Post on 13-Apr-2017
March, 2013
Corporate
Presentation
June 2015
22 1) Considers the date of startup of the plants, except Semesa.
Since 1997, CPFL Energia has maintained an aggressivegrowth and diversification strategy
Privatization
1998 2002 200420001997 2001 2003
IPO
2004 20062005 2007
IPO
2008 20102009 2011 2012 2013 2014
History of expansion
After the IPO
Construction of 6 Hydros
Incorporation of the
holding company
Creation of CPFL Brasil
Acquisition of 5 distributors
Entry in renewable energy segment
Association with Ersa -> Creation of CPFL Renováveis
Association of CPFL Renováveis with Desa
331) Furnas has the concession for HPP Serra da Mesa. CPFL has the contractual right of 51.54% of the plant’s assured energy, according to the 30-year leasing contract, maturing in 2028; 2) Adjusted by regulatory assets & liabilities and non-recurring items; does not consider the holding company; 3) Commercialization in the free market and Services.
Company Profile
Lajeado HPP
5.94%
Nect Serviços
CPFL CentraisGeradoras
DISTRIBUTION 100%
SERVICES100%
RENEWABLES51.61%
65% 48.72% 51%
25.01%
Serra da Mesa HPP
51.54%153.34%
GENERATION100%
COMMERCIALIZATION100%
Free Float
15.1%
31.1%24.4% 29.4%
Competitive Supply and Services3
221
Conventional Generation
1,210
CPFL Energia – Consolidated2| 3,976
Distribution2,09052%
30%
6%
LTM 1Q15 Adj. EBITDA Breakdown2 | R$ million
12%Renewable Generation
483
Concession’s expiration
2015 ... 2027 2028 2032 2035 2036
CPFL Santa Cruz
CPFL Paulista
CPFL Piratininga
HPP Luis Eduardo
Magalhães
HPP Campos Novos
HPP Foz do Chapecó
CPFL Jaguari RGEHPP Serra da
Mesa1HPP Barra
Grande
CPFL Sul Paulista
19 SHPPs(CPFL
Renováveis)
HPP Castro Alves
CPFL Leste Paulista
HPP Monte Claro
CPFL MococaHPP 14 de
Julho
~3% CPFL Energia'sEBITDA
TSR2: 1.7%For 2014, a capital increase through stock dividend was approved in General
Shareholders Meeting | Stock dividend approved is of 3.194510783%, in the ratio of 0.03194510783 new share, of the same type, for each share
2010 2011 2012 2013 2014 LTM1Q15
10
,92
1
11
,41
3
13
,23
5
13
,68
1
15
,68
7
16
,88
9
CPFL Energia | Key financial figures1
44
Net revenues | R$ million
CAGR 2010-LTM1Q15
9.1%7.7%
2010 2011 2012 2013 2014 LTM1Q15
3,2
60
3,6
49 4,3
43
3,9
08
3,9
16
3,9
76
EBITDA | R$ million
29.8
%
32.0
%
32.8
%
28.6
%
25.0
%
23.5
%
1.5%
EBITDA
EBITDA Margin
CAGR 2010-LTM1Q15
4.1%
Net Income | R$ million
Net Income
Net Margin
2010 2011 2012 2013 2014 LTM1Q15
1,5
26
1,5
03
1,6
17
1,3
04
1,1
59
1,0
63
14.0
%
13.2
%
12.2
%
9.5
%
7.4%
6.3
%
-8.2%
1) Take into account proportionate consolidation of minorities’ stakes at gencos (+) regulatory assets & liabilities (-) construction revenues (-) non-recurring items. 2) TSR from Dec-09 to Dec-14 = Dividends 6.7% (+) Stock performance -5.1% = 1.7%.
Dividends: CPFL has presented payout ratio close to 100% since its IPO, reaching the markof R$ 11.6 billion distributed. Declaration of dividend for 1H14: R$ 422 million, equivalent to
44.5% of net income of the fiscal year | R$ 0.44/share
Distribution segment
• 7.5 million customers
• 569 municipalities
• Footprint: most developed regions
• High potential in per capita consumption
• Market size: 60TWh/year
1º Market share: 13%
Industrial
Commercial
Residential
Others
1) Source: EPE.5
29% 42%
17%
12%
5 small discos
49%
23%
8%
20%RGE
CPFL Piratininga
LTM 1Q15 Adj. EBITDA Breakdown
R$ million
CPFL Paulista
Tariff review Sales CAGR by Region1 |
LTM 1Q10 - LTM 1Q154th Tariff Review Cycle
CPFL Piratininga Oct-15
CPFL Santa Cruz
Feb-16
CPFL Leste Paulista
CPFL Jaguari
CPFL Sul Paulista
CPFL Mococa
CPFL Paulista Apr-18
RGE Jun-18
LTM 1Q15 Sales Breakdown
GWh
2010 2011 2012 2013 2014 LTM1Q15Captive TUSD
Distribution | Key financial figures
Net revenues1 | R$ Million – Adjusted2
EBITDA | R$ Million – Adjusted2 Net income | R$ Million – Adjusted2
2010 2011 2012 2013 2014 LTM 1Q15
9,432 9,794
10,830 10,716 12,566 13,294
2010 2011 2012 2013 2014 LTM 1Q15
2,267 2,351
2,655
2,211 1,984 2,091
2010 2011 2012 2013 2014 LTM 1Q15
1,309 1,235
1,356
1,047
823 845
1) Excludes construction revenue; 2) Adjusted by non-recurring items and regulatory assets & liabilities.
CAGR 2010-LTM1Q15+7.1%
+5.8%
CAGR 2010-LTM1Q15-1.6% +5.4%
CAGR 2010-LTM1Q15-8.4% +2.7%
Sales in the Captive Market | TWh
CAGR 2010-LTM1Q15+2.6%
6
-0.7%
77 1) Considers CPFL’s equivalent stake in each project. 2) Amounts in currency Dec/14. PMSO excludes fuel cost at EPASA.
Conventional Generation Segment | Installed Capacity of 2,199 MW and Assured Energy of 1,134 MWavg1
Sector Average
16.018.7 18.8
22.4 23.727.2
21.1
-24%
Genco 1 Genco 2 Genco 3 Genco 4 Genco 5
117136
10189 89 79
102
Sector Average
Genco 1 Genco 2 Genco 3 Genco 4 Genco 5
+15%
PMSO2 / Physical Guarantee (R$/MWh) EBITDA2 / Physical Guarantee (R$ MM/MWh)
August 2011 July 2013 September2014
April 2015 2016-20 Total 2020 UnderDevelopment
Total Portfolio
6521,153
1,773
29333
2,135
3,244
5,379
Renewable Generation Segment
81) Through CPFL Geração; 2) Patria; Eton Park; BTG Pactual; Bradesco BBI; GMR Energia and Previ; 3) Renewables Market Share in Brazil based on contracted energy (26 GW); 4) Considers the export of 2/3 of energy produced by the Company.
CPFL Renováveis
Others2 Market
9.49%51.61%1 26.63%12.27%
IPO (R$ 1 billion)
Joint venture with DESA
+
Campo dos Ventos São Benedito
Mata Velha SHPPPedra Cheirosa
Boa Vista II SHPPMorro dos Ventos II
CPFL Renováveis Portfolio (100% - MW)
Portfolio Breakdown
2020(e)
Possible
Probable
Highly Confident
Highly Fragmented Market3
Renova
Energimp
QGER
Brookfield
Cosan
Eletrosul
Gestamp
ElecnorOther
1.3% 6.9%
7.5%
3.6%
2.9%
2.5%
2.4%
2.0%
1.8%
1.6%
67.6%4
8.2%
(MW) (MWavg)
CPFL Renováveis (Aug-11) 652 314
2Q12 25 8 Free market -
2Q12 70 24 Reserve auction Revenue(e): R$ 20 million/year
2Q12 158 63 PROINFA Acquisition price: R$ 1,062 million
3Q12 188 76 Reserve auction Revenue(e): R$ 115 million/year
4Q12 40 11 Auction and free market Acquisition price: R$ 111.5 million
4Q12 1 1 Free market -
4Q12 20 11 Alt. Sources auction Revenue(e): R$ 112 million/year
3Q13 50 18 Free market Revenue(e): R$ 22.6 million/year
4Q13 30 15 Reserve auction Revenue(e): R$ 18.5 million/year
4Q13 50 18 Free market Revenue(e): R$ 22.6 million/year
1Q14 14 5 PROINFA Acquisition price: R$ 103.4 million
1Q14 120 53 Alt. Sources auction Revenue(e): R$ 76.7 million/year
2Q14 78 38 Alt. Sources auction Revenue(e): R$ 52.6 million/year
3Q14 278 167 - Partnership with Dobrevê
2Q15 29 15 Reserve Auction Revenue(e): R$ 17.9 million/year
Current portfolio (June-15) 1,802 837
9
CPFL Renováveis | Track record
10
CPFL Renováveis | Greenfield projects
Commercial Start-up 2016-2020(e)
333 MW of installed capacity
174 average-MW of assured energy
Campo dos Ventos Wind Farms e São Benedito Wind Farms
Mata Velha SHPPPedra Cheirosa Wind
FarmsBoa Vista II SHPP
Commercial Start-up 20161 20161 20182 2020
Installed Capacity 231.0 MW 24.0 MW 51.3 MW 26.5 MW
Assured Energy 120.9 average-MW3 13.1 average-MW 26.1 average-MW3 14.0 average-MW
PPA4 Free market - 20 years16th LEN 20135
R$ 143.30/MWhuntil 2047
18th LEN 20145
R$ 133.00/MWhuntil 2037
21st LEN 2015R$ 207.64/MWh
until 2049
FinancingBNDES
(being structured)BNDES
(under analysis)BNDES
(under analysis)To be structured
1) Gradual commercial operation from 2Q16; 2) Gradual commercial operation from 1H18; 3) Assured Energy calculated in the P90; 4) Constant Currency (mar/15); 5) With the anticipation of work, a bilateral contract (Free Market) will run between 2016 and 2018, when the supply of LEN 2013 starts.
Winner
A-5 Auction
2015
2010 2011 2012 2013 2014 LTM1Q15
1,0
47 1,3
51
1,9
64
2,3
56
3,1
64
3,0
86
Conventional and Alternative Energy | Key financial figures1
1111
Net revenues | R$ million
CAGR 2010-LTM1Q15
24.1%-2.5%
2010 2011 2012 2013 2014 LTM1Q15
EBITDA | R$ million
-0.1%
CAGR 2010-LTM1Q15
17.7%
Net Income | R$ million
2010 2011 2012 2013 2014 LTM1Q15
-12.0%
1) Adjusted by proportional consolidation and non-recurring items.
1,0
60
1,4
27
1,6
43
1,6
95
1,6
93
72
1
37
3
41
9
30
6
26
9
75
0 24
4
CAGR 2010-LTM1Q152.0%
Competitive power supply
12
, of which 196 special customers
current = 1.9 GWavg |
current = 9.4 GWavg |
• New activities: and
2008 2009 2010 2011 2012 2013 2014 1Q15
80 74129 141
231284 266 250
2008 2009 2010 2011 2012 2013 2014 1Q15
7 12 47 47
169 213 221 196
CAGR 2010-15
14.1%
CAGR 2010-15
33.1%
Free Customers (#) | Conventional + Special
Free Customers (#) | Special
Incorporation: 2008
Provision of customer relationship services to utility companies:
call center
face-to-face service
back office
credit recovery
ombudsman
help desk and sales
Foundation: 2006
Offers a wide range of value-added services:
engineering projects for transmission and distribution grids
equipment maintenance and recovery
self-generation grids
collection of utilities’ bills through an established authorized network
Services Segment
13
CPFL Telecom
Grid Operations Center(COR) in Jundiaí
Value Creation Processes
Objective: To be the provider of grid infrastructure and connectivity
solutions to telecommunication operators and service providers.
Focus: economically more attractive cities with ahigher concentration of grid users
CPFL concession area:
7.3% of Brazil’s GDP
Telecom market estimated at R$13 billion/year
Footprint:
17 cities (780 km + optic fiber)
14
Net revenues | R$ million EBITDA | R$ million Net income | R$ million
Competitive power supply and Services | Financials1
1) Pro forma15
2010
2011
2012
2013
2014
1Q
15LTM
1,909
1,699
2,031 2,031
2,497 2,443
2010
2011
2012
2013
2014
1Q
15LTM
201
164
127
52
168146
2010
2011
2012
2013
2014
1Q
15LTM
303
278 287
74
263
221
CAGR 2010-LTM1Q15
5.1%
-2.2%
-16.1%
-13.4%
161616
CPFL Energia’s ambitions
GENERATION
• To act on both institutional and regulatory fronts to mitigate business risks
• To be efficient in managing energy contracts
• Maintain the leadership in operating efficiency across the sector
COMMERCIALIZATION
• To maximize value in the free market by operating within the risk thresholds
• To operate with the focus on special clients
• To explore synergies through strategic operations: ESCO and Retail Commercialization
DISTRIBUTION
• To be the leader in operating efficiency by investing in technology, automation and innovation
• To act on both institutional and regulatory fronts to ensure sustainability of the sector
SERVICES
• To operate with the focus on Technical Services, with technology and productivity
• To mitigate service risk by hiring qualified manpower and suppliers
RENEWABLES
• Growth while creating value through acquisitions and greenfield projects
• To be the leader in operating efficiency in the Renewables segment
TELECOM
• Sales growth in the 17 cities where the project has been implemented
• Geographic expansion on demand according to client requirements and profitability of projects
Annex
Energy sector in Brazil: business segments
Consumers
1) Source: ANEEL – March, 2015; 2) Source: EPE and CCEE; 3) Source: ONS and Ministry of Mines and Energy (MME) – March, 2015; 4) March, 2015
Free Market
Captive Market
77.6 million consumers
1,791 Consumers4
120 TWh of billed energy2
75.8 million Consumers354 TWh of billed energy2
Transmission
• 68 Companies³
• 125,149 km of transmission lines³
• Eletrobrás: ~55% of total assets
Distribution
• 63 Companies
• 473 TWh of billed energy2
• Top 5: ~46% of the market
Competitive Power Supply
Generation
• 135 GW of installed capacity1
• 78.1% Renewable energy1
• Eletrobrás: ~30% of total assets
18
Brazilian electricity matrix
1) Source: EPE - National Energy Balance 2013 and 10-year Energy Plan 2023; 2) Others: considers coal, oil, diesel and process gas; 3) Abeeólica.
Brazil’s electricity matrix is predominantly renewable, with hydro installed capacity totaling 69% of the
total supply, while biomass, wind and SHPPs account for 14%. In the next years, it is expected that other
sources will grow, mainly wind, reaching 11% of total installed capacity in 2023.
Brazilian Electricity Matrix
125 GW 196 GW
2013 2023
19
Wind Potential: 350GW3
Installed capacity: 3.8GW1%
SHPP Potential: 17.5GW Installed capacity: 5.0GW
29%
Biomass Potential: 17.2GW Installed capacity: 9.3GW
54%
Potential Realized
Potential to be Explored in Brazil
Evolution of Installed Capacity (GW) 2013-20231
• Shares listed in differentiated segments:
• BM&FBovespa Novo Mercado
• NYSE (ADR Level III)
• Compliant with the Sarbanes-Oxley Act
• Board of Directors composed by 7 members:
• 1 Independent Member
• Advised by 3 Committees
• Self-Assessment for Board of Directors and Fiscal Council
• Enforcement of policies for disclosure of information and for
prevention of insider trading by employees
• Dividend Policy:
• Minimum of 50% of net income
World-Class Corporate Governance Practices
2020
Corporate governance
21
Capex(e) 2015-2019 | R$ Million
1) Current currency. Take into account 100% interest on CPFL Renováveis and Ceran (IFRS); 2) Current currency. Considers the proportional stake in the generation projects; 3) Disregarding investments in Special Obligations (among other items financed by the consumer); 4) Conventional + Renewable.
Total:R$ 8,754 million1 (IFRS)R$ 7,769 million2 (Pro-forma)
Distribution3: R$ 6,238 million
Generation4:R$ 2,121 million (IFRS)R$ 1,135 million (Pro-forma)
Commercialization and Services:R$ 395 million
702 8821.390 1.385 1.299 1.282
265592
1.181
28237 2994
83
88
6477 84
2014 actual(cash flow)
2015 2016 2017 2018 2019
702 8821.390 1.385 1.299 1.282172
324
615153 22 21
94
83
88
64 77 84
1,062
1,557
2,659
1,7311,413 1,395
IFRS
Pro
-form
a
968
1,289
2,093
1,6021,398 1,387
22
CPFL Energia | Indebtedness and leverage
CDI
Prefixed(PSI)
IGP
TJLP
Gross debt breakdown by indexer | 1Q15 1,4
1) Financial covenants criteria. 2) LTM recurring EBITDA; 3) IFRS criteria; 4) Financial debt (+) private pension fund (-) hedge.
Average tenor: 3.67 years
Short-term (12M): 12.4% of total
Cash coverage:
1.65x short-term amortization (12M)
Gross debt cost3,4:
Nominal: 10.5% / Real: 2.2%
73%
1%
6%
20%
2013 1Q14 2Q14 3Q14 4Q14 1Q15
12.2 12.8 13.2 13.0 13.0 13.6 Leverage1 | R$ billion
Adjusted net debt1/Adjusted EBITDA2
3,399 3,570 3,830 3,886 3,736 3,835Adjusted EBITDA1,2
R$ million
3.59 3.583.44
3.333.49 3.54
Zero-Base Budget
Inefficiencies from past budgets are not carried over
to the next periods
Tauron Program
Introduction of the smart grid technology in the distribution network
Corporate Services Center
Implementation of a back-office services provider to
increase operating productivity and efficiency
Corporate Level
• Optimization of inspections (loss prevention), process review, and improvement in assertiveness: reduction of ≈17%
• Metering and delivery of bills - online billing (email), changes in layout/type of paper, alignment of bank fees for all Discos: reduction of ≈11%
Operational Level
Value Initiatives
• Reduction of consulting services and “insourcing” of activities: reduction of ≈47%
• Standardization of outsourced labor: reduction of ≈52%
• Improved management of travel expenses: reduction of ≈18%
• Consumption of paper and office supplies: reduction of ≈66%
23
Cost-cutting Initiatives
Cost-cutting Initiatives Total (2015 x 2011):
Cost-cutting already performed (LTM1Q15 x 2011)1: ≈R$ 249 million
1) Constant value of Mar-15.
24
• Automated dispatch + tablets deployed in all emergency orders (8 discos) and commercial orders (CPFL Piratininga)
• 24,554 smart meters already installed as of December-14
• Implementation of RF Mesh Telecom Network already concluded
Achievements
• Real-time consumption readings
• Analysis of consumer load curve
• Inputs to fraud detection
• Real-time power outage detection
• Savings with truck rolls
Optimized logistics for field teams (georeferenced maps)
• Faster power restoration
• Savings with optimized routes
Tablets for real-time communication
• Dynamic dispatch of teams
• Automated routing of teams
• On-line update of field services’ progress
Tauron Program – smart grid
Sustainability at CPFL: Incorporation of strategic guidelines
25
Energy is essential for
the welfare of people
and the development
of society.
We believe that
producing and using
energy in a
sustainable manner
is vital for the future of
humanity.
Vision
To provide
sustainable energy
solutions with
competitiveness and
excellence, acting in a
manner that is
integrated with the
community.
Mission
• Value Creation
Commitment
• Safety and Quality of
Life
• Austerity
• Sustainability
• Trust and Respect
• Overcoming
• Entrepreneurship
Principles
CPFL Energia is the
largest private group in
the Brazilian electricity
sector which, through
innovative strategies
and talented
professionals, offers
sustainable energy
solutions.
Positioning
CPFL Energia built its Sustainability Platform in 2013 in order to define the issues material to its growth strategy and the development of goals and indicators related to each of these issues at each business unit. The Platform consolidation process covered the company as a whole, meaning that sustainability is not just
an element of our principles and values but included in strategic planning.
Sustainability Platform
Indicators 2014 x 2013 x 2012
1) index obtained through the survey ABRADEE (value = average value between the distributors CPFL Paulista, CPFL Piratininga, RGE, CPFL Santa Cruz and CPFL LestePaulista). 2) FR - represents the number of accidents involving time off work in relation to one million man hours worked (106 x total number of accidents involving time off work divided by total Man Hours Worked). 3) DS - represents the seriousness of the injury, i.e. the “non-productive time” per one million man hours worked (106 x total number of days lost + total number) of days debited divided by the total man hours
Emissions Scope 1 and 2 / Net Energy Generated (tCO2e/MWh) - EN15|EN16|EN17 0.08 0.08
Meters and transformers recuperated (%) - EN2 19 & 37 14 & 23
Strategic suppliers assessed for sustainability (%) - G4-12 22.2 17.7
Number of strategic suppliers - G4-12 139 124
Energy saved by energy efficiency projects (GWh) - EU7 | EU23 36.7 33.3
Satisfaction Index Perceived Quality - ABRADEE (%)¹ 89.4 88.2
Reverse chain - lighting, wooden cross arms, poles, transformers (un) - EN1 367.3 463.8
Investments in the Environment (R$ million) - EN31 96 93
Contributions to society – without mandatory investments (R$ million) - EC1 22.0 23.4
Investments in energy efficiency projects for low-income consumers (R$ million) - EN31 35.5 36.3
Degree of Severity (DS)³ - LA6 1,073 415
Frequency Rate (FR)² - LA6 1.77 1.80
26
87.08
125
21 & 29
0.09
89.5
354.8
34.2
3.02
414
39
17.0
25.6