1Q20 RESULTS PRESENTATION Disclaimer The statements contained in - - PowerPoint PPT Presentation

1Q20 RESULTS PRESENTATION

Disclaimer

The statements contained in this report regarding the business outlook of ISA CTEEP (“ISA CTEEP”, “CTEEP”, “Company”), the projections and their growth potential are based on mere forecasts and were based on management's expectations in regarding the Company's future. These expectations are highly dependent on changes in the market, in the general economic performance of the country, the sector and international markets, and are subject to change. The financial information was prepared in accordance with CVM (Brazilian Securities and Exchange) rules and CPCs, and it is in compliance with international accounting standards (IFRS) issued by the International Accounting Standard Board (IASB). The Regulatory Result is presented in accordance with accounting practices adopted in Brazil. The purpose of disclosing the Regulatory Result is merely to collaborate to understand ISA CTEEP's business. Sums may differ due to rounding. The Regulatory result is audited only at the end of each fiscal year by the independent auditors.

2

Management focus on the pandemic

Priority is to care for our people and society, and to continue to provide the essential energy transmission service

Operation executed with minimal employees and service providers face to face, and home office orientation Backup Operation Center and teams division with protocols for shift exchanges in the

• perating room

Employees and service providers orientation to maintain the adequate distance Restrictions in national and international travels, events participation, and external visits

3

Risk to execute growth projects in the ISA CTEEP's challenging schedule

Cleaning and sanitization reinforcement in all work environment and functional transportation Creation of a “Health Channel” to assist employees and hiring

• f an infectologist to validate

the protocols Daily health monitoring of all employees through an app Social and emotional support activities: PASS support and Yoga and relaxation classes Analysis of the potential impact of pandemic on 2020 budget with different scenarios for resuming activities Risk assessment for all operations and establishment of a Crisis Committee BRL1.5 million donation to the Oswaldo Cruz Foundation to produce quick test for detecting the disease Voluntary employee contribution program to participate actively against COVID-19. The funds will be used to purchase equipment to reinforce hospital facilities

4

IE Paraguaçú IE Aimorés IE Itaúnas IE Ivaí IE Tibagi IE Itaquerê IE Aguapeí IE Itapura Lorena IE Biguaçu Minuano Três Lagoas Triângulo Mineiro

In progress

¹ “Sudene” tax benefit IL: Installation License Land: Released properties Project: Evolution of all activities related to the enterprise until it starts up

100%

IL Land

95% 75%

Project Project

100%

IL

70% 99%

Land Land

100%

Project IL

100% 57% 46%

IL

100%

Land

31%

Project Project

99% 100%

Land IL

100% 100%

IL

100%

Land Project

97%

Project

73% 100%

IL

100%

Land Project

100%

IL

100%

Land

64%

Project Land IL

28% 5%

IL Land Project

6%

IL Land Project

5%

Project IL Land

Growth - Greenfield Projects

ANEEL investment of ~BRL5 billion and revenue of BRL567 million in the 2019/2020 cycle

ANEEL construction term: Feb/22 Tax: Real Profit¹ ANEEL construction term: Feb/22 Tax: Real Profit¹ ANEEL construction term: Aug/22 Tax: Real Profit ANEEL construction term: Aug/21 Tax: Presumed Profit ANEEL construction term: Feb/22 Tax: Presumed Profit ANEEL construction term: Aug/21 Tax: Presumed Profit ANEEL construction term: Sep/22 Tax: Presumed Profit ANEEL construction term: Sep/23 Tax: Presumed Profit ANEEL construction term: Dec/24 Tax: Presumed Profit ANEEL construction term: Jun/23 Tax: Presumed Profit ANEEL construction term: Dec/24 Tax: Presumed Profit

Opportunity to generate sustainable value with projects that will contribute to the expansion and security of Brazil's electricity transmission system

In progress In progress In progress In progress In progress In progress In progress

ANEEL construction term: Aug/21 Tax: Presumed Profit

Organic Growth

Growth through retrofitting projects¹

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Opportunity to generate sustainable value with projects that will contribute to the expansion and security of Brazil's electricity transmission system

Retrofitting projects: Growth without competition

BRL7 million invested in 1Q20 Risk to delay startup of projects due to the pandemic Average investment of ~BRL180 million/year with average revenue of ~BRL50 million/year (average of last 5 years) ~ BRL500 million already authorized by ANEEL to be executed by ISA CTEEP in the upcoming years Asset renewal opportunity

Ten Year Energy Plan (PDE) 2029

Investment opportunity of ~BRL70 billion in retrofitting projects expected by 2029 and ~BRL38 billion in greenfield projects Two auctions were planned in 2020 with investments estimated at BRL11 billion Auction scheduled for mid 2020 has been postponed.

¹ Retrofitting projects consist in upgrading assets to improve transmission service and investments to ensure higher quality service

• ISA CTEEP is the Transco benchmark company
• 17% O&M revenue reduction over the cycle (5 years), from BRL750 million (2017/2018 cycle) to BRL620

million (2022/2023 cycle). O&M revenue considers a 34% efficiency premium.

• Value does not consider the margin
• The WACC defined in the new methodology for the transmission sector is 7.71% for 2018, 7.40% for

2019 and 6.96% for 2020. 2018 WACC will be used for the PTR of contract 059

• WACC increase from 6.64% to 7.71% has a positive impact on the 2018/2019 revenue cycle of about

BRL80 million¹

• ANEEL Price Reference update was approved in February/2019
• Evaluation report of assets with new Price Reference has been under ANEEL inspection since 3/30/20

O&M WACC Regulatory Asset base

Periodic Tariff Reset (PTR) - Contract 059

6

ANEEL indicates a reduction of BRL4 million in ISA CTEEP’s 2018/2019 revenue cycle due to the PTR

Opening of PTR Public Consultation with contribution deadline on May 15, 2020. The PTR will be applied in the 2020/2021 cycle with retroactive effect as of 2018/2019 cycle

Reduction of 0.2% in the 2018/2019 revenue cycle, from BRL2,453 million to BRL2,449 million (base date: June 2018), and adjustment parcel with positive impact of BRL 110 million, to be diluted over the next 3 adjustment cycles.

¹Resulting from the higher remuneration of the Company's asset base (RBNI and RBSE) according to the report presented in the PTR process (filed in Jul/19). Value does not consider possible impacts of the new regulatory WACC on the Financial Component of RBSE. Base date of Jan/20. Non-linearized revenue.

1Q20 Results

7

Adjusted Net Income2

(BRL million)

Margin 81% 88%

Note: Results in regulatory accounting

Strong results allow the growth strategy to advance with sustainable value creation

Operational Highlights

Focus on efficiency, quality and safety Availability: 99.99988% in 1Q20 Non-supplied energy index: 0.0001% ISA CTEEP vs 0.003%³ SIN

¹ Excludes equity income and other non recurring effects and includes the proportional EBITDA to its participation in affiliates ² Excludes non-controlling shareholder participation ³ SIN information available only for the month of January 2020

694 730 734 1Q19 4Q19 1Q20 +6% 130 133 128 4Q19 1Q19 1Q20

• 2%

PMSO

(BRL million)

615 671 674 1Q19 4Q19 1Q20 +10% 230 345 309 1Q19 4Q19 1Q20 +34%

83%

Main financial indicators reflect robust result in the quarter

Net Revenue

(BRL million)

Adjusted EBITDA¹

(BRL million)

Financial Strength

8

Competitive capital structure allows funding at a competitive cost and leverages return on investments

Regulatory Debt Profile on 3/31/2020

• Gross Debt: BRL3.4 billion

▪

Cash¹: BRL767 million

• Net Debt: BRL2.7 billion
• Average cost of debt: 6.4% p.a
• Average term: 3.8 years
• Net debt / Adjusted EBITDA: 1.1x

Gross Debt amortization schedule (BRL Million)

250 82 78 396 725 613 51 9M20 2021 2024 2022 2023 2025 2026 to 2030 to 1,237 2029 2032

¹ Considers parent company and subsidiaries

Investment Grade: AAA (bra)

Robust financial position

Return to Shareholders

9

Cash generation allows sustainable growth and dividends

Dividends of BRL150 million announced in April

This amount will be imputed to the mandatory dividends for the fiscal year 2020

2020 estimated schedule for dividends announcement:

▪ April ▪ July ▪ October ▪ December (with payment in 2021)

Minimum payout¹ of 75%, limited to the leverage of 3x Net Debt/EBITDA

¹ Regulatory Accounting

10

Existing assets management ▪ Tariff Reset ▪ RBSE (Financial Component Remuneration) ▪ Law 4819 / SEFAZ

Why to invest in ISA CTEEP

Growth strategy with sustainable value creation to be shared with stakeholders

▪ Basic network access – “Conexão Plus” ▪ Real Estate ▪ Biodiversity conservation and climate change mitigation program - 1st Jaguar Connection Project in Brazil ▪ Digitalization ▪ Asset Renewal Operational excellence and efficiency New energy businesses Social and environmental impact Maximize value creation to share with stakeholders Growth with sustainable value creation ▪ Auctions / M&A ▪ Retrofitting Projects

INVESTOR RELATIONS

e-mail: ri@isacteep.com.br phone: +55 11 3138-7407 www.isacteep.com.br/ir