Apimec 2014 ing

1

PUBLIC MEETINGCTEEP 2014

2

Principal Challenges

Growth Opportunities

3Q14 Financial Results

Questions and Answers Session

Monitored Visit

A CTEEP

3

APIMEC 13 Year Seal

4

História CTEEP

1999

CTEEP is incorporated with the transmission assets of CESP

Incorporation of EPTE – Empresa Paulista de Transmissão de Energia Elétrica

Rollover of Concession Agreement 059/2001 with ANEEL, beginning a new cycle for its businesses.

The IEMadeira transmission line becomes operational and conclusion of work on IEMadeira

ISA sets out a new business vision for the long term

Adheres to Level 1 of Bovespa’s Corporate Governance

CTEEP is privatized. ISA becomes the new controller

2001

2002 2006

2012 2013 2014

Expansion to 16 Brazilian states result from participation in auctions and acquisitions

Business portfolio with 8 subsidiaries, investments of R $ 6.2 billion and RAP of R $ 670.2 MM

5

Breakdown of Shareholding - CTEEP

Preferred Shares – TRPL4(60% do total)

Common Shares - TRPL3(40% do total)

Capital Total

89.5%

9.8%

0.7%ISA Capital do Brasil

Eletrobras

Others

3.6%

52.4%

9.6%7.0%

27.4%

ISA Capital do BrasilEletrobrasState Government of São PauloVinci LtdaOthers

38.0%

35.4%

5.8%4.2%

16.7%


89.5%

9.8%


Eletrobras

Others

3.6%

52.4%

9.6%7.0%

27.4%


38.0%

35.4%

5.8%4.2%

16.7%


89.5%

9.8%


Eletrobras

Others

3.6%

52.4%

9.6%7.0%

27.4%


38.0%

35.4%

5.8%4.2%

16.7%


89.5%

9.8%


Eletrobras

Others

3.6%

52.4%

9.6%7.0%

27.4%


38.0%

35.4%

5.8%4.2%

16.7%


89.5%

9.8%


Eletrobras

Others

3.6%

52.4%

9.6%7.0%

27.4%


38.0%

35.4%

5.8%4.2%

16.7%


89.5%

9.8%


Eletrobras

Others

3.6%

52.4%

9.6%7.0%

27.4%


38.0%

35.4%

5.8%4.2%

16.7%


6

Perfil da ISA

49-year track record in the energy transmission sector Assets in energy transmission, telecoms and highways Footprint in Brazil, Chile, Argentina, Colombia, Peru, Bolivia

and Central America USD 946 million in operating revenue in the first half of

2014

Fonte: 2ºITR 2014 ISA

EBITDA by country EBITDA by business

Multilatina works with 33 companies in 8 countries and 4 busin

Colômbia

Chile

Peru

Brasil

Outros

41,1%

28,2%

15,6%

1,4%

13,6%

Transporte de Energia

Concessões Viárias

Telecomunicações

Gestão Inteligente de Tempo Real

68%

2,8% 0,8%

28,4%

7

Perfil da CTEEP

Responsible for transmission of about 25% of all the energy produced in Brazil and 60% of the energy consumed in the southeast region and approximately 100% in the state of São Paulo.

13,726 Km in transmission

lines

19,189 Km of circuits

107 substations

45.737 MVA of installed

transformation capacityData: 30/set/14

8

Expansion in Brazil

Present in 16 Brazilian states

Subsidiarie State(s)CTEEP

Participation

RAPTotal(R$)

Pinheiros SP 100% 34.8 MM

Serra do Japi

SP 100% 32.6 MM

IEMG MG 100% 14.3 MM

Evrecy MG e ES 100% 10 MM

Madeira RO, MT, GO, MG e SP 51% 445.4 MM

Garanhuns PB, PE, AL 51% 81.4 MM

IESUL PR, SC e RS 50% 14.1 MM

IENNE MA, PI e TO 25% 37.9 MM

9

CTEEP




Monitored Visit


10

Vision 2020

11

Value Drivers

O&M

EFFICIENCY

Investments

PROFITABILITY

Subsidiaries

GOVERNANCE

Indemnification

FAIR VALUE

Contingencies

REDUCTION

Optimization of Costs

Tax Optimization

Optimization O&M Model

Optimization of CapEx

Utilization of Inventory

Centralization of FIN/ADM 100% in CTEEP

Controls of IEMG and Evrecy via COT

RBSE Report

Área de Assuntos Regulatórios

Strategic Project for Liability Management

12

Operation and Maintenance

Costs/Tax Optimization

Actions already adopted Review of support and operational processes

Contract renegotiation Adequacy of scope Review of assumptions anticorrosive treatmen

Adjustment of investments in R&D

PIS/COFINS credit for Inputs and Fixed Assets

Studies in Progress Optimization of the O&M model, capture of efficiency 2015- 2020 Other support processes (services agreements) Logistics and Supplies

R$ MM

(*) exclui custos de construção e despesa de depreciação

13

Investments

Principal Initiatives

Equilibrium of Profitability from Projects

Analysis of insourcing of inspection and commissioning activities

CTEEP Prices Bank vs Aneel

Optimization of Inventory

Review of investments governance

Optimization of CapEx

14

Subsidiaries

Governance and Efficiency

IEMadeira Conclusion of work in May 2014 Economic and financial rebalancing of Lote D requested of ANEEL

Cost overrun: R$ 342 million / Loss of RAP R$ 251million / Readjustment of 26.8% in RAP

Stakes in 8 subsidiaries Total investment of R$ 6.2 bi Capital injections by CTEEP of

R$ 1.6 bi RAP 14/15 of R$ 670.6 million Portfolio totally operational in

2015

Wholly-owned Subsidiaries Evrecy and IEMG controlled by

COT Coordination and centralization

of the financial/administrative functions

ES

PBPE A

L

15

Indemnification

Status

Indemnification as offset for reduction in RAP for the anticipated return of capital

RBNI (Upgrades and Improvements): R$ 2,891 million 50% cash paid in January 2013 and 50% in monthly installments for January 2013 through July 2015, Interest at IPCA +

5.59% p.a

RBSE (Basic Network – Existing System): pending since December 2012 Absolute priority of Management Independent report delivered to ANEEL on August 14 with a value of R$ 5,186 million

16

Indemnification

Physical Inventory of 140 ESs, 85 locations isolated from Telecom and 2,000 km of transmission lines (sample), distributed throughout the state of São Paulo in 4 months;

Transformers: 600 units Circuit breakers: 1,600 units Load break switch disconnectors: 7,000 units CT’s/PT’s: 9,000 units Towers: 31,000 towers, totaling 44,000 tons. Conductors: 14,000 km length of line totaling 150,000 tons.

Permanent mobilization of 110 employees to assist the valuation company in its

work; Reconciling Physical-Book of 171 thousand registrations; Analysis of 5 thousand acquisitions of machines/equipment to make up the Prices Bank; Analysis of 700 ES and TL projects and the classification of 157 thousand registrations

for determining the percentages of COM and CA, Verification of eligibility in the case of 2 thousand land deed registers and 19 thousand

rights of way; Analysis and classification of 110 thousand assets either in the from of Existing Systems

or Upgrades and Improvements

17

Indemnification

Valuation Report

ANEEL Inspection - October 14 to 31, 2014

Inspection Monitoring Report – scheduled for the first half

of January 2015

Ratification of the Report by ANEEL’s Executive Board

NRV R$ 20.212 million

RBV : R$ 5,186 million

Baseline date: December 31, 2012

Prices Bank CTEEP average Aneel average Corrected booking

Baseline date: December 31, 2012Critérios

Etapas Futuras

Resultado

18

O&M | Investments | Indemnification

Institutional Relations

Public Hearing 021/2014 – Review of Resolution REN 443/2011 Inclusion of revenues for Improvements for the period 2013/18 Treatment of Assets at the end of their useful regulatory life Treatment of revenue for emergency investments (accidents and claims)

Public Hearing 022/2014 – Creation of a Minimum Maintenance Plan To establish the Minimum Maintenance Plan for Transmitters To establish exemption from the Variable Parcel for scheduled downtime

REN589/2013 Regulatory Annuity Baseline – BAR: remuneration, amortization and depreciation in the

form of annuities, To define the cost of the BAR, 5% of AOM costs since Jan/2013

Public Hearing 027/2014 – Revision of REN 270/2007 Equilibrium in the application of the Variable Parcel Revise the Permitted Outage Times for the Resumption of Transmission Line

Operations

Creation of a Regulatory Unit underscores Management priorities and focus on themes critical to the Company

19

CTEEP




Monitored Visit


20

Ten Year Energy Expansion Plan to 2022

Increase of 205.5 TWh in Brazilian electric energy consumption from 2013 to 2022 59.2% of the increase in Brazilian consumption will be in the Southeast. Center –

West where CTEEP is the leading transmission company for energy transportation Need for expansion via auctions or authorizations

Electricity consumption in the network by subsytem

21

CTEEP




Monitored Visit


22

Highlights 3Q14

Increase in Net Income for 9M14

Increase in Ebitda and Ebitda Margin in 9M14

Readjustment in Annual Allowed Revenue (RAP)

Increase in Capital

23

559.235.6 20.1 574.8 3.9 578.8

555.4

RAP 13/14 IPCA / IGPM Tariff Review RAP 13/14 Adjust.Parcel

Total RAP14/15

Total RAP13/14

Annual RAP Readjustment

(R$ million)

+21,7%

+6,9%

+4,2%

CTEEP

Jointly Controlled Subsidiaries

Subsidiaries

100%

581.837.3

19.6 638.821.1 659.9

542.0

RAP 13/14 IPCA / IGPM Reinfor. RAP 14/15 Adjust.Parcel

Total RAP14/15

Total RAP13/14

6.1 -1.4 91.9 -0.1 91.7 85.8

RAP 13/14 IPCA / IGPM Tariff Review RAP 14/15 Adjust.Parcel

Total RAP14/15

Total RAP13/14

87.2

24

Breakdown of Revenue

9M13 9M14

Growth of 13.3% in net revenue

406.4

110.0

131.1

647.5

(86.6)

560.9 530.8

138.8

122.3

791.9

(89.2)

702.7

18.0

38.7

88.4145.1

(11.8)

133.3

19.7

19.2

61.1 100.0(5.3)

94.7

424.4

148.8

219.5 792.6 (98.4)

694.2

550.5

158.0

183.4 891.9 (94.5)

797.4

O&M Construction Financial/Others

GrossRevenue

Deductions NetOperatingRevenue

O&M Construction Financial/Others

GrossRevenue

Deductions NetOperatingRevenue

Company Subsidiaries

25

498.6434.3

55.1

37.4

9M13 9M14

TOTAL


553.6

471.7

Operating Costs and ExpensesEfficiency in the management of costs and expenses

-14.8%

O&M

Construction

General/Adm

(R$ million)

228.8 197.0

9.415.2

238.3212.2

128.6 111.4

3.1 3.1

131.7 114.5

141,2 115,4

42,517,5

9M13 9M14

183.7145.0

26

-415.8

166.8

-324.2

384.1

13.9

6.1

25.0

14.2

100.5192.1

13.9

25.0

3Q13 3Q13 exProvisonSEFAZ

3Q14 9M13 9M13 exProvisonSEFAZ

9M14


114.4

172.8

(292.2)

217.1

398.3

(401.9)

Ebitda ICVM 527 and Ebitda Margin

28.4%

46.9%

Ebitda Margin

(R$ million)

39.7%

50.4%

31.3%50.6%

27

Equity

(R$ million) 9M13 9M14

Total Equity Income: R$ 53.8 Total Equity Income : R$ 71.843,0

1,0 0,1 0,4

Madeira Garanhuns IENNE IESUL

60.2

1.8

(9.7)1.4

54.8

12.4

3.8 0.9

28

18.0

3.2

78.0

28.6

-4.7 -4.2

-13.8 -13.0


13.3

3T13 9M133T14 9M14

64.3

15.6

(1.0)

13.3

3T13 9M133T14 9M14

64.3

15.6

(1.0)

Financial Result

(R$ million) -71,5%

-107,5%

Remuneration of the indemnification for upgrades and improvements (NI)

29

Net Income

(R$ million)

+46,7%

+47,5%

Earnings per share reached R$ 1.9579 in 9M13

-245.3

95.5140.1

-126.9

213.9

315.7

3Q13 3Q13 exProvision

SEFAZ

3Q14 9M13 9M13 exProvision

SEFAZ

9M14

3T133T13

3Q13 9M13

30

Net Debt

R$ 127.7 million increase in Capital

(*) As from January 2013, the Company channeled its financial investments into exclusive investment funds. The investment fund units are highly liquid and are readily convertible into cash irrespective of the maturity of the assets.

Debt 1,286.2 1,239.5 3.8%

Short-term Debt 375.0 377.7 -0.7%

Long-term Debt 911.2 861.8 5.7%

Cash* 777.7 600.0 29.6%

Net Debt 508.5 639.5 -20.5%

Debt(BRL millions)

9M14 2013 Δ%

31

Amortization of Debt

Settlement of 1st Series Debentures

(R$ million)Future Cash (NI) 2014 2015 Total

Accounts Receivable (NI) - (projection) 142.4 332.2 474.6

Interest Income on the Accounts Receivable (projection)

11.6 12.0 23.5

Total 153.9 344.2 498.1

Cash and Financial Investments on 09/30/14: R$ 777.7 millions

207.7

150.9

197.5 197.6 179.0

13.0

59.4 29.2

9.7

35.7

26.5 26.5 26.5

85.4

15.0

217.4186.6

224.0 224.1 205.5

39.5

2014 2015 2016 2017 2018 2019 2020 a 2024 2025 a 2029


144.8

44.2

26.5

32

Gross Debt of Joint Subsidiaries

1.245,1

101,257,9 18,9

Madeira Garanhuns IENNE IESUL

CTEEP stake

2013 3T14

(R$ million)

Total Gross Debt: R$ 1,423.2 Total Gross Debt: R$ 1,484.4

1,245.1

101.257.9 18.9

1,242.9

166.6

57.1 17.8

33

Performance in the Capital Markets

220.6 thousand

transactions up to

09/30/2014.

Daily Average of 1,161

transactions.

Market cap. In

09/30/2014 R$ 6.3

billion.

Share performance up to 09/30/2014

75.00

100.00

125.00

150.00

Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14

TRPL3 TRPL4 IBOVESPA IEE

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14

Trade Financial - 09/30/2014(R$ million)

Total R$ 1.312 Million Daily Average / Day R$ 6.9 million

34

CTEEP




Visita Monitorada


35

Disclaimer

All statements contained herein with regard to the Company’s

business prospects, projected results and the potential growth

of its business aremere forecasts, based on local management

expectationsin relation to the Company’s future performance.

Dependent as they are on market shifts and on the overall

performance of the Brazilian economy and the sector

and international markets, such estimates

are subject to changes.

36

Sessão de Perguntas e Respostas

Monitored Visit

A CTEEP

Principais Desafios

Oportunidades de Crescimento

Resultados Financeiros do 3T14

37

Investor RelationsTel: +55 11 3138-7557

[email protected]/ir

Date post:	22-Jun-2015
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