ČEZ gets green light: shareholders approve new distribution company

Energy group ČEZ can begin the process of spinning off the non-generation part of the company into a new subsidiary. Shareholders approved the move at the general meeting. Group spokesperson Ladislav Kříž told ČTK that the new company should be established within weeks of the approval, with selected businesses to be incorporated into it in the first quarter of 2027. According to analysts, the proposal is a crucial step towards the planned nationalisation of the company.

The creation of the new company was approved by more than 90 percent of votes present. The state currently holds around 70 percent of shares in the group, with the remainder owned by minority shareholders. At the start of the meeting at 09:00, 480 shareholders were present at the Prague Congress Centre, representing 75.22 percent of shares with a total value of more than CZK 40 billion, ČEZ CEO Daniel Beneš said in the morning.

Energy sales and distribution, trading and energy services will be spun off from ČEZ's current structure into the new company. These will include ČEZ Prodej, ČEZ Distribuce, GasNet, ČEZ ESCO and trading companies. The energy group will retain a 51 percent stake in the new subsidiary, while it plans to offer the remaining share to investors in the future.

According to the ČEZ board of directors, the spun-off company could gain better access to other sources of financing, partly because it will not be tied to coal-fired and nuclear power plants. This may deter some investors in certain cases. According to vice-chairman of the board Pavel Cyrani, this could improve the financial flexibility of the entire group. The sale of a minority stake could then provide funds for a possible buyout of the group's minority shareholders, he said.

Before the approval of changes to the group's structure, Cyrani said the subsidiary had yet to be valued. However, the book value of ČEZ Distribuce's assets is CZK 110 billion, the GasNet stake is worth CZK 11 billion, ČEZ Prodej CZK 9 billion, ČEZ ESCO CZK 15 billion and Elevion Group CZK 16 billion, he said. Cyrani noted, however, that their market value would need to be determined for the purposes of contributing the companies to the new business.

According to Cyrani, the new business has not yet been given a name, and the working acronym DSZS is currently being used. The board has also not set a timetable for a share buyback. This would be discussed by another general meeting in the future.

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 that the cabinet wants to complete the entire 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 thus 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 decrease of around CZK 400 million. Operating revenues fell by three percent year on year to CZK 333.4 billion.