Commission File Number 32297

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Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.  Form 20-F ___X___ Form 40-F _______

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): [ ]

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): [ ]

 Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.  

Yes _______ No ___X____

If "Yes" is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82-_________________

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CPFL ENERGIA ANNOUNCES ITS 2Q16 RESULTS

 

 

 

Notes:

(1)   Disregard construction revenues;

(2)   EBITDA (IFRS) is calculated from the sum of net income, taxes, financial result, depreciation/amortization, as CVM Instruction no. 527/12;

(3)   Adjusted EBITDA considers CPFL Energia stake in each of the generation assets and excludes the non-recurring effects and the exchange variation in Itaipu invoices;

(4)   Adjusted Net Income considers CPFL Energia stake in each of the generation assets and excludes the non-recurring effects.

 

 

2Q16 HIGHLIGHTS

 

•     Stability of the load in the concession area (-0.2%) – captive (+1.8%) and free client (-5.1%);

•     Contracted demand preserved at the same level: +0.5% Off Peak and +1.1% Peak (Jun-16 x Jun-15);

•     Decrease of 15.4% in adjusted Net Revenues and increase of 8.1% in adjusted EBITDA;

•     Tariff adjustment of RGE, in Jun-16, with an average effect of -7.51% to consumers;

•     Reduction of 77% in the balance of CVA - R$ 737 million in Mar-16 to R$ 170 million in Jun-16;

•     Investments of R$ 504 million;

•     Net debt of R$ 11.7 billion and leverage of 3.10x net debt/Ebitda;

•     Commercial start-up of 36 generation units in Campo dos Ventos and Sao Benedito wind complexes (75.6 MW) until Jul-16;

•     Announcement of the proposal of acquisition of Camargo Corrêa’s equity interest by State Grid for R$ 25.00/share - pending the due diligence process and Aneel and CADE approvals;

•     Announcement of the acquisition of AES Sul distribution company - pending Aneel and creditors approvals.

 

 

 

 

 

 

 

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INDEX

1) MESSAGE FROM THE CEO	4
2) ENERGY SALES	5
2.1) Sales within the Distributors’ Concession Area	5
2.1.1) Sales by segment – Concession Area	6
2.1.2) Sales to the Captive Market	6
2.1.3) Free clients	6
2.2) Contracted Demand in % (high voltage)	7
2.3) Generation Installed Capacity	7
3) INFORMATION ON INTEREST IN COMPANIES AND CRITERIA OF FINANCIAL STATEMENTS CONSOLIDATION	8
3.1) Consolidation of CPFL Renováveis Financial Statements	10
3.2) Presentation of adjusted figures	10
4) ECONOMIC-FINANCIAL PERFORMANCE.	11
4.1) Sectoral Financial Assets and Liabilities	11
4.2) Operating Revenue	12
4.3) Cost of Electric Energy	12
4.4) Operating Costs and Expenses	14
4.5) EBITDA	17
4.6) Financial Result	18
4.7) Net Income	20
5) DEBT	21
5.1) Debt (IFRS)	21
5.2) Debt (Pro forma)	22
5.2.1) Debt Evolution in Pro forma criteria (R$ Billion)	22
5.2.2) Debt Amortization Schedule in Pro forma criteria	24
5.2.3) Indexation and Debt Cost in Proforma criteria	25
5.3) Net Debt and Leverage (Covenant criteria)	25
5.4) Ratings	26
6)  INVESTMENTS	27
6.1)  Capital Expenditures	27
6.2)  Projected Capital Expenditures	28
7) STOCK MARKETS	29
7.1) Stock Performance	29
7.2) Daily Average Volume	29
8) CORPORATE GOVERNANCE	30
9) CURRENT SHAREHOLDERS STRUCTURE – 06/30/2016	31
10) PERFORMANCE OF THE BUSINESS SEGMENTS	34
10.1) Distribution Segment	34
10.1.1) Economic-Financial Performance	34
10.1.1.1) Sectoral Financial Assets and Liabilities	34
10.1.1.2) Operating Revenue	34
10.1.1.3) Cost of Electric Power	35
10.1.1.4) Operating Costs and Expenses	36
10.1.1.5) EBITDA	38
10.1.1.6) Financial Result	39
10.1.1.7) Net Income	41
10.1.2) Annual tariff Adjustment	42
10.1.3) Periodic tariff Review	43

 

 

 

 

10.1.4) 4th Periodical Tariff Review Cycle	43
10.1.5) Operating Performance of Distribution	44
10.1.5.1) SAIDI and SAIFI	44
10.1.5.2) Losses	45
10.2) Commercialization and Services Segments	46
10.3) Conventional Generation Segment	46
10.3.1) Economic-Financial Performance	46
10.4) CPFL Renováveis	51
10.4.1) Economic-Financial Performance	51
10.4.2) Status of Generation Projects – 100% Participation	55
11) ATTACHMENTS	57
11.1) Statement of Assets – CPFL Energia	57
11.2) Statement of Liabilities – CPFL Energia	58
11.3) Income Statement – CPFL Energia (IFRS)	59
11.4) Income Statement – CPFL Energia (Adjusted)	60
11.5) Cash Flow – CPFL Energia	61
11.6) Income Statement – Conventional Generation Segment (IFRS)	62
11.7) Income Statement – Conventional Generation Segment (Adjusted)	63
11.8) Income Statement – CPFL Renováveis (IFRS)	64
11.9) Income Statement – CPFL Renováveis (Adjusted)	65
11.10) Income Statement – Distribution Segment (IFRS)	66
11.11) Income Statement – Distribution Segment (Adjusted)	67
11.12) Economic-Financial Performance – Distributors.	68
11.13) Sales within the Concession Area by Distributor (in GWh)	70
11.14) Sales to the Captive Market by Distributor (in GWh)	71

 

 

1) MESSAGE FROM THE CEO

 

After a three-month transition period, I took over as CEO of CPFL Energia on July 1. During this period, I could confirm my perception of the excellent reputation that CPFL Energia enjoys in the market, its top-notch technical team, the robust corporate platform that supports the businesses and the balance in our workforce between the experience of veterans and the vigor of youth.

In this new cycle, our focus will be on making sure that processes and systems are increasingly simpler and more efficient in order to make our company more agile and lean so that we continue to face the challenges and seize the opportunities for growth and creating value for the Company.

Our 2Q16 results were marked by clarity in the financial statements, which did not bring any significant extraordinary items. In 2Q16, the Company reported managerial EBITDA of R$901 million (+8.0%), mainly due to the recovery of the Distribution segment, whose average load measured in the captive market increased by 1.8%. Demand contracted by high-voltage clients, which remunerates the distribution activity, increased slightly by 0.5% for off-peak hours and by 1.1% for peak hours. The renewable energies segment also contributed positively, reflecting the 20% increase in wind power generation compared to 2Q15 and the startup of new generation assets (SHP Mata Velha and part of the Campo dos Ventos wind power complex).

In the consolidated result, the reduction in the Company’s leverage, which reached 3.10 times net debt/EBITDA at the end of the quarter, reflected not only the improved results, but also the consistent monetization of regulatory assets (CVA) throughout 2016.

On June 16, we announced the acquisition of AES Sul, a Company that serves more than 1.3 million clients in 118 cities in the state of Rio Grande do Sul. The transaction, approved by Brazil's antitrust authority CADE on August 5 and the Extraordinary Shareholders Meeting held on August 9, still requires approval from the Brazilian Electricity Regulatory Agency (ANEEL) and the creditors of AES Sul. With this step, we have resumed the long-awaited process of consolidating the distribution segment, where scale and efficiency are fundamental for ensuring better services and lower tariffs to final consumers. Once the operation is concluded, CPFL Energia will enjoy a market share of over 14% of Brazil’s distribution segment, serving around 9 million clients through 9 concessionaires in the Southern and Southeastern regions of the country.

In the beginning of July, CPFL Energia was informed by Camargo Corrêa S.A. that the latter had received and accepted a proposal from the State Grid Corporation of China to acquire its interest in the controlling block of CPFL Energia (23% of the Company’s capital) for R$25.00 per share. Once the final agreement is signed (pending confirmatory due diligence), the period will start for other controlling shareholders of CPFL Energia to express their opinion regarding the following rights: (i) preference in acquiring all the shares covered by the transaction; or (ii) become a party to the transaction and sell, together with Camargo Corrêa, all their bound shares at the same price per share and under the same conditions offered by State Grid.

Both transactions reflect the new scenario in the electricity sector, now with prospects for attracting investments and growth opportunities for companies. This scenario favors the consolidation of the most fragmented segments - CPFL Energia took the first step in this direction with the acquisition of AES Sul and will continue to play a leading role in this new phase of development for Brazil’s electricity sector.

 

Andre Dorf

CEO of CPFL Energia

 

 

 

 

2) ENERGY SALES

2.1) Sales within the Distributors’ Concession Area

In 2Q16, sales within the concession area, achieved by the distribution segment, totaled 13,903 GWh, a decrease of 2.0%.

 

 

In 2Q16, the captive market sales totaled 10,122 GWh, an increase of 0.4%. Already the amount of energy in GWh, which corresponds to the consumption of free clients in the area of expertise of the distributors of the group, billed through the Use rate of the distribution system (Free Client), reached 3,780 GWh at 2Q16, a decrease of 8.1%. This reduction reflects the adverse macroeconomic scenario, resulting in a drop in industrial production.

 

 

Note: The tables with sales within the concession area by distributor are attached to this report in item 11.13.

 

Noteworthy in 2Q16, in the concession area:

·         Residential and commercial segments (28.8% and 17.4% of total sales, respectively): increase of 4.2% and 0.9%, respectively. The positive performance in residential and commercial class reflects mainly the high temperature compared to what accrued to the 2Q15.

·         Industrial segment (38.3% of total sales): decrease of 9.3%, reflecting the slowdown in economic activity. It is noteworthy that a large customer of the steel business in the area of CPFL Piratininga has reduced consumption by 76.8%. This represents 4% of the 9.3% reduction. Among the Group's distributors, we highlight that CPFL Paulista recorded a fall of 5.7% (or 162 GWh) and CPFL Piratininga had a decrease of 17.4% (or 332 GWh) due to the performance of the large customer cited above.

 

 

 

 

 

2.1.2) Sales to the Captive Market

 

 

Note: The tables with captive market sales by distributor are attached to this report in item 11.14.

 

Sales on the captive market were influence mainly by the good performance of the residential class with an increase of 4.2% and others with 3.5% increase, that is variations of temperatures recorded this quarter. Reduction of consumption in the industrial class, which, in turn, reflects the slowdown of economic activity, as explained earlier.

 

2.1.3) Free Clients

 

 

 

 

 

 

 

 

 

 

 

 

2.2) Contracted Demand in % (high voltage)

Contracted demand evolution | % compared to previous quarters

2.3) Generation Installed Capacity

As of June 30, 2016, the installed capacity of generation of CPFL Energia group, considering its stake in each of the projects, reached 3,215 MW, representing an expansion of 2.8% if compared to 2Q15. This increase is due to the commercial start-up of SHPP Mata Velha and 26 of 36 wind turbines of Complexes Campo do Ventos and São Benedito (12 wind turbines of Campo dos Ventos III, 6 wind turbines of Campo do Ventos I and 8 wind turbines of Campos dos Ventos V).

Generation Installed Capacity | MW

 

Note: Take into account CPFL Energia’s 51.61% stake in CPFL Renováveis

 

 

 

 

 

3) INFORMATION ON INTEREST IN COMPANIES AND CRITERIA OF FINANCIAL STATEMENTS CONSOLIDATION

 

The interests directly or indirectly held by CPFL Energia in its subsidiaries and jointly-owned entities are described below. Except for: (i) the jointly-owned entities ENERCAN, BAESA, Foz do Chapecó and EPASA, that, as from January 1, 2013 (and for comparative purpose for the balances of 2012) are no longer proportionally consolidated in the Company’s financial statements, being their assets, liabilities and results accounted for using the equity method of accounting, and (ii) the investment in Investco S.A. recorded at cost by the subsidiary Paulista Lajeado, the other units are fully consolidated.

As of June 30, 2016 and 2015, the participation of non-controlling interests stated in the consolidated statements refers to the third-party interests in the subsidiaries CERAN, Paulista Lajeado and CPFL Renováveis.

 

 

 

 

Notes:

a)      SHPP – Small Hydroelectric Power Plant;

b)      The joint venture Chapecoense fully consolidates the interim financial statements of its direct subsidiary, Foz de Chapecó;

c)      Paulista Lajeado has a 7% participation in the installed power of Investco S.A. (5.94% share of its capital).

d)      MHPP – Micro Hydroelectric Power Plant.

 

 

 

 

e)      The incorporation of CPFL Transmissora Morro Agudo S.A., subsidiary of CPFL Geração, was approved in January 2015, with the objective of building and operating electric energy transmission concessions, including construction, implementation, operation and maintenance of transmission facilities of the basic network of the Interlinked National System.

 

 

f)      In September, 2014 the direct subsidiary TI Nect Serviços de Informática Ltda. (“Authi”), was set up with the objective of providing informatics, information technology maintenance, system update, program development and customization and computer and peripheral equipment maintenance services.

g)      The main objective of CPFL GD S.A., incorporated in August 2015 and fully controlled by CPFL Eficiência Energética S.A., is the provision of general consultancy services in the electric energy market and commercialization of assets related to the electric energy generation plants.

 

3.1) Consolidation of CPFL Renováveis Financial Statements

On June 30, 2016, CPFL Energia indirectly held 51.61% of CPFL Renováveis, through its subsidiary CPFL Geração.

CPFL Renováveis has been fully consolidated (100%, line by line), in CPFL Energia’s financial statements since August 1, 2011, and the interest held by the non-controlling shareholders has been mentioned bellow the net income line (in the Financial Statements), as “Non-Controlling Shareholders’ Interest”, and in the Shareholders Equity (in the Balance Sheet) in the line with the same name.

 

3.2) Presentation of adjusted figures

Since the 1Q14, the presentation of adjusted figures considers similar holdings in each of the assets in which CPFL Energia has a stake. Therefore, the result of adjusted figures already excludes non-controlling shareholders’ interests.

 

 

4) ECONOMIC-FINANCIAL PERFORMANCE

 

Notes:

(1)    Adjusted figures take into account CPFL’s equivalent stake in each generation project and disregard non-recurring effects. Details about the adjustments in the Adjusted EBITDA and in the Adjusted Net Income are in items 4.5 and 4.7 of this report;

(2)    Disregard Construction Revenue, in the amount of R$ 275 million in 2Q16, R$ 285 million in 2Q15, R$ 492 million in 1H16 and R$ 516 million in 1H15;

(3)    EBITDA is calculated from the sum of net income, taxes, financial result and depreciation/amortization, according to CVM Instruction no. 527/12.

 

4.1) Sectoral Financial Assets and Liabilities

On November 25, 2014, through Dispatch no. 4,621, Aneel approved the amendment to concession agreements of distribution companies, in order to include a specific clause guaranteeing that the balance remaining of any insufficient payment or reimbursement of tariff due to termination of the concession, for any reason, will be indemnified.

After this change, the Securities and Exchange Commission of Brazil (CVM) approved, on December 9, 2014, through Resolution no. 732, the recognition of assets and liabilities that were previously called “regulatory assets and liabilities” in the financial statements of distribution companies, which are now called “sectorial financial assets and liabilities”.

In 2Q16, it was accounted the total sectoral financial liabilities in the amount of R$ 462 million, compared to the total sectoral financial assets in the amount of R$ 896 million in 2Q15, a variation of R$ 1,358 million. On June 30, 2016, the balance of these sectoral financial assets and liabilities was positive in R$ 130 million (R$ 170 million, excluding the special obligations recorded as the methodology of the 4^th Periodical Tariff Review Cycle), compared to a positive balance of R$ 707 million (R$ 737 million, excluding the special obligations recorded as the methodology of the 4^th Periodical Tariff Review Cycle) on March 31, 2016.

 

Disregarding the revenue from the construction of concession infrastructure, gross operating revenue (IFRS) reached R$ 6,887 million in 2Q16, representing a reduction of 21.5% (R$ 1,881 million). The adjusted gross operating revenue was of R$ 6,831 million in 2Q16, a reduction of 21.7% (R$ 1,894 million).

Net operating revenue (IFRS, disregarding the revenue from the construction of concession infrastructure) reached R$ 4,141 million in 2Q16, registering a reduction of 15.1% (R$ 736 million). The adjusted net operating revenue, disregarding the revenue from the construction of concession infrastructure, amounted to R$ 4,089 million in 2Q16, a reduction of 15.4% (R$ 745 million).

The increase in net operating revenue, already considering revenue eliminations, was mainly caused by the following factors:

·       Reduction of revenues in the Distribution segment, in the amount of R$ 779 million (for more details, see item 10.1.1.2);

·       Reduction of revenues in the Conventional Generation segment, in the amount of R$ 40 million;

Partially offset by:

·       Increase of revenues in the Commercialization and Services segment, in the amount of R$ 50 million;

·       Increase of revenues in CPFL Renováveis, in the amount of R$ 24 million.

 

4.3) Cost of Electric Energy

The cost of electric energy (IFRS), comprising the purchase of electricity for resale and charges for the use of the distribution and transmission system, amounted to R$ 2,665 million in 2Q16, registering a reduction of 26.2% (R$ 947 million). The adjusted cost of electric energy was R$ 2,522 million in 2Q16, a reduction of 25.2% (R$ 848 million).

The factors that explain these variations follow below:

·       The cost of electric power purchased for resale (IFRS) in 2Q16 reached R$ 2,314 million, a reduction of 30.1% (R$ 998 million), mainly due to the following non-recurring events:

ü GSF (Generation Scale Factor), in the amount of R$ 140 million in 2Q15;

ü Effect of the strategy put in place for the seasonality of physical guarantee, totaling R$ 61 million in 2Q15 (R$ 60 million in the Conventional Generation segment and R$ 1 million in CPFL Renováveis); the total effect of the strategy put in place for the seasonality of physical guarantee was of R$ 63 million in 2Q15 (R$ 60 million in the Conventional Generation segment and R$ 3 million in CPFL Renováveis), considering that the difference of R$ 2 million of CPFL Renováveis was considered in the Operating Revenue;

ü CPFL Renováveis’ energy purchase for SHPPs, totaling R$ 1 million in 2Q15.

Note: after the GSF renegotiation in 4Q15, the Company has considered the remaining GSF as a recurring effect, and has considered the effects of the strategy put in place for the seasonality of physical guarantee of 2015 as a non-recurring effect, since the effects of seasonality are significantly reduced after the renegotiation of the GSF.

 

 

Note: (*) As from 2016, both the GSF and the seasonality effect will be treated as recurring items, being part of the business.

 

 

In the adjusted figures, that disregard these effects, the cost of electric power purchased for resale in 2Q16 was R$ 2,165 million, representing a reduction of 29.4% (R$ 900 million). The decrease mainly reflects the variations below:

               (i)       Reduction in the amount of energy purchased in the spot market/PROINFA cost (R$ 65 million), excluding the GSF and the effect of the strategy put in place for the seasonality of physical guarantee (non-recurring effects), due to lower spot prices (in SE/CW, R$ 62.22/MWh in 2Q16 vs. R$ 382.82/MWh in 2Q15; in South, R$ 60.15/MWh in 2Q16 vs. R$ 382.82/MWh in 2Q15);

              (ii)       Reduction of 29.8% (R$ 763 million) in the cost of energy purchased through auction in the regulated environment and bilateral contracts, due to the reduction of 34.1% in the average purchase price (R$ 167.96/MWh in 2Q16 vs. R$ 254.85/MWh in 2Q15), partially offset by the increase of 6.6% (664 GWh) in the volume of purchased energy;

             (iii)       Reduction of 24.3% (R$ 162 million) in the cost of energy from Itaipu, due to the reductions of 23.6% in the average purchase price (R$ 199.16/MWh in 2Q16 vs. R$ 260.83/MWh in 2Q15) and of 0.8% (21 GWh) in the volume of purchased energy;

Partially offset by:

             (iv)       Reduction of 29.2% (R$ 90 million) in PIS and COFINS tax credits (cost reducer), generated from the energy purchase.

 

·         Charges for the use of the transmission and distribution system (IFRS) reached R$ 351 million in 2Q16, an increase of 16.9% (R$ 51 million). In adjusted figures, that take into account the proportionate consolidation of generation assets, sector charges reached R$ 357 million in 2Q16, an increase of 16.8% (R$ 51 million), due to the following factors:

               (i)       Expense of R$ 71 million in Reserve Energy Charge – EER, paid in 2Q16 and not observed in 2Q15;

              (ii)       Increase of R$ 11 million in Itaipu transmission charges and charges for connection and usage of the distribution system;

Partially offset by:

             (iii)       Reduction of 9.4% (R$ 21 million) in basic network charges;

             (iv)       Reduction of 5.7% (R$ 4 million) in the system service usage charges – ESS, due to the spot price (PLD) reduction;

              (v)       Increase of 16.7% (R$ 5 million) in PIS and COFINS tax credits (cost reducer), generated from the charges.

 

 

Operating costs and expenses (IFRS) were R$ 1,231 million in 2Q16, a decrease of 1.3% (R$ 17 million) if compared to 2Q15, R$ 1,247 million. Adjusted operating costs and expenses were R$ 1,213 million in 2Q16, an increase of 1.0% (R$ 12 million), if compared to 2Q15, R$ 1,202 million, due to the following factors:

  (i)       The adjusted PMSO item, that reached R$ 652 million in 2Q16, compared to R$ 614 million in 2Q15, registering an increase of 6.2% (R$ 38 million);

The table below lists the main variation in PMSO:

 

 

 

This variation is explained mainly by the following aspects:

ü  Personnel expenses, that recorded an increase of 12.7% (R$ 29 million), mainly due to:

·         collective bargaining agreement – wages and benefits (R$ 15 million);

·         increase in the Services segment business, due to  business expansion of CPFL Serviços, CPFL Atende, Nect and CPFL Eficiencia (R$ 9 million);

 

 

 

·         other effects (R$ 5 million)

 

ü  Out-sourced services expenses, which registered an increase of 17.6% (R$ 22 million), mainly due to increase in the expenses with the maintenance of the power grid, machinery and equipment (R$ 12 million), collection actions (R$ 5 million) and in the  Services segment business (R$ 3 million), due to  business expansion of CPFL Serviços, CPFL Atende, Nect and CPFL Eficiência;

ü  Other operational costs/expenses, that registered an increase of 8.8% (R$ 14 million), mainly due to:

·         increase of 20.7% in allowance for doubtful accounts (R$ 9 million), due to deterioration of the macroeconomic scenario and tariff adjustments that occurred in 2015;

·         Hydrologic risk premium amortization – GSF in the Generation segment business (Conventional/Renewables) (R$ 8 million)

·         increase of 136.2% in operating fines (DIC, FIC, DMIC and DICRI) in the Distribution segment (R$ 6 million);

·         increase of 64.5% in assets disposal (R$ 5 million);

·         increase of 47.0% in CFURH – Financial Compensation for use of the water (R$ 4 million)

·         increase of 12.7% in collection fees expenses (R$ 2 million);

·         increase of 18.9% in leases and rentals expenses (R$ 2 million);

·         others effects (R$ 5 million)

Partially offset by:

·         decrease of 35.1% of legal and court expenses (R$ 27 million).

Partially offset by:

ü  Decrease of 27.4% in Material (R$ 27 million), mainly explained by

·         In the Conventional Generation segment business, additional material expenses related to the oil acquisition by Epasa (Termonordeste TPP and Termoparaíba TPP), that reduced R$ 36 million in Conventional Generation. The average Unit Variable Cost (CVU) this thermal plant decreased of R$ 426.75/MWh to R$ 272.36/MWh when comparing the same quarters of each year.

Partially offset by:

·         In the Distribution segment business, that increased R$ 6 million, mainly due to replacement of the line and grid, machinery and equipment and buildings conservation and maintenance (R$ 3 million);

·         increase in Services segment business (R$ 2 million); due to business expansion

 (ii)       Depreciation and Amortization, which represented an increase of 2.7% (R$ 6 million), are mainly explained by (i) the increase in the Distribution segment business (R$ 3 million) in amortization of intangible distribution infrastructure asset, mainly due to additions to the intangible assets base in the period and (ii) CPFL Renováveis (R$ 3 million) due to depreciation of the projects that started operations in this period.

Partially offset by:

 

 

 

 (iii)       Decrease of 31.2% in Intangible of Concession Amortization (R$ 20 million), due to:

ü  decrease in the Intangible of Concession balance accounted in the holding company CPFL Energia, due to the renewal of the concessions of the subsidiaries CPFL Santa Cruz, CPFL Leste Paulista, CPFL Sul Paulista, CPFL Jaguari e CPFL Mococa (R$ 10 million);

ü  change in accounting practice, due to until December 31, 2015, the intangible assets acquired of Distribution companies and Generation companies, which registered in the CPFL Energia holding and in the CPFL Geração (parent company) were amortized on a straight-line basis or based on the net projected profit curve of the concessionaries, as applicable. As of January 1, 2016, the Company will amortize the intangible assets acquired on a straight-line basis, in all cases (R$ 8 million) and;

ü  Others effects (R$ 2 million)

 

(iv)       Decrease of 3.5% (R$ 10 million) in the cost of building the infrastructure of the concession. This item, which reached R$ 217 million in 2Q16, has its counterpart in the “operating revenue”;

 (v)       Decrease of 14.9% in the Private Pension Fund expenses (R$ 2 million).

 

4.5) EBITDA

In 2Q16, IFRS EBITDA reached R$ 902 million, registering an increase of 30.2% (R$ 209 million). Adjusted EBITDA in 2Q16 totaled R$ 901 million, compared to R$ 834 million in 2Q15, an increase of 8.1% (R$ 68 million).

 

 

 

 

Note: (*) In order to better reflect the actual operating cash generation of the distribution segment, we adjust Itaipu foreign exchange variation in the adjusted EBITDA. This effect has its counterpart in the Financial Result, with no effect on Net Income.

 

 

 

 

 

 

4.6) Financial Result

In 2Q16, net financial expense (IFRS) was of R$ 199 million, an increase of 6.7% (R$ 13 million) compared to the net financial expense of R$ 187 million reported in 2Q15. The adjusted net financial expense, considering the proportional consolidation in the segments of conventional and renewable generation, and excluding the effect of the exchange variation in Itaipu’s invoices (negative in R$ 28 million in 2Q16 and in R$ 13 million in 2Q15), was of R$ 198 million, an increase of 6.0% (R$ 11 million).

 

 

 

Note: (*) The effect of Itaipu foreign exchange variation was negative in R$ 28 million in 2Q16 and in R$ 13 million in 2Q15.

 

The items explaining these variations in adjusted Financial Result are as follows:

·         Financial Revenues: in IFRS, an increase of 21.9% (R$ 72 million), from R$ 329 million in 2Q15 to R$ 402 million in 2Q16. In the adjusted figures, considering the proportional consolidation in the segments of conventional and renewable generation, and excluding the effect of the exchange variation in Itaipu’s invoices (negative in R$ 11 million in 2Q15), an increase of 29.9% (R$ 90 million), from R$ 302 million in 2Q15 to R$ 392 million in 2Q16 mainly due to the following factors:

 

 

 

(i)            Increase of 76.1% (R$ 69 million) in the income from financial investments, due to the increases in the average balance of investments and in the average CDI interbank rate;

(ii)           Increase of 342.4% (R$ 37 million) in the monetary and foreign exchange updates, due to: (a) the gain of R$ 32 million with the zero-cost collar derivative¹; (b) the increase of R$ 4 million in revenues from fines, interest and monetary adjustment relating to installment payments made by consumers; (c) other monetary and foreign exchange updates (R$ 4 million); partially offset by (d) the increase of R$ 3 million in the update of the balance of tariff subsidies, as determined by ANEEL;

(iii)          Increase of 179.0% (R$ 10 million) in fiscal credits update;

(iv)          Increase of 13.6% (R$ 7 million) in additions and late payment fines;

(v)           PIS and COFINS over Interest on Own Capital (R$ 5 million).

(vi)          Increase of R$ 11 million in other financial revenues;

Partially offset by:

(vii)         Reduction of 77.7% (R$ 26 million) in the sectoral financial assets update;

(viii)        Reduction of 53.9% (R$ 11 million) in judicial deposits update;

(ix)          Reduction of 13.2% (R$ 10 million) in the adjustment of expected cash flow (monetary update of concession’s financial asset), due to: (a) the lower inflation, with a 0.49% fall in the index (IGP-M index of 2.31% in 2Q15 vs. IPCA index of 1.82% in 2Q16)²; and (b) the reduction in concession’s financial asset observed in the distributors which have gone through the concession renewal process at the end of 2015 (CPFL Santa Cruz, CPFL Leste Paulista, CPFL Sul Paulista, CPFL Jaguari and CPFL Mococa)³.

 

·         Financial Expenses: in IFRS, an increase of 16.4% (R$ 85 million), from R$ 516 million in 2Q15 to R$ 601 million in 2Q16. In adjusted figures, considering the proportional consolidation in the segments of conventional and renewable generation, and excluding the effect of the exchange variation in Itaipu’s invoices (negative in R$ 28 million in 2Q16 and in R$ 2 million in 2Q15), an increase of 20.8% (R$ 101 million), from R$ 488 million in 2Q15 to R$ 589 million in 2Q16, mainly due to the following factors:

(i)            Increase of 108.3% (R$ 75 million) in the monetary and foreign exchange updates, due to: (a) the increase of debt charges in foreign currency, with swap to CDI interbank rate (R$ 81 million); partially offset by (b) the mark-to-market positive effect for financial operations under Law 4,131 – non-cash effect (R$ 6 million);

(ii)           Increase of 4.5% (R$ 17 million) of debt charges in local currency, reflecting the increase in the average cost of debt;

---

 

(iii)          Sectoral financial liabilities update (R$ 16 million);

Partially offset by:

(iv)          Reduction of 24.9% (R$ 5 million) in the financial expenses with the Use of Public Asset (UBP);

(v)           Reduction of R$ 1 million in other financial expenses.

 

4.7) Net Income

In 2Q16, net income (IFRS) was R$ 240 million, registering an increase of 166.1% (R$ 150 million). Adjusted net income in 2Q16 totaled R$ 261 million, compared to R$ 221 million in 2Q15, an increase of 18.4% (R$ 41 million).

 

 

 

 

 

 

5) DEBT

5.1) Debt (IFRS)

 

    

 

1)     Do not consider mark-to-market effects and borrowing costs.

 

Indexation after Hedge¹ – 2Q15 vs. 2Q16

 

 

1) For debt linked to foreign currency (32% of total in 2Q16), swaps are contracted, which convert indexing for CDI;

 

Net Debt and Leverage in IFRS

 

 

 

 

5.2) Debt (Pro forma)

5.2.1) Debt Evolution in Pro forma criteria (R$ Billion)

In June 30, 2016, financial debt in Pro forma criteria was R$ 17,158 million, an increase of 1.2% in comparison to the same period last year. Find below the debt profile during the last twelve months:

 

1) Considering mark-to-market effect, borrowing costs and accounting adjustments

 

Find below CPFL Energia’s financial debt by segment and company, and the debt profile during the last twelve months:

 

                                

 

 

 

 

 

 

 

 

 

5.2.2) Debt Amortization Schedule in Pro forma Criteria

CPFL Energia has always adopted a solid and conservative financial policy. Thus, the Company has used since 2011, a prefunding strategy, in other words, forecasts the cash needs for the next 24 months and anticipates market access on more favorable terms of liquidity and cost. Thus, at the beginning of 2015, CPFL Energia started working in 2016 and 2017 prefunding.

 

Debt Amortization Schedule in Pro forma criteria (Jun-16)¹

      

 

1) Considers only the principal debt, including hedge and excluding accrued interests (R$ 462 million in 2Q16);

2) Twelve months (Jul-16 to Jun-17);

 

The cash position at the end of 2Q16 has coverage ratio of 2.29x the amortizations of the next 12 months, enough to honor all amortization commitments until around the beginning of 2018. The average amortization term, calculated by this schedule, is 3.48 years.

  

 

5.2.3) Indexation and Debt Cost in Pro forma criteria

 

Indexation¹ After Hedge² Pro forma criteria – 2Q15 vs. 2Q16

   

1) Considering proportional consolidation of CPFL Renováveis, CERAN, BAESA, ENERCAN, Foz do Chapecó and EPASA;

2) For debt linked to foreign currency (36% of total), swaps are contracted, which convert the indexation to CDI. The debt amount indexed in Interbank Rate (CDI) increased from 70.6% to 72.3%, mainly due to the R$ 708 million borrowed through a syndicated loan by 4,131 Brazilian Law in May 2016.

 

Gross Debt Cost¹ in Pro forma criteria – LTM

 

  

 

1) Adjusted by the proportional consolidation since 2012; Financial debt (+) private pension fund (-) hedge.

 

 

5.3) Net Debt and Leverage (Covenant criteria)

In 2Q16, Net Debt Pro forma totaled R$ 11,658 million, a decrease of 15.4% compared to net debt position at the end of 2Q15 in the amount of R$ 13,774 million.

 

 

 

1) Considering proportional consolidation of CPFL Renováveis, CERAN, BAESA, ENERCAN, Foz do Chapecó and EPASA;

2) Adjusted EBITDA in the covenants criteria: adjusted according to equivalent participation of CPFL Energia in each of its subsidiaries, with the inclusion of regulatory assets and liabilities and the historical EBITDA of newly acquired projects.

 

 

In line with the criteria for calculation of financial covenants of loan agreements with financial institutions, net debt is adjusted according to the equivalent participation of CPFL Energia in each of its subsidiaries. Also, include in the calculation of adjusted EBITDA the effects of historic EBITDA of newly acquired projects. Considering that, adjusted net debt totaled R$ 11,658 million and adjusted EBITDA reached R$ 3,764 million, the adjusted Net Debt / adjusted EBITDA at the end of 2Q16 reached 3.10x.

 

5.4) Ratings

On March 2016, Fitch Ratings affirmed the AA (bra) ratings of CPFL Energia and its subsidiaries. However, the agency changed the outlook from stable to negative. Despite of the Brazilian Sovereign downgrade in May by the agency, the ratings of CPFL Energia were maintained.

At beginning of July, CPFL Energia informed the markets that Camargo Correa S.A., its biggest shareholder, had received a letter agreement from state-owned Chinese company State Grid to acquire its shares. The rating agencies had evaluated the letter agreement as positive, given the credit quality of the Chinese company, but there has had any immediate impacts on corporate and issuances ratings of CPFL Energia. The following table shows the ratings and the outlooks assigned by the agencies.

 

 

 

6.1)  Capital Expenditures

 

 

 

Notes:

1) The difference of R$ 5 million negative in the 2Q16 and R$ 3 million positive in 1H16 is listed at the line “Non-  cash transactions and other information” from CPFL Renováveis ITR (Note 30);

2) Others – all type of investment that is not included on the segments listed above.

 

In 2Q16, R$ 504 million were invested in business maintenance and expansion, 31.9% higher than 2Q15. In addition, we invested R$ 12 million in the quarter in the construction of CPFL Transmissão’s transmission lines and, according to the requirements of IFRIC 12, it was recorded as “Financial Asset of Concession” in non-current assets. CPFL Energia also booked R$ 66 million in Special Obligations in the quarter among other items financed by the consumer.

 

Listed below are some of the main investments made by CPFL Energia in 2Q16, in each segment:

 

    (i)        DisCos:

 

a.    Strengthening and expansion the electric system;

b.    Electricity system maintenance and improvements;

c.    Operational infrastructure;

d.    Upgrade of management and operational support systems;

e.    Customer help services;

f.      Research and development programs.

 

        (ii)   GenCos:

a.    Campo dos Ventos II Wind Complex;

b.    São Benedito Wind Complex;

c.    Pedra Cheirosa Wind Complex;

d.    Mata Velha SHPP.

 

 

 

 

6.2)  Projected Capital Expenditures

In December 2015, the Board of Executive Officers' proposal for the 2016 Annual Budget and the 2017/2020 Multiannual Plan for CPFL Energia and its subsidiaries, which was previously discussed by the Budget and Corporate Finance Commission.

 

Projected Capital Expenditures in R$ thousand

 

 

Notes:

(i) Constant currency;

(ii) Disregard investments in Special Obligations on Distribution segment (among other items financed by consumers);

(iii) IFRS – Considers 100% on CPFL Renováveis and Ceran; Pro forma – Considers proportional stakes in the generation projects.

 

 

7) STOCK MARKETS

7.1) Shares Performance

CPFL Energia, which has a current free float of 31.9% (up to June 30, 2016), is listed on both the BM&FBOVESPA (Novo Mercado) and the NYSE (ADR Level III), segments with the highest levels of corporate governance

 

 

 

On June 30, the price shares closed at R$ 20.59 on BM&FBovespa and $ 12.86 on NYSE. In 2Q16, the shares’ prices valued 8.8 % and         19.3 %, respectively. Year over year, the shares devalued 10.8% on BM&FBovespa and 6.0% on NYSE.

 

7.2) Daily Average Volume

The daily trading volume in 2Q16 averaged R$ 56.7 million, of which R$ 36 million on the BM&FBOVESPA and R$ 20.7 million on the NYSE, 31.8 % up compared to 2Q15. The number of trades on the BM&FBOVESPA increased by 51%, rising from a daily average of 5,407, in 2Q15, to 8,163 in 2Q16.

 

 

 

Note: Considers the sum of the average daily volume on the BM&FBovespa and NYSE

 

8) CORPORATE GOVERNANCE

The corporate governance model adopted by CPFL Energia ("CPFL" or "Company") and its subsidiaries is based on the principles of transparency, fairness, accountability and corporate responsibility.

In 2015, CPFL marked 11 years since being listed on the BM&FBovespa and the New York Stock Exchange (“NYSE”).  With more than 100 years of history in Brazil, the Company’s shares are listed on the Novo Mercado Special Listing Segment of the BM&FBovespa with Level III ADRs, a special segment for companies that comply with corporate governance best practices.  All CPFL shares are common shares, entitling all shareholders the right to vote with 100% Tag Along rights guaranteed in case of sale of shareholding control.

CPFL’s Management is composed of the Board of Directors (Board), its decision-making authority, and the Board of Executive Officers, its executive body.  The Board is responsible for defining the strategic business direction of the holding company and subsidiaries, and is composed of 7 external members, one of whom an Independent Member, whose term of office is 1 year and who are eligible for reelection.

The Bylaws of the Board establishes the procedures for evaluating the directors, under the leadership of the Chairman, their main duties and rights.

The Board set up three advisory committees (Management Processes Risks and Sustainability, People Management and Related Parties), which support the Board in its decisions and monitor relevant and strategic themes, such as people and risk management, sustainability and the surveillance of internal audits, analysis of transactions with Parties Related to controlling shareholders and handling of incidents recorded through complaint hotlines and ethical conduct channels.

To ensure that best practices permeate all activities of the Board and its relations with the Company while the Board members are focused on their decision-making functions, in 2006 the Company created the Board of Directors Advisory Council, which reports directly and solely to the Chairman of the Board. In 2015, the name was changed from Board of Directors Advisory Council to Corporate Governance Advisory Council.

This Advisory Council acts as the guardian of best practices to ensure compliance with Governance Guidelines; speed of communication between the Company and its Board members; quality and timeliness of information; integration and evaluation of members of the Board of Directors and the Audit Board; constant improvement of governance processes and institutional relations with government authorities and entities.

The composition of Executive board, in line with governance guidelines, was changed on May 2015.  The change in Company’s Bylaws, which were approved at the General Shareholders Meeting held on April 29, 2015, created a new vice President position subordinated to the CEO, who passes 5 (five) to 6 (six) Executive vice Presidents, standing in line with our succession program. The mandates of the Executive vice Presidents endures two years, with a re election possibility, besides they sit on the Boards of the subsidiaries. Therefore, the changes in CPFL Energia aims to create the bases required to consolidate as the leader of Brazilian power Market, always seeking the efficient management of its assets and sustainable opportunities to create value for its stakeholders.

CPFL has a permanent Audit Board, made up of 5 members, that also exercises the duties of the Audit Committee, in line with Sarbanes-Oxley law (SOX) rulings applicable to foreign companies listed on U.S. stock exchanges.

The guidelines and documents on corporate governance are available at the Investor Relations website http://www.cpfl.com.br/ri.

 

 

9) CURRENT SHAREHOLDERS STRUCTURE – 06/30/2016

 

CPFL Energia is a holding company, whose results depend directly on those of its subsidiaries.

 

 

Notes:

(1) Controlling shareholders;

(2) Includes the 0,5% stake of Caixa de Previdência dos Funcionários do Banco do Brasil;

(3) Includes the 0.2% stake of Petros e Sistel pension funds;

(4) % of bound shares by the controlling shareholders

(5) 51.54% stake of the availability of power and energy of Serra da Mesa HPP, regarding the Power Purchase Agreement between CPFL Geração and Furnas.

 

Proposal of acquisition of Camargo Corrêa S.A. equity interest

 

On 1 July 2016, CPFL Energia issued material fact to the market stating that, as of that date, “CPFL Energia S.A. (“CPFL Energia”), in compliance with the provisions of article 157, paragraph 4 of Law No. 6,404/76 (“Corporation Law”), and Brazilian Securities Commission (“CVM”) Ruling No. 358/2002, informs to its shareholders and to the market at large that received today from its controlling shareholder Camargo Corrêa S.A. (“CCSA”) a communication about the proposal received from State Grid International Development Limited. (“Buyer”) to the acquisition of the totality of its CPFL Energia’s bound shares, as established in CPFL Energia’s Shareholders Agreement signed in March 22, 2002 and its amendments (“Shareholders Agreement”). Find below the transcription of the notification received by the Company: Camargo Corrêa S.A (“CCSA”) comes, through this communication, inform you that received and accepted today a proposal (“Proposal”) sent by State Grid International Development Limited. (“Buyer”) to acquire the totality of its CPFL Energia’s bound shares as established in CPFL Energia Shareholders Agreement signed in March 22, 2002 and its amendments (“Shareholders Agreement”). In this sense, CCSA signed today a binding letter agreement (“Letter Agreement”) with the Buyer, targeting the signature of a Share Purchase Agreement (“Share Purchase Agreement”) related to the direct or indirect acquisition, by one or more of the buyer’s Brazilian subsidiaries of 234,086,204 shares of

 

 

CPFL Energia, owned by ESC Energia S.A., CCSA subsidiary, which are bounded to the Shareholders Agreement and represent approximately 23% of CPFL Energia capital (“Transaction”). The acquisition price is R$ 25.00 (twenty-five reais) for each share of CPFL Energia, subject to the adjustments foreseen in the Transaction documents (“Price per Share”). CCSA was communicated that, by the means and facts of the Transaction, the amount attributed by the Buyer to the shares of CPFL Energias Renováveis S.A., owned directly or indirectly by CPFL Energia is R$ 12.20 per share. The signing of the Share Purchase Agreement will happen after the conclusion of a confirmatory due diligence to be conducted by the Buyer at CPFL Energia and its subsidiaries. The effective conclusion of the transaction will happen after all the necessary approvals by the proper public authorities, including Brazilian antitrust agency (“CADE”) and the National electricity regulatory agency (“ANEEL”). After the effective signing of the Share Purchase Agreement, it will start to count the term to the other participants of CPFL Energia Shareholders Agreement to exercise its right of first refusal to acquire the totality of shares related to the Transaction or, otherwise, opt to be a part of the Transaction and sell together of CCSA the totality of the shares bounded to CPFL Energia Shareholders Agreement for the same Price per Share and the same conditions offered to CCSA by the Buyer. CCSA will inform you about any further relevant developments related to the Transaction.”

 

 

Acquisition of AES SUL Distributor

 

On 16 June 2016, CPFL Energia issued material fact to the market stating that, as of that date, “CPFL Energia S.A. (“CPFL Energia”), in compliance with the provisions of article 157, paragraph 4 of Law No. 6,404/76 (“Corporation Law”), and Brazilian Securities Commission (“CVM”) Ruling No. 358/2002, informs to its shareholders and to the market at large that it has executed, yesterday, with AES Guaíba II Empreendimentos Ltda., as seller (“AES Guaíba”), and with The AES Corporation, as guarantor, a Share Purchase and Sale Agreement that provides for the acquisition by CPFL Energia of the totality of the shares issued by AES Sul Distribuidora Gaúcha de Energia S.A. (“AES Sul”, the “Agreement” and the “Transaction”, respectively). For the Transaction, CPFL Energia shall pay to AES Guaíba, on the closing date, the amount of one billion four hundred and three million Reais (R$ 1,403,000,000.00) added of two hundred and ninety five million four hundred and fifty five thousand Reais (R$ 295,455,000.00) regarding the capital increase of AES Sul, effected by AES Guaíba on February 26, 2016, totaling one billion six hundred and ninety eight million four hundred and fifty five thousand Reais (R$ 1,698,455,000.00) (“Total Price”). The Total Price shall be adjusted, in up to forty five (45) days counted as of the closing date, by the working capital and net debt variations (excepted the capital increase variation) of AES Sul between December 31, 2015, and the Transaction’s closing date.

The closing and implementation of the Transaction shall occur once certain conditions precedent usual in similar transactions are verified, as determined by the Agreement, among which, the previous approval of Agência Nacional de Energia Elétrica – ANEEL, of the Conselho Administrativo de Defesa Econômica – CADE, and other third parties, including AES Sul’s creditors. CPFL Energia also informs that the Transaction constitutes a material investment for purposes of Article 256, I, of the Corporation Law, so an extraordinary shareholders’ meeting of CPFL Energia shall be timely summoned to approve the Transaction by its shareholders. Such extraordinary shareholders’ meeting shall take place before the closing date. It should be emphasized that CPFL Energia’s controlling shareholders have committed to vote favorably to the approval of the Transaction in such extraordinary shareholders’ meeting. On the other hand, the Transaction does not suit in the requirements and parameters provided for in Article 256, II, of the Corporation law and, therefore, shall not grant the withdrawal right to the shareholders of CPFL Energia. The necessary documentation for the shareholders of CPFL Energia to decide regarding the previous approval of the Transaction, including the appraisal report, per determined by Article 256, paragraph 1st of the Corporation Law, shall be timely disclosed to CPFL Energia’s shareholders and to the market. AES Sul acts as an electric energy distributor in the State of Rio Grande do Sul and has the monopoly to distribute energy to the captive market of 118 cities of such State.“

 

AES Sul meets 1.31 million client, with an area of 99,512 km ², has 7,241 GWh consumption, have 65000 km on distribution network deadline for award winning in 11/6/2027 and the next rate review in 04/2018. The CPFL Energia holds market share of 12.3% of the national market of distribution, with its market share in this market will reach 14.3%, to meet 382 of the 497 municipalities of Rio Grande do Sul. Finally, the CPFL Energia will keep the market informed of subsequent facts related to the transaction.

 

 

10) PERFORMANCE OF THE BUSINESS SEGMENTS

10.1) Distribution Segment

10.1.1) Economic-Financial Performance

 

 

Notes:

(1)     Excludes Construction Revenue;

(2)     EBITDA (IFRS) is calculated from the sum of net income, taxes, financial result and depreciation/amortization, as CVM Instruction no. 527/12;

(3)     Adjusted EBITDA, besides the items mentioned above, excludes  non-recurring effects and the exchange variation in Itaipu invoices (negative effect of R$ 28 million in 2Q16 compared to a negative effect of R$ 13 million in 2Q15);

(4)     Adjusted Net Income excludes the non-recurring effects;

(5)     The distributors’ financial performance tables are attached to this report in item 11.12.

 

10.1.1.1) Sectoral Financial Assets and Liabilities

On November 25, 2014, through Dispatch no. 4,621, Aneel approved the amendment to concession agreements of distribution companies, in order to include a specific clause guaranteeing that the balance remaining of any insufficient payment or reimbursement of tariff due to termination of the concession, for any reason, will be indemnified.

After this change, the Brazilian Securities and Exchange Commission (CVM) approved, in December 2014, through Deliberation no. 732, the recognition of assets and liabilities that were previously called “regulatory assets and liabilities” in the financial statements of the electric energy distributors, which are now called “sectoral financial assets and liabilities”.

In 2Q16, the total sectoral financial liabilities accounted for R$ 462 million, compared to an amount of sectoral financial assets of R$ 896 million in 2Q15, a variation of R$ 1,358 million. On June 30, 2016, the balance of sectoral financial assets and liabilities was positive in R$ 130 million (R$ 170 million, excluding the amount related to special obligations recorded according to the methodology of the 4^th Cycle of Tariff Review), compared to a positive balance of R$ 707 million (R$ 737 million, excluding the amount related to special obligations recorded according to the methodology of the 4th Cycle of Tariff Review) on March 31, 2016.

 

10.1.1.2) Operating Revenue

Excluding the revenue from building the infrastructure of the concession (which does not affect the results, because of the related cost, in the same amount), gross operating revenue amounted to R$ 5,876 million in 2Q16, a decrease of 24.9% (R$ 1,947 million), due to the following factors: