2014 MANAGEMENT REPORT

Transcription

1 2014 MANAGEMENT REPORT São Paulo, March 4, HIGHLIGHTS OF 2014, AND SUBSEQUENT EVENTS POWER CONTRACTS PLACEMENTS / PROJECTS Supply contracts for MW average contracted in the Free Market, corresponding to MW of installed capacity, in a project in which Renova owns 50% and Cemig 50%. Development of Brazil s first hybrid wind + solar project MW average, corresponding to 43.5 MW of wind power capacity, contracted in the 2014 LER (reserve supply) wind power auction MW average, corresponding to MWp of solar generating capacity, contracted in the 2014 LER auction MW average, corresponding to MW of installed wind power capacity, contracted at the A 5 LEN (new build) auction of OPERATIONS Synchronization of contractual periods with start date of operation of transmission lines, for the new units built to provide supply under the 2010 LER and the 2011 A 3 LEN auctions (jointly, the Alto Sertão II complex). Start of commercial operation of the 2009 LER (Alto Sertão I) wind farm complex. INVESTOR RELATIONS Pedro Pileggi Vice-president for Finance, Business Development and Investor Relations Flávia Carvalho Investor Relations Manager Thatiana Zago Investor Relations Analyst ri@renovaenergia.com.br +55 (11) /1174 MEDIA OFFICE Inês Castelo - ines@tree.inf.br (11) Data at March 4, 2015: RNEW11 = R$ 33.30/Unit Market Value BM&FBOVESPA R$ 3,537.1 million Start of commercial operation of the 2010 LER complex. 1

2 Start of commercial operation of four wind farms of the 2011 A 3 LEN auction (subsequent event). STOCKHOLDING STRUCTURE / STRATEGIC PARTNERSHIPS Acquisition of 51% of Brasil PCH. Renova concludes capital increase; Cemig GT enters controlling stockholding block. Strategic partnership with SunEdison for creation of a joint venture to build 1 GW of solar energy projects in Brazil. FINANCING Long-term Brazilian risk rating of A(bra) maintained for Renova and its second debenture issue. BNDES Board approves long-term financing for Alto Sertão II wind complex and partial disbursement. Partial rollover of the Notes for the SPCs of Alto Sertão II. CONTENTS About Renova...03 Message from Management...04 Highlights in detail...05 Renova s Power Trading Company...12 Consolidated profit and loss account...13 Cash flow...19 Main indicators of the financial statements...22 Stock price performance...23 Stockholding structure...24 Glossary...25 First issue of Infrastructure Debentures for Alto Sertão II: R$ 146 million. BNDES accepts Alto Sertão III Phase A wind complex for financing study. Bridge loans for Alto Sertão III Phase A approved first tranche received. New R$ 500mn corporate debenture, to replace existing issue. RESULTS Net operational revenue: up 34% in 2014 vs. 2013, at R$ 302.9mn. Renova reports net loss of R$ 35.7 mn in adjusted Ebitda R$ mn, with Ebitda margin 55.3%. 2

3 1 ABOUT RENOVA Renova Energia S.A. ( Renova, the Company ) is a company generating electric power from renewable sources, focusing on wind farms, small hydroelectric plants (SHPs) and solar energy. It is the largest company generating electricity from renewable sources in Brazil, by contracted installed capacity. It has been prospecting, developing and implementing projects to generation power from renewable sources for 13 years having invested to build a highly qualified multidisciplinary team of experienced electricity sector professionals over this period. It has placed 1,609.1 MW of contracted wind power in Brazil s regulated market and MW in its free market , ,9 58,3 58, , , ,0 58,3 4,8 4, , ,4 652, , , ,6 462,1 190,2 190,2 190,2 190,2 190,2 190,2 Em In operation operação atual Installed einm capacity operação in operation PCH SHP Eólico Wind Solar Regulated Market- Wind LER 2009 LER 2010 LEN A LEN A LER 2013 LEN A LEN A LER 2014 Complex Alto Sertão I Alto Sertão II Alto Sertão III - Fase A Umburanas TBD Installed Capacity (MW) Energy Sold (average MW) Number of wind farms Start of operation ¹ Jul-12 Oct-14 feb/mar-15 Jan-17 Sep-15 May-18 Jan-19 Oct-17 Free Market- Wind Light I Light II Complex Alto Sertão III - Fase A Alto Sertão III - Fase B Mercado Livre I Alto Sertão III - Fase B Mercado Livre II Alto Sertão III - Fase B Mercado Livre III Alto Sertão III - Fase A PPA Cemig² Jacobina Installed Capacity (MW) Energy Sold (average MW) Number of wind farms TBD Start of operation ¹ Sep-15 Sep-16 Jan-16 Jan-17 Sep-15 Sep-18 Regulated Market- SHP ESPRA Brasil PCH³ Installed Capacity (MW) Energy Sold (average MW) Number of wind farms 3 13 Start of operation ¹ /2009 Regulated Market/Free - Solar LER Híbrido Installed Capacity (MW) Energy Sold (average MW) Number of wind farms 4 1 Start of operation ¹ out ¹ Contracted under the 2009 Reserve Energy Action ( LER ), which has been operation ready since July ² This figure is for Renova s 50% interest. ² This figure is for Renova s 51% interest. 4 Figure is for the 50% interest in this joint venture. 3

4 2 MESSAGE FROM MANAGEMENT 2014 was a very important year for the history of Renova. Following the company s initial success in winning wind power contracts in 2009, its first wind farms began commercial operation in The 14 wind farms that sold power contracts in the 2009 Reserve Energy (LER) auction, which comprised the Alto Sertão I complex, with MW of installed capacity, began commercial operation in July Then, in October 2014, the wind farms that sold supply in the 2010 LER Auction, with installed capacity of MW, also started operation. Jointly with the nine wind farms that contracted power supply in the 2011 A 3 LEN Auction, these six 2010 LER wind farms comprised the Alto Sertão II Complex, with MW of installed capacity located in the same region as Alto Sertão I, in the Southeast of Brazil s Bahia state. The generation performance of these projects so far, even in this short initial period, has proven the quality of the wind in the region, and the successful strategy in execution of the project. In February 2015, four new wind farms contracted in the 2011 A 3 LEN auction were connected, to on the same transmission line as the 2009 and 2010 projects. The other five wind farms are awaiting the transmission line which, according to the Transmission Project Timetables (SIGET) set by Aneel, is scheduled to be ready for connection in August of this year. Another important landmark of the year was the placement of two utility-scale solar projects. At the beginning of the year the first hybrid wind/solar generation project in Brazil was announced. It will have two wind farms with installed capacity of 21.7 MW, corresponding to 11.0 MW average, and a solar plant with installed capacity of 4.8 MWp, corresponding to approximately 1 MW average, to be installed in Bahia, in the same region as the Company s wind farms. In October 2014 the government held the first auction in which solar power did not compete with other sources. In this auction Renova contracted MWp, to be generated by four solar wind installations, also located in the same region of Bahia. After this auction the Company announced the creation of a joint venture with SunEdison, a world-leading supplier of solar energy services, with the objective of building 1 GW of solar energy projects in the regulated market in Brazil. Also in 2014, in February, Renova (through a subsidiary) acquired 51% of Brasil PCH, a company that owns 13 small hydroelectric plants (SHPs), with installed capacity of 291 MW and contractual takeoff guarantee of 194 average MW. In October Renova concluded a capital increase, with Cemig GT entering its controlling stockholding block, through a stock subscription of R$ bn. Under the Investment Agreement signed in August 2013, RR Participações, Light Energia and Cemig GT signed a new Stockholders Agreement. The decisions of the controlling block are taken unanimously and each one of the groups will have two members on the Board of Directors. The direct participation of Cemig GT brings to Renova one of the largest and most experienced electricity groups operating in Brazil. During the year Renova followed its strategy of growth in the wind sector, and contracted MW of installed capacity in the Free Market, and MW of installed capacity in the regulated market. It also continued with construction of the projects already contracted, finalizing the works of Alto Sertão II and 4

5 beginning construction of Phase A of Alto Sertão III, a complex which has PPAs of the free market and the regulated market, with total installed capacity of MW. Over the year of 2014, debt was contracted to continue execution of the projects with capital efficiency. The first tranche, totaling R$ bn, of the long-term financing from the BNDES for Alto Sertão II, and bridge loans and part of the Notes were settled with this funding. A new debenture issue was made by the holding company for R$ 500.0mn, settling a prior debenture. Renova Eólica, the sub-holding company for Alto Sertão II, made an issue of Infrastructure Debentures, for R$ mn: the first series of this issue, totaling R$ 73.0 mn, was settled in December, and the second series, for the same amount, was settled in January A tranche of the bridge loan for the Alto Sertão III Phase A, of R$ mn, was also released. Looking forward in 2015, the Company continues to be optimistic on its capacity for growth and execution, and now also for operation, continuing to generate value for its stockholders and for society as a whole. 3 - HIGHLIGHTS IN DETAIL: POWER CONTRACTS PLACEMENTS / PROJECTS 3.1. Supply contracts for MW average contracted in the Free Market, corresponding to MW of installed capacity, in a project in which Renova has 50% and Cemig 50% The Company contracted MW average in the Free Market, in an auction won by Cemig GT. This wind project will comprise 26 wind farms, with total MW of installed capacity, in the municipality of Jacobina in Bahia. Cemig will own 50% of the project and, for this interest, under the Investment Agreement signed, will pay up to R$ mn representing 50% of the advances under the contracts already signed by Renova, plus monetary adjustment by the CDI (interbank CD) rate, from the date of its disbursement by Renova to the date of payment by Cemig. As from the acquisition, Cemig and Renova will share the future investment in the wind power project. 3.2 Development of Brazil s first hybrid wind + solar project Renova is building a hybrid solar and wind power project, in Bahia, in the same region as the Company s wind farms that are currently operating. The solar plant will have installed capacity of 4.8 MWp, corresponding to approximately 1 MW average, from approximately 20,000 photovoltaic modules with fixed sustaining structure and four inverters. The wind farms in the project will have installed capacity of 21.7 MW, corresponding to 11.0 MW average. Construction will begin in 2015 for conclusion in an estimated 12 months. Financing for the project was contracted with Finep for R$ 108.0mn, at a financing cost of 3.5% per year. 5

6 average MW, corresponding to 43.5 MW of wind power capacity, contracted in the 2014 LER (reserve supply) wind power auction In the 2014 Reserve Energy (LER) Auction, Renova contracted 20.9 average MW, corresponding to 43.5 MW of installed wind power capacity, to be generated by three wind farms in the state of Bahia, in the same region as the Company s existing wind farms. The lots were sold for an average price of R$ per MWh. The wind farms will have Alstom aerogenerators, and are scheduled to start operation in October The contracts are for 20 years average MW, corresponding to MWp of solar generating capacity, contracted in the 2014 LER auction Renova also contracted 21.8 MW average of solar power in the 2014 LER Auction, corresponding to MWp of installed capacity, to be generated by four plants, also in the state of Bahia in the same region as the Company s wind farms in operation. The lots were sold for an average of R$ per MWh, under 20-year contracts, for start of supply in October The equipment to build the photovoltaic solar plants will be supplied by SunEdison, with prices fixed in Brazilian Reais, qualifying for the Brazilian-content levels required by the BNDES (Finame) for long-term financings average MW, corresponding to MW of installed wind power capacity, contracted at the A 5 LEN (new build) auction of 2014 In the 2014 New-build Supply auction the 2014 A 5 LEN Auction Renova placed 49.4 MW average to be generated by five wind farms, located in Bahia, corresponding to MW of installed capacity. The lots were sold at an average ICB (cost-benefit index) of R$ /MWh, under 20-year contracts, with start of supply in January The project will use Alstom aerogenerators. The wind farms are in the state of Bahia, in the region of Umburanas, 450 km from Salvador and 600 km north of the region where the Company s existing wind complexes are installed. Also in Umburanas, Renova had already placed MW of installed capacity in the 2013 A 5 LEN auction, bringing the total in the region to MW, continuing the company s strategy of developing wind complexes with scale and quality. 6

7 OPERATIONS 3.6. Synchronization of contractual periods with start date of operation of transmission lines, for the new units built to provide supply under the 2010 LER and the 2011 A 3 LEN auctions (jointly, the Alto Sertão II complex) The contracts for the wind farms that placed supply in the 2010 LER auction and the 2011 A 3 LEN auction stated the dates for start of supply as September 2013 and March 2014, but the plants completed on schedule were unable to start providing supply because the transmission lines were not ready. In March 2014 the electricity regulator, Aneel, published a dispatch changing the supply timetable for the 2011 A 3 LEN wind farms, to coincide with the startup of commercial operation of the transmission lines to which they would connect. Aneel also gave a period of 30 days for start of commercial operation after the transmission lines were in operation, so that the Company would not be subject to contractual and/or regulatory penalties while the transmission line was not ready. The full length of the supply contract, in years, was maintained. In April 2014, Aneel made the same concession for the 2010 LER Auction wind farms, delaying start of the contractual period to synchronize with the transmission lines starting commercial operation. Aneel again gave 30 days from the transmission line being operational for startup of generation. As with the 2011 A-3 LEN wind farms, the Company was not subject to contractual and/or regulatory penalties during the time when the transmission line was not ready, and the full period of the supply contract was maintained Start of commercial operation of the 2009 LER (Alto Sertão I) wind farm complex The 14 wind farms that placed supply contracts in the 2009 LER Auction began commercial operation on July 4, As from that date, the power from the wind farms, with installed capacity of MW, has been accounted under the commercial contract signed between the Company and the Electricity Trading Chamber (CCEE). Prior to the start of commercial operation, the wind farms received the revenue from the energy sold, as per contract. These wind farms placed average MW in the auction, and are located in the interior of Bahia state Start of commercial operation of the 2010 LER complex The six wind farms that placed supply in the 2010 LER Auction began commercial operation on October 11, As from that date the power from these parks, with installed capacity of MW, has been accounted under the commercial contract signed between the Company and the CCEE. 7

8 The timetable for operational startup of these units has been synchronized with the start of commercial operation of the transmission line. The power supply contracted is 78.0 MW average. These units are also in the interior of Bahia, in the same region as the 2009 LER wind farms Start of commercial operation of four wind farms of the 2011 A 3 LEN auction (subsequent event) Of the total of nine wind farms that sold power supply in the 2011 A 3 LEN auction, four began commercial operation on March 04, These four Ametista, Pilões, Maron and Dourados with installed capacity of MW, were connected to the same transmission line that serves the wind farms contracted under the 2009 LER auction and the 2010 LER auction (Igaporã II). The other five wind farms will be connected to the Igaporã III line, which according to the Transmission Project Timetables (SIGET) figure published by Aneel is scheduled to start operating on August 12, The nine wind farms contracted under the 2011 A 3 LEN auction are still contractually synchronized: the contract will start in up to 30 days after the operational startup of the transmission line. From March 04, 2015 (start of commercial operation) until the operational start date of the contract, these wind farms, according to a technical note issued by Aneel, will receive revenue for the energy actually generated at the contract price. STOCKHOLDING STRUCTURE AND STRATEGIC PARTNERSHIPS Acquisition of 51% of Brasil PCH In August 2013 Renova announced the Investment Agreement signed with Cemig Geração e Transmissão S.A. (Cemig GT), in which Chipley, a subsidiary of the Company, would acquire 51% of Brasil PCH, and Cemig GT would enter the controlling stockholding block of Renova, through subscription of newly issued shares. In February 2014 Chipley in fact acquired 51% of Brasil PCH, for R$ mn. Brasil PCH has 13 small hydroelectric plants (SHPs), with installed capacity of 291 MW and physical takeoff guarantee of 194 MW average. All the SHPs have long-term (20-year) contracts for sale of their supply under the Proinfa program. The acquisition is strategic for Renova, which added operational assets to its base, improving the balance between assets in operation and assets under construction or in development. Brasil PCH contributed to the Company s cash generation, providing cash able to be used for the growth of Renova, both in projects already contracted and in new 8

9 projects Renova concludes capital increase; Cemig GT enters controlling stockholding block On September 29, as specified in the Investment Agreement announced on August 8, 2013, Cemig GT subscribed 87,186,035 common shares in Renova, by realization of the Advances against Capital Increase (AFACs) previously made, in the total amount of R$ 1,550,071, As well as Cemig GT, other stockholders exercised first refusal rights, on a total of 10,866 common shares, resulting in a total of 87,196,901 common shares subscribed, for a total of R$ 1,550,264, After the subscription and payment, a new Stockholders Agreement was signed between Cemig GT, RR Participações and Light Energia. On October 27 the Company s Board of Directors homologated the capital increase. Stockholding ownership of Renova on December 31, 2014 was as follows: RENOVA ENERGIA ON shares PN shares Total Shares Controlling stockholder block ,6% - 0,0% ,1% RR Participações ,4% - 0,0% ,9% Light Energia ,4% - 0,0% ,9% Cemig GT ,8% - 0,0% ,3% Other stockholders ,4% ,0% ,9% RR Participações* ,5% ,6% ,0% BNDESPAR ,9% ,8% ,8% InfraBrasil ,9% ,5% ,0% FIP Caixa Ambiental ,3% ,4% ,1% Others ,8% ,7% ,0% Total ,0% ,0% ,0% * Holding of RR Participações outside the controlling block Strategic partnership with SunEdison for creation of a joint venture to build 1 GW of solar energy projects in Brazil In November 2014, Renova and SunEdison Brasil announced the creation of a joint venture for development of 1 GW of solar energy projects in Brazil. 9

10 The joint venture was created as the exclusive vehicle of the two companies to operate and sell solar energy supply projects in the Brazilian regulated market. It will be 50% owned by Renova and 50% by SunEdison, and will initially build and operate four solar plants contracted under the 2014 LER auction, with installed capacity of MWp. SunEdison Brazil is part of the SunEdison, Inc Group, a world leader in the supply of solar energy services, with expertise in global projects and leadership in the solar energy industry in Latin America. The partnership strengthens Renova s strategy in the solar energy market, and makes it more competitive in development of this source in Brazil. Renova believes in the development of solar energy in Brazil a country where the source is abundant, and which has a history of preference for renewable generation. Brazil has recently created the regulatory framework for development of solar power and definitively included solar energy in its planning for the country s domestic supply. The companies will transfer projects they currently have under development to the joint venture. FINANCING Long-term Brazilian risk rating of A(bra) maintained for Renova and its second debenture issue In September 2014, Fitch Ratings restated its Brazilian Long Term Rating of A(bra), with outlook Stable, for Renova and its R$ 300.0mn second debenture issue. That issue was paid in full from the proceeds of the new debenture issue by the holding company, as reported in item Fitch said its rating for Renova is based on the strength of its operational assets and of its projects under development. It highlighted the acquisition of Brasil PCH, which in its assessment will strengthen the flow of dividends received, and its robust liquidity position following the entry of R$ 1.55bn in capital from Cemig GT. Fitch also sees the participation of Light Energia and Cemig GT in the controlling block of Renova as positive, since it believes the presence of these stockholders will assure greater financial flexibility BNDES Board approves long-term financing for Alto Sertão II wind complex and partial disbursement In May 2014 the Board of Directors of Renova approved application to the Brazilian Development Bank (BNDES) for financing of R$ 1.044bn for Alto Sertão II comprising the wind farms that placed supply in the 2010 LER auction and the 2011 A 3 LEN auction, with total installed capacity of MW. The Board of the Brazilian Development Bank (BNDES) approved this financing in June It was contracted by Renova Eólica Participações S.A., a subsidiary of the Company. Its repayment period is 16 years. Also in June 2014, R$ 647.9mn of this financing was received and used to settle the bridge loans contracted with the BNDES. In August 2014 another tranche, of R$ 155.0mn, was received and used to settle part of the earlier issue of Notes. The rest of the financing will be released in 1Q15 and used to settle the remaining balance of the Notes. 10

11 3.15. Partial rollover of the Notes for the SPCs of Alto Sertão II In October 2014 the third issue of commercial promissory notes of eight of the Company s indirect subsidiaries was approved these are the companies that won the 2011 A 3 LEN auction, for a total of up to R$ mn. The funds raised were used for payment of the principal of the second note issue of the subsidiaries. The second issue was for R$ mn, and had been partially settled using funds from part of the long-term financing. Part of these notes contracted in October had already been settled with part of the long-term financing First issue of Infrastructure Debentures for Alto Sertão II R$ 146.0mn In September 2014 the Board of Renova approved the first issue of debentures by the indirectly-controlled subsidiary Renova Eólica Participações S.A., for a total of R$ 146.0mn. The issue is of non-convertible debentures, for public distribution, with physical guarantee and additional surety, in two series. The issue has the status of Infrastructure Debentures, since the projects in which the proceeds will be invested have been qualified, in Mining and Energy Ministry Ministerial Orders, as priority projects of that Ministry. Proceeds of these debentures were allocated to Alto Sertão II to complement the long-term financing from the BNDES. Both series were for R$ 73.0mn. The first was disbursed in December 2014, the second in January BNDES accepts Alto Sertão III Phase A wind complex for financing study Phase A of the Alto Sertão III complex, comprising the wind farms of the projects Mercado Livre III, LER 2013, Light I and LEN A , was admitted for analysis of financial support feasibility by the Qualification, Credit and Capital Markets Committee of the BNDES. These wind farms have aggregate installed capacity of MW, for planned delivery between 2015 and early Renova awaits BNDES analyses and approvals, to confirm the amount and to itself approve the financing Bridge loans for Alto Sertão III Phase A approved first tranche received. Bridge loans totaling R$ 700mn for Alto Sertão III Phase A were approved with the BNDES in December A tranche of R$ 215mn was released before the end of December, with a further R$ 85mn scheduled for released by the end of first quarter 2015, and disbursement of the rest as from second quarter The loans will be settled on the date of disbursement of the long-term financing from the Brazilian Development Bank (BNDES). 11

12 3.19. New, R$ 500mn corporate debenture, to replace existing issue On December 30, 2014 a new corporate debenture was issued in the amount of R$ 500.0mn. Proceeds were used for pre-payment of the existing debenture in the amount of R$ mn, generating additional cash of R$ 129.2mn. This new debenture has the same remuneration as the one it replaces, tenor of 10 years, and three months grace period for payment of the principal, thus lengthening the Company s debt profile. 4 RENOVA S POWER TRADING COMPANY Renova created its energy trading company in 2012, to manage its portfolio and mitigate risks. In full-year 2014 RC generated revenues of R$ 17.0mn, spent R$ 13.4mn on purchase of electricity and other costs, and reported a net loss of R$ 1.5 mn. Renova Comercializadora (R$ 000) Change Net Revenue Energy purchase (13.397) - - Other costs (5.181) (38) 13534,2% Financial results Results (1.542) (38) 3957,9% 12

13 5 - CONSOLIDATED PROFIT AND LOSS ACCOUNTS Renova Energia S.A. R$ Change Gross operational revenue ,5% ( ) Taxes PIS, Cofins and ICMS (12.667) (8.534) 48,4% Net operational revenue (NOR) ,0% Non-manageable costs (14.220) (11.437) 24,3% Non-manageable costs (46.413) (18.154) 155,7% Depreciation (80.380) (68.449) 17,4% Operational profit ,5% Administrative expenses (90.201) (38.392) 134,9% Administrative depreciation (1.808) (1.077) 67,9% Administrative expenses (60.060) (72.261) -16,9% Equity income (1.620) - - Amortization of value added (23.222) - - Gain / Loss on investments (5.259) - - Income tax and Social Contribution tax (15.407) (9.970) 54,5% Net profit (35.723) ,7% Net margin -11,8% 2,8% -14,6 p.p. Electricity sold (MWh) ,1% 5.1. Net operational revenue: up 34% in 2014, at R$ 302.9mn Net operational revenue in the year was R$ mn, 34.0% higher than in The difference mainly reflects revenue from the generation capacity contracted in the 2010 LER Auction, after those plants came into commercial operation, on October 11, During the period of test of the wind farms of the 2010 LER auction contract, the power generated was sold for the spot price (Preço de Liquidação da Diferença, or PLD), generating revenue of R$ 41.2 mn. Between October 11 and the end of the month, the power generated was sold at contract price, generating revenue of R$ 4.7 mn. The contract under the 2010 LER, with the CCEE, began to be accounted as from November 1. Renova Energia S.A. (R$ 000) Change Net revenue Small Hydro Plants ,3% Net revenue Wind farms ,0% Net revenue Solar ,3% Net revenue Energy Trading Net operational revenue (NOR) ,0% 13

14 In spite of the significant increase in the revenue from wind power, as mentioned above, there was a negative effect on total revenue as a result of the lower revenue coming from the SHPs (this effect does not include Brasil PCH). Two of Renova s SHPs are part of the Energy Reallocation Mechanism (MRE), which makes an accounting reallocation of the total volume of electricity generated in the country, transferring the excess of those who generated more than their physical guarantee to those that generated less. Since the MRE generated less than the total physical guarantee in 4Q14, Renova made a provision for its share in the accounting adjustment of the amounts of the MRE and, since the Spot Price is high, the provision had a negative effect on the final profit/loss. There were also adjustments for the Colino II SHP, which is outside the MRE. The financial settlement of these amounts takes place only in the following year, after the accounting of the whole of the current year. The net value of the financial adjustment for generation, which was negative for the SHPs and received a positive effect from the wind farms, was R$ 19,848 negative in the year. As mentioned above, every quarter a provision is made of the amount sold and the amount in fact generated, the difference being accounted as an item reducing or increasing revenue. The revenue from trading in power supply in the year was R$ 17.0 mn Consolidated costs Electricity production costs are separated into manageable, and non-manageable, components. Non-manageable costs are: (i) The tariff for use of the distribution system (TUSD), for the use of the distribution system of Coelba, the concession holder to which the SHPs are connected, and the tariff for use of the transmission system (TUST), for the transmission lines and substations of the wind farms; and (ii) the inspection charge made by Aneel. These costs are related to the small hydro plants and the wind plants that are in operation. Manageable costs are the costs of operation and maintenance of the SHPs of the subsidiary Energética Serra da Prata S.A. ( ESPRA ) and of the wind farms in operation. In the full year, non-manageable costs totaled R$ 14.2 mn, 24.3% more than in 2013, mainly reflecting the commercial startup of the 2010 LER wind complexes. Manageable costs totaled R$ 46.4mn in the full year. Main factors in the higher figures than the previous year were: Payment for outsourced services R$ 19.8mn higher in the year, mainly reflecting: (i) payment of operation and maintenance services for the rotors and the electrical balance of plant (BOP) of the 2009 LER auction, after expiry of the grace period of two years following delivery of the completed wind farms; and (ii) payment of services of preservation of machines in the wind farms of the 2010 LER and 2011 A 3 projects for the period in which they were not operating. Rentals and leasing costs R$ 3.9mn higher in the year, reflecting leasing of sites for the Alto Sertão III complex, costs that did not exist in Purchase of energy for resale R$ 13.4mn higher in the year. 14

15 Other costs R$ 8.9mn lower in the year, principally due to reversal in 2014 of the provisions of R$ 4.6mn made in 2013 (R$ 1.3mn in 3Q13 and R$ 3.3mn in 4Q13), for a fine that could formally have applied to the 2010 LER wind farms. That provision was reversed after the approval by the regulator, Aneel, in April 2014, of synchronization of the generation contract with the awaited date of startup of the transmission lines. Depreciation was R$ 80.4 mn in the year, vs. R$ 68.5 mn in The increase in the amounts reflects the start of operation of the 2010 LER wind farms Administrative expenses consolidated Renova Energia S.A. R$ Change Personnel and managers ,2% Outsourced services ,2% Rentals and leasing ,9% Travel ,7% Projects discontinued ,7% Insurance ,1% Telephony and IT ,1% Materials for use and consumption ,9% Others ,5% Total (*) ,9% *Excludes administrative depreciation. Expenses in the full year were R$ 90.2 mn, an increase of R$ 51.8 mn from 2013, mainly on the following factors: Personnel and administration: The increase mainly reflects a larger number of employees 281 on December 31, 2014 compared to 223 a year before; and a larger provision and bonus payment. Outsourced services: R$ 20.1mn more than in 2013, reflecting higher expenses on consultants, including consultancy in HR and sustainability; higher spending on legally-required advertising; and also higher institutional expenses non-recurring. Rentals and leasing: Higher, due to new rentals for the São Paulo and Salvador offices. Travel: Higher mainly because of operational startup of the 2009 and 2010 LER wind farms, and events. Discontinued projects: The Company revises its portfolio of basic projects and inventories of SHPs quarterly and in 2014 there were more write-offs than in Others: The higher figure mainly reflects the costs of Renova Comercializadora, primarily personnel expenses. 15

16 5.4. Consolidated financial revenue (expenses) Renova Energia S.A. R$ Change Financial revenues ,7% Revenue from cash investments ,9% Other financial revenues ,7% Financial expenses ( ) ( ) 8,1% Costs of debt ( ) (98.034) 6,0% Other financial expenses (9.183) (6.653) 38,0% Financial revenue (expenses) (60.060) (72.261) -16,9% For the whole year, Renova reports net financial expenses of R$ 60.1 mn, 16.9% less than in This arises from the higher cash balance than in the previous, year, partially offset by the higher total of financings, and by the operational startup of the 2010 LER projects, causing financing costs to cease to be capitalized Equity gain (loss) in subsidiaries Brasil PCH Renova made the acquisition of 51% of Brasil PCH with the funds from the advance against future capital increase (AFAC), through a subsidiary, Chipley. Up to September 30, 2014 the Company owned 60% of Chipley and after that date, 100%. In 2014, Brasil PCH (100%-owned) reported net profit of R$ 4.9 mn. Chipley owns the right to 51% of the profit of Brasil PCH (R$ 000) Feb Dec Net revenue 202,325 Costs (38,464) Expenses (16,089) Depreciation (39,525) Financial revenue (exp.) (94,321) Income tax and Social Contribution tax (9,041) Net profit 4,885 Brasil PCH. The following shows the effect of the acquisition of Chipley: The total goodwill premium on the acquisition was R$ mn. The Company identified and measured the fair value of the existing assets and liabilities of Brasil PCH based on the best existing estimate, and began to post the amount of the monthly amortization of goodwill in the month of the acquisition. The amortization of goodwill accounted in the full-year result (February to December) was R$ 32.6mn, in Chipley. 16

17 Feb a Dec Equity gain(loss) in subsidiary Amortization of value added (32.592) Operational result (72) Financial result 211 IR e CSLL (33) Results (29.996) In Renova the effect of the acquisition is as shown in the table below. Up to the end of September the Company consolidated 60% of Chipley, and in 4Q14 began to consolidate 100% Feb a Dec Equity gain(loss) in subsidiary (1.620) Amortization of value added (23.222) Results ¹ (24.843) Gain / Loss on investments (5.259) ¹ Until September, Renova consolidated only the result of Chipley, which was R$ 7.9mn negative for the period February through September. The loss on holdings in investments reflects the increase in ownership in the subsidiary Chipley, in which Renova owned 60% on September 30, and 100% as from October. Since the stockholders equity of Chipley on September 30, 2014 was R$ 13,145 negative, Renova recognized 40% of that amount as a loss on holding in an investment, generating an expense of R$ 5.3 mn Income tax, Social Contribution tax, Net profit/loss Renova s revenues from generation are taxed by the Presumed Profit method of tax reporting. Under this regime, the amount on which the tax is calculated is the sum of 8% of gross revenues arising from electricity generation and 100% of financial revenues. To this amount, Income Tax is applied, at the regular rates: 15% basic rate plus an additional 10% over a threshold figure. The Social Contribution tax is calculated, at its regular rate of 9%, on: 12% of gross revenues from electricity generation, plus 100% of financial revenues. In 2014, income tax and the Social Contribution tax totaled R$ 15.4mn, compared to R$ 10.0mn in This mainly reflected the change in the taxation of the SPCs of the 2010 LER projects, which began to be accounted by the Presumed Profit method, and as a result had their financial revenues taxed; also, they started commercial operation in 4Q14. In full-year 2014, the Company reported a loss of R$ 35.7mn, compared to net profit of R$ 6.3mn in full-year

18 5.7. EBITDA Renova Energia S.A. R$ Change Net operational revenue (NOR) ,0% Net profit (35.723) ,7% (+) Income tax and Social Contribution tax ,5% (+) Depreciation ,6% (+) Financial expenses ,1% ( ) Financial revenues (53.082) (32.426) 63,7% Ebitda ,1% Ebitda margin 47,9% 69,9% -22, p.p. (+) Equity income (+) Gain / Loss on investments (+) SHPs financial adjustments ,3% (+) LER 2010 provision (4.464) Adjusted Ebitda ,3% Adjusted Ebitda margin 55,3% 73,2% -17,9 p.p. Adjusted Ebitda in full-year 2014 was R$ 167.4mn, with margin of 55.3%. The difference from 2013 mainly reflects: (i) higher administrative expenses due to higher expenditure on outsourced services, especially consultants, lawyers and personnel; (ii) higher manageable costs on purchase of electricity for resale and expenses on maintenance and operation; (iii) negative equity contribution from subsidiaries, due to amortization of goodwill for the acquisition of Brasil PCH; and (iv) the financial adjustment in generation both the latter being reversed in adjusted Ebitda. 18

19 6 CASH FLOW 2014 Cash Flow , , ,598 (32.925) Initial cash Operational Financing Cash Investments (4Q14)* 86,599 ( ) Investments Final Cash Cash Investments (total) Availabilities (total) * In the cash flow statements, cash investments are classified as investing activities. In full-year 2014 the Company s cash was reduced by R$ 46.0 mn, on the following main elements: Net outflow of R$ 32.9mn from operations. Net inflow of R$ 1.242bn in financing activities, mainly comprising: inflow of R$ 810.4mn (updated value) in the capital increase; inflow of R$ 215mn, the first tranche, of the BNDES bridge loan; entry of R$ 73.0mn the 1 st series of the Renova Eólica Infrastructure Debenture (for Alto Sertão II); and net inflow of R$ 129.2mn from the new corporate debenture that replaced the previous issue. Cash investments of R$ 7.4mn, in investment funds. R$ 1.262bn invested in construction of the Company s wind farms. 19

20 7 - MAIN INDICATORS FROM THE FINANCIAL STATEMENTS Balance Sheet Consolidated Assets Amounts in R$ thousands Consolidated Liabilities 12/31/ /31/ /31/ /31/2013 Current Assets 692, ,615 Current Liabilities 517,165 1,380,939 Cash and cash equiv. 86, ,598 Loans and Financing 355,442 1,100,134 Investments 509, ,449 Debentures ,239 Clients 68,627 20,923 Suppliers 100, ,418 Other 28,411 46,645 Others 60,639 27,148 Long-term Assets 4,849,587 3,230,564 Long-term Liabilities 2,515,436 1,290,640 Cauções e Depósitos 160, ,981 Loans and Financing 1,917, ,855 Others 8,745 1,098 Debentures 572, , ,312 - Other 26,070 11,757 Shareholder s Equity 2,509,641 1,000,600 Capital Stock 2,526, ,585 Fixed Assets in Use 2,175,130 1,459,662 Capital Reserve 55,176 55,067 Fixed As sets in Progress 1,791,913 1,645,823 Retained Los ses (71,775) (36,052) Sources for future capital increase - - Total Assets 5,542,242 3,672,179 Total Liabilities 5,542,242 3,672, Main variations in assets On December 31, 2014, the total cash position (cash and cash equivalents + cash investments) was R$ 595.6mn. The difference in the cash balance from December 31, 2013 mainly comprised: net inflow of cash from the capital increase; inflow of cash from new financings, mainly the BNDES bridge loan for Alto Sertão III, the corporate debenture, and settlement of the first series of debentures of Renova Eólica (Alto Sertão II) partially absorbed by conclusion of the works of Alto Sertão II, advances to suppliers for the projects already contracted, and progress on Alto Sertão III. In non-current assets: the account of deposits was R$ 36.5mn higher than at December 31, 2013, reflecting the special reserve account, O&M, and service of debt under the contract with the BNDES, principally for the 2009 LER wind farms. The purpose of the reserve is to guarantee full payment of installments and principal of the long-term debt to the BNDES. The Investments line refers to the investment in Chipley, the subsidiary that acquired the 51% equity interest in Brasil PCH. 20

21 Fixed assets in service was R$ 715.5mn higher than at December 31, 2013, due to the operational startup of the 2010 LER projects. During construction, Fixed assets under construction are accounted in Fixed assets in progress; after a wind farm starts operation it is accounted in Fixed assets in service Main variations in liabilities At December 31, 2014 the balance was R$ 755.1mn lower than at December 31, 2013, due to settlement of the bridge loans and part of the Notes raised for Alto Sertão II, following the release of the long-term financing. This amount was, thus, removed from current liabilities to noncurrent liabilities. In non-current liabilities, the Loans, financings and debentures line, in the full year, increase was R$ bn, including both the effects of the fourth quarter and also the disbursement of the long-term financing for Alto Sertão II. In Stockholders equity, the main variation in the quarter was the transfer of the Advances against Capital Increase, paid in by Cemig GT, to Share capital. In the full year, the change of R$ bn was principally due to the increase in capital, detailed above in item Financings The total of short and long-term loans and financings and debentures at the end of 2014 was R$ bn¹, comprised as shown in this table, which gives tenors and rates: Contract Tax R$ millin BNDES Salvador Eólica TJLP + 1,92% 583,145 BNDES (subcrédito social) TJLP 4,258 BNDES Bahia Eólica TJLP + 2,18% 285,231 BNDES (subcrédito social) TJLP 2,699 BNDES Renova Eólica TJLP + 2,45% 674,010 BNDES Renova Eólica TJLP + 2,60% 159,071 BNDES (subcrédito social) TJLP 1,323 BNDES - Ponte I TJLP + 3,65%/2,50% 215,094 Itaú (NP - ponte) 100% CDI + 0,98% 256,598 BNB² 9,5% a.a. 96,635 Debêntures - 3ª emissão Holding 123,45% CDI 500,269 Debêntures 1ª Série - Renova Eólica IPCA + 7,60% a.a. 74,343 Finep - CEOL Itaparica 3,5% a.a. 6,356 Total debt 2,859,032 Funding cost (13,340) End. líquido dos custos 2,845,692 Availabilities 509,018 Net debt³ 2,336, until 12 months Maturities timetabe (R$ million) After Total 21

22 ¹ The total represents the amount accounted, plus the interest generated, without considering the funding costs of the transactions. ² The financings have interest rates of 9.5% p.a. (which may be reduced to 8.08% under a 15% non-default bonus). ³ Cash equivalents plus cash investments. 22

23 8 - STOCK PRICE: RNEW11 ON THE BM&FBOVESPA This chart compares the stock price of RNEW11, the Bovespa index and the Brazilian electricity index, in the last 12 months. 50,00 RNEW11 R$ /01/15 40,00 30,00 20,00 10,00 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec ,00 400,00 300,00 200,00 100,00 RNEW11 x IBOVESPA x IEE - Jul-10 Sep-10 Nov-10 Jan-11 Mar-11 May-11 Jul-11 Sep-11 Nov-11 Jan-12 Mar-12 May-12 Jul-12 Sep-12 Nov-12 Jan-13 Mar-13 May-13 Jul-13 Sep-13 Nov-13 Jan-14 Mar-14 May-14 Jul-14 Sep-14 Nov-14 Jan-15 RNEW11 IBOV IEE Source: Bloomberg. 23

24 RNEW11¹ In R$ IPO (July 2010) Close of January 30, Highest price since IPO: Appreciation since IPO 221.2% Appreciation, LTM 23.5% Appreciation in % With the tools of the Company s website and the constant relationship with stockholders and potential investors at public events and events organized by investment banks, Renova s Investor Relations Department seeks to operate in a transparent relationship with the market, updating investors on its positioning, its projects under development and its outlook. The company s information and publications can be accessed on our website ( which also carries leading news on the sector that could be relevant to our business plan. ¹ Adjusted for coproate action. 9 STOCKHOLDING STRUCTURE Controlling Block 79.6% ON shares 59.1% total shares RR Participações Light Energia Cemig GT RR Participações 1 BNDESPAR FIP InfraBrasil FIP Caixa Ambiental Others 21,4% ON 0,0 % PN 15,9% total 21,4% ON 0,0% PN 15,9% total 36,8% ON 0,0% PN 27,3% total 3,5% ON 1,6% PN 3,0% total 3,9% ON 22,8% PN 8,8% total 4,9% ON 28,5% PN 11,0% total 2,3% ON 13,4% PN 5,1% total 5,8% ON 33,7% PN 13,0% total Base date: January 31, ¹ Shares held by RR Participações outside the controlling block. On January 31, 2015 the share capital of Renova was constituted as follows: RENOVA ENERGIA ON shares PN shares Total shares 236,845,392 81,810, ,655,422 For calculation of market share the total number of shares of Renova is divided by three (due to its trading in units one common share and two preferred shares), and multiplied by the price of the security RNEW11 on the date in question. 24

25 10 - GLOSSARY Alto Sertão I Alto Sertão II Alto Sertão III Alto Sertão III Phase A Aneel 14 wind farms owned by Renova in the interior of Bahia State, with installed capacity of MW, which contracted electricity sales in the 2009 Reserve Energy auction (LER). 15 Renova wind farms in the interior of Bahia State, with installed capacity of MW, which contracted electricity sales in the Reserve Energy (LER) Auction of 2010 and the A 3 Auction of Renova wind farms in the interior of Bahia, which sold supply in the 2012 (A 5) LEN Auction, in the 2013 LER auction, and in the Free Market, with total installed capacity of 736.8MW. 23 Renova wind farms in the interior of Bahia with installed capacity of 411.0MW, which sold power supply in the 2012 (A 5) LEN auction, the 2013 LER auction, and in the Free Market. Brazil s electricity regulator (Agência Nacional de Energia Elétrica National Electricity Agency). A 3 or A 5 Auctions New-build auctions to contract supply starting respectively 3 and 5 years ahead. CCEE ESPRA Free Market ICB ICSD LEN LER Mercado Livre I Mercado Livre II The Electricity Trading Chamber (Câmara de Comercialização de Energia Elétrica): Brazil s Wholesale Electricity Market. The company Energética Serra da Prata S.A., indirect subsidiary of Renova and holder and operator of Renova s three Small Hydro Plants. Contracting environment in which prices are freely negotiated between the consumer and the generating agent or trader. Cost-Benefit Index (Índice Custo Benefício) calculated by Aneel for new-build auctions. Debt servicing coverage index (Índice de Cobertura do Serviço da Dívida). New-build auction: Auction to contract energy supply to be provided by facilities yet to be built (Leilão de Energia Nova New Electricity Auction ). A Reserve Capacity auction (Leilão de Energia de Reserva Reserve Energy Auction). A Renova wind farm with installed capacity of 21.6MW, in the interior of Bahia State, which sold power supply in the Free Market. A group of eight Renova wind farms in the interior of Bahia, with installed capacity of 101.4MW, which sold power supply in the Free Market. 25

26 GLOSSARY (Page 2 of 2) Mercado Livre III MCPSE MRE O&M P50 P90 PCHs PLD PPA Proinfa Regulated market SHPs SPC A Renova wind farm in the interior of Bahia with installed capacity of 32.4 MW, which sold power supply in the Free Market. Electricity Sector Assets Property Management Manual (Manual de Controle Patrimonial do Setor Elétrico). Electricity Reallocation Mechanism (Mecanismo de Realocação de Energia). Operation and maintenance. An estimate of average electricity output for which the possibility of its being exceeded in the long term is estimated at 50%. Regarded as an average estimate for electricity production. An estimate of average electricity output for which the possibility of its being exceeded in the long term is estimated at 90%. Regarded as a conservative estimate for electricity production. SHPs Small Hydroelectric Plants (Pequenas Centrais Hidrelétricas, in Portuguese). The Spot Market Price (Preço de Liquidação das Diferenças Differences Settlement Price ), published weekly by the CCEE. Power Purchase Agreement contract to buy power supply. The Program to Encourage Alternative Sources of Electric Power (Programa de Incentivos às Fontes Alternativas de Energia). Contracting environment in which the tariffs practiced are laid down by the regulator, Aneel. Small Hydro Plants In Portuguese, PCHs (q.v.) Special-purpose company (in Portuguese, Sociedade de Propósito Específico or SPE ). In accordance with CVM Instruction 381 (of January 14, 2003), the Company reports that it has signed a contract with Deloitte Touche Tohmatsu Auditores Independentes ( Deloitte ) to provide services of auditing of the accounting and financial statements of the Company and its subsidiaries. 26

27 Individual and Consolidated Financial Statements As of December 31, 2014

28 CONTENTS (Page) Balance sheets... 3 Income statements... 5 Statements of comprehensive income... 6 Statements of changes in equity... 7 Statement of cash flows... 8 Statements of value added... 9 NOTES TO THE FINANCIAL STATEMENTS 1. General information Basis of preparation Basis of consolidation Authorizations Power sale Segment reporting Cash and cash equivalents and short-term investments Trade receivables Recoverable taxes Advances to suppliers Collaterals and restricted deposits Deferred taxes Investments Property, plant and equipment Trade payables Borrowings, financing and debentures Taxes payable Accounts payable / receivable - CCEE/Eletrobras Provision for civil, tax and labor risks Provision for environmental costs Equity and shareholders compensation Net revenue Costs and expenses Finance income (costs) Income tax and social contribution Related-party transactions Financial instruments and risk management Earnings per share Insurance coverage Commitments Non-cash transactions Events after the reporting date

29 BALANCE SHEETS As of December 31, 2014 In thousands of Brazilian reais - R$ Consolidated Parent ASSETS Note 12/31/ /31/ /31/ /31/2013 CURRENT ASSETS Cash and cash equivalents 7 86, ,598 28, ,686 Short-term investments 7 509, , ,027 - Trade receivables 8 68,627 20,923-1 Accounts receivable - CCEE Recoverable taxes 9 15,064 10,751 8,476 7,327 Prepaid expenses 721 2, ,480 Collaterals and restricted deposits , Dividends receivable ,452 Advances to suppliers 10 8,575 5,065 6,033 3,261 Other receivables 3,812 1,260 4,118 1,260 Total current assets 692, , , ,507 NONCURRENT ASSETS Accounts receivable - CCEE 18 6, Related parties ,063 26,589 Collaterals and restricted deposits , , Deferred taxes 12 2, Other receivables Investments ,312-1,973, ,779 Property, plant and equipment 14 2,175,130 1,459,662 30,285 14,614 Construction in progress 14 1,791,913 1,645, , ,086 Total noncurrent assets 4,849,587 3,230,564 2,817,524 1,217,634 TOTAL ASSETS 5,542,242 3,672,179 3,036,574 1,362,141 The accompanying notes are an integral part of these financial statements. 3

30 BALANCE SHEETS As of December 31, 2014 In thousands of Brazilian reais - R$ Consolidated Parent EQUITY AND LIABILITIES Note 12/31/ /31/ /31/ /31/2013 CURRENT LIABILITIES Trade payables , ,418 10,989 2,273 Borrowings and financing ,442 1,100, Debentures , ,239 Taxes payable 17 17,561 7,549 3,002 1,450 Payroll and related taxes 13,974 8,465 13,974 8,465 Accounts payable - CCEE/Eletrobras 18 22,339 8, Provision for social and environmental costs 20 6,686 2, Other payables Total current liabilities 517,165 1,380,939 28,215 23,439 NONCURRENT LIABILITIES Borrowings and financing 16 1,917, , Debentures , , , ,028 Deferred taxes Accounts payable - CCEE/Eletrobras 18 15,627 11, Related parties ,987 Provision for social and environmental costs 20 9, Provision for civil, tax and labor taxes Total noncurrent liabilities 2,515,436 1,290, , ,102 EQUITY 21 Capital 2,567,997 1,017,697 2,567,997 1,017,697 (-) Costs on issuance of shares (41,757) (36,112) (41,757) (36,112) Capital reserve 55,176 55,067 55,176 55,067 Accumulated losses (71,775) (36,052) (71,775) (36,052) Total equity 2,509,641 1,000,600 2,509,641 1,000,600 TOTAL LIABILITIES AND EQUITY 5,542,242 3,672,179 3,036,574 1,362,141 The accompanying notes are an integral part of these financial statements. 4

31 INCOME STATEMENTS As of December 31, 2014 In thousands of Brazilian reais - R$ Consolidated Parent Note 12/31/ /31/ /31/ /31/2013 NET OPERATING REVENUE , , COST OF SERVICES Depreciation 14 (80,380) (68,449) (2,305) (1,536) Operating costs (46,413) (18,154) (54) (137) Charges on use of distribution system (14,220) (11,437) - - Total 23 (141,013) (98,040) (2,359) (1,673) GROSS PROFIT (LOSS) 161, ,971 (2,258) (1,537) INCOME (EXPENSES) General and administrative (87,529) (38,306) (72,058) (29,764) Depreciation and amortization 14 (1,808) (1,077) (1,796) (1,070) Other expenses (2,672) (86) (1,436) (1,300) 23 (92,009) (39,469) (75,290) (32,134) Share of profit (loss) of subsidiaries (24,842) - 42,288 43,733 Loss on gain of equity interest (5,259) - (5,259) - Total (122,110) (39,469) (38,261) 11,599 PROFIT (LOSS) FROM OPERATIONS BEFORE FINANCE INCOME (COSTS) 39,744 88,502 (40,519) 10,062 FINANCE INCOME (COSTS) Finance income 53,082 32,426 33,640 21,713 Finance costs (113,142) (104,687) (28,844) (26,247) Total 24 (60,060) (72,261) 4,796 (4,534) (LOSS) PROFIT BEFORE INCOME TAX AND SOCIAL CONTRIBUTION (20,316) 16,241 (35,723) 5,528 Income tax and social contribution - current (15,925) (9,994) - - Income tax and social contribution - deferred Total 25 (15,407) (9,970) - - (LOSS) PROFIT FOR THE YEAR (35,723) 6,271 (35,723) 5,528 The accompanying notes are an integral part of these financial statements. 5

32 STATEMENTS OF COMPREHENSIVE INCOME As of December 31, 2014 In thousands of Brazilian reais - R$ Consolidated Parent 12/31/ /31/ /31/ /31/2013 (Loss) profit for the year (35,723) 6,271 (35,723) 5,528 Other comprehensive income TOTAL COMPREHENSIVE INCOME FOR THE YEAR (35,723) 6,271 (35,723) 5,528 The accompanying notes are an integral part of these financial statements. 6

33 STATEMENTS OF CHANGES IN EQUITY As of December 31, 2014 In thousands of Brazilian reais - R$ Capital Capital reserve Reserve of benefits to employees Funds Cost on settled with for future Total Reversal of Total issuance equity Accumulated capital parent s deferred consolidated Note Paid-in of shares instruments Goodwill losses increase equity charges equity BALANCES AT DECEMBER 31, ,017,557 (36,112) 52,274 1 (41,580) - 992,140 (743) 991,397 Capital increase - issuance of shares 21.b Recognition of share-based payment , ,792-2,792 Profit for the year ,528-5, ,271 BALANCES AT DECEMBER 31, ,017,697 (36,112) 55,066 1 (36,052) - 1,000,600-1,000,600 Funds for future capital increase 21.b ,550,072 1,550,072-1,550,072 Capital increase - issuance of shares 21.b Recognition of share-based payment Loss for the year (35,723) - (35,723) - (35,723) Costs on issuance of shares 21.c - (5,645) (5,645) - (5,645) Capitalization of funds for future capital increase 21.b 1,550, (1,550,072) BALANCES AT DECEMBER 31, ,567,997 (41,757) 55,175 1 (71,775) - 2,509,641-2,509,641 The accompanying notes are an integral part of these financial statements. 7

34 STATEMENT OF CASH FLOWS As of December 31, 2014 In thousands of Brazilian reais - R$ Consolidated Parent Note 12/31/ /31/ /31/ /31/2013 CASH FLOWS FROM OPERATING ACTIVITIES (Loss) profit for the year (35,723) 6,271 (35,723) 5,528 Adjustments to reconcile (loss) profit to cash (used in) provided by operating activities: Depreciation 14, 23 82,188 69,526 4,100 2,606 Finance charges on intragroup loans (net) (670) (1,019) Residual value of fixed assets disposed of 14 4,008 1,418 4,008 1,418 Interest on debentures and borrowings ,012 98,034 27,314 24,588 Recognition of costs on debentures and borrowings ,061 1, Interst on short-term investments and collaterals (33,435) (12,071) (13,047) - Provision CCEE/Eletrobras, net ,212 7, Deferred taxes 12 (1,123) (42) - - Expense on share-based payment Accrued bonuses 10,594 6,643 10,594 6,643 Loss (gain) on equity interests ,259-5,259 - Share of profit (loss) of subsidiaries ,842 - (42,288) (43,733) (Increase) decrease in operating assets: Trade receivables (47,704) Recoverable taxes (4,313) (3,656) (1,149) (691) Advances to suppliers (3,510) (755) (2,772) (515) Prepaid expenses 1,617 (194) 1,261 (1,302) Contas a receber - CCEE Other receivables (2,560) (351) (2,866) (350) Increase (decrease) in operating liabilities: Trade payables 20,998 12,071 8,716 (3,342) Taxes payable 18,021 11,035 1,552 (549) Payroll and accrued vacation (5,085) 276 (5,085) 276 Accounts payable - CCEE / Eletrobras 18.1 (4,151) (2,909) - - Other payables (95) (8) Payment of income tax and social contribution (8,009) (9,925) - - Payment of interest on borrowings and financing 16, 31 (192,624) (62,086) (81,183) - Indeminities paid 19 (8) - (8) - Dividends received ,494-35,879 11,920 Net cash (used in) provided by operating activities (32,925) 122,738 (85,563) 2,040 CASH FLOWS FROM INVESTING ACTIVITIES Capital contribution in investees 13, (180,645) (184,159) Short-term investments (244,474) (235,174) (157,981) - Collaterals and restricted deposits 7,417 (33,450) Purchase of property, plant and equipment 14, 31 (776,572) (980,965) (620,389) (136,289) Payment of property, plant and equipment purchased in prior years (226,657) (153,685) - - Intragroup loans - granted - - (56,458) (707) Intragroup loans - received ,082 45,997 Net cash used in investing activities (1,240,286) (1,403,274) (985,939) (275,158) CASH FLOWS FROM FINANCING ACTIVITIES Payment of shares 21.b 810, , Costs on issuance of shares 21.c (5,645) - (5,645) - Borrowings and financing 16, ,525 1,152, ,000 - Costs on debentures and borrowings 16 (3,149) (171) - (171) Borrowings repaid 16, 31 (517,912) (347,709) (301,883) - Intragroup loans - receivable Intragroup loans - payable - - (13,479) (290) Mútuo com partes relacionadas - concedidos Net cash provided by (used in) financing activities 1,242, , ,414 (202) Effect on cash and cash equivalents due to increase in equity interest in investee (14,964) DECREASE IN CASH AND CASH EQUIVALENTS (45,999) (475,524) (82,088) (273,320) Cash and cash equivalents at beginning of year 132, , , ,006 Cash and cash equivalents at end of year 86, ,598 28, ,686 DECREASE IN CASH AND CASH EQUIVALENTS (45,999) (475,524) (82,088) (273,320) The accompanying notes are an integral part of these financial statements. 8

35 STATEMENTS OF VALUE ADDED As of December 31, 2014 In thousands of Brazilian reais - R$ Consolidated Parent Note 12/31/ /31/ /31/ /31/2013 REVENUE Electric power sales , , Revenue from construction of own assets 122,646 81,161 51,401 42,518 INPUTS ACQUIRED FROM THIRD PARTIES Cost of sales (60,633) (29,591) (54) (137) Materials, power, outside services and other (69,250) (27,892) (52,549) (20,564) Gross value added 312, ,223 (1,086) 21,977 Depreciation and amortization 14, 23 (82,188) (69,526) (4,100) (2,606) NET WEALTH CREATED 230, ,697 (5,186) 19,371 WEALTH RECEIVED IN TRANSFER Share of profit (loss) of subsidiaries 13.3 (24,842) - 42,288 43,733 Finance income 24, 31 59,474 32,426 33,640 21,713 TOTAL WEALTH TO BE DISTRIBUTED 264, ,123 70,742 84,817 DISTRIBUTION OF WEALTH Personnel Payroll and related taxes 36,513 30,456 36,513 30,456 Management fees 1,821 1,869 1,821 1,869 Benefits 6,381 4,794 6,381 4,794 FGTS 2,594 1,602 2,594 1,602 Taxes and contributions: Federal 37,669 25,303 8,999 6,434 State Municipal Lessers and lessors: Interest 209, ,918 45,249 30,829 Rentals 3,606 2,168 3,606 2,168 Other 2,305 5,732 1,298 1,127 (Loss) profit for the year (35,723) 6,271 (35,723) 5,528 TOTAL WEALTH DISTRIBUTED 264, ,123 70,742 84,817 The accompanying notes are an integral part of these financial statements. 9

36 NOTES TO THE FINANCIAL STATEMENTS As of December 31, 2014 In thousands of Brazilian reais - R$ 1. General information Renova Energia S.A. ( Renova or Company or Parent ) is a publicly-held company enrolled with CNPJ under no / , with shares traded at BM&FBOVESPA ( BOVESPA ) under the Corporate Governance Level 2. Headquartered at Av. Roque Petroni Júnior, 999, 4 o andar, City of São Paulo, State of São Paulo, the Company is primarily engaged in the development, implementation and operation of projects for generation of energy from renewable sources wind, small hydroelectric plants (PCHs) and solar, and in the sale of power and related activities. The Company s corporate purposes are the generation and sale of power of all types, manufacturing of fuel from natural and renewable sources, provision of logistics supporting services to companies or environmental advisory companies, provision of advisory services for power solutions relating to the generation, sale, transmission and other businesses involving alternative power sources, provision of engineering, construction and logistics services, and development of studies and projects related to the power generation plants of all types and systems, as well as the implementation, operation, maintenance and development, manufacturing and sale of parts and equipment for power generation, transmission and distribution, operation in the electric power generation market through solar power generation equipment, including, but not limited to, sale of solar power and equipment for generation, transmission and distribution of solar power, processing of polysilicon, ingots, wafers, cells, panels, modules and inverters, sale, lease, rental or other type for provision of power generation assets, and investment in other companies capital. As of December 31, 2014, the Company holds equity interests in the following direct and indirect subsidiaries which are in the operating and preoperating stages and under construction ( Renova Group ): Equity interest - % 12/31/ /31/2013 PCH Consolidation Direct Indirect Direct Indirect Enerbras Centrais Elétricas S.A. (Holding) (a) Full Energética Serra da Prata S.A. (b) Full in Enerbras Renova PCH LTDA. (c) Full Chipley SP Participações S.A. (Holding) (d) Full Equity interest - % 12/31/ /31/2013 Wind Farms Consolidation Direct Indirect Direct Indirect Nova Renova Energia S.A. (Holding) (e) Full Bahia Eólica Participações S.A. (Holding) (e) Full in Nova Renova Centrais Eólicas Candiba S.A. (f) Full in Bahia Eólica Centrais Eólicas Igaporã S.A. (f) Full in Bahia Eólica Centrais Eólicas Ilhéus S.A. (f) Full in Bahia Eólica Centrais Eólicas Licínio de Almeida S.A. (f) Full in Bahia Eólica Centrais Eólicas Pindaí S.A. (f) Full in Bahia Eólica CONTINUED - 10

37 - CONTINUATION Equity interest - % 12/31/ /31/2013 Wind Farms Consolidation Direct Indirect Direct Indirect Salvador Eólica Participações S.A. (Holding) (e) Full in Nova Renova Centrais Eólicas Alvorada S.A. (f) Full in Salvador Eólica Centrais Eólicas Guanambi S.A. (f) Full in Salvador Eólica Centrais Eólicas Guirapá S.A. (f) Full in Salvador Eólica Centrais Eólicas Nossa Senhora Conceição S.A. (f) Full in Salvador Eólica Centrais Eólicas Pajeú do Vento S.A. (f) Full in Salvador Eólica Centrais Eólicas Planaltina S.A. (f) Full in Salvador Eólica Centrais Eólicas Porto Seguro S.A. (f) Full in Salvador Eólica Centrais Eólicas Rio Verde S.A. (f) Full in Salvador Eólica Centrais Eólicas Serra do Salto S.A. (f) Full in Salvador Eólica Renova Eólica Participações S.A. (Holding) (e) Full in Nova Renova Centrais Eólicas da Prata S.A. (g) Full in Renova Eólica Centrais Eólicas dos Araçás S.A. (g) Full in Renova Eólica Centrais Eólicas Morrão S.A. (g) Full in Renova Eólica Centrais Eólicas Seraíma S.A. (g) Full in Renova Eólica Centrais Eólicas Tanque S.A. (g) Full in Renova Eólica Centrais Eólicas Ventos do Nordeste S.A. (g) Full in Renova Eólica Centrais Eólicas Ametista S.A. (h) Full in Renova Eólica Centrais Eólicas Borgo S.A. (h) Full in Renova Eólica Centrais Eólicas Caetité S.A. (h) Full in Renova Eólica Centrais Eólicas Dourados S.A. (h) Full in Renova Eólica Centrais Eólicas Espigão S.A. (h) Full in Renova Eólica Centrais Eólicas Maron S.A. (h) Full in Renova Eólica Centrais Eólicas Pelourinho S.A. (h) Full in Renova Eólica Centrais Eólicas Pilões S.A. (h) Full in Renova Eólica Centrais Eólicas Serra do Espinhaço S.A. (h) Full in Renova Eólica Alto Sertão Participações S.A. (Holding) (e) Full Diamantina Eólica Participações S.A. (Holding) (e) Full in Alto Sertão Centrais Eólicas São Salvador S.A. (i) Full in Diamantina Centrais Eólicas Abil S.A. (former Centrais Eólicas Bela Vista VIII LTDA.) (j) Full in Diamantina Centrais Eólicas Acácia S.A. (former Centrais Eólicas Bela Vista XII LTDA.) (j) Full in Diamantina Centrais Eólicas Angico S.A. (former Centrais Eólicas Bela Vista XIII LTDA.) (j) Full in Diamantina Centrais Eólicas Folha da Serra S.A. (former Centrais Eólicas Bela Vista XVI LTDA.) (j) Full in Diamantina Centrais Eólicas Jabuticaba S.A. (former Centrais Eólicas Bela Vista XVII LTDA.) (j) Full in Diamantina Centrais Eólicas Jacarandá do Serrado S.A. (former Centrais Eólicas Bela Vista XVIII LTDA.) (j) Full in Diamantina Centrais Eólicas Taboquinha S.A. (former Centrais Eólicas Bela Vista XIX LTDA. ) (j) Full in Diamantina Centrais Eólicas Tabua S.A. (former Centrais Eólicas Bela Vista XX LTDA.) (j) Full in Diamantina Centrais Eólicas Vaqueta S.A. (former Centrais Eólicas Itapuã VIII LTDA.) (j) Full in Diamantina Centrais Eólicas Unha d'anta S.A. (former Centrais Eólicas Itapuã XVI LTDA.) (k) Full in Diamantina Centrais Eólicas Cedro S.A. (k) Full in Diamantina Centrais Eólicas Vellozia S.A. (former Centrais Eólicas Itapuã III LTDA.) (k) Full in Diamantina Centrais Eólicas Angelim S.A. (former Centrais Eólicas Bela Vista VI LTDA.) (k) Full in Diamantina Centrais Eólicas Facheio S.A. (former Centrais Eólicas Itapuã XXI LTDA.) (k) Full in Diamantina Centrais Eólicas Sabiu S.A. (former Centrais Eólicas Riacho de Santana LTDA.) (k) Full in Diamantina Centrais Eólicas Barbatimão S.A. (former Centrais Eólicas Bela Vista II LTDA.) (k) Full in Diamantina Centrais Eólicas Juazeiro S.A. (former Centrais Eólicas Bela Vista V LTDA.) (k) Full in Diamantina Centrais Eólicas Jataí S.A. (former Centrais Eólicas Itapuã IX LTDA.) (k) Full in Diamantina Centrais Eólicas Imburana Macho S.A. (former Centrais Eólicas Bela Vista III LTDA.) (k) Full in Diamantina Centrais Eólicas Amescla S.A. (former Centrais Eólicas Bela Vista IV LTDA.) (k) Full in Diamantina Centrais Eólicas Umbuzeiro S.A. (former Centrais Eólicas Itapuã XVIII LTDA.) (k) Full in Diamantina Centrais Eólicas Pau d'água S.A. (former Centrais Eólicas Santana LTDA.) (k) Full in Diamantina Centrais Eólicas Manineiro S.A. (former Centrais Eólicas Itapuã XIV LTDA.) (k) Full in Diamantina Centrais Elétricas Botuquara S.A. (k) Full Centrais Eólicas Anísio Teixeira S.A. (former Centrais Eólicas Arapuã LTDA.) (k) Full Centrais Eólicas Cabeça de Frade S.A. (former Centrais Eólicas Bela Vista I LTDA.) (k) Full Centrais Eólicas Canjoão S.A. (former Centrais Eólicas Itapuã II LTDA.) (k) Full Centrais Eólicas Carrancudo S.A. (former Centrais Eólicas Itapuã XI LTDA.) (k) Full Centrais Eólicas Conquista S.A. (k) Full Centrais Eólicas Coxilha Alta S.A. (k) Full Centrais Eólicas Ipê Amarelo S.A. (former Centrais Eólicas Itapuã XIX LTDA.) (k) Full Centrais Eólicas Jequitiba S.A. (former Centrais Eólicas Itapuã I LTDA.) (k) Full Centrais Eólicas Macambira S.A. (former Centrais Eólicas Bela Vista XI LTDA.) (k) Full Centrais Eólicas Tamboril S.A. (former Centrais Eólicas Itapuã XIII LTDA.) (k) Full Centrais Eólicas Tingui S.A. (former Centrais Eólicas Itapuã VI LTDA.) (k) Full CONTINUED 11

38 - CONTINUATION Equity interest - % 12/31/ /31/2013 Holding Consolidation Direct Indirect Direct Indirect Renovapar S.A. (m) Full Equity interest - % 12/31/ /31/2013 Wind Farms Consolidation Direct Indirect Direct Indirect Centrais Eólicas Alcacuz S.A. (former Centrais Eólicas Itapuã X LTDA.) (k) Full Centrais Eólicas Caliandra S.A. (former Centrais Eólicas Bela Vista VII LTDA.) (k) Full Centrais Eólicas Cansanção S.A. (former Centrais Eólicas Recôncavo I LTDA.) (k) Full Centrais Eólicas Embiruçu S.A. (former Centrais Eólicas Itapuã XII LTDA.) (k) Full Centrais Eólicas Ico S.A. (former Centrais Eólicas Bela Vista IX LTDA.) (k) Full Centrais Eólicas Imburana de Cabão S.A. (former Centrais Eólicas Itapuã XVII LTDA.) (k) Full Centrais Eólicas Lençóis S.A. (k) Full Centrais Eólicas Putumuju S.A. (former Centrais Eólicas Bela Vista X LTDA.) (k) Full Centrais Elétricas Itaparica S.A. (k) Full Centrais Eólicas Bela Vista XIV LTDA. (k) Full Centrais Eólicas Bela Vista XV LTDA. (k) Full Centrais Eólicas Itapuã IV LTDA. (k) Full Centrais Eólicas Itapuã V LT DA. (k) Full Centrais Eólicas Itapuã VII LTDA. (k) Full Centrais Eólicas Itapuã XV LTDA. (k) Full Centrais Eólicas Itapuã XX LT DA. (k) Full Centrais Eólicas Umburanas 1 S.A. (k) Full Centrais Eólicas Umburanas 2 S.A. (k) Full Centrais Eólicas Umburanas 3 S.A. (k) Full Centrais Eólicas Umburanas 4 S.A. (k) Full Centrais Eólicas Umburanas 5 S.A. (k) Full Centrais Eólicas Umburanas 6 S.A. (k) Full Centrais Eólicas Umburanas 7 LTDA. (k) Full Centrais Eólicas Umburanas 8 LTDA. (k) Full Centrais Eólicas Umburanas 9 LTDA. (k) Full Centrais Eólicas Umburanas 10 LTDA. (k) Full Centrais Eólicas Umburanas 11 LTDA. (k) Full Centrais Eólicas Umburanas 12 LTDA. (k) Full Centrais Eólicas Umburanas 13 LTDA. (k) Full Centrais Eólicas Umburanas 14 LTDA. (k) Full Centrais Eólicas Umburanas 15 LTDA. (k) Full Centrais Eólicas Umburanas 16 LTDA. (k) Full Centrais Eólicas Umburanas 18 LTDA. (k) Full Equity interest - % 12/31/ /31/2013 Power Sale Consolidation Direct Indirect Direct Indirect Renova Comercializadora de Energia S.A. (l) Full Equity interest - % Shared control 12/31/ /31/2013 PCH (not consolidated) Direct Indirect Direct Indirect Brasil PCH S.A. (n) Indirect by Chipley (a) Enerbras Centrais Elétricas S.A. ( Enerbras ), a direct subsidiary, is a privately-held company, headquartered in the State of Bahia, exclusively engaged in holding equity interest in Energética Serra da Prata S.A. ( Espra ). (b) Energética Serra da Prata S.A. ( Espra ), an indirect subsidiary, is a privately-held company, exclusively engaged in the generation and sale of electric power from Serra da Prata Hydroelectric Complex, which are comprised of PCHs Cachoeira da Lixa, Colino I and Colino II, located in the State of Bahia. Under an authorization regime, 100% of its production is contracted with Centrais Elétricas Brasileiras ( Eletrobras ), in the context of the Alternative Electric Power Source Incentive Program (PROINFA). Espra started operations in

39 (c) Renova PCH Ltda. ( Renova PCH ), a direct subsidiary, is mainly engaged in the construction, implementation, operation, maintenance and generation of water source power. The company is in the preoperating stage. (d) Chipley SP Participações S.A. ( Chipley ) is a privately-held company, mainly engaged in holding equity interests in other businesses, as partner or shareholder, which may include participating in consortia, and operating, directly or indirectly, as the case may be, electric power services, encompassing generation systems and other related services. (e) Privately-held companies, headquartered in São Paulo, which are mainly engaged in holding equity interests in other companies that operate, directly or indirectly, in the wind power generation. (f) Privately-held companies which are mainly engaged in the design, implementation, development and operation of specific wind farm, located in the State of Bahia. Under an authorization regime, 100% of its production is contracted with the Electric Power Trade Chamber ( CCEE ), in the context of the Reserve Auction 2009 ( LER 2009 ). (g) Privately-held companies which are mainly engaged in the design, implementation, development and operation of specific wind farm, located in the State of Bahia. Under an authorization regime, 100% of its production is contracted with CCEE, in the context of the Reserve Auction 2010 ( LER 2010 ). (h) Privately-held companies which are mainly engaged in the design, implementation, development and operation of specific wind farm, located in the State of Bahia. Under an authorization regime, 100% of its production is contracted with those distributors which declared demand in the New Power Auction 2011 ( LEN 2011 [A- 3] ). The wind farms are under construction. (i) Centrais Eólicas São Salvador S.A. ( São Salvador ), direct subsidiary, is a privately-held company specifically engaged in the design, implementation, development and operation of São Salvador wind farm, located in the State of Bahia. Under an authorization regime, 1005 of its production is contracted with those distributors which declared demand in the New Power Auction 2012 ( LEN 2012 [A-5]). The wind farm is under implementation. (j) Direct subsidiaries which are mainly engaged in the design, implementation, development and operation of specific wind farm, located in the State of Bahia. Under an authorization regime, 100% of its production is contracted with CCEE, in the context of the Reserve Auction 2013 ( LER 2013 ). The wind farm is under implementation. (k) Direct subsidiaries which are mainly engaged in the construction, implementation, operation, maintenance and generation of wind power. These companies are under implementation. (l) Renova Comercializadora de Energia S.A. ( Renova Comercializadora ), a direct, wholly-owned subsidiary, which is mainly engaged in the sale of power of all types. (m) Renovapar S.A. ( Renovapar ), a direct subsidiary, wholly-owned subsidiary, is a privately-held company, mainly engaged in holding equity interests in other companies which operate, directly or indirectly, in the generation and sale of power of all types. (n) Brasil PCH S.A. ( Brasil PCH ) is a privately-held company, mainly engaged in holding equity interests in other businesses, as partner or shareholder, which may include conducting activities related to the management, construction, planning, operation, maintenance and development of renewable electric power generation 13

40 projects through PCHs. As required by CVM Instruction 381/03, we disclose that in the year ended December 31, 2014 independent auditors Deloitte Touche Tohmatsu Auditores Independentes ( Deloitte ), which provides services to the Company and its subsidiaries and jointly-controlled subsidiaries, did not conduct any services not related to external audit that accounted for more than 5% of the annually contracted fees. 1.1 Admission of Cemig Geração e Transmissão S.A. ( CEMIG GT ) to the Company s controlling block On September 29, 2014, CEMIG GT subscribed and paid in 87,186,035 common shares issued by Renova, in the total amount of R$1,550,072, through the capitalization of an advance for future capital increase, in the amount of R$810,129, made on March 31, 2014 and through the assignment to Renova of the amount relating to the advance for future capital increase in Chipley on February 14, 2014, in the amount of R$739,943. Upon the subscription and payment, a new Shareholders Agreement was entered into between Cemig GT, RR Participações and Light Energia. On October 27, 2014, the Company s Board of Directors meeting approved the capital increase made by CEMIG GT, which subscribed and paid in 87,186,035 common shares issued by Renova, in the total amount of R$1,550,072, of which R$810,129 through the capitalization of the advance for future capital increase made in the Company and R$739,943 through assignment to the Company of the advance for future capital increase made by CEMIG GT in Chipley. In addition to CEMIG GT, preemptive rights relating to 10,866 common shares were exercised by the Company s other shareholders, totaling 87,196,901 subscribed and paid-in common shares, in the total amount of R$1,550, Acquisition of the shared control of Brasil PCH As disclosed by Renova in the material facts issued on August 8, 2013 and October 28, 2013, the Company s subsidiary Chipley SP Participações S.A. acquired, on February 14, 2014, 51% of the shares in Brasil PCH, thus sharing its control. Brasil PCH holds 13 small hydroelectric plants (PCHs), with an installed capacity of 291 MW and average guaranteed power of 194 MW. All PCHs have long-term agreements (20 years) for the sale of electric power in the context of PROINFA (physical information and information relating to power capacity measures not audited by the independent auditors). The total amount of the acquisition of Brazil PCH was R$754,906, which comprises: (i) R$739,943 paid on February 14, 2014; (ii) R$23,522 paid on August 14, 2014 as a purchase price acquisition; less (iii) R$8,559 relating to the recognition and receipt of dividends originally due to the sellers of the shares in Brasil PCH. Because the company control is shared, Chipley s equity interest in Brasil PCH is recorded under the equity method, as required by IFRS 11 / CPC 19 (R2) Joint Arrangements. 14

41 Additional information on the acquisition of jointly-controlled subsidiary Brasil PCH a) Considerations transferred Brasil PCH Considerations transferred: Cash transferred in cash and cash equivalents directly to shareholders 739,943 Price adjustment 23,522 Dividends originally due to the sellers of shares in Brasil PCH (8,559) Net cash from acquisition 754,906 b) Allocation of purchase price The acquisition value paid was allocated to Brasil PCH s assets and liabilities at fair values, including those intangible assets associated to the right to operate each authorization, which will be amortized over the remaining terms of the authorizations for the PCHs acquired. Consequently, as total amount paid was allocated to identifiable assets and liabilities, no residual value was allocated to goodwill. The purchase price allocation in accordance with the standards applicable to business combinations was made in the fourth quarter of 2014 and was supported by a business appraisal report prepared by an independent firm in conjunction with analyses conducted by the Company s management. The acquisition of Brasil PCH was initially accounted for as of January 31, 2014, and the fair value of Brasil PCH s assets and liabilities as of the acquisition date is shown below: Brasil PCH Assets Cash and cash equivalents 131,139 Trade receivables 34,047 Property, plant and equipment 1,593,984 Intangible assets - concession arrangement 1,785,877 Other assets 118,517 Total assets 3,663,564 Liabilities and equity Trade payables Borrowings and financing 1,327,522 Deferred taxes 687,101 Other liabilities 157,716 Equity 1,480,208 Total liabilities and equity 3,663,564 15

42 1.3 Commercial operation of wind farms under LER 2010 and LEN 2011 (A-3) The Reserve Power Agreements sets forth that the wind farms under LER 2010 shall start commercial operations on September 1, However, ANEEL Decision 1317, of April 28, 2014, changed this date so that it could coincide with the date on which Igaporã II Substation, under the responsibility of Companhia Hidro Elétrica do São Francisco ( Chesf ), starts commercial operations, granted an additional term of 30 days for the wind farms to start commercial operations, as from the date Igaporã II Substation starts commercial operations, and maintained the original date for ending the supply period under the agreement. In March 2014, the Company reversed the provisions previously recognized to meet the reimbursement amount due by the SPEs (clause 11 of the Reserve Power Agreement), in the amount of R$7,399, recorded in balance sheet line item Trade payables CCEE/Eletrobras, R$4,645 out of which relating to the year ended December 31, 2014 (see note 23). For the New Power Agreements under LEN 2011 (A-3), ANEEL Decision 571, of March 11, 2014, changed the starting supply date of CCEARs so that it could coincide with the date on which the transmission facilities under Concession Arrangement 19/2012 start commercial operations, granted an additional term of 30 days for starting commercial activities, as from the date the transmission facilities are made available, and maintained the supply period of 19 years and 10 months under the agreement. The wind farms under LER 2010 started commercial operations on October 11, 2014, under ANEEL Decision Regarding LEN 2011 (A-3), four of the nine farms were connected to the same transmission line as that which serves the farms under LER 2009 and LER 2010 (Igaporã II). The other five farms will be connected to Igaporã III line, which, according to the Transmission Projects Schedule (SIGET/ANEEL), is scheduled to be delivered on August 12, On March 4, 2015, four, out of the nine, farms which traded power under LEN 2011 (A-3) started commercial operations (see note 32.2). 1.4 Impact of new laws Provisional Act 627/2013 ( MP 627 ) Law 12973/2014 On November 11, 2013, MP 627 was enacted and significantly changed the income tax and social contribution rules, among others. The provisions set forth in MP 627 will become mandatory beginning calendar year 2015, with early adoption beginning 2014 being allowed. Management analyzed the tax effects of new provisions and concluded that the distributions of dividends and/or interest on capital were not greater than those recorded in accordance with accounting methods and criteria effective as at December 31, Accordingly, according to Management, no additional tax charges will be recorded in addition to the profit sharing over the last five years. Management elected to early adopt such rules beginning calendar year MP 627 was converted into Law 12973, of May 13,

43 2. Basis of preparation 2.1 Statement of compliance The individual and consolidated financial statements have been prepared in accordance with accounting practices adopted in Brazil ( BR GAAP ) and with the International Financial Reporting Standards ("IFRS") issued by the International Accounting Standards Board (IASB), which include the Brazilian Corporate Law, which encompasses the provisions of Laws 11638/07 and 11941/09; technical pronouncements, guidelines and interpretations issued by the Accounting Pronouncements Committee (CPC) and the standards set forth by the Brazilian Securities and Exchange Commission (CVM). The Company also follows the guidance in the Accounting Manual for the Brazilian Electricity Industry and standards established by ANEEL. Pursuant to CPC 43 (R1), the profit reported in the individual financial statements for the year ended December 31, 2013 differs from that reported in the consolidated financial statements due to the existence of deferred charges not yet amortized in the Parent. The profit reconciliation for the year ended December 31, 2013 is detailed in note 2.2. The individual and consolidated financial statements, expressed in thousands of reais and rounded to the nearest thousand, unless other stated, were approved for issuance, filing with CVM and submittal to the Annual Shareholders Meeting, as authorized by the Board of Directors, on March 04, Reconciliation of the Parent (CPC) and consolidated financial statements (IFRS) to the comparative figures for the year ended December 31, The profit reconciliation for the year ended December 31, 2013 is shown as follows: Profit for the year 12/31/2013 Parent (CPC) 5,528 Write-off of deferred charges and reversal of the respective amortization in profit (loss) 743 Consolidated (IFRS) 6, Basis of measurement The individual and consolidation financial statements have been prepared based on the historical cost, except for the valuation of certain noncurrent assets such as financial instruments, which are stated at fair value. 17

44 2.4 Functional and reporting currency The individual and consolidated financial statements are expressed in Brazilian reais (R$), which is the Company s functional currency. The financial information is presented in thousands of Brazilian reais, unless otherwise stated. 2.5 Use of estimates and judgments The preparation of individual and consolidated financial statements pursuant to the accounting practices adopted in Brazil ( BR GAAP ) and IFRSs requires Management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results could differ from those estimates. The notes to the financial statements that require the adoption of assumptions and estimates that are subject to higher uncertainties and exposed to a risk that could result in a material adjustment if such assumptions and estimates are significantly changed within the next fiscal year are as follows: Property, plant and equipment (Note 14). Payables/receivables to/from CCEE and Eletrobras (note 18); Provision for social and environmental costs (note 20) Provision for civil, tax and labor risks (note 19). Related-party transactions - Stock option plan (note 26.4); and Financial instruments and risk management (note 27). 2.6 Reclassification of account balances For better presentation and comparability of the balance sheet and statement of cash flows, the Company reclassified the amount of R$2,016 from trade payables to provision for social and environmental costs whereas collaterals and restricted deposits were reclassified from operating activities to investing activities, respectively. 2.7 Significant accounting policies The accounting policies described below are consistently applied to all reporting periods presented in these individual and consolidated financial statements. a) Financial instruments and risk management (note 27) Financial assets and financial liabilities are recognized when the Company or its subsidiaries are parties to the underlying contracts. Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, if applicable, after initial recognition. 18

45 a.1) Categories of financial instruments Classified according to Management s intent to hold the financial assets and liabilities acquired or contracted, which is determined at the initial recognition of financial instruments. The Company s and its subsidiaries financial assets and financial liabilities were classified as follows: Financial assets: Measured at fair value through profit or loss These are financial assets held for trading, when acquired for such purpose, mainly in short term, and are stated at fair value on the balance sheet date, whose variations are recorded in profit or loss. Derivative financial instruments are also classified in this category. Assets in this category are classified in current assets. The Company and its subsidiaries classified cash and cash equivalents in this category (note 7). Cash and cash equivalents include cash and short-term investments with maturities of three months or less at the contracting date, which are subject to an insignificant risk of change in value, and are used to manage short-term obligations. Receivables Include non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are recorded in current assets, except for maturities greater than 12 months after the balance sheet date, which are classified as noncurrent assets, where applicable. The Company and its subsidiaries have the following main financial assets classified in this category: Trade receivables (note 8). Receivables - CCEE (note 18); Collaterals and restricted deposits (note 11); and Related-party transactions (note 26). Financial liabilities Other Other financial liabilities are stated at amortized cost under the effective interest method. As at December 31, 2013 and 2012, the Company s and its subsidiaries main financial liabilities comprise: Trade payables (note 15); Borrowings, financing and debentures (note 16); Provision for social and environmental costs (note 20) Payables CCEE/Eletrobras (note 18); and Related-party transactions (note 26). 19

46 Derivatives As at December 31, 2014 and 2013, the Company and its subsidiaries do not have derivative financial instruments. a.2) Offsetting financial instruments Financial assets and financial liabilities are offset and the net amount is presented in the balance sheet when, and only when, there is a legally enforceable right to set off recognized amounts and the intent to either settle them on a net basis, or to recognize the asset and settle the liability simultaneously. a.3) Capital Common shares are classified in equity. Additional costs directly attributable to share issuance are recognized as a deduction from equity, net of taxes. Preferred shares are nonvoting and have preemptive rights in the liquidation of its interest in the capital. As provided for by bylaws and when determined at the end of the year, minimum mandatory dividends are recognized as liabilities, as described in Note 21.c. a.4) Impairment of financial assets A financial asset not measured at fair value through profit or loss is valued at the end of the reporting period to determine whether there is any objective evidence that it is impaired, which can occur after the asset s initial recognition and have an adverse impact on projected future cash flows. The Company and its subsidiaries test all significant receivables and investment securities held to maturity for impairment, both individually and in aggregate. Held-to-maturity receivables and investments that are not individually significant are collectively assessed for impairment by grouping together securities with similar risk characteristics. In assessing collective impairment the Company uses historical trends of the probability of default, the timing of recoveries and the amount of loss incurred, adjusted for management s judgment as to whether current economic and credit conditions are such that the actual losses are likely to be greater or less than suggested by historical trends. An impairment of a financial asset measured at amortized cost is calculated as the difference between the carrying amount and the present value of estimated future cash flows, discounted at the effective original interest rate of the financial asset. Losses are recognized in profit or loss in an allowance account against receivables. Interest on an impaired asset continues to be recognized through the reversal of the discount. When a subsequent event indicates the reversal of impairment, the impairment loss is reversed and recognized in profit or loss. b) Foreign currency Foreign currency-denominated transactions are translated into the functional currency of the Company and its subsidiaries at the exchange rates prevailing at the dates of the transactions. Monetary assets and liabilities denominated and determined in foreign currencies at the reporting date are translated into the functional currency at the exchange rates prevailing on that date. Exchange rate changes on monetary items are recognized in profit or loss for the year in which they are incurred or capitalized, where applicable. 20

47 c) Investments in subsidiaries and jointly controlled entities (note 13) Investments in subsidiaries and jointly-owned entities are accounted for under the equity method. The Company s shared control acquisitions are accounted for under the acquisition method. The consideration transferred in a business combination is measured at fair value. d) Property, plant and equipment (note 14) Recognition and measurement Property, plant and equipment items are measured are the historical purchase or construction cost, less accumulated depreciation and accumulated impairment losses, when necessary. The cost of assets constructed by the Company includes the cost of materials and direct labor, any other costs to place the asset in proper location and condition to operate as expected by Management, the disassembly and recovery costs of the place where these assets are located, if applicable, and borrowings and financing costs and interest obtained from third parties capitalized during the construction stage, less finance income from third-party resources not used, if applicable. The interest and other financial charges from financing related to the work in progress are rcorded in property, plant and equipment in progress. In relation to those resources raised specifically for certain work, the charges are allocated directly to the financed assets. With respect to the other borrowings and financing not related directly to specific work, the capitalization cost rate of these borrowings is established. Depreciation Property, plant and equipment items are depreciated on a straight-line basis in profit or loss for the year based on the estimated economic useful life of each item. Land is not depreciated. Property, plant and equipment items are depreciated as from the date they are installed and available for use or, in the case of internally built assets, on the day construction is completed and the asset is available for used. The depreciation rates are in accordance with Normative Instruction 474/12, issued by ANEEL, which changes tables I and XVI of the Power Sector Equity Control Guide (MCPSE), approved by Normative Resolution 367/09. The depreciation rates reflect the useful life of assets and are used by the Company and its subsidiaries for depreciation of property, plant and equipment. As the regulatory agency or the concession grantor issue new information or decisions, the current depreciation term for such assets may be changed. e) Impairment of fixed and intangible assets At the end of each year, the Company and its subsidiary review the carrying amounts of their fixed and intangible assets to determine if there are any indications that the assets might be impaired. When such indication exists, the recoverable amount of the asset is estimated to measure the impairment loss, if any. Where it is not possible to estimate the recoverable amount of an individual asset, the Company and its subsidiaries estimate the recoverable amount of the cash-generating unit to which the asset belongs. Where a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation basis can be identified. 21

48 Intangible assets with indefinite useful lives or not yet available for use are tested for impairment at least once a year and whenever there is any indication that the asset may be impaired. Recoverable amount is the higher of fair value less costs to sell and value in use. Estimated future cash flows are discounted to present value to determine the value in use at the pretax discount rate that reflects a current market assessment rate of the time value of money and the risks specific to the asset for which the future cash flow estimate was not adjusted. If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. Impairment losses are immediately recognized in profit or loss. When the impairment loss is subsequently reversed, the carrying amount of the asset (or cash-generating unit) increases to the revised estimate of its recoverable value provided that it does not exceed the carrying amount that would have been obtained had no impairment losses been recognized for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognized immediately in profit or loss. f) Environmental licenses The previous environmental and installation licenses, obtained during the planning and installation of the undertaking, in sequence, are recognized as cost of assets of small hydroelectric plants, wind farms and solar generation plants. g) Employee benefits Short-term employee benefits Short-term employee benefit obligations are measured on an undiscounted basis and incurred as expenses as the related service is provided. Share-based payment arrangements The share-based compensation plan for employees and other similar service providers is measured at the fair value of the equity instruments at grant date. Details on the determination of the fair value of these plans are shown in note The fair value of options granted set on grant date is recognized on a straight-line basis as expenses in profit or loss for the year or capitalized during the construction of the wind farms of jointly-controlled subsidiaries over the vesting period, based on Management s estimates on which options granted will become eventually vested, with a corresponding increase in equity. At the end of each year, Management reviews its estimates on the number of equity instruments that will become vested. The transactions that result in share-based payments, which are settled using equity instruments, to third parties, except employees and executives, are measured at the fair value of the goods or services received. When the fair value cannot be reliably estimated, the transactions are measured at the fair value of the equity instruments granted on the date goods or services are received. 22

49 h) Provisions A provision is recognized for present obligations (legal or constructive) as a result of past events, when the amount of the obligation can be reliably estimated, and its settlement is probable. The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation at the end of each reporting period, taking into account the risks and uncertainties surrounding the obligation. When a provision is measured based on the estimated cash flows to settle an obligation, its carrying amount corresponds to the present value of such cash flows (where the effect of the time value of money is material). When some or all the economic benefits required to settle a provision are expected to be recovered from a third party, an asset is recognized if, and only if, reimbursement is virtually certain and the amount can be reliably measured. i) Profit or loss Revenue and expenses are recorded on the accrual basis. Revenue from power sale is recognized in profit or loss upon supply, measurement or contractual condition. Revenue is not recognized when there is significant uncertainty as to its realization. Finance income consists basically of interest income on short-term investments and relatedparty loans. Interest income is recognized in profit or loss under the effective interest method. Finance costs basically comprise interest on borrowings and financing. Borrowing costs that are not directly attributable to the acquisition, construction or production of a qualifying asset are recognized in profit or loss under the effective interest method. j) Income tax and social contribution Current tax For the Company and some subsidiaries, current income tax for the year is calculated at the rate of 15%, plus a surtax of 10% on taxable income exceeding R$240, and current social contribution is calculated at the rate of 9% on taxable income; this calculation takes into consideration tax loss carryforwards, limited to 30% of taxable income. Current tax is the tax payable or receivable/to be offset against profit or taxable loss. As permitted by tax legislation, certain consolidated subsidiaries opted for taxation based on deemed income. Under this regime, the income tax calculation basis is calculated at the rate of 8% on gross revenues from power generation and 100% on finance income, subject to regular rate of 15%, plus a 10% surtax for income tax. The social contribution calculation basis is calculated at the rate of 12% on gross revenues from power generation and 100% on finance income, subject to regular rate of 9%. 23

50 Deferred tax Deferred income tax and social contribution ( deferred taxes ) are recognized on temporary differences at the end of each year distributed between asset and liability balances recognized in the financial statements and the corresponding tax basis used to determine taxable income, including tax losses, when applicable. The recovery of the deferred tax asset balance is reviewed at the end of each year and, when it is no longer probable that future taxable income will be available to allow the recovery of all or part of the asset, the asset balance is adjusted based on the expected recoverable amount. Deferred tax assets and liabilities are measured at the tax rates applicable for the year in which the liability is expected to be settled or the asset realized, based on the tax rates set forth in the tax law prevailing at the end of each reporting period, or when a new legislation has been substantially approved. k) Earnings per share Basic earnings per share are calculated by dividing net profit (loss) for the year attributed to the holders of common and preferred shares of the parent entity by the weighted average number of common and preferred shares outstanding during the year, less treasury shares. Diluted earnings per share is calculated by dividing profit (loss) for the year attributable to the holders of the Parent s common and preferred shares by the weighted average number of common and preferred shares available during the year, plus the weighted average number of common shares issued on the assumption of exercise of stock options with strike price lower than fair value, less treasury shares. l) Segment reporting (note 6) Revenue and expenses from segments include items directly attributable to the segment, as well as those that may be allocated on reasonable basis. m) Statements of value added The Company has prepared individual and consolidated statements of value added (DVA) in accordance with CPC 09 Statement of Value Added, which are presented as an integral part of the financial statements according to this CPC applicable to publicly-held companies, whereas they represent additional disclosure for IFRS. n) Adoption of new and/or revised accounting pronouncements, guidelines and interpretations Amendments to IFRS and new interpretations mandatory for application beginning the current year In the current year, the Company and its subsidiaries applied several amendments and new interpretations to IFRSs and CPCs issued by IASB and CPC, the application of which became mandatory for accounting periods beginning January 1, Amendments to CPC 39 Presentation of Net Financial Assets and Financial Liabilities. The amendments to CPC 39 clarify the requirements related to offsetting financial assets and financial liabilities. 24

51 Amendments to CPC 01 (R1) Disclosure of Impairment of Non-Financial Assets. The amendments to CPC 01 (R1) remove the requirement to disclose the recoverable value of a cash-generating unit for which the goodwill based on future earnings or other intangible asset with indefinite intangible asset has been allocated when no reduction to the recoverable value of an asset or reversal of the reduction to the recoverable value relating to this cash-generating unit has occurred. Amendments to CPC 38 Novation of Derivatives and Continuation of Hedge Accounting. The amendments to CPC 38 remove the requirement to discontinue hedge accounting when a derivative instrument designated as hedge instrument is renewed under certain circumstances. IFRIC 21 Levies. IFRIC 21 provided guidance on when a liability for a levy imposed by a government. The interpretation defines taxes and identifies the obligating event for the recognition of a liability as the activity that triggers the payment of the levy in accordance with the relevant legislation. The Company analyzed all new standards summarized above and did not identify significant effects on the financial statements. 3. Basis of consolidation The financial statements of the subsidiaries referred to in note 1 were consolidated. The main consolidation procedures are as follows: elimination of intercompany asset and liability balances between consolidated companies; elimination of the Parent s interests in the equity of its subsidiaries, directly and indirectly; elimination of revenues and expenses and finance costs between the consolidated companies; reversal of assets and deferred charges of subsidiary Espra (note 2.2). 25

52 4. Authorizations Authorized Installed PCH Ref. Contract ANEEL Resolution Resolution date period production capacity* Cachoeira da Lixa PROINFA /24/ years 14,80 MW Colino 2 PROINFA /24/ years 16,00 MW Colino 1 PROINFA /24/ years 11,00 MW Authorized Installed Wind Farms Ref. Contract MME Ordinance Ordinance date period production capacity* Centrais Eólicas Alvorada S.A. LER 03/ /05/ years 8,00 MW Centrais Eólicas Candiba S.A. LER 03/ /05/ years 9,60 MW Centrais Eólicas Guanambi S.A. LER 03/ /06/ years 20,80 MW Centrais Eólicas Guirapá S.A. LER 03/ /19/ years 28,80 MW Centrais Eólicas Igaporã S.A. LER 03/ /05/ years 30,40 MW Centrais Eólicas Ilhéus S.A. LER 03/ /05/ years 11,20 MW Centrais Eólicas Licínio de Almeida S.A. LER 03/ /05/ years 24,00 MW Centrais Eólicas Nossa Senhora Conceição S.A. LER 03/ /05/ years 28,80 MW Centrais Eólicas Pajeú do Vento S.A. LER 03/ /05/ years 25,60 MW Centrais Eólicas Pindaí S.A. LER 03/ /05/ years 24,00 MW Centrais Eólicas Planaltina S.A. LER 03/ /05/ years 27,20 MW Centrais Eólicas Porto Seguro S.A. LER 03/ /05/ years 6,40 MW Centrais Eólicas Rio Verde S.A. LER 03/ /19/ years 30,40 MW Centrais Eólicas Serra do Salto S.A. LER 03/ /05/ years 19,20 MW Centrais Eólicas Morrão S.A. LER 05/ /20/ years 30,24 MW Centrais Eólicas da Prata S.A. LER 05/ /25/ years 21,84 MW Centrais Eólicas dos Araçás S.A. LER 05/ /07/ years 31,86 MW Centrais Eólicas Seraíma S.A. LER 05/ /27/ years 30,24 MW Centrais Eólicas Tanque S.A. LER 05/ /26/ years 30,00 MW Centrais Eólicas Ventos do Nordeste S.A. LER 05/ /18/ years 23,52 MW Centrais Eólicas Ametista S.A. LEN 02/ /14/ years 28,56 MW Centrais Eólicas Borgo S.A. LEN 02/ /13/ years 20,16 MW Centrais Eólicas Caetité S.A. LEN 02/ /21/ years 30,24 MW Centrais Eólicas Dourados S.A. LEN 02/ /13/ years 28,56 MW Centrais Eólicas Espigão S.A. LEN 02/ /22/ years 10,08 MW Centrais Eólicas Maron S.A. LEN 02/ /08/ years 30,24 MW Centrais Eólicas Pelourinho S.A. LEN 02/ /21/ years 21,84 MW Centrais Eólicas Pilões S.A. LEN 02/ /13/ years 30,24 MW Centrais Eólicas Serra do Espinhaço S.A. LEN 02/ /22/ years 18,48 MW Centrais Eólicas São Salvador S.A. LEN 06/ /22/ years 22,40 MW Centrais Eólicas Abil S.A. LER 05/ /19/ years 23,70 MW Centrais Eólicas Acácia S.A. LER 05/ /24/ years 16,20 MW Centrais Eólicas Angico S.A. LER 05/ /19/ years 8,10 MW Centrais Eólicas Folha de Serra S.A. LER 05/ /19/ years 21,00 MW Centrais Eólicas Jabuticaba S.A. LER 05/ /19/ years 9,00 MW Centrais Eólicas Jacaranda do Cerrado S.A. LER 05/ /19/ years 21,00 MW Centrais Eólicas Taboquinha S.A. LER 05/ /19/ years 21,60 MW Centrais Eólicas Tabua S.A. LER 05/ /19/ years 15,00 MW Centrais Eólicas Vaqueta S.A. LER 05/ /28/ years 23,40 MW Centrais Eólicas Umburanas 1 S.A. (Umburanas 1) LEN 10/ /01/ years 27,00 MW Centrais Eólicas Umburanas 1 S.A. (Umburanas 2) LEN 10/ /04/ years 27,00 MW Centrais Eólicas Umburanas 1 S.A. (Umburanas 3) LEN 10/ /04/ years 18,90 MW Centrais Eólicas Umburanas 2 S.A. (Umburanas 4) LEN 10/ /01/ years 18,90 MW Centrais Eólicas Umburanas 2 S.A. (Umburanas 5) LEN 10/ /04/ years 18,90 MW Centrais Eólicas Umburanas 2 S.A. (Umburanas 6) LEN 10/ /12/ years 21,60 MW Centrais Eólicas Umburanas 3 S.A. (Umburanas 7) LEN 10/ /27/ years 24,30 MW Centrais Eólicas Umburanas 3 S.A. (Umburanas 8) LEN 10/ /27/ years 24,30 MW Centrais Eólicas Umburanas 3 S.A. (Umburanas 9) LEN 10/ /04/ years 18,00 MW Centrais Eólicas Umburanas 4 S.A. (Umburanas 10) LEN 10/ /04/ years 21,00 MW Centrais Eólicas Umburanas 4 S.A. (Umburanas 11) LEN 10/ /08/ years 15,00 MW Centrais Eólicas Umburanas 4 S.A. (Umburanas 12) LEN 10/ /21/ years 22,80 MW Centrais Eólicas Umburanas 5 S.A. (Umburanas 13) LEN 10/ /21/ years 18,90 MW Centrais Eólicas Umburanas 5 S.A. (Umburanas 14) LEN 10/ /21/ years 24,90 MW Centrais Eólicas Umburanas 5 S.A. (Umburanas 15) LEN 10/ /21/ years 18,90 MW Centrais Eólicas Umburanas 6 S.A. (Umburanas 16) LEN 10/ /21/ years 27,00 MW Centrais Eólicas Umburanas 6 S.A. (Umburanas 18) LEN 10/ /21/ years 8,10 MW (*) Information not audited by independent auditors 26

53 5. Power sale 5.1 Regulated market (ACR) Amounts Effective Term Annual power Historical Adjusted Inflation Tariff Original contract contracted price price adjustment adjustment Group company Ref. Contract Buyer amount (MWh) MWh MWh Initial Final index month (R$) (R$) Small hydroelectric plants: Caxoeira da Lixa PROINFA Eletrobras 172,450 65, May 2008 April 2028 IGP-M June Colino1 PROINFA Eletrobras 153,243 87, Sep 2008 Aug 2028 IGP-M June Colino2 PROINFA Eletrobras 219,008 61, July 2008 June 2008 IGP-M June Wind power generation Centrais Eólicas Alvorada S.A. LER 03/2009 CCEE 76,233 26, July 2012 June 2032 IPCA July Centrais Eólicas Candiba S.A. LER 03/2009 CCEE 101,644 35, July 2012 June 2032 IPCA July Centrais Eólicas Guanambi S.A. LER 03/2009 CCEE 203,287 70, July 2012 June 2032 IPCA July Centrais Eólicas Guirapá S.A. LER 03/2009 CCEE 330, , July 2012 June 2032 IPCA July Centrais Eólicas Igaporã S.A. LER 03/2009 CCEE 334, , July 2012 June 2032 IPCA July Centrais Eólicas Ilhéus S.A. LER 03/2009 CCEE 128,808 43, July 2012 June 2032 IPCA July Centrais Eólicas Licínio de Almeida S.A. LER 03/2009 CCEE 254,109 87, July 2012 June 2032 IPCA July Centrais Eólicas NS Sr. Conceição S.A. LER 03/2009 CCEE 309, , July 2012 June 2032 IPCA July Centrais Eólicas Pajeú do Vento S.A. LER 03/2009 CCEE 283,377 96, July 2012 June 2032 IPCA July Centrais Eólicas Pindaí S.A. LER 03/2009 CCEE 279,520 96, July 2012 June 2032 IPCA July Centrais Eólicas Planaltina S.A. LER 03/2009 CCEE 309, , July 2012 June 2032 IPCA July Centrais Eólicas Porto Seguro S.A. LER 03/2009 CCEE 51,523 17, July 2012 June 2032 IPCA July Centrais Eólicas Rio Verde S.A. LER 03/2009 CCEE 406, , July 2012 June 2032 IPCA July Centrais Eólicas Serra do Salto S.A. LER 03/2009 CCEE 177,876 61, July 2012 June 2032 IPCA July Centrais Eólicas da Prata S.A. LER 05/2010 CCEE 214,701 88, Nov 2014 (**) Aug 2033 IPCA September Centrais Eólicas dos Araçás S.A. LER 05/2010 CCEE 295, , Nov 2014 (**) Aug 2033 IPCA September Centrais Eólicas Morrão S.A. LER 05/2010 CCEE 312, , Nov 2014 (**) Aug 2033 IPCA September Centrais Eólicas Seraíma S.A. LER 05/2010 CCEE 325, , Nov 2014 (**) Aug 2033 IPCA September Centrais Eólicas Tanque S.A. LER 05/2010 CCEE 295, , Nov 2014 (**) Aug 2033 IPCA September Centrais Eólicas Ventos do Nordeste S.A. LER 05/2010 CCEE 214,701 88, Nov 2014 (**) Aug 2033 IPCA September Centrais Eólicas Ametista S.A.(*) LEN 02/2011 Distributors 238, , Feb 15 (**) April 2035 IPCA January Centrais Eólicas Borgo S.A.(*) LEN 02/2011 Distributors 166,189 84, July 15 (**) April 2035 IPCA January Centrais Eólicas Caetité S.A.(*) LEN 02/2011 Distributors 245, , July 15 (**) April 2035 IPCA January Centrais Eólicas Dourados S.A.(*) LEN 02/2011 Distributors 226, , Feb 15 (**) April 2035 IPCA January Centrais Eólicas Espigão S.A.(*) LEN 02/2011 Distributors 83,951 42, July 15 (**) April 2035 IPCA January Centrais Eólicas Maron S.A.(*) LEN 02/2011 Distributors 236, , Feb 15 (**) April 2035 IPCA January Centrais Eólicas Pelourinho S.A.(*) LEN 02/2011 Distributors 202, , July 15 (**) April 2035 IPCA January Centrais Eólicas Pilões S.A.(*) LEN 02/2011 Distributors 224, , Feb 15 (**) April 2035 IPCA January Centrais Eólicas Serra do Espinhaço S.A.(*) LEN 02/2011 Distributors 152,483 77, Jul 15 (**) April 2035 IPCA January Centrais Eólicas São Salvador S.A. LEN 06/2012 Distributors 158,583 89, Jan 2017 Dec 2036 IPCA January Centrais Eólicas Abil S.A. LER 05/2013 CCEE 202,880 96, Sep 2015 Aug 2035 IPCA September Centrais Eólicas Acácia S.A. LER 05/2013 CCEE 136,979 60, Sep 2015 Aug 2035 IPCA September Centrais Eólicas Angico S.A. LER 05/2013 CCEE 75,789 34, Sep 2015 Aug 2035 IPCA September Centrais Eólicas Folha de Serra S.A. LER 05/2013 CCEE 175,459 84, Sep 2015 Aug 2035 IPCA September Centrais Eólicas Jabuticaba S.A. LER 05/2013 CCEE 82,011 39, Sep 2015 Aug 2035 IPCA September Centrais Eólicas Jacaranda do Cerrado S.A. LER 05/2013 CCEE 172,488 83, Sep 2015 Aug 2035 IPCA September Centrais Eólicas Taboquinha S.A. LER 05/2013 CCEE 186,909 88, Sep 2015 Aug 2035 IPCA September Centrais Eólicas Tabua S.A. LER 05/2013 CCEE 135,406 64, Sep 2015 Aug 2035 IPCA September Centrais Eólicas Vaqueta S.A. LER 05/2013 CCEE 197,191 93, Sep 2015 Aug 2035 IPCA September CRNV&M (Umburanas 1) (*) LEN 10/2013 Distributors 98, , May 2018 Dec 2037 IPCA January CRNV&M (Umburanas 2) (*) LEN 10/2013 Distributors 99, , May 2018 Dec 2037 IPCA January CRNV&M (Umburanas 3) (*) LEN 10/2013 Distributors 83,590 85, May 2018 Dec 2037 IPCA January CRNV&M (Umburanas 4) (*) LEN 10/2013 Distributors 82,621 84, May 2018 Dec 2037 IPCA January CRNV&M (Umburanas 5) (*) LEN 10/2013 Distributors 81,692 81, May 2018 Dec 2037 IPCA January CRNV&M (Umburanas 6) (*) LEN 10/2013 Distributors 71,979 98, May 2018 Dec 2037 IPCA January CRNV&M (Umburanas 7) (*) LEN 10/2013 Distributors 28,764 98, May 2018 Dec 2037 IPCA January CRNV&M (Umburanas 8) (*) LEN 10/2013 Distributors 28, , May 2018 Dec 2037 IPCA January CRNV&M (Umburanas 9) (*) LEN 10/2013 Distributors 72,059 75, May 2018 Dec 2037 IPCA January CRNV&M (Umburanas 10) (*) LEN 10/2013 Distributors 82,967 91, May 2018 Dec 2037 IPCA January CRNV&M (Umburanas 11) (*) LEN 10/2013 Distributors 67,410 63, May 2018 Dec 2037 IPCA January CRNV&M (Umburanas 12) (*) LEN 10/2013 Distributors 92, , May 2018 Dec 2037 IPCA January CRNV&M (Umburanas 13) (*) LEN 10/2013 Distributors 81,843 87, May 2018 Dec 2037 IPCA January CRNV&M (Umburanas 14) (*) LEN 10/2013 Distributors 108, , May 2018 Dec 2037 IPCA January CRNV&M (Umburanas 15) (*) LEN 10/2013 Distributors 81,086 82, May 2018 Dec 2037 IPCA January CRNV&M (Umburanas 16) (*) LEN 10/2013 Distributors 97, , May 2018 Dec 2037 IPCA January CRNV&M (Umburanas 18) (*) LEN 10/2013 Distributors 35,807 36, May 2018 Dec 2037 IPCA January * The price includes ICB (Benefit Cost Index) and CEC (Short-term Economic Cost). ** Original date pursuant to Decision 1317, dated April 28, 2014, and Decision 571, dated March 11,

54 5.2 Free-trading market (ACL) The Company is currently a party to various free trading market agreements totaling MW(*) of installed capacity. In August 2011, the Company entered into a power purchase and sale commitment with Light Energia, whereby Renova will deliver average MW(*) of wind power, corresponding to MW(*) of installed capacity; wind farms will begin to generate power between 2015 and Out of the total amount of MW(*), 1/3 of the power was traded with LIGHTCOM Comercializadora de Energia S.A. and 2/3 with CEMIG GT. Other three agreements were negotiated in the free market, whereby Renova will deliver average 76.0 MW(*) of wind power, corresponding to MW of installed capacity. The wind farms that will satisfy these agreements will start to operate in 2015, 2016 and Additionally, in March 2014, Renova Comercializadora traded average MW with CEMIG GT, corresponding to MW(*) of installed capacity. On July 17, 2014, a Share Purchase and Sale Investment Agreement was entered into among the Company and Companhia Energética de Minas Gerais ( CEMIG ), which will hold a 50% stake in the project. The wind farms that will satisfy this agreement will start to generate power in On October 22, 2014, the Administrative Council of Economic Defense (CADE) approved the execution of such Investment Agreement. Pursuant to the Investment Agreement, the transaction will be carried out upon the acquisition by CEMIG of 50% of the voting and total capital of a publicly-held company (SPE) to be established by the Company, in which all agreements relating to the Wind Project will be paid in. The acquisition price will correspond to up to R$113,450 relating to 50% of the amounts of advances relating to agreements already entered into by the Company, adjusted by the fluctuation of the interbank deposit rate ( CDI ) from effective disbursement by the Company up to the date of payment by CEMIG. After the acquisition, CEMIG and Renova will share the future investment of the Wind Project proportionally to their share in the SPE s capital. (*) Information not audited by independent auditors. 6. Segment reporting The Company has four reportable segments representing its strategic business units, besides the performance of its administrative activities. Such strategic business units offer different renewable power sources and are administered separately as they require different technologies, developments and operating characteristics. The operations on each one of the Company s reportable segments can be summarized as follows: a) PCH This segment is responsible for the development, implementation and operation of water source power generation projects. This segment includes the development of studies on inventories and basic projects and power generation. The PCHs are under operation stage for comparison between the years ended December 31, 2014 and b) Wind This segment is responsible for the development, implementation and operation of wind source power generation projects. It includes wind measurement, leased land, implementation and power generation. The plants which won LER 2009 became able to operate in the second half of The plants which won LER 2010 started commercial operations on October 11, The plants which won LEN 2011 (A-3) are ready to operate and await the transmission line (see note 32.2). 28

55 c) Solar This segment is responsible for the development, implementation and operation of the solar source power generation projects. It includes measurements, development of solar projects for generation in high scale and distributed generation, as well as the sale of goods and services. d) Sale This segment is responsible for the power sale of all types. As at December 31, 2014 and 2013, segment reporting for profit or loss and total assets and liabilities is broken down as follows: 12/31/2014 PCH Wind Solar Sale Admin. Consolidated Net revenue 22, , , ,867 Non-manageable costs (463) (13,757) (14,220) Gross margin 22, , , ,647 Manageable costs (7,970) (36,517) (83) (18,578) (73,466) (136,614) Share of profit (loss) of subsidiaries (24,842) (24,842) Loss (gain) on equity interests (5,259) (5,259) Depreciation (5,578) (74,814) - - (1,796) (82,188) Finance income 4,046 16, ,541 53,082 Finance costs (8,093) (76,576) - (57) (28,416) (113,142) Income tax and social contribution (2,343) (13,064) (15,407) (Loss) profit (27,937) 64, (1,542) (71,137) (35,723) Total assets 981,678 3,584, , ,699 5,542,242 Total liabilities 119,027 2,382,689-3, ,933 3,032,601 12/31/2013 PCH Wind Solar Sale Admin Consolidated Net revenue 40, , ,011 Non-manageable costs (674) (10,763) (11,437) Gross margin 39, , ,574 Manageable costs (4,665) (20,540) (147) (38) (31,156) (56,546) Depreciation (5,568) (62,885) - - (1,073) (69,526) Finance income 3,555 8, ,098 32,426 Finance costs (8,570) (70,466) - - (25,651) (104,687) Income tax and social contribution (2,807) (7,163) (9,970) Profit (loss) 21,797 22,305 (11) (38) (37,782) 6,271 Total assets 263,174 3,234, ,966 3,672,179 Total liaibilities 105,032 2,217, ,695 2,671,579 29

56 7. Cash and cash equivalents and short-term investments Consolidated Parent 12/31/ /31/ /31/ /31/2013 Cash Banks checking account 56,898 22, Short-term investments 538, , , ,234 Total 595, , , ,686 Stated as: Cach and cash equivalents 86, ,598 28, ,686 Short-term investments 509, , ,027 - Total 595, , , ,686 Short-term and highly liquid investments which can be immediately converted into a known cash amount and are subject to an insignificant risk of change in value were classified as cash equivalents. These financial investments refer to fixed-income instruments under repurchase agreements yielding rates ranging from 98% to % of CDI. Those financial investments corresponding to investment funds which do not have characteristics of cash and cash equivalents were classified in line item short-term investments. The Company s exposure to interest rate risks and a sensitivity analysis of its financial assets and financial liabilities are disclosed in note Trade receivables Consolidated Parent 12/31/ /31/ /31/ /31/2013 Eletrobras 4,744 4, Câmara de Comercialização de Energia Elétrica - CCEE 60,957 16, Other 2, Total 68,627 20,923-1 As of December 31, 2014, balances are comprised of receivables, with average collection period of 24 days, for which losses on performance are not expected. 30

57 9. Recoverable taxes Consolidated Parent 12/31/ /31/ /31/ /31/2013 Withholding Income Tax IRPJ 9,534 7,015 8,138 4,575 Corporate Income Tax (IRPJ) 3,610 1,239-1,239 COFINS (tax on revenue) IRRF on short-term investments 582 2, ,447 Social Contribution on Net Profit (CSLL) PIS (tax on revenue) Other Total 15,064 10,751 8,476 7, Advances to suppliers Consolidated Parent 12/31/ /31/ /31/ /31/2013 Advances to suppliers 8,575 5,065 6,033 3,261 These advances were made for maintenance of the Company s and its subsidiaries operations. 11. Collaterals and restricted deposits Consolidated Parent 12/31/ /31/ /31/ /31/2013 Current 40 27, Noncurrent 160, , Total 160, ,

58 As at December 31, 2014, collaterals and restricted deposits are broken down as shown below: Consolidated Company Collateral Institution Rate Contractual Subject 12/31/ /31/2013 Salvador Eólica Secured account Citibank 98.70% CDI BNDES Financing - 18,003 Bahia Eólica Secured account Citibank 98.70% CDI BNDES Financing - 9,188 Renova Other - - Property lease Total current 40 27,231 Consolidated Company Collateral Institution Rate Contractual Subject 12/31/ /31/2013 LER 2009 Special reserve (a) Citibank 98.70% CDI BNDES Financing 101,111 69,241 LER 2009 O&M reserve (b) Citibank 98.70% CDI BNDES Financing 4,536 4,160 LER 2009 SD reserve (c) Citibank 98.70% CDI BNDES Financing 41,908 38,433 Espra Guarantee BNB 98.70% CDI BNB Financing 12,932 11,696 Renova Guarantee ANEEL - Inventory and project studies Total noncurrent 160, ,981 The balances refer to short-term fixed-income instruments linked to financing agreements with BNDES and Banco do Nordeste do Brasil ( BNB ). The Company can solely manage these short-term investments upon express authorization of BNDES and BNB. (a) Refers to collateral Special reserve under the BNDES agreement transferred by the SPEs mandatory bank to its direct parent companies. This reserve is entitled to receive the total exceeding resources from the central accounts maintained with the bank and not managed by the subsidiary in order to ensure the full payment of the installments for payment of principal and debt accessories. These collaterals may solely be managed by the subsidiary upon BNDES express authorization. (b) A reserve that the subsidiaries must maintain over the agreement to ensure the payments of the operation and maintenance agreement obligations (O&M). (c) A reserve that the subsidiaries must maintain over the agreement to ensure the payments of the financing agreement obligations. 32

59 12. Deferred taxes Deferred taxes were recorded based on the differences between generated and effectively invoiced power (note 18). These deferred taxes were calculated using the rates based on the deemed income. Assets Consolidated Liabilities 12/31/ /31/ /31/2014 PIS deferred COFINS deferred 1, IRPJ deferred CSLL deferred Total 2, Changes in deferred IRPJ and CSLL Consolidated Balance at December 31, Changes, net 24 Balance at December 31, Changes, net 518 Balance at December 31,

60 13. Investments 13.1 Breakdown of investments Investments in subsidiaries and jointly controlled entities are as follows: Company Consolidated Parent 12/31/ /31/ /31/2013 PCH Enerbras Centrais Elétricas S.A. (Holding) - 110, ,135 Renova PCH LTDA Chipley SP Participações S.A. (Holding) - 709,949 - Brasil PCH S.A. 713, Wind farms Nova Renova Energia S.A. - 1,071, ,291 Alto Sertão Participações S.A. (Holding) - 46,968 - Centrais Eólicas São Salvador S.A Centrais Eólicas Carrancudo S.A. (former Centrais Eólicas Itapuã XI LTDA.) - 2,955 - Centrais Elétricas Botuquara S.A. - 2,728 - Centrais Eólicas Alcacuz S.A. (former Centrais Eólicas Itapuã X LTDA.) - 2,682 - Centrais Eólicas Tamboril S.A. (former Centrais Eólicas Itapuã XIII LTDA.) - 2,415 - Centrais Eólicas Conquista S.A. - 2,326 (1) Centrais Eólicas Coxilha Alta S.A. - 2,085 (1) Centrais Eólicas Tingui S.A. (former Centrais Eólicas Itapuã VI LTDA.) - 2,007 - Centrais Eólicas Cansanção S.A. (former Centrais Eólicas Recôncavo I LTDA.) - 1,358 (1) Centrais Eólicas Macambira S.A. (former Centrais Eólicas Bela Vista XI LTDA.) - 1,958 - Centrais Eólicas Imburana de Cabão S.A. (former Centrais Eólicas Itapuã XVII LTDA.) - 1,933 - Centrais Eólicas Ipê Amarelo S.A. (former Centrais Eólicas Itapuã XIX LTDA.) - 1,594 - Centrais Eólicas Putumuju S.A. (former Centrais Eólicas Bela Vista X LTDA.) - 1,350 - Centrais Eólicas Lençóis S.A. - 1,310 (1) Centrais Eólicas Anísio Teixeira S.A. (former Centrais Eólicas Arapuã LTDA.) - 1,218 (1) Centrais Eólicas Ico S.A. (former Centrais Eólicas Bela Vista IX LTDA.) - 1,185 - Centrais Eólicas Jequitiba S.A. (former Centrais Eólicas Itapuã I LTDA.) Centrais Eólicas Caliandra S.A. (former Centrais Eólicas Bela Vista VII LTDA.) Centrais Eólicas Canjoão S.A. (former Centrais Eólicas Itapuã II LTDA.) Centrais Eólicas Cabeça de Frade S.A. (former Centrais Eólicas Bela Vista I LTDA.) (2) Centrais Eólicas Embiruçu S.A. (former Centrais Eólicas Itapuã XII LTDA.) Centrais Eólicas Itapuã V LTDA Centrais Eólicas Bela Vista XIV LTDA Centrais Eólicas Umburanas 3 S.A Centrais Eólicas Vaqueta S.A. (former Centrais Eólicas Itapuã VIII LTDA.) Centrais Eólicas Cedro S.A. - - (1) Centrais Eólicas Sabiu S.A. (former Centrais Eólicas Riacho de Santana LTDA.) - - (1) Centrais Eólicas Pau d'água S.A. (former Centrais Eólicas Santana LTDA.) - - (1) Centrais Elétricas Itaparica S.A. - (323) (1) Other equity interests (*) Renovapar S.A. - - (16) Power sale Renova Comercializadora de Energia S.A. - 2,351 - Total 713,312 1,973, ,779 (*) Other companies listed in Note 1 34

61 13.2 Information on investees The main information on subsidiaries and jointly controlled entities is broken down as follows: Company Total number of shares Equity interest Renova (%) Capital 12/31/ /31/2013 Total Equity Equity (equity Proposed Profit (loss) for Equity (equity number of interest Capital deficiency) dividends the year** deficiency) shares Renova (%) PCH Enerbras Centrais Elétricas S.A. (Holding) 5,170, , ,866 15,966 2,697 5,170, , ,135 (5,142) 21,652 Renova PCH LTDA. 31, (6) (8) Chipley SP Participações S.A. (Holding) 1, ,949 - (24,736) Wind farms Nova Renova Energia S.A. 870,083, ,083 1,071,110-70, ,485, , ,291-22,366 Alto Sertão Participações S.A. (Holding) 12,163, ,164 46,968 - (1,598) Centrais Eólicas São Salvador S.A (17) 219, (7) Centrais Eólicas Abil S.A. (former Centrais Eólicas Bela Vista VIII LTDA.) (140) 10, Centrais Eólicas Acácia S.A. (former Centrais Eólicas Bela Vista XII LTDA.) (34) 10, Centrais Eólicas Angico S.A. (former Centrais Eólicas Bela Vista XIII LTDA.) (29) 10, Centrais Eólicas Folha da Serra S.A. (former Centrais Eólicas Bela Vista XVI LTDA.) (158) 10, Centrais Eólicas Jabuticaba S.A. (former Centrais Eólicas Bela Vista XVII LTDA.) (47) 10, Centrais Eólicas Jacarandá do Serrado S.A. (former Centrais Eólicas Bela Vista XVIII LTDA.) (100) 10, Centrais Eólicas Taboquinha S.A. (former Centrais Eólicas Bela Vista XIX LTDA. ) (29) 10, Centrais Eólicas Tabua S.A. (former Centrais Eólicas Bela Vista XX LTDA.) (160) 10, Centrais Eólicas Carrancudo S.A. (former Centrais Eólicas Itapuã XI LTDA.) ,955 - (23) (7) Centrais Elétricas Botuquara S.A. 21, ,728 - (6) (6) Centrais Eólicas Alcacuz S.A. (former Centrais Eólicas Itapuã X LTDA.) ,682 - (33) (7) Centrais Eólicas Tamboril S.A. (former Centrais Eólicas Itapuã XIII LTDA.) ,415 - (47) (7) Centrais Eólicas Conquista S.A ,326 - (6) (1) - (2) Centrais Eólicas Coxilha Alta S.A ,085 - (8) (1) - (1) Centrais Eólicas Tingui S.A. (former Centrais Eólicas Itapuã VI LTDA.) ,007 - (207) (7) Centrais Eólicas Cansanção S.A. (former Centrais Eólicas Recôncavo I LTDA.) ,358 - (10) (1) - (1) Centrais Eólicas Macambira S.A. (former Centrais Eólicas Bela Vista XI LTDA.) 10, ,958 - (26) Centrais Eólicas Imburana de Cabão S.A. (former Centrais Eólicas Itapuã XVII LTDA.) ,933 - (188) (8) Centrais Eólicas Ipê Amarelo S.A. (former Centrais Eólicas Itapuã XIX LTDA.) ,594 - (26) (8) Centrais Eólicas Putumuju S.A. (former Centrais Eólicas Bela Vista X LTDA.) 10, ,350 - (16) Centrais Eólicas Lençóis S.A ,310 - (6) (1) - (2) Centrais Eólicas Anísio Teixeira S.A. (former Centrais Eólicas Arapuã LTDA.) ,218 - (19) (1) - (2) Centrais Eólicas Ico S.A. (former Centrais Eólicas Bela Vista IX LTDA.) 10, ,185 - (13) Proposed dividends Profit (loss) for the year - CONTINUED 35

62 - CONTINUATION Company Total number of shares Equity interest Renova (%) Capital 12/31/ /31/2013 Total Equity Equity (equity Proposed Profit (loss) for Equity (equity number of interest Capital deficiency) dividends the year** deficiency) shares Renova (%) Centrais Eólicas Jequitiba S.A. (former Centrais Eólicas Itapuã I LTDA.) (60) (7) Centrais Eólicas Caliandra S.A. (former Centrais Eólicas Bela Vista VII LTDA.) 10, (43) Centrais Eólicas Canjoão S.A. (former Centrais Eólicas Itapuã II LTDA.) (15) (7) Centrais Eólicas Cabeça de Frade S.A. (former Centrais Eólicas Bela Vista I LTDA.) (8) (2) - (2) Centrais Eólicas Embiruçu S.A. (former Centrais Eólicas Itapuã XII LTDA.) (145) (8) Centrais Eólicas Itapuã V LTDA (7) (7) Centrais Eólicas Bela Vista XIV LTDA. 10, , Centrais Eólicas Umburanas 3 S.A Centrais Eólicas Vaqueta S.A. (former Centrais Eólicas Itapuã VIII LTDA.) (126) (8) Centrais Eólicas Unha d'anta S.A. (former Centrais Eólicas Itapuã XVI LTDA.) (75) (7) Centrais Eólicas Cedro S.A (117) (1) (1) Centrais Eólicas Vellozia S.A. (former Centrais Eólicas Itapuã III LTDA.) (109) (7) Centrais Eólicas Angelim S.A. (former Centrais Eólicas Bela Vista VI LTDA.) Centrais Eólicas Facheio S.A. (former Centrais Eólicas Itapuã XXI LTDA.) (8) (8) Centrais Eólicas Sabiu S.A. (former Centrais Eólicas Riacho de Santana LTDA.) (32) (1) (1) Centrais Eólicas Barbatimão S.A. (former Centrais Eólicas Bela Vista II LTDA.) Centrais Eólicas Juazeiro S.A. (former Centrais Eólicas Bela Vista V LTDA.) Centrais Eólicas Jataí S.A. (former Centrais Eólicas Itapuã IX LTDA.) (8) (7) Centrais Eólicas Imburana Macho S.A. (former Centrais Eólicas Bela Vista III LTDA.) Centrais Eólicas Amescla S.A. (former Centrais Eólicas Bela Vista IV LTDA.) Centrais Eólicas Umbuzeiro S.A. (former Centrais Eólicas Itapuã XVIII LTDA.) (19) (8) Centrais Eólicas Pau d'água S.A. (former Centrais Eólicas Santana LTDA.) (10) (1) (1) Centrais Eólicas Manineiro S.A. (former Centrais Eólicas Itapuã XIV LTDA.) (30) (7) Centrais Elétricas Itaparica S.A. 51, (323) - (323) (1) (42) Other equity interests (*) (65) (32) Renovapar S.A (4) (16) (16) Sale Renova Comercializadora de Energia S.A. 58, ,351 - (1,542) (37) Proposed dividends Profit (loss) for the year (*) Other companies listed in Note 1. (**) Considering the Company s equity interest. 1,973,507 15,966 42, ,779 (5,142) 43,732 36

63 13.3 Changes in investments Changes in investments in subsidiaries and jointly controlled entities are as follows: Consolidated Company 12/31/2013 AFCI Share of profit (loss) of Brasil PCH Jan - Sep (*) Consolidated elimination Loss on gain of equity interest Assgnment of receivables Share of profit (loss) of Brasil PCH Oct - Dec (*) Amortization of appreciation (*) Dividends 12/31/2014 PCH Chipley / Brasil PCH S.A ,943 (7,887) (739,943) (5,259) 754,907 (7,787) (9,168) (11,494) 713,312 (*) Total share of profit (loss) of subsidiaries is R$24,842. The effect of cash upon reconciliation of Chipley beginning October 2014 is R$14, Changes in equity interests Through September 30, 2014, the Company had the shared control of Chipley, with a 60% equity interest. Beginning October 2014, CEMIG GT completed the transaction and Renova became the holder of 100% of the shares. The effects of changes in Chipley s equity interest are shown as follows: Loss on gain of equity interest in Chipley Equity interest through September 30, % Equity interest after September 30, % Equity interest acquired 40% Chipley's equity as of September 30, 2014 (13,145) Loss on gain of equity interest (5,259) 37

64 Shared control investment Brasil PCH S.A. The Company measures its investments in equity interests in joint ventures using the equity method of accounting. As mentioned in note 1.2, on February 14, 2014, Chipley acquired a 51% equity interest in Brasil PCH S.A. and, as a result of the new Shareholders Agreement, obtained the shared control of this venture. As required by CPC 45 (IFRS 12), the financial statements of Brasil PCH (jointly controlled entity) are as follows: BALANCE SHEET AS OF DECEMBER 31, 2014 ASSETS 12/31/2014 EQUITY AND LIABILITIES 12/31/2014 CURRENT ASSETS CURRENT LIABILITIES Cash and cash equivalents 85,855 Borrowings and financing 170,098 Other 49,340 Other 128,154 Total current assets 135,195 Total current liabilities 298,252 NONCURRENT ASSETS NONCURRENT LIABILITIES Property, plant and equipment 1,171,028 Borrowings and financing 950,957 Other 100,321 Other 60,310 Total noncurrent assets 1,271,349 Total noncurrent liabilities 1,011,267 EQUITY 97,025 TOTAL LIABILITIES TOTAL ASSETS 1,406,544 AND EQUITY 1,406,544 38

65 INCOME STATEMENT FOR THE PERIOD FROM FEBRUARY TO DECEMBER /01/2014 to 12/31/2014 NET OPERATING REVENUE 202,325 COSTS OF SALES Depreciation (32,390) Cost of operations (33,719) Charges on use of distribution system (4,745) Total (70,854) GROSS PROFIT 131,471 INCOME (EXPENSES) General and administrative (16,089) Depreciation and amortization (7,135) Total (23,224) PROFIT BEFORE FINANCE INCOME (COSTS) AND INCOME TAXES 108,247 FINANCE INCOME (COSTS) (94,321) PROFIT BEFORE INCOME TAX AND SOCIAL CONTRIBUTION 13,926 Income tax and social contribution (9,041) PROFIT FOR THE YEAR 4,885 39

66 Parent Company 12/31/2012 Additions AFCI Proposed dividends Share of profit (loss) of subsidiaries 12/31/2013 Transfers Additions AFCI Loss on gain of equity interest Proposed dividends Share of profit (loss) of subsidiaries 12/31/2014 PCH Enerbras Centrais Elétricas S.A. (Holding) 107, (5,142) 21, , (15,966) 2, ,866 Renova PCH LTDA. (19) (8) (6) 3 Chipley SP Participações S.A. (Holding) ,943 (5,259) - (24,736) 709,949 Eólico Nova Renova Energia S.A. 652, ,690-22, ,291-72,908 69, ,011 1,071,110 Alto Sertão Participações S.A. (Holding) ,164-36, (1,598) 46,968 Centrais Eólicas São Salvador S.A (7) 266 (801) (17) - Centrais Eólicas Abil S.A. (anterior Centrais Eólicas Bela Vista VIII LTDA.) (677) (140) - Centrais Eólicas Acácia S.A. (anterior Centrais Eólicas Bela Vista XII LTDA.) (533) (34) - Centrais Eólicas Angico S.A. (anterior Centrais Eólicas Bela Vista XIII LTDA.) (286) (29) - Centrais Eólicas Folha da Serra S.A. (anterior Centrais Eólicas Bela Vista XVI LTDA.) (644) (158) - Centrais Eólicas Jabuticaba S.A. (anterior Centrais Eólicas Bela Vista XVII LTDA.) (337) (47) - Centrais Eólicas Jacarandá do Serrado S.A. (anterior Centrais Eólicas Bela Vista XVIII LTDA.) (646) (100) - Centrais Eólicas Taboquinha S.A. (anterior Centrais Eólicas Bela Vista XIX LTDA. ) (693) (29) - Centrais Eólicas Tabua S.A. (anterior Centrais Eólicas Bela Vista XX LTDA.) (370) (160) - Centrais Eólicas Carrancudo S.A. (anterior Centrais Eólicas Itapuã XI LTDA.) (7) , (23) 2,955 Centrais Elétricas Botuquara S.A. (10) (6) , (6) 2,728 Centrais Eólicas Alcacuz S.A. (anterior Centrais Eólicas Itapuã X LTDA.) (7) , (33) 2,682 Centrais Eólicas Tamboril S.A. (anterior Centrais Eólicas Itapuã XIII LTDA.) (7) , (47) 2,415 Centrais Eólicas Conquista S.A (2) (2) - - 2, (6) 2,326 Centrais Eólicas Coxilha Alta S.A (1) (1) - - 2, (8) 2,085 Centrais Eólicas Tingui S.A. (anterior Centrais Eólicas Itapuã VI LTDA.) (7) , (207) 2,007 Centrais Eólicas Cansanção S.A. (anteriro Centrais Eólicas Recôncavo I LTDA.) (1) (1) - - 1, (10) 1,358 Centrais Eólicas Macambira S.A. (anterior Centrais Eólicas Bela Vista XI LTDA.) , (26) 1,958 Centrais Eólicas Imburana de Cabão S.A. (anterior Centrais Eólicas Itapuã XVII LTDA.) (8) , (188) 1,933 Centrais Eólicas Ipê Amarelo S.A. (anterior Centrais Eólicas Itapuã XIX LTDA.) (8) , (26) 1,594 Centrais Eólicas Putumuju S.A. (anterior Centrais Eólicas Bela Vista X LTDA.) , (16) 1,350 Centrais Eólicas Lençóis S.A (2) (2) - - 1, (6) 1,310 Centrais Eólicas Anísio Teixeira S.A. (anterior Centrais Eólicas Arapuã LTDA.) (2) (2) - - 1, (19) 1,218 Centrais Eólicas Ico S.A. (former Centrais Eólicas Bela Vista IX LTDA.) , (13) 1,185 - Continued - 40

67 - Continuation - Company 12/31/2012 Additions AFCI Proposed dividends Share of profit (loss) of subsidiaries 12/31/2013 Transfers Additions AFCI Loss on gain of equity interest Proposed dividends Share of profit (loss) of subsidiaries 12/31/2014 Centrais Eólicas Jequitiba S.A. (former Centrais Eólicas Itapuã I LTDA.) (7) (60) 807 Centrais Eólicas Caliandra S.A. (former Centrais Eólicas Bela Vista VII LTDA.) (43) 606 Centrais Eólicas Canjoão S.A. (former Centrais Eólicas Itapuã II LTDA.) (7) (15) 595 Centrais Eólicas Cabeça de Frade S.A. (former Centrais Eólicas Bela Vista I LTDA.) (2) (2) (8) 548 Centrais Eólicas Embiruçu S.A. (former Centrais Eólicas Itapuã XII LTDA.) (8) (145) 538 Centrais Eólicas Itapuã V LTDA (7) (7) 190 Centrais Eólicas Bela Vista XIV LTDA Centrais Eólicas Umburanas 3 S.A Centrais Eólicas Vaqueta S.A. (former Centrais Eólicas Itapuã VIII LTDA.) (7) 29 (660) (126) - Centrais Eólicas Unha d'anta S.A. (former Centrais Eólicas Itapuã XVI LTDA.) (7) 1 (342) (75) - Centrais Eólicas Cedro S.A (1) (1) (246) (117) - Centrais Eólicas Vellozia S.A. (former Centrais Eólicas Itapuã III LTDA.) (7) - (544) (109) - Centrais Eólicas Angelim S.A. (former Centrais Eólicas Bela Vista VI LTDA.) (616) Centrais Eólicas Facheio S.A. (former Centrais Eólicas Itapuã XXI LTDA.) (8) - (467) (8) - Centrais Eólicas Sabiu S.A. (former Centrais Eólicas Riacho de Santana LTDA.) (1) (1) (378) (32) - Centrais Eólicas Barbatimão S.A. (former Centrais Eólicas Bela Vista II LTDA.) (460) Centrais Eólicas Juazeiro S.A. (former Centrais Eólicas Bela Vista V LTDA.) (540) Centrais Eólicas Jataí S.A. (former Centrais Eólicas Itapuã IX LTDA.) (7) 1 (465) (8) - Centrais Eólicas Imburana Macho S.A. (former Centrais Eólicas Bela Vista III LTDA.) (464) Centrais Eólicas Amescla S.A. (former Centrais Eólicas Bela Vista IV LTDA.) (386) Centrais Eólicas Umbuzeiro S.A. (former Centrais Eólicas Itapuã XVIII LTDA.) (8) - (611) (19) - Centrais Eólicas Pau d'água S.A. (former Centrais Eólicas Santana LTDA.) (1) (1) (494) (10) - Centrais Eólicas Manineiro S.A. (former Centrais Eólicas Itapuã XIV LTDA.) (7) 1 (504) (30) - Centrais Elétricas Itaparica S.A. (10) (42) (1) (323) (323) Other equity interests (*) (32) (2) (65) 3 Renovapar S.A (16) (16) (4) - Power sale Renova Comercializadora de Energia S.A (37) , (1,542) 2,351 Total 760, ,076 (5,142) 43, ,779-85, ,703 (5,259) (15,966) 42,288 1,973,507 (*) Other companies listed in Note 1 41

68 13.4 Changes in dividends receivable Consolidated Parent Balance as of December 31, ,230 Proposed dividends - 5,142 Dividends received - (11,920) Balance as of December 31, ,452 Proposed dividends 11,494 15,966 Dividends received (11,494) (35,879) Balance as of December 31, As of December 31, 2014, subsidiary Enerbras had dividends payable in the amount of R$539 (R$20,452, in 2013). These amounts were recorded as dividends receivable in the Parent s current assets. 42

69 13.5 Changes in investments in subsidiary Nova Renova The investments made in subholding Nova Renova, which controls Renova Eólica, Salvador Eólica and Bahia Eólica, are broken down as follows: Share of profit (loss) Company 12/31/2013 Additions AFCI Proposed dividends of subsdiaries 12/31/2014 Nova Renova Energia S.A (111) 477 Renova Eólica Participações S.A. (200) 416 3, (6,560) (2,536) Centrais Eólicas da Prata S.A. 24,906 3,255 4,091 (42) 5,626 37,836 Centrais Eólicas dos Araçás S.A. 48,051 3,610 4,938 (65) 7,998 64,532 Centrais Eólicas Morrão S.A. 30,142 5,740 2,140 (82) 9,837 47,777 Centrais Eólicas Seraíma S.A. 34,189 3,771 5,086 (74) 9,072 52,044 Centrais Eólicas Tanque S.A. 38,902 3,531 3,385 (56) 8,263 54,025 Centrais Eólicas Ventos do Nordeste S.A. 29,458 2,471 3,327 (54) 6,866 42,068 Centrais Eólicas Ametista S.A. 21,079 8,072 5,352 - (303) 34,200 Centrais Eólicas Borgo S.A. 10,573 9,065 3,283 - (202) 22,719 Centrais Eólicas Caetité S.A. 22,436 8,681 8,738 - (285) 39,570 Centrais Eólicas Dourados S.A. 23,569 5,313 7,348 - (306) 35,924 Centrais Eólicas Espigão S.A. 9,841 2,354 3,214 - (126) 15,283 Centrais Eólicas Maron S.A. 27,267 7,471 4,614 - (255) 39,097 Centrais Eólicas Pelourinho S.A. 17,190 2,901 4,521 - (169) 24,443 Centrais Eólicas Pilões S.A. 39,189 2,709 2,914 - (234) 44,578 Centrais Eólicas Serra do Espinhaço S.A. 14,891 3,545 3,406 - (170) 21,672 Bahia Eólica Participações S.A. 1, ,568 1,427 9,248 Centrais Eólicas Candiba S.A. 21, (75) (53) 21,023 Centrais Eólicas Igaporã S.A. 53, (2,457) 2,453 53,389 Centrais Eólicas Ilhéus S.A. 24, (949) (266) 23,302 Centrais Eólicas Licínio de Almeida S.A. 42, (1,326) 1,562 42,701 Centrais Eólicas Pindaí S.A. 42, (1,761) 3,063 43,776 Salvador Eólica Participações S.A. 8, ,895 3,814 31,785 Centrais Eólicas Alvorada S.A. 11, (7) ,214 Centrais Eólicas Guanambi S.A. 26, (622) ,110 Centrais Eólicas Guirapá S.A. 39, (2,956) 3,638 40,269 Centrais Eólicas N. S. Conceição S.A. 35, (2,772) 4,108 36,732 Centrais Eólicas Pajeú do Vento S.A. 33, (2,891) 1,959 32,582 Centrais Eólicas Planaltina S.A. 37, (3,528) 2,440 36,119 Centrais Eólicas Porto Seguro S.A. 13, (1,323) 12,229 Centrais Eólicas Rio Verde S.A. 49, (7,086) 5,610 48,000 Centrais Eólicas Serra do Salto S.A. 26, (33) ,922 TOTAL 858,291 72,908 69,900-70,011 1,071,110 43

70 Dividendos Equivalência Company 12/31/2012 AFAC propostos patrimonial 12/31/2013 Nova Renova Energia S.A (114) 477 Renova Eólica Participações S.A. (21) (332) (200) Centrais Eólicas da Prata S.A. 24,116 1,757 - (967) 24,906 Centrais Eólicas dos Araçás S.A. 28,674 20,445 - (1,068) 48,051 Centrais Eólicas Morrão S.A. 25,868 5,400 - (1,126) 30,142 Centrais Eólicas Seraíma S.A. 25,858 9,472 - (1,141) 34,189 Centrais Eólicas Tanque S.A. 34,459 5,614 - (1,171) 38,902 Centrais Eólicas Ventos do Nordeste S.A. 23,764 6,629 - (935) 29,458 Centrais Eólicas Ametista S.A. 10,830 10,490 - (241) 21,079 Centrais Eólicas Borgo S.A. 7,126 3,627 - (180) 10,573 Centrais Eólicas Caetité S.A. 10,380 12,265 - (209) 22,436 Centrais Eólicas Dourados S.A. 10,607 13,295 - (333) 23,569 Centrais Eólicas Espigão S.A. 4,627 5,405 - (191) 9,841 Centrais Eólicas Maron S.A. 10,997 16,535 - (265) 27,267 Centrais Eólicas Pelourinho S.A. 8,064 9,335 - (209) 17,190 Centrais Eólicas Pilões S.A. 25,231 14,242 - (284) 39,189 Centrais Eólicas Serra do Espinhaço S.A. 6,587 8,498 - (194) 14,891 Bahia Eólica Participações S.A ,253 Centrais Eólicas Candiba S.A. 20, (1) ,151 Centrais Eólicas Igaporã S.A. 50, (25) 2,589 53,393 Centrais Eólicas Ilhéus S.A. 22, (9) ,517 Centrais Eólicas Licínio de Almeida S.A. 40,057 1,010 (13) 1,411 42,465 Centrais Eólicas Pindaí S.A. 39, (17) 2,430 42,474 Salvador Eólica Participações S.A. 6, ,598 8,076 Centrais Eólicas Alvorada S.A. 8,884 2,538 - (4) 11,418 Centrais Eólicas Guanambi S.A. 22,045 3,798 (6) ,746 Centrais Eólicas Guirapá S.A. 30,178 5,650 (30) 3,789 39,587 Centrais Eólicas N. S. Conceição S.A. 30,882 1,635 (28) 2,907 35,396 Centrais Eólicas Pajeú do Vento S.A. 27,499 2,990 (29) 3,054 33,514 Centrais Eólicas Planaltina S.A. 29,224 4,292 (35) 3,726 37,207 Centrais Eólicas Porto Seguro S.A. 10,619 3,437 - (504) 13,552 Centrais Eólicas Rio Verde S.A. 32,912 9,155 (71) 7,480 49,476 Centrais Eólicas Serra do Salto S.A. 22,822 3, ,106 TOTAL 652, ,690-22, ,291 44

71 13.6 Transfer of control On November 10, 2014, the Company increased the capital of subsidiary Alto Sertão Participações S.A. ( Alto Sertão ) from R$100 to R$12,164, which, in turn, increased the capital of its direct subsidiary Diamantina Eólica Participações S.A. ( Diamantina ) from R$100 to R$12,164, all at the carrying amounts of the investments through the transfer of 100% of the registered common shares, without par value, of its subsidiaries Centrais Eólicas Manineiro, Centrais Eólicas Pau d Água, Centrais Eólicas São Salvador, Centrais Eólicas Abil, Centrais Eólicas Tabua, Centrais Eólicas Jabuticaba, Centrais Eólicas Vaqueta, Centrais Eólicas Jacarandá do Serrado, Centrais Eólicas Taboquinha, Centrais Eólicas Acácia, Centrais Eólicas Folha da Serra, Centrais Eólicas Angico, Centrais Eólicas Jataí, Centrais Eólicas Amescla, Centrais Eólicas Imburana Macho, Centrais Eólicas Juazeiro, Centrais Eólicas Facheio, Centrais Eólicas Sabiu, Centrais Eólicas Umbuzeiro, Centrais Eólicas Unha d'anta, Centrais Eólicas Vellozia, Centrais Eólicas Cedro, Centrais Eólicas Angelim, Centrais Eólicas Barbatimão, as supported by appraisal reports, through the issuance of 12,163,708 new registered common shares without par value. As a result, Diamantina obtained the direct control of said subsidiaries, and Alto Sertão obtained the indirect control of them. This change was necessary due to the financing structure of its wind farms related to LEN 2012 (A-5), LER 2013 and Free Trading Market. The investments made in subholding Alto Sertão, which controls Diamantina, are broken down as follows: 45

72 Company 12/31/2013 Transfer of control AFCI Share of profit (loss) of subsidiaries 12/31/2014 Alto Sertão Participações S.A. (Holding) Diamantina Eólica Participações S.A. (Holding) Centrais Eólicas Manineiro S.A. (former Centrais Eólicas Itapuã XIV LTDA.) ,523 (106) 1,921 Centrais Eólicas Pau d'água S.A. (former Centrais Eólicas Santana LTDA.) ,674 (42) 2,126 Centrais Eólicas São Salvador S.A ,359 (47) 2,113 Centrais Eólicas Abil S.A. (former Centrais Eólicas Bela Vista VIII LTDA.) ,172 (184) 2,665 Centrais Eólicas Tabua S.A. (former Centrais Eólicas Bela Vista XX LTDA.) ,337 (48) 1,659 Centrais Eólicas Jabuticaba S.A. (former Centrais Eólicas Bela Vista XVII LTDA.) (95) 1,028 Centrais Eólicas Vaqueta S.A. (former Centrais Eólicas Itapuã VIII LTDA.) ,099 (78) 2,681 Centrais Eólicas Jacarandá do Serrado S.A. (former Centrais Eólicas Bela Vista XVIII LTDA.) ,445 (36) 2,055 Centrais Eólicas Taboquinha S.A. (former Centrais Eólicas Bela Vista XIX LTDA. ) ,168 (63) 1,798 Centrais Eólicas Acácia S.A. (former Centrais Eólicas Bela Vista XII LTDA.) ,236 (68) 2,701 Centrais Eólicas Folha da Serra S.A. (former Centrais Eólicas Bela Vista XVI LTDA.) ,480 (37) 2,087 Centrais Eólicas Angico S.A. (former Centrais Eólicas Bela Vista XIII LTDA.) (144) 812 Centrais Eólicas Jataí S.A. (former Centrais Eólicas Itapuã IX LTDA.) ,017 (32) 1,450 Centrais Eólicas Amescla S.A. (former Centrais Eólicas Bela Vista IV LTDA.) ,199 (6) 1,579 Centrais Eólicas Imburana Macho S.A. (former Centrais Eólicas Bela Vista III LTDA.) ,262 (52) 1,674 Centrais Eólicas Juazeiro S.A. (former Centrais Eólicas Bela Vista V LTDA.) ,387 (60) 1,867 Centrais Eólicas Facheio S.A. (former Centrais Eólicas Itapuã XXI LTDA.) ,246 (64) 1,649 Centrais Eólicas Sabiu S.A. (former Centrais Eólicas Riacho de Santana LTDA.) ,142 (62) 1,458 Centrais Eólicas Umbuzeiro S.A. (former Centrais Eólicas Itapuã XVIII LTDA.) ,479 (65) 2,025 Centrais Eólicas Unha d'anta S.A. (former Centrais Eólicas Itapuã XVI LTDA.) ,931 (90) 3,183 Centrais Eólicas Vellozia S.A. (former Centrais Eólicas Itapuã III LTDA.) ,192 (51) 2,685 Centrais Eólicas Cedro S.A ,220 (49) 1,417 Centrais Eólicas Angelim S.A. (former Centrais Eólicas Bela Vista VI LTDA.) ,236 (88) 2,764 Centrais Eólicas Barbatimão S.A. (former Centrais Eólicas Bela Vista II LTDA.) ,142 (38) 1,564 TOTAL - 12,164 36,402 (1,598) 46,968 46

73 14. Property, plant and equipment 14.1 Consolidated 12/31/ /31/2013 Annual depreciation rates % Historical cost Accumulated depreciation Net value Historical cost Accumulated depreciation Net value Property, plant and equipment Generation Land Reservoirs, dams and watermains 3% 95,797 (14,467) 81,330 95,797 (12,232) 83,565 Buildings, civil works and improvements 3% 136,763 (16,428) 120, ,732 (10,990) 116,742 Machinery and equipment 4% 1,825,932 (154,822) 1,671,110 1,242,337 (89,799) 1,152,538 Vehicles 20% 202 (32) (2) 200 Furniture and fixtures 10% 120 (74) (62) 57 IT equipment 20% 245 (209) (170) 75 Measurement towers 20% 19,489 (6,141) 13,348 9,086 (3,839) 5,247 Measurement equipment 20% 367 (3) Tower equipment 20% Other 20% 6,768 (679) 6,089 6,768 (356) 6,412 Transmission and connection system Buildings, civil works and improvements 3% 5,385 (174) 5,211 1,668 (80) 1,588 Machinery and equipment 4% 268,947 (9,259) 259,688 87,594 (4,378) 83,216 2,361,561 (202,288) 2,159,273 1,572,143 (121,908) 1,450,235 Administration Machinery and equipment 10% 3,958 (394) 3,564 2,167 (91) 2,076 Improvements 10% 1,949 (206) 1,743 2,304 (243) 2,061 Furniture and fixtures 10% 7,492 (1,080) 6,412 3,223 (680) 2,543 Software 20% 3,480 (1,325) 2,155 2,472 (776) 1,696 IT equipment 20% 2,980 (997) 1,983 1,650 (599) 1,051 19,859 (4,002) 15,857 11,816 (2,389) 9,427 Total construction in progress 2,381,420 (206,290) 2,175,130 1,583,959 (124,297) 1,459,662 Construction in progress Generation Unapportioned 348, , , ,438 Studies and projects 23,757-23,757 27,102-27,102 Land 11,325-11,325 12,462-12,462 Buildings, civil works and improvements 115, , , ,853 Measurement towers 3,285-3,285 4,105-4,105 Wind generators 549, , , ,864 Substation equipment 87,804-87, , ,417 Advances to suppliers 652, , , ,582 Total construction in progress 1,791,913-1,791,913 1,645,823-1,645,823 Total property, plant and equipment 4,173,333 (206,290) 3,967,043 3,229,782 (124,297) 3,105,485 47

74 14.2 Changes in property, plant and equipment (consolidated) 12/31/2013 Additions Write-offs Reclassifications 12/31/2014 Property, plant and equipment Cost Generation Plant Land Reservoirs, dams and watermains 95, ,797 Buildings, civil works and improvements 127, , ,763 Machinery and equipment 1,242,337 7, ,805 1,825,932 Vehicles Furniture and fixtures IT equipment Measurement towers 9,086 10, ,489 Measurement equipment Tower equipment Other 6, ,768 Transmission and connection system Buildings, civil works and improvements 1, ,717 5,385 Machinery and equipment 87, , ,947 1,572,143 20, ,196 2,361,561 Administration Machinery and equipment 2,167 1, ,958 Improvements 2, (371) - 1,949 Furniture and fixtures 3,223 4, ,492 Software 2,472 1, ,480 IT equipment 1,650 1, ,980 11,816 8,016 (371) ,859 T otal property, plant and equipment - cost 1,583,959 28,238 (371) 769,594 2,381,420 (-) Depreciation Generation Plant Reservoirs, dams and watermains (12,232) (2,235) - - (14,467) Buildings, civil works and improvements (10,990) (5,438) - - (16,428) Machinery and equipment (89,799) (65,023) - - (154,822) Vehicles (2) (30) - - (32) Furniture and fixtures (62) (12) - - (74) IT equipment (170) (39) - - (209) Measurement towers (3,839) (2,302) - - (6,141) Measurement equipment - (3) - - (3) Tower equipment Other (356) (323) - - (679) Transmission and connection system Buildings, civil works and improvements (80) (94) - - (174) Machinery and equipment (4,378) (4,881) - - (9,259) (121,908) (80,380) - - (202,288) Administration Machinery and equipment (91) (303) - - (394) Improvements (243) (158) (206) Furniture and fixtures (680) (400) - - (1,080) Software (776) (549) - - (1,325) IT equipment (599) (398) - - (997) (2,389) (1,808) (4,002) T otal property, plant and equipment - depreciation (124,297) (82,188) (206,290) T otal property, plant and equipment 1,459,662 (53,950) (176) 769,594 2,175,130 - CONTINUED - 48

75 - CONTINUATION - 12/31/2013 Additions Write-offs Reclassifications 12/31/2014 Construction in progress Generation Unapportioned 237, ,319 - (146,988) 348,769 Studies and projects 27,102 3,293 (3,832) (2,806) 23,757 Land 12,462 4,049 - (5,186) 11,325 Buildings, civil works and improvements 183,853 31,507 - (99,890) 115,470 Measurement towers 4, (1,225) 3,285 Wind generators 895, ,529 - (457,086) 549,307 Substation equipment 113,417 33,389 - (59,002) 87,804 Advances to suppliers 171, ,025-2, ,196 T otal construction in progress 1,645, ,516 (3,832) (769,594) 1,791,913 T otal property, plant and equipment 3,105, ,566 (4,008) - 3,967,043 49

76 12/31/2012 Additions Write-offs Reclassifications 12/31/2013 Property, plant and equipment Cost Generation Plant Land Reservoirs, dams and watermains 95, ,797 Buildings, civil works and improvements 118,031 9, ,732 Machinery and equipment 1,242, ,242,337 Vehicles Furniture and fixtures (7) 119 IT equipment Measurement towers 8, ,086 Other ,744 6,768 Transmission and connection system Buildings, civil works and improvements 1, ,668 Machinery and equipment 87, ,594 1,554,604 10,777-6,762 1,572,143 Administration Machinery and equipment 596 1, ,167 Improvements 2, ,304 Furniture and fixtures 2, ,223 Software 1, ,472 IT equipment 1, (18) - 1,650 7,947 3,880 (18) 7 11,816 Total property, plant and equipment - cost 1,562,551 14,657 (18) 6,769 1,583,959 (-) Depreciation Generation Plant Reservoirs, dams and watermains (9,999) (2,233) - - (12,232) Buildings, civil works and improvements (6,762) (4,228) - - (10,990) Machinery and equipment (32,858) (56,941) - - (89,799) Vehicles - (2) - - (2) Furniture and fixtures (51) (11) - - (62) IT equipment (128) (42) - - (170) Measurement towers (2,303) (1,536) - - (3,839) Other (4) (352) - - (356) Transmission and connection system Buildings, civil works and improvements (24) (56) - - (80) Machinery and equipment (1,330) (3,048) - - (4,378) (53,459) (68,449) - - (121,908) Administration Machinery and equipment (31) (60) - - (91) Improvements (153) (90) - - (243) Furniture and fixtures (412) (268) - - (680) Software (367) (409) - - (776) IT equipment (354) (250) 5 - (599) (1,317) (1,077) 5 - (2,389) Total property, plant and equipment - depreciation (54,776) (69,526) 5 - (124,297) Total property, plant and equipment 1,507,775 (54,869) (13) 6,769 1,459,662 Construction in progress Generation Unapportioned 74, , ,438 Studies and projects 27, (1,405) - 27,102 Land 5,840 6, ,462 Buildings, civil works and improvements - 183, ,853 Measurement towers 3, ,105 Wind generators ,714-19, ,864 Substation equipment 100,304 1,451-11, ,417 Advances to suppliers 201,181 1,313 - (30,912) 171,582 Social projects - BNDES 3,471 3,273 - (6,744) - Total construction in progress 417,128 1,236,869 (1,405) (6,769) 1,645,823 Total property, plant and equipment 1,924,903 1,182,000 (1,418) - 3,105,485 50

77 14.3 Parent Annual depreciation rates % Historical cost 12/31/2014 Accumulated depreciation Net value Historical cost 12/31/2013 Accumulated depreciation Net value Property, plant and equipment Generation Measurement towers 20% 19,489 (6,141) 13,348 9,086 (3,839) 5,247 Measurement equipment 20% 367 (3) Tower equipment 20% ,807 - (6,144) 14,663 9,086 (3,839) 5,247 Administration Machinery and equipment 10% 3,890 (392) 3,498 2,138 (90) 2,048 Improvements 10% 1,949 (206) 1,743 2,304 (243) 2,061 Furniture and fixtures 10% 7,291 (1,048) 6,243 3,171 (658) 2,513 Software 20% 3,480 (1,325) 2,155 2,472 (776) 1,696 IT equipment 20% 2,963 (980) 1,983 1,632 (583) 1,049 19,573 (3,951) 15,622 11,717 (2,350) 9,367 Total property, plant and equipment 40,380 (10,095) 30,285 20,803 (6,189) 14,614 Construction in progress Generation Unapportioned 160, , , ,354 Studies and projects 23,757-23,757 27,102-27,102 Land 2,612-2,612 2,612-2,612 Advances to suppliers 571, ,908 40,018-40,018 Total consctruction in progress 758, , , ,086 Total property, plant and equipment 798,934 (10,095) 788, ,889 (6,189) 207,700 51

78 14.4 Changes in property, plant and equipment (parent) 12/31/2013 Additions Writeoffs Capital payment - Wind power SPEs Reclassifications 12/31/2014 Property, plant and equipment Generation Measurement towers 9,086 10, ,489 Measurement equipment Tower equipment ,086 11, ,807 Administration Machinery and equipment 2,138 1, ,890 Improvements 2, (371) - - 1,949 Furniture and fixtures 3,171 4, ,291 Software 2,472 1, ,480 IT equipment 1,632 1, ,963 11,717 8,227 (371) ,573 Total property, plant and equipment - cost 20,803 19,948 (371) ,380 (-) Depreciation Generation Measurement towers (3,839) (2,302) (6,141) Measurement equipment - (3) (3) (3,839) (2,305) (6,144) Administration Machinery and equipment (90) (302) (392) Improvements (243) (158) (206) Furniture and fixtures (658) (390) (1,048) Software (776) (549) (1,325) IT equipment (583) (397) (980) Total property, plant and equipment - depreciation (6,189) (4,101) (10,095) Total property, plant and equipment 14,614 15,847 (176) ,285 Construction in progress Generation Unapportioned 123,354 86,921 - (49,077) (921) 160,277 Studies and projects 27,102 3,293 (3,832) - (2,806) 23,757 Land 2, ,612 Advances to suppliers 40, , , ,908 Total construction in progress 193, ,377 (3,832) (49,077) - 758,554 Total property, plant and equipment 207, ,224 (4,008) (49,077) - 788,839 52

79 Property, plant and equipment The Company and its subsidiaries did not identify evidence of impairment of property, plant and equipment. ANEEL, in accordance with the Brazilian regulatory framework, defines the economic useful lives of the power generation assets, with periodical reviews on the estimates. The rates established by ANEEL are recognized as a reasonable estimate of the useful life of the assets. Accordingly, these rates were used as the basis for depreciation of property, plant and equipment. According to articles 63 and 64 of Decree 41019/1957, those assets and facilities used in the power generation, transmission, distribution and sale are linked to these services and cannot be removed, sold, assigned or provided as pledge without the prior and express authorization of the regulatory body. ANEEL, through SFF/ANEEL Letter 459/2001, authorized the assignment of the emerging rights, assets and facilities for the concession of Serra da Prata Hydroelectric Complex, pledged as collateral for the obligations assumed by the Company in the context of the direct financing. Construction in progress Property, plant and equipment in progress include investments in water projects, divided into inventories and basic projects already authorized by ANEEL. They also include investments in the wind projects which won LER 2010, LEN 2011 (A-3), LEN 2012 (A-5), LER 2013 and projects traded in the free market which are under construction through the Company s subsidiaries. The investments include amounts to purchase wind power generators, civil works, substations and sundry costs. As at December 31, 2014, the consolidated balance of advances to suppliers amounts to R$652,196 (2013, R$171,582), comprised of the following: an advance to purchase measurement towers with IEM, in the amount of R$714, an advance under a substation equipment supply agreement entered into with ABB Ltda., Metalurgica Santa Rita and Sadesul, in the amount of R$53,236, an advance to purchase wind power generators, in the amount of R$463,028, with GE and Alstom, an advance to assemble wind generators, in the amount of R$77, with Mammoet, an advance for civil works, in the amount of R$90,000, with Consórcio MGT and others, an advance for sundry services related to the compliance with environmental requirements by wind plant facilities and other, in the amount of R$5,141, and an advance to acquire a project in the amount of R$40,000. Amounts to be apportioned refer mainly to project costs, with the implementation of plants and capitalized interest. As of December 31, 2014, capitalized interest amounts to R$89,319 (R$44,884, as of December 31, 2013). Project breakdown As of December 31, 2014, property, plant and equipment in progress totals R$1,791,913, broken down as follows: 53

80 Projects Consolidated LEN 2011 (A-3) 964,301 LEN 2012 (A-5) 11,379 LER ,650 LEN 2013 (A-5) 41,514 Subtotal - Regulated market 1,113,844 Subtotal - Free trading market 542,158 Other construction in progress 135,911 Total construction in progress 1,791,913 Write-off of projects The Company reviews its portfolio of basic projects and inventories on an annual basis. After reviewing its portfolio of development of small hydroelectric plant projects, the Company elected to discontinue the inventory projects, in the total amount of R$3,832 (see note 23). 15. Trade payables Consolidated Parent 12/31/ /31/ /31/ /31/2013 Trade payables 100, ,418 10,989 2,273 As of December 31, 2014, the consolidated balance of trade payables mainly includes the amounts relating to the agreements for supply of equipment and materials contracted for the construction of plants under LEN 2011 (A- 3), LER 2013, LEN 2012 (A-5), free trading market, among others, relating to wind power generators, substations and civil construction. 54

81 16. Borrowings, financing and debentures 16.1 Consolidated Consolidated 12/31/ /31/2013 Current Noncurrent Current Noncurrent Debt cost Finance charges Principal Total Finance charges Principal Total Finance charges Principal Total Finance charges Principal Total Local currency BNDES - LER 2009 (a) TJLP % p.a. 1,730 40,682 42, , ,733 1,724 40,315 42, , ,342 BNDES - LER 2009 (a) TJLP % p.a ,959 20, , , ,945 20, , ,239 BNDES - LER 2009 (Tranche "C") (a) TJLP ,163 2, ,407 2,407 BNDES - LER 2009 (Tranche "D") (a) TJLP ,005-3,253 3, ,075 2,075 FNE - Banco do Nordeste do Brasil S.A. - Espra (b) 9.5% p.a. (8.08% p.a.)* - 5,896 5,896-90,739 90, ,536 5,556-96,635 96,635 BNDES - LER 2010 (d) TJLP % p.a , , , BNDES - LEN 2011 (d) TJLP % p.a , , , Promissory Notes - LER 2010 (e) 100% CDI % p.a , , , Promissory Notes - LEN 2011 (e) 100% CDI % p.a. 5, , , , , , Finep - CEOL Itaparica (f) 3.5% p.a ,356 6, BNDES - Renova Eólica (a) TJLP % 1,097 21,449 22,546 1, , , BNDES - Renova Eólica (a) TJLP % 1,855 4,464 6,319 2, , , BNDES - Renova Eólica (Tranche "P") (a) TJLP ,320 1, BNDES - Ponte I Diamantina Eólica (Tranche "A") (d) TJLP % , , BNDES - Ponte I Diamantina Eólica (Tranche "B") (d) TJLP + 2.5% ,000 75, Subtotal borrowings 11, , ,243 3,227 1,924,950 1,928,177 34,008 1,066,742 1,100, , ,698 Borrowing costs - (801) (801) - (11,126) (11,126) - (616) (616) - (8,843) (8,843) TOTAL BORROWINGS AND FINANCING 11, , ,442 3,227 1,913,824 1,917,051 34,008 1,066,126 1,100, , ,855 *15% timely payment bonus Debentures - 2nd issuance - Renova Energia S.A. (c) % CDI ,207 10,062 11,269 34, , ,817 Debentures - 3rd issuance - Renova Energia S.A. (c) % CDI , , Debentures - 1st issuance - Renova Eólica Participações S.A. (g) IPCA % p.a ,676 73, Subtotal debentures , ,676 1,207 10,062 11,269 34, , ,817 Borrowing costs - (52) (52) - (1,361) (1,361) - (30) (30) - (1,789) (1,789) TOTAL DEBENTURES 936 (52) , ,315 1,207 10,032 11,239 34, , ,028 55

82 16.2 Parent Parent 12/31/ /31/2013 Current Noncurrent Current Noncurrent Finance charges Principal Total Finance charges Principal Total Finance charges Principal Total Finance charges Principal Total Local currency Debt cost Debentures - 2nd issuance - Renova Energia S.A. (c) % CDI ,207 10,062 11,269 34, , ,817 Debentures - 3rd issuance - Renova Energia S.A. (c) % CDI , , Borrowing costs - (52) (52) - (1,361) (1,361) - (30) (30) - (1,789) (1,789) TO TAL DEBENTURES 269 (52) , ,639 1,207 10,032 11,239 34, , ,028 56

83 16.3 Collaterals As at December 31, 2014, the balance payable of borrowings and financing is collateralized as follows: BNDES (a) BNB (b) Debentures (c) Total Receivables 7,914, ,578-8,564,854 Pledge of shares 1,071, ,866 1,181,976 2,363,952 Mortgage/Sale of assets 1,264, ,729-1,441,816 Surety - money 147,555 12, ,487 Total 10,397, ,105 1,181,976 12,531, Changes Changes in borrowings, financing and debentures are as follows: Consolidated Parent Principal Finance charges Total Principal Finance charges Total Balances as of December 31, ,421,527 81,995 1,503, ,821 5, ,195 Borrowings and financing 1,152,752-1,152, Accrued finance charges - 98,034 98,034-24,588 24,588 Finance charges paid - (62,086) (62,086) Finance charges capitalized - 44,884 44,884-6,241 6,241 Finance charges added to the principal 92,616 (92,616) Financing repayment (347,709) - (347,709) Borrowing costs (171) - (171) (171) - (171) Recognition of borrowing costs 1,030-1, Balances as of December 31, ,320,045 70,211 2,390, ,064 36, ,267 Borrowings and financing 2,006,419-2,006, , ,000 Accrued finance charges - 110, ,012-27,314 27,314 Finance charges paid - (240,518) (240,518) - (81,183) (81,183) Finance charges capitalized - 99,497 99,497-17,935 17,935 Finance charges added to the principal 23,972 (23,972) - Financing and debentures repayment (1,517,912) - (1,517,912) (301,883) - (301,883) Borrowing costs (3,149) - (3,149) Recognition of borrowing costs 1,061-1, Borrowing costs capitalized Balances as of December 31, ,830,462 15,230 2,845, , ,856 57

84 16.5 Maturity of non-current amounts (principal and finance charges) Maturities of the amounts classified in noncurrent liabilities (consolidated) are as follows: 12/31/2014 Maturity year Consolidated Parent , , ,332 71, ,133 71, ,526 71, to , , to , ,054 - Total 2,501,853 (*) 500,000 (*) (*) This amount does not include borrowings costs 16.6 Summary of agreements (a) BNDES agreements (long term) LER 2009 Subsidiaries Pajeú do Vento, Planaltina, Porto Seguro, Nossa Senhora da Conceição, Guirapá, Serra do Salto, Guanambi, Alvorada and Rio Verde, with the intermediation of subsidiary Salvador Eólica, entered into a financing agreement with BNDES in the total amount of R$586,677. Financing is subject to interest rates of 1.92% p.a. + Long-term Interest Rate (TJLP), payable in 16 years. The first installment fell due on May 15, 2013 and the last will mature on April 15, The nine plants total 195.2MW of installed capacity and average 84 MW of contracted firm power. In April 2014, the last installment of the financing agreement, in the amount of R$4,370, was released. The total amount financed for Porto Seguro and Serra do Salto plants includes subloan D, which is designed for social investments, in the total amount R$6,400. The financing is subject to TJLP rate, with a two-year grace period for interest payment and a six-year grace period for principal repayment. The first installment fell due on May 15, 2013 and the last will mature on May 15, In April 2014, the last installment of the financing agreement, in the amount of R$2,500, was released Subsidiaries Candiba, Igaporã, Ilhéus, Licínio de Almeida and Pindaí, with the intermediation of subsidiary Bahia Eólica, entered into a financing agreement with BNDES, in the total amount of R$297,380. Financing is subject to interest rates of 2.18% p.a. + TJLP (Long-Term Interest Rate) and 16 years for principal repayment. The first installment fell due on April 15, 2013 and the last will mature on March 15, The five plants total an installed capacity of 99.2 MW and average contracted firm power of 43 MW. In April 2014, the last installment of the financing agreement, in the amount of R$192, was released. The total amount financed for Candiba and Ilhéus includes subloan C, which is designed for social investments, in the total amount R$3,000. The financing is subject to TJLP rate, with a two-year grace period for interest payment and a six-year grace period for principal amortization. The first installment fell due on January 15,

85 and the last will mature on December 15, In April 2014, the last installment of the financing agreement, in the amount of R$248, was released All BNDES contracts are collateralized by pledged shares, collateral assignment of credit and emerging rights, financed assets, bank guarantee letter during the construction and first year of commercial operations and reserve accounts equivalent to three months of debt service and three months of operation and maintenance. Under this operation, the Debt Service Coverage Ratio (ICSD) = [(activity cash generation + closing cash balance from prior year)/debt service] must be greater than or equivalent to 1.3. As of December 31, 2014, this ratio was met. LER 2010 and LEN 2011 (A-3) Subsidiary Renova Eólica, with the intermediation of subsidiaries Ametista, Araças, Borgo, Caetité, Dourados, Espigão, Maron, Morrão, Pelourinho, Pilões, Da Prata, Seraíma, Serra do Espinhaço, Tanque, Ventos do Nordeste, its direct subsidiary Nova Renova and the Company obtained a financing in the amount of R$1,044,100 (a direct agreement executed on June 4, 2014, in the amount of R$734,020, and a transfer agreement entered into with Banco do Brasil, in the amount of R$310,080). As of December 31, 2014, the amount released was R$804,224, which was used to settle the bridge loan obtained from BNDES, in the amount of R$647,894 and part of promissory notes, in the amount of R$154,617. The direct BNDES financing will be divided into 16 tranches, from A to P, having the followings features: (a) tranches A, C, D, E, F, G, I, J, M and P will have a use and grace period through December 15, 2015, with a repayment term of 192, in monthly consecutive installments, each one in the amount of the debt principal falling due, divided by the number of installments yet to fall due. The first installment will mature on January 15, 2016 and the last, on December 15, 2031; and (b) tranches B, H, K, L, N and O have a use and grace period through December 15, 2014, with a repayment term of 192, in monthly consecutive installments, each one in the amount of the debt principal falling due, divided by the number of installments yet to fall due. The first installment fell due on January 15, 2015 and the last will mature on December 15, Tranches A, B, C, D, E, F, G, H, I, J, K, L, M, N and O are subject to interest rates of 2.45% p.a.+ TJLP where Tranche P is subject to TJLP. The transfer agreement with Banco do Brasil is subject to a rate of 2.60% p.a. + TJLP. All agreements entered into with BNDES are collateralized by pledged shares, collateral assignment of receivables and emerging rights, financed assets, bank guarantee letter and reserve accounts equivalent to three months of debt service and three months of operation and maintenance. Under this transaction, the Debt Service Coverage Ratio (ICSD) = [(activity cash generation + closing cash balance from prior year)/debt service] must be greater than or equivalent to 1.3 calculated at the end of the year. As of December 31, 2014, this ratio was met. (b) BNB agreement Subsidiary Espra, with the intermediation of subsidiary Enerbras, obtained a financing with BNB on June 30, 2006, in the total amount of R$120,096. The agreements are subject to an interest rate of 9.5% p.a. (which can be reduced to 8.08% due to the 15% timely payment bonus) payable monthly on the 30th of each month. The agreement matures on June 30, The contracted amount was fully released. 59

86 This financing is collateralized by property mortgage of Serra da Prata Complex, pledged shares, pledged emerging rights of Authorization Resolutions, right to receive any and all amounts that, actually or potentially, are or may become payable by the Concession Grantor to Espra, all other tangible or intangible rights of the respective Authorization Resolutions and liquidity fund in reserve account (note 11). The financing agreement with BNB does not include covenants requiring compliance with financial ratios subject to accelerated payment of the debt. (c) Simple, nonconvertible debentures On December 15, 2014, a new debenture (3 rd issuance) was issued in the amount of R$500,000. The proceeds from this debenture were used to prepay the already existing debenture (2 nd issuance) in the amount of R$370,754, generating an additional cash for the Company in the amount of R$129,246. The 3 rd issuance debenture yields the same as the 2 nd issuance one (123.45% of CDI), with a grace period of four years as from the agreement signature date. The amortization will begin on December 15, 2018 with annual consecutive installments through December 15, Interest will be paid in semi-annual installments, with no grace period, in June and December of each year, with the first payment falling due on June 15, The 3 rd issuance of debentures was made in accordance with CVM Instruction 476, as resolved by the Company s Board of Directors meeting of December 17, 2014 ( RCA ). Debentures have no restructuring clause. The debentures are collateralized by the pledge of 100% of the Enerbras shares owned by the Company and collateral assignment of assets and rights deposited in restricted account with Banco do Brasil from the dividends distributed by subsidiaries Enerbras and Nova Renova. This transaction sets forth that the ICSD (Debt Service Coverage Ratio = dividends received/debt service) must be greater than or equivalent to 1.0. The debt service is represented by the payment of principal and interest of the falling due series in each year of verification. As of December 31, 2014, this ratio was met. (d) BNDES (short-term) On June 7, 2013, the Company s indirect subsidiaries entered into a financing agreement with BNDES, in the amount of R$600,000. The funds from this financing were allocated to the implementation of the wind farms under LER 2010 and LEN 2011 (A-3). On June 16, 2014, when the long-term financing amount was released, the Company s indirect subsidiaries settled these short-term loans. On December 19, 2014, a short-term financing agreement was entered into between BNDES and Diamantina, in the total amount of R$700,000, divided into two tranches: tranche A, in the amount of R$140,000, and tranche B, in the amount of R$560,000, for wind farms under LEN 2012 (A-5), LER 2013 and free trading market. On December 29, 2014, the amount of R$215,000 was released. The bridge loans will be settled on June 15, 2016 or on the date the long-term financing with BNDES is released. The principal of tranche A will be subject to interest of 3.55% p.a. above TJLP. The principal of tranche B will be subject to interest of 2.50% p.a. above TJLP. The loans are collateralized by the shares issued by Diamantina and the SPEs in which Diamantina holds shares. 60

87 This agreement does not include covenants requiring compliance with financial ratios subject to accelerated payment of the debt. (e) Promissory notes On November 05, 2013, the indirect subsidiaries which are part of the wind farms under LER 2010 and LEN 2011 (A-3) issued commercial promissory notes, for public distribution with restrict placement efforts, in the amount of up to R$400,000 and pursuant to CVM Instruction 476. The distribution is financially settled through CETIP and the commercial bills were deposited in the name of the respective holder as registered with CETIP s Electronic Custody System. The promissory notes will be subject to compensatory interest calculated based on the accumulated variation of 100% of the daily average interbank deposit (DI) rate, over extra group, plus a surcharge of 0.98% per year. On April 30, 2014, these indirect subsidiaries settled the commercial promissory notes, in the amount of R$400,000 (principal) plus interest for the period and renegotiated the issuance of new promissory notes for an additional period of 6 months as from April 30, 2014, in the amount of R$400,000, under the same financial conditions as those of the first issuance. These notes would be settled when the second tranche of the agreement with BNDES is released. On August 29, 2014, when the second tranche of the agreement with BNDES was released, part of the promissory notes was settled, thus remaining a balance of the principal in the amount of R$251,200. The promissory notes do not provide for covenants requiring compliance with financial ratios subject to accelerated payment of the debt. (f) FINEP On December 19, 2013, subsidiary Centrais Elétricas Itaparica S.A. entered into a financing agreement with Financiadora de Estudos e Projetos - FINEP, in the amount of R$107,960. The funds from this financing will be used to implement a hybrid and wind power generation and distribution plant. The financing is subject to interest of 3.5% p.a., with a grace period of 36 months, which covers the period from the agreement signature date and to the date of maturity of the amortization installment, payable in 85 installments, with the first one falling due on January 15, 2017 and the last on January 15, Through December 31, 2014, the amount of R$6,346 had been released. This financing is collateralized by bank letters of guarantee in an amount equivalent to 50% of each release, plus finance charges, and the finance assets (equipment). (g) Infrastructure debentures On November 15, 2014, the 1 st issuance of simple, non-convertible debentures, occurred, subject to collateral and an additional unsecured guarantee, in two series ( Debentures ), for public distribution, with restrict placement efforts, of the Company s indirect subsidiary, Renova Eólica, in the total amount of R$146,000. The 1 st series debentures are subject to IPCA + prefixed interest of % p.a. where those of the 2 nd series are subject to IPCA + prefixed interest of % p.a. 61

88 Debentures were issued as infrastructure debentures, considering the classification of the ventures as priority projects, under the ordinances issued by the Ministry of Mines and Energy (MME). The proceeds from these debentures will be allocated to LER 2010 and LEN 2011 (A-3) in order to supplement the BNDES financing for acquisition of new assets. The first series in the amount of R$73,000 was settled in December 2014 and the second series, also in the amount of R$73,000, will be settled in January 2015 (see note 32.3). The amortization will begin on June 15, 2016 with semi-annual, consecutive installments through December 15, The interest is payable in semi-annual installments, with no grace period, in June and December of each year. Under this transaction, the Debt Service Coverage Ratio (ICSD) = [(activity cash generation + closing cash balance from prior year)/debt service] must be greater than or equivalent to 1.3 calculated at the end of the year. As of December 31, 2014, this ratio was met. 17. Taxes payable Consolidated Parent 12/31/ /31/ /31/ /31/2013 IRPJ 4,214 1, COFINS 3, CSLL 2,426 1, INSS (third parties) 1, INSS 1, , IRRF (payroll) 1, FGTS ISS PIS PIS, COFINS and CSLL IRRF Other TOTAL 17,561 7,549 3,002 1,450 62

89 18. Accounts payable / receivable - CCEE/Eletrobras Consolidated Assets Liabilities 12/31/ /31/ /31/2013 Current Eletrobras - 21,174 2,060 CCEE 199 1,165 6, ,339 8,936 Noncurrent CCEE 6,100 15,627 11,670 Total 6,299 37,966 20,606 Eletrobras The Power Purchase and Sale Agreement, entered into the indirect subsidiary Espra and Eletrobras, sets forth that the sales revenues in the context of the CCEE is determined each year (from January to December). The financial adjustment portion resulting from this calculation will be offset in the monthly invoices of the next year. In the year ended December 31, 2014, the generated power volume (120,940 MWh) was lower than the invoice power volume (213,742 MWh), which resulted after accounting of the Power Relocation Mechanism (MRE) in the context of the CCEE system for sharing the hydrological risks of the generators in a negative financial adjustment in the amount of R$21,174 (2013, R$3,262). CCEE The Reserve Power Agreements entered into the indirect subsidiaries under LER 2009, LER 2010 and CCEE set forth that the differences between the power generated by plants and contracted power are calculated in each contractual year. The reimbursement for negative deviations (below the tolerance level 10%) of generation will be paid in 12 equal monthly installments over the next agreement, at 115% of the current sales price, as set forth in subclause 11.3 of such agreement. The returns within the tolerance level 10% of generation will be reimbursed in 12 installments after possible offset against the positive deviations as from the end of the first four-year period. As of March 31, 2014, the Company reversed the provision for fines relating to the reimbursement of LER 2010 (see note 1.3). (*) Information not audited by independent auditors Changes Changes in the period are as follows: 63

90 Changes in assets 12/31/2012 Additions Receipts 12/31/2013 Additions Receipts 12/31/2014 CCEE ,299-6,299 Total assets ,299-6,299 Changes in liabilities 12/31/2012 Provision Amortization 12/31/2013 Provision Amortization 12/31/2014 Eletrobras 1,293 2,085 (1,318) 2,060 21,174 (2,060) 21,174 CCEE 14,351 5,778 (1,583) 18, (2,091) 16,792 Total liabilities 15,644 7,863 (2,901) 20,606 21,511 (4,151) 37,966 Tota, net 15,644 7,863 (2,901) 20,606 15,212 (4,151) 31, Provision for civil, tax and labor risks As of December 31, 2014, the provision for civil, tax and labor risks amounted to R$79 (2013, R$87). The change of R$8 basically refers to administrative proceedings involving environmental risks. The Company s and its subsidiaries management, based on the opinion of their legal advisors with respect to the likelihood of favorable outcome from several claims, considers that the provisions recorded in the balance sheet are sufficient to cover probable losses. The Company and its subsidiaries are parties to several contingencies amounting to approximately R$7,346 (2013, R$3,455), out of which civil claims in the amount of R$3,855 (2013, R$3,165), and labor claims in the amount of R$3,491 (2013, R$189), which Management, based on the opinion of its legal counsel, assessed as possible loss and did not record any provisions for the year ended December 31, The main lawsuits refer to pain and suffering and termination of lease and rental agreements. Power Grid Charges - National Energy Policy Council Resolution CNPE Resolution 3, of March 6, 2013, defined new criteria for apportionment of the additional commissioning cost of thermal power plants. According to the new criteria, the Power Grid Charges (ESS), for purposes of power security, which was fully apportioned amongst free consumers and distributors, would be apportioned amongst all members of the National Interconnected System (SIN), including generators and sellers. The Brazilian Association of Independent Power Producers (APINE), of which the Company is a member, obtained the preliminary injunction to suspend the effects of article 2 and 3 of CNPE Resolution 3, which exempted the generators from the ESS payment in accordance with such Resolution. The risk involved approximately R$1,420. Based on Management s understanding and on the legal counsel s opinion, this risk was classified as possible loss and did not recognize a provision for the year ended December 31,

91 20. Provision for environmental costs Considering that: (a) before the PCHs and the wind power plants are placed into service, the Company obtains all the environmental permits and, consequently, has a present obligation to comply with all the obligations set out in such permits to be able to operate; (b) such obligation arises from past events (power plant construction); and (c) it is expected that there will be cash outflows capable of generating future economic benefits, the Company provides for socio-environmental costs in current and noncurrent liabilities, and capitalizes such costs in fixed assets over the projects construction periods. After plant startup, such costs are recognized directly in profit or loss. The provision is initially measured at fair value and, subsequently, adjusted to present value and upon change in the value or timeliness of the estimated cash flows, which are considered sufficient for the subsidiaries future disbursements during the phase of construction and the operation of wind farms in operation. As of December 31, 2014, the total balance of line item Provision for social and environmental costs is R$6,686 recognized in current liabilities and R$9,940 (2013, R$2,016) in noncurrent liabilities. 21. Equity and shareholders compensation a) Authorized capital As prescribed by article 8 of the Bylaws, the Company is authorized to increase its capital, as approved by the Board of Directors, regardless of any amendment to the bylaws, through the issuance of common or preferred shares, up to the limit of R$5,002,000. b) Capital In 2013, the Company recorded the following capital increases: Capital increase through stock option plan The Company offers a long-term compensation plan to its employees, whereby stock options are granted to eligible employees upon compliance with the goals established in the plan. In the year ended December 31, 2013, the total number of options granted, exercised and paid through stock option plan is broken down below: Date Number Common Preferred Total Value 03/18/ ,112 78, , /12/ , ,698 1,070, /19/ , , , /20/2013 6,003 12,006 18,009 2 Total 464, ,998 1,393, In 2013, out of the subscribed capital of R$157, the amount of R$140 was paid and R$17 is to be paid. In the year, 34,684 common shares were converted into preferred shares. As of December 31, 2013, the Company s subscribed totaled R$1,017,714 and paid-in capital totaled R$1,017,697, distributed as follows: 65

92 RENOVA ENERGIA Common Preferred Total shares % of total capital Number % Number % Number % Controlling block 101,123, % % 101,123, % RR Participações 50,561, % % 50,561, % Light Energia 50,561, % % 50,561, % Other shareholders 55,775, % 74,408, % 130,184, % RR Participações* 18,560, % % 18,560, % BNDESPAR 9,311, % 18,622, % 27,934, % InfraBrasil 11,651, % 23,302, % 34,954, % Santander 2,269, % 4,539, % 6,809, % FIP Caixa Ambiental 5,470, % 10,940, % 16,410, % FIP Santa Barbara 4,655, % 9,311, % 13,967, % Other 3,856, % 7,691, % 11,548, % Total 156,899, % 74,408, % 231,308, % * Shares not included in the controlling block Note: The controlling block considers shares subject to the Shareholders Agreement In the first quarter of 2014, the amount was R$17 and no unpaid capital balance remained. On September 29, 2014, CEMIG GT subscribed and paid in 87,186,035 common shares issued by Renova, in the total amount of R$1,550,072, through the capitalization of an advance for future capital increase, in the amount of R$810,129, made on March 31, 2014 and through the assignment to Renova of the amount relating to the advance for future capital increase in Chipley on February 14, 2014, in the amount of R$739,943. The capital increase was authorized by the Company s Board of Directors on October 27, In addition to CEMIG GT, preemptive rights relating to 10,866 common shares were exercised by the Company s other shareholders, totaling 87,196,901 subscribed and paid-in common shares, in the total amount of R$1,550,265. On October 30, 2014, a capital increase was made through the stock option plan whereby eligible employees subscribed and paid in 50,165 common shares in the amount of R$18. A summary of the capital increases made in 2014, plus the R$17 paid during the first quarter, is shown in the table below: Date Number Common Preferred Total Value 09/29/ ,186,035-87,186,035 1,550,072 09/29/ ,866-10, /30/ , , , Total 87,247, ,330 87,347,396 1,550,283 As of December 31, 2014, the Company s subscribed and paid-in totaled R$2,567,997, distributed as follows: 66

93 RENOVA ENERGIA Common Preferred Total shares % of total capital Number % Number % Number % Controlling block 188,309, % - 0.0% 188,309, % RR Participações 50,561, % - 0.0% 50,561, % Light Energia 50,561, % - 0.0% 50,561, % Cemig GT 87,186, % - 0.0% 87,186, % Other shareholders 48,535, % 81,810, % 130,345, % RR Participações* 8,260, % 1,300, % 9,560, % BNDESPAR 9,311, % 18,622, % 27,934, % InfraBrasil 11,651, % 23,302, % 34,954, % FIP Caixa Ambiental 5,470, % 10,940, % 16,410, % Other 13,842, % 27,643, % 41,486, % Total 236,845, % 81,810, % 318,655, % * Shares not included in the controlling block Note: The controlling block considers shares subject to the Shareholders Agreement In the year 7,300,884 common shares were converted into preferred shares. c) Share issuance costs Parent 12/31/ /31/2014 Costs on issuance of shares (41,757) (36,112) The Company records all share issuance costs in a specific line item. These amounts refer to consulting and financial advisory fees relating to the capital increase operations, as shown below: Event Date Costs on issuance of shares Initial Pulic Offering (IPO) July ,686 New investor: Light Energia September ,555 New investor: BNDESPAR September ,871 New investor: CEMIG GT September ,645 Total 41,757 67

94 d) Reserves Capital reserve The Company recorded in the capital reserve the effect of costs on share-based payment relating to its plants under LER 2009, LER 2010 and LEN 2011 (A-3) and other projects, as well as the awards paid relating to the successful IPO and also agreements entered into with its executive officers. These records both reflect the shares granted and the shares to be granted in the medium and short term. These accounting records are detailed in note e) Dividends Accumulated losses, if any, and provision for income tax and social contribution will be deducted from profit (loss) for the year before profit sharing. Net profit recorded will be allocated successively in the order below, as set forth in Chapter XVI of the Brazilian Corporate Law: (i) 5% will be directed, prior to any other allocation, to the legal reserve, which cannot exceed 20% of capital; (ii) a portion, as proposed by the management bodies and approved at the General Meeting, may be allocated to the provision for risks, as prescribed by article 195 of the Brazilian Corporate Law; (iii) a portion will be allocated to the payment of mandatory dividends to shareholders. The shareholders are entitled to receive as mandatory dividends, in each year, 25% on net profit for the year, less or plus the following: (i) amount allocated to legal reserve; and (ii) amount allocated to reserve for contingencies and reversal of this reserve from prior years. 68

95 22. Net revenue Consolidated Parent 12/31/ /31/ /31/ /31/ /31/ /31/2013 MWh* MWh* Power generation/supply Electric power supply - PCHs - Eletrobras 213, ,434 45,064 44, Wind power supply - CCEE 1,184,333 1,112, , , Difference in generation - Eletrobras/CCEE agreement (158,292) (133,944) (20,333) (3,218) - - Total revenue 296, , (-) Deductions from revenue COFINS (8,973) (6,994) - - PIS (1,943) (1,516) - - Total deductions (10,916) (8,510) - - Other revenues Operations - solar and sale of electric power 18, (-) Deductions from revenue COFINS (1,435) (12) (9) (12) PIS (312) (3) (2) (3) ISS - (3) - (3) ICMS (3) (6) (4) (6) 17, Total 1,239,783 1,203, , , (*) Information not audited by independent auditors. 69

96 23. Costs and expenses Cost of services Consolidated 12/31/ /31/2013 Operating expenses Total Cost of services Operating expenses Total Tusd/Tust (1) 13,004-13,004 11,356-11,356 Inspection fee 1,216-1, ,220-14,220 11,437-11,437 Personnel and management - 29,741 29,741-12,178 12,178 Outside services 25,344 39,171 64,515 5,527 19,093 24,620 Rentals and leases 7,999 2,183 10,182 4, ,546 Travels - 4,937 4,937-1,594 1,594 Depreciation 80,380 1,808 82,188 68,449 1,077 69,526 Discontinued projects - 3,832 3,832-1,405 1,405 Insurance 1, ,037 3, ,649 Telephony and IT - 4,339 4,339-1,694 1,694 Materials and consumables 2,335 1,607 3, Fine on reimbursement (2) (4,464) - - 4,645-4,645 Power for resale 13,397-13, Other 57 4,099 4, ,263 1, ,793 92, ,266 86,603 39, ,072 Total 141,013 92, ,486 98,040 39, ,509 (1) Tusd - distribution system use tariff and Tust - transmission system use tariff (2) As mentioned in note 1.2, the Company reversed the fine balance, in the amount of R$ 4.645, for wind farms under LER 2010 having not being placed into operation and recorded this reversal in the same line item as that which triggered the operation cost. Cost of services Company 12/31/ /31/2013 Operating expenses Total Cost of services Operating expenses Total Personnel and management - 27,711 27,711-12,178 12,178 Outside services - 26,807 26,807-11,389 11,389 Rentals and leases - 2,183 2, Travels - 4,467 4,467-1,374 1,374 Depreciation 2,305 1,796 4,101 1,536 1,070 2,606 Discontinued projects - 3,832 3,832-1,405 1,405 Insurance Telephony and IT - 3,877 3,877-1,606 1,606 Materials and consumables - 1,463 1, Other 54 2,862 2, ,005 2,142 Total 2,359 75,290 77,649 1,673 32,134 33,807 70

97 24. Finance income (costs) Consolidated Parent 12/31/ /31/ /31/ /31/2013 Finance income Income from short-term investments 52,871 32,070 32,367 19,753 Interest income - intragroup loans - - 1,098 1,615 Discounts obtained Inflation adjustments Total finance income 53,082 32,426 33,640 21,713 Finance costs Debt charges (103,959) (98,034) (27,314) (24,587) Interest (838) (180) (271) (9) Interest - intragroup loan (1,974) - (428) (596) Tax on Financial Transactions (IOF) (825) (921) (232) (532) Banking fees (117) (142) (57) (41) Other finance costs (5,429) (5,410) (542) (482) Total finance costs (113,142) (104,687) (28,844) (26,247) Total finance income (costs) (60,060) (72,261) 4,796 (4,534) 71

98 25. Income tax and social contribution Consolidated Parent 12/31/ /31/ /31/ /31/2013 (Loss) earnings before income tax and social contribution (20,316) 16,241 (35,723) 5,528 Combined income tax and social contribution rate 34% 34% 34% 34% Income tax and social contribution at statutory rates 6,907 (5,522) 12,146 (1,880) Permanent deductions (additions) Nondeductible expenses (3,818) (499) (3,817) (499) Loss on gain of equity interests (1,788) - (1,788) - Share of profit (loss) of subsidiaries (8,446) - 14,378 14,869 Costs on issuance of shares 1,919-1,919 - Effect on subsidiaries taxed under the deemed income 12,657 12, Other - (485) - - Effect of unrecognized deferred tax assets on: Temporary provisions (1,382) (3,838) (1,382) (2,259) Tax loss carryforwards (21,456) (12,315) (21,456) (10,231) Income tax and social contribution in profit or loss (15,407) (9,970) - - The Company did not record taxable income for the year. As of December 31, 2014, the Company had tax loss carryforwards to offset, for which deferred taxes were not recorded, in the following amounts: Parent 12/31/ /31/2013 Tax loss for the year (63,105) (30,091) Prior years' tax loss carryforwards (125,723) (95,632) Total tax loss carryforwards (188,828) (125,723) The consolidated tax refers to subsidiaries Espra (deemed income regime), 14 wind farms under operation (deemed income regime), subholdings Bahia Eólica and Salvador Eólica (actual income regime) and 15 plants under construction (actual income regime). Income tax and social contribution are calculated at the rate of 15%, plus a 10% surtax on taxable income exceeding R$240 for income tax and 9% on taxable income for social contribution, and take into consideration the offset of tax loss carryforwards, limited to 30% of taxable income. The income tax and social contribution under the deemed income regime are paid on gross revenues on a quarterly basis, based on the estimated percentage, according to the conditions and rates set forth in applicable legislation (estimated bases of 8% and 12% on sales, income tax and social contribution, respectively, plus other finance 72

99 income). Deferred taxes on tax loss carryforwards were not recognized as future taxable income is not expected. 26. Related-party transactions Parent Assets Liabilities Finance income (costs) Finance income (costs) Effective term 12/31/ /31/ /31/ /31/ /31/ /31/2013 Start End Intragroup loans Espra 07/10/ /31/ ,987 (428) (596) Salvador Eólica 05/27/ /31/2015 1,106 17, Bahia Eólica 10/17/ /31/ , CE Tanque 10/25/ /30/ CE da Prata 10/25/ /30/ CE Ventos do Nordeste 10/25/ /30/ Other 10/25/ /30/ Total 1,684 26,589-12, ,019 Redeemable shares Nova Renova (*) 38, Advance for future capital increase Chipley (**) 14, ,063 26,589-12, ,019 (*) Redeemable shares issued by subsidiary Nova Renova S.A. under the Bylaws. (**) The advance for future capital increase does not meet the requirements necessary for it to be considered an investment. The main balances of assets and liabilities as of December 31, 2014, as well as the transactions that impact the profit or loss for the year, relating to the related-party transactions, resulted from the Company s transactions with its subsidiaries. Despite of the short-term maturities, the Company expects that these amounts will be performed in the long term Trade receivables/payables Trade receivables loans entered into with the subsidiaries described in the table. These loans were performed to meet these companies cash needs. Trade payables the loan with associate Espra was entered into to meet the cash needs. For both balances (receivable and payable), the amount payable is subject to TJPL rate, plus interest varying between 0.25% and 0.5% p.a. 73

100 26.2 Sales In August 2011, the Company entered into a power purchase and sale commitment with Light Energia, whereby Renova will deliver average MW(*) of wind power, corresponding to MW(*) of installed capacity; wind farms will begin to generate power between 2015 and Out of the total amount of MW(*), 1/3 of the power was traded with LIGHTCOM Comercializadora de Energia S.A. and 2/3 with CEMIG GT. In March 2014, Renova Comercializadora traded average MW with CEMIG GT, corresponding to MW of installed capacity. On June 17, 2014, a Share Purchase and Sale Commitment Investment Agreement was entered into among the Company and Companhia Energética de Minas Gerais ( CEMIG ), which will hold a 50% stake in the project. The wind farms that will satisfy this agreement will start to operate in Pursuant to the Investment Agreement, the transaction will be carried out upon the acquisition by CEMIG of 50% of the voting and total capital of a publicly-held company (SPE) to be established by the Company, in which all agreements relating to the Wind Project will be paid in. The acquisition price will correspond to up to R$113,450 relating to 50% of the amounts of advances relating to agreements already entered into by the Company, adjusted by the fluctuation of the interbank deposit rate ( CDI ) from effective disbursement by the Company up to the date of payment by CEMIG. After the acquisition, CEMIG and Renova will share the future investment of the Wind Project proportionally to their share in the SPE s capital. (*) Information not audited by independent auditors Compensation of key management personnel Compensation of key management personnel for the years ended December 31, 2014 and 2013, as set forth in CVM Resolution 560, of December 11, 2008, amounted to R$8,738 and R$2,530, respectively, including shortterm benefits only. Compensation of the Board of Directors and Statutory Board paid by the Company in the year Statutory Board (*) 12/31/2014 Non-statutory Board (*) Total Board of Directors (**) 12/31/2013 Statuory Board Number of members 4,42 1,75 6, Total Accrued fixed compensation Salary or fees Direct and fringe benefits n/a n/a n/a Compensation due to participation in committee n/a n/a n/a 8 n/a 8 Variable compensation n/a Bonus n/a Share-based payment n/a n/a n/a Charges Post-employment benefits n/a n/a n/a n/a n/a n/a Total compensation by management body

101 Annual average compensation of the Board of Directors and Statutory Board Statutory Board (*) 12/31/ /31/2013 Non-statutory Board (*) Board of Directors (**) Statutory Board Number of members Highest individual compensation amount 1,757 2, Lowest individual compensation amount Average individual compensation amount 1, (*) The Company had four statutory and four non-statutory executive officers. (*) As of December 31, 2013, the Company also has five directors who are not paid compensation. As of December 31, 2014, Board members are not paid compensation Stock option plan The Company s Stock Option Plan, created under the terms of article 168, 3, of Law 6404/76, and approved at the Extraordinary General Meeting, held on January 18, 2010, sets forth the general grant conditions for the Company s stock options. The Plan s main purpose is to retain qualified professional and improves the expansion and performance of the Company s goals, aligned with its shareholders and management s interests. The Stock Option Plan ( Plan ) established that beneficiaries eligible under the Plan include the Company s directors, executive officers and employees, as well as individuals providing services to the Company or other companies under its control. The options are granted within the maximum limit of 5% of the total shares representing the Company s capital, on a diluted basis, including in the calculation all options already granted under the plan. Once the option is exercised, the shares subject to this option will be issued through the Company s capital increase, to be approved under the terms of applicable legislation and the Company s Bylaws. Plan 2011 Plan 2011 was designed to ensure the high performance of the wind projects, the grants and vesting are simultaneous and fully related to goals achieved in each project, subject to the percent of 3% of the project s net present value calculated on the following dates: 10% on the execution of the power sale agreement; 20% on the execution of the financing for project construction; 20% on the date the project is placed into operation; and 50% after one year of start-up of operations of the project. The options granted entitle beneficiaries to acquire shares at the price of R$0.34 per unit (corresponding to a one common and two preferred shares). The services provided by project paid through shares/units are as follows: 75

102 LER 2009 Number of units Unit value - R$ Total amount R$/thousand Grant and vesting date 10% upon execution of the power sale agreement 53, , % upon execution of the project construction financing agreement 106, , % on the date the project is placed into operation 127, , % one year after the project is placed into operation 344, , ,481 18,669 LER 2010 Total amount R$/thousand Grant and vesting date Number of units Unit value - R$ 10% upon execution of the power sale agreement 27, % upon execution of the project construction financing agreement 72, , % on the date the project is placed into operation 78, ,314 scheduled for % one year after the project is placed into operation 215, ,331 scheduled for ,077 11,517 LEN 2011 Total amount R$/thousand Grant and vesting date Number of units Unit value - R$ 10% upon execution of the power sale agreement 10, % upon execution of the project construction financing agreement 34, , % on the date the project is placed into operation 37, ,113 scheduled for % one year after the project is placed into operation 101, ,983 scheduled for ,913 5,432 In addition, the Company distributed the following shares in connection with the Initial Public Offering (IPO) and key management agreements: Parent Total amount R$/thousand Grant and vesting date Number of units Unit value - R$ Initial Public Offer (IPO) Success 360, , Initial Public Offer (IPO) Success 125, , Key executive agreement 48, , Key executive agreement 22, Key executive agreement 54, , ,941 16,658 For beneficiaries terminated during 2013, options were granted under the new projects (free trading market) as part of existing contractual conditions, as shown below: 76

103 Data da Quantidade de Valor justo Preço de Valor justo outorga opções/units outorgadas da outorga exercício na data da outorga 18/03/13 11, /09/13 47, ,185 20/12/13 4, Outros 25 2,792 In 2013, the fair value of the grants was recorded in the reverse for employee s benefits in the amount of R$2,792. On June 26, 2013, the Company s Board of Directors resolved to suspend Plan 2011 and did not allow the admission of new participants and limited to the projects traded between December 2009 and June The eligible beneficiaries will continue to participate in the Plan until all goals of these projects are met. In 2014, for the goals of projects traded by the Company after November 2011, the amount of R$3,432, including charges, was paid via payroll. These amounts were recorded in property, plant and equipment in progress of the respective project. The other grants in 2014 refer to the share-based payment plan of former projects already recorded. Plan 2013 Also on June 26, 2013, another program was approved ( Plan 2013 ). The grants are exercisable in up to 6 years, with a vesting period of four years (25% per year) subsequently to the grant date. The share exercise price is determined by the average weighted by the volume of the 30 trading sessions prior to the reference date. The first grant was approved by the Company s Board of Directors on December 19, 2014, in the total volume of 444,520 shares, corresponding to 148,173 units. The exercise price of each option is R$38.42 per unit. As of December 31, 2014, the Company recorded the amount of R$109 directly in equity and profit (loss) for the year. 27. Financial instruments and risk management The Company and its subsidiaries conduct transactions with financial instruments. These financial instruments are managed through operating strategies and internal controls that aim at liquidity, profitability and security. Gains and losses on these transactions are consistent with the policies set by Company s management. The risks associated with these operations are managed according to the practices defined by Management, including the monitoring of the levels of exposure of each market risk and estimated future cash flow. These practices also determine that the information is updated in the operating systems, as well as the information and operation of the transactions with counterparties. 77

104 a. Fair value of financial instruments Fair value is the amount for which an asset could be exchanged or a liability could be settled, between parties aware of and interested in the business, through a transaction without beneficiaries. The definition of fair value covers several variations on the metrics adopted to measure an amount at reliable value. The calculation of the fair value was determined based on the available market information and methodologies adopted in the evaluation. However, significant judgment is necessary to understand the market information and estimate the fair value. Some line items have accounting balance equivalent to the fair value. This results from the fact that these financial instruments have characteristics similar to those that would be obtained had these financial instruments been traded in the market. The use of different market methodologies may have a material effect on the estimated realizable values. The transactions with financial instruments are recorded in the Company s balance sheet at their carrying amount, which is equivalent to their fair value in cash and cash equivalents, trade receivables, related parties, collaterals and restricted deposits and trade payables. The accounting balances of borrowings, financing and debt charges differ from fair value. Consolidated Fair value Carrying amount Financial assets 12/31/ /31/ /31/ /31/2013 Current assets Short-term investments 538, , , ,711 Trade receivables 68,627 20,923 68,627 20,923 Collaterals and restricted deposits 40 27, ,231 Noncurrent assets Collaterals and restricted deposits 160, , , ,981 Financial liabilities Current liabilities Trade payables 100, , , ,418 Debentures , ,239 Borrowings and financing 356,243 1,100, ,939 1,100,134 Noncurrent liabilities Debentures 573, , , ,028 Borrowings and financing 1,928, ,698 1,911, ,855 78

105 Parent Fair value Carrying amount Financial assets 12/31/ /31/ /31/ /31/2013 Current assets Short-term investments 198, , , ,234 Trade receivables Collaterals and restricted deposits Noncurrent assets Collaterals and restricted deposits Related parties 55,063 26,589 55,063 26,589 Financial liabilities Current liabilities Trade payables 10,989 2,273 10,989 2,273 Debentures , ,239 Noncurrent liabilities Debentures 500, , , ,028 Related parties - 12,987-12,987 79

106 b. Categories of financial instruments The classification of financial instruments and their accounting balances are broken down below: Financial assets Current assets Loans and receivables Fair value through profit or loss O ther at amortized cost Total Loans and receivables Fair value through profit or loss O ther at amortized cost Short-term investments - 538, , , ,711 Trade receivables 68, ,627 20, ,923 Collateral and restricted deposits , ,231 Noncurrent assets Consolidated 12/31/ /31/2013 Collateral and restricted deposits 160, , , ,981 Total Financial liabilities Current liabilities Trade payables , , , ,418 Borrowings and financing , , ,100,134 1,100,134 Debentures ,239 11,239 Noncurrent liabilities Borrowings and financing - - 1,917,051 1,917, , ,855 Debentures , , , ,028 Financial assets Current assets Loans and receivables Fair value through profit or loss O ther at amortized cost Total Loans and receivables Fair value through profit or loss O ther at amortized cost Short-term investments - 198, , , ,234 Trade receivables Collateral and restricted deposits Noncurrent assets Collateral and restricted deposits Related parties 55, ,063 26, ,589 Parent 12/31/ /31/2013 Total Financial liabilities Current liabilities Trade payables ,989 10, ,273 2,273 Debentures ,239 11,239 Noncurrent liabilities Debentures , , , ,028 Related parties ,987 12,987 c. Fair value measurement The Company adopts the measurement at fair value of its financial assets and financial liabilities. Fair value is measured at market value based on the assumptions that the market players are able to measure an asset or liability. For purposes of consistency and comparison, the fair value hierarchy prioritizes the inputs adopted in the measurement of the three main levels, as follows: Level 1. Active market: Price - a financial instrument is considered as quoted in an active market if the quoted prices are immediately and regularly available in stock exchange or organized over-the-counter market, by 80

107 operators, brokers or market association, by entities whose purpose is to disclose the prices by regulatory agencies, and if these prices represent market transactions regularly carried out between independent parties, without beneficiaries. Level 2. Without active market: Valuation method In relation to financial instruments not traded in an active market, the fair value must be determined based on the valuation/pricing methodology. Criteria used include current fair value of another financial instrument significantly similar, analysis of discounted cash flow and option pricing models. The purpose of the evaluation method is to determine the transaction price on the measurement date through a commercial exchange not subject to personal interests. Level 3. Without active market: Inputs for an asset or liability not based on observable market variations (nonobservable inputs) as at December 31, 2014 the Company did not have any financial instrument classified in this category. The instruments stated at fair value are broken down as follows: Description Balance at 12/31/2014 Active market - quoted price (level 1) Fair value as of December 31, 2014 No active market - No active market - valuation technique nonobservable inputs (level 2) (level 3) Assets Short-term investments 538, ,697 - Description Balance at 12/31/2013 Active market - quoted price (level 1) Fair value as of December 31, 2013 No active market - No active market - valuation technique nonobservable inputs (level 2) (level 3) Assets Short-term investments 351, ,711 - Short-term investments: prepared taking into consideration the security market quotation or market information used in such calculation, based on future interest and exchange rates of similar instruments. The fair value of a security corresponds to its value at the maturity date, discounted to present value using a discount obtained using the market interest curve, in Brazilian reais. In the years ended December 31, 2014, there were no transfers between fair value measurements of level 1 and level 2 or between level 3 and level 2. d. Market risk The market risk reflects the possibility of monetary losses due to the changes in variables that impact the prices and rates traded in the market. These fluctuations basically impact all sectors and, therefore, represent financial risk factors. 81

108 The Company s and its subsidiaries borrowings and financing, as described in Note 16, were entered into with BNB, BNDES and the Debentureholders. The contractual rules applicable to financial liabilities represent risks related to these exposures. As at December 31, 2014, the Company and its subsidiaries are exposed to market risk associated to the CDI, TJLP and fixed rates. e. Sensitivity analysis (consolidated) The Company and its subsidiaries present below the additional disclosures on their financial instruments required by CVM Instruction 475/08, specifically on the sensitivity analysis in addition to the sensitivity analysis required by IFRSs and accounting practices adopted in Brazil. The Company adopted the assumptions below, defined in CVM Instruction 475/08, to conduct this sensitivity analysis: definition of a probable scenario for risk behavior that, if materialized, can generate adverse results for the Company, and which is benchmarked by an independent external source (Scenario I); definition of two additional scenarios with stresses of at least 25% and 50% in the risk variable considered (Scenario II and Scenario III, respectively); and presentation of the impact of the defined scenarios on the fair values of the financial instruments operated by the Company and its subsidiaries. Transaction as of December 31, 2014 Risk Scenario I - Probable scenario Scenario II - 25% decrease Scenario III - 50% decrease Rate effective at December 31, % 11.57% 11.57% Short-term investments: CDI decrease 538, , ,697 Annual estimated CDI rate for % 9.36% 6.24% Annual effect on short-term investments: Gain 5,045 Loss (12,251) (29,546) Transaction Risk Scenario I - Probable scenario Scenario II - 25% decrease Scenario III - 50% decrease Rate effective at December 31, % 11.57% 11.57% Borrowings: DEBENTURES - RENOVA CDI increase 500, , ,269 PROMISSORY NOTES - LER 2010 AND LEN 2011 CDI increase 256, , ,598 Annual estimated CDI rate for % 15.60% 18.72% Annual effect on borrowings: Loss 7,955 35,229 62,504 82

109 Transaction Risk Scenario I - Probable scenario Scenario II - 25% decrease Scenario III - 50% decrease Rate effective at December 31, % 5.00% 5.00% Borrowings: BNDES - LP - LER 2009 TJLP increase 875, , ,239 BNDES - LP - Renova Eólica TJLP increase 833, , ,080 BNDES - CP - Diamantina Eólica TJLP increase 215, , ,094 Annual estimated TJLP rate for % 6.88% 8.25% Reduction Loss 9,618 36,066 62,514 For short-term investments, the probable scenario considers SELIC future rates, used as the basis for calculation of the CDI rate, based on the Central Bank of Brazil s expectations, over a year, at 12.48%. Scenarios II and III consider a reduction of this rate by 25% (9.36% p.a.) and 50% (6.24% p.a.), respectively. These projections are also applicable to debentures and promissory notes subject to the CDI rate, considering scenarios II and III, based on an increase of 25% (15.60%) and 50% (18.72%), respectively. For borrowings and financing subject to the TJLP rate, the Company and its subsidiaries considered a probable scenario according to the rate for the third quarter of 2014 provided by BNDES, which rate is expected to be maintained over a year, at 5.50%. Scenarios II and III consider a reduction of this rate by 25% (6.88% p.a.) and 50% (8.25% p.a.), respectively. The weighted average spread in the short-term investments and loans is: (i) % of CDI rate on short-term investments; (ii) 2.33% + TJLP on BNDES loans; and (iii) % of CDI rate on debentures. The effects (increase/decrease) included in this sensitivity analysis refer to interest rate changes considered in scenarios I, II and III based on the interest rate in effect as at December 31,2014. These sensitivity analyses have been prepared in accordance with CVM Instruction 475/2008, whose purpose is to measure the effects from the changes in market variables on each financial instrument of the Company and its subsidiaries. However, the actual settled amounts could differ from these estimates due to the subjectivity inherent in the process used in preparing the analyses. f. Liquidity risk The liquidity risk determines the parent s and subsidiary s ability to settle the obligations assumed. In order to determine the subsidiary s financial capacity to properly comply with the commitments assumed, the maturity flows of the funds raised and other obligations are included in the disclosure. For further information on the Company s borrowings, see note 16. The Company s management solely enters into with credit lines to leverage its operating capacity. This assumption is confirmed based on the characteristics of the Company s borrowings. 83

110 f.1. Liquidity and interest rate risk tables The tables below detail the remaining contractual maturity of the Company s and its subsidiaries non-derivative financial liabilities and the contractual repayment periods. These tables were prepared using the undiscounted cash flows of the financial liabilities based on the nearest date on which the Company and its subsidiaries should settle the related obligations. The tables include interest and principal cash flows. As interest flows are based on floating rates, the undiscounted amount was based on the interest curves at yearend. The contractual maturity is based on the most recent date on which Renova Group should settle its respective obligations. Consolidated Intruments at interest rate 1 to 3 months 3 months to 1 year 1 year to 5 years Over 5 years Total Fixed Borrowings and financing - principal and finance charge 48, ,801 1,052,003 1,625,051 2,862,662 Debentures - principal and finance charge - 537,252 3,247,774 1,635,875 5,420,901 Total 48, ,053 4,299,777 3,260,926 8,283,563 Parent Intruments at interest rate 1 to 3 months 3 months to 1 year 1 year to 5 years Over 5 years Total Fixed Debentures - principal and finance charge - 537,252 3,247,774 1,635,875 5,420,901 Total - 537,252 3,247,774 1,635,875 5,420,901 g. Credit risk The credit risk reflects the possibility that the Company may not exercise its rights. This description is directly related to line item Trade receivables. Financial assets Note 12/31/ /31/ /31/ /31/2013 Current Consolidated Carrying amount Parent Trade receivables 8 68,627 20,923-1 In the power sector, the operations carried out are directed to the regulatory agency that maintains the active information on the positions of produced and consumed power. Based on structure, planning is made to operate the system without interferences or interruptions. Power is sold through auctions, agreements, among others. This system is reliable and controls the payments by the players in the market. The Company does not carry out transactions for speculative purposes. The Company manages its risks on a continuous basis, evaluating whether the practices adopted in the performance of its activities are aligned with Management s policies. The Company does not carry out transactions with financial instruments for equity hedge purposes as it believes that the risks to which its assets and liabilities are exposed can be compensated between 84

111 each other over the normal course of its activities. These financial instruments are managed using operating strategies that seek to obtain liquidity, profitability, and security. The control policy consists of a permanent monitoring of contracted terms and conditions compared to market terms and conditions. As at December 31, 2014, the Company did not make speculative investments in derivatives or any other risk assets. h. Derivative transactions No transactions with derivative financial instruments were conducted in the years reported. i. Capital management Consolidated 12/31/ /31/2013 Borrowings and financing debt 2,845,692 2,390,256 (-) Cash and cash equivalents and short-term investments 595, ,047 Net debt 2,250,075 2,016,209 Equity 2,509,641 1,000,600 Financial leverage ratio - % 90% 202% The objectives of the Company in managing its capital are to ensure that the Company is always capable of providing return to its shareholders and benefits to other stakeholders, and maintain an ideal capital structure to reduce this cost. In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to stockholders, return capital to stockholders or, also, issue new shares or sell assets to reduce, for example, indebtedness. j. Risk of shortage of wind This risk results from the shortage of wind due to natural factors, which is reduced because the wind deposits in Brazil are one of the best in the world, as in addition to high speed, wind is considered stable, different from certain regions in Asia and the United States, which are subject to cyclones, typhoons and other natural factors. k. Risk of shortage of water Indirect subsidiary Energética Serra da Prata S.A. and the jointly controlled entity Brasil PCH generate power through small hydroelectric plants (PCHs). A long period of shortage of rain, during the humid season, will reduce the water volume of the plants reservoirs. An extreme condition would imply decrease in revenues. The occurrence of unfavorable hydrologic conditions, and the obligation to deliver the contracted energy, may result in the Company s exposure to the long-term energy market, which would affect its future financial results. However, except for one PCH, 100% of the hydroelectric generation capacity of the other PCHs is part of the Power Relocation Mechanism ( MRE ), which mitigates part of the hydrologic risk, through the allocation between all plants linked to the MRE. 85

112 28. Earnings per share Basic earnings (loss) per share are calculated by dividing profit (loss) for the year attributable to the holders of common and preferred shares of the Parent by the weighted average number of common and preferred shares outstanding during the year. Diluted earnings (loss) per share is calculated by dividing profit (loss) for the year attributable to the holders of the Parent s common and preferred shares by the weighted average number of common and preferred shares available during the year, plus the weighted average number of common shares issued on the assumption of exercise of stock options with strike price lower than fair value. According to the Company s bylaws, preferred shares are entitled to the same conditions of the common shares in profit sharing. The table below shows the data and number of shares used to calculate basic and diluted earnings (loss) per share for the years indicated in the statement of operations. Consolidated Parent 12/31/ /31/ /31/ /31/2013 (Loss) profit for the year (35,723) 6,271 (35,723) 5,528 Basic (loss) earnings per share: Weighted average of outstanding common shares (in thousands) 253, , , ,476 (Loss) basic earnings per share (in R$) (0.14) 0.03 (0.14) 0.02 Diluted earnings per share: Weighted average of outstanding common shares (in thousands) 253, , , ,476 Dilutive effect of stock options (in thousands) Total shares applicable to dilution (in thousands) 253, , , ,504 (Loss) diluted earnings per share (in R$) (0.14) 0.03 (0.14) Insurance coverage The Company and its subsidiaries contracted insurance for certain property, plant and equipment items, civil liability and other contractual guarantees. As at December 31, 2014, current policies are summarized as follows: Risks of generation, construction and transmission: 86

113 Operation Insured item Coverage Effective term Start End Insured Surety - Contractual obligations R$ /08/ /08/2015 COELBA Operating risks R$ 156,109 09/25/ /25/2015 ESPRA Civil liability R$ 20,000 09/25/ /25/2015 ESPRA Performance bond for implementation of LER 2010 R$ 29,470 04/14/ /10/2015 ANEEL Operating risks (LER 2009) R$ 1,274,971 07/11/ /11/2015 Renova Energia Civil liability LER 2009 R$ 10,000 06/28/ /28/2015 Renova Energia Construction Insured item Coverage Effective term Start End Insured Performance bond for implementation of LEN 2011 R$ 41,193 12/05/ /21/2015 ANEEL Engineering risks / ALOP (LEN 2011) R$ 785,822 11/29/ /01/2015 Renova Energia Civil liability - LEN 2011 R$ 20,000 11/29/ /01/2015 Renova Energia Transportation / Delay Start Up (Project LER 2010 / LEN 2011) R$ 801,500 11/30/ /01/2015 Renova Energia Performance Bond (LEN 2012) R$ 3,144 04/02/ /01/2017 ANEEL Performance Bond (LER 2013) R$ 31,750 12/05/ /01/2015 ANEEL Performance Bond (A ) R$ 64,715 04/28/ /01/2018 ANEEL Performance Bond (ACL) R$ 43,980 09/19/ /01/2015 ANEEL Performance Bond (ACL) R$ 36,720 09/19/ /01/2016 ANEEL Performance Bond (ACL) R$ 19,520 09/19/ /01/2017 ANEEL Performance Bond (ACL) R$ 4,320 09/19/ /01/2016 ANEEL Performance Bond (ACL) R$ 6,480 09/19/ /10/2015 ANEEL Administration and Portfolio Insured item Coverage Effective term Start End Insured Civil liability D&O R$ 30,000 12/18/ /18/2015 Renova Energia Civil liability - Initial Public Offering POSI R$ 25,000 07/07/ /07/2015 Renova Energia Rd Equipment (Wind measurer - Lidar) R$ /12/ /12/2015 LIDAR 30. Commitments The Company and its subsidiaries have contractual obligations and commitments assumed in connection with the construction and maintenance of their wind farms, including purchases of machinery and equipment, in the amount of R$4,559,676, civil construction, in the amount of R$470,742, maintenance, in the amount of R$4,216, and acquisition of projects, in the amount of R$93,

114 31. Non-cash transactions As of December 31, 2014, the Company conducted the following noncash transactions; therefore, these transactions are not reflected in the statement of cash flows: Consolidated Parent Note 12/31/ /31/ /31/ /31/2013 Finance charges capitalized 14.2, ,497 44,884 17,935 6,241 Finance income capitalized 14.2 (6,392) (3,772) - - Borrowing costs capitalized 16 (26) Capitalization of share-based payments (property, plant and equipment) ,792-2,792 Payment of capital in subsidiaries through property, plant and equipment ,077 - Capital increase by Cemig through assignment of receivables from advance for future capital increase in Chipley , ,943 - Acquisition of property, plant and equipment - Trade payables , , Provision for social and environmental costs 20 14, Payment of borrowings and promissory notes through a new financing 16 1,000, Payment of interest on borrowings through a new financing 16 47, Events after the reporting date 32.1 Settlement of promissory notes On February 02, 2015, promissory notes issued against eight companies under LEN 2011 (A-3) were settled, in the total amount of R$259,316, out of which R$251,200 relating to the principal and R$8,116 relating to interest Startup of LEN 2011 (A-3) commercial operations On March 04, 2015, four, out of nine, plants which traded power under LEN 2011 (A-3) started commercial operations. Ametista, Pilões, Maron and Dourados plants, with an installed capacity of MW, were connected to the same transmission line which serves LER 2009 and LER 2010 (Igaporã II) plants. The other five plants will be connected to Igaporã III line, whose startup date, under the Schedule of Transmission Projects (SIGET) disclosed by ANEEL, is scheduled for August 12, The nine LEN 2011 (A ) plants remained connected and the agreement will start in up to 30 days after the transmission line starts operations. From March 04, 2015 (start of commercial operations) to the startup date under the agreement, plants, in accordance with a technical note issued by ANEEL, will be paid for the energy actually generated at the contracted price. 88

115 32.3 Receipt of the 2 nd series of debentures On January 21, 2015, the 2 nd series of debentures of the indirect subsidiary Renova Eólica, in the amount of R$73,000, was settled. The amount was inflation adjusted based on IPCA + prefixed interest of % p.a., from the issuance date, November 15, 2014 to the settlement date, of R$75,106. * * * Carlos Mathias Aloysius Becker Neto Chief Executive Officer Ricardo de Lima Assaf Vice-President for Legal Affairs, Regulation and Institutional Relations Officer Pedro V.B. Pileggi Vice-President for Finance, Business Development and Investors Relations Officer Ney Maron de Freitas Vice-President for Environment and Sustainability Reinaldo Cardoso Silveira Accountant CRC /0-S- SP 89

116 (Convenience Translation into English from the Original Previously Issued in Portuguese) Renova Energia S.A. e Controladas Individual and Consolidated Financial Statements for the Year Ended December 31, 2014 and Independent Auditor s Report Deloitte Touche Tohmatsu Auditores Independentes

117 Deloitte Touche Tohmatsu Auditores Independentes Avenida Tancredo Neves 450 Edf. Suarez Trade 29º andar Salvador - BA Tel: + 55 (71) Fax:+ 55 (71) (Convenience Translation into English from the Original Previously Issued in Portuguese) INDEPENDENT AUDITOR S REPORT To the Shareholders, Directors and Management of Renova Energia S.A. São Paulo - SP We have audited the accompanying individual and consolidated financial statements of Renova Energia S.A. ( Company ), identified as Parent and Consolidated, respectively, which comprise the balance sheet as at December 31, 2014, and the income statement, statement of comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information. Management s responsibility for the financial statements Management is responsible for the preparation and fair presentation of these individual and consolidated individual financial statements in accordance with accounting practices adopted in Brazil and International Financial Reporting Standards (IFRS), issued by the International Accounting Standards Board - IASB, and for such internal control as Management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor s responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conduct our audit in accordance with Brazilian and International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing selected procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by Management, as well as evaluating the overall presentation of the financial statements. Deloitte refere-se à sociedade limitada estabelecida no Reino Unido Deloitte Touche Tohmatsu Limited e sua rede de firmas-membro, cada qual constituindo uma pessoa jurídica independente. Acesse para uma descrição detalhada da estrutura jurídica da Deloitte Touche Tohmatsu Limited e de suas firmas-membro. Deloitte Touche Tohmatsu. Todos os direitos reservados.