Empresa Metropolitana de Águas e Energia S A : Dados Econômico-Financeiros

From left to right: Rio Pinheiros, Usina Elevatória de Pedreira, Reservatório Billings, and UFV Araucária 5MW. Photo EMAE.

2023 Results

MANAGEMENT REPORT, ANNUAL GOVERNANCE LETTER, AND FINANCIAL STATEMENTS

Dear Shareholders,

The Management of EMAE - Empresa Metropolitana de Águas e Energia S/A ("Company" or "EMAE"), in accordance with the legal and statutory provisions, is pleased to submit for its appreciation the Management Report, Annual Governance Letter, and the Company's Financial Statements, accompanied by the Independent Auditors' Opinion, for the year ended December 31, 2023.

The Company's operating and financial information, except where otherwise indicated, is expressed in thousands of Brazilian Reais and was prepared according with the International Financial Reporting Standards (IFRS) of the International Accounting Standards Board (IASB) and the accounting policies adopted in Brazil. In addition, it accompanies the Independent Auditors' Opinion.

Table of Contents

• I. Message from Management__________________________________________ 5

• II. MANAGEMENT REPORT AND ANNUAL CORPORATE GOVERNANCE

LETTER____________________________________________________________________ 6

a.	Activities______________________________________________________________ 6
b.	Control Structure____________________________________________________ 10
c.	Economical and Financial Data _______________________________________ 11
d.	Operating Performance ______________________________________________ 15
e.	Management's Composition and Compensation______________________ 20
f.	Environmental Liability _______________________________________________ 21
III.	FINANCIAL STATEMENTS ____________________________________________ 23

Assets _________________________________________________________________________ 23

Statements of Income - DRE ___________________________________________________ 25

Statements of Comprehensive Income _________________________________________ 26

Statements of Changes in Equity _______________________________________________ 27

Statements of Cash Flows (indirect method)____________________________________ 28

Statements of Value Added ____________________________________________________ 29

Notes __________________________________________________________________________ 30

• 1. OPERATING CONTEXT _________________________________________________________ 30

• 2. PRESENTATION OF THE FINANCIAL STATEMENTS ____________________________ 34

• 3. SIGNIFICANT ACCOUNTING PRACTICES _______________________________________ 36

• 4. CASH AND CASH EQUIVALENTS _______________________________________________ 43

• 5. RESELLERS ____________________________________________________________________ 44

• 6. TAXES AND SOCIAL SECURITY CONTRIBUTIONS TO BE OFFSET _______________ 44

• 7. TPP PIRATININGA LEASE ______________________________________________________ 44

• 8. OTHER CREDITS _______________________________________________________________ 46

• 9. DEFERRED AND CURRENT INCOME TAX AND SOCIAL SECURITY

CONTRIBUTION________________________________________________________________________ 48

9.1 LossReconciliation of Income Tax and Social Security Contribution in the Profit or 48

• 9.2 Breakdown of deferred taxes __________________________________________________ 49

• 10. ESCROWS AND RELATED DEPOSITS ___________________________________________ 50

• 11. NON-CURRENT ASSETS HELD FOR SALE ______________________________________ 51

• 12. INDEMNIFIABLE FINANCIAL ASSET ____________________________________________ 51

• 13. CONCESSION'S REVERSIBLE ASSETS __________________________________________ 52

• 14. INVESTMENTS _________________________________________________________________ 52

• 15. PROPERTY, PLANT, AND EQUIPMENT _________________________________________ 54

• 16. PAYROLL AND ESTIMATES_____________________________________________________ 55

• 17. POST-EMPLOYMENT BENEFITS, COMPLEMENTARY RETIREMENT PLAN ______ 56

• 18. PROVISION FOR LABOR, CIVIL, AND TAX RISKS _______________________________ 61

• 1.1. Contingencies - Possibility of Probable Loss ___________________________________ 61

• 18.2 Contingencies - Probability of Possible Loss ___________________________________ 63

• 18.3 Contingent Assets _____________________________________________________________ 64

• 19. SPECIAL OBLIGATIONS - GLOBAL REVERSION RESERVE (RGR) ________________ 64

• 20. OTHER OBLIGATIONS - INVESTMENTS IN THE CONCESSION __________________ 65

• 21. OTHER OBLIGATION - COMGÁS _______________________________________________ 65

• 22. OTHER LIABILITIES ____________________________________________________________ 66

• 23. TRANSACTIONS WITH RELATED PARTIES _____________________________________ 66

• 23.1. Financial asset - Sabesp Agreement ___________________________________________ 66

• 23.2. Operation and Maintenance Agreement between EMAE and Pirapora _________ 67

• 23.3. Agreement entered into with Secretariat for the Environment, Infrastructure,

and Logistics___________________________________________________________________________ 67

• 23.4. Employee Assignment _________________________________________________________ 67

• 23.5. Compensation of the key management personnel _____________________________ 68

• 24. EQUITY ________________________________________________________________________ 68

• 24.1. Capital _________________________________________________________________________ 68

• 24.2. Earnings per share - basic and diluted _________________________________________ 69

• 24.3. Allocations of net income for the fiscal year ___________________________________ 69

• 24.4. Dividend per share_____________________________________________________________ 70

• 24.5. Changes in profit reserves _____________________________________________________ 71

• 24.6. Changes from other comprehensive income ___________________________________ 71

• 24.7. Dividend and interest on equity reconciliations ________________________________ 71

• 25. NET REVENUE _________________________________________________________________ 72

• 25.1. Reconciliation of net operating revenue _______________________________________ 72

• 25.2. Electric power sold ____________________________________________________________ 72

• 25.3. Income from services provided ________________________________________________ 73

• 26. OPERATING COSTS AND OPERATING EXPENSES PER TYPE ___________________ 74

• 26.1. Parent Company_______________________________________________________________ 74

• 26.2. Consolidated __________________________________________________________________ 75

• 28. INSURANCE ___________________________________________________________________ 76

• 29. FINANCIAL INSTRUMENTS ____________________________________________________ 77

• 30. RISK MANAGEMENT ___________________________________________________________ 78

• 31. LONG-TERM COMMITMENTS__________________________________________________ 84

• 32. NON-CASH CHANGES _________________________________________________________ 85

IV. INDEPENDENT AUDITOR'S REPORT __________________________________ 88

I.

Message from Management

With great joy, we share the exceptional results of 2023, a special year for our company, which celebrates its 25th anniversary. We want to express our sincere gratitude for the ongoing trust that you, our essential partners, have placed in us, playing a crucial role in the successes we celebrate today.

In 2023, we renewed our commitment to sustainability and environmental responsibility. We are excited to report that we have intensified our efforts in clean energy generation, significantly contributing to a more sustainable future in the São Paulo Metropolitan Region. This year's record investment was carefully directed towards innovative projects, aiming not only to boost our growth but also to ensure excellence in our public service and minimize our impact on the environment.

It is important to highlight that these positive results would not have been possible without the invaluable support of our dedicated employees. We are excited about the opportunities the future holds for us and are committed to continuing to move towards a more sustainable and prosperous world. We appreciate your active participation in this journey with us.

MARCIO REA

CHIEF EXECUTIVE OFFICER

PABLO UHART

CHIEF FINANCIAL OFFICER AND RELATIONS WITH INVESTORS OFFICER

II. MANAGEMENT REPORT AND ANNUAL CORPORATE GOVERNANCE LETTER

a. Activities

Profile

As a public utility concessionaire specialized in electricity generation, EMAE manages four hydroelectric projects. This includes three plants operating under the regime of guaranteed physical power and energy quotas, as well as a small hydroelectric plant owned by its wholly-owned subsidiary, Pirapora Energia S.A., which is authorized to operate as an independent power producer. These projects are distributed from the municipality of Salto to Baixada Santista, in the State of São Paulo. The company also owns a thermal power plant in the capital city of São Paulo, currently leased to Baixada Santista Energia - BSE, a wholly-owned subsidiary of Petrobras.

Additionally, EMAE is responsible for managing a complex hydraulic system that includes dykes, dams, and reservoirs, with notable ones being Billings and Guarapiranga, located in the southern zone of São Paulo city, as well as the São Paulo and Pedreira pumping stations and the Pinheiros River canal.

EMAE's main activities include: (i) electricity supply; (ii) the construction of energy generation assets; and (iii) the provision of operation and maintenance services for power plants and related structures, serving both private companies and public sector entities.

Power Plant

HPP Henry Borden Concession - Quotas

Cubatão, State of São Paulo Installed capacity: 889.0 MW

Physical guarantee: 115.4 MW average Concession period

Starting: 01/01/2013

HPP Porto Góes Concession - Quotas

Salto, State of São Paulo

Installed capacity: 24.8 MW Physical guarantee: 11.6 MW average

Concession period: Starting: 01/01/2013

HPP Rasgão Concession - Quotas

Pirapora do Bom Jesus, State of São Paulo

Installed capacity: 22.0 MW

Physical guarantee: 11.8 MW averag Concession period:

Starting: 01/01/2013

Ending: 07/01/2043

Ending: 24/01/2043

Ending: 30/11/2042

SHP Pirapora

TPP Piratininga

Independent Producer - PIE

Concession

Pirapora do Bom Jesus, State of São Paulo

São Paulo, State of São Paulo

Installed capacity: 25 MW

Physical guarantee: 17.2 MW average

Concession period

Starting: 24/06/2008

Ending: 02/05/2045

Hydroenergetic System

Installed capacity: 472 MW

Thermoelectric plant leased to Baixada Santista Energia - BSE, a wholly-owned subsidiary of Petrobras, since 2007. Note "Leasing."

Key:
USINA DE PORTO GÓES	-	PORTO GÓES PLANT
Unidades de	-	Units of
Unidade de	-	Unit of
Comportas	-	Floodgates
Vãos com Stop Logs	-	Gaps with Stop Logs
Vertedouros Livres	-	Free Spillways
BARRAGEM E TÚNEL DE PIRAPORA	-	PIRAPORA DAM AND TUNNEL
Comportas Superfície	-	Surface Floodgates
Comportas Fundo	-	Bottom Floodgates
PCH PIRAPORA	-	SHP PIRAPORA
RIO TIETÊ	-	TIETÊ RIVER
RESERVATÓRIO DE PORTO GOÉS	-	PORTO GOÉS RESERVOIR
USINA DE RASGÃO	-	RASGÃO PLANT
BARRAGEM MÓVEL (DAEE)	-	MOBILE DAM (DAEE)
BARRAGEM EDGARD DE SOUZA	-	EDGARD DE SOUZA DAM
NA Max Útil	-	At Max Utility
CANAL PINHEIROS INFERIOR	-	LOWER PINHEIROS CHANNEL
ESTRUTURA DE RETIRO	-	PASSAGE STRUCTURE
Comportas	-	Floodgates
USINA ELEVATÓRIA SÃO PAULO	-	SÃO PAULO PUMPING STATION
Unidades	-	Units
Sangradouro	-	Spillway
BARRAGEM DO GUARAPIRANGA	-	GUARAPIRANGA DAM
Vertedouro Livre	-	Free Spillways
RESEVATÓRIO DO GUARAPIRANGA	-	GUARAPIRANGA RESERVOIR
CANAL PINHEIROS SUPERIOR	-	SUPERIOR PINHEIROS CHANNEL
BARRAGEM REGULADORA BILLINGS-PEDRAS	-	BILLINGS-PEDRAS REGULATORY DAM
RESERVATÓRIO BILLINGS	-	BILLINGS RESERVOIR
RESERVATÓRIO DO RIO DAS PEDRAS	-	RIO DAS PEDRAS RESERVOIR
BARRAGEM DO RIO DAS PEDRAS	-	RIO DAS PEDRAS DAM
CASA DE VÁLVULAS	-	VALVE CHAMBER
RIO CUBATÃO	-	CUBATÃO RIVER
NÍVEL DO MAR	-	SEA LEVEL
USINA HENRY BORDEN SUBTERRÂNEA	-	HENRY BORDEN UNDERGROUND PLANT

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Main projects and achievements

In line with its strategic planning, EMAE has made significant advancements in projects aimed at increasing its generation capacity, modernizing its facilities, and monetizing non-operational assets, with the following achievements standing out:

• ▪ Expansion of Power Plant: EMAE has expanded its generating capacity focusing on sustainable sources. Notably, the implementation of floating photovoltaic plants in the Billings Reservoir stands out, inaugurating the first phase of the project in December with 5 MW of distributed generation capacity.

• ▪ HPP Henry Borden: Significant improvements have been made, including the replacement of old transformers and the modernization of the digital supervision and control system, with a total investment of BRL 65.1 million. Additionally, the replacement of 6 Pelton turbine rotors (BRL 23.5 million), the manufacture and installation of a ball valve in unit 15, and the modernization of units 13 and 14 have been carried out with an investment of BRL 29.2 million, part of a total of BRL 40.2 million in progress. The modernization of Unit 13 has also been completed, with an investment of BRL 9.2 million, within a larger project of BRL 105 million for the underground section.

• ▪ HPP Rasgão: The modernization of Units 1 and 2 is underway, with an expected investment of BRL 89.9 million, of which BRL 18.1 million has already been invested in 2023.

• ▪ HPP Porto Góes: An investment of BRL 11.3 million has been made in the supply and installation of a speed and voltage regulation system, automation, and protection of generator unit 3, marking another significant advancement in the modernization of this plant.

• ▪ Launch of the Voluntary Retirement Program (VRP) aimed at optimizing costs and operational expenses.

• ▪ Continuation of activities related to Emergency Action Plans for dams, following an important path, and in dialogue with the agents involved in this planning.

The Company remains committed to promoting sustainable development through the generation of clean electric power and environmental preservation and is committed to creating value for its shareholders.

Research & Development

EMAE allocates 1% of its net operating revenue to the Electric Power Sector's Research and Development Program, in compliance with current legislation. From this allocation, 40% is directed to the National Fund for Scientific and Technological Development, 20% to the Planning Coordination of the Ministry of Mines and Energy, 7% to the Energy Development Account, and the remaining 33% funds research projects developed by EMAE itself.

One notable initiative is the project initiated in March to develop the Emergency Action Plan (EAP) in regions near dams. The focus is on establishing alert systems for populations in Self-Rescue Zones (ZAS), enhancing safety at 19 EMAE structures. This project will last for 42 months and involves a partnership with the Federal University of Uberlândia.

b. Control Structure

EMAE is a publicly traded company whose shares are traded on B3 - Brasil, Bolsa Balcão, under the codes EMAE3 (common shares - ON) and EMAE4 (preferred shares - PN). The Government of the State of São Paulo holds the shareholding control of the company, with 97.6% of the common shares.

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