,926	1,957
3.000% Eurobonds, due 2028 (EUR 725 million)	17,672	18,024
0.875% Eurobonds, due 2026 (EUR 750 million)	17,558	17,978
2.375% Eurobonds, due 2027 (EUR 600 million)	14,337	14,628
5.625% U.S. bonds, due 2042 (USD 300 million)	6,609	6,824
4.500% Registered bonds, due 2030 (EUR 40 million)	944	958
4.750% Registered bonds, due 2023 (EUR 40 million)	-	1,006
4.700% Registered bonds, due 2032 (EUR 40 million)	981	995
4.270% Registered bonds, due 2047 (EUR 61 million)	1,433	1,456
3.550% Registered bonds, due 2038 (EUR 30 million)	703	741
Total bonds and debentures	87,509	92,406
Less: Current portion	(3,295)	(5,725)
Bonds and debentures, net of current portion	84,214	86,681
Long-term bank and other loans, lease liabilities:	62,418	56,684
Less: Current portion	(2,965)	(3,131)
Long-term bank and other loans, lease payables, net of current portion Total long-term debt Less: Current portion	59,453 149,927 (6,260)	53,553 149,090 (8,856)
Total long-term debt, net of current portion	143,667	140,234

8. Other Financial Liabilities

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

	March 31, 2023
	Long-term liabilities	Short-term liabilities	Total
Payables from non-current assets purchase Other	301 1,846	- 482	301 2,328
Financial liabilities at amortized cost	2,147	482	2,629
Cash flow hedge derivatives Commodity and other derivatives Liabilities from put options held by non-controlling interests Contingent consideration from the acquisition of subsidiaries	16,542 123 495 352	21,988 127,496 - 247	38,530 127,619 495 599
Financial liabilities at fair value	17,512	149,731	167,243
Total	19,659	150,213	169,872

	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 three months of 2023 is caused by physical delivery of the commodity or by the financial settlement. The decrease 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.

9. Short-term Loans

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

	March 31, 2023	December 31, 2022
Bank loans	7,584	4,805
Other loans	23,553	48,230
Bank overdrafts	80	21
Total	31,217	53,056

10. Revenues and Other Operating Income

The composition of revenues and other operating income for the first three months ended March 31, 2023 and 2022 is as follows (in CZK millions):

	1-3/2023	1-3/2022
Sales of electricity:
Sales of electricity to end customers Sales of electricity through energy exchange and other	35,458	19,620
organized markets	16,792	25,211
Sales of electricity to traders	11,342	10,144
Sales to distribution and transmission companies	43	136
Other sales of electricity	1,902	2,226
Effect of hedging – presales of electricity Effect of hedging – currency risk hedging	(10,036) (260)	(14,130) (390)
Total sales of electricity	55,241	42,817
Sales of gas, coal and heat:
Sales of gas	11,038	4,888
Sales of coal	2,076	1,146
Sales of heat	4,817	3,781
Total sales of gas, coal and heat	17,931	9,815
Total sales of electricity, heat, gas and coal	73,172	52,632
Sales of services and other revenues:
Distribution services	9,469	9,416
Other services	9,057	8,068
Rental income	46	38
Revenues from goods sold	281	330
Other revenues	752	446
Total sales of services and other revenues	19,605	18,298
Other operating income:
Gain on sale of emission rights for own use	-	4,283
Granted green and similar certificates	46	49
Contractual fines and interest fees for delays	65	252
Gain on sale of property, plant and equipment	108	61
Gain on sale of material	53	39
Other	331	383
Total other operating income	603	5,067
Total revenues and other operating income	93,380	75,997

Revenues from contracts with customers for the three months ended March 31, 2023 and 2022 were CZK 103,027 million and CZK 85,412 million, respectively, and can be linked to the above figures as follows:

	1-3/2023	1-3/2022
Sales of electricity, heat, gas and coal Sales of services and other revenues	73,172 19,605	52,632 18,298
Total revenues	92,777	70,930
Adjustments: Effect of hedging – presales of electricity Effect of hedging – currency risk hedging Rental income	10,036 260 (46)	14,130 390 (38)
Revenues from contracts with customers	103,027	85,412

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, 2023 and 2022 is as follows (in CZK millions):

	1-3/2023	1-3/2022
Gain from electricity derivative trading	1,025	875
Gain (loss) from gas derivative trading	(1,775)	11,686
Gain (loss) from oil derivative trading	(4)	4
Gain (loss) from coal derivative trading	15	(1)
Gain from emission rights derivative trading	1,476	527
Total gains from commodity derivative trading	737	13,091

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.

12. Other Operating Expenses

Other operating expenses for the three months ended March 31, 2023 and 2022 are as follows (in CZK millions):

	1-3/2023	1-3/2022
Change in provisions	591	445
Levy on revenues above price caps	(10,144)	-
Other taxes and fees	(678)	(671)
Other	(1,193)	(1,121)
Total other operating expenses	(11,424)	(1,347)

13. Income Taxes

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

	1-3/2023		1-3/2022
	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	47,524	(34,840)	12,684	(41,710)	7,925	(33,785)
Cash flow hedges reclassified to statement of income Disposal of debt instruments	10,689 23	(7,025) (3)	3,664 20	14,669 (1)	(2,787) -	11,882 (1)
Change in fair value of debt instruments	500	(94)	406	(784)	150	(634)
Translation differences – subsidiaries Translation differences –	(377)	-	(377)	(239)	-	(239)
associates and joint-ventures Disposal of translation differences	(125) -	- -	(125) -	(54) (19)	- -	(54) (19)
Share on other equity movements of associates and joint-ventures Change in fair value of equity	(61)	-	(61)	(4)	-	(4)
instruments	-	-	-	1	-	1
Total	58,173	(41,962)	16,211	(28,141)	5,288	(22,853)

14. 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):

	1-3/2023	1-3/2022
Income before other income (expenses) and income
taxes (EBIT)	24,298	36,168
Depreciation and amortization	8,357	7,569
Impairment of property, plant and equipment and intangible assets	(14)	-
Gains and losses on sale of property, plant and equipment, net1)	(107)	(61)
EBITDA	32,534	43,676

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):

	1-3/2023	1-3/2022
Operating income	93,380	75,997
Gains and losses from commodity derivative trading	737	13,091
Purchase of electricity, gas and other energies	(20,652)	(17,633)
Fuel and emission rights	(11,630)	(11,526)
Services	(7,437)	(6,613)
Capitalization of expenses to the cost of assets and
change in own inventories	1,416	1,516
Levy on revenues above price caps1)	(10,144)	-
Other2)	(1,275)	(239)
Gross margin	44,395	54,593

1) Levy on revenues above price caps is part of the statement of income line-item Other operating expenses (Note 12).

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 three months ended March 31, 2023 and 2022 and at December 31, 2022 (in CZK millions):

March 31, 2023:	Gene ration	Distribu tion	Sales	Mining	Combined	Elimina tion	Consoli dated
Revenues and other operating income – other than intersegment Revenues and other operating	26,294	9,481	55,351	2,254	93,380	-	93,380
income – intersegment	50,226	101	7,712	3,713	61,752	(61,752)	-
Total revenues and other operating income Thereof:	76,520	9,582	63,063	5,967	155,132	(61,752)	93,380
Sales of electricity, heat, gas and coal Sales of services and other revenues Other operating income	72,828 3,395 297	- 9,490 92	54,815 8,056 192	5,561 399 7	133,204 21,340 588	(60,032) (1,735) 15	73,172 19,605 603
Revenues and other operating income, including result from commodity derivative trading Total sales of electricity, including the result of electricity	77,561	9,582	62,960	5,967	156,070	(61,953)	94,117
trading1) Gross margin EBITDA Depreciation and amortization	58,625 31,320 25,768 (5,659)	- 7,480 5,056 (1,772)	40,220 2,167 (1,605) (514)	- 5,781 3,886 (412)	98,845 46,748 33,105 (8,357)	(42,579) (2,353) (571) -	56,266 44,395 32,534 (8,357)
Impairment of property, plant and equipment and intangible assets EBIT Interest on debt and provisions Interest income Share of profit (loss) from associates and joint-ventures Income taxes Net income	- 20,192 (3,546) 1,252 (10) (12,001) 6,946	- 3,305 (286) 154 375 (598) 2,733	- (2,116) (88) 371 38 (201) (2,071)	14 3,488 (165) 144 (18) (669) 2,813	14 24,869 (4,085) 1,921 385 (13,469) 10,421	- (571) 270 (270) - (103) 400	14 24,298 (3,815) 1,651 385 (13,572) 10,821
Identifiable assets Investment in associates and joint-ventures Unallocated assets	277,464 2,553	127,278 -	11,542 451	16,419 644	432,703 3,648	(207) -	432,496 3,648 506,949
Total assets							943,093
Capital expenditure	3,048	3,107	316	358	6,829	(60)	6,769

1) The item contains the line Total sales of electricity (Note 10) and the line Gain from electricity derivative trading (Note 11).

March 31, 2022 (adjusted1) ):	Gene ration	Distribu tion	Sales	Mining	Combined	Elimina tion	Consoli dated
Revenues and other operating income – other than intersegment Revenues and other operating	33,118	9,418	32,167	1,294	75,997	-	75,997
income – intersegment	26,369	67	3,774	2,129	32,339	(32,339)	-
Total revenues and other operating income Thereof:	59,487	9,485	35,941	3,423	108,336	(32,339)	75,997
Sales of electricity, heat, gas and coal	51,527	-	28,976	3,061	83,564	(30,932)	52,632
Sales of services and other revenues	3,317	9,394	6,601	335	19,647	(1,349)	18,298
Other operating income	4,643	91	364	27	5,125	(58)	5,067
Revenues and other operating income, including result
from commodity derivative trading Total sales of electricity, including the result of electricity	72,555	9,485	35,965	3,423	121,428	(32,340)	89,088
trading2)	43,719	-	22,229	-	65,948	(22,256)	43,692
Gross margin	41,845	7,378	3,377	3,396	55,996	(1,403)	54,593
EBITDA	36,700	5,164	(104)	1,922	43,682	(6)	43,676
Depreciation and amortization Impairment of property, plant and equipment and	(5,089)	(1,603)	(501)	(376)	(7,569)	-	(7,569)
intangible assets	-	(3)	(1)	4	-	-	-
EBIT	31,643	3,577	(606)	1,560	36,174	(6)	36,168
Interest on debt and provisions	(1,363)	(192)	(68)	(71)	(1,694)	201	(1,493)
Interest income	247	66	152	42	507	(201)	306
Share of profit (loss) from associates and joint-ventures	(6)	515	32	(13)	528	-	528
Income taxes	(5,658)	(653)	(79)	(296)	(6,686)	-	(6,686)
Net income	22,854	2,799	(191)	1,252	26,714	(7)	26,707
Capital expenditure	1,334	2,737	300	313	4,684	(30)	4,654
	Gene	Distribu				Elimina	Consoli
December 31, 2022:	ration	tion	Sales	Mining	Combined	tion	dated
Identifiable assets Investment in associates and joint-ventures Unallocated assets	281,176 2,630	125,898 -	11,751 451	16,458 662	435,283 3,743	(164) -	435,119 3,743 668,518
Total assets							1,107,380

1) Some figures were adjusted due to the final valuation of Belectric Group companies and company ELIMER, a.s., at fair value on the date of acquisition.

2) The item contains the line Total sales of electricity (Note 10) and the line Gain from electricity derivative trading (Note 11).

15. Events after the Balance Sheet date

On April 20, 2023, a court judgment became final in the dispute between ČEZ Prodej, a.s., and Správa železnic, a state organization, for damages in the amount of CZK 858 million resulting from the failure to collect the agreed amount of electricity in 2011. The final judgment satisfied ČEZ Prodej's claim in the amount of CZK 727 million and in the amount of CZK 131 million is rejecting it. On April 25, 2023, Správa železnic paid the amount owed without accessories in the amount of CZK 727 million and the costs of the proceedings in the amount of CZK 12 million. Accessories that have not yet been paid amount to approximately CZK 675 million.

ČEZ Prodej continues to lead a similar lawsuit for damages in the amount of CZK 805 million relating to electricity supplies to Správa železnic in 2010.

On May 10, 2023, the Board of Directors of ČEZ, a. s., approved a dividend proposal in the amount of CZK 117 per share to be submitted to the general meeting, which will be held on June 26, 2023.