Engie Brasil Energia S A : Earning results video conference - 4Q21

ENGIE BRASIL ENERGIA S.A.

SCRIPT OF THE VIDEO-CONFERENCE OF THE

RESULTS OF THE FOURTH QUARTER AND THE YEAR 2021

FEBRUARY 15, 2022 - 11:00 a.m.

RAFAEL BÓSIO - Investor Relations Manager: Hi, good morning! We are beginning the video-conferenceon the fourth quarter results 2021 and the year 2021 of ENGIE Brasil Energia. I am Rafael Bósio, the Company's Investor Relations Manager. I would like to inform you that those that are connected by phone are in listening mode and may already put their questions to the participants, to the panelists here, via the chat platform. It is worth remembering that this video-conferenceis being recorded. We have also made available in our websitewww.engie.com.br/investidoresboth the presentation which will be used here as well as the results release wherein are published more details of the operations, progress with the implementation of new projects and analysis of the financial statements. Before proceeding further, I would like to voice the standard disclaimer and clarify that eventual statements that may be made during this video-conferencewith respect to the outlook for the Company's businesses should be treated as forecasts, contingent on the economic scenario for the country, performance of the electric sector regulations as well as other variables, and, therefore subject to changes.

With me today are Eduardo Sattamini, Chief Executive and Investor Relations Officer and Marcelo Malta, Chief Financial Officer, who will also comment on the performance of ENGIE Brasil Energia in the periods I have mentioned. We would remind you that journalists wishing to ask questions should do so via e-mail, sending their questions to the Company's Press Relations office.

Now I would like to hand over to Eduardo Sattamini. Please you may go ahead. I will pass the slides. Just let me know when it's time to move to the next. I´m going to Slide 05.

EDUARDO SATTAMINI - Chief Executive and Investor Relations Officer: Thank you very much Rafael, good morning to all. We are going to begin with the highlights of 2021 and the intention is to make the presentation focused more on the results for the year as a whole. Detailed information on the quarter - which is important for a quarter-on-quartercomparison for some analysts - is going to be shown in full in our release. We can give you some of the numbers for the quarter but the focus is to analyze what happened during 2021, how the Company managed its business, how it protected itself from the grave

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hydrological crisis we experienced in 2021, the worst hydrology series since measurement began 91 years ago.

So let's begin with the first driver, the renegotiation of hydrological risk, where we have had one more year since renegotiation as a result of the regulatory changes, legislative changes, were agreed by the hydropower generators at the end of 2020. The impact this year was a total of R$ 1.591 billion, and this is R$ 623 million more than the first amount which was booked at the end of 2020. So we have already accumulated amount somewhere in the region of R$ 2.5 billion in recovered expenses the Company incurred in a period of high thermoelectric dispatch outside the numerical order, importation of energy, which displaced hydropower generation, and at the time obliged the hydro generators to purchase energy in the market to fulfill their obligations. So this claw-back with one tranche now in the fourth quarter, a very significant amount of the order of R$ 1.2 billion in the fourth quarter, over and above the booking of one more, if I am not mistaken, in the third quarter of a smaller amount, all this as a function of our understanding and maturity of the process being put in to place.

The second important factor, which influenced our result - and this you are going to see in our numbers, in our financial aggregates - was non-recurring account entries as a function of: the impairment of UTE Pampa Sul, which we expect to sell before the end of the first half of this year with financial closing due before the end of the calendar year, and our distributed solar generating unit, an activity which we are also discontinuing in our portfolio. We see this as an activity of very low added value, with a low entry barrier and today an extremely dispersed segment which detracts from our focus on our main business, which is as a major wholesaler, major clients, and moving towards a market which is increasingly more pulverized but one with an elevated added value as the free market opens up. And the other non-recurring element was the result of the sale of the Jorge Lacerda Thermoelectric Complex in October. The finalization of the transaction was in October, the closing of the transaction, and also bringing a reduction in book value of R$ 200 million. Non-recurring events which are fruit of our decarbonization strategy. So a price to pay, but we understand that with the sale of Pampa Sul now, this year, that we can become a totally renewable energy generator and this also has a relative value for our clients that are also seeking carbon neutrality, the decarbonization of their activities. So we shall become a preferred partner to our clients as soon as we no longer generate fossil fuel- fired energy.

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One more element was the contribution of TAG to the Company's EBITDA, R$ 602 million in 2021, a positive variation of R$ 115 million year-on-year, principally as a function of the improvement in the operating result, fruit of the valorization of the gas transportation agreements that the company has.

A further element, and it is an element that we show you to understand how efficient our team has been in portfolio management despite 2021 being the worst year ever hydrologically, was the impact in short-term transactions of just R$ 35 million. This was obviously uncontracted energy which we left in reserve in the event of an eventual GSF and representing a purchase in the short-term market as energy swaps so that we could adjust our portfolio, exposing it as little as possible to eventual high prices. And all this ensured that our loss in the short-term market was limited. When we look at the preceding year, 2020, when the water situation was better, although still not so good, we reported a loss of R$ 276 million year-on-year.

When we look at the global impact on our EBITDA, Rafael, please, I don't know whether you have already made the alteration, we see a reduction of recurring EBITDA of 8.4%, but when we consider adjusted EBITDA, there is a growth of 12.3%. That is to say, that if we had not had the non-recurring events, we would have had a growth in EBITDA of about 12.3%, showing how the Company is coming along in its growth strategy. Remembering that we had Campo Largo 2 going into operations during the year. We shall also be talking later about the entry into operations of Gralha Azul in August and the start of operations of Novo Estado in December. And we are going to speak in more detail of these projects under construction with work in progress, which are going to be the basis of our acquired growth over 2022. Let's go, Rafael, one more.

In relation to net income, we have, when we look just at the recurring factors, excluding the non-recurring, we have a decline of 44%, but when we ignore the non-recurring effect, the decline is just 11.8%. Natural because not only are we experiencing a water crisis problem but also a problem of accelerated inflation. And also remembering that companies in the electric energy sector are companies that leverage their growth, although we are not a very leveraged company, we still have a reasonable level of leverage, but with a very efficient capital structure. Our debt is linked to inflation, and why?

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Because our agreements are also based on the standard indexer for the industry, the IPCA,

• it was the IGP-M for a period -,it is the IPCA now and obviously, as inflation accelerates, it has an impact on the stock of debt, on the stock of concessions payable, which is going to reflect in the prices of the agreements only over the following year. So this year we should recover through our contracts a good part of this financial loss. But the financial result is impacted with immediate effect by the monetary restatement of these obligations payable, concessions and loans and financing. Our net financial result was minus R$ 3 billion and a variation compared to last year of something in the region of R$ 1.2 billion, a R$ 1.197 billion lower financial result.

So let's go on to the next slide now, Rafael. Let's move on to highlights of a qualitative, informational nature for you. Basically, the first bullet is information we are publishing, based on retained profits in 2022, R$ 638.7 million more than the profit distributed in 2021. The main objective is to maintain the level of earnings, total earnings of last year, of about R$ 2 billion, R$ 2.017 billion. Thus with this distribution of profits retained last year, we reach R$ 2.038 billion, or nearly R$ 2.5 per share, producing a dividend yield, stability in dividend yield, for our shareholders.

Another extremely important point is the sale of the Jorge Lacerda Complex. With the sale of this asset, we reach 95.8% of our installed capacity in renewable energy. Our aim is that by the end of the year we can clean our portfolio so that it is made up entirely of renewables and from the start of next year, we can announce our portfolio as being made up of 100% of renewable energy.

Another important highlight was the start of commercial operations of Novo Estado through the entry into operation and energization of the Serra Pelada substation and then connecting the Serra Pelada - Itacaiúnas transmission line. This is an extremely important milestone for us. We should also announce at the beginning of the second quarter the conclusion of a further stage in this project with one more piece of the RAP being announced as well.

Let's go to the next slide. The Board of Directors has also approved the acquisition of the photovoltaic complexes of Paracatu and Floresta. Remember that last year, if I am not mistaken in the third quarter, we announced the installation of the Related Parties Committee for analyzing the purchase of these two solar generation assets. This has indeed

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taken place. The Related Parties Committee had the support of outside advisors such as Bradesco, as lead manager, as well as Machado Meyer and Intertechne, which were the three main advisors to the Related Parties Committee to ensure that there could be a complete and impartial evaluation of these assets. And the value paid for these 259.8 megawatts/peak of installed capacity was R$ 625 million, equity value. This asset has a relatively low leverage, 50%, so it represents a very satisfactory return for Engie Brasil Energia, considering that the asset is an asset with no construction risk.

Another highlight of the year was that the Company was one of the three Brazilian companies in the ranking of the 100 most sustainable global companies in the Corporate Knights magazine. We were placed 23rd, behind Banco do Brasil in 21st position and ahead of Natura which came in at 88th. This survey, this ranking involves between 6, nearly 7 thousand publicly held companies throughout the world. So this is a source of great pride and we are going to try to improve still further our position in the ranking as we clean up the Company's generation matrix.

The Company obtained the integrated management certificate from Bureau Veritas, something very natural in our plants. All our hydroelectric plants are included. And the recently acquired Jaguara and Miranda as well, but both also needing this certification so that we could have all our largest plants 100% certified. And another very important certification was the ISO 37001, the anti-bribery management system and extremely important, of course, for us to operate in Brazil. It is very important that we have this type of certification to demonstrate our integrity and to avoid having any kind of deviation in our Company, processes, restrictions in relation to fraud, etc., Code of Ethics. All these are taken extremely seriously in the Company and we have successfully shown this in the certification awarded to us by the Euro Compliance Institute.

Very well, from this quarter forward we now talk about highlights in ESG. In 2021, we recorded some very important elements. So the first is installed capacity in percentage of renewables. You can see that we have been growing year-after-year and obviously we are going to see a significant jump from this year due to the sale of Jorge Lacerda, and next year as well when we reach the 100% in renewables, although we had already been registering continuous growth of new generation and in so doing increasing this percentage. The intensity of emissions varies in function of thermoelectricity dispatch. In 2020, we had a year with considerable dispatch, 2021 was a little less, and now from 2022, with the sale of Jorge Lacerda, this amount will fall significantly. Note that the emissions of Jorge Lacerda were something like nearly 4 million tons/year against 1 million and a bit from Pampa. A

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