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CENTRAIS ELÉTRICAS BRASILEIRAS S/A

CNPJ: 00.001.180/0001-26

OPEN COMPANY

 

Centrais Elétricas Brasileiras S/A (“Company” or “Eletrobras”) informs its shareholders and the market in general that the Board of Directors of Eletrobras, at the meeting held on December 21, 2018, approved the new Business and Management Master Plan for the period from 2019 to 2023 (“PDNG 2019-2023”).

 

Corporate Identity

 

Mission: Acting in the energy markets in an integrated, profitable and sustainable way;

Vision for 2030: To be among the 3 largest global clean energy companies and among the 10 largest in the world in electricity, with profitability comparable to the best in the industry and being recognized by all its stakeholders;

Values: Ethics and transparency, focus on results; appreciation and commitment of the people;

entrepreneurship and innovation and sustainability.

 

Eletrobras Business and Management Master Plan - PDNG 2019-2023

 

The Eletrobras Business and Management Plan for the five-year period 2019-2023 ("PDNG 2019-2023") is the result of an ongoing process of updating based on the PDNG 2018-2022, considering the Strategic Plan 2015-2030 ( "PE 2015-2030"); analysis of current and probable scenarios; and diagnosis of the business context.

 

Like the PDNG 2018-2022, in order to face the challenges that still persist for the next five years, the process for the preparation of the PDNG 2019-2023 promoted adjustments in the Strategic Guidelines in a manner aligned with Eletrobras' Corporate Identity - Mission, Vision and Values:

The Strategic Guidelines (D.E.) are deployed in the following Strategic Goals (O.E.):

 

D.E.1: Profitable growth

          To grow in a sustainable way, guaranteeing the Company's profitability and value

          O.E.1: Increase profitability in electric energy businesses; and

          O.E.2: To expand the businesses of Generation and Transmission  in a sustainable way

D.E.2: Sustainable Performance - To be recognized as a company of generation and transmission of social, environmental and financially responsible energy

 

O.E.1: Acting as an agent for sustainable development in its chain of relationships; and

O.E.2: Optimizing the level of indebtedness reaching international standards

 

D.E.3: Operational Excellence - Seek operational excellence across the value chain

 

O.E.1: Promote continuous improvement in the management of processes, projects and decisions support systems; and

O.E.2: To adapt the structure of operational and corporate costs of Eletrobras Companies.

 

 

This document may contain estimates and forecasts that are not statements of fact that occurred in the past but reflect our management beliefs and expectations and may constitute future events' forecasts and estimates under Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities and Exchange Act of 1934, as amended. The words "believe", "may", "estimate", "continue", "anticipate", "intend", "expect" and related words are intended to identify estimates that necessarily involve risks and uncertainties, known or unknown . Known risks and uncertainties include, but are not limited to: general economic, regulatory, political and commercial conditions in Brazil and abroad, changes in interest rates, inflation and value of the Real, changes in volumes and the pattern of use of electricity by consumer, competitive conditions, our level of indebtedness, the possibility of receiving payments related to our receivables, changes in rainfall and water levels in the reservoirs used to operate our hydroelectric plants, our financing and capital investment plans, existing and future government regulations , and other risks described in our annual report and other documents filed with CVM and SEC. Estimates and forecasts refer only to the date they were expressed and we assume no obligation to update any of these estimates or forecasts due to the occurrence of new information or future events. Future results of the Company's operations and initiatives may differ from current expectations and the investor should not rely solely on the information contained herein. This material contains calculations that may not reflect accurate results due to rounding.

 

 

D.E.4: Governance and Business Integrity Enhancement - Strengthen internal controls and corporate governance, ensuring the corporate integrity

 

O.E.1: Improve corporate governance through benchmarking, based on best market practices;

O.E.2: Improve internal controls and risk management by promoting transparency and reliability; and

O.E.3: Strengthening Eletrobras business integrity.

 

D.E.5: Valuing People - Develop and strengthen technical and technological skills, valuing employees and fostering the culture of results

 

O.E.1: Encourage high performance culture, knowledge management and recognition;

O.E.2: Develop R&D+I, projects, applying new technologies to the Company's processes, focusing on value aggregation; and

O.E.3: Promote safety and well-being to company employees.

 

The following figure shows the results achieved and the projections for 2019 of the main challenges to be overcome through projects developed in each of the Strategic Guidelines in the "Challenge 23 Plan: Sustainable Excellence”

 

 

 

The Business and Management Master Plan (PDNG) has a set of Initiatives that will allow the achievement of these goals, as follows:

 

 

 

This document may contain estimates and forecasts that are not statements of fact that occurred in the past but reflect our management beliefs and expectations and may constitute future events' forecasts and estimates under Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities and Exchange Act of 1934, as amended. The words "believe", "may", "estimate", "continue", "anticipate", "intend", "expect" and related words are intended to identify estimates that necessarily involve risks and uncertainties, known or unknown . Known risks and uncertainties include, but are not limited to: general economic, regulatory, political and commercial conditions in Brazil and abroad, changes in interest rates, inflation and value of the Real, changes in volumes and the pattern of use of electricity by consumer, competitive conditions, our level of indebtedness, the possibility of receiving payments related to our receivables, changes in rainfall and water levels in the reservoirs used to operate our hydroelectric plants, our financing and capital investment plans, existing and future government regulations , and other risks described in our annual report and other documents filed with CVM and SEC. Estimates and forecasts refer only to the date they were expressed and we assume no obligation to update any of these estimates or forecasts due to the occurrence of new information or future events. Future results of the Company's operations and initiatives may differ from current expectations and the investor should not rely solely on the information contained herein. This material contains calculations that may not reflect accurate results due to rounding.

 

 

                                                        1st Strategic Guideline: Sustainable Growth

 

We highlight the following associated initiatives:

 

1st Initiative: Regulatory Strategy for Generation, Transmission and Distribution

 

Consolidate legal and regulatory actions with the Stakeholders aiming to increase revenue for the Company through projects such as:

ü  Receipt of indemnification for the generation of renewed concessions pursuant to Law 12,783/2013;

ü  WACC Revision of Generation and Transmission;

ü  Transmission Tariff Review;

ü  Receipt of the controversial portion of RBSE - Basic Network of the Existing Transmission System ("RBSE"), under judicial dispute; and

ü  Reimbursement of amounts not yet recognized as economic and financial neutrality, by the management of the Distribution Companies, in the period of designation provided for in article 9, paragraph 3 of Law 12,783/2017, affecting Eletrobras.

 

2nd Initiative: Exit of plants of quota regime

 

Study alternatives and actions in the legal, regulatory and legislative framework to enable the quota regime to be withdrawn from the plants/projects controlled by the Eletrobras Companies, extended under the provisions of the Law 12,783/2013, as well as propose alternatives for the plants/projects whose ending of the concession is close, aiming, in both cases, to increase generation revenues and to recover investment capacity.

 

3rd Iniciative: Angra 3 Nuclear Power Plant Project

International public call to select a global investor with technical, financial and management capacity to enable the conclusion of the venture.

 

 

2nd Strategic Guideline : Sustainable Development

 

We highlight the following initiative:

 

1st Initiative: Sale of assets and interests

 

Complete, until the end of 2019, the divestment program, begun in 2018, of assets and shareholdings that are not considered strategic for Eletrobras. In addition, Special Purpose Companies will be incorporated in which Eletrobras Companies hold majority interests and those that do not present financial economic viability will be closed.

 

 

3rd Strategic Guideline: Operational Excellence

 

We highlight the following associated initiatives:

 

1st Initiative: Corporate Synergy of Regional Subsidiaries

 

Seek the operational, economic-financial and corporate synergy between the companies through the projects:

 

 

This document may contain estimates and forecasts that are not statements of fact that occurred in the past but reflect our management beliefs and expectations and may constitute future events' forecasts and estimates under Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities and Exchange Act of 1934, as amended. The words "believe", "may", "estimate", "continue", "anticipate", "intend", "expect" and related words are intended to identify estimates that necessarily involve risks and uncertainties, known or unknown . Known risks and uncertainties include, but are not limited to: general economic, regulatory, political and commercial conditions in Brazil and abroad, changes in interest rates, inflation and value of the Real, changes in volumes and the pattern of use of electricity by consumer, competitive conditions, our level of indebtedness, the possibility of receiving payments related to our receivables, changes in rainfall and water levels in the reservoirs used to operate our hydroelectric plants, our financing and capital investment plans, existing and future government regulations , and other risks described in our annual report and other documents filed with CVM and SEC. Estimates and forecasts refer only to the date they were expressed and we assume no obligation to update any of these estimates or forecasts due to the occurrence of new information or future events. Future results of the Company's operations and initiatives may differ from current expectations and the investor should not rely solely on the information contained herein. This material contains calculations that may not reflect accurate results due to rounding.

 

 

ü  Restructuring of Eletrosul and CGTEE subsidiaries

 

ü  Corporate restructuring of subsidiaries Eletronorte and Amazonas Generation and Transmission

 

ü  Consolidation of the Shared Service Center (CSC)

 

2nd Initiative: Reduction of Personnel Costs

 

Reduction of personnel expenses through the following projects:

 

ü  Consensus Dismissal Plan (PDC), for the dismissal of 2,187 employees, with an estimated savings of R$ 574 million/year, at a cost of approximately R$ 731 million;

ü  Reduction of Costs with Extra Hours, Hazards and Warning;

ü  Negotiation of a new Collective Labor Agreement aimed at aligning it with the new Labor Law and CGPAR Resolutions, stimulating productivity and meritocracy.

 

3rd Initiative: Cost Reduction with Materials and Third Party Services

 

Reduce expenses with the purchase of materials and third-party service contracts, through the following projects:

 

ü  Implementation of Joint Purchase in the companies;

ü  Implementation of the Zero Base Budget (OBZ).

 

 

4th Strategic Guideline: Enhancing Governance and Business Integrity

 

We highlight the following associated initiatives:

 

1st Initiative: Continuous Improvement of the Internal Control Environment, through the implementation of Process Control

 

Implementation of the Process Control system, in conjunction with the optimization of controls, with a view to facilitating and streamlining the process of updating and validating the Matrix of Objectives and Controls (MOCs) and narratives, as well as monitoring the evidence for future tests and external auditor).

 

2nd Initiative: Consolidation of the Program 5 Dimensions

 

The Eletrobras Integrity Program of 5 dimensions was implemented in all Eletrobras Companies, in order to comply with international corporate governance standards.

 

The second phase, proposed by the new PDNG 2019-2023, aims to finalize the structure of the Program, with approval of policies, procedures and guides formally documenting the integrity mechanisms of Eletrobras Companies and the operationalization of these mechanisms in a systematic way.

 

5th Strategic Guideline: Valuation of People

 

We highlight the following associated initiatives:

 

1st Initiative: Organizational Culture Transformation

 

 

This document may contain estimates and forecasts that are not statements of fact that occurred in the past but reflect our management beliefs and expectations and may constitute future events' forecasts and estimates under Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities and Exchange Act of 1934, as amended. The words "believe", "may", "estimate", "continue", "anticipate", "intend", "expect" and related words are intended to identify estimates that necessarily involve risks and uncertainties, known or unknown . Known risks and uncertainties include, but are not limited to: general economic, regulatory, political and commercial conditions in Brazil and abroad, changes in interest rates, inflation and value of the Real, changes in volumes and the pattern of use of electricity by consumer, competitive conditions, our level of indebtedness, the possibility of receiving payments related to our receivables, changes in rainfall and water levels in the reservoirs used to operate our hydroelectric plants, our financing and capital investment plans, existing and future government regulations , and other risks described in our annual report and other documents filed with CVM and SEC. Estimates and forecasts refer only to the date they were expressed and we assume no obligation to update any of these estimates or forecasts due to the occurrence of new information or future events. Future results of the Company's operations and initiatives may differ from current expectations and the investor should not rely solely on the information contained herein. This material contains calculations that may not reflect accurate results due to rounding.

 

 

Diagnose and create plan and action to guide the evolution of the current culture to a culture of high performance. Considering for this, the review of Human Resources policies and processes, aiming at the construction of new models of performance management, training and development, recognition, promotion and remuneration, keeping close association with the business strategy and values of Eletrobras Companies.

 

Through this initiative, we seek to increase productivity and continuous improvement of business results, in addition to employee satisfaction and commitment.

 

2nd Initiative: Occupational Health and Safety Program

 

To consolidate a program of actions directed at the prevention of occupational diseases and work accidents at Eletrobras companies, considering employees and outsourced workers, in order to reduce accident rates and reduce medical licenses.

 

There are others initiatives to be followed by management in relation to PDNG 2019-2023, which are not being disclosed due to their strategic peculiarities for the Company.

 

Investments

 

The PDNG 2019-2023 foresees investments in the five-year period, totaling R$ 30.2 billion, according to the table below, of which R$ 12 billion related to the investments of the Angra 3 Nuclear Plant project in said five-year period; to be carried out by the subsidiary Eletronuclear, according to the business plan to be approved.

 

 

 

 

 

 

This document may contain estimates and forecasts that are not statements of fact that occurred in the past but reflect our management beliefs and expectations and may constitute future events' forecasts and estimates under Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities and Exchange Act of 1934, as amended. The words "believe", "may", "estimate", "continue", "anticipate", "intend", "expect" and related words are intended to identify estimates that necessarily involve risks and uncertainties, known or unknown . Known risks and uncertainties include, but are not limited to: general economic, regulatory, political and commercial conditions in Brazil and abroad, changes in interest rates, inflation and value of the Real, changes in volumes and the pattern of use of electricity by consumer, competitive conditions, our level of indebtedness, the possibility of receiving payments related to our receivables, changes in rainfall and water levels in the reservoirs used to operate our hydroelectric plants, our financing and capital investment plans, existing and future government regulations , and other risks described in our annual report and other documents filed with CVM and SEC. Estimates and forecasts refer only to the date they were expressed and we assume no obligation to update any of these estimates or forecasts due to the occurrence of new information or future events. Future results of the Company's operations and initiatives may differ from current expectations and the investor should not rely solely on the information contained herein. This material contains calculations that may not reflect accurate results due to rounding.

 

 

Disclaimer

 

In view of the foregoing, this Relevant Fact is targeted at showing the strategies and efforts to be accomplished by Eletrobras to shareholders and general market, aiming to achieve the goals of its PDNG 2018-2022. However, it should be noted that the Relevant Fact has certain estimates. Such estimates do not stand as statements of facts happening in the past or to be performed in the future, but they do reflect beliefs and expectations of our management and may stand as uncertain estimates and forecasts on future events according to the Brazilian Securities and Exchange Commission and the Securities and Exchange Commission, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities and Exchange Act of 1934, as amended.

 

Words “believes”, “might”, “may”, “estimates”, “continues”, “foresees”, “intends”, “hopes,” “potential” and similar words are targeted at spotting estimates that necessarily imply risks and uncertainties, regardless of current awareness on them. Known risks and uncertainties include, without limitation: economic, regulatory, political, and commercial conditions at large, in Brazil or abroad, changes in interest rates, inflation and value of Brazilian Reais, changes in volumes and standard for use of electric energy by consumers, competitive conditions, our level of indebtedness, the possibility of receiving payments connected to our receivables, changes in our rainfall and water levels in the reservoirs used to operate our hydro power plants, our plans concerning financing and capital investment, governmental regulations existing in Brazil and abroad, as well as other risks described in the Reference Form, Forms 20-F’s and other documents registered before the Brazilian Securities and Exchange Commission and the Securities and Exchange Commission of the United States.

 

Thus, the estimates and forecasts which may be stated in this document solely refer to the date on which they were stated, and thus we do not undertake any obligation accomplishing or updating such estimates, financial metrics or forecasts as a result of new information or future events, and, to that regard, it should be noted that Eletrobras has not changed its policy of disclosure, and continues not disclosing forecasts for the purpose of CVM Normative Instructions No. 480 and 358. The future results of operations and efforts of Companies may be different from the current forecasts, and investor should not rely solely in the information hereunder.

 

 

 

Rio de Janeiro, December 21, 2018

 

 

Armando Casado de Araújo

Chief Financial and Investor Relations Officer

 

 

 

This document may contain estimates and forecasts that are not statements of fact that occurred in the past but reflect our management beliefs and expectations and may constitute future events' forecasts and estimates under Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities and Exchange Act of 1934, as amended. The words "believe", "may", "estimate", "continue", "anticipate", "intend", "expect" and related words are intended to identify estimates that necessarily involve risks and uncertainties, known or unknown . Known risks and uncertainties include, but are not limited to: general economic, regulatory, political and commercial conditions in Brazil and abroad, changes in interest rates, inflation and value of the Real, changes in volumes and the pattern of use of electricity by consumer, competitive conditions, our level of indebtedness, the possibility of receiving payments related to our receivables, changes in rainfall and water levels in the reservoirs used to operate our hydroelectric plants, our financing and capital investment plans, existing and future government regulations , and other risks described in our annual report and other documents filed with CVM and SEC. Estimates and forecasts refer only to the date they were expressed and we assume no obligation to update any of these estimates or forecasts due to the occurrence of new information or future events. Future results of the Company's operations and initiatives may differ from current expectations and the investor should not rely solely on the information contained herein. This material contains calculations that may not reflect accurate results due to rounding.

 

 

 

CENTRAIS ELÉTRICAS BRASILEIRAS S.A. - ELETROBRÁS
By:	/S/ Armando Casado de Araujo
	Armando Casado de Araujo Chief Financial and Investor Relation Officer