1Q16 Consolidated Results

Transcription

1 The first step in the continued growth Rio de Janeiro May 04, 2016 Transmissora Aliança de Energia Elétrica S.A. Taesa (BM&FBovespa: TAEE11), one of the largest electric power transmission groups in Brazil, announces today its results for 1Q16. The consolidated interim financial information has been prepared and is presented in accordance with CPC 21 (R1) Interim Financial Reporting and IAS 34 Interim Financial Reporting issued by the International Accounting Standards Board (IASB). This information is presented in accordance with the standards issued by the Brazilian Securities Commission (CVM), applicable to the preparation of Interim Financial Information (ITR). José Aloíse Ragone Filho Marcus Pereira Aucélio Rafaela Gunzburger IR Contact CEO CFO and IRO Investor Relations

2 2 Conference Call in English May 5, 2016 Thursday BR TIME 2:00 PM Dial in: Code: Taesa NY TIME 1:00 PM Consolidated Results IFRS Regulatory (Non-IFRS) R$ mn 1Q16 1Q15 Chg. Chg. % 1Q16 1Q15 Chg. Chg. % EBITDA % % EBITDA Margin 90.4% 87.1% 3.2 bps 90.3% 90.0% 0.2 bps Net Income % % Net Debt BS 3,000 3,307 (306.8) -9.3% 3,000 3,307 (306.8) -9.3% TAEE11 (04 Mai) % % Market Cap 6,811 6, % 6,811 6, % In this release, Transmissora Aliança de Energia Elétrica S.A., Taesa, presents the financial and operating results, accompanied by the main highlights of the 1Q16. The results will be presented in both IFRS and Regulatory (Non-IFRS) formats. The results presented in the regulatory format are not audited. The Regulatory Information hereby stated was prepared as per the current structure of the electric sector accounting manual, issued by ANEEL, according to which all the investments done for the construction of a transmission line are registered as a fixed asset and the effects of the adoption of ICPC 01 (R1) (IFRS 12) are written off, including the fiscal impact (deferred income taxes, CSLL, PIS and COFINS) booked due to time differences that derived from the adoption of this principle. Taesa declares dividends based on the audited results.

3 3 1Q16 Consolidated Result The first step in the continued growth The first quarter 2016 represents the Companies capacity to deliver solid and consistent results aligned with a strategy to maintain a management focused in operational and financial discipline. On April 13, Taesa was the winning bidder of Branch P in Auction 013/ ANEEL. Branch P has an initial revenue of R$ 56.0 million and comprises 90 km of transmission lines and 2 substations in Tocantins State. ANEEL will grant Taesa the right to explore the concessions for 30 years. The contract is expected to be signed in June This was the first step towards the next growth cycle focusing on the acquisition of value accretive assets. The Regulatory EBITDA is a metric that represents Taesa s operational cash flow generation. In the first quarter 2016 it amounted to R$ mn, 6.7% higher than the first quarter 2015 and in line with the inflation cycle readjustment. The Regulatory EBITDA margin for the period was 90.3%. The first quarter 2016 Net Income IFRS was R$ mn 25.6% above the first quarter The main impact at the IFRS quarterly comparison was the monthly adjustment by inflation since it was different in both periods. Transmission lines quarterly availability rate was 99.98% and variable portion amounted to R$ 3.0 mn (discount equivalent to 0.7% of Taesa s revenue). Taesa s financial discipline geared on reducing the cost of debt, optimizing the cash management and generating shareholders returns, resulted in the following first quarter events: Refinance of the Swap with Citibank that amounted to R$ 350 mn in March with a new cost of 114.0% of CDI and 3.5 years period; Payment of R$ mn in April as dividends regarding 2015 results. Taesa presents its 1Q16 results on the following pages

4 4 Overview Pages 5 to 8 1Q16 Results Pages 9 to 27 Financial Statements Pages 28 to 39

5 Overview

6 6 Overview Taesa is a Pure Transco Taesa is a publicly listed company controlled by CEMIG and FIP COLISEU, solely dedicated to power transmission. It s one of the largest Brazilian companies within the segment. Generation Transmission Distribuition The Brazilian power transmission companies receive revenues (RAP Annual Permitted Revenue) based on the availability of the line, therefore not based on the volume of energy transmitted in the system. Premium Asset Base There are 3 categories of concessions within the Brazilian transmission sector. The category I is composed of the concessions granted before 1999 and were renewed in 2012 for another 30 years. The category II is comprised of the concessions granted between 1999 and November 2006 under a 30-year contract, with revenues adjusted annually by inflation (IGPM) that will be halved on the 16th year of the operation, not been subjected to tariff review. The category III is comprised of the concessions granted after November 2006, also under 30-year contracts, with revenues adjusted annually by inflation (IPCA), but subjected to tariff review. TAESA TBE Currently, the Company holds 28 concessions or stakes, 22 from category II and 6 from category III, totaling 9,803 km of lines ranging from 230 and 500 kv.

7 7 Corporate Structure Overview The 28 transmission concessions or stakes own by Taesa are: (i) 10 held within the holding company (TSN, NVT, ETEO, GTESA, PATESA, Munirah, NTE, STE, ATE e ATE II), (ii) 3 integral subsidiaries (ATE III, São Gotardo, Mariana) and (iii) 15 stakes (ETAU, Brasnorte and TBE). TBE is a group of 13 stakes: EATE (50%), ETEP (50%), ENTE (50%), ECTE (19%), ERTE (50%), STC (40%), EBTE (74%), ESDE (50%), ETSE (19%), Lumitrans (40%), Transudeste (5%), Transirapé (5%) and Transleste (5%). FIP Coliseu CEMIG Free Float 22.1% 43.4% 34.5% TAESA Brasnorte ETAU ATE III São Gotardo Mariana TBE* 38.7% 52.6% 100% 100% 100% 49.99% Combined stake TBE is a fantasy name for a group of 13 concessions TBE s corporate structure can be found on page 27.

8 1Q16 Results

9 Financial Results Operational Performance Taesa has presented a consistent operational performance throughout the years, as the company regularly kept the availability of the lines above 99.9%. In 1Q16, the Company presented an average consolidated availability of 99.98%, as shown in the chart below. The charts show the result of Taesa, excluding Brasnorte, ETAU e TBE % % 99.99% 99.98% 99.98% 99.98% 99.98% 99.97% 99.97% 99.97% Q16 Line Availability is a measure of time and is strictly an operating indicator. It is calculated by dividing the number of hours during which the line is available by the number of hours in a year (8,760 hours) per 100 km stretch. (Line Extension x hours available)/100 (Line Extension x 8,670 hours)/100 The line availability, as presented in the chart above, is a key operational indicator, but it is a measure of time. The indicator that shows the impact of the unavailability on the Income Statement of the company is the Variable Portion (PV). x 100 Ø 1.0% 1.0% % % % % % % % % % 1Q16 Due to the random behavior of the PV in the short term, the best way to understand the Company s performance in terms of PV is to analyze the value of the PV divided by the RAP, as shown in the chart on the left. The 1Q16 PV occurred mainly due to: (i) forced and programmed outage of the BC5 fixed series capacitor bank located at Imperatriz Substation (NVT), (ii) forced outage of the BC2 fixed series capacitor bank located at Ribeiro Gonçalves Substation (ATE II), and (iii) reversal of the PV provision at ETEO. R$ mn 25.0 Concession Amount (R$ mn) NVT ATE II ATE ETEO +1.0 Others * Q16 Total * Considering the PV of the 50% of UNISA concessions during 1S12

10 10 Financial Results RAP Cycle On June 29, 2015, ANEEL has published the resolution 1,918/15 with the Annual Allowed Revenues to Transmission Concessions for the cycle. The concessions adjusted by IGPM received a 4.1% adjustment and the concessions adjusted by IPCA received a 8.5% adjustment. RAP (R$ MM) 2014/ /2016 Cycle Cycle IGP-M Adjustment 7.8% 4.1% Novatrans TSN² Munirah GTESA PATESA ETAU ¹ ETEO NTE STE² ATE I ATE II² EATE¹ ETEP¹ ENTE¹ ECTE¹ ERTE¹ Lumitrans¹ Transleste¹ Transirapé¹² Transudeste¹ IPCA Adjustment 6.4% 8.5% Brasnorte¹²³ ATE III³ São Gotardo³ Mariana³ STC¹³ EBTE¹²³ ESDE¹³ ETSE¹³ Total 2,157 2,259 ¹ RAP amount regarding Taesa s proportional stake on December 31, ² Including reinforcement projects. ³ RAP must be grossed up of PIS/COFINS. Considering the jointly controlled and associate concessions, Taesa's RAP for the cycle is R$ 2,259 thousand, of which 74% is consolidated at the holding level. The cycle adjustment at TSN and Transirapé was above the inflation due to reinforcements. ESDE and EBTE had a tariff review and Mariana is under construction. ETSE became 100% operational. The RAP of Brasnorte, ATE III, São Gotardo, Mariana, EBTE, STC, ESDE and ETSE concessions must be grossed up of PIS/COFINS. RAP by Category Cat 3 4% 96% Cat 2

11 11 Net Revenues IFRS 1Q16 Net Revenues IFRS reached R$ mn, up 18.2% QoQ. Financial Results Taesa does not consolidate proportionally the jointly controlled and associate companies. This way, the results of ETAU, Brasnorte and TBE are booked within the equity method line. Due to the predictable adjustment assured in the concession agreement, the Company became to recognize these effects monthly and no longer annually. Since then, the inflationary effect is diluted monthly considering the IGP-M or IPCA inflation rate performed in the previous month. The indexes used for the adjustment of the first quarter were IGP-M of 0.49%, 1.14% and 1.29% and the IPCA of 0.96%, 1.27% and 0.90% for the months of December 2015, January and February 2016, respectively. In the first quarter 2015, the IGP-M was 0.62%, 0.76% and 0.27% and the IPCA was 0.78%, 1.24% and 1.22%. R$ mn IFRS Net Revenues 1Q16 1Q15 Chg. Chg. % Operation and Maintenance % Financial Asset Income (2.0) -1.2% Financial Asset - Monetary adjustment % Construction and indemnity (0.5) 4.4 (5.0) % Total IFRS Revenues % PV (3.0) (8.1) % Other % Total Gross Revenues % Deductions (40.2) (37.6) (2.6) 7.0% Total Net Revenues % Adding all invested companies, including the jointly controlled and associate companies, proportionally, 1Q16 Net Revenues would amount to R$ mn, up 19.1% QoQ. The quarterly variation is mainly due to: (i) inflation adjustment in the O&M revenues ( Cycle) (ii) the difference between the IGP-M in the 1Q16 and the 1Q15 at the monthly adjustment by inflation and (iii) decrease in the Construction Revenues. Managerial Net Revenue IFRS x Managerial Net Revenue Regulatory (Non IFRS) Net revenues as presented below is adjusted to include the revenues from the companies that are booked in the equity method line. Regulatory (Non IFRS) adjusted IFRS adjusted Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16

12 Financial Results O&M (R$ mn) O&M Revenues of Taesa increased in the quarterly comparison mainly due to the annual adjustment by inflation ( Cycle). Considering all invested companies, including the jointly controlled and associate companies, proportionally, the Company O&M would be R$ mn for 1Q16, up 4.8% in the quarterly comparison. +4.8% % Consolidated 1Q15 chg Consolidated 1Q16 TBE Etau Bras Managerial 1Q16 chg Managerial 1Q15 Financial Asset Income (R$ mn) The Financial Asset Income consists of multiplying the rate of return by the outstanding financial asset. The amount of 1Q16 was in line with 1Q15 once the rate is fixed. Adding all the jointly controlled and associate companies, proportionally, 1Q16 Net Revenues would amount to R$ mn % % Consolidated 1Q15 chg Consolidated 1Q16 TBE Etau Bras Managerial 1Q16 chg Managerial 1Q15

13 Financial Results Financial Asset Monetary Adjustment (R$ mn) The monetary adjustment of the Finacial Asset is based on the monthly inflation adjustment. In the 1Q16, the amount was R$ mn, an increase of 61.5% in the quarterly comparison, due to the different inflation in the period. Adding all invested companies, including the jointly controlled and associate companies, proportionally, 1Q16 monetary adjustment would amount to R$ mn, up 58.5% QoQ % % Consolidated 1Q15 chg Consolidated 1Q16 TBE Etau Bras Managerial 1Q16 chg Managerial 1Q15 Construction and Indemnity (R$ mn) The 1Q16 Construction Revenue of R$ -0.5 mn mainly influenced by: (i) adding at TSN fixed asset were reversed by R$ mn, (ii) reinforcement at NVT of R$ 0.3 mn, (iii) reinforcements at Patesa of R$ 0.3 mn and (iv) construction of the transmission line Mariana, which amounted to R$ 0.4 mn % % Consolidated 1Q15 chg Consolidated 1Q16 TBE Etau Bras Managerial 1Q16 chg Managerial 1Q15

14 14 Financial Results Costs, Expenses, Depreciation and Amortization 1Q16 Costs and Dep/Amort totaled R$ 40.2 mn, down 9.7% QoQ. In line with the accounting rules, Taesa does not consolidate proportionally the jointly controlled and associate companies. Adding all invested companies, including the jointly controlled and associate companies, proportionally, 1Q16 costs and expenses would be R$ 50.2 mn, down 12.8% QoQ. The main changes occurred on IFRS costs were: (i) the annual adjustment by inflation in personnel line, (ii) decrease in material costs line due to the provision reversal of R$ 1.8 mn for construction, operation and maintenance made in 2015, (iii) decrease of maintenance expenses and (iv) decrease of construction costs. R$ mn IFRS Costs and Opex 1Q16 1Q15 Chg. Chg. % Personnel (28.1) (24.0) (4.2) 17.4% Material 0.4 (6.8) % Third Party Services (6.9) (9.9) % Other (4.5) (3.4) (1.1) 32.1% Total (39.1) (44.1) % Dep/Amort (1.1) (0.4) (0.7) 182.7% Total (40.2) (44.5) % Costs and Expenses (R$mn) -12.8% % Consolidated 1Q15 chg Consolidated 1Q16 TBE Etau Bras Managerial 1Q16 chg Managerial 1Q15 R$ mn Regulatory (Non-IFRS) Costs and Opex 1Q16 1Q15 Chg. Chg. % Personnel (28.1) (24.0) (4.2) 17.4% Material (0.1) (0.9) % Third Party Services (6.9) (9.9) % Other (4.5) (3.4) (1.1) 32.1% Total (39.6) (38.1) (1.5) 3.9% Dep/Amort (50.3) (50.7) % Total (89.9) (88.9) (1.0) 1.2%

15 15 Financial Results EBITDA / EBITDA Margin IFRS 1Q16 EBITDA IFRS reached R$ mn with EBITDA Margin of 90.4%. As Taesa does not consolidate proportionally the jointly controlled and associate companies, the results of ETAU, Brasnorte and TBE are not reflected on the consolidated EBITDA IFRS. The quarterly EBITDA IFRS reflects the effect of the monthly inflationary adjustment in the Financial Asset Income described on page 11. Thus, the variation of 22.6% between the 1Q16 and 1Q15 EBITDA IFRS occurred mainly due to the difference between the inflation that updated the revenue from the Monetary Adjustment of the Financial Asset. Adding the EBITDA IFRS of all invested companies, including the jointly controlled and associate companies, proportionally, the 1Q16 EBITDA IFRS would be R$ mn, up 23.8% QoQ. The EBITDA IFRS is not a gauge that reflects the operating cash flow of the Company. The adoption of IFRS caused a deviation between P&L and CF. R$ mn IFRS EBITDA 1Q16 1Q15 Chg. Chg. % Net Revenues % Costs and Expenses (39.1) (44.1) % EBITDA % EBITDA margin 90.4% 87.1% 3.2 bps EBITDA IFRS (R$ mn) +23.8% % Consolidated 1Q15 chg Consolidated 1Q16 TBE Etau Bras Managerial 1Q16 chg Managerial 1Q15

16 16 Regulatory Net Revenues (Non-IFRS) 1Q16 Regulatory Net Revenues (Non-IFRS) reached R$ mn, up 6.5% QoQ. Financial Results The Regulatory Result (Non IFRS) will also be presented according to accounting principles consolidating the jointly controlled and associate companies in the equity method line. This way, the results below exclude ETAU, Brasnorte and TBE. Adding all invested companies, including the jointly controlled and associate companies, proportionally, the 1Q16 Net Revenue amounted to R$ mn with a positive variation of 5.9%. The accounting of the inflationary effects described on page 11 does not impact the Regulatory Result, since it is an accounting change that affects only the IFRS. R$ mn Regulatory (Non-IFRS) Net Revenues 1Q16 1Q15 Chg. Chg. % RAP Concessions % PV (3.0) (8.1) % Service Revenues % Other Revenues % Total Gross Revenues % Deductions (39.4) (38.3) (1.1) 2.9% Total Net Revenues % Net Revenue (R$mn) +5.9% % Consolidated 1Q15 chg Consolidated 1Q16 TBE Etau Bras Managerial 1Q16 chg Managerial 1Q15

17 17 Financial Results Regulatory EBITDA / EBITDA Margin (Non IFRS) 1Q16 Regulatory EBITDA (Non IFRS) reached R$ mn with Regulatory EBITDA Margin (Non IFRS) of 90.3%. According to the accounting rules, Taesa does not consolidate proportionally the jointly controlled and associate companies. This way, the results of ETAU, Brasnorte and TBE are not reflected on the consolidated Regulatory EBITDA (Non IFRS). The 1Q16 Regulatory EBITDA (Non IFRS) presented a variation of 6.7% in comparison with 1Q15, due to the macroeconomic indicators that update the RAP Cycle. Adding the Regulatory EBITDA (Non IFRS) of all invested companies, including the jointly controlled and associated companies proportionally, the 1Q16 number would amount to R$ mn with an EBITDA Margin 90.5%. The EBITDA Margin above to 90.0% proves the commitment of the Company with its operational efficiency. In the energy transmission market, the Regulatory EBITDA (Non IFRS) is a key financial indicator, due to its adherence to the Company s operating cash flow. R$ mn Regulatory (Non-IFRS) EBITDA 1Q16 1Q15 Chg. Chg. % Net Revenues % Costs and Expenses (39.6) (38.1) (1.5) 3.9% EBITDA % EBITDA margin 90.3% 90.0% 0.2 bps Regulatory EBITDA (Non IFRS) (R$ mn) +6.5% % Consolidated 1T15 chg Consolidated 1T16 TBE Etau Bras Managerial 1T16 chg Managerial 1T15

18 18 Regulatory EBITDA (Non-IFRS) Breakdown Financial Results The table below shows how the EBITDA would be, considering all the concessions from Taesa group, proportionally. It s important to highlight that the accounting consolidated results does not include ETAU, Brasnorte and TBE. 1Q16 Results Taesa EBITDA: R$ mn Margin: 90.3% Net Rev. R$407.3 mn Opex R$ 39.6 mn EBITDA R$ mn Margin: 90.5% ETAU (52.56%) EBITDA: R$ 3.8 mn Margin: 84.5 % BRA (38.66%) EBITDA: R$ 1.5 mn Margin: 75.7% Net Rev. R$ 4.5 mn Opex R$ 0.7 mn Net Rev. R$ 2.0 mn Opex R$ 0.5 mn TBE (49.99%) EBITDA: R$ 92.2 mn Margin: 91.8% Net Rev R$ mn Opex R$ 8.2 mn

19 19 Financial Results Equity Method The 1Q16 Equity Method Income totaled R$ 76.7 mn The variation in the result of the invested companies, including the jointly controlled and associate in the quarterly comparison was mainly due to the difference of the inflation adjustment in the quarters, given the fact the effect of the inflation adjustment is recognized monthly. In addition, ETSE (a TBE Company) became operational while ETAU and Brasnorte reduced their debt interests. R$ mn IFRS Equity method 1Q16 1Q15 Chg. Chg. % ETAU % Brasnorte % TBE % Total Equity method % Net Financial Results In 1Q16, Net Financial Expenses totaled R$ mn, in line with 1Q15. R$ mn Net Financial Expenses 1Q16 1Q15 Chg. Chg. % Financial Revenues Revenues from financial investments % Financial Expenses Borrowings and financing 43.0 (112.8) % Financial instrument (74.4) 99.6 (174.0) % Debentures (115.9) (133.8) % Other financial expenses/revenues 1.1 (0.7) % Total (133.8) (137.4) % The borrowings and financing line considers: (i) borrowings interest of R$ 3.1 mn (ii) positive accounting of some lines of the loan subject to the Law amounting to R$ 46.1 mn. The debentures line considers: (i) negative monetary variation of R$ 54.2 mn, due to the IPCA adjust series in the 1 st and 3 rd issuance of debentures and (ii) negative interest incurred of R$ 61.7 mn. The loan subject to the Law totaling R$ 350 mn was obtained in April, 2014, in US Dollars linked to Libor interest rate, included a swap based on 103.5% of CDI and maturing in April This way, the debt is shown in the financial result as: Borrowings and financing accounted (i) positive exchange variation of R$ 39.7 mn and (ii) updated positive fair value of R$ 6.4 mn regarding to the marked to market loan in US dollars. Financial instrument derivatives were mainly influenced by: (i) negative marked-to-market swap in CDI of R$ 24.3 mn, (ii) negative exchange variation of R$ 39.7 mn and, (iii) debt expenses in CDI of R$ 12.0 mn.

20 20 Financial Results Taxes In the 1Q16, the IFRS income tax amounted to R$ 54.0 mn. In March 2015 the SUDAM/SUDENE tax subsidy of the concessions TSN, Novatrans, Munirah and Gtesa were renewed for more 10 years retroactive to The 1Q15 was positively influenced by R$ 31.0 mn. The concession Patesa is in the renewal process. The 1Q16 income tax was mainly influenced by: (i) R$ 21.9 mn consolidated tax subsidy (ii) exclusion of R$ 26.1 mn due to fact that the equity method is net of taxes. The tax subsidy is calculated based on IFRS revenue of each concession. Our tax incentive on the operating profit aims to reduce 75% of the income tax in nominal terms, so, normally the greater the Corporate Income Tax (IRPJ), higher will be the gain with the tax benefit and vice versa. 34% 34% 34% 34% 8% 9% 6% 9% 7% 10% 1% 17% 1% 19% 18% 17% 8% 8% 0% -3% 1Q16 IFRS 1Q15 IFRS 1Q16 Regulatory 1Q15 Regulatory Equity Method Tax Subsidy Others Effective Rate R$ mn IFRS Regulatory (Non-IFRS) Reconciliation of income tax 1Q16 1Q15 1Q16 1Q15 Pretax Profit IRPJ ans CSLL rate of 34% (104.6) (74.6) (76.6) (66.2) Equity method SUDAM/SUDENE Other 2.6 (0.5) 2.1 (5.2) IRPJ and CSLL recognized in profit (54.0) (17.5) (38.4) (16.1) Effective Rate 18% 8% 17% 8%

21 21 Financial Results The table below disclosure the Fiscal Regimen by concession and presents those which held the Fiscal Benefit and the expiration of the benefit. According to the Law 12,973 in July there was a change at the presumption base to 32% for assets within the Lucro Presumido fiscal regime. Concessão Regime Fiscal Benefício Fiscal % Área Fim TSN Real Sudene 100% 2023 NVT Real Sudam 100% 2023 GTESA Real Sudene 100% 2023 PATESA Real Munirah Real Sudene 100% 2023 ETEO Real NTE Real Suspended - - STE Real ATE I Real ATE II Real Sudam/Sudene 100% 2016 ATE III Real Sudam 100% 2018 São Gotardo Presumido ETAU Presumido BRASNORTE Real Sudam 100% 2020 EATE Real Sudam 100% 2023 ENTE Real ECTE Real ETEP Real ERTE Presumido LUMITRANS Presumido EBTE Presumido ESDE Presumido STC Presumido ETSE Presumido - - -

22 22 Financial Results The table below shows the PIS and COFINS aliquot of each concession. Concession PIS COFINS TSN 0.65% 3.00% NVT 0.65% 3.00% GTESA 0.65% 3.00% PATESA 0.65% 3.00% Munirah 0.65% 3.00% ETEO 0.65% 3.00% NTE 0.65% 3.00% STE 0.65% 3.00% ATE I 0.65% 3.00% ATE II 1.65% 7.60% ATE III 1.65% 7.60% SGT 0.65% 3.00% ETAU 0.65% 3.00% BRASNORTE 1.65% 7.60% TRANSMINEIRAS 0.65% 3.00% EATE 0.65% 3.00% ETEP 0.65% 3.00% ENTE 0.65% 3.00% ECTE 0.65% 3.00% ERTE 0.65% 3.00% LUMITRANS 0.65% 3.00% EBTE 1.65% 7.60% STC 0.65% 3.00% ESDE 0.65% 3.00% ETSE 0.65% 3.00%

23 Net Income 1Q16 Net Income amounted to R$ mn, 25.6% higher than the 1Q15. Financial Results From 1Q13 onwards, the equity method is added to the comparison, reflecting the accounting principles. 1T16 x 1T15: IFRS The chart below presents 1Q16 IFRS Net Income, comparing with the IFRS figures of 1Q15 and the variations of the events which impacted the 1Q16 Net Income % Q15 Net Income Δ EBITDA Δ Dep/Amort Δ Equity Method Δ Net Financial Result Δ Taxes 1Q16 Net Income Net Income 1Q16: IFRS X Regulatory (Non IFRS) The chart below presents the 1Q16 Net Income, comparing the results IFRS to the Regulatory (Non IFRS) % Regulatory Net Income Δ Net Revenue Δ Costs, Expenses and Depreciation Δ Equity Method Δ Taxes IFRS Net Income

24 24 Financial Results Dividends and Interest on Equity The total amount of dividends and interest on equity paid regarding 2015 Results was R$ mn (R$ 2.39/unit). In 2015, the Company paid R$ mn as dividends and interest on equity. This amount can be split into (i) R$ mn (R$ 0.74/unit) as dividends based on the 2014 results, (ii) R$ mn (R$ 0.43/unit) as interim dividends and R$ mn (R$ 0.47/unit) as interest on equity on September 30 and, (iii) R$ mn (R$ 0.32/unit) as interim dividends and R$ 82.0 mn (0.24/unit) as interest on equity on December 30. In april 2016, the Company paid the remaining R$ mn (R$ 0.31/unit) as dividends regarding the 2015 results. This way, 2015 has resulted in a payment of dividends and interest on equity amounted to R$ mn (R$ 2.39/unit), of which (i) R$ mn (R$ 1.68/unit) as dividends and (ii) R$ mn (R$ 0.71/unit) as interest on equity. 95% 95% 95% 95% 95% 100% 87% 88% 91% 94% 91% Extra (*) Net Income IFRS (R$ mm) Dividends (R$ mm) Payout * IFRS Reserve

25 25 Financial Results Indebtedness Outstanding effective debt amounted to R$ 3,536 mn, effective Cash and Equivalents totaled R$ 536 mn, hence effective Net Debt totaled R$ 3,000 mn. The gross and net debt include the financial derivative instrument. Considering all the jointly controlled and associate companies, proportionally, the total consolidated gross debt would amount to R$ 4,136 mn and the consolidated cash and cash equivalents R$ 615 mn. The difference between the accounting debt and the effective debt is related to the following items: (i) the debentures issuing costs of R$ 2.2 mn, (ii) ETAU and Brasnorte debt of R$ 15.3 mn and (iii) TBE debt of R$ mn. The amount of cash and cash equivalents were also adjusted to include (i) R$ 8.9 mn of ETAU and Brasnorte and (ii) R$ 70.1 mn of TBE. R$ mn Net Debt 1Q16 % Outst. Debt * Cash is the sum of the lines Cash and Cash Equivalent + Financial Investments + escrow deposits and the proportional cash of ETAU, Brasnorte and TBE The loan subject to the Law of R$ 350 mn, obtained in US Dollars in April 2014, linked at Libor interest rate and including a swap for 103.5% of CDI with Citibank, was paid through the issuance of a new loan of R$ 350 mn, also subject to the Law 4.131, with a maturity of 3.5 years, indexed to Libor and a swap for 114% of CDI. The cash and debt variations in the 1Q16 were mainly caused by: Payment of R$ mn as interest and principal paid to Citibank regarding the settlement of the loan 4,131 with a swap for 103.5% of CDI. R$ 350 mn obtained as a loan empowered by the Law with a swap for 114% of CDI. 4Q15 As a subsequent event: Payment of R$ mn as dividends on April 28 regarding 2015 Result. % Outst. Debt Short Term 335 9,5% ,8% (272) TJLP - 0,0% - 0,0% - Basket of Currencies - 0,0% - 0,0% - Fixed Coupon 9 0,3% 9 0,3% - CDI 283 8,0% ,9% (296) IPCA 43 1,2% 19 0,6% 24 Libor - 0,0% - 0,0% - Long Term ,5% ,2% 391 TJLP 0 0,0% 0 0,0% - Basket of Currencies - 0,0% - 0,0% - Fixed Coupon 54 1,5% 56 1,6% (2) CDI ,0% ,2% 341 IPCA ,0% ,4% 52 Libor - 0,0% - 0,0% - Total Debt (-) Cash and cash equivalents* (536) (220) - (315) (=) Net Debt (197) Chg.

26 26 Financial Results Outstanding Debt: Breakdown by Creditor The debt from controlled and associates is disclaimed below, proportionally. Company Creditor Index Taesa SWAP - CITIBANK* FINAME Principal (R$ / mn) Interest (R$ / mn) Cost Issue Rating Maturity Amort CDI CDI + 1.6% Aa1.br Dec /17 1 CDI CDI + 1.6% Aa2.br Dec /17 1 CDI CDI +0.8% Br.AAA Oct Bullet 1 IPCA IPCA % Br.AAA Oct /19/20 1 IPCA IPCA % Br.AAA Oct /22/23/24 1 CDI % CDI - Sep Bullet 1 TJLP/Fixed Coupon Coupons per Year 1 0 TJLP + 4.2% / 8.7% - Aug Monthly 12 FINAME Fixed % - Jul Monthly 12 FINAME Fixed % - Dec Monthly 12 FINAME Fixed 0,4 0 6,00% - Aug Monthly 12 FINAME Fixed ,00% - Jun Monthly 12 SGT FINAME Fixed % - Dec Monthly 12 Brasnorte 1st Debentures CDI % CDI Jun Semiannual 2 ETAU EATE EBTE ECTE ENTE ETEP ESDE ETSE TRANSLESTE TRANSIRAPÉ BoC 2 0 BoC + 4% - Jan Monthly 12 TJLP 6 0 TJLP + 4% - Jan Monthly 12 1st Debentures CDI % CDI Dec Bullet 1 1st Debentures CDI 0 0 CDI + 1.3% Aaa.br Mar Monthly 12 2nd Debentures CDI 60 4 CDI % Aaa.br Oct Semiannual 2 3rd Debentures CDI CDI % - Mar Quarterly 4 4rd Debentures CDI % CDI - Aug Quarterly 4 TJLP 75 0 TJLP % - May Monthly 12 Fixed % - Nov Monthly 12 2nd Debentures CDI 12 1 CDI % Aa2.br Oct Semiannual 2 3rd Debentures CDI 13 0 CDI % - May Quarterly 4 1st Debentures CDI 0 0 CDI + 1.3% Aa1.br Mar Monthly 12 2nd Debentures CDI % CDI - Aug Quarterly 4 1st Debentures CDI % CDI - Nov Monthly 12 2nd Debentures CDI % CDI - Aug Quarterly 4 TJLP 9 0 TJLP % - Apr Monthly 12 Fixed % - Sep Monthly 12 BNDES TJLP 8 0 TJLP % - Nov Monthly 12 BNDES Fixed % - Nov Monthly 12 BDMG Fixed % - Mar Monthly 12 BDMG Fixed 0,1 0 5%/ Libor/FX - Jan Semiannual 2 BNB Fixed 0, % - Mar Monthly 12 1st Debentures CDI % CDI - Aug Quarterly 4 BDMG Fixed % - Jul Monthly 12 BDMG Fixed % - Jan Monthly 12 BDMG Fixed 0, % + TJLP - Oct Monthly 12 1st Debentures CDI 1 0 CDI % - Nov Semiannual 2 Mutuo CDI % + TJLP - Nov Bullet - TRANSUDESTE 1st Debentures CDI 2 0 CDI % - Nov Semiannual 2 Total 2nd Debentures 3rd Debentures BNDES BNDES BNDES *The debt was issued in USD indexed to Libor but, as it has a swap to CDI, the final value in R$ after the swap was considered as the debt amount.

27 27 Financial Results Outstanding Debt Debt by Company (R$ mn) Capital structure (Book Value) Company Outstanding Debt (R$ Million) Cash Balance (R$ Million) Net Debt (R$ Million) TAESA 3, ,000 Brasnorte (38,7%) ETAU (52,6%) TBE (49.99%) TOTAL 4, ,519 61% 39% The net debt from Taesa above includes the debentures emission costs of R$ 2.2 mn that are not accounted at the balance sheet. Net Debt Equity (book value) TBE Corporate Structure On March 31, Taesa 50%* TBE¹ 49.99% 74%* 38% 18% 51% ENTE ERTE EATE EBTE ECTE ETEP 50% 22% 50% 49% 19% 50% 19% STC Lumitrans Transirapé Transudeste Transleste 62% 80% 10% 10% 10% ETSE 100% 100% ESDE 40%* 40%* 5%* 5%* 5%* 19%* 50%* Direct and indirect stake s at the concessions ¹ TBE is a fantasy name for a group of 13 concessions

28 Financial Statements

29 29 Financial Statements Breakdown of the IFRS Revenues O&M Revenues O&M Revenues is adjusted annually by inflation (IGPM or IPCA) in the same way as the RAP. The PV and other adjustments began to be booked in the line Variable Portion and other revenues. The PV (variable portion) is the penalty due to unavailability of the assets (see further details on page 9). R$ MM 1Q16 Concession O&M PV NVT 24.7 (0.3) TSN 46.3 (2.2) MUN GTE PAT ETE ETA 1.3 (0.1) BRA 0.3 (0.1) NTE STE 3.2 (0.0) ATE 5.9 (0.4) ATE II 13.2 (0.8) ATE III 9.2 (0.1) SÃO GOTARDO 0.3 (0.1) EATE 4.2 (0.2) EBTE 1.9 (0.5) ECTE ENTE ERTE ETEP Lumitrans 0.3 (0.3) STC 0.5 (0.0) ESDE 0.3 (0.2) ETSE MARIANA - Total (4.5) The table beside disclosure the O&M Revenues and the Variable Portion by concession on 1Q16, including ETAU, Brasnorte and TBE. The Consolidated amount is the sum of each concession weighted by Taesa s stake.

30 30 Financial Statements Breakdown of the IFRS Revenues Financial Asset Income and Monetary Adjustment The Financial Asset Income consists of the outcome of a rate of return times the outstanding Financial Asset. Monetary Adjustment of the Financial Asset Income is the monthly recognition of inflationary effects. In the Income Statement, the Financial Asset Income, the Monetary Adjustment of the Financial Asset Income and the Construction Revenue are booked within the Gross Income, as described in the table below. R$ MM 1Q16 Concession Financial Asset Income FA - Monetary adjustment Construction NVT TSN (1.6) MUN GTE PAT ETE ETA BRA NTE STE ATE ATE II ATE III SÃO GOTARDO EATE EBTE ECTE ENTE ERTE ETEP Lumitrans STC ESDE ETSE MARIANA Total The table beside disclosure the Financial Asset Income, the Monetary Adjustment of the Financial Asset Income and Construction Revenue by concession on 1Q16, including ETAU, Brasnorte and TBE. The Consolidated amount is the sum of each concession weighted by Taesa s stake

31 31 Financial Statements Financial Asset Financial Asset 4Q15 Financial Asset Income Mon Ad Fin Ass O&M Rev. Const. Rev. RAP Financial Asset 1Q16 Concession Financial Asset 1Q16 (R$ mn) Annual Rate Monthly O&M (R$ mn) cicle '15-16 RAP Concessions³ (R$ mn) cicle '15-16 End Concessions RAP reduction NVT 1, % Dec-30 Jun-18 TSN % Dec-30 Jun-18 TSN Reforço % Dec-30 No MUN % Feb-34 Oct-20 GTE % Jan-32 Aug-18 PAT % Dec-32 Sep-19 ETE % May-30 Oct-16 ETA % Dec-32 Apr-20 BRA¹ % Mar-38 No BRA¹ Reforço 5 5.7% Mar-38 No NTE % Jan-32 Jan-19 STE % Dec-32 Jul-19 ATE I % Feb-34 Dec-20 ATE II 1, % Mar-35 Jan-22 ATE III¹ % Apr-36 Mar-23 ATE III¹ Reforço % Apr-36 No SÃO GOTARDO¹ % Sep-42 No EATE 1, % Jun-31 Mar-18 EBTE¹ % Oct-38 No ECTE % Nov-30 Mar-17 ENTE % Dec-32 Feb-20 ERTE % Dec-32 Sep-19 ETEP % Jun-31 Aug-17 Lumitrans % Feb-34 Oct-22 STC¹ % Apr-36 Nov-22 ESDE¹ % Nov-39 No ETSE¹ % May-42 No Transleste 8 5.2% Feb-34 Dec-20 Transirapé 7 4.2% Mar-35 Feb-22 Transudeste 5 5.2% Mar-35 May-22 Mariana¹ ² % May-44 No Total 9, ,259 ¹ The RAPs must be grossed up of PIS/COFINS ² under construction ³ The Financial Asset RAP does not consider the basic transmission grid at the border ou basic frontier transmission grid

32 32 Financial Statements Income Statement IFRS Regulatory (Non-IFRS) Income Statement 1Q16 1Q15 Chg. Chg. % 1Q16 1Q15 Chg. Chg. % GROSS OPERATING REVENUES Service revenues ,5% Operation and Maintenance ,6% Financial Asset Income (1.987) -1,2% Financial Asset - Monetary adjustment ,5% Construction and indemnity (540) (4.984) -112,2% Variable Portion and Other Revenues (730) (7.255) ,9% (730) (7.255) ,9% TOTAL GROSS REVENUES ,1% ,1% Revenue deductions (40.199) (37.554) (2.645) 7,0% (39.442) (38.337) (1.105) 2,9% NET REVENUES ,2% ,5% COSTS AND OPERATING EXPENSES (40.204) (44.506) ,7% (89.913) (88.864) (1.049) 1,2% Depreciation and amortization (1.145) (405) (740) 182,7% (50.272) (50.717) 445-0,9% Costs and Expenses (39.059) (44.101) ,4% (39.641) (38.147) (1.494) 3,9% GROSS PROFIT ,4% ,0% Equity method ,4% ,8% Revenues from financial investments ,7% ,7% Interest expenses Borrowings and financing ( ) ,1% ( ) ,1% Financial instrument (74.427) ( ) -174,7% (74.427) ( ) -174,7% Debentures ( ) ( ) ,3% ( ) ( ) ,3% Other financial expenses (658) ,2% (658) ,2% Financial Revenues (Expenses) ( ) ( ) ,6% ( ) ( ) ,6% NET INCOME BEFORE INCOME TAXES ,2% ,7% Income taxes and social contribution (53.988) (17.490) (36.498) 208,7% (38.380) (16.136) (22.244) 137,9% NET INCOME ,6% ,7% EBITDA ,6% ,7% EBITDA Margin 90,4% 87,1% 3,2 bps 90,3% 90,0% 0,2 bps

33 33 Financial Statements Income Statement IFRS 1Q16 R$ 000 IFRS TAESA ETAU Brasnorte TBE GROSS OPERATING REVENUES Service revenues Operation and Maintenance 124,234 1, ,987 Financial Asset Income 164, ,462 40,149 Financial Asset - Monetary adjustment 157,877 2,394 3,356 76,895 Construction and indemnity (540) 1, Variable Portion and Other Revenues (730) ,266 TOTAL GROSS REVENUES 445,172 6,274 5, ,482 Revenue deductions (40,199) (493) (548) (11,876) NET REVENUES 404,973 5,781 4, ,606 COSTS AND OPERATING EXPENSES Personnel (28,123) (7) (121) (3,858) Material 439 (1,127) (11) (805) Third party services (6,901) (677) (331) (3,401) Depreciation and amortization (1,145) - - (158) Other operating expenses (4,474) (18) (31) (783) Costs and Expenses (39,059) (1,829) (494) (8,846) GROSS PROFIT 364,769 3,952 4, ,602 Equity method 76, NET FINANCIAL EXPENSES Revenues from financial investments 12, ,908 Borrowings and financing 43,003 (27) - (2,424) Financial instrument (74,427) Debentures (115,930) (189) (86) (16,817) Other financial expenses 1,133 (23) 32 (779) Financial Revenues (Expenses) (133,787) (77) (4) (18,112) NET INCOME BEFORE INCOME TAXES 307,673 3,875 4,101 92,163 Income taxes and social contribution (53,988) (1,315) (1,214) (20,921) Reversal of Interest on Equity NET INCOME 253,685 2,560 2,887 71,242 EBITDA 365,914 3,952 4, ,759 EBITDA Margin 90.4% 68.4% 89.3% 92.5% The equity method consists on booking the investment in a subsidiary or associate company according to the value of the shareholder equity of the invested company, also reflecting the variation in the equity of the invested company on the P&L of the holding company. Therefore, the sum of the Net Income of the subsidiaries or associate companies may differ from the equity method booked on the P&L.

34 34 Financial Statements Income Statement Regulatory (Non-IFRS) 1Q16 R$ 000 Regulatory (Non-IFRS) TAESA ETAU Brasnorte TBE GROSS OPERATING REVENUES Service revenues 447,441 4,433 2, ,359 Variable Portion and Other Revenues (730) (1,289) TOTAL GROSS REVENUES 446,711 4,919 2, ,070 Revenue deductions (39,442) (389) (292) (8,711) NET REVENUES 407,269 4,530 2, ,360 COSTS AND OPERATING EXPENSES Personnel (28,123) (7) (121) (3,858) Material (143) - (4) (160) Third party services (6,901) (677) (331) (3,401) Depreciation and amortization (50,272) (471) (649) (10,102) Other operating expenses (4,474) (18) (31) (783) Costs and Expenses (39,641) (702) (487) (8,201) GROSS PROFIT 317,356 3, ,056 Equity method 41, NET FINANCIAL EXPENSES Revenues from financial investments 12, ,908 Borrowings and financing 43,003 (27) - (2,424) Financial instrument (74,427) Debentures (115,930) (189) (86) (16,817) Other financial expenses 1,133 (23) 32 (847) Financial Revenues (Expenses) (133,787) (77) (4) (18,180) NET INCOME BEFORE INCOME TAXES 225,428 3, ,365 Income taxes and social contribution (38,380) (1,112) (113) (11,779) Reversal of Interest on Equity NET INCOME 187,048 2, ,587 EBITDA 367,628 3,828 1,516 92,158 EBITDA Margin 90.3% 84.5% 75.7% 91.8% The difference between Taesa s equity method and the sum of the results from ETAU, Brasnorte and TBE is due to the amortization of the fair value allocated arising from the process of allocation of the price paid registered at the investment line.

35 35 EBITDA Reconciliation Financial Statements 1Q16 EBITDA reconciliation exclude the impact from the equity method at the Company s result. R$ MM IFRS EBITDA Reconciliation 1Q16 1Q15 Chg. Chg. % Net Income % Income taxes and social contribution % Net Financial Expenses (3.6) -2.6% Depreciation and amortization % Equity method (76.7) (58.8) (17.9) 30.4% EBITDA % EBITDA Margem 90.4% 87.1% 3.2 bps R$ MM Regulatory (Non-IFRS) EBITDA Reconciliation 1Q16 1Q15 Chg. Chg. % Net Income % Income taxes and social contribution % Net Financial Expenses (3.6) -2.6% Depreciation and amortization (0.4) -0.9% Equity method (41.9) (38.5) (3.4) 8.8% EBITDA % EBITDA Margem 90.3% 90.0% 0.2 bps

36 36 Balance Sheet Financial Statements After the new accounting principle, ETAU, Brasnorte and TBE are consolidated through the line investment against Shareholder s Equity. R$ 000 IFRS Regulatory (Non-IFRS) Balance Sheet 1Q16 Adjustment 1Q16 Assets Cash and cash equivalent 432, ,163 Financial Investments 97,048-97,048 Receivables 169, ,362 Financial Asset 1,266,490 1,266,490 - Recoverable taxes 100, ,086 Dividends and interest on equity to receive 82,899-82,899 Other Current Assets 37,847-37,847 Total Current Assets 2,185,895 1,266, ,405 Financial Investments 6,584-6,584 Financial Asset 4,937,153 4,937,153 - Deferred income tax and social contribution - (548,308) 548,308 Investment 1,728, ,230 1,468,883 Receivables 13,385-13,385 Escrow deposits 15,437-15,437 Other receivables 14,997-14,997 Fixed Assets 21,723 (4,146,454) 4,168,177 Intangible Assets 20,191 (136,647) 156,838 Total Non Current Assets 6,757, ,974 6,392,609 Total Assets 8,943,478 1,631,464 7,312,014 Liabilities Trade accounts payable 19,306-19,306 Taxes 70,386-70,386 Borrowings and financing 10,617-10,617 Debentures 297, ,993 Financial instruments: derivatives - swap 26,348-26,348 Dividends to pay 4-4 Regulatory fees 57,942-57,942 Other payables 21,074-21,074 Total Current Liabilities 503, ,670 Borrowings and financing 394, ,476 Debentures 2,806,184-2,806,184 Deferred taxes and social contributions 149,923 (10,747) 160,670 Deferred Taxes 322, ,070 - Provisions for tax, social security, labor and civil contingencies 1,100-1,100 Other payables 135, ,305 Total Non Current Liabilities 3,809, ,323 3,497,735 Shareholder's Equity Paid-in capital 3,042,035-3,042,035 Capital Reserve 594, ,507 Earnings reserve 417, ,864 Proposed additional dividends 322, ,659 Accumulated Losses - 1,253,504 (1,253,504) Retained earnings 253,685 66, ,048 Total Shareholder's Equity 4,630,750 1,320,141 3,310,609 Total Liabilities and Shareholder's Equity 8,943,478 1,631,464 7,312,014

37 Financial Statements TBE Balance Sheet R$ 000 IFRS Regulatory (Non-IFRS) Balance Sheet 1Q16 Adjustment 1Q16 Assets Cash and cash equivalent 68, ,141 Receivables 44, ,309 Financial Asset 395,722 (395,722) - Recoverable taxes 6, ,745 Other Current Assets 15,513 (0) 15,513 Total Current Assets 530,429 (395,722) 134,707 Financial Investments 1,953-1,953 Financial Asset 2,446,335 (2,446,335) - Investment 14,933 10,733 25,666 Other receivables 11,442 (2,616) 8,825 Fixed Assets 7, , ,840 Total Non Current Assets 2,481,851 (1,466,566) 1,015,285 Total Assets 3,012,280 (1,862,288) 1,149,992 Liabilities Trade accounts payable 15, ,523 Taxes 18, ,186 Borrowings and financing 13,770-13,770 Debentures 133, ,901 Dividends to pay 78, ,580 Regulatory fees 17, ,441 Other payables 23, ,650 Total Current Liabilities 301, ,051 Borrowings and financing 97,882-97,882 Debentures 328, ,659 Deferred Taxes 705,323 (702,809) 2,514 Other payables 25, ,064 Total Non Current Liabilities 1,156,928 (702,809) 454,118 Shareholder's Equity Paid-in capital 584, ,916 Legal Reserve 91, ,348 Earnings reserve 806,797 (1,140,826) (334,029) Retained earnings 71,242 (18,655) 52,587 Total Shareholder's Equity 1,554,301 (1,159,479) 394,822 Total Liabilities and Shareholder's Equity 3,012,280 (1,862,288) 1,149, The TBE balance sheet is unaudited.

38 38 Cash Flow Cash Flow 1Q16 Cash Flow from operating activities Income for the period Adjusts to: Income on equity in subsidiaries (76.691) Depreciation and amortization Tax, social security, labor and civil provisions 40 Interest, monetary variation and exchange gains / losses and fair value adjustment on borrowings and financing (43.003) Interest and inflation adjustment on debentures Derivative financial instruments Income tax and social contribution Deferred taxes 757 Return on financial assets ( ) Construction and indemnity revenue 540 Variable Portion Provision Changes in assets and liabilities Increase in trade accounts receivable (5.850) Decrease in financial assets Increase in the balance of income tax and social contribution assets, less liabilities (22.693) Decrease in the balance of other assets Decrease in balance of trade accounts payable (14.406) Increase in the balance of regulatory fees Decrease in the balance of other payables (1.515) Dividends and interest on equity earned from jointly controlled Cash from operating activities Income tax and social contribution paid (43) Net cash from operating activities Financial Statements Cash flow of investing activities Increase in the balance of Financial Investments (15.660) Additions/write-offs in investments - Additions in property, intangible assets 375 Net cash used in investing activities (15.285) Cash Flow provided by financing activities Payment of borrowings and financing (principal) ( ) Payment of borrowings and financing (interest) (4.916) Payment of derivative financial instruments (interest) (9.552) Receiving and settlement of financial instruments Net Cash provided by financing activities (59.089) Opening balance of cash and cash equivalents Closing balance of cash and cash equivalents Increase in cash and cash equivalents

39 39 Recent Development Disclaimer The stand-alone and consolidated financial statements were prepared in accordance with the accounting principles adopted in Brazil, which include corporation law, the pronouncements, instructions and interpretations issued by the Accounting Pronouncements Comnittee (CPC) and the regulations of the Securities and Exchange Comnission of Brazil (CVM), combined with specific legislation issued by the National Electric Power Agency (ANEEL). As the industry regulator, ANEEL has powers to regulate the concessions. The forward-looking statements contained in this document relating to the business outlook, projections of operational and financial results and the growth prospects of Taesa are merely projections, and as such are based exclusively on management s expectations for the future of the business. These expectations depend materially on changes in market conditions and the performance of the Brazilian economy, the sector and international markets and therefore are subject to change without prior notice. EBITDA: EBITDA consists of net income before taxes, net financial expenses, and expenses with depreciation and amortization, and revenues. EBITDA is not recognized by generally accepted accounting principles in Brazil or by the IFRS, it does not represent a cash flow for the periods presented, it should not be considered as an alternative to net income, and it is not a performance indicator. The EBITDA presented is used by Taesa to measure its own performance. Taesa understands that some investors and financial analysts use EBITDA as an indicator of its operating performance. Net Debt: Net Debt is not recognized by generally accepted accounting principles in Brazil or by the IFRS, it does not represent a cash flow for the periods presented, and it is not a performance indicator. The Net Debt presented is used by Taesa to measure its own performance. Taesa understands that some investors and financial analysts use Net Debt as an indicator of its operating performance.