CTEEP - Resultados 2T16 1

Transcription

1 CTEEP - Resultados 2T16 1

2 CTEEP ANNOUNCES RESULTS FOR 2Q16 São Paulo, August 15, 2016 CTEEP - Companhia de Transmissão de Energia Elétrica Paulista ( CTEEP or Company ) (BM&FBovespa: TRPL3 and TRPL4), announces its results for 2Q16. The following financial and operating information for the periods shown below is in accordance with generally accepted accounting practices in Brazil (IFRS), except where otherwise stated. HIGHLIGHTS Readjustment in Allowed Annual Revenue (RAP): On June 28, 2016, Ratifying Resolution was published setting the RAPs for CTEEP and its Subsidiaries for the 2015/2016 Cycle. Consolidated RAP increased from R$ million to R$ 1,035.3 million in July 2016, an increase of 7.5% or R$ 71.9 million. Increase in Capital Stock: On June 2, 2016, the Board of Directors approved the ratification of the increase in CTEEP s capital stock in the amount of R$ million through the issue of 3,461,371 preferred shares. The Paid-in Capital Stock has now been increased to R$ 2.4 billion. Distribution of Earnings: On June 16, 2016, the Board of Directors approved the credit to shareholders as interim dividends in the amount of R$ million corresponding to R$ per share of both types with financial settlement on June 30, RBSE: On April 20, 2016, the Ministry of Mines and Energy issued Order 120 determining that the amounts ratified by ANEEL in Dispatch 4036/2015 with respect to the indemnification of the undepreciated assets as at May 31, 2000 (RBSE), should be incorporated in the Regulatory Remuneration Base of the electric energy transmission concessionaires as from the 2017 tariff review for an estimated term of eight years. DIT (Other Transmission Installations): On April 26, 2016, the Management of ANEEL decided to open a second phase of the Public Hearing with a period for contributions set from April 28 to July 27, The scope of this second phase will be restructed to the DIT for exclusive use of the distributors only, albeit still on a compulsory basis. Gross Debt: A decline of 2% in 2Q16 in relation to the end of 2015, gross consolidated debt amounting to R$ 1,074.5 million. Key Indicators Consolidated IFRS REGULATÓRIO (R$ million) 2Q16 2Q15 % 2Q16 2Q15 Net Revenues % EBITDA % % 17.6% 28.7% EBITDA Margin 60.8% 41.3% 19.5 p.p 52.4% 47.9% 4.5 p.p Net Income % % Net Margin 37.6% 28.6% 9.0 p.p 27.9% 30.5% (2.7) p.p Raiting - Fitch AA+(bra) Conference Call August 16, :00 a.m. (Brasília) Telephones: Brazil: (+55 11) or (+55 11) USA: (+1 888) Others: (+1 786) Webcast: CTEEP - Resultados 2T16 2

3 CONTENTS CTEEP... 4 Operating Performance... 5 Economic- Financial Performance - IFRS... 7 Economic-Financial Performance Regulatory Investments Capital Markets Subsequent Event Attachments Attachment I - IFRS Balance Sheet Attachment II IFRS Income Statement (R$ thousand) Attachment III IFRS Cash Flow (R$ thousand) Attachment IV - Breakdown of Consolidated Debt (R$ thousand) Attachment V - Breakdown of Debt: Jointly Controlled Subsidiaries - (R$ thousand) Attachment VI Subsidiaries Attachment VII Accounts Receivable Attachment VIII Regulatory Balance Sheet Attachment IX Regulatory Income Statement Attachment X Regulatory Results for the Jointly Controlled IEMadeira and IEGaranhuns Subsidiaries (51% CTEEP) CTEEP - Resultados 2T16 3

4 CTEEP CTEEP is one of the leading energy transmission concessionaires in the private sector in Brazil, currently CTEEP is responsible for the annual transmission of about 26% of all electricity produced in the country, 60% of the energy consumed in the Southeast Region and nearly 100% in the state of São Paulo. With head offices in the city of São Paulo, the Company has a footprint through proprietary assets and through subsidiaries and jointly controlled subsidiaries in 16 Brazilian states: Rio Grande do Sul, Santa Catarina, Paraná, São Paulo, Minas Gerais, Espírito Santo, Rondônia, Mato Grosso, Mato Grosso do Sul, Goiás, Tocantins, Maranhão, Piauí, Paraíba, Pernambuco and Alagoas. The organization also has a stake in other companies constituted for providing a public utility service for the transmission of electric energy: IEMG (Interligação Elétrica de Minas Gerais), IEPinheiros (Interligação Elétrica Pinheiros), IESerra do Japi (Interligação Elétrica Serra do Japi), IEGaranhuns (Interligação Elétrica Garanhuns), IEMADEIRA (Interligação Elétrica do Madeira), IESUL (Interligação Elétrica Sul), and IENNE (Interligação Elétrica Norte e Nordeste) and Evrecy. CTEEP and its subsidiaries have a robust infrastructure with an installed transformation capacity of 55,687 MVA with 18,468 km of transmission lines, 25,820 km of circuits, 2,347 km of optic fiber cables and 122 high voltage substations up to 550 kv. This network is integrated with other transmission companies, permitting access to free consumers as well as connecting with generator companies and distributors, which carry electricity to the final consumer. The following chart shows CTEEP s participation, in GWh, in the National Interconnection System (SIN) for the period from 2012 to 1H16, SIN being a national grid system for the transmission and production of electricity in Brazil. GWh 513, , , , , , , , , , , , , ,486 68, H16 CTEEP Others CTEEP - Resultados 2T16 4

5 Shareholding Breakdown Controlled by ISA, an important multilatina group engaging in the supply of linear infrastructure systems, CTEEP also has among its investors, Eletrobrás, the largest electric energy group in Brazil, and more than sixty thousand individual and corporate shareholders from different countries. Those shareholders with more than 5% of the common or preferred shares are highlighted below: Common Shares TRPL3 (39% of the total Capital Stock) Preferred Shares TRPL4 (61% of the total Capital Stock) Total Capital Stock 89.5% 6.1% 35.4% 3.7% 51.9% 38.3% 0.7% 9.8% 3.6% 37.3% 23.6% ISA Capital do Brasil Eletrobras Vinci Ltda Others Corporate Structure The following chart shows the corporate structure of CTEEP, including its subsidiaries and jointly owned subsidiaries: * Consolidação Integral Consolidação via Equivalência Patrimonial (*) 50% mais 1 (uma) ação. CTEEP - Resultados 2T16 5

6 Operating Performance Operating Excellence Ministry of Mines and Energy (MME) data shows that the Brazilian electricity system is made up of a few isolated grid systems and the National Interconnected System (SIN), the national grid, serving more than 98% of the Brazilian population. The coordination and control of SIN s electric energy generation and transmission installations are the responsibility of the National Electric System Operator (ONS) under the supervision and regulation of ANEEL (National Electric Energy Agency). The sector s consolidated regulatory framework is set out under Law /2004, governing the rules for the functioning and activities of electricity generation, transmission, distribution and commercialization. Compliance with these rules is subject to ANEEL inspection. The Company s objective is to guarantee efficiency and quality in rendering a profitable transmission service. In this context, CTEEP also operates an Asset Optimization Plan (POA) and a Transmission Improvements Program (PMT), both focused on the continual upgrading of equipment and systems. CTEEP is remunerated according to the uptime of its assets through the Allowed Annual Revenue (RAP). Consequently, any downtime in its assets can result in reduced remuneration for the Company via a discount from revenue due from uptime operations. The operating indicators highlighted below summarize CTEEP s operating performance for the period from 2012 to June ,75% 99,50% 99,55% S S S16 Linhas de Transmissão Transformadores Reatores Meta Asset Uptime Equivalent Duration of Interruption (DREQ) Time equivalent of interruption to maximum demand expressed in minutes. DREQ (min) 9,00 8,00 7,00 6,00 5,00 4,00 3,00 2,00 1,00 0,00 1,280 Jan Fev Mar Abr Mai Jun Jul Ago Set Out Nov Dez INFERIOR META SUPERIOR 8,000 6,000 4,000 2,200 1,888 1,205 Equivalent Frequency of Interruption (FREQ) - Number of times that maximum demand is interrupted in the period. FREQ (vezes) 0,40 0,35 0,30 0,25 0,20 0,15 0,10 0,05 0,00 0,053 Jan Fev Mar Abr Mai Jun Jul Ago Set Out Nov Dez INFERIOR META SUPERIOR 0,350 0,300 0,250 0,118 0,095 0,079 As at June 30, 2016, CTEEP s DREQ ratio for the previous 12 months was The FREQ ratio for the same period was times (Translating into 1 disconnection of 2 minutes and 4 seconds every 9 years). CTEEP - Resultados 2T16 6

7 Economic- Financial Performance - IFRS Gross Operating Revenue In 2Q16, Gross Operating Revenue was R$ million, a growth of 4.2% in relation to the same period in 2015 when this item reported R$ million, this representing: (i) an increase of 13.7% in revenue from operations and maintenance; (ii) an increase of 47.3% in compensation from concession assets and (iii) a decline of 50.0% in infrastructure revenue. Gross Revenue (R$ million) Company Consolidated 2Q16 2Q15 % 1H16 1H15 % 2Q16 2Q15 % 1H16 1H15 % Infrastructure (47.6%) (47.1%) (50.0%) (50.0%) Operation and Maintenance Compensation Asset Concession % % % % % % % % Others % % % % Total % % % % Revenue from Infrastructure Services - Revenue from the implementation of infrastructure for electricity transmission services under concession services agreements is recognized as and when expenditures are incurred. Consolidated Infrastructure Revenue amounted to R$ 35.4 million in 2Q16, a decrease of 50.0% from the R$ 70.8 million reported in 2Q15, principally due to the conclusion of upgrading projects, the implementation of new infrastructure installations at the substations and the repowering of the Controlling Company s transmission lines. Infrastructure revenue at the subsidiaries declined due to the implementation phase of the work on the installation of a transformer bank, capacitators and reactors at IEPinheiros. Revenues from Operations and Maintenance Services In 2Q16, consolidated Revenue from Operations and Maintenance amounted to R$ million, an increase of 13.7% compared to the R$ million in 2Q15. This increase reflects: (i) a positive variation of R$ 13.3 million in the 2015/2016 Annual Allowed Revenue (RAP) cycle as a result of restating the 2014/2015 RAP with the application of the IGPM/IPCA; (ii) positive variation of R$ 8.1 million due to the effects of the inclusion of the Annual Cost of Facilities and Assets (CAIMI) as from July 2015; (iii) entry into operation of new projects worth R$ 2.2 million; and (iv) an increase of R$ 3.9 million in regulatory charges due to growth of CDE (Energy Development Account) and Proinfa (Incentive Program for Alternative Sources of Electric Energy) transfers. Revenue from the Remuneration of Concession Assets - Interest revenue is recognized at the effective rate of interest on the balance of investments, the effective rate being that which equals the rate for future cash receipts, calculated over the estimated life of the financial asset in relation to its initial book value. Consolidated Remuneration Revenue from the Concession Assets amounted to R$ 67.4 million in 2Q16, an increase of 47.3% against the same period in 2015 when this item reported R$ 45.8 million, largely reflecting the growth in the financial asset for the realization of infrastructure projects as well as monetary restatement for the period. Other Revenues - Revenue relates to leasing income from fixed line telephone companies and from maintenance and technical analysis services contracted by third parties. In 2Q16, these revenues totaled R$ 5.8 million, an increase of 9.4% over the R$ 5.4 million reported for 2Q15, principally due to an increase in services related to maintenance and technical analysis. CTEEP - Resultados 2T16 7

8 Deductions from Operating Revenue Deductions from operating revenue were R$ 40.2 million in 2Q16, an increase of 14.7% compared to R$ 35.0 million for 2Q15, due to: (i) an increase of 4.4% in income tax corresponding to a positive variation in revenues and (ii) an increase of 49.9% in regulatory charges, mainly CDE- and PROINFA-related, due to the increase in energy consumption by free consumers and an increase in tariffs. Net Operating Revenue The Company reported Consolidated Net Operating Revenue in 2Q16 of R$ million, an increase of 2.8% compared with 2Q15, when this item posted R$ million. (R$ million) Q15 2Q16 1H15 1H16 Controladora Controladas CTEEP - Resultados 2T16 8

9 O&M and Infrastructure Costs and Expenses Total O&M costs and expenses in 2Q16 were R$ million, a decline of 8.2% compared with 2Q15 when this item was R$ million. The variation in costs and expenses reflects, principally :(i) growth of 6.9% in payroll costs and expenses due to the collective wage bargaining agreement of 8.2% awarded in August 2015, retroactive to June of the same year and due to the restructuring of the Company s technical group; and (ii) the increase of 10.3% in third party services, due in large part to the maintenance and conservation of transmission lines and substations, notably the substitution of spacers, erosion containment and anti-corrosion treatment. Contingency overheads were R$ 1.3 million, a fall in relation to 2Q15, due to: (i) variation of R$ 10.7 million in labor contingencies due to the concentration in 2Q15 of provisions for losses from labor lawsuits against defaulting and insolvent outsource providers in which CTEEP is legally a co-responsible party; and (ii) an increase of R$ 6.2 million in 2Q16 with respect to an IPTU (property tax) contingency. The breakdown in O&M costs and expenses for the period is shown below: Costs and expenses O&M (R$ millions) Company Consolidated 2Q16 2Q15 % 1H16 1H15 % 2Q16 2Q15 % 1H16 1H15 % Perssonel (60.0) (56.1) 7.0% (126.2) (117.2) 7.7% (62.6) (58.6) 6.9% (131.0) (122.8) 6.7% Services (24.5) (21.7) 12.9% (2.8) 0.4 (727.4%) (25.9) (23.5) 10.3% (3.1) (0.4) 738.5% Material (2.1) (2.5) (16.5%) (48.2) (42.0) 14.6% (2.2) (3.1) (30.0%) (50.5) (45.7) 10.5% Depreciation (2.0) (2.0) (2.2%) (4.0) (3.9) 1.9% (2.2) (2.2) (0.7%) (4.3) (4.3) 1.7% Contingencies (1.3) (19.9) (94.1%) (7.6) (35.4) (78.7%) (1.3) (19.9) (93.3%) (7.5) (35.4) (78.9%) Others (14.6) (11.4) 27.9% (29.9) (24.1) 23.9% (15.2) (12.0) 27.1% (30.5) (25.2) 20.9% Total (104.6) (113.6) -8.0% (218.5) (222.2) -1.6% (109.6) (119.3) -8.2% (226.9) (233.8) -2.9% Consolidated infrastructure costs amounted to R$ 32.2 million in 2Q16, a year-on-year reduction of 50.1%. This variation is in line with the fall in revenue from infrastructure following the conclusion of upgrading projects. Costs and expenses infrastructure (R$ millions) Company Consolidated 2Q16 2Q15 % 1H16 1H15 % 2Q16 2Q15 % 1H16 1H15 % Total (30.9) (58.9) (47.6%) (49.2) (93.0) (47.1%) (32.2) (64.6) (50.1%) (54.5) (109.4) (50.1%) CTEEP - Resultados 2T16 9

10 Equity Income The equity income account for 2Q16 reported revenue of R$ 27.1 million, an increase of 43.6% in relation to revenue of R$ 18.8 million in 2Q15. The positive variation stems largely from the results from the IEMadeira subsidiary which reported: (i) an increase in gross profit of R$ 10.0 million from the remuneration of concession assets; (ii) reduction of R$ 0.7 million in general and administrative expenses; and (iii) an increase in Income Tax and Social Contribution (IR&CSLL) overheads of R$4.6 million, a reflection of improved results. There was also an increase of R$ 3.4 million in results from the IEGaranhuns subsidiary, principally due to remuneration from financial flows from concession assets and the entry into commercial operations in December (R$ million) 0, , , ,1-2,1 2Q15 2Q16 1H15 1H16 IEMadeira IEGaranhuns IENNE/IESUL Financial Result The consolidated financial result reported an expense of R$ 28.9 million in 2Q16 against revenue of R$ 6.0 million recorded for the same period in The variation reflects the termination of revenues from monetary restatement and active interest with respect to the restatement at the IPCA % of accounts receivable by reversal under Law and the increase of R$ 11.3 milllion in monetary restatement expenses on provisions for pending lawsuits. Financial Result (R$'million) Company Consolidated 2Q16 2Q15 % 1H16 1H15 % 2Q16 2Q15 % 1H16 1H15 % Interest Receivable (33.3%) (42.9%) (21.7%) (28.5%) Monetary (net) (9.6) 7.9 (221.1%) (16.2) 23.8 (167.9%) (9.6) 7.9 (221.6%) (16.0) 23.8 (167.0%) Interest and expenses on loans (31.4) (31.7) (0.9%) (61.6) (61.0) 0.9% (35.6) (36.1) (3.2%) (70.2) (70.1) 0.3% Others (1.0) (0.1) % (0.0) (0.2) (77.4%) (1.1) (0.0) % (0.2) (0.1) 18.7% Total (30.0) (6.0) (401.5%) (56.3) 0.4 ( %) (28.9) (6.0) 384.4% (54.1) (1.2) % CTEEP - Resultados 2T16 10

11 Income Tax and Social Contribution The Company makes a monthly provision for income tax and social contribution payments against net income on an accrual basis. The Controlling Company is taxed according to the real profit regime while all the subsidiaries are taxed according to their presumed profit. With the enactment of Law /14 repealing the Transitional Tax Regime RTT, the Company adjusted the base for calculation of corporate Income Tax and Social Contribution charged against Net Income. These adjustments were made with a view to maintaining tax neutrality in line with current legislation. The results of the operation for implementing electricity transmission infrastructure and compensation of the concession asset (ICPC 01) are recognized on an accrual basis and taxed on a cash basis (effective receipt). The Company s consolidated Income Tax and Social Contribution liability generated expenses of R$ 34.8 million in 2Q16, 83.2% more than the expense of R$ 18.9 million in 2Q14, a reflection of the increase in net earnings. The effective rate of corporate Income Tax and Social Contribution in 2Q16 was 24.4% compared to 19.2% in 2Q15. The growth in the effective rate is due to the reduction in the tax credit on goodwill. Net Income Net Income amounted to R$ million in 2Q16, an increase of 35.0% compared with R$ 79.9 million in 2Q15. Basic earnings per share in 2Q16 were R$ Q15 2Q16 1H15 1H16 CTEEP - Resultados 2T16 11

12 EBITDA and EBITDA Margin In accordance with ICVM 527/12, the Company reported a consolidated EBITDA of R$ million in 2Q16, an increase of R$ 59.2 million compared to the EBITDA of R$ million in 2Q15. EBITDA margin in 1Q16 was 60.8%. EBITDA (R$ million) Company Consolidated 2Q16 2Q15 1H16 1H15 2Q16 2Q15 1H16 1H15 Net Income Income tax and social contribuition Financial Results (0.4) Depreciation and Amortization EBITDA ICVM 527/ EBITDA Margin 66.7% 44.6% 64.5% 46.6% 60.8% 41.3% 58.6% 42.8% CTEEP - Resultados 2T16 12

13 Economic-Financial Performance Regulatory 1 Regulatory results for CTEEP Controlling Company and Consolidated figures shown below, also comply with the established accounting rules. Gross Operating Revenue Regulatory In 2Q16, Consolidated Gross Operating Revenue reached R$ million, an increase of 19.5% in relation to 2Q15 when this item reported R$ million. This increase is due to the: (i) monetary restatement of the 2014/2015 RAP cycle at the IPCA (8.47%) for adjusting the 2015/2016 cycle;(ii) inclusion of the Annual Cost of Facilities and Assets (CAIMI) receivable as from July 2015 and; (iii) the startup in the operations of new investments worth R$ 6.7 million. Gross Revenue (R$ million) The electrical Interconnection Revenues Company Consolidated 2Q16 2Q15 % 1H16 1H15 % 2Q16 2Q15 % 1H16 1H15 % % % % % Others % % % % Total % % % % Deductions from Operational Revenue Regulatory Deductions from operating revenue were R$ 36.6 million in 2Q16, an increase of 28.4% compared with the R$ 28.5 million in 2Q15. This variation reflects the increase in taxes in line with the variation in operating revenue. 1 Regulatory Results: Refers to the numbers raised from the regulatory account statements for CTEEP and its Subsidiaries which are only audited at the end of each fiscal year by the independent auditors (the regulatory results for 1Q16 have still not been revised by the auditors). The principal difference with IFRS figures being that the New Accounting Standards ICPC 01 (IFRIC 12) is not applied. The ICPC 01 has a material impact on the Income Statements of the Company and its Subsidiaries -.noticeably in the recording of investments in transmission assets and reflected in the equity accounts of Financial Assets and Fixed Assets and alterations in the structure and presentation of the Income Statements. For this reason, our purpose in disclosing this information is solely to assist in the understanding of CTEEP s business. CTEEP - Resultados 2T16 13

14 Net Operating Revenue Regulatory Consolidated Net Operating Revenue in 2Q16 reached R$ million, an increase of 18.6% in relation to the same period in 2015 when the Company reported R$ million for this item Q15 2Q16 1H15 1H16 Company Subsidiaries CTEEP - Resultados 2T16 14

15 O&M Costs and Expenses Regulatory Total O&M costs and expenses in 2Q16 were R$ million, a decline of R$ 5.2 million or 4.1% compared with 2Q15 when this item was R$ million. The variation in costs and expenses reflects, principally :(i) growth of 7.1% in payroll costs and expenses due to the collective wage bargaining agreement of 8.2% awarded in August 2015, retroactive to June of the same year and due to the restructuring of the Company s technical group; and (ii) the increase of 34.7% in material and 13% in third party services, due in large part to the maintenance and conservation of transmission lines and substations, notably the substitution of spacers, erosion containment and anticorrosion treatment. Contingency overheads were R$ 1.3 million, a fall in relation to 2Q15, due to: (i) variation of R$ 10.7 million in labor contingencies due to the concentration in 2Q15 of provisions for losses from labor lawsuits involving service providers of outsourced labor, in default and insolvent, where CTEEP is legally co-responsible; and (ii) an increase of R$ 6.2 million in 2Q16 due to the execution of an IPTU (property tax) contingency. The breakdown in O&M costs and expenses for the period is shown below: Cost and Expenses (R$ millions) Company Consolidated 2Q16 2Q15 % 1H16 1H15 % 2Q16 2Q15 % 1H16 1H15 % Personnel (60.2) (56.0) 7.4% (125.3) (116.5) 7.5% (62.7) (58.6) 7.1% (130.1) (122.1) 6.5% Material (3.0) (2.2) 38.3% (6.0) (3.8) 58.9% (3.1) (2.3) 34.7% (6.2) (4.0) 55.5% Services (24.7) (21.6) 14.7% (47.0) (40.1) 17.2% (26.1) (23.1) 13.0% (49.2) (43.2) 13.7% Depreciation (8.1) (6.1) 30.6% (15.4) (11.8) 30.9% (14.7) (12.5) 17.9% (28.4) (24.4) 16.6% Contingencies (1.3) (19.9) -94.1% (7.6) (35.4) -78.7% (1.3) (19.9) -93.3% (7.5) (35.4) -78.9% Others (14.6) (11.4) 27.9% (29.9) (24.1) 23.9% (15.3) (12.0) 27.3% (31.1) (25.2) 23.7% Total (111.9) (117.2) -4.5% (231.1) (231.6) -0.2% (123.2) (128.2) -4.0% (252.5) (254.3) -0.7% CTEEP - Resultados 2T16 15

16 Equity Income Regulatory Equity income in 2Q16 was R$ 7.2 million. The variation reflects principally the fall in the result from the IEMadeira subsidiary, this largely due to a reduction in revenue from a negative adjustment parcel (PA) applied to the RAP for the 2015/2016 cycle and also due to the increase in financial expenses on debt. In 2Q16, IEGaranhuns reported a result of R$ 2.9 million following its entry into commercial operations at the end of (R$ million) , , , , T15 2T16 1H15 1H16 IEMadeira IEGaranhuns IENNE/IESUL Net Income Regulatory Net income in 2Q16 was R$ 73.1 million, an increase of 38.7% compared to the same period in 2015 when this item reported R$ 52.7 million T15 2T16 1H15 1H16 CTEEP - Resultados 2T16 16

17 EBITDA and EBITDA Margin pursuant to ICVM 527/12 Regulatory Pursuant to ICVM 527/12, the Consolidated EBITDA reached R$ million in 2Q16, an increase of R$ 45.6 million compared to the EBITDA recorded in 2Q15 of R$ 98.2 million. The Company s EBITDA margin in 2Q16 was 58.7%. EBITDA (R$ million) Company Consolidated 2Q16 2Q15 1H16 1H15 2Q16 2Q15 1S16 1S15 Net Income Income tax and social contribuition Financial Results (0.4) Depreciation and Amortization EBITDA ICVM 527/ EBITDA Margin 62.9% 49.1% 57.3% 49.1% 58.7% 47.5% 55.6% 48.1% IFRS vs Regulatory Net Income Comparison The principal year-on-year variations between consolidated results based on IFRS and Regulatory principles in 2Q16 are as follows: Net Income IFRS Net Revenue Cost and Expenses Depreciation Other Operating expenses/income Income tax and social contribuition Equity Net Income Regulatory % Operating Revenue: Recognition of Infrastructure Revenue of R$ 35.4 million and Revenue from Concession Assets in the amount of R$ 67.4 million, combined with the reclassification of Revenues from O&M of R$ 57.3 million and PIS and COFINS charges of R$ 3.7 million, totaling R$ 41.8 million. O&M and Infrastructure Costs: Recognition of Implementation Costs of Infrastructure and O&M totaling an adjustment of R$ 31.0 million. Depreciation and Amortization: Total reversal of Concession Financial Assets of R$ 12.5 million. Equity Income: Adoption of the IFRIC 12 at the subsidiaries, affecting principally the booking of Infrastructure revenue and Concession Assets. Income Tax & Social Contribution (IR & CSLL): as from 2015, the IFRS is now the base for assessing the IR & CSLL take with recognition of deferred tax on infrastructure results and remuneration of concession assets on an accrual basis and taxed according to effective receipt (R$ 8.2 million).. CTEEP - Resultados 2T16 17

18 Capital Structure 2Q % 24.9% 75.4% 75.1% Equity Debt Debt* Gross consolidated debt as at June 30, 2016 amounted to R$ 1,074.5 million, a decline of 2.0% in relation to the end of 2015 when the Company reported a gross consolidated debt of R$ 1,096.7 million, reflecting principally, the payment of interest of R$ 39.2 million on the 3 rd Simple Debentures Issue and the payment of debt servicing to the BNDES in the amount of R$ 27.7 million. CTEEP s consolidated cash and cash equivalents amounted to R$ million as at June 30, 2016, a decline of 4.6% compared with December 31, 2015, when this same item amounted to R$ million, principally due to the termination at the end of 2015 of receipts for indemnification of New Investments (NI). Consequently, net consolidated debt totaled R$ million, an increase of 0.3% in relation to net debt at the end of Debt (R$ million) Q16 % Debt 1, , % Short-term Debt % Long-term Debt % Cash CTEEP and 100%* % Net Debt % Cash* % Net Debt Consolidated % (*)The Company s financial investments are concentrated in exclusive investment funds, also used as investment vehicles by subsidiaries and jointly controlled subsidiaries. The investment funds comprise highly liquid units readily convertible into cash irrespective of the maturity of the assets. The principal covenants to which CTEEP is a party, are enshrined in the 1 st simple debenture issue and the financing agreements with the BNDES: CTEEP - Resultados 2T16 18

19 i. Debentures: the financial covenants in the indenture agreement are: Net Debt/Adjusted EBITDA Debentures 3.5 and Adjusted EBITDA Debentures/Financial Result 3.0, calculated on a quarterly basis. The Company is currently in full compliance with the requirements and covenants established in the 1 st Simple Debenture Issue; ii. BNDES (valid for 2016) financing agreements: maximum financial covenants are: Net Debt/Adjusted EBITDA BNDES 3.5 and Net Debt/(Net Debt + Shareholders Equity) 0.6, both calculated annually at the end of the fiscal year. The Company is required to consolidate all the wholly owned and the jointly owned subsidiaries (proportional to the stake held), contingent on its shareholding stake being equal or more than 10%, for the purposes of calculation and substantiation of the ratios. The 3 rd Debenture Issue requires full compliance with the financial indicators contained in the BNDES financing agreements. The Company is in compliance with the covenants and requirements established in the 3 rd Debentures Issue. The average cost of consolidated debt increased from 12.5% p.a. on December 31, 2015 to 12.8% p.a. on June 30, The accumulated IPCA for the last 12 months was 9.32% and the annualized CDI (Interbank Deposit Interest Rate) for June 2016 was 14.13%. The average consolidated debt maturity as at June 30, 2016 was 2.5 years and less than the average of 2.7 years at the end of The following chart shows the schedule for amortization of consolidated debt (Controlling Company and Subsidiaries) and breakdown of funding agreements and respective indexers. R$ million to to 2029 Company Subsidiaries Breakdown of Indexation 2Q16 Breakdown of Debt and Indexation ,3% 50,7% BNDES - TJLP Debêntures - CDI/IPCA 49,3% 50,7% (*)The detailed breakdown of the debt of CTEEP, its subsidiaries and jointly controlled subsidiaries can be found in the attachments to this document. Investments As at June 30, 2016, CTEEP had invested a total of R$ 75.4 million, being: (i) R$ 34.9 million in upgrading, new connections, modernization and improvements which generated additional revenue for the Company from the energization of each project; (ii) R$ 25.7 million of investments via subsidiaries for finalizing of work on the original project as well as eventual improvements, upgrading and new connections which will contribute to the generation of additional revenue for the Company; and (iii) R$ 14.8 million in capitalization of personnel, corporate projects and telecommunications. CTEEP - Resultados 2T16 19

20 Capital Markets Closing prices of CTEEP s common and preferred shares (BM&FBovespa: TRPL3 and TRPL4) as at June 30, 2016 were R$ and R$ 62.50, respectively, corresponding to a variation of 20.26% and 36.76%, respectively, in relation to December 31, During the same period, the Ibovespa reported an appreciation of 18.86% while the Electric Power Stock Index (IEE) rose 24.12%. 40% 30% 20% 10% 36.76% 24.12% 20.26% 18.86% 0% -10% -20% -30% -40% Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Volume TRPL4 TRPL3 TRPL4 IBOVESPA IEE ADTV TRPL4 During the first half of 2016, CTEEP s preferred shares reported an average daily trading volume on the BM&FBovespa of R$ 24.5 million. Trade Financial - 06/30/2016 (R$ million) Total R$ 3,041 Million Daily Average / Day R$ 24.5 million 0 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 With a daily average of 2,532 trades, CTEEP s preferred shares recorded a total of 314 thousand transactions in 1H16. Trade Volume - 06/30/2016 (units) 8, Total Trade: 331,967 Daily Average/ Day: 2,532 6, , , Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 CTEEP - Resultados 2T16 20

21 Subsequent Event Infrastructure Debentures On July 15, 2016, pursuant to CVM Instruction 476/2009, CTEEP issued 148,700 non-convertible simple, unsecured debentures in a single series for a total amount of R$ million. The debentures carry a maturity date of July 15, 2021, remuneration being paid annually in July, the first payment falling due on July 15, The funds raised from this Debenture Issue will be used exclusively for reimbursing incurred costs or for investments in the projects of the IEGaranhuns and IEMadeira subsidiaries pursuant to Article 2, Paragraph 1 of Law (infrastructure debentures). CTEEP - Resultados 2T16 21

22 Attachments Attachment I - IFRS Balance Sheet Assets (R$' 000) 06/30/ /31/ /30/ /31/2015 CURRENT ASSETS Cash and Banks 1,795 3,120 3,635 6,135 Financial Investments 250, , , ,054 Trade Account Receivable 188, , , ,961 Inventory 36,619 38,787 38,307 40,476 Recoverable taxes and conbtributions 43,908 4,928 44,176 5,763 Prepaid Expenses 20,146 6,037 20,262 6,057 Others 45,741 79,366 46,863 80, , , , ,826 NON-CURRENT ASSETS Long-Term Assets Trade Account Receivable 2,641,761 2,569,403 3,600,082 3,526,968 Amounts Receivable from the State Finance Secretariat 1,039, ,920 1,039, ,920 Tax benefit - incorporated goodwill Pledges and Escrow 71,169 66,252 71,169 66,268 Inventory 26,301 27,948 29,781 29,675 Deferred taxes 171, , , ,809 Others 8,497 9,249 21,137 21,308 3,958,620 3,823,167 4,933,061 4,794,534 Investments 2,485,198 2,394,590 1,620,249 1,572,640 Property, Plant and Equipment 25,639 23,163 25,669 23,194 Intangible Assets 16,487 22,649 41,731 49,509 2,527,324 2,440,402 1,687,649 1,645,343 Total Assets 7,072,387 6,847,228 7,488,522 7,338,703 CTEEP - Resultados 2T16 22

23 COMPANY CONSOLIDATED Liabilities and Shareholders' Equity 06/30/ /31/ /30/ /31/2015 CURRENT LIABILITIES Loans and Financing 32,400 32,530 71,084 71,070 Bonds 183, , , ,782 Suppliers 28,271 31,824 29,577 34,950 Taxes, Fees and Contributions 66,231 26,825 68,158 28,417 Taxes installments - Law 11,941 16,863 16,200 16,863 16,200 Regulatory Charges 14,665 21,442 14,795 21,821 Interest on Shareholders' Equity 2,459 2,156 2,459 2,156 Provisions 32,807 28,828 33,892 29,757 Amounts Payable - Fundação CESP 5,114 6,144 5,114 6,144 Others 20,561 21,849 24,598 31, , , , ,311 NON-CURRENT LIABILITIES Long-Term Liabilities Loans and Financing 292, , , ,239 Bonds 361, , , ,573 Taxes installments - Law 11, , , , ,897 PIS and COFINS 113, , , ,022 Adiantamento para futuro aumento de capital ,842 35,801 Regulatory Charges 32,124 28,783 34,890 31,194 Provisions for Contingencies 199, , , ,612 Especial Liabilities - Reversal/Amortization 24,053 24,053 24,053 24,053 Monority Interest , ,796 1,147,176 1,142,443 1,516,142 1,580,187 SHAREHOLDERS' EQUITY Paid-up Capital 2,372,437 2,215,291 2,372,437 2,215,291 Capital Reserves 1,217,583 1,277,356 1,217,583 1,277,356 Revenue Reserves 1,842,892 1,842,892 1,842,892 1,842,892 Profits / Losses 88, ,651 0 Advance for future capital increases ,522,229 5,336,205 5,522,229 5,336,205 Total Liabilities and Shareholders' Equity 7,072,387 6,847,228 7,488,522 7,338,703 CTEEP - Resultados 2T16 23

24 Attachment II IFRS Income Statement (R$ thousand) Results Company (R$ '000) 2Q16 2Q15 % 1H16 1H15 % Operating revenue 292, , % 564, , % Construction 34,033 64,924 (47.6%) 54, ,532 (47.1%) Operation and Maintenance 210, , % 418, , % Financial 41,652 27, % 78,418 55, % Others 6,957 5, % 13,302 11, % Deductions from Operating Revenue (37,941) (32,909) 15.3% (73,154) (62,825) 16.4% Net operating revenue 254, , % 490, , % Cost and Expenses (135,449) (172,517) (21.5%) (267,700) (315,161) (15.1%) Personnel (63,761) (59,510) 7.1% (134,687) (124,611) 8.1% Material (23,636) (42,771) (44.7%) (31,049) (55,104) (43.7%) Services (30,058) (36,856) (18.4%) (60,546) (72,029) (15.9%) Others (17,994) (33,380) (46.1%) (41,418) (63,417) (34.7%) Gross Revenue 119,375 74, % 223, , % Equity 48,736 33, % 89,142 60, % Other Operating Expenses/Income (752) (8,184) (90.8%) (878) (16,010) (94.5%) Previous to the Net Financial Income and Taxes 167, , % 311, , % Financial Results (30,035) (5,989) 401.5% (56,254) 373 ( %) Interest Receivable 11,920 17,861 (33.3%) 21,540 37,756 (42.9%) Monetary (net) (9,553) 7,889 (221.1%) (16,161) 23,816 (167.9%) Interest and expenses on loans (31,388) (31,668) (0.9%) (61,595) (61,031) 0.9% Others (1,014) (71) % (38) (168) (77.4%) Operating Income 137,324 94, % 255, , % Income tax and social contribuition (33,084) (17,602) 88.0% (56,618) (38,020) 48.9% Current (27,256) (20,496) 33.0% (44,552) (37,855) 17.7% Deferred (5,828) 2,894 (301.4%) (12,066) (165) % Net Income Before Minority Interest 104,240 76, % 198, , % Minority interest 0 0 0% 0 0 0% Net Income 104,240 76, % 198, , % CTEEP - Resultados 2T16 24

25 Results (R$ '000) 2Q16 Consolidated 2Q15 % 1H16 1H15 % Operating revenue 327, , % 634, , % Construction 35,390 70,809 (50.0%) 59, ,554 (50.0%) Operation and Maintenance 218, , % 437, , % Financial 67,424 45, % 125,417 89, % Others 5,848 5, % 11,348 10, % Deductions from Operating Revenue (40,209) (35,042) 14.7% (77,681) (67,107) 15.8% Net operating revenue 286, , % 556, , % Cost and Expenses (141,739) (183,908) (22.9%) (281,400) (343,144) (18.0%) Personnel (66,567) (62,353) 6.8% (139,773) (130,943) 6.7% Material (23,997) (44,832) (46.5%) (31,687) (61,983) (48.9%) Services (32,021) (42,565) (24.8%) (65,264) (84,955) (23.2%) Others (19,154) (34,158) (43.9%) (44,676) (65,263) (31.5%) Gross Revenue 145,239 95, % 275, , % Equity 27,024 18, % 46,045 34, % Other Operating Expenses/Income (752) (9,118) (91.8%) (878) (16,934) (94.8%) Previous to the Net Financial Income and Taxes 171, , % 320, , % Financial Results (28,898) (5,966) 384.4% (54,055) (1,167) % Interest Receivable 17,378 22,261 (21.9%) 32,298 45,325 (28.7%) Monetary (net) (9,580) 7,864 (221.8%) (15,979) 23,769 (167.2%) Interest and expenses on loans (35,638) (36,088) (1.2%) (70,214) (70,126) 0.1% Others (1,058) (3) % (160) (135) 18.5% Operating Income 142,613 98, % 266, , % Income tax and social contribuition (34,753) (18,971) 83.2% (60,103) (39,932) 50.5% Current (28,941) (21,829) 32.6% (47,996) (40,318) 19.0% Deferred (5,812) 2,858 (303.4%) (12,107) 386 (3236.5%) Net Income Before Minority Interest 107,860 79, % 206, , % Minority interest (3,620) (3,281) 100% (7,448) (5,483) 0% Net Income 104,240 76, % 198, , % CTEEP - Resultados 2T16 25

26 Attachment III IFRS Cash Flow (R$ thousand) Cash Flow of operating activities COMPANY CONSOLIDATED 2Q16 2Q15 2Q16 2Q15 Net Cash by operating activities 77, , , ,578 Cash provided by operating 208, , , ,706 Net Income 198, , , ,490 PIS and COFINS Deferred 5,982 10,007 6,031 10,336 Depreciation and amortization 3,969 3,894 4,344 4,272 IR and CSLL deferred 12, ,107 (386) Demandas Judiciais (6,054) 17,679 (6,346) 17,642 Residual value of permanent asset disposals and donations 4, , Tax benefit - Goodwill 18 14, ,943 Amortização ativo de concessão na aquisição da controlada 1,245 1,245 1,245 1,245 Reversal of the loss provision in a Controlled Company (1,147) (1,177) (1,147) (1,177) Equity (89,142) (60,911) (46,045) (34,979) Juros e variações monetárias e cambiais s/ ativos e passivos 78,287 68,290 86,987 71,277 Changes in Assets -155, ,039-3,583 Trade accounts receivable (39,825) 80,313 (44,491) 70,594 Inventories 3,815 8,860 2,063 8,860 Amounts receivable - State Finance Department (73,229) (72,761) (73,229) (72,761) Taxes and contributions to offset (38,980) (1,630) (38,413) (1,630) Pledges and restricted deposits 14 3, ,457 Other (7,215) (19,087) (7,999) (12,103) Changes in Liabilities 23,945-9,048 17,508-25,545 Suppliers (3,553) (14,699) (5,373) (32,036) Taxes and social charges payable 39,406 29,453 39,741 29,926 Taxes installments - Law 11,941 (8,294) (7,642) (8,294) (7,642) Regulatory charges payable (5,276) (17,238) (5,255) (17,210) Provisions 3,979 2,918 4,135 3,231 Amounts payable - Cesp (1,030) 857 (1,030) 857 Other (1,287) (2,697) (6,416) (2,671) Cash flow of investment activities 2, ,956-16, ,240 Financial Investments (19,346) 137,880 17,970 90,301 Transações com acionistas não controladores 0 0 (55,741) 36,489 Purchase of property, plant and equipment (4,985) (585) (5,002) (585) Intangible assets 0 (459) (3) (685) Investments (1,564) (31,880) (1,564) (14,280) Dividends 28, ,050 0 Cash flow of financing activities -80, , , ,142 News loans , ,000 Loan payments (including interest) (68,918) (195,547) (90,577) (217,745) Dividends paid (109,697) (141,397) (109,697) (141,397) Capital Increase 97, ,373 0 Change in Cash -1,325 3,299-2,500 2,676 Opening Balance of Cash and Cash Equivalents 3,120 1,390 6,135 4,696 Closing Balance of Cash and Cash Equivalents 1,795 4,689 3,635 7,372 CTEEP - Resultados 2T16 26

27 Attachment IV - Breakdown of Consolidated Debt (R$ thousand) FUNDING CHARGES MATURITY 2Q TJLP + 1.8% year 15/03/29 238, ,316 BNDES 3.50% year 15/01/24 77,327 82,538 4,00% year 15/08/ ,00% year 15/11/19 7,875 9,029 TJLP 15/03/ Debentures CTEEP 1st Issuance CDI + 1.3% year 15/12/ nd Issuance IPCA + 8.1% year 15/12/17 45,771 41,608 Single Series 116% CDI 02/07/14 499, ,747 Banks CTEEP Eletrobras 8% year 15/11/ Leasing TOTAL CTEEP: 869, ,961 BNDES IEMG TJLP + 2.4% year 15/04/23 35,114 37, % year 15/05/26 35,551 37,132 PINHEIROS TJLP + 2.6% year 15/01/21 46,061 51, year 15/04/23 12,376 13,282 TJLP % year 15/02/28 6,229 6,451 SERRA DO JAPI TJLP + 1.9% year 15/05/26 37,189 38,796 TJLP + 1.5% year 15/05/26 32,137 33,525 TOTAL SUBSIDIARIES 204, ,703 Total Consolidated (R$ mil) 1,074,537 1,096,664 CTEEP - Resultados 2T16 27

28 Attachment V - Breakdown of Debt: Jointly Controlled Subsidiaries - (R$ thousand) Company Bank Final Maturity Total CTEEP participation ITAÚ BBA 3/18/ , ,352.4 IE MADEIRA BNDES 2/15/2030 1,401, ,694.8 BNDES 10/15/ ,227 87,835.6 BASA 10/10/ , ,196.8 Gross Debt IE Madeira (51% CTEEP) 2,366,823 1,207,079.6 Cash and Equivalents 166,691 85,012.4 Net Debt IE Madeira (51% CTEEP) 2,200,132 1,122,067.2 IENNE BB 7/3/ ,012 4,003.1 BNB 5/19/ ,177 48,794.0 Gross Debt IENNE (25% CTEEP) 211,189 52,797.1 Cash and Equivalents Net Debt IENNE (25% CTEEP) 211,011 52, BNDES 12/15/ , IEGARANHUNS BNDES 8/15/ , BNDES 12/15/2028 1, Gross Debt IE GARANHUNS (51% CTEEP) 328, Cash and Equivalents 13,276 6,770.8 Net Debt IE GARANHUNS (51% CTEEP) 315,069 (6,594.9) BNDES 1/15/2021 8,961 4,480.4 IE SUL BNDES 8/15/2023 4,797 2,398.4 BNDES 8/15/2028 6,961 3,480.6 BNDES 5/15/2025 8,482 4,241.0 Gross Debt IE SUL (50% CTEEP) 29,201 14,600.4 Cash and Equivalents Net Debt IE SUL (50% CTEEP) 28,836 14,417.9 Total Gross Debt (R$ million) 2,935,558 1,274,653 TOTAL Net Debt (R$ million) 2,755,048 1,182,643 CTEEP - Resultados 2T16 28

29 Attachment VI Subsidiaries Subsidiaries State(s) Start of Operation RAP (R$ million) Expiration of Contract Shareholding Interligação Elétrica Minas Gerais Minas Gerais Dez/ Abr/37 CTEEP 100% Interligação Elétrica Pinheiros São Paulo (*) 53.8 Out/38 CTEEP 100% Interligação Elétrica Serra do Japi São Paulo Mar/ Nov/39 CTEEP 100% Minas Gerais Espírito Evrecy Nov/ Santo Jul/25 CTEEP 100% Interligação Elétrica Norte e Nordeste Interligação Elétrica Sul Interligação Elétrica Madeira Tocantins Rio Grande do Sul Rondônia / São Paulo Jan/ (**) 16.9 (***) Mar/38 Out/38 Fev/39 Isolux 50% CTEEP 25% CYMI 25% CTEEP 50% + 1 ação CYMI 50% CTEEP 51% Furnas 24,5% Chesf 24,5% Interligação Elétrica Garanhuns Pernambuco Dez/ Dez/41 CTEEP 51% Chesf 49% (*) Lot H - The Araras, Getulina and Mirassol substations went into operation on September 5, 2010, March 10, 2011 and April 17, 2011, respectively. Lot E - The Piratininga II substation began operations on December 26, Lot K The Atibaia II substation (Auction 004/2008) began operations on January 8, The Itapeti substation (Auction 004/2011) began operations on August 9, (**) Lot F - Nova Santa Rita Scharlau transmission line and the Scharlau substation was made commercially operational on December 6, Lot I - The Forquilhinha substation went into operation on October 10, The Jorge Lacerda B Siderópolis transmission line went into operation on August 21, The Joinville Norte - Curitiba transmission line is scheduled to begin operations in the second half of (***) Lot D - The Coletora Porto Velho Araraquara 2 transmission line went into commercial operations on August 1, 2013 (RAP: R$ million). Lot F - The Inverter and Rectifier stations went into provisional commercial operations on May 12, The assets as from the date of the Concession Agreement were declared free of pending proprietary impediments in August However, because of pending impediments on the part of other agents (with respect to incomplete joint studies of integrators in the ONS electronic studies simulator), a reducing factor equivalent to 10% of the revenue from the agreement has been instituted. (RAP: R$ million). On June 30, 2016, a fault in the Wall Bushing was identified causing a temporary stoppage in converter tests with an estimate that full return to operations would occur in August Current forecasts are that the converters will be fully commissioned by the end of this year. CTEEP - Resultados 2T16 29

30 Attachment VII Accounts Receivable Accounts receivable item (concession assets) represents the amount receivable for services of construction, expansion and improvements to the electric energy installations. It includes the estimated portion of the investments realized and not amortized up to the end of the concession and to which the Company will have the right to receive in the form of cash or other financial assets on expiry of the agreement. Receivables are remunerated at the effective rate of interest calculated for each concession agreement. O&M Operations and Maintenance are also part of the accounts receivable item (concession assets) and relate to the portion of the monthly billing notified by the National System Operator ONS and earmarked for remuneration of operations and maintenance services with an average receivable term of less than 30 days. Accounts Receivable (concession assets) Company Consolidated 2Q Q O&M Receivables from O&M services (a) Financial Asset 1, , , ,197.3 Receivables from Construction services (b) 1, , , ,111.2 Accounts Receivable by reversal (c ) Asset - Law , , , ,491.0 Accounts Receivable (SE) (d) 1, , , ,491.0 Total 2, , , ,847.0 (a) O&M - Operations and Maintenance relates to the portion of the monthly billing notified by the National System Operator ONS and earmarked for remuneration of operations and maintenance services with an average receivable term of less than 30 days. (b) The value of receivables relates to construction services, expansion, upgrading and improvement to the electric energy transmission installations up to the end of each one of the concession agreements to which the Company and its subsidiaries are signatories, adjusted to present value and remunerated at the effective rate of interest. (c) Accounts receivable by reversal relates to the estimated portion of the investments realized and not amortized up to the end of the current concession agreements and to which the Company and its subsidiaries will have a right to receive cash or other financial assets on expiry of the concession agreement. (d) Accounts receivable Law relates to the amount receivable by reversal of the investments realized and not amortized under concession agreement 059/2001, subdivided into New Investment (NI) and Existing Service (SE): The entitlement with respect to the NI installations corresponds to R$ 2.95 billion, being R$ 2.89 billion relating to the New Replacement Value (VNR) and R$ million to the remuneration at the IPCA+ WACC of 5.59% p.a. as determined in Inter-ministerial Order 580. Half of this amount was received on January 18, 2013 and the remaining 50% was divided into 31 monthly installments, largely settled in fiscal year Discussions as to the method of monetary restatement remain pending. The entitlement to indemnification with respect to the SE installations, registered on June 30, 2016, corresponds to the cost of implementation of infrastructure, equivalent to the residual value of these assets in the regulatory financial statement on the extension date (December 31, 2012) pursuant to ANEEL Dispatch 155 of January 23, The latter instructs that the cost value be maintained until the Granting Authority s ratification. While the baseline amounts with respect to the SE installations is available and have been approved by ANEEL s Executive Board, the Company s management is of the view that it is not possible to reliably estimate the restated value of this entitlement given: (i) the request for reconsideration of SE related amounts, submitted to ANEEL and filed on December 30, 2015; and (ii) matters pending regulation and decision by ANEEL as to issues in Order 120/13 of the Ministry of Mines and Energy such as: (a) methodology, restatement index and remuneration of the asset; (b) clarifications as to the terms of payment for delayed and remaining installments; and (c) definition of tax treatment and eventual gross-up. The Company is to register an unadjusted balance in its books until formal guidance is received from the Regulators for reliably measuring the asset. As a measure of the possible range of amounts which could be recognized, the Company estimates a variation of approximately 67% between the highest and the lowest amount. The range is contingent on the prevailing conditions following the conclusion of the public hearing expected in early October Thus, until then, no reliable estimate can be made given that it is impossible to evaluate which scenario has the greatest possibility materializing. CTEEP - Resultados 2T16 30