Engie Brasil Ene Sa S/Adr

Good morning and welcome to the ENGIE Brazil Energia's second quarter 26 earnings result video conference. I'm Adriana Albagnet, investor relations analyst at the company, and I would like to make a few announcements before we begin the video conference. At this moment, the people connected are in listener mode, ensuing this when we open the Q&A session participants can send their questions through the Zoom Q&A option. Please keep in mind that this video conference is being recorded. We have made available on our website www.engi.com.br slash investors, the results presentation and the earnings release besides the complete interim financial statement and other documents filed at the CDM. Analysis of Financial Statements, Operational Results, ESG Indicators, among other highlights for the period. Before proceeding, we would like to clarify that all the statements made during this video conference regarding business outlook of the company should be treated as forecast depending on the country, macroeconomic conditions, The performance and regulation of the electric sector. Besides other variables, they are subject to changes. We remind you that journalists who wish to ask questions can do so by email, sending them to the company's press office. To present Engie Brazil's Energia performance in the second quarter, we have here with us Mr. Eduardo Sattamini, Chief Executive Officer, Mr. Gustavo Labanca Director of Power Networks, Mr. Gabriel Mann, Chief Regulation and Strategy Officer, and Mr. Leonardo Deguine, Investor Relations Manager. I will now turn the floor over to Mr. Sattamini. Good morning. I was opening my microphone. It is a pleasure to be with you another quarter to present the results of the second quarter of this year. It has a very interesting feature. You all know that we have the controlling company that has developed hydro power plants. The last one developed was Girão, and in this last quarter, after years of enhancements and operational conditions at the plant, we have been able to bring this asset into ENGIE Brazil's energia portfolio. There's a significant capital movement here in the electrical sector. This has always been the case, and the additional resources to the Girão asset have been used to anticipate payments of the concession for the public asset use, and this, of course, with excellent results. The acquisition of the asset had a A real return of 10%, real return, excellent for this asset contracted for the long term. It's a hydroelectric asset. It will add a great deal to the company's portfolio. And on the other hand, we have anticipated some payments which also bring about interesting returns for shareholders with a payback of three years or something similar. These are excellent opportunities, therefore, to create value for our shareholders. Now, additionally to these two events, recently at the General Extraordinary Meeting, we had the merger of Jadis, the energy company of Jadis, with Operational Gains and Operational Simplifications. This company had already been and the payment date as you know is defined by Our executive board based on what we have in cash. On the next slide, our financial highlights, our growth strategy as you can see. We have a growth of adjusted EBITDA of almost 17% quarter on quarter and 13% as a whole. These are the projects we put into operation last year and today represent A growth of cash generation for the company's net income. We have a non-recurring event of the public asset use. Of course, this from the expansion of concession, but we also have significant adjusted growth quarter on quarter. We have different allocation strategies as well as other components, but this is A very reasonable gain of about to 7%. Now, we're still undergoing a period of very high interest rates. And what is of interest here, of course, is our net results. We have a lucrative and very interesting operation indeed. Now, which are the main drivers of this result? We have the generation segment. With a growth of this segment thanks to the investments carried out, the same holds true for transmission because of the growth. And this quarter, this is somewhat lower because of the results that we had with TAG. We go on to the next slide to speak about our ESG KPIs. We have reduced the intensity of emissions in our portfolio and the growing evermore in renewable energy. Now, this goes against what we see in the sector that is increasing its emissions because of thermal dispatch. We have been reducing our emissions intensity. Now, health and safety, we have a specific reduction in some accidents, minor accidents in the operational area. and this has hampered our indicators. We will repress this during the year and go back to our target of 0.9% in the frequency rate. Gender distribution, we have had evolution, perhaps less evolution that we wanted vis-à-vis last year because of the assets we have in Amapá and we have A great deal of male participation in the works there because of the type of work, and because of that we were not able to increase this KPI as we wanted. Investments in innovation continue to be stable. We invest in innovation, especially when it's geared to the enhancement of our assets, Social Responsibility Investments. We have a certain seasonality here. And in the second half of this year, we should have considerably more incentivized resources allocated because of the extraordinary profit we have had with the public asset use strategy. Now, in terms of engagements, we have a high rate. It continues on. And this points to our main interest in our stakeholders, of course. Next slide, please. Generating and transmission uptime. We continue to have a growing uptime in our assets. When we acquire an asset, we always perceive the possibility of operational enhancements, and this is what we have done. We have acquired solar and wind assets. Now we have acquired hydroelectric assets. And as we acquire them, we implement continuous enhancement activities, allowing for the uptime of generating and transmission assets to always follow a growing curve. Next slide, please. Energy generation. We have an increase in solar energy. This is basically organic growth because of the Azul Sol plant. And in wind energy, this is also higher than in the second quarter of 2025. And we perceive this through the GFF that you will see through the graph to the left. So in terms of generation, we have had a good moment at this complex. Let's continue on. I will now give the floor to Mr. Dettinet, who will speak about the curtailment issue. We continue to suffer from this. Now, we will have a reimbursement for this, so we would like to further detail the figures. We have some technologies with improvements, other technologies with a slowdown. Dettinet, you have the floor. You can see that in the second quarter, the total curtailment of energy reached 20%. Wind and solar energy, very similar to the system we had that was 19%, higher than last year where they reached 15 and 16%. Now, during that period, the total generation reported was 7%, which is the 20%. Allocated throughout our portfolio. Solar, very close, 26 compared to 27. And the difference is in wind that went from 12 to 17%. We do have important regulatory news here published in measure 140 that will allow for the compensation of past curtailment between September of 23 This was published only 15 years ago and we have a certain term to manifest our interest. This is non-binding interest and this will continue on for some quarters until mid-2027, until it is reserved. When we speak about the energy commercial strategy, no crazy. So, prices, we have a great deal contracted in the short term. The price fluctuation is going downward, but we're protected against these effects. And in the long term, we are able to capture price increases, which we see through time, especially in the prices contracted for longer terms. If you look at 2026, only 1% is uncontracted. Goals up to 5 in 27, 11 and almost 37% in 2029 and 30. Evolution in the number of free customers and consumer units. This is part of our commercial strategy. 43% of consumers or almost 22% growth in consumer units served. Let's go on with greater details in our financial performance. Our net operating revenue had a change of 14% during the period of growth, of course. All of the lines, price and sales volume, free energy, and others that are part of the generation segment, as well as trading, a slight and the construction revenue is somewhat lower, almost 14% for the period increase, as you can see. If we speak about the results of TAG in detail, last year they had A bit more than 1 billion BRLs in profit this year, 743. And you can see that TAG is undergoing a process of tariff review. This process should be concluded until the end of the year, perhaps this year. All of this depends on the regulator. Now, when this process is over, TAG will review their tariffs and probably have a different result if compared to what we see at present. Now finally, the EBITDA evolution. We have a growth of 16% for adjusted EBITDA and when we carry out a new cycle of adjustment because of GFRS, We have a sound growth of 13%, especially for generation and training, especially generation, and tagged with a negative contribution this quarter, but with robust results of 13% when we look at this from a regulatory perspective.

Now, before we head to our profit,

The prepayment of the public asset use, we began this operation last year. At the end of June, the balance represented 4.2 billion. We prepaid 2.2 billion. This generated capital gain of approximately 2 billion, 0.7 billion went to taxes, 1.3 billion to the net gain, which you will see in the adjustment on the next slide. Until the second quarter, we had six concessions with public asset use. They would total 773 million per year. This payment has been settled through this operation, and we continue to pay Canabrava and Cachoeira 105 million a year. The cash flow of those 773 million is something we will only see as of the third quarter. Not only the cash flow, but interest rates and service on the liabilities. Now, this operation will begin to appear in the third and fourth quarters. Now, with this, it's easier to explain this slide, nominal change going from 567 to almost 2 billion once again thanks to that operation of the public asset use. We have a robust growth of 23% thanks to the increase in EBITDA offset by depreciation of assets, financial results and of course coming to 694 million adjusted net income for the quarter. Now with this, Our debt continues that trajectory of remaining at 3 with a minor drop. We were at 3.2 last year at 3.3. We are now at 3.1 times, a total debt of 25 billion without major surprises, of course. We continue at an appropriate level of leverage for the company. On the following slide, we see the debt profile. You can see it is quite soft, an average term of somewhat more than seven years, very similar to last year and other quarters. Presently, we're at 40% of CDI and 54% of IPCA, plus something and a small part of IPCA, a debt of 11% nominally. We go on to our last slide to show you our dividend policy. And while our leverage is close to three, we continue with a payout, minimum payout of 55%. We have several cycles of investment In this first quarter, we have 54 cents, 50% of distributable profit for the first half, and the extraordinary profit of the public asset use will not be distributed, so we stand at 54 cents. Now, let's think a bit about expansion. Simply, we see the conclusion of the GEDAW process, that has been thoroughly disclosed. The General Assembly was held on July 2nd, held only by maturity shareholders, the pricing. So this process is concluded. It was concluded on our part.