CEZ Group Energy Transformation and Financial Results

CZECH REPUBLIC: ELECTRICITY DISTRIBUTION - WACC WACC set using CAPM formula: E D WACC-(k)+(k) (1-T)] ke = r; + ẞ × MRP. D+E ka = r+ + credit risk margin (CRM) Risk free rate (r) was derived from median yields of 10-y Czech sovereign bonds for 10 years period Credit risk margin set as a difference between BBB rated corporate bonds and 10Y AAA EUR Sovereign bonds WACC components 5th regulatory period 2021-2025 Risk free rate (r₂) 2.04% Market risk premium (MRP) 6.54% ẞ unlevered 0.51 ẞ levered (B) 0.90 Cost of equity (ke) 7.94% Credit risk margin (CRM) 1.09% Cost of debt, pre tax (kd) 3.14% Tax rate (T) 19% Cost of debt, post-tax 2.54% Debt/(Debt+Equity) 48.92% WACC (nominal, before tax) 6.54% 99 64 Π

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