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Brazil Day*
Brazil Day*
Brazil Day*
Brazil Day*
Brazil Day*
Brazil Day*
Brazil Day*
Brazil Day*
Brazil Day*
Brazil Day*
Brazil Day*
Brazil Day*
Brazil Day*
Brazil Day*
Brazil Day*
Brazil Day*
Brazil Day*
Brazil Day*
Brazil Day*
Brazil Day*
Brazil Day*
Brazil Day*
Brazil Day*
Brazil Day*
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Brazil Day*

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  • 1. BRAZIL DAY José Antônio Filippo - CFO
  • 2. Summary IPO Decision Process and Results After 1st Year CPFL Energia – 2005 Financial Results Value Creation Agenda 2
  • 3. CPFL Energia IPO was motivated by growth strategy • Growth and value creation through scale gains Electric • Intensive capital activity Sector • Public companies in international markets Profile Net Income¹ • Financial turnover 500 297 211 99 (106) 1Q04 2Q04 3Q04 4Q04 1Q05 • Growth and shareholders value creation through Corporate expansion Strategy • Industry consolidation • Shareholders liquidity providing • Bovespa Novo Mercado: highest level of Corporate Target Market / Governance Governance Level • NYSE ADR Level 3: accessing international e national investors market 3 ¹ Net income of last 12 months
  • 4. Deal size and timing decision driven by target markets Deal Size • U$ 300 million – adequate volume to access both markets • Local and international macroeconomic scenario improvement: Timing Brazilian interest rate reduction, economic growth perspective • Bookrunners Advisor • Legal advisor Selection • Depositary bank • External auditors • Multifunction team reporting direct to the CEO/CFO Building a Internal Team • Full time dedicated team (1 coordinator and 8 members) for the IPO • Part time dedicated team (5 members) 4
  • 5. Joint bookrunners decision Decision: Joint bookrunners Bookrunner Structure “joint bookrunner” selection: “research” area Distribution capacity “investment banking” support US$ MM Lass than 13% 100 100-200 23% % USA offerings with more than one 200-400 50% Bookrunner (2002-2004 400-800 60% More than 71% 800 5
  • 6. On the Road Roadshow Summary - Marketing Activities Total: 88 43 43 27 Total: 27 21 18 Total: 8 4 2 3 3 2 One-on-Ones Group Meetings Internet Roadshow USA Europe Brazil More than 200 investors were approached through One-on-Ones, Group Meetings and Internet Roadshows 6
  • 7. Deal Summary Issuer: CPFL Energia NYSE/BOVESPA Symbol: CPL/CPFE3 Filing Range: US$ 17.50 – US$ 20.40 / 3 shares per ADS Volume: US$250mm primary and US$50mm secondary Share Class: Common shares listed in the Novo Mercado Use of Proceeds: Generation projects, potential acquisitions and general corporate purposes Post Offering Shares Outstanding (1): 452.3 million Pro Forma Market Capitalization (1): US$2.8 billion Anticipated Pricing Date: Week of September 27 Global Coordinator: Joint Bookrunners: International 60% Local 40% Offering Institutional 80% Institutional 80% Allocation Retail 20% Retail 20% 7 (1) Considering midpoint range
  • 8. Post IPO Proactive IR team and market best practices IR website: information and download center Conference calls and Webcasts Non-deal roadshows and major conferences participation Newsletter - Investidor CPFL Frequent follow-ups with research analysts Wide coverage – 12 institutions Action plan to meet target investors 8
  • 9. Stock Performance Since IPO BOVESPA1 NYSE1 51% 97% 45% 68% 33% 5% IB O V E S P A IE E CPFE3 D o w Jo n es DJ BR 20 CPL Ownership Total Trading Volume2 40% 40% Liquidity 47% maintenance in both 60% 60% 53% markets IP O O ct 31, 2005 ON ADR 1 From IPO to Nov 04, 2005 – adjusted for dividends 2 From IPO to Nov 04, 2005 9
  • 10. Stock Performance – Increasing Liquidity BOVESPA IBrX Brazil Index – IBrX (IBX-100) CPFL Energia Daily Average Trading IEE Electric Energy Index Volume R$ million 1 3 . 6 ITAG Differentiated Tag Along Shares Index 6 .9 5 .9 Differentiated Corporate Governance 3 .5 IGC Shares Index J a n -O ct/ 0 5 O ct/ 0 5 NYSE B o ve spa B o ve sp a + N yse DJBr20 Dow Jones Brazil Titans 20 ADR Index Negotiability Index: 63rd place over the past 12 months 45th in October, 2005 Aiming for inclusion in IBX-50 and ISE 10
  • 11. Next Steps Continuous focus on capital markets and investors CPFL shares increasing liquidity Increase around 1% with the migration of CPFL Paulista and Piratininga’s minority shareholders Commitment to reach 25% of free-float until sep/07 Corporate Governance/ Sarbanes-Oxley Compliance Conclusion of internal process audit in early 2006 11
  • 12. Summary IPO Decision Process and Results After 1st Year CPFL Energia – 2005 Financial Results Value Creation Agenda 12
  • 13. Organizational structure Free-Float 37.48% 32.38% 13.34% 16.80% 94.94% 100% 100% DISTRIBUTION COMMERCIALIZATION GENERATION 100% 97,41% 100% 67,07% 65% 25,01% 48,72% 66,67% 60% As of July 31, 2005 13
  • 14. CPFL Energia – 3Q05 Highlights Net Income of R$ 240 million in 3Q05 and R$ 641 million in 9M05 Growth of 17% in Gross Revenue and 79% in EBITDA in 3Q05 over 3Q04 comparison Electric Energy Index (IEE) and IBX-100 - Bovespa inclusion CPFL Paulista and CPFL Piratininga’s minority shareholders migration announcement, with potential free-float increase from 16.8% to 17.8% Final Tariff Review for CPFL Piratininga Growth of 45% in the Commercialization business Gross Revenue and 31% in EBITDA in 3Q05 over 3Q04 comparison HPP Campos Novos reservoir water filling started on Oct 10, 2005 HPP Barra Grande commercial operation started on Nov 1st, 2005 14
  • 15. 3Q05 Energy Sales Total Energy Sales (GWh)1 2 6 ,7 1 8 2 7 ,8 5 2 4.2% Distribution sales evolution 9 ,1 3 9 9 ,2 9 3 Commercialization sales growth in the free 1.7% market 3Q 04 3Q 05 9M 04 9M 05 Free Market Sales 2 (GWh) 4 , 6 4 3 114% 2 ,1 6 9 1 ,6 5 2 1,652 GWh sales in the free market, 85% 891 representing growth of 85% in 3Q05 over 3Q04 comparison 3Q 04 3Q 05 9M 04 9M 05 Concession Area Sales3 (GWh) 5.5% 28,288 26,819 2 .2 7 0 5 .0 7 9 Captive market growth: residential 5.8% 3.1% 2 4 ,5 4 9 and commercial 6.0% 9,215 9,505 2 3 ,2 0 9 967 1 .8 6 4 93% increase in “TUSD” sales 8 ,2 4 8 7 ,6 4 1 3Q 04 3Q 05 9M 04 9M 05 ¹ With calendar adjustment. Does not include supply, CCEE and sales to Group’s distribution companies C a t iv o TUSD 2 Does not include supply, CCEE and sales to Group’s distribution companies 15 3
  • 16. CPFL Energia – 3Q05 Results Gross Revenue – R$ million 17% Gross Revenue increase 8 .0 1 6 6 .9 9 6 1.7% energy sales growth 15% Average price increase in distribution and generation 2 .7 6 3 2 .3 6 0 companies, due to price readjustments 17% 111% growth in “TUSD” sales 3Q 04 3Q 05 9M 04 9M 05 EBITDA – R$ million 1 ,6 3 1 1 ,1 6 6 79% EBITDA increase 40% 17% increase in gross revenue 318 570 0.3% increase in energy costs 79% 4.8% increase in operational costs and expenses 3Q 04 3Q 05 9M 04 9M 05 Net Income – R$ million 4.105% Net Income increase 641 79% EBITDA increase 51% reduction in net financial expenses 4,105% 240 439% Recognition of the adjustments related to CPFL 119 -6 Piratininga´s 2004 tariff review 3Q 04 3Q 05 9M04 9M05 16
  • 17. CPFL Energia has reporting consistent growth in EBITDA and Net Income EBITDA¹ - Last Twelve Months 2 ,1 3 0 1 ,9 6 4 30% 1 ,8 2 4 1 ,6 9 4 1 ,6 4 2 3Q04 4Q04 1Q05 2Q05 3Q05 Net Income¹ - Last Twelve Months 806 610 282% 429 297 211 3Q04 4Q04 1Q05 2Q05 3Q05 Amounts in R$ million 17 ¹ With CPFL Piratininga Tariff Revision effects adjustment
  • 18. Summary IPO Decision Process and Results After 1st Year CPFL Energia – 2005 Financial Results Value Creation Agenda 18
  • 19. Defined strategy focused on value creation Strategies Programs Objectives Standardization and Certification of Processes System Automation and Modernization Operating Efficiency Call Center Distribution: Opportunities of Scale Gains Generation: PPA’s Guarantee Synergic Growth Commercialization: Free Clients Retention Value Liquidity Debt management Security Financial Discipline Financial Investment Policy Tax planning Single class of shares: 100% Tag Along Differentiated Corporate Commitment to increase the Free Float Governance Dividend Policy 19
  • 20. Focusing on operational efficiency Distribution • 51 thousand new connections in 3Q05, 14% above 1H05 monthly average • Commercial losses reduction1 • 292 thousand inspections in 9M05 • R$ 49 million revenues recovery in 9M05 • 65 GWh annual recovery perspective • Delinquency levels reduction, with the historical best indexes in the CPFL Paulista e CPFL Piratininga in 3Q05 Commercial Losses % Delinquency % 3.66 1 .8 9 3.20 1 .6 0 2.82 2.76 1 .7 6 1 .4 9 2.63 2.42 2.22 2.02 1.95 1 .3 7 1.86 1 .2 6 2002 2003 2004 1H05 3Q05 2004 1H05 3Q05 CPFL Paulista CPFL Piratininga C P F L P a u lis t a C P F L P ir a t in in g a 20 1 CPFL Paulista and CPFL Piratininga
  • 21. Strong activity in free market Commercialization business • 9 new free customers in 3Q05 Highlight for customers recovery from the CPFL concession area • 50 customers in Dec/04 e 83 in 3Q05 25 outside concession area Customers number in free market 83 74 25 50 25 13 14 49 58 37 5 9 2003 2004 1H05 3Q05 Energy commercialization desk o u t s id e c o n c e s s io n a r e a I n s id e c o n c e s s io n a r e a 21
  • 22. Synergic Growth Generation business • HPP Barra Grande commercial operation started on Oct 31st, 2005 • R$ 102 million/year1 additional in Group’s revenue • HPP Campos Novos reservoir water filling started on Oct 10, 2005 • Small power plants repowering Estimated Evolution of Installed Capacity - MW Campos Novos Barra Grande HPP operation in HPP operation Jan/06 innov/05 Oct/05 54% Barra Grande HPP assured energy in the 1st turbine and 100% in the 2nd turbine 91% Campos Novos HPP assured energy in the 1st turbine 22 ¹ Considering approximately 100% Normative Value tariffs
  • 23. Financial Discipline Indebtedness (R$ billion) Debt Breakdown1 6.28 3Q05 4.9 D o lla r 5% TJLP 4.39 26% CDI 3.78 3.87 32% 2.9 2.3 1.8 IGP 37% 3Q04 D o lla r TJLP 2002 2003 2004 3Q05 3% 16% Adjusted Net Debt* Net Debt/EBITDA CDI Capital Structure 3Q05 53% Debt 55% / Equity 45% IGP 28% Net Debt / EBITDA = 1.8 3Q04 3Q05 Nominal Debt Cost 18.4% 13.2% -28% Amortization Average Term - years 5.1 6.1 20% EBITDA 3Q05: considering last 12 months. ¹ Debt without RTE 23 * Adjusted net debt = total debt + pension funds - regulatory assets / CVA – cash
  • 24. Corporate Governance/Free Float Increase Jul/05 Free-Float 37,48% 32,38% 13,34% 16,80% Migration of CPFL Paulista and CPFL Piratininga’s minority shareholders Benefits to CPFL Paulista and CPFL Piratininga shareholders ordinary shares with 100% tag along rights shares with higher liquidity, traded in Bovespa´s Novo Mercado and NYSE Benefits to CPFL Energia and its shareholders 7.7 million new shares on the free float, representing around R$ 182 thousand1 (+10%) increase by 10.5 thousand2 in the current shareholders base reduction in the number of subsidiaries trading at Bovespa liquidity concentration in CPFL Energia shares (higher float in Brazilian private electric sector) Dez/05 - estimado Free-Float 38,32% 31,11% 12,82% 17,75% 1 Based on Oct. 31, 2005 share price 24 2 Estimated – standard lot

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