ISA CTEEP earns R$ 261 million in the second quarter and forecasts R$ 1 billion increase in revenue for the next cycle

• 22% growth in potential RAP will affect 23/24 cycle and reach R$ 5.9 billion. Of the total, 87% are assets already in operation;
• The company contributes to the energy transition and advances in its expansion strategy by winning lots 7 (MG and RJ) and 9 (SP) in the first transmission auction of the year, with 5% increase in RAP (R$ 226.3 million);

São Paulo, July 31, 2023 – ISA CTEEP (B3: TRPL3; TRPL4), leader in the energy transmission sector in the country, closed the second quarter of 2023 with regulatory net income of R$ 261.2 million, representing 252.6% increase as compared to the same period of 2022. From January to June, the Company achieved regulatory net income of R$ 567.2 million, up 204.0% versus the recorded in the first half of the previous year, reflecting the solid business scenario.

Consolidated net operating revenue, combined with the Company's share of net revenue from jointly controlled projects, amounted to R$ 680 million in last quarter, showing 28.8% growth compared to the same period last year. For the first half, this amount reached R$ 1.36 billion, representing a 32.3% growth as compared to 2022. These amounts refer to regulatory accounting and exclude effects of the Existing Basic Network System (RBSE) revenue.

For 23/24 cycle, the Company will achieve a 22% increase (equivalent to R$ 1.1 billion) in potential RAP, amounting to R$ 5.9 billion. Of this amount, 87% are assets already in operation. The main factors contributing to increase potential RAP are: (1) start-up of new reinforcement and improvement projects (modernization of the installed park); (2) RAP from the two lots won in the last auction, (3) adjustment of the tariff cycle from July 2023 and (4) total reconstitution of RAP from RBSE financial component, which had its payment flow reduced in the last two years due to the reprofiling adopted in 2021.

Regulatory EBITDA amounted to R$ 686.8 million in the last quarter, 23.8% higher than the same period of previous year. From January to June, the amount reached R$ 1.4 billion, up 31.2%.

Among the main factors that positively impacted the Company's quarterly result are the start-up of more than 80 reinforcement and improvement projects in the last 12 months, in addition to the energization of six greenfield projects which increased the operational portion of 22/23 RAP cycle by R$ 420 million in Annual Permitted Revenue (RAP). Revenue was also positively impacted by the RAP adjustment by IPCA for the period and by the partial reconstitution of revenue from RBSE financial component, whose payment flow was reprofiled in 2021.

As a result of the continuous search for operational efficiency gains, last quarter's manageable PMSO – i.e., personnel, material, services and other costs, compared to net operating revenue, excluding RBSE – reached an additional efficiency of 0.4 percentage points compared to the same period of the previous year. In addition, the company's leverage level, measured by net debt versus EBITDA is 2.65x in the period.
“The 22% increase in potential RAP for the next cycle and the Company's operational efficiency strengthen EBITDA growth, which, together with the responsible allocation of resources, ensures leverage under control, currently at around 2.6%. This combination of factors confirms the soundness and cash generation forecasts that were expected for the last half-year period and the generation of shareholder value", highlights Carisa Cristal, ISA CTEEP's Chief Financial and Investor Relations Officer.

Last quarter, the Company invested R$ 377.4 million, down 32.4% versus the same period last year, explained by the composition of the portfolio of projects under construction (greenfield) which had more projects in the final stages of construction and, therefore, received more contributions. Of the total contributions in the period, R$ 274.4 million was allocated to renewing its installed base (reinforcements and improvements) and R$ 103 million to projects won at auctions (greenfield). From January to June, the amount invested reached R$ 921.1 million, 5.3% lower than the same period of the previous year.

Between 2019 and 2022, investment in reinforcement and improvement projects showed a compound annual growth rate (CAGR) of 83.7%. Today, the Company has approximately R$ 5 billion in investments in projects already authorized by Aneel and which will be executed between 2023 and 2027.

Highlights: energy transition and national expansion

In June, the Company won two lots (7 and 9) in one of the largest transmission auctions in the country’s history, held by the National Electric Energy Agency (Aneel), which will lead to R$ 226.3 million increase in RAP when completed. As a result, R$ 2.4 billion (Aneel Capex) will be invested in the construction of 522 km of double-circuit transmission lines, totaling 1,044 km, the construction of a substation and the expansion of an existing one, with a focus on serving three States, Minas Gerais, Rio de Janeiro and São Paulo, and will allow the flow of large amounts of renewable energy, such as wind and solar power plants. With the new projects, the company continues to contribute to the energy transition and expands its national presence to 18 states, starting to operate in Rio de Janeiro.

“Investments in greenfield projects reinforce our commitment to society, the generation of shareholder value, thanks to our discipline and ability to execute large projects, and corporate longevity. Currently, our pipeline has five projects under construction, whose investment, added to the two new lots won, amounts to approximately R$ 7.6 billion for the next few years and around R$ 730 million in incremental RAP. Now, by winning lots 7 and 9, we will have a potential RAP growth of 5%”, explains Rui Chammas, ISA CTEEP’s CEO.
In the half-year period, relevant projects were also completed, such as the partial energization of Itaúnas project, which allowed the Company to start receiving 66% of a R$ 63.4 million RAP.

Sustainability

Through Jaguar Connection Program, ISA CTEEP supported the development of the first project certified for issuing carbon credits in Pantanal region (MS). In May, the initiative certified over 231,000 carbon credits that will be traded on the international voluntary market and have the potential to reduce around 430,000 tons of CO2e by 2030.
At the beginning of the year, the company also joined B3's Corporate Sustainability Index (ISE) portfolio, and returned to B3's IBrX 100 and ICO2 index portfolios. Also noteworthy was the achievement, together with the parent company ISA, of the carbon-neutral certificate issued by the Colombian Institute of Technical Standards and Certification (ICONTEC).

About ISA CTEEP

With a staff comprising over 1,500 employees, ISA CTEEP is present in 18 States, operating a complex transmission network, responsible for the flowing of 30% of all electricity consumed in the country, and 94% of the State of São Paulo. Its electrical system comprises more than 29,000 km of circuits (about 28,000 in operation and 1,500 under construction), including owned and jointly controlled assets, and 133 owned substations (126 in operation and seven under construction) with voltage up to 550 kV. Its controlling shareholder is the Colombian company ISA, holder of 35.82% of the total capital.


Press information
ISA CTEEP – RPMA Comunicação
Kelly Queiroz – (11) 94216-3176
Sara Saar – (11) 97566-2433
[email protected]