Obligation CZE 0.875% ( XS1912656375 ) en EUR

CZE

100 % ▲

Republique tcheque

XS1912656375 ( en EUR )

0.875% par an ( paiement annuel )

21/11/2022 - Obligation échue

Prospectus brochure de l'obligation CEZ XS1912656375 en EUR 0.875%, échue

100 000 EUR

500 000 000 EUR

CEZ est une importante société énergétique tchèque, principalement active dans la production et la distribution d'électricité et de chaleur.

L'Obligation émise par CZE ( Republique tcheque ) , en EUR, avec le code ISIN XS1912656375, paye un coupon de 0.875% par an.
Le paiement des coupons est annuel et la maturité de l'Obligation est le 21/11/2022

BASE PROSPECTUS
CEZ, a. s.
(incorporated with limited liability in the Czech Republic)
8,000,000,000
Euro Medium Term Note Programme
Under this 8,000,000,000 Euro Medium Term Note Programme (the "Programme"), CEZ, a. s. (the "Issuer" or "CEZ") may from
time to time issue notes (the "Notes") denominated in any currency agreed between the Issuer and the relevant Dealer (as defined
below). The maximum aggregate nominal amount of all Notes from time to time outstanding under the Programme is specified
under "Overview of the Programme Programme Size" and will not exceed 8,000,000,000 (or its equivalent in other currencies
calculated as described in the Amended and Restated Programme Agreement described herein), subject to any increase as
described herein.
The Notes may be issued on a continuing basis to one or more of the Dealers specified under "Overview of the Programme" and
any additional Dealer appointed under the Programme from time to time by the Issuer (each a "Dealer" and together the
"Dealers"), which appointment may be for a specific issue or on an ongoing basis. References in this Base Prospectus to the
"relevant Dealer" shall, in the case of an issue of Notes being (or intended to be) subscribed by more than one Dealer, be to all
Dealers agreeing to subscribe such Notes.
An investment in Notes issued under the Programme involves certain risks. For a discussion of these risks see "Risk
Factors".
Application has been made to the Commission de Surveillance du Secteur Financier (the "CSSF") in its capacity as competent
authority under the Luxembourg Act dated July 10, 2005 on prospectuses for securities (the "Prospectus Act 2005") to approve this
document as a base prospectus. By approving this Base Prospectus, the CSSF assumes no responsibility for the economic and
financial soundness of the transactions contemplated by this Base Prospectus or the quality or solvency of the Issuer in accordance
with Article 7(7) of the Prospectus Act 2005. Application has also been made to the Luxembourg Stock Exchange for Notes issued
under the Programme to be admitted to trading on the Luxembourg Stock Exchange's regulated market and to be listed on the
Official List of the Luxembourg Stock Exchange. The Programme provides that Notes may be listed or admitted to trading, as the
case may be, on such other or further stock exchanges or markets as may be agreed between the Issuer and the relevant Dealer. The
Issuer may also issue unlisted Notes and/or Notes not admitted to trading on any market.
References in this Base Prospectus to Notes being "listed" (and all related references) shall mean that such Notes have been
admitted to trading on the Luxembourg Stock Exchange's regulated market and have been admitted to the Official List of the
Luxembourg Stock Exchange. The Luxembourg Stock Exchange's regulated market is a regulated market for the purposes of the
Markets in Financial Instruments Directive (Directive 2014/65/EU), as amended.
The requirement to publish a prospectus under the Prospectus Directive only applies to Notes which are to be admitted to trading
on a regulated market in the European Economic Area and/or offered to the public in the European Economic Area, other than in
circumstances where an exemption is available under Article 3.2 of the Prospectus Directive (as implemented in the relevant
Member State(s)). References in this Base Prospectus to "Exempt Notes" are to Notes which are neither to be admitted to trading
on a regulated market for the purposes of the Markets in Financial Instruments Directive (Directive 2014/65/EU), as amended, in
the European Economic Area nor offered in the European Economic Area in circumstances where a prospectus is required to be
published under the Prospectus Directive. The CSSF has neither approved nor reviewed information contained in this Base
Prospectus in connection with Exempt Notes.
Notice of the aggregate nominal amount of Notes, interest (if any) payable in respect of Notes, the issue price of Notes and certain
other information which is applicable to each Tranche (as defined under "Terms and Conditions of the Notes") of Notes will (other
than in the case of Exempt Notes, as defined above) be set out in a final terms document (the "Final Terms") which will be filed
with the CSSF. Copies of Final Terms in relation to Notes to be listed on the Luxembourg Stock Exchange will also be published
on the website of the Luxembourg Stock Exchange (www.bourse.lu). In the case of Exempt Notes, notice of the aggregate nominal
amount of Notes, interest (if any) payable in respect of such Exempt Notes, the issue price of such Exempt Notes and certain other
information which is applicable to each Tranche of such Exempt Notes will be set out in a pricing supplement document (the
"Pricing Supplement").
The Issuer has been rated A- (stable outlook) by Standard & Poor's Credit Market Services Europe Limited ("Standard & Poor's")
and Baa1 (stable outlook) by Moody's Investors Service Ltd. ("Moody's"). The Programme has been rated A- by Standard &
Poor's and Baa1 by Moody's. Each of Standard & Poor's and Moody's is established in the European Union and is registered
under the Regulation (EC) No. 1060/2009 (as amended) (the "CRA Regulation"). As such each of Standard & Poor's and Moody's
is included in the list of credit rating agencies published by the European Securities and Markets Authority ("ESMA") on its
website (https://www.esma.europa.eu/supervision/credit-rating-agencies/risk) in accordance with the CRA Regulation. Notes
issued under the Programme may be rated or unrated by either of the rating agencies referred to above. Where a Tranche of Notes
is rated, such rating will be disclosed in the Final Terms (or Pricing Supplement, in the case of Exempt Notes) and will not
necessarily be the same as the rating assigned to the Programme by the relevant rating agency. A security rating is not a
recommendation to buy, sell or hold securities and may be subject to suspension, reduction or withdrawal at any time by the
assigning rating agency.
Amounts payable on Floating Rate Notes will be calculated by reference to one of LIBOR, EURIBOR or PRIBOR, as specified in
the relevant Final Terms (or Pricing Supplement, in the case of Exempt Notes). As at the date of this Base Prospectus, the
administrators of LIBOR, EURIBOR and PRIBOR are not included in ESMA's register of administrators under Article 36 of the
Regulation (EU) No. 2016/1011 (the "Benchmarks Regulation"). As far as the Issuer is aware, the transitional provisions in Article
51 of the Benchmarks Regulation apply, such that each of the Intercontinental Exchange Benchmark Administration Ltd (as
1

administrator of LIBOR), the European Money Markets Institute (as administrator of EURIBOR) and the Czech Financial
Benchmark Facility s.r.o. (as administrator of PRIBOR) are not currently required to obtain authorisation/registration (or, if located
outside the European Union, recognition, endorsement or equivalence).

Arrangers
BNP PARIBAS
CITIGROUP
The date of this Base Prospectus is April 20, 2018.

IMPORTANT INFORMATION
This Base Prospectus comprises a base prospectus in respect of all Notes, other than Exempt Notes,
issued under the Programme for the purposes of Article 5.4 of the Prospectus Directive. When used in this Base
Prospectus, "Prospectus Directive" means Directive 2003/71/EC (as amended, including by Directive
2010/73/EU), and includes any relevant implementing measure in a relevant Member State of the European
Economic Area. Application has been made to the Commission de Surveillance du Secteur Financier for this
document to be approved as such a base prospectus. The Issuer, having made all reasonable enquiries confirms
that this Base Prospectus contains all information regarding the Issuer, the Issuer and its subsidiaries taken as a
whole (the "CEZ Group"), the electricity industry in the Czech Republic and the Notes which is (in the context of
the issue of the Notes) material; that such information is true and accurate in all material respects and is not
misleading in any material respect; that any opinions, estimates, or intentions expressed in this Base Prospectus
on the part of the Issuer are honestly held or made and are not misleading in any material respect; that this Base
Prospectus does not omit to state any material fact necessary to make such information, opinions, estimates or
intentions (in such context) not misleading in any material respect; that this Base Prospectus does not contain
any untrue statement of a material fact or omit to state any material fact necessary to make the statements in
this Base Prospectus, in the light of the circumstances under which they were made, not misleading; and that all
proper enquiries have been made to ascertain and to verify the foregoing.
Without prejudice to the foregoing, the Issuer accepts responsibility for the information contained in
this Base Prospectus and the Final Terms for each Tranche of Notes issued under the Programme. The
information contained in this Base Prospectus is in accordance with the facts and does not omit anything likely
to affect the import of such information. The obligations of the Issuer are not in any way guaranteed by, or
otherwise backed by the credit of, the Czech Republic or any agency, ministry or political subdivision thereof.
This Base Prospectus is to be read in conjunction with all documents which are deemed to be
incorporated herein by reference (see "Documents Incorporated by Reference"). This Base Prospectus shall be
read and construed on the basis that such documents are incorporated by reference and form part of this Base
Prospectus.
The Dealers have not independently verified the information contained herein. Accordingly, no
representation, warranty or undertaking, express or implied, is made and no responsibility or liability is
accepted by the Dealers as to the accuracy or completeness of the information contained or incorporated by
reference in this Base Prospectus or any other information provided by the Issuer in connection with the
Programme. No Dealer accepts any liability in relation to the information contained or incorporated by
reference in this Base Prospectus or any other information provided by the Issuer in connection with the
Programme.
Nothing contained in this Base Prospectus is or should be relied upon as a promise or representation of
future results or events. No person is or has been authorized by the Issuer to give any information or to make
any representation not contained in or not consistent with this Base Prospectus or any other information
supplied in connection with the Programme or the Notes and, if given or made, such information or
representation must not be relied upon as having been authorized by the Issuer or any of the Dealers.
Neither this Base Prospectus nor any other information supplied in connection with the Programme or
any Notes (a) is intended to provide the basis of any credit or other evaluation or (b) should be considered as a
recommendation by the Issuer or any of the Dealers that any recipient of this Base Prospectus or any other
information supplied in connection with the Programme or any Notes should purchase any Notes. Each investor
contemplating purchasing any Notes should make its own independent investigation of the financial condition
and affairs, and its own appraisal of the creditworthiness, of the Issuer. Neither this Base Prospectus nor any
other information supplied in connection with the Programme or the issue of any Notes constitutes an offer or
invitation by or on behalf of the Issuer or any of the Dealers to any person to subscribe for or to purchase any
Notes.
Neither the delivery of this Base Prospectus nor the offering, sale or delivery of any Notes shall in any
circumstances imply that the information contained herein concerning the Issuer is correct at any time
subsequent to the date hereof or that any other information supplied in connection with the Programme is
3

correct as of any time subsequent to the date indicated in the document containing the same. The Dealers
expressly do not undertake to review the financial condition or affairs of the Issuer during the life of the
Programme or to advise any investor in the Notes of any information coming to their attention.
IMPORTANT EEA RETAIL INVESTORS If the Final Terms in respect of any Notes (or Pricing
Supplement, in the case of Exempt Notes) includes a legend entitled "Prohibition of Sales to EEA Retail
Investors" the Notes are not intended to be offered, sold or otherwise made available to and should not be
offered, sold or otherwise made available to any retail investor in the European Economic Area ("EEA"). For
these purposes, a retail investor means a person who is one (or more) of: (i) a retail client as defined in point (11)
of Article 4(1) of Directive 2014/65/EU (as amended, "MiFID II"); (ii) a customer within the meaning of
Directive 2002/92/EC ("IMD"), where that customer would not qualify as a professional client as defined in
point (10) of Article 4(1) of MiFID II; or (iii) not a qualified investor as defined the Prospectus Directive.
Consequently no key information document required by Regulation (EU) No 1286/2014 (as amended, the
"PRIIPs Regulation") for offering or selling the Notes or otherwise making them available to retail investors in
the EEA has been prepared and therefore offering or selling the Notes or otherwise making them available to
any retail investor in the EEA may be unlawful under the PRIIPs Regulation.
MiFID II PRODUCT GOVERNANCE / TARGET MARKET The Final Terms in respect of any
Notes (or Pricing Supplement, in the case of Exempt Notes) will include a legend entitled "MiFID II product
governance" which will outline the target market assessment in respect of the Notes and which channels for
distribution of the Notes are appropriate. Any person subsequently offering, selling or recommending the Notes
(a "distributor") should take into consideration the target market assessment; however, a distributor subject to
MiFID II is responsible for undertaking its own target market assessment in respect of the Notes (by either
adopting or refining the target market assessment) and determining appropriate distribution channels.
A determination will be made in relation to each issue about whether, for the purpose of the Product
Governance rules under EU Delegated Directive 2017/593 (the "MiFID Product Governance Rules"), any Dealer
subscribing for any Notes is a manufacturer in respect of such Notes, but otherwise neither the Arranger nor the
Dealers nor any of their respective affiliates will be a manufacturer for the purpose of the MIFID Product
Governance Rules.
The Notes have not been and will not be registered under the United States Securities Act of 1933, as
amended, (the "U.S. Securities Act") and are subject to U.S. tax law requirements. Subject to certain exceptions,
Notes may not be offered, sold or delivered within the United States or to, or for the account or benefit of, U.S.
persons (see "Subscription and Sale").
This Base Prospectus does not constitute an offer to sell or the solicitation of an offer to buy any Notes
in any jurisdiction to any person to whom it is unlawful to make the offer or solicitation in such jurisdiction. The
distribution of this Base Prospectus and the offer or sale of Notes may be restricted by law in certain
jurisdictions. The Issuer and the Dealers do not represent that this Base Prospectus may be lawfully distributed,
or that any Notes may be lawfully offered, in compliance with any applicable registration or other requirements
in any such jurisdiction, or pursuant to an exemption available thereunder, or assume any responsibility for
facilitating any such distribution or offering. In particular, no action has been taken by the Issuer or the Dealers
which is intended to permit a public offering of any Notes or distribution of this Base Prospectus in any
jurisdiction where action for that purpose is required. Accordingly, no Notes may be offered or sold, directly or
indirectly, and neither this Base Prospectus nor any advertisement or other offering material may be distributed
or published in any jurisdiction, except under circumstances that will result in compliance with any applicable
laws and regulations. Persons into whose possession this Base Prospectus or any Notes may come must inform
themselves about, and observe, any such restrictions on the distribution of this Base Prospectus and the offering
and sale of Notes. In particular, there are restrictions on the distribution of this Base Prospectus and the offer or
sale of Notes in the United States, the European Economic Area (including the United Kingdom and the Czech
Republic) and Japan, see "Subscription and Sale".
This Base Prospectus has been prepared on a basis that would permit an offer of Notes with a
denomination of less than 100,000 (or its equivalent in any other currency), only in circumstances where there
is an exemption from the obligation under the Prospectus Directive to publish a prospectus in connection with
such an offer. As a result, any offer of Notes in any Member State of the European Economic Area which has
implemented the Prospectus Directive (each, a "Relevant Member State") must be made pursuant to an

4

exemption under the Prospectus Directive, as implemented in that Relevant Member State, from the requirement
to publish a prospectus for offers of Notes. Accordingly any person making or intending to make an offer of
Notes in that Relevant Member State may only do so in circumstances in which no obligation arises for the
Issuer or any Dealer to publish a prospectus pursuant to Article 3 of the Prospectus Directive or supplement a
prospectus pursuant to Article 16 of the Prospectus Directive, in each case, in relation to such offer. Neither the
Issuer nor any Dealer have authorized, nor do they authorize, the making of any offer of Notes in circumstances
in which an obligation arises for the Issuer or any Dealer to publish or supplement a prospectus for such offer.
This Programme is not a bond programme under the Czech Act No. 190/2004 Coll., on Bonds, as
amended (the "Bonds Act") (Section 11). The issue of Notes will be notified to the Czech National Bank under
Section 8a of the Czech Act No. 15/1998 Coll., on Capital Markets Supervision, as amended.
The investment activities of certain investors are subject to legal investment laws and regulations, or
review or regulation by certain authorities. Each potential investor should consult its legal advisors to determine
whether and to what extent (1) the Notes are legal investments for it, (2) the Notes can be used as collateral for
various types of borrowing and (3) other restrictions apply to its purchase or pledge of the Notes. Financial
institutions should consult their legal advisors or the appropriate regulators to determine the appropriate
treatment of the Notes under any applicable risk-based capital or similar rules.
All references in this document to "U.S. dollars" and "U.S.$" refer to United States dollars and to
"Czech crowns", "CZK" and "Kc" refer to the lawful currency for the time being of the Czech Republic. In
addition, all references to "euro", "EUR" and "" refer to the currency introduced at the start of the third stage
of European economic and monetary union pursuant to the Treaty on the Functioning of the European Union,
as amended, all references to "BGN" and "Bulgarian Lev" are to the lawful currency of Bulgaria, all references
to "PLN" and "Polish zloty" are to the lawful currency of Poland and all references to "RON" and "Romanian
lei" refer to the lawful currency of Romania.
Certain figures included in this Base Prospectus have been subject to rounding adjustments;
accordingly, figures shown for the same item of information presented in different tables may vary slightly, and
figures shown as totals in certain tables may not be an arithmetical aggregate of the figures preceding such
totals.
CEZ, a. s. was incorporated as a joint stock company under the laws of the Czech Republic on May 6,
1992 with unlimited duration and was registered in the Commercial Register administered by the Municipal
Court in Prague, File B, Section 1581, with identification number 45274649. Its registered office is at Duhová
2/1444, 140 53 Prague 4, Czech Republic and its telephone number at that address is +420 211 041 111. In this
Base Prospectus, references to "CEZ", "CEZ" and the "Issuer" are to CEZ, a. s. and references to the "CEZ
Group", the "Group", "we", "us" and "our" are to CEZ, a. s. and its consolidated subsidiaries. The obligations
of the Issuer are not in any way guaranteed by, or otherwise backed by the credit of, the Czech Republic or any
agency, ministry or political subdivision thereof.

5

CONTENTS
Clause
Page
Risk Factors ...................................................................................................................................................... 7
Stabilization.................................................................................................................................................... 34
Presentation of Financial Information ............................................................................................................ 35
Forward-Looking Statements ......................................................................................................................... 37
Historical and Current Market and Industry Data .......................................................................................... 39
Selected Financial Information ...................................................................................................................... 40
Overview of the Programme .......................................................................................................................... 44
Documents Incorporated by Reference .......................................................................................................... 49
Glossary of Terms and Definitions ................................................................................................................ 51
Form of the Notes........................................................................................................................................... 58
Applicable Final Terms .................................................................................................................................. 60
Applicable Pricing Supplement ...................................................................................................................... 71
Terms and Conditions of the Notes ................................................................................................................ 82
Use of Proceeds ............................................................................................................................................ 108
Description of the Issuer .............................................................................................................................. 109
Description of other Indebtedness ................................................................................................................ 163
Regulation .................................................................................................................................................... 165
Management ................................................................................................................................................. 189
Principal Shareholders ................................................................................................................................. 204
Related Party transactions ............................................................................................................................ 205
Taxation ....................................................................................................................................................... 208
Subscription and Sale ................................................................................................................................... 213
General Information ..................................................................................................................................... 217

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RISK FACTORS
The Issuer believes that the following factors may affect its ability to fulfil its obligations under the Notes. All
of these factors are contingencies which may or may not occur and the Issuer is not in a position to express a view on
the likelihood of any such contingency occurring.
In addition, factors which are material for the purpose of assessing the market risks associated with the Notes
are also described below.
The Issuer believes that the factors described below represent the principal risks inherent in investing in the
Notes, but its inability to pay interest, principal or other amounts on or in connection with the Notes may occur for
other reasons which may not be considered significant risks by the Issuer based on information currently available to it
or which the Issuer may not currently be able to anticipate. Prospective investors should also read the detailed
information set out elsewhere in this Base Prospectus and reach their own views prior to making any investment
decision.
This Base Prospectus also contains forward-looking statements that involve risks and uncertainties. The
actual results of the CEZ Group may differ materially from those anticipated in these forward-looking statements as a
result of various factors, including the risks described below and elsewhere in this Base Prospectus. Please see
"Forward-Looking Statements".
Risks Related to Our Business and Operations
Any decreases in the prices obtained for our electricity and heat could have a material adverse effect on our results
of operations and financial condition.
In the ordinary course of our business, we are exposed to the risk of decreases in the prices obtained for our
electricity and heat. We sell the majority of our electricity at prices derived from European market prices, which are
mainly driven by the prices of E.U. emission allowances and the cost of raw materials, as well as by the European
aggregate supply and demand balance; available cross-border capacities; global oil, coal and gas prices and E.U. and
national regulation of the wholesale energy market. Furthermore, there is a strong correlation between the price of
electricity in the Czech Republic and the price of electricity in Germany, which is one of our export markets and the
primary price-setting market in the region. Changes in global commodity prices, available cross-border capacities
(caused, for example, by renewable energy sources or flow-based allocation) or a decline in electricity demand in
Europe, as a result of an economic slowdown, economic downturn or increased energy efficiency, could decrease the
price of electricity and could have a material adverse effect on our business, results of operations and financial
condition.
The operation of our power plants, in particular our nuclear power plants, is characterized by high fixed costs.
Some of our costs are not faced by our non-nuclear competitors because they are unique to the nuclear power
generation industry. Our ability to generate sufficient turnover at sufficient margin to cover our fixed costs is
dependent, in part, on favourable electricity prices and our overall sales and trading strategy. Because our costs are
relatively fixed in nature, they cannot be reduced in periods of low electricity prices. Therefore, in these circumstances,
it is possible that we may not produce sufficient cash flows from our electricity sales or trading activities, which could
have a material adverse effect on our business, results of operations and financial condition.
To mitigate such exposure, we have developed a hedging strategy of stabilizing margins by contracting for
deliveries of electricity to the wholesale market and to end-consumers up to six years ahead through the use of
derivative instruments and by concluding long-term contracts. We have also implemented a formal procedure that
measures our commodity risk, specifying a ceiling for the maximum acceptable risk. However, the hedging strategies
we pursue may create new risks and exposures and we cannot give any assurance that they will function as intended.
We cannot completely eliminate our exposure to potential decreases in electricity and heat prices. Any significant
decreases in electricity or heat prices, or indeed any further economic recessions, could reduce our revenues and have a
material adverse effect on our business, results of operations and financial condition.

7

The costs and risks associated with increasing our nuclear generation capacity could have a material adverse effect
on our business, results of operations and financial condition.
Pursuant to the updated State Energy Policy of the Czech Republic ("USEP") and the National Action Plan for
Development of Nuclear Energy in the Czech Republic ("NAPNE"), which were prepared by the Czech Government,
two new nuclear power plant units with total installed capacity of 2,500 MW should be constructed and commissioned
at the Dukovany and/or Temelín site by 2035 and, based upon predictions of the Czech Republic's electricity
generation and consumption, one additional nuclear power plant unit could possibly be constructed and commissioned
at the Dukovany or Temelín site in connection with expected end of the operation of the existing nuclear power plant
units at Dukovany following the year 2035. Neither the Czech Government nor CEZ has made the final decision as to
whether or not those new nuclear power plant units will be constructed. However, in accordance with our strategy to
meet future electricity demand, we are taking all necessary steps in order to be able to build new nuclear power plant
units at both Dukovany and Temelín sites by those deadlines and for the minimum cost as possible.
As of October 1, 2016, our projects for construction of new nuclear power plant units were spun off into
CEZ's two project subsidiaries Elektrárna Dukovany II, a.s. and Elektrárna Temelín II, a.s. incorporated by CEZ under
the laws of the Czech Republic. In December 2017, the Standing Committee for Nuclear Energy established by the
Czech Government (CEZ's controlling shareholder) investigated available options for developing new nuclear projects
in the Czech Republic. The following three main options were considered by that committee: (i) CEZ itself will
develop new nuclear units; (ii) the Czech Government will acquire from CEZ the two project subsidiaries - Elektrárna
Dukovany II, a.s. and Elektrárna Temelín II, a.s. - and will continue with the development of the new nuclear units on
its own; or (iii) the Czech Government will acquire from CEZ part of its existing business activities, including CEZ's
existing nuclear power plants, and will develop new nuclear units within a new entity (see also "Risk Factors - Future
privatization or split of CEZ may result in a credit downgrade or may affect our ability to repay debt, which could have
a material adverse effect on our business, results of operations and financial condition"). Support mechanisms,
including potential state guarantees, needed for each of these options are part of the ongoing analysis, in which CEZ is
participating. As at the date of this Base Prospectus, neither the Czech Government nor the Board of Directors of CEZ
has arrived at any conclusion on this matter.
The decision to increase the nuclear generation capacity of the Temelín and/or Dukovany nuclear power plants
may result in a significant capital expenditure investment, as well as imposing significant risks associated with building
a nuclear power plant, particularly the overall debt capacity risks and the risks and uncertainties involved in such a long
and complex project, which could have a material adverse effect on our business, results of operations and financial
condition. In addition, any failure to complete such a project within budget and on schedule may result in additional
cost and loss of revenues, which could have a material adverse effect on our business, results of operations and
financial condition. Moreover, the profitability of the projects would be subject to many of the risk factors that we
already face, including any political and regulatory developments, decrease in prices obtained for our electricity or
default or delay by our counterparties, and would therefore be highly uncertain. Any significant decrease in expected
revenues from the project or any significant increase in operating costs could have a material adverse effect on our
business, results of operations and financial condition.
Future privatization or split of CEZ may result in a credit downgrade or may affect our ability to repay debt, which
could have a material adverse effect on our business, results of operations and financial condition.
The Czech Republic, through the Ministry of Finance, holds approximately 69.8% of all shares in CEZ as of
the date of this Base Prospectus. Although we do not currently expect the Czech Government to privatize CEZ, we
cannot give any assurance that the Czech Government or any future government of the Czech Republic will not
ultimately seek to undertake a partial or full privatization of CEZ resulting in the sale of its entire shareholding in CEZ
or a part thereof.
In addition, according to the USEP, the Czech Government (CEZ's controlling shareholder): (i) aims to
preserve the full independence of the Czech Republic in electricity production after Czech coal reserves are exhausted;
and (ii) expects that two new nuclear power plant units with total installed capacity of 2,500 MW should be constructed
and commissioned at the Dukovany and/or Temelín site by 2035 and, based upon predictions of the Czech Republic's
electricity generation and consumption, one additional nuclear power plant unit could possibly be constructed and
commissioned at the Dukovany or Temelín site in connection with expected end of the operation of the existing nuclear
power plant units at Dukovany following the year 2035. To investigate available options for development of new
nuclear projects, the Czech Government established the Standing Committee for Nuclear Energy. In September 2017,

8

the Czech Government also requested CEZ to analyse alternative options for transformation of CEZ which will enable
CEZ to succeed in the future European energy market and meet targets set forth in the USEP and NAPNE. The options
considered by CEZ and the Standing Committee for Nuclear Energy include a variant where the Czech Government
will acquire from CEZ part of its existing business activities, including CEZ's existing nuclear power plants, and will
develop new nuclear units within a new entity. As at the date of this Base Prospectus, neither the Czech Government
nor the Board of Directors of CEZ has arrived at any conclusion on this matter. See also "Risk Factors The costs and
risks associated with increasing our nuclear generation capacity could have a material adverse effect on our business,
results of operations and financial condition."
We cannot give any assurance that the Czech Government or any future government of the Czech Republic (as
CEZ's controlling shareholder) will not ultimately seek to undertake any split of CEZ. It is not possible to rule out that
following such split of CEZ, CEZ will cease to be controlled by the Czech Government.
The credit rating currently assigned to CEZ by the rating agencies is based in part on the opinion of the rating
agencies that the Czech Republic may potentially provide support to CEZ in the event of financial distress. This rating
could come under pressure, potentially leading to a downgrade, if the Czech Republic is no longer a controlling
shareholder or if the Czech Republic seeks a split of CEZ, which could affect our ability to make repayments on our
debt or otherwise have a material adverse effect on our business, results of operations and financial condition.
The impairment losses in connection with our existing or acquired operations and our investments may have a
significant impact on our results and financial condition.
We may incur impairment losses in connection with our assets or investments mainly due to adverse
regulatory actions and adverse market conditions. In 2017 and 2016, we performed impairment tests of goodwill and
tests of other non-current assets where there was an indication that the carrying amounts could be impaired. Recognized
impairments mainly resulted from the drop in market prices of electricity in 2016, the negative outlook of electricity
distribution regulation in Bulgaria and changes in legislation relevant to our wind projects in Poland. In 2017, we
recognized total impairment losses of CZK 2,306 million, of which CZK 982 million were incurred with respect to the
distribution of electricity in Bulgaria. For information on impairment of property, plant and equipment and intangible
assets including goodwill in 2016 and 2017, please refer to Note 7 of our audited consolidated financial statements for
years ended December 31, 2016 and December 31, 2017 respectively. Any future adverse changes in the economic and
regulatory environment or market conditions of our reporting segments could result in further impairment charges,
which could have a material adverse effect on our business, results of operations and financial condition.
Our ability to access credit and bond markets and our ability to raise additional financing is in part dependent on
our credit ratings.
As of the date of this Base Prospectus, CEZ has a credit rating of A- with a stable outlook by Standard &
Poor's and Baa1 with a stable outlook by Moody's. Standard & Poor's (domiciled in the United Kingdom) and
Moody's (domiciled in the United Kingdom) are both established in the European Union and are included in the list of
credit rating agencies registered in accordance with Regulation (EC) No. 1060/2009, as amended by Regulation (EU)
No 513/2011, which is available on the ESMA website (https://www.esma.europa.eu/supervision/credit-rating-
agencies/risk). These ratings reflect each agency's opinion of our financial strength, operating performance and ability
to meet our debt obligations as they become due. These ratings are near the low-end of the respective rating agency's
scale of investment-grade ratings. Credit rating agencies now monitor companies more closely and have made liquidity,
and the key ratios associated with it, such as gross leverage ratio, a particular priority. Our ability to access the capital
markets and other forms of financing (or refinancing), and the costs connected with such activities, depend in part on
our credit ratings. We currently expect to operate with sufficient liquidity to maintain our current ratings. However, this
is dependent on a number of factors, some of which may be beyond our control. If we fail to maintain adequate levels
of liquidity, our ratings may be downgraded. On June 23, 2015, our credit rating granted by Moody's was downgraded
from A2 to A3 and on April 6, 2016, our credit rating granted by Moody's was downgraded from A3 to Baa1 due to
CEZ's exposure to a decreasing power price environment. On November 23, 2017 Standard & Poor's confirmed CEZ's
A- rating with stable outlook. On December 7, 2017 Moody's confirmed CEZ's Baa1 rating with stable outlook. In the
event our credit or debt ratings are further lowered by the rating agencies, we may not be able to raise additional
indebtedness on terms similar to our existing indebtedness or at all, and our ability to access credit and bond markets
and other forms of financing (or refinancing) could be limited, which could have a material adverse effect on our
business, results of operations and financial condition. Further lowering of our credit rating may also trigger our

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obligation to redeem certain debt securities prior to their scheduled redemption date which could have a material
adverse effect on our business, results of operations and financial condition.
We have substantial debt and our financial obligations could impair our ability to service our debt, carry out new
financings and fund our capital expenditures.
We have substantial debt and other financial obligations. We cannot give any assurances that our cash flow
from operations will be sufficient to service our debt and to meet other payment obligations or to fund our planned
capital expenditures without the need for additional external financing. Our substantial debt and other financial
obligations could limit our flexibility in planning for, or reacting to, changes in our business or our industry, which
could have a material adverse effect on our business, results of operations and financial condition.
Any reduction in demand for our electricity, heat, coal and gas as a result of poor economic performance in Europe
or otherwise could have a material adverse effect on our results of operations and financial condition.
In the ordinary course of our business we are exposed to the risk of a reduction in demand for our electricity,
heat, coal and gas, which may occur as a result of any global financial and economic uncertainty. The deterioration of
macroeconomic conditions in Europe and globally may decrease consumption and industrial production. Electricity
consumption is strongly affected by the level of economic activity in Europe. Any reduction in demand for our
electricity, heat, coal or gas could have a material adverse effect on our business, results of operations and financial
condition.
Our profitability is exposed to developments in the capital markets and economy in Europe and globally. The
latest global crisis and sovereign debt crisis in Europe has had a significant impact on the world's banking system and
financial markets. If the global economic situation worsens again, we may face liquidity problems and may experience
increased costs of funding which could have a material adverse effect on our business, results of operations and
financial condition.
Changes in the European Union's renewable energy policy and an accelerated market shift towards renewable
energy sources could have a material adverse effect on our results of operations and financial condition.
The electricity generation industry in Europe is strongly influenced by the European Union's policy,
implemented in 2008 by the E.U. Climate and Energy Package, to increase the share of electricity generated by
renewable energy sources. We are effectively obliged, due to economic incentives, to reflect the E.U. Climate and
Energy Package within our own strategy. By 2020, the E.U. Climate and Energy Package requires a 20% decrease in
carbon dioxide ("CO2") emissions, a 20% increase in energy efficiency and requires renewable energy sources to
comprise 20% of total energy consumption. In October 2014, the E.U. Council adopted new targets and the architecture
for the E.U. framework on climate and energy in the period from 2020 to 2030 and the newly adopted targets require at
least 40% decrease in CO2 emissions by 2030 (compared to 1990 levels), renewable energy sources to comprise 27% of
total E.U. energy consumption (resulting in up to 47% share of renewable energy sources in electricity production),
increase in E.U. wide energy efficiency by 27% and achieving 10% electricity interconnection by 2020. The
implementation of the E.U. Climate and Energy Package and targets of the E.U. council for period from 2020 to 2030,
or any amendments to such targets, could have a material adverse effect on our business, results of operations and
financial condition. Support for renewable sources may decrease energy prices, limit the production time, the stability
of transmission and distribution grid, the profitability of distribution services provided by us and production quantity of
conventional power plants that we operate and may decrease our market share. Continued or increased support for
renewable energy sources in the European Union, particularly in the Czech Republic (please see "Regulation Czech
Republic Renewable Energy Sources Current Legislation - The Czech Promoted Energy Sources Act") and
Germany, may adversely affect our profit from nuclear, coal-fired and gas power plants, which could have a material
adverse effect on our business, results of operations and financial condition.
Political developments in the European Union and in other countries where we have or plan to have a business
presence could have a material adverse effect on our results of operations and financial condition.
Any political developments in the European Union, including any future integration or withdrawal of
European countries in the European Union or changes in the economic policy, executive authority or composition of
the European Union and its institutions, may have an adverse effect on the overall economic stability of the European
Union and the European countries in which our assets and operations are located. Any changes in the political or

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