Earnings Release 2Q14

Transcription

1 Earnings Release 2Q14 São Paulo, August 5, HIGHLIGHTS OF 2Q14, AND SUBSEQUENT EVENTS Start of commercial operation of the wind farms contracted at the 2009 Reserve Energy (LER) Auction the Alto Sertão I complex. Brazilian Development Bank (BNDES) approves long-term financings for Alto Sertão II the wind farms contracted at the 2010 LER Auction and the 2011 A 3 new-build (LEN) auction. Brazilian Development Bank (BNDES) qualifies Phase A wind complexes of Alto Sertão III. Progress on distributed-generation solar projects. Investment agreement signed with Cemig to build wind farm complex. Net operational revenue R$ 57.1 million in 2Q14 and R$ million in first half Adjusted EBITDA R$ 34.1 million in second quarter, and R$ 73.7 million in first semester of 2014, with EBITDA margin of 66.6%. INVESTOR RELATIONS Pedro Pileggi Chief Finance and Investor Relations Officer Flávia Carvalho Investor Relations Manager Thatiana Zago Investor Relations Analyst ri@renovaenergia.com.br +55 (11) MEDIA OFFICE Inês Castelo - ines@tree.inf.br (11) DATA AT AUGUST 1 ST, 2014 RNEW11 = R$ 41.50/Unit MARKET VALUE ON BM&FBOVESPA R$ 3,199.8 million Renova Energia S.A. operates in generation of electricity from renewable sources, focused on wind farms, Small Hydro Plants (SHPs) and solar energy. Renova is Brazil s largest renewable energy company by contracted installed capacity. It prospects, develops and implements electric power generation undertakings from renewable sources the result of its investment to build its highly qualified multidisciplinary team of experienced electricity sector professionals over its 13 years of operation. Renova has placed 1,217.4MW of contracted wind power in Brazil s Regulated Market, and 883.8MW in its Free Market (this total includes 50% of its PPA with Cemig GT). It also operates small hydro plants, with total installed capacity of 190.2MW. Of this total, 148.4MW comes from its 51% interest in Brasil PCH. The 51% ownership in Brasil PCH will be fully established after completion of the capital increase the Company currently owns 60% of its subsidiary Chipley, which owns 51% of Brasil PCH. 1

2 MESSAGE FROM MANAGEMENT In this quarter Renova had one more important milestones in its history, with the generation of its first megawatts of wind power. After its history of success in placing and contracting power supply, Renova built Alto Sertão I, the largest wind complex in Latin America, comprising 14 wind farms built to supply the contracts won in the 2009 LER auction, on time and within budget. ANEEL the Brazilian electricity regulator attested in July 2012 that these wind farms were ready to operate. However, the transmission line was delivered only in June of this year. After the delivery of the line, Renova had the challenge of commissioning and powering-up the complex s 184 turbines in 30 days. The Company succeeded in commissioning all the turbines within the required period, and after a series of tests commercial operation began on July 4, The next step is the commissioning of the LER 2010 generating plants, scheduled for September. For the facilities built under the 2011 (A 3) LEN auction, under the Transmission Project Timetables (SIGET) set by Aneel, the line to connect these wind farms to the grid will be delivered on April 14, For the financing of these projects, we received approval from the Board of the BNDES in second quarter 2014 for the long-term financing of Alto Sertão II comprising the wind farms selling energy under the LER 2010 auction and the 2011 (A 3) LEN auction. The borrower under the contract is Renova Eólica Participações S.A. and the contract was signed at the beginning of June. Also in the quarter, BNDES formally qualified for financing the wind farms comprising Phase A of the Alto Sertão III complex, scheduled for delivery by the start of Continuing its strategy for development of solar energy, the Company delivered two more distributed generation projects. The first is in Curitiba, and is now in operation. The second is in Rio de Janeiro and is in the process of connection to the distributor. Continuing the wind farm complex project announced in March of this year, with installed capacity of MW, contracted for supply to Cemig, an Investment Agreement was signed in July, for Cemig to acquire a 50% interest in a new, project-dedicated company that will own and operate all the contracts of the project, under the specific option to do this specified in the PPA. The Company continues to have confidence in its strategy of development of renewable energy, and will continue to work on: completion of the wind complexes for which it has supply contracts in place; sale and placement of new wind and solar projects; operation of the SHPs; and now, also, operation of the wind farms. 2

3 1. HIGHLIGHTS IN DETAIL: 1.1. Start of commercial operation of the wind farms contracted at the 2009 Reserve Energy (LER) Auction the Alto Sertão I complex. On July 4, an announcement by the National Electricity Agency (Aneel) was published in the federal Official Gazette, to the effect that the Company s 14 wind farms providing the power supply contracted in the 2009 LER Auction are licensed for commercial operation. That is to say, from that date, the electricity of these wind farms, with installed capacity of MW, was for the first time accounted under the commercial contract signed between the Company and the National Electricity Trading Chamber (Câmara de Comercialização de Energia Elétrica), or CCEE. The wind farms were declared ready for operation in July 2012, but the transmission line was not ready. After the delivery of the transmission line, in June 2014, Renova had 30 days to commission and power-up the wind farms. Within this period, it succeeded in commissioning the 184 turbines comprising the 14 wind farms, and after a series of tests, on July 4 began commercial operation. For the wind farms selling energy under the 2010 LER contracts, outflow transmission will use the same line being used for the energy produced under the 2009 LER, but the substation is different and is not ready it is scheduled for delivery at the end of August After the delivery of that substation, the Company will also have one month to commission that group of wind farms Brazilian Development Bank (BNDES) approves long-term financings for Alto Sertão II the wind farms contracted at the 2010 LER Auction and the 2011 A 3 new-build (LEN) auction. This financing, for a total of R$ billion, was approved by Company s Board of Directors on May 29, 2014, and approved by the Board of Directors of the Brazilian Development Bank (BNDES) on June 3, The Alto Sertão II complex comprises the wind farms that sold power supply in the 2010 Reserve Energy (LER) Auction and the A 3 New Energy ( LEN ) Auction of 2011, for total installed capacity of MW. The financing will be contracted by Renova Eólica Participações S.A., a subsidiary of the Company, with tenor of 16 years, and a grace period of six months after the wind farms come into operation. 3

4 With the contracting and disbursement of this financing, totaling R$ million, the bridge loans contracted with BNDES were settled. Full settlement of the Promissory Notes will take place when the rest of the contract is released Brazilian Development Bank (BNDES) qualifies Phase A wind complexes of Alto Sertão III. The wind farms of Mercado Livre III, the 2013 LER auction, Light I and the 2012 A 5 LEN group which comprise Phase A of the Alto Sertão III Complex, have been accepted for feasibility analysis by the Qualification, Credit and Capital Markets Committee of the BNDES. These projects have joint installed capacity of MW, with delivery scheduled over the period 2015 to The total amount for which a financing application has been made is R$ billion. The Company is awaiting the studies and approvals of the BNDES to confirm the amount, and go forward with its own internal approval of this financing Progress on distributed-generation solar projects. In the second half of 2014, following the strategy of advancing in the development of solar energy and electric power sources, the Company concluded two more distributed-generation projects. The first, in Curitiba, at the technology company Idealsoft, has installed generation capacity of 8.3 KWp and has been operating since May of this year. The second project was implemented at a construction company in Rio de Janeiro, with installed capacity of 4.4 KWp, and is awaiting the procedure of connection to the local electricity distributor, Light. Renova has a team dedicated to the development of new technologies, and believes that solar energy is becoming increasingly viable, especially with the increasing level of government incentives for this technology, and the development of its production chain the same pattern that took place for wind energy in recent years. Renova continues to be optimistic in relation to its capacity for growth, execution and generation of value, and will continue to create and implement new solar energy projects while at the same time seeking to expand in generation of electric power from wind energy and other renewable sources. 4

5 1.5. Investment agreement signed with Cemig to build wind farm complex. As reported in a Material Announcement published on March 21, 2014, Cemig Geração e Transmissão S.A. ( Cemig GT ) made the winning bid in an auction announced by Renova on February 7, The subject of the auction was: (a) sale of power supply totaling 295 average MW; and (b) development of a wind power project ( the Wind Power Project ), comprising 25 wind farms, for a total of 676.2MW of installed capacity, in the municipality of Jacobina in the Brazilian state of Bahia. Under the terms of the auction, the winning bidder received the option to participate in the Wind Power Project with an equity interest of up to 50%. Since Cemig (Companhia Energética de Minas Gerais) was interested in the exercise of that option, Renova and Cemig have signed an Investment and Share Purchase Agreement ( the Investment Agreement ), under which Cemig will acquire 50% of the voting and total stock of a new corporation ( the SPC ) to be created by Renova, which will hold all the contracts related to the Wind Power Project. The price of the acquisition, for Cemig, will be up to a limit of R$ 113,450, (one hundred thirteen million four hundred fifty thousand four hundred nine Reais and thirty two centavos), corresponding to 50% of the amounts of the advances on contracts already signed by Renova, with monetary updating by the CDI Rate (the Brazilian Interbank CD rate) from the date of disbursement by Renova up to the date of payment by Cemig. As from the acquisition, Cemig and Renova will share future investment in the Wind Power Project in the proportion of their equity ownership in the SPC. Signature of the Investment Agreement is subject to conditions precedent, in particular approval by the Brazilian Monopolies Authority, CADE. Taking into account the 50% equity interest in this project, Renova s total contracted installed capacity is now 2,291.4 MW, divided as follows: Capacidade Contracted instalada installed contratada capacity by por source fonte 190,2 Capacidade Contracted installed instalada contratada capacity por by stage estágio 870,7 Capacidade Contracted installed instalada contratada capacity por by market mercado 883, , , ,6 SHP PCH Eólico Wind power Construído Built Em In desenvolvimento development Mercado Regulated Regulado Market Mercado Free Market Livre 5

6 2. ENERGY TRADING This quarter, Renova Comercializadora de Energia S.A. ( Renova Comercializadora ) bought power supply of 4 average MW for three months (April, May and June) and sold this in the short-term market and to other agents. The operation generated a profit of R$ 2.0 million in the quarter, but with fees for contracting of consultants and lawyers for the structuring of the Company, the Company reports a net loss for the quarter of R$ 28,000. 2Q14 2Q13 Change Net Revenue 5, Energy purchase (3,393) - - Other costs (2,058) (32) % Results (28) (32) -12.5% 3. CONSOLIDATED PROFIT AND LOSS ACCOUNTS Renova Energia S.A. R$ 000 2Q14 2Q13 Change 1H14 1H13 Change Gross operational revenue 59,597 54, % 115, , % ( ) Taxes PIS, Cofins and ICMS (2,502) (1,955) 28.0% (4,519) (4,050) 11.6% Net operational revenue (NOR) 57,095 52, % 110, , % Non-manageable costs (2,627) (2,945) -10.8% (4,975) (5,806) -14.3% Non-manageable costs (7,458) (2,688) 177.5% (7,011) (5,952) 17.8% Depreciation (17,348) (16,945) 2.4% (34,861) (33,890) 2.9% Operational profit 29,662 29, % 63,849 62, % Administrative expenses (20,416) (14,494) 40.9% (32,924) (25,925) 27.0% Administrative depreciation (424) (266) 59.4% (734) (506) 45.1% Financial revenues (expenses) (5,967) (19,304) -69.1% (23,655) (37,930) -37.6% Equity income (3,233) - - (6,211) - - Income tax and Social Contribution tax (2,944) (1,558) 89.0% (6,391) (4,343) 47.2% Net profit (3,322) (5,777) -42.5% (6,066) (6,478) -6.4% Net margin -5.8% -11.0% 5.2 p.p. -5.5% -6.0% 0.5 p.p. Electricity sold (MWh) 310, , % 619, , % Number of employees % % 6

7 3.1. Net operational revenue Renova reports net operational revenue of R$ 57.1 million in 2Q14, 8.9% more than in 2Q13. Renova Energia S.A. R$ 000 2Q14 2Q13 Change 1H14 1H13 Change Net revenue Wind farms 3,456 7, % 8,943 17, % Net revenue Small Hydro Plants 48,115 45, % 96,229 90, % Net revenue Solar % % Net revenue Energy Trading 5, , Net operational revenue (NOR) 57,095 52, % 110, , % The higher figure reflects: (i) adjustment of prices, in the wind energy supply contracts of the 2009 LER wind farm supply, by the IPCA inflation index; (ii) revenue from distributed-generation solar energy projects; and (iii) revenue from trading of energy in the quarter, totaling R$ 5.4 million. This increased net revenue figure takes into account the lower revenue from the SHPs (it does not include Brazil PCH). Two of Renova s SHPs are included in Brazil s Energy Reallocation Mechanism (Mecanismo de Realocação de Energia, or MRE), which makes an accounting reallocation of the total volume of electricity generated in Brazil, transferring the excess of those that generated more than their guaranteed physical output levels, to those that generated less. Since the MRE group generated less than their physical guarantee in 2Q14, and the Brazilian Spot Price (PLD) is high, the Company made a provision of its portion in the accounting adjustment of the amounts of the MRE. There were also adjustments for the Colino II SHP, which is outside the MRE. The financial settlements of these amounts take place only in the following year, after the accounting of the whole of the current year. The amount of the financial adjustment of the SHPs in this quarter was R$ 7.5 million. In the second quarter of 2013 the amount was R$ 3.3 million. In the whole of the first half of the year, Renova s net operational revenue was R$ million, 2.6% more than in 2Q13. The increase reflects the revenue from trading in the second quarter, and the provision of R$ 12.6 million in the financial adjustment arising from the trading of the SHPs in this half-year, while in the first half of 2013 that provision was R$ 3.3 million Consolidated costs Electricity production costs are separated into two components: manageable and non-manageable. Non-manageable costs are: (i) The tariff for use of the distribution system (TUSD), for the use of the distribution system of Coelba, the distribution concession holder to which the SHPs are connected, and the tariff for use of the 7

8 transmission system (TUST), for the transmission lines and substations of the wind farms; and (ii) the inspection charge made by Aneel. These costs are related to the small hydro plants and the wind plants that are in operation. Manageable costs are the costs of operation and maintenance of the SHPs of the subsidiary Energética Serra da Prata S.A. ( ESPRA ) and of the wind farms in operation. In 2Q14 non-manageable costs totaled R$ 2.6 million, 10.8% less than in 2Q13, reflecting a provision in excess made in 2Q13 for the TUST, which was subsequently reversed. Non-manageable costs in the whole of the first half totaled R$ 5.0 million, which was 14.3% less than in the first half of 2013 and reflected the reversal of provision for the TUST charge. Manageable costs in the second quarter of 2014 were R$ 7.5 million. This total was higher than in the first half 2013 by a difference of R$ 4.8 million, or 177.5%, mainly reflecting three factors: (i) cost of outsourced services R$ 1.3 million higher, due to (a) higher expenditure on maintenance, and (b) the powering-up of the 2009 LER wind farms; (ii) purchase of electricity for resale, in the amount of R$ 3.4 million; and (iii) other costs R$ 0.1 million higher. In the half-year, manageable costs totaled R$ 7.0 million, which was 17.8% higher than in first half 2013, mainly reflecting higher expenditure on outsourced services and purchase of power supply, partially offset by the reversal of the R$ 4.6 million penalty payment related to the 2010 LER auction. The penalty payment was reversed after the government approved postponing the start-up of Renova s supply contract to coincide with the (late) delivery by Aneel of its transmission lines, in April Depreciation was R$ 17.3 million in the quarter, and R$ 34.9 million in the first half of These amounts are in line with those for Costs excluding depreciation (R$ 000) 5,633 10,085 11,758 11,986 2,627 5,806 4,975 2,945 2,688 7,458 5,952 7,011 2Q13 2Q14 1H13 1H14 Manageable Non-manageable 8

9 3.3. Consolidated administrative expenses Renova Energia S.A. R$ 000 2Q14 2Q13 Change 1H14 1H13 Change Personnel and managers 5,012 5, % 8,769 9, % Outsourced services 10,764 6, % 17,075 10, % Rentals and leasing % % Travel 1, % 1,516 1, % Projects discontinued 1,343 1, % 1,343 1, % Insurance % % Telephony and IT % 1,141 1, % Materials for use and consumption % % Others 1,139 (235) % 2,070 1, % Total (*) 20,416 14, % 32,924 25, % *Excludes depreciation on administrative facilities. Administrative expenses reported for the second quarter totaled R$ 20.4 million, or 40.9% more than in 2Q13. This is mainly due to the following factors: Outsourced services: R$ 4.1 million higher than in 2Q13, on higher expenditure on consultants, including HR consultancy and consultancy on trading, higher expenses on lawyers, and also expenses on advertising. Travel: The higher figure for this line reflects more travel for the powering-up of the wind farms of the 2009 LER auction. Discontinued projects: The Company reviews its portfolio of basic projects and inventories of SHPs quarterly. In the second quarter of 2014 there was an increase of 33.9% in the value of write-offs in these projects. Other: This represents expenses on freight, deliveries, and expenses on social programs for the communities where the Company operates, as well as non-recurring expenses. The difference from 2Q13 arises mainly from reversal of a provision and reversals of expenses in 2Q13, and also higher expenses on events in the current year. Administrative expenses in the whole of first half 2014 totaled R$ 32.9 million, or 27.0% more than in first half 2013, mainly reflecting higher expenditure on consultants and lawyers. 9

10 3.4. Consolidated financial revenue (expenses) Renova Energia S.A. R$ 000 2Q14 2Q13 Change 1H14 1H13 Change Financial revenues 19,144 7, % 26,155 15, % Revenue from cash investments 18,974 7, % 25,982 15, % Other financial revenues % % Financial expenses (25,111) (26,968) -6.9% (49,810) (53,591) -7.1% Costs of debt (23,617) (25,479) -7.3% (46,758) (50,019) -6.5% Other financial expenses (1,494) (1,489) 0.3% (3,052) (3,572) -14.6% Financial revenue (expenses) (5,967) (19,304) -69.1% (23,655) (37,930) -37.6% For the second quarter of 2014, Renova reports net financial expenses of R$ 6.0 million. Financial revenues were 149.8% higher than in 2Q13, since the average cash balance was higher, reflecting the advance against future capital increase (AFAC) paid by Cemig GT, as part of the capital increase approved in February of this year. Financial expenses were 6.9% lower than in 2Q13, due to the capitalization of interest expense on the debentures, which was begun in third quarter In the first half of the year, the Company had net financial expenses of R$ 23.7 million, or 37.6% less than in 2Q13 reflecting the higher cash balance, and the capitalization of the interest expense on the debentures. 10

11 3.5. Equity gain on subsidiary Brasil PCH Renova acquired 51% of Brasil PCH with the funds from the advance against capital increase, via a subsidiary (Chipley) in which, on today s date, Renova owns 60% of the equity. After full payment of the advance against capital increase (in the total amount of R$ million), with the full increase in capital, Renova will own 100% of Chipley. Brasil PCH reported net profit of R$ 6.3 million in the quarter, and for the first half (reported for February through Brasil PCH (100%) R$ 000 2Q14 Feb/Jun Net Revenue 63, ,086 Costs (10,349) (17,172) Expenses (3,464) (6,273) Depreciation (10,833) (18,106) Financial Result (30,132) (53,192) IR and CSLL (2,544) (4,274) Net Income 6,253 8,069 June, since the acquisition took place in February), Brasil PCH posted profit of R$ 8.1 million. Chipley has the right to 51% of the profit of Brasil PCH, and Renova to 60% of the profit of Chipley. The total value added in the acquisition was R$ million. The Company identified and measured the fair value of the existing assets and liabilities in Brasil PCH based on the best existing estimate. The resulting calculation for the average monthly amount of amortization of value added is R$ 2.9 million, and this was reported for the first time in the month of the acquisition. In the quarter, the total of amortization of value added accounted in Chipley was R$ 8.7 million, and in the period of the first half (February through June), R$ 14.6 million. This table shows the various effects of the acquisition on Chipley and on Renova: 2Q14 Feb to Jun Chipley (51%) Renova (60%) Chipley (51%) Renova (60%) Equity gain(loss) in subsidiary 3,189 4,115 Amortization of value added (8,667) (14,555) Financial result Result (5,390) (3,233) (10,352) (6,211) 3.6. Income tax, Social Contribution tax and net profit At present the Company s revenues are taxed in accordance with its adoption of the Presumed Profit taxation regime. In this regime the taxable amount is calculated as 8% of gross revenue arising from generation of electricity, and 100% of financial revenues. The tax rate applied to both of them is 15%, plus application of the additional 10% arising in income tax. The taxable amount for the purposes of the Social Contribution tax is 12% of gross revenues arising from electricity generation, and 100% of financial revenues: the regular rate of 9% for the Social Contribution tax is applied to both of these. Expenses on income tax and the Social Contribution tax in 2Q14 totaled R$ 2.9 million, compared to an expense of R$ 1.6 million in 2Q13. The difference mainly reflects the change in taxation of the special-purpose companies serving 11

12 the 2010 LER contracts, which began to be accounted by the Presumed Profit method, and as a consequence had their financial revenues taxed. In the whole first half of the year, the total of income tax and the Social Contribution tax was R$ 6.4 million, compared to R$ 4.3 million in the first half of In the second quarter of 2014 the Company posted a loss of R$ 4.1 million, which compares with a loss of R$ 5.8 million in the same period of The Company reported a loss of R$ 6.1 million for the first half of 2014, which compares with a loss of R$ 6.5 million in the first half of EBITDA Renova Energia S.A. R$ 000 2Q14 2Q13 Change 1H14 1H13 Change Net operational revenue (NOR) 57,095 52, % 110, , % Net profit (3,322) (5,777) -42.5% (6,066) (6,478) -6.4% (+) Income tax and Social Contribution tax 2,944 1, % 6,391 4, % (+) Depreciation 17,772 17, % 35,595 34, % (+) Financial expenses 25,111 26, % 49,810 53, % ( ) Financial revenues (19,144) (7,664) 149.8% (26,155) (15,661) 67.0% Ebitda 23,361 32, % 59,575 70, % Ebitda margin 40.9% 61.6% p.p. 53.8% 65.1% p.p. (+) Equity income 3, , (+) SHPs financial adjustments 7,488 3, % 12,580 3, % (+) LER 2010 provision (4,645) - - Adjusted Ebitda 34,082 35, % 73,721 73, % Adjusted Ebitda margin 59.7% 67.8% -8.1 p.p. 66.6% 68.1% -1.5 p.p. In the second quarter of 2014, the Company s Ebitda, adjusted for equity gain in subsidiaries and non-recurring items, was R$ 34.1 million, with Ebitda margin of 59.7%. The difference from 2Q13 mainly reflects: (i) a higher increase in costs of energy trading than in revenue in the quarter, reflecting payment and receipt periods in accordance with the rules governing trading; (ii) higher administrative expenses, mainly expenditure on outsourced services; (iii) higher provision for adjustment of the SHPs, with reversal of the adjusted Ebitda; and (iv) negative equity gain from subsidies, reflecting the amortization of the goodwill on the acquisition of Brasil PCH also reversed from the adjusted Ebitda. 12

13 Adjusted EBITDA 7,488 34,082 23,361 3,233 EBITDA Equity Income SHPs adjustments Adjusted EBITDA Adjusted Ebitda in the first half of the year was R$ 73.7 million, with adjusted Ebitda margin of 66.6%. The difference from 2Q13 primarily reflects: (i) higher administrative expenses, reflecting higher expenditure on outsourced services, especially consultancy and lawyers; (ii) equity gain on subsidiaries, reversed from adjusted Ebitda; (iii) lower manageable costs due to the reversal of the 2010 LER contracts provision, also reversed from adjusted Ebitda; and (iv) higher provision for financial adjustment of the SHPs, adjusted in the same way in Ebitda. 4. CASH FLOW 2Q14 Cash Flow (15.328) (9.422) (57.981) Initial cash Operational Financing Investments Investments - Cahs investments (2Q14)* Final cash Investments - Cahs investments (total) Cash and cash equivalents * In the formal accounting cash flow statements, cash investments are classified as investing activities. 13

14 In second quarter 2014 Renova s cash position was reduced by R$ 15.5 million, from March 31, The main components of the variation are: R$ 15.3 million used in operational activities; R$ 9.4 million used in financing activities, principally payment of loans; R$ 58.0 million in capital expenditure, in construction of wind plants; and R$ 67.2 million in redemptions of cash investment positions in investment funds to be used in construction of the Alto Sertão II wind farms. In addition to cash, the Company has R$ million in cash investments, so that the total of Cash and cash equivalents is R$ million. In the half-year, the Company s cash position was increased by R$ million, primarily reflecting the incoming advance against capital increase, from Cemig, the amount of which was partially offset by the capital expenditure in the wind projects. 5. MAIN ECONOMIC AND FINANCIAL INDICATORS Consolidated Assets Balance Sheet Amounts in R$ thousands Consolidated Liabilities 06/30/ /31/ /31/ /30/ /31/ /31/2013 Current Assets 728, , ,615 Current Liabilities 717,397 1,344,323 1,380,939 Cash and cash equiv. 345, , ,598 Loans and Financing 488,377 1,123,032 1,100,134 Investments 296, , ,449 Debentures 11,955 11,584 11,239 Clients 31,101 22,913 20,923 Suppliers 187, , ,434 Other 55,579 50,299 46,645 Others 29,743 22,468 25,132 Long-term Assets 1,573,394 1,577,004 1,584,741 Long-term Liabilities 1,934,977 1,292,952 1,290,640 Cauções e Depósitos 143, , ,981 Loans and Financing 1,571, , ,855 Others 1,828 1,370 1,098 Debentures 345, , ,028 Other 17,968 14,734 11,757 Shareholder s Equity 1,804,680 1,808,002 1,000,600 Capital Stock 981, , ,585 Fixed Assets in Use 1,427,740 1,443,185 1,459,662 Capital Reserve 55,067 55,067 55,067 Fixed Assets in Progress 2,154,770 2,078,791 1,645,823 Retained Losses (42,118) (38,796) (36,052) Sources for future capital increase 810, ,129 - Total Assets 489, , ,579 Total Liabilities 3,864,686 3,874,427 3,054,

15 5.1. Main variations in assets On June 30, 2014 the total of cash and cash equivalents plus cash investment was R$ million. In non-current assets, the deposits line was increased by R$ 11.4 million from March 31, 2014, due to the account Special reserve for O&M and debt servicing under the BNDES contract for the 2009 LER wind farms. The purpose of this reserve is to guarantee full payment of the installments and principal of the long-term debt to the BNDES, so that all debt coverage obligations are completely met with regularity. Fixed assets in service was at a similar level to March 31, 2014, and the increase of R$ 76.0 million in fixed assets in progress mainly reflected the works on wind farms. Evolução do Investimento em Imobilizado em Serviço R$ /30/ /31/ /31/2013 Wind farms 1,235,634 1,251,145 1,267,259 Wind power Measuring towers 5,728 4,865 5,247 PCHs (small hydro plants) 174, , ,729 Administrative investments 11,450 10,857 9,427 Total 1,427,740 1,443,185 1,459,662 Evolução do Investimento em Imobilizado em Curso R$ /30/ /31/ /31/2013 Wind farms 2,126,126 2,049,097 1,614,313 Inventories SHPs 15,508 16,574 16,449 Basic projects PCHs 13,136 13,120 15,061 Total 2,154,770 2,078,791 1,645, Principal changes in liabilities In the second quarter of 2014 the balance of Loans and financings in Current liabilities was R$ million, 56.5% less than at March 31, The reduction, of R$ million, mainly reflected the settlement of bridge loans borrowed from the BNDES, on release of part of the long-term financing. Non-current liabilities totaled R$ billion, or 49.7% more than on March 31, 2014, mainly due to the increase in loans and financings, from R$ million on March 31, 2014 to R$ billion at the end of June, reflecting settlement of the bridge loans of the BNDES and the contracting of the long-term loan. 15

16 Financings The Loans, financings and debentures line short and long-term totaled R$ billion¹, at the end of the second quarter. This breaks down by maturities as shown in the chart on the right below. The long-term financing from the BNDES was approved in this quarter, and was used to settle the bridge loan previously contracted with the BNDES itself, in the amount of R$ million. As a result, that amount migrated from short-term to long-term. When the rest of the financing is disbursed, the Company will settle the promissory notes issued this year (the Itaú Bridge Promissory Note issue) thus increasing the overall tenor of the debt. Contract Cost R$ 000 BNDES Salvador Eólica TJLP + 1,92% 602,845 BNDES (subcrédito social) TJLP 5,227 BNDES Bahia Eólica TJLP + 2,18% 295,198 BNDES (subcrédito social) TJLP 2,889 BNDES Renova Eólica TJLP + 2,45% 649,705 BNDES (subcrédito social) TJLP 1,292 Itaú (NP) 100% CDI + 0,98% 407,376 BNB² 9,5% a.a. 99,490 Debêntures 123,45% do CDI 358,946 Finep - CEOL Itaparica 6,357 Total do endividamento 2,429,325 Custo de captação (11,984) End. líquido dos custos 2,417,341 Disponibilidades 642,210 Dívida líquida³ 1,775, até 12 meses Maturities timetable (R$ million) Após Total ¹ The total represents the amount accounted, plus the interest generated, without considering the funding costs of the transactions. ² The financings have interest rates of 9.5% p.a. (which may be reduced to 8.08% under a 15% non-default bonus). ³ Cash equivalents plus cash investments. 16

17 6. STOCK PRICE: RNEW11 ON THE BM&FBOVESPA This chart compares the stock price of RNEW11, the Bovespa index and the Brazilian electricity index in the last 12 months. 45,00 40,00 35,00 30,00 25,00 RNEW11 R$ 41,50 08/01/14 20,00 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul ,00 RNEW11 X IBOV x IEE 140,00 120,00 100,00 80,00 60,00 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 RNEW11 IBOV IEE Source: Bloomberg. RNEW11¹ Em R$ IPO (jul/10) 11,67 Fechamento (02/05/2014): 40,63 Maior cotação desde IPO: 43,33 Valorização desde o IPO: 255.5% Valorização nos últimos 12 meses: 18.2% Valorização em 2014: 3.7% Renova s Investor Relations department seeks to act transparently with the market, keeping investors up to date on the Company s positioning, plans in progress and outlook using the tools of our website, and our constant relationship with stockholders and potential investors, at public events and events organized by investment banks. The Company s information and publications can be accessed on our site ( which also carries leading news on the sector that could be relevant to our business plan ( ¹ Adjusted for corporate action. 17

18 7. STOCKHOLDING STRUCTURE Bloco de Controle 67,0% ON 43,7% total RR Participações Light Energia RR Participações 1 BNDESPAR FIP InfraBrasil FIP Caixa Ambiental FIP Santa Bárbara Outros 33,5% ON 0,0 % PN 21,9% total 33,5% ON 0,0% PN 21,9% total 6,3% ON 0,0% PN 4,1% total 6,2% ON 23,2% PN 12,1% total 7,7% ON 29,0% PN 15,1% total 3,6% ON 13,6% PN 7,1% total 3,1% ON 11,6% PN 6,0% total 6,1% ON 22,7% PN 11,8% total Position at June 30, ¹ Shares owned by RR Participações outside the controlling block. As reported in a Notice to Stockholders published on July 25, 2014, the Board of Directors of Renova approved extension, for a further 60 days, of the period for exercise of the first refusal right in the capital increase approved by the Board on February 20, As a result, the period for exercise of that right of preference, which would have ended on July 29, 2014 under the terms of the Notice to Stockholders published on March 31, 2014, will now end at the close of business on September 29, The Company ratifies all the other terms and conditions of that Notice to Stockholders, published on February 21, 2014, which remain in full force and effect. After the capital increase a new stockholders agreement will be signed in which Cemig GT (or a special-purpose company), RR Participações and Light Energia will be part of the controlling block of the Company. Depending on the exercise of the right of preference by the other stockholders, the stockholding structure of Renova after the capital increase may be at any point between the following two cases: Capital increase subscribed only by Cemig GT or the special-purpose company RENOVA ENERGIA ON shares PN shares Total shares Controlling block 188,309, % ,309, % RR Participações 50,561, % ,561, % Light Energia 50,561, % ,561, % Cemig GT (or SPC) 87,186, % ,186, % Other stockholders 49,775, % 80,408, ,0% 130,184, % RR Participações* 9,560, % - 0,0% 9,560, % BNDESPar 9,311, % 18,622,850 23,2% 27,934, % Others 30,904, % 61,785,966 76,8% 92,690, % Total 238,085, % 80,408, % 318,494, % Base date: June 30,

19 Capital increase subscribed by Cemig GT (or special-purpose company) and by all the other stockholders RENOVA ENERGIA ON shares PN shares Total shares Controlling block 188,309, % ,309, % RR Participações 50,561, % ,561, % Light Energia 50,561, % ,561, % Cemig GT (or SPC) 87,186, % ,186, % Other stockholders 162,017, % 80,408, ,0% 242,425, % RR Participações* 25,562, % - 0,0% 25,562, % BNDESPar 33,395, % 18,622,850 23,2% 52,018, % Others 103,059, % 61,785,966 76,8% 164,845, % Total 350,326, % 80,408, ,0% 430,735, % Base date: June 30, *Shares owned by RR Participações outside the controlling block. For more detailed information on the capital increase, please see the Company s website: ( 8. GLOSSARY Alto Sertão I 14 wind farms owned by Renova in the interior of Bahia State, with installed capacity of MW, which contracted electricity sales in the 2009 Reserve Energy auction (LER). Alto Sertão II Alto Sertão III 15 Renova wind farms in the interior of Bahia State, with installed capacity of MW, which contracted electricity sales in the Reserve Energy (LER) Auction of 2010 and the A 3 Auction of Renova wind farms in the interior of Bahia, which sold supply in the 2012 (A 5) LEN Auction, the 2013 LER auctions, and the Free Market, with total installed capacity of MW. Alto Sertão III Phase A 23 Renova wind farms in the interior of Bahia with installed capacity of 411.1MW, which sold power supply in the 2012 (A 5) LEN auction, the 2013 LER auction, and in the Free Market. Aneel Brazil s electricity sector regulator (Agência Nacional de Energia Elétrica National Electricity Agency). A 3 or A 5 Auctions New-build auctions to contract supply starting respectively 3 and 5 years ahead. CCEE ESPRA Free Market The Electricity Trading Chamber (Câmara de Comercialização de Energia Elétrica): Brazil s Wholesale Electricity Market. The company Energética Serra da Prata S.A., an indirect subsidiary of Renova, holder and operator of Renova s three Small Hydro Plants. Contracting environment in which prices are freely negotiated between the consumer and the generating agent or trader. 19

20 ICSD LEN LER Mercado Livre I Mercado Livre II Mercado Livre III MCPSE MRE O&M P50 P90 PCHs PLD PPA Proinfa Regulated market SPC Debt servicing coverage index (Índice de Cobertura do Serviço da Dívida). New-build auction: Auction to contract energy supply to be provided by facilities yet to be built (Leilão de Energia Nova New Electricity Auction ). A Reserve Capacity auction (Leilão de Energia de Reserva Reserve Energy Auction). A Renova wind farm with installed capacity of 21.7MW, in the interior of Bahia State, which sold power supply in the Free Market. Four Renova wind farms in the interior of Bahia, with installed capacity of 94.3 MW, which sold power supply in the Free Market. A Renova wind farm in the interior of Bahia with installed capacity of 29.7 MW, which sold power supply in the Free Market. Electricity Sector Assets Control Manual (Manual de Controle Patrimonial do Setor Elétrico). Electricity Reallocation Mechanism (Mecanismo de Realocação de Energia). Operation and maintenance. An estimate of average electricity output for which the possibility of its being exceeded in the long term is estimated at 50%. Regarded as an average estimate for electricity production. An estimate of average electricity output for the possibility of its being exceeded in the long term is estimated at 90%. Regarded as a conservative estimate for electricity production. SHPs Small Hydroelectric Plants (Pequenas Centrais Hidrelétricas, in Portuguese). The Spot Market Price (Preço de Liquidação de Diferenças Differences Settlement price), published weekly by the CCEE. Power Purchase Agreement The Program to Encourage Alternative Sources of Electricity (Programa de Incentivos às Fontes Alternativas de Energia). Contracting environment in which contracted tariffs are laid down by the regulator, Aneel. Special-purpose company. In accordance with CVM Instruction 381 of January 14, 2003, the Company reports that it has signed a contract with Deloitte Touche Tohmatsu Auditores Independentes ( Deloitte ) to provide the services of auditing of the accounting and financial statements of the Company and its subsidiaries. 20

21 Consolidated and Individual Interim Financial Information As at June 30, 2014 (Convenience Translation into English from the Original Previously Issued in Portuguese)

22 CONTENTS (Page) Balance Sheet... 3 Statement of Operations... 5 Statement of Comprehensive Income... 6 Statement of Changes in Equity... 8 Statement of Cash Flows... 9 Statement of Value Added NOTES TO THE INTERIM INFORMATION 1. General information Basis of preparation Basis of consolidation Authorizations Power sale Segment reporting Cash and cash equivalents Trade receivables Recoverable taxes Advances to suppliers Collaterals and restricted deposits Deferred taxes Investments Property, plant and equipment Trade payables Borrowings, financing and debentures Taxes payable Trade payables - CCEE/Eletrobras Provision for risks Equity and shareholders compensation Net operating revenue Operating expenses Finance income (costs) Income tax and social contribution Related-party transactions Financial instruments and risk management Earnings per share Insurance Commitments Non-cash Transactions Events after the reporting period

23 BALANCE SHEET As at June 30, 2014 (In thousands of Brazilian reais - R$) Consolidated Parent ASSETS Note 06/30/ /31/ /30/ /31/2013 CURRENT ASSETS Cash and cash equivalents 7 345, , , ,686 Financial investiments 7 296, , ,052 - Trade receivables 8 31,101 20, Recoverable taxes 9 12,044 10,751 6,788 7,327 Advances to suppliers 10 5,945 5,065 3,028 3,261 Prepayments 7,044 2,338 6,862 1,480 Collaterals and restricted deposits 11 28,363 27, Dividends receivable ,569 20,452 Other 2,183 1,260 2,084 1,260 Total current assets 728, , , ,507 NONCURRENT ASSETS Related parties ,668 26,589 Collaterals and restricted deposits , , Deferred taxes 12 1, Other Investments ,065, ,779 Property, plant and equipment 14 1,427,740 1,459,662 16,982 14,614 Construction in progress 14 2,154,770 1,645, , ,086 Total noncurrent assets 3,728,164 3,230,564 1,638,528 1,217,634 TOTAL ASSETS 4,457,054 3,672,179 2,195,329 1,362,141 The accompanyng notes are an integral part of these interim financial information. 3

24 BALANCE SHEET As at June 30, 2014 (In thousands of Brazilian reais - R$) Consolidated Parent LIABILITIES AND EQUITY Note 06/30/ /31/ /30/ /31/2013 CURRENT LIABILITIES Trade payables , ,434 3,763 2,273 Borrowing and financing ,377 1,100, Debentures 16 11,955 11,239 11,955 11,239 Recoverable taxes 17 8,562 7,549 2,753 1,450 Payroll and acrued vacation 7,112 8,465 7,112 8,465 Trade payables - CCEE/Eletrobras 18 13,717 8, Other Total current liabilities 717,397 1,380,939 25,598 23,439 NONCURRENT LIABILITIES Borrowing and financing 16 1,571, , Debentures , , , ,028 Trade payables - CCEE/Eletrobras 18 11,671 11, Related parties ,325 12,987 Provision for risks Provision for investment loss 13 6,210-6,259 - Total noncurrent liabilities 1,934,977 1,290, , ,102 EQUITY 20 Capital 1,017,714 1,017,697 1,017,714 1,017,697 (-) Share issuance costs (36,112) (36,112) (36,112) (36,112) Capital reserve 55,067 55,067 55,067 55,067 Accumulated losses (42,118) (36,052) (42,118) (36,052) Resources for future capital increase 810, ,129 - Total equity 1,804,680 1,000,600 1,804,680 1,000,600 TOTAL LIABILITIES AND EQUITY 4,457,054 3,672,179 2,195,329 1,362,141 The accompanyng notes are an integral part of these interim financial information. 4

25 STATEMENT OF OPERATIONS As at June 30, 2014 (In thousands of Brazilian reais - R$) Consolidated 04/01/ /01/ /01/ /01/2013 to to to to Note 06/30/ /30/ /30/ /30/2013 NET OPERATING REVENUE 21 57,095 52, , ,874 COST OF SERVICES Depreciation 14, 22 (17,348) (16,945) (34,861) (33,890) Cost of operation (7,458) (2,688) (7,011) (5,952) Distribuition system use charges (2,627) (2,945) (4,975) (5,806) Total 22 (27,433) (22,578) (46,847) (45,648) GROSS PROFIT 29,662 29,845 63,849 62,226 INCOME (EXPENSES) General and administrative 22 (19,820) (15,027) (32,240) (25,320) Depreciation and amortization 14, 22 (424) (266) (734) (506) Other expenses 22 (596) 533 (684) (605) Equity in subsidiaries 13 (3,233) - (6,211) - Total (24,073) (14,760) (39,869) (26,431) INCOME BEFORE FINANCE INCOME (COSTS) AND TAXES ON INCOME 5,589 15,085 23,980 35,795 FINANCE INCOME (COSTS) Finance income 23 19,144 7,664 26,155 15,661 Finance costs 23 (25,111) (26,968) (49,810) (53,591) Total (5,967) (19,304) (23,655) (37,930) INCOME (LOSS) BEFORE INCOME TAX AND SOCIAL CONTRIBUTION (378) (4,219) 325 (2,135) Current income tax and social contribution 24 (3,149) (1,651) (6,722) (4,429) Defered income tax and social contribution Total (2,944) (1,558) (6,391) (4,343) LOSS FOR THE PERIOD (3,322) (5,777) (6,066) (6,478) The accompanyng notes are an integral part of these interim financial information. 5

26 STATEMENT OF OPERATIONS As at June 30, 2014 (In thousands of Brazilian reais - R$) 6

27 STATEMENT OF COMPREHENSIVE INCOME As at June 30, 2014 (In thousands of Brazilian reais - R$) Consolidated Parent 04/01/ /01/ /01/ /01/ /01/ /01/ /01/ /01/2013 to to to to to to to to 06/30/ /30/ /30/ /30/ /30/ /30/ /30/ /30/2013 Loss for the period (3,322) (5,777) (6,066) (6,478) (3,322) (6,141) (6,066) (7,221) Other comprehensive income TOTAL COMPREHENSIVE INCOME FOR THE PERIOD (3,322) (5,777) (6,066) (6,478) (3,322) (6,141) (6,066) (7,221) The accompanyng notes are an integral part of these interim financial information. 7

28 STATEMENT OF CHANGES IN EQUITY As at June 30, 2014 (In thousands of Brazilian reais - R$) Capital Capital reserve Reserva for employee benefits Resources Share settle with for future Total Reversal Total issuance equity Accumulated capital equity - of deferred equity - Note Paid-in costs instruments Goodwill losses increase Parent charges Consolidated BALANCES AS AT DECEMBER 31,2012 1,017,557 (36,112) 52,274 1 (41,580) - 992,140 (743) 991,397 Capital increase - shares issued Loss of the period (7,221) - (7,221) 743 (6,478) BALANCES AS AT JUNE 30,2013 1,017,570 (36,112) 52,274 1 (48,801) - 984, ,932 BALANCES AS AT DECEMBER 31,2013 1,017,697 (36,112) 55,066 1 (36,052) - 1,000,600-1,000,600 Capital increase - shares issued 20.b Loss of the period (6,066) - (6,066) - (6,066) Resources for future capital increase 20.e , , ,129 BALANCES AS AT JUNE 30,2014 1,017,714 (36,112) 55,066 1 (42,118) 810,129 1,804,680-1,804,680 The accompanyng notes are an integral part of these interim financial information. 8

29 STATEMENT OF CASH FLOWS As at June 30, 2014 In thousands of Brazilian reais - R$ 9

30 STATEMENT OF VALUE ADDED As at June 30, 2014 (In thousands of Brazilian reais - R$) Consolidated Parent Note 06/30/ /30/ /30/ /30/2013 REVENUES Eletric power sales , , Income from construction of own assets 69,319 18,977 28,743 10,540 INPUTS ACQUIRED FROM THIRD PARTIES Costs of sales (11,986) (11,758) (40) (65) Materials, power, outside services and other (26,302) (16,360) (17,301) (10,854) Gross value added 146, ,783 11,518 (293) Depreciation and amortization 14, 22 (35,595) (34,396) (1,560) (1,273) NET WEALTH CREATED 110,651 68,387 9,958 (1,566) WEALTH RECEIVED IN TRANSFER Equity in subsidiaries 13 (6,211) - 14,483 16,387 Finance income 23, 30 31,942 15,661 17,247 12,122 TOTAL WEALTH TO BE DISTRIBUTED 136,382 84,048 41,688 26,943 DISTRIBUTION OF WEALTH Personnel Payroll and related charges 16,069 12,063 16,069 12,063 Management fees 963 1, ,022 Benefits 2,916 2,104 2,916 2,104 FGTS 1, , Taxes and contribuitions: Federal 15,198 12,034 3,968 3,444 State Municipal Lessers and lessors: Interest 102,332 58,456 20,860 13,469 Rentals 1, , Other 2,592 3, Loss for the period (6,066) (6,478) (6,066) (7,221) TOTAL 136,382 84,048 41,688 26,943 The accompanyng notes are an integral part of these interim financial information. 10

31 (Convenience Translation into English from the Original Previously Issued in Portuguese) NOTES TO THE INTERIM FINANCIAL INFORMATION As at June 30, 2014 In thousands of Brazilian reais - R$ 1. General information Renova Energia S.A. ( Renova or Company or Parent ) is a publicly-held company enrolled with CNPJ under no / , with shares traded at BM&FBOVESPA ( BOVESPA ) under the Corporate Governance Level 2. Headquartered at Av. Roque Petroni Júnior, 999, 4º andar, city of São Paulo, São Paulo State, the Company is primarily engaged in the development, implementation and operation of projects for generation of energy from renewable sources wind, small hydroelectric plants (PCHs) and solar, and in the sale of power and related activities. The Company s corporate purposes are the generation and sale of power of all types, manufacturing of fuel from natural and renewable sources, provision of logistics supporting services to companies or environmental advisory companies, provision of advisory services for power solutions relating to the generation, sale, transmission and other businesses involving alternative power sources, provision of engineering, construction and logistics services, and development of studies and projects related to the power generation plants of all types and systems, as well as the implementation, operation, maintenance and development, manufacturing and sale of parts and equipment for power generation, transmission and distribution, operation in the electric power generation market through solar power generation equipment, including, but not limited to, sale of solar power and equipment for generation, transmission and distribution of solar power, processing of polysilicon, ingots, wafers, cells, panels, modules and inverters, sale, lease, rental or other type for provision of power generation assets, and investment in other companies capital. As at June 30, 2014, the Company holds equity interests in the following direct and indirect subsidiaries that are in the operating and preoperating stage and under construction: Equity interest - % 06/30/ /31/2013 PCH Basis of consolidation Direct Indirect Direct Indirect Enerbras Centrais Elétricas S.A. (a) Full Energética Serra da Prata S.A. (b) Full in Enerbras Renova PCH LTDA (c) Full Equity interest - % 06/30/ /31/2013 Wind Basis of consolidation Direct Indirect Direct Indirect Nova Renova Energia S.A. (Holding) (d) Full Bahia Eólica Participações S.A. (Holding) (d) Full in Nova Renova Centrais Eólicas Candiba S.A. (e) Full in Bahia Eólica Centrais Eólicas Igaporã S.A. (e) Full in Bahia Eólica Centrais Eólicas Ilhéus S.A. (e) Full in Bahia Eólica Centrais Eólicas Licínio de Almeida S.A. (e) Full in Bahia Eólica Centrais Eólicas Pindaí S.A. (e) Full in Bahia Eólica CONTINUED - 11

32 - CONTINUED- Equity interest - % 06/30/ /31/2013 Wind Basis of consolidation Direct Indirect Direct Indirect Salvador Eólica Participações S.A. (Holding) (d) Full in Nova Renova Centrais Eólicas Alvorada S.A. (e) Full in Salvador Eólica Centrais Eólicas Guanambi S.A. (e) Full in Salvador Eólica Centrais Eólicas Guirapá S.A. (e) Full in Salvador Eólica Centrais Eólicas Nossa Senhora Conceição S.A. (e) Full in Salvador Eólica Centrais Eólicas Pajeú do Vento S.A. (e) Full in Salvador Eólica Centrais Eólicas Planaltina S.A. (e) Full in Salvador Eólica Centrais Eólicas Porto Seguro S.A. (e) Full in Salvador Eólica Centrais Eólicas Rio Verde S.A. (e) Full in Salvador Eólica Centrais Eólicas Serra do Salto S.A. (e) Full in Salvador Eólica Renova Eólica Participações S.A. (Holding) (d) Full in Nova Renova Centrais Eólicas da Prata S.A. (f) Full in Renova Eólica Centrais Eólicas dos Araçás S.A. (f) Full in Renova Eólica Centrais Eólicas Morrão S.A. (f) Full in Renova Eólica Centrais Eólicas Seraíma S.A. (f) Full in Renova Eólica Centrais Eólicas Tanque S.A. (f) Full in Renova Eólica Centrais Eólicas Ventos do Nordeste S.A. (f) Full in Renova Eólica Centrais Eólicas Ametista S.A. (g) Full in Renova Eólica Centrais Eólicas Borgo S.A. (g) Full in Renova Eólica Centrais Eólicas Caetité S.A. (g) Full in Renova Eólica Centrais Eólicas Dourados S.A. (g) Full in Renova Eólica Centrais Eólicas Espigão S.A. (g) Full in Renova Eólica Centrais Eólicas Maron S.A. (g) Full in Renova Eólica Centrais Eólicas Pelourinho S.A. (g) Full in Renova Eólica Centrais Eólicas Pilões S.A. (g) Full in Renova Eólica Centrais Eólicas Serra do Espinhaço S.A. (g) Full in Renova Eólica Centrais Eólicas São Salvador LTDA (h) Full Centrais Eólicas Bela Vista VII LTDA (i) Full Centrais Eólicas Bela Vista VIII LTDA (i) Full Centrais Eólicas Bela Vista XII LTDA (i) Full Centrais Eólicas Bela Vista XIII LTDA (i) Full Centrais Eólicas Bela Vista XVI LTDA (i) Full Centrais Eólicas Bela Vista XVIII LTDA (i) Full Centrais Eólicas Bela Vista XIX LTDA (i) Full Centrais Eólicas Bela Vista XX LTDA (i) Full Centrais Eólicas Itapuã VIII LTDA (i) Full CONTINUED - 12

33 - CONTINUED - Equity interest - % 06/30/ /31/2013 Wind Basis of consolidation Direct Indirect Direct Indirect Centrais Elétricas Botuquara LTDA (j) Full Centrais Elétricas Itaparica S.A. (j) Full Centrais Eólicas Arapuã LTDA (j) Full Centrais Eólicas Bela Vista I LTDA (j) Full Centrais Eólicas Bela Vista II LTDA (j) Full Centrais Eólicas Bela Vista III LTDA (j) Full Centrais Eólicas Bela Vista IV LTDA (j) Full Centrais Eólicas Bela Vista V LTDA (j) Full Centrais Eólicas Bela Vista VI LTDA (j) Full Centrais Eólicas Bela Vista IX LTDA (j) Full Centrais Eólicas Bela Vista X LTDA (j) Full Centrais Eólicas Bela Vista XI LTDA (j) Full Centrais Eólicas Bela Vista XIV LTDA (j) Full Centrais Eólicas Bela Vista XV LTDA (j) Full Centrais Eólicas Bela Vista XVII LTDA (j) Full Centrais Eólicas Cedro LTDA (j) Full Centrais Eólicas Conquista LTDA (j) Full Centrais Eólicas Coxilha Alta LTDA (j) Full Centrais Eólicas Itapuã I LTDA (j) Full Centrais Eólicas Itapuã II LTDA (j) Full Centrais Eólicas Itapuã III LTDA (j) Full Centrais Eólicas Itapuã IV LTDA (j) Full Centrais Eólicas Itapuã V LTDA (j) Full Centrais Eólicas Itapuã VI LTDA (j) Full Centrais Eólicas Itapuã VII LTDA (j) Full Centrais Eólicas Itapuã IX LTDA (j) Full Centrais Eólicas Itapuã X LTDA (j) Full Centrais Eólicas Itapuã XI LTDA (j) Full Centrais Eólicas Itapuã XII LTDA (j) Full Centrais Eólicas Itapuã XIII LTDA (j) Full Centrais Eólicas Itapuã XIV LTDA (j) Full Centrais Eólicas Itapuã XV LTDA (j) Full Centrais Eólicas Itapuã XVI LTDA (j) Full Centrais Eólicas Itapuã XVII LTDA (j) Full Centrais Eólicas Itapuã XVIII LTDA (j) Full Centrais Eólicas Itapuã XIX LTDA (j) Full Centrais Eólicas Itapuã XX LTDA (j) Full Centrais Eólicas Itapuã XXI LTDA (j) Full CONTINUED - 13

34 - CONTINUED Equity interest - % 06/30/ /31/2013 Wind Basis of consolidation Direct Indirect Direct Indirect Centrais Eólicas Lençóis LTDA (j) Full Centrais Eólicas Recôncavo I LTDA (j) Full Centrais Eólicas Riacho de Santana LTDA (j) Full Centrais Eólicas Santana LTDA (j) Full Centrais Eólicas Umburanas 1 LTDA (j) Full Centrais Eólicas Umburanas 2 LTDA (j) Full Centrais Eólicas Umburanas 3 LTDA (j) Full Centrais Eólicas Umburanas 4 LTDA (j) Full Centrais Eólicas Umburanas 5 LTDA (j) Full Centrais Eólicas Umburanas 6 LTDA (j) Full Centrais Eólicas Umburanas 7 LTDA (j) Full Centrais Eólicas Umburanas 8 LTDA (j) Full Centrais Eólicas Umburanas 9 LTDA (j) Full Centrais Eólicas Umburanas 10 LTDA (j) Full Centrais Eólicas Umburanas 11 LTDA (j) Full Centrais Eólicas Umburanas 12 LTDA (j) Full Centrais Eólicas Umburanas 13 LTDA (j) Full Centrais Eólicas Umburanas 14 LTDA (j) Full Centrais Eólicas Umburanas 15 LTDA (j) Full Centrais Eólicas Umburanas 16 LTDA (j) Full Centrais Eólicas Umburanas 18 LTDA (j) Full Equity interest - % 06/30/ /31/2013 Sale Basis of consolidation Direct Indirect Direct Indirect Renova Comercializadora de Energia S.A. (k) Full Equity interest - % 06/30/ /31/2013 Holding Basis of consolidation Direct Indirect Direct Indirect Renovapar S.A. (l) Full Holding Jointly-controlled non consolidated Equity interest - % 06/30/ /31/2013 Direct Indirect Direct Indirect Chipley SP Participações S.A. (m) Direto na Renova Brasil PCH S.A. (n) Indireto pela Chipley

35 (a) Enerbras Centrais Elétricas S.A. ( Enerbras ), a direct subsidiary, is a privately-held company, headquartered in the State of Bahia, exclusively engaged in holding equity interest in Energética Serra da Prata S.A. ( Espra ). (b) Energética Serra da Prata S.A. ( Espra ), an indirect subsidiary, is a privately-held company, exclusively engaged in the power generating and sale of Serra da Prata Hydroelectric Complex, comprised of PCHs Cachoeira da Lixa, Colino 1 and Colino 2, based in the State of Bahia. Under an authorization regime, its production is fully contracted with Eletrobras Centrais Elétricas Brasileiras, in the context of the Alternative Electric Power Source Incentive Program (PROINFA). Espra started operations in (c) Renova PCH Ltda. ( Renova PCH ), a direct subsidiary, is mainly engaged in the construction, implementation, operation, maintenance and generation of water source power. Company in preoperating stage. (d) Privately-held companies, headquartered in São Paulo, are mainly engaged in holding equity interest in other companies that operate, directly or indirectly, in the wind power generation. In 2013, Renova Eólica Participações S.A. requested before CVM its registry as publicly-held company, under category B, which was not confirmed by CVM by the closing of these interim financial information. (e) Privately-held companies mainly engaged in the design, implementation, development and operation of specific wind farm located in the State of Bahia. Under an authorization regime, its production is fully contracted with the Electric Power Trade Chamber (CCEE), in the context of the Reserve Auction 2009 (LER 2009). The wind farms were ready to operate in 2012 (Note 31.1). (f) Privately-held companies mainly engaged in the design, implementation, development and operation of specific wind farm located in the State of Bahia. Under an authorization regime, its production is fully contracted with the Electric Power Trade Chamber (CCEE), in the context of the Reserve Auction 2010 (LER 2010). The wind farms are under construction. (g) Privately-held companies mainly engaged in the design, implementation, development and operation of specific wind farm located in the State of Bahia. Under an authorization regime, its production is fully contracted with the distributors that declared demand in the New Power Auction 2011 (LEN 2011(A-3)). The wind farms are under construction. (h) Centrais Eólicas São Salvador Ltda. ( São Salvador ), direct subsidiary, is a privately-held company specifically engaged in the design, implementation, development and operation of São Salvador wind farm located in the State of Bahia. Under an authorization regime, its production is fully contracted with the distributors that declared demand in the New Power Auction 2012 (LEN 2012). The wind farm is under implementation. (i) Direct subsidiaries whose purpose is to design, deploy, operate and exploit a specific wind farm, located in the State of Bahia. Subject to na authorization regimen, it has all its production contracted with The subsidiary is a closely held corporation whose purpose is to design, deploy, operate and exploit specifically the wind farm, located in the State of Bahia. Subject to an authorization regime, it has all its production contracted with CCEE (Electric Energy Trading Chamber) under the Reserve Auction 2013 (LER 2013). The wind farms are under deployment. (j) Direct subsidiaries mainly engaged in the construction, implementation, operation, maintenance and generation of wind power. 15

36 (k) Renova Comercializadora de Energia S.A. ( Renova Comercializadora ), a direct, wholly-owned subsidiary, is mainly engaged in the sale of power of all types. (l) Renovapar S.A. ( Renovapar ), a direct subsidiary, wholly-owned subsidiary, is a privately-held company, mainly engaged in holding equity interest in other companies that operate, directly or indirectly, in the general and sale of power of all types. (m) Chipley SP Participações S.A. (Chipley) is a privately-held company, mainly engaged in holding equity interests in other business companies, as partner or shareholder, including consortia, and development, directly or indirectly, as the case may be, of power services, including the generation systems and other related services. (n) Brasil PCH S.A. (Brasil PCHis a closely held corporation, whose purpose is to invest in other business societies, as partner, shareholder or quotaholder, being also able to participate in activities related to management, construction, planning, operation, maintenance and development of renewable electric power generation projects by means of PCHs (small hydroelectric power plants). In compliance to CVM Instruction 381/03, we disclosed that in the period ended June 30, 2014 the independent auditors, Deloitte Touche Tohmatsu Auditores Independentes ( Deloitte ), who provide services for the Company and its subsidiaries and jointly-owned subsidiaries, do not perform any services not related to external audit that represent over 5% of the annually contracted fees. 1.1 Inclusion of Cemig Geração e Transmissão S.A. (CEMIG GT) in the Company s controlling group and acquisition of 51% of Brasil PCH On February 14, 2014 CEMIG GT made an advance for future capital increase of R$739,943 to Chipley SP Participações S.A., subsidiary of the Company, used totally for the payment of the acquisition of 51% of Brasil PCH (49% equity held by Petrobras and 2% held by Jobelpa), sharing its control. On march 31, 2014 CEMIG GT made an advance for future capital increase of R$ 810,129 to Renova Energia S.A.. The Company approved through its Supervisory Board, a capital increase in the amount of up to R$3,545,602, at the issue price of R$ (seventeen reais, seventy seven cents and eighty nine thousandths) per common share, equivalent to R$ (fifty tree reais, thirty three cents and sixty seven thousandths) per unit. In accordance with the Investment Agreement signed on August 8, 2013 between the Company, RR Participações S.A., Light Energia S.A., CEMIG Geração e Transmissão S.A. and Chipley Participações S.A., the preference rights in the participation of the capital increase of the shares that compose the control block formed by the shareholders RR Participações e Light Energia were assigned to CEMIG GT, which assumed the commitment of subscribing and paying-in the shares until July 29, 2014, in the amount of R$1,550 million, of which R$810,129 through capitalization of the advance for future capital increase made to the Company and R$ R$739,943 to be paid-in through assignment, to the Company, of the advance for future capital increase performed by CEMIG GT to Chipley (see Note 31.2). Also in accordance with the Investment Agreement, the subscription of shares may be performed by CEMIG GT itself and/or the private equity fund ( FIP ), or, also, special purpose company ( SPE ) controlled by such fund. After the capital increase a new shareholder s agreement shall be signed in which CEMIG GT, RR Participações and Light Energia will be a part of the control block of the Company. 16

37 Depending on the exercise of the right of preference of the other shareholders, the breakdown of the shareholders of Renova after the capital increase may vary according to one of the cases below: Subcribed e paid-in capital increase by only Cemig GT or SPE RENOVA ENERGIA Common shares Preferred shares Total shares Controlling group 188,309, % ,309, % RR Participações 50,561, % ,561, % Light Energia 50,561, % ,561, % CEMIG GT ou SPE 87,186, % ,186, % Other shareholders 49,775, % 80,408, % 130,184, % RR Participações* 9,560, % - 0.0% 9,560, % BNDESPAR 9,311, % 18,622, % 27,934, % Outros 30,904, % 61,785, % 92,690, % Total 238,085, % 80,408, % 318,494, % Date: March 31, 2014 * Shares not included in the controlling group Note: the controlling group considers the shares subject to the shareholders' agreement Subcribed e paid-in capital increase by only Cemig GT or SPE and all Other Shareholders RENOVA ENERGIA Common shares Preferred shares Total shares Controlling group 188,309, % ,309, % RR Participações 50,561, % ,561, % Light Energia 50,561, % ,561, % CEMIG GT ou SPE 87,186, % ,186, % Other shareholders 162,017, % 80,408, % 242,425, % RR Participações* 25,562, % - 0.0% 25,562, % BNDESPAR 33,395, % 18,622, % 52,018, % Outros 103,059, % 61,785, % 164,845, % Total 350,326, % 80,408, % 430,735, % Date: March 31, 2014 * Shares not included in the controlling group Note: the controlling group considers the shares subject to the shareholders' agreement About Brasil PCH Brasil PCH holds 13 small hydroelectric plants (PCHs), with installed capacity of 291 MW and guaranteed power of 194 MW, on average. All PCHs entered into long-term power sale agreements (20 years) in the context of PROINFA. With this acquisition, the Company will increase its operating assets and subsequent generation of available cash to invest in Renova s expansion. The acquisition is also positive as the wind and water resources supplement each other, which reduces the dependency on a single source. Upon acquisition of equity interest in Brasil PCH, Renova s installed capacity became 1,953.3 MW. With the addition of the commercialization made on March 21, 17

38 2014 with CEMIG GT, as informed in Note 5, the contracted installed capacity of Renova will be of at least 2,291 MW (Note 31.2). 1.2 Commercial operation of wind farms under LER 2010 and LEN 2011 (A-3) The Reserve Power Agreements set forth that the wind farms under LER 2010 should start their commercial operations on September 1, The Company requested before ANEEL the alignment of the schedule for initial power supply of the wind farms with the initial operations of the transmission lines. By aligning the obligation to start the power supply with the date of completion of the transmission line, the Company changes the initial date and maintains the original period of 20 years of the power sale agreement. The Company is waiting for ANEEL s decision. ANEEL order 1317, of April 28, 2014 altered the initial schedule for the supply of energy related to the beginning of the supply period for the commercialization of energy under the regulatory framework CCEAR of LER 2010 in order to concatenate these with entrance into commercial operation of Substation Igaporã II, under the responsibility of Companhia Hidro Elétrica do São Francisco Chesf, granting the additionals term of 30 days for entering into commercial operation, starting from the date in which Substation Igaporã II enters into commercial operation, maintaining the contracted 20 year term for supply. In March 2014, the Company reversed the provisions previously registered for the compensation due by the SPEs (clause 11 of the reserve energy contract), in the amount of R$7,399 registered in the accounts payable line CCEE/Eletrobras, of the balance sheet, of which R$ 4,645 for the period ended June 30, 2014, see Note 22. For the Energia Nova contracts (LEN 2011 (A-3)), according to dispatch 571 of March 11, 2014, ANEEL altered the beginning of the supply period of the electric power commercialization contracts in the regulated environment CCEAR in order to concatenate them with the entrance into commercial operation of the transmission installations object of Concession Contract 19/2012, an additional term was granted of 30 days for entering into commercial operation, as of the date of availability of the transmission installations, maintaining in this manner the 20 years term of supply of the contract. The LER 2010 commissioning is planned to occur in September In relation to LEN 2011 (A-3), in accordance with the Transmission Enterprise Monitoring schedule (SIGET of ANEEL), the line to connect these farms shall be delivered on April 14, Impact of new laws Provisional Measure 627/2013 ( MP 627 ) Law /2014 On November 11, 2013, MP 627 was enacted and significantly changed the income tax and social contribution rules, among others. The provisions set forth in MP 627 will become mandatory beginning 2015, with early adoption beginning Management analyzed the tax effects of new provisions and concluded that the distributions of dividends and/or interest on capital were not greater than those recorded in accordance with accounting methods and criteria effective as at December 31, Accordingly, according to Management, no additional tax charges will be recorded in addition to the profit sharing over the last five years. Management is analyzing the early adoption of the provisions set forth in Provisional Measure. 18

39 The MP 627 was converted into Law 12,973 of May 13, Net working capital On March 31, 2014, the consolidated financial statements of the Company presented a negative net working capital in the amount of R$ 554,841 due, mainly, to bridge loans signed with BNDES in the amount of R$ 600,000 and the issue of promissory notes in the amount of R$ 400,000 for the construction of wind farms. The bridge loans and promissory notes had maturities for June 15, 2014 and May 4, 2014, respectively, or on the date of the disbursement of the long-term financing contract. As disclosed in Note 16, in June 104 a long-term loan was approved with BNDES in the total amount of R$ 1,044,100, of which R$ 649,183 was released before June 30, 2014, which was used to settle bridge-loans extending the debt of the Company. In this manner, as at June 30, 2014 the consolidated net working capital of the Company is positive. 2. Basis of preparation 2.1 Statement of compliance The individual Interim Financial Information was prepared in accordance with the accounting practices adopted in Brazil, following the guidance issued by the Accounting Pronouncement Committee ( CPC ) (especially CPC 21 (R1) Interim Financial Information. The consolidated Interim Financial Information is in accordance with the accounting practices adopted in Brazil and international financial reporting standards ( IFRS ), issued by the International Accounting Standards Board IASB. These have been prepared and are presented in compliance with CPC 21 (R1) and IAS 34. The Company also uses the guidance of the Accounting Manual of the Brazilian Electrical Sector and standards defined by ANEEL. The accounting practices and criteria adopted in the preparation of the Interim Financial Information are consistent to those adopted in the preparation of the financial statements of December 31, As provisioned in CPC 43 (R1) the loss presented in the individual Interim Financial Information as at June 30, 2013 diverge from the consolidated loss, due to the existence of a deferred asset balance not yet amortized from a controlling company. The reconciliation of the loss for the period ended June 30, 2013 is presented in Note 2.2. The disclosure of the individual and consolidated interim financial information, expressed in thousands of reais, rounded to the nearest thousand, unless other stated, was approved for filing with CVM by the Board of Directors on August 4, Reconciliation of the consolidated interim financial information (IFRS) and Parent s interim financial information (CPC) The reconciliation of the net income for the period ended June 30, 2013 is demonstrated below: 19

40 06/30/2013 Parent (CPC) (7,221) Offset of deferred charges and reversals Loss of period of the respective amortization on profit or loss 743 Consolidated (IFRS) (6,478) Description of accounting policies and respective adjustments: The main difference between consolidated financial statements (IFRS) and Parent s financial statements (CPC) is described below: Deferred assets: For purposes of the consolidated interim financial information (IFRS), the Company s management wrote off against accumulated losses, on the transition date as at January 1, 2009, the balance previously recorded as deferred asset in indirect subsidiary Espra, while it was maintained in the individual position (CPC). Management maintained this balance until total performance through amortization on June 30, Basis for preparation, basis for measurement and significant accounting practices The remaining information related to the basis for preparation, presentation of the Interim Financial Information and summary of significant accounting practices have not suffered relevant alterations in relation to those disclosed in Note 2 to the annual financial statements for the year ended December 31, 2013, published on February 18, 2014 in the newspapers Valor Econômico, Diário Oficial de São Paulo and made available by means of the following electronic sites: For the Accounting Pronouncements and Interpretation that were prevailing as at December 31, 2013, there were no significant alterations for these interim financial statements in relation to those disclosed in Note 2 to the financial statements as at December 31, For accounting Pronouncements and Interpretations that prevail as of January 1, 2014, as disclosed in Note 2 to the financial statements for the year ended December 31, 2013, there are not relevant impacts for the Company, subsidiaries or jointly-owned subsidiaries. 3. Basis of consolidation The interim financial information of the subsidiaries referred to in Note 1 were consolidated. The main consolidation procedures are as follows: elimination of intercompany asset and liability balances between consolidated companies; elimination of the Parent s interests in the equity of its subsidiaries, directly and indirectly; elimination of the revenue and expense financial balances; reversal of assets and deferred assets of subsidiary Espra (Note 2.2). 20

41 4. Authorizations Authorization Installed production PCH Ref. Contract ANEEL Resolution Resolution date term capacity* Cachoeira da Lixa PROINFA /24/ years 14.8 MW Colino II PROINFA /24/ years 16.0 MW Colino I PROINFA /24/ years 11.0 MW Authorization Installed production Wind Ref. Contrato Portaria MME Data da portaria term capacity* Centrais Eólicas Alvorada S.A. LER 03/ /05/ years 8.0 MW Centrais Eólicas Candiba S.A. LER 03/ /05/ years 9.6 MW Centrais Eólicas Guanambi S.A. LER 03/ /06/ years 20.8 MW Centrais Eólicas Guirapá S.A. LER 03/ /19/ years 28.8 MW Centrais Eólicas Igaporã S.A. LER 03/ /05/ years 30.4 MW Centrais Eólicas Ilhéus S.A. LER 03/ /05/ years 11.2 MW Centrais Eólicas Licínio de Almeida S.A. LER 03/ /05/ years 24.0 MW Centrais Eólicas Nossa Senhora Conceição S.A. LER 03/ /05/ years 28.8 MW Centrais Eólicas Pajeú do Vento S.A. LER 03/ /05/ years 25.6 MW Centrais Eólicas Pindaí S.A. LER 03/ /05/ years 24.0 MW Centrais Eólicas Planaltina S.A. LER 03/ /05/ years 27.2 MW Centrais Eólicas Porto Seguro S.A. LER 03/ /05/ years 6.4 MW Centrais Eólicas Rio Verde S.A. LER 03/ /19/ years 30.4 MW Centrais Eólicas Serra do Salto S.A. LER 03/ /05/ years 19.2 MW Centrais Eólicas Morrão S.A. LER 05/ /20/ years 30.2 MW Centrais Eólicas da Prata S.A. LER 05/ /25/ years 21.8 MW Centrais Eólicas dos Araçás S.A. LER 05/ /07/ years 31.9 MW Centrais Eólicas Seraíma S.A. LER 05/ /27/ years 30.2 MW Centrais Eólicas Tanque S.A. LER 05/ /26/ years 30.0 MW Centrais Eólicas Ventos do Nordeste S.A. LER 05/ /18/ years 23.5 MW Centrais Eólicas Ametista S.A. LEN 02/ /14/ years 28.6 MW Centrais Eólicas Borgo S.A. LEN 02/ /13/ years 20.2 MW Centrais Eólicas Caetité S.A. LEN 02/ /21/ years 30.2 MW Centrais Eólicas Dourados S.A. LEN 02/ /13/ years 28.6 MW Centrais Eólicas Espigão S.A. LEN 02/ /22/ years 10.1 MW Centrais Eólicas Maron S.A. LEN 02/ /08/ years 30.2 MW Centrais Eólicas Pelourinho S.A. LEN 02/ /21/ years 21.8 MW Centrais Eólicas Pilões S.A. LEN 02/ /13/ years 30.2 MW Centrais Eólicas Serra do Espinhaço S.A. LEN 02/ /22/ years 18.5 MW Centrais Eólicas São Salvador LTDA LEN 06/ /22/ years 22.4 MW Centrais Eólicas Bela Vista VIII Ltda. (Abil) LER 05/ /03/ anos MW Centrais Eólicas Bela Vista XII Ltda. (Acácia) LER 05/ /03/ anos MW Centrais Eólicas Bela Vista XIII Ltda. (Angico) LER 05/ /03/ anos 8.10 MW Centrais Eólicas Bela Vista XVI Ltda. (Folha de Serra) LER 05/ /03/ anos MW Centrais Eólicas Bela Vista XVII Ltda. (Jabuticaba) LER 05/ /03/ anos 9.00 MW Centrais Eólicas Bela Vista XVIII Ltda. (Jacaranda do CLER 05/ /03/ anos MW Centrais Eólicas Bela Vista XIX Ltda. (Taboquinha) LER 05/ /03/ anos MW Centrais Eólicas Bela Vista XX Ltda. (Tabua) LER 05/ /03/ anos MW Centrais Eólicas Itapuã VIII Ltda. (Vaqueta) LER 05/ /03/ anos MW (*) Information not revised by independent auditors. 21

42 5. Power sale 5.1. Regulated Market (ACR) Amount Term Original Annual contracted Historical Adjusted contract power price price Adjustment Adjustment Group company Ref. Contract Purchaser amount (MWh) MWh MWh Initial Final index month (R$) (R$) Small hydroelectric power plants: Cachoeira da Lixa PROINFA Eletrobras 172,450 71, may/08 apr/28 IGP-M June Colino 2 PROINFA Eletrobras 219,008 90, jul/08 jun/28 IGP-M June Colino 1 PROINFA Eletrobras 153,243 63, sep/08 aug/28 IGP-M June Wind power generation Centrais Eólicas Alvorada S.A. LER 03/2009 CCEE 76,233 26, jul/12 jun/32 IPCA July Centrais Eólicas Candiba S.A. LER 03/2009 CCEE 101,644 35, jul/12 jun/32 IPCA July Centrais Eólicas Guanambi S.A. LER 03/2009 CCEE 203,287 70, jul/12 jun/32 IPCA July Centrais Eólicas Guirapá S.A. LER 03/2009 CCEE 330, , jul/12 jun/32 IPCA July Centrais Eólicas Igaporã S.A. LER 03/2009 CCEE 334, , jul/12 jun/32 IPCA July Centrais Eólicas Ilhéus S.A. LER 03/2009 CCEE 128,808 43, jul/12 jun/32 IPCA July Centrais Eólicas Licínio de Almeida S.A. LER 03/2009 CCEE 254,109 87, jul/12 jun/32 IPCA July Centrais Eólicas NS Sr. Conceição S.A. LER 03/2009 CCEE 309, , jul/12 jun/32 IPCA July Centrais Eólicas Pajeú do Vento S.A. LER 03/2009 CCEE 283,377 96, jul/12 jun/32 IPCA July Centrais Eólicas Pindaí S.A. LER 03/2009 CCEE 279,520 96, jul/12 jun/32 IPCA July Centrais Eólicas Planaltina S.A. LER 03/2009 CCEE 309, , jul/12 jun/32 IPCA July Centrais Eólicas Porto Seguro S.A. LER 03/2009 CCEE 51,523 17, jul/12 jun/32 IPCA July Centrais Eólicas Rio Verde S.A. LER 03/2009 CCEE 406, , jul/12 jun/32 IPCA July Centrais Eólicas Serra do Salto S.A. LER 03/2009 CCEE 177,876 61, jul/12 jun/32 IPCA July Centrais Eólicas da Prata S.A. LER 05/2010 CCEE 214,701 88, sep/13 aug/33 IPCA September Centrais Eólicas dos Araçás S.A. LER 05/2010 CCEE 295, , sep/13 aug/33 IPCA September Centrais Eólicas Morrão S.A. LER 05/2010 CCEE 312, , sep/13 aug/33 IPCA September Centrais Eólicas Seraíma S.A. LER 05/2010 CCEE 325, , sep/13 aug/33 IPCA September Centrais Eólicas Tanque S.A. LER 05/2010 CCEE 295, , sep/13 aug/33 IPCA September Centrais Eólicas Ventos do Nordeste S.A. LER 05/2010 CCEE 214,701 88, sep/13 aug/33 IPCA September Centrais Eólicas Ametista S.A.(*) LEN 02/2011 Distributors 238, , mar/14 dec/33 IPCA January Centrais Eólicas Borgo S.A.(*) LEN 02/2011 Distributors 166,189 84, mar/14 dec/33 IPCA January Centrais Eólicas Caetité S.A.(*) LEN 02/2011 Distributors 245, , mar/14 dec/33 IPCA January Centrais Eólicas Dourados S.A.(*) LEN 02/2011 Distributors 226, , mar/14 dec/33 IPCA January Centrais Eólicas Espigão S.A.(*) LEN 02/2011 Distributors 83,951 42, mar/14 dec/33 IPCA January Centrais Eólicas Maron S.A.(*) LEN 02/2011 Distributors 236, , mar/14 dec/33 IPCA January Centrais Eólicas Pelourinho S.A.(*) LEN 02/2011 Distributors 202, , mar/14 dec/33 IPCA January Centrais Eólicas Pilões S.A.(*) LEN 02/2011 Distributors 224, , mar/14 dec/33 IPCA January Centrais Eólicas Serra do Espinhaço S.A.(*) LEN 02/2011 Distributors 152,483 77, mar/14 dec/33 IPCA January Centrais Eólicas São Salvador LTDA LEN 06/2012 Distributors 158,583 89, jan/17 dec/36 IPCA January Renova Energia S.A. (Abil) LER 05/2013 CCEE 202,880 96, sep/15 aug/35 IPCA September Renova Energia S.A. (Acácia) LER 05/2013 CCEE 136,979 60, sep/15 aug/35 IPCA September Renova Energia S.A. (Angico) LER 05/2013 CCEE 75,789 34, sep/15 aug/35 IPCA September Renova Energia S.A. (Folha de Serra) LER 05/2013 CCEE 175,459 85, sep/15 aug/35 IPCA September Renova Energia S.A. (Jabuticaba) LER 05/2013 CCEE 82,011 39, sep/15 aug/35 IPCA September Renova Energia S.A. (Jacarandá do Cerrado) LER 05/2013 CCEE 172,488 83, sep/15 aug/35 IPCA September Renova Energia S.A. (Taboquinha) LER 05/2013 CCEE 186,909 88, sep/15 aug/35 IPCA September Renova Energia S.A. (Tábua) LER 05/2013 CCEE 135,406 64, sep/15 aug/35 IPCA September Renova Energia S.A. (Vaqueta) LER 05/2013 CCEE 197,191 93, sep/15 aug/35 IPCA September CRNV&M (Umburanas 1) (*) A-5 10/2013 Distributors 98,245 14, may/18 dec/37 IPCA January CRNV&M (Umburanas 2) (*) A-5 10/2013 Distributors 99,774 14, may/18 dec/37 IPCA January CRNV&M (Umburanas 3) (*) A-5 10/2013 Distributors 83,590 10, may/18 dec/37 IPCA January CRNV&M (Umburanas 4) (*) A-5 10/2013 Distributors 82,621 10, may/18 dec/37 IPCA January CRNV&M (Umburanas 5) (*) A-5 10/2013 Distributors 81,692 9, may/18 dec/37 IPCA January CRNV&M (Umburanas 6) (*) A-5 10/2013 Distributors 71,979 11, may/18 dec/37 IPCA January CRNV&M (Umburanas 7) (*) A-5 10/2013 Distributors 28,764 12, may/18 dec/37 IPCA January CRNV&M (Umburanas 8) (*) A-5 10/2013 Distributors 28,169 13, may/18 dec/37 IPCA January CRNV&M (Umburanas 9) (*) A-5 10/2013 Distributors 72,059 9, may/18 dec/37 IPCA January CRNV&M (Umburanas 10) (*) A-5 10/2013 Distributors 82,967 10, may/18 dec/37 IPCA January CRNV&M (Umburanas 11) (*) A-5 10/2013 Distributors 67,410 7, may/18 dec/37 IPCA January CRNV&M (Umburanas 12) (*) A-5 10/2013 Distributors 92,611 12, may/18 dec/37 IPCA January CRNV&M (Umburanas 13) (*) A-5 10/2013 Distributors 81,843 10, may/18 dec/37 IPCA January CRNV&M (Umburanas 14) (*) A-5 10/2013 Distributors 108,051 12, may/18 dec/37 IPCA January CRNV&M (Umburanas 15) (*) A-5 10/2013 Distributors 81,086 9, may/18 dec/37 IPCA January CRNV&M (Umburanas 16) (*) A-5 10/2013 Distributors 97,626 13, may/18 dec/37 IPCA January CRNV&M (Umburanas 18) (*) A-5 10/2013 Distributors 35,807 4, may/18 dec/37 IPCA January * Includes ICB (Benefit Cost Index) and CEC (Short-term Economic Cost) in price. 22

43 5.2. Free Market (ACL) In August 2011, Light Energia entered into with the Company a power purchase commitment from 400MW of the wind power installed capacity. In addition, the Company has additional three contracts in the free market with 76.0 MW sold on average, corresponding to MW of the installed capacity. On March 21, 2014 Renova Comercializadora, subsidiary of the Company, commercialized an average of 295 MW of electric power for supply between 2016 and 2031, according to the bid invitation for the sale of electric power published by the Company on February 7, 2014 ( Contract ). The object of the mentioned bid invitation was the sale of electric power by Renova Comercializadora, as well as the search for partners for the development of wind power projects to attend to the Contract by means of granting equity participation of up to 50% of the enterprise. After the process of adhesion, authorization and classification of the best proposal, Cemig GT came out the winner and may exercise the option of participating in up to 50% of the project. During the first year of the Contract, the amount commercialized shall be of an average of 100 MW and in the remaining years an average of 308 MW. The volume commercialized is in relation to the production of energy at the P90 and any other additional energy to be produced by the Projeto Eólico shall also be commercialized within the scope of the Contract. The total installed capacity of Projeto Eólico is of 676.2MW (*). Considering the exercise of the option by Cemig GT of equity participation of up to 50% of the project, the installed capacity of the Company shall go from 1,953.3MW (*) to at least 2,291.4MW (*) (see Note 31.2). (*) Information not revised by independent auditors. 6. Segment reporting The Company has four reporting segments that represent strategic business units and refer to the administrative activities developed by the Parent. Such strategic business units offer different renewable power sources and are administered separately as they require different technologies, developments and operating characteristics. The operations on each one of the Company s reportable segments can be summarized as follows: a) PCH This segment is responsible for the development, implementation and operation of water source power generation projects. This segment includes the development of studies on inventories and basic projects and power generation. The PCHs are under operation stage for comparison between the periods ended June 30, 2014 and b) Wind This segment is responsible for the development, implementation and operation of wind source power generation projects. It includes wind measurement, leased land, implementation and power generation. The winning plants under LER 2009 were able to operate in the second six-month period of 2012 (Note 31.1). The winning plants under LER 2010 and LEN 2011 (A-3) are under implementation stage. c) Solar This segment is responsible for the development, implementation and operation of the solar source power generation projects. It includes measurements, development of solar projects for generation in high scale and distributed generation, as well as the sale of goods and services. This segment is under implementation stage in the period ended June 30,

44 d) Sale This segment is responsible for the power sale of all types. As at June 30, 2014 and 2013, segment reporting for profit or loss and total assets and liabilities is broken down as follows: 06/30/2014 PCH Wind Solar Sale Management Consolidated Net revenue 8,943 96, , ,696 Non-manageable costs (312) (4,663) (4,975) Gross margin 8,631 91, , ,721 Manageable costs (3,280) (7,285) (69) (5,451) (23,850) (39,935) Equity in subsidiaries (6,211) (6,211) Depreciation (2,784) (32,084) - - (727) (35,595) Finance income (2,073) (26,110) - - 4,528 (23,655) Income tax and social contribution (1,139) (5,252) (6,391) Profit (loss) (6,856) 20, (28) (20,049) (6,066) Total assets 271,219 3,647, , ,896 4,457,054 Total liabilities 125,378 2,158,810-3, ,486 2,652,374 06/30/2013 PCH Wind Solar Sale Management Consolidated Net revenue 17,596 90, ,874 Non-manageable costs (307) (5,499) (5,806) Gross margin 17,289 84, ,068 Manageable costs (2,722) (8,640) (65) (32) (20,418) (31,877) Depreciation (2,785) (31,109) - - (502) (34,396) Finance income (2,894) (32,419) - - (2,617) (37,930) Income tax and social contribution (1,242) (3,101) (4,343) Profit (loss) 7,646 9,436 9 (32) (23,537) (6,478) Total assets 268,737 2,478, ,410 3,140,996 Total liabilities 110,426 1,720, ,632 2,156,064 24

45 7. Cash and cash equivalents and financial investments Consolidated Parent 06/30/ /31/ /30/ /31/2013 Cash Banks - checking account 25,025 22, Short-term investments 617, , , ,234 Total 642, , , ,686 Recorded as: Cash and cash equivalents 345, , , ,686 Short-term investments 296, , ,052 - Total 642, , , ,686 Short-term and highly liquid investments that can be immediately converted into a known cash amount and are subject to an insignificant risk of change in value were classified as cash equivalents. These financial investments refer to fixed-income instruments of commited operations, subject to the CDI rates varying from 100.5% to 103%. The financial investments correspond to investment funds that do not have the characteristics of cash and cash equivalents and were classified in the line of financial investments. The Company s exposure to interest rate risks and a sensitivity analysis of its financial assets and financial liabilities are disclosed in Note Trade receivables Consolidated Parent 06/30/ /31/ /30/ /31/2013 Eletrobras 10,750 4, Câmara de Comercialização de Energia Elétrica - CCEE 16,329 16, Other 4, Total 31,101 20, As at June 30, 2014, balances are comprised of receivables, with average collection period of 24 days, for which losses on performance are not expected. 25

46 9. Recoverable taxes Consolidated Parent 06/30/ /31/ /30/ /31/2013 IRRF 7,863 8,254 3,776 5,814 IRRF on short-term investment 3,468 2,133 2,946 1,447 COFINS CSLL PIS ISS ICMS Total 12,044 10,751 6,788 7, Advances to suppliers Consolidated Parent 06/30/ /31/ /30/ /31/2013 Advances to suppliers 5,945 5,065 3,028 3,261 These advances occurred for maintenance of the operations of the Company and its subsidiaries. 11. Collaterals and restricted deposits Consolidated Parent 06/30/ /31/ /30/ /31/2013 Current 28,363 27, Noncurrent 143, , Total 172, , As at June 30, 2014, collaterals and restricted deposits are broken down below: 26

47 The balances refer to short-term investments from fixed-income instruments under the BNDES and BNB financing. The Company can solely manage these short-term investments upon express authorization of BNDES and BNB. (a) Refers to collateral Special reserve under the BNDES agreement transferred by the SPEs mandatory bank to its direct parent companies. This reserve is entitled to receive the total exceeding resources from the central accounts maintained with the bank and not managed by the subsidiary in order to ensure the full payment of the installments for payment of principal and debt accessories. These collaterals may solely be managed by the subsidiary upon BNDES express authorization. (b) Reserve that the subsidiaries must maintain over the agreement to ensure the payments of the operation and maintenance agreement obligations (O&M). (c) Reserve that the subsidiaries must maintain over the agreement to ensure the payments of the financing agreement obligations. 12. Deferred taxes Deferred taxes were recorded based on the differences between generated and effectively invoiced power (Note 18). These deferred taxes were calculated using the rates based on the deemed income. Consolidated 06/30/ /31/2013 PIS COFINS IRPJ CSLL Total 1, Investments 27

48 The subsidiaries and jointly-owned subsidiaries investments are broken down as follows: Company Parent Consolidated 06/30/ /31/ /30/2014 PCH Enerbras Centrais Elétricas S.A. 108, ,135 - Chipley SP Participações S.A. (jointly-controlled company) (6,210) - (6,210) Wind Nova Renova Energia S.A. 954, ,291 - Centrais Elétricas Itaparica S.A. (18) (1) - Centrais Eólicas Itapuã VIII LTDA Centrais Eólicas São Salvador LTDA RenovaPar S.A. (19) (16) - Other (*) (12) 76 - Sale Renova Comercializadora de Energia S.A. 2, Total 1,059, ,779 (6,210) (*) Other companies listed in Note 1. Recorded as: Assets Investments 1,065, ,779 - Liabilities Provision for investment loss (6,259) - (6,210) Total 1,059, ,779 (6,210) 28

49 The main informations on subsidiaries and jointly-owned subsidiaries are broken down as follows: PCH Company Total number of shares Renova interest (% ) Capital 06/30/2014 Equity (unsecured liability) Proposed dividends Profit (loss) of period ** Enerbras Centrais Elétricas S.A. 5,170, % 101, ,358 (15,427) (350) Renova PCH LTDA 31, % (5) Chipley SP Participações S.A. (jointly-controlled company) 2, % 2 (10,350) - (10,352) Wind Nova Renova Energia S.A. 867,617, % 867, ,181-21,451 Centrais Elétricas Itaparica S.A. 51, % 51 (18) - (17) Centrais Eólicas Itapuã VIII LTDA % (7) Centrais Eólicas São Salvador LTDA. 288, % (6) Renovapar S.A % - (19) - (3) Other (*) % - (12) - (341) Sale Renova Comercializadora de Energia S.A % - 2,623 - (28) (*) Other companies listed in Note 1 (**) Considering the participation of the Company. Changes in investment in subsidiaries and jointly-owned subsidiaries: Consolidated Company 12/31/2013 Additions Equity in subsidiaries 06/30/2014 PCH Chipley SP Participações S.A. (jointly-controlled company) - 1 (6,211) (6,210) 29

50 Parent Company 12/31/2013 Additions Advance for future capital increase Proposed dividends Equity in subsidiaries 06/30/2014 PCH Enerbras Centrais Elétricas S.A. 124, (15,427) (350) 108,358 Renova PCH LTDA (5) - Chipley SP Participações S.A. (jointly-controlled company) (6,211) (6,210) Wind Nova Renova Energia S.A. 858,291 70,442 3,997-21, ,181 Centrais Elétricas Itaparica S.A. (1) (17) (18) Centrais Eólicas Itapuã XVIII LTDA (7) 28 Centrais Eólicas São Salvador LTDA (6) 265 Renovapar S.A. (16) (3) (19) Outras participações (*) (341) (12) Sale Renova Comercializadora de Energia S.A ,630 - (28) 2,623 Total 982,779 70,567 6,794 (15,427) 14,483 1,059,196 (*) Other companies listed in Note 1 Company 12/31/2012 Additions Advance for future capital increase Proposed dividends Equity in subsidiaries 12/31/2013 PCH Enerbras Centrais Elétricas S.A. 107, (5,142) 21, ,135 Renova PCH LTDA (19) (8) - Wind Nova Renova Energia S.A. 652, ,690-22, ,291 Centrais Elétricas Itaparica S.A. (10) (42) (1) Centrais Eólicas Itapuã XVIII LTDA (8) 28 Centrais Eólicas São Salvador LTDA (7) 266 Renovapar S.A (16) (16) Outras participações (*) (10) (167) 76 Sale Renova Comercializadora de Energia S.A (37) - Total 760, ,076 (5,142) 43, ,779 (*) Other companies listed in Note 1 As at June 30, 2014, subsidiary Enerbras had dividends payable in the amount of R$20,569 (R$20,452 in 2013). These amounts are recorded in dividends receivable in the Parent s current assets. In January 2014 Enerbras paid to the Company R$ 15,310 of dividends on the income earned in the year

51 Breakdown of investments in Nova Renova S.A. The investments in subholding Nova Renova Energia S.A., which controls the companies Renova Eólica, Salvador Eólica and Bahia Eólica, are broken down as follows: Advance for future Equity in Proposed Company Additions capital increase subsidiaries dividends 06/30/2014 Nova Renova Energia S.A (97) 477 Renova Eólica Participações S.A ,330 - (1,365) 1,181 Centrais Eólicas da Prata S.A. 3, ,470 Centrais Eólicas dos Araçás S.A. 3, ,219 Centrais Eólicas Morrão S.A. 5, ,393 Centrais Eólicas Seraíma S.A. 3, ,578 Centrais Eólicas Tanque S.A. 3, ,998 Centrais Eólicas Ventos do Nordeste S.A. 2, ,357 Centrais Eólicas Ametista S.A. 8, (154) 28,969 Centrais Eólicas Borgo S.A. 8, (53) 19,470 Centrais Eólicas Caetité S.A. 8, (102) 31,015 Centrais Eólicas Dourados S.A. 5, (173) 28,529 Centrais Eólicas Espigão S.A. 2, (56) 12,139 Centrais Eólicas Maron S.A. 5,876 1,573 - (130) 34,586 Centrais Eólicas Pelourinho S.A. 2, (64) 20,009 Centrais Eólicas Pilões S.A. 2, (103) 41,590 Centrais Eólicas Serra do Espinhaço S.A. 3, (72) 18,304 Bahia Eólica Participações S.A , ,187 Centrais Eólicas Candiba S.A. - - (75) ,285 Centrais Eólicas Igaporã S.A. - - (2,434) 1,897 52,856 Centrais Eólicas Ilhéus S.A. - - (934) ,164 Centrais Eólicas Licínio de Almeida S.A. - - (1,326) 1,267 42,406 Centrais Eólicas Pindaí S.A. - - (1,732) 2,008 42,750 Salvador Eólica Participações S.A ,702 1,317 29,095 Centrais Eólicas Alvorada S.A ,578 Centrais Eólicas Guanambi S.A. - - (613) ,887 Centrais Eólicas Guirapá S.A. - - (2,921) 2,564 39,230 Centrais Eólicas N. S. Conceição S.A. - - (2,733) 1,808 34,471 Centrais Eólicas Pajeú do Vento S.A. - - (2,872) 1,794 32,436 Centrais Eólicas Planaltina S.A. - - (3,505) 2,161 35,863 Centrais Eólicas Porto Seguro S.A (834) 12,718 Centrais Eólicas Rio Verde S.A. - - (7,033) 4,217 46,660 Centrais Eólicas Serra do Salto S.A. - - (25) ,311 TOTAL 70,442 3,997-21, ,181 31

52 Advance for future Proposed Equity in Company 12/31/2012 capital increase dividends subsidiaries 12/31/2013 Nova Renova Energia S.A (114) 477 Renova Eólica Participações S.A. (21) (332) (200) Centrais Eólicas da Prata S.A. 24,116 1,757 - (967) 24,906 Centrais Eólicas dos Araçás S.A. 28,674 20,445 - (1,068) 48,051 Centrais Eólicas Morrão S.A. 25,868 5,400 - (1,126) 30,142 Centrais Eólicas Seraíma S.A. 25,858 9,472 - (1,141) 34,189 Centrais Eólicas Tanque S.A. 34,459 5,614 - (1,171) 38,902 Centrais Eólicas Ventos do Nordeste S.A. 23,764 6,629 - (935) 29,458 Centrais Eólicas Ametista S.A. 10,830 10,490 - (241) 21,079 Centrais Eólicas Borgo S.A. 7,126 3,627 - (180) 10,573 Centrais Eólicas Caetité S.A. 10,380 12,265 - (209) 22,436 Centrais Eólicas Dourados S.A. 10,607 13,295 - (333) 23,569 Centrais Eólicas Espigão S.A. 4,627 5,405 - (191) 9,841 Centrais Eólicas Maron S.A. 10,997 16,535 - (265) 27,267 Centrais Eólicas Pelourinho S.A. 8,064 9,335 - (209) 17,190 Centrais Eólicas Pilões S.A. 25,231 14,242 - (284) 39,189 Centrais Eólicas Serra do Espinhaço S.A. 6,587 8,498 - (194) 14,891 Bahia Eólica Participações S.A ,253 Centrais Eólicas Candiba S.A. 20, (1) ,151 Centrais Eólicas Igaporã S.A. 50, (25) 2,589 53,393 Centrais Eólicas Ilhéus S.A. 22, (9) ,517 Centrais Eólicas Licínio de Almeida S.A. 40,057 1,010 (13) 1,411 42,465 Centrais Eólicas Pindaí S.A. 39, (17) 2,430 42,474 Salvador Eólica Participações S.A. 6, ,598 8,076 Centrais Eólicas Alvorada S.A. 8,884 2,538 - (4) 11,418 Centrais Eólicas Guanambi S.A. 22,045 3,798 (6) ,746 Centrais Eólicas Guirapá S.A. 30,178 5,650 (30) 3,789 39,587 Centrais Eólicas N. S. Conceição S.A. 30,882 1,635 (28) 2,907 35,396 Centrais Eólicas Pajeú do Vento S.A. 27,499 2,990 (29) 3,054 33,514 Centrais Eólicas Planaltina S.A. 29,224 4,292 (35) 3,726 37,207 Centrais Eólicas Porto Seguro S.A. 10,619 3,437 - (504) 13,552 Centrais Eólicas Rio Verde S.A. 32,912 9,155 (71) 7,480 49,476 Centrais Eólicas Serra do Salto S.A. 22,822 3, ,106 TOTAL 652, ,690-22, ,291 Merger goodwill Parent 06/30/ /31/2013 Goodwill 119, ,272 (-) Provision for goodwill on merger (119,272) (119,272) On January 15, 2010, the Company merged one of its shareholders, Hourtin Holdings S.A. ( Hourtin ). After this merger, the Company recognized goodwill in the amount of R$119,272. This goodwill was initially recognized in Hourtin resulted from the acquisition of the Company s equity interest. The economic grounds of this goodwill 32

53 was supported by the expected future earnings of Energética Serra da Prata ( Espra ) and other specific-purpose entities holding the Renova s projects. Notwithstanding and as indicated in the Appraisal Report prepared to determine the economic grounds of the goodwill, the appraisers indicated that, because Renova is a pure holding and such earnings result from direct and indirect investments, it must be attributed to the appreciation of such investments. The assets transferred to the Company on the date of operation supported the goodwill value recorded against capital reserve. By considering the subsequent reversal merger at the beginning of 2010, the goodwill was fully accrued in the merging company and, for purposes of tax effects, the Company recorded in its Lalur Part B the goodwill arising from this merger Investments in jointly-owned subsidiaries The Company measures its equity interests in jointly-owned subsidiaries using the equity accounting method. Equity interest in jointly-owned subsidiaries of the Company and the summary of the financial information, as required by CPC 45 (IFRS 12), are informed below: Chipley SP Participações S.A. BALANCE SHEET AS AT JUNE 30, 2014 ASSETS 06/30/2014 LIABILITIES AND EQUITY 06/30/2014 (UNSECURED LIABILITY) CURRENT ASSETS NONCURRENT LIABILITIES Cash and cash equivalents 8,628 Advance for future capital increase 739,943 Other 20 EQUITY (UNSECURED LIABILITY) (10,350) NONCURRENT ASSETS Investment in Brasil PCH 720,945 TOTAL LIABILITIES AND EQUITY TOTAL ASSETS 729,593 (UNSECURED LIABILITY) 729,593 STATEMENT OF OPERATIONS AS AT JUNE 30, /01/2014 to 06/30/2014 Equity in subsidiaries (10,352) Loss of period (10,352) 33

54 Brasil PCH S.A. (Indirect equity interest of 51% through Chipley) BALANCE SHEET AS AT JUNE 30, 2014 ASSETS 06/30/2014 LIABILITIES AND EQUITY 06/30/2014 CURRENT ASSETS CURRENT LIABILITIES Cash and cash equivalents 47,791 Borrowing and financing 169,453 Other 42,977 Other 55,934 Total current assets 90,768 Total dos passivos circulantes 225,387 NONCURRENT ASSETS NONCURRENT LIABILITIES Property, plant and equipment 1,190,178 Borrowing and financing 970,915 Other 96,118 Other 59,035 Total noncurrent assets 1,286,296 Total noncurrent liabilities 1,029,950 EQUITY 121,727 TOTAL ASSETS 1,377,064 TOTAL LIABILITIES AND EQUITY 1,377,064 34

55 - CONTINUED STATEMENT OF OPERATIONS AS AT JUNE 30, /01/2014 to 06/30/2014 NET OPERATING REVENUE 107,087 COST OF SERVICES Depreciation (14,879) Cost of operation (14,995) Distribuition system use charges (2,177) Total (32,051) GROSS PROFIT 75,036 INCOME (EXPENSES) General and administrative (6,273) Depreciation and amortization (3,227) Total (9,500) INCOME BEFORE FINANCE INCOME AND TAXES ON INCOME 65,536 FINANCE INCOME (COSTS) Finance income 5,697 Finance costs (58,889) Total (53,192) INCOME BEFORE INCOME TAX AND SOCIAL CONTRIBUTION 12,344 Current income tax and social contribution (4,274) PROFIT FOR THE PERIOD 8, Acquisition of equity interest of Brasil PCH by the jointly-controlled subsidiary, Chipley As mentioned in Note 1.1., on February 14 Chipley acquired equity interest of 51% of Brasil PCH S.A. and according to the shareholder s agreement obtained joint control of the enterprise. The amount paid for the mentioned acquisition was of R$739,943 and the book value of the participation of Chipley in the equity of Brasil PCH on the date of acquisition was of R$94,001 generating a preliminary difference that will be amortized during the term of authorization of Brasil PCH, in the average monthly amount of R$2,911. Chipley management, based on the best existing estimate, prepared a preliminary allocation of the price of purchase paid for the shares of Brasil PCH and consequent identification and measurement of the participation of Chipley in the fair-value of the existing assets and liabilities of Brasil PCH. The added value paid in the acquisition of Brasil PCH was substantially in relation to the fair-value of the authorizations for the supply of electric power held by subsidiaries of Brasil PCH. Chipley management believes that after the conclusion of the process of allocation of the purchase price, as well as the portion of added value allocated to the authorizations, there are allocations of added value to property, plant and equipment and to loans. On the date of conclusion of the Interim Financial Information, the necessary market evaluations and other calculations had not yet been concluded and, consequently, had only been temporarily calculated based on the best estimate of Chipley management for these probable amounts. 35

56 14. Property, plant and equipment 14.1 Consolidated Annual depreciation rates - % Historical cost 06/30/ /31/2013 Accumulated depreciation Net value Historical cost Accumulated depreciation Net value Property, plant and equipment Generation Land Reservoirs, dams and watermains 3% 95,797 (13,348) 82,449 95,797 (12,232) 83,565 Buildings, civil construction and improvem 3% 127,732 (13,441) 114, ,732 (10,990) 116,742 Machinery and equipment 4% 1,242,337 (118,480) 1,123,857 1,242,337 (89,799) 1,152,538 Vehicle 20% 202 (16) (2) 200 Furniture and fixtures 10% 119 (68) (62) 57 Information technology equipment 20% 245 (190) (170) 75 Measurement towers 20% 10,400 (4,672) 5,728 9,086 (3,839) 5,247 Other 20% 6,768 (532) 6,236 6,768 (356) 6,412 Transmission and connection system Buildings, civil construction and improvem 3% 1,668 (108) 1,560 1,668 (80) 1,588 Machinery and equipment 4% 87,196 (5,914) 81,282 87,594 (4,378) 83,216 Management 1,573,059 (156,769) 1,416,290 1,572,143 (121,908) 1,450,235 Machinery and equipment 10% 3,891 (199) 3,692 2,167 (91) 2,076 Improvements 10% 2,319 (289) 2,030 2,304 (243) 2,061 Furniture and fixtures 10% 3,469 (839) 2,630 3,223 (680) 2,543 Software 20% 2,806 (1,024) 1,782 2,472 (776) 1,696 Information technology equipment 20% 2,088 (772) 1,316 1,650 (599) 1,051 14,573 (3,123) 11,450 11,816 (2,389) 9,427 Total property, plant and equipment 1,587,632 (159,892) 1,427,740 1,583,959 (124,297) 1,459,662 Construction in progress Generation To be apportioned 321, , , ,438 Studies and projects 26,024-26,024 27,102-27,102 Land 13,221-13,221 12,462-12,462 Buildings, civil construction and improvements 199, , , ,853 Measurement towers 4,105-4,105 4,105-4,105 Wind power generators 999, , , ,864 Substation equipment 129, , , ,417 Advances to suppliers 462, , , ,582 Total construction in progress 2,154,770-2,154,770 1,645,823-1,645,823 Total property, plant and equipment 3,742,402 (159,892) 3,582,510 3,229,782 (124,297) 3,105,485 36

57 14.2 Changes in property, plant and equipment (consolidated) 12/31/2013 Additions Retirement Line item reclassifications 06/30/2014 Property, plant and equipment Cost Generation Plant Land Reservoirs, dams and watermains 95, ,797 Buildings, civil construction and improvements 127, ,732 Machinery and equipment 1,242, ,242,337 Vehicles Furniture and fixtures Information technology equipment Measurement towers 9,086 1, ,400 Other 6, ,768 Transmission and connection system Buildings, civil construction and improvements 1, ,668 Machinery and equipment 87, (398) 87,196 1,572,143 1,314 - (398) 1,573,059 Management Machinery and equipment 2,167 1, ,891 Improvements 2, ,319 Furniture and fixtures 3, ,469 Software 2, ,806 Information technology equipment 1, ,088 11,816 2, ,573 Total property, plant and equipment - cost 1,583,959 3, ,587,632 (-) Depreciation Generation Plant Reservoirs, dams and watermains (12,232) (1,116) - - (13,348) Buildings, civil construction and improvements (10,990) (2,451) - - (13,441) Machinery and equipment (89,799) (28,681) - - (118,480) Vehicles (2) (14) - - (16) Furniture and fixtures (62) (6) - - (68) Information technology equipment (170) (20) - - (190) Measurement towers (3,839) (833) - - (4,672) Other (356) (176) - - (532) Transmission and connection system Buildings, civil construction and improvements (80) (28) - - (108) Machinery and equipment (4,378) (1,536) - - (5,914) (121,908) (34,861) - - (156,769) Management Machinery and equipment (91) (108) - - (199) Improvements (243) (46) - - (289) Furniture and fixtures (680) (159) - - (839) Software (776) (248) - - (1,024) Information technology equipment (599) (173) - - (772) (2,389) (734) - - (3,123) Total property, plant and equipment - depreciation (124,297) (35,595) - - (159,892) Total property, plant and equipment 1,459,662 (31,922) - - 1,427,740 - CONTINUED - 37

58 12/31/2013 Additions Retirement Line item reclassifications 06/30/2014 Construction in progress Generation To be apportioned 237,438 86,573 - (2,589) 321,422 Studies and projects 27, (1,343) - 26,024 Land 12, ,221 Buildings, civil construction and improvements 183,853 15, ,078 Measurement towers 4, ,105 Wind power generators 895, , ,618 Substation equipment 113,417 15, ,158 Advances to suppliers 171, ,973-2, ,144 Total construction in progress 1,645, ,290 (1,343) - 2,154,770 Total property, plant and equipment 3,105, ,368 (1,343) - 3,582, Parent Annual depreciation rates - % Historical cost 06/30/2014 Accumulated depreciation Net value Historical cost 12/31/2013 Accumulated depreciation Net value Property, plant and equipment Generation Measurement towers 20% 10,400 (4,672) 5,728 9,086 (3,839) 5,247 10,400 (4,672) 5,728 9,086 (3,839) 5,247 Management Machinery and equipment 10% 3,852 (197) 3,655 2,138 (90) 2,048 Improvements 10% 2,319 (288) 2,031 2,304 (243) 2,061 Furniture and fixtures 10% 3,284 (813) 2,471 3,171 (658) 2,513 Software 20% 2,806 (1,025) 1,781 2,472 (776) 1,696 Information technology equipmen 20% 2,070 (754) 1,316 1,632 (583) 1,049 14,331 (3,077) 11,254 11,717 (2,350) 9,367 Total property, plant and equipment 24,731 (7,749) 16,982 20,803 (6,189) 14,614 Property, plant and equipment Generation To be apportioned 96,890-96, , ,354 Studies and projects 26,024-26,024 27,102-27,102 Land 2,612-2,612 2,612-2,612 Advances to suppliers 400, ,782 40,018-40,018 Total construction in progress 526, , , ,086 Total property, plant and equipment 551,039 (7,749) 543, ,889 (6,189) 207,700 38

59 14.4 Changes in property, plant and equipment (Parent) 12/31/2013 Additions Retirement Capital increase Wind SPEs Line item reclassifications 06/30/2014 Property, plant and equipment Generation Measurement towers 9,086 1, ,400 Management Machinery and equipment 2,138 1, ,852 Improvements 2, ,319 Furniture and fixtures 3, ,284 Software 2, ,806 Information technology equipment 1, ,070 11,717 2, ,331 Total property, plant and equipment - cost 20,803 3, ,731 (-) Depreciation Generation Measurement towers (3,839) (833) (4,672) Management Machinery and equipment (90) (107) (197) Improvements (243) (45) (288) Furniture and fixtures (658) (155) (813) Software (776) (249) (1,025) Information technology equipment (583) (171) (754) Total property, plant and equipment - depreciation (6,189) (1,560) (7,749) Total property, plant and equipment, net 14,614 2, ,982 Construction in progress Generation To be apportioned 123,354 23,874 - (46,611) (3,727) 96,890 Studies and projects 27, (1,343) ,024 Land 2, ,612 Advances to suppliers 40, , , ,782 Total construction in progress 193, ,176 (1,343) (46,611) - 526,308 Total property, plant and equipment 207, ,104 (1,343) (46,611) - 543,290 39

60 Property, plant and equipment in use The Company and its subsidiaries did not identify evidences of impairment of property, plant and equipment. ANEEL, in accordance with the Brazilian regulatory framework, defines the economic useful lives of the power generation assets, with periodical reviews on the estimates. The rates established by ANEEL are recognized as a reasonable estimate of the useful life of the authorization assets. Accordingly, these rates were used as the basis for depreciation of property, plant and equipment. According to articles 63 and 64, of Decree 41019/1957, the assets and facilities used in the power generation, transmission, distribution and sale are subject to these services, and cannot be removed, sold, assigned or provided as pledge without the previous and express authorization of the regulatory body. ANEEL, through 459/ SFF/ANEEL letter, authorized the assignment of the emerging rights, assets and facilities for the concession of Serra da Prata Hydroelectric Complex, pledged as collateral for the obligations assumed by the Company in the context of the direct financing. Property, plant and equipment in progress The property, plant and equipment in progress includes the investments in water projects, divided into inventories and basic projects already authorized by ANEEL and, in the account to be apportioned, the wining wind farm projects under LER 2010, LEN 2011 (A-3), LEN 2012, LER 2013 and the projects sold in the Free Market in construction through the Company s subsidiaries. The investments include the amounts for purchase of wind power generators and sundry costs. As at June 30, 2014, the consolidated balance of advances to suppliers amounts to R$462,144 (2013, R$171,582), comprised of the following: advance for purchase of measurement towers with IEM, in the amount of R$2,889, advance for agreement for supply of substation equipment entered into with ABB Ltda., in the amount of R$20,893, advance for purchase of wind power generators, in the amount of R$420,728, with GE and Alstom, advance for mounting of wind power generators, in the amount of R$372, with Mammoet, advance for transportation services and related services, in the amount of R$4,761, with IRGA and Perfimec, advance for civil construction, in the amount of R$8,565, with Consórcio MGT, advance for various services for compliance with the environmental requirements in the installations of the wind farms and others, in the amount of R$3,936. Amounts to be apportioned refers mainly to project costs, with implementation of plants, capitalized interest and recognition of share-based payment. As at June 30, 2014, capitalized interest amounts to R$81,016 (December 31, 2013, R$44,884). Write-off of projects The Company reviews its portfolio of basic projects and inventories on a quarterly basis. After review of its portfolio for development of small hydroelectric plant projects, the Company opted for discontinuing with the inventory projects, in the total amount of R$1,343, see Note

61 15. Trade payables Consolidated Parent 06/30/ /31/ /30/ /31/2013 Trade payables 187, ,434 3,763 2,273 As at June 30, 2014, the consolidated balance of trade payables mainly includes the amounts relating to the agreements for supply of equipment and materials contracted for the construction of plants under LER 2010 and LEN 2011 (A-3), under construction stage, relating to wind power generators, substations and civil construction. 16. Borrowings, financing and debentures Consolidated 06/30/ /31/2013 Current Noncurrent Current Noncurrent Debt cost Charges Principal Total Charges Principal Total Charges Principal Total Charges Principal Total Local currency BNDES - LER 2009 (a) TJLP % a.a. 1,567 40,681 42, , ,597 1,724 40,315 42, , ,342 BNDES - LER 2009 (a) TJLP % a.a ,959 20, , , ,945 20, , ,239 BNDES - LER 2009 (Subcredit "C") (a) TJLP ,359 2, ,407 2,407 BNDES - LER 2009 (Subcredit "D") (a) TJLP ,005-4,222 4, ,075 2,075 FNE - Banco do Nordeste do Brasil S.A. - Espra (b) 9.5% a.a. (8.08% a.a.)* - 5,711 5,711-93,779 93, ,536 5,556-96,635 96,635 BNDES - LER 2010 (d) TJLP % a.a , , , BNDES - LEN 2011 (d) TJLP % a.a , , ,620 Promissory Notes - LER 2010 (e) 100% CDI % a.a. 1, , , , , , Promissory Notes - LEN 2011 (e) 100% CDI % a.a. 5, , , , , ,503 Finep - CEOL Itaparica (f) 3.5% a.a ,357 6, BNDES - Renova Eólica (a) TJLP % 32 11,353 11,385 1, , , BNDES - Renova Eólica (Subcredit "P") (a) TJLP ,292 1, Subtotal of loans 9, , ,009 1,781 1,579,589 1,581,370 34,008 1,066,742 1,100, , ,698 Cost of operations - (632) (632) - (9,741) (9,741) - (616) (616) - (8,843) (8,843) TO TAL 9, , ,377 1,781 1,569,848 1,571,629 34,008 1,066,126 1,100, , ,855 *15% of non-defaulting bonus Debentures - 2nd issuance - Renova Energia S.A. (c) % CDI 1,902 10,063 11,965 55, , ,981 1,207 10,062 11,269 34, , ,817 Cost of operations - (10) (10) - (1,601) (1,601) - (30) (30) - (1,789) (1,789) TO TAL 1,902 10,053 11,955 55, , ,380 1,207 10,032 11,239 34, , ,028 Parent Current 06/30/2014 Noncurrent Current 12/31/2013 Noncurrent Debt cost Charges Principal Total Charges Principal Total Charges Principal Total Charges Principal Total Local currency (c) Debentures - 2nd issuance - Renova Energia S.A % CDI 1,902 10,063 11,965 55, , ,981 1,207 10,062 11,269 34, , ,817 Cost of operations - (10) (10) - (1,601) (1,601) - (30) (30) - (1,789) (1,789) TO TAL 1,902 10,053 11,955 55, , ,380 1,207 10,032 11,239 34, , ,028 41

62 Warranties As at June 30, 2014, the balance payable of borrowings and financing is collateralized as follows: Changes The changes in borrowings, financing and debentures are as follows: Consolidated Parent Principal Charges Total Principal Charges Total Balance as at December 31, ,421,527 81,995 1,503, ,821 5, ,195 Borrowing and financing 1,152,752-1,152, Accrued finance charges - 73,446 73, Accrued finance charges (debentures) - 24,588 24,588-24,588 24,588 Finance charges paid - (62,086) (62,086) Capitalized finance charges - 38,643 38, Capitalized finance charges (debentures) - 6,241 6,241-6,241 6,241 Finance charges on principal 92,616 (92,616) Repayment of borrowings (347,709) - (347,709) Borrowings costs (171) - (171) (171) - (171) Accrued borrowings costs 1,030-1, Balance as at December 31, ,320,045 70,211 2,390, ,064 36, ,267 Borrowing and financing 1,062,840-1,062, Accrued finance charges - 35,109 35, Accrued finance charges (debentures) - 11,651 11,651-11,651 11,651 Finance charges paid - (103,913) (103,913) Capitalized finance charges - 46,363 46, Capitalized finance charges (debentures) - 9,209 9,209-9,209 9,209 Repayment of borrowings (1,033,468) - (1,033,468) Borrowings costs (1,228) - (1,228) Accrued borrowings costs Capitalized borrowings costs Balance as at June 30, ,348,711 68,630 2,417, ,272 57, ,335 42

63 Maturity of non-current amounts (principal and charges) Maturities of the amounts classified in noncurrent liabilities (consolidated) are as follows: Maturity 06/30/ , , , , , onwards 1,234,249 Total 1,928,351 (*) (*) Value does not include borrowings costs. (a) BNDES agreements LER 2009 Subsidiaries Pajeú do Vento, Planaltina, Porto Seguro, Nossa Senhora da Conceição, Guirapá, Serra do Salto, Guanambi, Alvorada and Rio Verde, with the intermediation of subsidiary Salvador Eólica, entered into a financing agreement with BNDES in the total amount of R$586,677. Financing is subject to interest rates of 1.92% p.a. + Long-term Interest Rate (TJLP), payable in 16 years, and the first installment matures on May 15, 2013 and the last installment matures on April 15, The nine plants total 195.2MW of installed capacity and 84MW of average contracted firm power. As at June 30, 2014, the contracted amount was totally released. Financing for Porto Seguro and Serra do Salto plants includes subcredit D, directed to corporate investments, in the total amount R$6,400. The financing is subject to TJLP rate, with a two-year grace period for interest payment and a six-year grace period for principal amortization. Subsidiaries Candiba, Igaporã, Ilhéus, Licínio de Almeida and Pindaí, with the intermediation of subsidiary Bahia Eólica, entered into a financing agreement with BNDES, in the total amount of R$297,380. Financing is subject to interest rates of 2.18% p.a. As at June 30, 2014, the contracted amount was fully released. Financing for Candiba and Ilhéus plants includes subcredit C, directed to corporate investments, in the total amount R$3,000. The financing is subject to TJLP rate, with a two-year grace period for interest payment and a six-year grace period for principal amortization. All BNDES contracts are collateralized by pledged shares, collateral assignment of credit and emerging rights, financed assets, bank guarantee letter during the construction and first year of commercial operations and reserve accounts equivalent to three months of debt service and three months of operation and maintenance. Under this operation, the Debt Service Coverage Ratio (ICSD) = [(activity cash generation + closing cash balance from prior year)/debt service] must be greater than or equivalent to 1.3. As at June 30, 2014, this ratio was complied. LER 2010 and LEN 2011 (A-3) The subsidiary Renova Eólica with the participation of the subsidiaries Ametista, Araças, Borgo, Caetité, Dourados, Espigão, Maron, Morrão, Pelourinho, Pilões, Da Prata, Seraíma, Serra do Espinhaço, Tanque, Ventos do Nordeste, of its direct controlling company Nova Renova and of Company obtained a financing in the total 43

64 amount of R$1,044,100 (direct contract signed on June 4, 2014, in the amount of R$734,020 and onlending contract to be signed with Banco do Brasil, in the amount of R$310,080). As at June 30, 2014 the amount released was of R$649,184. This amount was used to settle the balance of the short-term bridge loan with BNDES without cash disbursement. The BNDES direct financing shall be divided into 16 sub-credits, from A to P, with the following characteristics: (a) Sub-credits A, C, D, E, F, G, I, J, M and P shall have a term for use and grace period of up to December 15, 2015, and amortization in 192 months, with monthly and successive installments, each in the amount of the principal due of the debt, divided by the number of installments of amortization not yet due, with the first one maturing on January 15, 2016 and the last on December 15, 2031; and (b) the sub-credits B, H, K, L, N and O shall have a term for use and grace period of up to December 15, 2014 and amortization in 192 months, with monthly and successive installments, each in the amount of the principal due of the debt, divided by the number of installments of amortization not yet due, with the first one maturing on January 15, 2015 and the last on December 15, Over the principal of the debt from Sub-credits B, H, K, L, N and O interest of 2.45% shall incur per year (as remuneration), above the long-term interest rate (TJLP), disclosed by the Central Bank of Brazil; over the principal of the debt from Sub-credit P, the TJLP shall incur. The guarantees of all the BNDES contracts are the pledge of shares, conditional assignment of credit and emerging rights, statutory lien of assets, bank surety and reserva account in the amount of 3 months of service of the debt and 3 months of operation and maintenance. This operation establishes that the ICSD (index of coverage of debt coverage service) = [(cash generation of the activity + final cash balance of prior year) / debt service] should be equal or above 1.3. (b) BNB agreement Subsidiary Espra, with the intermediation of subsidiary Enerbras, entered into a financing agreement with BNB on June 30, 2006, in the total amount of R$120,096. Financing is subject to interest rates of 9.5% p.a. (and it may be reduced to 8.08% due to the 15% payment bonus), payable on a monthly basis at the 30 th day of each month. The agreement matures on June 30, The amount contracted was totally released. This financing is collateralized by property mortgage of Serra da Prata Complex, pledged shares, pledged emerging rights of Authorization Resolutions, right to receive all amounts that, effectively or potentially, are or may become payable by the Concession Grantor to Espra, all other tangible or intangible rights of the respective Authorization Resolutions and liquidity fund in reserve account (Note 11). The financing agreement with BNB does not provide for financial ratios for advanced debt maturities. (c) Simple, nonconvertible debentures As at June 30, 2014, the 2 nd issuance of the Company s debentures is as follows: 44

65 Parent Balance as at Type and class Raised 06/30/ /31/2013 Charges Maturity Local currency 1st series debentures - 2nd issuance 10,063 11,965 11, % CDI 09/17/2014 2nd series debentures - 2nd issuance 26,163 31,109 29, % CDI 09/17/2015 3rd series debentures - 2nd issuance 27,169 32,305 30, % CDI 09/17/2016 4th series debentures - 2nd issuance 29,182 34,698 32, % CDI 09/17/2017 5th series debentures - 2nd issuance 35,220 41,877 39, % CDI 09/17/2018 6th series debentures - 2nd issuance 57,358 68,200 64, % CDI 09/17/2019 7th series debentures - 2nd issuance 38,238 45,466 42, % CDI 09/17/2020 8th series debentures - 2nd issuance 35,220 41,877 39, % CDI 09/17/2021 9th series debentures - 2nd issuance 43,270 51,449 48, % CDI 09/17/2022 Total 301,883 (*) 358,946 (*) 338,086 (*) (*) Value does not include debentures issuance costs On October 11, 2012, the Company settled the 2 nd issue of simple, non-convertible, unsecured debentures, with an additional real guarantee, in nine series, for public distribution under restricted placement efforts, under firm guarantee regime, in the total amount of R$301,883 and total term of 10 years, maturing on September 17, The debentures bear interest equivalent to % of CDI. Principal and interest are paid on the maturity of each series (bullet). The Company may redeem the debentures at any time and at its discretion beginning September 17, The resources from this issue will be direct to reinforce cash and/or investments in projects under LER 2010 and/or LEN 2011 (A-3). The debentures were issued as set forth in CVM Instruction 476, based on the resolution at the Company s Board of Directors Meeting, held on August 15, 2012 ( RCA ), and at the Issuer s Extraordinary General Meeting, held on August 31, 2012 ( AGE ), as set forth in article 59, of the Brazilian Corporate Law, and in the Company s Bylaws. There is no clause for repactuation of debentures. The debentures are collateralized by the pledge of 100% of the Enerbras shares owned by the Company and collateral assignment of assets and rights deposited in restricted account with Banco do Brasil from the dividends distributed by subsidiaries Enerbras and Nova Renova. This operation sets forth that the ICSD (Debt Service Coverage Ratio = dividends received/debt service) must be greater than or equivalent to 1. The debt service is represented by the payment of principal and interest of the falling due series in each year of verification. As at June 30, 2014, this ratio was complied. (d) BNDES (short-term) On June 7, 2013, the Company s indirect subsidiaries entered into the financing agreement with BNDES, in the amount of R$600,000. The funds from this financing are allocated to the implementation of the wind farms under LER 2010 and LEN 2011 (A-3). On June 16, 2014 the indirect subsidiaries of the Company settled these short-term loans. 45

66 (e) Promissory notes On November 5, 2013, the indirect subsidiaries of LER 2010 and LEN 2011 (A-3) issued and liquidated commercial promissory notes, for public distribution with restrict placement efforts, in the amount of up to R$400,000, as set forth in CVM Instruction 476. The promissory notes will be subject to compensatory interest calculated based on the accumulated variation of 100% of the daily average interbank deposit (DI) rate, over extra group, plus a surcharge of 0.98% per year. The promissory notes are not subject to financial ratios for advanced debt maturity. On April 30, 2014 these indirect subsidiaries settled the commercial promissory notes, in the amount of R$400,000 (principal) plus interest for the period and renegotiated the issue of new promissory notes for a complementary period of 6 months as of April 30, 2014 in the amount of the principal of R$ 400,000, maintaining the same financial conditions of the first issue. These notes shall be settled in disbursement of the second release of the long-term financing contract signed with BNDES. (f) FINEP On December 19, 2013, the subsidiary Central Electric Itaparica S.A. signed a financing agreement with the Financier of Studies and Projects - FINEP, in the amount of R$107,960. The proceeds of this financing are intended to fund a generating plant and distribution of solar and wind hybrid power. Principal will be subject to average interest of 3.5% p.a. grace period of 36 months covering the period from the date of signing the contract and the maturity and amortization installment must be paid in 85 installments, the first installment is on January 15, 2017 and the last on January 15, On June 30, 2014, the amount released was R $ 6,346. The financing is guaranteed by bank letters of guarantee amounting to 50% of each release, plus applicable charges issued by financial institutions and liens on movable property (equipment) purchased in the course of financing. 46

67 17. Taxes payable Consolidated Parent 06/30/ /31/ /30/ /31/2013 INSS FGTS IRRF on payroll 1, , Trade union dues IRRF IOF ICMS ISS PIS COFINS 1, PIS, COFINS and CSLL Withholding INSS on third parties IRPJ 2,003 1, CSLL 1,197 1, TOTAL 8,562 7,549 2,753 1, Trade payables - CCEE/Eletrobras Consolidated 06/30/ /31/2013 Current Eletrobras 13,387 2,060 CCEE 330 6,876 13,717 8,936 Noncurrent CCEE 11,671 11,670 25,388 20,606 Eletrobras The Power Purchase and Sale Agreement, entered into the indirect subsidiary Espra and Eletrobras, sets forth that the sales revenues in the context of the CCEE is determined each year (from January to December). The financial adjustment portion resulting from this calculation will be offset in the monthly invoices of the next year. In the period ended June 30, 2014, the generated power volume (62,519 MWh) was lower than the invoice power volume (106,872 MWh), which resulted after accounting of the Power Realocation Mechanism (MRE) in the context of the CCEE system for sharing the hydrological risks of the generators in a negative financial adjustment in the amount of R$12,580 (June 30, 2013, R$3.262). 47

68 CCEE LER 2009 The Reserve Power Agreements entered into the indirect subsidiaries under LER 2009 and CCEE set forth that the differences between the power generated by plants and contracted power are calculated in each contractual year (from July to June). The reimbursement for negative deviations (below the tolerance level 10%) of generation will be paid in 12 equal monthly installments over the next agreement, at 115% of the current sales price, as set forth in subclause 11.3 of such agreement. The returns within the tolerance level 10% of generation will be reimbursed in 12 installments after possible offset against the positive deviations as from the end of the first fouryear period. The reimbursement amounts are recorded in net income, except for the portion of 15% above current price, which accounts for the penalty and is recorded as cost. CCEE LER 2010 The Reserve Power Agreements entered into the indirect subsidiaries under LER 2010 and CCEE set forth that the differences between the power generated by plants and contracted power are calculated in each contractual year (from September to August). The reimbursement for negative deviations (below the tolerance level 10%) of generation will be paid in 12 equal monthly installments over the next agreement, at 115% of the current sales price, as set forth in subclause 11.3 of such agreement. The returns within the tolerance level 10% of generation will be reimbursed in 12 installments after possible offset against the positive deviations as from the end of the first four-year period. On March 31, 2014, the Company reversed the provision of penalty (note 1.3). 19. Provision for risks As at June 30, 2014, the provision for risks amounted to R$87 and basically refers to administrative proceedings involving environmental risks. The Company s and its subsidiaries management, based on the opinion of their legal advisors with respect to the likelihood of favorable outcome from several claims, considers that the provisions recorded in the balance sheet are sufficient to cover probable losses. The Company and its subsidiaries are parties to several contingencies amounting to approximately R$3,876 (2013, R$3,455): R$3,580 (2013, R$3,165) of civil claims, R$189 (2013, R$189) of labor claims and R$107 (2013, R$101) of administrative proceedings, whose likelihood of loss was classified by Management, based on the opinion of its legal advisors, as possible; the Company did not record any provision for the year ended June 30, These contingencies mainly resulted from pain and suffering and termination of lease and rental agreements. Power Grid Charges - National Energy Policy Council Resolution CNPE Resolution 3, of March 6, 2013, defined new criteria for apportionment of the additional commissioning cost of thermal power plants. According to the new criteria, the Power Grid Charges (ESS), for purposes of power security, which was fully apportioned amongst free consumers and distributors, would be apportioned amongst all members of the National Interconnected System (SIN), including generators and sellers. The Brazilian Association of Independent Power Producers (APINE), of which the Company is a member, obtained the preliminary injunction to suspend the effects of article 2 and 3 of CNPE Resolution 3, which exempted the generators from the ESS payment in accordance with such Resolution. 48

69 The risk amounts to approximately R$1,420. According to the opinion of the Company s management and its legal advisors, this risk is classified as possible because provisions were not recorded. 20. Equity and shareholders compensation a) Authorized capital As provisioned under article 8 of its Articles of Association, the Company is authorized to increase capital through deliberation of the Supervisory Board, independently of the statutory amendment, through the issue of common or preferred shares, up to a limit of R$5,002,000. b) Capital In 2013, the Company recorded the following capital increases: 1. Capital increase through stock option plan The Company has a long-term compensation plan for its employees, under which purchase options of shares of the Company are granted to eligible employees upon the achievement of milestones set by the plan. As at December 31, 2013, the total number of options granted, exercised and paid through stock option plan is broken down below: Date Number Common shares Preferred shares Total shares Value 03/18/ ,112 78, , /12/ , ,698 1,070, /19/ , , , /20/2013 6,003 12,006 18,009 2 Total 464, ,998 1,393, In 2013, of the subscribed capital in the amount of R$157, the amount of R$140 was paid and R$17 left to be paid. During the year, over 34,684 common shares were converted into preferred shares. As at December 31, 2013, the Company s subcribed capital amounted to R$1,017,714 and paid-in capital amounted to R$1,017,697, distributed as follows: 49

70 RENOVA ENERGIA Common shares Preferred shares Total shares % of total capital Number % Number % Number % Controlling group 101,123, % - 0.0% 101,123, % RR Participações 50,561, % - 0.0% 50,561, % Light Energia 50,561, % - 0.0% 50,561, % Other shareholders 55,775, % 74,408, % 130,184, % RR Participações* 18,560, % - 0.0% 18,560, % BNDESPAR 9,311, % 18,622, % 27,934, % InfraBrasil 11,651, % 23,302, % 34,954, % Santander 2,269, % 4,539, % 6,809, % FIP Caixa Ambiental 5,470, % 10,940, % 16,410, % FIP Santa Barbara 4,655, % 9,311, % 13,967, % Other 3,856, % 7,691, % 11,548, % Total 156,899, % 74,408, % 231,308, % * Shares not included in the controlling group Note: the controlling group considers the shares subject to the shareholders' agreement On June 30, 2014 the balance of capital to be paid-in (R$17) was totally paid-in. During the period 6,000,000 ONs were converted into PNs. On June 30, 2014 the subscribed and paid-in capital of the Company was of R$1,017,714, distributed as demonstrated below: RENOVA ENERGIA Common shares Preferred shares Total shares % of total capital Number % Number % Number % Controlling group 101,123, % - 0.0% 101,123, % RR Participações 50,561, % - 0.0% 50,561, % Light Energia 50,561, % - 0.0% 50,561, % Other shareholders 49,775, % 80,408, % 130,184, % RR Participações* 9,560, % - 0.0% 9,560, % BNDESPAR 9,311, % 18,622, % 27,934, % InfraBrasil 11,651, % 23,302, % 34,954, % Santander 2,269, % 4,539, % 6,809, % FIP Caixa Ambiental 5,470, % 10,940, % 16,410, % FIP Santa Barbara 4,652, % 9,305, % 13,958, % Other 6,859, % 13,697, % 20,557, % Total 150,899, % 80,408, % 231,308, % * Shares not included in the controlling group Note: the controlling group considers the shares subject to the shareholders' agreement 50

71 c) Share issuance costs Parent 06/30/ /31/2013 Share issuance costs (36,112) (36,112) The Company records all share issue costs in a specific line item. These amounts refer to costs from advisory services and financial advisors, in connection with the going public process (Initial Public Offering IPO) in July 2010, in the amount of R$13,686, capital increase by the new investor, Light Energia, in September 2011, in the amount of R$20,555, and costs, in the amount of R$1,871, with capital increase by the new investor, BNDESPAR, in September d) Reserves Capital reserve The Company recorded in the capital reserve the effect from the share-based payment in its plants under LER 2009, LER 2010 and LEN 2011 (A-3), and other projects, as well as the awards paid relating to the successful IPO and also agreements entered into with its executive officers. These records both reflect the shares granted and the shares to be granted in the medium and short term. These accounting records is detailed in Note 25. e) Resource for future capital increase On March 31, 2014 CEMIG Geração e Transmissão S.A. (CEMIG GT) transferred to the Company the amount of R$810,129 as advance for future capital increase in an irrevocable and irreversible manner and with a fixed quantity of shares to be acquired, under the terms of the contract for future capital increase signed by the Company and CEMIG GT. In this manner, the Company classified the advance for future capital increase within its net equtiy. According to the contract the total subscription of the advance must occur before July 29, 2014 (see Note 31.3). f) Dividends Accumulated losses, if any, and provision for income tax and social contribution will be deducted from profit (loss) for the year before profit sharing. Profit recorded will be allocated successively in the order below, as set forth in Chapter XVI of the Brazilian Corporate Law: (i) 5% will be directed, prior to any other allocation, the legal reserve, which cannot exceed 20% of capital. (ii) a portion, as proposed by the management bodies and approved at the General Meeting, may be allocated to the provision for risks, as prescribed by article 195 of the Brazilian Corporate Law. (iii) a portion will be allocated to the payment of mandatory dividends to shareholders. The shareholders are entitled to receive as mandatory dividends, in each year, 25% on profit for the year, less or plus the following: (i) amount allocated to legal reserve; and (ii) amount allocated to the provision for risks and reversal of this reserve from prior years. 51

72 As at March 31, 2014, the Company s profit amounted to R$5,528, which will be allocated to absorb accumulated losses; therefore, the Company will not distribute dividends. 21. Net revenue Consolidated Parent 06/30/ /30/ /30/ /30/ /30/ /30/2013 MWh* MWh* R$/thousand R$/thousand Power generation/supply Power supply - PCHs - Eletrobras 106, ,214 21,829 21, Power supply - Wind - CCEE 556, ,260 99,874 93, CCEE/ELETROBRAS reimbursement (44,353) - (12,580) (3,262) - - Total revenue 109, , (-) Revenue deductions COFINS (3,247) (3,319) - - PIS (704) (719) - - Total deductions (3,951) (4,038) - - Other revenues Operations - solar 6, (-) Revenue deductions COFINS (463) (6) (9) (6) PIS (101) (1) (2) (1) ISS - (3) - (3) ICMS (4) (2) (4) (2) 5, Total 110, , (*) Information not revised by independent auditors. 52

73 22. Operating expenses Service cost Consolidated 06/30/ /30/2013 Operating expenses Total Service cost Operating expenses Total Tusd/Tust (*) 4,935-4,935 5,766-5,766 Inspection fee ,975-4,975 5,806-5,806 Personnel and management - 8,769 8,769-9,165 9,165 Outside services 4,321 17,075 21,396 2,374 10,338 12,712 Rental and lease 2, ,047 1, ,222 Travel - 1,516 1,516-1,716 1,716 Depreciation 34, ,595 33, ,396 Discontinued projects - 1,343 1,343-1,624 1,624 Insurance 1, ,174 1, ,620 Telephone and IT - 1,141 1,141-1,050 1,050 Use and consumption material Reversal of Reimbursement fine (**) (4,645) - (4,645) Energy for resale 3,393-3, Other 40 2,070 2, ,270 1,347 41,872 33,658 75,530 39,842 26,431 66,273 Total 46,847 33,658 80,505 45,648 26,431 72,079 (*) Tusd - distribution system use tariff and Tust - transmission system use tariff. (**) As informed in Note 1.2, the Company reversed the provisions previously registered for the compensation due by the SPEs and registered this reversal in the same account that gave rise to the service cost. Service cost Parent 06/30/ /30/2013 Operating expenses Total Service cost Operating expenses Total Personnel and management - 8,769 8,769-9,165 9,165 Outside services - 9,135 9,135-5,237 5,237 Rental and lease Travels - 1,462 1,462-1,621 1,621 Depreciation , ,273 Discontinued projects - 1,343 1,343-1,624 1,624 Insurance Telephone and IT - 1,081 1,081-1,013 1,013 Use and consumption material Other 40 1,196 1, ,021 1,086 Total ,647 25, ,921 21,757 53

74 23. Finance income Consolidated Parent 06/30/ /30/ /30/ /30/2013 Finance income Income from short-term investments 25,982 15,491 16,460 10,973 Interest received - loan Discounts Inflation adjustment ,155 15,661 17,247 12,122 Finance costs Interest (315) (147) (28) (9) Interest - loan - - (295) (296) Debt charges (46,758) (50,019) (11,651) (13,172) IOF (460) (532) (126) (323) Banking fees (57) (89) (23) (33) Banking guarantees (1,639) Other finance costs (581) (2,804) (254) (214) (49,810) (53,591) (12,377) (14,047) Total (23,655) (37,930) 4,870 (1,925) 54

75 24. Income tax and social contribution Consolidated Parent 06/30/ /30/ /30/ /30/2013 Profit (loss) before income tax and social contribution 325 (2,135) (6,066) (7,221) Income tax and social contribution combined rate 34% 34% 34% 34% Income tax and social contribution at rates under legislation (111) 726 2,062 2,455 Permanent additions Non-deductible expenses (810) (198) (810) (198) Permanent exclusions (additions) Equity in subsidiaries (2,112) - 4,924 5,572 Reversal of the effect of subsidiaries adopting the deemed income 2,818 2, Effect of unrecognized deferred taxes on: Temporary provisions 1,124 (384) 1,124 (384) Tax loss carryforwards (7,300) (7,445) (7,300) (7,445) Income tax and social contribution in profit or loss (6,391) (4,343) - - The Company did not record taxable income for the year. As at June 30, 2014, the Company had tax loss carryforwards to offset, for which deferred taxes were not recorded, in the following amounts: 06/30/ /30/2013 Tax loss for the period (21,470) (21,897) Accumulated tax loss forwards from previous years (125,723) (95,632) Total accumulated tax loss carryforwards (147,193) (117,529) The consolidated tax refers to subsidiaries Espra (deemed income regime), 14 wind farms under operation (deemed income regime), subholdings Bahia Eólica and Salvador Eólica (actual income regime) and 15 plants under construction (actual income regime). Income tax and social contribution are calculated at the rate of 15%, plus a 10% surtax on taxable income exceeding R$240 for income tax and 9% on taxable income for social contribution, and take into consideration the offset of tax loss carryforwards, limited to 30% of taxable income. The income tax and social contribution under the deemed income regime are paid on gross revenues on a quarterly basis, based on the estimated percentage, according to the conditions and rates set forth in applicable legislation (estimated bases of 8% and 12% on sales, income tax and social contribution, respectively, plus other finance income). 55

76 Deferred taxes on tax loss carryforwards were not recognized as future taxable income is not expected. 25. Related-party transactions Parent Assets Liabilities Finance income (costs) Finance income (costs) Term 06/30/ /31/ /30/ /31/ /30/ /30/2013 Beginning End Espra 07/10/ /31/ ,325 12,987 (295) (296) Salvador Eólica 05/27/ /31/ ,603 17, Bahia Eólica 10/17/ /31/ ,065 9, CE Itaparica 01/01/ /30/ Renova Eólica 01/01/ /30/ São Salvador 09/15/ /31/ Nova Renova Energia 09/25/ /31/ Renova Comercializadora 04/30/ /31/ CE Tanque 02/05/ /31/ CE da Prata 10/25/ /30/ CE Ventos do Nordeste 10/25/ /30/ CE Seraíma 12/14/ /30/ CE Araçás 12/14/ /30/ Total 29,668 26,589 13,325 12, The main balances of assets and liabilities, as at June 30, 2014, as well as the transactions that impact the profit or loss for the year, relating to the related-party transactions resulted from the Company s transactions with its parent, subsidiaries or other related parties. The Company did not record interest income in the consolidated profit or loss as at June 30, Despite of the short-term maturities, the Company expects that these amounts will be performed in the long term Trade receivables/payables Trade receivables loans entered into with the subsidiaries described in the table. These loans were performed to meet these companies cash needs. Trade payables the loan with associate Espra was entered into to meet the cash needs. For both balances (receivable and payable), the amount payable is subject to TJPL rate, plus interest varying between 0.25% and 0.5% p.a Commercialization In August 2011, Light Energia signed with the Company a commitment for the acquisition of energy from the 400MW installed capacity of wind power. On March 21, 2014 Renova Comercializadora, a subsidiary of the Company traded and average 295 MW of electric power for supply between 2016 and 2031, according to bid invitation for the sale of electric power published by the Company on February 7, 2014 ( Contract ). 56

77 During the first year of the Contract, the amount commercialized shall be of an average 100 MW and in the following gyears 308 MW. The volume traded is in relation to the production of electric power at P90 and any additional electric power to be produced by Projeto Eólico shall also be commercialized under the scope of the Contract. The total installed capacity of Projeto Eólico is of MW Compensation of key management personnel Compensation of key management personnel for the periods ended in June 30, 2014 and 2013, as set forth in CVM Resolution 560, of December 11, 2008, amounted to R$3,083 and R$1,039, respectively, including shortterm benefits only. Compensation of the Board of Directors and Statutory Board paid by the Company in the year Parent Statutory Board 06/30/2014 Total Board of Directors (*) 06/30/2013 Statutory Board Number of members Total n/a n/a n/a n/a n/a Accumulated fixed compensation 1,532 1, ,022 Salary or pro-labore 1,386 1, ,014 Direct and indirect benefits n/a n/a n/a Committee compensation n/a n/a 8 n/a 8 Variable compensation 1,551 1,551 n/a Bonus n/a Share-based payment n/a n/a n/a n/a n/a Post-employment benefits n/a n/a n/a n/a n/a Total compensation per body 3,083 3, ,039 Monthly average compensation of the Board of Directors and Statutory Board Parent 06/30/2014 Statutory Board Board of Directors (*) 12/31/2013 Statutory Board Number of members Highest individual compensation Lowest individual compensation Average individual compensation (*) The Company also has five directors not compensated. As at June 30, 2014, there was no compensation for members of the Board of Directors. 57

78 25.4 Stock option plan The Company s Stock Option Plan, created under the terms of article 168, 3, of Law 6404/76, and approved at the Extraordinary General Meeting, held on January 18, 2010, sets forth the general grant conditions for the Company s stock options. The Plan s main purpose is to retain qualified professional and improves the expansion and performance of the Company s goals, aligned with its shareholders and management s interests. Under the Stock Option Plan, the beneficiaries include the Company s directors, executive officers and employees, as well as individuals providing services to the Company or other companies under its control. In order to ensure the high performance of the wind projects, the grants and vesting are simultaneous and fully related to goals achieved in each project, subject to the percent of 3% of the project s net present value calculated on the following dates: 10% on the execution of the power sale agreement; 20% on the execution of the financing for project construction; 20% on the start-up of operations of the project; 50% after one year of start-up of operations of the project. The options are granted within the maximum limit of 5% of the total shares representing the Company s capital, on a diluted basis, including in the calculation all options already granted under the plan, exercised or not, except for those terminated and not exercised, which will become available for new grants. Once the option is exercised, the shares subject to this option will be issued through the Company s capital increase, to be approved under the terms of applicable legislation and the Company s Bylaws. As at June 30, 2014, the total number of the Company s options granted and subsequently exercised is 4,094,055 shares, in the proportion of one common share and two preferred shares. These shares were paid in the amount of R$0.34 per unit (one common share and two preferred shares). The current share-based payment plan does not provide for new adhesions or new projects. However, in relation to the benefits termined in 2013, options were granted in connection with the new projects as part of the contractual condition, as follows: Date of Quantity of Fair Value Price of Fair value at grant options/units granted of Grant financial year date of grant 03/18/13 11, /19/13 47, ,185 12/20/13 4, Other 25 2,792 The fair value of the grants was recorded in the reverse for employee s benefits in the amount of R$2,792. The other grants in 2013 refer to the share-based payment plan of former projects already recorded. The services provided by project are broken down as follows: 58

79 LER 2009 Total amount Number of units Unit value - R$ R$/thousand Grant and vesting date 10% upon execution of the power sale agreement 53, , % upon execution of the project construction financing agreement 106, , % on the date the project is placed into operation 127, , % one year after the project is placed into operation 344, , ,481 18,669 LER 2010 Total amount Number of units Unit value - R$ R$/thousand Grant and vesting date 10% upon execution of the power sale agreement 27, % upon execution of the project construction financing agreement 72, ,139 scheduled for % on the date the project is placed into operation 78, ,314 scheduled for % one year after the project is placed into operation 215, ,331 scheduled for ,077 11,517 LEN 2011 Total amount R$/thousand Grant and vesting date Number of units Unit value - R$ 10% upon execution of the power sale agreement 10, % upon execution of the project construction financing agreement 34, ,003 scheduled for % on the date the project is placed into operation 37, ,113 scheduled for % one year after the project is placed into operation 101, ,983 scheduled for ,913 5,432 In addition, the Company distributed the following shares in connection with the Initial Public Offering (IPO) and key management agreements: Parent Total amount R$/thousand Grant and vesting date Number of units Unit value - R$ Initial Public Offer (IPO) Success 360, , Initial Public Offer (IPO) Success 125, , Key executive agreement 48, , Key executive agreement 22, Key executive agreement 54, , ,941 16, Financial instruments and risk management The Company and its subsidiaries conduct transactions with financial instruments. These financial instruments are managed through operating strategies and internal controls that aim at liquidity, profitability and security. Gains and losses on these transactions are consistent with the policies set by Company s management. The risks associated with these operations are managed according to the practices defined by Management, including the monitoring of the levels of exposure of each market risk and estimated future cash flow. These 59

80 practices also determine that the information is updated in the operating systems, as well as the information and operation of the transactions with counterparties. a. Fair value of financial instruments Fair value is the amount for which an asset could be exchanged or a liability could be settled, between parties aware of and interested in the business, through a transaction without beneficiaries. The definition of fair value covers several variations on the metrics adopted to measure an amount at reliable value. The calculation of the fair value was determined based on the available market information and methodologies adopted in the evaluation. However, significant judgment is necessary to understand the market information and estimate the fair value. Some line items have accounting balance equivalent to the fair value. This results from the fact that these financial instruments have characteristics similar to those that would be obtained had these financial instruments been traded in the market. The use of different market methodologies may have a material effect on the estimated realizable values. The transactions with financial instruments are recorded in the Company s balance sheet at their carrying amount, which is equivalent to their fair value in cash and cash equivalents, trade receivables, related parties, collaterals and restricted deposits and trade payables. The accounting balances of borrowings, financing and debt charges differ from fair value. Consolidated Fair value Carrying amount Financial assets 06/30/ /31/ /30/ /31/2013 Current Short-term investments 617, , , ,711 Trade receivables 31,101 20,923 31,101 20,923 Collaterals and restricted deposits 28,363 27,231 28,363 27,231 Noncurrent Collaterals and restricted deposits 143, , , ,981 Financial liabilities Current Trade payables 187, , , ,434 Debentures 11,965 11,269 11,955 11,239 Borrowings and financing 489,009 1,100, ,377 1,100,134 Noncurrent Debentures 346, , , ,028 Borrowings and financing 1,581, ,698 1,571, ,855 60

81 Parent Fair value Carrying amount Financial assets 06/30/ /31/ /30/ /31/2013 Current Short-term investments 516, , , ,234 Trade receivables Collaterals and restricted deposits Noncurrent Collaterals and restricted deposits Related parties 29,668 26,589 29,668 26,589 Financial liabilities Current Trade payables 3,763 2,273 3,763 2,273 Debentures 11,965 11,269 11,955 11,239 Noncurrent Debentures 346, , , ,028 Related parties 13,325 12,987 13,325 12,987 b. Categories of financial instruments The classification of financial instruments and their accounting balances are broken down below: Consolidated 06/30/ /31/2013 Financial assets Loans and receivables Fair value through profit or loss O ther at amortized cost Total Loans and receivables Fair value through profit or loss O ther at amortized cost Total Current Short-term investments - 617, , , ,711 Trade receivables 31, ,101 20, ,923 Collaterals and restricted deposits 28, ,363 27, ,231 Noncurrent Collaterals and restricted deposits 143, , , ,981 Financial liabilities Current Trade payables , , , ,434 Borrowings and financing , ,100,134 Debentures ,955 11, ,239 11,239 Noncurrent Borrowings and financing - - 1,571,629 1,571, , ,855 Debentures , , , ,028 61

82 Parent 06/30/ /31/2013 Financial assets Loans and receivables Fair value through O ther at Loans and Fair value through profit or loss amortized cost Total receivables profit or loss O ther at amortized cost Total Current Short-term investments - 516, , , ,234 Trade receivables Collaterals and restricted deposits Noncurrent Collaterals and restricted deposits Related parties 29, ,668 26, ,589 Financial liabilities Current Trade payables - - 3,763 3, ,273 2,273 Debentures ,955 11, ,239 11,239 Noncurrent Debentures , , , ,028 Related parties ,325 13, ,987 12,987 c. Fair value measurement The Company adopts the measurement at fair value of its financial assets and financial liabilities. Fair value is measured at market value based on the assumptions that the market players are able to measure an asset or liability. For purposes of consistency and comparison, the fair value hierarchy priorizes the inputs adopted in the measurement of the three significant levels, as follows: Level 1. Active market: Quoted price a financial instrument is considered as quoted in the active market if the quoted prices are immediately and regularly available in stock exchange or organized over-the-counter market, by operators, brokers or market association, by entities whose purpose is to disclose the prices by regulatory agencies, and if these prices represent market transactions regularly carried out between independent parties, without beneficiaries. Level 2. Without active market: Evaluation method In relation to financial instruments not traded in an active market, the fair value must be determined based on the evaluation/pricing methodology. Criteria used include current fair value of another financial instrument significantly similar, analysis of discounted cash flow and option pricing models. The purpose of the evaluation method is to determine the transaction price on the measurement date through a commercial exchange not subject to personal interests. Level 3. Without active market: Inputs for an asset or liability not based on observable market variations (nonobservable inputs) as at June 30, 2014 the Company did not have any financial instrument classified in this category. The instruments stated at fair value are broken down as follows: 62

83 Balance as at 06/30/2014 Active market - quoted price (Level 1) Fair value as at June 30, 2014 Without active market - evaluation technique (Level 2) Without active market - non-observable inputs (Level 3) Description Assets Short-term investments 617, ,561 - Balance as at 12/31/2013 Active market - quoted price (Level 1) Fair value as at December 31, 2013 Without active market - evaluation technique (Level 2) Without active market - non-observable inputs (Level 3) Description Assets Short-term investments 351, ,711 - Short-term investments: prepared taking into consideration the security market quotation or market information used in such calculation, based on future interest and exchange rates of similar instruments. The fair value of a security corresponds to its value at the maturity date, discounted to present value using a discount obtained using the market interest curve, in Brazilian reais. In the period ended June 30, 2014 there were no transfers between the evaluations of level 1 and level 2 fair value or level 3 and level 2 fair value. d. Market risk The market risk reflects the possibility of monetary losses due to the changes in variables that impact the prices and rates traded in the market. These variations basically impact all sectors and, therefore, represent financial risk factors. The Company s and its subsidiaries borrowings and financing, as described in Note 16, were entered into with BNB, BNDES and the Debentureholders. The contractual rules applicable to financial liabilities represent risks related to these exposures. As at June 30, 2014, the Company and its subsidiaries are exposed to market risk associated to the CDI, TJLP and fixed rates. e. Sensitivity analysis (consolidated) The Company and its subsidiaries present below the additional disclosures on their financial instruments required by CVM Instruction 475/08, specifically on the sensitivity analysis in addition to the sensitivity analysis required by IFRSs and accounting practices adopted in Brazil. The Company adopted the assumptions below, defined in CVM Instruction 475/08, to conduct this sensitivity analysis: 63

84 definition of a probable scenario for risk behavior that, if materialized, can generate adverse results for the Company, and which is benchmarked by an independent external source (Scenario I); definition of two additional scenarios with stresses of at least 25% and 50% in the risk variable considered (Scenario II and Scenario III, respectively); and presentation of the impact of the defined scenarios on the fair values of the financial instruments operated by the Company and its subsidiaries. Operation Risk Scenario I - Probable scenario Scenario II - 25% stress Cenário III - 50% stress Effective rate as at June 30, % 10.80% 10.80% Short-term investments: CDI decrease 617, , ,159 Annual estimated CDI rate in % 8.76% 5.84% Annual effect on short-term investments: Gain 5,486 Loss (12,718) (30,922) Operation Risk Scenario I - Probable scenario Scenario II - 25% stress Cenário III - 50% stress Effective rate as at June 30, % 10.80% 10.80% Loans: DEBENTURES - RENOVA CDI increase 358, , ,946 PROMISSORY NOTES - LER 2010 AND LEN 2011 CDI increase 407, , ,376 Annual estimated CDI rate in % 14.60% 17.52% Annual effect on short-term investments: Loss 7,484 32,319 57,153 Operation Risk Scenario I - Probable Scenario Scenario II - 25% stress Cenário III - 50% stress Effective rate as at June 30, % 5.00% 5.00% Loans: BNDES - LP - LER 2009 TJLP increase 906, , ,159 BNDES - CP - LER 2010 and LEN 2011 TJLP increase 650, , ,997 Annual estimated TJLP rate in % 6.25% 7.50% Annual effect in loans: Loss - 19,464 38,929 64

85 In the short-term investments, the probable scenario considers SELIC future rates, used as the basis for calculation of the CDI rate, based on the Central Bank of Brazil s expectations, over a year, at 11.68%. Scenarios II and III consider a reduction of this rate by 25% (8.76% p.a.) and 50% (5.84% p.a.), respectively. These projections are also applicable to debentures and promissory notes subject to the CDI rate, considering scenarios II and III, based on an increase of 25% (14.60%) and 50% (17.52%), respectively. In relation to borrowings and financing subject to the TJLP rate, the Company and its subsidiaries considered the probable scenario according to the rate for the second quarter of 2013 provided by BNDES, which rate is expected to be maintained over a year, at 5%. Scenarios II and III consider a reduction of this rate by 25% (6.25% p.a.) and 50% (7.50% p.a.), respectively. The weighted average spread in the short-term investments and loans is: (i) % of CDI rate on short-term investments; (ii) 1.99% + TJLP on BNDES loans; and (iii) % of CDI rate on debentures. The effects (increase/decrease) included in this sensitivity analysis refer to interest rate changes considered in scenarios I, II and III based on the interest rate in effect as at June 30,2014. These sensitivity analyses have been prepared in accordance with CVM Instruction 475/2008, whose purpose is to measure the effects from the changes in market variables on each financial instrument of the Company and its subsidiaries. However, the actual settled amounts could differ from these estimates due to the subjectivity inherent to the process used in preparing the analyses. f. Liquidity risk The liquidity risk determines the parent s and subsidiary s ability to settle the obligations assumed. In order to determine the subsidiary s financial capacity to properly comply with the commitments assumed, the maturity flows of the funds raised and other obligations are included in the disclosure. For further information on the Company s borrowings, see Note 16. The Company s management solely enter into with credit lines to leverage its operating capacity. This assumption is confirmed based on the charateristics of the Company s borrowings. The maturities of the Company s borrowings are broken down as follows: Intruments at interest rate Total 1 to 3 months Consolidated 06/30/ months to 1 year 1 year to 5 years Over 5 years Fixed Borrowings, financing and debt charges 99,490 2,073 6,218 33,163 58,036 Floating Borrowings, financing and debt charges 1,970,889 15, , ,793 1,086,390 Debentures 358,946 11, , ,992 Total 2,429,325 29, , ,945 1,351,418 65

86 g. Credit risk The credit risk reflects the possibility that the Company may not exercise its rights. This description is directly related to trade payables. Carrying amount Consolidated Parent Financial assets Nota 06/30/ /31/ /30/ /31/2013 Current Trade receivables 8 31,101 20, In the power sector, the operations carried out are directed to the regulatory agency that maintains the active information on the positions of produced and consumed power. Based on structure, plannings are created to operate the system without interferences or interruptions. Power is sold through auctions, agreements, among others. This system is reliable and controls the payments by the players in the market. Another credit risk source is associated to the short-term investments. These financial instruments are managed through operating strategies and internal controls that aim at liquidity, security and profitability. The Company does not carry out transactions for speculative purposes. The Company manages its risks on a continuous basis, evaluating whether the practices adopted in the performance of its activities are aligned with Management s policies. The Company does not carry out transactions with financial instruments for equity hedge purposes as it believes that the risks to which its assets and liabilities are exposed can be compensated between each other over the normal course of its activities. These financial instruments are managed using operating strategies that seek to obtain liquidity, profitability, and security. The control policy consists of a permanent monitoring of contracted terms and conditions compared to market terms and conditions. As at June 30, 2014, the Company did not make speculative investments in derivatives or any other risk assets. h. Derivative transactions No transactions with derivative financial instruments were conducted in the years reported. i. Capital management Consolidated 06/30/ /31/2013 Borrowings and financing 2,417,341 2,390,256 (-) Cash and cash equivalents and short-term in 642, ,047 Net debt 1,775,131 2,016,209 Equity 1,804,680 1,000,600 Financial leverage ratio - % 98% 202% 66

87 The objectives of the Company in managing its capital are to ensure that the Company is always capable of providing return to its shareholders and benefits to other stakeholders, and maintain an ideal capital structure to reduce this cost. In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to stockholders, return capital to stockholders or, also, issue new shares or sell assets to reduce, for example, indebtedness. j. Risk of shortage of wind This risk results from the shortage of wind due to natural factors, which is reduced because the wind deposits in Brazil are one of the best in the world, as in addition to high speed, wind is considered stable, different from certain regions in Asia and the United States, which are subject to cyclones, typhoons and other natural factors. k. Risk of shortage of water Indirect subsidiary Energética Serra da Prata S.A. generates power through small hydroelectric plants (PCHs). A long period of shortage of rain, during the humid season, will reduce the water volume of the plants reservoirs. An extreme condition would imply decrease in revenues. 27. Earnings per share Basic earnings (loss) per share are calculated by dividing profit (loss) for the year attributed to the holders of common and preferred shares of the Parent by the weighted average number of common and preferred shares outstanding during the period. Diluted earnings (loss) per share is calculated by dividing profit (loss) for the year attributable to the holders of the Parent s common and preferred shares by the weighted average number of common and preferred shares available during the year, plus the weighted average number of common shares issued on the assumption of exercise of stock options with strike price lower than fair value. According to the Company s bylaws, preferred shares are entitled to the same conditions of the common shares in profit sharing. The table below shows the data and number of shares used to calculate basic and diluted earnings (loss) per share for the years indicated in the statement of operations. Consolidated Parent 06/30/ /30/ /30/ /30/2013 Loss for the period (6,066) (6,478) (6,066) (7,221) Basic loss per share: Weighted average of outstanding common shares (in thousands) 231, , , ,982 Basic loss per share (in R$) (0.03) (0.03) (0.03) (0.03) 67

88 28. Insurance The Company and its subsidiaries contracted insurance for certain property, plant and equipment items, civil liability and other contractual guarantees. As at June 30, 2014, current policies are summarized as follows: Risks of generation, construction and transmission: Operation Term Insured item Coverage Beginning End Insured party Surety - Contractual obligations R$ /08/ /08/2014 COELBA Operating risks R$ 156,109 09/25/ /25/2014 ESPRA Civil liability R$ 20,000 09/25/ /25/2014 ESPRA Construction Term Insured item Coverage Beginning End Insured party Construction performance bond (LER 2009) R$ 48,519 02/01/ /28/2014 ANEEL Implementation performance bond LER 2010 R$ 29,470 04/14/ /31/2014 ANEEL Implementation performance bond LEN 2011 R$ 41,193 12/05/ /21/2015 ANEEL Engineering risk / ALOP (LER 2009) R$ 1,287,348 06/30/ /30/2014 Renova Energia Engineering risk / ALOP (LER 2010) R$ 672,254 03/30/ /28/2014 ANEEL Engineering risk / ALOP (LEN 2011) R$ 785,586 11/29/ /01/2014 ANEEL Civil liability LER 2009 R$ 10,000 06/28/ /28/2014 Renova Energia Civil liability - LER 2010 R$ 20,000 03/30/ /28/2014 Renova Energia Civil liability - LEN 2011 R$ 20,000 11/29/ /01/2014 Renova Energia Transportation/Delay Start-up (Project LER 2010/LEN 2011) R$ 801,500 11/30/ /01/2014 Renova Energia Construction performance bond (LEN 2012) R$ 3,144 04/02/ /01/2017 ANEEL Construction performance bond (LER 2013) R$ 31,750 12/05/ /01/2015 ANEEL Construction/Supply and Services bond R$ 64,715 04/28/ /01/2018 ANEEL Management and Portfolio Term Insured item Coverage Beginning End Insured party General civil liability insurance for directors and officers D&O R$ 30,000 12/18/ /18/2014 Renova Energia Civil liability insurance for Public Offer of Shares POSI R$ 25,000 07/07/ /07/2014 Renova Energia Office insurance - Branches R$ 7,050 11/07/ /07/2014 Renova Energia Office insurance - Head office R$ 3,276 11/19/ /19/2014 Renova Energia Registry guarantee - PB - PCH Açungui R$ /15/ /15/2014 ANEEL Warranty ICG LEN nd Stage R$ /12/ /12/2014 ANEEL Vehicle insurance R$ /14/ /14/2014 Renova Energia Rd Equipment (Meter Wind - Lidar) R$ 1,236 09/12/ /12/2014 LIDAR Transportation - Distributed Generation R$ 49 05/14/ /14/2014 BERKLEY 68

89 29. Commitments The Company and its subsidiaries assumed contractual obligations and commitments relating to the construction of the plants under LER 2010 and LEN 2011 (A-3), including the purchase of machinery and equipment, in the amount of R$228,583, maturing in Non-cash Transactions During the period, the Company carried out the following non-cash transactions; therefore, these transactions are not reflected in the statement of cash flows: Consolidated Parent 06/30/ /30/ /30/ /30/2013 Capitalized finance charges 55,578 8,437 9,209 - Capitalized finance income (5,787) Purchase of property, plant and equipment - trade payables 165, , Subsidiarires' capital payment through property, plant and equipment ,611 - Subsidiarires' proposed dividends ,427 - Repayments of borrowing and promissory notes with new borrowing (Note 16) 1,000, Repayments of finance charges with new borrowing (Note 16) 47, Events after the reporting period 31.1 Beginning of commercial operations of LER 2009 wind farms On July 4, 2014, ANEEL (Brazilian Electric Power Agency) published Order 2257 releasing the fourteen wind farms of LER 2009 for commercial operation. In other words, as of that date, the energy from the wind farms, with an installed capacity of MW began to be registered under the terms of the commercial contract signed between the Company and CCEE (Electric Power Trading Company). The LER 2009 wind farms were declared apt to operate in July 2012, but the transmission lines were not ready. After the delivery of the transmission lines, which occurred in June 2014, Renova had 30 days to commission and energize the farms. In 6 days, the Company managed to commission the 184 turbines that complete the 14 wind farms and after a series of tests, on July 4, 2014 the commercial operation began. For the wind farms commercializing energy through LER 2010, the transmission line that will discharge the energy is the same line as LER 2009, nevertheless the substation is not ready yet and its conclusion is estimated for August 31, After delivery of this substation, the Company will also have one moth to commission these wind farms. 69

90 31.2 Investment Contract for the Purchase and Sale Commitment of Shares between the Company and CEMIG Em 21 de março de 2014, a Cemig GT sagrou-se vencedora do leilão publicado pela Companhia em 07 de fevereiro de Referido leilão, tinha como objetivo a comercialização de 295 MW médios e desenvolvimento de projeto eólico composto por 25 parques eólicos que somam 676,2 MW de capacidade instalada no município de Jacobina/BA (Projeto Eólico). De acordo com o edital, o vencedor do leilão tinha a opção de participar em até 50% do Projeto Eólico. (nota 5) Considerando o interesse do exercício da opção pela Companhia Energética de Minas Gerais (CEMIG), em 17 de julho de 2014, foi celebrado Contrato de Investimento de Compromisso de Compra e Venda de Ações entre a Companhia e a CEMIG. In accordance with the Investment Agreement, the operation shall occur through the acquisition, by CEMIG, of 50% of voting and total capital of a special purpose company to be created by the Company, in which all the contracts related to the Wind Farm Project shall be paid-in. The acquisition amount will be of R$113,450 for 50% of the amount of the advances of the contracts already signed by the Company, adjusted by the CDI (interbank deposit certificate) variation from the effective disbursement by the Company until the date of payment by CEMIG. As of the acquisition, CEMIG and Renova will share the future investment of the Wind Farm Project in the proportion of their capital equity in the SPE. The Investment Agreement is subject also to the suspension condition, especially approval by the Administrative Council for Economic Defense (CADE) Entrance of Cemig Geração e Transmissão S.A. (CEMIG GT) to the control block of the Company On July 25, 2014 the Administrative Council of the Company approved and extended the term for exercising the right of preference in relation to the capital increase approved during the Administrative Council Meeting of February 20, In this manner, the term for exercising the right of preference, which would expire on July 29, 2014, will expire on September 29, 2014, inclusive. * * * Carlos Mathias Aloysius Becker Neto Chief Executive Officer Alexandre Nogueira Machado Engineer and Operations Officer Ricardo de Lima Assaf Legal and Procurement Officer Pedro V.B. Pileggi Chief Financial and Investor Relations Officer Ney Maron de Freitas Sustainability and Communication Officer Reinaldo Silveira Accountant CRC /0-S- SP 70

91 (Convenience Translation into English from the Original Previously Issued in Portuguese) Renova Energia S.A. and Subsidiaries Individual and Consolidated Interim Financial Information for the Quarter Ended June 30, 2014 and Report on Review of Interim Financial Information Deloitte Touche Tohmatsu Auditores Independentes

92 Deloitte Touche Tohmatsu Auditores Independentes Avenida Tancredo Neves 450 Edf. Suarez Trade 29º andar Salvador - BA Tel: + 55 (71) Fax:+ 55 (71) (Convenience Translation into English from the Original Previously Issued in Portuguese) REPORT ON REVIEW OF INTERIM FINANCIAL INFORMATION To the Shareholders and Management of Renova Energia S.A. São Paulo, SP Introduction We have reviewed the accompanying individual and consolidated interim financial information of Renova Energia S.A. ( Company ), identified as Parent and Consolidated, respectively, included in the Interim Financial Information Form (ITR), for the quarter ended June 30, 2014 and which comprise the balance sheet as of June 30, 2014, and the related income statement and the statement of comprehensive income for the three-month and six-month then ended, and statement of changes in equity and statement of cash flows for the six-month then ended, including a summary of significant accounting policies and other explanatory notes. Management is responsible for the preparation and fair presentation of the individual interim financial information in accordance with CPC 21 Interim Financial Reporting and consolidated interim financial information in accordance with CPC 21 and IAS 34 Interim Financial Reporting, issued by the International Accounting Standard (IASB), and in accordance with accounting practices adopted in Brazil, as well as for the presentation of such information in accordance with the standards issued by the Brazilian Securities Commission (CVM), applicable to the preparation of Interim Financial Information (ITR). Our responsibility is to express a conclusion on this interim financial information based on our review. Scope of Review We conducted our review in accordance with Brazilian and International Standards on Review Engagements (NBC TR 2410 and ISRE Review of Interim Financial Information Performed by the Auditor of the Entity). A review of interim financial information consists of making inquiries, primarily of persons responsible for financial matters and accounting, and applying analytical and other review procedures. The scope of a review is substantially less than an audit conducted in accordance with International Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Therefore, we do not express an audit opinion. Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee and its network of member firms, each of which is a legally separate and independent entity. Please visit for a detailed description of the legal structure of Deloitte Touche Tohmatsu Limited and its member firms. Deloitte Touche Tohmatsu. All rights reserved.