ENGIE Brasil Energia reports an increase of 20.4% in adjusted Net Income in 2Q22

Highlights:

• Net adjusted income was R$ 514 million in 2Q22, 20.4% (R$ 87 million) more than reported in 2Q21.
• The adjustedEbitda in 2Q22 was R$ 1,897 million, an increase of 23.8% compared with 2Q21.
• The average price of energy sales' contracts, net of revenue taxes and trading operations was R$ 219.52/MWh, 6.9% higher than recorded in 2Q21.
• Energy salesvolume in 2Q22, excluding trading operations, was 9,556 GWh (4,376 average MW), a volume 7.9% higher than sold in 2Q21.
• Concluded the acquisition of the development rights to the Serra do Assuruá Project, with a total authorized capacity of approximately 880 MW and a price ceiling of R$ 265 million. The installation of the asset has an estimated investment of around R$ 6 billion.
• The Company made a successful bid in the Aneel 01/2022 Transmission Auction for Block 7 covering the installation of 1 km of transmission line and a substation, complementary to the Novo Estado project in the state of Pará.
• The Board of Directors approved the distribution of R$ 578 million as intermediate dividends.

In 2Q22, ENGIE Brasil Energia (EGIE3) recorded an adjusted Ebitda of R$ 1.89 billion, 23.8% higher than the same period in 2021 while net adjusted income was R$ 514 million in the quarter, 20.4% up on the preceding year, fruit of the Company's ongoing growth strategy. In the period, an impairment of R$ 180 million was recognized in the light of progress made in the process for disposing the Pampa Sul TPP.

Results were affected positively by the impact of year-on-year increases of 6.9% in the average price in energy sales agreements of R$ 219.52/MWh, and 7.9% in sales volume of 9.556 GWh (4,376 average MW), excluding trading operations. Also boosting results was the increase in the contribution from the energy transmission segment, an improved result from transactions in the short-term market and the higher remuneration on financial assets of concessions, among other factors.

"The Company continues to reveal its capacity to deliver at a high level of excellence, both in terms of the projects in the process of implementation as well as the management of the operations portfolio. Our performance over the years has shown the importance of executing our growth strategy based on renewables and transmission infrastructure, both of which guarantee portfolio resilience", comments Eduardo Sattamini, Chief Financial and Investor Relations Officer of ENGIE Brasil Energia. "By acting with a high degree of governance, financial discipline and respect for people and the planet, we are able to ensure the necessary confidence, allowing us to continue growing over the long-term", he concludes.

Progress with the Transmission Systems

The formal transfer of the Gralha Azul Transmission System to the operational phase was concluded during the last quarter with the energization of the Castro Substation, permitting the system to reach 94% of the RAP (Annual Allowed Revenue). With work now reaching 99.9% completion, all that remains is the connection of the Irati - Ponta Grossa Substation and its related transmission lines - the responsibility of other developers and with conclusion scheduled for March 2023.

Additionally, work on the installation of the Novo Estado Project was ramped up with the end of the rainy period in the states of Pará and Tocantins, this project already with work 93% complete and generating 49% of the total RAP. Again, in respect of the transmission segment, in June, ENGIE Brasil Energia bid successfully for Block 7 of the Aneel Transmission Auction, complementary to the Novo Estado Project, incorporating the installation of a substation and 1 km of transmission line in the state of Pará.

"Given our commitment to a fair and accessible energy transition, we continue to strengthen our presence in the transmission segment. Block 7 brings with it significant synergies with the Novo Estado Project and a potential reduction in the investment as well as anticipation of at least 24 months in the start of commercial operations in relation to the established timeframe", Sattamini points out.

Growth in wind and solar generation

In the generation segment, the Santo Agostinho Wind Complex in the state of Rio Grande do Norte continues to move ahead. With an installed capacity of 434 MW, work on the project is already 19.5% complete.

The Company continues to strengthen its portfolio of projects at an advanced stage of development, surpassing a potential 3.5 GW of capacity to be installed and encompassing the Santo Agostinho Photovoltaic Complex (509 MW), to be built in the same region as the Santo Agostinho Wind Complex, as well as the conclusion on June 21 of the acquisition of the Serra do Assuruá wind complex (state of Bahia), the installed capacity of which is to be approximately 880 MW.

The Company is forecasting investments for 2022 of R$ 3.9 billion, of which R$ 1.5 billion has already been disbursed in the first half. ENGIE remains in a financially comfortable condition thanks to its cash position of the order of R$ 4.3 billion and a net debt/Ebitda ratio of 2.1x, in line with the financial discipline necessary for planned growth.

Operational Performance

In the second quarter, with the start of the dry season, it was with satisfaction that the Company was able to record the storage of large volumes of water in the reservoirs backing its hydroelectric plants, a factor fundamental for the stability of the National Grid System. At Company-operated plants, the uptime ratio reached 89% with an output of 3,982 average MW from the hydropower plants, while production at the plants fired from complementary power sources was of 736 average MW.

Also worthy of mention in the period was the start of remote operations of the Itá Hydropower Plant on May 30 from the Generation Operations Center (COG) at ENGIE Brasil Energia's headquarters in Florianópolis (SC). With an installed capacity of 1,450 MW, the project includes a further 59 plants already operated remotely out of the COG.

Dividends

The Board of Directors approved the distribution of R$ 578 million in the form of intermediary dividends (R$ 0.7082542240/share), equivalent to 55% of the distributable net profit for the first half of 2022. Shares will become ex-dividend as from August 17, 2022 and shall be paid out on a date to be decided in due course by the Executive Board.

About ENGIE

Our group is a global reference in low-carbon energy and services. Together with our 170,000 employees, our customers, partners and stakeholders, we are committed to accelerate the transition towards a carbon-neutral world, through reduced energy consumption and more environmentally-friendly solutions. Inspired by our purpose ("raison d'être"), we reconcile economic performance with a positive impact on people and the planet, building on our key businesses (gas, renewable energy, services) to offer competitive solutions to our customers.

ENGIE is the largest private-sector power producer in Brazil, operating in generation, commercialization and transmission of electric power, gas transport and energy solutions. With an installed capacity of 10 GW from 69 power plants, which stands for about 6% of the country's capacity, the Company has nearly 97% of its installed capacity in the country from renewable sources and with low GHG emissions, such as hydro, solar and biomass power plants, and windfarms.

With the acquisition of TAG, ENGIE now also owns the largest natural gas transportation network in the country, at 4,500 km and transecting 10 states and 191 cities.

The Group also has a complete portfolio of integrated solutions focused on reducing costs and emissions and improving the infrastructure for companies, such as compressed air, local solar self-production, biogas and biomass, power management and consulting, HVAC and substations. ENGIE also acts as a partner for cities to make the urban spaces more efficient and sustainable, with public lighting, electric mobility and district cooling solutions. With 3,500 employees, ENGIE's turnover in Brazil in 2021 was R$ 13.5 billion.

The Group´s turnover in 2021 was of 57.9 billion Euros. The Group is listed on the Paris and Brussels stock exchanges (ENGI) and is represented in the main financial indices (CAC 40, Euronext 100, FTSE Eurotop 100, MSCI Europe) and non-financial indices (DJSI World, DJSI Europe, Euronext Vigeo Eiris - Eurozone 120/Europe 120/France 20, MSCI EMU ESG screened, MSCI Europe ESG Universal Select, Stoxx Europe 600 ESG, and Stoxx Global 1800 ESG).

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