2Q13 R lt2Q13 Results

August 2013August, 2013

2Q13 Highlights (1/2)

■ 52% reduction in the ‘unscheduled outage rate’ (1.92% in 1H12 vs. 0.87% in 1H13).

■ Investments of R$ 26 million, (27.7% higher then 2Q12) allocated to modernization and preventive maintenance works in the plants of Água Vermelha Ibitinga and Cacondepreventive maintenance works in the plants of Água Vermelha, Ibitinga and Caconde.

■ Expansion in the bilateral contract portfolio related to the free market to 455 MWavg (150 MWavg in new contracts; 288 MWavg as of 2015).

■ Price adjustment in the energy sold through the bilateral contract with AES Eletropaulo from

Operational

j gy g pR$ 182.61/MWh to R$ 194.19/MWh.

■ Net revenues of R$ 583 million in 2Q13, up 9% year-over-year.

■ Costs of R$ 42 million on energy purchased mainly explained by the increase in the portfolio of new bilateral contracts (566 GWh in 2Q13 vs. 200 GWh in 2Q12).

■ EBITDA came to R$ 421 million in 2Q13 (with a 72% margin), up 4.1% from 2Q12.

Net income reached R$ 240 million representing a 5% growth year over year

Financial

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■ Net income reached R$ 240 million, representing a 5% growth year-over-year.

.

2Q13 Highlights (2/2)

■ CNPE 03/2013 - Suspension of the requirement through the injunction granted by APINE on May 27, 2013Regulatory

■ Average lowering of physical guarantee ranging from 0.7% to 2.4%, considering thermal plant g g p y g g g g pdispatches of 10 GW to 12 GW.

■ Energy purchase of 296 GWh - 468 GWh on the spot market, at an annual cost of R$ 123 million - R$ 156 million.

Actual cost already spent on the purchase of energy on the short term market in 1H13 totaled R$

2013 Estimate

■ Interim dividends in the amount of R$ 258 million to be distributed with payment expected to

■ Actual cost already spent on the purchase of energy on the short-term market in 1H13 totaled R$ 122 million.

■ Interim dividends in the amount of R$ 258 million to be distributed, with payment expected to take place on September 25, 2013.

■ R$ 0.65 per common share and R$ 0.71 per preferred share (dividend yield of 3.3%) Dividends

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Operational Performance

■ Recovery on the reservoir levels supported by thermal dispatch(6 GW in 1H12 to 12 GW in 1H13)

▬ Expectation of the average thermal dispatch in 2H13 of 10 GW

■ Lower spot price compared to 1Q13 due to better affluence and reduced thermal dispatch in 2Q13

Historical Level of Brazilian Reservoirs (%) Monthly Evolution of PLD¹ (R$/MWh) SE/CO

■ Lower spot price compared to 1Q13 due to better affluence and reduced thermal dispatch in 2Q13

■ CNPE 03/2013 – Suspension of the requirement through the injunction granted by APINE (∆PLD and ESS per energy security )

100

Historical Level of Brazilian Reservoirs (%) Monthly Evolution of PLD¹ (R$/MWh) - SE/CO

376 

413.95 

339 75

3846

5562 61 63

61

5060708090

ax (%

)

192 73 180.94  183 

280 260 

214.54 

339.75 

196.13 

345.00 

207.62 

38

010203040

b l

M

2948

26 12 17 32 23 20 2137 46

4423.14 50.67 

124.97 

192.73 

118.49 91 

119 121 

j f b j j l t dJan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

2001 2012 2013Historical Data since 2001

1 – PLD April-June 2013 was calculated based on the values of PLD1 (∆PLD not included) 4

2011 2012 2013

jan feb mar apr may jun jul aug sep oct nov dec

Operational Performance

■ 52% reduction in the unscheduled outage rate (1.92% in 1H12 to 0.87% in 1H13)

■ 28% reduction in the generated energy compared to 2Q12 due to the lower dispatch of Água Vermelha power plant

8 38 28 0%-75.8%

Generated Energy (MW avg2)Unscheduled Outage (%)

8,38 7,47

-28.0%

125% 124% 127% 136%

7,33

7,23

2 03

-52%

97%

1,05 0,24 0,35 0,31 0,37 0,15

1,68 1,07 1,55 0,71

2,03 1,38 1,92

0,87

2010 2011 2012 2013 FYF 2012 YTD 2013 YTD

1,599 1,582 1,629 1,731

1,247

2010 2011 2012 2Q12 2Q132010 2011 2012 2013 - FYF 2012 YTD 2013 YTD

1 – Forced stop equivalent factor2 - Generated energy divided by the number of hours of the period 5

EFOF¹ Unscheduled Outage Rate

2010 2011 2012 2Q12 2Q13

Generation - Mwavg Generation/Physical guarantee

Investments

Investments Background (R$ million)

M d i ti f Á

2Q13 Investments Breakdown (%)

Modernization of ÁguaVermelha, Nova Avanhandava and Caconde power plants

12%

12%

194

175

139

88%

12%

156 135

213

26120

27.7%

88%

19 26

2011 2012 2013 (e) 2Q12 2Q13

Investments New SHPPs¹Modernization and Maintenance IT Projects

61 – Small Hydro Power Plants

Financial Performance■ Price adjustment in the energy sold through the bilateral contract with AES Eletropaulo from R$ 173,68/MWh to

R$ 182.61/MWh in July 4, 2013 (R$ 194,19/MWh in July 4, 2012)

■ Lower volume of energy sold in the quarter and for the year due to lower sales volume in the spot and MRE partially compensated by higher sales of energy by bilateral contracts

9 9 %

Billed Energy(GWh) Net Revenue (R$ million)

9.8%

1025338 101

1.0751.181

1.0751.181

1.0751.181

1.0751.181

1.0751.181

1.0751.181

1.0751.1811.075 1.181

1.0751.181

1.0751.181

1.0751.181

1.0751.181

1.0751.181

1.0751.181

1.0751.1811,075 1,181

911297

971

9,0628,163

-5.1%

-9.9 %

8.9%

936 1,026 56 3820 51

535535 5832,182 1,143

911

158

339

971

135 489

4,193 3,980

459 493

1H12 1H13 1Q12 1Q13

5,672 5,890

2,793 2,832

925 543 339 116

1H12 1H13 2Q12 2Q13 1H12 1H13 1Q12 1Q13

AES Eletropaulo Spot/ERM Other bilateral

1H12 1H13 2Q12 2Q13AES Eletropaulo ERM¹Spot Market Bilateral Contracts

71 –Energy Realocation Mechanism

Financial Performance

■ Increase in operating expenses primarily due to the purchase of energy for bilateral contracts

■ Variation in the manageable costs (PMS) of +6.8% in 2Q13 aligned with the period´s inflation (6.3%)

Operating costs and expenses¹ (R$ million)

23.7%

6 2.5 4 4

173 179 177 162

42

131 131

2Q12 electric energy operat provisions and personnel material and transmission and financ comp for use of 2Q13

1 – Excluding depreciation and amortization 8

2Q12 electric energy purchased for resale

operat. provisions and other exp.

personnel, material and third party services

transmission and conection

financ. comp. for use of wat. resources

2Q13

Financial Performance

Ebitda (R$ million) 2Q12 x 2Q13 Highlights

77%

64%

76%72%

■ Positive impact by the change in volume and the price of the bilateral contract with AES Eletropaulo-8.7% p

■ Lower generation of secondary of the system (1% in 2Q13 vs. 9% in 2Q12)

4.2%

827 755

404 421

and higher spot price (R$ 250 MWh in 2Q13 vs. R$ 165 MWh no 2Q12)

$1H12 1H13 2Q12 2Q13

Ebitda Ebitda Margin (%)

■ Reduction of R$ 3 million in PMSO expenses

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Financial Performance

108% 108% 109% 107%

Net Income (R$ million)

■ Higher volume of energy sold

2T13 Highlight

108% 08% 107%

5.3% 3.0% 2.5% 3.3%

■ Higher volume of energy sold through the bilateral contract with Eletropaulo favored the 5.2% increase in net income for 2Q13

Dividends

-10.5%

5.2%

476426

229 241

■ Distribution of interim dividends of R$ 258 million

5.2%

1H12 1H13 1Q12 1Q13

▬ R$ 0.64/common share▬ R$ 0.71/preferred share▬ Payment Date: 09/25/2013

Net Profit Payout Yield Preferred Shares

10

▬ Payment Date: 09/25/2013

Financial Performance

2Q12 x 2Q13 Highlights

■ Reduction of operating cash flow in 2Q13 due to lower secondary and settlement in the CCEE (downgrade in

O ti C h Fl (R$ illi ) Fi l C h B l (R$ illi )

January), partially offset by the adjustment of the contract with Eletropaulo

■ Increase in the final cash balance in the 2Q13 due to the 2ª debenture issuance (May/15/2013)

Operating Cash Flow (R$ million) Final Cash Balance(R$ million)

-24.2% 36.8%

466354 374354

2Q12 2Q13Operating Cash Flow

273 374

2Q12 2Q13Final Cash Balance

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DebtNet Debt (R$ million) Debt Amortization Schedule

Total of R$ 498 million of the 2nd debenture

0.8

300 300

2nd debenture issuance

0.4

0.50.6

300 300166 166 166

2014 2015 2017 2018 2019

0.6 0.7

2014 2015 2017 2018 20192015 2017 2018 2

Debt amortization flow

2Q12 2Q13

Net Debt

Net Debt/Ebitda

Covenants■ Gross debt / Ebitda =< 2,5x ■ Net debt / Ebitda =< 3 5x

Debt Cost 2Q12 2Q13■ Financial Res. (R$ MM) (15) (16)■ Average Cost (% CDI) 120% 103%■ Average Term (years) 1 8 2 9

Gross Debt/Ebitda

■ Net debt / Ebitda =< 3,5x■ Adjusted Ebitda / Financial Expenses =>1,75x

121 – CDI percentage

■ Average Term (years) 1.8 2.9■ Effective Rate 10.1% 10.5%

The statements contained in this document with regard to thebusiness prospects projected operating and financial resultsbusiness prospects, projected operating and financial results,and growth potential are merely forecasts based on theexpectations of the Company’s Management in relation to itsfuture performance.Such estimates are highly dependent on market behavior andSuch estimates are highly dependent on market behavior andon the conditions affecting Brazil’s macroeconomicperformance as well as the electric sector and internationalmarket, and they are therefore subject to changes.

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