Engie Brasil Energia S A : posts R$ 2.4 B in adjusted net income

ENGIE Brasil Energia (EGIE3) posted R$ 12.5 billion in net revenues in 2021, up 2.3% from 2020. EBITDA was R$ 5.9 billion, down 8.4% from 2020, while net income was R$ 1,565 million in 2021, down 44.1% from the previous year, under impact from R$ 1 billion in impairment at the Pampa Sul Thermal Power Plant and subsidiary ENGIE Geração Solar Distribuída, in addition to R$ 200 million in losses from the disposal of the Jorge Lacerda Thermal Complex. Ex- these non-recurring effects, Adjusted EBITDA was R$ 7.2 billion, up 12.3% from 2020, and adjusted income reached R$ 2.4 billion, down 11.8% year on year, due mainly to the effects of inflation on the Company's debt.

The year's results saw positive impact from the effects of Laws 14.052/2020 and 14.182/21, which enabled renegotiating hydrological risk and thereby recovering GSF costs incurred last year, for a total R$ 1.6 billion in 2021, R$ 1.2 billion of which in 4Q21 alone. It is also worth pointing out that the 32.5% interest in TAG contributed R$ 602 million to the Company's EBITDA in 2021 through equity income.

Active management of the commercial portfolio, where the optimized contracting and sale strategy is a highlight, enabled the Company to secure additional free energy to mitigate the impacts of the most severe water crisis in 91 years. despite the 27% domestic hydroelectric generation deficit, with average PLD up 58% from the previous year, net results from short-term operations, in particular those conducted on the CCEE, was just a negative R$ 35 million in 2021.

The average price of energy sale contracts, net of taxes on revenues and trading operations, was R$ 202.94/MWh in 2021, up 4.9% from 2020. It is worth emphasizing that, in the medium run, the restatement of existing sales contracts tends to neutralize the financial expenses arising from the restatement of the company's debt in line with inflation indices.

"This year was about consolidating our actions as an investment platform for energy infrastructure, and about successful deployment of our strategy. Even in the face of the challenges posed by the pandemic, we have evolved our projects undergoing implementation, made our debut in the transmission segment, grew in terms of renewable generation, ensured our assets' operational efficiency, and carried out optimized portfolio management for energy sales, mitigating the impacts of the hydrological crisis on our results," said Eduardo Sattamini, ENGIE Brasil Energia's Chief Executive and Investor Relations Officer. Our focus on business essentials, together with the financial discipline to keep risk and return in balance, continues to ensure robust, sustainable growth. This is how we work to accelerate the transition to a carbon-neutral economy, contributing as well to our customers' de-carbonization journey and upholding our historical commitment to socio-environmental action alongside with the communities of which we are part," he added.

The Board of directors approved a proposal for the distribution of complementary dividends in the amount of R$ 549.8 million (R$ 0.6738/share) and interim dividends in the amount of R$ 638.7 million (R$ 0.7828/share) from 2020 retained earnings. Total proceeds in fiscal year 2021 will reach R$ 2,038.0 million (2.4978/share), corresponding to 100% of FY 2021 adjusted net income and earnings allocated to profit reserves in 2020, bringing dividend yield to 6.2%, up from 2020 levels.

Focus on growth in transmission and renewable generation

With its eyes set on the future, the Company continues to diversify its actions and grow in the renewable generation area. The expansion and maintenance investment plan is supported by solid cash generation and a prudent funding strategy. In 2021, the Company invested R$ 3.4 billion in the implementation of transmission lines and renewable energy generation plant, in addition to maintaining operations and acquiring be projects to pave the way for long-term growth.

In the transmission infrastructure area, August saw the energization of the Gralha Azul Transmission System's first lines and substations, 16 months ahead of the schedule stipulated by the National Electric Energy Agency (Aneel). The project, whose purpose is to enable improved supply of energy from Itaipu to the state of Paraná, will begin commercial startup of groups and installations to enable 95% of Annual Allowed Revenue in the first quarter of 2022.

As for Novo Estado, with 3, 634 dual circuit towers, for a total 1,800 kilometers of transmission lines in the states of Pará and Tocantins, the first substation was energized in December, and works are expected to be completed by the end of 2022, enabling the energy generated in the North region of Brazil to flow to the remainder of the country.

The Company also expanded its renewable generation activities, celebrating fully operational status at Campo Largo II, in Bahia, in September, adding 361.2 MW in wind capacity to the portfolio. Aside from this, implementation of Santo Agostinho - Phase I, in the state of Rio Grande do Norte, began early this year. This will be ENGIE Brasil Energia's largest wind power complex, at a total 434 MW.

4Q21 milestones also include completed acquisition of the Assú Sol project, consolidating a 2.2 GW portfolio for the pipeline of projects at advanced stages of implementation. "We continue to pursue new acquisition opportunities or greenfield projects to support our plans for growth in regions where a potential for synergy exists with our generation assets and transmission lines, consistently with the group's expansion plans for renewables and infrastructure," Sattamini underscored.

In a subsequent event had in February, the Board of Directors approved acquisition of the Paracatu and Floresta Photovoltaic Compounds, for an additional 259.8 MWp in installed capacity, according to the recommended purchase report submitted by the Special Independent Committee for Transactions with Related Parties. "This acquisition is in line with the ENGIE Group's global guidelines for operational de-carbonization, which provide for disposal of coal-burning plants and replacement of their capacity with renewable generation assets. The process was conducted in line with best governance practices, ensuring the required balance between risk and return," the Company's CEO concluded.

ESG

The evolution of ENGIE Brasil Energia's non-financial objectives is also a leading feature of its 2021 results presentation. In line with business materiality, the Company reached 95.8% of renewable sources in its proprietary generation plant, a historical milestone that is a fruit of the de-carbonization of ENGIE's portfolio in Brazil. The main contributing factor, aside from investments in renewable energy, was the disposal of the Jorge Lacerda Thermal Power Complex, in the South of Santa Catarina, which enabled a gradual and fair transition for the regional economy and reduced potential local socio-economic impacts that would arise from a sudden interruption of the operation. In the same vein, proposals are still being reviewed for the sale of Pampa Sul Thermal Power Plant. In the state of Rio Grande do Sul. Negotiations are expected to conclude in the first half of 2022.

Investments on the social front exceeded R$ 18.2 million, of which more than R$ 7 million were allocated to fighting the COVID-19 pandemic in the communities neighboring the Company's power plants and projects. In addition, October saw the release of the second call for projects for the Mulheres do Nosso Bairro program, which focuses on skills building and income generation for women. It led to the selection of 33 winning projects in 27 municipalities from 14 states. An Educational call for projects was released in November that recognized 30 associations, schools, teachers and students with a focus on reducing non-attendance and the development of teachers' and/or student's competencies and skills.

On the Gender Diversity front, the share of women employed in ENGIE Brasil Energia was up 5 percentage points, reaching 24.4%. The goal is to achieve gender parity in management positions by 2030. One of the biggest challenge sin this area is to increase talent attraction for Operation & Maintenance positions, providing support for initiatives already underway, including a pilot for technical training for women of the Umburanas (Bahia) and Lajes (Rio Grande do Norte) communities that is training 76 workers to operate in wind farms. The Company also invests in female employee career acceleration actions.

ENGIE Brasil Energia's best practices also earned awards and recognitions, including placing 23rd among the 100 Most Sustainable Global Companies ranking by Corporate Knights, as one of three Brazilian companies ranked according to a worldwide survey of more than 6.9 thousand publicly listed corporations.

ENGIE Brasil Energia remains listed in B3's Business Sustainability Index (ISE), as it has been for 17 years, and in the Carbon-Efficient Index (ICO2). The Company also earned its ISO 37001 - Anti-Bribery Management Systems certification. The certificate reinforces the seriousness of the corporate governance and compliance practices in place.

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 is also among the largest distributed photovoltaic generation companies in the country and has a complete portfolio of integrated solutions focused on reducing costs and improving the infrastructure for companies and cities, such as energy efficiency, public lighting, energy monitoring and management. With 3,000 employees, ENGIE's turnover in Brazil in 2020 was R$ 13.3 billion.

The Group´s turnover in 2020 was of 55.8 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, MSCI Europe ESG, Euro Stoxx 50 ESG, Stoxx Europe 600 ESG, and Stoxx Global 1800 ESG).

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