Engie Brasil Ene Sa S/Adr

I am Rafael Bozio and would like to make a few announcements before starting the video conference. At this moment, those connected are in listen mode only. Later, we can open the Q&A session where participants will be able to send questions. I would also like to remind you that this video conference is being recorded. It is made available on our website at www.eng.com.br slash investors. And the results of the presentation and earning releases, in addition to the financial statements and other documents filed at CMB, are going to be put there. Before proceeding, I would like to clarify that all statements made during this video conference regarding business outlook of the company should be treated as forecast, depending on the country's macroeconomic conditions, on the performance of the regulation of the electric sector, in addition to other variables, and therefore are subject to changes provided. We remind you that journalists wishing to ask questions can do so by e-mail and submit them to the company's press office. To present Brazil, ENGIE Brazil Energy's performance in the fourth quarter of year 23, we have here with us Mr. Eduardo Satamini. our CEO, and Mr. Eduardo Takamori, our Chief Financial and Investor Relations Officer. Santa, you start. Well, thank you, Rafael. Good morning, everyone. It's a pleasure to be with you once again, and once again presenting good results for 2023, which was a very important year for us. This is where we effectively had the company's energy transition. And of course, that all of these impacts will be a part of our presentation here today. Next slide, please. Slide number five. Here we have the company's highlights. First of all, the financial highlights. So we are saying that we concluded our energy transition and then We exchanged our assets into new assets, and you can see that this year we grew, and we lost a very important element of our Etuda composition, the Pampa plant, and we will talk a little bit more about it later. It contributed with over 350 million BRLs, or Etuda if we compare 22 to 23 BRLs. But then when we look at the generation and training, we only lost 122, which means that we have already offset part of this loss in our ETEDA by new generation assets. But we also had a transition into a more diversified company in terms of businesses with the contribution of our financial results, among others, which led us to grow 4.7% from 22 to 23. In terms of net profit, which really matters to our shareholders, we had very good net results, almost 24%, and that was a result of the decrease of inflation. And this shows that the company is robust. That's our control. And the company benefits from inflationary movements. This is important for us to keep in mind. Now let's move on to the next highlights. The company, with the sales of our coal assets, we have become the largest generator of 100% renewable electricity in the country, which is very significant for us in 23. We also bought a lot of Lot 5 at the latest auction in the full amount of $3.2 billion. and we are about to conclude our contracts. Also, in the auction, we acquired Lot 5, the Azabanka project at NIL's transmission auction, and we concluded the issuance of debentures in the amount of 2.5 billion so that we could offset the implementation of transmission and energy generation projects. In the next slide, we can see the sale of 15% of the company's equity stake held in TAG. As a group today, we have TAG's control along with CDPQ, which was our original project. but we need resources now so that we can invest in greenfield assets, continuing our diversification strategy. And now in the meeting of the board, we approved the sales of 900.94 millions, which represent 1.2 cents per share. And Takamori is probably already defining the date of TAX. With that, our total earnings for 23 reached a 55% payout and dividend yield of 5.6%. And this is our practice towards reduction so that in moments of significant investments, we have resources available to meet the company's commitment. In the next page, we have ESG highlights. For the first time ever, the company was included in the S&P Global Sustainability Yearbook. This was for the first time, and only 12% of the companies that apply for publication in this yearbook are taken into account, and therefore, This has been a significant achievement and is very relevant for ESG practices. Another important aspect, we went from a B rating to an A- rating in the CDP Climate Change 23, and this is very important to keep us within B3 sustainability indexed. We were once again included. We ranked as number five with the best position in the sector. And since it was created in 25, we've been there. Now we have the KPIs for ESG. We're not going to talk about them one by one. But the important message here are the control of emissions, the health and safety of our employees and service providers. The share of women in our workforce has grown. We are pursuing innovation to improve productivity and performance. We also work very close to the communities where we are located. With that, we try to have social investments, and this is something that we've done. It went down in monetary terms during 23 due to tax-related issues, but we intend to use all of the resources available with the communities that are located close to our projects and our plants. We also have an engagement index with the communities, and this is very high, and we try to meet the local needs. I will turn over to Rafael, and he will talk about our expansion and our business strategy. Rafael will talk about finances, and I will be available to answer any eventual questions. I turn over to you, Rafa. Thank you. I am now going to talk about our energy commercial strategy to update our performance in the market and also to help us model it for the company. Also to verify opportunities and exposures. If we compare the figures on the left side graph, we can see consistent evolution. We had good sales. And, of course, this was during a period where we have a lot of changes. And you can see that we have sales greater than 800 megawatts for the year 2018. And I'd like to remind you that the energy balance is found in slide 36 of our attachments, and you can compare it to our balance disseminated in 23. We have been able to maintain the mean energy price throughout this period. This was a relevant result, and it shows our capacity to leverage sales and also to start increasing our participation in wholesales. And this is demonstrated in the next slide. Well, perhaps just I would like to add something in terms of keeping prices. This has to do with the way we sell energy. We always sell We meet the needs of the market. We reduce costs when the demand is lower. And that guarantees a very resilient price in the short run. When we look at our mean prices, they have been met. And this is something that we've gone through. We have resilience of our results. And then when prices go up too much, we don't really use it that much. But this is a characteristic for resilience and stability. So likewise, Rafael, we have some diversification of the industrial sectors so that avoid all sectors which might have competition problems. Rafael, apologize me for the interruption, but this is part of our dynamics of presentation. I would also like to remind you that we contract from the regular market and also from the free market, so part of our revenue once again confers stability in our results for the long term. In the next slide, you can see the evolution for our consumers. And then in terms of volume, we have our visibility in the long term that has been a little bit decreased. The number of clients you can see here, we opened for consumers and we can see significant growth in the number of clients with an increase of 66% in the last three years. I think that We can now move on to the expansion session where we update you on the projects that are being implemented. We have some good news of the Santo Agostinho wind complex. We have turbines that are already operating and being tested. So we're moving towards a conclusion It is almost totally commissioned as we had planned. And I would like to remind you that this project has been totally contracted in the free market, adding renewable capacity. We have two other projects. The next one is in Serra do Açoeira. It is... under accelerated implementation. We have started assembling the towers so that we can start operating in the second half of this year with full operations in 2025. The project is very large, over 850 46 megawatts of total installed capacity in the northeast region, which will contribute, as Satanini said, it will help us replace the non-renewable capacity that we got rid of in the past years. And this is going to overcome what we sold. Now we have another project for the Voltec. which is an implementation. It is quite significant and is one of the largest projects being implemented in our group. It is not as advanced as the Asura project, but Asusol will start operating this year, reaching total operations by the end of 2025. It will be totally operational in 26. But this is according to our project, and now we're going to talk about the diversification of our project. The VLHL is a small project. It is an extension of the NOVO standard transmission system, which has been operating since February last year. And as planned, it will start operating in the first quarter of 24. We have other projects here in the next slide. This is a relevant project. It's much bigger. It is the Asa Branca Energy Transmission Plant. It is a project which is over 1,000 kilometers long, going through Bahia, Minas, reaching Sergipe and Espírito Santo. And it will help us distribute the renewable energy that is going to be produced in the Northeast. We are disseminating CO2 forecasting of actually 24 months, taking into account the deadline established by NAL, which is March 29. Now, in the next slide, GDAL. And this is a historical slide about GDAL. It is a growth opportunity, and I'd like to remind you that the Angie Group has a share of 40%. It hasn't been included in our portfolio, but maybe so. And this is something that we've been working with for a long time, and you all know that we had a lot of problems. We had delays. and the challenges that we faced on site. Today, the project is well balanced. Financially speaking, it is balanced. We had some cash generation to reasonable levels, which are sustainable according to the project. So it is possible that in a near future we will have to discuss it with the controller, but we have a large project pipeline.

At some point in time, we will grade our participation to the levels that we had planned

and we expect to have something available by 24 or 25. We will provide extensive information to the market as soon as possible. To you, Rafa. Okay, next slide. I'd like to remind you that in addition to the projects that are being implemented, we have a portfolio of of developing projects. They are waiting for a business opportunity to be enabled, and it's very important to have these options because the market reacts really fast, historically speaking, from the beginning of the development to implementation. A project may take several years, and therefore it's important for us to keep an updated portfolio of with mature projects so that we can capture opportunities that come up suddenly. With this, I end the part of the discussion of our developing projects, and I now turn over to Taka for the financial performance. Thank you very much, Rafael. We are very happy with our results. I will make a recap of our financial balance and what was mentioned here about the carbonization of our portfolio. You can see that we still have very high levels, close to 36%, keeping an average which is superior to that of the market. Return on equity also and perhaps these relationships will change a little bit, but we still generate a lot of value to our shareholders. On the right side, I would like to remind you of the investments made from 2016. You can see $28.5 billion, which is very high, and a leverage of 84%. We used our balance to be able to leverage and distribute dividends until a point when it was possible. We evolved in terms of decarbonization. In 26, we're basically renewable generation and thermoelectric generation. We were able to decarbonize, diversify our portfolio, from the point of view of inclusion of new projects, which represent about 8% to 10% of the adjustable, or adjusted, I'm sorry, etc. Also, with the participation where we made our investments naturally, because we had partial investments, and this participation, which reached 10% to 14%, will probably go down in the upcoming year, but even so, the combination of networks, including transmission of electric energy and gas transportation, will continue representing this amount, which is very important for the stability of our results. Another important aspect, we have an important part of our energy transmission with longer-term contracts. Of the 76% of the 23, we have about 60% of regulated contracts. And this helps us to have stability of our results and recurrence. Now, in the next slide, we will talk about the net operating revenue evolution. Satamini mentioned it, and you can see here in the middle bar, the main drivers here, which made us go from 11.9 billion to the amounts we reached, are justifiable. We can see there is a significant impact in our recovery. In the next slides, you will see that there is an impact on our constitution, but in the top line here, really, there was a significant aspect. Another element, we had a decrease in trade in sales and purchases. In this case, we also had a decrease in the generation of revenue. $250 million year over year. But there was also lower purchases. You can see that the ANTEDA was pretty much controlled. And then the most relevant effect of $570 million approximately had to do with the decrease in the construction revenue. you know that a transmission has a differentiated accounting rule. Construction generates revenue even before it goes to the market. And so, naturally, we no longer have this revenue once we start operating, and this is why we had this decrease of about 10% in our net. And now I'm going to talk a little bit about TAG. TAG had exceptional results in 23. We had also commented about this throughout the year. We had a series of internal optimizations. We were able to capture this value, and the main one here was funding that generated cash, And so we really had a one-of-a-kind year here. We now expect TAG to go back to normal in the upcoming years, and you will see that the contribution of TAG to our ETEDA was of almost 1 billion BRLs. And then we had our prior participation of 32%. In the beginning of the year, we signed a contract for sales with our partner. Our position went to 17.5% as of the first quarter, with the completion of the divestment of participation in the asset. And then you will see these equalized figures. with more stable contributions. I would like to highlight that TAG contribution was significant for our results this year. Now, in the next slide, this is a graph with many columns, but it's easy to understand. The external bars for gross metadata we had significant evolution from 6.8 to 7.3 billion BRLs. Without the non-recurring events, we had an adjustment to 55 million in 2022, which didn't happen. But this is not recurring. And then in early 2023, we had something minor. When we analyzed adjusted ETEDA, we had an increase, as you can see here, It was 4.7%. And I would like to make a disclaimer. As of this year, to meet your needs or those who analyze our financial information, we decided to include the effect of quota generation. In the past, we only used the accounting effects, but we still had the non-cash events. So we decided to include it here to make it easier for you to see the operational effects that you usually analyze. And so if we remove all of the RFS adjustments, our growth performance was 6.4% year over year, going to 7 billion BRS. actually 7.028. And here we can see some effects. One of them was the portfolio purchase reduction with better defined prices. We have less interest in buying and selling third-party energy. And here we can see an important effect. with a hydrologic risk and here you probably have noted that in the second quarter of 23 we had already received higher amounts and this was an estimate we had for our plant but the accounting principles and accounting treatment evolved over the year we had some adjustments and decided that we had to review it. So we had a reversion of $125 million in the beginning of the year, and the net amount now in the beginning of the year is $115 million. But there was a significant amount for the concession, generating value to our shareholders. Now, in the final bars program, We can also see 348 million BRLs, one of the most important bars year over year, which is the reduction in our portfolio. And transmission, as we mentioned already, or transmission without the effects of the accounting treatment. And then you can see an increase of our ANTEDA as a function of RAF. So all of our assets and transmission lines, Graal e Azul, are already operational, which leads to our results year over year. Also, TAG had a significant contribution when compared to the previous year, and this is very important. We imagine that it would be lower in 2024, but even so, 2023 was a fantastic year with very important results for us. Now, in the next slide, the net profit evolution, Satamini has already mentioned that the main, in fact, was the financial result. which suffers a lot from variations of the PCA. And because PCA was much lower in 23 than 22, we already have an important variation year over year. We are relieved that in addition to this more normalized results, we have... The other plants, three of them were indexed to PCA, and when the PCA is lower, we end up having less impact in our accounts to pay.