ENGIE : FY 2022 Financial results

Press release 21 February 2023

ENGIE FY 2022 Financial results

Significant progress on execution of strategic plan

Strong financial and operational performance

Proposal to pay a dividend of €1.40 per share for 2022

Business highlights

• Leading role played by ENGIE to support security of supply in Europe
• Continued contribution to public policy measures through Working Capital support, extraordinary taxes and dedicated customer actions
• Major progress on simplification with €11.0bn disposals signed or closed
• €5.5bn growth Capex, primarily in Renewables, Networks and Energy Solutions
• Acceleration in Renewables with +3.9 GW of capacity added in 2022, taking total installed capacity to c. 38 GW
• Further progress on coal exit, coal represents 2.6% of centralised generation capacity

Financial performance

• 2022 guidance achieved with continuing NRIgs of €5.2bn
• EBIT of €9.0bn, up 43% organically, with growth across most activities. Key contribution from GEMS and Thermal in unprecedented market conditions as well as from new capacity additions for Renewables
• Impact of windfall profit taxes of €0.9bn in 2022, mainly in Belgium and Italy, in addition to existing Government profit sharing mechanisms in Belgium and France (nuclear and hydro) of €1.1bn
• Strong balance sheet and high liquidity with improvement in credit ratios
• Improved Cash Flow From Operations1, despite Working Capital headwinds due to energy prices
• Net financial debt at €24.1bn, down €1.3bn.
• 2022 proposed dividend of €1.40 per share

Key financial figures as at 31 December 2022

In € billion	31 December	31 December	Δ 2022/21	Δ 2022/21
2022	2021	gross	organic
Revenue	93.9	57.9	+62.2%	+60.4%
EBITDA	13.7	10.6	+29.8%	+27.0%
EBIT	9.0	6.1	+47.2%	+42.7%
Net recurring income Group share (continuing)	5.2	2.9	+78.4%	+76.2%
Net income Group share	0.2	3.7	-94.1%
Capex2	7.9	6.7	+17.4%
Cash Flow From Operations	8.0	6.5	+24.0%
Net financial debt	24.1	€-1.3bn versus 31 December 2021
Economic net debt	38.8	€+0.5bn versus 31 December 2021
Economic net debt / EBITDA	2.8x	-0.8x versus 31 December 2021

Catherine MacGregor, CEO, said: "2022 was an unprecedented year during which ENGIE played a major role in ensuring security of supply, remaining close to its customers throughout the crisis. I am particularly proud that in this volatile and complex environment, our teams have delivered very strong operational performance,

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N.B. Footnotes are on page 11

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leveraging our resilient and balanced assets base. Not only have we achieved robust operational and financial results, but we have also progressed on our strategic roadmap, establishing strong foundations for our Group to continue the implementation of the energy transition. Notably, we have reached our goal to increase from 2022 onwards the rate of additions in Renewables capacity from 3 GW to 4 GW on average.

2022 was also a year of refocus, both strategic and geographical. The completed €11 billion disposal plan will allow us to significantly increase our investments in renewable energy and decarbonisation solutions for our customers. In the new energy order, it is more crucial than ever to accelerate the transition and rely on a balanced energy mix, which guarantees the sovereignty and reliability of our energy system. Faced with these challenges, ENGIE's integrated model has demonstrated its relevance and strength."

2023-2025 outlook and guidance

The progress on the execution of the strategic plan solidifies the foundation for ENGIE towards delivering long- term growth while achieving its purpose of carbon neutrality.

The Group anticipates delivering growth in the medium-term primarily fueled by investment in Renewables and improved results from Energy Solutions, alongside a stable contribution from Networks. GEMS is projected to further enhance the integrated business model securing energy supply, optimising and managing risks for ENGIE and third parties. Nuclear contribution, due to the ongoing phase-out capacity plan in Belgium, has been excluded from the EBIT indication.

European commodity price assumption in the guidance for residual merchant exposure: the price assumption used in the guidance for 2023-2025 provided today is based on the European forward prices as at 31 December 2022.

ENGIE outlook for 2023 to 2025:

In € billion	2023	2024	2025
EBIT excluding Nuclear	6.6 - 7.6	7.2 - 8.2	7.5 - 8.5
NRIgs guidance	3.4 - 4.0	3.8 - 4.4	4.1 - 4.7

ENGIE remains committed to a "strong investment grade" rating and continues to target a leverage ratio of below or equal to 4.0x economic net debt to EBITDA.

Detailed guidance key assumptions are on appendix 4.

Dividend policy reaffirmed and €1.40 per share proposal for 2022

ENGIE is focused on delivering a progressively growing and sustainable dividend for shareholders.

The Board has reaffirmed the Group's dividend policy with a payout ratio of 65-75% of net recurring income Group share, and a floor of €0.65 per share for the 2023 to 2025 period.

For 2022, the Board has proposed a payout ratio of 65%. This translates to a dividend of €1.40 per share, which will be proposed for shareholder approval at the Annual General Meeting on 26 April 2023.

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ENGIE playing a leading role in security of supply and contributing to support energy affordability

As gas infrastructure owner, operator, and gas supplier, ENGIE has played a crucial role in Europe.

In France, ENGIE's networks activities have operated at record high utilisation rates, with LNG terminals working at nearly full capacity, two-fold increase in transit at GRTgaz including reversed flows from France to Germany, and gas storage levels filled at 82% as at 31 December 2022 compared to 53% at 31 December 2021.

ENGIE has contributed €1.1 billion in 2022 to existing Government profit-sharing mechanisms for Belgian Nuclear (specific tax framework) and French hydro (CNR).

ENGIE has pledged to support its French customers with €90 million in measures for vulnerable customers and a €60 million fund for industrial/tertiary customers affected by rising energy prices. ENGIE has also launched platforms for retail and SME customers to monitor and save energy.

ENGIE is contributing to public policy measures to address high energy prices. In France, ENGIE has increased working capital support for the tariff shield mechanism, now including small and medium-sized enterprises as well as customers under market prices (by linking their contracts to the regulated tariff). Most of ENGIE's B2C gas and power contracts in France benefit from protection against price increases through this tariff shield mechanism or fixed prices over the lifetime of the contract.

The Group is supporting the implementation of social tariffs in Belgium and a price cap mechanism in Romania and Chile. In addition, the Group has engaged with various local authorities to provide support through payment facilities. The overall impact of delayed payment plans worldwide is close to €1.0 billion. The Group is more focused than ever to work collaboratively with clients on energy efficiency to reduce their energy bill and achieve their decarbonisation goals.

ENGIE has also recognised the engagement of its employees around the world with an exceptional bonus of €1,500 awarded to each employee in an unprecedented energy situation to support in a high inflation environment.

Update on European proposals for windfall taxes

In December 2022, the Governments of Belgium and France, ENGIE's two most significant power generation countries in the EU, have passed new measures into Law to address inframarginal rent in relation to power prices.

In Belgium, an inframarginal rent cap was implemented retroactively, from 1 August 2022 to 30 June 2023, at a level depending on the power production's technology. A possible extension of this period will be evaluated next April. ENGIE's nuclear assets, owned and operated via its subsidiary Electrabel, fall into the scope of this measure: normative revenues exceeding €130/MWh are subject to the new levy but with a mechanism limiting potential double taxation with existing nuclear taxes.

In France, the Finance Bill for 2023 provides for a rent cap applicable over a period of eighteen months, (from 1 July 2022 until 31 December 2023). The cap ranges from €40/MWh to €175/MWh depending on the power production technology. The excess revenue is subject to a tax rate of 90%. ENGIE is mainly impacted through its drawing rights on two EDF nuclear power plants (Chooz B and Tricastin, 1.2 GW, 9 TWh of annual output at an availability rate of 85%) subject to a €90/MWh cap and its gas power plants (1.4 GW capacity) subject to a €40/MWh cap on the clean spark spread.

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In Italy, the Government has already enacted an "extraordinary solidarity contribution" on energy companies calculated on a variation of VAT-taxable basis between October 2021 and April 2022 versus the same duration a year earlier, at a rate of 25%. ENGIE has been significantly and adversely impacted due to an ill-designed methodology, not representative of the excess revenues over the period.

The overall impact of extraordinary taxes in Europe is close to €0.9 billion in 2022, 85% in EBIT and 15% in corporate income tax.

Significant progress on the execution of strategic plan

Acceleration in Renewables, infrastructures and renewable gases

ENGIE added 3.9 GW of renewable capacity in 2022, including 1.8 GW of onshore wind, 1.2 GW of solar and

1.0 GW of offshore wind, taking total renewable installed capacity at 100% to c. 38 GW at the end of 2022. Geographically, the 3.9 GW additions include 2.6 GW in Europe (mainly in UK, Spain and France), 0.8 GW in US and 0.4 GW in Latin America. The Group is therefore on track with its target to add 4 GW on average per year of renewable capacity until 2025. This ambition is fuelled by a growing pipeline that totalled 80 GW at end of December 2022, up 14 GW compared to December 2021.

Ocean Winds, ENGIE's joint venture with EDPR dedicated to offshore wind continues to grow strongly. In December, Ocean Winds was awarded a lease area for a floating offshore wind site of 2 GW capacity in California. In 2022, the Group continued supporting its customers in their decarbonisation efforts by signing a total amount of 2 GW of green Power Purchase Agreements (PPAs).

Energy Solutions has achieved major wins in District Heating and Cooling (DHC) and sustainable mobility in the 2022, including 12,000 electric vehicle charging points mainly in Belgium and Singapore. In 2022, c. 1 GW net installed capacity has been added in distributed energy infrastructures.

In Brazil, the internalization of TAG O&M activities has been successfully completed and the two power transmission lines, Gralha Azul and Novo Estado, are now close to full completion.

ENGIE continues to unlock the potential of renewable gases: 492 biomethane production units, with a yearly production capacity of up to 8.3 TWh are connected to ENGIE's networks in France. On hydrogen, the European Commission has approved up to €5 billion in public support. ENGIE has submitted five projects across Belgium, France, the Netherlands and Spain, and all of them have been selected.

Simplifying and refocusing

The disposal plan financial target of at least €11 billion by the end of 2023 has been achieved with €11.0 billion already closed or signed, with EQUANS being the main contributor.

On geographic rationalization, the Group will be operating in 31 countries, down from 70 in 2018, once closing of the signed deals is effective. ENGIE exited seven countries as part of the EQUANS disposal and targets to be in less than 30 countries by the end of 2023.

Disciplined capital allocation

In 2022, total Capex amounted to €7.9 billion. Growth Capex reached €5.5 billion, of which 58% dedicated to Renewables, 20% to Networks and 13% to Energy Solutions, thus fully aligned with ENGIE's strategic roadmap.

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Performance plan delivering

In a context of rising inflation, ENGIE maintained its momentum on cost efficiency and is on track to achieve its 3-year target, with a net EBIT contribution in 2022 of €0.4 billion.

Update on Belgian nuclear assets

In line with the planned nuclear phase-out in Belgium, the Doel 3 reactor was shut down in September 2022 and the Tihange 2 reactor in February 2023.

In January 2023, ENGIE and the Belgian federal government set a framework for the extension of the nuclear reactors Doel 4 and Tihange 3, signing the Heads of Terms and Commencement of LTO Studies Agreement which builds on the Letter of Intent signed on 21 July 2022, with the objective to extend the operational lifetime of both reactors for ten years, for a total production capacity of 2 GW.

This agreement in principle comprises three conditions, including the establishment of a legal structure dedicated to the two extended nuclear units equally owned by the Belgian State and ENGIE, the framework for a cap on future nuclear waste management costs, and a set of guarantees to ensure the proper execution of the nuclear operator's commitments. With this agreement, both parties confirm their objective to make reasonable endeavours to restart the Doel 4 and Tihange 3 nuclear units in November 2026.

In December 2022, ENGIE was informed on the new parameters considered by the Commission for Nuclear Provisions (CPN) for the calculation of the nuclear provision for the dismantling and spent fuel management of Belgian nuclear power plants following the triennial revision. Based on these parameters, nuclear provisions have increased by €3.3 billion, of which €2.9 billion borne by Synatom, compared to ENGIE's initial proposal of an increase of €0.9 billion. ENGIE considers the increase by €2.9 billion unjustified and has submitted an adapted proposal to the CPN.

ESG

Key ESG targets

In 2022, greenhouse gas emissions from energy production were reduced to 60 million tons, a decrease of 44% compared to 2017, and in line with the target of 43 million tons by 2030. 2022 results were positively impacted by the weather and a lower utilization rate of our CCGTs.

ENGIE increased the share of renewables in its portfolio to 38% at the end of 2022 from 34% at the end of 2021 with the addition of 3.9 GW of renewables.

ENGIE continues to progress on coal exit with the signing in September of the disposal of Pampa Sul in Brazil and the closure of Tocopilla in Chile which comprises a total of 0.6 GW installed capacity. ENGIE is committed to exiting all coal assets in continental Europe by 2025 and globally by 2027, including coal generation for district heating and cooling networks. At the end of 2022, coal represented 2.6% of ENGIE's centralized power generation portfolio.

On gender diversity, ENGIE had 30% women in management at the end of 2022 and is implementing action plans towards its ambition of managerial parity of 40% to 60% between men and women.

ENGIE CORPORATE HEADQUARTERS

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