CPFL Investor Newsletter is issued bi-monthly, published by Investor Relations area with the support of the Corporate Communications and Institutional Relationship department
field of renewable energy Merger of assets with ERSA creates CPFL Renováveis and the acquisition of Jantus SL raties the priority of power generation from renewable sources CPFL advances in the The merger of assets with ERSA, resulting in the founding of CPFL Renováveis, came about from a strategic decision to create an exclusive and distinctive vehicle for generating renewable power. The new company comes into existence with 648 MW of installed capacity (August/2011) and with good prospects for speedy growth. The new enterprise has 386 MW under construction, 600 MW in certied projects and 2,741 MW for development purposes. As a result, CPFL Renováveis will reach 4,375 MW of installed capacity. This partnership creates a company that is focused on the development of renewable energy projects — small hydroelectric power plants (PCHs), biomass thermal plants and wind farms, with a quality portfolio that is diversified by type of source. It also comes with experienced teams, operating synergies and shareholders with plenty of success in developing generation projects. Thus, we have been able to couple the expertise of our people in prospecting and developing high technology and engineering projects with the highest levels of corporate governance, management excellence and experience — consolidated through nearly 100 years of activities in the electric power market. This has transformed CPFL Energia into the largest private group in the Brazilian electricity industry. Wilson Ferreira Jr. President of CPFL Energia April 2011 will be remembered as a major landmark for CPFL Energia. On April 7, the group announced an investment of R$ 1.494 billion to acquire Jantus SL, owner of 210 MW in operating wind farms in Ceará and another 732 MW in its wind farm project portfolio in the states of Ceará, Piauí and Maranhão. This acquisition cost could rise by another R$ 70 million resulting from the Quintanilha Machado project in Rio de Janeiro, which has potential installed capacity of 135 MW. All of the wind farms currently in operation, as well as Quintanilha Machado, have signed long-term power sales contracts with Eletrobrás through the PROINFA program. On April 19, an association with ERSA was concluded creating CPFL Renováveis, an enterprise based on the merger of the renewable generation assets of the two founding companies — small hydroelectric power plants, wind farms and biomass-fueled thermoelectric power plants. CPFL will own a 63.6% interest in the new company. It represents a very diversied portfolio, containing high quality assets, the possibility of operating synergies that mitigate risks and a potential for added value. With a portfolio that includes 648 MW currently in operation (estimated position at August 2011) and 386 MW under construction, as well as 3,341 MW to be developed, CPFL Renováveis comes into existence as one of the main players in Latin America in terms of renewable energy. These businesses strengthen CPFL Energia’s consolidation strategy and determination to achieve leadership of the segments in which it is active, positioning the company as one of Latin America’s leading renewable energy enterprises. INVESTOR RELATIONS | 37 | YEAR 7 | MARCH/APRIL/MAY 2011 In this issue The President’s Word Another ve wind farms Five wind farms will be built to sell the power they generate to the free market. With 150 MW of installed capacity, the Campo dos Ventos I, III, IV, V and Eurus V wind farms, located in Rio Grande do Norte, will require investments of some R$ 600 million. The electricity produced, expected to go on the grid as of the third quarter of 2013, will be sucient to supply a city of 800,000 residential customers. The initiation of construction work currently is awaiting Aneel’s authorization. 4 3 BNDES finances CPFL’s renewable energy Lorival Nogueira Luiz Jr, new VP of Finance and IR Officer 2 page page page More partners for the BM&FBovespa
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field of renewable energy Merger of assets with ERSA creates CPFL Renováveis and the acquisition of Jantus SL
rati!es the priority of power generation from renewable sources
CPFL advances in the
The merger of assets with ERSA, resulting in the founding of CPFL Renováveis, came about from a strategic decision to create an exclusive and distinctive vehicle for generating renewable power.
The new company comes into existence with 648 MW of installed capacity (August/2011) and with good prospects for speedy growth. The new enterprise has 386 MW under construction, 600 MW in certi!ed projects and 2,741 MW for development purposes. As a result, CPFL Renováveis will reach 4,375 MW of installed capacity.
This partnership creates a company that is focused on the development of renewable energy projects — small hydroelectric power plants (PCHs), biomass thermal plants and wind farms, with a
quality portfolio that is diversified by type of source. It also comes with experienced teams, operating synergies and shareholders with plenty of success in developing generation projects.
Thus, we have been able to couple the expertise of our people in prospecting and developing high technology and engineering projects with the highest levels of corporate governance, management excellence and experience — consolidated through nearly 100 years of activities in the electric power market. This has transformed CPFL Energia into the largest private group in the Brazilian electricity industry.
Wilson Ferreira Jr.President of CPFL Energia
April 2011 will be remembered as a major landmark for CPFL Energia. On April 7, the group announced an investment of R$ 1.494 billion to acquire Jantus SL, owner of 210 MW in operating wind farms in Ceará and another 732 MW in its wind farm project portfolio in the states of Ceará, Piauí and Maranhão. This acquisition cost could rise by another R$ 70 million resulting from the Quintanilha Machado project in Rio de Janeiro, which has potential installed capacity of 135 MW. All of the wind farms currently in operation, as well as Quintanilha Machado, have signed long-term power sales contracts with Eletrobrás through the PROINFA program.
On April 19, an association with ERSA was concluded creating CPFL Renováveis, an enterprise based on the merger of the renewable generation assets of the two founding companies — small hydroelectric power plants, wind farms and biomass-fueled thermoelectric power plants. CPFL will own a 63.6% interest in the new company. It represents a very diversi!ed portfolio, containing high quality assets, the possibility of operating synergies that mitigate risks and a potential for added value.
With a portfolio that includes 648 MW currently in operation (estimated position at August 2011) and 386 MW under construction, as well as 3,341 MW to be developed, CPFL Renováveis comes into existence as one of the main players in Latin America in terms of renewable energy.
These businesses strengthen CPFL Energia’s consolidation strategy and determination to achieve leadership of the segments in which it is active, positioning the company as one of Latin America’s leading renewable energy enterprises.
INVESTOR RELATIONS | 37 | YEAR 7 | MARCH/APRIL/MAY 2011In this issue
The President’s Word
Another !ve wind farms Five wind farms will
be built to sell the power they generate to the free
market. With 150 MW of installed capacity, the Campo dos Ventos I, III, IV, V and Eurus V wind farms, located in Rio
Grande do Norte, will require investments of some R$ 600 million.
The electricity produced, expected to go on
the grid as of the third quarter of 2013, will be
su"cient to supply a city of 800,000 residential
customers. The initiation of construction work currently is awaiting
Aneel’s authorization.
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BNDES finances CPFL’s renewable energy
Lorival Nogueira Luiz Jr, new VP of Finance and IR Officer
2page
page
page
More partners for the BM&FBovespa
The BM&FBOVESPA has entered into a joint undertaking with CPFL Energia to win over new partners and support its “Do You Want To Be a Partner?” campaign. The communications plan involves the participation of the athlete of the century, legendary Brazilian footballer Pelé, who is the star of a commercial that makes an analogy between his sports career with the development of a company.
CPFL Energia is betting on the potential of the initiative to expand the number of Brazilians who invest in the stock market and is running the campaign on its Investor Relations website (www.cp#.com.br/ri).
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You can see in the chart below the performance of CPFL Energia’s shares for the 12 months ending March 2011, both in the Bovespa (CPFE3) as well as the New York Stock Exchange (CPL), compared to the main benchmark indices for both of the exchanges.
CPFL Energia posted net income of R$ 466 million for the !rst quarter of this year, presenting 5.4% growth in sales in its concession area, with the highlight being the TUSD (Distribution System Use Fee), which was up 18.4%. Gross operating revenues reached R$ 4.5 billion while
the EBITDA closed the quarter at R$ 1.0 billion, which was 3.9% higher than the same quarter of the previous year.
CPFL’s shares on the Bovespa rose 12.6% during the !rst quarter of 2011, outperforming the Ibovespa (- 1.0%) and the IEE (9.7%) for the same period.
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In order to stimulate the liquidity of its stock by reducing the individual value of each share, CPFL Energia is promoting a reverse split and split of its stock. Its common stock CPFE3 (Bovespa) will be subject to a reverse split in the proportion of 10 to 1, with a simultaneous stock split, in the proportion of 1 to 20, doubling the number of shares and lowering the unit price to the equivalent of 50% of the current price. The exchange ratio for ADRs (American Depositary Receipts) traded on the NYSE and the common shares also will be changed, from 1 to 3 to 1 to 2 common shares, reducing the individual value of the ADRs. This will also contribute to improving the
liquidity of these securities.CPFL Energia established a
deadline of 60 days (until June 28) to enable shareholders to adjust their share positions to lots in multiples of 10 shares, in order to conduct the reverse split proposal.
At the end of this deadline, share fractions will be identified, separated and subject to a reverse split in full integers so that subsequently they can be sold in an auction to be held at the BM&FBovespa. Simultaneous with the reverse split process, the shares will be split at a ratio of 1 to 20, with the new positions of the shareholders recorded as of July 4, pursuant to an announcement that was disclosed to the market.
Higher share liquidity
Investments of nearly R$ 7 billion in five years
An executive with 20 years of !nancial market experience, Lorival Nogueira Luz Jr. (photo), 39, is CPFL Energia’s new Vice President for Finance and Investor Relations O"cer. With a background in business administration, Lorival was a senior executive at Citibank and CFO of Estácio Participações, one of the companies of the GP Group, where he was responsible for the Department of the Controller, Treasury, Mergers and Acquisitions, Investor Relations and Strategic Planning.
Last year, he was nominated Corporate Treasurer and IR Executive for the Votorantim Group, responsible for the funding strategies of its di$erent companies in Brazil and abroad, including !nancial investments and hedges.
Lorival Nogueira Luz Jr, new Chief Financial and IR Officer
CPFL Energia’s investments through 2015 should reach approximately R$ 6.9 billion, without taking into account the transactions involving Ersa and Jantus SL. Of this amount, R$ 4.8 billion will be earmarked for the Distribution segment and
another R$ 1.9 billion is for Generation of electric power. In 2010, CPFL invested R$ 1.801 billion, an amount that repre-
sented an increase of 36.9% (R$ 485 million) compared to invest-ments in 2009.
CPFL Energia distributed R$ 1.3 billion in dividends to its shareholders, referring to earnings achieved in 2010, representing R$ 2.62/ON. This amount satis!es the corporate policy of paying a minimum of 50% of adjusted net pro!ts in the form of dividends: the rate in 2010 was 95%.
Since the company’s IPO in September 2004, CPFL Energia already has distributed R$ 7.6 billion, which represents an accumulated dividend yield of 93%.
The amount for the !rst half of 2010, R$ 774 million, was paid out in September 2010 and the R$ 486 million referring to the second half of the year was paid out in April 2011.
R$ 1.3 billion in dividends
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CPFL INVESTOR is a publication of the Investor Relations Department of CPFL Energia, published by the Corporate Communication and Institutional A$ airs Department, Rodovia Campinas Mogi Mirim, Km 2.5 - Jd. Santana - Campinas/SP, CEP 13.088-900. Tel.: (19) 3756-8197 Fax: (19) 3756-8040 – Chief Financial and Investor Relations O"cer: Lorival Nogueira Luz Jr., Investor Relations O"cer: Gustavo Estrella, Investor Relations Manager: Alessandra Maria Mazia Andretta, Corporate Communications O"cer: Augusto Rodrigues, Journalism Manager: Carlos Henrique Matos Ramos (MTb) 19.163). Content and Editing: Usina do Texto. Design: Produção Coletiva - site: Investor Relations: www.cp#.com.br/ri - email: ri@cp#.com.br.
CPFL Energia has obtained R$ 973 million in !nancing from the BNDES for biomass projects scheduled to go on stream this year: these include Bio Formosa, Bio Ipê and Bio Buriti, as well as Bio Pedra, which is scheduled to start up next year. The funds will be used for the construction of the Santa Clara I, II, III, IV, V, VI and Eurus VI wind farms, totaling 188 MW of installed capacity and 76 MW-average of assured energy.
Construction of these seven wind farms located in the state of Rio Grande do Norte began in February of this year and commercial operations should begin in the third quarter of 2012.
BNDES finances CPFL’s renewable energy
Fraud combat programAbout 500 CPFL Energia professionals are engaged
in daily work in the !eld to identify electricity consumption metering frauds. The company is investing in technology to further improve its meter examination process, both through inspections of units that are more likely to be practicing this type of crime or in the historical identi!cation of consumption patterns that could denote some irregularity at a given address. We are investing R$ 20 million in 2011 to !ght fraud and improve this process in order to guarantee the recovery of credits and to imbue the company-customer relationship with greater transparency.
This is a task that is vital to the company because it is able to identify irregularities in about 21% of the
addresses visited. And that’s only as possible through the proper choice of locations to be visited. In order to
enhance the inspections and guide the fraud combat teams to the most likely addresses, CPFL uses special software developed by IBM called “SPSS Modeler,” which analyzes consumption histories of each client, seasonal consumption, payment pro!le and the possibility of commercial problems with the company. This multiple assessment model generates a report after conducting a series of simulations.
