4q15 highlights - aluparri.alupar.com.br/.../4/2017/...release-4t15-ingles.pdf · 1 | 32 são...

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São Paulo, March 10, 2016 - Alupar Investimento S.A. (BM&FBovespa: ALUP11), discloses today its 4Q15 results. The quarterly information (ITR) and standardized financial statements (DFP) are presented in accordance with the accounting practices adopted in Brazil, in compliance with the provisions of Brazilian Corporate Law, International Financial Reporting Standards (IFRS) and the standards issued by the Accounting Pronouncements Committee (CPC).

4Q15

Conference Call: March, 11 English (Simultaneous Translation) 03:00 p.m. (Brasília Time) 01:00 p.m. (NY Time) Phone: +1 (646) 843-6054 Code: Alupar Replay: + 55 (11) 2188-0400 Code: Alupar Portuguese (Original Language) 03:00 p.m. (Brasília Time) 01:00 p.m. (NY Time) Phone: + 55 (11) 2188-0155 Code: Alupar Replay: + 55 (11) 2188-0400 Code: Alupar IR Contact José Luiz de Godoy Pereira Luiz Coimbra Kassia Orsi Amendola Fernando Carvalho Pereira Tel.: +55 (011) 4571-2400 [email protected] Live Webcast: www.alupar.com.br/ri

Price on 03/10/2016 ALUP11: R$13.10 Total no. of UNITS¹: 208,300,600 Market Cap: R$2.729 billion

(1) Equivalent Units

4Q15 Highlights

• Corporate Result (IFRS): In 4Q15, the adjusted Net Revenue reached R$ 341.3 million, against the R$ 391.3 million recorded in 4Q14. In 2015, Adjusted Net Revenue totaled R$ 1,417.8 million, 5.9% higher than the R$ 1,338.9 million recorded in 2014.

In 4Q15, EBITDA totaled R$ 278.4 million, compared to the R$ 301.6 million in 4Q14. In 2015, EBITDA totaled R$ 1,150.8 million, 5.7% higher than the R$ 1,088.9 million in 2014.

In 4Q15, Net Income totaled R$ 42.0 million, compared to R$ 114.6 million in 4Q14. In 2015, Net Income amounted to R$ 209.2 million compared to the R$ 362.8 million in 2014.

In 4Q15 investments amounted R$ 229.0 million, compared with R$ 113.6 million in 4Q14. In 2015, investments totaled R$ 753.5 million, compared to R$ 417.2 million recorded in 2014.

• Regulatory Result: In 4Q15, Net Revenue reached R$ 353.6 million, compared to R$ 387.0 million in 4Q14. In 2015, Net Revenue totaled R$ 1,416.6 million, 9.5% higher than the R$ 1,293.2 million reported in 2014. In 4Q15, EBITDA reached R$ 317.7 million, 4.5% higher than the R$ 303.8 million posted in 4Q14. In 2015, EBITDA totaled R $ 1,160.6 million, 9.9% higher than the R$ 1,055.6 million recorded in 2014.

In 4Q15, Net Income totaled R$ 59.1 million, compared to R$ 114.0 million in the 4Q14. In 2015, Net Income was R$ 169.7 million, up on the R$ 287.7 million recorded in 2014.

• The Company joined the proposal for renegotiation of the hydrological risk in the ACR (Regulated Environment), as established by Law No. 13.203/2015 and ANEEL Resolution No. 684/2015. The decision was based on the evaluation of the various Difference Settlement Price (PLD) and Generation Scaling Factor (GSF) scenarios. For Foz do Rio Claro HPP and São José HPP (Ijuí), the Company adhered to the SP100 product while Ferreira Gomes HPP joined the SP92 product.

• In February 2016, the La Virgen subsidiary received a favorable decision from the Ministry of Mines and Energy of Peru to expand the installed capacity of the La Virgen HPP, from 64MW to 84MW.

• On February 29, 2016, the agency Fitch Ratings has affirmed the National Long-term rating 'AA + (bra)' of Alupar and its debenture issues, being the perspective of the corporate rating is Stable.

• On March 10, 2016, the Board of Directors recommended: (a) the distribution of R$ 175.0 million of profits for the 2015 fiscal year (equivalent to R$ 0.84 per unit), that refers to 88.1% of the 2015 Net Income, and; (b) the Company reinforcement of working capital in the amount of R$ 173.3 million, with the issuance of 40,618,617 new shares, to be bonus to shareholders and holders of Units at a ratio of 6.50 new shares for every 100 existing shares, both proposal will be submitted for approval at the General Shareholders Meeting to be held April 20, 2016.

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Key Consolidated Indicators

Key Indicators "CORPORATE LAW (IFRS)" R$ MM 4Q15 4Q14 Var.% 2015 2014 Var.%

Adjusted Net Revenue 341.3 391.3 (12.8%) 1,417.8 1,338.9 5.9%

EBITDA (CVM 527) 278.4 301.6 (7.7%) 1,150.8 1,088.9 5.7%

Adjusted EBITDA Margin 81.6% 77.1% 4.5 p.p 81.2% 81.3% (0.1 p.p)

Financial Results (124.0) (74.5) 66.4% (427.7) (242.6) 76.3%

Consolidated Net Income 146.1 193.9 (24.7%) 571.2 751.7 (24.0%)

Subsidiaries' Minority Interest 104.0 79.3 31.3% 362.0 388.9 (6.9%)

Net Income Alupar 42.0 114.6 (63.3%) 209.2 362.8 (42.3%)

Earnings per UNIT (R$)* 0.20 0.55 (63.3%) 1.00 1.74 (42.3%)

Net Debt** 3,902.3 3,350.9 16.5% 3,902.3 3,350.9 16.5%

Net Debt / Ebitda*** 3.5 2.8 3.4 3.1

Key Indicators "REGULATORY" R$ MM 4Q15 4Q14 Var.% 2015 2014 Var.%

Net Revenue 353.6 387.0 (8.6%) 1,416.6 1,293.2 9.5%

EBITDA (CVM 527) 317.7 303.8 4.5% 1,160.6 1,055.6 9.9%

Adjusted EBITDA Margin 89.8% 78.5% 11.3 p.p 81.9% 81.6% 0.3 p.p


Consolidated Net Income 145.3 173.8 (16.4%) 467.4 592.2 (21.1%)

Subsidiaries' Minority Interest 86.2 59.8 44.2% 297.7 304.5 (2.2%)

Net Income Alupar 59.1 114.0 (48.1%) 169.7 287.7 (41.0%)

Earnings per UNIT (R$)* 0.28 0.55 (48.1%) 0.81 1.38 (41.0%)

Net Debt** 3,902.3 3,350.9 16.5% 3,902.3 3,350.9 16.5%

Net Debt / Ebitda*** 3.1 2.8 3.4 3.2

* Net Income / Units Equivalents (208,300,600) ** Including Securities under Non–Current Assets ***Annualized EBITDA.

Notes: 1) “Adjusted” concept in the corporate law numbers: According to IFRS (ICPC 01 and IFRIC12), investments (Capex) by transmission companies must be recognized as revenue and cost. However, since we are dealing with investments and, in Alupar’s case, since there is no effect on the Company´s result (revenue and cost being equal, giving a zero margin), for analytical reasons we have disregarded this effect when analyzing the Company´s revenues. The three main effects are figures relating to Adjusted Net Revenue (Net Revenue less Infrastructure Revenue, or Capex), Adjusted Operating Costs (same as the Revenue concept), and Adjusted EBITDA Margin (EBITDA divided by Adjusted Net Revenue). 2) “Regulatory” concept: This refers to the figures in the regulatory financial statements of our subsidiaries, whose main difference is the non-application of ICPC 01 (IFRIC 12). ICPC 01 has a material impact on our transmission segment companies with the creation of the “Financial Assets” account and the elimination of the “Fixed Assets” account in the balance sheet and several changes in the presentation of “Revenue” in the Statement of Income. 3) GSF: The Generation Scaling Factor (GSF) can be regarded as a percentage of energy that all participants in the MRE (Energy Reallocation Mechanism) generate in relation to the MRE’s total guaranteed power (or assured energy) output in a given month. When the GSF is lower than 100%, MRE participants are generating less energy than their total guaranteed output. This deficit, usually due to hydrological risk, results in an exposure, which is apportioned in accordance with the guaranteed output of each participant. As a result, each generator is required to purchase the missing MWh to cover their exposure and comply with their respective contracted energy supply at the Difference Settlement Price (PLD) determined by the Electricity Trading Board (CCEE). When the system is operating normally under typical hydrological conditions, this effect is not expected to be of sufficient importance as to deserve a special mention in the Company’s results. However, the recent unfavorable hydrological scenario over 2015, resulted in a higher GSF-related cost.

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Overview

Alupar Investimento S.A. is a privately-held Brazilian holding company operating in the electricity transmission and generation

segments, whose corporate purpose is to construct and operate infrastructure projects related to the energy sector in Brazil

and other selected Latin American countries with economic, institutional and regulatory stability. Alupar is one of the largest

companies in the Brazilian transmission segment in terms of Annual Permitted Revenue (RAP) and the largest one under

private national control.

The Company´s ownership structure is shown below:

Alupar seeks to maximize shareholder returns through moderate financial leverage and a debt profile compatible with the

low-risk nature of its business, high revenue predictability and the strong operating cash flow typical of the electricity

transmission and generation segments.

Alupar’s corporate credit ratings reflect this solid capital structure and predictable strong cash flow: AA+ (bra) from Fitch

Ratings for national scale.

Fully committed to creating value for its shareholders and society as a whole, Alupar is a socially responsible company with substantial technical ability and strong financial discipline, enabling it to continue growing in a sustainable manner through the development of generation and transmission system projects.

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Transmission

Alupar retains an interest in 21 transmission system concessions, with a term of 30 years and a total extension of 5,703 km of

transmission lines, 5,503 km of which are in Brazil and 200 km in Chile. In Brazil, it is part of 20 such concessions, 18 of which

are operational and two are in the implementation phase, scheduled for commercial start-up in 2017 and 2018.

The main features of Alupar’s transmission assets are shown below:

Company Concession Term Beginning of Line RAP/RBNI RAP/RBNI RAP/RBNI Index

Begin End Operations Expansion (Cycle 2013-14) (Cycle 2014-15) (Cycle 2015-16)

ETEP 06/12/2001 06/12/2031 08/25/2002 323 km R$ 77.4 R$ 83.4 R$ 86.9 IGP-M

ENTE 12/11/2002 12/11/2032 02/12/2005 464 km R$ 177.7 R$ 191.6 R$ 199.5 IGP-M

ERTE 12/11/2002 12/11/2032 09/15/2004 179 km R$ 39.9 R$ 43.0 R$ 44.8 IGP-M

EATE 06/12/2001 06/12/2031 03/10/2003 924 km R$ 339.6 R$ 366.2 R$ 381.3 IGP-M

ECTE 11/01/2000 11/01/2030 03/26/2002 252.5 km R$ 75.0 R$ 80.9 R$ 84.2 IGP-M

STN 02/18/2004 02/18/2034 01/01/2006 541 km R$ 142.2 R$ 153.3 R$ 159.6 IGP-M

Transleste 02/18/2004 02/18/2034 12/18/2005 150 km R$ 32.2 R$ 34.7 R$ 36.2 IGP-M

Transudeste 03/04/2005 03/04/2035 02/23/2007 140 km R$ 20.0 R$ 21.5 R$ 22.4 IGP-M

Transirapé 03/15/2005 03/15/2035 05/23/2007 65 km R$ 23.3 R$ 25.2 R$ 26.3 IGP-M

STC 04/27/2006 04/27/2036 11/08/2007 195 km R$ 32.0 R$ 34.0 R$ 36.9 IPCA

Lumitrans 02/18/2004 02/18/2034 10/03/2007 51 km R$ 21.0 R$ 22.7 R$ 23.6 IGP-M

ETES 04/20/2007 04/20/2037 12/12/2008 107 km R$ 11.9 R$ 12.1 R$ 13.1 IPCA

EBTE 10/16/2008 10/16/2038 07/11/2011 775 km R$ 36.7 R$ 39.0 R$ 40.6 IPCA

TME 11/19/2009 11/19/2039 11/22/2011 348 km R$ 35.6 R$ 37.8 R$ 43.7 IPCA

ESDE 11/19/2009 11/19/2039 01/22/2014 Substation R$ 10.8 R$ 11.5 R$ 11.5 IPCA

ETEM 07/12/2010 07/12/2040 12/16/2011 235 km R$ 10.7 R$ 11.4 R$ 12.3 IPCA

ETVG 12/23/2010 12/23/2040 12/23/2012 Substation R$ 3.6 R$ 3.8 R$ 9.4 IPCA

TNE 01/25/2012 01/25/2042 Pre-Oper. 715 km R$ 134.5 R$ 143.1 R$ 155.2 IPCA

ETSE 05/10/2012 05/10/2042 12/01/2014 Substation R$ 15.8 R$ 16.8 R$ 19.7 IPCA

Transchile 06/16/2005 Perpetual 01/21/2010 200 km R$ 15.8 R$ 21.1(1) R$ 21.8(2) CPI-USA

ELTE 09/05/2014 09/05/2044 Pre-Oper. Substation+38km R$ 28.9 R$ 28.9 R$ 31.4 IPCA

TOTAL 5,703 km R$ 1,284.4 R$ 1,382.0 R$1,460.5 (1)US$ = 3.00 (2)US$ =3.10

See below the evolution of the Company’s transmission lines – km:

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Generation

Alupar is currently involved in generating electricity by means of HPPs (hydroelectric power plants), SHPPs (small

hydroelectric power plants) and wind farms in Brazil, Colombia and Peru. Its total asset portfolio has an installed capacity of

431.4 MW in operation and 255.9 MW under construction. The Company is also prospecting and developing generation

projects totaling more than 3,000 MW.

The main features of Alupar’s generation assets are shown below:

Concession Beginning of Voting Total Installed Assured

Beginning End Operation Capital Capital Capacity - MW Energy - MW

Queluz Apr/04 Apr/34 Aug/11 65.70% 65.70% 30.0 21.4

Lavrinhas Apr/04 Apr/34 Sep/11 61.00% 61.00% 30.0 21.4

Foz do Rio Claro Aug/06 Aug/41 Aug/10 100.00% 52.01% 68.4 41.0

São José - Ijuí Aug/06 Aug/41 Mar/11 100.00% 50.01% 51.0 30.4

Ferreira Gomes Nov/10 Nov/45 Nov/14 100.00% 100.00% 252.0 153.1

Energia dos Ventos Jul/12 Jul/47 Pre-Oper. 100.00% 100.00% 98.7 47.7

Morro Azul (Risaralda) Jan/09 Perpetual Pre-Oper. 99.97% 99.97% 20.2 13.2

Verde 08 Oct/12 Oct/42 Pre-Oper. 99.90% 99.90% 30.0 18.7

La Virgen Oct/05 Perpetual Pre-Oper. 65.00% 65.00% 84.0 49.3

Antônio Dias Jul/14 Jul/49 Pre-Oper. 90.00 % 90.00 % 23.0 11.9

TOTAL 687.3 408.1

Below we present the evolution of the Company´s generating capacity:

687,3

634,3

2330

LA VIRGEN ANTÔNIO

DIAS

VERDE 8

2016 2018

84

Generation capacity evolution (in MW)

431,4

347,4168

179,430

20,2

30

51

68,4

84

98,7

2010

IJUI QUELUZ LAVRINHAS FERREIRA

GOMES

UGI+UGII

MORRO

AZUL

FERREIRA

GOMES

UGIII

ENERGIA

DOS

VENTOS

2011 2014 2015

FOZ DO

RIO CLARO

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Combined Performance Analysis – Transmission Segment

The figures below reflect the combined results (100%) of all the transmission subsidiaries in which Alupar holds an interest, as

presented in Note 37 to the 2015 financial statements, under Information by Segment.

Due to the matters already addressed regarding differences between Regulatory and Corporate Law figures (see the Notes on

page 2 of this report), the analysis of the transmission segment focuses on the Regulatory performance, except for the

comments on revenue and income in the Corporate Law income statement.

Key Indicators "CORPORATE LAW (IFRS)"

R$ MM 4Q15 4Q14 Var.% 2015 2014 Var.%


Adjusted Operating Costs* (24.5) (22.3) 10.0% (84.2) (82.7) 1.8%

Depreciation / Amortization (2.1) (1.9) 13.1% (10.0) (7.1) 41.1%

Operating Expenses (53.3) (14.5) 268.2% (82.0) (42.0) 95.2%

EBITDA (CVM 527) 207.3 253.6 (18.3%) 1,029.7 1,018.9 1.1%

Adjusted Ebitda Margin 72.7% 87.3% (14.6 p.p) 86.1% 89.1% (3.0 p.p)


Net Income 143.6 168.7 (14.9%) 681.6 781.4 (12.8%)

Net Debt** 1,772.6 2,187.4 (19.0%) 1,772.6 2,187.4 (19.0%)

Net Debt / EBITDA*** 2.1 2.2 1.7 2.1

Key Indicators "REGULATORY"

R$ MM 4Q15 4Q14 Var.% 2015 2014 Var.%

Net Revenue 293.4 272.2 7.8% 1,146.1 1,058.2 8.3%

Operating Costs (23.1) (20.9) 10.3% (78.6) (79.1) (0.6%)


Operating Expenses (9.2) (14.4) (36.3%) (37.8) (42.0) (9.9%)

EBITDA (CVM 527) 261.1 236.8 10.3% 1,029.6 937.1 9.9%

Ebitda Margin 89.0% 87.0% 2.0 p.p 89.8% 88.6% 1.2 p.p


Net Income 169.3 138.8 22.0% 586.5 582.9 0.6%

Net Debt** 1,772.6 2,187.4 (19.0%) 1,772.6 2,187.4 (19.0%)

Net Debt / EBITDA*** 1.7 2.3 1.7 2.3

*Adjusted Operating Costs: excluding infrastructure costs

** Including Securities under Non-Current Assets

*** Annualized EBITDA

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Transmission - Combined Performance Analysis – Regulatory

Net Revenue

In 4Q15, Net Revenue totaled R$ 293.4 million, 7.8% up on the R$ 272.2 million in 4Q14, due to: (a) adjustment of the Annual Permitted Revenue (RAP) pursuant to Resolution 1.918 of June 23, 2015, which established an adjustment of 8.47% for contracts indexed by the IPCA and 4.11% for contracts indexed to the IGP-M (general price index), as mentioned in the table in the "Transmission" section (p. 4); (b) entry into operation of the ETSE transmission company (4Q14), impact of R$ 4.6 million and; (c) entry into operation of the Boa Vista substation (2Q15), under the responsibility of TNE, an impact of R$ 1.2 million.

Cost of Services

Totaled R$ 56.8 million in 4Q15, 11.1% higher than the R$ 51.1 million reported in 4Q14. In the Cost of Services account there was an increase of R$ 2.2 million due to: (a) the acquisition of transmission line maintenance equipment belonging to the EATE and ECTE transmission companies, an impact of R$ 0.4 million; (b) expenditures for technical and radiographic inspection consultants by the EBTE transmission company, an impact of R$ 0.6 million and; (c) start up of ETSE (4Q14) and the Boa Vista substation (2Q15), belonging to TNE, an impact of R$ 0.4 million. The Depreciation/Amortization account increased by R$ 3.5 million, mainly due to: (a) entry into operation of ETSE (4Q14), an impact of R$ 1.3 million and (b) entry into operation of the Boa Vista substation (2Q15), under the responsibility of TNE, an impact of R$ 2.5 million.

Operating Expenses

Totaled R$ 9.3 million in 4Q15, 37.9% lower than the R$ 15.0 million in the 4Q14. This variation was explained by: (a) reduction of R$ 5.0 million in the General and Administrative account primarily due to: (i) a reduction in external consulting costs and Rouanet Law sponsorship expenses at the EATE transmission company, an impact of R$ 0.8 million and; (ii) the reversal of provision for fines by Transchile, an impact of R$ 5.2 million and; (b) a R$ 0.5 million reduction of the Depreciation/Amortization account, mainly due to the reclassification of accounts in the EATE transmission company.

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EBITDA and EBITDA Margin

Amounted to R$ 261.1 million in 4Q15, 10.3% higher than the R$ 236.8 million reported in 4Q14. This variation was due to: (a) a R$ 26.6 million increase in gross revenue, mainly due to the adjustment of the RAP, as detailed above and; (b) a reduction of R$ 5.0 million in general and administrative expenses, mainly due to the reversal of fines by Transchile. The EBITDA margin reached 89.0% in 4Q15, 2.0 p.p. higher than the 87.0% recorded in 4Q14.

Net Income

Totaled R$ 169.3 million in 4Q15, 22.0% higher when compared to the R$ 138.8 million posted for 4Q14. In addition to the factors already mentioned earlier, profit was affected by the R$ 12.1 million income tax/social contribution reduction mainly due to: (i) the R$ 13.9 million reduction in the income tax/social contribution account, due to the accounting booked in the 4Q15 of the adjustments stemming from the adoption of Law 12.973 - Art. 69, section IV, which defines that the calculation of the difference in taxable income, considering the prior methods and criteria and the methods and criteria laid down in this Law, must be added, if negative, or excluded, if positive, and; (ii) increase of R$ 2.9 million in Transchile, due to an improve in the result from fines provision reversal.

Important to note that, on several Group companies, such as: ECTE, ETEP, ETES, TME, ETEM and ETVG, in the fiscal year of 2014, opted for the presumed taxable income regime and, as of the adoption of Law 12.973, which amended the presumption of the IRPJ rate from 8% to 32% and the CSLL rate from 12% to 32%, chose the actual taxable income regime with the use of the SUDAM tax incentives, to mitigate the impacts of the adoption of Law. In 2015, the R$ 14.6 million increase in the IRPJ/CSLL account mainly was caused by the change of ETEP's and ECTE's tax regimes, as they opted for the actual taxable income regime in 2015 whereas they had used the presumed taxable income regimen in 2014.

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Transmission - Combined Income and Revenue Analysis – Corporate Law (IFRS)

With the adoption of IFRS, the Revenue for Provision (RAP – PV) was replaced by 3 new revenue categories: Infrastructure

Revenue, Power Transmission Revenue (O&M) and Revenue from Remuneration of the Concession Asset.

Consequently, transmission company balance sheets now contain a Financial Asset account, the transactions of which are set forth according to the following example:

Financial Asset on December 31, 2014

+Infrastructure Revenue from 01/01/2015 to 12/31/2015

+Financial Asset Remuneration from 01/01/2015 to 12/31/2015

+O&M Revenue from 01/01/2015 to 12/31/2015

-RAP from 01/01/2015 to 12/31/2015

-Residual Value received from 01/01/2015 to 12/31/2015

=Financial Asset on December 31, 2015

Asset Remuneration

Investment volume (CAPEX) in the transmission companies

Revenue that remunerates the operational and maintenance

costs of the transmission assets

The remuneration rate of a given transmission asset multiplied by the balance of its financial asset

Transmission

Revenue

Infrastructure Revenue

Note on residual value: if there is an inflow of funds related to possible indemnification

resulting from the termination of the concession, this amount will also reduce the Financial

Assets. In Alupar´s case, its subsidiaries’ concessions have exceptionally long terms, the first of

which matures in November 2030.

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Adjusted Net Revenue

Reduction of 1.8% in Adjusted Net Revenue, due to exclusively to the TNE transmission company, which recorded a reduction of R$ 8.9 million in the account Remuneration of Concession Assets, as a result of the protocol with ANEEL's requesting for amicable return of the concession.

Net Income

Totaled R$ 143.6 million in 4Q15, 14.9% lower than the R$ 168.7 million posted in 4Q14.

The income in the quarter was impacted by: (a) R$ 46.3 million decrease in the EBITDA, due to the protocol with ANEEL's requesting for amicable return of the TNE’s concession, being accounted a reversal of IFRIC12 practice, for the investiments that are being object of return and have not been unitized, impact of R$ 53.1 million and; (b) R$ 24.4 million IRPJ/CSLL reduction, due mainly to: (i) reduction of R$ 24.0 million, due to the account adjustments as a result of the adoption of the law 12.973-Art. 69, section IV, which defines that the calculation of the difference in taxable income, considering the prior methods and criteria and the methods and criteria laid down in this Law, must be added, if negative, or excluded, if positive, and; (ii) increase of R$ 2.9 million in Transchile, due to an improve in the result from fines provision reversal.

It is worth to mention that the companies, such as, ECTE, ETEP, ETES, TME, ETEM and ETVG, in the fiscal year of 2014, opted for

the presumed taxable income regime and, as of the adoption of Law 12.973, which amended the presumption of the IRPJ rate from 8% to 32% and the CSLL rate from 12% to 32%, chose the actual taxable income regime with the use of the SUDAM tax incentives, to mitigate the impacts of the adoption of Law.

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Operating Indicators – Transmission

Alupar’s transmission companies recorded a consistent operating performance throughout 2Q15, maintaining physical availability of above 99.96%.

Projects under Construction:

TNE: Transnorte Energia is a company formed by the partnership between Alupar (51%) / Eletronorte (49%) to implement a transmission system that will connect the state of Roraima to the National Interconnected Grid System (SIN), via the Lechuga substation, in the state of Amazonas, covering approximately 715.0 km of 500 kV line, in a double circuit, with two new substations, the Equador substation - 500 kV, to be installed in the city of Rorainópolis (RR) and the Boa Vista substation - 500/230 kV - 800 MVA, located in the city of Boa Vista (RR). This project has a documented and justified change in its implementation schedule, due to its environmental licensing process, especially with regard to a study of the indigenous component. On September 2, 2015, the consortium filed an application with the ANEEL (National Electric Energy Agency) to amicably terminate concession contract 003/2012 – ANEEL due to the failure of FUNAI to issue a conclusive statement as to the viability of the project with regard to the indigenous component. However, on November 6, 2015, FUNAI submitted an official non-environmental obstacle statement to IBAMA. In view of the receipt of this communication, on December 9, 2015, IBAMA issued a Prior License for the project. The consortium currently is analyzing financial-economic rebalancing, a precondition for going forward with the project. We emphasize that the Boa Vista substation has been in commercial operation since May 2015, generating revenues equivalent to 4% of the Venture's total Annual Permitted Revenue (RAP). ELTE (Lot C): ELTE is an SPE holding the public service electricity transmission concession operating through the 345/138kV Domenico Rangoni and the 230/88kV Manoel da Nóbrega substations, in addition to a 38 km transmission line. The enterprise will be connected to the Brazilian National Interconnected System and will strengthen distribution grids, as well as meet the increasing demand for electric power in the Baixada Santista area, composed of nine cities (Bertioga, Cubatão, Guarujá, Itanhaém, Mongaguá, Peruíbe, Praia Grande, Santos and São Vicente).

Transmission Companies being

Implemented

Extension (km)

RAP (R$ MM)

Estimated Investment

(R$ MM)

Investment Made (R$ MM)

Estimated Start-up

(Regulatory)

Estimated Start-up (Management)

TNE* 715 155.2 1,260.0** 293.9 2015 2018

ELTE 38 31.4 262.0 5.6 2017 2017

ETVG – RBNI - 5.2 41.0 31.7 2016 2016

TME - RBNI - 5.3 42.7 0.5 2017 2017

* Total investment. This project is 51% owned by Alupar and 49% by Eletronorte.

** Initial investment in the amount of R$ 969.0 in September 2011, updated by the IPCA consumer price index.

The line’s physical availability is an operational indicator that

demonstrates the percentage of hours the line was available

during a given period.

VP shows the impact of unavailability on the

company’s results

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This project has a justified change in its implementation schedule regarding the environmental licensing process. Although ELTE has been making its best efforts to obtain the Environmental Licenses from the environmental agency of the state of São Paulo ("Companhia Ambiental do Estado de São Paulo - CETESB"), the environmental licensing process has been prolonged for reasons not manageable by ELTE, resulting in a change to the schedule foreseen in concession contract 016/2014.

The issuance of a Prior License for the Domenico Rangoni 345/138 kV substation and its respective transmission lines was scheduled for October 2015; however, due to the lack of statements from IPHAN and the CETESB licensing agency, the issuance of the Prior License is still pending.

In addition, the issuance of a Prior License for the Manoel da Nobrega 230/88 kV substation and its respective transmission line, also scheduled for October 2015 is still pending due to failure of the intervening public bodies such as the Fundação Florestal, CONDEPHAAT and FUNAI, as well as the CETESB licensing agency, to issue statements regarding the matter.

Generation - Combined Performance Analysis – Corporate Law (IFRS) The figures below reflect the combined results (100%) of all the generation subsidiaries in which Alupar holds an interest, as

presented in Note 37 to the 2015 financial statements, under Information by Segment.

Unlike in the transmission segment, the adoption of ICPC 01 has had no material effects on the corporate figures vis-à-vis the

regulatory figures. Thus, the regulatory and corporate performance analyses are basically the same.

Key Indicators "CORPORATE LAW (IFRS)"

R$ MM 4Q15 4Q14 Var.% 2015 2014 Var.%

Net Revenue 90.7 128.9 (29.7%) 340.0 288.6 17.8%

Operating costs (12.0) (12.5) (4.3%) (62.0) (35.5) 74.5%


Energy Purchase 2.0 (24.6) (108.3%) (63.9) (65.7) (2.6%)

Operating Expenses (11.9) (6.8) 75.4% (31.8) (19.1) 66.1%

EBITDA (CVM 527) 68.9 85.0 (19.0%) 182.3 168.3 8.3%

Ebitda Margin 76.0% 65.9% 10.0 p.p 53.6% 58.3% (4.7 p.p)

Financial Result (37.3) (10.9) 242.8% (113.7) (41.4) 174.5%

Net Income / Loss 9.7 59.7 (83.8%) 0.2 82.2 (99.8%)

Net Debt* 1,593.2 1,213.1 31.3% 1,593.2 1,213.1 31.3%

Net Debt / EBITDA** 5.8 3.6 8.7 7.2

* Includes Securities under Non-Current Assets

**Annualized EBITDA

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Net Revenue

Net Revenue totaled R$ 90.7 million in 4Q15, compared to R$ 128.9 million recorded in 4Q14. This reduction was due exclusively to the early entry into operation of the Ferreira Gomes HPP, which generated extraordinary income of R$87.7 million in 4Q14 because the power effectively generated in this period was remunerated by the Difference Settlement Price (PLD) (North Submarket). When analyzed for the year, net revenue grew 17.8%, due to: (a) adjustment of the energy sale contracts, which are indexed for inflation (IPCA/IGP-M); (b) startup of the CCEAR by the Ferreira Gomes HPP in Jan/15, an impact of R$ 84.7 million and; (c) commencement of delivery of power by the Ferreira Gomes HPP to the free market, trading 350.0 GWh at an average price of R$ 165.8 MWh, a R$ 58.0 million impact.

The chart below shows a breakdown of generator Revenues:

REVENUES FROM GENERATORS / TRADING Invoiced Average Gross Revenue

Energy (GWh) Price (R$/MWh) (R$ million)

1. Long Term - Revenues of Bilateral Contracts 633.8 155.1 98.3 1.1 ACR (Long Term Contract) 390.4 131.7 51.4 1.2 ACL (Short Term Contract) 243.4 192.6 46.9

2. SPOT / CCEE - Seasonalization 0.8

3. TAXES (ICMS) 1.1

4. TOTAL GENERATION 100.2

Cost of Services

Totaled R$ 27.7 million in R$ 4Q15, R$ 20.0 million lower than the R$ 47.7 million posted in 4Q14. This variation can be explained by: (a) R$ 7.2 million increase in Depreciation / Amortization, due to exclusively the Ferreira Gomes HPP starting

operations, and; (b) the R$ 26.7 million reduction in Energy Purchased due solely to joining in the proposed renegotiation of the hydrological risk in the ACR (Regulated Contracting Environment), pursuant to Law 13.203/2015 and ANEEL Resolution 684/2015.

In 2015, the costs amounted R$ 194.6 million, R$ 58.2 million higher than the R$ 136.4 million registerd in 2014. The variation is due to: (a) increase of R$ 6.6 million in the costs of services rendered, R$ 14.0 million in the CUST, R$ 5.9 million CFURH and R$ 33.5 million in depreciation / amortization, due to solely the Ferreira Gomes HPP starting operations.

Asset Bonus - base date Jan/15 Product Amount to be reimbursed ANEEL Decision HPP São José (Ijui) R$ 9.50/MWh SP 100 R$ 8.8 MM DSP nº 027/2016 HPP Foz do Rio Claro R$ 9.50/MWh SP 100 R$ 11.5 MM DSP nº 083/2016 HPP Ferreira Gomes R$ 2.50/MWh SP 92 R$ 16.8 MM DSP nº 140/2016

Total R$ 37.1 MM

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Operating Expenses

Operating Expenses amounted to R$ 12.1 million in 4Q15, R$ 5.2 higher than the R$ 6.9 million reported in 4Q14. This variation is explained by: (a) an increase of R$ 3.3 million in general and administrative expenses due to start up of the La Virgen HPP and the Morro Azul (Risaralda) SHPP, totaling R$ 6.8 million in 4Q15, compared to the R$ 2.6 million in 4Q14 and; (b) the R$ 1.8 million increase in the cost of personnel and management, due to: (i) implementation of the aforementioned projects, a R$ 1.3 million impact and (ii) the Ferreira Gomes HPP starting operations, with a R$ 0.4 million impact.

EBITDA and EBITDA Margin

In 4Q15, EBITDA totaled R$ 68.9 million, compared to R$ 85.0 million in 4Q14. For its part, the EBITDA margin reached 76.0%, compared to 65.9% recorded in the same period in 2014. The reduction in EBITDA between the quarters was caused mainly: (a) by the decline in gross revenue, due to extraordinary revenue of R$ 87.7 million registered in 4Q14, resulting from the early start up of the Ferreira Gomes HPP; (b) the R$ 26.7 million reduction in energy purchased for resale, due to joining the proposed renegotiation of the hydrological risk in the ACR, as discussed in the "Cost of Services" section. On the other hand, calculated for the full year of 2015, EBITDA totaled R$ 182.3 million, 8.3% higher than the R$ 168.3 million recorded in 2014. This variation is due to: (a) the R$ 64.9 million increase in gross revenue and; (b) the R$ 26.5 million increase in operating costs, both because of the starting up of commercial power generation by the Ferreira Gomes HPP in Jan/15.

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Net Income - Generation

In 4Q15, the generation segment's total profit was R$ 9.7 million, compared to R$ 59.7 million recorded in 4Q14. This reduction can be explained by: (a) R$ 16.1 million decrease in the EBITDA, as explained above; (b) the R$ 7.3 million increase in depreciation/amortization and; (c) the R$ 26.4 million increase in the financial result. It is worth mentioning that these variations occurred due to the Ferreira Gomes HPP starting operations in 4Q14, which had a R$ 7.2 million impact on the depreciation/amortization account and a R$ 18.4 million impact on the financial result.

Operating Indicators – Generation

Availability of less than 100% was a result of equipment shutdowns for annual preventive maintenance and contractual maintenance scheduled with the supplier.

Below we see the energy balance of the company, demonstrating the impact of the GSF of 39.3 GWh in 4Q15, besides a negative exposure in the CCEE of 148.6 GWh, due to the seasonalization strategy adopted by the company.

When the energy balance for the year of 2015 is analyzed, it can be seen that the seasonally adjusted physical guarantee was 84.1 GWh less than the sales contracts signed by the power plants, exclusively due to the motorization phase of the Ferreira Gomes HPP, concluded on April 30, 2015, with the firm guarantee for the months from Jan/15 to Apr/15 lowered by 23%.

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Projects in Progress:

Generation Companies

Installed Capacity

(MW)

Assured Energy (MW)

Estimated Investments

(million)

Investments Completed

(million)

Estimated Start-up

(Regulatory)

Estimated Start-up

(Management)

Energia dos Ventos 98.7 47.7 R$ 480.5 R$ 480.5 2016 2016

Morro Azul 20.2 13.2 COP 132,600,0 COP 93,694,0* N/A 2016

Verde 08 30.0 18.7 R$ 199.0 R$ 7.8 2018 2018

Antônio Dias 23.0 11.9 R$ 125.0 R$ 5.3 2018 2018

La Virgen 84.0 49.3 US$ 110.0 US$ 55.5** N/A 2016

* Considering COP 1.0 = R$ 0.001177 **Considering USD 1.0 = BRL 4.00.

Energia dos Ventos: Energia dos Ventos is a cluster established to implement ten wind farms in the municipalities of Aracati and Fortim in Ceará, resulting from the sale of 204.4 MW in the 07/2011 auction held in December 2011 by ANEEL. However, in October 2014, Alupar won the bid for the sale of the interests held by Furnas in the Aracati Complex, comprising five wind farms, Energia dos Ventos I, II, III, IV and X. In March 2015, Alupar had concluded the acquisition of the equity interest of each of the companies of the Aracati Complex, with the conclusion the company holds 99.99% of the equity interest of each of the companies. Additionally, on August 31, 2015, the Company announced that the sale of Fortim Complex to Furnas had been completed. With this process complete, it ends the partnership with this company in ANEEL auction A-5 No. 007/2011.

Construction work at the five complexes is already completed and the wind turbines are being assembled and are at different stages of completion. The first, of the five planned farms, Pitombeira (27.3 MW) was finished in December 2015, Ventos do Horizonte (16.8 MW) was finished in January 2016 and Santa Catarina (18.9 MW) was finished in February 2016, these three farms already have Operating Licenses, and it is expected that the others two farms to be concluded by March 2016.

Risaralda: Risaralda is an SPE established in October 2011 to develop and implement three SHPPs (Morro Azul, Guatica I and Guatica II) in Colombia, with a total installed capacity of 28 MW. SHPP Morro Azul had its implementation project optimized, which unfeasible Guatica I and II. In February 2014, construction started on Morro Azul SHPP, with an installed capacity of 20.2 MW, and commercial operations are scheduled to start in 1H16. In 4Q15, it was concluded excavation of the adduction tunnel, on November 23, 2015, and initiated the penstock assembly. Progress continued on the manufacturing of the electromechanical assembly, the free-flowing weir spillway and the concreting of the powerhouse. There was started the assembly of the powerhouse's metallic structure and the concreting of the spillway. On November 5, 2015, there was signed a power sales contract for delivery as of July 1, 2016 with a 10-year duration.

Verde 08: Verde 08 is an SPE constituted to develop and implement the Verde 08 SHPP, located in the municipality of Santa Helena de Goiás, in the state of Goiás, with an installed capacity of 30.0 MW and assured energy of 18.7 MW. The ANEEL 06/2013 auction sold 70% of the energy for 30 years, to be delivered as of January 2018 at R$130.00/MWh (data: August, 2013), adjusted throughout the concession by the IPCA consumer price index.

Água Limpa: Água Limpa is an SPE constituted to develop and implement Antônio Dias SHPP, located in the municipality of Antônio Dias, in the state of Minas Gerais, with an installed capacity of 23.0 MW and assured energy of 11.9 MW. The ANEEL 10/2013 auction sold 50% of the energy for 30 years, to be delivered as of May 2018 at R$138.00/MWh (data: December, 2013), adjusted throughout the concession by the IPCA consumer price index.

La Virgen: La Virgen is an SPE constituted to implement La Virgen HPP, with an installed capacity of 84.0 MW and assured energy of 49.3 MW, located in the province of Chanchamayo, Peru, to be developed in accordance with Generation Concession Contract 253-2005 of October 7, 2005 and Transmission Concession Contract 313-2008 of June 11, 2008, entered into with the Ministry of Mines and Energy. In 4Q15, progress was made in construction of an adduction tunnel, completing 92% of the excavation, while civil works involving concreting and transmission line building operations continued. The manufacturing of the electromechanical equipment also was on schedule, and during the period the first pieces for the generation island and the penstock were delivered to the work site.

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Analysis of Consolidated Results – IFRS

Net Operating Revenue Alupar and its subsidiaries reported Adjusted Net Income of R$ 341.3 million in 4Q15, compared to R$ 391.3 million in 4Q14. When we analyze the Holding Company's IFRS Net Revenue, it can be seen that it totaled R$ 372.6 million in 4Q15, compared to R$ 422.3 million in 4Q14. However, this reduction of Adjusted Net Revenue higher than the reduction of Net Revenue was due solely to the fact that, according to IFRS rules, the entire volume of investments (Capex) by our transmission companies is recognized as revenue. Because these are investments and have no effect on the Company's results (the same amount of revenue is excluded in the Cost - Infrastructure Cost account) we exclude its effect on the Company's revenues for analytical purposes, as detailed below:

The variation 12.8% in Adjusted Net Revenue in 4Q15 is explained by the reduction of R$ 45.6 million in Energy Supply Revenue, due solely to early starting of the Ferreira Gomes HPP, which generated extraordinary revenue of R$ 87.7 million in 4Q14, as described in the "Generation Segment" section.

Accrued for the year, there was an increase of 5.9% in Adjusted Net Income, totaling R$ 1,417.8 million compared to R$ 1,388.9 million recorded in 2014, mainly due to the R$ 67.0 million increase in energy supply revenue due to the beginning of the commercial operation of the Ferreira Gomes HPP, an impact of R$ 55.4 million.

Adjusted Net Income (R$ MM)

4Q15 4Q14 Var. % 2015 2014 Var. %

Energy Transmission Revenue 28.2 30.7 (8.0%) 108.7 111.4 (2.5%)

Infrastructure Revenue 31.3 31.0 0.8% 75.8 130.6 (42.0%)

Remuneration of Concession Assets 261.0 253.5 3.0% 1,070.0 1,022.4 4.7%

Energy Supply 91.4 137.0 (33.3%) 378.5 311.5 21.5%

Gross Revenue - IFRS 412.0 452.2 (8.9%) 1,632.9 1,575.9 3.6%

Deductions 39.4 29.8 31.8% 139.4 106.4 31.0%

Net Income - IFRS 372.6 422.3 (11.8%) 1,493.6 1,469.5 1.6%

Exclusion of Infrastructure Revenue 31.3 31.0 0.8% 75.8 130.6 (42.0%)

Adjusted Gross Revenue 380.7 421.1 (9.6%) 1,557.1 1,445.3 7.7%


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Cost of Services

In 4Q15, Cost of Services totaled R$ 68.8 million, 29.9% lower than the R$ 98.2 million reported for 4Q14. This variation was due to the reduction of R$ 39.6 million in the cost of energy purchased for resale, as previously explained in the "Generation Segment" section. Accrued for 2015, there was a reduction of 0.4% in this account, totaling R$ 339.9 million compared to R$ 341.2 million recorded in 2014, due to the R$ 7.3 million increase in the Cost of Services, R$ 14.0 million in CUST, R$ 5.9 million in CFURH and R$ 33.4 million in Depreciation/Amortization, mainly due to the starting of operations at the Ferreira Gomes HPP.

The cash cost in 4Q15, excluding the cost of infrastructure (investments) and depreciation/amortization was equivalent to 5.8% of Adjusted Net Revenue, compared to 14.5% recorded in 4Q14. Accrued for the year, this represented 13.8%, compared to 13.1% in 2014.

Operating Expenses

In 4Q15, Operating Expenses totaled R$ 43.7 million, compared to R$ 34.2 million in the 4Q14.

This variation in the period can be mainly explained by: (a) the R$ 1.6 million increase in the personnel and management account due to: (i) implementation of the La Virgen HPP and the Morro Azul SHPP, an impact of R$ 1.3 million; (ii) the starting of the operation of the Ferreira Gomes HPP, an impact of R$ 0.4 million; (b) the R$ 27.0 million reduction of Equity Pickup, mainly due to the TNE's income result, which totaled a loss R$ 43.0 million in 4Q15 compared to a R$ 7.0 million profit in 4Q14, an impact of R$ 25.5 million. It is important to note that the loss recorded in the period was due exclusively to the reversal of investment in the TNE company, pursuant to the ANEEL Protocol for the non-contentious return of the concession and; (c) increase of R$ 18.6 million in the Others account, because of the expense reversal related to the capital premium generated by subscription of the La Virgen subsidiary's shares.

Accrued for 2015, there was a 2.0% reduction in operating expenses, totaling R$ 76.4 million compared to the R$ 78.0 recorded in 2014. This variation was due to the Others account, which recorded a positive R$ 14.7 million, for the same previously cited factor.

Cost of Services R$ (MM)

4Q15 4Q14 Var. % 2015 2014 Var. %

Cost of Services Cost of Services Rendered 27.8 24.3 14.4% 101.0 93.7 7.8%

Energy Purchased for Resale (15.0) 24.6 - 58.5 65.7 (10.9%)

Charges of Electric Grid - CUST 6.6 7.1 (6.4%) 26.3 12.4 112.7%

Hydro Resources – CFURH 0.4 0.6 (35.3%) 9.6 3.6 164.2%

Infrastructure Cost 31.3 31.0 0.8% 75.8 130.6 (42.0%)

Depreciation / Amortization 17.8 10.6 68.1% 68.8 35.3 94.7%

Total 68.8 98.2 (29.9%) 339.9 341.2 (0.4%)

Operating Expenses R$ (MM) 4Q15 4Q14 Var. % 2015 2014 Var. %

Operating Expenses

General and Administrative 18.3 18.3 (0.1%) 47.4 45.2 4.8%

Personnel and Management 14.1 12.5 12.4% 56.2 46.3 21.4%

Equity Pickup 19.0 (8.0) - (17.3) (26.8) (35.7%)

Others (8.2) 10.4 - (14.7) 10.1 -

Depreciation / Amortization 0.5 1.0 (45.8%) 4.8 3.2 48.2%

Total 43.7 34.2 27.9% 76.4 78.0 (2.0%)

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EBITDA

In 4Q15, EBITDA totaled R$ 278.4 million, compared to R$ 301.6 million in 4Q14. For its part, the Adjusted EBITDA Margin, excluding Infrastructure Revenue, reached 81.6% compared to 77.1% in the same period last year.

This variation in EBITDA was due to: (a) a R$ 45.6 million reduction in Energy Supply Revenue, as explained previously in the "Generation Segment" section and; (b) the R$ 27.0 million reduction in the equity account, mainly due to TNE's income result, which totaled a loss R$ 43.0 million in 4Q15 compared to a R$ 7.0 million profit in 4Q14, an impact of R$ 25.5 million. It is important to note that the loss recorded in the period was due exclusively to the reversal of investment in the TNE transmission company, pursuant to the ANEEL Protocol for the non-contentious return of the concession.

The chart below shows the breakdown of EBITDA:

EBITDA (R$ MM)

4Q15 4Q14 Var. % 2015 2014 Var. %

Adjusted Gross Revenue 380.7 421.1 (9.6%) 1,557.1 1,445.3 7.7%

Deductions 39.4 29.8 31.8% 139.4 106.4 31.0%


Operating Costs (34.8) (31.9) 8.9% (136.9) (109.7) 24.8%

Energy Purchase 15.0 (24.6) - (58.5) (65.7) (10.9%)

Operating Expenses (24.1) (41.2) (41.3%) (88.9) (101.6) (12.5%)

Equity Equivalence (19.0) 8.0 - 17.3 26.8 (35.7%)

EBITDA 278.4 301.6 (7.7%) 1,150.8 1,088.9 5.7%

EBITDA Margin 81.6% 77.1% 4.5 p.p 81.2% 81.3% (0.1 p.p)

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Financial Result

Totaled R$ 124.0 million in 4Q15, compared to R$ 74.5 million recorded in the same period last year.

This change in the financial result was due mainly to the increase of R$ 55.1 million in financial expenses, which was due to: (i) the higher average interbank rate ("CDI"), which is applied to 36.3% of the Company's consolidated debt, which was 3.31% in 4Q15, compared to 2.72% in 4Q14; (ii) the higher long-term interest rate ("TJLP"), which is applied to 22.8% of the Company's consolidated debt, which was 1.75% in 4Q15, compared to 1.25% in 4Q14; (iii) the higher national broad consumer price index ("IPCA") that adjusts 19.6% of the Company's consolidated debt, which was 2.82% in 4Q15, compared to 1.72% in 4Q14; (iv) funding by the Holding Company in the amount of R$ 250.0 million in April/2015, with interest equivalent to the IPCA + 7.33% p.a.; (v) funding in the amount of COP 120,000,000,000 in November 2014, with the release of COP 44,000,000,000 over 2015 for implementation of the Morro Azul SHPP, with interest equivalent to 100% of Colombia's banking benchmark - IBR + spread of 3.90%; (vi) funding of USD 50.0 million by La Virgen, in April 2015, with interest equivalent to Libor + 2.40% p.a. and maturing in January/16; (vii) funding of USD 30.0 million by La Virgen, in December 2015, with interest equivalent to Libor + 3.00% p.a.; (viii) funding of USD$ 15.0 million by Alupar Peru in October 2014, with the settlement of USD 5.0 million in Jan/15, with interest equivalent to Libor + 3.85% p.a.; (ix) funding of USD$ 5.0 million by Alupar Peru in December 2014, and the amount settled in January 2015, with interest equivalent to Libor + 3.85% p.a., and; (x) increase in the financial expenses in Ferreira Gomes HPP, due to the start up operations in Jan/15, given that in the 4Q14 the expenses and interests were capitalized and in the 4Q15 started to transit in the Company’s result, impact of R$ 19.4 million.

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Net Income

In 4Q15, Net Income totaled R$ 42.0 million, compared to R$ 114.6 million registered in 4Q14.

This variation was the result of: (a) a reduction of R$ 23.1 million in EBITDA, mainly due to the reduction in gross revenue in the generation segment, as detailed above; (b) the R$ 6.7 million increase in Depreciation/Amortization, mainly due to the starting of operations at the Ferreira Gomes HPP (4Q14); (c) the increase of R$ 49.5 million in the Financial Result, due to: (i) the higher average interbank rate ("CDI"), (ii) the higher long-term interest rate ("TJLP"), (iii) the higher broad consumer national price index ("IPCA"); (iv) issuance of debentures by the Holding Company; (v) funding by the Risaralda, La Virgen and Alupar Peru subsidiaries, as detailed in the "Financial Results" section and; (d) a R$ 31.5 million reduction in IRPJ/CSLL, mainly due to the adjustments resulting from the adoption of Law 12.973 - Article 69, section IV, as detailed in the “Transmission Segment” and; (e) increase of R$ 24.8 million in the minority stakeholders, due to the positive impact in the result of some transmission companies caused by the adjustments resulting from the adoption of Law 12.973, booked in 4Q15.

Allocation of Profit

Dividends: On March 10, 2016, the Board of Directors recommended the distribution of R$ 175.0 million of profits for the 2015 fiscal year (equivalent to R$ 0.84 per unit), which should be discussed at the General Shareholders Meeting to be held April 20, 2016.

Bonus: On March 10, 2016, the Board of Directors also recommended the Company reinforcement of working capital in the amount of R$ 173.3 million, with the issuance of 40,618,617 new shares, to be bonus to shareholders and holders of Units at a ratio of 6.50 new shares for every 100 existing shares, regardless of their species. This proposal will also be submitted for approval at the General Shareholders Meeting to be held April 20, 2016.

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Investments

In 4Q15, total investments (Capex) were made in our companies in the amount of about R$ 229.0 million, of which R$ 31.3 million was earmarked for the transmission segment, R$ 196.3 million went for generation and R$ 1.4 million was allocated for new business development, compared to R$ 113.6 million in 4Q14, when R$ 31.0 million was invested in the transmission segment, R$ 80.5 million went for generation and R$ 2.1 million was destined for the development of new business.

The volume of investments in 4Q15 reflected the implementation of the Energia dos Ventos wind farms, the La Virgen HPP, the Morro Azul (Risaralda) SHPP and the RBNI in the ETVG transmission company.

(1) The negative value for Ferreira Gomes is due to the payment of contractual retainers to Ferreira Gomes suppliers depending on the completion of work. (2) In 2014, Energia dos Ventos was not consolidated by the Company.

Investiments (R$ MM)

4Q15 4Q14 2015 2014

Transmission 31.3 31.0 75.8 130.6

ETSE - 20.7 26.5 89.3

Transirapé 1.1 9.9 10.0 31.7

ELTE 1.4 0.4 5.2 0.4

ESDE - - - 6.5

ETVG 27.6 - 31.7 -

Others 1.2 - 2.4 2.7

Generation 196.3 80.5 672.8 277.5

Ferreira Gomes(1) (1.1) 52.2 10.3 223.1

Energia dos Ventos(2) 91.8 - 412.6 -

La Virgen 78.1 16.3 155.9 18.6

Morro Azul 22.8 9.1 65.4 22.6

Antônio Dias 0.8 - 3.8 -

La Virgen 2.9 - 7.1 -

Others 1.0 2.9 17.7 13.2

Holding 1.4 2.1 4.9 9.1

Total 229.0 113.6 753.5 417.2

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Indebtedness Holding Company:

In Dec/2015, the Holding Company's net debt totaled R$ 658.6 million, R$ 359.7 million higher than the R$ 298.9 million registered in December/2014. This variation was mainly explained by: (a) funding in the amount of R$ 250.0 million in April/2015 for implementation of projects under development and; (b) settlement of the 1st issue of debentures by Transnorte Energia S.A., on September 28, 2015, with Alupar responsible for the payment of R$ 110.7 million.

The Holding Company's gross debt totaled R$ 837.6 million in Dec/15, 34.5% higher than the R$ 622.9 million gross debt as at Dec/2014. The gross debt of the parent company is almost entirely in debenture issues (96.6%), 20% indexed by the CDI and 80% by the IPCA, with a very elongated profile, with approximately 48% due after 2020. For more information on the Company's Indebtedness, please see Explanatory Note 25, "Loans and Financing," and Explanatory Note 26, "Debentures" in 2015's financial statements.

The Holding Company's debt profile is shown below:

837.6 658.6

179.1

Gross Cash and Equivalents Net Debt

Total Debt De/15

622.9

298.9

324.0

Gross Cash and Equivalents Net Debt

Total Debt Dec/14

23%77%

Holding Debt Profile Dec/14

Short Term Long Term

5%95%

Holding Debt Profile Dec/15


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Consolidated:

The gross debt of Alupar and its subsidiaries totaled R$ 4,628.4 million in Dec/15, 16.4% or R$ 651.4 million higher than the R$ 3,977.0 million recorded as at Dec/14. The net debt recorded as at Dec/15 was R$ 3,902.3 million, R$ 551.5 million higher than the R$ 3,350.8 million as at Dec/14.

This variation can be explained by: (a) funding by the Holding Company in the amount of R$ 250.0 million in April/2015; (b) funding by Risaralda in the amount of COP 120,000,000,000 in November 2014, with settlement of COP 44,000,000,000 over the course of 2015 for implementation of the Morro Azul SHPP, (c) funding for La Virgen in the amount of USD 50.0 million in April 2015 and USD 30.0 million in December 2015; (d) funding by Alupar Peru in the amount of USD 15.0 million in October 2014, with settlement of USD 5.0 million in Jan/15 and USD 5.0 million in December 2014, with the amount settled in January 2015 for the implementation of La Virgen HPP and; (e) settlement of the 1st issue of debentures by Transnorte Energia SA, on September 28, 2015, with Alupar responsible for the payment of R$ 110.7 million.

The short-term debt as at Dec/15 totaled R$ 1,112.9 million, compared to R$ 541.4 million in Dec/14.

Alupar and its subsidiaries' available cash and equivalents in Dec/15 amounted to R$ 726.0 million, R$ 99.8 million higher than the R$ 626.2 million registered in Dec/2014.

The Holding Company accounts for R$ 837.6 million of the consolidated debt, as detailed above, with R$ 3,043.6 million allocated to the operating companies, whose cash outflows are compatible with their respective cash generation and another R$ 747.2 million related to project implementation, with R$ 96.1 million allocated to the Morro Azul (Risaralda) SHPP, R$ 403.8 million allocated for Alupar Peru/La Virgen to implement the La Virgen HPP, R$ 223.0 million allocated to the Aracati Complex (Energia dos Ventos) and R$ 24.3 million allocated to reinforce ETVG's implementation.

Of the total debt, R$ 1,550.3 million is for infrastructure projects (project finance) financed by development banks.

In Dec/15, debentures issues totaled R$ 2,551.0 million or 55% of total debt. Debentures issued by the Holding Company carried a balance of R$ 809.3 million and the balance of those issued by the EATE, ECTE, ENTE, ETEP, STN, Ferreira Gomes, Transirapé, Transleste, Transudeste and Energia dos Ventos subsidiaries amounted to R$ 1,741 7 million. Foreign currency debt totaled R$ 502.8 million or 11% of the total debt, of which R$ 2.9 million represented financing from development banks in a basket of currencies and R$ 499.9 million for the implementation of generation projects in Peru and Colombia.

4,628.4

3,902.3

726.0

Gross Debt Cash and Equivalents Net Debt

Total Debt Dec/15

3,977.0 3,350.8

626.2

Gross Debt Cash and Equivalents Net Debt

Total Debt Dec/14

14%

86%

Consolidated Debt Profile Dec/14


24%76%

Consolidated Debt Profile Dec/15


Of the 24% of short-term debt, 45% or R$ 496.5 million

refers to bridge loan.

25 | 32

Alupar's consolidated debt profile is quite favorable, compatible with the low risk involved in the Company's businesses, highly predictable revenues and strong operating cash generation of the electric power transmission and generation segments.

26 | 32

Capital Market Alupar was listed on the São Paulo Stock Exchange - BM&FBOVESPA on April 23, 2013. Its UNITS are traded under the ticker ALUP11 and each UNIT comprises one common share and two preferred shares.

Alupar’s UNITS were traded in all trading sections since its listing, with average daily traded volume of R$ 3.5 milhões. On March 10, 2016; Alupar’s market cap was R$ 2.729 bilhões.

Upcoming Events 4Q15 Results Conference Call Date: March 11, 2016 English (Simultaneous Translation) 01:00 p.m. (NY Time) 03:00 p.m. (Brasilia) Phone: +1 (646) 843-6054 Code: Alupar Replay: + 55 (11) 2188-0400 Code: Alupar

Portuguese (Original Language) 03:00 p.m. (Brasília) 01:00 p.m. (NY Time) Phone:+ 55 (11) 2188-0155 Code: Alupar Replay: + 55 (11) 2188-0400 Code: Alupar

27 | 32

ANNEX 1 – Regulatory

12/31/2015 12/31/2014 12/31/2015 12/31/2014

ASSET

CURRENT 298,851 453,833 1,070,248 989,869

Cash and Cash Equivalents 134,631 114,162 591,857 337,692

Short-Term Investments 44,430 209,791 44,430 209,791

Marketable Securities - - 82,907 50,127

Trade Accounts Receivable 15,051 - 182,712 228,751

Receivables from related parties 4 4 - -

Dividends to be received 63,645 43,185 4,524 4,299

Interest on Equity 11,563 - - -

Income tax and social contribution compensable 26,736 33,785 38,563 41,274

Other Taxes Recoverable - 93 12,623 5,498

Advance for Suppliers 200 169 35,349 20,429

Inventories - - 541 919

Prepaid Expenses 1,710 34 9,868 2,057

Cauções e depósitos judiciais - - - -

Accounts Receivable - Concession Assets - - - -

Assets held for sale - 45,521 - 45,521

Other Assets 881 7,089 66,874 43,511

NON CURRENT 2,538,527 2,202,296 7,206,866 6,279,915

Trade Accounts Receivable - - 8,358 13,632

Receivables from related parties - - - -

Adavances for Future Capital Increases 54,662 205,555 - 16

Marketable Securities - - 6,844 28,573

Income tax and social contribution compensable - - 3,309 3,681

Taxes Recoverable - - 8,287 21,743

Deferred Income and Social Contribution Taxes - - 12,382 1,269

Advance for Suppliers - - 2,394 2,394

Inventories - - - -

Collaterals and Judicial Deposits 2,090 1,991 7,727 7,300

Accounts Receivable - Concession Assets - - - -

Other Assets - - 41,817 10,047

Investments in associates and controlled jointly 303,802 187,558 355,770 236,328

Investments in controlled companies 2,080,624 1,711,984 - -

Property to investiments 9,271 9,274 9,271 9,274

Fixed assets 3,457 4,351 6,532,153 5,721,386

Intangibles Assets 84,621 81,583 218,554 224,272

TOTAL ASSET 2,837,378 2,656,129 8,277,114 7,269,784

Holding Consolidated

28 | 32

12/31/2015 12/31/2014 12/31/2015 12/31/2014

LIABILITIES

CURRENT 160,130 327,800 1,927,046 1,093,591

Loans and Financing 11,791 11,867 519,997 170,220

Debentures 33,745 133,250 592,889 371,182

Suppliers 12,646 2,464 341,561 82,622

Salaries, vacation pay and social charges 956 1,061 10,284 11,152

Income and social contribution payable - - 55,689 49,470

Other payable taxes 1,612 106 26,112 21,152

Provision for assets built up - - 83,449 93,056

Dividends payable 99,355 172,323 150,764 199,965

Environmental l iabil ity accrual - - 22,239 19,465

Regulatory charges payable - - 48,213 43,907

Provision for l itigation - - 66 90

Advances from customers - - 58,208 772

Other l iabilities 25 6,729 17,575 30,538

NON CURRENT 831,538 497,631 3,653,054 3,564,079

Loans and Financing 16,565 28,259 1,557,321 1,585,930

Debentures 775,524 449,546 1,958,153 1,849,705

Suppliers - - 250 250

Advance for future capital increase - - 359 5,779

Taxes payable - - 26 44

Deferred income and social contribution taxes - - 5,705 7,090

Provision for l itigation 2,103 1,927 4,213 2,739

Advances from customers - - 82,902 59,554

Environmental l iabil ity accrual - - 11,214 9,292

Regulatory charges payable - - - 315

Provision for assets built up - - 9,606 11,693

Other l iabilities - - 23,305 31,688

Provision to uncovered liability 37,346 17,899 - -

EQUITY 1,845,710 1,830,698 1,845,710 1,830,698

Capital Subscribed and Paid 1,625,227 1,625,227 1,625,227 1,625,227

(-) Expenses on Issue of Shares (34,569) (34,569) (34,569) (34,569)

Capital Reserve 9,391 14,397 9,391 14,397

Income Reserves 126,768 132,071 126,768 132,071

Retained Earnings 75,617 77,638 75,617 77,638

Accumulated Earnings - - - -

Other Comprehensive Income 43,276 15,934 43,276 15,934

Non-controlling interest - - 851,304 781,416

Equity + non-controlling interest

TOTAL LIABILITIES AND EQUITY 2,837,378 2,656,129 8,277,114 7,269,784

1,845,710 2,697,014

ConsolidatedHolding

1,830,698 2,612,114

29 | 32

12/31/2015 12/31/2014 12/31/2015 12/31/2014 12/31/2015 12/31/2014 12/31/2015 12/31/2014

GROSS OPERATING REVENUE

Energy Transmission System - - - - 301,543 279,840 1,177,504 1,088,118

Energy Generation System 25,825 - 51,873 - 91,428 136,981 378,486 311,466

Service Rendering - - - - - - - -

25,825 - 51,873 - 392,971 416,821 1,555,990 1,399,584

DEDUCTIONS (4,299) - (6,055) - (39,354) (29,849) (139,360) (106,402)

NET OPERATING REVENUE 21,526 - 45,818 - 353,617 386,972 1,416,630 1,293,182

OPERATING COSTS

Cost of Energy

Energy Purchased for Resale (21,642) - (45,060) - 15,018 (24,620) (58,509) (65,655)

Charges of Electric Grid - CUST - - - - (6,638) (7,095) (26,342) (12,385)

Hydro Resources - CFURH - - - - (376) (581) (9,552) (3,616)

Operating Costs

Cost of Services Rendered (228) - (229) - (26,313) (22,881) (95,463) (90,131)

Depreciation / Amortization - - - - (45,039) (37,533) (176,965) (139,416)

(21,870) - (45,289) - (63,348) (92,710) (366,831) (311,203)

GROSS PROFIT (344) - 529 - 290,269 294,262 1,049,799 981,979

OPERATING INCOME (EXPENSES)

General and Administrative (6,861) (10,503) (32,096) (34,030) (33,000) (31,924) (108,862) (95,216)

Equity Pickup 95,292 139,358 285,787 371,046 6,440 4,998 22,579 10,844

Other Income - (692) 6,411 4,766 8,208 13,123 15,000 30,147

Other Expenses 45 (1,849) (39) (1,849) 29 (15,272) (156) (15,278)

88,476 126,314 260,063 339,933 (18,323) (29,075) (71,439) (69,503)

INCOME BEFORE FINANCIAL INCOME (EXPENSES) 88,132 126,314 260,592 339,933 271,946 265,187 978,360 912,476

Financial Expenses (37,724) (23,625) (129,058) (96,292) (147,298) (92,155) (513,552) (314,180)

Financial Income 8,709 11,319 38,134 44,095 23,328 17,670 85,854 71,554

(29,015) (12,306) (90,924) (52,197) (123,970) (74,485) (427,698) (242,626)

INCOME BEFORE TAXES 59,117 114,008 169,668 287,736 147,976 190,702 550,662 669,850

Current income and social contribution taxes - - - - (3,165) (19,476) (94,393) (78,884)

Deferred income and social contribution taxes - - - - 466 2,538 11,091 1,262

- - - - (2,699) (16,938) (83,302) (77,622)

NET INCOME FOR THE PERIOD 59,117 114,008 169,668 287,736 145,277 173,764 467,360 592,228

Attributed to Company Shareholders 59,117 114,008 169,668 287,736 59,117 114,008 169,668 287,736

Attributed to Non-Controlling Shareholders - - - - 86,160 59,756 297,692 304,492

59,117 114,008 169,668 287,736 145,277 173,764 467,360 592,228

Holding

Quarter ended in Year ended in

Consolidated


30 | 32

ANNEX 2 – CORPORATE LAW

12/31/2015 12/31/2014 12/31/2015 12/31/201403/01/1900

ASSET

CURRENT 298.851 453.833 2.320.219 2.168.072

Cash and Cash Equivalents 134.631 114.162 591.857 337.692

Short-Term Investments 44.430 209.791 44.430 209.791

Marketable Securities - - 82.907 50.127

Trade Accounts Receivable 15.051 - 182.712 228.751

Receivables from related parties 4 4 - -

Dividends to be received 63.645 43.185 4.524 4.299

Interest on Equity 11.563 - - -

Income tax and social contribution compensable 26.736 33.785 39.419 41.274

Other Taxes Recoverable - 93 12.623 5.498

Advance for Suppliers 200 169 35.349 20.429

Inventories - - 541 2.603

Prepaid Expenses 1.710 34 9.868 2.057

Accounts Receivable - Concession Assets - - 1.249.115 1.176.519

Assets held for sale - 45.521 - 45.521

Other Assets 881 7.089 66.874 43.511

NON CURRENT 3.202.894 2.824.908 7.691.444 6.760.099

Trade Accounts Receivable - - 8.358 13.632

Receivables from related parties - - - -

Adavances for Future Capital Increases 54.662 205.555 - 16

Marketable Securities - - 6.844 28.573

Income tax and social contribution compensable - - 17.901 3.681

Taxes Recoverable - - 8.287 21.743

Deferred Income and Social Contribution Taxes - - 12.382 1.269

Advance for Suppliers - - 2.394 2.394

Inventories - - 25.534 25.545

Collaterals and Judicial Deposits 2.090 1.991 7.666 7.300

Accounts Receivable - Concession Assets - - 3.321.056 3.316.723

Other Assets - - 43.533 10.047

Investments in associates and controlled jointly 340.119 231.247 416.996 302.862

Investments in controlled companies 2.708.674 2.290.907 - -

Property to investiments 9.271 9.274 9.271 9.274

Fixed assets 3.457 4.351 3.661.828 2.860.721

Intangibles Assets 84.621 81.583 149.394 156.319

TOTAL ASSET 3.501.745 3.278.741 10.011.663 8.928.171


31 | 32

12/31/2015 12/31/2014 12/31/2015 12/31/2014

LIABILITIES

CURRENT 160.130 327.800 1.927.256 1.093.591

Loans and Financing 11.791 11.867 519.997 170.220

Debentures 33.745 133.250 592.889 371.182

Suppliers 12.646 2.464 341.561 82.622

Salaries, vacation pay and social charges 956 1.061 10.284 11.152

Income and social contribution payable - - 55.897 49.470

Other payable taxes 1.612 106 26.112 21.152

Provision for assets built up - - 83.449 93.056

Dividends payable 99.355 172.323 150.764 199.965

Environmental l iabil ity accrual - - 22.239 19.465

Regulatory charges payable - - 48.213 43.907

Provision for l itigation - - 66 90

Advances from customers - - 58.208 772

Other l iabilities 25 6.729 17.577 30.538

NON CURRENT 831.538 497.631 4.017.361 3.956.271

Loans and Financing 16.565 28.259 1.557.321 1.585.930

Debentures 775.524 449.546 1.958.153 1.849.705

Suppliers - - 250 250

Advance for future capital increase - - 359 5.779

Taxes payable - - 26 44

Current income and social contribution taxes - - 1.555 -

Deferred income and social contribution taxes - - 406.610 399.282

Provision for l itigation 2.103 1.927 4.213 2.739

Advances from customers - - 44.749 59.554

Environmental l iabil ity accrual - - 11.214 9.292

Regulatory charges payable - - - 315

Provision for assets built up - - 9.606 11.693

Other l iabilities - - 23.305 31.688

Provision to uncovered liability 37.346 17.899 - -

EQUITY 2.510.077 2.453.310 2.510.077 2.453.310

Capital Subscribed and Paid 1.625.227 1.625.227 1.625.227 1.625.227

(-) Expenses on Issue of Shares (34.569) (34.569) (34.569) (34.569)

Capital Reserve 52.749 55.500 52.749 55.500

Income Reserves 747.777 713.580 747.777 713.580

Retained Earnings 75.617 77.638 75.617 77.638

Other Comprehensive Income 43.276 15.934 43.276 15.934

Non-controlling interest - - 1.556.969 1.424.999

Equity + non-controlling interest

TOTAL LIABILITIES AND EQUITY 3.501.745 3.278.741 10.011.663 8.928.171


2.510.077 2.453.310 4.067.046 3.878.309

32 | 32

12/31/2015 12/31/2014 12/31/2015 12/31/2014 12/31/2015 12/31/2014 12/31/2015 12/31/2014

GROSS REVENUE

Energy Transmission System - - - - 320.572 315.196 1.254.433 1.264.476

Energy Generation System 25.825 - 51.873 - 91.428 136.981 378.486 311.466

Service Rendering - - - - - - - -

25.825 - 51.873 - 412.000 452.177 1.632.919 1.575.942

DEDUCTIONS (4.299) - (6.055) - (39.354) (29.849) (139.360) (106.402)

NET OPERATING REVENUE 21.526 - 45.818 - 372.646 422.328 1.493.559 1.469.540

OPERATING COSTS

Cost of Energy

Energy Purchased for Resale (21.642) - (45.060) - 15.018 (24.620) (58.509) (65.655)

Charges of Electric Grid - CUST - - - - (6.638) (7.095) (26.342) (12.385)

Hydro Resources - CFURH - - - - (376) (581) (9.552) (3.616)

Operating Costs

Cost of Services Rendered (228) - (229) - (27.757) (24.257) (101.004) (93.655)

infrastructure Cost - - - - (31.308) (31.045) (75.778) (130.622)

Depreciation / Amortization - - - - (17.755) (10.563) (68.753) (35.305)

(21.870) - (45.289) - (68.816) (98.161) (339.938) (341.238)

GROSS PROFIT (344) - 529 - 303.830 324.167 1.153.621 1.128.302

OPERATING INCOME (EXPENSES)

General and Administrative (6.861) (10.503) (32.096) (34.030) (32.877) (31.802) (108.380) (94.739)

Equity Pickup 78.217 134.533 325.288 446.095 (19.019) 7.990 17.265 26.832

Other Income - 4.766 6.411 4.766 8.168 4.921 14.869 5.212

Other Expenses 45 (1.849) (39) (1.849) 29 (15.272) (156) (15.278)

71.401 126.947 299.564 414.982 (43.699) (34.163) (76.402) (77.973)

INCOME BEFORE FINANCIAL INCOME (EXPENSES) 71.057 126.947 300.093 414.982 260.131 290.004 1.077.219 1.050.329

Financial Expenses (37.724) (23.625) (129.058) (96.292) (147.282) (92.153) (513.552) (314.180)

Financial Income 8.709 11.319 38.134 44.095 23.329 17.670 85.855 71.554

(29.015) (12.306) (90.924) (52.197) (123.953) (74.483) (427.697) (242.626)

INCOME BEFORE TAXES 42.042 114.641 209.169 362.785 136.178 215.521 649.522 807.703

Current income and social contribution taxes - - - - (4.831) (19.476) (96.038) (78.884)

Deferred income and social contribution taxes - - - - 14.742 (2.136) 17.708 22.839

- - - - 9.911 (21.612) (78.330) (56.045)

NET INCOME FOR THE PERIOD 42.042 114.641 209.169 362.785 146.089 193.909 571.192 751.658

Attributed to Company Shareholders 42.042 114.641 209.169 362.785 42.042 114.641 209.169 362.785

Attributed to Non-Controlling Shareholders - - - - 104.047 79.268 362.023 388.873

42.042 114.641 209.169 362.785 146.089 193.909 571.192 751.658


Consolidated


Holding

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