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
