Earnings Results 2Q15

August 14, 2015

Disclaimer

The material that follows is a presentation of general background information about ENEVA S.A. and its subsidiaries (collectively, ENEVA or the Company) as of
the date of the presentation. It is information in summary form and does not purport to be complete. No representation or warranty, express or implied, is made
concerning, and no reliance should be placed on, the accuracy, fairness, or completeness of this information.
This presentation may contain certain forward-looking statements and information relating to ENEVA that reflect the current views and/or expectations of the
Company and its management with respect to its performance, business and future events. Forward looking statements include, without limitation, any statement
that may predict, forecast, indicate or imply future results, performance or achievements, and may contain words like may , plan , believe , anticipate ,
expect, envisages, will likely result, or any other words or phrases of similar meaning. Such statements are subject to a number of risks, uncertainties and
assumptions. We caution you that a number of important factors could cause actual results to differ materially from the plans, objectives, expectations, estimates
and intentions expressed in this presentation. In no event, neither the Company, any of its affiliates, directors, officers, agents or employees nor any of the
placement agents shall be liable before any third party (including investors) for any investment or business decision made or action taken in reliance on the
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written consent.

1
Recent highlights

Recent highlights (1)

Sale of ENEVA's interest on Pecm I (R$300MM) closed on May 15
o

Build-up of an important cash cushion to withstand the Judicial Recovery Process

Successful achievement of the first steps of the Judicial Recovery Plan already in 2Q15
o

Payment to creditors of 50% of credits up to R$250k, totaling R$4.2MM

Exercise of the mandatory 20% debt haircut on the JR debt (R$489MM)

Reprofile of the remaining debt (R$985MM)

HoldCo debt profile on 12/31/2014

HoldCo debt profile on 06/30/2015

183
8%
2.199
92%

Short Term

1.974
100%

2.199

Long Term

2015

116

66

2016

2017

Maturity: 0 (outstanding debts) / Average cost: 14.0% p.a.

2018

+2019

Short Term

Long Term

1.974
0

2015

2016

2017

2018

+2019

Maturity: ~11 years; Average cost: 14.3% p.a.

The proceeds of the sale of Pecm I and the implementation of the first steps
of the JR Plan have already reduced ENEVA's leverage

Recent highlights (2)

Implementation of the next steps of the JR Plan
o

Meeting the conditions precedent to launch the capital increase provided for in the JR Plan, such as the rollover of Parnaba IIs debt

Holding the shareholders meeting on August 26 to resolve on the capital increase launch

Capital increase amounting up to R$3.6Bi, comprised by:

Debt-to-equity conversion of 40% of the JR debt (R$979MM);
Important assets contribution by certain stakeholders (R$1.3Bi); and
Eventual cash contribution from minority shareholders

Payment to creditors of the outstanding 50% installment of credits up to R$250k

Continuation of the effective HoldCo expenses management

o

Consistent expenses decrease over the last 4 quarters (10% reduction QoQ in 2015)

Growing average availability of the Parnaba Complex

o

Successful strategy of optimizing natural gas resources by partially substituting Parnaba I by Parnaba II

Important achievements on regulatory claims

o

Review of plants long-term consumption, contributing to reduce ballast exposure (FID) and downtime costs (ADOMP)

Reduction of Itaquis ADOMP cost, now calculated based on the capacity declared in its PPAs (350MW). Other plants of ENEVA may benefit in the future

Reduction of spot prices aids reduce financial exposure associated with FID and ADOMP costs

2
Economic and financial data

Main indicators
Main Indicators

2Q15

(R$ million)

Net Operating Revenue

Operating Costs
Operating Expenses
EBITDA
EBITDA (Adjusted)
Net Income
Net Income (Adjusted)

2Q14

2Q15/

Pro-forma

2Q14 PF

1H15

1H14

1H15/

Pro-forma

1H14 PF

310.4

392.6

-20.9%

687.6

832.2

-17.4%

(267.3)

(353.4)

-24.4%

(601.0)

(737.9)

-18.5%

(22.4)

(17.5)

28.2%

(48.4)

(52.8)

-8.3%

64.5

58.5

10.4%

123.9

116.1

6.8%

50.9

58.5

-13.0%

127.9

116.1

10.1%

371.2

(103.9)

242.6

(175.5)

(92.4)

(103.9)

-11.1%

(221.0)

(175.5)

26.0%

Net Debt

4,466.3

5,003.8

-10.7%

4,466.3

5,003.8

-10.7%

Total Gen. Energy Sales (GWh)

1,670.8

1,681.5

-0.6%

3,323.2

3,957.9

-16.0%

Requests by the ONS throughout 2Q15 for generation interruptions or load reductions decreased operating income by R$82,2MM, mostly
impacting Parnaba I ( = -R$68.5MM). Operating costs were positively impacted
Non-recurring services related to financial restructuring and JR process increased operating expenses by R$3.1MM
Half-year comparable profitability increased 10% over the last 12 months due to the improvement of plant's operating performance and
the advancement of the HoldCo's cost saving program

The proceeds of the sale of Pecm I and the implementation of the first
steps of the JR Plan have already reduced ENEVA's leverage
Note: "Pro-forma" indicators exclude the consolidation effect of Pecm II

EBITDA development
Consolidated EBITDA (R$MM)

Reduction of 33.9% due to the

reduction of plants dispatch and
adjustments in Parnaba II

17,6
59,4
1Q15 EBITDA

(63.4)

77,0

Unavailability
Adjustments

1Q15 ajust.
EBITDA

Net Operating
Revenues

3,6
33,6
Operating
Costs

13.7

64,5

50,9
Operating
Expenses

2Q15 ajust.
EBITDA

Unavailability
Adjustments

2Q15 EBITDA

Adjusted EBITDA shrank due to the following factors:

o

Revenues: Reflected the reduced dispatch of power plants by the ONS, forced maintenance in Itaqui and accounting adjustment in Parnaba II

Operating costs: Reduction largely driven by lower generation in the period, impacting fuel and GTU's lease costs

Operating expenses: Decrease due to lower expenses posted by HoldCo personnel and management in the period Unavailability adjustment

Regulatory: Change in the ADOMP calculation led Itaqui and Parnaba I to higher unavailability or undue costs

Operating costs development

2Q15 Operating costs impacted by:
o Reduction in Operating costs in R$63,1MM, mainly due to the
reduction

in

fuel

(R$42.1MM)

and

unavailability/ADOMP

Operating Costs1 (R$ million)

2Q15

2Q15
(Adj)

1Q15

1Q15
(Adj)

2Q15 (Adj)/
1Q15(Adj)

224.3

238.0

289.2

271.3

-12.3%

1,450.5

1,450.5

1,923.9

1,923.9

-24.6%

154.7

164.1

150.3

141.0

16.3%

(R$33.5MM) costs
o Decline in consolidated gross generation in 2Q15 (-24.6%) as a
result of forced maintenances and generation restrictions by ONS
hit fuel and leases and rentals costs:

Fuel cost fell by R$34.0MM and R$8.2MM in Itaqui and Parnaba I,

Gross Energy Generated (GWh)

Operating Costs per Gross
Energy Generated (R$/MWh)

2Q15 (Adj.) excludes unavailability costs undue (R$13.7MM)

1Q15 (Adj.) excludes unavailability costs undue (R$17.9MM)

respectively

Leases and rentals cost lowered in Parnaba I by R$21.8MM

o Spot prices retraction of 42.9% QoQ reduced in R$7.0MM ballast

acquisition cost
o Decrease in R$33.5MM in ADOMP cost

Positive impact of R$17.3MM in Itaqui due to a reimbursement from

regulatory decisions (calculation of ADOMP based on the FID calculated
using the declared installed capacity provided for in the PPAs and
revision of plant's firm energy)

Overstatement of R$3.7MM in Parnaba I as a result of change in the

ADOMP calculation methodology

Note: 1) Does not include Depreciation & Amortization.

HoldCo expenses development

HoldCo operating expenses1/2/3
Total reduction of R$3.6MM mainly attributable to lower
HoldCo personnel expenses, in particular:

57.6
10,0

Non-cash events:
R$10.0MM

o A 6.9% headcount reduction, leading to savings of -R$1.2MM

o Increase in the shared expenses reimbursed by subsidiaries (-

46,9
27,9

29,1

2Q14

3Q14

4Q14

20,4

18,3

1Q15

2Q15

R$1.2MM)
o Accounting adjustment for performance bonuses overstated in
previous periods for (-R$7.0MM)
o Increase of +R$6.3MM in management compensation

Headcount3
Consistent headcount reduction trend:
-29% in 12 months

153

2Q14

148

3Q14

130

4Q14

116

108

1Q15

2Q15

Notes: 1) Does not include depreciation & amortization; 2) Does not include stock options cost; 3) Holding costs comprised by ENEVA and ENEVA Participaes

10

Consolidated cash position

392,1

(312.3)

(55.9)

(53.1)

(22.0)

(11.2)

300,0
418,5
180,9
Cash and Cash
Equivalents
(1Q15)

Sale of Pecm I

Revenues

Operating Costs
and Expenses

CAPEX

Intercompany
Loans and
Contributions to
Subsidiaries

Debt Service

DSRA/Others

Cash and Cash

Equivalents
(2Q15)

Strengthened cash position allows crossing the remaining

period of the Judicial Recovery process
11

Consolidated debt (2Q15)

Net debt reduction as a result of achieving the first steps of the JR Plan
Consolidated debt (R$MM)

Consolidated short-term debt (R$MM)

157,3

5.006,4

418,5

-10,8%
(net debt)

1.090
33%

4.466,3

4Q14

Net Debt

4Q14
Short Term Gross Debt
R$3,289MM

2Q15

Hold Co.

1.875
36%

Short Term

3.289
64%

Long Term

2.199
67%

Project Related

1.053
100%

Hold Co.

Project Related

Cash and Cash Equivalents

By implementing the first stages of the JR Plan, HoldCo debt had a 20%

Consolidated debt profile (R$MM)

4Q14
Total Gross Debt
R$5,164MM

2Q15
Short Term Gross Debt
R$1,053MM

haircut (R$489MM) and had been reprofiled (term and cost)

2Q15
Total Gross Debt
R$4,885MM

1.053
22%
3.832
78%

Short Term

Long Term

Once the capital increase provided for in the JR Plan is completed, the 40%
debt-to-equity conversion (R$979MM) will be effective
The short-term debt is allocated to the projects, as follows:
o

R$137.9MM: Current portion of the short-term debt of Itaqui and Parnaba I;

R$914.7MM: Bridge loans to Parnaba II

Debt of Parnaba II under negotiation with the financial backers of the project
in order to postpone its maturity to 1H16 end

12

3
Operational highlights

Operating performance (Itaqui)

Increased profitability due to better operating costs management
EBITDA (R$MM)

Operating costs
2Q15

2Q15
(Adj)

1Q15

1Q15
(Adj)

2Q15 (Adj)/
1Q15(Adj)

69.9

87.2

138.0

128.6

-32.2%

Gross Energy Generated (GWh)

427.3

427.3

682.4

682.4

-37.4%

Operating Costs per Gross

Energy Generated (R$/MWh)

163.6

204.1

202.2

188.5

8.3%

+21.8%
Operating Costs1 (R$ million)

17,3
(0,0)
9,3

41.4

24,6

15,2

47,2
29,9

(36.0)

2Q15 (Adj.) excludes unavailability costs undue (R$17.3MM)

1Q15 (Adj.) excludes unavailability costs undue (R$9.3MM)

EBITDA
1Q15

1Q15
Unavai.
Adjust.

Ajust.
EBITDA
1Q15

Net
Oper. Ver.

Oper.
Costs

Oper.
Expenses

Ajust.
EBITDA
2Q15

2Q15
Unavai.
Adjust.

EBITDA
2Q15

Lower generation in 2Q15 due to unscheduled maintenance on the boiler and

coal mills, as well as operating restrictions by ONS

Availability

Variable revenue reduction of R$21.9MM

Decrease by R$34.0MM in purchase of coal and other fuel supplies

Reduction of 42.9% in spot priced in the period led to a decrease in R$8.1MM

77%

87%

90%

88%

of power purchase costs from the annual ballast review (FID)

94%
67%

60%

May-15

Jun-15

74%

Downtime cost overstated by R$17.3MM due to regulatory changes, already

challenged by the Company

2Q14

3Q14

4Q14

1Q15

Apr-15

2Q15

Sources: ONS and the Company

Note: 1) Does not include Depreciation & Amortization.

14

Operational performance (Pecm II)

Maintenance shutdown for an extended period impacted the profitability of the plant
Operating costs

EBITDA (R$MM)

2Q15

2Q15
(Adj)

1Q15

1Q15
(Adj)

2Q15 (Adj)/
1Q15(Adj)

73.6

66.3

92.1

83.7

-20.8%

Gross Energy Generated (GWh)

424.0

424.0

696.7

696.7

-39.1%

Operating Costs per Gross

Energy Generated (R$/MWh)

173.6

156.4

132.3

120.1

30.2%

-16.2%
Operating Costs (R$ million)

8.5

(25.5)

17,4

(0.8)

(7.3)

54,3

45,8

45,5

38,2

2Q15 (Adj.) excludes unavailability costs undue (R$7.3MM)

1Q15 (Adj.) excludes unavailability costs undue (R$8.5MM)

EBITDA
1Q15

1Q15
Unavai.
Adjust.

Ajust.
EBITDA
1Q15

Net
Oper. Ver.

Oper.
Costs
Ajust.

Oper.
Expenses

Ajust.
EBITDA
2Q15

2Q15
Unavai.
Adjust.

EBITDA
2Q15

Maintenance to remove ash from the boiler and anticipation of the twoyearly shutdown (38 days) impacted the generation and availability in the

Availability

96%

77%

period

99%

89%

89%
41%

2Q14

3Q14

4Q14

1Q15

Apr-15

53%

29%
May-15

Variable revenue reduction of R$24.6MM

Decrease by R$24.6MM in purchase of coal and other fuel supplies

Increase in R$4.0MM in materials and outsourced services costs

Downtime cost overstated by R$7.3MM due to regulatory changes, already

challenged by the Company

Jun-15

2Q15

Sources: ONS and the Company

Notes: 1) Includes 100% of Pecm II; 2) Does not include Depreciation & Amortization

15

Operational performance (Parnaba I)

Gas optimization process in the Parnaba Complex and agreement with PGN/BPMB helped
profitability maintenance
Operating costs

EBITDA (R$MM)
2.3%

Operating Costs (R$ million)

(0.8)

8,5

(3.7)
58,1

56,8

48,2

Gross Energy Generated (GWh)

32,4

(30.3)

54,4

Operating Costs per Gross Energy

Generated (R$/MWh)

2Q15

2Q15
(Adj)

1Q15

1Q15
(Adj)

2Q15 (Adj)/
1Q15(Adj)

134.6

130.9

171.8

163.3

-19.8%

1,023.2

1,023.2

1,241.6

1,241.6

-17.6%

131.5

127.9

138.4

131.5

-2.7%

2Q15 (Adj.) excludes unavailability costs undue (R$3.7MM)

EBITDA
1Q15

1Q15
Unavai.
Adjust.

Ajust.
EBITDA
1Q15

Net
Oper. Ver.

Oper.
Costs

Oper.
Expenses

Ajust.
EBITDA
2Q15

2Q15
Unavai.
Adjust.

EBITDA
2Q15

1Q15 (Adj.) excludes unavailability costs undue (R$8.5MM)

Natural gas optimization procedure with Parnaba II operating in partial

substitution of Parnaba I have contributed resuming high availability
rates Best availability since COD achieved in Jun/15: 100%

Availability

Reduced dispatch of the plant by the ONS in the period (-17.7% of net
generation), resulting in:

98%

94%

86%

81%

85%

2Q14

3Q14

4Q14

1Q15

Apr-15

98%

100%

94%

May-15

Jun-15

2Q15

Reduction in R$30.3MM of net income

Decrease in natural gas and GTU lease costs, totaling R$30.3MM

Overstated in previous periods, leases and rentals grew by R$9.7MM

Downtime cost overstated by R$3.7MM due to regulatory changes, already
challenged by the Company

Sources: ONS and the Company

Notes: 1) Does not include Depreciation & Amortization

16

Operational performance (Parnaba III)

Reduced dispatch in the period was accompanied by unbalanced revenue/cost behavior
EBITDA1 (R$MM)

Operating costs
-34.5%

1,6
(0.7)

16,7

15,2

11,0

2Q15
(Adj)

1Q15

1Q15
(Adj)

2Q15 (Adj)/
1Q15(Adj)

37.5

36.8

65.6

64.0

-42.5%

Gross Energy Generated (GWh)

169.0

169.0

361.5

361.5

-53.3%

Operating Costs per Gross

Energy Generated (R$/MWh)

221.7

218.1

181.5

177.1

23.1%

Operating Costs (R$ million)

(0.6)

27.2

2Q15

10,4

(32.3)

2Q15 (Adj.) excludes unavailability costs undue (R$0.6MM)

1Q15 (Adj.) excludes unavailability costs undue (R$1.6MM)
EBITDA
1Q15

1Q15
Unavai.
Adjust.

Ajust.
EBITDA
1Q15

Net
Oper. Ver.

Oper.
Costs

Oper.
Expenses

Availability

80%

82%

2Q14

3Q14

Ajust.
EBITDA
2Q15

2Q15
Unavai.
Adjust.

Availability
recorded by the
plant: 99.1%

96%

100%

Best availability since COD achieved in Apr/15: 100%

Availability increases
to 99.1% when adj.
by May 15 figure

98%
69%

67%

EBITDA
2Q15

89%

Reduced dispatch of the plant by the ONS in the period (-26.7% of net
generation), resulting in:
o

Variable revenue reduction of R$32.3MM

Decrease in natural gas and GTU lease costs, totaling R$29.7MM

Reduction of 42.9% in spot priced in the period led to a decrease in

R$1.4MM of power purchase costs from the annual ballast review (FID)

4Q14

1Q15

Apr-15

May-15

Jun-15

2Q15

Sources: ONS and the Company

Notes: 1) Includes 100% of Parnaba III; 2) Does not include Depreciation & Amortization

17

Thank you.
www.eneva.com.br