EDP Energias do Brasil S.A. CNPJ/MF nº / NIRE Publicly Company. 36th General and Special Shareholders' Meeting

Transcription

1 EDP Energias do Brasil S.A. CNPJ/MF nº / NIRE Publicly Company 36th General and Special Shareholders' Meeting Proposal by Management To Messrs. The shareholders of EDP Energias do Brasil S.A. Attachment I Comments of the Company's Directors Management Accounts related to the fiscal year ended December 31, 2013 Page 03 Attachment II Attachment III Proposal for Use of Net Profits for the Year 2013 Page 49 Information about the Directors Page 53 Attachment IV Information about Management Compensation From April/2014 to March/2015, including the latter Page 60 Attachment V Detailed report on Bylaws change Page 77 Attachment Reasons for Resubmission Page 82 VI 1

2 CONSIDERATIONS ON THIS MANAGEMENT PROPOSAL Company Identification Head office Investor Relations Director's office The Company's Independent Auditors Depositary Bank Shareholder Assistance EDP ENERGIAS DO BRASIL S.A., a corporation enrolled in the taxpayers' registry under number / and with its corporate documentation filed at the State of São Paulo Board if Trade under NIRE , registered as a public company at the Brazilian Securities Commission ("CVM") under number 19763, hereinafter referred to as ENERGIAS DO BRASIL or EDPBR Rua Gomes de Carvalho, nº 1996, 8 andar, Vila Olímpia, Cidade de São Paulo, Estado de São Paulo, CEP Mr. Miguel Dias Amaro is the Director Vice- President of Investor Relations. The telephone of the investor relations department is (55 11) The fax number of the investor relations department of EDPBR is (55 11) and the is ri@edpbr.com.br. 2013: PricewaterhouseCoopers, located at Av. Francisco Matarazzo, City and State of São Paulo. Água Branca Tel: (11) Itaú Corretora de Valores A.( Itaú ) Shareholder Assistance takes place through the EDPBR Investor Relations Office (information found above) or through any Banco Itaú branch office, whose main office is located at Av. Engenheiro Armando de Arruda Pereira, º andar The person in charge of the Shareholders' Department is Mr. Luis Antonio Andrade, who is available through telephone (55 11) , fax number (55 11) , and luis.andrade@itau-unibanco.com.br. Securities Issued The Company's shares are listed in Bolsa de Valores, Mercadorias e Futuros ("BM&FBOVESPA") under ticker "ENBR3", in the segment known as Novo Mercado. 2

3 ATTACHMENT I Comments of the Company's Directors Item 10 - Reference Form CVM Instruction 480/ COMMENTS OF THE COMPANY'S DIRECTORS. In thousands of Reais, unless otherwise indicated The comments contained in the items below reflect the opinion of EDP Energias do Brasil S.A. ( EDPBR ) Directors regarding this Company's financial aspects and equity position Comments by EDPBR Directors on: a. general financial and equity conditions We are a holding company with a diversified portfolio composed of companies in the areas of generation, distribution, and trading electricity in the Brazilian market. Our net operating revenues for the year ended December 31, 2013 was 9.9% greater than our net operating revenues for 2012, which increased from R$ 6,454.5 million to R$ 7,096.5 million. For the 12-month period ended December 31, 2012, our net operating revenues for that year was 13.1% greater than our net operating revenues for 2011, which was R$ 5,705.4 million. Our distribution, marketing, and generation assets were responsible for 58,0%, 18,4%, and 23,6% of our net revenues in 2013 respectively, without considering eliminations. In 2012, they replied as shown below: 61.9% distribution, 19.2% generation and 18.8% sales. Our net profits for the calendar year ended December 31, 2013 adjusted for nonparent company interest was R$ million; while in 2012, we recorded R$343.5 million, compared to net profits of R$ million in Our directors believe that we have satisfactory liquidity, even with our net working capital of R$ million as on December 31, 2013, resulting from a temporary situation which the distributors are undergoing, not just from the EDP group but those throughout Brazil as well owed to the additional costs of buying energy, especially from thermal sources which is more costly than from the usual sources (hydro). The impact of distributors was cushioned by the receipt of the CDE funds, besides of the sale of 50% interest in the ventures of Cachoeira Caldeirão and Jari, informed with more details in item 10.3, item b of this proposal. Our current liquidity indexes of 1.02 on December 31, 2013 and.87 on December 31, 2012 reflect this trend. Net working capital is equal to the difference between current assets and current liabilities, and the current ratio is the ratio obtained by dividing current assets by current liabilities, which provides adequate conditions to comply with our short-term operating liabilities. Our Directors believe that our financial and equity conditions are sufficient to maintain our business plan and to carry out our activities and meet our short and medium-term liabilities. b. capital structure and likelihood of redemption of shares or quotas, indicating: (i) hypothesis of redemption; (ii) formula for calculation of the redemption amount On December 31, 2013 our equity structure was composed of 32.3% in equity capital and 67.7% in third-party capital. During this same period, we had a net debt of R$ 2,335.3 million. On December 31, 2012 our structure was 34.9% in equity capital and 65.1% in third-party capital. As compared to the 2011 year, 38.6% was in equity capital and 61.4% in third-party capital. Our Directors consider that the current equity structure reflects an adequate leverage position, and complies with the return and risk levels in line with EDPBR's sustainable growth. Below follows a summary table of the key indicators comprising our net debt and capital structure: 12/31/ /31/ /31/2013 3

4 Net debt (1) 2, , ,259.4 Cash and cash equivalents Net debt 1, , ,335.3 (1) Corresponds to debentures, loans, financing and debt charges 12/31/ /12/ /12/2 013 Own capital (2) 4, % 4, % 4, % Third-party capital (3) 7, % 8, % 9, % Total 11, % 12, % 14, % (2) (3) This comprises Shareholders' Equity without non-controllers' interests This comprises total current liabilities, non-current liabilities, and non-controllers' interests Our equity capital is of R$ 3,182.7 million, composed of 476,415,612 ordinary shares, all of which are registered shares at no par value, entirely underwritten and paid in. We have an authorized capital of 200,000,000 (two hundred million) common shares. The Board of Directors is authorized to raise the equity capital up to this limit, regardless of any amendments to the bylaws. If it were not for the stock split at a rate of 1 to 3, whereby we went from to the current number of common shares, our EDPBR capital has not changed in the last 3 (three) calendar years. Our bylaws do not provide for the redemption of shares issued by EDPBR or for a formula to find redemption value, and the provisions of the Brazilian Corporate Law should be complied with. There was no share redemption and there is no intention of holding such an event. c. payment capacity in connection with financial commitments, in millions of Brazilian reais, unless otherwise indicated Our Senior Mangers believe that we are in a comfortable leverage position. Our consolidated gross debt, which considers the Total Debt of the Group, totaled R$ 3,259.4 million, R$ 3,088.5 million, and R$2,451.1 million as of December 31, 2013, 2012 and 2011, respectively. Our net debt consists in our gross debt as defined in 10.1(b) less Cash and Banks, composed of "Cash and Marketable Securities." It reached R$2,335.3 million as of December 31, 2013, down 7.2% on the balance as of December 31, 2012, when it amounted to R$2,517.2 million. This variation was caused by a higher cash generation, mainly because of the CDE funds received by distributors. The consolidated cash / marketable securities position increased from R$ million on December 31, 2012 to R$ million on December 31, Hence, the net indebtedness / EBITDA ratio, adjusted EBITDA being of R$ 1,655.7 million as defined in this Management Proposal, ended December 2013 at 1.41, which kept us at a comfortable leverage position although this was greater than the 1.77 for the same period in 2012, based on an adjusted EBITDA of R$ 1,420.6 million for 2012, which was deemed by our Directors to be still a comfortable leverage position. The subsidiaries on December 31, 2013 are in total compliance with all the restrictive clauses ("covenants") provided for in the respective agreements. Ratings of EDP Energias do Brasil and its distribution companies Moody s S&P Local Project Local Project EDP - Energias do Brazil Aa2.br Stable Ba1 Stable - - 4

5 EDP Bandeirante EDP Escelsa Lajeado Energia Energest Aa1.br Baa3 braa+ - Stable Stable Negative Aa1.br Baa3 braa+ BB+ Stable Stable Negative Negative Aa1.br Baa3 - - Stable Stable Aa1.br Baa3 - - Stable Stable Rating scale - Moody s Aaa Aa2 Aa2 Aa3 A1 A2 A3 Baa1 Baa2 Baa3 Ba1 Ba2 Ba3 B1 B2 B3 Caa1 Caa2 Caa3 Ca C WR Investment Grade Rating scale - S&P AAA AA+ AA AA- A+ A A- BBB BBB BBB- BB+ BB BB- B+ B B- CCC+ CCC CCC- CC C D HR Investment Grade d. sources of financing for working capital and for investments in non-current assets used In order to fund our working capital and investments in non-current assets ("CAPEX"), EDPBR and its subsidiaries have used cash generated by its activities as well as loans and financing obtained from financial institutions. For financing working capital and the investments in projects on electric energy generation, the EDPBR carried out two issues of debentures in 2013 totaling R$ 950 million, described below: On August 28, 2012, EDPBR made the first issue of simple or non-convertible, naked debentures, with a third-party guarantee, in a single series for public distribution with restricted placement efforts. A total of 45,000 debentures were issued with unit par value of R$ 10,000 fully subscribed by R$ 450 million, valid up to February 28, 2014, and with payment of interest on maturity date. In compensation, interest will be charged on the debentures' face value equal to 105.5% of the CDI. On April 11, 2013, EDPBR made the second issue of simple or non-convertible, naked debentures, with a third-party guarantee, in a single series for public distribution with restricted placement efforts. A total of 50,000 (fifty thousand) debentures was issued, at the unit face value of R$ 10,000.00, with full subscription in the amount of R$ 500 million, effective up to April 11 th, 2016, with amortization in two equal installments in April 2015 and on maturity date, and payment of interests every six months. The remuneration on the face value of debentures corresponds to interest at 0.55% in excess of the CDI. Among loan agreements, there is a credit facility ("CALC") entered into with Banco Nacional do Desenvolvimento Econômico e Social ("BNDES") in 2009, for a sum of R$900 million. EDP Energias do Brasil will use these resources basically for financing the investments of its distributors (Bandeirante and Escelsa), and for the construction of Small Hydroelectric Power Plants ( PCHs ) besides the repower ing of existing plants. We were the first electricity company to obtain this type of direct financing (without intermediation of a financial agent), created by the BNDES in 2005, aimed at simplifying the procedures of access to financing facilities to companies or large groups representing low credit risk. The resources approved were made available for withdrawal during five years, with total financing term of each withdrawal of up to ten years. The interest rates are formed in the same manner as other direct operations at BNDES: financial cost (TJLP in the case of investments in distribution) + remuneration rate of BNDES + credit rate risk established in accordance with the Group's rating at BNDES. 5

6 Our Directors believe that we are in a comfortable position with regard to our sources of funding for working capital and investments in non-current assets, in view chiefly of our (i) cash generation and (ii) our contracted and unused credit facilities. e. sources of financing for working capital and for investments in non-current assets destined for coverage of liquidity deficiency Needs for financing CAPEX are assured by means of pre-approved facilities from BNDES and the European Investment Bank ("EIB"), in addition to the company's own cash generation. Our Directors believe that owing to our cash generation, we will not need to make recurring use of credit facilities to cover our working capital needs, in addition to what will be required to fund our CAPEX. The need for any likely funding in addition to these facilities will in general extend the indebtedness curve and preserve the leverage position, which in accordance with our Directors are adequate for our shareholders as well as for our creditors. Should our cash generating capacity be insufficient to cover any possible deficiencies in liquidity, our Directors believe that we will be able to correct this through the credit facilities still available (see sub-item 10.1(g) below) or by means of new credit lines. When contracting new loans, our Directors seek to analyze those options available at that time, considering market conditions and always bearing in mind maximum terms and compatible interest rates. f. indebtedness levels and the characteristics of said debts Our Directors believe that that indebtedness level has been kept at a level compatible with our cash flow. According to or Directors, the breakdown of our indebtedness also reflects the Group's good financial condition. The average term of the consolidated debt in December 2013 reached 2.45 years, a reduction in relation to December 2012 (2.73 years). This reduction was caused by the funding of the 1 st issue of debentures of Lajeado Energia. Our Gross Debt is predominantly related to TJLP and CDI indexers, which were responsible for 14% and 80% respectively of our Gross Debt in December 2013, which is compatible with the Group's strategy. (A) significant loan and financing agreements The table below presents some of the features of our relevant loan agreements on the dates shown: 6

7 Debentures Date Characteristics of the issuances Issuer Issuance Settlement Frequency Series Quantity of securities Remuneration Amount EDP Bandeirante 07/01/ /30/2016 4a Sole 39, % of CDI + 1.5% 390,000 EDP 08/28/ /28/2014 1a Sole 45, % of CDI 450,000 EDP 04/11/ /11/2016 2a Sole 50,000 CDI % 500,000 EDP Escelsa 07/02/ /02/2014 2a Sole 25, % of CDI 250,000 Energest 04/23/ /23/2017 1a Sole 12,000 CDI % 120,000 Loans and financing EDP Energias do Brasil S.A. Contracted Contracting amount date Amount released Contract term Use Covenants Debt cost Payment condition Local currency Banco do Brasil - Commercial credit note 210,000 02/22/ ,000 02/22/ /30/2013 (-) Transaction cost 1,330 02/22/2013 1,330 02/22/ /30/2013 Working capital 107.1% of CDI Principal and interest in single statement in the end Working capital Monthly amortization of transaction cost Lajeado Energia S.A Contracted amount Contracting date Amount released Contract term Use Covenants Debt cost Payment method Local currency Banco do Brasil and Bradesco Promissory Notes (-) Transaction cost 450,000 08/19/ ,000 08/19/ /14/2014 Bridge Loan to enable the issue of simple debentures. 0.47% p.a. above TJLP Principal and interest in single statement in the end 7

8 (b) level of subordination between the debts There is no degree of subordination among our unsecured debt. Our debt secured by tangible guarantees enjoys the preferences and prerogatives provided by law. (c) occasional restrictions imposed on EDPBR, in particular with regard to indebtedness limits and entering into new debt, dividend payouts, disposal of assets, new security issues, and disposal of equity control On the date of this Management Proposal our subsidiaries complied with the ratios specified in the financial covenants to which they were bound. Non-compliance with any of these covenants may result in acceleration of our subsidiaries' loan agreements. Our subsidiaries Enerpeixe, Santa Fé are parties to financing agreements that provide for covenants limiting these companies' capacity to pay out dividends: Enerpeixe: By virtue of the loan agreement entered into with BNDES on May 21, 2004, Enerpeixe may only pay out dividends above the minimum mandatory sum if it obtains previous approval from BNDES and the financial agents (Banco do Brasil, Banco Bradesco S/A, Banco Itaú BBA S/A, and Unibanco - União de Bancos Brasileiros S/A). Santa Fé: By virtue of the loan agreement entered into with BNDES on May 11, 2009, Santa Fé may only pay out dividends of a sum above the minimum mandatory, if it obtains previous approval from BNDES and Banco do Brasil. g. limits for use of financing already contracted On February 12, 2014, the Board of Directors of the Company approved the 3rd issue of Single Debentures. That issuance, whose funds will be allocated for the partial payment of the Company s first nonconvertible debentures will amount to R$300,000 at a cost of Interbank Deposit Rate plus 0.72% per year, and a term of 18 months. The settlement of that issuance is scheduled for February 26, h. significant changes in each item of the financial statements The following discussion on EDPBR's financial condition and result of operations reflects our Directors' understanding and should be read jointly with EDPBR's financial statements for years ended December 31, 2013 and 2012, and the respective explanatory notes, as well as the information found in the Management Proposal's remaining items. Operating results in 2012 and 2013 The table below displays the sums in the consolidated statement of income and changes between the periods shown. Please note that the sums in connection with the fiscal year ended December 31, 2012 reflect the figures restated in the financial statements for comparison purposes with the financial statements for the fiscal year ended December 31, 2013, respectively, derived from technical pronouncements issued by CPC. Statement of income for the year 12/31/2012 AV (1) 12/31/2013 AV (1) Net operating revenue 6, % 7,096.5 Variatio n 12/12-12/13 (%) Electricity service cost Costs of electricity (4,043.7) -62.6% (4,109.5) -57.9% 1.6% Electricity purchased for resale (3,436.1) -53.2% (3,799.9) -53.5% 10.6% Electricity network utilization charges (607.6) -9.4% (309.6) -4.4% -49.1% Cost of operations (697.2) -10.8% (806.0) -11.4% 15.6% Personnel (188.8) -2.9% (217.0) -3.1% 14.9% % 9.9% 11

9 Third-party materials and services (230.2) -3.6% (220.6) -3.1% -4.2% Depreciation and amortization (271.2) -4.2% (337.9) -4.8% 24.6% Other operating costs (7.0) -0.1% (30.5) -0.4% 333.0% Cost of services rendered to third-parties (243.5) -3.8% (332.2) -4.7% 36.4% Gross operating income 1, % 1, % 25.8% Operating expenses (387.1) -6.0% (595.7) -8.4% 53.9% Sales expenses (11.8) -0.2% (52.4) -0.7% 343.4% General and administrative expenses (291.4) -4.5% (444.6) -6.3% 52.6% Depreciation and amortization (66.4) -1.0% (64.7) -0.9% -2.6% Other operating expenses (17.5) -0.3% (34.0) -0.5% 94.1% Service result 1, % 1, % 15.7% Income from equity interests (106.7) -1.7% (140.4) -2.0% 31.6% Financial income % % -7.0% Financial expenses (393.2) -6.1% (481.2) -6.8% 22.4% Financial result (197.4) -3.1% (299.1) -4.2% 51.5% Income before income tax and social contribution % % 4.5% Income tax and social contribution - current (146.3) -2.3% (254.0) -3.6% 73.6% Deferred income and social contribution taxes (97.2) -1.5% (5.5) -0.1% -94.3% Net profits before minority shareholders % % 3.5% Non-controlling interests (191.9) -3.0% (178.3) -2.5% -7.1% Net profit (loss) for the year/quarter % % 9.4% Earnings per share (in Reais) Comparison of the consolidated income statement for fiscal years ended December 31, 2012 and Net operating revenue Total net operating revenues found for the year ended December 31, 2013 rose to R$ 7,096.5, a 9.9% increase as compared to the same period in the preceding year, when this sum rose to R$ 6, The main determinant conditions of the variation of net revenue in 2012 were: In generation: (i) Primarily for the adjustment of generating companies tariffs and increase in power sales of shortterm contracts. In distribution: (i) Increase of 2.2% in the volume of energy sold to end customers; (ii) 6.4% increase in volume of energy in transit in the distribution system (USD); (iii) Increase in other operating revenue that reflects CDE (energy development account) grants to distributors, supplying funds to compensate tariff discounts to low income population, rural activity, water treatment, sewage, sanitation and irrigation; (iv) Reduction in distribution companies power tariffs (Law no. 12,783/2013) and reduction in tariffs applied to tariff reviews and adjustments; and (vi) increase of 10.1% in volume of power sales in the free market with higher prices. In 2013, tariffs were an average of 17.3% higher than those in In commercialization: Increase of 10.1% in the volume of power sales in the free market are the reflex of short- and long-term negotiation strategy and concentrated seasonality in the first half of 2013, when the Trading company was benefited by average PLD increase in the 1Q13 (average of R$326.3/MWh). Cost of electricity The cost of electricity during the year ended December 31, 2013 was of R$ 4,109.5, an 1.6% increase as compared to the preceding year, when this sum grew to R$ 4, The main variations refer to the costs of acquisition of electric energy purchased for resale that increased 10.6%, in view of the beginning of the supply of energy from two new products acquired at the auction of new energy, necessary to meet the market growth, increase in the average purchase price of energy, adjusted by the IPCA variation, the increase in the amount of the energy purchased from ITAIPU, and the daily shareholders equity (PLD) which remained at a high level, reflecting in a higher dispatch of thermal power plants over the period. The costs with Charges for the Use of the Electrical Network decreased 49.1% as compared to the previous year because of the reduction, mainly the charges of CDE (25% reduction in relation to the amount charged over 2012) and CCC (which was zeroed in relation to 2012), according to the resolution. Cost of operation 12

10 The operation's costs during the year ended December 31, 2013 were of R$ 806, a 15.6% increase as compared to the preceding fiscal year, when this sum totaled R$ 697.2, owing to the factors that follow: Personnel: Personnel expenses rose by 14.9% to R$ 217 for the fiscal year ended December 31, 2013, as against R$ for the preceding fiscal year, owing to: (i) Average salary adjustment of 6.3%, pursuant to the collective bargaining agreement, resulting in additional charges on payroll; (ii) Increase in personnel of the Group, mainly because of the insourcing of labor in EDP Bandeirante, EDP Escelsa, Enerpeixe and Energest; (iii) Organizational restructuring of the Distribution Business Unit; (iv) Nonrecurring effects occurred in 2Q12 and 4Q12 referring to SAT (Occupational Accident Insurance) credit facility related to the years of and in EDP Escelsa due to overpayments in the previous periods, impacting positively in 2012 and in the comparison of the year Third-party materials and services: Costs with materials and outsourced services decreased by 4.2% to R$ million during the fiscal year ended December 31, 2013, as against R$ for the preceding fiscal year. The materials account is owed to the higher expenses for fuel and vehicle maintenance materials and the outsourced services item is due in part to the contractual readjustment repasses lower than the inflation ratios by our service providers and decreased expenses for conservation and repairs of the electrical system especially the upgrade of the EDP Bandeirante plant, reduction of service provider teams and decrease in network maintenance and tree pruning activities. Depreciation and amortization: The depreciation and amortization reached R$337.9 in the year ended December 31, 2013, as compared to R$271.2 in the previous year, because of the provision for inventory adjustment, arising from the physical inventory taken for meeting the ANEEL Resolution No. 367/2009 (+R$ 33.5 million in EDP Bandeirante and +R$ 26.2 million in EDP Escelsa). Cost of services rendered to third parties: Principally corresponds to fluctuation in costs of distributor infrastructure construction. Gross operating income Gross operating income rose by 25.8% over the period and totaled R$ 1,848.8 on December 31, 2013, a compared to the sum of R$ 1,470.1 on December 31, 2012, also because of the above. Operating expenses Our operating costs grew by 53.9% to R$ during the fiscal year ended December 31, 2013, as against R$ for the preceding fiscal year, owing to the following factors. Sales expenses: Sales expenses increased 343.4%, totaling R$ 52.4 million during the year ended December 31, 2013 as opposed to R$ 11.8 million in the prior calendar year owed especially to the reversal of the PDD in 2012 based on an agreement between EDP Comercialização and Ampla Energia to end the legal dispute between the companies related to the arbitration decision handed down by the FGV Conciliation and Arbitration Chamber (Câmara FGV de Conciliação e Arbitragem.) General and administrative expenses: General and administrative expenses rose by 52.6% to R$ for the fiscal year ended December 31, 2013, as opposed to R$ for the previous fiscal year, owing basically to: (i) Average salary adjustment of 6.3%, pursuant to the collective bargaining agreement, resulting in additional charges on payroll; (ii) (iii) Determination of the profit or loss in the sale of Evrecy Participações Ltda to CTEEP, made in 2012, which hinders the comparison to Depreciation and amortization: The -2.6% variation over the period was mainly caused by a lower basis of assets to be depreciated over the period, mainly the fixed assets items not directly related to the operation. Other operating costs (revenues): Other operating costs rose by 94.1% to R$ 34 for the fiscal year ended December 31, 2013, as against R$ 17.5 for the preceding fiscal year, owing basically to: (i) Positive effect recorded in 2012, of the New Value of the Replenishment of the distribution assets at R$ million (R$ 24.5 million in EDP Bandeirante and R$ 77.9 million in EDP Escelsa) As defined in Provisional Measure No. 579; (iii) losses in the discontinuance and disposal of the fixed assets items of distributors. Service result 13

11 The service figure increased by 15.7%, at R$ 1,253.1 for the fiscal year ended December 31, 2013, as compared to R$ 1,083.0 during the preceding fiscal year, chiefly due to the above figures regarding operating revenues, electricity and operating costs, in addition to operating costs. Income from equity interests The share of profit or loss increased 31.6%, reaching a negative amount of R$140.4 in the year ended December 31, 2013, as compared to a negative amount of R$106.7 in the previous year, mainly because of a negative result of our jointly-controlled subsidiary Energia Pecém. Net financial income (loss) EDPBR's net financial income for the fiscal year ended December 31, 2013 rose by 51.5% and totaled R$ negative, as against R$ negative on December 31, The amount of financial income showed a variation of -7.0%, this variation is mainly caused by a lower cash balance and, consequently, lower income from financial investments. In the meantime, the amount of financial expenses showed a 22.4%, variation, mainly caused by the charges on debt raised by the group distributors, besides of the Holding itself, to cover the investments and working capital of distributors, in addition to the expenses of financial adjustment to the post-employment benefit portion, mainly of the subsidiary EDP Escelsa. Income and social contribution taxes Income and social contribution tax expenses for the fiscal year ended December 31, 2013 were of R$ 295.5, a variation of 6.6% as compared to expenses for year ended December 31, 2012, of R$ The key changes arose from: (i) income and social contribution taxes - current: displayed a variation of 73.6%, rising to R$ 254 in 2013 as compared to R$ million in 2012, chiefly due to the greater taxable profits of the distributors EDP Bandeirante and EDP Escelsa; and (ii) deferred income tax and social contribution: it showed a decrease of 94.3%, because of the realization of the tax credits of distributors. Non-controlling interests Non-controlling interests in consolidated profit rose to R$ for the fiscal year ended December 31, 2013, which is a 7.1% decrease over the previous year's figure of R$ Such variation was mainly caused by the reduction in the Investment Reserve, through the distribution to the controlling shareholders of the subsidiary Lajeado Energia. Net profits In view of the analyzed effects, the consolidated net profits reached R$375.8 in 2013, up 9.4% on 2012, which amounted to R$ The variation was mainly caused by the positive impacts on gross operating profit, explained above. Operating results in 2011 and 2012 The table below displays the sums in the consolidated statement of income and changes between the periods shown. Please note that the sums in connection with the fiscal year ended December 31, 2011 reflect the figures restated in the financial statements for comparison purposes with the financial statements for the fiscal year ended December 31, 2012, respectively, derived drom technical pronouncements issued by CPC. Statement of income for the year 12/31/2011 AV (1) 12/31/2012 AV (1) Variatio n 12/11-12/12 (%) Net operating revenue 5, % 6, % 13.1% Electricity service cost Costs of electricity (2,954.2) -51.8% (4,043.7) -62.6% 36.9% Electricity purchased for resale (2,392.3) -41.9% (3,436.1) -53.2% 43.6% Electricity network utilization charges (561.9) -9.8% (607.6) -9.4% 8.1% Cost of operations (687.9) -12.1% (697.2) -10.8% 1.3% Personnel (167.6) -2.9% (188.8) -2.9% 12.7% Third-party materials and services (223.1) -3.9% (230.2) -3.6% 3.2% Depreciation and amortization (261.2) -4.6% (271.2) -4.2% 3.8% Other operating costs (36.1) -0.6% (7.0) -0.1% -80.5% 14

12 Cost of services rendered to third-parties (309.3) -5.4% (243.5) -3.8% -21.3% Gross operating income 1, % 1, % -16.2% Operating expenses (552.8) -9.7% (387.1) -6.0% -30.0% Sales expenses (41.8) -0.7% (11.8) -0.2% -71.7% General and administrative expenses (301.4) -5.3% (291.4) -4.5% -3.3% Depreciation and amortization (84.3) -1.5% (66.4) -1.0% -21.2% Other operating expenses (125.3) -2.2% (17.5) -0.3% -86.0% Service result 1, % 1, % -9.8% Income from equity interests (39.6) -0.7% (106.7) -1.7% 169.3% Financial income % % -5.5% Financial expenses (443.1) -7.8% (393.2) -6.1% -11.3% Financial result (235.9) -4.1% (197.4) -3.1% -16.3% Income before income tax and social contribution % % -15.9% Income tax and social contribution - current (234.6) -4.1% (146.3) -2.3% -37.6% Deferred income and social contribution taxes % (97.2) -1.5% - Net profits before minority shareholders % % -22.8% Non-controlling interests (200.9) -3.5% (191.9) -3.0% -4.5% Net profit (loss) for the year/quarter % % -30.2% Earnings per share (in Reais) Comparison of the consolidated income statement for fiscal years ended December 31, 2011 and 2012 Net operating revenue Total net operating revenues found for the year ended December 31, 2012 rose to R$ 6,454.5, a 13.1% increase as compared to the same period in the preceding year, when this sum rose to R$ 5, The main determinant conditions of the variation of net revenue in 2012 were: In generation: (i) Lajeado Energia: Greatest energy sale in a Short Term in the first 9-month period of the year, a reflex of the seasonality strategy and favorable hydrological scenario in the period; (ii) Energest: There was a rise in the volume of electricity sold as a result of increase in Physical Guarantee by UHE Mascarenhas, and the generator's increase in contacting level. This energy increase was sold in short term operations, favored by the high spot price (PLD); (iii) Enerpeixe: The variation in the average electricity sale price is a result of the variation in the IGPM rate jointly with contractual readjustments in the course of the year. In distribution: (i) Increase of 2.9% in the volume of power sold to end consumers, driven mainly by the increase in residential and commercial class consumption; (ii) Reduction of 1.2% in the volume of the energy distributed to free market customers in 2012 as compared to 2011, because of the performance of the Mineral Extraction (-4.5%) and Chemical (-5.9%) sectors, and reduction in the contract of two large customers (Gerdau units -8GWh), return to captive market of Nobrecel (-6GWh) and return of the selfproduction of customers Revap and Fibria (-14 GWh); (iii) The impact of new rules put in place with the tariff revision procedures regarding revenues from fines due to Excess Demand and the use of Reactive Surplus Electricity (PRORET 2.7), which are now stated as Special Liabilities in Progress, as of the tariff revision's contractual date in the 3rd Revision Cycle. So EDP Bandeirante provisioned the amount of R$ 50.1 million related to the period from October 23, 2011 to December 31, 2012, reducing the Operating Revenue. At the beginning of the 4th Rate Revision Cycle, the amount accumulated in this subaccount will receive the usual depreciation treatment of allocated assets as investments originated from these Special Obligations; (iv) The 14.29% annual average tariff readjustment at EDP Escelsa as of August 07, 2012, with a 11.33% average effect felt by captive customers, considering financial adjustments with regard to previous periods. Tariff review and readjustment at EDP Bandeirante of -1.85% and 11.45%, respectively. The average effect to be perceived by captive consumers, already considering the tariff review of 2011 and the tariff adjustment of 2012 was 7.29%, applied as from October 23, and (v) Delay in the completion of the method of the 3rd tariff revision cycle, ANEEL made EDP Bandeirante s tariffs remain the same, which were approved in October 2010, up to October 23,

13 In commercialization: net revenue grew 47.0% in 2012 in relation to the previous year, owed mainly to an increase of 13.7% in volume sold resulting from the intensification of short and long term negotiations and sales of the 13rd Adjustment Auction, besides the increase of 29.0% in the average price of sale in relation to Cost of electricity The cost of electricity during the year ended December 31, 2012 was of R$ 4,043.7, an 36.9% increase as compared to the preceding fiscal year, when this sum totaled R$ 2, This cost increase is due to the factors described below. Electricity purchased for resale: Costs with acquisition of electricity for resale rose by 43.6%, to R$ 3,436.1 during the fiscal year ended December 31, 2012, as against R$ 2,392.3 due: (i) Start-up of energy supply from two new products in 2012 acquired at new energy auctions required to meet market growth; (ii) increase in the average electricity purchase price, readjusted by means of the IPCA rate; (iii) Increase in the value of energy purchased from ITAIPU in 2012, owed to an increase of 17% in the Dollar at the period. Electricity network use charges: Costs of electric power network use charges grew 8.1% compared with the the year as of December 31, 2011, due to revision of tariffs charged for the use of transmission system and also to the increase in distributors, as a result of reserve energy charges in view of the energy supply from wind resources, object of the 2nd Reserve Energy Auction, beginning its supply in July Cost of operation The operation's costs during the year ended December 31, 2012 were of R$ 697.2, a 1.3% increase as compared to the preceding year, when this sum rose to R$ 687.9, owing to the factors that follow: Personnel: Personnel expenses rose by 12.7% to R$ for the fiscal year ended December 31, 2012, as against R$ for the preceding fiscal year, owing to: (i) Average salary adjustment of 6.7%, pursuant to the collective bargaining agreement, resulting in additional charges on payroll; (ii) Increase in personnel of the Group, mainly because of the insourcing of labor in EDP Bandeirante; (iii) Organizational restructuring of the Distribution Business Unit; (iv) Non-recurring effects occurred in 2Q12 and 4Q12 referring to SAT (Occupational Accident Insurance) credit facility related to the years of and in EDP Escelsa due to the overpayments in the previous periods. Third-party materials and services: Costs with materials and outsourced services rose by 3.2% to R$ during the fiscal year ended December 31, 2012, as against R$ for the preceding fiscal year. The materials account is owed to the higher expenses for fuel and vehicle maintenance materials and the outsourced services item is due in part to the contractual readjustment, repasses by our service providers and decreased expenses for conservation and repairs of the electrical system especially the upgrade of the EDP Bandeirante plant, reduction of service provider teams and decrease in network maintenance and tree pruning activities. Depreciation and amortization: Depreciation and amortization totaled R$ in the year ended December 31, 2012 compared to R$ million in the previous year, mainly due to lower utilization of PIS and COFINS credit on depreciation of distributors and generators of EDPBR, offset by revised depreciation rates that increased the useful life of assets related to the concession. Other costs of operation: Other operations costs decreased -80.5%, totaling R$ 7 for the year ended December 31, 2012 compared to R$36.1 million in the prior calendar year mainly due to the adjustment in the accounting reconciliation related to liabilities comprising provisioned but unrealized services. Cost of services rendered to third parties: Principally corresponds to fluctuation in costs of distributor infrastructure construction. Gross operating income Gross operating income rose by -16.2% over the period and totaled R$ 1,470.1 on December 31, 2012, a compared to the sum of R$ 1,754.0 on December 31, 2011, also because of the above. Operating expenses 16

14 Our operating costs drop by 30.0% to R$ during the fiscal year ended December 31, 2012, as against R$ for the preceding fiscal year, owing to the following factors: Sales expenses: Sales expenses decreased -71.7%, totaling R$11.8 during the year ended December 31, 2012 as opposed to R$41.8 in the prior calendar year owed especially to the reversal of the PDD based on an agreement between EDP Comercialização and Ampla Energia to end the legal dispute between the companies related to the arbitration decision handed down by the FGV Conciliation and Arbitration Chamber (Câmara FGV de Conciliação e Arbitragem.) The agreement entered into provides for the continuation of the energy sales contract signed on June 26, 2002 remaining valid until General and administrative expenses: General and administrative expenses decreased by 3.3% to R$ for the fiscal year ended December 31, 2012, as opposed to R$ for the previous fiscal year, owing basically to: (i) Average salary adjustment of 6.7%, pursuant to the collective bargaining agreement, resulting in additional charges on payroll; Standard expenses and improvements to the São Paulo installations, administrative main office in São Paulo; (iii) Determination of profit or loss in the sale of Evrecy Participações Ltda to CTEEP; (iv) Payment of fee awards related to the SAT process in EDP Escelsa; and (v) Consultancy expenditures related to the Inventory of Assets in Distributors (Regulatory Demand). Depreciation and amortization: The fluctuation of -21.2% in the period is owed mainly to depreciation of assets of the subsidiary, Terra Verde, which took place in 2011 and which was not repeated in Other operating costs (revenues): Other operating costs decreased by -86.0% to R$ 17.5 for the fiscal year ended December 31, 2012, as against R$ for the preceding fiscal year, owing basically to: (i) New Value of Replenishment of distribution assets at R$ million (R$ 24.5 million in EDP Bandeirante and R$ 77.9 million in EDP Escelsa) As defined in Provisional Measure No. 579; (ii) Non-recurring effect, in 2Q11, due to a change in the rating of the likelihood of loss from possible to probable for the lawsuit in progress between the companies EDP Bandeirante and White Martins S.A., referring to the increase in the tariffs in the Cruzado Plan period; (iii) lower losses in the discontinuance and disposal of fixed assets items of distributors. Service result The service figure increased by 9.8%, at R$ 1,083 for the fiscal year ended December 31, 2012, as compared to R$ 1,201.2 during the preceding fiscal year, chiefly due to the above figures regarding operating revenues, electricity and operating costs, in addition to operating costs. Income from equity interests The share of profit or loss increased 169.3%, reaching a negative value of R$106.7 in the year ended December 31, 2012, as compared to the negative value of R$39.6 in the previous year, mainly because of the negative result of our jointly-controlled subsidiary Energia Pecém. Net financial income (loss) EDPBR's net financial income for the year ended December 31, 2012 decreased by 16.3% and totaled R$ negative, as against R$ negative on December 31, The following changes contributed to this result: (i) Financial income: Financial revenue declined by 5.5% and dropped to R$ in 2012, as compared to R$ in Reduction of 11.3% corresponding mainly to the lower cash balance and subsequent lower income from investments. (ii) Financial expenses: The amount of financial expenses showed a negative variation of 11.3%, reaching R$393.2 in 2012 as compared to R$443.1 in The variation is chiefly due to inflation updating of legal contingencies in 2011, basically in the Bandeirante and White Martins court case valued at R$ 55 million. Income before income tax and social contribution Income before income and social contribution taxes was negative by 15,9% and in 2012 totaled R$ 778.9, as opposed to the sum of R$ million in 2011, driven by the increase in the allowance for doubtful 17

15 accounts and Thermal power plants and dispatch of thermoelectric power plants, generating greater spending on the purchase of energy, mainly distributors, as explained above. Income and social contribution taxes Income and social contribution tax expenses for the fiscal year ended December 31, 2012 were of R$ 243.5, a variation of 4.8% as compared to expenses for year ended December 31, 2011, of R$ The key changes arose from: (i) income and social contribution taxes - current: it showed a negative variation of 37.6%, reaching an amount of R$146.3 million in 2012 as compared to R$234.6 million in 2011, mainly because of a lower taxable income of the distributors EDP Bandeirante and EDP Escelsa; and (ii) deferred income tax and social contribution: it showed a negative amount of R$97.2 in 2012 as compared to a positive amount of R$2.1 in 2011 in view of the adjustments to the preferred shares of EDP Investco. Net income before non-controlling shareholders Net profits before minority interest totaled R$533.4 million on December 31, 2012, a 22.8% reduction compared to 2011, mainly owed to the increased expenses for energy purchases, already described above, partly offset by the reduction in the negative financial result previously detailed. Non-controlling interests Non-controlling interests in consolidated profit rose to R$ million for the year ended December 31, 2012, which is a 4.5% decrease over the previous year's figure of R$ million. Such variation is owed to the higher results from our subsidiaries, Lajeado Energia and Enerpeixe, offset by the adjustment of minority interests of our subsidiary, Investco. Net profits Due to the effects analyzed, consolidated net profits attained R$ million in 2012, 30.2% lower than in The reduction is owed mainly to the greater expenses for the purchase of energy explained in the respective item. SOURCES AND USES OF FUNDS EDPBR depends chiefly on the cash flow from its operations and on third-party funding through loan agreements to base its operating and investment activities. EDPBR's funds are employed chiefly to invest in its electricity distributors, seeking to preserve service quality and to support the natural growth of its concession's work load. In generation, by increasing installed capacity and expanding this activity's share in the Group's portfolio. Statement of financial positions The tables that follow show the consolidated Balance Sheets for the years ended December 31, 2013, 2012, and /31/2011 AV (1) 12/31/2012 AV (1) 12/31/201 3 AV (1) Variation 12/11 12/12 (%) Variation 12/12 12/13 (%) Balance sheets Assets Current 2, % 2, % 4, % 0.6% 116.0% Cash and cash equivalents % % % -31.5% 61.7% Accounts receivable % % % 8.8% 9.6% Indemnifiable financial assets % - 0.0% - 0.0% - - Consumers and concessionaires % 1, % 1, % 30.0% -10.1% Tax and social contribution % % % -31.0% 17.6% Related parties - 0.0% % % - - Inventories % % % -1.6% -51.7% Pledges and restricted deposits % % % % Prepaid expenses % % % -83.4% -77.4% Non-current assets held for sale - 0.0% - 0.0% 2, % - - Income receivable % % % 27.5% -22.6% Financial assets available for sale % % % -40.0% -44.3% Other receivables % % % 141.8% -18.2% 18

16 Non-current 9, % 10, % 9, % 8.5% -10.6% 1, % 1, % 1, % 22.8% 4.5% Accounts receivable % % % -10.8% -20.0% Indemnifiable financial assets % % % 43.1% 12.9% Consumers and concessionaires % % % -36.7% 36.3% Tax and social contribution % % % 84.8% -0.3% Deferred income and social contribution taxes % % % -0.6% -10.1% Related parties % % % - - Pledges and restricted deposits % % % -0.4% -0.8% Other receivables % % % 16.4% 29.7% Investments % % % 76.8% -5.1% Investment properties % % % -1.4% 229.1% Property, plant and equipment 4, % 4, % 4, % 7.5% -11.6% Intangible assets 3, % 3, % 2, % -3.9% -18.8% Total assets 11, % 12, % 14, % 7.1% 11.1% Continues on the next page 19

17 12/31/2011 AV (1) 12/31/2012 AV (1) 12/31/2013 AV (1) 12/11 12/12 Variation (%) Variation 12/12 12/13 (%) Balance sheets Liabilities Current 2, % 2, % 4, % 20.5% 83.0% Suppliers % % % 47.2% -12.1% Tax and social contribution % % % 1.3% 26.3% Dividends % % % 4.6% -20.2% Debentures % % % 303.6% 60.5% Loans, financing and debt charges % % % -25.1% 60.8% Post-employment benefits % % % 18.3% -30.5% Non-current liabilities held for sale - 0.0% - 0.0% 1, % - - Estimated employee liabilities and social charges % % % 13.5% 0.5% Regulatory and industry charges % % % -31.4% -29.5% Use of public property % % % 8.8% 8.1% Provisions % % % -65.5% -60.7% Other accounts payable % % % 17.5% -52.6% Non-current 3, % 3, % 3, % 18.7% -15.3% Tax and social contribution % % % -18.2% -21.1% Deferred income and social contribution taxes % % % 3.2% -55.1% Debentures % 1, % 1, % 22.3% 30.9% Loans, financing and debt charges 1, % 1, % % 18.5% -43.7% Post-employment benefits % % % 77.4% -16.6% Regulatory and industry charges % % % 142.7% -24.6% Use of public property % % % 5.0% 1.1% Provisions % % % -0.1% -3.7% Provision for unsecured liabilities % % % -8.3% -99.4% Reserve for reversals and amortization % % % 0.0% 0.0% Other accounts payable % % % -59.6% -29.5% Shareholders' equity 4, % 4, % 4, % -3.0% 2.9% Capital 3, % 3, % 3, % 0.0% 0.0% Capital reserves % % % 51.2% -1.1% Profit reserves 1, % 1, % 1, % -1.9% 1.4% Other comprehensive income (174.3) -1.5% (336.9) -2.6% (245.9) -1.7% 93.3% -27.0% Treasury shares (6.6) -0.1% (6.6) -0.1% (6.6) 0.0% 0.0% 0.0% Retained earnings (losses) (19.5) -0.2% (17.7) -0.1% - 0.0% - - Non-controlling interests 1, % 1, % 1, % -2.9% -11.0% Total shareholders' equity and 6, , ,253.2 non-controlling shareholders Total liabilities and shareholders' equity 11, ,729.4 % % 14, % 7.1% 11.1% Comparison of the key Asset Accounts on December 31, 2012 and December 31, 2013 Assets Current assets: Cash and cash equivalents On December 31, 2013, the account s balance was R$ 924.1, or 61.7% higher than on December 31, This variation occurred mainly because of the operating activities, mainly of the Group distributors, in view of the receipts from the CDE, for offsetting expenditures with energy purchase in excess of those covered by the energy rates of distributors, offset by the investing activities of EDPBR. The account represented 6.5% of the assets of EDPBR as of December 31, 2013, as compared to 4.5% as of December 31, Consumers and concessionaires The figure on December 31, 2013 was R$ 1,126.5, 10.1% lower than on December 31, This variation occurred mainly because of the reduction in the average term of receipt from the customers of distributors (in the Residential, Industrial and Commercial classes, of which Free Market Customers stand out). The item accounted for 8.0% of EDPBR's assets on December 31, 2013 and 9.8% on December 31, Taxes and social contributions On December 31, 2013, taxes and social contributions totaled R$ 195.3, or 17.6% above the December 31, 2012 figure. This variation occurred mainly because of the higher disbursements with the advances of 20

18 Income Tax and Social Contribution, in view of higher taxable profits in 2013 as compared to those in 2012, mainly in the distributors EDP Escelsa. The item accounted for 1.4% of EDPBR's assets on December 31, 2013 and 1.3% on December 31, Related parties As of December 31, 2013, the account had a balance of R$12.4, related to loans of funds to the jointlycontrolled subsidiary Energia Pecém. The item accounted for EDPBR's assets, had no representativeness on December 31, 2012 and 0.1% on December 31, Inventories EDPBR inventories on December 31, 2013 were of R$ 19.6, 51.7% lower than on December 31, It occurred mainly because of the higher efficiency in the use of spare parts and maintenance in the distributors substations. The item accounted for 0.1% of assets on December 31, 2013 and 0.3% on December 31, Pledges and restricted deposits Pledges and restricted deposits on December 31, 2013 totaled R$ 4.6, 80.8% below the December 31, 2012 figure. This variation was mainly caused by the transfer of funds from the reserve account used as collateral of loans of the subsidiary Enerpeixe to the Cash and Cash Equivalents account. Once the balance of Loans and Financing of the subsidiary Enerpeixe are being settled, the funds of the reserve account can be used for other purposes. The item accounted for EDPBR's assets had no representativess on December 31, 2013 and 0.2% on December 31, Non-current assets held for sale As of December 31, 2013, the account had a balance of R$2,327.6, related to the sale of 50% interest in the ventures Cachoeira Caldeirão and UHE Santo Antonio do Jari. The item accounted for EDPBR's assets on December 31, 2012 had no representativeness and 16.5% on December 31, Financial assets available for sale: Financial assets refer to the acquisition of 5.63% of preferred shares, corresponding to 3.16% of all the shares of Denerge S.A. ( Denerge ), a close company that holds interest in companies from the electricity industry. In this negotiation, EDPBR has the option to convert Denerge shares into Rede Energia S.A. ( Rede Energia ) preferred shares, within a period of up to two years, at the price of a possible public offer, or exercise the option of converting those shares within one year and at R$5.68 each if the public offering does not occur. On December 31, 2013, the account's balance was of R$ 11, 44.3% below the December 31, 2012 figure. This variation was a result mainly of the mark-to-market variation in the share price of Rede Energia. The item accounted for 0.1% of our assets on December 31, 2013 and 0.2% on December 31, Other receivables On December 31, 2013 the balance was of R$ 75.8 million, 18.2% below the December 31, 2012 figure. This variation was mainly caused by the fact that the balance of assets held for sale of the subsidiary EDP Escelsa were realized during The item accounted for 0.5% of our assets on December 31, 2013 and 0.7% on December 31, Non-current assets: Accounts receivable On December 31, 2013 the balance was of R$ 17.0, 20.0% below the December 31, 2012 figure of R$ 21.3 million.this variation arose from the financial updating and repayment of the Credit Assignment Agreement between the subsidiary Lajeado Energia and Caiuá Distribuição de Energia S.A. The item accounted for 0.1% on December 31, 2012 and 0.2% on December 31, Indemnifiable financial assets These financial assets reflect the remaining balances of intangible assets owned by the distributors Bandeirante and Escelsa, not subject to amortization on the concession's expiry and non-recoverable through service provision in connection with the concession. On December 31, 2013 financial assets totaled R$ 779.4, 12.9% greater than on December 31, 2012 of R$ Such variation is owed to the additions of 21

19 the period and price level financial restatement according to the Replacement Value Ordinance. The item accounted for 5.5% on December 31, 2013 and 5.4% on December 31, Consumers and concessionaires On December 31, 2013, the account balance was R$ 54.9, 36.3% higher than the December 31, 2012 balance owed to the values negotiated with customers in default of the distributors having increased throughout the year. The item accounted for 0.4% of EDPBR's assets on December 31, 2013 and 0.3% on December 31, Taxes and social contributions As of December 31, 2013, the taxes and social contributions in long term amounted to R$55.3, practically in line with the balance of the previous year. This account comprises ICMS credits on the acquisition of fixed assets and that are used to offset the ICMS payable on the supply of energy to the end consumers of the subsidiaries EDP Bandeirante and EDP Escelsa. The item accounted for 0.4% of our assets on December 31, 2013 and December 31, Deferred income and social contribution taxes As of December 31, 2013, the balance of the account amounted to R$552.6, 10.1% lower than as of December 31, 2012, and mainly comprised the IRPJ and CSLL on temporary additions to the provision on post-employment benefits, mainly of the distributors. The variation in the period is related to the decrease in the balance payable of the subsidiary EDP Bandeirante. The item accounted for 3.9% of our assets on December 31, 2013 and 4.8% on December 31, Related parties As of December 31, 2013, the account had a balance of R$171.1, up 25.6% on the balance as of December 31, The composition of this account is mainly related to loan of funds to the jointly-controlled subsidiary Energia Pecém. The item accounted for 1.2% of EDPBR's assets on December 31, 2013 and 1.1% on December 31, Pledges and restricted deposits On December 31, 2013, the account had a balance of R$242.7, practically in line with the balance recorded on December 31, 2012, which was R$ This variation considers judicial deposits settled during the period, against the respective labor, tax, and civil contingencies, in addition to the remaining balances that the companies Enerpeixe, Energest, and Santa Fé own under deposit in the light of loans due to BNDES, and short-term transactions with CCEE. The item accounted for 1.7% of our assets on December 31, 2013 and 1.9% on December 31, Other receivables The account's balance on December 31, 2013 was of R$ 60.1, a variation of 29.7% as compared to the R$ 46.3 balance on December 31, This variation took place owing to: i) Balance receivables from Low Income customers; ii) Decrease in the amount of Services provided to third parties. The item accounted for 0.4% of our assets on December 31, 2013 and December 31, Investments As of December 31, 2013, the investments account had a balance of R$672.3, down 5.1% on the R$708.7 as of December 31, The composition corresponds to the investments in the jointly-controlled companies Porto do Pecém and EDP Renováveis. The variation in this account is caused by the investments made by the EDPBR together with the variation in the profit or loss for the year of these subsidiaries. In 2013, there were investments in Porto do Pecém, in the amount of R$98.6 and a loss for the year in the amount of R$ The investments item accounted for 4.8% of our assets on December 31, 2013 and 5.6% on December 31, Property, plant and equipment On December 31, 2013, the account had a balance of R$ 4,026.2, 11.6% lower than the balance as of December 31, This variation is caused by the additions to the fixed assets of the recurring business of distributors and generators for the most part, and the UHE JARI and UHE Cachoeira Caldeirão projects, which in December 2013 had their balances reclassified into the account Non-current assets held for sale. The fixed assets item accounted for 28.5% of EDPBR's total assets on December 31, 2013 and 35.8% on December 31,

20 Intangible assets On December 31, 2013, the accounts had a balance of R$ 2,789.3, 18.8% below the December 31, 2012 balance, largely consisting in infrastructure Concession Rights (mainly due to the distributors), the use of Public Assets (mainly the generators, including UHE Jari and UHE Cachoeira Calderão), and the variation over the period arising mainly from amortization of assets in connection with the Concession and the Use of Public Assets. In December 2013, the amounts related to Cachoeira Caldeirão and UHE Jari were transferred to the account Non-current assets held for sale. The intangible assets item accounted for 19.7% of EDPBR's total assets on December 31, 2013 and 27.0% on December 31, Liabilities Current liabilities Suppliers On December 31, 2013, trade payables totaled R$ million, or 12.1% lower than the balance of trade payables on December 31, This variation is mainly caused by the reduction in the average payment term, mainly of the energy purchase invoices of the group distributors. This item accounted for 5.7% of EDPBR's liabilities on December 31, 2013 and 7.2% on December 31, Taxes and social contributions The balance of taxes and social contributions on December 31, 2013 was of R$ million, a 26.3% increase as against the December 31, 2012 balance, mainly resulting from the increase in IRPJ and CSLL taxes payable and the period's variation in taxable profits. In connection with total liabilities, taxes and social contributions accounted for 2.5% and 2.2% respectively on December 31, 2013 and December 31, Dividends The balance of dividends on December 31, 2013 was of R$ 160.7, which reflected a 20.2% decrease as against December 31, 2012, mainly due the 25% minimum mandatory dividend on net profit payout. This item accounted for 1.1% of liabilities on December 31, 2013 and 1.6% on December 31, Debentures As of December 31, 2013, the balance of the debenture account was R$699.1, showing an increase of 60.5% as compared to December 31, 2012, basically because of the transfer from the non-current liabilities to current liabilities of the installments falling due in 2014 of the parent company EDP Escelsa besides EDPBR. The account represented 4.9% of the total liabilities of EDPBR as of December 31, 2013 and 3.4% as of December 31, Loans, financing and debt charges The account balance as of December 31, 2013 was R$432.9, showing an increase of 60.8% as compared to December 31, 2012, mainly because of the debt amortizations of the subsidiaries Enerpeixe, Pantanal and Santa Fé, besides of the transfers from the nun-current liabilities to current liabilities of the installments falling due in 2014, of the subsidiaries EDP Escelsa, EDP Bandeirante and the EDPBR itself. Loans and financing represented 3.1% of total liabilities of EDPBR as of December 31, 2013 and 2.1% as of December 31, Post-employment benefits Post-employment benefits on December 31, 2013 was R$ 24.7, 30.5% lower than the balance at December 31, This variation is explained by updating of the assumptions found in the actuarial report. This item accounted for 0.2% of EDPBR's total liabilities on December 31, 2013 and 0.3% as of December 31, Non-current liabilities held for sale As of December 31, 2013, the account had a balance of R$1,878.5, related to the sale of 50% interest in the ventures Cachoeira Caldeirão and UHE Santo Antonio do Jari. The item accounted for EDPBR's liabilities had no representativeness on December 31, 2012 and 13.3% on December 31, Estimated employee liabilities and social charges The account balance as of December 31, 2013 was R$65.4, practically in line with the balance for the previous year. The variation in this account is mainly caused by the accrued vacations and the respective 23

21 charges, besides the profit sharing for the period. This item accounted for 0.5% of total liabilities on December 31, 2013 and December 31, Regulatory and industry charges The account balance was of R$ 74.9 million on December 31, 2013 as compared to R$ million on December 31, 2012, a 29.5% drop resulting chiefly from the research and development and energy efficiency account, which varies in accordance with the net revenues by distributors, in addition to the completion of projects related and approved by ANEEL, and lower RGR, CCC and CDE charges, which decreased compared to Regulatory and sectorial charges accounted for 0.5% of EDPBR's total liabilities on December 31, 2013 and 0.8% on December 31, Use of Public Property The account's balance on December 31, 2013 was of R$ 23.7, 8.1% greater than the December 31, 2012 balance of R$ 22, owing to the total balance's financial updating and payment of the period's installments. This item accounted for 0.2% of EDPBR's total liabilities on December 31, 2013 and December 31, Provisions The provisions account includes civil, tax, and labor contingencies, in addition to environmental license provisions and contingent installments following acquisition of UHE JARI. The balance on December 31, 2013 was R$ 21.0, 60.7% lower than on December 31, The balances related to the UHE Jarí were reclassified into the account Non-current liabilities held for sale, which mainly explains the reduction in the account balance in The item accounted for 0.1% of EDPBR's total liabilities on December 31, 2013 and 0.4% on December 31, Other accounts payable The account balance on December 31, 2013 was R$ 63.5 million, increase of 52.6% as compared to December 31, 2012, chiefly as a result of the settlement of advances received by subsidiary Escelsa, for the purpose of disposal of assets and rights. Other accounts payable accounted for 0.4% of EDPBR's total liabilities on December 31, 2013 and 1.1% on December 31, Non-current liabilities Taxes and social contributions On December 31, 2013, the account s balance was R$ 88.3, 21.1% below that on December 31, Such variation arose from the transfer into current liabilities of the installments falling due in a period shorter than 12 (twelve) months. The item accounted for 0.6% of EDPBR's liabilities on December 31, 2013 and 0.9% on December 31, Deferred income and social contribution taxes The balance on December 31, 2013 was R$ 173.7, 55.1% below that on December 31, Such variation was mainly caused by the reclassification of the amounts related to the UHE Jari and UHE Cachoeira Caldeirão to the account Non-current liabilities held for sale. The item accounted for 1.2% of EDPBR's liabilities on December 31, 2013 and 3.0% on December 31, Debentures On December 31, 2013, the balance of the accounts was R$ 1,377.9, an 30.9% increase as compared to December 31, 2012, basically due to the first R$ 450 debenture issue to the subsidiary Lajeado Energia, offset by the transfer to current liabilities and the ensuing payment of the distributors' debentures. This item accounted for 9.7% of EDPBR's liabilities on December 31, 2013 and 8.3% on December 31, Loans, financing and debt charges The account balance on December 31, 2013 was of R$ 749.5, a 43.7% decrease as against December 31, 2012, basically due to the borrowings occurred in subsidiaries Escelsa, Bandeirante and ECE Participações, for cope with investments in improving the distribution network and the Jari Hydropower Plant undertaking. In the end of December 2013, the balances of the subsidiaries UHE Jarí and UHE Cachoeira Caldeirão were transferred to the account Non-current liabilities held for sale. This item accounted for 5.3% of EDPBR's total liabilities on December 31, 2013 and 10.5% on December 31, Post-employment benefits 24

22 The account balance of post-employment benefits on December 31, 2013 was of R$ 432.1, a 16.6% decrease as compared to December 31, 2012, which arose from the updating of the assumptions contained in the actuarial report and transfers to current liabilities of sums maturing in less than one year. This item accounted for 3.1% of EDPBR's total liabilities on December 31, 2013 and 4.1% on December 31, Regulatory and industry charges The balance of regulatory and sectorial charges accounted for 0.1% of total liabilities on December 31, 2013 and December 31, 2012, which sums were respectively R$ 12.9 and R$ The variation of the account is owed basically by the amounts of Research and Development and Energy Efficiency which have a realization term of greater than 12 months. Use of Public Property The account's balance on December 31, 2013 was of R$ 253.9, 1.1% greater than the December 31, 2012 balance of R$ 251.2, owing basically to the total balance's financial updating (with the IGPM rate) and transfer to current liabilities of installments maturing in less than one year. This item accounted for 1.8% of EDPBR's total liabilities on December 31, 2013 and 2.0% on December 31, Provisions The provisions account on December 31, 2013, had a balance in non-current liabilities of R$ 173.7, 3.7% lower than the balance of December 31, 2012, which totaled R$ The variation in this account is caused by the reversals of expectations on success as to the lawsuits or even the new lawsuits against EDPBR. In the composition of the total liabilities of EDPBR, the account represented 1.2% as of December 31, 2013 and 1.4% as of December 31, Reserve for reversal and amortization This refers to funds derived from a reserve created on December 31, 1971 pursuant to regulation SPEE (Federal Decree no. no. 41,019/57), employed by us to expand the Public Power Service, and in the reserve fund. Its potential settlement will occur in accordance with determinations of the Concession Authority. The account balance was equal to 0.1% on December 31, 2013 and December 31, Other accounts payable The account balance as of December 31, 2013 was R$11.0, a reduction of 29.5% as compared to December 31, 2012, mainly arising from the settlement of amounts payable to several creditors. This item accounted for 0.1% of EDPBR's total liabilities on December 31, 2013 and December 31, Shareholders' equity Shareholders' equity was of R$ 4,573.2 on December 31, 2013, an 2.9% increase as compared to December 31, 2012, because of: i) increase in Revenue Reserve, in view of the transfer of Other Comprehensive Income, besides the recognition of 5% on profit for the year in the account Legal Reserve; and ii) adjustments to equity valuation, mainly with the reduction in the balance of the post-employment benefit of the subsidiary. This item accounted for 32.3% of EDPBR's total liabilities on December 31, 2013 and 34.9% on December 31, We calculated our shareholders' equity without considering non-controlling interests. Taking into consideration non-controlling interests, our shareholders' equity would rise to R$ 6,253.2 on December 31, 2013, as compared to R$ 6,332.4 on December 31, 2012, equal to 44.2% and 49.7% respectively of EDPBR's total liabilities. Other equity accounts Equity accounts not commented above do not display material changes when comparing December 31, 2013 and December 31, 2012 balances, and/or did not reflect a substantial share of EDPBR's total liabilities and/or assets on those dates. Comparison of the key Asset Accounts on December 31, 2011 and December 31, 2012 Assets 25

23 Current assets: Cash and cash equivalents On December 31, 2012 the account's balance was of R$ 571.4, 31.4% below the December 31, 2011 figure. This variation was due mainly to EDPBR's investment activities. This item accounted for 4.5% of EDPBR's assets on December 31, 2012, as compared to 7.0% on December 31, Consumers and concessionaires The figure on December 31, 2012 was R$ 1,252.6, 30.0% greater than on December 31, This increase was a result mainly of the rise in the average term of customer receivables: by the distributors (chiefly the residential class). The item accounted for 8.0% of EDPBR's assets on December 31, 2012 and 8.1% on December 31, Taxes and social contributions On December 31, 2012 taxes and social contributions were of R$ 166.1, or 31.0% below the December 31, 2011 figure. This variation mainly occurred because of the decrease in the taxable profit for the period and the consequent decrease in income tax and social contribution. In the composition of the EDPBR assets, the account represented 1.3% as of December 31, 2012 and 2.0% as of December 31, Inventories EDPBR inventories on December 31, 2012 were of R$ 40.6, 1.6% lower than on December 31, It occurred mainly because of the higher efficiency in the use of spare parts and maintenance in the distributors substations. The item accounted for 0.3% of our assets on December 31, 2012 and December 31, Pledges and restricted deposits pledges and restricted deposits' account on December 31, 2012 totaled R$ This increase mainly occurred in the balance of the reserve account balance of the subsidiaries Enerpeixe and Santa Fé to be used as collateral of the loans from the BNDES. In the composition of the EDPBR assets, the account represented 0.2% as of December 31, 2012 and was not representative as of December 31, Financial assets available for sale: Financial assets refer to the acquisition of 5.63% of preferred shares, corresponding to 3.16% of all the shares of Denerge S.A. ( Denerge ), a close company that holds interest in companies from the electricity industry. In this negotiation, EDPBR has the option to convert Denerge shares into Rede Energia S.A. ( Rede Energia ) preferred shares, within a period of up to two years, at the price of a possible public offer, or exercise the option of converting those shares within one year and at R$5.68 each if the public offering does not occur. On December 31, 2012 the account's balance was of R$ 19.8 million, or 40.0% below the December 31, 2011 figure. This variation was a result mainly of the mark-to-market variation in the share price of Rede Energia. The item accounted for 0.2% of our assets on December 31, 2012 and 0.3% on December 31, Other receivables On December 31, 2012 the balance was of R$ 92.7, 141.8% higher than the December 31, 2011 figure. This variation occurred mainly owed to the assets destined toward the disposal of the subsidiary, EDP Escelsa. The item accounted for 0.7% of our assets on December 31, 2012 and 0.3% on December 31, Non-current assets: Accounts receivable On December 31, 2012 the balance was of R$ 21.3, 10.8% below the December 31, 2011 figure of R$ 23.9.This variation arose from the financial updating and repayment of the Credit Assignment Agreement between the subsidiary Lajeado Energia and Caiuá Distribuição de Energia S.A. The item accounted for 0.2% on December 31, 2012 and 0.2% on December 31, Indemnifiable financial assets These financial assets reflect the remaining balances of intangible assets owned by the distributors Bandeirante and Escelsa, not subject to amortization on the concession's expiry and non-recoverable through service provision in connection with the concession. On December 31, 2012 financial assets totaled R$ 690.3, 43.1% greater than on December 31, 2011, totaled R$ Such variation is owed to the 26

24 additions of the period and price level financial restatement according to the Replacement Value Ordinance. The item accounted for 5.4% on December 31, 2012 and 4.1% on December 31, Consumers and concessionaires On December 31, 2012, the account balance was R$40.3, 36.7% lower than the December 31, 2011 balance owed to the values negotiated with customers in default having decreased throughout the year. The item accounted for 0.3% of EDPBR's assets on December 31, 2012 and 0.5% on December 31, Taxes and social contributions On December 31, 2012, long-term taxes and social contributions totaled R$ There was a positive variation of 84.8% as compared to December 31, 2011, chiefly due to the use of ICMS tax credits on acquisitions of fixed assets to deduct ICMS tax payable on the supply of electricity to Bandeirante end consumers. The item accounted for 0.4% of our assets on December 31, 2012 and 0.3% on December 31, Deferred income and social contribution taxes As of December 31, 2012, the account balance was R$615.0, practically in line with the balance as of December 31, 2011, mainly composed of IRPJ and CSLL on tax losses and the additions related to the Use of Public Good of the generators Investco, Enerpeixe and UHE Jari. The item accounted for 4.8% of our assets on December 31, 2012 and 5.2% on December 31, Related parties As of December 31, 2012, the account balance was R$136.2, corresponding to the loan contract between EDPBR and the jointly-controlled subsidiary Porto do Pecém. The item accounted for 1.1% of our assets on December 31, 2012 and December 31, 2011 and none representativeness on December 31, Pledges and restricted deposits Pledges and restricted deposits on December 31, 2012 totaled R$ 244.7, practically in line with the balance recorded on December 31, 2011, which was R$ This variation considers judicial deposits settled during the period, against the respective labor, tax, and civil contingencies, in addition to the remaining balances that the companies Enerpeixe, Energest, and Santa Fé own under deposit in the light of loans due to BNDES, and short-term transactions with CCEE. The item accounted for 1.9% of our assets on December 31, 2012 and 2.1% on December 31, Other receivables The account's balance on December 31, 2011 was of R$ 46.3, a variation of 16.4% as compared to the R$ 39.8 balance on December 31, This variation took place owing to: i) Balance receivables from Low Income customers; ii) Decrease in the amount of Services provided to third parties. The item accounted for 0.4% of our assets on December 31, 2012 and 0.3% on December 31, Investments As of December 31, 2012, the investments account had a balance of R$708.7, up 76.8% on the R$400.8 as of December 31, The composition corresponds to the investments in the jointly-controlled companies Porto do Pecém and EDP Renováveis. The variation in this account is caused by the investments made by the EDPBR together with the variation in the profit or loss for the year of these subsidiaries. The investments item accounted for 5.6% of our assets on December 31, 2012 and 3.4% on December 31, Property, plant and equipment Fixed assets on December 31, 2012 were of R$ 4,554.3 thousand, 7.5% greater than on December 31, This variation is a result of additions to property, plant and equipment, chiefly for the periods in connection with UHE JARI, partly offset by the depreciation of assets in the distributors. The fixed assets item accounted for 35.8% of EDPBR's total assets on December 31, 2012 and 35.6% on December 31, Intangible assets Intangible assets on December 31, 2012 totaled R$ 3,433.3, 3.9% below the December 31, 2011 balance, largely consisting in infrastructure Concession Rights (mainly due to the distributors), the Use of Public Property (mainly the generators), and the variation over the period arising mainly from amortization of assets in connection with the Concession and the Use of Public Property. The intangible assets item accounted for 27.0% of EDPBR's total assets on December 31, 2012 and 30.1% on December 31,

25 Liabilities Current liabilities Suppliers On December 31, 2012, trade payables totaled R$ 912.2, 47.2% above the December 31, 2011 figure. This variation was mainly caused by the increase in the price of energy acquired from thermal power plants which price is higher than the conventional energy one. The account represented 7.2% of the EDPBR liabilities as of December 31, 2012, and 5.2% as of December 31, Taxes and social contributions The balance of taxes and social contributions on December 31, 2012 was of R$ million, a 1.3% increase as against the December 31, 2011 balance, mainly resulting from the increase in IRPJ and CSLL taxes payable and the period's growth in taxable profits. In connection with total liabilities, taxes and social contributions accounted for 2.2% and 2.3% respectively on December 31, 2012 and December 31, Dividends The balance of dividends on December 31, 2012 was of R$ 201.5, which reflected a 4.6% increase as against December 31, 2011, mainly due the 25% minimum mandatory dividend on net profit payout. This item accounted for 1.6% of total liabilities of assets on December 31, 2012 on December 31, Debentures The balance in the debentures account on December 31, 2012 was of R$ million, which reflected a 303.6% increase as against December 31, 2011, primarily due to the transfer of non-current liabilities to current liabilities of installment maturing in June 2013 of the subsidiary Escelsa. This item accounted for 3.4% of EDPBR's total liabilities on December 31, 2012 and 0.9% on December 31, Loans, financing and debt charges The account balance on December 31, 2012 was R$ million, which reflected a 25.1% decline as compared to December 31, 2011, chiefly as a result of amortization of debts of subsidiaries Enerpeixe, Pantanal and Santa Fé. Loans and financing accounted for 2.1% of EDPBR's total liabilities on December 31, 2012 and 3.0% on December 31, Post-employment benefits Post-employment benefits on December 31, 2012 was R$ 35.5, 18.3% above the December 31, 2011 figure. This variation is explained by updating of the assumptions found in the actuarial report. This item accounted for 0.3% of EDPBR's total liabilities on December 31, 2012 and December 31, Estimated employee liabilities and social charges The account balance on December 31, 2012 totaled R$ 65 as against R$ 57.3 on December 31, 2011, a variation of 13.5% resulting mainly from the provision for vacation and respective charges, in addition to the period's profit sharing. This item accounted for 0.5% of total liabilities on December 31, 2012 and December 31, Regulatory and industry charges The account balance was of R$ million on December 31, 2012 as compared to R$ million on December 31, 2011, a 31.4% drop resulting chiefly from the research and development and energy efficiency account, which varies in accordance with the net revenues by distributors, in addition to the completion of projects related and approved by ANEEL, and lower RGR, CCC and CDE charges, which decreased compared to Regulatory and sectorial charges accounted for 0.8% of EDPBR's total liabilities on December 31, 2012 and 1.3% on December 31, Use of Public Property The account's balance on December 31, 2012 was of R$ 22, 8.8% greater than the December 31, 2011 balance of R$ 20.2, owing to the total balance's financial updating and payment of the period's installments. This item accounted for 0.2% of EDPBR's total liabilities on December 31, 2012 and December 31, Provisions 28

26 The provisions account includes civil, tax, and labor contingencies, in addition to environmental license provisions and contingent installments following acquisition of UHE JARI. The balance on December 31, 2012 was R$ 53.5, 65.5% lower than on December 31, This variation occurred mainly due to the contingent consideration settled in 2012, since the seller has met some clauses covenants of sales agreement of JARI Hydropower Plant undertaking. The item accounted for 0.4% of EDPBR's total liabilities on December 31, 2012 and 1.3% on December 31, Other accounts payable The account balance on December 31, 2012 was R$ million, increase of 17.5% as compared to December 31, 2011, chiefly as a result of advances received by subsidiary Escelsa, for the purpose of disposal of assets and rights. Other accounts payable accounted for 1.1% of EDPBR's total liabilities on December 31, 2012 and 1.0% on December 31, Non-current liabilities Taxes and social contributions The balance on December 31, 2012 was R$ 111.9, 18.2% below that on December 31, This variation was a result of updating of federal tax installments according to the Selic and TJLP interest rates under Law no. 11,941/09, and of the transfer to current liabilities of installments below 12 months. The item accounted for 0.9% of EDPBR's liabilities on December 31, 2012 and 1.2% on December 31, Deferred income and social contribution taxes The balance of deferred income and social contribution taxes on December 31, 2012 was of R$ 387.4, 3.2% above the December 31, 2011 figure. Such variation was mainly caused by the temporary exclusions related to the Use of Public Good of the generators Enerpeixe and Investco. The item accounted for 3.0% of EDPBR's liabilities on December 31, 2012 and 3.2% on December 31, Debentures The balance of debentures on December 31, 2012 was of R$ 1,052.6, a 22.3% increase as compared to December 31, 2011, basically due to the first R$ 450 debenture issue to EDPBR, offset by the transfer to current liabilities and the ensuing payment of the distributors' debentures. This item accounted for 8.3% of EDPBR's liabilities on December 31, 2012 and 7.2% on December 31, Loans, financing and debt charges The account balance on December 31, 2012 was of R$ 1,331.1, a 18.5% increase as against December 31, 2011, basically due to the borrowings occurred in subsidiaries Escelsa, Bandeirante and ECE Participações, for cope with investments in improving the distribution network and the Jari Hydropower Plant undertaking. This item accounted for 10.5% of EDPBR's total liabilities on December 31, 2012 and 9.4% on December 31, Post-employment benefits The account balance of post-employment benefits on December 31, 2012 was of R$ 518.3, a 77.4% rise as compared to December 31, 2011, which arose from the updating of the assumptions contained in the actuarial report and transfers to current liabilities of sums maturing in less than one year. This item accounted for 4.1% of EDPBR's total liabilities on December 31, 2012 and 2.5% on December 31, Regulatory and industry charges The balance of regulatory and sectorial charges accounted for 0.1% of total liabilities on December 31, 2012 and December 31, 2011, which sums were respectively R$ 17.1 and R$ 7.0. The variation of the account is owed basically by the amounts of Research and Development and Energy Efficiency which have a realization term of greater than 12 months. Use of Public Property The account's balance on December 31, 2012 was of R$ 251.2, 5.0% greater than the December 31, 2011 balance of R$ 239.3, owing basically to the total balance's financial updating (with the IGPM rate) and transfer to current liabilities of installments maturing in less than one year. This item accounted for 2.0% of EDPBR's total liabilities on December 31, 2012 and December 31, Provisions 29

27 The provisions account on December 31, 2012, had a balance in non-current liabilities of R$ 180.4, virtually in line with the balance of December 31, 2011, which totaled R$ The item accounted for 1.4% of EDPBR's total liabilities on December 31, 2012 and 1.5% on December 31, Provision for unsecured liabilities This is a provision formed due to the settlement of the Terra Verde project, with a R$ 1.5 balance on December 31, 2012, virtually in line with the balance of R$ 1.6 on December 31, Reserve for reversal and amortization This refers to funds derived from a reserve created on December 31, 1971 pursuant to regulation SPEE (Federal Decree no. no. 41,019/57), employed by us to expand the Public Power Service, and in the reserve fund. Its potential settlement will occur in accordance with determinations of the Concession Authority. The account balance was equal to 0.1% on December 31, 2012 and December 31, Other accounts payable The account balance as of December 31, 2012 was R$15.6, down 59.6% on December 31, 2011, arising from the financial settlement of the amounts owed to several creditors, mainly in the distributors EDP Escelsa and EDP Bandeirante. This item accounted for 0.1% of EDPBR's total liabilities on December 31, 2012 and 0.3% on December 31, Shareholders' equity Shareholders' equity was of R$ 4,445.7 on December 31, 2012, a 3.0% decrease as compared to December 31, 2011, because of: i) decrease in Profits Reserve owed to the transfer of Other Broad Income and; ii) adjustments to equity assessment consisting in: a) actuarial gains and losses - Post-employment benefits (R$ million negative in 2012 as opposed to R$ 80.3 million negative in 2011); b) Financial assets available for sale (R$ 2.7 million in 2012 as opposed to R$ 5.0 million in 2011), and; c) Deferred taxes on these adjustments. This item accounted for 34.9% of EDPBR's total liabilities on December 31, 2012 and 38.6% on December 31, We calculated our shareholders' equity without considering non-controlling interests. Taking into consideration non-controlling interests, our shareholders' equity would rise to R$ 6,332.4 on December 31, 2012, as compared to R$ 6,528 on December 31, 2011, equal to 49.7% and 54.9% respectively of EDPBR's total liabilities. Other equity accounts Equity accounts not commented above do not display material changes when comparing December 31, 2012 and December 31, 2011 balances, and/or did not reflect a substantial share of EDPBR's total liabilities and/or assets on those dates. Cash flow The table below reflects our cash flow from operating, investment, and financing activities for the periods shown: 12/31/ /31/ /31/2013 Variation 12/11 12/12 Variation 12/12-12/13 Net cash generated (consumed) in operational activities 1,432,678 1,110, ,825 (322,617) (210,236) Cash generated (consumed) in investment activities (730,853) (577,802) (1,036,740) 153,051 (458,938) Net cash generated (consumed) in financing activities (926,310) (794,882) 489, ,428 1,284,568 Cash and cash equivalents at the beginning of the year 1,058, , ,375 (224,485) (262,623) Cash and cash equivalents at the end of the year 833, , ,146 (262,623) 352,771 Increase (decrease) in cash and cash equivalents (224,485) (262,623) 352,771 Increase (decrease) in cash and cash equivalents (%) -21.2% -31.5% 61.7% Comparison of Cash Flow for fiscal years ended December 31, 2013 and December 31, 2012 Cash flow from operating activities dropped by R$ million between the periods ended December 31, 2013 and Such variation can be explained mainly by the over payment for the purchase of energy, 30

28 especially from the distributors, Escelsa and Bandeirante Energia, owed to the greater output of the thermal plants which costs are higher than energy from other conventional energy sources, partially offset by the resources received from CDE. The cash flow of investing activities showed a negative variation of R$458.9 million between the periods ended December 31, 2013 and December 31, 2012, in view of the investments in fixed assets made during 2013, mainly arising from the beginning of the construction of the UHE Cachoeira Caldeirão and for the progress of the construction works of the UHE Jari, besides the financial investments in Porto do Pecém, to increase its working capital. In addition, cash flow from financing activities rose by R$ 1,284.6 million between the years ended December 31, 2013 and December 31, This funding level was necessary to support the reduction in operating activities, and maintain an adequate level in both investments and maintenance of dividends to shareholders, using the space available for leverage and favorable indebtedness conditions. Comparison of Cash Flow for fiscal years ended December 31, 2012 and December 31, 2011 Cash flow from operating activities dropped by R$ million between the periods ended December 31, 2012 and Such variation can be explained mainly by the over payment for the purchase of energy, especially from the distributors, EDP Escelsa and EDP Bandeirante Energia, owed to the greater output of the thermal plants which costs are higher than energy from other conventional energy sources. Cash flow from investing activities, in turn, showed an increase of R$ million between the periods ended December 31, 2012 and December 31, 2011, explained by lower fixed asset investments made during 2012, mainly due to the final phase of the works of UTE Pecem. Additionally, during 2012, the sale of controlling interest in the subsidiary, Evrecy contributed positively as well toward this improvement in relation to Additionally, the cash flows of financing activities showed a positive variation of R$131.4 million between the period ended December 31, 2012 and December 31, 2011, which shows a lower funding in 2012, in relation to 2011, once, as previously explained, the investing activities demanded less funds in 2012, as compared to Comments by EDPBR Directors on: (Amounts expressed in thousands of Reais, unless otherwise indicated) a. results of operations EDPBR's three key areas of activity are distribution, generation and trading. Our different areas purchase and sell electricity among themselves. The generating and marketing areas sell electricity to our distributors. In order to avoid a duplication of revenues and expenses, our consolidated financial statements eliminate the outcome if inter-area transactions. Hence, an individual analysis by area would not be the most adequate should we not consider these transactions. Consequently, inter-area sales and expenses were not eliminated in the explanations of the income figures described below. Distribution reflects chiefly sales to captive consumers and payments for use of the distribution system (TUSD) by free consumers, for which the tariff is defined by ANEEL, and the amount sold is based on factors over which EDPBR has no control, such as temperature, total payroll, and business activity in our distributors' concession area, in addition to the country's own business activity. In 2013, the distribution area accounted for 58.0% of EDPBR's consolidated net revenues of R$ 4,633.4 million, a 3.8% growth over 2012 when this figure rose to R$ 4,461.8 million and was equal to 61.9% of EDPBR's consolidated net revenues (already considering the effects of the recognition of construction revenues). In relation to the year 2011, distribution recorded net revenue of R$4,232.5 million, which reflected 66.4% of EDPBR consolidated net revenue. The distribution area accounted for R$ million of adjusted EBITDA in 2013 (44.7% of EDPBR's consolidated EBITDA), an 38.5% increase as against 2012 when it rose to R$ million (38.3% of EDPBR's consolidated EBITDA). In 2011, adjusted EBITDA totaled R$ million, which represented 48.0% of consolidated adjusted EBITDA of EDPBR. 31

29 Net profit by distribution reflected the following sums: R$324.8 million in 2013, R$239.6 million in 2012 and R$328.6 million in Our generation area consists in operation s by 19 plants (Hydro and Small Hydros), and also activities with renewable energies. This area calls for substantial investments in fixed assets and material loans to enable the respective constructions, and in several undertakings we are required to act jointly with strategic partners. This explains why revenues and margins are not reflected in our consolidated net profit. A portion of these revenues and margins is allocated to non-controlling shareholders. Net revenues from generation were as follows: R$ 1,325.3 million in 2013, R$ 1,198.6 million in 2012 and R$ 1,077.3 million in 2011, representing an increase of 11.3% from 2011 to 2012 and 10.6% from 2012 to Of the consolidated net revenue of EDPBR, the generation segment accounted for the following: 18.4% in 2013, 19.2% in 2012 and 19.0% in Adjusted EBITDA from generation was as follows: R$904.6 million in 2013, R$859.2 million in 2012, increase of 5.3%. In 2011, adjusted EBITDA totaled R$ million, 9.1% increase as compared to Generation in EDPBR's adjusted EBITDA contributed as follows: 50.8% in 2013, 58.2% in 2012 and 49.4% in Net profit by generation reflected the following sums: R$ million in 2013, R$ million in 2012 and R$ million in 2011, disregarding the effects of interest of non-controlling shareholders. The trading segment represented by EDP Comercialização trades electricity and added value services to free consumers, concessionaires, and licensees. Net revenues from marketing were as follows: R$1,885.8 million in 2013, a 39.2% increase in relation to the revenue for In 2012, the net revenue was R$1,354.6 million and represented a growth of 47.0% in relation to the revenue for 2011, which amounted to R$ million. Trading segment of EDPBR represented 23.6% in 2013, 18.8% in 2012 and 14.5% in 2011 of consolidated net revenue. Adjusted EBITDA from marketing was as follows: R$68.8 million in 2013, increase of 32.8% in relation to 2012 EBITDA. In 2012, adjusted EBITDA totaled R$ 53.7 million, a 64.2% rise as compared to 2011, with EBITDA of R$ 32.7 million. Of EDPBR s adjusted EBITDA, trading segment represented: 3.9% in 2013, 3.6% in 2012 and 2.1% in Net profit by marketing reflected the following sums: in 2013, R$43.2 million, which represented an evolution of 12.3% over 2012 net profits. In 2012 net profit totaled R$ 38.5 million, a 62.5% rise as compared to 2011 which totaled R$ 23.7 million. Based on the above-described areas, EDPBR's operating figures displayed the following performance: (i) net operating revenues of R$ 7,096.5 million in 2013 and R$ 6,454.5 million in 2012, 9.9% rise. In 2012, net operating revenue increased 13.1% over 2011, the amount of which was R$5,705.4 million; (ii) adjusted EBITDA of R$1,655.7 million in 2013, R$1,420.6 million in 2012, an increase of 16.6%. In 2012, adjusted EBITDA was reduced by 8.2% in relation to 2011, the amount of which was R$1,546.7 million; (iii) net profits of R$375.8 in 2013, R$343.5 million in 2012, an increase of 9.4%. In net profits decreased 30.2% in relation to 2011 net profits, which was R$492.3 million. Such variations have already been explained. b. income variations attributable to changes in prices, exchange rates, inflation, volumes and introduction of new products and services Our Directors believe that our operating activities are directly and materially affected by power tariffs controlled by Aneel, and our operating revenues and margins (essentially in our distribution subsidiaries) depend on tariff revisions. We seek to preserve good relations with the regulating body and with other market participants, so that the tariff revision procedure should clearly and adequately reflect the interests of consumers and shareholders alike. c. The inflationary impact and those of price changes on key inputs and goods, of foreign exchange, and interest rates on the Company's operating and financial income figures 32

30 All of our operations are within the country. Therefore, the Brazilian economy's overall performance affects demand for electricity, and inflation affects our costs and margins. Inflation affects business chiefly through increases in operating costs and financial expenses. The Brazilian real's devaluation increases power acquisition costs from the Itaipu hydro plant, in addition to reducing in US dollar (or Euro) terms the sum of dividends payable to shareholders, or even the US dollar (or Euro) equivalent of our common shares' trading piece. Our Directors believe that we have an adequate protection policy against foreign exchange fluctuations Comments of EDPBR Directors about the significant effects that the events below have caused or might cause on the financial statements of EDPBR and on its results: a. introduction or sale of operating segment; b. formation, acquisition or sale of ownership interest; c. unusual events or operations: Our Directors believe that the events listed in item 10.3(b) below are a result of compliance with our strategies for (i) our quest for sustainable growth in generation assets, in particular in the acquisition of CENAEEL and Elebrás; (ii) our focus on activities in our business area and for which we have competencies, as in the case of disposal of our interest in Evrecy Participações Ltda; and (iii) maximizing our shareholders' returns, as in the case of making use of fiscal incentives and cost reductions arising from the corporate reorganizations described below: a) acquisition or disposal of an operating segment Our Officers understand that in the last three years there was no introduction or disposal of operating segment. Except for the sale of shareholding interest in Evrecy, which operated in the transmission segment and was not part of the group s operating strategy. Sale of the subsidiary Evrecy Participações Ltda. On May 28, 2012, the Company entered into an agreement for the sale of the total shares it held in Evrecy, representing 100% of this company's capital, to CTEEP - Companhia de Transmissão de Energia Elétrica Paulista, for a total amount of R$58,000, to be paid in current local currency. On December 11, 2012, ANEEL approved the sale of 100% of the shares in Evrecy, owned by the Company, to CTEEP. On December 21, 2012, the sale of the investment in Evrecy to CTEEP was concluded, at a total amount of R$ 63,100, generating a gain of R$ 31,477 for the Company, recorded under the heading of General and Administrative Expenses Other; see note on Operating Expenses. b) recognition acquisition or disposal of shareholding interest Selling of assets - Indirect subsidiary Pantanal On August 1, 2013, the indirect subsidiary Pantanal transferred the assets of the São João I Power Plants, with an installed capacity of 0.664MW, São João II Power Plant, with an installed capacity of 0.600MW, and Coxim Power Plant, with an installed capacity of 0.400MW, to two Special Purpose Entities (SPEs) (fullyowned subsidiaries of Pantanal); the assets of the São João I and São João II Power Plants will be transferred to São João Energia Ltda., and those of the Coxim Power Plant to Coxim Energia Ltda. Pantanal and YU Empreendimentos Imobiliários e Participações Ltda. entered into an Agreement for Purchase and Sale of Shares and Other Covenants for the assets related to the aforementioned plants, totaling R$5,000, and, on September 1, 2013, both the control of both SPEs was transferred to YU. Start of Commercial Operation of the Second generating unit of Porto do Pecém I On March 27, 2012, the Brazilian Power Regulatory Agency (ANEEL) approved an amendment to the schedule for the implementation of the thermal power plant Energia Pecém (Energia Pecém or the Development), as well as the supply start date provided for in the Power Trading Agreements in the Regulated Market (CCEAR). By unanimous agreements, the entrance into operation of the two generating units of the Porto do Pecém I Thermal Power Plant was postponed to July 23, However, the joint venture Porto do Pecém will not be able to make the two generating units available for business operations, which will oblige it to fulfill its power reserve replacement obligations set forth in the 33

31 Power Trading Agreements in the Regulated Market (CCEAR) through the acquisition of third parties' electrical power contracts. On July 12, 2012, Porto do Pecém filed a request to ANEEL requesting the full suspension of article 3 of Regulatory Resolution No. 165/05 and the approval of the monthly payment of the lower amount between: (i) the electric power purchase agreement entered into by the plant to guarantee its sales in the Regulated Trading Environment, and; (ii) the power price in the original sales agreement, for Power Trading Agreements in the Regulated Environment (CCEARs) according to the availability, such as the cost the consumer would have if the plant were operating. On March 5, 2013, ANEEL through Order 643 determined that, while Regulatory Resolution 165/05 remains in force, is considered the ballast recomposition performed by the Porto do Pecém, for purposes of transfer to the original contracts, and consequently the rate for end users, the lower value considering: (i) the value of power under the agreement of ballast recomposition; and (ii) the Cost Benefit Index ICB of UTE Porto do Pecém I, updated according to Order nº 1.203/09-SEM/SRG. On April 22, 2013, Energia Pecém filed with ANEEL a Request for Reconsideration of this decision, with a view to recovering the difference between the Online ICB (monthly cost of the Electricity Sale Contracts in the Regulated Environment (CCEARs) of the availability type, calculated as if the plant were operating) and the Auction ICB. On November 19, 2013, ANEEL accepted the Request for Reconsideration filed by Porto do Pecém, in view of Order nº 643/13, so as to apply the provision of Regulatory Resolution nº 165/05, for the delay of UTE Porto de Pecém I, dismissing, however, the adoption of items II (CVU) and III (PLD + 10%) of article 3, and it should be considered, for purposes of repass, the lowest value between the monthly cost of the agreement for replacement of the ballast and the price of power under the original sales agreement, calculated as if the power plant were in operation, provided that the agreement entered into for replacement of ballast meets the requirements of the standards that address the recording, homologation and approval of the agreement of purchase of power, as per ANEEL Order nº 3.889/13. This decision meant an additional repass of R$107,800 recorded in the result of November 2013 of Porto do Pecém. The Company recorded the effect of such gain in its result under the equity method, in proportion to its share in Porto do Pecém (50%). EDP GRID Obtaining of registry for Multimedia Communication Services On December 13, 2012, EDP GRID obtained from the National Telecommunications Agency - Anatel authorization, through PVST / SPV Term Nº 637-Anatel, for provision, under closed regime, Multimedia Communication Services - SCM. The SCM is the fixed telecommunication service which offers, nationally and internationally, the transmission, emission and reception of multimedia information to subscribers of an area of provision of service. On December 16, 2013, it was registered with Anatel the communication of change of the corporate name from Escelsa Participações S.A. to EDP GRID Gestão de Redes Inteligentes de Distribuição S.A, the address of the head office and corporate purpose according to the Extraordinary Shareholders Meeting of August 12, EDP GRID has focused its efforts to begin its activities in telecommunications services and, also, in electric power, with focus on the integration and convergence of many areas that fall into the concept of smart electric network. Concession of Central Hídrica de São Manoel On December 13, 2013 the Company informed the market that Consórcio Terra Nova, established between the Company and Furnas Centrais Elétricas S.A, was the winner of the A-5 auction held by ANEEL, in regard to the concession of São Manoel Hydric Power Plant, which will be built in the limit of the States of Mato Grosso and Pará, on Teles Pires river. 34

32 The main characteristics of the project are: (i) installed capacity of 700 MW; (ii) power sold in the Regulated Contracting Environment ACR of MW average; (iii) sale price in the ACR of R$83.49/MWh adjusted every year by the IPCA; (iv) beginning of the Power Trading Agreement CCEAR in May 2018; (v) term of the CCEAR of 30 years; and (vi) total estimated investment (not considering inflation and capitalized interest) of R$ 2.7 billion. The project financing considers having a long term debt with an estimated leverage of up to 66%. Concession of Aroeira, Jericó, Umbuzeiros and Aventura I Eolic Power Plants The affiliate EDP Renováveis, on December 13, 2013, sold average 45 MW of power on the A-5 Auction, through four eolic power plants: Aroeira, Jericó, Umbuzeiros and Aventura I. Projects are located in Rio Grande do Norte State, Northeast region of Brazil. Together, the projects total 116MW installed capacity. Power sale in the Regulated Trade Market (ACR) is to be carried out over 20 years, starting in January 2018, at the price of R$109/MWh. Assumption of MABE Operations On July 8, 2012, the Company and its partner MPX Energia S.A. (MPX) entered into a purchase and sale contract for the purpose of acquiring, for the symbolic value of R$1.00 and at equal rates, total shares of MABE Brasil Ltda. (MABE), a company that belonged to the consortium formed by Maire Tecnimont Group (Tecnimont) and Group Efacec (Efacec). The purchase is subject to a variety of set of conditions precedent, which is emphasized is the approval of the Economic Defense Council (CADE), after which the Company and MPX can jointly take over the management of the construction of the Energia Pecém, Itaqui and Pecém II Thermal Power Plants, avoiding stoppages in the construction in service and ensuring the completion of the plants. The Company and MPX agreed that Pecém II and Itaqui, developments fully controlled by MPX, will be managed exclusively by MPX, and the latter must hold the Company harmless from any burdens, losses, contingencies, expenses, disbursements or costs, and take responsibility for losses and damage directly related to these developments. The structured transaction resulted in a commitment on the part of Tecnimont and Efacec to make a capital contribution of R$421,000 in MABE. In addition, Tecnimont and Efacec continue to guarantee the performance of the plants by providing bank guarantees referring to the technical performance of the units (without involving indemnity for delay) in the amount of R$411,000. It should also be mentioned that Tecnimont and Efacec provided additional bank guarantees in the total amount of R$166,000 to cover potential contingencies. In addition to the aforementioned amounts, Tecnimont and Efacec waived the amounts currently retained by the plants as performance bond, in the total amount of R$185,000, R$100,000 of which refers to Pecém. As of December 31, 2012, the above conditions had not been completely fulfilled and therefore the Company and MPX have not taken over the management of MABE s operations. Return of the indirect subsidiary Couto Magalhães The Company had the grant of the Concession Agreement nº 021/2002, with the National Agency of Electric Energy ANEEL, in respect to the construction of Couto Magalhães Hydroelectric Power Plant (UHE Couto Magalhães), with installed capacity of 150 MW, guaranteed power of MWm, for a period of 35 years up to April 23, In 2011, 9 years after the grant of the Concession Contract, IBAMA, through Official Letter nº 892/11, informed the definitive disapproval of the request for environmental license. In view of the impossibility to implement the UHE Couto Magalhães, on March , the Company filed a request with the Ministry of Mines and Energy (MME) and ANEEL, according to Administrative Proceeding no / , which requested: (i) the amicable rescission of the Concession Agreement; (ii) the return of the guarantee of full compliance with the liabilities of the Concession Agreement provided for in subclause 9, of Clause 7; (iii) the consequent non-collection of the UBP amount; and (iv) the refund of costs incurred by the petitioners in the preparation of environmental studies. 35

33 On July 10, 2013, Law nº was published, allowing the generation concessionaires granted up to March 15, 2004 which did not commence operations up to December 31, 2013, to request within 30 days: (i) the rescission of their concession agreements, being assured to them, as applicable, the release or refund of the guarantees of compliance with the liabilities under the Concession Agreement; (ii) the non-payment of UBP during the validity of the Concession Agreement; (iii) the refund of costs incurred in the preparation of studies or projects that might be approved for future tender. On July 19, 2013, the ratification of the request for termination of Concession Contract No. 021/2002 of the Couto Magalhães Hydroelectric Power Plant was filed with the Brazilian Electricity Regulatory Agency (ANEEL), in compliance with the guidelines of Ordinance No. 243/2013 of the Ministry of Energy and Mines (MME). On September 5, 2013, the ANEEL Executive Board, in its Extraordinary Public Meeting, approved the termination of the concession of the Couto Magalhães Hydroelectric Power Plan. In the sequence, the process was sent to the MME, which called the Concessionaires to sign the Agreement of Rescission of the Concession Agreement nº 021/2002 on November 27, As per the Termination, concessionaires are released from the payment of UBP charges, and accordingly, the return of the guarantee and reimbursement of the costs incurred to develop the environmental studies will be made upon future bid. Finally, on December 10, 2013, the Company requested to ANEEL the return of the guarantees of full compliance, as bank guarantee, as provided for in the aforementioned Law and Agreement of Rescission. Concession of Central Hídrica de Cachoeira Caldeirão (Cachoeira Caldeirão Water Power Station) On December 14, 2012, in the A-5 auction held by ANEEL, the Company obtained the concession of the Cachoeira Caldeirão Water Power Station will be built in the state of Amapá, on the Araguari river. The project will have an installed capacity of 219 MW and electricity sold in the ACR scope, at average MW, and the trading agreement (CCEAR) is expected to begin in January 2017, for a period of 30 years. The total investment estimated is R$ 1.1 billion and the beginning of the works is estimated for Acquisition of ECE On June 15, 2011, EDPBR, through its subsidiary CEJA, acquired ECE, a company belonging to the groups CS and Participa, and holder of 90% of the Amapá Energia consortium, which owns the concession ption rights to JARI hydroelectric power plant, at the border of the states Pará and Amapá. The remaining interest of 10% of the Consórcio Amapá Energia is held by Jari Energética S.A. ( Jari Energética ), original holder of the concession, which has the right of joint sale of its interest to Ipueiras Energia S.A., current corporate name of CEJA, for the same price and in the same conditions of payment (tag along). That right was exercised on June 30, The UHE JARI hydroelectric power plant has an installed capacity of 300 MW and assured energy of MW on average, corresponding to an utilization factor of 65%, already approved by the Brazilian Power Regulatory Agency (ANEEL), of which 190 MW on average sold in Auction A-5 of December 2010 for a 30- year period ending December 31, 2044 (end of the concession). The total investment foreseen can range from R$ 1,270 million to R$ 1,410 million, including the investment for the construction of the power plant to install the maximum capacity of MW, the payment of the project to the sellers and considering the xercise of tag along rights by Jari Energética On October 13, 2011, the acquisition of 90% of the rights to exploit Jari Hydroelectric Power Plant was completed. The acquisition was formalized on December 23, 2011 of the remaining 10% of UHE JARI's exploitation rights, through the subsidiary ECE. By means of this acquisition, the EDP Group has consolidated 100% of exploitation rights. Sale of interest 36

34 On December 6, 2013, the Company informed the market of its partnership with CWE Investment Corporation (CWEI) and CWEI Brasil Participações (CWEI Brasil), wholly-owned subsidiaries of China Three Gorges (CTG), for joint investments in the Brazilian power market. Under the partnership, the Company signed on this date the Purchase and Sale Agreement and the Shareholders agreement in respect to the sale of 50% of its interest in CEJA and Cachoeira Caldeirão. The agreement provides for the joint participation of the parties in power projects in Brazil, under a balanced shareholding structure, with shared control, balance of rights and decision making based on consensus between the parties. For the sale of CEJA, the value of the transaction was R$490,000 and, in addition, CWEI Brasil will assume the commitment of capital contributions up to the conclusion of the construction of UHE Jari, estimated at R$81,000. For the sale of Cachoeira Caldeirão, the cost of entry of CWEI Brasil will correspond to the reimbursement of costs incurred by EDP - Energias do Brasil and the commitment of capital contributions up to the conclusion of the construction estimated at R$294,000, in proportion to the acquired interest. Under the Agreement, the conclusion of the operation is subject to approval by ANEEL, the National Economic and Social Development Bank BNDES, Chinese regulatory bodies and other provisions of corporate and contractual nature necessary to consummate the disposal of control, which are expected to take place in the first half of As required by CPC 19 (R2) Joint Business (IFRS 11), with the conclusion of the operations and after the aforementioned approvals, CEJA and Cachoeira Caldeirão will be accounted for under the equity method and should result in a capital gain estimated in the net profits for 2014 of R$160,000. Takeover of CESA by Energest On July 31, 2011, CESA's Special Shareholders' Meeting resolved to merge the subsidiary CESA into Energest, supported by the following justifications: a) Energest and CESA are controlled directly and indirectly by EDPBR; b) Energest, CESA's sole shareholder, holds the majority of the EDPBR Group's assets; and c) Energest and CESA carry out the same business activities and both have EDPBR Group generating assets, located in the state of Espírito Santo. The parties believe that benefits will be obtained by means of this takeover with regard to administration, finance and assets, leading to more efficient use of company resources and a prospect for expansion in Energest's business. The corporate reorganization procedure was submitted to the following conditions: (i) the transaction's approval by Banco Santander S.A., issued on February 10, 2011; (ii) the transaction's approval by ANEEL, pursuant to Authorizing Resolution no dated April 19, 2011; and (iii) the transaction's approval by BNDES, issued on June 20, By virtue of this corporate reorganization and on adoption of the legal steps for the takeover, CESA was legally wound up and Energest took over responsibility over assets and liabilities, and for all effects became the lawful successor. Transfer of Evrecy's equity control On October 17, 2011 Energest's Special Shareholders' Meeting resolved to reduce Energest's equity capital by R$ 27.9 million, and by means of the refund of a sum equal to the capital decrease, approval was obtained to transfer Evrecy's controlling interest to EDPBR. By means of Ordinance no dated December 20, 2011, Superintendência de Fiscalização Econômica e Financeira - SFF approved Energest's equity capital decrease. On December 23, 2011 SFF (i) attested that the supporting documents in the transfer application meet ANEEL's legal, financial, technical, and fiscal requisites; (ii) stated that the Concessionaire is in compliance with its intra-sectoral obligations, and (iii) recommended issuing of an authorizing resolution in favor of 37

35 EDPBR as well as approval of the Second Amendment to the Transmission Concession Agreement no. 20/2008-ANEEL. On January 17, 2012, SFF voted on the transfer of Evrecy's direct corporate control under the following conditions: (i) By issuing an authorizing resolution for the transfer of Energest's direct corporate control to EDPBR; (ii) determining that the corporate reorganization hereby authorized should be put in place and formalized in 90 days, and that the documentation in support of the transaction's formalizing should be remitted to ANEEL within 30 days as of its completion; and (iii) by means of the approval of the draft of the Second Amendment to the Transmission Concession Agreement no. 20/2008-ANEEL, which should be undersigned in not over 45 days as of the date of evidencing of the transfer in question. Enertrade's stake in Enertrade at Balcão Brasileiro de Comercialização de Energia - BBCE On December 15, 2011 the acquisition by Enertrade was approved of one batch of 1000 shares for R$ 200 million, entitling it to a seat in the board of directors of the company BBCE. BBCE is a closely-held corporation with a share capital of R$12 million (60 lots of 1000 shares) in which all Agents of the Free Contracting Environment (ACL) can invest. c) Unusual events or operations No events or unusual transactions took place over the last three years Comments by EDPBR Directors on: (a) significant changes in accounting practices; (b) material effects due to changes in accounting practices regarding the last three years: (c) exceptions and emphases found in the auditors' opinion 12/31/2011 The auditors placed the following emphasis on their opinion on the Financial Statements for the year ended December 31, 2011: As described in note 2.1.1, individual financial statements have been prepared in accordance with Brazilian accounting practices. In the case of EDPBR, these practices differ from IFRS and are applicable to segregate financial statements only as it refers to the evaluation of interest in subsidiaries and jointly-owned subsidiaries under the equity method, while for IFRS purposes, it would be at cost of fair value. Our opinion is not qualified in this respect. 12/31/2012 The auditors placed the following emphasis on their opinion on the Financial Statements for the fiscal year ended December 31, 2012: - Beneficiary parties in the subsidiary, Lajeado Energia S.A. The subsidiary, Lajeado Energia S.A. issued in 2006, beneficiary parts for third parties, the balance of which has been R$ 451 million since the issuance date has been recorded in net equity of that subsidiary. In the EDPBR consolidated financial statements the referenced balance was recorded as non-controlling interest as part of the consolidated shareholders equity. Taking into account that the characteristics of these beneficiary parts are those of a hybrid instrument, the referenced balance cannot be, according to accounting practices adopted in Brazil and the IFRSs, fully recorded in the net equity account and the substantial part must be recorded as a liability, reflecting at least the amount of cash that EDPBR must pay to the holder of the beneficiary parts during its validity term. Having understood otherwise, EDPBR did not determine the minimum amount that must be recorded as part of liabilities, thereby resulting in increased consolidated net equity and decreased liabilities balance on December 31, 2012 in an as yet undetermined amount and the income for the year does not include any effect arising from this adjustment. 38

36 The auditors placed the following emphasis on their opinion on the Financial Statements for the year ended December 31, 2012: Depreciation of property, plant and equipment used for the generation of electrical energy under the independent production regime Property, plant and equipment used in the activity of energy generation production regime are depreciated according to the term of the estimated useful life. Whenever new information or regulatory agency or concession authority decisions are made known, the current depreciation term of these assets may or may not be changed. 12/31/2013 Audit report on balance sheets as of December 31, 2012 contains emphasis of matter paragraph on likelihood of change in estimated useful life period for depreciation of power generation property, plant and equipment assets in the independent production system, taking into consideration events and circumstances described in corresponding notes. Current independent auditors opinion does not contain changes related to these matters Senior Management should point out and comment on critical accounting policies adopted EDPBR, exploiting in particular accounting estimates made by management on uncertain and relevant issues for the description of financial condition and income figures, which may require a subjective or complex judgment, such as: provisions, contingencies, revenue recognition, tax credits, lengthy duration assets, useful life of non-current assets, pension plans, foreign currency conversion adjustments, environmental recovery costs, criteria for recovery tests on assets and financial instruments: Useful life of fixed assets items All generating companies' tangible assets and only tangible assets not related to the distribution and transmission companies' infrastructure are recorded in Property, plant and equipment. Are accounted for at: i) acquisition costs plus nonrecoverable taxes on purchase; ii) any costs directly attributable to the placement of the asset in the location and required operating conditions; iii) financial charges relating to the financing obtained from third parties, effectively invested in construction in service; iv) in thermal and wind power plants, at the initial estimate of costs for disassembling and removing the item and restoring the location; and v) less accumulated depreciation and impairment losses. The depreciation calculation basis is the asset's depreciable amount (acquisition cost less residual value). Depreciation is recognized in the income statement on a straight line basis in accordance with the estimated useful life of each component of a property, plant and equipment item, as this method best reflects the consumption pattern of future economic benefits incorporated into the asset. The depreciation rates for assets of hydroelectric plants are in accordance with Normative Resolution 474/12 issued by ANEEL, new depreciation rates for assets in service were established, starting January 01, 2012, altering Tables I and XVI of the Manual of Asset Control in the Electricity Sector (MCPSE), approved by Resolution 367/09. Depreciation rates reflect the useful life of assets and are used by the Company and its subsidiaries for depreciation of its fixed assets. The residual value is the asset's remaining Balance on the end of the concession, since, as established in the agreement entered into by the subsidiaries and the Federal government, at the end of the concession, the assets will be transferred to the Federal government, which will indemnify the subsidiaries for the assets not fully depreciated. When the indemnity at the end of the thermal and wind power concession/authorization is not possible, no residual value is recognized and depreciation rates are adjusted so that all assets are depreciated within the concession/authorization. In the case of hydroelectric plants operating under the independent producer system, the Company believes that there is a right to compensation, since provided in the concession agreement, of the residual value of the related and reversible assets, supported by its legal advisors and considering the facts and circumstances available at the time. Any changes will be monitored and the impacts of any such changes will be analyzed. At the end date of the concession, for purposes of calculating the indemnity for the assets linked to the concession which are revertible to the Federal Government, the residual value of the assets will be adjusted in accordance with a criterion to be defined by ANEEL. 39

37 Depreciation methods and residual values are reviewed at the end of each fiscal year, possible adjustments are recognized as a change in accounting estimates. Accounting estimates In the preparation of individual and consolidated financial statements in accordance with Brazilian accounting practices and international accounting practices, it is required by the Management of the Company and its subsidiaries to make estimated to record certain transactions that affect assets, liabilities, revenues and expenses. The final results of those transactions and information, at the time of their effective realization in subsequent periods, may differ from the estimates, due to the lack of precision inherent to the process of their determination. The Company and its subsidiaries review the estimates and assumptions at least quarterly, except for the Post-employment benefit plans, which is reviewed on a 6-month basis and yearly for impairment losses. The main estimates that represent significant risk likely to cause adjustments to the financial statements, refer to the recording of the effects arising of: Allowance for doubtful accounts; Unbilled supply revenue; Transactions carried out in the sphere of the CCEE; Recovery of deferred income and social contribution taxes on tax loss carryforward, negative basis and temporary differences; Measurement of financial instruments; Provisions for contingencies; Post-employment benefit plans; Analysis of asset impairment test; Provision for contingent consideration; andevaluation of the useful life of tangible and intangible assets. Provisions for contingencies These are recognized in the statement of financial position as a result of a past event, and it is probable that an economic resource will be required to settle the obligation and that can be reliably estimated. Provisions are recorded considering the best estimates of the risk specific to the liability. Impairment Financial assets Evaluated at the end of each year regarding recoverability. Considered as nonrecoverable assets when there are evidences that one or more events occurred after the initial recognition of the financial asset that resulted in adverse effects on the estimated future cash flow of the investment. Non-financial assets The Management of the Company and its subsidiaries reviews the net book value of property, plant and equipment, investment property and intangible assets, including goodwill and intangible assets, on an annual basis to identify whether there was any evidence of unrecoverable losses or evidence of the occurrence of events or alterations in the circumstances indicating that the book value might not be recoverable. The recoverable amounts have been determined based on its value in use. When such evidence is identified, and the net book value exceeds the recoverable value, an allowance is recognized adjusting the net book value to the recoverable value. Intangible assets with undefined useful life are subjected to an impairment annually regardless of whether there are indicators of any loss, when applicable. Income and social contribution taxes The current income and social contribution taxes recorded in income are calculated in indirect subsidiaries Costa Rica and Santa Fé, based on the deemed profit method, where income and social contribution tax bases were computed considering tax rates of 8% and 12%, respectively, calculated on the amount of gross revenue in accordance with current legislation, and the current income tax is calculated in the parent company and other subsidiaries considering taxable income at tax rate applicable under the current legislation, of 15%, with a surtax of 10% on taxable income exceeding R$240 per year, and the current social contribution tax is calculated considering taxable income before income tax, at a tax rate of 9%. Both consider the offset of tax losses and negative basis of social contribution tax, limited to 30% of the taxable income (when applicable). Deferred income and social contribution tax assets and liabilities were recorded, as of the tax loss carryforward, negative social contribution basis and temporary differences and events resulting from the 40

38 Law 11638/07 RTT, considering the rates in force of the aforementioned taxes, in accordance with the provisions of CVM Instruction 371/02, and consider past profitability record and expectations of future taxable income based on a technical viability study. The current and deferred income and social contribution tax assets and liabilities are stated at their net amount, as requested by the Technical Pronouncement CPC 32. Income and social contribution tax expenses comprise current and deferred taxes, and they are recognized in the income statement unless they relate to items directly recognized in Shareholders' equity. On March 23, 2010, the subsidiary EDP Escelsa obtained Incorporation Report 26/2010 from Superintendência do Desenvolvimento do Nordeste - SUDENE, attesting to the fulfillment of all the legal conditions and requirements stipulated for recognition of the right to the reduction of 75% of the rate of Income Tax and Non-Reimbursable Surcharges, calculated with a basis on the income from the exploration relating to the municipalities from the northern region of the state, which are from the area of activity of SUDENE, for a period of 10 years as of the fiscal year 2010, filed at the Unit of the Brazilian Internal Revenue Service - RFB, with jurisdiction over the municipality of its head office. On December 22, 2009, the subsidiary Energest obtained from the Agency for the Development of the Northeast Region (SUDENE) Incentive-Granting Report 176/2009, attesting to the compliance with all legal conditions and requirements for the recognition of the right to a 75% reduction in the Income Tax rate and Additional non-reimbursable taxes calculated based on operating profit, on 33.08% of the revenue generated by the Mascarenhas power plant located in the Municipality of Baixo Guandu in Espírito Santo State, corresponding to 28.16% of the Company's total revenue, for a ten-year period beginning in the 2005 fiscal year. In compliance with the determinations of Administrative Ruling 2091-A of December 28, 2007 of the Ministry of National Integration, entity that regulates the benefit, the amount of unpaid income tax cannot be distributed to the partners or shareholders, which can only be used for compensation of loss or capital increase. Since the year ended December 31, 2008, the Tax incentive reserve in subsidiary Enerpeixe has been comprised of tax incentives granted by the Superintendência do Desenvolvimento da Amazônia - SUDAM, referring to the reduction of the Corporate Income Tax (IRPJ) rate. The amount of this government subsidy is being excluded from the calculation basis of the dividends, in accordance with article 195-A of Law 6,404/76 amended by Law 11,638/07 and only will be used for capital increase or possible absorption of losses. The tax incentives mentioned above are recorded in the subsidiaries financial statements, as required by CPC 07 (R1) Government Grants. Post-employment benefits The Company and its subsidiaries have employee benefit plans of the defined contribution and defined benefit types, including pension and retirement plans. Pursuant to CVM Resolution 695/12, post employment benefit liabilities should be accounted for based on standards contained in CPC 33 (R1) of Accounting Pronouncement Committee. To meet this requirement, the Company and its subsidiaries hired independent actuaries to conduct an actuarial appraisal of the benefits according to the Projected Unit Credit Method, and the last was performed at the base date of December 31, Actuarial gains and losses generated by adjustments and changes to actuarial assumptions of defined benefit plans are directly recognized in Shareholders' equity under Other comprehensive income in the year. Past service costs are fully recognized in the period they occur in income (loss) in the Personnel account and financial income (loss) of the benefit will be recognized at net amount based on the discount rate. The liabilities of the defined contribution plans are recognized as personnel expenses in the statement of income for the period in which the services are rendered. Financial instruments 41

39 Financial instruments are defined as any contract that originates a financial asset to the entity and a financial liability or equity instrument to another entity. Non-derivative financial instruments include cash and cash equivalents, collaterals and restricted deposits, trade accounts receivable and other receivables, investments in debt and equity instruments, loans, financing, debentures and trade accounts payable, as well as accounts payable and other obligations. These financial instruments are immediately recognized on negotiation date, that is, when the obligation or right is formalized, and are initially recorded at fair value plus or less any directly attributable transaction costs. After the initial recognition, they are measured as described below: Instruments held to maturity If the Company and/or its subsidiaries have the intention and capacity to hold to maturity their financial instruments, these are classified as held to maturity. Investments held to maturity are measured by the amortized cost using the effective interest rate method, less any reductions in their recoverable value. Financial instruments at fair value through profit or loss An instrument is classified at fair value through profit and loss if it is held for trading, that is, designated as such upon initial recognition. Financial instruments are recorded at fair value through profit or loss if the Company and/or its subsidiaries manages these investments and decides on purchases and sale based in their fair value according to the investment risk management strategy documented by them. After initial recognition, attributable transaction costs are recognized in statement of income when incurred. Loans and receivables Only non-derivative assets with fixed or determined payments that are not quoted in an active market are allocated to this category, initially recognized at their fair value any attributable transaction cost. After initial recognition, loans and receivables are measured at amortized cost using the effective interest method less any impairment losses. Instruments available for sale Non-derivative financial assets classified as available for sale or not classified in any of the prior categories are designated in this category. The indemnifiable financial assets of the subsidiaries are classified as available for sale. Subsequent to initial recognition, these financial assets are recorded to reflect the best estimate of the New Replacement Value - NRV, as described in note 2.2. item b, which is equivalent to fair value, calculated according to criteria established by regulation of the Concession Grantor. The effects of this measurement are recognized directly in profit or loss, using the effective interest rate method. Derivative financial instruments Derivative financial instruments are contracts with the following characteristics: a) their value changes as market changes affecting interest rates, foreign exchange rates, commodities prices, b) no initial investment is required or the initial investment is much lower than the investment required for similar contracts in the market; and c) They will always be settled in a future date. Derivative financial instruments are recognized on their trade date at their fair value. Subsequently, the fair value of the derivative financial instruments is reevaluated on a regular basis, while the gains and losses resulting from this revaluation are recorded in income (loss) for the year. Hedge accounting Subsidiaries and jointly-owned subsidiaries classify certain financial instruments as hedge accounting. The hedge derivatives are recorded at fair value and gains or losses are recognized according to the hedge accounting model adapted, and for such the following requirements were met: i) there is formal documentation of the hedge on the start date of the relationship; ii) the hedge is expected to be highly effective; iii) the hedge effectiveness can be measured reliably; iv) the hedge is evaluated on a continual basis and effectively determined as being highly effective throughout the useful life of the hedge accounting structure period; e 42

40 v) in relation to the hedge of an anticipated transaction, this must be highly probable and must present exposure to cash flow variations that could ultimately affect the statement of income. The Company and its subsidiaries use financial instruments of hedge of the interest rate, and foreign exchange variation. The derivatives that do not qualify as hedge derivatives are recorded as trading derivatives. Derecognition of financial instruments Financial instruments are written-off provided that contract rights to cash flows expire, that is, the end of the right or obligation of receiving or delivering cash or membership certificate is certain. For this situation, Management, based on consistent information, records the settlement. The recognition may be equity instrument due to cancellation, payment, receipt or when the debts expire. Concessions The Company has the right to indirectly explore the following power generation, concessions/licenses/permits/distribution: Distribution Concession contracts of the subsidiaries Bandeirante and Escelsa The main liabilities set forth in the concession agreements are as follows: Grantor: inspection of the compliance with the contract; to ensure the adequate provision of the service; to extend the term of the contract to ensure the quality of the service at adequate costs; to adjust the tariffs to ensure the economic and financial balance of the concession agreement; and, upon the receipt of the concession, to refund, as provided for in the law, the portions of associated investments which are not amortized or not depreciated on the date of the transfer, discounting, in the event of forfeiture, amounts of contractual fines and damage caused by EDP Bandeirante and EDP Escelsa.Bandeirante and Escelsa. EDP Bandeirante and EDP Escelsa must: permanently keep assets and facilities master file updated; maintain equipment in perfect operation and technical conditions to ensure service continuity and efficiency; to charge for the supply of electric power at the tariffs approved by the Concession Grantor; and make investments required to guarantee service provision. Generation Regarding the Generation agreements, when operating the Hydroelectric Power Plants, the concessionaires will have considerable independence in the management of their businesses, which includes measures related to investments, personnel, materials and technology, provided that they comply with the provisions of the concession agreements, the standards of the electric power industry and the instructions of the Concession grantor and ANEEL. The concession contracts establish that the price applicable to the electric power generated will be freely negotiated by the concessionaires and buyers, pursuant to article 10 of Law 9648/98, and articles 27 and 28 of Law 10438/02, worded by Laws 10604/02 and 10848/04. The concession contracts establish that, once the concession term has ended, the assets and facilities linked to the exploration of hydroelectric power plants can be returned to the Concession grantor, with the carrying out of the necessary analyses and appraisals, as well as the determination of an indemnity due to the concessionaires, which is based on the dates and amounts of their respective incorporation into the electric system. Concession contracts of the subsidiary Energest (Mascarenhas, Suiça hydroelectric power plants, Alegre, Fruteiras, Jucú and Rio Bonito small hydroelectric power plants) The term of the concessions of the UHEs of the parent company can be extended for a period of up to 20 years, pursuant to paragraph 20 of article 40 of Law 9074/95, worded by article 80 of Law 10848/04, based on the specific technical reports prepared by ANEEL inspectors, provided that the Hydroelectric Power Plants are being operated in compliance with the conditions set forth in the related concession contracts and the legislation of the electric power industry, and in a manner that properly protects the consumers' interests. 43

41 Through ANEEL Authorizing Resolutions No. 4020/13 and 3926/13 Suíça Hydropower Plant and Alegre, Fruteiras, Jucú and Rio Bonito Small Hydropower Plants had their exploration system changed from Public Service to Independent Producer. As of December 31, 2013, the concession agreements had not yet been amended to reflect the Independent Producer modality; these agreements are currently in the possession of the Brazilian Electricity Regulatory Agency (ANEEL) to be amended and signed. Concession contract of the subsidiary Pantanal (UHE Assis Chateaubriand) The concession contract determines that, at the exclusive discretion of the Grantor, and for the purpose of ensuring the continuity and quality of the electric power generated, the concession term can be extended for a period not exceeding its original term, at the request of the concessionaire. Through ANEEL Order 896/13, the Hydropower Plant had its exploration system changed from Public Service to Independent Producer and, in December 2013, the concession agreement was amended. Authorizations of the direct subsidiary Energest (Viçosa and São João PCHs) and indirect subsidiaries Costa Rica (Costa Rica PCH), Pantanal (Paraíso PCH) and Santa Fé (Francisco Gros PCH) The authorizations of PCHs will remain in force for a term of 30 years and may be extended at the discretion of ANEEL, pursuant to Article 7 of Resolutions 110/99 and 111/99. The electricity generated by the Authorized entity is intended to be marketed under the independent production of electricity modality, in accordance with the conditions set forth in Articles 12, 15 and 16 of Law 9074/95, regulated by Decree 2003/96. At the end of the duration of this Authorization, if there is no extension, the assets and facilities linked to the production of electricity will become the property of the Federal Government, through compensation of investments realized, provided they have been previously authorized but not yet amortized, as determined by an ANEEL audit. Concession contract of the indirect subsidiary Investco and direct subsidiary Lajeado Investco and Lajeado has part of the Concession agreement to operate the assets for a 35-year period starting on the date of the publication in the Official Gazette (January 15, 1998) and ending on January 15, 2033, and the concession term may be extended at the request of the concessionaires. The mentioned hydroelectric power plant is operating with five turbines, with a capacity of MW each, with a total installed capacity of 902.5MW and an assured capacity of 823.3MW. Investco is the sole owner of the assets that comprise the Lajeado hydroelectric power plant, but is not the exclusive holder of the Concession agreement. The concession of the Lajeado hydroelectric power plant is jointly held by: CEB Lajeado S.A. - holder of 19.80%, Lajeado Energia S.A. - holder of 72.27%, Paulista Lajeado Energia S.A. - holder of 6.93% and Investco - holder of 1%. Therefore, the aforementioned companies, together with Investco, are the concessionaires of the Lajeado hydroelectric power plant. Of the total assured capacity, concessionaires of UHE Lajeado must allocate MW and 2,877,660MWh/year for sale to electric power distribution concessionaires by the end of the concession term. In the event concessionaires are unable to deliver the aforementioned electric power amount, they shall refund the market agents with which it has commitments. At the end of the concession period, all assets and facilities linked to the Hydroelectric Power Plant will be incorporated into the Brazilian Federal Government's assets, and the concessionaires will be refunded for any investments made and not yet amortized, provided that the latter have been authorized by ANEEL and subjected to an ANEEL audit. The electricity generated by the Lajeado hydroelectric power plant is used and traded on an "Independent Producer" basis, pursuant to the provisions of the Concession agreement, by the aforementioned concessionaires, in proportion to their interests. A lease agreement was entered into for the assets of the Lajeado hydroelectric power plant consortium with the concessionaires of this power plant, under which the lease is proportionate to the concessionaires' interest in the Concession Agreement. Therefore, in addition to the revenue accrued from the sales of electricity proportionately to its interest, Investco also accrues revenue from the lease of the assets of the Lajeado hydroelectric power plant. 44

42 Concession contract of the subsidiary ECE Participações The initial concession term provided for a 30-year period starting on December 21, 1987, the date of the publication of the concession notice. The 4th addendum signed on January 23, 2012 extended the concession term up to December 31, The concession term can be extended based on the specific technical reports prepared by ANEEL inspectors, at the discretion of ANEEL, upon the request of the concessionaire, provided that the hydroelectric power plant is being operated in compliance with the conditions set forth in the related concession agreement and the legislation of the electric power industry, and in a manner that properly protects the consumers' interests. The basic design of the UHE Jari was altered on July 27, 2011, by ANEEL Order 3080, increasing from 300 MW to MW of installed capacity. On May 23, 2012, the Ministry of Mines and Energy, through MME Ordinance 35/12, published a review of the physical guarantee, rising from to average MW (Main Power House average MW and Secondary Power House 3.2 average MW). At auction A-5 held in December 2010, 190 average MW was sold, corresponding to a utilization factor of 65% of the installed capacity, already approved by ANEEL for the 30-year period ending on December 31, On December 14, 2012, the Company sold, in the A-5 Auction, the additional energy of the Jari Hydropower Plant. The energy sold totaled 20.9 MWm. The sale of this energy did not imply any additional investment in the project. Concession contract of the subsidiary Cachoeira Caldeirão The expected deadline for start of supply is January 2017, which will last a 30-year period, at the price of R$ per MWh, adjusted by the Broad Consumer Price Index (IPCA). Electric power to be generated by Hydroelectric Power Plant (UHE) Cachoeira Caldeirão will be used and traded as deriving from Independent Producer, pursuant to the terms of the Concession Agreement. The concession contract will be effective for a 35-year period starting from the date of execution, and an extension is not foreseen by the current legislation. Concession contract of the subsidiary Enerpeixe The concession term is 35 years starting from the date of the execution of the concession agreement (November 7, 2001). The concession term can be extended based on the specific technical reports prepared by ANEEL inspectors, at the discretion of ANEEL, upon the request of the concessionaire, provided that the hydroelectric power plant is being operated in compliance with the conditions set forth in the related concession agreement and the legislation of the electric power industry, and in a manner that properly protects the consumers' interests. The request for an extension of the concession term should be submitted within 36 months before the expiry of the concession agreement, together with proof of compliance with tax and social security obligations, as well as with commitments and charges assumed with the Public Administration bodies of the electric power generation industry. In the event the power generated is lower than the assured power and contracted and/or used capacity, Enerpeixe will have to refund the other agents operating on an integrated basis for the remainder of the amounts contracted and/or used, pursuant to the legislation, criteria and standards of the Control, Optimization and Computational Intelligence Group Applied to the Electric Power Systems (GCOI) in force, using tariffs defined by ANEEL. At any time, to safeguard public interest and as provided for in the prevailing legislation, the Concession grantor can carry out an expropriation by paying a previous indemnity to the concessionaires for assets which have not yet depreciated. The amount of the indemnity will be determined by audit to be conducted by the Concession grantor. Should the forfeiture of the concession be declared, the Concession grantor will indemnify the concessionaires for investments made during the contract term, but not yet amortized or depreciated, provided that these investments have been approved, deducting the amounts of penalties and damages that may have arisen from the event that led to the forfeiture. Consolidated financial statements 45

43 The consolidated financial statements were prepared in accordance with the standards established by CPC 36 (R3) - Consolidated statements approved by the CVM Resolution 698/12 covering the Company and its subsidiaries (as described in Note 16). The main consolidation practices had been adopted were as follow: Elimination of the investment of the Parent company in the subsidiary companies; Elimination of the balances of accounts between the parent company and the subsidiary companies and of the accounts maintained among these subsidiary companies; Recognition of non-controlling interests in the statement of financial position and in the statement of income; Business combinations have been considered since September 2008, determining the acquisition cost, recognizing and measuring all assumed assets and liabilities, as well as non-controlling interests, recognizing and measuring goodwill for expected future earnings, all measured on acquisition date. If the excess is negative, a gain is recognized in result for the year. Consolidation of entities in which the Grupo EDP - Energias do Brasil holds less than 50%: the Company is an indirect parent company of Investco, with an equity interest of 40.78%. The Company is a direct parent company of Lajeado, which holds 73% of the voting capital and 62.39% of the total capital stock of Investco, assuring Lajeado of sufficient voting rights and the power to direct Investco s activities. Consequently, the Company is an indirect parent company of Investco and, therefore, Investco was fully consolidated in the financial statements. Joint arrangements: The Company holds 50% of the voting rights in its joint arrangements in Porto do Pecém, Pecém TM and Pecém OM. The Company holds joint control because, pursuant to the terms of the arrangements, decisions about the relevant activities require the unanimous consent of the parties sharing control. The Company s joint arrangements are structured as closed companies and, pursuant to the terms of the arrangements, the Company and the other party to the arrangements are granted rights to these closed corporations' net assets. For this reason, these arrangements are classified as joint ventures. Previously, Porto do Pecém, Pecém TM and Pecém OM were classified as subsidiaries of the Company and accounted for on a proportional consolidation basis. Functional currency The Company's functional currency is the Brazilian real and the individual and consolidated financial statements are presented in Brazilian Reais, rounded to the nearest whole number, unless otherwise indicated Comments on internal controls adopted to ensure the preparation of reliable financial statements: a. level of efficiency of said controls, informing possible deficiencies and measures adopted to correct them Our Officers believe in effectiveness of internal procedures and controls adopted to ensure quality, accuracy and reliability of EDPBR s financial statements. For this reason, in EDPBR s management opinion, its financial statements present fairly the results of EDPBR s operations and financial situation on respective dates. b. weaknesses and recommendations on internal controls presented in the independent accountants' report In the audit of our financial statements, our independent auditors considered our internal control systems within the scope foreseen in audit standards applicable in Brazil, whose purpose is related to the planning of audit procedures. Note that financial statements audit scope does not provide for specific auditing and reporting on internal control effectiveness. Our practice is to promptly correct possible failures identified by auditors during their regular work process, be them process or system failures. Accordingly, our Directors are not aware of aspects that could significantly affect the adequacy of our financial statements to accounting practices adopted in Brazil and to IFRS Comments on securities distribution public offers in the last 3 years: 46

44 On July 18, 2011, EDPPT, controlling shareholder of EDPBR, completed the process of public offering of secondary distribution of ordinary, nominative, book-entry, non-par shares, free from charges or lien, issued by the subsidiary EDPBR and held by the Company, which resulted in the sale of 21,911,460 shares, decreasing its current interest from 64.8% to 51% in the capital stock of EDPBR. a. how the proceeds from the offering were used Public offer occurred in the ambit of our controlling shareholder EDPPT. Therefore, funds resulting from that offer were used to make investments in other projects, as well as to reduce our parent company s indebtedness level. b. if there were material deviations between the actual use of funds and the proposals of use disclosed in the offering memorandum of the respective distribution; and c. in case of deviations, the reasons for these deviations Our Directors consider that there has been deviation between the actual use of proceeds and the proposals of use Significant items not evidenced in the financial statements of EDPBR: There are no significant items not evidenced in the financial statements of EDPBR Comments on items not evidenced in the financial statements indicated in item 10.8: Not applicable according to the prior item Comments on the main elements of EDPBR business plan: (a) investments, including: (i) quantitative and qualitative description of the investments in progress and estimated investments The investments of EDP Energias do Brasil totaled R$ 1,140.4 million in 2013, with a decrease of 62.7% in relation to the funds allocated to the business areas in the previous year. The main reason for this increase is generation projects under construction. Investments (R$ thousand) 2013 %Weight 2012 %Weight Annual (%) Distribution 334, % 242, % 37.9% EDP Bandeirante 153, % 101, % 51.6% EDP Escelsa 181, % 141, % 28.1% Generation 785, % 454, % 73.0% Enerpeixe 6, % 3, % 94.6% Energest - Consolidated 47, % 75, % -36.6% Lajeado / Invéstco 7, % 6, % 10.4% Santo Antonio do Jari 487, % 368, % 32.3% Cachoeira Caldeirão 236, % Others 20, % 4, % 375.8% Total 1,140, % 700, % 62.7% Investments made in 2013, in distribution totaled R$ million with a 38% reduction compared to Investment (R$ thousand) EDP Bandeirante EDP Escelsa Total Expansion of the Electric System 97,332 68, , , , ,376 47

45 Network Improvement 61,894 44,558 40,623 34, ,518 79,211 Universalization 13,857 10, ,857 10,630 Telecom, IT and Others 33,507 30,869 36,675 26,927 70,182 57,796 Subtotal (1) 206, , , , , ,013 Revenues from Excess (2) (37,799) (42,845) (8,389) - (46,188) (42,845) (-) Special liabilities (3) (15,863) (11,167) (13,822) (21,325) (29,385) (32,492) Net Investment 153, , , , , ,676 In the generation segment, investment reached R$785.3 million in 2013, 73.0% higher than the same period of prior year, mainly due to the construction of UHE s (hydroelectric plants) Santo Antônio do Jari (R$487.4 million) and Cachoeira Caldeirão (R$236.0 million). Santo Antônio do Jari Hydropower Plant construction work evolved approximately 89% and is expected to start commercial operations in January Construction work of Cachoeira do Caldeirão Hydropower Plant began in August 2013 and is expected to start commercial operations in January (i) Investment funding sources Our Directors affirm that the main financing sources for our investments were and should continue to be our cash generating capacity and the raising of loans and financing from financial institutions. Among sources of financing to our investments, our Officers emphasize that BNDES is the main long-term financial partner, as it has characteristics that are consistent with the Company s standards. (ii) material divestitures in progress and estimated divestitures Our Directors understand that this item is not applicable, as EDPBR has no foreseen divestitures or ongoing relevant divestitures. b. provided that already disclosed, indicate the acquisition of plant, equipment, patents or other assets that could materially influence EDPBR production capacity. Not applicable, as EDPBR did not disclose the acquisition of plants, equipment, patents of other assets that could materially influence EDPBR production capacity. c. new products and services Not applicable, as EDPBR cannot provide products or services other than those agreed on in its concession agreement Comments on other factors that have significantly affected the operating performance and which have not been identified or commented in the other items of this section: There are no additional comments because there are no other factors that significantly influenced EDPBR operating performance and that have not been identified or commented in items of this section "10". * * * Declarations of the Company's Directors CVM Instruction 480/ Article 25 (Items V and VI) The Company's directors state that they have reviewed, discussed and agreed with the Opinion issued by PriceWaterhouseCoopers, and state that they have reviewed, discussed and agreed with the Company's financial statements as of December 31, * * * 48

46 ATTACHMENT II Proposal for Use of Net Profits for the Year 2013 Item 9-1-II (Amounts expressed in thousands of Reais, unless otherwise indicated) 1. Notify the net profits for the year: Net income (in reais) R$375,767, Adjusted net profits (in reais) R$358,109, Inform the total amount and amount per share of dividends, including prepaid dividends and interest on own capital already declared: Interest on own capital (JCP) (in Reais) R$29,190, Dividends (in Reais) R$311,013, Dividends debited from the retained earnings reserve (in reais) (***) R$30,045, Global amount (in Reais) R$370,249, Amount per share (JCP) (in reais) R$ Amount per share (in reais) R$ Amount per share (in reais) R$ Value per share R$ Inform the percentage of net income for the fiscal paid out: % Net income (*) %LLA(**) % % (*) Net profits less legal reserve recognition. (**) Net Income adjusted as required by ICPC 08 (***) See item 4 4. Inform the total amount and amount per share of dividends paid based on income from prior years: The Company will distribute dividends from prior years debited from the retained earnings reserve in the amount of R$ 30,045,737.85, corresponding to the amount of R$ per share. 5. Inform, deducting prepaid dividends and interest on own capital already declared: a) The gross amount of the dividend and interest on own capital, segregated, per each type and class of share: The Company only has ordinary shares and will pay dividends, in the amount of R$ 341,059,375.94, corresponding to the amount of R$ per share. b) The form and term of payment of dividends and interest on own capital: Payment will be made during c) possible levy on price level restatement and interest on dividends and interest on own capital: There is no price level restatement and interest on dividends and interest on own capital. d) Date of declaration of payment of dividends and interest on own capital considered for the identification of shareholders entitled to receive it: 49

47 Dividends will be paid on the base date of the General Shareholders' Meeting scheduled to be held on April 29, If the declaration of dividends or interest on own capital had occurred based on income determined in the semi-annually balances or in shorter periods: a) inform the amount of dividends or interest on own capital already declared: There is no declaration of dividends or interest on own capital based on income determined in semi-annually balances ou shorter periods. b) Notify the date of the respective payments: There is no declaration of dividends or interest on own capital based on income determined in semi-annually balances ou shorter periods. 7. Supply comparative table indicating the following amounts per share of each type and class: a) Net income of the year and of the three (3) previous years: 31/12/2013(*) 31/12/2012(*) 31/12/2011(*) 31/12/2010(*) R$ R$ R$ R$ (*) Considers the stock split occurred in 2012 b) Dividend and interest on own capital paid in the last three (3) years: Dividend per share 12/31/ /31/ /31/2010 R$ R$ 1, R$ 1, Interest on own capital per share 12/31/ /31/ /31/2010 R$ R$ R$ If there is allocation of profits to the legal reserve: a) Identify the amount allocated to the legal reserve: Legal reserve (in reais) R$17,905, b) Detail the form of calculation of legal reserve: Legal reserve is formed based on 5% of adjusted net profits up to the limit of 20% of the capital stock. 9. If the Company does not have preferred shares with fixed or minimum dividend rights: a) describe the calculation of fixed or minimum dividends: The Company does not have preferred shares. b) Inform if the income for the year is sufficient for the full payment of fixed or minimum dividends: The Company does not have preferred shares. c) Identify if any unpaid installment is cumulative: The Company does not have preferred shares. d) Identify the total amount of fixed or minimum dividends to be paid to each class of preferred shares: The Company does not have preferred shares. e) Identify the fixed or minimum dividends to be paid for preferred share of each class The Company does not have preferred shares. 50

48 10. Regarding the mandatory dividend: a) Describe the calculation form provided for in the By-laws: A portion equal to at least 25% (twenty-five percent) of net profit, calculated based on the balance obtained after the deductions and additions referred to in Article 202, I, II, and III of the Brazilian Corporate Law, shall be paid out to shareholder as the annual minimum mandatory dividends. b) inform if it is being fully paid: The dividend will be fully paid. c) Inform the amount eventually withheld: There was no amount withheld. 11. If there is retention of compulsory dividend due to the financial situation of the Company: a) Inform retention amount: There was no amount withheld. b) Describe the financial situation of the company in detail, also including aspects regarding the liquidity analysis, working capital and positive cash flows: There was no amount withheld. c) Justify the dividend retention: There was no dividend withheld. 12. If there is allocation of income to reserve for contingencies: a) identify the amount allocated to the reserve: There was no allocation of income to the reserve for contingencies. b) Identify the loss considered likely and its cause: There was no allocation of income to the reserve for contingencies. c) explain why the loss was considered likely: There was no allocation of income to the reserve for contingencies. d) Justify the formation of reserve: There was no allocation of income to the reserve for contingencies. 13. If there is allocation of income to unrealized profit reserve: a) Inform the amount allocated to unrealized profit reserve: There is no allocation of income to unrealized profit reserve. b) Inform the nature of unrealized profits that gave rise to the reserve: There is no allocation of income to unrealized profit reserve. 14. If there is allocation of income to statutory reserves: a) Describe the statutory clauses that determined the reserve: There was no allocation of income to statutory reserves. b) Identify the amount allocated to the reserve: There was no allocation of income to statutory reserves. c) Describe how the amount was calculated: There was no allocation of income to statutory reserves. 15. If there is profit retention provided for the capital budget: 51

49 a) Identificy the retention amount There was no profit retention. b) Supply a copy of the capital budget There was no profit retention. * * * 52

50 ATTACHMENT III Information about the Directors Items 12.6 to Reference Form CVM Instruction 480/2009 Board of Directors for the year 2013 and Advisory Committees It is proposed that the number of members in the Board of Directors shall be eightnine (89), and to reelect the current members for a one-year term of office, i.e.: until the date of the Shareholders' Meeting that will examine the financial statements for the fiscal year ending on December 31, 2014: Item 12.6 Name Age Profession Passport/ CPF Elective Position to be occupied Foreseen Election Date Term of office Elected by the Parent Company Other positions currently held in the Company: Ana Maria Machado Fernandes 51 years Economist 235,336, Chairman of the Board of Directors ASM of 04/11/2014 One (1) year Yes Not applicable Miguel Nuno Simões Nunes Ferreira Setas 43 years Engineer 233,022, Vice-President of the Board of Directors ASM of 04/11/2014 One (1) year Yes CEO. Miguel Dias Amaro Jorge Manuel Pragana da Cruz Morais Nuno Maria Pestana de Almeida Alves Pedro Sampaio Malan Francisco Carlos Coutinho Pitella Modesto Souza Barros Carvalhosa 46 years Mechanical Engineer 233,025, years Engineer no. L years Naval Engineer no. G years Economist 028,897, years Civil Engineer 370,030, years Attorney 007,192, Members of the Board of Directors Members of the Board of Directors Members of the Board of Directors Members of the Board of Directors Members of the Board of Directors Members of the Board of Directors ASM of 04/11/2014 ASM of 04/11/2014 ASM of 04/11/2014 ASM of 04/11/2014 ASM of 04/11/2014 ASM of 04/11/2014 One (1) year One (1) year One (1) year One (1) year One (1) year One (1) year Yes Yes Yes No No No - Vice-President of Finance and RI; - Vice-President of Management Control and Vice-President of Distribution. -Member of the Sustainability and Corporate Governance Committee -Member of the Audit Committee and Compensation Committee -Member of the Remuneration Committee Chairman of the Audit Committee President of the Sustainability and Corporate Governance Committee and Member of the Audit Committee Paulo Cesar Hartung Gomes 56 years Economist 698,412, Members of the Board of Directors ASM of 04/11/2014 One (1) year No Not applicable Item 12.7 Not applicable. Item

51 Officers résumé containing the following information i. Main professional experiences in the last 5 years, indicating: company name, position and functions inherent in the position. main activity of the company in which these experiences occurred, highlighting entities or organizations that are part of (i) the economic group of the issuer, or (ii) partners with direct or indirect interest equal to or higher than 5% of the same class or type of issuer's securities. Ana Maria Machado Fernandes EDP - Energias de Portugal, S.A. Member of the Board of Directors from March 2006 to June 2006; Member of the Executive Committee from March 2006 to June 2006; Member of the Executive Board from June 2006 to February 2012; EDP Energias de Portugal, S.A. is engaged in directly or indirectly promoting, dynamizing, and managing enterprises and activities of the energy sector, both internally and abroad, intending to increase and improve performance of the totality of its group entities. It refers to a publicly-held company that is the parent company of Grupo EDP in Brazil. EDP - Energias do Brasil S.A. President of the Board of Directors since February 2014, CEO from June 2012 to December 2013, Member of the Board of Directors since 2006, Member of the Corporate Sustainability and Governance Committee from 2007 to 2012; EDP Renováveis, S.A. Vice-President and delegate Counselor of the Board of Directors - since Chairman of the board of directors from 2007 to 2008: Chairman of the Board of Directors from 2007 to Vice-President of the Executive Commission - since 2008; EDP Energias de Portugal, Sociedad Anónima, Sucursal en España Permanent Representative - since 2008; Horizon Wind Energy, LLC, President of the Board of Directors - since 2010; Chairman of the Board of Directors from 2007 to EDP Finance BV Representative since 2007; EDP Produção Bioeléctrica, S.A. Chairman of the Board of Directors from 2006 to EDP Renováveis Portugal, S.A. Chairman of the Board of Directors from 2006 to Hidroeléctrica del Cantábrico, S.A. Member of the Board of Directors since EDP Gás, SGPS, S.A. Chairman of the Board of Directors from 2006 to EDP Investimentos, SGPS, S.A. Chairman of the Board of Directors from 2006 to EDP Gás II, SGPS, S.A. Chairman of the Board of Directors from 2007 to EDP Gás III, SGPS, S.A. Chairman of the Board of Directors from 2006 to Portgás Sociedade de Produção e Distribuição de Gás, S.A. Member of the Board of Directors from 2006 to Enagás, SGPS, S.A. Chairman of the Board of Directors from 2007 to EDP Renewables Europe, S.L. President of the Board of Directors - since EDP Renováveis Brasil, S.A. Chairman of the Board of Directors from 2008 to ii. Indication of all management positions he/she holds or has held in publicly-held companies. Administrator of Galp Energia, SGPS, S.A. from 2004 to Miguel Nuno Simões Nunes Ferreira Setas EDP - Energias do Brasil S.A. Vice-President of the Board of Directors since February 2014; CEO since January Vice-President of Distribution from January 2010 to December 2013; Vice-President of Trading from April 2008to December Bandeirante Energia S.A. Finance and Investor Relations Officer from April 2013 to February 2014; Sustainability Officer from April 2013 to February 2014; Vice-President of the Board of Directors - since 2009; CEO to 2014; Sustainability Officer from 2010 to 2012; CEO and Investor Relations Officer from April 2010 to August 2010; Member of the Board of Directors from 2008 to Espírito Santo Centrais Elétricas S.A. ESCELSA. Finance and Investor Relations Officer from April 2013 to February 2014; Vice-President of the Board of Directors - since 2009; CEO to 2014; CEO and Investor Relations Officer from April 2010 to August 2010; Member of the Board of Directors from 2008 to Investco S.A. Alternate Member of the Board of Directors since May Energest S.A. Member of the Executive Board of Directors since June EDP Comercialização e Serviços de Energia Ltda.; Member of the Board of Directors from January 2010 to February 2013; Vice-President of the Board of Directors from June 2008 to December 2009; CEO from June 2008 to December EDP Renováveis Brasil S.A. Chairman of the Board of Directors since February 2009; CEO from February 2009 to April Elebrás Projetos S.A. CEO from April 2010 to April Cenaeel Central Nacional de Energia Eólica S.A. CEO from July 2009 to April Lajeado Energia S.A. Alternate member of the Board of Directors since September Enerpeixe S.A.; Alternate member of the Board of Directors since June Instituto EDP Energias do Brasil Member of the Advisory Board since January 2009; Vice-President since January Terra Verde Bioenergia Participações S.A. member of the Board of Directors since April Porto do Pecém Geração de Energia S.A. Alternate Member of the Board of Directors since October ii. Indication of all management positions he/she holds or has held in publicly-held companies. There is nothing to report in addition to matters referred to (i). Miguel Dias Amaro EDP - Energias do Brasil S.A. Member of the Board of Directors since February 2014; Vice-President of Distribution since January 2014; Officer of Management Control since January 2008; Director Vice President of Finance and Investor Relations since January Bandeirante Energia S.A.; CEO since February 2014; Sustainability Officer since February 2014; Financial and Investor Relations Director since February 2014; and Member of the Board of Directors since April Espírito Santo Centrais Elétricas S.A. ESCELSA; CEO since February 2014; Financial and Investor Relations Director since February 2014; and Member of the Executive Board of Directors since June Investco S.A. Alternate Member of the Board of Directors since April Energest S.A. Member of the Board of Directors since August EDP Comercialização e Serviços de Energia Ltda. Member of the Board of Directors from 2008 to Lajeado Energia S.A. Effective Member of the Board of Directors since September Porto do Pecém Geração De Energia S.A. Alternate Member of the Board of Directors since April Terra Verde Bioenergia Participações S.A. Alternate Member of the Board of Directors since April Enerpeixe S.A. Alternate Member of the Board of Directors since June Couto Magalhães Geração de Energia S.A. Alternate Member of the Board of Directors since April ii. Indication of all management positions he/she holds or has held in publicly-held companies. There is nothing to report in addition to matters referred to (i). Francisco Carlos Coutinho Pitella EDP - Energias do Brasil S.A.; Member of the Independent Board of Directors - since 2007; Member of the Audit Committee - since GTD Participações S.A.; Director of Investor Relations. - August 1997 to March Juruena Participações e Investimentos S.A. President of the Board of Directors - February 2006 to January 2012; General Director - February 2006 to January Energia PCH Fundo de Investimento em Participações. President of the Investment Committee - since October Cia. de Tecidos Norte de Minas COTEMINAS Member of the Board of Directors - April 2007 to April Stratton Metals LTD e Trafigura AG representative in ore import and export - since

52 ii. Indication of all management positions he/she holds or has held in publicly-held companies. Member of the Board of Directors and Supervisory Board of Escelsa from April 2002 to 2005 Member of the Board of Directors and Supervisory Board of Enersul from April 2002 to Director of Vale do Rio Doce Alumínio S.A. - ALUVALE, from December 1990 to July Member of the Board of Directors of Valesul Alumínio S.A. from December 1990 to July Member of the Board of Directors of Mineração Rio do Norte S.A. from December 1990 to July Member of the Advisory Board of Albras - Alumínio Brasileiro S.A. from December 1990 to July Member of the Advisory Board of Alunorte - Alumina do Norte do Brasil S.A. from December 1990 to July Nuno Maria Pestana de Almeida Alves EDP - Energias de Portugal, S.A. Member of the Executive Board of Directors - since 2006; Member of the Executive Committee from March 2006 to June 2006; Member of the Board of Directors from March 2006 to June EDP - Energias do Brasil S.A. Member of the Board of Directors since Member of the Audit Committee - since Member of the Remuneration Committee since EDP Renováveis, S.A. Member of the Board of Directors since 2007; Member of the Executive Commission - since EDP Energias de Portugal, Sociedad Anónima, Sucursal en España; Permanent Representative - since Horizon Wind Energy, LLC Chairman of the Board of Directors from 2007 to EDP Finance BV Representative since 2007, EDP Estudos e Consultoria, S.A. President of the Board of Directors since EDP Imobiliária e Participações, S.A. President of the Board of Directors since EDP Valor Gestão Integrada de Serviços, S.A. President of the Board of Directors since Sãvida Medicina Apoiada, S.A. President of the Board of Directors - since SCS Serviços Complementares de Saúde, S.A. President of the Board of Directors since Hidroeléctrica del Cantábrico, S.A. Member of the Board of Directors since EDP Gás, SGPS, S.A. President of the Board of Directors from May 2006 to November EDP Gás III, SGPS, S.A. Chairman of the Board of Directors from 2006 to EDP Investimentos, SGPS, S.A. Chairman of the Board of Directors from 2006 to ii. Indication of all management positions he/she holds or has held in publicly-held companies. There is nothing to report in addition to matters referred to i). Pedro Sampaio Malan EDP - Energias do Brasil S.A. Member of the Independent Board of Directors since 2006; President of the Sustainability and Corporate Governance Committee to 2012; Member of the Compensation Committee from 2006 t2012. Itaú Unibanco Holding S.A. Chairman of the International Advisory Board since Globex-Ponto Frio Member of the Board of Directors since Alcoa Alumínio S.A. Member of the Advisory Board - since OGX Petróleo e Gás Participações S.A. Member of the Board of Directors since International Accounting Standards Committee Foundation A member of the Council of Curators since ii. Indication of all management positions he/she holds or has held in publicly-held companies. A former CEO of Unibanco from 2004 to Special consultant and head negotiator for foreign debt matters at the Ministry of Finance from 1991 to 1993; He was an Executive Director of the World Bank from 1986 to 1990 and from 1992 to Former Minister of Finance of Fernando Henrique Cardoso government, from 1995 to Former President of the Brazilian Central Bank from 1993 to A professor of the Department of Economics in the Catholic University of Rio de Janeiro, and the author of dozens of papers on the Brazilian and international economy, published locally and overseas. Jorge Manuel Pragana da Cruz Morais EDP - Energias de Portugal, S.A.; Member of the Executive Board of Directors - since June 2006; Member of the Executive Committee from March 2006 to June 2006; Member of the Board of Directors from March 2006 to June EDP - Energias do Brasil S.A. Member of the Board of Directors since 2012; Member of the Sustainability and Corporate Governance Committee - since EDP Serviner - Serviços de Energia, S.A. President of the Board of Directors since Balwerk - Consultadoria Económica e Participações, Sociedade nipessoal, Lda. Manager since 2006 EDP Gás.Com - Comércio de Gás Natural, S.A.; President of the Board of Directors - since EDP Projectos, SGPS AS; President of the Board of Directors - since EDP Serviços - Sistemas para a Qualidade e Gestão da Energia, S.A. Chairman of the Board of Directors since ii. Indication of all management positions he/she holds or has held in publicly-held companies. Member of Naturgas Executive Board of Directors, from 2005 to 2006, Spanish company of the EDP Group. Member of HC Energia Executive Board of Directors, from 2005 to 2006, Spanish company of the EDP Group. Executive member of Oni SGPS Board of Directors, from 2000 to 2004; Non-executive member of Açores Electricity Council, from 1999 to 2000; Non-executive member of Turbogás Board of Directors, from 1998 to 2000; and Assistant of EDP - Energias de Portugal S.A. Board of Directors, from 1991 to Modesto Souza Barros Carvalhosa EDP - Energias do Brasil S.A. President of the Sustainability and Corporate Governance Committee since 2012; Member of the Sustainability and Corporate Governance Committee to 2012; Member of the Independent Board of Directors - since Companhia Melhoramentos de São Paulo Member of the Board of Directors from 2002 to Universidade Federal de São Carlos Member of the Board of Trustees from 2001 to Academia de Escolas de Arquitetura e Urbanismo de Língua Portuguesa; Chairman of the Superior Council; Associação de Assistência à Criança Deficiente AACD; Members of the Board of Directors Fundação Padre Anchieta; Member of the Board of Trustees since 2002; Arbitration Chamber of the São Paulo Stock Exchange; Member of the Board of Directors since ii. Indication of all management positions he/she holds or has held in publicly-held companies. He was professor of Commercial Right at USP (Universidade de São Paulo), legal advisor of São Paulo Stock Exchange, president of the Ethics Court of OAB (Ordem dos Advogados do Brasil) - São Paulo Section and member of OAB Constitutional Commission. He actively participates as counsel, arbitrator and consultant various arbitration chambers. Paulo Cesar Hartung Gomes EDP - Energias do Brasil S.A. Member of the Independent Board of Directors of EDP - Energias do Brasil S.A. since 2012; Member of the Sustainability and Corporate Governance Committee - since 2012; Econos - Economia Aplicada Aos Negócios Ltda. Partner Director - since Espírito Santo State Government State Governor from 2003 to

53 ii. Indication of all management positions he/she holds or has held in publicly-held companies. There is nothing to report in addition to matters referred to i). Main activities of above-mentioned companies are summarized as follows. EDP - Energias de Portugal, S.A. EDP Energias de Portugal, S.A. is engaged in directly or indirectly promoting, dynamizing, and managing enterprises and activities of the energy sector, both internally and abroad, intending to increase and improve performance of the totality of its group entities. It refers to a publicly-held company that is the parent company of EDP in Brazil. EDP - Energias do Brasil S.A. Holding established to be engaged in: a) participating in other companies, as a partner, stockholder or unitholder, as well as in businesses and ventures of the energy sector, in Brazil and/or abroad; b) managing energy distribution, generation, transmission and trading assets, in their various forms and categories; c) to study, plan, develop,, and implement projects in distribution, generation, transmission and sale of electricity in all of its forms and means; and d) to provide services for the electrical industry in Brazil and/or overseas. EDP Renováveis, S.A. The company is mainly engaged in performing activities related to the electric industry, as follows: a) design, construction, operation, maintenance and management of electric power production facilities and, particularly those of the special regime, including hydraulic or mini-hydraulic, wind, solar, thermo solar, photovoltaic, biomass, and waste production; b) promotion and development of all types of projects related to energy sources and electric power production activities, particularly of the special regime system in the ambit of cogeneration, hydraulic production and wind production, use of industrial and urban waste for power production, renewable power, power savings and similar, through the construction and exploration of units for the production and trading of resulting products; c) conduction of studies, inspection and assembling, quality control, maintenance organization, preventive maintenance, product homologation, certification of processes and recognition of organizations for third parties, intended to power usage and production; d) contracting and execution of public or private construction work normally related to energy efficiency, diversification of power sources and environment and, particularly, to power production, utilization and transportation, construction of hydraulic work, construction and assembling of climatization electric facilities and of all types of mechanical devices, construction of water treatment facilities, as well as for the treatment of any other type of urban or industrial waste, and all construction and assembling work that supplements these activities. It refers to a publicly-held company that is part of EDP Group in Brazil. EDP Energias de Portugal, Sociedad Anónima, Sucursal en España Direct or indirect promotion, dynamization and management of initiatives and activities of the power sector at domestic and foreign levels, considering increase and improvement of joint productivity of entities in its group. It refers to a Company headquartered in Spain, part of the EDP Group. Horizon Wind Energy, LLC Company established to engage in any type of activity, provided that it is legal. It refers to a company that is part of EDP Group. EDP Finance BV The Company is engaged in: (i) Establish, hold interest, manage, overview, operate and promote organizations and businesses, (ii) finance companies and businesses, (iii) raise and grant loans, including the issuance of obligations, promissory notes or other securities representing debt, as well as entering into respective contracts, (iv) advise and provide services to entities with which the company has a group relationship or to third parties, provide collaterals and pledge assets in guarantee for the purpose of complying with obligations of entities with which the Company has a group or third-party relationship, (v) acquire, dispose of, manage and explore assets, (vi) conduct any other activity of industrial, financial or commercial nature, as well as performing any related or supplementary actions related to above described activities. It refers to a company that is part of EDP Group. EDP Produção Bioeléctrica, S.A. The Company is engaged in: Promotion, development and direct or indirect management of power plants and other facilities for the production and sale of bioelectric power in Portugal, using waste and biomass sources and performing studies and projects, as well as providing any other related activities and services. EDP Renováveis Portugal, S.A Design, build and explore electric power means of production for the alternative renewable power sector, provide services or hold interest in similar developments to other entities and perform other study, design and execution activities corresponding to its capacities. It refers to a company that is part of EDP Group. Hidroeléctrica del Cantábrico, S.A. Production, storage, transformation, transportation, distribution, supply, international interchange and trading of electric fluid (from hydraulic, thermo, nuclear, all types of hydrocarbons, wind, solar or any other alternative source) and fuel gases, as well as any other activity related to those above or derived from them in the energy ambit. Company that is part of the EDP Group. EDP Gás, SGPS, S.A. Management of interest in other companies as an indirect means of exercizing economic activities. Company that is part of the EDP Group. EDP Investimentos, SGPS, S.A. Management of interest in other companies as an indirect means of exercizing economic activities. Company that is part of the EDP Group. EDP Gás II, SGPS, S.A. Management of interest in other companies as an indirect means of exercizing economic activities. Company that is part of the EDP Group. EDP Gás III, SGPS, S.A. Management of interest held in other companies as an indirect way of conducting economic activities. Company that is part of the EDP Group. Portgás Sociedade de Produção e Distribuição de Gás, S.A. Distribution of natural gas, as well as production and distribution of other channeled fuel gases and, also, other activities related to the main objective, namely the production and trading of burning equipment. Organization integrated to the Grupo EDP. Enagás, SGPS, S.A. Management of interest held in other organizations, as an indirect means of exercising economic activities - and the provision of administration and management technical services to organizations in which it holds interest. Company that is part of the EDP Group. EDP Renewables Europe, S.L. The Company is engaged in operating electric power production facilities, particularly of the special regime, focusing on development and operation of wind plants. Company that is part of the EDP Group. EDP Renováveis Brasil, S.A. The Company is engaged in: (a) activities intended to generate, transmit and trade electric power from any origin and of any nature and, particularly, those of the special regime, including hydraulic or mini-hydraulic, wind, solar, thermal solar, photovoltaic, biomass and waste production; (b) identification, study, planning, development and implementation of different forms and types of power generation projects, among which those of the special regime, such as, without limitation, hydraulic or mini-hydraulic, wind, solar, thermal solar, photovoltaic, biomass and waste production; (c) management of power generating assets, production and consolidation of all relevant management control information; (d) implementation of means required to operate, maintain and explore power generation projects of different forms and types, including those of the special regime, such as, without limitation, those of hydraulic or mini-hydraulic, wind, solar, thermal solar, photovoltaic, biomass and waste production; (e) holding interest in other organizations, as partner and/or shareholder, even if these organizations are engaged in activities different from those of the Company, as well as in businesses and enterprises of the energy industry, in Brazil or in another country of South America; and (f) provision of advisory, consulting, engineering, project management, operation and maintenance services in the energy sector, to clients in Brazil or in another country of South America. Activities other than those described above may be directly or indirectly, fully or partially developed by the Company through contracting other organizations or holding interest in organizations both in Brazil and in another South American country. Company that is part of the EDP Group. Bandeirante Energia S.A. A Company engaged in the Electrical Energy Sector having the following corporate objective: (a) exploration of public electrical energy services and can study, plan, project, develop, build and explore the respective systems as well as provide correlated services which have been or may be delegated to it as well as conduct all other acts required for the performance of its objectives; (b) to generate energy distribution assets in their several forms and types as well as study, plan, develop and implement energy distribution projects; (c) to provide any services of a public or private nature, correlated to the management of energy distribution assets in their several forms and types; and (d) to contribute toward the conservation of the environment within its area of operations as well as take part in social programs of interest to the community. Espírito Santo Centrais Elétricas S.A. ESCELSA - A Company engaged in the electrical energy sector having the following corporate objective: (a) exploration of public electrical energy services and can study, plan, project, develop, build and explore the respective systems as well as provide correlated services which have been or may be delegated to it as well as conduct all other acts required for the performance of its objectives; (b) to generate energy distribution assets in their several forms and types as well as study, plan, develop and implement energy distribution projects; (c) to provide any services of a public or private nature, correlated to the management of energy distribution assets in their several forms and types; and (d) to contribute toward the conservation of the environment within its area of operations as well as take part in social programs of interest to the community. 56

54 Investco S.A. A Company engaged in the electrical energy sector having the following corporate objective: a) interest in companies in the electrical sector, specifically in the construction and exploration of the Usina Hidrelétrica Luís Eduardo Magalhães (Lajeado), under the terms of the Concession Contract 05/97 ANEEL; b) studies, planning, projects, constitution and exploration of production, transmission, transformation, distribution systems and sales of electrical energy, as well as correlated which have been or may be extended by any legal instrument and can manage and/or incorporate other energy systems, provide technical services in its area of specialization, organize subsidiaries or incorporate other companies and practice all other acts necessary to the pursuit of its objectives; c) the development of activities regarded as in the interest to Amazônia Legal, under the terms of prevailing legislation; to hold interests in other companies, commercial or civil, as a partner, shareholder or quotaholder. Energest S.A. A Company engaged in the electrical energy sector having the following corporate objective: (a) activities intended to generate, transmit and trade electricity from any origin and of any nature; (b) to study, plan, develop and implement projects in generation, in all of its forms and means; (c) manage power generation, product and consolidate all relevant management control information; (d) implement the means required to operate, maintain and explore power generation projects of different forms and types; (e) participating in other companies, as a partner, shareholder or quotaholder, as well as in businesses and ventures of the energy sector, in Brazil and/or abroad; and (f) render advisory, consulting, engineering, project management, operation and maintenance services in the energy sector, to clients in Brazil and/or abroad. EDP Comercialização e Serviços de Energia Ltda. Company of the electric power industry engaged in: (a) trading of electric power, including purchase, import, export and sale of electric power to other traders, to consumers that have the option to freely choose the supplier, or to other agents allowed by the law; (b) purchasing and selling electric power, at different forms and types, taking part in all segments of specialized markets; (c) developing all activities and providing all services associated to or necessary for power trading activities, at all forms and types, in the ambit of the Brazilian and/or of other countries electric sector, considering physical, operating and financial aspects of such activities and their consequences, for the purpose of creating, making possible and performing businesses that result in contracts; (d) managing risks inherent to electric power trading, generation, and distribution on behalf of electric power companies, at all forms and types, including through contracts for the provision of services, contracts for purchase and sale, assignment of contracts for purchase and sale, and remuneration guarantee, structured transactions and derivative transaction contracts; (e) providing technical advisory services to power consumers, at different forms and types, as well as to other customers in Brazil and/or abroad; (f) developing all activities and providing all services associated or related to power efficiency, at different forms and types, aiming at creating, making possible, managing, and conducting businesses; (g) providing advisory services on corporate management, including management of projects related to electric power in Brazil and/or abroad; (h) providing collection services to third parties and commercial services, as well as subscription management services; (i) conducting commercial partnerships; (j) providing advisory services, especially upon trading of carbon credits, as well as intermediation of transactions involving carbon credits, in Brazil and/or abroad; (k) providing civil construction, electric and other services through management, turn-key, contractor or subcontractor systems, including excavation, drainage, earthmoving, paving, concreting and products, parts and equipment installation and disassembling, when intended to the electric sector; (l) providing services for the preparation of strategic plans, feasibility studies, organization studies and others related to construction work and engineering services; preparation of drafts, basic designs, and detailed engineering designs in the ambit of the electric sector; (m) providing construction, maintenance and conservation services for properties and/or equipment fixed to previously built structures, including follow-up and inspection services for engineering, architecture and urbanism work related to the electric sector activities; (n) taking part in the Electric Power Trade Chamber (CCEE), as well as in any entity, association or body related to trading of electric power in its different forms and types, representing itself and/or partners and third parties, in conformity with related regulation; (o) holding interest in other companies as partner or shareholder, in Brazil and or/abroad; and (p) disclosing, through any type of media, information and knowledge related to its activities, produced by itself or by third parties. Elebrás Projetos S.A. The Company is engaged in conducting studies, projects, and construction work, as well as installing, implementing, conducting commercial operations and maintenance, as well as exploring the potential of Cidreira I Wind Plant located in the municipality of Tramandaí, Rio Grande do Sul State, and trading power generated by this plant. Cenaeel Central Nacional de Energia Eólica S.A. The Company is engaged in producing, transmitting and distributing electric power, as well as in developing projects for small, medium-sized and large wind and hydroelectric plants. Porto do Pecém Geração De Energia S.A. Company of the electric power sector engaged in: Conducting studies, projects, construction work, installation, implementation, commercial operation, maintenance and exploration of thermal plant denominated Pecém I (UTE Pecém I), located in Ceará State, and in conducting general commercial operations related to these activities, including generation and trading of electric power and capacity, intermediation of electric power and capacity purchase and sale, either in the ambit of the Electric Power Trade Chamber (CCEE) or other jurisdiction regulated by the law, transmission of electric power, advisory on power generation, transmission, trading and distribution, purchase and sale, import and export of equipment and machinery related to electric power generation, general export of assets, equipment and products, as well as load/unload of bulk products in ports, transportation of these products through conveying belts in Pecém Port and Industrial Complex, including, without limitation, the acquisition, construction, installation, operation and maintenance of a bulk product unload system comprised of unloaders and conveying belts. The Company is also engaged in holding interest in other simple or corporate organizations, whatever they are engaged in. In order to conduct its activities, the Company may establish subsidiaries of any type. Enerpeixe S.A. A Company engaged in the electrical energy sector having the following corporate objective: Studying, planning, designing, building, operating, maintaining and exploring electric power production, transmission and trading systems, as well as related services that have been or will be granted under any right certificate, exclusively in relation to the hydroelectric plant comprised of Peixe Angical Plant, with minimum installed power of MW, as well as respective Transmission Facilities of Restricted Interest to the Generating Plant, pursuant to the terms of Concession Agreement no. 130/2001 ANEEL, on November 7, 2001, and subsequent amendments. Instituto EDP Energias do Brasil Private limited association for noneconomic and nonpolitical purposes whose main operation is (a) to serve as an agent to promote structured engagement, open and transparent dialog with all interested parties to synchronize social and environmental, educational and cultural activities of EDP - Energias do Brasil S.A. and its direct and indirect subsidiaries and associated companies, herein after referred to jointly as the Grupo Energias do Brasil ; (b) encouraging the raising of social-environmental awareness, ethics, citizenship and human rights; (c) supporting initiatives that are of interest to group Energias do Brasil and that promote adequacy and mitigation measures for global climate changes; (d) promoting biodiversity and natural capital conservation; and (e) supporting natural resources management. Terra Verde Bioenergia Participações S.A. Company of the electric power sector engaged in: The Company is engaged in holding interest as shareholder in special purpose entities established to explore ethanol and electric power production projects, as well as related and supplementary activities. Couto Magalhães Geração de Energia S.A. Company of the electric power sector engaged in: studying, planning, designing, building, operating, maintaining and exploring electric power production, transmission, distribution and trading systems, as well as related services that have been or will be granted under any right certificate, exclusively in relation to the hydroelectric plant comprised of Couto Magalhães Hydroelectric Plant, with minimum installed power of MW, as well as respective Transmission Facilities of Restricted Interest to the Generating Plant, pursuant to the terms of Concession Agreement no. 021/2002 ANEEL AHE COUTO MAGALHÃES GTD Participações S.A. GTD Participações S.A., established on May 22, 1995, is a publicly-held corporation engaged in: (i) holding interest, under any form, in the capital of other civil or commercial organizations headquartered in Brazil or abroad, as partner or shareholder; (ii) participation in the National Development Program (PND) to acquire shares from any companies and/or organizations, acquisition and management of other businesses; and (iii) the provision of services in areas related to economic, market and similar matters. Juruena Participações e Investimentos S.A. A company with equity interests in small hydro plants in the state of Mato Grosso. Juruena focuses on concessions to explore hydroelectrical potential of Brazilian rivers with the construction of Small Power Plants. Energia PCH Fundo de Investimento em Participações. Analysis of power projects. Cia. de Tecidos Norte de Minas COTEMINAS A Company of the textile sector. Stratton Metals LTD e Trafigura AG A Company of the metallurgical segment. EDP Energias de Portugal, Sociedad Anónima, Sucursal en España Direct or indirect promotion, dynamization and management of initiatives and activities of the power sector at domestic and foreign levels, considering increase and improvement of joint productivity of entities in its group. It refers to a Company headquartered in Spain, part of the EDP Group. Horizon Wind Energy, LLC Company established to engage in any type of activity, provided that it is legal. It refers to a company that is part of EDP Group. 57

55 EDP Finance BV The Company is engaged in: (i) Establish, hold interest, manage, overview, operate and promote organizations and businesses, (ii) finance companies and businesses, (iii) raise and grant loans, including the issuance of obligations, promissory notes or other securities representing debt, as well as entering into respective contracts, (iv) advise and provide services to entities with which the company has a group relationship or to third parties, provide collaterals and pledge assets in guarantee for the purpose of complying with obligations of entities with which the Company has a group or third-party relationship, (v) acquire, dispose of, manage and explore assets, (vi) conduct any other activity of industrial, financial or commercial nature, as well as performing any related or supplementary actions related to above described activities. It refers to a company that is part of EDP Group. EDP Estudos e Consultoria, S.A. The management and implementation of operations in the consulting, human resources, logistics, finance and accounting areas, development of programs as well as providing any other related services. It refers to a company that is part of EDP Group. EDP Imobiliária e Participações, S.A. Study, conception, development and trading, on own behalf or on behalf of others, of real estate and tourist developments and performance of all operations related to real estate promotion, management of own or third-party properties, including lease, purchase and sale of properties and resale of properties acquired for that purpose. It refers to a company that is part of EDP Group. EDP Valor Gestão Integrada de Serviços, S.A. The Company is directly or indirectly engaged in the provision of management, advisory, administration, exploration and intermediation services, in the following areas: a) Intercompany, including general management, accounting and financial support, management planning and control, supply and operation of assets contracting systems and logistics services to support company activities, b) Human resources, including professional education; c) Safety, hygiene and health at workplace; d) Health, including the provision of health care and management and exploration of own or third-party hospitals or similar facilities; e) Transportation, including fleet management, as well as services that supplement exploration and respective acquisition, encumbrance and disposal, on own or third parties' behalf; f)real estate, including property and condominium administration, leases, equity master file, remodeling, conservation, space management, maintenance of facilities and supplementary services; also, study, conception, development and trading, on own or third parties' behalf of real estate and touristic projects, and performance of all real estate promotion, purchase and sale activities, purchase and sale of real property and resale of assets acquired for that purpose; g) Project management. It refers to an Organization integrated to the EDP Group. Sãvida Medicina Apoiada, S.A. The company is engaged in the provision of health care and management and exploration of own and third-party hospitals, assistance and similar establishments, as well as security, hygiene and health at workplace activities. It refers to an Organization integrated to the EDP Group. SCS Serviços Complementares de Saúde, S.A. The company is engaged in providing health care, management and exploration of hospitals, assistance and similar establishments, provision of business management and human resources services, on own or third parties' behalf, as well as security, hygiene and health at workplace activities. Refers to an EDP group integrated company. Hidroeléctrica del Cantábrico, S.A. Production, storage, transformation, transportation, distribution, supply, international interchange and trading of electric fluid (from hydraulic, thermo, nuclear, all types of hydrocarbons, wind, solar or any other alternative source) and fuel gases, as well as any other activity related to those above or derived from them in the energy ambit. EDP Gás, SGPS, S.A Management of interest in other companies as an indirect means of exercizing economic activities. Company that is part of the EDP Group. EDP Gás III, SGPS, S.A. Management of interest held in other companies as an indirect way of conducting economic activities. Company that is part of the EDP Group. EDP Investimentos, SGPS, S.A. Management of interest held in other companies as an indirect way of conducting economic activities. Company that is part of the EDP Group. Itaú Unibanco Holding S.A. Holding of Itaú Unibanco Banco Múltiplo S.A. Brazilianbank founded on November upon the merger of two of the largest financial institutions in the country, Banco Itaú Holding Financeira and Unibanco. Globex-Ponto Frio Company retaining the company Ponto Frio a Brazilian retail chain, founded in 1946 in the state of Rio de Janeiro. Alcoa Alumínio S.A. Main global producer of primary and industrialized aluminum and the largest bauxite mining company and alumina refining company worldwide. OGX Petróleo e Gás Participações S.A. OGX Petróleo e Gás operates in the oil and natural gas exploration and production sector, and is responsible for the largest private exploratory campaign in Brazil. The Company has a scattered and high potential portfolio comprised of 29 exploratory blocks in Campos, Santos, Espírito Santo, Pará-Maranhão and Parnaíba fields, covering approximately 7,000 km² at sea and 21,500 km² on land. In addition, in June 2010, OGX acquired 5 land exploratory blocks in Colombia, during Ronda 2010, that total 12,500 km² in Cesar-Ranchería, Vale Inferior do Madalena and Vale do Médio Madalena fields. International Accounting Standards Committee Foundation International Financial Reporting Interpretations Committee (IFRIC) is a group of the International Accounting Standards Committee Foundation (IASC), considered as the legal organization of the International Accounting Standards Board. IFRC is responsible for the preparation of the interpretations of the International Financial Reporting Standards (IFRS) in case of doubt EDP Serviner - Serviços de Energia, S.A. The Company is engaged in power purchase and sale, under the form of electricity and others, either directly or through the provision of services to power users or to power trading companies. It refers to an Organization integrated to the EDP Group. Balwerk - Consultadoria Económica e Participações, Sociedade Unipessoal, Lda. Wholesale and retail trading of all types of raw material, products, and consumer business, namely, food and beverage products, medical and hospital products, electric and electronic items, textile items, construction material, fuel, ore, metals and chemicals for the industry, equipment and machinery for the industry, commerce, construction, navigation and agriculture; agents activities; acquisition, sale and any other form of exploration of intellectual and industrial property rights, namely, registered trademarks, patents, copyright and related rights; provision of economic and accounting advisory services; provision of IT advisory services, civil engineering and architecture projects; provision of management, trading or marketing services for touristic enterprises and hotels; machinery and equipment rentals; IT and related activities, as well as provision of Internet services; market studies and opinion survey, marketing, advertising and organization of fairs and exhibits; purchase, exploration, promotion and sale of properties; construction and trading of real estate enterprises; management of own securities portfolio, namely, obligations and other securities; commissions and consignments. The Company may also subscribe, acquire, dispose of and burden interest in other organizations, if they are governed by special laws, even if the purpose of these organizations has no direct or indirect relation with its own. Company that is part of the EDP Group. EDP Gás.Com - Comércio de Gás Natural, S.A. Trading, namely, purchase and sale of natural gas, including for resale to end clients or other agents, by entering into bilateral contracts or participating in other markets and, to this end, it may conform to infrastructure for transportation, distribution, regasifying and storage of natural gas, pursuant to legally established terms. Company that is part of the EDP Group. EDP Projectos, SGPS AS The Company is engaged in managing interest in other organizations, as an indirect form of exercising economic activities. Company that is part of the EDP Group. EDP Serviços - Sistemas para a Qualidade e Gestão da Energia, S.A. Provision of power services, developing, implementing and financing projects for energy quality and efficiency, renewable power projects and power supply, produced on a decentralized manner, with or without performance guarantees. It also includes the supply and assembling of power equipment, construction and processing of power facilities, maintenance and operation of equipment and power systems. Company that is part of the EDP Group. Companhia Melhoramentos de São Paulo Business organization that includes publishing company, book store, pulp and urban development. * * * Declarations of the Company's Managers For purposes of item 12.8 "b" of the "Reference Form" (CVM Regulatory Instruction 480/2009), there is no criminal conviction, and/or conviction under administrative process of CVM, and we are not aware of any final and unappealable conviction at the judicial or administrative level, which has suspended or disqualified any Directors to the exercise of professional or commercial activity. 58

56 For purposes of item 12.9 of the "Reference Form" (CVM Regulatory Instruction 480/2009), no marital relationship, marriage or kinship relationship of subordination, provision of service or control under the terms of item For purposes of item of the "Reference Form " (CVM Regulatory Instruction 480/2009), no relation of subordination, provision of service or control under the terms of item * * * 59

57 ATTACHMENT IV Information about Management Compensation Item 13 - Reference Form CVM Instruction 480/ Compensation policy or practice of the Board of Directors, Executive Board, Fiscal Council and Committees: a. Purposes of the compensation policy or practice; The purpose of the compensation policy is to ensure the attraction and retention of highly qualified professionals, as well as to promote the attainment of targets and to surpass goals, in order to add value to the Company. The entire process is supported by constant qualitative and quantitative market research, currently conducted by Hay Group do Brasil Consultores Ltda., specialized company internationally renowned. b. Composition of the compensation, informing: (i) description of the compensation items and the purposes of each one; Board of Directors: Fixed Compensation o Salary or direct compensation: Monthly fee, according to seniority and complexity of the position in question, and according to market best practices. The purpose of salary, or pro-labore, is to compensate the counselor for services rendered. o Direct or Indirect Benefits: Represents the benefits, medical and dental assistance, pharmacy and private social security. The objective of the direct and indirect benefits is to complement the Chairman s fixed remuneration. o Compensation for participation in committees: Monthly fee, according to seniority and complexity of the position in question, and according to market best practices. The purpose of the remuneration for taking part in committees is to compensate the counselor for the performance of an additional activity - taking part in the committee - to activities inherent in a Board of Directors' member. Others: Regarding Board of Directors member who are remunerated, amounts legally levied on their fixed remuneration are paid to INSS (Social Security National Institute). Variable compensation o Bonus: Represents short term remuneration, as a reward for achieving or overcoming a company s goal. The objective of variable remuneration is to stimulate productivity and serve as additional remuneration o Profit sharing: Not applicable o Compensation for participation in meetings: Not applicable 60

58 o o o Commissions: Not applicable Advisory Committees (Audit, Remuneration, and Sustainability and Corporate Governance Committees): Advisory Committees (Audit, Remuneration, and Sustainability and Corporate Governance Committees): Fixed Compensation o Salary or direct compensation: Not applicable o Direct or Indirect Benefits Not applicable o Compensation for participation in committees: Monthly fee, according to seniority and complexity of the position in question, and according to market best practices. The objective of compensation for participation on committees is to remunerate the members for their participation on the committee and compensation is paid on account of the meetings in which the members take part during the year. o Others: Amounts legally levied on the remuneration they receive for taking part in respective committees are paid to INSS (Social Security National Institute). Variable compensation o Bonus: Not applicable o Profit sharing: Not applicable o Compensation for participation in meetings: Not applicable o Commissions: Not applicable Supervisory Board (if installed): Fixed Compensation o Salary or direct compensation: Fees paid monthly calculated according the Brazilian Corporate Law, i.e. 10% of the average Board Compensation. The purpose of salary, or pro-labore, is to compensate the counselor for services rendered. o Direct or Indirect Benefits: Not applicable. o Others: Regarding Board of Directors member who are remunerated, amounts legally levied on their fixed remuneration are paid to INSS (Social Security National Institute). Variable compensation o Bonus: Not applicable o Profit sharing: Not applicable o Compensation for participation in meetings: Not applicable o Commissions: Not applicable Statutory Board: 61

59 Fixed Compensation o Salary or direct compensation: Represents the fixed compensation, monthly fee, calculated according to seniority and complexity of the position in question, and according to market best practices. The purpose of the salary, or pro-labore, is to compensate the officer for services rendered. o Direct or Indirect Benefits: Represents benefits, medical assistance, dental assistance, drugstore and private pension plan. The purpose of direct and indirect benefits is to supplement Directors' fixed remuneration and also as remuneration for services provided. o Compensation for participation in committees: Not applicable o Others: Amounts legally levied on their fixed remuneration are paid to INSS (Social Security National Institute). Variable compensation o Bonus: Represents the short-term variable compensation as a way to recompense for having attained or surpassed the Company's goals. The purpose of variable remuneration is to encourage Directors' productivity and serve as additional remuneration for compliance with established goals and satisfactory performance of their jobs. o Profit sharing: Not applicable o Compensation for participation in meetings: Not applicable o Commissions: Not applicable o Others: Amounts legally levied on their variable remuneration are paid to INSS (Social Security National Institute). Non-Statutory Board: Fixed Compensation o Salary or direct compensation: Represents the fixed compensation, monthly fee, according to seniority and complexity of the position in question, and according to market best practices. The purpose of the salary, or pro-labore, is to compensate the officer for services rendered. o Direct or Indirect Benefits: Represents benefits, medical assistance, dental assistance, drugstore and private pension plan. The purpose of direct and indirect benefits is to supplement Directors' fixed remuneration and also as remuneration for services provided. o Compensation for participation in committees: Not applicable o Others: Amounts legally levied on their fixed remuneration are paid to INSS (Social Security National Institute). 62

60 Variable compensation o Bonus: Not applicable o Profit sharing: Represents the short-term variable remuneration to compensate the achievement or surpassing of the company's goals, paid through the Profit Sharing Program. The purpose of variable remuneration is to encourage Directors' productivity and serve as additional remuneration for compliance with established goals and satisfactory performance of their jobs. o Compensation for participation in meetings: Not applicable o Commissions: Not applicable o Others: No charges are collected because the variable remuneration is paid according to Law /2000, which provides for PLR, and according to Article 3, does not constitute a base for the levying of any labor charges. ii. Proportion of each item in total compensation Board of Directors and Advisory Committees Fixed Compensation o Salary or Management Fees: 72% o Variable remuneration Bonus: 26% Direct or indirect benefits: 2% Only fourive Board members are remunerated by the performance of this position. Supervisory Board (if installed) Fixed Compensation o Salary or Management Fees: 100% All three members of this group are remunerated. Statutory Board: Fixed Compensation o Salary or Management Fees: 100% Each statutory director is remunerated for the performance of this position, if installed. Non-Statutory Board Fixed Compensation o Salary or Management Fees: 70% o Direct or Indirect Benefits: 10% Variable compensation o Profit Sharing: 20% 63

61 iii. methodology of calculation and adjustment of each compensation item; The Company's remuneration policy is analyzed through comparison with amounts paid in the market, for the purpose of maintaining proper competition level. Salary surveys are conducted using the Hay Group methodology, which classifies positions using scores that take into consideration three elements: know-how, mental process and responsibility for results. Measurement of these three factors results in position weight. This methodology permits measuring the importance and complexity related to results expected. This comparison is made on an annual basis, and EDP Executive Board analyzes and decides on movement actions from this remuneration analysis. We present below the details referring to the Board of Directors, Advisory Committee, Statutory Executive Board and non-statutory Executive Board. Board of Directors: The methodology to define Remuneration is based on the analysis of Remuneration levels and best market prices, when the Remuneration Council analyzes information and approves proposals. Advisory committees The methodology to define Remuneration is defined by the Remuneration Committee, which stipulates an amount to be paid to each member based on the number of meetings in which the counselor will take part during the year. Supervisory Board (if installed): The methodology for defining Remuneration is based on 10% of the salary average of the directors fees for the members of the statutory board. Statutory and Non-Statutory Executive Board: The methodology to define Remuneration is based on the analysis of Remuneration levels and best market prices, when the Remuneration Council analyzes information and approves proposals. For fixed remuneration, a salary table with minimum, medium and maximum reference is determined to be competitive in our reference market. For variable remuneration, after market data analysis, we defined the target value for bonus/ profit sharing for every hierarchical level. iv. reasons for the composition of compensation. In addition to ensuring the Company's competitiveness and attractiveness, it is aimed at increasing the value of the Company. 64

62 Variable remuneration purposes are as follows: Creation of links between the company's performance, reward and profit sharing. Methodology is totally linked to the business and employee performance, that is, the more he is committed to his/her direct and indirect results, the better will be the company's performance and, accordingly, financial reward. To verify the manner in which compliance with goals and variable remuneration calculation methodology, please, see charts 13.1 (c) and 13.1 (d). c. key performance indicators considered in the determination of each compensation item; Performance of the Business in view of the purposes defined in connection with profitability, client, shareholder and employee satisfaction, image of the Company and social responsibility. KPIs of Grupo EDP in Brazil to calculate Variable Remuneration are as follows: a) EBITDA b) Operating costs c) Net income d) Capex e) ISE f) ENBR quotation vs. Ibovespa vs. IEE g) Operational Cash Flow d. compensation structure in order to reflect the evolution of performance indicators; Management fixed remuneration is not impacted by the evolution of performance indicators. Therefore, these indicators evolution does not increase salary, pro-labore, direct and indirect benefits or remuneration for taking part in committees. As regards the payment of bonus and profit sharing that are part of variable remuneration of statutory and non-statutory executive boards, it is directly related to the achievement, by the Company of goals established by the Board of Directors. As goals linked to performance indicators are met, portions of the Company's results are assigned to the payment of variable remuneration. The more performance indicators increase, the bigger is the portion of Company's results that will be assigned to the payment of variable remunerations to Directors. Based on individual evaluations of Directors made by the Remuneration Committee, and pre-established technical parameters, variable remuneration division and payment is made. e. relation between the compensation policy or practice and the interests of the Company Long, medium and long term; 65

63 Remuneration policy used, based on a fixed and a variable component, intends to align our employees activities with the Company's purposes, for example, market value and sustainability increase. Fixed component intends to attract qualified professionals, while the variable component, established based on performance indicators aligned to the Company's objectives, encourages individual overcoming to make the Company achieve goals outlined by Management. Note that variable remuneration value is directly linked to Individual Result (RI), which is calculated based on the employee compliance with strategic goals outlined by the Company's management to achieve their short and medium-term growth goals. Accordingly, we understand that the better the Individual Result of the employee, the greater his/her contribution to compliance with the Company's objectives and interests and the bigger his/her variable compensation. f. compensation supported by subsidiaries, controlled companies or direct or indirect parent controlling shareholders; and Members of the Board of Directors, Non-Statutory Executive Board and advisory committees do not receive fixed or variable remuneration paid by subsidiaries, or direct or indirect parent companies. Members of the Statutory Executive Board receive part of their compensation from subsidiaries of the Company (as detailed in item 13.15). In the table below, we identified remuneration components that are partially paid by the Company and partially paid by its subsidiaries:: Fixed Compensation Company Bandeirante Escelsa Enertrade Energest Investco Salary or direct Yes Yes Yes Yes Yes Yes compensation Direct or Indirect Yes No No No No No Benefits Compensation for Yes No No No No No participation in committees Others Yes No No No No No Variable compensation Bonus Yes Yes Yes Yes Yes No Profit sharing No No No No No No Compensation for No No No No No No participation in meetings Commissions No No No No No No Others No No No No No No 66

64 g. compensations or benefits linked to the occurrence of corporate events There are no compensations or benefits linked to the occurrence of corporate events Compensation of the Board of Directors, Fiscal Council (if established) and Company s Executive Board and compensation estimated for the fiscal year Total estimated remuneration for current fiscal year - December 31, Annual Values Board of Directors Statutory Board Fiscal Council Total No. of members Annual fixed remuneration 2,002,000 2,849, ,851,535 Salary or direct compensation 1,460,000 2,083,861 3,543,861 Direct and indirect benefits 45, , ,481 Participations in committees 80,000 80,000 Others 416, , ,193 Description of other fixed compensation 0 Variable compensation 648,000 1,700, ,348,465 Bonus 540,000 1,379,957 1,919,957 Profit sharing 0 Participation in meetings 0 Commissions 0 Others 108, , ,508 Description of other variable compensations 0 Post-employment 0 Cessation of the job position 0 Share-based 0 Observation: 0 Total compensation 2,650,000 4,550, ,200,000 67

65 Total compensation in the fiscal year as of 12/31/ Annual values Board of Directors Statutory Board Fiscal Council Total No. of members Annual fixed remuneration 860,000 3,446, ,306,951 Salary or direct compensation 660,000 2,653,814 3,313,814 Direct and indirect benefits 0 151, ,077 Participations in committees 40,000 40,000 Others 160, , ,060 Description of other fixed compensation 0 Variable compensation 0 2,153, ,153,049 Bonus 0 1,757,110 1,757,110 Profit sharing 0 Participation in meetings 0 Commissions 0 Others 0 395, ,939 Description of other variable compensations 0 Post-employment 0 Cessation of the job position 0 Share-based 0 Observation: 0 Total compensation 860,000 5,600, ,460,000 Total compensation in the fiscal year as of 12/31/2012 Annual values Board of Directors Statutory Board Fiscal Council Total No. of members Annual fixed remuneration 708,000 2,416, ,261 3,235,046 Salary or direct compensation 410,000 1,925,117 91,884 2,427,001 Direct and indirect benefits 0 94,380 94,380 Participations in committees 180, ,000 Others 118, ,288 18, ,665 Description of other fixed compensation 0 0 Variable compensation 0 544, ,800 Bonus 450, ,000 Profit sharing 0 Participation in meetings 0 Commissions 0 Others 94,800 94,800 Description of other variable compensations 0 Post-employment 0 Cessation of the job position 0 Share-based 0 Observation: 0 Total compensation 708,000 2,961, ,261 3,779,846 68

66 Total compensation in the fiscal year as of 12/31/ Annual values Board of Directors Statutory Board Fiscal Council Total No. of members Annual fixed remuneration 648,000 2,084, ,732,729 Salary or direct compensation 420,000 1,704, ,124,755 Direct and indirect benefits 120,000 26, ,902 Participations in committees 0 Others 108, , ,072 Description of other fixed compensation 0 0 Variable compensation 71, , ,312 Bonus 448, ,800 Profit sharing 0 Participation in meetings 60,000 60,000 Commissions 0 0 Others 11,000 94, ,512 Description of other variable compensations 0 0 Post-employment 0 0 Cessation of the job position 0 0 Share-based 0 0 Observation: 0 0 Total compensation 719,000 2,628, ,347, Variable compensation of the Board of Directors, Board of Directors and Fiscal Council in the last three fiscal years of the Company and compensation estimated for Year Variable Remuneration estimated for current fiscal year Board of Directors Statutory Board Fiscal Council Total No. of members Bonus Minimum amount provided for in the compensation plan Maximum amount provided for in the Remuneration Plan Amount provided for in the remuneration plan, in case goals are achieved. n/a 0.00 n/a ,000 2,069,935 n/a 2,879, ,000 1,379,957 n/a 1,919,957 Profit sharing Minimum amount provided for in the compensation plan Maximum amount provided for in the Remuneration Plan n/a n/a n/a n/a n/a n/a Amount provided for in the remuneration plan, in case goals are achieved. n/a n/a n/a 69

67 12/31/2013 Board of Directors Statutory Board Fiscal Council Total No. of members Bonus Minimum amount provided for in the compensation plan Maximum amount provided for in the Remuneration Plan Amount provided for in the remuneration plan, in case goals are achieved. Amount actually recognized in results for the year n/a 0.00 n/a 0.00 n/a 2,635,666 n/a 2,635,666 n/a 1,757,110 n/a 1,757,110 n/a 788,509 n/a 788,509 Profit sharing Minimum amount provided for in the compensation plan n/a n/a n/a Maximum amount provided for in the Remuneration Plan n/a n/a n/a Amount provided for in the remuneration plan, in case goals are achieved. n/a n/a n/a 12/31/2012 Board of Directors Statutory Board Fiscal Council Total No. of members Bonus Minimum amount provided for in the compensation plan Maximum amount provided for in the Remuneration Plan Amount provided for in the remuneration plan, in case goals are achieved. Amount actually recognized in results for the year n/a 0.00 n/a 0.00 n/a 1,541,718 n/a 1,541,718 n/a 1,277,706 n/a 1,277,706 n/a 450,000 n/a 450,000 Profit sharing Minimum amount provided for in the compensation plan Maximum amount provided for in the Remuneration Plan Amount provided for in the remuneration plan, in case goals are achieved. n/a n/a n/a n/a n/a n/a n/a n/a n/a 12/31/2011 Board of Directors Statutory Board Fiscal Council Total 70

68 No. of members 3 4 n/a 7 Bonus Minimum amount provided for in the compensation plan Maximum amount provided for in the Remuneration Plan Amount provided for in the remuneration plan, in case goals are achieved. Amount actually recognized in results for the year n/a 0.00 n/a 0.00 n/a 751,557 n/a 751,557 n/a 501,038 n/a 501,038 n/a 446,600 n/a 448,800 Profit sharing Minimum amount provided for in the compensation plan Maximum amount provided for in the Remuneration Plan Amount provided for in the remuneration plan, in case goals are achieved. n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a 13.4 Stock Option Plan. It is not applied 13.5 Shares held by the members of the Company's management. Company Security (Share, except when otherwise indicated) Board of Directors Executive board Fiscal Council EDP Energias do Brasil S.A. ON Enerpeixe S.A. ON Energest S.A. ON EDP Comercialização E Serviços de Energia S.A. Quota Santa Fé Energia S.A. ON Resende Engenharia e Assessoria Ltda. Quota Enercouto S.A. ON Companhia Energética do Jari - CEJA ON Cenaeel - Central Nacional de Energia Eólica S.A. ON Elebras Projetos S.A. ON Porto do Pecem Geração de Energia S.A ON EDP Renováveis Brasil S.A. ON Investco S.A. ON Couto Magalhães Energia S.A. ON Lajeado Energia S.A. ON Pantanal Energética Ltda. Quota Terra Verde Bioenergia Participações S.A. ON Bandeirante Energia S.A. ON Costa Rica Energética Ltda. Quota

69 Espírito Santo Centrais Elétricas S.A. - ESCELSA ON EDP Grid Gestão de Redes Inteligentes de Distribuição S.A. ON Porto do Pecém Transportadora de Minérios S.A. ON Porto do Pecém Operação e Manutenção de Geração Elétrica S.A. ON ECE Participações S.A. ON Central Eólica Aventura S.A. ON Central Eólica Baixa do Feijão I S.A. ON Central Eólica Baixa do Feijão II S.A. ON Central Eólica Baixa do Feijão III S.A. ON Central Eólica Baixa do Feijão IV S.A. ON Empresa de Energia Cachoeira Caldeirão S.A. ON Stock Option Plan recognized in the last three years - option exercise. It is not applied 13.7 Outstanding Stock Options. It is not applied 13.8 Exercised options. It is not applied 13.9 Significant information about the Stock Option Plan. There is no Stock Option Plan Provide in a table the following information related to effective pension plans granted to members of the Board of Directors and to Statutory Directors: Continues on the next page. 72

70 12/31/2013 Board of Directors Statutory Board of the members n/a 1 Plan s NorriG n/a Enerprev Number of management members that present the conditions to retire Conditions to anticipate retirement n/a n/a n/a n/a Updated accumulated value of contributions accumulated through the closing of the last fiscal year, less the portion related to contributions directly made management members. Updated accumulated value of contributions made during last year, less the portion related to contributions directly made management members. n/a 521, n/a 78, Possibility of anticipated redemption and conditions n/a Yes, at any time, provided that relationship with the company is ended. Only contributions made directly by officers may be redeemed, 12/31/2012 Board of Directors Statutory Board of the members n/a 1 Plan s NOITIG n/a Enerprev Number of management members that present the conditions to retire Conditions to anticipate retirement n/a n/a n/a n/a Updated accumulated value of contributions accumulated through the closing of the last fiscal year, less the portion related to contributions directly made management members. Updated accumulated value of contributions made during last year, less the portion related to contributions directly made management members. n/a 477, n/a 161, Possibility of anticipated redemption and conditions n/a Yes, at any time, provided that relationship with the company is ended. Only contribution directly made by management members may be redeemed. 12/31/2011 Board of Directors Statutory Board of Members n/a 1 Plan name n/a Enerprev Number of management members that present the conditions to retire Conditions to anticipate retirement n/a n/a n/a n/a Updated accumulated value of contributions accumulated through the closing of the last year, less the portion related to contributions directly made management members. n/a 315, Updated accumulated value of contributions made during last year, less the portion related to contributions directly made management members. n/a 91, Possibility of anticipated redemption and conditions n/a Yes, at any time, provided that relationship with the company is ended. Only contribution directly made by management members may be redeemed. 73

71 13.11 Maximum, minimum and average individual remuneration of members of the Board of Directors, Statutory Board and Fiscal Council. 12/31/2 013 Statutory Board Board of Directors Fiscal Council 12/31/ /31/ /31/ /31/ /31/ /31/ /31/ /31/2 011 No. of Members Amount of the highest remuneration (Reais) Amount of the lowest remuneration (Reais) Average remuneration value (Reais) Observation 1,514,604 1,327,798 1,289, , , ,000 13,996 36, , , , ,000 60, ,000 13,996 36, , , , , , ,667 13,996 36,754 0 Statutory Board 12/31/2013 Of the six positions of the Statutory Board, five receive compensation, and out of five members, one perform two functions (Officer, Vice-President of Finance and Investor Relations and Director Vice-President of Management Control). 12/31/2012 Annual amounts realized in Of the 06 positions of the Statutory Board, 4 receive compensation, and out of 4 members, 2 accumulate 2 functions (1 = Director Vice-President for Trading and Director Vice- President for Generation and 2 = Officer, Vice-President of Finance and Investor Relations and Director Vice- President of Control of Management). 12/31/2011 Annual amounts realized in 2011, Only four members of the Executive Board receive compensation, of these, two accumulate two positions (A= Vice-President of Trading and Vice-President of Generation and B = Vice-President of Finance and Investors Relation and Vice President of Management Control). Board of Directors 12/31/2013 Annual amounts realized in Out of the 08 positions of the Board of Directors, only 4 receive a compensation. 12/31/2012 Annual amounts realized in Out of the 08 positions of the Board of Directors, only 4 receive a compensation. 12/31/2011 Annual amounts realized in Only 3 members of the Board of Directors receive remuneration, but we have 6 seats on the board, and, of these, two vacant positions. Fiscal Council 12/31/2013 All members of the supervisory board are not remunerated. 12/31/2012 All members of the supervisory board are not remunerated. 12/31/ Description of contractual arrangements, insurance policies or other instruments that constitute compensation or indemnity mechanisms to the managers in case of removal or retirement, informing the financial consequences to the Company. 74

72 It is not applied In connection with the last three fiscal years, inform the percentage of total compensation of each body recognized in the result of the Company in regard to the members of the Board of Directors, Executive Board or Fiscal Council that are parties related to the direct or indirect controlling shareholders, as defined in the accounting rules that address this issue Board of Directors n/a n/a n/a Executive board n/a n/a 35.06% Fiscal Council n/a n/a n/a Regarding the last three years, indicate amounts recognized in the Company's statement of income as remuneration of members of the Board of Directors, Statutory Board or Statutory Board, grouped by body, and paid for any reason other than the position they hold, for example, commissions and advisory or consulting services provided. No other amount was recognized in the Company's results in addition to those previously informed in item In connection with the last three fiscal years, inform the amounts recognized in the result of direct or indirect controlling shareholders, of companies under common control and of subsidiaries of the Company, as compensation of members of the Board of Directors, Executive Board or Fiscal Council of the Company, organized by body, specifying the reason why these amounts have been attributed to said individuals. Continues on the next page. 75

73 Fiscal year 2013 Board of Directors Statutory Board Fiscal Council Total Direct and indirect controlling shareholders - n/a Subsidiaries of the issuer - 1,835,440 n/a 1,835,440 Companies subsidiaries under joint ownership - n/a Fiscal year 2012 Board of Directors Statutory Board Fiscal Council Total Direct and indirect controlling shareholders - n/a Subsidiaries of the issuer - 2,340,196 n/a 2,340,196 Companies subsidiaries under joint ownership - n/a Fiscal year 2011 Direct and indirect controlling shareholders Board of Directors Statutory Board Fiscal Council Total - n/a Subsidiaries of the issuer 33,002 1,592,728 n/a 1,630,729 Companies subsidiaries under joint ownership - n/a Other Relevant Information. Any relevant information related to this Section 13 was discussed in prior items. * * * 76

74 ATTACHMENT V Detailed report on Bylaws change Article 11 of CVM Instruction no. 481/2009 The Company s management presents the Management Proposal for the Extraordinary Shareholders' Meeting summoned for the following April 29, 2014, whose object is to change the number of Executive Board members and its composition, with individual names and respective statutory competences and, accordingly, to change Articles 24 and 25 of the Company s Bylaws. The main purpose of this proposal is to adequate the Company s Bylaws to the Company s current management model, and to describe competences of executive management jobs. For the purpose of this proposal, comparison chart of proposed changes to the Company s Bylaws is as follows: Article 24 - Executive Board shall be composed of up to six members, whether or not shareholders, residents in the country and elected by the Board of Directors, and shall have the following titles, doubling of functions by the same Director being permitted: (i) CEO; (ii) Director Vice-President of Finances and Investor Relations; (iii) Vice President for Distribution; (iv) Vice President for Generation; (v) Vice-President of Trading; and (iv) Vice President for Management Control. Article 24 - Executive Board shall be composed of up to five members, whether or not shareholders, residents in the country and elected by the Board of Directors, and shall have the following titles, doubling of functions by the same Senior Manager being permitted: (i) CEO; (ii) Director Vice-President of Finances and Investor Relations; (iii) Vice-President of Distribution Operations; (iv) Vice-President of Generation Operations; (v) Vice-President of Trading and Business Development. Article 25 - The Executive Board is responsible for managing the corporate businesses in general and performing all required and convenient acts, except those that shall be performed at the shareholders' meeting or Board of Directors, as provided by Law or Bylaws. While exercising their functions, the Senior Managers may perform any transactions and practice every managerial action as required to achieve the purposes of their office, according to the general guidance for business decided by the Board of Directors, including deciding on the allocation of resources, agreeing on, waiving, assigning rights, acknowledge debt, making agreements, undersigning commitments, entering Article 25 - The Executive Board is responsible for managing the corporate businesses in general and performing all required and convenient acts, except those that shall be performed at the shareholders' meeting, as provided by Law or Bylaws. While exercising their functions, the Senior Managers may perform any transactions and practice every managerial action as required to achieve the purposes of their office, according to the general guidance for business decided by the Board of Directors, including deciding on the allocation of resources, agreeing on, waiving, assigning rights, acknowledge debt, making agreements, undersigning commitments, entering into agreements, acquiring, 77

75 into agreements, acquiring, disposing of and encumbering assets and property, granting warranties, co-signatures and guarantees, issuing, endorsing, pledging discounting, issuing and guaranteeing securities in general, as well as opening, operating, and closing accounts in financial institutions, subject to the legal restrictions and to those found in these By-laws. disposing of and encumbering assets and property, granting warranties, co-signatures and guarantees, issuing, endorsing, pledging discounting, issuing and guaranteeing securities in general, as well as opening, operating, and closing accounts in financial institutions, subject to the legal restrictions and to those found in these By-laws. Paragraph One - It is incumbent upon the Chief Executive Officer: (i) to perform and cause the performance of the resolutions of the General Shareholders' Meeting and of the Board of Directors; (ii) deciding on and enforcing the execution and implementation of the Company's policies, strategies, budgets, investment projects, and other business plan conditions; (iii) to coordinate the activities of the other Officers, in compliance with the specific responsibilities set forth in these Bylaws; (iv) to define the attribution of roles of the other members of the Executive Board in the areas not specifically mentioned in these Bylaws, subject to the approval of the Board of Directors; (v) supervising every Company transaction, following up on their progress, including corporate governance, human resources and institutional relations polices, and activities in connection with auditing and the areas of regulations, legal counsel, and the Company's organizational development and processes; (vi) to convene and preside executive meetings; and (vii) to assure the enforcement of corporate policies and principles of sustainable development in all areas under his/her responsibility. Paragraph One - It is incumbent upon the Chief Executive Officer: (i) to perform and cause the performance of the resolutions of the General Shareholders' Meeting and of the Board of Directors; (ii) deciding on and enforcing the execution and implementation of the Company's policies, strategies, budgets, investment projects, and other business plan conditions; (iii) to coordinate the activities of the other Officers, in compliance with the specific responsibilities set forth in these Bylaws; (iv) define competence distribution to other members of the Executive Board in relation to areas mentioned in this paragraph or in relation to areas that were not specifically mentioned in these Bylaws, ad referendum of the Board of Directors; (v) supervising every Company transaction, following up on their progress, including corporate governance, human resources and institutional relation policies, Energy Planning and risk management such as activities in connection with auditing and the areas of regulations, legal counsel, and the Company's organizational development and processes; (vi) manage and promote the Company s labor and environment safety policies; (vii) to convene and preside executive meetings; and (viii) to guarantee the enforcement of corporate policies and principles of sustainable development in all activities under his/her responsibility. 78

76 Paragraph Two - It is incumbent Officer Vice- President of Finance and Investor Relations, among other responsibilities that may be established: (i) planning, coordinating, organizing, supervising, and managing activities with regard to Company transactions of a financial and accounting nature, (ii) managing the Company's consolidated finances and financial risk; (iii) representing the Company before control bodies and any other institutions active in the capital market, with the attribution of providing information to investors, to CVM - Comissão de Valores Mobiliários, and the Stock Markets where the Company's securities are traded, pursuant to the applicable legislation; (iv) to assure the enforcement of corporate policies and principles of sustainable development in all activities under his/her responsibility; and, (v) assessing and monitoring policies, strategies, and implementing projects in the fields related to the shared services defined by the President. Paragraph Two - It is incumbent Officer Vice- President of Finance and Investor Relations, among other responsibilities that may be established: (i) plan, coordinate, organize, overview and manage activities related to financial, accounting, tax and, planning and control areas of the Company; (ii) manage consolidated finance and the Company s financial risk; (iii) representing the Company before control bodies and any other institutions active in the capital market, with the attribution of providing information to investors, to CVM - Comissão de Valores Mobiliários, and the Stock Markets where the Company's securities are traded, pursuant to the applicable legislation; (iv) manage and promote labor and environment safety policies in all areas under its responsibility; (v) to assure the enforcement of corporate policies and principles of sustainable development in all activities under his/her responsibility; and (vi) evaluate and follow up policies and strategies, as well as manage activities in areas defined by the CEO. Paragraph Three - The Vice President for Distribution shall be in charge, among other attributions that may be allocated to him/her: (i) of assessing and monitoring policies, strategies in energy distribution, and implementing projects related to the technical services common to the Company's subsidiaries and associated companies; (ii) to assure the enforcement of corporate policies and principles of sustainable development in all activities under his/her responsibility; and, (iii) of assessing and monitoring policies, strategies, and implementing projects in the fields related to the shared services defined by the President. Paragraph Three - The Vice President for Distribution Operations shall be in charge, among other attributions that may be allocated to him/her: (i) manage and lead the power distribution business in Company s subsidiaries and associates; (ii) be responsible for planning, operating and maintaining electric and engineering systems, management of subsidiaries and associates power distribution assets, in compliance with proper corporate profitability standards and quality standards defined by the concession grantor; (iii) propose and manage investments related to the Company and its subsidiaries and associates power distribution business; (iv) be responsible for implementing 79

77 projects for distribution expansion and improvement, developing design, construction and assembling, ensuring physical-financial performance of these projects; (v) manage and promote labor and environment safety policies in the Company s subsidiaries and associates, in relation to power distribution; (vi) to guarantee the enforcement of corporate policies and principles of sustainable development in all activities under his/her responsibility; and (vii) evaluate and follow-up policies and strategies, as well as manage activities in areas defined by the CEO. Paragraph Four - The Vice President for Generation Operations shall be in charge, among other attributions that may be allocated to him/her: (i) to assess and monitor policies, strategies of energy generation by the Company's subsidiaries and affiliates; including operating and maintenance services for the energy generating facilities; (i) of assessing and monitoring policies, strategies in energy risk management in the Company's subsidiaries and associated companies; (iii) of planning, coordinating, organizing, supervising, and managing activities with regard to Company's environmental areas; (iv) to assure the enforcement of corporate policies and principles of sustainable development in all activities under his/her responsibility; and, (v) assessing and monitoring policies, strategies, and implementing projects in the fields related to the shared services defined by the President. Paragraph Four - The Vice President for Generation Operations shall be in charge, among other attributions that may be allocated to him/her: (i) manage and lead power generation business in the Company s subsidiaries and associates; (ii) be responsible for planning, operating and maintaining power generation engineering and asset management of the Company s subsidiaries and associates, in compliance with proper standards of corporate profitability and quality excellence standards; (iii) propose and manage investments related to the Company s power generation business and those of its subsidiaries and associates; (iv) be responsible for implementing projects for generation expansion, developing design, construction and assembling, ensuring physical-financial performance of these projects; (v) manage and promote labor and environment safety policies in the Company s subsidiaries and associates, in relation to power generation; (vi) to guarantee the enforcement of corporate policies and principles of sustainable development in all activities under his/her responsibility; and, (vii) evaluate and follow up policies and strategies,as well as manage activities in areas defined by the CEO. 80

78 Paragraph Five - The Vice President for Commercialization shall be in charge, among other attributions that may be allocated to him/her: (i) of assessing and monitoring policies, strategies in energy commercialization in the Company's subsidiaries and associated companies; (ii) of assessing and monitoring policies, strategies, and implementing projects related to the commercial services common to the Company's subsidiaries and associated companies; (iii) of planning, coordinating, organizing, supervising, and managing activities in connection with the Company's corporate development, institutional communications, and social responsibility areas; (iv) to assure the enforcement of corporate policies and principles of sustainable development in all activities under his/her responsibility; and, (v) of assessing and monitoring policies, strategies, and implementing projects in the fields related to the shared services defined by the President. Paragraph Five - The Vice President for Commercialization and Business Development shall be in charge, among other attributions that may be allocated to him/her: (i) manage and lead power trading business in the Company s subsidiaries and associates; (ii) manage the provision of services of the Company s subsidiaries and associates, proposing and managing investments related to all these businesses; (iii) seek, evaluate, propose and structure new business opportunities in compliance with the Company s strategic planning; (iv) manage and promote labor and environment safety policies in the Company s subsidiaries and associates, in relation to power trading and provision of services; (iv) to assure the enforcement of corporate policies and principles of sustainable development in all activities under his/her responsibility; and (v) evaluate and follow up policies and strategies, as well as manage activities in areas defined by the CEO. Paragraph Six - The Vice President for Control and Management shall be in charge, among other attributions that may be allocated to him/her: (i) of planning, coordinating, organizing, supervising, and managing activities with regard to Company's planning and control, and supplies areas; (ii) to assure the enforcement of corporate policies and principles of sustainable development in all activities under his/her responsibility; and, (iii) of assessing and monitoring policies, strategies, and implementing projects in the fields related to the shared services defined by the President. Paragraph deleted. *** 81

79 ATTACHMENT VI Reasons for Resubmission (Restated in ) The Company resubmit its Management Proposal, elaborated in the terms of CVM Instruction 481/2009, and related to the Annual General Shareholders meeting, to be held on April, 29 th 2014, at 10:00 hours, by virtue of: (i) Change on Attachment III, proposing 08 (eight) members rather than 09 (nine) as previously proposed; and (ii) Change on Attachment IV, updating the information regarding the change above. *** 82