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    EGIE3   BREGIEACNOR9

ENGIE BRASIL ENERGIA S.A.

(EGIE3)
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01/02Engie Brasil Energia S A : is included in B3's Sustainability Index (ISE) for the 18th consecutive year
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Engie Brasil Energia S A : Earnings Release - 3Q22

11/08/2022 | 05:51pm EST

EARNINGS RELEASE 3Q22

For Immediate Release

Additional information:

Eduardo Sattamini

Chief Executive and Investor Relations Officer

Marcelo Malta

Chief Financial Officer

Rafael Bósio

IR Manager

rafael.bosio@engie.com

Tel.: +55 48 3221-7246

ri.BREnergia@engie.com

Video Conference

On 11/09/2022 at 9:00 a.m. (EST) in Portuguese (simultaneous translation into English)

Further details on Upcoming Events section, available on page 36.

Visit our Website

www.engie.com.br/investidores

Florianópolis, Brazil, November 8, 2022. ENGIE Brasil Energia S.A. ("ENGIE" or "Company") - B3: EGIE3, ADR: EGIEY - announces earnings for the Third Quarter and nine months period ending on September 30, 2022 (3Q22, 9M22). The information in this release is shown on a consolidated basis and in accordance with Brazilian accounting principles and practices. The values are expressed in Brazilian Reais (R$), except where otherwise indicated. Rounding effects may cause differences in percentage changes, when comparing the comments on Economic- Financial Performance, presented in R$ million, with the Income Statement (Appendix III), presented in R$ thousand.

ENGIE Brasil Energia takes an important step forward to become a generator producing 100% renewable energy with the signature of the agreement to sell Pampa Sul Thermoelectric Plant.

Approval was given to the distribution of R$ 473 million as complementary intermediate dividends, reaching 100% of the 1H2022 payout.

São Salvador Hydroelectric Power Plant

Company begins implementation of the

Serra do Assuruá Wind Complex and

Gavião Real Transmission Line.

HIGHLIGHTS

Adjusted net income was R$ 710 million in the 3Q22, 17.2% (R$ 104 million) higher than posted in the 3Q21.

The Company posted adjusted Ebitda1 of R$ 1,432 million in the 3Q22, a decrease of 15.7% (R$ 266 million) compared to the 3Q21. The adjusted Ebitda margin was 52.1% in the 3Q22, a growth of 2.0 p.p. compared with the 3Q21.

Net operating revenue reached R$ 2,747 million in 3Q22, 18.9% (R$ 642 million) lower than recorded in the 3Q21.

The average price of the energy sales agreements, net of taxes on revenues and trading operations, was R$ 224.80/MWh in the 3Q22, 8.0% higher than registered in the 3Q21.

Excluding trading operations, the energy sales volume in the 3Q22 was 9,445 GWh (4,278 average MW), 9.3% higher than sold in the 3Q21.

Signed the agreement for the sale of 100% of the shares of Pampa Sul Thermoelectric Plant (345 MW of installed capacity situated in Candiota, state of Rio Grande do Sul).

In September, ENGIE contracted the supply of up to 188 wind turbines with Vestas for the Serra do Assuruá wind project, under implementation in Gentio do Ouro, state of Bahia.

Equipment supply contracts with WEG, and for construction with Abengoa, were signed for the Gavião Real Transmissora de Energia project (Bloc 7).

For the 13th time, the Company was awarded the Transparency Trophy, organized by Anefac-Fipecafi, recognizing companies with the best practices of governance and transparency in the financial statements published to the market.

A Ministry of Mines and Energy (MME) ordinance permits all high voltage consumers to sign up to the free energy market as from 2024.

The Company has executed energy sales for delivery in the 2023 to 2027 period, maintaining net average selling prices above R$ 220/MWh. Volumes of uncontracted commercial capacity fell on average by 88 MW from 2023 to 2026.

ENGIE Brasil Energia - Earnings Release 3Q22

2

SUMARY OF FINANCIAL

AND OPERATIONAL INDICATORS

Consolidated (In millions of R$)

3Q22

3Q21

Chg.

9M22

9M21

Chg.

Net Operating Revenue (NOR)

2,747

3,389

-18.9%

8,805

9,772

-9.9%

Results from Operations (EBIT)

1,216

1,509

-19.4%

4,314

4,148

4.0%

Ebitda

1

1,469

1,749

-16.0%

5,076

4,857

4.5%

Adjusted Ebitda

2

1,432

1,698

-15.7%

5,206

4,969

4.8%

Non-recurrent effects adjusted Ebitda

3

1,661

1,548

7.3%

5,039

4,503

11.9%

Ebitda / NOR - (%)

1

53.5

51.6

1.9 p.p.

57.6

49.7

7.9 p.p.

Adjusted Ebitda / NOR - (%)

2

52.1

50.1

2.0 p.p.

59.1

50.9

8.2 p.p.

Net Income

734

639

14.9%

1,774

1,487

19.3%

Adjusted Net Income

710

606

17.2%

1,860

1,561

19.2%

Adjusted Return on Equity (ROE)

4

33.2

33.7

-0.5 p.p.

33.2

33.7

-0.5 p.p.

Adjusted Return on Invested Capital (ROIC)

5

22.0

24.1

-2.1 p.p.

22.0

24.1

-2.1 p.p.

Net Debt

6

14,980

14,173

5.7%

14,980

14,173

5.7%

Gross

Power Production (avg MW)

7

6,250

4,882

28.0%

4,764

3,945

20.8%

Energy Sold (avg MW)

8

4,278

3,914

9.3%

4,288

4,057

5.7%

Average Net Sales Price (R$/MWh)

9

224.80

208.16

8.0%

223.76

206.19

8.5%

Number of Employees - Total

1,253

1,577

-20.5%

1,253

1,577

-20.5%

EBE Employees

1,185

1,461

-18.9%

1,185

1,461

-18.9%

Employees on Under Construction Plants

68

116

-41.4%

68

116

-41.4%

1 Ebitda: net income + income tax and social contribution + financial result + depreciation and amortization.

2 Adjusted Ebitda: net income + income tax and social contribution + financial result + depreciation and amortization + impairment + non-recurrent.

3 Adjusted EBITDA, less the effects of IFRS in the transmission segment.

4 ROE: adjusted net equity for the past 4 quarters /shareholders' equity.

5 ROIC: effective tax rate x adjusted EBIT / invested capital (invested capital: debt - cash and cash equivalents - deposits earmarked for debt servicing + SE).

6 Adjusted amount, net of gains from hedge operations.

7 Total gross electricity output from the plants operated by ENGIE Brasil Energia.

8 Disregarding sales for quota regime (Jaguara and Miranda HPPs).

9 Net of taxes and trading operations.

SUBSEQUENT EVENTS

ENGIE Brasil Energia and its indirect controlling company ENGIE S.A. have endorsed the initiative of Corporate Knights (leading sustainable economy media and research company) and Global 100 Council (council of specialists in sustainability), with a view to the commitment on the part of companies to combat climate change and support the Paris Accord. The formal endorsement took place in October and the Declaratory Act was launched on November 8 at COP27.

Approved the change in the denomination of the Administrative Office to the People, Processes and Sustainability Office.

The Board of Directors approved the distribution of R$ 472.8 million as

complementary intermediate dividends (R$ 0.5794807287/share)

representing 45% of the distributable net income reported in the first half of 2022, completing the 100% payout in the period. Shares will become ex-dividendas from November 22, 2022 and will be paid on a date to be determined later by the Management Board.

Umburanas Wind Complex

ENGIE Brasil Energia - Earnings Release 2Q22

3

MESSAGE FROM

THE MANAGEMENT

In the third quarter of 2022, we took an historic step forward in the direction of our decarbonization commitment: the signature of the agreement to sell the Pampa Sul Thermoelectric Plant, the final coal-fired asset in our portfolio. In this way, we are advancing our strategy of becoming a fully renewable energy generator, consolidating our position as the largest clean energy company in the Brazilian electricity sector.

The sale is aligned to the ENGIE Group's purpose of spearheading the energy transition to a carbon neutral economy. The movement towards the decarbonization of ENGIE Brasil Energia's generation matrix was intensified more than six years ago when we decided to exit coal-firedoperations and concentrate our efforts, together with more than R$ 20 billion in investments, on wind and solar-powered energy in addition to transmission infrastructure and gas transportation (through the stake in TAG).

ENGIE Brasil Energia and its indirect controlling company ENGIE S.A. have endorsed the initiative of Corporate Knights (leading sustainable economy media and research company) and Global 100 Council (council of specialists in sustainability), with a view to the committing companies to climate change and supporting the Paris Agreement. The formal endorsement took place in October and the Declaratory Action was launched on November 8th at COP27.

The Company's growth in energy from renewable sources continues even stronger and more accelerated, particularly following September's announcement of the signature of the Vestas contract to supply up to 188 model V150 wind turbines, each with a 4.5 MW capacity to the Serra do Assuruá Wind Complex, its overall installed capacity to be 846 MW when complete. This represents the conclusion of a further critical stage in the project,

allowing work to commence on the implementation of the complex, sited in Gentio do Ouro (BA), at an estimated investment of approximately R$ 6 billion.

With the addition of Serra do Assuruá to the 434 MW capacity of Santo Agostinho

Wind Complex, under construction in the state of Rio Grande do Norte, a further

1.3 GW of renewable energy will be harnessed, replacing the loss of installed capacity in the past 12 months due to the Company's complete decarbonization of its generator park, with wind and solar generation.

As already highlighted, another strategic driver of Company growth has been in the direction of the transmission infrastructure area. In this respect, it is important to emphasize as a subsequent fact to the end of the quarter, the signature on October 3rd of the Gavião Real Transmissora de Energia (new denomination of Bloc 7) concession, for which the Company bid successfully at Aneel's transmission auction in June. This project envisages the installation of one kilometer of transmission line in the state of Pará together with a substation, complementary to the Novo Estado Project, currently under construction.

The financial performance in 3Q22 was also positive due to organic growth -

addition of the installed capacity of the Campo Largo II Wind Complex and Paracatu and Floresta photovoltaic complexes

  • and the consequent increase in the volume of energy available for sale, in addition to the higher average selling price and the impact of inflationary deceleration on loans, financing, debentures and concessions payable. With this, ENGIE Brasil Energia reported a net adjusted profit at R$ 710 million, 17.2% higher than the same quarter in 2021.

Net operating revenue reached R$ 2.7 billion, (-18.9% vs 3Q21), the result of a decrease in revenue from transmission lines construction due to progress made in work on the projects, this effect attenuated by the combination of increased volume and average price for power selling agreements. Adjusted Ebitda recorded a reduction of 15.7% in relation to 3Q21, registering R$ 1.4 billion in 3Q22, a consequence of the aforementioned effects, in addition to the recognition, in 3Q21, of the complement to the amount already recognized in previous periods referring to the hydrological risk renegotiation (R$ 372 million). Excluding the mentioned effect Ebitda would have grown by 8%. The Adjusted Ebitda Margin increased by 2.0 p.p. reaching 52.1% in 3Q22.

With the reclassification of the assets and liabilities of Pampa Sul Thermoelectric Plant as an Asset held for sale, the Company's net debt in 3Q22 stood at R$ 15.0 billion, a reduction of 8.3% in relation to 2Q22. Our cash position, of the order of R$ 3.8 billion and the net debt/Ebitda ratio of 2.0x, maintained the Company's comfortable situation, in line with the financial position necessary for desired growth.

ENGIE Brasil Energia - Earnings Release 3Q22

4

Just as important as growing pari passu with respect for and committed to the environment, is evolving in the care of our people. With occupational health and safety of the employees as a license to operate, in July we ran our Safety Meeting, with 40 technicians and engineers, all of them in the operating areas of the plants, transmission lines or at projects in the process of implementation. And Mental Health was the driver of our awareness actions with employees during the entire month of September.

Continuing our objective of acting on the basis of a plurality of ideas, at the forefront of the electricity sector, we received on October 3rd the 13 engineers selected for the first Trainees Program with affirmative vacancies set aside specifically for women. These professionals, who will work at our plants, underwent an intense process of selection and are due to reinforce our Operations & Maintenance and Implementation teams in nine states around the country.

In the same month, we concluded an important process of active listening and dialog with stakeholders. Conducted in different regions of Brazil, the initiative has already involved approximately 250 people among employees, community leaders, educators, local suppliers and third sector representatives together with government entities. These dialogs are essential for steering initiatives of engagement as well as building the materiality matrix, a base for deciding the themes to be raised in our Sustainability Report for 2022.

In the 3Q22, for the 20th consecutive year, the Bureau Veritas Certification recommended recertification of our Integrated Management System (SIG), the scope of which covers the Company's headquarters, energy generation services at the hydropower plants and remote hydro operations in accordance with NBR ISO 9001 - Quality Management; NBR ISO 14001 - Environmental Management and ISO 45001 - Occupational Health and Safety Management standards.

As from November, ENGIE Brasil Energia's Administrative Office is to be known as People, Processes and Sustainability Office. The change in name has the purpose of adequately reflect the functions and responsibilities of the area, which is in charge of People & Culture; Environment; Social Responsibility; Communication; Technology of Information & Digital; Documentation, Premises and Supplies.

We come to the end of this message on a note of optimism. We cannot fail to conclude without making mention of an important step forward for the sector: the opening of the Free Energy Market. Published by the Ministry of Mines and Energy (MME) on September 27, Ordinance 50/2022 permits all high voltage consumers to migrate to the Free Energy Market as from January 2024. The decision guarantees freedom of choice to these consumers to negotiate prices and conditions for contracting energy directly with the suppliers - whether generators, traders or intermediate agents operating in the sector. This is a step which will intensify market dynamics to the benefit of healthy competition and with the potential to make the country more competitive. It is indeed an initiative which needs to be commemorated and one which will accelerate our strategy of digitalization with a client focus still further!

Good reading!

Eduardo

Marcelo

Antonio Gori Sattamini

Cardoso Malta

Chief Executive and

Chief Financial Officer

Investor Relations Officer

ENGIE Brasil Energia - Earnings Release 3Q22

5

This is an excerpt of the original content. To continue reading it, access the original document here.

Disclaimer

ENGIE Brasil Energia SA published this content on 08 November 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 08 November 2022 22:50:14 UTC.


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