Taesa Transmissora Aliança de Energia Eletrica S A : Dados Econômico-Financeiros

Transmissora Aliança de Energia Elétrica S.A. - TAESA

Individual and consolidated financial statements

December 31, 2022

CONTENTS

MANAGEMENT REPORT

1

INDEPENDENT AUDITOR'S REPORT ON THE INDIVIDUAL AND CONSOLIDATED FINANCIAL STATEMENTS

18

BALANCE SHEET STATEMENT OF INCOME

22

24

STATEMENT OF COMPREHENSIVE INCOME STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY STATEMENT OF CASH FLOW

25

26

27

STATEMENT OF ADDED VALUE

28

NOTES TO THE FINANCIAL STATEMENTS:

• 1. GENERAL INFORMATION

  29

• 2. PREPARATION BASIS

  31

• 3. SIGNIFICANT ACCOUNTING POLICIES

  34

• 4. CASH AND CASH EQUIVALENTS

  43

• 5. SECURITIES

  43

• 6. ACCOUNTS RECEIVABLE FROM CONCESSIONAIRES AND PERMISSIONAIRES

  44

• 7. CONCESSION CONTRACT ASSET

  46

• 8. CURRENT TAXES AND SOCIAL CONTRIBUTIONS

  48

• 9. DEFERRED TAXES AND SOCIAL CONTRIBUTIONS

  48

• 10. DEFERRED TAXES

  50

• 11. INTEREST (IN SUBSIDIARIES, JOINTLY-CONTROLLED SUBSIDIARIES AND ASSOCIATED COMPANIES)

  50

• 12. RELATED PARTY TRANSACTIONS

  54

• 13. LOANS, FINANCING AND DEBENTURES

  60

• 14. PROVISION FOR LABOR, TAX AND CIVIL RISKS

  64

• 15. SHAREHOLDERS' EQUITY

  67

• 16. CREDIT (EXPENSE) FROM INCOME TAX AND SOCIAL CONTRIBUTION

  69

• 17. INSURANCE COVERAGES

  70

• 18. FINANCIAL INSTRUMENTS

  71

• 19. EARNINGS PER SHARE

  78

• 20. NET OPERATING INCOME

  78

• 21. NATURE OF COSTS AND EXPENSES

  79

• 22. FINANCIAL INCOME (EXPENSES)

  79

• 23. PRIVATE PENSION PLAN - DEFINED CONTRIBUTION

  80

• 24. OTHER INFORMATION

  80

• 25. SUBSEQUENT EVENTS

CAPITAL BUDGET PROPOSAL OPINION OF THE AUDIT BOARD

STAEMENT OF REVIEW OF THE FINANCIAL STATEMENTS BY THE OFFICERS

STATEMENT OF REVIEW OF THE INDEPENDENT AUDITORS' REPORT ON THE FINANCIAL STATEMENTS BY THE OFFICERS

84 87 88 89 90

MANAGEMENT REPORT

(In thousands of Brazilian reais, unless otherwise stated)

The Management of Transmissora Aliança de Energia Elétrica S.A. - TAESA ("Taesa" or "Company") - B3: TAEE11, one of the largest concessionaire groups of electricity transmission in the country, submits to your appreciation its Management Report and the Individual and Consolidated Financial Statements, together with the Independent Auditor's Report and the opinion of its Supervisory Board for the year ended December 31, 2022.

MESSAGE FROM THE MANAGEMENT

Year 2022 was an important milestone for Taesa. The Company reached in the past year regulatory EBITDA, upon proportional consolidation, of R$2.5 billion - the highest volume ever posted by Taesa in its history - with EBITDA margin of nearly 86%. This strong performance results from the successful implementation of its strategic planning based on sustainable growth, competitiveness, regulatory management, sustainability and governance. With that, regulatory profit has more than doubled year-on-year, reaching R$1.0 billion in 2022.

The Company posted consolidated regulatory net operating revenue of R$2.2 billion in the year, 21.3% up when compared to 2021. Consolidated regulatory EBITDA totaled R$1.9 billion in 2022, a 24.2% growth against 2021. Consequently, EBITDA margin was 84.5% year-on-year, 2.0 percentage points higher than in the previous year.

One of the major drivers of this performance was the start-up of activities of projects Sant'Ana (55% delivered), ESTE, Aimorés, Paraguaçu and Ivaí (90% delivered) in 2022, and also the impact of Janaúba which, even though being delivered ahead of the deadline in 2021, has positively affected the comparison between 2022 and 2021. The RAP of all these projects totals more than R$680 million, considering Taesa's proportional interest in these concessions during the RAP 2022-2023 cycle, including PIS/COFINS.

With respect to the IFRS, the Company posted profit of R$1.5 billion in the year, a 34.5% drop when compared to 2021, mainly explained by the lower IGP-M and IPCA observed between the periods compared, adversely affecting revenue from inflation adjustment, and by the decrease of the infrastructure implementation margin, mainly due to the start-up of operation of various projects that were under construction.

At the end of the year, Taesa reached cash of R$1.5 billion and net debt of R$9.1 billion - considering the Company's interest in the joint ventures and associates -, with a 3.7x net debt-to-EBITDA ratio, an important improvement when compared to the level of 4.2x reported in the previous twelve months.

From the operational viewpoint, the Company reached 99.95% line availability rate in 2022, stressing its consistency in operational excellence and management of its transmission lines. The accounting variable portion totaled R$60.2 million year-on-year, influenced by events occurred in other years and which are being discussed in administrative and legal proceedings as they are considered alien to Taesa.

In the past three transmission auctions conducted by ANEEL, Taesa was one of the major winners and won four lots which together total nearly R$450 million of RAP. Ananaí refers to the biggest lot of auction 02/2021, located between São Paulo and Paraná, with R$1.75 billion in investments and RAP of R$160 million; and Pitiguari corresponds to lot 10 won at auction 01/2022, located in Santa Catarina, with a RAP of almost R$20 million and investments of R$243 million. The lots won in the last auction 02/2022 at the end of the year are called Tangará (lot 3) and Saíra (lot 5) and total R$2.3 billion in investments and total RAP of R$261 million.

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The agreement for these concessions is scheduled to be signed on March 30, 2023. Also, in October 2022 ANEEL authorized the implementation of big enhancements in concession Novatrans, comprising an investment of approximately R$263 million and RAP of R$45 million after its start-up, with regulatory 30-month term for completion of works.

Year 2022 was also affected by the beginning of the new cycle of the Annual Permitted Revenue (RAP) 2022-2023 which has also began on July 1. The concessions adjusted by the IGP-M (Category II) were subject to inflationary adjustment of 10.72% and concessions adjusted by IPCA (Category III) were subject to inflationary adjustment of 11.73%. Thus, the RAP of the 43 concessionaires of Taesa group in the new 2022-2023 cycle totaled R$4.1 billion, more than 15% above the total RAP of the previous cycle, already contemplating a 50% drop of the RAP of the category II concessions subject to such effect in the new cycle.

In terms of payment of dividends, Taesa maintained an appropriate level of distribution of dividends and interest on capital, totaling the approximate amount of R$1.7 billion in 2022, the equivalent to R$4.85 per Unit and 7.8% higher than the amount paid in 2021. With that, dividend yield of TAEE11 was 14.0% at the closing of 2022.

Taesa kept full focus on sustainability, as this topic is connected to its mission, vision and all its values, and is also a fundamental pillar of the Company's Strategic Plan. In terms of People, Taesa was awarded the Great Place to Work award for the 4th consecutive year, being ranked among the Best Companies to Work in Rio de Janeiro and 1st in Energy GPTW Highlight for the 2nd consecutive year. Also, the Company received the certification FIA Employee Experience of Organizational Climate 2022 which for more than 30 years analyzes the work environment in Brazilian companies, based on a methodology that assesses several topics such as career, internal communication, corporate education, ESG, leadership, life quality, recognition and reward and interpersonal relationships.

In terms of security, Taesa implemented numerous actions, which includes integrating objective security requirements into the process of hiring of engineering, procurement and construction contractors, and the purchase and use of security cameras in the performance of the field team's activities so as to ensure the compliance with security rules and, consequently, the protection and safety of technicians. A series of forums for employees were also conducted mainly aiming at raising everyone's awareness on health and security. As a result of all efforts, the accident frequency rate dropped considerably between 2021 and 2022 in all concessions in which the Company holds interest.

Another important sustainability issue to highlight was the approval of the action plan of the Materiality Matrix. After the assessment of the head office with the stakeholders, six important topics were prioritized from now on: ethics, transparency and integrity; mitigation of and adaptation to climate changes; environment and biodiversity; relationship with local communities; management, people development, diversity and inclusion; and health, security and life quality. In order to create a link with the global agenda, we connected these important topics to some Sustainable Development Goals (ODS): Clean and Accessible Energy (ODS 7), Decent Work and Economic Growth (ODS 8), Action Against Global Climate Change (ODS 13), Life on Earth (ODS 15), and Peace, Justice and Efficient Institutions (ODS 16).

In 2022, after a collaborative work integrated with all employees, the Company has defined its Mission, Vision and Values, in line with our strategic planning and connected to Taesa's Integrated Management System Policy. The purpose of this policy is to disseminate the security culture to prevent accidents, minimize environmental impacts arising from our activities, maintain appropriate levels of reliability and availability of transmission assets, be even more efficient, increase profitability of our assets, and implement, certify and maintain the Company's integrated management system.

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In terms of diversity and inclusion, diversity goals were defined for the hiring process and awareness debates and forums were conducted among the employees. Women currently account for more than 20% of Taesa's staff and leaders, an important number as the electric sector is currently mainly comprised of men. Taesa has been offering courses for the training of female electricians, with the participation of more than 120 women; some of these women were hired by the Company. Also, there was a 11% growth in the number of black employees, which currently account for 45% of the staff.

For the second consecutive year, Taesa remained in the Sustainability indices of B3, ICO2 and IGPTW, which confirms the recognition by the market of the Company's efforts in view of the important topics involving climate changes and organizational climate. Finally, we stress the issuance of one more green infrastructure debenture in 2022 - the 12th issuance of Taesa's debentures in the amount of R$1.25 billion - which was the biggest ICVM 400 "green" issuance in the past year with the expressive participation of individual investors (more than 17,500 CPFs) and very competitive cost - lower premium above the National Treasury bonds (NTN-B) in the past two years in the electric sector.

In view of the extraordinary accomplishments and important achievements in the past year, TAESA strengthens its strategic position as one of the major electric power transmission companies in Brazil and focus on strategic pillars of sustainable growth, value generation, financial discipline and operating efficiency, reaffirming the commitment of transmitting electric power on a reliable, transparent and safe manner to the entire society, respecting the environment and all stakeholders.

THE COMPANY

Taesa is a power transmission concessionaire, which is engaged in providing operation and maintenance services for power transmission facilities in Brazil and performing other activities related to the power transmission sector. It is one of the largest private power transmission groups in Brazil in terms of Annual Permitted Revenue (RAP), with 12,362 km of transmission lines in operation and 1,746 km under construction, totaling 15,130 Km length. It has assets in 108 substations with voltage between 230 and 525kV and one operation and control center located in Brasília.

Taesa holds interest in forty-three transmission concessions: ten concessions in the holding (TSN, NVT, ETEO, GTESA, PATESA, Munirah, NTE, STE, ATE and ATE II), fourteen subsidiaries (ATE III, São Gotardo, Mariana, Miracema, Janaúba, Brasnorte, Sant'ana, São João, São Pedro, Lagoa Nova, Ananaí, Pitiguari, Tangará and Saíra), four joint ventures (ETAU, Paraguaçu, Aimorés and Ivaí) and fifteen associates, of which four direct (EATE, ENTE, ETEP and ECTE), five indirect (STC, ESDE, Lumitrans, ETSE and ESTE) and six with direct and indirect interests (EBTE, EDTE, ERTE, Transudeste, Transleste and Transirapé).

ORGANIZATIONAL STRUCTURE AND CONCESSION LOCATION

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