Index. Page. Analysis of the Result Subsidiaries Financial Statements Results from Temporary Investments.. 81

Transcription

1 Marketletter June/2006

2 Index Page Analysis of the Result.. 02 Eletrobrás Subsidiaries Financial Statements.. 16 Itaipu Furnas.. 22 Chesf.. 28 Eletronorte.. 38 Boa Vista Energia.. 49 Manaus Energia.. 55 Eletronuclear.. 60 Eletrosul.. 66 CGTEE.. 73 Lightpar.. 79 Results from Temporary Investments.. 81 Ceron.. 82 Eletroacre.. 87 Ceal.. 92 Cepisa.. 97 Ceam.. 99 ADR Nível I ELET3, ELET6 XELTO, XELB CAIFY, CAIGY DFR Funding and Investor Relations Department DFRM Investor Relations Division invest@eletrobras.com

3 Analysis of the Result ELETROBRÁS PERFORMANCE DURING THE SECOND QUARTER 2006 E letrobrás recorded on the second quarter of 2006 a net income of R$ million, corresponding to R$ 0.82 per 1000 shares. During the same period of 2005 the Company recorded a loss of R$ million, equivalent to R$ 1.08 per 1000 shares. As regarding the six months ended on June 30, 2006 Eletrobrás recorded a net income of R$ million, corresponding to R$ 0.57 per 1000 shares, as compared with a loss in the amount of R$ 36.4 million, equivalent to R$ 0.06 per 1000 shares, for the same period of The accounting of the results obtained by the subsidiary companies of Eletrobrás had a positive impact on the Company s result for the second quarter, of R$ million on the equity method R$ million for the semester, as a result of the appreciation of the Brazilian Real in the present scenario of economic stabilization and through measures of corporate governance being carried out in the Eletrobrás System companies, specially Eletronuclear and Eletronorte. As for the previous period, the positive influence reached the amount of R$ million. The following table shows the revenue obtained from the shareholding participations of Eletrobrás: Eletrobrás Participation % R$ thousand 06/30/ /31/2006 Stockholders Equity Income from Shareholding Participation Equity value of the Investment Controlled companies Furnas ,926, ,814 12,867,279 12,683,157 Chesf ,149, ,679 11,087,874 11,017,245 Eletrosul ,932, ,734 1,926,732 1,864,396 Eletronorte ,906,037 (265,194) 7,800,096 8,079,953 Eletronuclear ,989,040 (3,845) 3,981,062 4,030,915 Lightpar , ,060 28,637 CGTEE ,427 (1,067) 710, ,431 Itaipu ,430 27, , , ,878 38,510,319 38,525,354 Affiliates Celpa ,779 7, , ,840 Cemat ,579 16, , ,122 Emae ,436 (16,922) 308, ,577 CTEEP ,927,098 23,916 1,385,873 1,369,878 Cemar ,838 22, , ,702 Other relevant affiliates , , ,515 92,408 3,165,818 3,132,634 Investments in partnerships , , ,934 Other companies 86, , , , , ,581 Total 671,634 42,276,999 42,267,569 The evaluation of investments in controlled and affiliate companies was based on the stockholders equity value on June 30, For the affiliate companies CEEE, CTEEP and for the controlled company Itaipu values as of May 31, 2006, were considered, based on the terms of CVM Instruction 247/96, since they represent the last available information at the time of closing of the financial statements. In order to obtain improved future results, the Company is increasing its measures for promoting the economic and financial recovery of the federal distribution companies under its administration - Ceron, Ceam, Ceal, Cepisa and Eletroacre, which are listed on the National Privatization Program. In the medium term, it is estimated that those companies might reach the necessary economic and financial balance. Under the same light, the Company is studying alternatives for solving the debt situation of controlled company Eletronorte, bearing in mind the Company s interests of preserving the profitability of its shareholders. 2

4 Analysis of the Result We also wish to point out, as an influence on the result for the quarter ended on June 30, 2006, the financial revenues derived from loans and financing granted, which recorded a gain of R$ 1,050.5 million, repeating the same level of revenue recorded in the previous quarter. The appreciation of the Brazilian Real in comparison to the US dollar and the fact that Eletrobrás holds a significant amount of receivables (net of obligations) R$ 14.6 billion (US$ 6,752.8 million) indexed to the North-American currency, have caused a small loss for the Company in the second quarter of During this period, Eletrobrás recorded a loss of R$ 35.2 million due to the effects of the currency variation, as compared to a loss of R$ 2.4 billion for the same period of As regarding monetary variations derived from the internal price levels, during the second quarter of 2006 the Company obtained a gain of R$ 22.7 million, whereas in 2005 there was a gain of R$ 31.0 million. However, considering the profitability of its portfolio of shares and loans and financing, the Company has obtained a relevant income. The main indices from the Company s loans and financing contracts recorded the following variations: st sem 2 nd qrt 1 st qrt 1 st sem 2 nd qrt 1 st qrt IGP-M (0.46) 0.70 (1.15) 1.75% 0.20% 1.55% US$ (7.54) (0.37) (7.19) (11.46%) (11.84%) 0.44% In addition, we also wish to point out the influence, on the Company s result for the quarter ended on June 30, 2006, of the financial revenues derived from loans and financing granted, which have generated a gain of R$ 1,050.5 million, thus repeating the level of revenue of that kind recorded in the same period of We also wish to mention the gains obtained with the recognition of the effects of the North-American inflation, measured by the Industrial Goods and Consumer Price Indeces, which are used to correct the financing contracts of Itaipu, that positively influenced the result of the second quarter in R$ million. The loans and financing portfolio of Eletrobrás has the following composition: 1 Loans and Financing receivable R$ thousand % p.a. Principal Charges Charges Current Long-term Average rate Furnas 9, , , Chesf 25, ,347 4,215, Eletrosul ,995 55, Eletronorte 2,443, ,529 4,232, Eletronuclear - 163,805 2,030, Lightpar 6,255 11, Itaipu - 16,464 14,807, Cepisa , , Ceron 2,328 21, , Ceal , , Cemig 1,844 53, , Copel 2,303 49, , CEEE 1,530 58, , Duke 4, , , AES-Tietê 5, ,802 1,252, AES Eletropaulo 243, ,770 16, Tractebel 2,181 83, , Celpe ,810 83, Cemar 1,083 1, , Cesp 1,354 31, ,

5 Analysis of the Result Outras 48, ,038 1,228,122 - Total 2,801,273 2,351,145 31,548,132 (-) Provision for credits of (263,215) (197,227) - questionable liquidation Balance on 06/30/2006 2,538,058 2,153,919 31,548,132 Balance on 03/31/2006 2,529,821 2,112,591 30,969,695 The loans and financing receivable are originated from funds owned by Eletrobrás, as well as sector funds, such as: RGR (Global Reversion Reserve), CDE (Energetic Development Account) and UBP (Use of Public Asset), compulsory loan, external funds obtained from international development agencies, financial institutions and the issuance of bonds in the international financial market. All the loans and financing are supported by contracts signed with the concessionaires. The receipt of such values, in their great majority, occurs in monthly installments, with an average amortization schedule of 10 years, with average interest rate, weighted by debtor, of 8.77% p.a.. a) The loans and financing granted, with a clause of foreign currency correction, represent approximately 49% of the total portfolio. The financing indexed to the internal price indices represent approximately 27% of the total portfolio. By the end of the semester, Eletrobrás held 780 contracts of loans and financing granted, in the total amount of R$ 36,240,109 thousand (March 31, R$ 35,612,107 thousand), whose composition is detailed in the table below: b) Provision for credits of questionable liquidation Currency US$ thousand (equivalent) % R$ thousand US dollar 7,425, ,071,063 IGP-M 4,436, ,601,542 Real 4,139, ,960,012 Yen 258, ,391 EURO 484, ,049,101 Total 16,744, ,240,108 Eletrobrás records a provision for credits originated from loans and financing, among which we point out the credits held against AES Eletropaulo, which is under litigation, and has already been judged favorably to Eletrobrás. However, until the present date, the Company did not receive the due amounts. Accordingly, the Company, in a conservative measure, kept a provision for credits of questionable liquidation in the amount of R$ thousand (March 31, 2006 R$ thousand), corresponding to the principal and the debt service derived from the financing contract granted to that company. Eletrobrás also records a provision for several other credits, in the amount of R$ thousand (March 31, 2006 R$ thousand). Such provisioned amount is considered adequate by the Company s administration, to face possible losses. 2 Loans and Financing payable R$ thousand % p.a. Principal Charges Average Charges Current Long-term rate Foreign currency Financial institutions: International Bank for Reconstruction and Development IBRD (*) 34 1,

6 Analysis of the Result Interamerican Development Bank IDB (*) 7,351 59, , Corporación Andina de Fomento -CAF 2,099 8, , KFW , , AMFORP & BEPCO , Dresdner Bank , , Eximbank 2,322 41, , Others 360 2,093 23,703 12, ,569 1,469,659 Bonds Bonds Dresdner Bank 4, , Balance on 06/30/ , ,569 2,118,949 Balance on 03/31/ , ,235 2,164,336 a) (*) The debt is entirely guaranteed by the Federal Government. b) The principal of the long-term loans and financing, expressed in US$ thousand, has the following maturities: After 2012 Total 66,107 58,022 57,965 57,965 57, , ,046 By the end of the second quarter of 2006, Eletrobrás held 15 contracts, including loans, financing and bonds, in the total amount of R$ 2,303,054 thousand (March 31, R$ 2,379,975 thousand), according to the following table: Currency US$ thousand (equivalent) % R$ thousand US dollar 672, ,456,039 Yen 231, ,690 EURO 160, ,325 Total 1,064, ,303,054 Another important point to highlight in the first semester of 2006 is linked to the conversion of the compulsory loan, in the amount of R$ 3.542,0 million, that took place in Due to such conversion, there has been a reduction in financial expenses recorded by the Company, of approximately R$ 272,7 million, due to the reduction of the corresponding liability, corresponding to the IPCA-E variation and interest of 6% p.a.. The Company effectively started the trading of energy within the PROINFA Program to Improve the Usage of Renewable Energy Sources. The Program establishes that Eletrobrás is entitled to trade the energy produced in such way for the next 20 years. Eletrobrás is also searching alternatives for new businesses in the segments of generation and transmission of electric energy, so as to increase its participation in the electric power sector and its capacity for generation of funds, with emphasis on the expansion of its profitability and increased remuneration to its shareholders. Considering this objective, Eletrobrás, through its subsidiaries, shall participate in the next generation and transmission auctions scheduled, by ANEEL, for Eletrobrás joined the ISE Bovespa Corporate Sustainability Index, in the year of its launching in Brazil. To be listed on the ISE means that the company is considered by the market to be transparent, with good corporate governance practices, together with a good social and environmental policy. The evaluation concept for corporate sustainability is based on the principle triple bottom line, which presumes the same weight for environmental, social and financial indicators. Such principle establishes that a project might turn into a non-feasible project due to a great environmental liability or working practices which are not accepted at international levels. Due to this reason, main international financial instituitons classify as lower risk such companies which demonstrate such sustainability practices within their business strategies. Being listed in a sustainability index means that the companies will have lower funding costs in the 5

7 Analysis of the Result international market, either as equity or debt. The great pension funds show increased interest in shares from companies that are sustainable. Eletrobrás has also joined the Global Agreement, being strategicaly positioned with the major world companies, in line with the UN, aiming at corporate social responsibility. In pursuit of a global economy wich is more sustainable and more inclusive, the Agreement lists ten World Principles involving human rights, working rights, environmental protection and principles against corruption. The Global Agreement is connected with the great movements of Socially Responsible Investments and work at world level the concept of corporate sustainability. Considering the exemple of the ISE Bovespa, Eletrobrás is working to demonstrate to its investors the social and environmental actions considered to be politically correct. Together with those measures, the Company is concluding the steps to obtain registration at the Securities and Exchange Commission of the United States of America, and for that purpose, is concluding the requests necessary to comply with the Sarbanes-Oxley Act wich will allow the trading of ADRs Level 2 in the New York Stock Exchange by year s end We wish to point out that Eletrobrás has obtained approval to join the Level 1 of BOVESPA Corporate Level of Governance and will conclude its strategic planning for the forthcoming years by the end of the third quarter of

8 Eletrobrás Balance Sheet for the period ended on June 30 (R$ thousand) Parent Company Consolidated Assets Current Assets Cash and banks 1,809, ,204 4,059,736 2,645,621 Consumers and resellers 1,145,175 1,337,389 4,066,628 4,030,182 Loans and Financing - principal 2,153,919 1,951, , ,831 Loans and Financing - charges 2,538,058 1,939,761 55,811 54,167 Fuel consumption account - CCC 449, , , ,517 Investment remuneration 550, ,285 44,948 17,051 Bonds and marketable securities 243, , , ,518 Renegotiated credits 69,851 98, , ,544 Tax credits 766, ,012 1,169, ,777 Reimbursement right 335, , , ,288 Debtors 20,763 15, , ,655 Stored materials 2, , ,417 Expenses paid in advance ,401 61,349 Others 192, , , ,765 10,276,297 8,886,874 12,676,526 11,994,682 Non-Current Liabilities Loans and Financing - principal 31,548,132 32,398,302 13,223,734 13,459,557 Renegotiated credits 2,770,548 2,489,131 4,878,529 3,594,008 Bonds and marketable securities 1,220,019 1,393,722 1,224,383 1,480,002 Stored nuclear fuel , ,699 Studies and projects 292, , , ,924 Consumers and resellers , ,368 Tax credits 804, ,654 1,867,727 1,121,363 Collaterals and linked deposits 185, , , ,887 Fuel consumption account - CCC 393,104 5, ,104 5,979 Others 25,630 24, , ,331 37,239,392 37,336,175 23,880,274 22,427,118 Advances for shareholding participation 1,060, ,552 80, ,768 38,300,159 38,088,727 23,960,658 22,607,886 Permanent Investments 42,276,999 41,042,247 4,642,605 3,874,426 Property, plant and equipment 88,698 85,830 77,240,220 77,210,300 Deferred ,658 14,179 42,365,697 41,128,077 81,928,483 81,098,905 Total Assets 90,942,153 88,103, ,565, ,701,473 7

9 Eletrobrás (R$ thousand) Parent Company Consolidated Liabilities and Stockholders Equity Current Liabilities Loans and Financing - principal 166, ,402 1,754,240 2,031,547 Loans and Financing - charges 17,536 14,717 30,810 40,056 Complusory loan 131, , , ,862 Suppliers 1,283,421 1,497,868 1,892,255 1,934,648 Taxes and social contributions 572, ,875 1,223,549 1,093,092 Fuel consumption account - CCC 441, , , ,875 Shareholders remuneration 25, ,639 51, ,839 Credits from the National Treasury 48, ,115 48, ,115 Estimated obligations 10,751 6, , ,086 Anticipated energy sale ,795 29,484 Complementary security 13,506 30, , ,925 Provisions for contingencies - - 1,010,494 1,082,200 Remuneration and reimbursement , ,923 Others 390, , , ,375 3,099,340 3,921,937 8,412,465 9,271,027 Non-Current Liabilities Loans and Financing - principal 2,118,949 1,548,805 17,912,739 17,880,530 Credits from the National Treasury 476, , , ,783 Global Reversion Reserve - RGR 5,713,654 5,207,956 5,713,654 5,207,956 Complusory loan 87,585 89,242 87,585 89,242 Taxes and social contributions 716,030 1,244,761 2,297,782 2,907,164 Decommissioning of nuclear units , ,825 Anticipated energy sale , ,567 Fuel consumption account - CCC 393,104 1, ,104 1,290 Provisions for contingencies 1,438,568 1,160,004 1,902,251 1,917,557 Complementary security 2,827 5,421 1,825,402 1,845,654 Provision for uncovered liability in investment 123,777 47, ,777 47,031 Others 4,748 4,690 1,207, ,278 11,075,364 9,833,983 33,138,472 31,832,877 Participations of non-controlling shareholders , ,811 Stockholders Equity Social Capital 24,235,829 24,235,829 24,235,829 24,235,829 Capital Reserves 25,907,304 25,907,304 25,907,304 25,907,304 Re-evaluation reserves 239, , , ,153 Income Reserves 22,864,376 21,269,822 22,864,376 21,269,822 Accumulated income 328,432 (36,438) 328,432 (36,438) 73,575,775 71,637,670 73,575,775 71,637,670 Advances for capital increase 3,191,674 2,710,088 3,191,674 2,710,088 76,767,449 74,347,758 76,767,449 74,347,758 Total Liabilities and Stockholders Equity 90,942,153 88,103, ,565, ,701,473 8

10 Eletrobrás Statement of Income for the period ended on June 30 (R$ thousand) Parent Company Consolidated Operating Revenues Sale and transmission of electric energy 3,048,548 3,184,592 10,101,269 9,400,606 Subventions fuel consumption ,046,967 Arrears on energy sold 522 8, , ,429 (-) Sector charges - - (390,862) (328,526) (-) ICMS tax - - (367,680) (187,103) Shareholding participations 671, , , ,046 3,720,704 4,134,231 9,653,516 10,268,419 Operating Expenses Personnel 76,343 75,803 1,159, ,032 Material 1,116 1, ,923 88,143 Services 48,703 30, , ,538 Electric energy purchased for resale 2,976,869 3,149,677 2,223,602 2,272,379 Fuel for production of electric energy ,229 1,266,936 PASEP and COFINS 21,197 11, , ,823 Use of electric grid , ,945 Charges on emergency capacity ,308 Depreciation and amortization 2,842 2, , ,439 Operating provisions 263, , , ,773 Result from Itaipu to compensate - - (253,693) (287,395) Donations and contributions 71,365 64, ,873 80,807 Others 51,416 54, , ,610 3,513,579 3,734,381 6,616,805 7,496,338 Operating Result before Financial Result 207, ,850 3,036,711 2,772,081 Financial Revenues (Expenses) Revenues from interest, commissions and taxes 2,067,492 2,192, , ,865 Debt charges (216,941) (239,628) (420,006) (617,475) Charges shareholders remuneration (758,082) (740,104) (795,689) (740,104) Remuneration and reimbursement - - (520,906) (528,774) Revenue from financial applications 183, , , ,991 Net monetary corrections 100, ,467 (476,767) (537,221) Net currency corrections (1,398,926) (2,358,708) (1,424,038) (1,697,310) Other financial revenues 129, ,161 92, ,062 Financial Result 106,462 (763,127) (2,377,077) (2,758,966) Operating Result 313,587 (363,277) 659,634 13,115 Non-operating result (1,637) 16 (26,993) (14,759) Result before social contribution, Income tax, Participations of employees and 311,950 (363,261) 632,641 (1,644) Administration staff and minority participation Social contribution (167) 85,436 (86,332) (10,550) Income tax 8, ,387 (225,730) (22,847) Result before participations 320,411 (36,438) 320,579 (35,041) Minority participation - - (168) (1,397) Net income for the periods 320,411 (36,438) 320,411 (36,438) Net income per 1000 shares R$0.57 (R$0.06) R$0.57 (R$0.07) 9

11 Cash Flow for the period ended on June 30 (R$ thousand) Eletrobrás Parent Company Operating Activities Net income for the period 320,411 (36,438) Adjustments to reconciliate net income with cash generated by operations Depreciation and amortization 2,842 2,314 Long-term net monetary variations 727,803 2,032,702 Result of shareholding participation (519,784) (884,059) Long-term provisions (370,999) (575,952) Deferred tax credits (35,017) (9,956) Financial charges applied over stockholders equity 732, ,159 Uncovered liability 69,196 - Sub-total 926,600 1,235,770 (Increases) decreases in operating assets Consumers and resellers 168,319 (231,363) Loans and Financing - principal (34,658) 285,787 Loans and Financing - charges (232,998) (518,319) Fuel consumption account - CCC (270,657) (104,934) Investmemt remuneration 147, ,134 Bonds and marketable securities (6,105) (8,010) Renegotiated credits 1,984 14,246 Tax credits 467, ,674 Debtors (18,697) (9,638) Stored materials (30) (50) Others (14,187) (141,237) 207,957 (5,710) Increases (decreases) in operating liabilities Loans and Financing - principal (182,057) (1,296,752) Loans and Financing - charges (18,798) (15,747) Compulsory loan (166,274) (32,196) Suppliers (1,396,439) 261,160 Taxes and social contributions (1,069,444) (641,730) Fuel consumption account - CCC (143,044) 77,397 Shareholders remuneration (472,571) 7,435 Credits from the National Treasury (46,239) 367,047 Estimated obligations (26,439) 4,165 Credits from controlled companies (5,912) 4,697 Others (156,876) (782) (3,684,093) (1,265,306) Resources from (applied in) operating activities (2,549,536) (35,246) Financing Activities Long-term financing obtained transferred to current (614,504) (603,027) Loans and financing granted liberations (855,161) (504,122) Loans and financing granted receipt 1,247,968 1,074,206 Refinancing obtained (transferred from current to non-current liabilities) 57,765 7,525 Refinancing granted (transferred from current to non-current assets) (725,092) (384,636) Compulsory loan and Global Reversion Reserve 450, ,270 Others (2,796) - Resources from (applied in) financing activities (441,578) (189,784) Investment Activities Acquisition of permanent asset (1,950) (743) Investments 141,264 49,228 10

12 Eletrobrás Resources from (applied in) investment activities 139,314 48,485 Increase (reduction) in cash and cash equivalent (2,851,800) (176,545) Cash and cash equivalent - beginning of period 1,561, ,749 Cash and cash equivalent - end of period 1,809, , ,840 (176,545) 11

13 Eletrobrás Structure of Eletrobrás Eletrobrás Itaipu 50% IC = 12,600 MW Lightpar 81.61% Furnas 99.54% IC = 9,467 MW TL = 19,277 km Chesf 99.45% IC = 10,618 MW TL = 18,260 km Eletronorte 98.66% IC = 8,275 MW TL = 9,779 km Eletrosul 99.71% TL = 9,087 Km Eletronuclear 99.80% IC = 2,007 MW CGTEE 99,94% CI = 490 MW Manaus Energia (Distribution) 100% IC = 247 MW Boa Vista Energia (Distribution) 100% IC = 62 MW Ceron (Distribution) 99.96% IC = 616 MW Eletroacre (Distribution) 93.29% IC = 309 MW Ceal (Distribution) 75.16% Cepisa (Distribution) 98.56% IC = 723 MW TL = 4,398 km Ceam (Distribution) 97.96% IC = 339 MW % = Participation in total capital IC = Installed Capacity TL = Extension of transmission line Capital structure As at June 30, 2006 the capital of Eletrobrás had the following composition: Shareholders Common Pref. "A" Pref. "B" Total Total 452,511,763, % 73,460, % 112,164,027, % 564,749,250, % Federal Gov. 244,328,120, % 17,595,501, % 261,923,621, % FND 22,810,794, % 22,810,794, % BNDESpar 66,878,975, % 66,878,975, % FGP (*) 20,000,000, % 20,000,000, % Others 98,493,872, % 73,460, % 94,568,526, % 193,135,858, % Custody CBLC 98,461,526, % 41,379, % 63,311,183, % 161,814,089, % ADR Prog. 39,600,452, % 1,327,566, % 40,928,018, % Others 58,861,074, % 41,379, % 61,983,617, % 120,886,071, % Others 32,345, % 32,080, % 31,257,343, % 31,321,769, % (*) Guarantor Fund for Public and Private Partnerships (Fundo Garantidor de Parcerias Público-Privadas) 12

14 Eletrobrás Common 80.1% Preferred 19.9% Common Stocks Millions Participation Preferred B Stocks Millions Participation União BNDESpar FND FGP Minority Residents Minority Non-residents 244,328 66,879 22,811 20,000 34,140 64, % 14.8% 5.0% 4.4% 7.6% 14.2% 17,596 61,835 32, % 55.1% 29.2% 452, % 112, % Share Performance Analysis Shares Eletrobrás Preferred Shares (prices per 1000 shares) - ELET6 During the second quarter of 2006, the maximum price recorded by Eletrobrás preferred shares (ELET6) was R$ 56.59, on April 26. The lowest price reached in the period was R$ 37.60, on June 14. The preferred shares recorded a negative variation of 6.36% as regarding the second quarter of In relation to the period ended on December 30, 2005, when that class of shares closed at R$ 39.60, those shares recorded an appreciation of 13.38%. Trading performance Date Average monthly price São Paulo Stock Exchange Average daily number of trades during the month Average daily number of shares during the month Jan ,085,000 Feb ,976,471 Mar ,530,435 Apr ,094,444 May ,633,333 Jun ,672,222 13

15 Eletrobrás Common (price per 1000 shares) - ELET 3 Eletrobrás During the second quarter of 2006, the maximum price recorded by Eletrobrás common shares (ELET3) was R$ 60.50, on April 28. The lowest price reached in the period was R$ 39.30, on June 14. The common shares recorded a negative variation of 3.59% as regarding the second quarter of At December 30, 2005 that class of shares closed the period traded at R$ 38.00, recording a positive variation of 23.68%, and by the end of the first semester of 2006 they were traded at R$ Trading performance Date Average monthly price São Paulo Stock Exchange Average daily number of trades during the month Average daily number of shares during the month Jan ,328,571 Feb ,588,235 Mar ,704,348 Apr ,788,889 May ,152,381 Jun ,816,667 Monthly variation table (in %) Indeces IGP-M Ibovespa US$ ELET 6 ELET 3 EURO Jan (0.91%) 14.73% (5.33%) 6.06% 4.74% (2.53%) Feb (0.01%) 0.59% (3.67%) 11.07% 13.04% (6.05%) Mar (0.23%) (1.71%) 1.77% 2.79% 8.36% 3.76% Apr (0.42%) 6.36% (3.83%) 14.29% 22.83% 0.19% May 0.38% (9.50%) 10.11% (25.55%) (28.19%) 11.82% Jun 0.75% 0.28% (5.92%) 10.05% 9.30% (6.10%) ADR Programs CAIGY Preferred shares of Eletrobrás (1 ADR = 500 shares) During the second quarter of 2006, ADRs of preferred shares of Eletrobrás recorded a maximum price of US$ 13.05, on May 2. The minimum price of US$ 8.15 was recorded on June 14. As regarding the second quarter, the ADRs recorded a devaluation of 8.11%. By the end of the first semester, those ADRs had a positive variation of 23.64%, and by the end of the semester were traded at US$ 10.20, in comparison to the closing of December, 2005, when they were traded at US$ CAIFY Common shares of Eletrobrás (1 ADR = 500 shares) During the second quarter of 2006, ADRs of common shares of Eletrobrás recorded a maximum price of US$ 14.10, on May 2. The minimum price of US$ 8.55 was recorded on June 14. As regarding the second quarter, the ADRs recorded a devaluation of 5.38%. That type of ADR was traded at US$ by the end of the semester and had an appreciation of 34,39% in relation to 2005, when the ADRs were traded at US$ 7,85. 14

16 Month Closing (US$) CAIGY Number of ADRs held by investors Month Closing (US$) CAIFY Number of ADRs held by investors Jan ,000,483 Jan ,096,821 Fev ,942,976 Fev ,408,990 Mar ,979,493 Mar ,997,292 Abr ,267,719 Abr ,325,546 Mai ,969,053 Mai ,294,829 Jun ,655,132 Jun ,200,904 Eletrobrás Latibex (Program for trading of shares of Latin-American companies at the Madrid Stock Exchange) XELTO During the second quarter of 2006, common shares of Eletrobrás recorded a maximum price of є 11.45, on May 2. The minimum price of 7.10 was recorded on June 16. As regarding the second quarter, those shares recorded a devaluation of 9.53%. Those shares had an appreciation of 65.69% in the first semester of 2006, and by the closing of June was traded at 8.45, whereas it was traded at 5.10 in December 30, Month Performance of Common Shares Closing ( ) Number of trades Jan ,202 Fev ,149 Mar ,040 Abr ,096 Mai ,884 Jun ,567 XELTB During the second quarter of 2006, preferred shares of Eletrobrás recorded a maximum price of є 10.80, on April 7. The minimum price of 6.52 was recorded on May 25. As regarding the second quarter, those shares recorded a devaluation of 12.53%. Preferred shares traded at LATIBEX had a positive variation of 6.50% in the semester. Performance of Preferred Shares Mês Fecham. ( ) Number of trades Jan ,752 Fev ,708 Mar ,067 Abr ,324 Mai ,839 Jun ,123 15

17 Subsidiaries Financial Statements The table below represents the main indices of the Subsidiary Companies: R$ million Net Operating Result of Service Income / Loss for the Ebitda Ebitda Margin Company Revenue period Furnas 2, , % 31.23% Chesf 1, , % 60.89% Eletronorte Parent co. 1, , (28.11) (160.19) (268.80) (415.06) % 6.90% Consolidated 1, , (141.22) (183.27) (268.80) (415.06) % 6.34% Boa Vista (18.49) (15.08) (14.24) (11.78) (15.56) (12.42) (34.81%) (30.63%) Manaus (94.62) (8.00) (98.33) (23.37) (50.93) (11.31%) 3.97% Eletronuclear (3.85) % 38.56% Eletrosul % 46.77% CGTEE (20.66) (7.69) (1.07) % 21.97% 1 st Semester/ 2006 by Activity Generation Transmission Company Ebitda Ebitda Company Ebitda Ebitda (R$ million) Margin (R$ million) Margin Furnas % Furnas % Chesf % Chesf % Eletronorte % Eletronorte % Eletronuclear % Eletrosul % CGTEE % Total 1, Total 1, Commercialization/Distribution Company Ebitda Ebitda (R$ million) Margin Furnas (577.17) (112.63%) Eletronorte (66.85) (73.9%) Total (644.02) 16

18 Itaipu Balance Sheet (In US$ ) Assets May/2006 June/2005 Current Assets Cash and banks 43,467, ,381, Accounts receivable Contracts of electricity services rendered 611,743, ,694, Obligations and loans receivable 423, , Debtors 2,526, ,031, Stored materials 5,865, ,697, Advances to personnel 5,733, ,587, Advances to suppliers 1,941, ,907, Sale of assets in course 531, ,237, Collaterals and linked deposits 1,809, ,126, ,042, ,087, Non-Current Assets Accounts receivable Contracts of electricity services rendered 84,426, ,207, Obligations and loans receivable 116,282, ,129, Collaterals and linked deposits 23,262, ,919, ,971, ,257, Results Account Results to compensate from previous periods 2,687,449, ,012,085, Result for the period 234,904, ,550, ,922,353, ,256,636, Permanent Installations, equipment and others 17,464,103, ,417,992, ,464,103, ,417,992, Total Assets 21,284,471, ,506,973,

19 Itaipu (In US$) Liabilities May/2006 June/2005 Current Liabilities Loans and financing 814,774, ,411, Payable charges in course 6,604, ,797, Remuneration and reimbursement 330,517, ,763, Suppliers and others 6,322, ,336, Wages and social obligations 29,449, ,314, Estimated obligations 20,527, ,732, Contractual retentions given in guarantee 908, , ,209,105, ,086,102, Non-Current Liabilities Loans and financing 19,468,824, ,921,513, Estimated obligations 506,540, ,358, ,975,365, ,320,871, Stockholders Equity Capital Centrais Elétricas Brasileiras S.A. Eletrobrás 50,000, ,000, ANDE - Administracion Nacional de Eletricidad 50,000, ,000, ,000, ,000, Total Liabilities 21,284,471, ,506,973,

20 Itaipu Statement of Income for the period ended on (In US$) May/2006 June/2005 Operating Revenues Power supply Administración Nacional de Electricidad - ANDE 53,300, ,942, Centrais Elétricas Brasileiras S.A. Eletrobrás 1,052,367, ,158,300, ,105,667, ,212,243, Remuneration on power assignment Centrais Elétricas Brasileiras S.A. Eletrobrás 43,092, ,134, ,092, ,134, Reimbursement of energy costs in addition to guaranteed energy Centrais Elétricas Brasileiras S.A. Eletrobrás 29,468, ,466, Administración Nacional de Electricidad - ANDE 7,263, ,191, ,731, ,658, Total of operating revenues 1,185,491, ,284,036, Operating Expenses Remunerations and reimbursements Capital income 16,670, ,969, Reimbursement of charges administration and supervision 10,713, ,161, Reimbursement of charges administ.and superv. in addition to 2,623, ,449, guaranteed energy Royalties 139,271, ,093, Royalties Energy in addition to guaranteed energy 34,107, ,840, Remuneration for power granted 43,092, ,503, ,479, ,017, Other expenses Personnel 148,568, ,586, Material and equipment 4,599, ,800, Thrid party services 16,225, ,671, Other operating expenses (21,226,062.84) 13,267, Program of social responsibility 9,614, ,493, ,781, ,819, Total of operating expenses 404,261, ,836, Result of service 781,230, ,199, Financial Revenues Income from financial applications 2,634, ,350, Arrears on energy bills 151, , Other financial revenues 6,346, ,981, ,132, ,626, Financial Expenses Debt charges 546,915, ,873, Monetary variations 477,896, ,510, ,024,812, ,114,384, Financial Result (1,015,679,827.10) (1,090,758,234.73) Operating Result (234,449,322.75) (244,558,292.28) Non-operating revenues (expenses) Other revenues 838, ,164, Other expenses (1,293,252.28) (1,156,771.48) Non-operating result (454,678.41) 7, Result for the period (234,904,001.16) (244,550,635.27) 19

21 Market Data Itaipu Energy generated MWh 22,862, ,091,861.8 Obs.: Billed by contracted power Contracted sale MW (*) 32,361 32,361 USD million (*) Corresponding to the hiring of total avilable power ( MW) x number of months Losses - MWh 67, ,704.0 Main clients Client MWh US$ million MWh US$ million Eletrobrás 21,156, ,502, Ande 1,706, ,589, Installed Capacity 12,600 MW Assured Energy - MWh Hydro 18,740,904 Extension of transmission lines 75.2 km Average Tariff US$/kW Main Investments - US$ million Project Units 9A and 18A Plan for conclusion of works OBS.: Base = May/2006 Loans and Financing - US$ million Creditor Currency BNDES - R$ Eletrobrás - US$ 6, ,527.4 Treasury - US$ 12, ,334.6 Restructuring of external debt with Banco do Brasil DMLP - US$

22 BIB S - US$ Paris Club Agreement - CHF and EURO Fibra - R$ Itaipu Number of employees Brazilian Paraguayan Brazilian Paraguayan Own staff 1,437 1,651 1,515 1,676 Contracted Total 1,453 1,778 1,530 1,771 21

23 Balance Sheet for the period ended on June 30 (R$ thousand) Furnas Assets Current Assets (reclassified) Cash and banks 10,607 19,229 Financial applications 337, ,195 Consumers, concessionaires and affiliates 1,114,269 1,156,281 Financed energy credits 166, ,135 Loans and financing granted 95, ,111 Debtors 275, ,468 Stored materials 68,821 60,293 Tax credits 58,582 52,601 Taxes and contributions to recover 185, ,357 Collaterals and linked deposits 32,899 24,215 Expenses paid in advance 11,528 4 Others 34,441 75,902 2,391,572 2,817,791 Non-Current Assets Consumers, concessionaires and affiliates 284, ,000 Debtors Concessions to bid 15,681 36,267 Loans and financing granted 150, ,680 Financed energy credits 1,086,993 1,090,960 Collaterals and linked deposits 246, ,335 Assets and rights for sale 30,164 36,318 Others 86,174 21,247 1,900,773 1,743,202 Permanent Investments 384, ,780 Property, plant and equipment In Service 11,130,865 11,262,195 Production 7,471,806 7,467,732 ( - ) Depreciation (2,671,095) (2,533,141) Transmission 11,787,492 11,472,415 ( - ) Depreciation (5,452,747) (5,115,193) Administration 185, ,034 ( - ) Depreciation (77,988) (72,112) ( - ) Obligations linked to concessions (112,540) (112,540) In course 2,857,278 2,366,455 13,988,143 13,628,650 Deferred ,372,658 13,909,486 Total Assets 18,665,003 18,470,479 22

24 Furnas (R$ thousand) Liabilities (reclassified) Current Liabilities Suppliers 431, ,269 Charges on loans and financing 9,953 14,119 Fundação Real Grandeza (pension fund) - debt 131, ,149 Taxes and social contributions 369, ,393 Loans and financing 329, ,188 Other funding from third parties 415, ,406 Estimated obligations 56,183 50,514 Provisions for contingencies 162, ,211 Creditors 6,261 63,526 Interest on capital 210, ,212 Participation in income ,369 Others 119, ,670 2,241,504 2,116,026 Non-Current Liabilities Loans and financing 770, ,404 Other funding from third parties 654, ,034 Taxes and social contributions 1,033, ,091 Fundação Real Grandeza debt 988,624 1,110,124 Creditors 2 2 3,446,463 3,955,655 Stockholders Equity Capital 2,000,000 2,000,000 Capital Reserves 5,700,817 5,700,817 Income Reserves 2,589,008 1,990,022 Accumulated income 2,342,802 2,342,802 Result for the period 313, ,003 12,945,882 12,367,644 Resources for capital increase 31,154 31,154 12,977,036 12,398,798 Total Liabilities 18,665,003 18,470,479 23

25 Statement of Income for the period ended on March 31 (R$ thousand) Furnas Generation Transmission Commercialization Total Operating Revenue Supply of electric energy , , ,453 Gross supply of electric energy 1,371, ,693 1,726,206 1,570,532 Short-term energy ,513 19,513 33,831 Use of electric grid - 960, , ,422 Other revenues (8,531) 13, ,771 99,222 1,362, , ,398 2,839,107 2,616,460 Deductions from operating revenue Taxes and contributions over revenue 116,469 64,333 (25,200) 155, ,791 Global Reversion Reserve 38,340 24,207 14,152 76,699 66,985 Other consumer charges 7, ,388 8, ,197 88,540 (11,048) 239, ,779 Net operating revenue 1,200, , ,446 2,599,418 2,407,681 Operating Expense Personnel 81, ,167 5, , ,932 Material 9,055 14, ,330 22,152 Third party services 80, ,152 2, , ,900 Fuel and water for production of electric energy 11, ,934 47,382 Financial compensation for the use of hydro resources 72, ,591 70,753 Electric energy purchased for resale , , ,526 Charges on the use of electric grid , , ,050 Supervision tax for electric energy services 2,843 4, ,482 6,436 Depreciation and amortization 89, , , ,329 Research & Development 6,923 2,967-9,890 8,501 Other expenses 29,272 36,166 6,310 71,748 34, , ,556 1,089,754 1,941,854 1,909,084 Result of service 817, ,631 (577,308) 657, ,597 Financial Revenue (Expense) Income from financial applications 14,190 21, ,435 39,497 Charges from loans and financing (13,204) (16,818) (28,972) (58,994) (81,602) Debt charges FRG (pension fund) (16,687) (24,989) (2,451) (44,127) (77,928) Special installment - PAES (Law 10684/2003) - - (43,269) (43,269) (48,657) Currency variation and arrears energy sold ,884 5,482 7,583 Monetary variation and arrears energy purchased (1) (1) (141) Monetary variation on loans and financing (478) 28,257 (180,519) (152,740) 107,297 Monetary variation over refinanced credits and loans granted ,903 11,066 37,886 Other monetary variation asset (4,310) (1,069) 34,762 29,383 2,531 Other monetary variation liability (931) (1,469) (46) (2,446) (1,259) Interest over refinanced credits and loans granted 351 3,328 76,191 79,870 70,458 Other financial revenues 9,860 2, ,821 22,099 Other financial expenses (16,410) (25,029) (12,042) (53,481) (67,394) (27,533) (12,660) (139,787) (179,980) 10,370 Operating Result 789, ,971 (717,095) 477, ,967 Non-Operating Revenue ,139 1,081 Non-Operating Expense (5,577) (929) (16) (6,522) (3,593) Non-Operating Result (4,823) (554) (6) (5,383) (2,512) Result before taxes 784, ,417 (717,101) 472, ,455 Social Contribution (70,397) (36,651) 64,285 (42,763) (45,732) Income tax (192,833) (101,804) 178,575 (116,062) (126,720) Participations in results (43) (76) (2) (121) - Result for the period 521, ,886 (474,243) 313, ,003 24

26 Furnas Cash Flow for the period ended on June 30 (R$ thousand) Operating Activities (reclassified) Net income for the period 313, ,003 Expenses (revenues) not affecting net working capital Depreciation and amortization 257, ,329 Long-term monetary and currency variation 136,539 (106,490) Interest on special installment PAES 43,268 48,655 Others (6,454) - 430, ,494 Variation of current asset Consumers, concessionaires and affiliates 53,011 (15,680) Stored materials (6,096) (4,599) Taxes and contributions to compensate (102,426) (136,350) Loans granted and refinancing 97,092 (80,363) Other operating assets 57,195 (76,793) 98,776 (313,785) Variation of current liability Suppliers (162,382) (127,604) Payment-roll (5,969) 9,156 Taxes and social contributions 72, ,438 Creditors (56,763) (37,527) Provision for contingencies 15,788 (930) Consumer charges (5,108) (27,279) Other operating liabilities (31,422) 11,281 (173,671) (31,465) Total of Operating Activities 669, ,247 Investment activities Applications in property, plant and equipment (351,308) (351,400) Others (62,522) (79,696) (413,830) (431,096) Financing Activities Long-term loans and financing 29,509 (250,540) Other funding from third parties (115,185) 310,643 Non-current liabilities transferred to current (244,790) (303,393) Current assets transferred to non-current (119,293) (11,578) Refinancing of credits 103, ,837 Interest on capital 11,335 10,873 Others 13,657 18,326 (321,538) 559,168 Total of cash effects (66,146) 312,319 Cash and cash equivalent beginning of period 413, ,105 Cash and cash equivalent end of period 347, ,424 Cash variation (66,146) 312,319 25

27 Furnas R$ million 2º qrt/2006 2º qrt/ months/ months/2005 EBITDA Margin EBITDA 35.44% 29.06% 35.20% 31.23% Energy generated Market Data Serra da Mesa (51,53%) 413, ,527 Manso (30,19%) 115,255 75,442 Furnas 8,987,392 8,911,218 Total 9,515,899 9,590,187 Contracted purchase MWh 4,200, ,805, R$ million 428, KW 3,540,000 3,540,000 R$ million Purchase CCEE/MAE R$ million Contracted sale MWh 11,689, ,768, R$ million KW R$ million R$ million total Auction Contracts (Regulated) Values adjusted according to Method for Compensation of Surplus and Deficits - MCSD Sale CCEE/MAE R$ million Losses - MWh 3% 3% Main clients Client MWh R$ million MWh R$ million (1) kw R$ million (2) Light Initial Contract 947, , ,93 Eletropaulo Initial Contract 669, , ,77 Eletropaulo Contract CCEAR / , ,07 0 0, Cemig Distrib D Contract CCEAR / , (1) + (2) 26

28 Furnas Eletropaulo D Contract CCEAR / , Copel Distrib D Contract CCEAR / , Installed Capacity - MW Hydro Thermal Hydro Thermal 8, , Average Tariff - R$/MWh * * Average tariff of regulated contracts. Main Investments - R$ million Project Transmission 141,0 203,0 Installation of Transmission Line Macaé (RJ) - Campos (RJ) 9,8 5,1 Installation of Transmission System Cachoeira Paulista (SP) - Adrianópolis III (RJ) 0,0 6,7 Installation of Transmission System Ouro Preto (MG) - Vitória (ES) 0,0 37,2 Reinforcement of Transmission System RJ and ES 44,1 44,9 Reinforcement of Transmission System SP and MG 51,9 96,7 Reinforcements of Transmission System GO - MT - DF 35,2 12,4 Generation 143,6 72,2 Installation of Combined Cycle TPU Santa Cruz (RJ) 18,6 14,6 Modernization of HPU Furnas (MG) 24,3 34,2 Modernization of HPU Mascarenhas de Moraes (MG) 11,9 9,7 Modernization of HPU Luiz Carlos Barreto (MG) 88,8 13,7 Total 284,6 275,2 Loans and Financing - R$ Creditors Local Currency Eletrobrás 293,545, ,322, FRG 1,117,950, ,211,295, BNDES 187,096, ,204, Bradesco 40,626, ,959, EPE- Emp. Prod. de Energia 96,677, Eletronuclear - Tard Cemig 19,145, Total 1,755,042, ,877,782, Foreign Currency BID 111,607, ,394, Exim Japão 343,692, ,085, Total 455,300, ,479, General Total 2,210,342, ,445,261, Number of employees 06/30/06 06/30/05 Own staff 4,561 4,455 Contracted 1,961 2,076 27

29 Chesf Balance Sheet for the period ended on June 30 (R$ thousand) Assets Current Assets Availabilities Cash and banks 6,900 9,233 Open-market applications 63,998 45,785 70,898 55,018 Credits, values and accomplished assets Consumers and concessionaires 824, ,823 Taxes and contributions to compensate 81,488 28,345 Advances to employees 63,361 17,424 Stored materials 62,169 65,234 Bonds and marketable securities ,494 Tax credits deferred social contribution 15,800 14,560 Tax credits deferred income tax 1,371 1,367 Advances to suppliers 4,185 3,707 Collaterals and linked deposits 8,900 4,903 Global Reversion Reserve 8,750 3,596 Others 97, ,766 1,238,434 1,234,237 Non-Current Assets Credits, values and accomplished assets Consumers and concessionaires 429, ,826 Repassed financing 3,554 6,431 Bonds and marketable securities Deposits linked to legal suits 56,159 34,460 Tax credits deferred social contribution 98, ,120 Tax credits deferred income tax 54,648 71,286 Assets and rights for sale 4,481 4,776 Others 4,874 4, , ,416 Permanent Investments Permanent shareholding participations 97,511 56,383 Alternative sources - fotovoltaic energy Procel Energy Conservation Others ,827 58,699 Property, plant and equipment In service Intangibles 76,113 75,807 Lands 1,899,456 1,899,449 Reservoirs and dams 8,840,288 8,805,493 Buildings and civil works 2,703,122 2,697,839 Machinery and equipment 10,082,039 9,838,767 Vehicles 42,093 36,260 Furniture and utensils 21,826 17,188 23,664,937 23,370,803 Accumulated depreciation and amortization (9,364,340) (8,824,233) 14,300,597 14,546,570 In course 2,113,298 1,918,431 16,413,895 16,465,001 Obligations linked to Concession (155,208) (155,146) 16,258,687 16,309,855 Deferred 28

30 Pre-operating expenses 1,359 1,359 Others deferred expenses 3,371 3,371 4,730 4,730 Accumulated amortization (4,173) (3,985) ,359,071 16,369,299 Total Assets 18,250,564 18,415,952 Chesf 29

31 Chesf (R$ thousand) Liabilities Current Liabilities Suppliers 147, ,683 Payment-roll 5,362 4,835 Taxes and social contributions 70,898 77,023 Loans and financing 520, ,501 Debt charges 2,553 59,019 Tax credits deferred social contribution - 4,420 Tax credits deferred income tax - 1,016 Participation in income or results 43,476 - Remunerations to shareholders 213, Estimated obligations 64,256 54,568 Private security fund 161, ,732 Provisions for contingencies 63,247 85,899 Consumer charges to collect (RGR and CCC) 9,577 21,438 Research & Development 59,699 - Ministry of Mines and Energy (MME) 7,581 - Resarch centers 52,118 - Financial compensation for use of hydro resources 32,802 28,788 Others 47,330 30,343 1,441,967 1,532,312 Non-Current Liabilities Suppliers 8,893 21,386 Loans and financing 4,458,571 4,756,688 Tax credits deferred social contribution - 9,279 Tax credits deferred income tax - 3,340 Taxes and social contributions 60,317 53,740 Provisions for contingencies 293, ,035 Private security fund 520, ,064 Consumer charges to collect (RGR) 810 3,245 Others 7,883 7,015 5,351,292 5,704,792 Stockholders Equity Social Capital 1,696,306 1,278,585 Capital reserves 7,416,199 7,416,199 Income reserves 1,829,123 1,850,439 Accumulated income 221, ,229 11,162,909 10,884,452 Resources for capital increase 294, ,396 11,457,305 11,178,848 Total Liabilities 18,250,564 18,415,952 30