ENEVA S.A.
CNPJ/MF (Taxpayer Registration Number) 04.423.567/0001-21
NIRE (Company Registration Number) 33.3.0028402-8
(Publicly Held Company)
Management Proposal for the Ordinary General Shareholders’ Meeting to
be held on April 28th, 2014, at 11:00 a.m., pursuant to the Call Notice
published on the date hereof.
Dear Shareholders,
The Management of ENEVA S.A. (“Company” or “ENEVA”), in accordance with its
Bylaws and with applicable legislation, in order to serve the interests of the
Company, hereby proposes the following, with respect to the Ordinary General
Shareholders’ Meeting:
(i) Verify the management accounts, examine, discuss and vote on the
financial statements related to the fiscal year ended on December 31st,
2013:
The Company’s Management proposes that the Shareholders analyze and, after
careful consideration, approve the Financial Statements and Management Report,
as approved by the Company’s Board of Directors in the meeting held on March
27th, 2014. The Management also recommends the approval of the management
accounts and the acknowledgement of the Independent Auditors’ Report related to
the fiscal year that ended on December 31st, 2013.
The Financial Statements and the Management Report were published on March
28th, 2014, in the Diário Oficial do Estado do Rio de Janeiro and in the Diário
Mercantil. The mentioned documents, along with the standardized financial
statements form – DFP and the comments of the Management regarding the
Company’s financial status are available on the website of the Brazilian Securities
and Exchange Commission (Comissão de Valores Mobiliários – CVM)
(www.cvm.gov.br), on the BM&FBovespa website (www.bmfbovespa.com.br) and
on ENEVA’s website (http://ri.eneva.com.br/), pursuant to CVM Rule 481/09.
(ii) Approve the allocation of the income of the fiscal year ended on
December 31st, 2013:
Considering the negative results of the fiscal year, at R$ 942.5 million, it is not
applied any proposition of allocation of the income. In this sense, the presentation
of the Annex 9-1-II pursuant of the CVM Rule 481/09 is not applied.
(iii) Establish the global annual amount of the management compensation:
The Management proposes the approval of an aggregate compensation for the
Company’s Management in the amount of up to R$8.5 million, to be distributed in
accordance with the duties undertaken, the time devoted to the Company and the
professional expertise of each member of the Management. This amount, which will
not necessarily be fully expended, is comprised of approximately R$300.000,00
(three hundred thousand Reais) for payment of the fixed fees of the members of
the Board of Directors and of the Committees related to such governing body. In
addition to the compensation detailed above, the members of the Company’s
Management may exercise and/or receive stock options for subscription of shares
of the Company, pursuant to the Company’s Stock Purchase or Subscription Option
Program, available on the Company’s Investor Relations website
(http://ri.eneva.com.br/) and on the CVM’s website (www.cvm.gov.br). The
proposed remuneration for the Company’s Executive Officers of up to R$8.2 million
comprises fees and benefits.
As instructed by Item 2.4.2.a of the Ofício-Circular/CVM/SEP/Nº01/2014, below lies
the comparison between the amounts approved in the Management Proposal for the
Ordinary General Shareholders’ Meeting held on April 29th, 2013 and payments
actually incurred.
Amounts approved in
the Management
Proposal for the
Ordinary General
Shareholders’ Meeting
held on April 29th, 2013
Payments actually
incurred in the fiscal
year of 2013
Board of
Directors 800,000.00 610,936.54
Executive
Committee 6,200,000.00 44,389,795.86
Total 7,000,000.00 45,000,732.40
The difference between the approved amounts and those actually incurred is mainly
due to stock-based compensation received by the administrators during the fiscal
year of 2013 related to the exercise of stock options of the Shareholder’s Plan and
the Company’s Program, described in Item 13 of Reference Form.
Additionally, we clarify that any differences between the amounts of the
Management compensation scheduled for the fiscal year of 2014 presented in the
Management Proposal and in the Item 13 of the Reference Form are due to the
need of possible adjustments during the fiscal year.
Pursuant to article 12 of CVM Rule 481/09, additional information related to
Management compensation, according to item 13 of the Reference Form, is
attached hereto as Annex III. Such information is also available Company’s website
(http://ri.eneva.com.br/), on the CVM’s website (www.cvm.gov.br), and on
BM&FBovespa’s website (www.bmfbovespa.com.br).
GENERAL CLARIFICATIONS REGARDING PARTICIPATION IN THE
SHAREHOLDERS’ MEETING:
In order to participate in the Meeting, the Shareholders shall be present, in person
or by proxy, at the time and place set forth for the Meeting, pursuant to the Call
Notice, and shall present the following documents:
(a) Individual Shareholders:
(i) Shareholder’s identification document;
(ii) Statement of equity participation issued by the custodian of the
Company’s shares no more than 2 (two) business days prior to the
Shareholders’ Meeting; and,
(iii) In the event the shareholder is represented by a proxy, the
documents listed in item (c) below.
(b) Legal Entity Shareholders:
(i) Identification document of the legal representative or proxy in
attendance;
(ii) Statement of equity participation issued by the custodian of the
Company’s shares no more than 2 (two) business days prior to the
Shareholders’ Meeting;
(iii) Updated Bylaws or Articles of Association, registered with the
relevant authority;
(iv) Document evidencing the powers of representation: minutes of the
meeting in which the legal representative or person who signed the
power-of-attorney was elected, as the case may be;
(v) In the event the shareholder is represented by a proxy, the
documents listed in item (c) below; and,
(vi) In the event the shareholder is an equity fund, the charter and
documents related to its manager listed in item (iv) above.
(c) Shareholders represented by proxy:
In the event the shareholder prefers to be represented by proxy, such shareholder
shall also furnish the following documents:
(i) Notarized Power-of-attorney, issued less than one year from the date
of the Shareholders’ Meeting, as legally required (article 126,
paragraph 1 of Law 6,404/76). The proxy must be a shareholder,
manager of the Company, attorney, financial institution or equity
fund manager representing the investors; and
(ii) Proxy’s identification document;
Note: Proxies granted outside of Brazil shall be notarized by a duly
authorized notary, registered with the Brazilian consulate and translated to
the Portuguese language by a sworn translator.
In order to expedite the organization of the Shareholders’ Meeting, the Company
requests that the above listed documents be delivered at least 2 business days
prior to the Shareholders’ Meeting, by hand delivery, courier or e-mail (in the latter
case, the hard copy must be furnished at the Shareholders’ Meeting) to the
following addresses:
Hard Copies:
Att.: Corporate Governance
Praia do Flamengo, 66, 7th floor
CEP: 22.210-903, Rio de Janeiro – RJ
E-mail:
Please include in the subject line:
Documents Shareholders’ Meeting of ENEVA - April 28th, 2014
E-mail: [email protected]
The Company would like to note that the purpose of the prior delivery of the
documents is to streamline the proceedings related to the Shareholders’ Meeting
and such prior delivery is not a requirement for participation in the Meeting.
Finally, the Company would like to clarify that this Management Proposal, together
with the relevant Call Notice, are available at CVM’s website (www.cvm.gov.br), at
BM&FBOVESPA’s website (www.bmfbovespa.com.br), as well as on the Company’s
Investor Relations (http://ri.eneva.com.br/). Additionally, the documents related to
this Call Notice, including those required by CVM Rule 481/09, are available to the
shareholders’ at the Company’s head office.
Rio de Janeiro, March 27th, 2014.
The Management.
Jørgen Kildahl
Chairman of the Board of Directors
ENEVA S.A.
ANNEX I
ITEM 10 OF THE REFERENCE FORM
10.1 General financial and equity conditions
The information given below has been reviewed by the Company Management, and
their comments are attached.
The figures shown in this section 10 have been extracted from the Company
consolidated financial statements for the years ended December 31, 2012, 2011
and 2010 and the quarterly financial statements – QFS for the quarter ended March
31, 2013.
(a) Management’s comments on the general financial and equity
conditions
The Company Management has the following comments to make on the general
financial and equity conditions of the Company:
In the year 2011, our Company recorded consolidated gross revenue of R$189.9
million, R$42.3 of which from the operation of Serra do Navio thermoelectric plant
and R$148.1 million from the energy trader. The Company recorded a loss of
US$408.5 million for this year, with consolidated cash position (cash and cash
equivalents, marketable securities) at the end of 2011 to R$ 1,380.2 million,
consisting mainly of issuance in June year of R$ 1,377 billion in convertible
debentures. Loans and financings totaled R$ 3.321 million.
In the year 2012, the Company reported a consolidated gross revenue of R$ 54.1
million, which is entirely caused by the Amapari, Comercializadora de Energia e
Itaqui operation. Our Company recorded a loss of R$435.2 million for this year;
however, it recorded consolidated cash and cash equivalents as of December 31,
2012, of R$519.3 million, while securities amounted to R$3.4 million. On
December 31, 2012, loans, financing and debentures totaled R$6,072.4 million,
giving a net debt position of R$4,924.8 million.
In 2013, the Company reported a consolidated at $ 1.600,3 million gross revenue,
this revenue was originated by the operation of subsidiaries Pecém II, Itaqui
Parnaíba Parnaíba and II and Amapari. Our Company recorded loss of R$942.4
million for this year; however, it recorded consolidated cash and cash equivalents of
R$277.6 million. On December 31, 2013, loans, financing and debentures totaled
R$6,210.5 million.
It should be noted that due to the adoption of new accounting practices (IFRS 11),
the Company has ceased to record proportionally the revenue from some investees,
among which is Comercializadora de Energia and Port of Pecém.
The Company’s overall liquidity ratio, measured as the sum of current and non-
current assets over the sum of current and non-current liabilities, was 1.24 as of
December 31, 2011, 1.51 as of December 31, 2012, and 1.36 as of December 31,
2013.
The Management believes that, as explained in Note 1 – Operation Context of the
Financial Statement of December 31, 2013, the Company has sufficient financial
and equity conditions to implement its business plan and meets its current
obligations in the short, medium and long term.
(b) Management’s comments on the capital structure and the possibility
of redemption of shares or quotas
The make-up of our Company’s capital structure is shown below, for the periods
indicated. In the opinion of Management, the current capital structure indicates a
satisfactory relationship between own capital and third party capital.
As of December 31, 2013, our Company’s capital structure was made up of
27% of own capital and 73% of third party capital. On that date, the
consolidated equity of MPX was R$ 2,573 billion while the gross debt plus the
liabilities to third parties totaled US$ 7,115 billion.
As of December 31, 2012, our Company’s capital structure consisted of 34%
of own capital and 66% of third party capital. On that date, the consolidated
equity of ENEVA was R$ 2,701 billion while the gross debt plus the liabilities
to third parties totaled US$5,338.5 billion.
As of December 31, 2011, our Company’s capital structure consisted of 19%
of own capital and 81% of third party capital. On that date, the consolidated
equity of ENEVA was R$ 1,370 billion while the gross debt plus the liabilities
to third parties totaled US$5,753 billion.
i. circumstances in which shares or quotas could be redeemed
Management also notes that our Company has not issued any redeemable shares.
ii. formula for calculating redemption value of shares or quotas
Management also notes that there is no formula for calculation redemption value,
since the Company has not issued any redeemable shares.
(c) Management comments on the Company’s ability to meet financial
commitments assumed
Management believes that our Company is fully able to meet all its financial
commitments, since its major undertakings have been structured as Project
Finance, with approximately 25% of total investments being met from its own
resources, which are disbursed pari passu with external financing. These
undertakings are also linked to Regulated Environment Electricity Sales Contracts
(CCEAR), which allow generation of fixed revenues for 15 and 20 years (provided
the parties comply with their respective contractual obligations).
Our operation is performed through an interest, as a shareholder, in the capital
stock of companies that develop such projects. Some of these projects are
developed in partnership with other agents of the energy sector. Funds for the
projects have been raised basically from the Company’s IPO, held on December 14,
2007, and January 11, 2008, (over-allotment shares), in the total amount of R$2
billion as well as from financing and more recently from the issuance of 21,735,744
debentures convertible into shares, held on June 15, 2011, in the amount of R$1.4
billion. On May 24, 2012, 21,653,300 debentures were converted into 33,255,219
new shares, by virtue of the corporate restructuring process implemented by the
Company in the year 2012. On March 28, 2013 the controlling shareholder of MPX
Energia S.A., Mr. Eike Furken Batista celebrated at E.ON SE an investment
agreement which provides for the following events:
(a) On May 29, 2013 E.ON acquired shares of the Company owned by Eike Batista
representing approximately 24.5% of the share capital of MPX.
(b) At the date of acquisition of the shares of MPX, E.ON and Eike Batista signed a
shareholders' agreement,
which regulated the exercise of voting rights and restrictions on transfers of shares
held by them.
(c) In August 2013, the private capital increase of approximately R$800 million was
completed, with a subscription price fixed at R$ 6.45 per share.
The Company is working towards a partial settlement and long-term rollover in
2013 these short-term debt and capitalize the company to face the investment
needs of potential new projects.
(d) Sources of financing for working capital and investments in non-
current assets
Our reply below under item “f” gives details of sources for financing investments in
non-current assets.
Management believes that the sources of finance used are adequate for our
Company’s debt profile, since projects have been structured on the basis of Project
Finance supplied by development banks at subsidized rates of interest and on
extended repayment terms of up to 14 years.
(e) Sources of financing for working capital and investments in non-
current assets which are intended to be used to cover liquidity shortfalls
TAs stated above, we are arranging to settle part of this short-term finance during
2013, and to replace the rest with long-term debt, so as to provide the
capitalization needed for the company to invest in potential new projects.
(f) Levels of indebtedness and characteristics of the debt
(i) Relevant loan and financing agreements
The following table shows our Company’s consolidated indebtedness with financial
institutions as of December 31, 2013, 2012 and 2011, with the corresponding
interest rates and maturity dates. The amounts are stated in thousands of Reais.
Consolidated
12/31/13
12/31/12
Company Creditor
Currency Interest Rate Maturity Effective
Rate
Transaction
cost
Cost to be
recognized Principal
Interest
Rate Total
Transaction
cost
Cost to be
recognized Principal
Interest
Rate Total
Itaqui BNDES (Direct) (a) R$ TJLP+2.78% 6/15/26 2.89% 11,182
9,913
830,630
2,586
823.304
11,182
10,541
898,472
2,772
890,703
Itaqui BNB (b) R$ 10.00% 6/15/26 10.14% 2,892
2,727
201,977
857
200,107
2,892
2,816
202,322
859
200,365
Itaqui BNDES (Indirect) (c) R$ IPCA + TR
BNDES+ 4.8% 6/15/26 4.80% 1,475
1,473
109,302
6,041
113,870
1,475
1,475
111,299
31,378
141,202
Itaqui BNDES (Indirect) (d) R$ TJLP+4.8% 6/15/26 4.94% 2,023
1,953
162,052
632
160,731
2,023
2,000
175,016
669
173,685
Pecém II BNDES (Direct) (e) R$ TJLP+2.18% 6/15/27 7.24% 7,803
6,091
710,327
2,054
706,290
7,803
6,854
695,027
2,002
690,175
Pecém II BNDES (Direct) (f) R$ IPCA+ TR
BNDES + 2.18% 6/15/27 13.51% 1,740
1,294
131,607
42,840
173,153
1,740
1,482
124,439
25,814
148,772
Pecém II BNB (g) R$ 10.00% 1/31/28 10.30% 4,287
3,620
250,000
4,070
250,450
4,164
3,773
235,000
3,826
235,053
Parnaíba I BRADESCO (h) R$ CDI+3.00% 12/18/14 4.49% 4,593
-
48,000
117
48,117
4,593
1,571
60,000
5,634
64,063
Parnaíba I Banco Itaú BBA (i) R$ CDI+3.00% 4/15/15 3.44% 11,516
-
60,670
776
61,446
8,917
4,646
65,000
7,675
68,029
Parnaíba I BNDES (Direct) (j) R$ TJLP+1.88% 6/15/27 2.16% 16,867
16,860
493,444
1,370
477,980
2,998
2,998
495,676
392
493,070
Parnaíba I BNDES (Direct) (k) R$ IPCA + TR
BNDES + 1.88% 7/15/26 2,17% 6,953
6,663
215,988
10,408
219,733
1,236
1,237
204,388
38
203,189
Parnaíba
II Banco Itaú BBA (l) R$ CDI+3.00% 12/30/14 - -
-
200,000
146
200,146
-
-
100,000
8,189
108,189
Parnaíba II
Banco HSBC (m) R$ CDI+3.00% 12/31/13 - -
-
-
-
-
-
-
125,000
10,236
135,236
Parnaíba
II Banco HSBC (m) R$ CDI+3.00% 12/31/13 - -
-
-
-
-
-
-
-
-
-
Parnaíba II
CEF (n) R$ CDI+3.00% 12/30/14 - -
-
280,000
286
280,286
-
-
325,000
21,523
346,523
Parnaíba
II BNDES (o) R$ TJLP+2.40% 6/15/15 - 3,619
3,619
280,700
223
280,923
-
-
325,000
21,523
346,523
ENEVA S/A
Banco Itaú BBA (p) R$ CDI+2.65% 12/16/14 - -
-
105,790
503
106,293
-
-
105,790
368
106,158
ENEVA
S/A
Promissory
Notes - 1st Issue (q) R$ CDI+1.50% 12/15/13 - -
-
-
-
-
-
-
300,000
11,595
311,595
ENEVA
S/A Banco Citibank (r) R$ CDI+2.95% 9/22/14 - -
-
101,250
3,107
104,357
-
-
101,250
2,042
103,292
ENEVA
S/A Banco Citibank (s) US$
LIBOR 3M +
1.26% 9/27/17 - -
-
117,130
20
117,150
-
-
102,175
18
102,193
ENEVA
S/A
Promissory
Notes - 2nd Issue
(t) R$ CDI+1.50% 12/9/13 - -
-
-
-
-
-
-
300,000
1,005
301,005
ENEVA
S/A
Promissory
Notes - 3rd Issue (u) R$ CDI+2.95% 12/25/13 - -
-
-
-
-
-
-
-
-
-
ENEVA S/A
Banco BTG Pactual
(v) R$ CDI+3.75% 12/9/14 - -
-
101,912
792
102,705
-
-
101,912
372
102,284
ENEVA
S/A
Banco BTG
Pactual (w) R$ CDI+3.75% 6/9/15 - -
-
350,000
2,559
352,559
-
-
-
-
-
ENEVA S/A
Banco BTG Pactual
(x) R$ CDI+3.75% 12/9/14 - -
-
370,000
1,196
371,196
-
-
-
-
-
ENEVA
S/A Banco HSBC (y) R$ CDI+2.75% 12/12/14 - -
-
303,825
1,747
305,572
-
-
-
-
-
ENEVA
S/A Banco Citibank (z) R$ CDI+4.00% 11/3/14 - -
-
42,000
879
42,879
-
-
-
-
-
ENEVA
S/A Banco Citibank (aa) R$ CDI+4.00% 12/9/14 - -
-
100,000
792
100,792
-
-
-
-
-
ENEVA
S/A Banco Itaú BBA (bb) R$ CDI+2.65% 12/5/14 - -
-
200,000
1,618
201,618
-
-
-
-
-
ENEVA
S/A Banco Itaú BBA (cc) R$ CDI+2.65% 12/9/14 - -
-
210,000
1,499
211,499
-
-
-
-
-
ENEVA
S/A Banco Santander (dd) R$ CDI+3.25 1/15/15 - -
-
66,667
336
67,003
-
-
-
-
-
Consolidated
12/31/13
12/31/12
Company Creditor
Currency Interest Rate Maturity Effective
Rate
Transaction
cost
Cost to be
recognized Principal
Interest
Rate Total
Transaction
cost
Cost to be
recognized Principal
Interest
Rate Total
ENEVA
S/A Morgan Stanley (ee) R$ CDI+3.25 1/15/15 - -
-
66,667
336
67,003
-
-
-
-
-
ENEVA
S/A Banco Itaú BBA (ff) R$ CDI+3.25 1/15/15 - -
-
66,667
336
67,003
-
-
-
-
-
71,331
54,213
3,339,202
88,129
6,210,520
49,023
39,393
5,152,766
157,929
5,271,303
Cost to be recognized
Principal
Interest Rate
Total
Cost to be recognized
Principal
Interest Rate
Total
Working
2,606
2,322,842
87,906
2,410,748
6,984
1,716,403
110,555
1,819,974
Noncurrent
51,607
3,853,762
223
3,853,984
32,409
3,111,363
25,852
3,104,806
The table below sets forth the composition of loans of the joint subsidiary Porto do Pecém Geração de Energia S.A. and the indirect subsidiary MPX
Chile Holding Ltda., and Parnaíba IV Geração de Energia S.A., which, as from 2013, by applying the new consolidation rules introduced by the
adoption of IFRS 11, we have no obligation to submit financial statements:
12/31/13
12/31/12
Company Creditor
Currency Interest
Rate Maturity
Effective
Rate
Transaction
cost
Cost to be
recognized Principal
Interest
Rate Total
Transaction
cost
Cost to be
recognized Principal
Interest
Rate Total
Pecém I
(50%)
BNDES
(Direct) (gg) R$
TJLP +
2.77% 6/15/26
TJLP +
3.09% 8,461
4,844
740,449
2,312
737,918
8,461
5,644
799,685
2,475
796,516
Pecém I
(50%) BID (hh) US$
LIBOR +
3.50% 5/15/26
LIBOR +
4.67% 8,808
5,296
158,142
779
153,625
8,705
6,196
143,974
740
138,518
Pecém I
(50%) BID (ii) US$
LIBOR +
3.00% 5/15/22
LIBOR +
4.16% 8,939
5,375
184,506
791
179,922
8,814
6,001
173,716
782
168,498
Chile (50%) Banco Credit
Suisse (jj) US$ 8,125% 4/15/15 - -
-
10,519
183
10,702
-
-
14,907
267
15,173
Chile (50%) Banco Credit
Suisse (kk) US$ 8,000% 4/15/15 - -
-
7,013
120
7,133
-
-
10,232
175
10,408
Parnaíba IV
(35%)
Banco BTG
Pactual (ll) R$
CDI +
2.28% 1/29/14 - -
-
24,500
1,796
26,296
-
-
-
-
-
Parnaíba III
(35%)
Banco
Bradesco (mm) R$
CDI +
2.53% 1/31/14 - -
-
42,000
493
42,493
-
-
-
-
-
26,208
15,514
1,167,129
6,475
1,158,089
25,980
17,841
1,142,514
4,439
1,129,113
Cost to be
recognized Principal
Interest
Rate Total
Cost to be
recognized Principal
Interest
Rate Total
Working
2,481
160,876
6,475
164,870
2,609
88,083
4,439
89,913
Noncurrent
13,033
1,006,252
-
993,219
15,231
1,054,432
-
1,039,201
Consolidated
12/31/13 12/31/12
Company Creditor
Currency Interest Rate Maturity Effective Rate Transaction cost
Cost to be
recognized Principal
Interest
Rate Total
Transaction
cost
Cost to be
recognized Principal
Interest
Rate Total
Itaqui BNDES (Direct) (a) R$ TJLP+2.78% 6/15/26 2.89% 11,182
10,541
898,472
2,772
890,703
11,204
11,087
868,996
3,256
861,165
Itaqui BNB (b) R$ 10.00% 6/15/26 10.14% 2,892
2,816
202,322
859
200,365
2,948
2,917
202,755
861
200,699
Itaqui BNDES (Indirect) (c) R$ IPCA + TR BNDES+ 4.8% 6/15/26 4.94% 1,475
1,475
111,299
31,378
141,202
1,358
1,344
114,470
581
113,707 Itaqui BNDES (Indirect) (d) R$ TJLP+4.8% 6/15/26 4.94% 2,023
2,000
175,016
669
173,685
2,062
2,040
172,279
787
171,026
PecemI BNDES (Direct) (e) R$ TJLP+2.77% 6/15/26 TJLP + 3.11% 8,461
5,644
799,685
2,475
796,516
8,437
6,428
735,867
2,689
732,128
PecemI BID (f) US$ LIBOR+3.5% 5/15/26 LIBOR + 4.52% 8,705
6,196
143,974
740
138,518
8,052
6,265
134,856
717
129,308
PecemI BID (g) US$ LIBOR+3.0% 5/15/22 LIBOR + 4.02% 8,814
6,001
173,716
782
168,498
8,013
6,239
165,073
772
159,606 Colombia Banco Santander (h) US$ LIBOR+2.0% 7/5/12 - -
-
-
-
-
-
-
45,957
639
46,596
PecemII BNDES (Direct) (i) R$ TJLP+2.18% 6/15/27 7.67% 7,803
6,854
695,027
2,002
690,175
7,803
7,316
579,717
2,029
574,430
PecemII BNDES (Direct) (j) R$ IPCA+ TR BNDES + 2.18% 6/15/27 9.63% 1,740
1,482
124,439
25,814
148,772
1,740
1,660
117,886
11,749
127,975
MPX S/A Banco Itaú BBA (k) R$ CDI+2.85% 6/17/13 - -
-
105,790
368
106,158
-
-
105,790
495
106,285
PecemII BNB (l) R$ 10.00% 1/31/28 8.50% 4,164
3,773
235,000
3,826
235,053
4,139
4,007
235,000
3,826
234,819 Colombia Banco de Bogotá (m) COP DTF (TA)+2.23% 7/3/12 - -
-
-
-
-
-
-
44,849
821
45,670
Colombia Banco HSBC (n) US$ LIBOR+2.0% 4/13/12 - -
-
-
-
-
-
-
67,004
8
67,012
Colombia Banco de Bogotá (o) US$ LIBOR+2.0% 6/13/12 - -
-
-
-
-
-
-
46,895
709
47,604
Chile Banco Credit Suisse (p) US$ 8,13% 4/15/15 - -
-
23,023
400
23,423
-
-
28,137
536
28,673 Chile Banco Credit Suisse (q) US$ 8,00% 4/15/15 - -
-
15,349
263
15,612
-
-
18,758
358
19,116
Colombia Banco de Bogotá (r) US$ LIBOR+3.5% 12/19/12 - -
-
-
-
-
-
-
46,895
67
46,962
Colombia Banco HSBC (s) US$ LIBOR+3.5% 6/18/12 - -
-
-
-
-
-
-
28,137
37
28,174
Parnaíba I BRADESCO (t) R$ CDI+3.00% 6/26/13 4.49% 4,593
1,571
60,000
5,634
64,063
-
-
75,000
127
75,127 Parnaíba I Banco Itaú BBA (u) R$ CDI+3.00% 6/26/13 6,22% 8,917
4,646
65,000
7,675
68,029
-
-
125,000
212
125,212
Parnaíba I BNDES (Direct) (v) R$ TJLP+2.80% 3/15/13 - -
-
-
-
-
-
-
242,729
228
242,957
Parnaíba I BNDES (Direct) (w) R$ IPCA + TR BNDES + 2.8% 3/15/13 - -
-
-
-
-
-
-
157,382
118
157,500
Parnaíba I BNDES (Direct) (x) R$ TJLP+1.88% 6/15/27 1,93% 2,998
2,998
495,676
392
493,070
-
-
-
-
-
Parnaíba I BNDES (Direct) (y) R$ IPCA + TR BNDES + 1.88% 7/15/26 1,93% 1,236
1,236
204,388
38
203,190
-
-
-
-
- Parnaíba I Banco Santander (z) R$ CDI+3.00% 6/26/13 - -
-
-
-
-
-
-
-
-
-
Colombia Banco HSBC (aa) US$ LIBOR+2.65% 8/14/12 - -
-
-
-
-
-
-
-
-
-
Parnaíba II Banco Itaú BBA (bb) R$ CDI+3.00% 9/30/13 - -
-
100,000
8,189
108,189
-
-
-
-
-
Parnaíba II Banco HSBC (cc) R$ CDI+3.00% 9/30/13 - -
-
125,000
10,236
135,236
-
-
-
-
- Parnaíba II CEF (dd) R$ CDI+3.00% 11/7/13 - -
-
325,000
21,523
346,523
-
-
-
-
-
MPX S/A Banco BTG Pactual (ee) R$ CDI+1.50% 7/15/13 - -
-
200,000
7,730
207,730
-
-
-
-
-
MPX S/A Banco Santander (ee) R$ CDI+1.50% 7/15/13 - -
-
100,000
3,865
103,865
-
-
-
-
-
MPX S/A Banco Citibank (ff) R$ CDI+1.15% 9/27/13 - -
-
101,250
2,042
103,292
-
-
-
-
- MPX S/A Banco Citibank (gg) US$ LIBOR 3M + 1.26% 9/27/17 - -
-
102,175
18
102,193
-
-
-
-
-
Consolidated
12/31/13 12/31/12
Company Creditor
Currency Interest Rate Maturity Effective Rate Transaction cost
Cost to be
recognized Principal
Interest
Rate Total
Transaction
cost
Cost to be
recognized Principal
Interest
Rate Total
MPX S/A Banco BTG Pactual (hh) R$ CDI+1.50% 12/9/13 - -
-
100,000
335
100,335
-
-
-
-
-
MPX S/A Banco Morgan Stanley (hh) R$ CDI+1.50% 12/9/13 - -
-
100,000
335
100,335
-
-
-
-
-
MPX S/A Banco Citibank (hh) R$ CDI+1.50% 12/9/13 - -
-
100,000
335
100,335
-
-
-
-
-
MPX S/A Banco BTG Pactual (ii) R$ CDI+1.50% 12/13/13 - -
-
101,912
372
102,284
-
-
-
-
-
75,003
57,233
5,983,516
141,066 6,067,349 55,756 49,303 4,359,432 31,622 4,341,751
Cost to be
recognized Principal
Interest
Rate Total
Cost to be
recognized Principal
Interest
Rate Total
Working
9,593
1,809,781
115,213
1,915,402
-
1,020,230
10,457
1,030,687
Noncurrent
47,640
4,173,735
25,852
4,151,947
49,303
3,339,202
21,165
3,311,064
12
Below is a summary of our Company’s principal debt agreements:
Itaqui Geração de Energia S.A. (Itaqui)
(a) The Brazilian Development Bank (Banco Nacional de Desenvolvimento Econômico e
Social or “BNDES”) released the full amount of the R$784 million long-term
financing for Porto do Itaqui Geração de Energia S.A. thermoelectric plant, in
respect of sub-loans A, B and C, at an agreed annual cost of TJLP + 2.78%. The
financing period is 17 years, with amortization over 14 years and no repayments of
principal until July 2012. Sub-loan D, on the other hand, which is for R$13.6
million and intended for social investments (BNDES Social), pays interest only at
the TJLP rate. The BNDES Social line of credit is for a total period of 9 years, with
amortization over 6 years and no repayments of principal until July 2012. Interest
on these loans is being capitalized during the construction phase. With this the
principal balance on December 31, 2013, was R$ 830.6 million. Interest on these
loans was capitalized during the construction period. This funding has the
traditional package guarantee transactions in the form of Project Finance.
(b) To supplement the BNDES financing, Porto do Itaqui Geração de Energia S.A.
thermoelectric plant has raised a loan from BNB-FNE, for a total of R$203 million.
The final disbursement was made on July 28, 2011, and the loan is now drawn in
full. The BNB loan is for a total period of 17 years, with amortization over 14 years
and no repayments of principal until July 2012. The annual cost is 10%. There is a
15% compliance bonus, thus reducing the cost to 8.5% p.a. This funding has the
traditional package guarantee transactions in the form of Project Finance. The
principal balance on December 31, 2013, was R$ 201.9 million.
(c) R$99 million of the indirect BNDES line of credit, for which Banco Bradesco and
Banco Votorantim are the agents, has been disbursed to the Porto do Itaqui
Geração de Energia S.A. thermoelectric plant, in respect of sub-loans A, B, C, D
and E. This portion of the loan is for a total period of 17 years, with amortization
over 14 years and no payments of capital or interest until July 2012. The agreed
annual cost is IPCA + BNDES Reference Rate + 4.8% during the construction
phase, and IPCA + BNDES Reference Rate + 5.3% when the plant is in operation.
Interest on these loans is being capitalized during the construction phase. With
this the principal balance on December 31, 2013, was R$ 109.3 million. Interest on
these loans was capitalized during the construction period. This funding has the
traditional package guarantee transactions in the form of Project Finance.
(d) The full amount of sub-loan F, part of the loan described in (c) above, amounting
to R$141.8 million, has been disbursed to Itaqui. This part of the loan is for a
total period of 17 years, with amortization over 14 years and no payments of
capital or interest until July 2012. The agreed annual cost is TJLP + 4.8% during
the construction phase and TJLP + 5.3% when the plant is in operation. Interest
on these loans is being capitalized during the construction phase. With this the
principal balance on December 31, 2013, was R$ 162.0 million. Interest on these
loans was capitalized during the construction period. This funding has the
traditional package guarantee transactions in the form of Project Finance.
Pecém II Geração de Energia S.A. (Pecém II)
(e) By the end of March 2013, Pecém II had drawn down R$615.3 million of the
R$627.3 million provided under sub-loans A, B, C, D and L of the long-term
financing provided by BNDES (in nominal R$, excluding interest during the
construction phase). The sub-loans A, B, C and D are for a total period of 17
years, with amortization over 14 years and no payments of capital or interest until
July 2013. The agreed annual cost is TJLP + 2.18%. Interest on these loans is
being capitalized during the construction phase. With this the principal balance on
December 31, 2013, was R$ 710.3 million. This funding has the traditional package
guarantee transactions in the form of Project Finance.
13
(f) Pecém II has drawn down R$110.1 million, being the full amount of sub-loans E, F,
G, H and I under the long-term BNDES financing agreement mentioned in (i)
above. These sub-loans are for a total period of 17 years, with amortization over
14 years and no payments of capital or interest until July 2014. The agreed annual
cost is IPCA + BNDES Reference Rate + 2.18%. Sub-loan J for R$22 million, which
was part of this line of credit, was transferred to sub-loan A of the preceding item
in April 2012. The principal balance on December 31, 2013, was R$ 131.6 million.
This funding has the traditional package guarantee transactions in the form of
Project Finance.
(g) To supplement the BNDES financing, MPX Pecém II Geração de Energia S.A. has
raised a loan from BNB with FNE funds, for a total of R$250 million, totally drawn.
The BNB loan is for a total period of 17 years, with quarterly interest and
amortization over 14 years. No repayments of principal are due until February
2014, and the annual cost is 10%. There is a 15% compliance bonus, thus
reducing the cost to 8.5% p.a. This funding has the traditional package guarantee
transactions in the form of Project Finance.
Parnaíba Geração de Energia S.A. (Parnaíba I)
(h) (i) On December 276, 2011, the Parnaíba project raised R$75 million by means of
a Bank Credit Note (CCB) issued to Banco Bradesco S/A, having the parent
company as a guarantor. This is a bridge loan to finance the installation of the
Maranhão IV and V thermoelectric plants. Interest is 100% of the CDI rate plus 3%
p.a., with capital and interest being paid in full when the loan matures on June 26,
2013. A further amount of R$75 million was disbursed on February 28, 2012, on
the same conditions as for the earlier disbursement. R$90 million of capital, plus
interest accrued, was paid off on December 28, 2012, when the long-term loan
from BNDES, described in items (j) and (k). On June 26, 2013, the Company
renewed the principal balance of US$ 60 million, paying all interest due to date
through the new maturity on September 24, 2013 and keeping interest rates at
100% of the CDI rate plus 3% per year. On September 24, Parnaíba renegotiated
the terms of the contract changing its maturity to October 24, 2013, and
subsequently to November 24, 2013. On October 31, 2013, a new renegotiation
changed the maturity of the contract to December 18, 2014. Principal and interest
will be paid in 15 monthly installments. The principal balance on December 31,
2013, was R$ 48 million.
(i) On December 27, 2011, Parnaíba raised R$125 million by means of a Bank Credit
Note (CCB) issued to Banco Itaú BBA, against the guarantee of the parent
companies. This is a bridge loan to finance the installation of the Maranhão IV and
V thermoelectric plants. Interest is 100% of the CDI rate plus 3% p.a., with capital
and interest being paid in full when the loan matures on June 26, 2013. R$60
million of capital, plus interest accrued, was paid off on December 2012, when the
long-term loan from BNDES, described in items (j) and (k), was released On June
26, 2013, the Company renewed the principal balance of US$ 65 million, paying all
interest due to date through the new maturity on September 24, 2013 and keeping
interest rates at 100% of CDI plus 3% per year. On this date, a new renegotiation
changed the maturity of the contract to October 24, 2015 and later to April 15,
2015. Principal and interest will be paid in 05 monthly installments, starting on
April 15, 2014. The principal balance on December 31, 2013, was R$ 60.7 million.
(j) Parnaíba I drew down R$495.6 million in December 2012, being sub-loans B and C
of the long-term BNDES financing agreement totaling R$671 million. These sub-
loans will be amortized in 168 monthly installments, together with interest, starting
on July 15, 2013. The agreed cost is TJLP + 1.88% p.a. The principal balance on
December 31, 2013, was R$ 493.4 million.
14
(k) Additionally, Parnaíba I drew down R$204.3 million in December 2012, being the
full amount of sub-loan A of the long-term BNDES financing agreement referred to
in the preceding item. This sub-loan is to be amortized in 13 monthly installments,
together with interest, starting on July 15, 2014. The annual cost agreed is IPCA +
TR BNDES + 1.88%. Interest on these loans is being capitalized during the
construction phase. With this the principal balance on December 31, 2013, was R$
215.9 million. This funding has the traditional package guarantee transactions in
the form of Project Finance.
Parnaíba II Geração de Energia S.A. (Parnaíba II)
(l) On March 30, 2012, the Parnaíba II Geração de Energia S.A. thermoelectric plant
raised R$100 million by means of a Bank Credit Note (CCB) issued to Banco Itaú
BBA, against the guarantee of the parent company. This is a bridge loan to finance
the installation of the Parnaíba II thermoelectric plant. Interest is 100% of the CDI
rate plus 3% p.a., with capital and interest being paid in full when the loan
matures on September 30, 2013. The company renegotiated the contract
changing its maturity to December 30, 2013. Subsequently, it renegotiated the
contract changing its maturity to December 30, 2014 and raised additional funding
of R$ 100 million maturing in December 2014. The principal balance at December
31, 2013, 30 corresponds to R$ 200 million.
(m) On March 30, 2012, the Parnaíba II Geração de Energia S.A. thermoelectric plant
raised R$125 million by means of a Bank Credit Note (CCB) issued to Banco HSBC,
in the amount of R$125 million, against the guarantee of the parent company.
This is a bridge loan to finance the installation of the Parnaíba II thermoelectric
plant. Interest is 100% of the CDI rate plus 3% p.a., with capital and interest
being paid in full when the loan matures on September 30, 2013. UTE Parnaíba II
renegotiated the contract changing its maturity to December 30, 2013. On June 3,
2013, an additional US$ 100 million was disbursed by the bank under the same
conditions of the previous disbursement, but with maturity of principal and interest
on December 31, 2013. The R$ 225 million of the principal was awarded in
December 2013, together with interest accrued to date.
(n) On May 2012, the Parnaíba II Geração de Energia S.A. thermoelectric plant raised
R$325 million under a Bank Credit Notes (CCBs) agreement with Caixa Econômica
Federal, against the guarantee of the parent company. This bridge loan intended
to finance the installation of the thermoelectric plant Maranhão III, was disbursed
in one tranche of US$ 125 million and two of R$ 100 million, on May 8, 2012, May
15, 2012 and May 30, 2012 respectively, and has an annual interest rate of 100%
of the CDI rate plus 3% and an original maturity on November 7, 2013 with
principal and interest paid in the end. At the time of maturity, the company
renegotiated the contract changing its maturity to December 30, 2013. At this date
R$ 45 million were settled, plus accrued interest to the date, and renegotiated with
the remaining value due on December 30, 2014. The principal balance on
December 31, 2013, was R$ 280.0 million.
(o) Parnaíba II received from BNDES a bridge loan in the amount of R$ 280.7 million
at the end of December 2013. These sub-loans will be amortized in a single
installment on June 15, 2015, together with interest. The agreed cost is TJLP +
2.40% p.a.
ENEVA S.A. (ENEVA)
(p) On December 16, 2013, Eneva renegotiated the R$ 105.8 million CCB (Bank Credit
Notes), with Banco Itaú BBA S.A., paying all interest due until that date, extending
the new maturity date to December 16, 2014. The cost corresponds to CDI plus
2.65% per year, with principal and interest paid at the end of the operation.
(q) On July 18, 2012, ENEVA S.A. made the first public distribution of 300 trade
promissory notes, in a single series, with a nominal value of R$1 million each, for a
15
total amount of R$300 million, maturing 360 days after issue and paying interest
at the CDI rate plus 1.5% p.a. The promissory notes were settled in advance June
28, 2013, by the issuance of new promissory notes described in item (u) below.
(r) On September 27, 2012, the parent company Eneva S.A issued at Banco Citibank
SA a CCB (Bank Credit Notes) in the amount of R$ 101,250 maturing on
September 27, 2013. The agreed interest was 100% of CDI plus 1.15% per annum
and will be paid at maturity on September 27, 2013. On this date the ENEVA S/A
renewed this contract changing the maturity to September 22, 2014 and changing
the interest rate to CDI plus 2.95% per annum.
(s) On September 25, 2012, ENEVA S.A. obtained a loan from Citibank N.A. United
States through a Credit Agreement, under Central Bank (BACEN) Resolution 4.131,
for US$50 million (the equivalent of R$101.5 million). Interest on this raising is
fixed at LIBOR + 1.26% p.a., to be paid quarterly. The principal is to be paid half-
yearly, with no capital payments until September 26, 2014, and the loan matures
on September 27, 2017. As a currency hedge for this raising, ENEVA S.A. entered
into a swap operation with Citibank itself. The principal balance at December 31,
2013, was R$ 117 million. See Explanatory Note 18.
(t) On December 13, 2012, ENEVA S.A. made the public distribution of 300 trade
promissory notes, in a single series, with a nominal value of R$1 million each, for a
total amount of R$300 million, maturing 360 days after issue and paying interest
at the CDI rate plus 1.5% p.a. These promissory notes were settled at maturity.
(u) On December 13, 2013, Eneva S/A made the public distribution of 33 trade
promissory notes, in a single series, with a nominal value of R$10 million each, for
a total amount of R$330 million, maturing on December 31, 2013 and paying
interest at the CDI rate plus 2.95% p.a. These promissory notes were settled at
maturity.
(v) On December 13, 2012, ENEVA S.A. issued a Bank Credit Note (CCB) to Banco BTG
Pactual for an amount of R$101.9 million, maturing on December 13, 2013.
Interest, which will be payable on maturity, is at 100% of the CDI rate plus 1.5%
p.a. At the time of maturity, the line was renegotiated to mature on December 9,
2014. Interest will be paid quarterly to the cost of CDI plus 3.75% p.a. The
principal will be paid in full at maturity.
(w) On February 7, 2013, ENEVA S.A. issued a Bank Credit Note (CCB) to Banco BTG
Pactual S.A. in the amount of R$350.0 million, maturing on August 7, 2013.
Interest, which will be payable on maturity, was set at 100% of the CDI rate plus
2.95% p.a. On August 6, 2013, the Company renegotiated the loan maturity to
December 2, 2013. A new rescheduling postponed the debt maturity to June 9,
2015, with interest to be paid quarterly at CDI + 3.75% p.a. and principal payable
at maturity.
(x) Eneva issued a Bank Credit Note (CCB) to Banco BTG Pactual for an amount of
R$100 million on December 9, 2013 and R$ 270 million on December 26, 2013,
both with the principal maturing on December 9, 2014. Interest, to be paid
quarterly, is at 100% of the CDI rate plus 3.75% p.a.
(y) On March 25, 2013, ENEVA S.A. issued a Bank Credit Note (CCB) to HSBC Bank
Brasil S.A. in the amount of R$100 million, maturing on March 25, 2014. Interest,
which will be payable on maturity date, was set at 100% of the CDI rate plus
1.75% p.a. The interest accumulated until December 12, 2013 was paid and a
new maturity was agreed for December 12, 2014. The spread for this new period
will be 2.75% per annum. At the time of renegotiation, the company issued new
CCB in the amount of R$ 203.8 million, due on December 12, 2014. The cost
corresponds to 100% of CDI plus 2.75% per year, with principal and interest paid
at maturity.
16
(z) Eneva contracted with Citibank S.A. a debt of R$ 42 million (as CCB), on November
1, 2013, maturing on November 3, 2014. Interest will be paid quarterly to the cost
of 100% of CDI plus 4.00% p.a., and the principal will be paid at maturity.
(aa) Eneva issued with Banco Citibank SA CCB (Bank Credit Notes) in the amount of R$
100 million on December 9, 2013 maturing on December 9, 2014., The agreed
interest were 100% of CDI plus 4.00% p.a. with payment of principal and interest
at maturity.
(bb) Eneva issued with Itaú BBA BAC (Bank Credit) in the amount of R$ 200 million on
December 5, 2013 maturing on December 5, 2014. The agreed interest was 100%
of CDI plus 2.65% per annum and will be paid at maturity.
(cc) Eneva issued with Itaú BBA CCB (Bank Credit Notes) in the amount of R$ 210
million, on December 9, 2013, maturing on December 9, 2014. The agreed interest
was 100% of CDI plus 2.65% per annum and will be paid at maturity.
(dd) Due to the OGX Maranhão (current Parnaíba Gás Natural) negotiations, Eneva
acquired from Banco Santander a debt of R$66.6 million (as CCB) on November
04, 2013 with maturity on 15 January 2015. The interest will be paid monthly at
the cost of 100% of CDI plus 3.25% p.a. until June 14, 2014, 3,75% p.a. until
September 14, 2014 and 4,25% p.a. until the date of maturity of the CCB. The
principal will be paid in full at maturity.
(ee) Due to the OGX Maranhão (current Parnaíba Gás Natural) negotiations, Eneva
acquired from Morgan Stanley a debt of R$66.6 million (as CCB) on November 04,
2013 with maturity on 15 January 2015. The interest will be paid monthly at the
cost of 100% of CDI plus 3.25% p.a. until June 14, 2014, 3,75% p.a. until
September 14, 2014 and 4,25% p.a. until the date of maturity of the CCB. The
principal will be paid in full at maturity.
(ff) Due to the OGX Maranhão (current Parnaíba Gás Natural) negotiations, Eneva
acquired from Itaú BBA a debt of R$66.6 million (as CCB) on November 4, 2013
with maturity on 15 January 2015. The interest will be paid monthly at the cost of
100% of CDI plus 3.25% p.a. until June 14, 2014, 3,75% p.a. until September 14,
2014 and 4,25% p.a. until the date of maturity of the CCB. The principal will be
paid in full at maturity.
Porto do Pecém Geração de Energia S.A. (Pecém I)
(gg) By the end of June 30, 2013, BNDES had released an amount of R$1.40 billion of
the long-term financing for Pecém I. The BNDES financing agreement is for a total
amount of R$1.41 billion (in nominal R$, excluding interest during the construction
phase), for a total period of 17 years, with amortization over 14 years and no
payments of capital or interest until July 2012. The agreed annual cost is TJLP +
2.77%. Interest is to be capitalized during the construction phase. The balances
of principal and interest shown in the above table correspond to 50% of the
original balances, taking into account the 50% share in the company held by EDP
Energias do Brasil S.A. This funding has the traditional package guarantee
transactions in the form of Project Finance.
(hh) (aa) To supplement the direct BNDES loan, Porto do Pecém Geração de Energia
S.A. has raised a direct loan from the Banco Interamericano de Desenvolvimento
(BID) (“A Loan”), amounting to US$147 million. The total disbursed so far is
US$143.78 million (the equivalent of R$316,284 as of December 31, 2012). The
cost of the “A Loan” is LIBOR + 3.5% for a total period of 17 years, with
amortization over 14 years and no repayments of principal until July 2012. The
balances of principal and interest shown in the above table correspond to 50% of
the original balances, taking into account the 50% share in the company held by
EDP Energias do Brasil S.A.
17
(ii) To supplement the direct BNDES loan, Porto do Pecém Geração de Energia S.A.
has raised an indirect loan from the BID (“B Loan”), amounting to US$180 million.
The total disbursed so far is US$176 million (the equivalent of R$369,012 as of
December 31, 2012). The onlending banks are the Banco Comercial Português
Group, Calyon and Caixa Geral de Depósito. The cost of the “B Loan” is LIBOR +
3% for a total period of 13 years, including 10 years of amortization and no
repayments of principal until July 2012. The balances of principal and interest
shown in the above table correspond to 50% of the original balances, taking into
account the 50% share in the company held by EDP Energias do Brasil S.A.
MPX Chile Holding Ltda. (MPX Chile)
(jj) MPX Chile Holding Ltda. entered into a foreign currency loan agreement with Banco
Credit Suisse Bahamas on April 13, 2011, with the guarantee of the parent
company. The loan was raised in US Dollars for a total of US$15 million (the
equivalent of R$21,038 as of December 31, 2012), at a fixed annual interest rate
of 8.13%. Capital and interest are to be paid half-yearly, with no capital payments
until April 15, 2013, and the loan maturing on April 15, 2015. The balances of
principal and interest shown in the above table correspond to 50% of the original
balances.
(kk) MPX Chile Holding Ltda. entered into a foreign currency loan agreement with Banco
Credit Suisse Bahamas on June 29, 2011, with the guarantee of the parent
company. The loan was raised in US Dollars for a total of US$10 million (the
equivalent of R$20,815 as of December 31, 2012), at a fixed annual interest rate
of 8%. Capital and interest are to be paid half-yearly, with no capital payments
until April 15, 2013, and the loan matures on April 15, 2015. The balances of
principal and interest shown in the above table correspond to 50% of the original
balances.
Parnaíba IV Geração de Energia S.A. (Parnaíba IV)
(ll) On April 29, 2013, the Parnaíba IV Project raised R$70 million in a CCB contract
(Bank Credit Note) with Banco BTG Pactual. This bridge loan is to finance the
deployment of natural gas thermal project signed with Kinross Brasil Mineração
S.A. Interest is 100% of the CDI rate plus 2,28% p.a., with capital and interest
being paid in full when the loan matures on September 29, 2014.
Parnaíba III Geração de Energia S.A. (Parnaíba III)
(mm) The Parnaíba III Project received on November 25, 2013 from Banco
Bradesco a bridge loan in the amount of US$ 120 million with an initial maturity
scheduled for January 9, 2014. On this date a new maturity was rescheduled for
January 31, 2014. The cost of the bridge loan corresponds to CDI plus 2.53% per
annum. The principal and interest shall be paid at the end of the operation.
In addition to the above mentioned financing, as from July 2012, the Company disbursed
R$500 million as a result of loan agreements subordinated to transactions with IDB, BNDES
and BNB, of which R$150 million to Porto do Pecém Geração de Energia S.A. and R$350
million to UET Porto do Itaqui Geração de Energia S.A.
In October and December 2012, the Company entered into two loan agreements, in each of
which the Company undertook to make R$667 thousand available to Pecém Operação e
Manutenção de Unidades de Geração Elétrica S.A., at an annual cost of 110% of the CDI,
with maturities currently fixed for September 30 and December 31, 2013, respectively.
Management of the Company states that the total amount of debt of any nature, which as
defined in Circular Letter CVM/SEP/No. 01/2013 is the aggregate total of the Company’s
consolidated Current and Non-Current Liabilities, is not contractually subordinated, except
for the legal subordination arising from the collateral given by the Company to its financial
creditors.
18
As of March 31, 2013, the Company’s total consolidated debt of any nature was R$6,077.4
million. R$3,961.8 million of this was collateralized, with preference, in the case of
collective insolvency proceedings, over the unsecured creditors of the Company, which at
the same date amounted to R$2,115.9 million.
As of December 31, 2012, of the Company’s total consolidated debt of any nature,
amounting to R$6,746.6 million, R$3,898.3 million was collateralized, with preference, in
the case of collective insolvency proceedings, over the unsecured creditors of the Company,
which at the same date amounted to R$2,848.4 million.
The table below shows the financial debt and the non-financial debt and the Company’s
total indebtedness for the periods indicated:
(in thousands of R$) 03/31/2013 12/31/2012
Financial Debt 5,459,825 6,067,349
Non-financial Debt 617,949 679,256
Total Indebtedness 6,077,774 6,746,605
For more information on the Company’s indebtedness, see item 3.7 of this Reference Form.
(ii) Other long-term relationships with financial institutions
Our Company and its subsidiaries have no long-term relationships with financial
institutions, other than those already described in item 10.1(f)(i) of this Reference Form.
(iii) Degree of subordination between debts
The long-term financing agreements entered into by our Company’s subsidiaries and
described above are for the most part structured as Project Finance and are collateralized.
The undertakings that have been financed are subject to the usual market obligations not
to issue guarantees of any kind for transactions with other creditors, without the same
guarantees being offers to the lenders, except with the prior express authorization of the
latter, other than encumbrances allowed in terms of the corresponding agreements.
Furthermore, the financing agreements entered into by one undertaking are in no way
subordinated to debts contracted in respect of the other undertakings.
(iv) Any restrictions imposed on the Company, in particular regarding
borrowing limits and the raising of new debt, dividend distribution, asset disposal,
the issue of new securities or the transfer of control of the Company
As a way of monitoring the financial condition of the Company and its subsidiaries by
lenders involved in financial contracts, some of them include specific financial covenants
clauses.
The financing agreements for the projects Porto do Pecém Geração de Energia S.A., Pecém
II Geração de Energia S.A., Itaqui Geração de Energia S.A. e Parnaíba Geração de Energia
S.A. contain specifications indexes (coverage ratio of debt service - operating cash flow
divided by the annual debt service) minimum intended to measure the ability to pay
interest expense to EBITDA ("earnings before interest, taxes, depreciation and
amortization").
On December 31, 2013 all financial covenants under the contracts were met.
Some financing agreements also contain clauses with non-financial covenants, usual
market and summarized below, which in December 31, 2013 are fully met.
i. Obligation to submit periodic financial statements to lenders;
19
ii. Right of creditors to undertake inspections and visits their premises;
iii. Obligation to keep up to date with respect to tax, labor and social security
obligations;
iv. Obligation to maintain existing material contracts for its operations;
v. Comply with environmental legislation and maintain the necessary licenses for their
operations;
vi. Contractual restrictions on related party transactions and dispositions of assets
outside the ordinary course of business, i.e., any related transaction or disposition of
assets that are proven to provide significant change in the economic capacity of the
Company's shares;
vii. Restrictions on the direct or indirect change of control in the control group and the
Company's material change in the corporate purpose and the incorporation of
debtors, since not approved by creditors; and
viii. Hiring of additional debt on projects with project finance and guarantees share since
not approved by the creditors of the respective projects.
No cases of non-compliance with financial covenants clauses were identified and
nonfinancial until December 31, 2013.
(g) Limits on use of financing previously contracted
The table below shows the financing contracted by the Company and its subsidiaries, as
well as the total disbursed as of December 31, 2013:
R$ million Disbursed % Disbursed Total
Pecém I 1,958 99.1% 1,976
Itaqui 1,239 99.9% 1,241
Pecém II 975 98.8% 987
Parnaíba I 700 78.9% 888
Total 4,872 95.6% 5,092
Disbursed amounts as of December 31, 2013
Porto do Pecém Geração de Energia S.A (Pecém I)
The company has a Financing Agreement upon Opening of Credit entered into with BNDES,
which provides for financing of R$1.4 billion (in nominal R$, excluding interest during the
construction phase), divided into sub-loans A, B, C and D, for a total period of 17 years,
with amortization over 14 years and no payments of capital or interest until July 2012. The
agreed annual cost is TJLP + 2.77%. Interest is to be capitalized during the construction
phase. As of December 31, 2013, a total of R$1.393 billion had been disbursed. The
undertaking also has a financing agreement with the Inter-American Development Bank
(“IBD”), providing for an A Loan for a total of USD147 million and a B Loan for a total of
USD180 million. The “A Loan” is for a total period of 17 years, with amortization over 14
years and no repayments of principal until July 2012. As of December 31, 2013, US$117
million had been disbursed on October 30, 2009, US$22.68 million on September 2, 2010
and US$4.05 million on February 2, 2011, at an annual cost of LIBOR + 3.5%. The “B
Loan” is for a total period of 13 years, including 10 years of amortization and no
20
repayments of principal until July 2012. As of December 31, 2013, US$143 million had
been disbursed on October 30, 2009, US$27.72 million on September 2, 2010 and US$4.95
million on February 2, 2011, at an annual cost of LIBOR + 3%.
Porto do Itaqui Geração de Energia S.A. (Itaqui)
The company has a Financing Agreement upon Opening of Direct Credit entered into with
BNDES, which provides for a loan of R$797 million. The agreed annual cost is TJLP +
2.78%, with part of the line being for social investments (BNDES Social) for an amount of
R$10 million and paying the TJLP rate only. The “BNDES Social” line is for a total period of
9 years, including 6 years of amortization and no repayments of principal until July 2012.
The financing period for the remaining amount is 17 years, with amortization over 14 years
and no capital repayments until July 2012. Interest on these loans is to be capitalized
during the construction phase. As of December 31, 2013, a total of R$795 million had been
disbursed. As a supplement to the direct BNDES line of credit, the Porto do Itaqui
thermoelectric plant has an indirect line of BNDES credit on-lent by Banco Bradesco S/A
and Banco Votorantim S/A, for a total of R$241 million. This portion of the loan is for a
total period of 17 years, with amortization over 14 years and no payments of capital or
interest until July 2012. The agreed annual cost for sub-loans A, B, C, D and E is IPCA +
Reference Rate + 4.80% during the construction phase and UMIPCA + Reference Rate +
5.30% when the plant is in operation. The agreed annual cost for sub-loan F is IPCA +
4.80% during the construction phase and IPCA + 5.30% during the operational phase.
Interest on these loans is to be capitalized during the construction phase. As of December
31, 2013, the totality of the loan had been disbursed. In addition to the direct and indirect
BNDES financing, the Porto do Itaqui Geração de Energia S.A. thermoelectric plant has a
loan from BNB-FNE, for a total amount of R$203 million. The BNB loan is for a total period
of 17 years, with amortization over 14 years and no repayments of principal until July
2012. The annual cost is 10%. The conditions of the financing include a 15% compliance
bonus, thus reducing the cost to 8.5% p.a. As of December 31, 2013, a total of R$203
million had been disbursed.
Pecém II Geração de Energia SA (Pecém II)
The company has a long-term Financing Agreement upon Opening of Credit entered into
with BNDES, which provides for a loan totaling R$737.39 million (in nominal R$, excluding
interest during the construction phase), divided into sub-loans A, B, C, D, E, F, G, H, I, J
and L. These sub-loans, amounting to an aggregate amount of R$627.2 million, are for a
total period of 17 years, with amortization over 14 years and no payments of capital or
interest until July 2013. The agreed annual cost is TJLP + 2.18%. Part of the line, the
equivalent of R$2 million, is for social investments (BNDES Social) and pays the TJLP rate
only. The “BNDES Social” line is for a total period of 9 years, with amortization over 6
years and no repayments until July 2013. These sub-loans, amounting to an aggregate
amount of R$110.1 million, are for a total period of 17 years, with amortization over 14
years and no payments of capital or interest until June 2014. The annual cost agreed is
IPCA + TR BNDES + 2.18%. As of December 31, 2013, a total of R$725 million had been
disbursed. As a supplement to the BNDES financing, MPX Pecém II Geração de Energia
S.A. has raised a loan from BNB with FNE funds, for a total amount of R$250 million (in
nominal R$), for a period of 17 years with quarterly interest payments and amortization
over 14 years. No payments of principal will be made until February 2014, and the annual
cost is 10%. The conditions of the financing include a 15% compliance bonus, thus
reducing the cost to 8.5% p.a. As of December 31, 2013, the loan totaling R$250 million
had been disbursed.
UTE Parnaíba Geração de Energia S.A. (Parnaíba I)
This plant has funds arising from Bank Credit Notes issued to Banco Itaú BBA, Banco
Bradesco and Banco Santander, in the amounts of R$125.0 million, R$150.0 million and
R$150.0 million respectively. The cost of such bills corresponds to 100% of CDI plus 3.0%
21
per year, with maturity on June 26, 2013. These amounts were partially settled by the
release of funds of the long-term Financing Agreement entered into with BNDES. Only the
CCB of R$150 million issued to Banco Santander was fully settled.
The Parnaíba Geração de Energia S.A. thermoelectric plant has a long-term Financing
Agreement through Opening of Credit with BNDES, signed on December 18, 2012, in the
amount of R$887,516 million, subdivided into sub-loans A, B, C and D.
The Parnaíba Geração de Energia S.A. thermoelectric plant was released R$495.6 million of
the R$671 million provided under sub-loans B and C of the long-term financing agreement
entered with BNDES. These sub-loans will be amortized in 168 monthly installments,
together with interest, starting on July 15, 2013. The agreed cost is TJLP + 1.88% p.a.
This financing also includes sub-loan D, directed toward social investments (BNDES Social)
in the amount of R$12.2 million, which has not yet been disbursed and is only subject to
TJLP cost. Additionally, Parnaíba Geração de Energia S.A. thermoelectric plant was released
R$204.3 million of the total sub-loan A of the aforesaid long-term financing agreement
entered with BNDES. This sub-loan will be repaid in 13 monthly installments, the first
installment being due, together with interest, on July 15, 2014. The annual cost agreed is
IPCA + TR BNDES + 1.88%.
The total amount of R$700 million disbursed in December 2012 for the long-term financing
agreement entered into with BNDES, with respect to Sub-loans A, B and C, was used to
settle: (i) the entire short-term financing granted by BNDES of R$400 million; (ii) the entire
CCB of R$150 million issued to Banco Santander; (iii) R$90 million of the total R$150
million of CCBs issued to Banco Bradesco; and (iv) R$60 million of the total R$125 million
of the CCB issued to Banco Itaú BBA. Funds from the balance to be disbursed by BNDES
will be used to settle the amount of the current short-term debt.
To guarantee the financing granted through sub-loans A, B and C, bank guarantees were
issued in the total amount of R$700 million, of which R$310 million were disbursed by
Banco Itaú BBA S/A, R$240 million were disbursed by Banco Bradesco S/A and R$150
million were disbursed by Banco Santander (Brasil) S/A.
(h) Significant changes in financial statements items:
The following information expresses the opinions of our Management.
Our summary financial statements for the years ended December 31, 2012, 2011 and
2010, were extracted from our consolidated financial statements, which were prepared
under the responsibility of our management and according to the IFRS and the accounting
practices adopted in Brazil, both in force on December 31, 2012.
The Company’s Management understands that the Company adopted all rules, revisions of
rules and interpretations issued by IASB and then in effect, and applicable to the financial
statements as of December 31, 2013, 2012 and 2011.
The consolidated financial statements included the financial statements of our Company
and of the business in which the Company has share control, directly or indirectly, and
whose fiscal years coincide with ours and whose accounting practices are uniform.
As from January 1, 2013, the Company adopted IFRS 10 and IFRS 11, whose accounting
policy is as follows:
IFRS 10 establishes one single model that is applicable to all entities, including
special purpose entities. The changes introduced by IRFS 10 required significant
judgment from Management to determine which entities are controlled, and, thus,
which entities must be consolidated by a parent company, compared to the
requirements provided for in IAS 27.
IFRS 11 eliminated the option to record joint ventures (ECC) based on proportional
consolidation. In turn, ECCs that may correspond to the definition of “joint venture”
were recorded based on equity pick-up.
22
The adoption of IFRS 10 and IFRS 11 was made retroactively regarding the quarterly
financial statements for the period ended December 31, 2012.
In compliance with IFRS 11, the investments made in the joint ventures: Porto do Pecém
Geração de Energia S.A., Porto do Pecém Transportadora de Minérios S.A., OGMP
Transporte Aéreo Ltda., Pecém Operação e Manutenção de Unidades de Geração S.A.,
MABE Construção e Administração de Projetos Ltda., MPX Chile Holding Ltda., Seival
Participações S.A., UTE MPX Sul Energia Ltda., Parnaíba Participações S.A., UTE Porto do
Açú Energia S.A., Porto do Açú II Energia S.A. and MPX E.ON Participações S.A. were
assessed at the equity method in the individual and consolidated quarterly statements for
the three-months ended March 31, 2013 and 2012.
Comparison of our consolidated income in the three-month periods ended March
31, 2013 and March 31, 2012.
The statements of income for the three month-period ended March 31, 2013 and 2012
consider the accounting practices adopted as from January 1, 2013, which were adjusted
retroactively in the statement of income of the three-month period ended December 31,
2012.
(In thousands of Reais) Consolidated
2013
AV 2012 AV Var13/12
(Presenting again)
Revenue of goods and/or services sold 1,438,831
100%
48,786
100%
2849%
Cost of goods and/or services sold (1,507,047)
-105%
(50,949)
-104%
2858%
Gross result (68,216)
-5%
(2,163)
-4%
3054%
Operating revenue/expenses (358,957)
-25%
(404,708)
-830%
-11%
General and administrative (167,261)
-12%
(231,026)
-474%
-28%
Personnel and administrators (79,762)
-6%
(111,440)
-228%
-28%
Other expenses (12,323)
-1%
(12,411)
-25%
-1%
Third Party Services (64,803)
-5%
(92,139)
-189%
-30%
Depreciation and Amortization (3,125)
0%
(2,788)
-6%
12%
Leasing and rents (7,248)
-1%
(12,248)
-25%
-41%
0%
0%
0%
Other operational revenues 4,424
0%
1,208
2%
266%
Other operational expenses (43,108)
-3%
(16,787)
-34%
157%
Unsecured Liabilities (7,717)
-1%
(14,671)
-30%
-47%
Losses on disposal of assets (7,231)
-1%
(879)
-2%
723%
Provision for loss on investment (23)
0%
(1,237)
-3%
-98%
Loss for the period BCC (24,617)
-2%
-
0%
0%
Others (3,520)
0%
-
0%
0%
Equity income (153,012)
-11%
(158,103)
-324%
-3%
0%
0%
0%
Income before net financial revenues (expenses) and taxes (427,173)
-30%
(406,871)
-834%
5%
0%
0%
0%
Financial result (506,096)
-35%
(90,459)
-185%
459%
Financial revenues 88,513
6%
(249,822)
-512%
-135%
Positive Exchange Rate 15,346
1%
25,086
51%
-39%
Debenture Fair Value (479)
0%
62,482
128%
-101%
Financial Application 63,707
4%
76,599
157%
-17%
23
Derivatives 2,728
0%
(422,684)
-866%
-101%
Other financial revenues 7,211
1%
8,695
18%
-17%
Financial expenses (594,609)
-41%
159,363
327%
-473%
Negative Exchange Rate (33,745)
-2%
(16,479)
-34%
105%
Derivatives (3,339)
0%
398,638
817%
-101%
Debenture interest rate/costs (786)
0%
(130,863)
-268%
-99%
Debenture Fair Value -
0%
-
0%
0%
Debt Charges (364,832)
-25%
(47,248)
-97%
672%
Financial Consultancy (123,093) -9% - 0% 0%
Other financial expenses (68,814)
-5%
(44,685)
-92%
54%
0%
0%
0%
Results before income taxes (933,269)
-65%
(497,330)
-1019%
88%
0%
0%
0%
Income tax and social contribution - current (11,152)
-1%
62,876
129%
-118%
Current (3,744)
0%
(1,921)
-4%
95%
Deferred (7,408)
-1%
64,797
133%
-111%
0%
0%
0%
Net Profit of Fiscal Year (944,421)
-66%
(434,454)
-891%
117%
-
0%
-
0%
0%
Loss of Fiscal Year (944,421)
-66%
(434,454)
-891%
117%
-
0%
-
0%
0%
Attributable to controlling shareholders (942,455)
-66%
(435,202)
-892%
117%
Interest of Non-controlling shareholders (1,966)
0%
748
2%
-363%
Net Operational Revenue
The Company’s net operating revenues went from R$48.7 million in the period ended
December 31, 2012 to R$1,438.8 million in the period ended December 31, 2013,
representing an increase of 2,849%. The Company’s Management believes that this
variation was primarily due to the fact that Parnaíba I and Itaqui thermoelectric plants’
projects intensified their business operations in the first quarter of 2013, which increased
the sales of energy of the Company and its subsidiaries by 158% against the same period
in the year 2012. Consolidated net revenues consists principally of revenue from Energy
Trading Contracts in the Regulated Environment (CCEAR) Itaqui, Pecém I and II and
Parnaíba by an independent producer contract on the open market Parnaíba II.
Itaqui: Net revenue impacted by the revision of the criteria to be applied for
compensation in case of delay in the commencement of commercial operation of the
plant, approved by ANEEL in December 2013. Previously, the criteria for reimbursement
provided that the reimbursement was based on the plant’s cost-benefit index (ICB),
i.e., the estimated cost of the plant to the National Integrated System (SIN) at the time
of the auction in which the plant sold energy. The new methodology determines the
criteria for reimbursement is based on the cost effective index ("online") from the plant
to the SIN (ICB Online), if it were available. The decision was retroactive to the
commencement date of CCEAR on December 20, 2012, resulting in an additional
revenue of R$ 17.2 million during 4Q13.
Pecém II: The plant received approval to begin commercial operation on October 18,
2013. Net revenue in 4Q13, totaling R$ 146.6 million was positively impacted by the
adoption of the new criteria for reimbursement ICB Online (US$ 6.1 million) and the
injunction granted Pecém II the right to receive a fixed income from September 2013
until the date of commencement of commercial operations (US$ 31 million). In August
2013, the board of ANEEL determined the postponement of the start of the Trading
24
Agreements in the Regulated Electricity (CCEARs) of Pecém II until the beginning of
commercial operation of the substation and transmission line, which took place in
October. As the plant was ready for operation on July 1, 2013, the Company filed an
injunction against Aneel, requesting that the fixed charges were paid starting from July.
In September, an injunction from the Federal Court ruled that Pecém II had the right to
receive fixed income from the date of the injunction until the date of commercial
operation. The company is awaiting a court decision on their right to receive fixed
income for the months of July and August 2013, worth R$ 48 million.
Parnaíba I: The plant received approval to begin commercial operation in partially
February 1, 2013 (1 turbine) and totally on February 17, 2013 (2nd turbine). Net
revenue in 4Q13, totaling R$ 239 million.
Parnaíba II: Net revenue totaled R$ 9.1 million related to a contract on the open
market for November and December 2013.
Cost of goods and/or services sold
The cost of goods and/or services sold went from R$50.9 million in the period ended
December 31, 2012 to R$1,507 million in the period ended December 31, 2013,
representing an increase of 2.858%. The Company’s Management believes that this
variation was basically due to the following reasons:
Electrical energy purchased for resale
In the period ended on December 31, 2013, we recorded an increase in the purchase of
electrical energy for resale by the subsidiaries Itaqui, Pecém II and Parnaíba II, which
represented an increase of R$252,7 million in the cost of goods and/or services sold. The
increase in the purchase of electrical energy is due to the fulfillment of the obligations of
energy supply that the Company and its subsidiaries have vis-à-vis regulatory bodies in the
scope of CCEAR contracts, which require that the Company and its subsidiaries supply
electrical energy in a given period through its Itaqui, Pecém II and Parnaíba II
undertakings. Due to the delay in starting the power generation operations of such
undertakings, the Company was forced to purchase electrical energy on the market to
honor its electrical energy supply commitments.
Fuel for generation of electrical energy
In the period ended on December 31, 2013, we recorded an increase in the consumption of
coal and natural gas by the aforesaid subsidiaries amounting to R$556.2 million in which
increased the cost of goods and/or services sold against the same period of 2012.
Gross loss
The Company’s gross loss went up from R$2.2 million in the period ended on December 31,
2012 to R$68.2 million in the period ended on December 31, 2013, representing an
increase of 3054%. Management understands this increase occurred mainly as a result of
the factors described above.
Operating revenues (expenses)
General and administrative expenses
General and administrative expenses went from R$231 million in the period ended on
December 31, 2012 to R$167 million in the period ended on December 31, 2013,
representing a decrease by 28%. The Company’s Management believes that this
reduction was mainly due to the reduction of stock options expenses that resulted,
mainly, from the shorter number of open options and the decrease of stock prices
compared to 2012, smaller provision of bonus compared to the period in 2012, average
wage increase of 8% after the completion of the annual collective negotiation process
and labor costs related to dismissals.
25
Equity Pick-up
Equity pick-up went from an expense of R$158 million in the period ended on
December 31, 2012 to an expense of R$153 million in the period ended on December
31, 2013, which represents a decrease of 3%.
Net Financial Result
Net financial result went from R$90.5 million in expenses in the period ended on
December 31, 2012 to R$506.1 million in expenses in the period ended on December
31, 2013, representing an increase of 460%. The increase was affected, mainly, by the
growth of expenses with debt service charges in the Parent Company, Itaqui, Pecém II
and Parnaíba II. With the end of the grace periods of long term financings in Itaqui,
Pecém II and Parnaíba II, the debt interests, which so far were mostly capitalized,
started to cause an impact in the results. The growth of charges in the Parent Company
is justified by the debt increase due to the contribution need in the subsidiaries to buy
energy facing the delay to begin the commercial operation in the plants and to cover
unavailability costs.
The net financial result was also affected by the increase in other financial expenses,
arising from taxes on financial operations and structuring charges related to the
holding’s debt refinancing, completed on December, 2013.
Income tax and social contribution – deferred
The amounts regarding income tax and social contribution went from R$64.8 million of
revenue in the period ended on December 31, 2012 to R$7.4 million in the period ended on
December 31, 2013, representing a decrease of 111%. The Company’s Management
believes that this variation was mainly due to a decrease in the Parent Company’s deferred
taxes amounting to R$114 million.
Loss for the year
The Company’s loss for the year rose from R$435.2 million in the period ended on
December 31, 2012, to R$942.5 million in the period ended on December 31, 2013, an
increase of 117%. The Company Management is of the opinion that this increase was due
largely to the factors mentioned above.
Comparison of our consolidated income in the financial years ended December 31,
2012 and December 31, 2011.
The statements of income for the financial years ended December 31, 2012 and 2011,
presented below, were prepared and are presented in accordance with the accounting
practices in force on December 31, 2013. The variations in the 2012 and 2011 financial
statements, both represented, are explained below. However, with the application of the
IFRS 11, starting January 1st 2013, the investiments in the subsidiaries together with Porto
do Pecém Geração de Energia S.A., Porto do Pecém Transportadora de Minérios S.A., OGMP
Transporte Aéreo Ltda., Pecém Operação e Manutenção de Unidades de Geração S.A.,
MABE Construção e Administração de Projetos Ltda., MPX Chile Holding Ltda., Seival
Participações S.A., Sul Geração de Energia Ltda., Parnaíba Participações S.A., UTE Porto do
Açú Energia S.A., Açú II Geração de Energia S.A. and Eneva E.ON Participações S.A. are
evaluated by equity pick-up in individual and consolidated financial statements. Previously,
these investments were consolidated proportionally.
2012 AV 2011 AV Var12/11
(Resubmitted)
(Resubmitted)
Revenues for assets and/or services sale
48.786
100%
167.873
100%
-71%
Cost of goods and/or services sold
(50.949)
-104%
(162.214)
-97%
-69%
26
Gross balance
(2.163)
-4%
5.659
3%
-138%
Operating expenses/revenues
(404.708)
-830%
(371.999)
-222%
9%
General and Administrative
(231.026)
-474%
(270.414)
-161%
-15%
Staff and Managers
(111.440)
-228%
(146.349)
-87%
-24%
Other expenses
(12.411)
-25%
(16.751)
-10%
-26%
Third-party expenses
(92.139)
-189%
(90.323)
-54%
2%
Depreciation and Amortization
(2.788)
-6%
(3.289)
-2%
-15%
Leases and Rents
(12.248)
-25%
(13.703)
-8%
-11%
0%
0%
0%
Other operational revenues
1.208
2%
1.128
1%
7%
Other operational expenses
(16.787)
-34%
(37.060)
-22%
-55%
Unsecured obligations
(14.671)
-30%
-
0%
0%
Losses in disposal of assets
(879)
-2%
(120)
0%
631%
Provision for loss in Investment
(1.237)
-3%
(36.940)
-22%
-97%
Decreas in CCC Benefit
-
0%
-
0%
0%
Others
-
0%
0%
0%
Equity pick-up balance
(158.103)
-324%
(65.653)
-39%
141%
0%
0%
0%
Result before the financial result and tax rates on profit
(406.871)
-834%
(366.340)
-218%
11%
0%
0%
0%
Financial Result
(90.459)
-185%
(154.808)
-92%
-42%
Financial Revenues
(249.822)
-512%
441.799
263%
-157%
Positive Exchange Variation
25.086
51%
5.401
3%
364%
Debenture Fair Value
62.482
128%
-
0%
Aplicação Financeira
76.599
157%
97.305
58%
-21%
Derivative financial instruments
(422.684)
-866%
333.098
198%
-227%
Other financial revenues
8.695
18%
5.995
4%
45%
Financial Expenses
159.363
327%
(596.607)
-355%
-127%
Negative Exchange Variation
(16.479)
-34%
(17.376)
-10%
-5%
Derivative financial instruments
398.638
817%
(383.611)
-229%
-204%
Debenture Interests/Costs
(130.863)
-268%
(53.875)
-32%
143%
Debenture Fair Value
-
0%
(62.003)
-37%
-100%
Debt Charges
(47.248)
-97%
(3.865)
-2%
1123%
Other financial expenses
(44.685)
-92%
(75.878)
-45%
-41%
0%
0%
0%
Result before the tax rates on profit
(497.330)
-1019%
(521.148)
-310%
-5%
0%
0%
0%
Income Tax and Social Contribution on Profit
62.876
129%
119.286
71%
-47%
Current
(1.921)
-4%
(4.867)
-3%
-61%
Deferred
64.797
133%
124.152
74%
-48%
0%
0%
0%
Year Net Profit
(434.454)
-891%
(401.862)
-239%
8%
-
0%
-
0%
0%
Year Losses
(434.454)
-891%
(401.862)
-239%
8%
-
0%
-
0%
0%
27
Assigned to controlling stockholders
(435.202)
-892%
(408.553)
-243%
7%
Assigned to non-controlling stockholders
748
2%
6.691
4%
-89%
Net operating revenues
The Company’s net operating revenues increased from R$167.8 million in the fiscal year
ended December 31, 2011 to R$48.8 million in the fiscal year ended December 31, 2012,
representing a decrease of 71%. The Company’s Management believes that this variation
was mainly in order to meet IFRS 11 the investments in subsidiraries together with Porto
do Pecém Geração de Energia S.A, Proto do Pecém Transportadora de Minérios S.A., OGMP
Transporte Aéreo Ltda., Pecém Operação e Manutenção de Unidades de Geração S.A.,
MABE Construção e Holding Ltda., Seival Participações S.A., Sul Geração de Energia Ltda.,
Parnaíba Participações S.A., UTE Porto do Açú Energia S.A., Açú II Geração de Energia
S.A., and Eneva Participações S.A., that starting on January 1st 2013, will be evaluated by
equity pick-up in individual and consolidates financial statements. Previously, these
investments were consolidated proportionally.
Cost of goods and/or services sold
The cost of goods and/or services sold increased from R$162.2 million in the fiscal year
ended December 31, 2011 to R$50.9 million in the fiscal year ended December 31, 2012,
representing a decrease of 69%. The increase in the purchase of electrical energy is due to
the fulfillment of the obligations of energy supply that the subsidiaries have vis-à-vis
regulatory bodies, under CCEAR agreements, which require the supply of electrical energy
in a given period through its Itaqui and Energia Pecém undertakings. Due to the delay in
starting the power generation operations of such undertakings, the Company was forced to
purchase electrical energy on the market to honor its electrical energy supply
commitments.
Gross Profit (Loss)
The gross profit (loss) of the Company went from gross profit of R$4.5 million for the year
ended December 31, 2011, to gross loss of R$106.6 million for the year ended December
31, 2012, a negative variation of R$111.1 million. Management considers that this decrease
occurred principally as a result of the factors described above.
Operating revenues (expenses)
Other operating expenses
Other operating expenses went from R$37.1 million in the fiscal year ended December
31, 2011 to R$2.2 million in the fiscal year ended December 31, 2012, representing an
decrease of 94%. Management considers that this variation occurred mainly in the light
of the reduction due to the spin-off of CCX and provision for investment loss in 2011.
Equity Pick-up
Equity pick-up went from an expense of R$27.7 million in the three-month period
ended March 31, 2011 to an expense of R$34.2 million in the three-month period
ended March 31, 2012, which represents an increase of 24%. Management
understands this increased occurred mainly due to the result recorded by the
subsidiary Parnaíba Gás Natural (formerly OGX Maranhão).
Net financial revenues (expenses)
Financial revenues
Financial revenues increased from R$106.3 million in the fiscal year ended December
28
31, 2011 to R$157.8 million in the fiscal year ended December 31, 2012, representing
an increase of 48%. Management considers that this occurred mainly in the light of the
portion of the gain on the fair value of debentures.
Financial expenses
Financial expenses increased from R$197.3 million in the fiscal year ended December
31, 2011 to R$232.0 million in the fiscal year ended December 31, 2012, representing
an increase of 18%. Management believes that this variation occurred basically due to
the payment of a premium on the early conversion of the debentures. This transaction
led to an expense of R$75 million being debited in the books.
Derivative financial instruments
The values of derivatives financial instruments went from an expense of R$62.2 million
in the fiscal year ended December 31, 2011 to an expense of R$37.7 million in the
fiscal year ended December 31, 2012, representing a decrease of 39%. Management
considers that this variation occurred mainly in the light of changes in mark to market
– MTM of derivatives.
Exchange variation, net
The amounts regarding net exchange variation went from an expense of R$49.1 million
in the fiscal year ended December 31, 2011 to an expense of R$15.5 million in the
fiscal year ended December 31, 2012, representing a decrease of 68%. Management
believes that this variation occurred mainly due to the effect of the transactions in
foreign currency of CCX. As a result of the partial spin-off of the Company with the
transfer of the shareholding then owned by the Company in MPX Áustria to CCX Carvão
da Colômbia, the Company failed to register in its income the operations of CCX,
protecting the Company against exchange variations of CCX’s operations.
Income tax and social contribution – deferred
The amounts regarding deferred income tax and social contribution went from R$142.5
million in the fiscal year ended December 31, 2011 to R$116.9 million in the fiscal year
ended December 31, 2012, representing a decrease of 18%. Management believes that this
variation occurred mainly due to the increase in tax debts arising from temporary
difference, mainly, revenues from exchange variation over loans.
Comparison of the Main Consolidated Balance Sheet Accounts in December 31,
2013 and December 31, 2012.
The balance sheets consolidated on December 31, 2013 and December 31, 2012 consider
the accounting practices adopted as from January 1, 2013, which were adjusted
retroactively in the balance sheet consolidated on December 31, 2012 for comparability
purposes.
Consolidated Balance Sheets
Consolidated
(Resubmitted)
2013
AV
2012
AV
VAR13/12
Total Assets 9.689.212
100%
8.039.595
100%
21%
Cash and cash equivalents 277.582
3%
519.277
6%
-47%
Marketable Securities -
3.441
0%
-100%
29
Accounts receivable 294.396
3%
21.345
0%
1279%
Subsidies receivable – Fuel Consumption Account 30.802
0%
17.561
0%
75%
Inventories 78.376
1%
142.687
2%
-45%
Prepaid expenses 9.825
0%
19.351
0%
-49%
Recoverable taxes 47.651
0%
37.410
0%
27%
Gains on derivatives 4.171
0%
3.018
0%
38%
Miscellaneous advances 5.001
0%
1.783
0%
180%
Linked deposits 38
0%
35
0%
7%
Dividends receivable -
-
Other credits -
-
Current 747.842
8%
765.908
10%
-2%
Prepaid expenses 2.905
0%
8.494
0%
-66%
Linked deposits 118.606
1%
135.648
2%
-13%
Subsidies receivable – Fuel Consumption Account -
0%
24.617
0%
-100%
Recoverable taxes 14.614
0%
24.034
0%
-39%
Deferred Income Tax and Social Contribution 302.327
3%
305.548
4%
-1%
Loans with subsidiaries and grouped subsidiaries 191.968
2%
134.926
2%
42%
Accounts receivable with other linked persons 218.680
2%
1.134
0%
19176%
Accounts receivable with subsidiaries and grouped subsidiaries 117.372
1%
6.793
0%
1628%
Advance for Future Capital Increase with subsidiaries and group subsidiaries 150
0%
12.425
0%
-99%
Embedded derivatives 0
0%
479
0%
-100%
Other credits 60
0%
-
0%
0%
Non-current 966.682
10%
654.098
8%
48%
Investment 941.853
10%
833.955
10%
13%
Fixed Assets 6.819.454
70%
5.570.399
69%
22%
Intangble Assets 213.381
2%
215.236
3%
-1%
Consolidated
(Resubmitted)
2013
AV
2012
AV
VAR13/12
Total Obligations 9.689.212
100%
8.039.596
100%
21%
Suppliers 331.216
3%
115.261
1%
187%
Loans e financings 2.408.142
25%
1.819.974
23%
32%
Debits with subsidiaries -
0%
-
0%
0%
Debits with Parent Company -
0%
26.783
0%
-100%
30
Debits with other related parts -
0%
3.989
0%
-100%
Debentures 112
0%
111
0%
1%
Taxes and contributions payble 45.934
0%
7.241
0%
534%
Social and Labor Obligations 16.770
0%
9.863
0%
70%
Losses in opreations with derivatives -
0%
22.951
0%
-100%
Contractual reserve 84.789
1%
77.374
1%
10%
Profit sharing 8.148
0%
20.633
0%
-61%
Dividends payable -
0%
1.960
0%
-100%
Other liabilites 83.748
1%
3.325
0%
2419%
Current 2.978.859
31%
2.109.465
26%
41%
Loans e financings 3.802.378
39%
3.104.806
39%
22%
Debits with other related parts 307.720
3%
430
0%
71386%
Debentures 5.239
0%
4.954
0%
6%
Embedded derivatives -
0%
-
0%
0%
Losses in opreations with derivatives -
0%
94.797
1%
-100%
Provision for unsecured obligations 9.286
0%
19.840
0%
-53%
Deferred Income Tax and Social Contribution 9.591
0%
2.048
0%
368%
Provision for decomissioning 2.266
0%
2.118
0%
7%
Other provisions -
0%
-
0%
0%
Non-current 4.136.480
43%
3.228.993
40%
28%
Liquid Assets
Share Capital 4.532.313
47%
3.731.734
46%
21%
Capital reserve 350.514
4%
321.904
4%
9%
Equity valuation adjustments (53.284)
-1%
(119.067)
-1%
-55%
Accumulated losses (2.379.303)
-25%
(1.384.971)
-17%
72%
Liquid assets attributable to controlling stockholders 2.450.240
25%
2.549.600
32%
-4%
Participation of non-controlling stockholders 123.633
1%
151.538
2%
-18%
Total liquid asstes 2.573.873
27%
2.701.139
34%
-5%
Current assets
Our current assets went from R$765.9 million on December 31, 2012 to R$747.8 million on
December 31, 2013, representing a decrease of 2%. Management believes that this
increase was due mainly to the following reasons:
Cash and cash equivalents
Cash and cash equivalents went from R$519.3 million on December 31, 2012 to
R$277.6 million on December 31, 2013, representing a decrease of 31%. The
31
Company’s Management believes that this variation was mainly due to capital
expenditure (CAPEX), mainly in Parnaíba I TPP, Parnaíba II TTP and Porto do Itaqui,
which was partially offset by fundraising through long-term loans.
Accounts receivable
Accounts receivable went from R$21.3 million on December 31, 2012 to R$294 million
on December 31, 2013, representing an increase of 1279%. The Company’s
Management believes that this increase was mainly due to the fact that Parnaíba I,
Parnaíba II and Parnaíba III and Itaqui intensified their commercial operations, the
beginning of operations of Pecém II, resulting in an increase in energy sales of the
Company and its subsidiaries in relation to the same period in the year 2012.
Inventories
The value of inventories went from R$142.7 million on December 31, 2012 to R$78.4
million on December 31, 2013, representing a decrease of 45%. The Company’s
Management believes that this variation was mainly due to the use of coal in electricity
generation process, mainly by Porto de Itaqui plant.
Taxes recoverable
Accounts receivable went from R$37.4 million on December 31, 2012 to R$47.6 million
on December 31, 2013, representing an increase of 27%. The Company’s Management
believes that this variation was mainly due to an increase in deferred tax assets
relating to prepayment of income tax, social contribution, PIS and COFINS, mainly
relating to Porto de Itaqui project.
Non-current assets
Our non-current assets (non-current + investment + fixed + intangible) went from
R$7,237.7 million on December 31, 2012 to R$8.941,4 million on December 31, 2013,
representing an increase of 6%. Management believes that this variation was mainly due to
the following reasons:
Loans with affiliates
Loans with affiliates increased from R$134.9 million on December 31, 2012 to R$191.9
million on December 31, 2013, representing an increase of 17%. The Company’s
Management believes that such variation was mainly due the creation by the Company
and E.ON of the joint venture Eneva E.ON Participações S.A. in May 2012, the
Company ceased to consolidate, totally and proportionally, its equity interests in the
following companies: UTE Sul, Porto do Açú, MPX Chile, Porto do Açú II, Seival
Participações, MPX Comercializadora de Energia, Eneva Solar e Eneva Comercializadora
de Combustível, which were transferred to such joint venture. As a result of
adjustment to the rule mentioned above, the balances related to loans with subsidiaries
were not eliminated, as above mentioned.
Accounts Receivable from other linked persons
The values referring to accounts receivable went from R$1.1 million on December 31,
2012 to R$218.7 million on December 31, 2013, representing an increase of 19176%.
This variation was mainly due to the loan given to PGN (R$204 million) for payment of
financial costs.
Accounts receivable with subsidiaries and grouped subsidiaries
The values referring to accounts receivable went from R$6.8 million on December 31,
2012 to R$117.3 million on December 31, 2013, representing an increase of 1628%.
This variation was mainly due to the payment of coal from Pecém I.
32
Fixed Assets
The values referring to fixed assets went from R$5,570.4 million on December 31,
2012 to R$6,819.4 million on December 31, 2013, representing an increase of 22%.
The Company’s Management believes that this increase was mainly due to capital
expenditure (CAPEX) in the construction of Thermal Power Plants - TPP Parnaíba I,
Parnaíba II and Parnaíba III.
Current obligations
Our current obligations went from R$2,109.5 million on December 31, 2012 to R$978.8
million on December 31, 2013, representing an increase of 187%. Management believes
that this variation was mainly due to the following reasons:
Suppliers
The amounts regarding suppliers went from R$115.3 million on December 31, 2012 to
R$331.2 million on December 31, 2013, representing an increase of 187%.
Management believes that this increase was mainly due to expenses with suppliers
designated to capital expenditure (CAPEX) in the construction of TPPs, especially Porto
de Itaqui, Parnaíba I TPP and Parnaíba II TPP.
Loans and financing
The amounts regarding loans and financing went from R$1,820.0 million on December
31, 2012 to R$2,408 million on December 31, 2013, representing an increase of 32%.
Management believes that this increase was mainly due to an increase in short term
loans primarily taken by the Company.
Taxes and contributions payable
Tax and contributions payable increased from R$7.2 million on December 31, 2012 to
R$39.745.9 million on December 31, 2013, representing an increase of 534%. The
Company’ Management believes that such increase was mainly due to PIS and COFINS
incurred on revenues generated from Porto de Itaqui and Parnaíba I TPP.
Other obligations
The value referring to other obligations went from R$43.3 million on December 31,
2012 to R$83.7 million on December 31, 2013, representing an increase of 534%.
Management believes that this increase was mainly due to unavailability costs arising
from Itaqui, Parnaíba I and Pecém II thermal plants shutdown.
Non-current Obligations
Our non-current obligations went from R$3,229.0 million on December 31, 2012 to
R$4,136.5 million on December 31, 2013, representing an increase of 1%. The Company
‘Management believes that such variation was due to the fact that debts with other related
parties increased from R$0.4 million on December 31, 2012 to R$4307.7 million on
December 31, 2013, representing an increase of 71386%. The Company’s Management
believes that this variation was mainly due to Itaqui’s energy purchase obligation to Eneva
Comercializadora de Energia.
Comparison of the Main Consolidated Balance Sheet Accounts in December 31,
2012 and December 31, 2011.
The consolidated balance sheets as of December 31, 2012 and 2011 consider the
accounting practices implemented on January 1st, 2013 wich were retroactively adjusted in
the consolidated equity pick-up of December 31, 2012 for comparing.
33
Consolidated Balance Sheets
Consolidated
(Resubmitted)
(Resubmitted)
2012
AV
2011 AV
VAR12/11
Total Assets
8.039.595
100%
7.123.369 100%
13%
Cash and cash equivalents
519.277
6%
1.380.151 19%
-62%
Securities
3.441
0%
9.437 0%
-64%
Accounts receivable
21.345
0%
21.480 0%
-1%
Grants receivable – CCC
17.561
0%
4.828 0%
264%
Inventories
142.687
2%
58.190 1%
145%
Prepaid expenses
19.351
0%
13.272 0%
46%
Taxes recoverable
37.410
0%
35.126 0%
7%
Derivative gains
3.018
0%
36.445 1%
-92%
Miscellaneous advances
1.783
0%
8.416 0%
-79%
Restricted deposits
35
0%
61.844 1%
-100%
Dividends receivable
-
- -
Other credits
-
38 0
-100%
Current
765.908
10%
1.629.227 23%
-53%
Prepaid expenses
8.494
0%
1.964 0%
333%
Restricted deposits
135.648
2%
54.148 1%
151%
Grants receivable – CCC
24.617
0%
24.617 0%
0%
Taxes recoverable
24.034
0%
82.689 1%
-71%
Deferred income tax and social contribution
305.548
4%
248.862 3%
23%
Loans with subsidiaries and grouped subsidiaries
134.926
2%
680 0%
19735%
Accounts receivable with other related persons
1.134
0%
8.436 0%
-87%
Accounts receivable with subsidiaries and grouped subsidiaries
6.793
0%
- 0%
0%
Advance for Future Capital Increase with subsidiaries and group
subsidiaries
12.425
0%
- 0%
0%
Embedded derivatives
479
0%
411.121 6%
-100%
Other credits
-
0%
- 0%
0%
Non-current
654.098
8%
832.515 12%
-21%
Investments
833.955
10%
431.695 6%
93%
Fixed
5.570.399
69%
3.962.979 56%
41%
Intangible
215.236
3%
266.954 4%
-19%
34
Consolidated
(Resubmitted)
(Resubmitted)
2012
AV
2011 AV
VAR12/11
Total Obligations
8.039.596
100%
7.123.369 100%
13%
Suppliers
115.261
1%
154.476 2%
-25%
Loans e financings
1.819.974
23%
994.608 14%
83%
Debits with subsidiaries
-
0%
- 0%
0%
Debits with Parent Company
26.783
0%
- 0%
0%
Debits with other related parts
3.989
0%
3.697 0%
8%
Debentures
111
0%
30.463 0%
-100%
Taxes and contributions payble
7.241
0%
17.939 0%
-60%
Social and Labor Obligations
9.863
0%
16.246 0%
-39%
Losses in opreations with derivatives
22.951
0%
27.580 0%
-17%
Contractual reserve
77.374
1%
127.965 2%
-40%
Profit sharing
20.633
0%
19.177 0%
8%
Dividends payable
1.960
0%
2.269 0%
-14%
Other liabilites
3.325
0%
48.603 1%
-93%
0%
Current
2.109.465
26%
1.443.021 20%
46%
Loans e financings
3.104.806
39%
2.326.101 33%
33%
Debits with other related parts
430
0%
- 0%
0%
Debentures
4.954
0%
1.403.152 20%
-100%
Embedded derivatives
-
0%
62.003 1%
-100%
Losses in opreations with derivatives
94.797
1%
502.723 7%
-81%
Provision for unsecured obligations
19.840
0%
- 0%
0%
Deferred Income Tax and Social Contribution
2.048
0%
13.239 0%
-85%
Provision for decomissioning
2.118
0%
1.946 0%
9%
Other provisions
-
0%
1.026 0%
-100%
Non-current
3.228.993
40%
4.310.190 61%
-25%
Liquid Assets
Share Capital
3.731.734
46%
2.042.014 29%
83%
Capital reserve
321.904
4%
274.625 4%
17%
Equity valuation adjustments
(119.067)
-1%
(71.670) -1%
66%
Accumulated losses
(1.384.971)
-17%
(970.897) -14%
43%
Liquid assets attributable to controlling stockholders
2.549.600
32%
1.274.072 18%
100%
Participation of non-controlling stockholders
151.538
2%
96.086 1%
58%
35
Total liquid asstes
2.701.139
34%
1.370.158 19%
97%
Current assets
Current assets went from R$1,629.2 million on December 31, 2011 to R$765.9 million on
December 31, 2012, representing a decrease of 53%. Management believes that this
variation was primarily due to the following factors:
Cash and cash equivalents
The amounts regarding cash and cash equivalents went from R$1,380.1 million on
December 31, 2011 to R$519.3 million on December 31, 2012, representing a
decrease of 62%. Management considers that this variation occurred mainly due to
expenses from CAPEX investments which were partially offset by funding, via
capitalization through the issue of common shares.
Inventories
Inventories increased from R$52.2 million on December 31, 2011 to R$142.7 million
on December 31, 2012, representing a decrease of 145%. Management believes
that this increase occurred, mainly due to the purchase of supplies for electricity
generation, especially coal.
Restricted deposits
Restricted deposits went from R$61.8 million on December 31, 2011, to R$0.35
million on December 31, 2012, representing a decrease of 100%. Management
believes that this decrease occurred mainly due to the release of deposits linked to
the BNDES loan after capital investments in Energia Pecém.
Non-current assets
Non-current assets (non-current + investment + fixed + intangible) increased from
R$5,494.1 million on December 31, 2011, to R$7.273,7 million on December 31, 2012,
representing an increase of 93%. Management believes that this increase was primarily due
to the following factors:
Restricted deposits
Restricted deposits increased from R$54.1 million on December 31, 2011, to
R$135.6 million on December 31, 2012, representing an increase of 151%.
Management believes that this increase occurred, mainly, (i) by the release of the
guarantees with Banco Bradesco to buy energy on the open market for Itaqui; and
(ii) by hiring new loan guarantees with Citibank by ENEVA .
Taxes recoverable
Taxes recoverable went from R$42.7 million on December 31, 2011, to R$24 million
on December 31, 2012, representing a decrease by 71%. Management considers
that this decrease occurred mainly due to the offset of tax credits regarding the
prepayment of income tax, social contribution and taxes withheld.
Income tax and social contribution - deferred
The amounts regarding deferred income tax and social contribution increased from
R$248.9 million on December 31, 2011, to R$305.5 million on December 31, 2012,
representing an increase of 23%. Management considers that this variation occurred
mainly due to the increase in tax credits (tax losses and temporary differences) on
investments in Pecém II and Itaqui.
36
Fixed Assets
The amount fixed assets increased from R$3,962.9 million on December 31, 2011,
to R$5,570.4 million on December 31, 2012, representing an increase of 41%.
Management believes that this variation occurred mainly due to CAPEX Investments
for construction of Thermal Power Plants (Usinas Termelétricas de Energia or UTEs).
Current obligations
Current obligations increased from R$1,443 million on December 31, 2011, to R$2,109.5
million on December 31, 2012, representing an increase of 46%. Management believes that
this variation was primarily due to the following factors:
Loans and financing
Loans and financing increased from R$994.6 million on December 31, 2011 to
R$1,819.9 million on December 31, 2012, representing an increase of 63%.
Management believes that this increase was mainly due to (i) the increase in short-
term loans taken by ENEVA ; and (ii) investments in Parnaíba I and UTE Parnaíba II.
Debentures
The amount of debentures went from R$30.5 million on in December 31, 2011, to
R$0.1 million on in December 31, 2012. Management believes that this decrease
was mainly due to the conversion of almost all the debentures issued into shares in
ENEVA .
Contractual reserve
Contractual reserves went from R$127.9 million on December 31, 2011, to R$77.3
million on December 31, 2012, representing a decrease of 40%. Management
considers that this variation was mainly due to the release of the contractual reserve
to MABE (EPC) by Itaqui.
Other obligations
The amounts referring to other obligations went from R$48.6 million on December
31, 2010, to R$3.3 million on December 31, 2011, representing a reduction of 93%.
Management considers that this variation was mainly due to the reduction in VAT
obligation as result of the spin-off of a portion of ENEVA ’s capital regarding the
investments made in MPX Colombia.
Non-current obligations
Non-current obligations went from R$4,310.2 million on December 31, 2011, to R$3,228.9
million on December 31, 2012, representing a decrease of 25%. Management believes that
this decrease was primarily due mainly to the following factors:
Loans and financing
Loans and financing increased from R$2,326.1 million on December 31, 2011, to
R$3,104.8 million on December 31, 2012, representing an increase of 33%.
Management believes that this increase was mainly due to the release of long-term
credit lines for Pecém II, by BNDES and BNB; and for Itaqui, by BNDES and BNB.
Debentures
The amount of debentures increased from R$1,403.1 million on in December 31,
2011, to R$5,0 million on in December 31, 2012. Management believes that this
variation was mainly due to the conversion of almost all the debentures issued into
37
shares in ENEVA .
Embedded derivatives
The variation in embedded derivatives occurred due to the conversion of almost all
of the debentures into shares of ENEVA .
Shareholder’s equity
The amounts regarding consolidated shareholder’s equity went from R$1,370.1
million on December 31, 2011, to R$2,701.1 million on December 31, 2012,
representing an increase of 97%. Management believes that this increase was
mainly due to (i) the capital increase through issue of common shares; (ii) the
capital increase through the conversion of debentures; (iii) the reduction of capital
with the spin-off of MPX Colombia; and (iv) the loss recorded in the financial year
ended December 31, 2012.
38
10.2 – Management’s comments on operating and financial result
The financial information included in this Reference Form, except when stated otherwise,
refers to the Company’s consolidated financial statements.
(a) Company’s operating results
(i) Description of any relevant revenue components
The Company’s Management understands that the basis for its revenues and, consequently,
for its operations, in the years ended December 31, 2012 and 2011, refers to the gross
operating revenue from the sale of energy that totaled R$600.3 million, R$54.1 million and
R$189.9 million, respectively.
(ii) Factors that substantially affected the operating results
According to the Company’s Management, the facts that substantially affected their
operating results may be summarized as follows:
Year ended 2013: The Company assessed a loss of R$942.4 million. The primary factor
that substantially affected this result was that the Company and its subsidiaries received
proper authorizations from ANEEL to start electricity generation, but since the projects for
which such authorizations were granted were not completed, the Company and its
subsidiaries were required to purchase electricity from third parties to comply with their
energy supply agreements, resulting in a material loss.
Year ended 2012: The Company assessed a loss of R$434.5 million. The primary factors
that substantially affected this result are the following: (i) appropriation of interest incurred
and costs of bonds in the amount of R$130.9 million; (ii) negative result of R$37.7 million
from non-speculative derivatives operations; and (iii) impact on operating costs of coal
plants, due to change in the commencement of commercial operations.
Year ended 2011: The Company recorded a loss of R$408.5 million. The primary factors
that substantially affected this result are the following: (i) measurement of the fair value of
derivatives included in the issue of debentures of the Company made in June 2011,
resulting in a loss of R$62.0 million; (ii) appropriation of interest incurred on debentures in
the amount of R$50.8 million; and (iii) negative result of R$62.2 million from non-
speculative hedge transactions.
(b) Variations in revenues attributable to adjustments to prices, exchange
rates, inflation, changes in volumes and introduction of new products and services
The Company’s Management understands that the Company’s revenue is not directly
impacted by variations in prices, exchange rates and inflation and was not affected in the
last three years for changes in volumes and introduction of new products and services.
(c) Impact of inflation, variation in prices of the primary inputs and products,
exchange and interest rates in the Company’s operating and financial result
In the year ended December 31, 2013, 2012 and 2011, the consolidate net financial result
totaled expenses of R$506.1 million, R$90.5 million and R$154.8 million, respectively,
especially due to interest on loans and financings, the record of hedge positions and open
mark-to-market positions.
39
10.3 – Events with actual and expected relevant effects on the financial
statements
(a) Inclusion or disposal of operational segment
The Company Management makes its decisions based on four business segments, which ar
subject to risks and compensations managed by centralized decision, namely: energy
generation, energy commercialization, supplies and corporate.
As its enterprises progress, the Management intends to revalue possible business
segmentations to provide the market with real and qualitative information.
Operational Portfolio
ENEVA’s Operation Portfolio consists of the units Itaqui Geração de Energia S.A.,
Porto do Pecém Geração de Energia S.A., Pecém II Geração de Energia S.A.,
Parnaíba I Geração de Energia Ltda., Parnaíba III Geração de Energia S.A., Parnaíba
IV Geração de Energia S.A., Tauá Geração de Energia Ltda. and Amapari Energia
S.A.
Itaqui, a steamcoal termal plant, is located near Porto de Itaqui, in the State of
Maranhão, and its energy generation capacity is of 360 MW with an energy selling
contract signed from 2012.
The pulverized coal thermal plants Porto do Pecém Geração de Energia S.A., in
partnership with EDP – Energias do Brasil S.A. and Pecém II Geração de Energia
S.A. are located in the region of Porto do Pecém, in the State of Ceará, and have
energy generation capacities of 720 MW and 360 Mw, respectively.
Also in the region of Ceará, the solar energy generating company Tauá is located,
which has environmental licencing approved for a 5MW energy generation capacity,
with a 1MW unit already implemented and operating.
Amapari, Produtor Independente de Energia (PIE) in partnership with Eletronorte –
Centrais Elétricas do Norte do Brasil S.A., in the isolated system, has a
thermoelectric plant that generates energy from diesel, located in the Serra do Navio
Municipality, in the State of Amapá, with an installed capacity of 23 MW.
Complexo Parnaíba, a complex of thermal generation moved by natural gas is
strategically located in the PN-T-68 block of Parnaíba Basin, in the State of
Maranhão. The project consists of 4 (four) thermal plants, 3(three) of them already
operational and they all together will have capacity of 3,722 MW.
Greenfiel Projects
ENEVA’s Greenfield Projects consist of Proto do Açu Energia S.A., Açu III Geração de
Energia Ltda., Sul Geração de Energia S.A. and Seival Sul Mineração Ltda termal
plants.
Açu is a greenfield generation Project licensed in Brazil’s South-East region, with 5.4
GW. ENEVA has installation license, issued by the Instituto Estadual do ambiente do
Estado do Rio de Janeiro (INEA), for 2,100 MW, using imported mineral coal as fuel.
In addition, it has preliminar permit to build a natural gas termal plan with capacity
of 3,330 MW. Both projects are located near the Campos dos Goytacazes’s sub-
station and the Campos Basin natural gas exploratory blocks.
Seiva Sul mine, located in the Candiota Municipality, in the State of Rio Grande do
Sul, has proved reserves of 152 tonnes of mineral coal. In this same area, Sul and
Seival thermoelectric projects will be built, plant that will have an installed capacity
pf 727 MW and 600 MW, respectively, and from the integration with Seivel Sul mine,
they will be a guaranteed fuel supply for 30 years.
Complexos Eólicos Ventos, with projected capacity of up to 600 MW and addition
40
600 MW expansion plan, totaling 1200 MW, are located in the North-East region of
Brazil.
(b) Establishment, acquisition or disposal of equity interest
(i) On March 1, 2012, CCX Brasil Participações S.A. was incorporated, with the
corporate purpose of holding equity interest in other business and non-business
companies, in Brazil or abroad. On May 24, 2012, the Board of Directors of ENEVA
approved a partial spin-off which resulted in the incorporation of CCX Carvão da
Colômbia (Colombia Coal). The purpose of this transaction was to spin off ENEVA‘s
mining assets located in Colombia.
(ii) ENEVA Participações S.A. (formerly MPX E.ON Participações S.A.), established on
March 20, 2012, has the business purpose of holding shares in other business and
non-business companies, in Brazil or abroad. On May 24, 2012, ENEVA S.A.
contributed R$67.9 million in the capital of ENEVA Participações, via the partial
transfer of its investment portfolio with shareholdings in the subsidiaries MPX Chile
Holding Ltda., Parnaíba Participações S.A., Sul Geração de Energia Ltda. (TEP MPX
Sul Energia Ltda.’s new company name), TEP Porto do Açu Energia S.A. and Açu II
Geração de Energia S.A. (formerly TEP Porto do Açu II Energia S.A.) On the same
date, ENEVA S.A. contributed R$62.0 million as premium in the subscription of new
shares. On December 12, 2012 ENEVA increased capital stock of MPX EON
Participações by R$19.3 million, via the transfer of 50% of its shares in the
subsidiary Seival Participações.
(iii) On November 8, 2012 Tauá II Geração de Energia Ltda. (MPX Tauá II Energia Solar
Ltda.’s new company name) was established, with the business purpose of
implementing and exploring electrical energy projects via solar power use, including
the generation and trading of electric power and availability of a generation back-up.
(iv) On May 11, 2012 Parnaíba V Geração de Energia S.A (TEP Parnaíba V Geração de
Energia S.A.’s new company name) was established, with the business purpose of
developing, building and operating the thermal energy project units from natural
gas, and the trading of natural gas.
(v) On May 12, 2012 Parnaíba Geração e Comercialização de Energia S.A. was
established, with the business purpose of trading, importing and exporting electrical
energy, as well as the participation in the capital stock of other companies.
(vi) On June 20th, 2012 MPX Investimentos S.A. was established, with the business
purpose of holding equity interest in other business and non-business companies, as
shareholder, in Brazil or abroad.
(vii) On September 10, 2012 ENEVA Investimentos S.A. (MPX Desenvolvimentos S.A.’s
new company name) was established, with the business purpose of developing and
implementing coal gasification projects for the production of industrial gases and its
liquid and gaseous byproducts, utilizing commercial technologies. On December 31,
2012 this subsidiary is reported as uncovered liability.
(viii) On March 1, 2012 UTE Parnaíba III Geração de Energia S.A. was established with the
business purpose of developing, constructing and operating projects in thermal
energy generation from natural gas, and the trading of natural gas, as well as the
holding equity interests in other companies, whether simple or business companies,
whose business purposes are similar to the Company´s. On October 8, 2012 its
corporate name was changed to Parnaíba Participações S.A.
(ix) On September 10, 2012, ENEVA Participações S.A., a joint venture between ENEVA
and DD Brazil Holdings S.A. acquired 100% of Complexos Eólicos Ventos, with
projected capacity of up to 600 MW and expansion plans for additional 600 MW,
totaling 1200 MW, located in the North-East region of Brazil
41
(x) On March 27, 2013, the acquisition of 100% of Mabe Contrução e Administração de
Projetos Ltda.’s stocks was completed, a consortium formed by Maire Tecnimont S.A.
and EfacecGroup. The acquisition was made in conjunction and in equal proportions
between ENEVA and EDP – Energias do Brasil S.A. and refers to the management of
Pecém, Itaqui and Pecém II thermoelectric plants constructions works. ENEVA and
EDP have agreed that Pecém II and Itaqui, endevours fully controlled by ENEVA, will
continue to be exclusively managed by ENEVA
(xi) On April 5, 2013, the acquisition of TEP MC2 Nova Venécia’s entire share capital was
completed by ENEVA, ENEVA Participações S.A. (MPX E.ON PArticipações S.A.’s new
company name) and Petra Energia S.A. On November 15, 2013, the company’s
company name was changed to Parnaíba III Geração de Energia S.A.
(c) Unusual events or operations
The Company management informs that there was not any unusual Company related event
or activities during the periods ended December 31, 2013, 2012 and 2011, which may have
caused, or is expected to cause any relevant effect on the financial statements or returns of
the Company.
10.4 – Significant changes in accounting practices – Qualifications and Emphases
in the Auditor´s report
The Company Management has the following comments to make on changes in accounting
practices and emphases in the report of the independent auditors:
(a) Significant changes in accounting practices
The consolidated financial statements for the year ended December 31, 2010 were the first
presented in accordance with the IFRS. The Company applied the accounting policies
defined to all periods presented, which includes the balance sheet at the transition date,
defined as January 1, 2009.
To adjust the financial statements to the IFRS requirements and to the pronouncements,
interpretations and guidelines issued by CPC, the Company made the relevant mandatory
changes required and certain optional exemptions in relation to full retrospective
application, as follows:
Optional exemptions
• Business Combination Exemption – The Company applied the business combination
described in IFRS 1 and CPC 37 and thus did not restate the business combinations that
occurred before January 1, 2009, the transition date.
• Deemed Cost Exemption – The Company opted not to use deemed cost in the valuation
of its fixed assets, since this item, as presented pursuant to the previous accounting
practices (BR GAAP in force in 2009), already materially met the main requirements for
the recognition, valuation and presentation of CPC 27 (IAS 16), and mainly because
substantial portions of the Company’s assets are under construction, and were
purchased recently.
Mandatory changes
• Interest of non-controlling shareholders is now part of shareholders’ equity, separated in
a specific line, as per CPC 26 and IAS 1.
• Cumulative Translation Adjustments – The Company set to zero the cumulative
translation adjustments of previous years to the transition date of January 1, 2009. This
change was applied to all subsidiaries abroad.
42
• The Company recognized Stock Options granted by the Controlling Shareholder, as per
CPC 10 and ICPC 05, for BRGAAP purposes, and IFRS 2 (Share-based payment) and
IFRIC 11, for IFRS purposes.
• For BRGAAP purposes, Law No. 11941/09 extinguished the deferred asset, allowing the
maintenance of the balance accrued until December 31, 2008, which can be amortized
over up to 10 years, subject to impairment test. This is being adopted by the Company
in the individual financial statements pursuant to the provisions of CPC 43. In
accordance with the IFRS, pre-operational revenues and expenditures should be
recorded in income for the year when incurred. With the adoption of IFRS.
• The Company valued its fixed assets based on CPC 27, ICPC 10, and IAS 16, not
identifying relevant effects as to the assessment of the useful life, residual values and
componentization of the assets. As it understands that its fixed assets are recorded at
values that are very close to their fair value, and given that they mostly comprise fixed
assets in progress and properties recently purchased, it did not use deemed cost.
• The net effects of exchange variation on the principal of loans were reclassified from
fixed assets to accumulated losses in the consolidated balance sheet on the date of
initial adoption (January 1, 2009) and in income for the year ended December 31, 2009,
as per CPC 20 and IAS 23.
All IFRS standards and interpretations for financial instruments in force were adopted by
the Company in 2010. The main applicable ones are as follows:
• Amendment to IFRS 7 (Financial Instruments: Disclosure): The purpose of this
amendment is primarily to improve disclosure requirements. This increases the
requirements for the disclosure of fair value measurement, liquidity risk, market risk,
credit risk and any other significant risk.
• Amendment to IFRS 7 relating to Fair Value Hierarchy: This amendment establishes the
division of fair value hierarchy relating to financial instruments. The hierarchy gives
priority to unadjusted quoted prices in active markets for the financial asset or liability,
which are classified as Level 1. Fair Value of financial instrument may be classified in
three different levels, as set forth below:
. Level 1: Data from active market (unadjusted traded price), so that they can be accessed
on a daily basis, including on the day of fair value measurement.
. Level 2: Data from active market (unadjusted traded price) other than that included in
Level 1, derived from pricing model based on observable market data.
. Level 3: Data derived from pricing model based on unobservable market data.
• Amendment to CPC 38 and IAS 39 (Financial Instruments)
In such pronouncement, the procedures to identify derivative instruments embedded in
contracts were highlighted, aiming at timely recognition, control and appropriate
accounting treatment to be used, and which should be applicable to the Company and its
subsidiaries.
Agreements with possible clauses of embedded derivative instruments or securities were
analyzed in order to mitigate potential host contracts. If found, there is guidance regarding
possible effectiveness testing and methodology for calculation of fair value.
The Company and its subsidiaries do not hold outstanding agreements with embedded
derivatives.
In addition to the points described above, the Company has adjusted its financial
statements for disclosure purposes, and now presents the following information:
• Consolidated statement of comprehensive income, as required by CPC 26 and IAS 1
• Earnings (losses) per share, as required in CPC 41 and IAS 33 (Earnings per share).
43
• Expenses by nature, as required in CPC 26 and IAS 1 (Presentation of Financial
Statements).
• Information by segment, as required in CPC 22 and IFRS 8 (Operating Segments).
The consolidated financial statements for the year ended December 31, 2011, prepared
under the IFRS, did not suffer any effects of changes in the accounting practices.
There were no changes in the accounting practices used by the Company and its
subsidiaries during the years ended December 31, 2012 and 2011. The accounting
practices adopted by the Company and its subsidiaries are consistent with those utilized
abroad.
Except for the adoption of IFRS 10 and 11, whose accounting policy is described below,
information has been prepared based on the same accounting practices used to prepare the
Financial Statements as of December 31, 2012. Therefore, this information should be read
together with the Financial Statements as of December 31, 2012
IFRS 10 establishes a single control model which applies to all entities, including special
purpose entities. The changes introduced by IFRS 10 required that Management exercise a
significant judgment to determine which entities are controlled, and hence, required to be
consolidated by a controlling company, comparatively to the requisites that were part of
IAS 27.
IFRS 11 eliminates the option of accounting for joint ventures (ECC) based on proportional
consolidation. Instead, the ECCs which fit the definition of joint arrangements should be
recorded based on the equity method.
The changes in accounting policies influenced the individual and consolidated financial
statements, requiring the restatement of the comparative numbers. The main adjustments
made and the impacts on the financial statements relative to the presented periods are
demonstrated below:
In compliance with IFRS 11, investments in jointly-controlled subsidiaries Porto do Pecém
Geração de Energia S.A., Porto do Pecém Transportadora de Minérios S.A., OGMP
Transporte Aéreo Ltda., Pecém Operação e Manutenção de Unidades de Geração S.A.,
MABE Construção e Administração de Projetos Ltda., MPX Chile Holding Ltda., Seival
Participações S.A., UTE MPX Sul Energia Ltda., Parnaíba Participações S.A., UTE Porto do
Açú Energia S.A., Porto do Açú II Energia S.A. and MPX E.ON Participações S.A. are
evaluated by the equity method in the individual and consolidated financial statements.
Before, these investments were consolidated proportionally.
(b) Significant effects of changes in accounting practices
As of January 1, 2013, the Company adopted new accounting rules for compliance with the
international accounting standards. As a result of the change in accounting practices, the
Company no longer consolidates in its financial information all investees over which the
Company, individually, has no controlling power, namely, Porto do Pecém Geração de
Energia S.A., Porto do Pecém Transportadora de Minérios S.A., OGMP Transporte Aéreo
Ltda., Pecém Operação e Manutenção de Unidades de Geração S.A., MABE Construção e
Administração de Projetos Ltda., MPX Chile Holding Ltda., Seival Participações S.A., UTE
MPX Sul Energia Ltda., Parnaíba Participações S.A., UTE Porto do Açú Energia S.A., Porto
do Açú II Energia S.A. and MPX E.ON Participações S.A.
In addition, the Company began to recognize recognizes income from the above-mentioned
companies at the equity method. Thus, the Company’s income account at the equity
method gained relevance in the context of income of the Company as a whole, which would
not occur at the previously adopted accounting practices.
Below is the table showing the amendments made to the comparative balances restated in
the financial statements as of December 31, 2012:
Consolidated 12/31/2012
44
Originally disclosed Adjustments Restated
(in R$ thousands)
Assets
Current Assets
Cash and cash equivalents 590,469 (71,192) 519,277
Securities 3,441 - 3,441 Accounts receivable 152,114 (130,769) 21,345
Subsidies receivable – Fuel Consumption account 17,561 - 17,561
Inventories 211,718 (69,031) 142,687
Prepaid expenses 40,462 (21,111) 19,351 Tax recoverable 57,438 (20,028) 37,410
Earnings on Derivatives 3,018 - 3,018
Miscellaneous advances 20,267 (18,484) 1,783
Restricted deposits 4,237 (4,202) 35 Other credits 3 (3) -
1,100,728 (334,820) 765,908
Non-current assets
Prepaid expenses 8,705 (211) 8,494 Restricted deposits 137,717 (2,069) 135,648
Subsidies receivable – Fuel Consumption account 24,617 - 24,617
Tax recoverable 34,709 (10,675) 24,034
Income and social contribution taxes - deferred 456,123 (150,575) 305,548 Loans to affiliates 359 134,567 134,926
Accounts receivable from other related persons 8,575 (7,441) 1,134
Accounts receivable from affiliates 3,732 3,061 6,793
Advance for future capital increase in affiliates - 12,425 12,425 Embedded derivatives 479 - 479
675,016 (20,918) 654,098
Investments 62,956 770,999 833,955
Property, plant and equipment 7,362,815 (1,792,416) 5,570,399
Intangible assets 249,665 (34,429) 215,236
9,451,180 (1,411,584) 8,039,596
45
Consolidated 12/31/2012
Originally disclosed Adjustments Restated
(in R$ thousands)
Liabilities
Current Liabilities
Suppliers 228,638 (113,377) 115,261
Loans and Financing 1,915,402 (95,428) 1,819,974 Owing to affiliates - 26,783 26,783
Owing to parent company 3,407 (3,407) -
Owing to other related parties 19,057 (15,068) 3,989
Debentures 111 - 111 Taxes and contributions payable 11,375 (4,134) 7,241
Social and labor liabilities 12,980 (3,117) 9,863
Losses on derivatives transactions 39,506 (16,555) 22,951
Contractual reserve 133,935 (56,561) 77,374 Profit sharing 23,900 (3,267) 20,633
Dividends payable 1,960 - 1,960
Other obligations 16,888 (13,563) 3,325
2,407,159 (297,694) 2,109,465
Non-current liabilities
Loans and financing 4,151,947 (1,047,141) 3,104,806
Debts with other related parties 215 215 430
Debentures 4,954 - 4,954 Losses on derivatives transactions 166,992 (72,195) 94,797
Provision for uncovered liabilities - 19,840 19,840
Income and social contribution taxes - deferred 10,431 (8,383) 2,048
Provision for decommissioning 4,197 (2,079) 2,118
Other provisions 710 (710) -
4,339,446 (1,110,453) 3,228,993
Shareholders’ equity
Capital stock 3,731,734 - 3,731,734
Capital Reserve 321,904 - 321,904 Adjustments to equity valuation (119,067) - (119,067)
Accumulated loss (1,384,971) - (1,384,971)
Shareholders’ equity attributable to controlling shareholders 2,549,600 - 2,549,600
Participation of non-controlling shareholders 154,975 (3,437) 151,538
Total shareholders’ equity 2,704,575 (3,437) 2,701,138
9,451,180 (1,411,584) 8,039,596
46
Statement of income
Consolidated 3/31/2012
Originally disclosed Adjustments Restated
(in R$ thousands)
Revenues from sale of goods and/or services 490.940 -(442.154) 48.78675,669 Cost of goods and/or services sold (597.554) 546.605 (50.949)
Gross income (106.614) 104.451 (2.163)
Operating expenses/revenues (314.937) (89.771) (404.708)
General and administrative (280.284) 49.258 (231.026)
Personnel and managers (134.188) 22.748 (111.440)
Other expenses (20.860) 48.449 (12.411) Third party services (107.473) 15.334 (92.139)
Depreciation and amortization (3.976) 1.188 (2.788)
Leases and rentals (13.787) 1.539 (12.248)
Other operating revenues 1.823 (615) 1.208
Other operating expenses (2.241) (14.546) (16.787)
Unsecured liabilities 0 (14.671) (14.671)
Losses on disposal of assets (895) 16 (879)
Provision for losses in Investments (1.346) 16 (1.237) Equity pick-up (34.235) (123.868) (158.103)
-
Income before financial income and taxes (421.551) (14.680) (406.871)
-
Financial income (127.540) 37.087 (90.453)
Financial revenues 165.179 (415.102) 249.823
Positive Currency Variation 74.258 (49.172) 25.086
Fair Value of Debentures 62.482 -0 62.482
Financial Investments 85.136 (8.537) 76.599
Derivative Financial Instruments 66.739 (355.945) (422.684) Other Financial Revenues 10.142 (1.448) 8.694
Financial expenses (292.819) 452.189 (159.370)
Negative Currency Variations (89.793) 73.314 (16.479)
Derivative Financial Instruments (110,598) 124,005 13,407
Interest/Costs of Debentures (130.863) 0 (130.863) Fair Value of Debentures 0 0 0
Other financial Expenses (101.181) 9.255 (91.926)
Income before income taxes (549.091) 51.762 (497.324)
Income and Social Contribution Taxes on Earnings 114.638 (51.762) 62.876
Current (2.289) -368 (1.921)
Deferred 116.927 (52.130) 64.797
Consolidated Net Income for the Period (434.453) 5 (434.448)
Loss for the year (434.453) - (434.448)
Attributed to Partners of the Parent Company (435.201) -0 (435.201)
Attributed to Non-Controlling Partners (749) -5 (754)
Profit / Loss per Share - - -
Basic and diluted loss per share (in R$) (0.7513) (0.8705) (1.6218)
(c) Qualifications and emphases in the auditor´s report
In compliance with the standards contained in article 25 of CVM Instruction No. 480, of
December 7, 2009, as amended, Management declares that it has reviewed, discussed and
agreed with the opinions stated in the independent Auditor´s report, regarding the
Financial Statements (Parent Company and Consolidated) for the period ended December
31, 2011, 2012 and 2013.
(2011)
Emphasis
As described in note 3, the individual financial statements were prepared according to the
accounting practices adopted in Brazil. In the case of ENEVA S.A. these practices differ
from the IFRS applicable to separate financial statements only as regards valuation of
investments in subsidiaries, affiliates and joint ventures by the equity method, whilst for
the purposes of the IFRS they would be valued at cost or fair value; and as regards
maintenance of the deferred asset balance existing as of December 31 2008. Our opinion is
not qualified as a result of this matter.
As mentioned in note 1, the subsidiaries Porto do Pecém Geração de Energia S.A., MPX
Energia Pecém I Geração de Energia S.A., UTE Porto do Itaqui Geração de Energia S.A.,
UTE Porto do Açú Energia S.A., Seival Sul Mineração Ltda., UTE MPX Sul Energia Ltda., MPX
Viena GmbH, MPX Àustria GmbH, MPX Colômbia S.A., Porto do Pecém Transportadora de
47
Minérios S.A., MPX Comercializadora de Combustíveis Ltda., Termopantanal Ltda., Nova-
Sistemas de Energia Ltda., UTE Parnaíba Geração de Energia S.A., Pecém Operação e
Manutenção de Unidades de Geração Elétrica S.A., Kebiny S.A., CGX Castilla Generación de
Energia Ltda., Usina Termelétrica Seival Ltda. and UTE Parnaíba II Geração de Energia S.A.
are in pre-operating phase. The recovery of values recorded in non-current assets depend
on the success of future operations of the Company and its subsidiaries, affiliated and joint
ventures, and these depend on financial support of the shareholders and/or third party
funds until their operations are profitable. Management’s plans for the Company and its
subsidiaries related to operating activities are described in notes 1 and 13.
The Company’s management agrees with the auditor’s emphasis and reiterates its
understanding that the projects described in these financial statements are profitable and
will remunerate the shareholders for the investments made.
(2012)
Emphasis
As described in note 3, the individual financial statements were prepared according to the
accounting practices adopted in Brazil. In the case of ENEVA S.A. these practices differ
from the IFRS applicable to separate financial statements only as regards valuation of
investments in subsidiaries, affiliates and joint ventures by the equity method, whilst for
the purposes of the IFRS they would be valued at cost or fair value; and as regards
maintenance of the deferred asset balance existing as of December 31 2008, which is being
amortized. Our opinion is not qualified as a result of this matter.
A relevant part of the Company, its subsidiaries and joint ventures are in pre-operating
phase, and the business continuity and recovery of values recorded in non-current assets
depend on the success of future operations, as well as the shareholder´s financial support
and/or third party funds until operations are profitable. Management’s plans related to the
operating activities are described in notes 1 and 12. The financial statements were
prepared considering the regular business continuity of the Company, as well as of its
affiliates and joint ventures. Our opinion is not qualified as a result of this matter.
The Company’s management agrees with the auditor’s emphasis and reiterates its
understanding that the projects described in these financial statements are profitable and
will remunerate the shareholders for the investments made.
(2013)
Emphasis
Application of the equity equivalence method and maintenance of deferred assets
As described in Note 3, the financial statements have been prepared in accordance with
accounting practices adopted in Brazil. Geneva Preview In the case of SA, these practices
differ from IFRS applicable to the separate financial statements only as regards the
valuation of investments in subsidiaries, associates and jointly controlled by the equity
method, since under IFRS would cost or fair value, and to maintain the balance of deferred
assets existing as of December 2008, which is being amortized 31. Our opinion is not
qualified in respect of this matter.
Operational Continuity
We call attention to Note 1 to the financial statements, which describes that the Company
recorded in December 31, 2013 accumulated losses of R$ 2,379,303,000 and showed
excess liabilities over current assets in the parent and consolidated financial statements the
amounts of R$ 1,438,768 thousand and R$ 2,231,017 thousand, respectively. This
situation, among others described in Note 1, raises significant uncertainty about its
continued operation, which depend on the success of current operations and future as well
as the financial support of shareholders and/or renegotiations stretching of loans with third
parties. The financial statements do not include any adjustments due to these
uncertainties. Our opinion is not qualified in respect of this matter.
48
The Company's management agrees with the emphasis of the auditor and reiterates its
understanding that the projects described in these financial statements are profitable and
that will remunerate shareholders for investments.
Additionally, the Company is evaluating potential measures to strengthen the capital
structure and create the foundations necessary to allow a significant reduction of its
leverage.
10.5 – Management´s comments on Critical Accounting Policies
The Company’s management clarifies that the critical accounting polices applied by the
Company are described below.
Use of estimates and judgments.
Preparation of individual and consolidated financial statements in accordance with IFRS and
CPC standards requires Management to make judgments, estimates and assumptions that
affect the application of accounting policies and the reported values of assets, liabilities,
income and expenses. Actual future results may differ from these estimates.
The accounting estimates and judgments are revised on a continuous basis and are based
on historical experience and other factors, including expectations of future events
considered reasonable under the circumstances.
Based on assumptions, the Company prepares estimates in relation to the future. By
definition, the resulting accounting estimates will rarely be equal to the respective actual
results. The estimates and assumptions that present a significant risk, with the probability
of causing relevant adjustments of the accounting values of assets and liabilities fot the
upcoming fiscal year are contemplated below. The information on assumptions and
estimates that may result in adjustments within the next financial year are included below:
Impairment of non-current assets
The Company tests for eventual impairment of fixed assets, intangible assets and deferred
income tax and social contribution in accordance with the accounting principles described in
note 4.5.10. The recoverable values of Cash Generating Units (UGCs) were determined
based on calculations of value in use, made using assumptions and estimates formed based
on, mainly, studies of the regulated electric energy commercialization market. These
assumptions and estimates were discussed with the operational managers and were revised
and approved by the Company management.
(b) Fair value of derivatives and options (remunerations based on shares)
The fair value of financial instruments that are not negotiated in active markets is
determined by the use of assessment techniques. The Company uses its judgment to select
various methods and define assumptions that are based mainly on the market conditions
existing on the balance sheet issuance date. The Group uses proprietary methodology to
calculate the fait value of derivatives and granted options, instruments that are not
negotiated in active markets.
Summary of the main accounting policies
The main accounting policies applied in the preparation of these financial statements are
defined below. These policies were applied in a consistent manner in the presented
exercises, unless indicated otherwise.
1- Consolidation
The consolidated financial statements include the financial statements of the parent
company, of those companies where the Company has a controlling interest (directly and
indirectly) and of the Exclusive Funds, as detailed below:
Controlling Interest
49
12/31/2013
12/31/2012
Directly Controlled Companies (consolidated)
Pecém II Geração de Energia S.A.
100.00%
99.70%
Itaqui Geração de Energia S.A.
100.00%
100.00%
Amapari Energia S.A.
51.00%
51.00%
Seival Sul Mineração Ltda.
70.00%
70.00% Termopantanal Participações Ltda.
66.67%
66.67%
Parnaíba Geração de Energia S.A.
70.00%
70.00%
Parnaíba II Geração de Energia S.A. 100.00% 100.00%
Parnaíba V Geração de Energia S.A. 99.99% 99.99% Parnaíba Geração e Comercialização de Energia S.A. 70.00%
ENEVA Investimentos S.A. 99.99% 99.99%
ENEVA Desenvolvimento S.A. 99.99% 99.99%
Tauá II Geração de Energia Ltda. 100.00% 100.00% Fundos exclusivos:
Fundo de Investimento em Cotas de Fundos de Investimento Multimercado Crédito Privado MPX 63 100.00% 100.00%
Fundo de Investimento Multimercado Crédito Privado MPX 100.00% 100.00%
Coligadas/Controladas em conjunto (avaliadas por equivalência)
Parnaíba Gás Natural S.A.
33.33%
33.33%
UTE Porto do Açu Energia S.A. 50.00% 50.00%
Sul Geração de Energia Ltda. 50.00% 50.00%
MPX Chile Holding Ltda. 50.00% 50.00% Porto do Pecém Geração de Energia S.A. 50.00% 50.00%
Porto do Pecém Transportadora de Minérios S.A. 50.00% 50.00%
OGMP Transporte Aéreo Ltda. 50.00% 50.00%
Pecém Operação e Manutenção de Unidades de Geração S.A. 50.00% 50.00% Seival Participações S.A. 50.00% 50.00%
ENEVA Participações S.A. 50.00% 50.00%
Açu II Geração de Energia Ltda. 50.00% 50.00%
MABE Construção e Administração de Projeto 50.00% - Parnaíba Participações S.A. 50.00% 50.00%
The following accounting policies are applied in the preparation of the consolidated financial
statements.
(a) Subsidiaries
Subsidiaries are all the entities (including structured entities) in which the Company has
control. The Company controls an entity when it is exposed ou has the right to variable
returns resulting from its involvement with the entity and has the capacity to interfere in
these returns due to the power it exerts over the entity. Subsidiaries are totally
consolidated on the date on which control is transferred to the Company. Consolidation is
interrupted on the date on which the Company no longer detains control.
The Company uses the acquisition method to record the business combinations. The
transferred consideration includes the fair value of the assets and liabilities resulting from a
contingent consideration contract, when applicable. Costs related to the acquisition are
recorded in the fiscal year’s results as they occur. The purchased identifiable assets and the
assumed contingent liabilities in a business combination are initially stated by their fair
values on the date of the acquisition. The Company recognizes the non-controlling interest
in the acquired company, both by its fair value as well as by the proportional part of the
non-controlled interest in the fair value of the net assets of the acquired company.
The surplus: (i) of the transferred consideration; (ii) of the value of the participation on
minority shareholders in the acquired company; and (iii) of the fair value on the date of
acquisition of any prior equity interest in the acquired company, in relation to the fair value
of the Group’s interest in the net purchased identifiable assets is recorded as goodwill.
When the total transferred consideration, the recognized interest of non-controllers and the
measurement of the interest held before is less than the fair value of the net assets of the
acquired subsidiary, the difference is recognized directly in the income statement of the
fiscal year.
Transactions, balances and unrealized earnings in transactions between companies bound
to the Company are eliminated. The unrealized losses are also eliminated unless the
operation provides proof of an impairment of the transferred asset. The accounting policies
of subsidiaries are modified when necessary in order to ensure consistency with the policies
adopted by the Company.
(b) Transactions with non-controlling interests
50
The Company treats transactions with non-controlling interests as transactions with the
owners of Company assets. For the purchases of non-controlling interests, the difference
between any consideration paid and the acquired part of the accounting value of the
subsidiary’s net assets is recorded in shareholders’ equity. The earnings or losses on
disposals for non-controlling interests are also recorded directly in shareholders’ equity, in
the account “Equity Valuation Adjustments”.
(c) Loss of control in subsidiaries
When the Company loses control, any interest in the entity is restated to its fair value, with
the change in accounting value being recognized in the income statement. The fair value is
the accounting value for subsequent recording of the interest held in an affiliated company,
a joint venture or a financial asset. Furthermore, any values previously recognized in other
comprehensive results relative to said entity are recorded as if the Company had directly
disposed of the related assets or liabilities. This may mean that the values previously
recognized in other comprehensive results are reclassified to the result.
(d) Affiliated Companies and Joint Ventures
Affiliated companies are entities over which the Company has significant influence but not
control, generally by means of a 20% to 50% interest of the voting rights. Joint ventures
are all those entities over which the Company has joint control with one or more third
parties. The investments in joint ventures are classified as joint operations or joint ventures
depending on the contractual rights and obligations of each investor.
Joint operations are recorded in the financial statements in order to represent the
Company’s contractual rights and obligations. In this way, the assets, liabilities, revenues
and expenses related to its interest in joint operations are recorded individually in the
financial statements.
The investments in affiliates and joint ventures are recorded using the equity method and
are initially recognized at their cost value. The Company’s investment in affiliates and joint
ventures includes the premium identified in the acquisition, net of any losses due to
accumulated impairment.
The Company’s participation in the profits or losses of its affiliates and joint ventures is
recognized in the income statement and the participation in changes of reserves is
recognized in the Company’s reserves. When the Company’s participation in the losses of
an affiliate or joint venture is equal to or greater than the accounting value of the
investment, including any other receivables, the Company does not recognize the additional
losses unless it has incurred in obligations or made payments in name of the affiliated
company or joint venture.
The unrealized earnings from operations between the Company and its affiliates and joint
ventures are eliminated in the proportion of the Company’s interest. Unrealized losses are
also eliminated unless the operation provides evidence of an impairment of the transferred
asset. The accounting policies of the affiliated companies are changed, when necessary, in
order to ensure consistency with the policies adopted by the Company.
If the interest in the affiliated company is reduced, but significant influence is still held, only
a proportional part of the values previously recognized in other comprehensive results will
be reclassified to the income statement, when appropriate.
The diluted earnings and losses occurred in affiliated company interests are recognized in
the income statement.
2. Presentation of Segment Information
The information by operational segments is presented consistently with the internal report
supplied to the main operational decision maker. The main operational decision maker,
responsible for allocating resources and evaluating the performance of the segments, is the
Board of Directors, also responsible for strategic decisions of the Company.
3. Foreign Currency Conversion
51
(a) Functional Currency and presentation currency
The items included in the financial statements of each of the companies connected to the
Company are stated using the currency of the main economic environment in which the
company operates (functional currency). The individual and consolidated financial
statements are presented in R$, which is the Company’s functional currency as well as its
presentation currency. The functional currency of the MPX Chile Holding Ltda joint venture
is the Chilean Peso, due to its business plan, economic environment and, mainly, due to its
operational costs. The monetary assets and liabilities stated in foreign currencies have been
converted to Reais using the exchange rate of the balance sheet closing date.
(b) Transactions and balances
The operations in foreign currencies are converted to functional currency using the
exchange rates in effect on the dates of the transactions or on the dates of the valuation,
when the items are restated. The exchange rate earnings and losses resulting from the
settlement of these transactions and from the conversion using the exchange rates of the
end of the fiscal year, relative to monetary assets and liabilities in foreign currencies, are
recognized in the income statement, except when qualified as hedge accounting and,
therefore, deferred in equity as cash flow hedge operations and net investment hedge
operations.
The exchange earnings and losses related to loans, cash and cash equivalents are
presented in the income statement as financial revenue or expense.
The exchange rate variations of non-monetary financial assets and liabilities, such as
investments in shares classified as stated at fair value through income, are recognized in
the income statement as part of the earning or loss of fair value. The exchange rate
variations of non-monetary financial assets, for example, investments in shares classified
as available for sale, are included in the account “Equity Valuation Adjustments”.
(c) Companies with different functional currencies
The results and financial position of MPX Chile Holding Ltda (not a hyper-inflationary
economy currency), whose functional currency is different from the presentation currency,
are converted to the presentation currency, as follows:
(i) the assets and liabilities of each presented balance sheet are converted using the
exchange rate of the balance sheet closing date.
(ii) The revenues and expenses of each income statement are converted using the
average exchange rates (unless this average is not a reasonable approximation of
the cumulative effect of the rates in effect on the dates of the operations and, in this
case, the revenues and expenses are converted using the exchange rates of the
dates of the operations.
(iii) All resulting exchange rate differences are recognized as a separate component in
shareholders’ equity in the account “Equity Valuation Adjustments”.
In the consolidation, the exchange rate differences resulting from the conversion of the net
investment in foreign operations and from loans and other foreign currency instruments
designated as hedge of these investments are recognized in shareholders’ equity. When an
operation abroad is partially disposed of or sold, the differences in exchange recorded in
equity are recognized in the income statement as part of earnings ou part of the sale.
Premiums and fair value adjustments, resulting from the acquisition of an entity abroad are
treated as assets and liabilities of the foreign entity and are converted using the closing
date exchange rate.
4. Cash and Cash Equivalents
Cash and cash equivalents include cash, bank deposits and other short-term, high-liquidity
investments, with original maturities of up to three months, and having insignificant risk of
52
change of value, with the presented balance net of balances of accounts guaranteed in the
cash flow statement.
5. Financial Assets
5.1 Classification
The Company initially classifies its financial assets under the following categories: stated at
fair value through income and loans and receivables. The classification depends on the use
for which the financial assets were acquired.
(a) Financial assets at fair value through income
Financial assets at fair value through income are financial assets held for negotiation. A
financial asset is classified in this category if it was acquired, mainly, for purposes of short-
term sale. The assets in this category are classified as current assets. Derivatives are also
categorized as held for negotiation, unless they have been designated hedge instruments.
(b) Loans and Receivables
Loans and receivables are non-derivative financial assets, with fixed or determinable
payment, which are not sold in an active market. They are presented as current assets with
the exception of those having maturity dates greater than 12 months after the date of
issuance of the balance sheet (these as classified as noncurrent assets).
5.2 Acknowledgement and measurement
The purchases and sales of financial assets are normally acknowledged on the date of the
negotiation. Investments are initially recognized at their fair value, accrued by the costs of
the transaction for all financial assets not classified at fair value through income. Financial
assets at fair value through income are initially recognized at fair value and the costs of the
transaction are debited to the income statement. Financial assets are written off when the
rights to receive cash flows have matured or have been transferred; in this last case, as
long as the Company has significantly transferred all the risks and benefits of ownership of
the property. Loans and receivables are recorded at amortized cost, using the effective tax
rate method.
The earnings and/or losses resulting from variations in the fair value of financial assets
stated at fair value through income are presented in the income statement under “Financial
Revenue or Expense” during the period in which they occurred.
The foreign exchange variations of monetary instruments are recognized in the income
statement. The foreign exchange variations of non-monetary instruments are recognized in
shareholders’ equity. The variations in fair value of monetary and non-monetary
instruments, classified as available for sale, are recognized in shareholders’ equity.
The interest of securities available for sale, calculated using the effective tax rate method,
are recognized in the income statement as part of other revenues.
5.3 Compensation of financial instruments
Financial assets and liabilities are compensated and the net value is presented in the
balance sheet when there is a legal right to compensate the recognized values and there
exists the intention to liquidate them on a net basis or to realize the asset and liquidate the
liability at the same time.
5.4 Impairment of financial assets
(a) Assets are stated at amortized cost.
The Company evaluates, on the date of each balance sheet, if there is objective evidence
that a financial asset or group of financial assets is deteriorated. A financial asset or group
of financial assets is deteriorated and the losses due to impairment are incurred only if
there is objective evidence of impairment as a result of one or more events that occurred
after the initial acknowledgement of the assets (a “loss event”) and that loss event (or loss
53
events) has an impact on the estimated future cash flows of the financial asset ou group of
financial assets that can be reliably estimated.
The criteria that the Company uses to determine if there is objective evidence of a loss due
to impairment include:
(i) relevant financial difficulty of issuer or debtor;
(ii) breach of contract, such as default or delay in the payment of interest or principal;
(iii) the Company, for economic or legal reasons relative to the financial difficulty of the
borrower, extends to the borrower a concession that the borrower would not
normally consider;
(iv) it becomes probable that the borrower will declare bankruptcy or other type of
financial reorganization;
(v) disappearance of an active market for that kind of financial asset due to the financial
difficulties;
(vi) observable data indicating that there is a measurable reduction in the future cash
flows estimated based on a portfolio of financial assets as from the initial
acknowledgement of those assets, although the reduction may not yet be identified
with the individual financial assets in the portfolio, including:
Adverse changes in the payment situation of the loan borrowers in the portfolio;
National or local economic conditions that correlate with the defaults of the portfolio assets.
The amount of loses due to impairment is measured as the difference between the
accounting value of the assets and the present value of the estimated future cash flows
(excluding the losses of future credit that were not incurred) discounted by the financial
assets’ original interest rate. The book value of the asset is reduced and the value of the
loss is recognized in the income statement. If a loan or investment held until maturity has a
variable interest rate, the discount rate is used to measure a loss due to impairment is the
current effective interest rate determined according to the contract. Using a practical
method, the Company can measure the impairment based on the fair value of an
instrument using an observable market price.
If, during a subsequent period, the value of the loss due to impairment is reduced and the
reduction can be objectively related to an event that occurred after the impairment being
recognized (such as an improvement in the classification of the borrower’s credit), the
reversal of this loss recognized previously will be recognized in the income statement.
5.5 Derivative financial instruments and hedge activities
Initially, derivatives are recognized at fair value on the date on which a derivative contract
is executed and are subsequently restated at their fair value. The method to recognize the
resulting gain or loss depends on the fact of the derivative being designated or not as a
hedge instrument in the cases of adoption of hedge accounting. If this is the case, the
method depends on the nature of the item that is being protected by hedging. The
Company adopts hedge accounting and designates certain derivatives as hedge of o specific
risk associated to a recognized asset or liability or a highly probable foreseen operation
(cash flow hedge); or
The Company documents, at the beginning of the operation, the relationship between the
hedge instruments and the items protected by hedge operations, as well as the objectives
of the risk management and the strategy for the realization of various hedge operations.
The Company also documents its assessment, at both the beginning of the hedge and
continuously, that the derivatives used in the hedge operations are “highly effective” in the
compensation of fair value variations or of the cash flows of the items protected by hedge
operations.
The fair values of the derivative instruments used to hedge operations are disclosed in Note
18. The total fair value of a hedge derivative is classified as a noncurrent asset or liability
54
when the remaining maturity of the hedge-protected item is greater than 12 months, and,
when classified as a current asset or liability, when the remaining maturity of the hedge-
protected item is less than 12 months. The negotiation derivatives are classified as current
assets or liabilities.
(a) Cash flow hedge
The effective part of the fair value variations of derivatives designated and qualified as cash
flow hedge is recognized in shareholders’ equity, in the account “Equity Valuation
Adjustments”. The earnings or losses related to the non-effective part are immediately
recognized in the income statement as “Financial Revenue or Expense”.
The accumulated values in equity are realized in the income statement in the periods in
which the item protected by hedge affects the result (for instance, when a sale protected
by hedge occurs). The earning or loss related to the effective part of the interest rate
swaps that protects the loans with variable rates is recognized in the income statement as
“Financial Revenue or Expense”. The earnings or losses related to the non-effective part is
recognized in the income statement as “Financial Revenue or Expense”.
When a hedge instrument reaches maturity or is sold, or when a hedge no longer satisfies
the hedge accounting criteria, all the accumulated earnings or losses that exist in equity at
that moment remain in equity and are recognized in the result when the operation is
recognized in the income statement. When not more than one operation is expected to
occur, the accumulated earnings or loss that had been presented in equity are immediately
recognized in the income statement as “ Financial Revenue or Expense”.
(b) Derivatives stated at fair value through income
Certain derivative instruments do not qualify for hedge accounting. The variations in fair
value of any of these derivative instruments are immediately recognized in the income
statement as “ Financial Revenue or Expense”.
5.6 Client Receivables
Accounts receivable from clients correspond to the values to be received from the sale of
electric energy during the normal course of Company activities. If the term for receipt is
equivalent to one year or less, accounts receivable are classified as current assets. If not,
they are presented as noncurrent assets.
Accounts receivable from clients are, initially, recognized at fair value and, subsequently,
stated at amortized cost using the effective tax rate method minus the provision for
doubtful receivables (PDD or impairment).
5.7 Inventories
Inventories are stated at cost or net realization value, whichever is smaller. The method
used to assess inventories is the weighted moving average method. The net value of
realization is the sales price estimated during the normal course of business, minus the
estimated costs for conclusion and the estimated costs required to close the sale.
5.8 Intangible assets
(a) Goodwill
Goodwill is represented by the positive difference between the amount paid and/or to be
paid for the acquisition of a business and the net amount of fair value of the assets and
liabilities of the acquired subsidiary. The goodwill in the acquisitions of subsidiaries is
recorded as an ‘Intangible Asset’ in the consolidated financial statements. In the case of
recording negative goodwill, the amount is recorded as a gain in the result of the period on
the date of acquisition. Goodwill is tested annually to verify losses (impairment). Goodwill is
recorded at its fair value minus the amortization expenses and the accumulated losses due
to impairment. The term for goodwill amortization is the plant’s authorization period.
Losses due to impairment recognized on goodwill are not reverted. The earnings and losses
55
from the disposal of an entity include the book value of the goodwill related to the disposed
of entity.
Goodwill is allocated to the Cash Generating Units (UGCs) for impairment test purposes.
The allocation is made to the Cash Generating Units or to the Cash Generating Unit Groups
that should be benefitted by the business combination from which the goodwill originated,
and are identified according to the operational segment.
(b) Other intangible assets
Intangible assets include the assets acquired from third parties and that have a finite life
cycle, are stated at total acquisition cost, minus the accumulated amortization and losses
due to reduction of the recoverable value, when applicable. Other intangible assets are
represented mainly by the concession of electric power generation contracts acquired from
third parties.
5.9 Fixed Assets
5.10 Impairment of Non Financial Assets
Assets that have an undefined useful life, such as goowill, are not subject to amortization
and are tested annually to identify the eventual need for reduction to the recoverable value
(impairment). Assets that are subject to amortization are revised to verify for impairment
whenever events or changes in circumstances indicate that the book value exceeds its
recoverable value. Loss due to impairment is recognized when the book value exceeds,its
recoverable value, which represents the largest value between the fair value minus its
selling costs and its in use value. For impairment evaluation purposes, assets are grouped
at the lowest levels for which there exist separately identifiable cash flows (Cash
Generating Units – UGCs). Non-financial assets, excluding goodwill, that have been
adjusted due to impairment, are subsequently for analysis of a possible reversal of the
impairment on the date of the balance sheet.
5.11 Accounts payable to suppliers
Accounts payable to suppliers are obligations to pay for goods or services that have been
acquired in the ordinary course of business, are classified as current liabilities if payment is
due within a period of one year. Otherwise, the accounts payable are presented as non-
current liabilities. They are initially recognized at fair value and subsequently measured at
cost amortized cost using the method of effective interest rate.
5.12 Loans
Borrowings are initially recognized at fair value, net of costs incurred in transaction and are
subsequently stated at amortized cost. Any difference between the proceeds (net of
transaction costs) and the total amount payable is recognized in the income statement
during the period in which the loans are outstanding, using the method of effective interest
rate.
Loans are classified as current liabilities unless the Company has an unconditional right to
defer settlement of the liability for at least 12 months after the balance sheet date.
The costs of general and specific loans that are directly attributable to the acquisition,
construction or production of a qualifying asset, which is an asset that necessarily requires
a substantial period of time to get ready for its intended use or sale, are capitalized as part
the cost of the asset when it is probable that they will result in future economic benefits to
the entity and that such costs can be measured reliably. Other borrowing costs are
recognized as expenses in the period they are incurred.
5.13 Provisions
Provisions are recognized when: (i) the Company has a present legal or (constructive
obligation) as a result of past events obligation, (ii) it is probable that an outflow of
resources will be required to settle the obligation, and (iii) the amount can be reliably
estimated. The provisions do not include future operating losses.
56
When there are a number of similar obligations, the likelihood of settling them is
determined taking into account the class of obligations as a whole. A provision is
recognized even if the likelihood of an outflow with respect to any one item included in the
same class of obligations may be small.
Provisions are measured at the present value of the expenditures expected to be required
to settle the obligation using a rate before tax effects, which reflects current market
assessments of the value of money in time and the risks specific to the obligation. The
increase in the provision due to the passage of time is recognized as interest expense.
5.14 Income tax and social contribution current and deferred
The income tax and social contribution expenses for the period consist of current and
deferred taxes. Taxes on income are recognized in the income statement, except to the
extent that they relate to recognized directly in equity or other comprehensive income
items. In this case, the tax is also recognized in equity or other comprehensive income.
The burden of current and deferred income and social contribution tax is calculated based
on the enacted or substantively enacted at the date of the balance in the countries where
the Company's entities operate and generate taxable income. Management periodically
evaluates positions taken by the Company in the calculation of income taxes with respect to
situations in which applicable tax regulation is subject to interpretation, and establishes
provisions whenever appropriate on the basis of amounts expected to be paid to the tax
authorities.
Income tax and social contribution are presented net by the contributor in liabilities when
amounts payable or asset when the advance amounts paid exceed the total amount due at
the reporting date.
Income tax and social contribution taxes are recognized using the liability method, on
temporary differences arising between the tax bases of assets and liabilities and their
carrying amounts in the financial statements. However, the deferred income tax and social
contribution are not accounted for if it results from the initial recognition of an asset or
liability in a transaction other than a business combination, which, at the time of the
transaction, affects neither the accounting income nor taxable profit (tax loss).
Income tax and social contribution assets are recognized only to the extent of the likelihood
that future taxable profit will be available against which the temporary differences can be
utilized.
The deferred income taxes are recognized on temporary differences arising from
investments in subsidiaries, except where the timing of the reversal of the temporary
difference is controlled by the Company and it is probable that the temporary difference will
not be reversed in the foreseeable future.
The deferred income taxes and liabilities are presented net in the balance sheet when there
is a legal right and intention to offset them upon the calculation of current taxes, generally
related to the same legal entity and the same taxation authority. Accordingly, assets and
liabilities in different entities or different countries, generally deferred taxes are presented
separately, and not the net.
5.15 Benefits for employees
(a) Remuneration based on shares
The Company operates a number of compensation plans based on shares, settled with
shares, under which the entity receives services from employees as consideration for equity
instruments (options) of the Company. The fair value of the employee’s services received in
exchange for the grant of options is recognized as an expense. The total amount to be
recognized is determined by reference to the fair value of the options granted, excluding
the impact of any vesting conditions based on service and performance that are not in the
market (for example, profitability and sales growth targets and continued employment for a
specific period of time). The vesting conditions that are not in the market are included in
57
assumptions about the number of options that will vest. The total value of the expense is
recognized over the period in which the right is acquired, during which specific vesting
conditions must be met. At the balance sheet date, the entity revises its estimates of the
number of options that will vest based on the vesting conditions that are not in the market.
It recognizes the impact of the revision of original estimates, if any, in the income
statement, with a corresponding adjustment to equity.
The proceeds received, free of any directly attributable transaction costs are credited to
share capital (nominal value) when the options are exercised.
(b) Profit sharing
The Company recognizes a liability and an expense for profit sharing based on a
methodology that takes into consideration the profit attributable to the Company's
shareholders after certain adjustments. The Company recognizes a provision when
contractually obliged or where there is a past practice that has created a constructive
obligation.
5.16 Capital
The common and preferred shares are classified as equity.
The incremental costs directly attributable to the issue of new shares or options are shown
in equity as a deduction of the amount raised, free of taxes.
5.17 Revenue recognition
Revenue comprises the fair value of the consideration received or receivable for the sale of
electric energy in the ordinary course of the Company’s business. The revenue is shown
free of taxes, returns, rebates and discounts as well as eliminating sales within the Group.
The Company recognizes revenue when the amount of revenue can be reliably measured, it
is probable that future economic benefits will flow to the entity and specific criteria have
been met for each of the Company's activities as described below. The Company bases its
estimates on historic results, taking into consideration the type of client, type of transaction
the specifications of each sale.
(a) Sale of energy
Revenue from the sale of electricity is recognized as equivalent to the amount of energy
transferred to the customer and by estimating measurement to measure the energy
delivered but not yet considered by the previous year-end measurements. Revenues
derived from electricity supply contracts, with fixed monthly installment and variable
payment required according to the National System Operator demand - ONS.
(b) Financial income
Interest income is recognized on the accrual basis,
using the method of effective interest rate. When a loss (impairment) is identified in
relation to accounts receivable, the Company reduces the carrying amount to its
recoverable amount, being the estimated future cash flow discounted at the original
effective interest rate of the instrument. Subsequently, as time passes, the interest is
added to accounts receivables against the financial income. This financial income is
calculated at the same effective interest rate used to determine the recoverable amount,
i.e., the original rate of the instrument.
5.18 Leases
Leases in which a significant portion of the risks and rewards of ownership are retained by
the lessor are classified as operating leases. Payments made under operating leases (net of
any incentives received from the lessor) are recognized in the income statement on a linear
basis over the lease term.
58
10.6 - Internal controls related to the preparation of financial statements – Level
of efficiency and deficiency and recommendations included in the auditor’s report
(a) Level of efficiency of such controls indicating occasional imperfections and
measures adopted to correct them
The Company’s Management believes in the efficiency of internal procedures and controls
adopted to ensure the quality, accuracy and reliability of the Company’s financial
statements. For this reason, the Company’s financial statements properly show the result
from its operations and its equity and financial condition as of the respective dates.
Additionally, Management did not identify any types of imperfections that may compromise
the Company’s financial statements.
(b) Deficiencies and recommendations on internal controls set forth in the
independent auditor’s report
The Officers believe that the reports on internal controls issued by the Company's
independent auditors with respect to the years ended in December 31, 2013, 2012 and
2011 do not report significant deficiencies to the adequacy of our financial statements in
accordance with accounting practices adopted in Brazil and IFRS .
Our practice to meet and promptly amend any deficiencies identified by auditors during the
normal process of work, whether failures of processes or systems. Remember that the
scope of the audit of financial statements is not provided for the specific auditing and
reporting on the effectiveness of internal controls.
However, in the context of the audit of our financial statements, our independent auditors
have considered our systems of internal controls in the scope laid down in the applicable
auditing standards in Brazil, whose purpose is related to the planning of the audit
procedures.
10.7 - Management’s comments on the use of proceeds from public offerings and
deviations, if any
(a) How proceeds from the public offering were used
The Company Management states that, in June 15, 2011, the Company issued 21,735,744
debentures, at R$63.00 each, totaling R$1.376 billion. In the years ended December 31,
2011, 2012, and in the current year, the proceeds from the issuance of debentures were
used to:
reinforce the Company’s cash; and
support the contributions required for investments in the development of the
Company’s ventures
(b) Material deviations between the effective use of proceeds and proposals
disclosed in the memorandums of the respective distribution
Management informs that, in the past three years and in the current year, there were no
deviations between the use of proceeds and proposals set forth in the memorandums.
(c) In the event of deviations, reasons for such deviations
Management informs that, in the past three years and in the current year, there were no
deviations between the use of proceeds and proposals set forth in the memorandums.
10.8 - Management’s comments on off-balance sheet items
59
(a) Off-balance-sheet items directly or indirectly held by the issuer (off-balance
sheet items)
Management informs that the Company holds no off-balance sheet items.
i. Lease and operational lease of assets and liabilities
This is not applicable given that the Company has no off-balance sheet items.
ii. Written-off receivables portfolios on which the Company maintains risks and
responsibilities, and the relevant liabilities.
This is not applicable given that the Company has no off-balance sheet items.
iii. Agreements on future purchase and sale of products and services
This is not applicable given that the Company has no off-balance sheet items.
iv. Building agreements whose work has not been completed
This is not applicable given that the Company has no off-balance sheet items.
v. Agreements on future financing receivables
This is not applicable given that the Company has no off-balance sheet items.
(b) Other off-balance sheet items
Management informs that there are no other off-balance sheet items.
10.9 – Management’s comments on relevant off-balance sheet items
(a) As such items change or may change revenues, expenses, operating income,
financial expenses or other items recorded in the issuer’s financial statements
Management informs that the Company holds no off-balance sheet items.
(b) Nature and purpose of operation
Management informs that the Company holds no off-balance sheet items.
(c) Nature and amount of obligations assumed and rights generated in favor of the
issuer due to the transaction
Management informs that the Company holds no off-balance sheet items.
10.10 - Management’s comments on business plan
(a) Investments
(i) Quantitative and qualitative description of current and future investments
The Company's Directors report that the Company currently has in its portfolio a project
under construction, Parnaíba II. There are no plans for new investments in the short term.
Parnaíba II
The investments made and planned can be summarized in the tables below:
Operational Capex Performed (1) (2) (in thousands of R$)
2010 2011 2012 2013 2014E TOTAL
0 22,082 455,764 684,047 361,000 1,522,893
(1) Including taxes and contingencies.
(2) Not including interest during construction and reserve account for the debt service.
60
Disbursement Curve (%) and Total Estimated Capex (1) (2) (3) (in thousands of R$)
2010A 2011A 2012A 2013E 2014E TOTAL
0.00% 1.45% 29.93% 44.92% 23.70% 1,522,893
(1) Expected values in nominal terms.
(2) Contingencies budgeted and not used will be transferred to the budget of the following
year.
(3) Includes investments for 100% of the project.
(ii) Sources of investment financing
Parnaíba II
The Company Management states that in the fourth quarter of 2013, the maturity short-
term debt (bridge loan) contracted with Itaú BBA, CEF and BNDES was postponed. This
contracting aims to cover the financial obligations of the venture, in accordance with the
shareholder’s leveraging expectation, until the closing of the long-term debt scheduled for
the third quarter of 2014. The following table summarizes the conditions and stage of the
debt contracted as of December 31, 2013:
Amount Maturity Cost
BNDES R$280.7 MM 06/15/2015 TJLP + 2.4% p.a.
Itau BBA R$200.0 MM 12/30/2014 CDI + 3% p.a.
CEF R$280.0 MM 12/30/2014 CDI + 3% p.a.
Total R$760.7 MM
(iii) Material current and expected divestiture
The Company Management states that no capital divestiture has been made for the last
three financial years ended December 31, 2013, 2012 and 2011, as well as there is no
capital divestiture in progress.
(b) Provided that it has already been disclosed, indicate the acquisition of plants,
equipment, patents and other assets that may significantly influence the Company’s
production capacity
N/A
(c) New products and services
N/A
(i) Description of current research studies already disclosed
The Company seeks to develop all its projects in a sustainable manner, aiming at maximum
energy efficiency at low costs and, while preserving the environment. Thus, the Company
continually devotes to the acquisition, research and development of clean technologies and
environmentally-sustainable projects. In the R&D field, the Company develops several
projects, some of them are being negotiated and contracted, and others are being
implemented.
(ii) Total amount spent by the issuer on research for development of new products and
services
In each of the financial years ended December 31, 2011, 2012 and 2013, the Company
invested R$0.4 million, R$0.1 million, and R$4.8 million respectively in research and
development of new technologies.
(iii) Projects in progress already disclosed
61
An agreement was entered into with COPPE-UFRJ to create a Center for Research in Energy
Generation. The primary purposes of the new center will be the conduction of research and
technological development in energy generation and qualification and training of people in
the sector, and the construction of laboratories to physically support the analyses and
studies planned is also expected. COPPE-UFRJ is also a partner of the Company and of the
University of Tsingua, in China, for joint studies of control and storage of CO2, among
others.
(iv) Total amount spent by the issuer on developing new products or services
The Company did not incur expenses relating to developing new products or services.
10.11 - Other factors with significant influence
The Company Management states that there are no other factors that significantly
influenced the Company’s operating performance and that have not been identified or
commented in the other items of this section “10”.
62
ANNEX II
ITEM 13 OF THE REFERENCE FORM
(Additional information related to the proposed compensation of the management)
13.1 - Description of compensation policy or practice, including non-statutory
board members
(a) Objectives of compensation policy or practice
Our compensation strategy is in line with the market’s best practices and designed to
ensure our competitiveness in relation to our key rivals and majors operating in Brazil. The
main objective is to reward professionals for their performance ensuring the company
evolves as per the strategic planning we have defined and in alignment with short-,
medium- and long-term shareholder returns. We thus encourage improved management
and attract, motivate and retain highly qualified executives, aligning their interests with
those of shareholders
(b) compensation - breakdown
(i) description of components of compensation and their objectives
Management’s compensation policy consists of (i) a fixed component, the maximum
amount being set annually by general meetings (administrators) and by the Executive
Board (non-statutory board), which depending on the case, it may include direct or indirect
benefits; (ii) a variable component; and (iii) a share based component - stock options - to
purchase or subscribe our shares (“Stock Options”). Each body will have compensation
broken down as described in the items below.
All these components of compensation are intended to enhance teams’ performance, attract
highly qualified professionals for our management, and retain them.
Board of Directors
Fixed Compensation
As of May 2012, as decided by the 2012 annual general meeting, members of the board of
directors have been entitled to fixed monthly compensation (fees) with the purpose of
recognizing and reflecting the value of the position internally and externally. From the Fiscal
Year of 2013, it was deliberated that the Board of Directors would be eligible only for Fixed
Compensation and Long-Term Variable Compensation based on company shares.
Variable Compensation
Short Term
Until April 2012, the short-term remuneration of the Board of Directors was paid upon
attendance of board meetings.
Long term - Compensation based on company shares
Share-based compensation through options to buy or subscribe company shares, which
may be granted in two ways:
(i) Through the “Shareholder Plan”, i.e. options granted by the Co-controlling
Shareholder Eike Fuhrken Batista with its own shares, therefore not involving any
issue of new shares and consequently not causing dilution of other shareholders’
equity. These options are granted in favor of certain members of the executive
board and board of directors of the company. With the change of control of the
Company during the financial year of 2013, new grants of options of the Shareholder
Plan were suspended and the current beneficiaries are serving periods of finalization
of contracts still in effect.
63
(ii) Through annual stock option plans (“Company Plans”), under the “program
granting options to buy or subscribe the company’s common shares”, the latest
amendment and consolidation of which was voted at the general meeting held on
January 26, 2012 (“Program”).
The Company’s Program and the Shareholder’s Plan aim at stimulating Managers, key
employees and staff to conduct our business successfully, encouraging an entrepreneurial
and results-oriented culture, and aligning Management’s interests with those of our
shareholders.
For more information, see item 13.4 of the Reference Form.
Statutory and Non-Statutory Officers
Fixed Compensation
Statutory and Non-statutory Management’s fixed monthly compensation is determined in
accordance with the responsibilities of each position and in line with best market practices.
When appropriate, this compensation may be supplemented by direct or indirect benefits as
follows: medical assistance, dental assistance, life insurance, supplementary life insurance,
meal voucher and food voucher. Fixed compensation is intended to compensate
directors/officers for their work in accordance with their activity and seniority.
Variable Compensation
Short Term
Statutory and Non-Statutory Management’s short-term variable compensation consists of
an annual amount based on the extent to which company targets are reached. Its aim is to
provide compensation for results reached by statutory and non-statutory management in
accordance with their performance and returns earned for our company.
Long term - Compensation based on company shares
Share-based compensation through options to buy or subscribe company shares (“Stock
Options”), which may be granted in two manners: by the Shareholder or Company Plan in
the scope of our company stock option plan as described above.
The Company’s Program and the Shareholder’s Plan aim at stimulating Managers, key
employees and staff to conduct our business successfully, encouraging an entrepreneurial
and results-oriented culture, and aligning Management’s interests with those of our
shareholders.
For more information, see item 13.4 of the Reference Form.
Fiscal Council
Fixed Compensation
Our fiscal council is not permanent, therefore fiscal council members, when installed, will
receive fixed monthly payments (fees) equivalent to 10% of the average assigned to
management pursuant to Law 6404/76.
Audit Committee
Fixed Compensation
Audit Committee member compensation consists of a fixed monthly amount (fee) that
reflects responsibilities assumed, time devoted to company business and the professional
competence of its members. It is intended to compensate the results achieved according to
their performance and the return for the Company.
64
(ii) what is each component’s proportion of total compensation
Each component’s proportion of total compensation in FY 201 was as follows:
Board of
Directors
Statutory
Management
Audit
Committee
Fiscal Council
Fixed Compensation
Salary or withdrawal 81.5% 7.4% 100% 0%
Benefits 0.0% 0.3% 0% 0%
Others 7.9% 1.7% 0% 0%
Variable Compensation 0.0% 0.9% 0% 0%
Compensation based on company
shares
Shareholder Plan 5.1% 89.7% 0% 0%
Company Program 5.5% 0.0% 0% 0%
Total 100.0% 100.0% 100% 0%
(iii) methodology used for calculation and adjustment of each component of
compensation
Management compensation is benchmarked against market practices, taking into account
the practices used by peer companies with similar size and characteristics, as well as
internal references, which are analyzed on a regular basis. In the case of the statutory
board, it is also based on merit and international competitiveness.
There is no specific methodology for adjustment each of the components of compensation.
(iv) reasons for composition of compensation
The composition of compensation aims to reflect the responsibility involved in each
position, while maintaining competitiveness in the market. We aim to encourage improved
management, and to attract and retain managers while aligning their interests with those
of shareholders’ by sharing risks in long-term incentives Various components of
remuneration are practiced for the Statutory Board using various components of
remuneration and fixing the greater portion of compensation through stock-based
compensation (grant of Options under the Shareholder Plan). On the other hand, for the
members of the Board, the use of components of varying remuneration is practiced and
fixing the greater portion of compensation occurs through fixed remuneration as shown in
the table above.
(c) Key performance indicators taken into account to determine each
component of compensation
To determine fixed and variable compensation for executive board members, we uses
market surveys as benchmarks, as well as merit and the extent to which company targets
are met. Compensation of members of the board of directors and committees is also based
on market parameters. Performance is not monitored by indicators. In relation to share-
based compensation (stock options), management compensation reflects the performance
and evolution of the value of our company’s shares.
(d) How compensation is structured to reflect the evolution of performance
indicators
Compensation is determined from market surveys to define amounts and takes into
account responsibilities, time spent on duties, competence and professional reputation.
65
Share-based compensation for our company’s management is directly linked to share price,
which in turn reflects our company’s performance.
(e) How compensation policy or practice aligns with issuer’s short-, medium-
and long-term interests
Fixed and variable compensation together with share-based compensation aim to
encourage better management, and to attract and retain managers, seeking gains through
commitment to short and medium-term results.
In addition, stock options give beneficiaries an opportunity to become company
shareholders and encourage them to work to optimizing all aspects that may add to the
company’s value on a long-term sustainable basis.
(f) Existence of compensation supported by directly or indirectly controlled
subsidiaries
The stock option plan granted by the co-controlling shareholder Eike Furken Batista in favor
of certain members of management (“Shareholder Plan”), as mentioned above, grants
stock options issued by ENEVA. With the change of control of the Company during the
financial year of 2013, new grants of options of the Shareholder Plan were suspended and
the current beneficiaries are serving periods of finalization of contracts still in effect, as
mentioned previously.
For more information, see item 13.4 of the Reference Form.
(g) Existence of any compensation or benefit related to the occurrence of
certain corporate events, such as transfer of control of the issuer
Not applicable, since there is no component of management compensation related to
corporate events.
13.2 - Total compensation of the board of directors, statutory officers and fiscal
council
Total compensation stipulated for the current fiscal year (2014) – Annual Amounts
Board of Directors
Statutory Officers
Fiscal Council Total
No. of members 2.0 2.1 0.0 4.08
Annual Fixed Compensation
Salary or withdrawal 240,000.00 3,337,093.02 0.00 3,577,093.02
Direct and indirect benefits
0.00 95,014.64 0.00 95,014.64
Attending committees 0.00 0.00 0.00 0.00
Others 0.00 673,575.61 0.00 673,575.61
Description of other fixed compensation
items
No payment of INSS (social
security)
Payments to
INSS/FGTS
0.00 0.00
Variable
compensation
Bonus 0.00 0.00 0.00 0.00
Profit sharing 0.00 3,774,995.37 0.00 0.00
Share in meetings 0.00 0.00 0.00 0.00
Commissions 0.00 0.00 0.00 0.00
66
Others 0.00 0.00 0.00 0.00
Description of other variable compensation
items
0.00 0.00 0.00
0.00
Post-employment 0.00 0.00 0.00 0.00
Leaving position 0.00 0.00 0.00 0.00
Based on shares 0.00 0.00 0.00 0.00
Note
Forecast annual data for fiscal year
2014. The number of members was determined as specified by CVM Notice SEP/#01/2014.
Forecast annual data for fiscal year 2014. The number of members was determined as
specified by CVM Notice SEP/#01/2014.
There is no estimate yet of installation of Fiscal Council for fiscal year 2014. The number of members was
determined as specified by CVM Notice
SEP/#01/2014.
-
Total compensation 240,000.00 7,880,678.65 0.00 8,120,678.65
Total compensation in period ended 12/31/2012 - Annual Amounts
Board of Directors
Statutory Officers
Fiscal Council Total
No. of members 9.3 3.3 0.0 12.51
Annual Fixed Compensation
Salary or withdrawal 497,820.37 3,295,934.69 0.00 3,793,755.06
Direct and indirect benefits
0.00 139,205.04 0.00 139,205.04
Attending committees 47,999.98 0.00 0.00 47,999.98
Others 0.00 732,798.40 0.00 732,798.40
Description of other fixed compensation items
No payment of INSS (social
security)
Payments to
INSS/FGTS 0.00 0.00
Variable compensation
Bonus 0.00 0.00 0.00 0.00
Profit sharing 0.00 397,290.00 0.00 397,290.00
Share in meetings 0.00 0.00 0.00 0.00
Commissions 0.00 0.00 0.00 0.00
Others 0.00 0.00 0.00 0.00
Description of other variable compensation items
0.00 0.00 0.00 0.00
Post-employment 0.00 0.00 0.00 0.00
Leaving position 0.00 0.00 0.00 0.00
Based on shares 65,116.19 39,824,567.73 - 39,889,683.92
Note
Taking the total number of options exercised in 2013, under both the Shareholder Plan
and the Company
Taking the total number of options exercised in 2013, under both the
Shareholder Plan
The Fiscal Council has not been installed for the fiscal year 2013. The number of
members was
-
67
Total compensation in period ended 12/31/2012 - Annual Amounts
Board of
Directors
Statutory
Officers Fiscal Council Total
Plan. The number of members was determined as
specified by CVM Notice SEP/#01/2014.
and the Company Plan. The number of members was
determined as specified by CVM Notice SEP/#01/2014.
determined as specified by CVM Notice
SEP/#01/2014.
Total compensation 610,936.54 44,389,795.86 0.00 45,000,732.40
Total compensation in period ended 12/31/2012 - Annual Amounts
Board of Directors
Statutory Officers
Fiscal Council Total
No. of members 11.50 5.00 3.00 19.50
Annual Fixed Compensation
Salary or withdrawal 355,000.00 4,180,276.66 89,402.00 4,624,678.66
Direct and indirect benefits 0.00
177,096.06 0.00
177,096.06
Attending committees 165,000.00 0.00 0.00 165,000.00
Others 0.00 834,473.39 0.00 834,473.39
Description of other fixed compensation items
No payment of INSS (social
security)
Payments to INSS (social
security)
No payment of INSS (social
security)
-
Variable
compensation
Bonus 0.00 0.00 0.00 0.00
Profit sharing 0.00 0.00 0.00 0.00
Share in meetings 195,000.00 - - 195,000.00
Commissions 0.00 0.00 0.00 0.00
Others 0.00 0.00 0.00 0.00
Description of other
variable compensation items
No payment of
INSS (social security)
- - -
Post-employment 0.00 0.00 0.00 0.00
Leaving position 0.00 0.00 0.00 0.00
Based on shares 6,216,161.54 18,672,647.84 - 24,888,809.37
Note Taking the total
number of options exercised in 2012, under
both the Shareholder Plan and the Company Plan. The number of members was determined as
Taking the total
number of options exercised in 2012, under
both the Shareholder Plan and the Company Plan. The number of members was determined as
The number of
members was determined as specified by CVM
Notice SEP/#01/2014.
-
68
Total compensation in period ended 12/31/2012 - Annual Amounts
specified by CVM Notice
SEP/#01/2014.
specified by CVM Notice
SEP/#01/2014.
Total compensation 6,931,161.54 23,864,493.95 89,402.00 30,885,057.48
Total compensation in period ended 12/31/2011 - Annual Amounts
Board of Directors
Statutory Officers
Fiscal Council Total
No. of members 8.92 5.00 3.00 16.92
Annual Fixed Compensation
Salary or withdrawal 0.00 3,807,761.82 69,748.00 3,877,509.82
Direct and indirect benefits 0.00
173,292.35 0.00
173,292.35
Attending committees 120,000.00 0.00 0.00 120,000.00
Others 0.00 761,552.43 0.00 761,552.43
Description of other fixed compensation items
No payment of INSS (social
security)
Payments to INSS (social
security)
No payment of INSS (social
security)
Variable compensation
Bonus 0.00 0.00 0.00 0.00
Profit sharing 0.00 0.00 0.00 0.00
Share in meetings 395,000.00 0.00 0.00 395,000.00
Commissions 0.00 0.00 0.00 0.00
Others 0.00 0.00 0.00 0.00
Description of other variable compensation items
N/A
Post-employment 0.00 0.00 0.00 0.00
Leaving position 0.00 0.00 0.00 0.00
Based on shares 9,378,841.05 27,500,757.20 0.00 36,879,598.25
Note Taking the total number of options exercised
in the fiscal year of 2011 under both the
Shareholder Plan and the Company Plan. The number of members was determined as specified by CVM Notice SEP/#01/2014.
Taking the total number of options exercised
in the fiscal year of 2011 under both the
Shareholder Plan and the Company Plan.
The number of members was determined as specified by CVM Notice SEP/#01/2014.
The number of members was determined as
specified by CVM Notice SEP/#01/2014.
Total compensation 9,893,841.05 32,243,363.80 69,748.00 42,206,952.85
69
70
13.3 - Variable compensation of the board of directors, statutory officers, and
fiscal council
The payment of variable remuneration is scheduled only for the Statutory Officers related
to the current fiscal year (2014), as shown in the following table.
Variable compensation estimated for the current fiscal year (2014)
Board of Directors
Statutory Officers
Fiscal Council
Total
No. of members - 02 - 02
Bonus
Minimum amount estimated in compensation plan
- - - -
Maximum amount estimated in compensation plan
- - - -
Amount established in the compensation plan if the goals are achieved
- - - -
Profit sharing
Minimum amount estimated in compensation plan
- 2,642,496.76 - 2,642,496.76
Maximum amount estimated in compensation plan
- 4,907,493.98 - 4,907,493.98
Amount established in the
compensation plan if the goals are achieved
- 3,774,995.37 - 3,774,995.37
Variable compensation in period ended 12/31/2013 - Annual Amounts
Board of Directors
Statutory Officers
Fiscal Council
Total
No. of members - 1 - 1
Bonus
Minimum amount estimated in
compensation plan - - - -
Maximum amount estimated in
compensation plan - - - -
Amount established in the compensation plan if the goals are achieved
- - - -
Profit sharing
Minimum amount estimated in
compensation plan - 287,000.00 - 287,000.00
Maximum amount estimated in compensation plan
- 533,000.00 - 533,000.00
Amount established in the compensation plan if the goals are achieved
- 410,000.00 - 410,000.00
Amount recognized in Income for
the year - 397,290.00 - 397,290.00
There was no variable compensation related to bonuses or participation in results in the last
two fiscal years for members of the board of directors, statutory officers or fiscal council.
13.4 - Share-based compensation for the board of directors and statutory officers
71
(a) General terms and conditions
Stock options granted by the co-controlling shareholder Eike Fuhrken Batista
(“Shareholder Plan”)
The co-controlling shareholder Eike Batista Fuhrken granted in favor of certain members of
management of the Company, options to purchase shares held issued by the ENEVA. The
stock options granted to these professionals may be exercised in the proportion of 10% or
20% on each anniversary of their grant dates for periods of up to 10 years, as stated in the
corresponding individual grant contracts. Shares acquired by exercising these options are
subject to certain restrictions, including a ban on sale of such shares within 36 months of
signing the respective contracts. Also note that these options refer to acquisition of shares
held by the co-controlling shareholder, so if they are exercised they will not require new
shares to be issued and therefore will not result in dilution of the equity of other company
shareholders. With the change of control of the Company during the financial year of 2013,
new grants of options of the Shareholder Plan were suspended and the current beneficiaries
are serving periods of finalization of contracts still in effect, , as mentioned previously.
Company Program to subscribe or purchase ENEVA shares (“Company Program”):
The Extraordinary General Meeting held on November 26, 2007 approved a stock option
program consisting of grant of options to purchase or subscribe ENEVA common shares for
members of the board of directors, senior managers and other Company employees, as
well as those of other companies belonging to the ENEVA Group. This program was altered
and consolidated at general meetings held on September 28, 2010, April 26, 2011 and
January 26, 2012.
The latest consolidation of this program determines general guidelines to be considered by
our company’s management for options to purchase or subscribe our company’s common
shares granted to members of the Board of Directors, executive board and employees, as
well as those of other companies belonging to the Group ENEVA. These guidelines state
that:
(iii) the total number of shares allocated to the program may not exceed 2% of the total
number of shares issued by our company, not including authorized capital;
(iv) share value will be determined based on the market value of our shares calculated
as the simple average of their price over the 20 most recent trading sessions,
counted as of the date - inclusive- of the participant’s appointment, in all cases
taking the daily average price at close of trading (“Share Value”).
(v) the price for subscribing or buying shares will be calculated based on the percentage
of share value stated in the Option Agreement and will never be less than 40% or
more than 100% of said value (“Subscription Price”); and
(vi) the responsibility for administering the program was delegated to the board of
directors
Therefore, the board of directors shall:
(vii) decide issues of shares under the program (art. 168, § 1, “b” of the Law of
Corporations);
(viii) within the parameters of the program, define periodic plans (referred to in this
Reference Form as “Company Plans”);
(ix) proceed to make any alterations in relation to Company Plans currently in place;
(x) take any other steps required to manage the Company Program, as long as they do
not lead to its being altered; and
(xi) propose alterations to the Company Program to be submitted to the approval of
extraordinary general meetings.
72
The board of directors shall also decide on the opportunity and convenience of
implementing said periodic plans in each year of the program’s duration, or not doing so. If
implemented, plans must at least state: (a) their duration; (b) the maximum number of
options that may be granted under each plan; and (c) whether or not the trading of shares
acquired by the exercise of the options will be blocked, and the period stipulated for this
blocking.
On the recommendation of its president, the board of directors shall opportunely discuss
and decide: (a) proposed participants for each Plan; (b) the respective quantities of stock
options; (c) subscription or purchase prices; and (d) other conditions for acquiring the right
to exercise the options.
(b) Principal objectives of the plan
Both the Shareholder Plan and the Company Program have the following objectives: (i)
align management and shareholder interest, encourage continuous improvement of
management to boost our enterprise value and that of companies under our direct or
indirect control; and (ii) attract, motivate and retain highly qualified executives to our staff
and increase the attractiveness of the Company and ENEVA Group companies.
(c) State how the plan contributes to these objectives
Both the Shareholder Plan and the Company Program enable their beneficiaries to become
our company’s shareholders, thus encouraging them to work to optimize all aspects that
may add to the value of our company on a sustainable basis.
(d) How does the plan mesh with the issuer’s compensation policy
The Company’s compensation policy seeks to encourage the professional growth of its
managers, employees and service providers, and value their individual merit. In this sense,
the Stock Option Program is in line with the Company’s compensation policy as it allows its
managers, employees and service providers to measure their variable compensation in
accordance with their personal performance through the granting of stock options based on
that merit.
(e) How does the plan align the interests of the issuer’s management with
issuer short- medium- and long-term interests
The EBX and Company Plans stipulate the exercise of options in annual proportions for a
period of up to ten years, depending on the plan. Therefore, management’s gains are
linked to the performance of our shares until the last period for exercising options, thus
boosting management’s commitment to our company’s short-, medium- and long-term
performance.
(f) Maximum number of shares covered
Under the Company Program, beneficiaries may be granted options to purchase shares up
to the limit of 2% of the total number of shares issued by our company, computing in this
calculation all options already granted but not yet exercised.
The maximum number of shares that may be covered by the Controlling Shareholder Plan
is determined by the Controlling Shareholder itself, and does not follow a pre-established
criterion, since such plan does not involve issuing new shares and therefore will not cause
dilution of shares of other company shareholders.
(g) Maximum number of options to be granted
Under the Company Program, beneficiaries may be granted options to purchase shares up
to the limit of 2% of the total number of shares issued by our company, computing in this
calculation all options already granted but not yet exercised.
73
The maximum number of shares that may be covered by the Co-controlling Shareholder
Eike Fuhrken Batista (“Shareholder Plan”) is determined by the Co-controlling Shareholder,
and does not follow a pre-established criterion, since such plan does not involve issuing
new shares and therefore will not cause dilution of shares of other company shareholders.
(h) Conditions for acquiring shares
Once a member of management has been granted options under the Controlling
Shareholder Plan or Company Program, he or she shall: (i) remain with the company until
the date on which each portion of options vests, saving exceptions stipulated in paragraph
16 of the Program; (ii) state their wish to exercise portions within the maximum period
stipulated in the contract; and (iii) pay the exercise price set for the shares
(i) Criteria for determining acquisition or exercise price
Under the Company Program, the option exercise price will be determined based on market
value of the shares calculated by the simple average of the price of the Company’s shares
in the latest 20 trading days as of the share grant date for a given employees of the
company, in all cases taking closing prices of each trading session. The purchase or
exercise price of each share will never be less than 40% or more than 100% of the market
value of the shares. Prices may also be updated by IPCA inflation as announced by IBGE.
Under the Shareholder Plan, purchase price or exercise is determined at the discretion of
the Co-controlling Shareholder Eike Furken Batista.
(j) Criteria for determining exercise period
In the Company program, the maximum period for option exercise is stated in the
respective stock option contracts. This period shall not exceed one year as of period of
maturity of the last portion of options granted under the respective option contract.
(k) Means of payment
Subscription or purchase of stock options granted under the Program and Plan, as
applicable, must be paid cash from the beneficiary’s own funds. The same criteria apply to
stock options granted by our co-controlling shareholder Eike Furken Batista in favor of
executives.
For options granted under the Company Program, exceptionally, the Company’s board of
management may authorize Participants to pay a minimum portion equivalent to 10% of
total subscription price at the time of purchase, with the remaining 90% to be paid within
thirty days of the date of the first payment.
(I) Restrictions on transfer of shares
The Shareholder Plan does not allow trading in shares it has granted for 36 months as of
signing contracts.
Under the Company Plans, some contracts stipulate restriction on trading shares within
three years of signing the contract.
(m) Criteria and events that may lead to suspension, amendment or termination
of the plan
The occurrence of factors that cause severe alterations in the economic outlook and
compromise the Company’s financial condition may lead to modification or termination of
the Program, including in relation to plans already in place and stock options already
granted but not yet exercised. However, note that it is the incumbency of extraordinary
general meetings to approve, alter, suspend or terminate the Company’s Stock Option Plan.
74
(n) Effects of manager’s leaving issuer on rights stipulated in share-based
compensation plan
In the Company Program, dismissal cases will be treated as follows:
Dismissal for cause or upon request: (a) unvested options will be cancelled; and (b) vested
options, which were not exercised yet, may no longer be exercised e and will be equally
cancelled.
Dismissal without cause: (a) unvested options will be cancelled; and (b) vested options,
which were not exercised yet, may be exercised, provided that the conditions set forth in
the respective Stock Options Agreement are complied with, and it is hereby agreed that the
maximum term for exercise the options may be anticipated in this case, according to the
resolution of the competent agency or as set forth in the respective Stock Options
Agreement.
Dismissal for retirement for length of service or age: (a) unvested options will be cancelled;
and (b) vested option, which were not exercised yet, may be exercised within 90 days
counted from the date of approval by the National Social Security Institute (“INSS”) of the
request for retirement for length of service or age.
Permanent disability retirement: (a) unvested options will be cancelled upon termination of
the employment agreement due to the granting of permanent disability retirement, and the
Company may establish otherwise in specific cases; and (b) vested options, which were not
exercised yet, may be exercised by the disabled participant or his/her legal representative
(curator) by presenting to the Company the respective proof of granting of permanent
disability retirement issued by the INSS and respective termination of employment
agreement within 180 days counted from the date of approval by the INSS of the request
for permanent disability retirement.
Dismissal for the Participant’s death: (a) unvested options will be cancelled after the
Participant’s death, and the Company may establish otherwise in specific cases; and (b)
vested options, which were not exercised yet, may be exercised by the administrator, as
duly defined in the regular probate proceeding, by presenting to the Company the
respective administrator’s commitment agreement, as appointed by the competent court,
within 180 days counted from the appointment of the administrator by the court, or, in the
event of extrajudicial probate proceeding by the office of the notary public, it is hereby
agreed that, if the probate proceeding is not initiated within six months counted from the
date of death, the vested options will be also cancelled automatically.
With respect to the Shareholder Plan, the dismissal of the manager implies the loss of
unvested options.
13.5 - Holdings in shares, units or other convertible securities held by
management and fiscal council members - by body
ENEVA
shares
MMX
shares
MMX
debentures
OG Par
shares
OSX
Shares
CCX
Shares
Board of
Directors 155,155 277,500 137,885 139,100 50 34,305
Executive Board
485,700 1 0 1 0 0
Fiscal Council - - - - - -
75
Share-based compensation for the board of directors and statutory officers
Company’s stock option plan:
Share-based compensation estimated for the current financial year (2014)
Board of Directors Statutory Officers
Number of members - -
Grant of stock options
Grant date - -
Quantity of stock options granted - -
Final vesting date for options - -
Final date for exercising options - -
Transfer restriction period - -
Weighted average price for period:
(a) Options outstanding at beginning of year - -
(b) Options forfeited during the period - -
(c) Options exercised during the period - -
(d) Options expired during the period - -
Fair value of options on grant date(1) - -
Potential dilution if all options granted were to be exercised
- -
(1) The calculation of the fair value of options takes into account the total number of shares
included in the Company’s Stock Options Plan that may be subscribed or acquired in the
proportion of 20% per year and in the event of full option exercise.
Share-based compensation – financial year ended 12/31/2012
Board of Directors Statutory Officers
Number of members - -
Grant of stock options
Grant date - -
Quantity of stock options granted - -
Final vesting date for options - -
Final date for exercising options - -
Transfer restriction period - -
Weighted average price for period:
(a) Options outstanding at beginning of year - -
(b) Options forfeited during the period - -
(c) Options exercised during the period - -
(d) Options expired during the period - -
Fair value of options on grant date(1) - -
Potential dilution if all options granted were to be - -
76
Share-based compensation – financial year ended 12/31/2012
Board of Directors Statutory Officers
exercised
Share-based compensation – financial year ended 12/31/2012
Board of Directors Statutory Officers
Number of members 04 -
Grant of stock options
Grant date 11/26/2007 -
Quantity of stock options granted 528,000 -
Final vesting date for options Options will be
exercised in the
proportion of 20% on each of the first five
grant-date anniversaries of the
public offering held on
December 13, 2007
-
Final date for exercising options 1 year after maturing -
Transfer restriction period none -
Weighted average price for period:
(a) Options outstanding at beginning of year 1.01 -
(b) Options forfeited during the period - -
(c) Options exercised during the period - -
(d) Options expired during the period - -
Fair value of options on grant date(1) R$16.03 -
Potential dilution if all options granted were to be exercised
0.02% -
(1) The calculation of the fair value of options takes into account the total number of shares
included in the Company’s Stock Options Plan that may be subscribed or acquired in the
proportion of 20% per year and in the event of full option exercise.
Share-based compensation – financial year ended 12/31/2011
Board of Directors Statutory Officers
Number of members 04 -
Grant of stock options
Grant date 11/26/2007 -
Quantity of stock options granted 528,000 -
Final vesting date for options Options will be exercised in the
proportion of 20% on each of the first five
grant-date anniversaries of the
public offering held on
-
77
Share-based compensation – financial year ended 12/31/2011
Board of Directors Statutory Officers
December 13, 2007
Final date for exercising options 1 year after maturing -
Transfer restriction period none -
Weighted average price for period:
(a) Options outstanding at beginning of year 0.96 -
(b) Options forfeited during the period - -
(c) Options exercised during the period 0.96 -
(d) Options expired during the period - -
Fair value of options on grant date(1) R$16.03 -
Potential dilution if all options granted were to be
exercised 0.02% -
(1) The calculation of the fair value of options takes into account the total number of shares
included in the Company’s Stock Options Plan that may be subscribed or acquired in the
proportion of 20% per year and in the event of full option exercise.
Plan for Granting Stock Options by Co-controlling Shareholder Eike Furken Batista
(“Shareholder Plan”)
Share-based compensation estimated for the current financial year (2014)
Board of Directors Statutory Officers
Number of members - -
Grant of stock options
Grant date - -
Quantity of stock options granted - -
Final vesting date for options - -
Final date for exercising options - -
Transfer restriction period - -
Weighted average price for period:
(a) Options outstanding at beginning of year - -
(b) Options forfeited during the period - -
(c) Options exercised during the period - -
(d) Options expired during the period - -
Fair value of options on grant date - -
Potential dilution if all options granted were to be exercised
- -
Share-based compensation – financial year ended 12/31/2012
Board of Directors Board of Directors Statutory Officers
Number of members 01 01 05
78
Share-based compensation – financial year ended 12/31/2012
Grant of stock options
Grant date 04/28/2008 04/28/2008 04/28/2008
Quantity of stock options granted 2,885,400 1,295,940 17,312,640
Final vesting date for options Options will be exercised in the
proportion of 10%
on each of the first five grant-
date anniversaries of the public
offering held on December 13 of
each year
Options will be exercised in the
proportion of 20% on each of the first
five grant-date anniversaries of
the public offering held on December 13 of each year
Options will be
exercised in the proportion of
10% on December 13 of
each year
Final date for exercising options 1 year after maturing
1 year after maturing
1 year after maturing
Transfer restriction period None None None
Weighted average price for period:
(a) Options outstanding at beginning of year
R$ 0.01 R$ 0.01 R$ 0.01
(b) Options forfeited during the period
- - -
(c) Options exercised during the period
R$ 0.01 R$ 0.01 R$ 0.01
(d) Options expired during the
period - - -
Fair value of options on grant date R$15.83 R$15.83 R$15.83
Potential dilution if all options granted were to be exercised
None None None
Share-based compensation – financial year ended 12/31/2012
1.1 Board of Directors
Board of Directors Statutory Officers
Number of members 01 01 05
Grant of stock options
Grant date 04/28/2008 04/28/2008 04/28/2008
Quantity of stock options granted 2,885,400 1,295,940 17,312,640
Final vesting date for options Options will be exercised in the
proportion of 10%
on December 13 of each year
Options will be exercised in the
proportion of 20%
on December 13 of each year
Options will be exercised in the
proportion of
10% on December 13 of
each year
Final date for exercising options 1 year after maturing
1 year after maturing
1 year after maturing
Transfer restriction period None None None
Weighted average price for period:
(a) Options outstanding at R$0.01 R$0.01 R$0.01
79
Share-based compensation – financial year ended 12/31/2012
beginning of year
(b) Options forfeited during the period
- - -
(c) Options exercised during the period
R$0.01 R$0.01 R$0.01
(d) Options expired during the
period
- - -
Fair value of options on grant date R$15.83 R$15.83 R$15.83
Potential dilution if all options granted were to be exercised None None None
Share-based compensation – financial year ended 12/31/2011
Board of Directors Board of Directors Statutory Officers
Number of members 01 01 05
Grant of stock options
Grant date 04/28/2008 04/28/2008 04/28/2008
Quantity of stock options granted 2,885,400 1,295,940 17,312,640
Final vesting date for options Options will be exercised in the
proportion of 10% on December 13
of each year
Options will be exercised in the
proportion of 20% on December 13 of
each year
Options will be exercised in the
proportion of 10% on
December 13 of each year
Final date for exercising options 1 year after maturing
1 year after maturing
1 year after maturing
Transfer restriction period None None None
Weighted average price for period:
(a) Options outstanding at beginning of year
R$0.01 R$0.01 R$0.01
(b) Options forfeited during the
period
- - -
(c) Options exercised during the period
R$0.01 R$0.01 R$0.01
(d) Options expired during the period
- - -
Fair value of options on grant date R$15.83 R$15.83 R$15.83
Potential dilution if all options granted were to be exercised None None None
80
13.7 - Details of outstanding options held by the board of directors and statutory
officers
Company’s stock option plan
Outstanding options at the year ended 12/31/2013
Board of Directors Statutory Officers
No. of members - -
Options yet to vest
Quantity - -
Vesting date - -
Final date for exercising options - -
Transfer restriction period - -
Weighted average price for period - -
Fair value of options on last day of period - -
Options vested - -
Quantity - -
Final date for exercising options - -
Transfer restriction period - -
Weighted average price for period - -
Fair value of options on last day of period - -
Fair value of options on last day of period - -
Plan for Granting Stock Options by Co-controlling Shareholder Eike Furken Batista
(“Shareholder Plan”)
Outstanding options at the year ended 12/31/2013
Board of Directors Statutory Officers
No. of members - 1
Options yet to vest
Quantity - 1,290,621
Vesting date
-
Options will be exercised in the proportion of 10% on December 13 of each
year
Final date for exercising options - 12.13.2017
Transfer restriction period - -
Weighted average price for period - R$ 0.01
Fair value of options on last day of period
- R$ 2.92
Options vested
Quantity - 322,655
Final date for exercising options - 13.12.2014
81
Transfer restriction period - -
Weighted average price for period - R$ 0.01
Fair value of options on last day of period
- R$ 2.92
Fair value of options on last day of period
- R$ 4,710,765.92
13.8 - Options exercised and shares delivered in relation to share-based
compensation for the board of directors and statutory officers
Company’s stock option plan:
Options exercised - Period ended 12/31/2012
Board of Directors Statutory Officers
Number of members - -
Options vested
Number of shares - -
Weighted average price for period
- -
Difference between exercise price and share price for options exercised
- -
Shares delivered
Number of shares - -
Weighted average price for period
- -
Options exercised - Period ended 12/31/2012
Board of Directors Statutory Officers
Number of members 04 -
Options vested
Number of shares 0 -
Weighted average price for period
R$0.00 -
Difference between exercise price and share price for options exercised
R$0.00 -
Shares delivered
Number of shares 0 0
Weighted average price for period
- -
82
Options exercised - Period ended 12/31/2012
Board of Directors Statutory Officers
Number of members 04 -
Options vested
Number of shares 35,140 -
Weighted average price for period
R$3.52 -
Difference between exercise price and share price for
options exercised
R$1,510,317.20 -
Shares delivered
Number of shares 0 0
Weighted average price for
period - -
Plan for Granting Stock Options by Co-controlling Shareholder Eike Furken Batista
(“Shareholder Plan”)
Options exercised - Period ended 12/31/20123
Board of Directors Statutory Officers
Number of members 01 05
Options vested
Number of shares 636,092 3,816,612
Weighted average price for period R$ 0.01 R$ 0.01
Difference between exercise price and share price for options exercised
R$ 6,354,559.08 R$ 38,127,953.88
Shares delivered
Number of shares 0 0
Weighted average price for period - -
Options exercised - Period ended 12/31/20123
Board of Directors Statutory Officers
Number of members 02 05
Options vested
Number of shares 547,740 1,731,240
Weighted average price for period R$ 0.01 R$ 0.01
Difference between exercise price and share price for options exercised
R$ 6,101,823.60 R$ 19,286,013.60
Shares delivered
Number of shares 0 0
Weighted average price for period R$ 0.00 R$ 0.00
83
Options exercised - Period ended 12/31/20123
Board of Directors
Statutory Officers
Number of members 02 05
Options vested ENEVA ENEVA MMX LLX
Number of shares 182,580 577,080 10,640 10,640
Weighted average price for period
R$ 0.01 R$ 0.01 R$ 0.01 R$ 0.01
Difference between exercise
price and share price for options exercised
R$ 8,488,144.20 R$
26,828,449.20 R$ 70,862.40
R$ 35,750.40
Shares delivered
Number of shares 0 0 0 0
Weighted average price for period
R$ 0.00 R$ 0.00 R$ 0.00 R$ 0.00
13. 9 - Information required to understand figures disclosed in items 13.6 to 13.8
- Pricing method for shares and options
(a) Pricing model
Company’s Program
To determine the fair value of the stock options program, the Merton (1973) model, a
variant of the Black & Scholes (1973) model, which takes into account dividend payment,
was used.
Plan for Granting Stock Options by Co-controlling Shareholder Eike Furken Batista
(“Shareholder Plan”)
To determine the fair value of the stock options program of the Shareholders Plan, the
Black & Scholes model was used.
(b) Data and assumptions used in the pricing model, including the weighted
average price of shares, exercise price, expected volatility, term of the option,
expected dividends and risk-free interest rate
Company’s Program
(i) Determination of expected volatility
The limited historical series of quotes of ENEVA shares on the stock exchange does not
guarantee a reliable projection of future volatility of prices from past data. Therefore, the
Electric Power Index-IEE, the first sector index released by BM&FBOVESPA in August 1996,
was used as a proxy. The sector indexes are designed to provide a segmented view of the
stock market behavior. The definition of time window to estimate expected future volatility
(that is, the extent of the historical data series examined) was also maintained as equal to
the T term of the option to which it will be applied in the pricing.
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(ii) Expected Dividend Rate
ENEVA has not distributed any amounts as dividends or interest on shareholders’ equity
since its incorporation. Therefore, the hypothesis that dividends will not be paid during the
effectiveness of the stock options program was upheld.
(iii) Risk-Free Rate
Reference rates were used for adjustments of SWAP agreements with IPCA coupon,
disclosed by BM&FBOVESPA.
(iv) Program Abandonment Rate
There has been no record of abandonment by the executive officers participating in the
incentive program since its establishment.
Plan for Granting Stock Options by Co-controlling Shareholder Eike Furken Batista
(“Shareholder Plan”)
(i) Determination of expected volatility
To calculate share volatility, in those cases where there was no historical series of share
price, an approximation through average beta of similar companies was used and applied to
the Bovespa index.
The definition of time window to estimate expected future volatility (that is, the extent of
the historical data series examined) was also maintained as equal to the T term of the
option to which it will be applied in the pricing.
(ii) Expected Dividend Rate
As of the granting date, there was no estimated payment of dividends or interest on
shareholders’ equity. For this reason, the hypothesis that no dividends will be paid during
the effectiveness of the Shareholder Plan was taken into consideration.
(iii) Risk-Free Rate
The risk-free interest rate was determined based on market projections.
(iv) Program Abandonment Rate
There has been no record of abandonment by the executive officers participating in the
incentive program since its establishment.
(c) Method and assumptions used to incorporate the effects expected from
early exercise
Company’s Program
The Company’s Program 1 sets forth that options granted under the Plan may be exercised
as follows: (i) 20% per year, at the end of years 1 to 5, counted from the execution of the
corresponding Stock Options Agreement, according to the terms and conditions established
by the Board of Directors and the terms and conditions set forth in the Stock Options
Agreements.
Options granted under the terms of the other Company’s Plans may be exercised as
follows: (i) 10% per year, at the end of years 1 to 4; (ii) 20% per year, at the end of years
5 to 7, counted from execution of the corresponding Stock Options Agreement, according to
the terms and conditions established by the Board of Directors and under the terms and
conditions set forth in the Stock Options Agreements.
85
Plan for Granting Stock Options by Co-controlling Shareholder Eike Furken Batista
(“Shareholder Plan”)
Options granted under the terms of the Plan may be exercised as follows: (i) 10% per year,
at the end of years 1 to 10, counted from the date of ENEVA’s initial public offering,
December 13, 2007, according to the terms and conditions set forth in the respective Stock
Options Agreements.
For each of the Plans referred to above, the Company determined a period of time in which
the beneficiary may exercise the option. This period is one year, counted from the date of
maturity of the option. The Beneficiary may not exercise the option before this period.
(d) Determination of expected volatility
CIt is calculated using continuous returns of historical quotation of ENEV3 stock.
(e) If any other characteristic of the option has been incorporated into the
measurement of its fair value
All characteristics of the option were mentioned in the previous items of this Reference
Form.
13.10 - Information on pension plans provided to members of the board of
directors and statutory officers
The Company does not provide a pension plan to its managers.
13.11 Maximum, minimum and average compensation of the board of directors,
statutory board and fiscal council
Annual amounts
Board of Directors Statutory Officers Fiscal Council
12/31/2013 12/31/2012 12/31/2011 12/31/2013 12/31/2012 12/31/2011 12/31/2013 12/31/2012 12/31/2011
No. of
members 9.3 11.5 8.9 3.3 5.0 5.0 0.0 3.0 3.0
Amount of greatest
compensation
(Reais)
96,000 3,112,108 4,567,588 15,933,138 7,629,279 10,447,472 0,00 29,801 23,249
Amount of
lowest
compensation (Reais)
31,324 70,000 151,623 991,666 4,011,041 5,403,587 0,00 29,801 23,249
Average
amount of
compensation
(Reais)
65,692 602,710 1,111,668 13,451,453 4,772,899 6,448,673 0,00 29,801 23,249
13.12 - Compensation and indemnification mechanisms for management in the
event of removal from office or retirement
The Company has no contractual arrangements, insurance policies or other instruments for
structuring compensation or indemnification mechanisms for the managers in the event of
removal from office or retirement.
86
13.13 - Percentage of total compensation held by management and members of
the fiscal council who are parties related to the controlling shareholders
2011 2012 2013
Board of Directors 91% 91% 71%
Statutory Officers 32% 0% 0%
Fiscal Council - - -
13.14 - Compensation of management and members of the fiscal council, grouped
by body, received for any reason other than the office they hold
There was no compensation payment to the Board of Directors or Executive Board
members for any reason other than the position they hold.
13.15 - Compensation of management and members of the fiscal council
recognized in income of controlling shareholders, whether direct or indirect,
companies under common control and subsidiaries of the issuer
MMX/LLX/ OGX/EBX/OSX (1)
MMX/LLX/ OGX/OSX/CCX/EBX (1)
MMX/LLX/ OGX/OSX/CCX/EBX (1)
2011 2012 2013
Board of Directors 4,693,307 3,798,624 2,333,631
Executive Board - - -
Fiscal Council - - -
Others - - -
(1) MMX Mineração e Metálicos S.A.
LLX Logística S.A.
OGX Petróleo e Gás Participações S.A.
OSX Brasil S.A.
EBX Investimentos Ltda.
CCX Carvão da Colômbia S.A.
13.16 - Other relevant information
Clarifications about item 13.2 of the Reference Form
The Company wishes to clarify that in notes no. 15 to the Financial Statements of 2013 and
2012, respectively, the salary line refers to the sum total of commissions, direct and
indirect benefits and social security contributions of the executive officers and directors of
the Company and its subsidiaries. The difference between what is shown in this Reference
Form and in the financial statements of the Company arises because the financial
statements present the values assigned to the statutory and non-statutory managers of the
Company and its subsidiaries, while item 13.2 of this Reference Form requires the
submission of information concerning the Statutory Board only, as shown in the following
table:
Board of Directors
Statutory Officers
Fiscal Council
Total Reference Form
Other Directors of the Company and its subsidiaries
Total Financial Statements
( A ) ( B ) ( C ) ( A ) + ( B ) + ( C ) ( D ) ( A ) + ( B ) + ( C ) + ( D )
87
2011 515,000 4,742,607 69,748 5,327,355 5,152,819 10,480,173
2012 715,000 5,191,846 89,402 5,996,248 3,702,157 9,698,405
2013 545,820 4,565,228 0.00 5,111,048 4,338,255 9,449,304
In the case of share-based compensation, it is important to point out that the accounting
practices adopted in Brazil and the IFRS, notably CPC 10 (R1) – Share-based compensation
(equivalent to IFRS 2), paragraph 12, require the stock option granted to employees, board
members and executives to be shown at fair value, as disclosed by the Company in note
no. 22 to its 2012 financial statements, and in note no. 22, Share-based payment plan, to
the 2011 financial statements. In this note we showed two tables: the first containing the
accumulated position showing the fair value of all options not yet exercised by the
participants, and the second, showing the effect on income (expense) of the fair value of
the options ascertained for the period disclosed.
Also in the financial statements for 2013 and 2012 we presented information regarding the
accumulated position under liabilities, respectively in notes no. 15 – Related parties, item d.
This notwithstanding, the Company agrees to inform in future disclosures, in the note on
related parties, that the balances shown refer to the accumulated liability position of the
fair values calculated on the options granted.