A team is being set up at ČEZ to split off a new subsidiary. What comes next?

A project team has been set up at energy group ČEZ to oversee steps related to the carve-out of a new subsidiary focused on trading and distribution. Supporting documentation and talks with rating agencies are also being prepared. In addition, companies including ČEZ Distribuce, Czech Gas Networks, ČEZ Prodej, ČEZ ESCO and Elevion Group will begin to be valued. ČEZ spokesman Ladislav Kříž told ČTK today. The process of establishing the new subsidiary was approved by the group’s general meeting on Monday. ČEZ’s board of directors told shareholders that it would then begin taking the necessary steps.

An expert valuation will determine the market value of the companies that are to be contributed to the newly established subsidiary. According to Kříž, this should take place by the end of the first quarter of next year. However, work on the individual steps will begin earlier and proceed gradually.

The companies to be valued should include ČEZ Distribuce, Czech Gas Networks, ČEZ Prodej, ČEZ ESCO, Elevion, as well as trading activities. In the case of trading, however, these activities must first be carved out into the subsidiary itself before they can be valued.

The book value of ČEZ Distribuce’s assets currently stands at CZK 110 billion, the GasNet stake at CZK 11 billion, ČEZ Prodej at CZK 9 billion, ČEZ ESCO at CZK 15 billion and Elevion Group at CZK 16 billion. However, representatives of the board of directors said at Monday’s general meeting that their market value would need to be determined for the purposes of contributing the companies to the new business.

The establishment of the new company was confirmed by more than 90 percent of votes present at the general meeting. The state currently holds around 70 percent of the group’s shares, with the remainder owned by minority shareholders. According to analysts, this is a key step towards the planned nationalisation of the energy group.

The nationalisation of the company is one of the stated goals of the current government, which justifies it by the need to give the company greater freedom to invest. Prime Minister Andrej Babiš (ANO) previously said the cabinet wants to complete the process of taking full control of ČEZ no later than the end of the current electoral term in 2029.

ČEZ earned CZK 27.4 billion last year. The company’s net profit fell year on year by CZK 1.7 billion, or 5.8 percent. Operating profit before tax and depreciation (EBITDA) amounted to CZK 137 billion last year, representing a year-on-year decline of approximately CZK 400 million. Operating revenue fell three percent year on year to CZK 333.4 billion.