EFTA01367033.pdf

Amendment #4 Page 604 of 868 1shit ( nnh Convretrnenta for social and environmental costa-in connection wah the development of as energy generation projects the Group has asauned comm4ments for social and environmental costs to be incurred as condition for Moaning the related licenses and perm% for operations These oblgatons are recorded at the net present value d the estimated future costs asecciatel with these commdmerts. and a corresponding chaige is capitalized as part of the protect asset& when the obligabons are incurred Over time the latilrty is accreted to its expected future value. That porton of the lel:arty expected to be {Bid or setted within 12 months is classified as a current liability. The capitalized asset cost * depreciated over the estimated useful lie with the related dqect assets Revenue Recognition-The Groups revenue derives from the sale of electric energy under longterm power purchase agreements and is recorded based on the quantity of the electricity delvered at to contracted rates, net of appdcade federal sales taxes (PIS arid COF INS) These rates are generally fored under the terms of the PPM and are acitsted &Ina:* for inflaton The ierrainrg term of the PPAs at December 31. 2014 was between 14 and 18 years. Enemy Balance CCEE/Elermoraa-The terms of the PPM cam EletiCaas (SHPPs) and CCEE (wiml energy) each eslabash separate mechansms for the settlement of armies due from or payable 10 the parties. represerang the differences between the actual volume of electnclly generated by the Group as compared to the contracted volumes In to case of the Eletrotras PPM, dfferenoes between the arrouM of elect/Key generated and that sold in the CCEE emeonment are &lusted and offset in the marthly billings wth Eletrobras h the stbsequert year be CCEE. In the case of the CCEE PPM. clefferences in the volumes of actual electricity generated arid the contracted volumes witsi a defined tolerance of 90-130% are accurniJated ntntNy and are available to offset future differences in volumes during tre subsequent four-year period. after which tme. The accumulated balance will be liquidated. Differencesoda:le of the defined tolerances are liquidated n the suteequert year. These residing differences between the actual anoint of electncrly generated and that teed. read! in deferred payable and unbolted recavade amounts with the respective parties trail trey are liquidated. which are recorded in Energy balance—CCEE/Eletrobras in the combined balance sheets The related ',evinces are rot eligible for offset among to separate PPM. Ire otestandirg balances are wiled to monetary inflation updates in accordance with the applicable 'relation index as cleaned in the respective PPAs, which is recorded as part of finance non f expense in the cordoned income statements Seasonaky-There are substantal seasonal variabons in noddy and annual volumes. which depend fundamentally on the amount of ran that falls in each rainy season and the wind condtons which are variable and diff cult to predict As such operating resits vary sgreficardy from period to period depending on the weather conditions during the periods n quosbon Finance income and expanses Fmanoo lncomo-Finance tncorna is principally represented by interest income on the Group's cash and cash equivalents balances. shod-term investmerts and restricted deposit accounts Interest income is recognized 'rang tie effective interest method. Foams Expenses—Finance expenses are principally represented by interest on borrowings contractual monetary irelaton adiustmeres for certain finance' assets and liabilities. as well as other financing tees and taxes Borrowing costs that are not attributable to the acquisition construction or production of a qualifying asset are recognized in income under the effective interest method F.284 http://cfdocs.btogo.com:27638/cf/drv7/pub/edgar/2015/07/20/0001193125-15-256461/d78... 7/20/2015 CONFIDENTIAL - PURSUANT TO FED. R. CRIM. P. 6(e) DB-SDNY-0058561 CONFIDENTIAL SDNY_GM_00204745 EFTA01367033