Equatorial Energia S A : Dados Econômico-Financeiros

Equatorial Energia S.A.

Financial statements as at

December 31, 2021

(A free translation of the original report in Portuguese, prepared in accordance with the accounting practices adopted in Brazil)

Equatorial Energia S.A.

Financial statements

Contents
Independent auditor's report on individual and consolidated financial statements	1
Statements of financial position	7
Statements of profit or loss	8
Statements of comprehensive income (loss)	9
Statements of changes in equity	10
Cash flow statements - Indirect method	11
Statements of value added	12
Notes to individual and consolidated financial statements	13

Cenro Empresarial Iguatemi

Av. Washington Soares, 55

5º andar - sala 506 a 509 - Bairro Cocó 60811-341 - Fortaleza - CE - Brasil

Tel: [phone]

Fax: [phone] ey.com.br

Independent auditor's report on individual and consolidated financial statements

To the Board of Directors and Officers

Equatorial Energia S.A.

São Luis - MA

Opinion

We have audited the individual and consolidated financial statements of Equatorial Energia S.A. (the "Company"), identified as Individual and Consolidated, respectively, which comprise the statement of financial position as of December 31, 2021, and the statements of profit or loss, of comprehensive income, of changes in equity and cash flows for the year ended, and notes to the financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying financial statements work present fairly, in all material respects, the individual and consolidated financial position of Equatorial Energia S.A. as at December 31, 2021, and its individual and consolidated financial performance and cash flows for the year then ended in accordance with the accounting practices adopted in Brazil and with the International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB).

Basis for opinion

We conducted our audit in accordance with Brazilian and International Standards on Auditing. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the individual and consolidated financial statements section of our report. We are independent of the Company and its subsidiaries in accordance with the relevant ethical principles set forth in the Code of Professional Ethics for Accountants, the professional standards issued by Brazil's National Association of State Boards of Accountancy (CFC) and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key audit matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the individual and consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. For each matter below, our description of how our audit addressed the matter, including any commentary on the findings or outcome of our procedures, is provided in that context.

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A member firm of Ernst & Young Global Limited

We have fulfilled the responsibilities described in the Auditor's responsibilities for the audit of the individual and consolidated financial statements section of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the financial statements. The results of our audit procedures, including the procedures performed to address the matters below, provide the basis for our audit opinion on the accompanying financial statements.

Recognition of unbilled revenue from power distribution

The revenues of the Company's subsidiaries (Equatorial Maranhão Distribuidora de Energia S.A., Equatorial Pará Distribuidora de Energia S.A., Equatorial Piauí Distribuidora de Energia S.A. and Equatorial Alagoas Distribuidora de Energia S.A., Companhia Estadual de Distribuição de Energia Elétrica - CEEE-D and Companhia de Eletricidade do Amapá - CEA) mainly derive from the supply of electricity, being recognized when energy is consumed, on an accrual basis, regardless of its billing, since billing is carried out based on reading cycles that in certain cases follow the accounting closing period. Accounts receivable from unbilled supply services amount to

R$ 808,289 thousand at December 31, 2021 and is presented in Note 8 to the individual and consolidated financial statements.

Unbilled revenue calculation was considered a key audit matter due to the significance of the amounts involved and specificities inherent in the estimation process, which takes into consideration historical data, system parameterization, in addition to judgments by management on the estimated consumption by consumers, in order to ensure that revenue is recorded on an accrual basis.

How our audit addressed this matter

Our audit procedures included, among others: (i) assessing the design of the Company's internal controls for calculating unbilled revenue; (ii) obtaining an understanding and documentation on the estimation process, identifying and reviewing the assumptions used by management; (iii) involving our specialists in systems' audit to assist us in the tests of completeness, data accuracy and reports extracted from the billing system and that are used for calculating estimated unbilled revenue; and (iv) recalculating these revenues.

Based on the result of audit procedures performed on unbilled revenues, which is consistent with management's assessment, we believe that the policies for measuring and recognizing unbilled revenues adopted by management, as well as respective disclosure in Note 8 are acceptable in the context of the individual and consolidated financial statements taken as a whole.

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Business combinations

As detailed in Notes 4.1.1.1 and 4.1.1.2 to the individual and consolidated financial statements, Equatorial Energia S.A. concluded on July 8, 2021 and on November 23, 2021, all the conditions provided for in the auction notices "No. 01/2020 - Sale of Common and Preferred Shares of Companhia Estadual de Distribuição de Energia Elétrica - CEEE-D" and "BNDES No. 01/2021 - CEA", for the acquisition of shareholding controls of the State Company of Electric Energy Distribution ("CEEE-D") and Companhia de Eletricidade do Amapá - CEA ("CEA"), respectively, companies engaged in the same business segment as the main subsidiaries of Equatorial Energia S.A. The consideration transferred for these acquisitions amounts, respectively, to R$145 thousand and R$400,050 thousand. These transactions were accounted for using the acquisition method (CPC 15 (R1) - Business Combinations/IFRS 3 - Business Combinations), which requires, among other procedures, that the Company determines: (i) the effective acquisition date of control,

1. the fair value of the consideration transferred, (iii) the fair value of the assets acquired and the liabilities assumed, and (iv) the determination of the results obtained in the business combination. These procedures involve a high degree of judgment and the need to develop fair value estimates based on calculations and assumptions related to the future performance of the acquired businesses, which are subject to a high degree of uncertainty. In view of the high degree of judgment involved and the impact that any changes in assumptions could have on the individual and consolidated financial statements, we considered this to be a significant matter for our audit.

How our audit addressed this matter

Our audit procedures included, among others, (i) reading the documents that formalized the transaction, and obtaining the evidence that supported the determination of the date of acquisition of the shareholding control of the acquired companies, and the determination of the fair value of the consideration transferred ; (ii) analysis of the financial information of the acquired companies and discussion with management about the consistency of accounting practices and estimates, in addition to understanding the flow of significant transactions and examining the significant accounting balances of the acquired companies; (iii) evaluation of the objectivity, independence and technical capacity of the external experts involved in the measurement at fair value of the assets acquired and liabilities assumed; (iv) with the help of our specialists in valuation models, we analyzed the assumptions and methodology used by the Company's management related to the measurement of fair values and allocations, on the acquisition date, to assets acquired and liabilities assumed; (v) review of the due diligence reports conducted by the Company, with the help of external experts; and (vi) assessment of the adequacy of the disclosures made by the Company in relation to that matter.

Based on the result of audit procedures performed on recognition of the accounting effects of business combinations and their respective disclosures, which is consistent with management's assessment, we consider that the criteria and assumptions applied on business combinations by management, as well as the respective disclosures in Notes 4.1.1.1 and 4.1.1.2 are acceptable in the context of the individual and consolidated financial statements taken as a whole.

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