Engie Energia Chile S A : Press Release EECL 1Q22 English vf

About this update from Engie Energia Chile S.a.

April 27, 2022 ENGIE ENERGÍA CHILE REPORTED EBITDA OF US$69 MILLION AND NET INCOME OF US$4 MILLION IN THE FIRST QUARTER OF 2022. EBITDA AMOUNTED TO US$68.5 MILLION IN THE FIRST QUARTER OF 2022, A 4% INCREASE COMPARED TO THE FIRST QUARTER OF 2021. THIS QUARTER HAS BEEN IMPACTED BY THE INCREASE IN GENERATION COSTS AND SPOT ELECTRICITY PRICES DUE TO THE CONTINUED DROUGHT AND EXTREMELY HIGH FUEL PRICES WORLDWIDE. • Operating revenues amounted to US$417.9 million in the first quarter of 2022, a 26% increase compared to the first quarter of 2021, due to an increase in physical sales to unregulated clients, the rise in average realized energy prices explained by inflation and fuel-price indices, and revenue resulting from an agreement signed in early February with the company ' s main LNG supplier. • EBITDA amounted to US$68.5 million in the first quarter, a 4% increase compared to the first quarter of 2021. Despite increased revenues, the electricity sales margin remained tight due to the increase in generation costs and higher spot prices. • Net income reached US$3.8 million in the first quarter of 2022, which favorably compares with the US$18 million net loss reported in the first quarter of 2021. This improvement was mainly explained by the financial expenses related to the sale of accounts receivable from distribution companies resulting from the application of the price stabilization mechanism pursuant to Law #21,185 dated November 2019 ( " PEC " ). These expenses amounted to US$3.9 million in the first quarter of 2022, down from US$40.9 million in the first quarter of 2021. Total operating revenues 332.3 Operating income 20.7 EBITDA 65.9 EBITDA margin 19.8% Total non-operating results (46.3) Net income after tax (17.6) Net income attributed to controlling shareholders (17.6) Earnings per share (US$/share) (0.017) Total energy sales (GWh) 2,849 Total net generation (GWh) 1,831 Energy purchases on the spot market (GWh) 932 Energy purchases - back up (GWh) 122 Financial Highlights (in US$ millions) 1Q21 1Q22 Var % 417.9 26% 23.1 12% 68.5 4% 16.4% (14,8pp) (19.7) n.a 3.8 78% 3.8 78% 0.004 2,964 4% 1,393 -24% 999 7% 561 359% ENGIE ENERGÍA CHILE S.A. (" E CL") is engaged in the generation, transmission and supply of electricity and the transportation of natural gas in Chile. ECL is the fourth largest electricity generation company in Chile and one of the largest electricity generation companies in the northern segment of the SEN national grid (formerly known as SING). As of March 31, 2022, ECL accounted for 8% of the SEN 's installed capacity. ECL primarily supplies electricity to large mining and industrial customers, and it also supplies electricity to distribution companies throughout Chile. ECL is currently 59.99% indirectly owned by the French company, ENGIE LATAM. The remaining 40.01% of ECL 's shares are publicly traded on the Santiago stock exchange. For more information, please refer to www.engie-energia.cl . Contents HIGHLIGHTS: .............................................................................................................................................................. 3 SUBSEQUENT EVENTS: .......................................................................................................................................... 3 RECENT EVENTS ....................................................................................................................................... 3 1Q22 .......................................................................................................................................................... 3 INDUSTRY OVERVIEW ........................................................................................................................................... 4 Marginal Costs ............................................................................................................................................... 4 Fuel prices ....................................................................................................................................................... 5 Generation ....................................................................................................................................................... 5 Management's Discussion and Analysis of Financial Results ....................................................................................... 7 1Q 2022 compared to 4Q 2021 and 1Q 2021 .................................................................................................. 7 Operating Revenues .......................................................................................................................... 7 Operating Costs ................................................................................................................................. 8 Electricity Margin ............................................................................................................................. 9 Operating Results ............................................................................................................................ 10 Financial Results ............................................................................................................................. 10 Liquidity and Capital Resources ................................................................................................................... 11 Cash Flow from Operating Activities ............................................................................................. 11 Cash Flow Used in Investing Activities .......................................................................................... 11 Cash Flow from Financing Activities ............................................................................................. 12 Contractual Obligations .................................................................................................................. 12 Dividend Policy ............................................................................................................................................. 13 Risk management policy ............................................................................................................................... 14 Hedging Policy .............................................................................................................................................. 14 Business Risk and Commodity Hedging ......................................................................................... 14 Currency Hedging ........................................................................................................................... 15 Interest Rate Hedging ...................................................................................................................... 16 Credit Risk ...................................................................................................................................... 17 OWNERSHIP STRUCTURE AS OF MARCH 31, 2022 ........................................................................................... 18 Number of shareholders: 2,210 .................................................................................................................................... 18 APPENDIX 1 .............................................................................................................................................................. 19 PHYSICAL DATA AND SUMMARIZED QUARTERLY FINANCIAL STATEMENTS ........................ 19 Physical Sales .................................................................................................................................. 19 Quarterly Income Statement ........................................................................................................... 20 Quarterly Balance Sheet .................................................................................................................. 21 Main Balance Sheet Variations ....................................................................................................... 21 APPENDIX 2 .............................................................................................................................................................. 23 Financial information ...................................................................................................................... 23 Financial Ratios .............................................................................................................................. 23 CONFERENCE CALL 1Q22 ...................................................................................................................................... 24 HIGHLIGHTS: • COVID-19 : The Corona virus, or COVID-19, was first detected in Chile on March 3, 2020, and as of April 25, 2022, 3,549,327 cases have been confirmed and 57,387 deaths have been reported. The COVID-19 pandemic is deemed to be the worst sanitary and economic crisis in recent times and has forced us to adapt and respond to the challenges posed by the pandemic, giving priority to safety and wellbeing of our teams; operational continuity, essential for the country ' s continued electricity supply, and permanent, collaborative dialogue with our stakeholders including customers, suppliers, shareholders and communities. We have a crisis committee and have adopted sanitary measures in our sites as necessary to comply with the author ity's i nstructions. Similarly, we have monitored the situation and actions taken by our suppliers and contractors, asking them to comply with safety standards with their own staff. Since January 2022, we have adopted a hybrid work modality. Chile has implemented a widely recognized vaccination process, reporting over 17 million people vaccinated. SUBSEQUENT EVENTS: • An nual Ordinary Shareholders' Meeting : On April 26, 2022, the Company's shareholders agreed t he following: ➢ Dividend Policy: No final dividends will be paid on account of 2021 's net income, ➢ Auditors: To appoint EY Servicios Profesionales de Auditoría y Asesorías SpA as the Company's external auditors. ➢ Board Members: To appoint the following persons as principal and alternate members of the board of directors: Principal director Alternate director Frank Demaille Aníbal Prieto Larraín Hendrik De Buyserie André Cangucu Pascal Renaud Guilherme Ferrari Mireille Van Staeyen Bernard Esselinckx Cristián Eyzaguirre Johnston Ricardo Fischer Abeliuk Mauro Valdés Raczynski Enrique Allard Serrano Claudio Iglesis Guillard Victoria Vásquez García RECENT EVENTS 1Q22 • Tamaya solar PV plant : This 114MWac plant located in the Antofagasta region achieved its commercial operation date on January 14, 2022, as confirmed by the national grid coordinator ( " CEN " ). This new asset forms part of our ambitious transformation plan, which considers the addition of 2GW of renewable generation and is in line with our zero carbon goals. The Tamaya plant has been injecting power to the system since November 2021. • Price stabilization fund : On March 4, 2022, ENGIE Energía Chile and Eólica Monte Redondo sold to Chile Electricity PEC SpA the fourth group of accounts receivable from distribution companies born from the application of the electricity price stabilization mechanism enacted in November 2019. Chile Electricity PEC raised the financing to buy receivables from four groups of generation companies through a delayed draw private placement with the participation of Allianz, IDB Invest and Goldman Sachs. In the first quarter of 2022, ENGIE and EMR sold accounts receivable with face value of US$13.5 million. They received US$9.6 million in cash proceeds and reported US$3.9 million in financial expenses. The total amount of accounts receivable sold under this program, following the sale of the fourth group, is US$180.8 million, representing approximately 68% of the total amount of accounts receivable to be accrued during the life of the PEC mechanism. INDUSTRY OVERVIEW The SING and SIC power grids operated independently until November 24, 2017, when the interconnection of both grids was perfected through EECL 's 50%-owned TEN project, giving birth to the SEN ( "Sistema El éctrico Nacional" ). Currently, the comp any's generation asse ts are predominantly located in the northern segment of the SEN, in the area that used to be covered by the so-called SING Grid ( " Sistema Interconectado del Norte Grande " ), which serves a major portion of the country's mining industry. Given local conditions, the northern segment of the SEN is predominantly a thermoelectric system, with generation based on coal and LNG, with growing penetration of renewable sources, including wind, solar, and geothermal. Energy flows through the interconnection are variable, and until the full commissioning of the Interchile project, used to be predominantly in the south-north direction comprising inflows of renewable power generated in the area known as Norte Chico into the SING grid. Following the commissioning of the last tranche of Interchile's Cardones -Polpaico transmission project on May 30, 2019, marginal costs in the different nodes of the SEN have reported greater stability and lower average levels due to the coupling of transmission bars at different substations and the injection into the grid of renewable power generation, which was previously being lost due to insufficient transmission capacity. Marginal Costs 2021 Real 2022 Month Crucero 220 Polpaico 220 Charrúa 220 Pto. Montt 220 Temuco 220 Month Jan 51 59 57 87 58 Jan 69 69 Feb 76 84 83 151 85 Feb 68 68 Mar 76 84 87 166 90 Mar 95 102 Apr 71 78 83 130 85 Apr - - May 77 82 82 109 84 May - - Jun 67 68 66 63 66 Jun - - Jul 105 122 129 126 129 Jul - - Aug 99 114 128 130 128 Aug - - Sep 47 56 57 68 58 Sep - - Oct 49 50 49 145 50 Oct - - Nov 68 70 70 207 72 Nov - - Dec 85 89 87 212 89 Dec - - YTD 73 80 81 133 83 YTD 77 79 Real Crucero 220 Polpaico 220 Charrúa 220 Pto. Montt 220 Temuco 220 75 213 77 69 290 72 114 210 117 - - - - - - - - - - - - - - - - - - - - - - - - - - - 86 238 89 Source: Coordinador Eléctrico Nacional In the first quarter of 2022, marginal costs increased compared to previous quarters due to several factors: (i) lower reservoir levels which caused a reduction in hydraulic generation; (ii) the increase in international coal and gas prices to unprecedented levels due to the Russia-Ukraine war; (iii) higher transportation costs; and (iv) unavailability of cost-efficient coal plants due to both trips and maintenance outages. This was in part mitigated by the availability of Argentine gas and increased generation from renewables. Therefore, marginal costs at the Crucero node averaged US$77/MWh in the first quarter vs. US$67/MWh in the first quarter of 2021, which was already considered a high average. Fuel prices International Fuel Prices Index Jan Feb March April May June July August September October November December WTI (US$/Barrel) 2021 2022 % Variation YoY 2021 Brent (US$/Barrel) 2022 % Variation YoY Henry Hub (US$/MMBtu) 2021 2022 % Variation YoY European coal (API 2) (US$/Ton) 2021 2022 % Variation YoY 52.0 84.3 62% 54.8 86.2 57% 2.71 4.32 59% 67.8 167.2 147% 59.0 95.8 62% 62.3 96.6 55% 5.35 4.75 -11% 65.9 194.5 195% 62.3 107.9 73% 65.3 116.2 78% 2.61 4.99 91% 68.4 325.3 375% 61.7 64.9 2.67 71.8 65.9 68.9 2.93 86.1 72.3 74.1 3.35 108.4 72.2 75.0 3.85 132.8 67.9 71.0 4.05 148.8 72.2 75.0 5.27 173.0 81.8 83.7 5.51 206.3 77.5 79.8 4.77 159.4 71.4 74.8 3.71 121.1 Source: Bloomberg, IEA In the first quarter of 2022, fuel prices increased, with average year-on-year rises of over 50%, primarily due to sustained demand from China and certain supply issues attributed to weather phenomena in Australia and the U.S. When comparing the year 2022 with 2021, we can observe higher international fuel prices, with variations of more than 60% on average except for the Henry Hub index. Prices began to increase in 2021 due to an important "post-pandemic" reactivation, especially in China. In the last quarter of 2021, the Chinese government took steps to unblock coal supply and stabilize prices, which began to be reflected in a recovery in domestic production and a decline in international prices. However, on January 1, 2022, the Indonesian government banned coal exports, due to problems in domestic supply. This situation continued until January 20, 2022, when the authorities lifted the ban on 139 companies that had met their local supply quotas and were allowed to export immediately. Such a ban led to a significant increase in the main Australian coal price indicator (FOB Newcastle), which reached levels above 200 USD/ton. Following the export ban in Indonesia (the world's largest exporter), which affected January prices, Russia's invasion of Ukraine, that began on February 24, aggravated the situation. Russia is the world's third largest coal exporter and the European Union's top supplier. The war caused an increase in the prices of coal, gas, and oil. Russia ceased to be a reliable supplier and countries that commonly used Russian coal began to look for coal in other markets including Indonesia and Australia. Moreover, in early April, the EU agreed to completely ban the import of Russian coal, a move that will take effect in mid-August. A few days later, Japan also banned imports of Russian coal. Generation The following table provides a breakdown of generation in the SEN by fuel type:

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