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Non-Deal Roadshow Abril'
Non-Deal Roadshow Abril'
Non-Deal Roadshow Abril'
Non-Deal Roadshow Abril'
Non-Deal Roadshow Abril'
Non-Deal Roadshow Abril'
Non-Deal Roadshow Abril'
Non-Deal Roadshow Abril'
Non-Deal Roadshow Abril'
Non-Deal Roadshow Abril'
Non-Deal Roadshow Abril'
Non-Deal Roadshow Abril'
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Non-Deal Roadshow Abril'
Non-Deal Roadshow Abril'
Non-Deal Roadshow Abril'
Non-Deal Roadshow Abril'
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Non-Deal Roadshow Abril'
Non-Deal Roadshow Abril'
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Non-Deal Roadshow Abril'
Non-Deal Roadshow Abril'
Non-Deal Roadshow Abril'
Non-Deal Roadshow Abril'
Non-Deal Roadshow Abril'
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Non-Deal Roadshow Abril'
Non-Deal Roadshow Abril'
Non-Deal Roadshow Abril'
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Non-Deal Roadshow Abril'

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  • 1. 1
  • 2. CPFL Energia - Non Deal Road Show 4th quarter and full year 2004 Results José Antonio Filippo – CFO Paulo Cezar Tavares – VP for Energy Management Vitor Fagá de Almeida – Investor Relation April, 2005 CPFL Energia 2004 Business 2004 Highlights Business Outlook Results Highlights CPFL Energia Generation Distribution Commercialization Commercialization Distribution Generation 2
  • 3. CPFL Energia – 2004 Highlights CPFL Energia was consolidated as a market leader CPFL Energia’s Initial Public Offering (IPO), in September 2004, listed on Novo Mercado (Bovespa) and NYSE (Level 3 ADR); Net income of R$ 279 million in 2004 against net losses of R$ 297 million in 2003; Energy consumption increase of 4.9% in CPFL’s Group concession area above Brazilian average; Reduction of 8.9% in the total financial debt and improvement in the Group’s debt profile, seeking an optimum capital structure; Monte Claro Hydroelectric Plant starts it's commercial operations and indeed 14 de Julho and Castro Alves Hydroelectric Plants started the construction; Commercialization company confirmation as market leader (19% market share) and efficiency in retaining free customers in CPFL´s Group. MENU 3
  • 4. Highlights CPFL Energia Private Company Leader in Energy Sector R$ 9.5 billion gross revenues and R$ 1.7 billion EBITDA in 2004 Well-established operations leading the distribution and commercialization markets Successful history of acquisitions, restructuring and consolidation Distribution Commercialization Generation The largest distribution Market leader, with a 19% High growth on installed platform, with a 12.2% market share capacity market share Outstanding performance in Generate energy totally Operating in a high capturing free customers contracted with distributors of consumption regions the Group Development of value added Benchmark in operating services EBITDA Margin above 90% efficiency Efficient Distribution Success in Strong Growth in the Operation in a Commercialization Business Generation Business High Growth Area High Corporate Governance Standards MENU 4
  • 5. Best Corporate Governance Practices Shareholders Market 37.69% 33.04% 13.62% 5.09% 10.56% One Class of Common shares with 100% tag along rights – equal rights to Shares shareholders Benchmark in Dividend Policy Minimum dividend payout of 50% adjusted net profit, paid in semiannual basis Commitment to increase Free Current Free Float of 15.65%, to be increased to 25% by 2007 Float Alignment with Sarbanes-Oxley Act Compliance – NYSE (Level III ADR) the Best Market Commitment to Novo Mercado – BOVESPA Rules (Level III) Practices Annual Report in compliance with the Global Reporting Initiative Free-Float Best Equity Deal 2004 MENU 5
  • 6. Investor relations Commitment to Consistent Information Disclosure Periodic meetings with equity research analysts • - ABAMEC Meeting (Rio de Janeiro) – April, 06 • - APIMEC Meeting (São Paulo) – April, 07 Presence in the main local and international conferences Financial Results Conference Calls and Webcasts Presentations available on the IR web site Disclosure of material facts and press releases Newsletter – “CPFL Investor” ri.cpfl.com.br MENU 6
  • 7. Commitment to liquidity and stock performance Since December 2004, the Market Maker contributed to increase CPFL’s shares liquidity, targeting future participations in the main Bovespa´s Market Maker indexes, and liquidity - IBX – 100 – Sept/05; IBX – 50 and Ibovespa – from Jan/06; - Currently 56º major trading index. ADR Liquidity Included in the index Dow Jones Brazil Titans 20 ADR Research Currently, 9 banks covers CPFL stocks - 7 of them with “buy” analysts recommendation 4 institutions are under research process. Share price CPFL’s shares exceeds the variation of the main indexes evolution Common share price evolution 1 ADR price evolution ¹ CPFE3 9.8% CPL 15.6% IEE 4.9% Dow Jones 3.9% Ibovespa 14.6% S&P 500 5.7% ¹ - From 09/29/04 (IPO) to 03/22/05 MENU 7
  • 8. CPFL ENERGIA MENU 8
  • 9. Business Structure Distribution Commercialization Generation 94.94% 100% 97.01% 97.41% 100% 100% 67.07% 65.00% 48.72% 40.00% (1) Plants under construction 25.01% (6 Hydroelectric Power Plants) (1) 66.67% stake in Foz do Chapecó Energia S.A., which has a 60% interest in the Foz do Chapecó Energy Consortium MENU 9
  • 10. R$ 9.5 billion Gross Revenues in 2004 an 18% increase compare to 2003 Sales (GWh) Gross Revenues (R$ million) 36647 34945 4.9% 9549 8082 18% 9158 9500 2235 2553 3.7% 14% 4Q03 4Q04 2003 2004 4Q03 4Q04 2003 2004 2.2%, 3.9% and 5.8% consumption 4.9% increase in energy sold increase rate in the residential, Increase in energy tariff of Paulista, RGE e commercial and industrial segments, Piratininga respectively TUSD revenue increase in 495% Increase in energy sold by CPFL Readjustment in generation contracts Brazil (SHP’s and Semesa) Increase number of costumers in 2.4% MENU 10
  • 11. R$ 6.7 billion Net Revenue in 2004 an increase of 11% compare to 2003. Comparing the Net Revenue in 2004, excluding the adjustment effects of PIS and Cofins the Net Revenue would present an increase of 19.5% Net Revenue Pro-forma Change in the accounting criteria (R$ million) of PIS/Cofins credits Before the After the 7241 R$ (million) change change 19.5% Gross Revenue 9,548 9,548 6057 6.736 Deductions credits 505 - 11.2% Total deductions (2,307) (2,812) 24% 2048 Net Revenue 7,241 6,736 1648 Credit on operation - 472 -6.4% costs and expenses 1543 EBITDA 1.714 1.681 4Q03 4Q04 2003 2004 Credit on deprec./amort. 0 12 Credit on financial 0 21 results Net Income 279 279 Change in the criteria of PIS / Cofins credits account do not affect net income Accounting effected of PIS / Cofins credit were fully recognized on the 4th quarter MENU 11
  • 12. Net income of R$ 279 million in 2004 EBITDA (R$ million) Net Income (R$ million) 279 1681 1541 160 9% 72% 93 194% 429 484 13% -297 4Q03 4Q04 2003 2004 4T03 4T04 2003 2004 11.2% increase in net revenues 9% EBITDA increase 6.6% reduction in operating costs and 27% financial expenses reduction expenses Group results were affected by non- Positive effect of the change in the current items : goodwill amortization criteria • IPO expenses (R$ 44 million) • RTE provision (R$ 32 million) MENU 12
  • 13. Non-recurring events impacted the EBITDA and the net income of the Company in 2004 EBITDA Proforma Net Income Proforma (R$ million) (R$ million) 11 1.724 32 311 1.681 44 355 32 279 279 R e p o rte d RTE IP O o p e r . A d ju s te d Reported RTE IPO total Adjusted E b itd a E ffe c te d E xp. E b itd a Net Income Effected expenses Net Income Excluding the non-recurring events EBITDA would present a 12% growth when Net Income would present an increase of compared with 2003 220% when compared with 2003 MENU 13
  • 14. All business units have positively contributed to the consolidated net income Generation Commercialization Distribution R$ Million 2003 2004 +9% +11% 6313 6736 5775 6057 +13% +150% 783 Net 276 313 313 Revenue +5% +9% 1681 1295 1541 +12% +114% 1235 251 282 152 71 EBITDA +2267% +100% +888% +194% 323 279 71 51 102 Net 3 Income -4 1 -2 9 7 MENU 14
  • 15. Dividend payout of 95% of 2004 net income Net Income R$ million Dividends R$ million 279 265 154 140 125 125 1ºS 04 2ºS 04 2004 1ºS 04 2ºS 04 2004 Dividend per share Dividend Yield 1ºS04¹ – R$ 0.30 2ºS04 – R$ 0.31 2004E² - 3.2% 2004 – R$ 0.61 Dividend payment higher than the minimum payment of 50% as established by the company policy ¹ - Consider the dividend paid, divided by the number of shares before the IPO issued ² - Dividend paid in the 1ºS plus the dividend of the 2ºS divided by the share price on 03/21/05 MENU 15
  • 16. Debt profile Financial debt restructuring resulted in reduction of cost and maturity Reduction in nominal Debt Cost: 19.63% -10% Higher cost debt repayment and 17.75% lower costs borrowing; Debt Cost IGPM + 5.3% 102% CDI 2003 2004 Increased average maturity: Amortization of short-term debt and new 6.0% longer-than-average terms funding: 5.5% Average 9% Payment of CPFL Energia Maturity Debentures – ST (years) CPFL Geração Funding - LT IFC Funding – LT R$ 775¹ million will over due in the 2003 2004 next 12 months (17% of the total) ¹ Adjusted debt = total debt + Pension funds – regulatory assets / CVA MENU 16
  • 17. Debt Profile CPFL Energia reduced its CDI debt exposure replacing it by IGP and TJLP, thus reducing the interest rate volatility risk 2003 2004 Debt Breakdown Debt Breakdown by Index Type by Index Type Dólar D ó la r TJLP TJLP 4% 5% 19% 23% CDI 31% CDI 46% IGP IGP 31% 41% Main Borrowings Main amortizations CPFL Paulista Debentures CPFL Energia Debentures - R$ 787 million (CDI); R$ 255 million (IGP and CDI); FRN’s - R$ 350 million (CDI); FIDC - R$ 200 million (CDI); Short Term Financing - R$ 100 million (CDI) IFC - R$ 115 million (CDI); BNDES - R$ 150 million (TJLP). Significant indebtedness reduction in Parent Company MENU 17
  • 18. Capital structure CPFL Energia seeks optimum capital structure in order to minimize WACC and maximize shareholder value Significant debt reduction Ideal leverage parameters: (R$ billion) Net Debt / EBITDA = 2.5 Debt / Equity ratio - 65% / 35% 6.3 • Respecting the minimum limit on distribution business - 50% / 50% 4.9 4.4 3.8 2.9 2004 Year-end Capital Structure 2.3 Equity 44% Debt 56% Net Debt / EBITDA = 2.3 2002 2003 2004 Adjusted Net Debt * Net Debt/EBITDA * Adjusted net debt = total debt + Pension funds – regulatory assets / CVA – cash and cash equivalents MENU 18
  • 19. Capex is aligned with the financial reality of the Group Until 2008, CPFL Energia will invest approximately R$ 2.6 billion in maintenance and business expansion TOTAL CAPEX (R$ million) 723 672 681 179 626 166 158 559 159 161 506 544 523 467 398 2004 2005E 2006E 2007E 2008E E x p a n s io n M a in t e n a n c e In 2004, CPFL Energia generated R$ 1.7 billion of EBITDA MENU 19
  • 20. Small CAPEX needs to maintain Distribution and Generation businesses CPFL Energia will invest approximately R$ 657 million until 2008 in business maintenance CAPEX – MAINTENANCE (R$ million) 179 166 161 15 158 159 14 9 10 15 152 164 143 150 151 2004 2005E 2006E 2007E 2008E D is t r ib u t io n G e n e r a t io n MENU 20
  • 21. Funding needs for the new projects are already dully provided – Current business plan By 2008 R$ 1.9 billion will be invested in expansion of Generation and Distribution businesses CAPEX – NEW PROJECTS GENERATION AND DISTRIBUTION (R$ million) Additional funds provided through financings: 544 • Generation – BNDES 506 523 467 • Distribution – Finem BNDES 398 Equity guaranteed by IPO 320 270 298 218 (R$ 310 million) plus operating cash 347 373 374 311 240 180 generation 93 Generation investments will add 1,177 53 104 49 60 MW to the Group's capacity (R$ 2.03 million per MW) 159 171 149 156 158 Investments to distribution will attend to nearly 600 thousand of new 2004 2005E 2006E 2007E 2008E customers to the Group in the next 4 Capex distribution Capex generation - Debt years (R$ 1.05 thousand per Capex generation - Equity customers) * - December 2004 MENU 21
  • 22. Expectation of growth of controlling companies results and financial expenses reduction forecast strong net income increase Equity pickup in results of investees (R$ million) Growth in controlling companies results due to: 477 Start up of new generation projects 271 Growth in energy volume sold by distribution Co. 9% 206 4 31 32% Increase in revenues from generation projects with 15 EBITDA margin over 90%. 1H04 2H04 2003 2004 Financial Expenses Pró-Forma¹ (R$ million) -4 2 307 % Financial expenses reduction: 178 1 1 1 -3 Reduction in net debt; 9% 67 Improvement in the average debt cost. 1H04 2H04 2003 2004 Net Income Pró-Forma² (R$ million) 207 355 % Increase in expected profits of Parent 0% 104 100 22 Company results -2 9 7 MENU 1H 04 2H 04 2003 2004 ¹ - Exclude non current expenses incurred with the IPO as well as the proportional adjustment of the goodwill amortization which was fully booked on the 4ºQ 04 ² - Include the adjustment in the financial expenses plus the RTE effect 22
  • 23. Business Highlights MENU 23
  • 24. CPFL Energia – Business Highlights in 2004 CPFL Energia’s business units’ excellent performance in 2004 is the consequence of management actions targeting value creation Distribution Commercialization Generation Consolidation as the CPFL Brasil consolidation as Beginning of construction of industry’s operating indicators the largest energy Castro Alves and 14 de Julho benchmark commercialization company hydroelectric plants Transmission operation in the country, reaching 19% Startup of operations of Monte centralization and operating market share Claro hydroelectric plant unification consolidation Success in the free customer R$ 300 million additional 100% automation of CPFL retention strategy financing by BNDES for Barra Piratininga’s substations Increase sales of value added Grande services Issuance of installation license for Foz do Chapecó Foz do Chapecó project Acceptance by BNDES MENU 24
  • 25. Distribution - Sales CPFL serve 5.5 million customers (2004) a 2.4% Sales (GWh) growth compared to 2003 33644 33039 The amount of energy sold was virtually flat in the power supply market, however the increase in charges for the usage of the energy distribution system (TUSD) presented a strong growth 8883 8452 4Q 03 4Q 04 2003 2004 Adjusted Sales Evolution (GWh) 33039 31572 4.6% Operation Center - Santos C e n tr o d e O p e r a ç õ e s - S a n to s 2003 A D J 2004 ADJ¹ = excludes from 2003 basis the effect of the free customers migration in 2004 MENU 25
  • 26. Reducing the risk of captive customers migration on distribution business The potential free market represented 13,111 GWh/year in 2003 and in 2004 it represents 7,714 GWh/year (41% reduction) Annual Captive Market of distributors base 100 Energy sold to potential free customers reduced from 37% in 2003 to 22% in 2004; 22 Of those potential free customers in 2004, 37 80% requested a negotiation with CPFL; 78 Of those 80%, 78% renew in the captive 63 market; 19% have migrated to the free market and were retained by CPFL Brasil; Only 3% of those who migrated to free market were not retained by CPFL Brasil; 2003 2004 Captive market Potentially free market MENU 26
  • 27. Distribution –Business results 17% increase in the gross revenue in 2004 compare to 2003 Gross Revenue (R$ million) 9067 Increase in the residential, commercial and 7763 17% industrial sector’s consumption 8.7% reduction of operating costs and expenses 2153 2411 Change in the goodwill amortization curve 12% 4Q 03 4Q 04 2003 2004 Net Income (R$ million) EBITDA (R$ million) 323 1295 220 1235 139 58% 888% 5% 372 397 7% (4 1 ) 4Q 03 4Q 04 2003 2004 4Q 03 4Q 04 2003 2004 MENU 27
  • 28. Distribution – TUSD and migration of captive customers Charges for the system utilization (TUSD) presented growth in 2004 Revenues from the system utilization presented 495% increase in 2004 compared to 2003; In 2004, 38 captive customers have left the captive market and became free customers. Revenues for the System Utilization Operating center - Campinas (TUSD) (R$ million) 217 The 38 customers which have become free, represent 2,060 GWh/year: 495% 30 customers were retained in the Group 552% 67 through the commercialization unit, 36 represent 1,764 GWh/year (86%) 13 Only 8 customers have left the Group, 4Q03 4Q04 2003 2004 representing 296 GWh/year (14%) MENU 28
  • 29. Distribution – Consumption by customer class Excluding the effect of captive customer migration, all classes experienced an increase in the period Consumption Mix by Customer Class The major driver for residential 2004 (GWh) class growth was the customers Others base increase in the concession Rural 9% Residential area; 5% 25% The commercial class performance was driven by the economy’s Commercial 1 5 % warming up; The reduction in the industrial segment was mainly motivated by 46% Industrial the migration of captive customers to free customers. Consumption Consumption Classes Var.(%) 03-04 Var.(%) ADJ¹ Residential 2.2% 2.1% Excluding the effect of the captive customers migration, the Industrial -6.6% 7.1% industrial consumption presented Commercial 3.9% 4.6% an increase of 7.1% Rural 4.5% 4.3% ADJ¹ = excludes from 2003 basis the effect of the free customers migration in 2004 MENU 29
  • 30. Commercialization – Business Result CPFL Brasil: Commercialization business presented strong revenues, EBITDA and net profit growth Gross revenue (R$ million) EBITDA (R$ million) 152 893 166% 71 336 39 114% 243 87 180% 388% 8 4Q 03 4Q 04 2003 2004 4Q 03 4Q 04 2003 2004 Net income (R$ million) Highlights 102 Retention of customers in CPFL Group Capture of new free customers Energy sales to other market agents, 51 100% including distribution companies 19 Solution based on value added services 217% 6 sales, such as the construction of substations for major customers 4Q 03 4Q 04 2003 2004 MENU 30
  • 31. Commercialization – Free Customers CPFL Brasil maintains its focus on the free market Energy sold to Free Customers (GWh) Remarkable growth in the amount of 2889 energy sold to free customers; 270% Customers in different industries, such as automobiles, beverage and food, 925 278% 780 chemical, steel, retail and many others, 245 mitigate the demand oscillation risks. 4Q 03 4Q 04 2003 2004 Free Customer Flow 2004 (GWh) 2,347 Outside the Migration of distributors’ captive 28% 583 concession area customers is more than offset by the 86% 1764 14% capture of free customers in the 287 commercialization company -2 0 6 0 50 free customers in 2004, 13 of them Retained by the being customers outside the distribution Migration at Commercialization Distributors Company Balance companies’ concession area MENU 31
  • 32. Generation – Business Results Gross Revenues of the Generation business increased 14% in 2004 compare to 2003 Gross Revenue (R$ million) EBITDA (R$ million) 331 291 282 14% 251 12% 74 18% 87 74 62 19% 4Q 03 4Q 04 2003 2004 4Q 03 4Q 04 2003 2004 Net Income (R$ million) Energy supply contracts are related to 71 IGP-M Total generated energy are contracted 2267% Monte Claro plant has begun its operation EBITDA margin above 90% 6 217% 19 3 4Q 03 4Q 04 2003 2004 MENU 32
  • 33. Generation – Business Highlights Generation projects Monte Claro Hydroelectric plant start its commercial operations in December 2004; 14 de Julho Hydroelectric Plant started its construction in October 2004; Foz do Chapecó Installation License Obtained Acceptance of Foz do Chapecó by BNDES, considering it eligible for financing. Barra Grande – Current Stage Campos Novos – Current Stage Monte Claro – Plan Concluded MENU 33
  • 34. CPFL Energia launched Monte Claro Hydroelectric Plant in RS State Inauguration of Monte Claro: Built in less than 3 years; High technology employed; - Turbine and generator; - Digital Control and Supervision System Excellent installed power output by flooded area ratio – with low environmental impact level - 93 MW/Km² 5.1 MW/KM² average of the new energy projects¹ 14 MW/Km² average of the public projects bided between 2000 and 2002² Construction concluded 14 months ahead of Aneel´s concession agreement timetable; Proving the planning and administrative experience on generating projects implementation ¹ New generation projects to be auctioned by Aneel MENU 34
  • 35. Business Outlook MENU 35
  • 36. Business Outlook – Generation To add value through the continuous increase in operating efficiency and the conclusion of ongoing generation projects Barra Campos Foz do Monte Claro Castro Alves 14 de Julho Grande Novos Chapecó PPA’s OK OK OK OK OK OK Environmental OK OK OK OK OK OK Licenses Terms Financing OK OK OK OK OK released by BNDES Current Stage Concluded 92% 87% 13% 4% 2005 Installed capacity (MW Average) New projects will increase the Group installed % power capacity by 2.5x 2. 0 1990 : 2 3-08) Power capacity addition of 1,177 MW – 56% to be R (0 1647 CAG 1498 delivered by January, 2006 897 954 • Barra Grande: 173 MW (Oct/05) • Campos Novos: 429 MW (Jan/06) • Group will present a 22% CAGR in installed power capacity from 2004 to 2008 2004 2005 2006 2007 2008 MENU 36
  • 37. Business Outlook – Generation Projects Leverage competitive advantages to grow the generation business Plants in which CPFL is involved, will account CPFL seeks to be the 3° biggest private player for 35% of all new energy added to Brazilian in generation until 2010 electric sector until 2008 Investment in construction, acquisition, energy added to Brazilian electric and repotentiation of SHPs sector (MW)* Bid in the “new energy” auction, 3411 investment in generation Greenfields (sale in ACR); 2676 1340 295 Purchase existing assets Competitive Advantages 2381 2071 888 716 230 Experience in planning, management and 855 486 33 implementation of generation projects 2005 2006 2007 2008 Operational efficiency benchmark with an O t h e r P la n s C P F L P la n s EBITDA margin above 90% * - Energy to be generated by power plants whose construction has already been initiated MENU 37 Source: Aneel Jan/05
  • 38. Business Outlook - Generation SHP’s CPFL – Repowering PCH Gavião Peixoto PCH Chibarro PCH Capão Preto SHP - Gavião Peixoto: SHP - Chibarro: SHP - Capão Preto: ‒ Feasibility study ‒ Under feasibility study; ‒ Under feasibility study; approved by ANEEL; ‒ Beginning of construction ‒ Beginning of ‒ Beginning of forecast to August, 2005 construction forecast to construction forecast by August, 2005 June, 2005. MENU 38
  • 39. Business Outlook - Commercialization Commercialization keep working successfully on free customer retention/capturing strategy in CPFL Group and growing on free customer market Operating in buying and selling energy to distributors (including the Group distributors) through long term regulated contracts The free customer market reached 12% of the Brazilian market in 2004. Forecasting a growth of 50% in 2005 Strong growth on sales of value added services with adequate margins (CPFL Brasil has the biggest portfolio of energy substation under construction) CPFL Brasil has competitive prices due to the purchase of big energy volume: ― Among the commercialization companies, CPFL Brasil is the largest buyer from Biomass projects, Petrobrás thermoelectric plan and Tractebel CPFL Brasil is a strong and reliable brand making the difference for free customers decisions to buy energy Offices established on the main Brazilians cities to identify new business opportunities which include the development of value added services and support the free market MENU 39
  • 40. Business Outlook – Distribution Adding value through maximizing the distribution business operational efficiency Technical and commercial indicators are reference in the Benchmark in sector Technical and Commercial 1,5% reduction loss is the CPFL target for the next 2 years Losses Losses reduction add more than R$ 100 million EBITDA/year to CPFL results Continuous Reduction of manageable costs by 9.5% per year Reduction of Costs into the limits of the model company established by the ANEEL Manageable Low investment required by the universalization program Costs MENU 40
  • 41. Business Outlook – CPFL universalization program requires low investments Residential customers level without access to electric energy in CPFL’s area is lower if compared to the average of the main regions of the country Percentage of non-served Total non-served residential residential customers customers 2.443.028 5,46% 1,99% 1,23% 248.098 0,22% 142.041 5.074 Brazil CPFL Southeast South Brazil CPFL Southeast South Low investment needed to meet the universalization target There are only 5 thousand residential customers not served in CPFL’s concession area, against 2.4 million residential customers in Brazil The high population density in CPFL’s concession area does not demand large investments to meet the universalization targets Source: Aneel MENU 41
  • 42. Business Outlook – Distribution Growing focus linked to low cost of capital Adequate capital structure – (Debt/Equity ratio of 56%/44% Adequate by 2004 year-end) Capital Debt Cost compatible with the parameters of the model Structure company established by ANEEL presenting minimum WACC Minimum WACC achievement , maximizing value to the shareholders Proven experience in acquisition, restructuring and integration ― Piratininga acquisition Distribution Search for opportunities in the industry’s consolidation expansion ― Players seeking to leave the industry; ― Players with high operational synergies. MENU 42
  • 43. Business Outlook – CPFL in high-growth rate market Annual Market CPFL Energia Power Consumption 1Q05 (GWh)¹ (Concession Area) 5,3% CPFL2 vs Brazil vs. Southeast 38.384 36.449 36.397 34.517 34.298 895 3 .2 0 9 419 5 .6 8 8 28.794 29.522 5 .7 6 6 6 .0 8 6 6 .4 1 8 7 ,2 % 5 .8 8 6 7 ,0 % 1 0 .6 6 7 1 0 .2 3 5 1 0 .4 6 4 1 0 .3 1 5 9 .8 4 0 1 0 .1 6 1 1 0 .0 1 3 6 ,1 % 1 8 .5 5 9 1 9 .0 5 8 2 0 .0 4 2 1 9 .1 5 3 1 8 .3 7 1 1 8 .1 9 9 1 8 .9 1 7 1998 1999 2000 2001 2002 2003 2004 P a u lis t a P ir a t in in g a RGE C P F L B r a s il CPFL B r a z il S ou th east CPFL Energia’s energy demand has The consumption growth of CPFL already reached a higher level than the Energia distributors concession area pre-rationing period (2000) in the 1Q05 was higher than in CPFL Brasil had a key role in market southeast region and in Brazil increase, preventing free customers from leaving CPFL Group 1 Consider 100% of RGE 2 CPFL Paulista + Piratininga + RGE Source: ONS MENU 43
  • 44. CPFL Energia - Non Deal Road Show 4th quarter and full year 2004 Results José Antonio Filippo – CFO Paulo Cezar Tavares – VP for Energy Management Vitor Fagá de Almeida – Investor Relation April, 2005 44

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