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Apimec 2015 ing

This document provides an overview and financial results of ISA and its subsidiary CTEEP. ISA is a multinational company operating in 8 Latin American countries with businesses in electric energy transmission, toll roads, telecommunications and more. CTEEP is ISA's main subsidiary in Brazil, operating transmission lines across 16 states. The document discusses CTEEP's history, investments, efficiency initiatives, financial results, and subsidiaries. It also provides an overview of ISA's strategy to triple profits by 2020 through growth opportunities, efficiency, and portfolio optimization across Latin America.

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1 APIMEC 2015 PRESENTATION OF 3Q15 RESULTS São Paulo, October 27, 2015
2 APIMEC seal 14 YEARS
3 Disclaimer The statements in this report with respect to the outlook for the Company’s businesses, the estimates and result and to the potential for growth, constitute mere forecasts and were based on management’s expectations in relation to the Company’s future. These expectations are highly dependent on changes in the market, the economic performance of Brazil, the sector and international markets, all of which are subject to change.
4 ISA
Investor Presentation APIMEC 2015 Sao Paulo. October 27, 2015 The IR Recognition granted by the Colombian Securities Exchange (Bolsa de Valores de Colombia S.A) is not a certification of the registered securities or the solvency of the issuer
AGENDA 6
Today, ISA is one of the largest company in Latin America… 7 ELECTRIC ENERGY TRANSPORT TOLL ROAD CONCESSIONS TELECOMMUNICATIONS TRANSPORT SMART MANAGEMENT OF REAL TIME SYSTEMS Largest international energy carrier in Latin America. 41,650 kms of high voltage circuit 77.710 MVA of transformation capacity Presence in Colombia, Peru, Bolivia, Brazil, Chile, Panama and Central America. Largest continued terrestrial network of the continent. 26,700 kms of optical fiber Presence: Colombia, Venezuela, Ecuador, Peru, Chile, and Brazil. Equity stake in REDCA (Central America). Largest operator of private roads in Chile. 907 kms of roads in operation in 5 road concessions of the Route in Chile. Over 100 million vehicles. Close to USD 400 million in toll revenue. Operates the National Interconnected System Generation: 64,328 GWh Demand: 63,571 GWh Manages the Wholesale Energy Market Purchase and sale of energy: COP 13.3 trillion
ISA is recognized as a company with broad technical experience, carrying out its activities within the framework of corporate sustainability. 8 33 ISA Colombia Intercolombia Transelca XM INTERNEXA Peru REP Transmantaro ISA Perú PDI INTERNEXA Chile INTERCHILE INTERNEXA INTERVIAL CHILE Ruta del Maipo Ruta del Maule Ruta del Bosque Rutla de la Araucania Ruta de los Rios ISA inversiones Chile ISA inversiones Maule Brazil CTEEP IEMG PINHEIROS SERRA DO JAPI EVRECY INTERNEXA ISA Capital do Brasil Others: Ecuador Bolivia Argentina Panama Central America Affiliates and subsidiaries 8 Countries 1 Region: Central America 4 Business ISA has presence in Latin America through …
Limited growth in Colombia led ISA to an evolution in the business model… Leading energy transmitter in COL. Reduced growth opportunities in COL promoted internationalization process. Entering new markets: Peru, Bolivia, Brazil, Central America. ISA Peru, first internationalization achieved. COL-ECU interconnection. Consolidation transmission business, telecommunications. Intervial Chile, first diversification strategy achieved. COL-PAN interconnection. INTERCHILE 1967-1994 1995-1999 2000-2006 2007-2013 Institutional consolidation New ISA Geographic expansion Diversification Consolidation 2014+ 9 Regional systems interconnection and Center-Coast interconnection. CND COL-VEN interconnection. By 2020, ISA will have tripled its profits, by capturing the most profitable growth opportunities in its businesses existing in Latin America, the boost of operational efficiency and the optimization of its business portfolio. Vision 2020
AGENDA 10
ISA in Brazil has a broad history and an diversified investment… 11 In ISA’s consolidated figures (2014), Brazil represents: 25,9% of the revenues 16,0% of the EBITDA 23,9% of the Assets 2007-2012: CTEEP participated in ANEEL’s bidding processes with great success. IEMadeira, IENNE, IEMG, IEPINHEIROS, IESUL, SERRA DO JAPI, IEGAR ISA’s history in Brazil started in 2006 by purchasing 50.1% of CTEEP’s common shares Annually, CTEEP, invests USD 100 million approximately in reinforcement projects. 2007: ISA acquired 39,28% of CTEEP by a tender offer 2013: ISA acquired an information transport network company in Rio de Janeiro. 2012: ISA started operations in the telecommunication s business ISA is the Colombian company that has made the largest investments in Brazil. Between 2006-2015: BRL 11,3 billion ISA reinforced its commitment with Brazil by signing the concession contract renewal in 2012 CTEEP’ s concession contract 059 goes from 2013 to 2042 1 2 3 4 5
AGENDA 12
2.528 2.540 2.557 2.570 2.589 2.615 2015 2016 2017 2018 2019 2020 COLOMBIA PERU BRAZIL CHILE OTHERS An investment of USD 3.883 million supports ISA’s future growth ... 13 by country COP % Colombia 3.121 31,9 Peru 2.097 21,5 Brazil 1.991 20,3 Chile 2.549 26,2 Others 12 0,1 by business COP % Energy 9.052 92,7 Toll Roads 167 1,7 Telecommunications 392 4,0 SMRTS 159 1,6 COP 9.769.711 million USD 3.883 million Projections: July 2015 Breakdown COP billions 3.509 2.335 818 407 412 2.288 In Brazil, investments are in reinforcement projects for an average of USD 100 million annually. USD/COP
14 For nearly 50 years, ISA has been characterized by the efficient and reliable delivery of its services, within a framework of respect for human rights and environmental protection in order to promote regional competitiveness and sustainability, thanks to a highly qualified and committed team consisting of more than 3,800 workers.
16 CTEEP
17 CTEEP: Timeline CTEEP is constituted with the transmission assets of CESP Incorporation of EPTE with transmission assets of Eletropaulo Extension of Concession Agreement 059/2001 with ANEEL, beginning a new cycle for its businesses Startup of Operations of IE Madeira’s transmission line and conclusion of work ISA Group launches Vision 2020 with focus on profitability and operational efficiency Signs up to Level 1 of BM&FBovespa’s Corporate Governance Privatization, ISA becomes the new controller 2002 2006 2012 2013 2015 Expansion into 16 Brazilian states, the result of participations in auctions and acquisitions Portfolio of businesses with 8 subsidiaries, investments of R$ 6.2 billion and a RAP of R$ 670.2 MM 1999 2001 Start of operations of IE Garanhuns’ transmission line
18 CTEEP today Active participation in the expansion of the transmission system with investments in excess of R$ 6 billion since 2007 Responsible for the transmission of about 30% of the energy produced in Brazil, 55% of the energy consumed in the Southeast and 98% in the state of São Paulo 9 companies with 18 th. Km of TLs, 112 substations and 60.7 th. MVA of transformation capacity Footprint in the state of São Paulo and 15 other states R$ 10 billion in assets Strategic assets for the wholesale supply of energy: São Paulo and important regional interconnections (IEMadeira) An ANEEL Benchmark Company in Operational Efficiency and Quality Indicators
19 CTEEP: Shareholding Breakdown Capital Total Preferred Shares - TRPL4 (60% of the total) Common Shares - TRPL3 (40% of the total) 0.7% 9.8% 89.5% 52.4% 2.3% 31.2% 6.7% 7.4% 19.0% 4.0% 4.4% 35.4% 37.2% Others Vinci Ltda Governo do Estado de SP Eletrobras ISA Capital do Brasil Base: 30/09/2015
20 A ‘Multilatina’ company with a footprint in 8 countries, ISA has consolidated over the course of more than 46 years of activities at its 33 companies, distributed across 4 sectors: electric energy transmission, highway concessions, telecommunications and intelligent management of real time systems ISA Group 1S15 ISA 1H15 EBITDA by country 1S15 EBITDA 9M15 by business Colômbia Chile Peru Brasil Outros 41,1% 28,2% 15,6% 1,4% 13,6% Transporte de Energia Concessões Viárias Telecomunicações Gestão Inteligente de Tempo Real 68% 2,8% 0,8% 28,4%
21 CTEEP: Investments 539 680 785 623 443 656 957 884 801 288 197 449 369 425 306 250 229 285 493 240 1552202 407 683 2010 2011 2.062 1.563 2015E 637 2012 1.976 2014 757 1.674 20132009 1.386 2008 610 2007 CTEEP Sócios nas SubsidiariasCTEEP nas Subsidiarias Investments in excess of R $ 11 billion since 2007 , including investments in subsidiaries , directly or in partnership with partners Participation in 14 of the 19 auctions between 2006 and 2012 , with supply in 48 lots 12 lots in operational phase and 1 lot with operation scheduled for November / 15 Investimentos 2007/2015E (R$ MM corrigidos)
22 Results and Challenges
23 Vision 2020
24 Value Drivers O&M EFFICIENCY Investments RETURN Subsidieries GOVERNANCE Indemnification /DIT FAIR VALUE Contingencies REDUCTION Optimization of Costs Tax Optimization Optimization of O&M Model CapEx Optimization Inventory Utilization FIN/ADM Centralization of the 100% subs. in CTEEP Control of IEMG and Evrecy via COT RBSE Report Regulatory Affairs Area Strategic Liabilities Management Project
25 Efficiency Operations and Maintenance Use of all that is most modern in technology – Control Centers, Substations and Transmission Lines Management of Operations and Maintenance by Processes, continuously improved and certified People are valued, highly trained and continuously developed with a focus on the multidisciplinary approach and team spirit ANEEL Benchmark Company CTEEP’s operational strategy is based on excellence in the rendering of services with a focus on the continuous creation of value for the clients CTEEP’s operational strategy is based on excellence in the rendering of services with a focus on the continuous creation of value for the clients
26 Efficiency Execution of O&M optimization project: reorganization of the regional offices, optimization of headcount, review of scope and renegotiation of contracts Expected savings of R$ 7.5 million (2%) in PMSO, despite higher inflation (200bps above budget) and unbudgeted extraordinary expenditure (Law 4819 and making a case against the transfer of DITs). PIS/COFINS credit on Inputs and Fixed Assets Collective Bargaining Agreement: 8.2% wage agreement Readjustment of 10% in fixed profit sharing value, food vouchers and basic basket of goods Changes in Profit Sharing values and criteria with respect to meritocracy: inclusion of Ebitda and Variable Parcel indicators, aligned to Company goals (QGI) Operations and Maintenance Rigorous cost control 2012 613 -13,8% 9M15 357 2014 455 2013 472 (*) exclui custos de construção e despesa de depreciação +11.8% 9M15 613.2 2014 740.6 2013 586.6 2012 592.3 O&M Revenue (IFRS) (R$ MM - IFRS) OpEx* (R$ MM - IFRS) Controladas Controladora
27 In 9M15, we carried 98,835 GWh of the grid (SIN), or 25% of the entire system’s load Expected energy unsupplied in 9M15 was 286 MWh, just 0.0003% of total transmitted energy Efficiency Operations and Maintenance Transformer Uptime (time)Transmission Line Uptime (time) 2009 99,9339% 2008 99,8134% 2007 99,9961% 9M15 99,9987% 2014 99,9882% 2013 99,9949% 2012 99,9963% 2011 99,9900% 2010 99,9754% 200999,9521%2008 99,9306% 2007 99,9580% 9M15 99,9067% 2014 99,9414% 2013 99,9736% 2012 99,9500% 2011 99,9681% 2010 99,9575% 286 740 1.285 1.057 1.208 1.741 2009 1.230 20082007 1.332 2013 9M152014201220112010 623 Reduction in Expected Energy Unsupplied (MWh)
28 Return Strategy for supporting global returns through inclusion of a cost reduction goal in the 2015 Budget Internalization of inspection and commissioning Prioritization in the use of inventory, improvement in procurement process. Execution with real gain of 5% on budget (goal) Investments Discipline in the allocation of resources CapEx executed (R$ MM - realizado) 688 591 264 225 219 289 132168 299 9M152014 -27,0% 507 2013 815 2012 952 ControladasControladora Requests lodged with ANEEL with immediate effect, begin the administrative process for revising the Price Bank with respect to items included in the Resolutions. issue new Authorization Resolutions (REAs) based on “market prices” quoted by CTEEP and already shown in the administrative processes together with a new schedule for the execution of work Reduced financial execution in the Jan-Sep/15 period
29 Governance Total investment of R$ 6.2 bi, CTEEP capital injections of R$ 1.6 bi 15/16 RAP of R$ 682.8 million (45% total RAP total*) 9M15 EBITDA of R$ 403,1 million (margin of 88%) Dividends of R$ 27.6 million paid to CTEEP in 2015 (IEMadeira, IEJapi and Evrecy) IEGaranhuns Schedule for startup in operations of projects in november 2015 Subsidiaries Portfólio totalmente operacional em 2015 E S P BP EA L IEMadeira Conclusion of work in May 2014 Financial–economic rebalancing for Lot D requested of ANEEL Surcharge: R$ 342 million / Loss of R$ 251milhões in RAP / Readjustment of 26.8% in RAP (*) Não ponderado pela participação nas coligadas (**) Ebitda Regulatório total das subsidiárias
30 Fair Value With the purpose of reducing tariffs, MP 579 modified the method used to remunerate investments, divided into: (i) sufficient revenue to cover costs plus a profit margin for operations and maintenance; and (ii) indemnification of assets not fully amortized CTEEP’s decision was essential for 100% adherence of the transmission companies and was based on trust in Brazilian institutions and the creation of value through the fair indemnification of the unamortized assets with a view to recovering the Company’s investment capacity and long-term growth Indemnification Extention of Conecession Agreement 40% 60% RAP (R$ million) Indemnification (R$ million) 358 158 495 Pre MP 579 2,150 1,655 -76% Post MP 579 516 36% RBNI 2.891 RBSE 5.186 64%
31 Fair Value Indemnification Background to the Process MP 579 Sep/12 Law 12.783 Jan/13 RBNI Jan/13 RBSE ANEEL Resolution 583 Dec/13 Evaluation Report Aug/14 ANEEL Ratification Decision on Criteria (MME) ANEEL Inspection Oct/14 3.6053.7263.742 4.9385.0315.186 121161.196 93155 Post Ins.Rep. Revision Report Filed Inspection Mont. Rep. NT SFF 196/2015 Inspection Monitoring Report -24% Revised Report CTEEP Current Difference ANEEL Timeline of the Indemnification Amount (R$ million)
32 Fair Value Comparison between New Replacement Values recognized by ANEEL and Transmission Auction Values (Bain&Company) For transmission lines, the recognized values are on average 26% lower than those prevailing at the auctions For substations, ANEEL recognized values on average 29% lower than prevailing at the auctions Indemnification Aneel NRV vs Aneel Auctions 518 777 1.095 380312 384 664 873 314 161 440/500kV Total138kV 230kV 345kV -26% NRV Multiple Report (ANEEL Proposal)NRV Multiple Auctions 218191214184 542 156160110171 315 440/500kV345kV Total138kV 230kV -28% Substations (R$ th / MVA) Transmission Lines (R$ th / KM)
33 Fair Value Conditions for extension of the concession imply net reduction of 45% in Revenue CTEEP ( RAP after renovation + annuities equivalent to SE compensation at $ 3.7 billion Conditions well below those of the Eletrobras companies ( 17% ) indicate the need to persist in discussions with ANEEL on calculation criteria Indemnification Valor Glosa CTEEP 2.208 522 2.891 3.743 -28% 201 494 1.217 -45% FURNAS 2.308 637 2.878 8.999 -16% 200 1.188 2.026 -12% CHESF 1.401 524 1.587 5.064 -10% 110 669 1.303 -7% Eletronorte 1.115 280 1.682 2.633 -10% 117 348 744 -33% Eletrosul 920 411 1.986 1.007 -5% 138 133 682 -26% Grupo Eletrobras 5.745 1.852 8.133 17.704 -13% 565 2.338 4.755 -17% Total 7.952 2.374 11.024 21.446 -16% 766 2.832 5.972 -25% Concessionárias Base: Dez/2012 Nova RAP NI (B) SE (com IR) (D) Com IR em SE (A+B+D) ∆% Receita Anual Permitida (RAP) NI Pós- renovação (A) Pré- renovação SE Indenizações Anuidades CTEEP indemnity vs other utilities
34 Fair Value Indemnification Payment of indemnity by way of electricity energy tariff Payments on a reducing basis in monthly installments Restatement at the IPCA + capital cost as from the baseline date of the Report (12/31/2012) Gross up of applicable direct and indirect taxes Sight payment of the amount corresponding to the period from Jan/2013 to the initial date of payment Initial indemnity payment for each Transmission Company as soon as the respective amount is ratified Report Value Financial Restatement Gross up taxes Indemnity Value in Dec12 + + = Indemnity Value Additional RAP Constant amortization system + Regulatory charges Payment Method: ABRATE Proposal
35 Considerations Legal Aspects Transfer of more than 50% of the assets covered by the CTEEP concession Legal insecurity triggered by two regulatory changes in less than three years Possible loss of the concession’s purpose Technical Aspects Transfer of all the DIT Significant part of CTEEP DIT bear no similarity to the traditional distribution networks, the example of the complementary network operated by the ONS (National Grid Operator) DIT cannot be analyzed simply on the basis of voltage but rather on the basis of the systematic function they exercise Indemnificat ion Indemnification for all investments executed post- 2012 based on ANEEL’s Price Bank (R$ 356 million ) According to the Federal Audit Court (TCU), the Price Bank constituted in 2008 has not be updated Does not take into account the tax levy The effective restated cost of R$ 1,398 million (nominal value of R$ 624 million, restated for inflation and regulatory WACC with taxes) Revenue from O&M Decrease of Revenue does not impact economic/financial balance CTEEP’s current RAP includes a 35% quality premium and an O&M margin of 10% pursuant to NT ANEEL 383/2012 Indemnification for the loss of these future results is necessary to ensure that the economic and financial balance of the agreement is maintained. Expected impact amounts to R$ 688 million Decrease in revenue income could trigger early repayment of loans and sureties Others Transmission and Distribution companies decide other aspects Necessary prior definition for equipment replacement; inventory; service agreements signed by the Transmission Companies; Labor Relations and cost, and regularization with transfer of properties Technical Note Summary of CTEEP’s contributions to Public Hearings Transfer of Other Transmission Installations - DIT
36 Reduction Supplementary Retirement Act 4819 Favorable decision of the Supreme Court in April of 4819 / 2015 ( defines the regular courts as competent to proceed to judgment ) Association of Retired CESP Foundation filed an appeal against the decision and obtained injunctive relief (maintenance of leaf payment until evaluation by regular courts ) In 14/10 the Supreme Court ruled on the embargo and confirmed the jurisdiction of the ordinary courts and upheld the injunction of the Association of Retirees Collection Suit 4819 There was judgment of the Collection CTEEP proposed action against the State of São Paulo. The appeal of CTEEP was welcomed defining the jurisdiction of the regular courts , as well as a right to reimbursement of expenses 4,819 . CTEEP will appeal for a better definition of funds entitled to reimbursement in sentencing Process Eletropaulo / Eletrobras Expert report of 16 September 2015 confirmed the Company's thesis Contingencies Status (*) ex provisão de R$ 0,5 MM
37 Awards and Best Practices CTEEP is the first electricity company to have the Quality Assessment Certification , an international certification granted by The Institute of Internal Auditors (IIA ) , which aims to recognize the quality of the areas of internal audit organizations. A research and development project (R & D ) developed by CTEEP in partnership with the Institute for Energy and Environment ( IEE ) at USP and CESP won recognition in the 1st Innovation and Technology Award Solar Brazil . The study , which focuses on analyzing the impacts of photovoltaics in the electrical system , was awarded in the category " Award for best academic design innovation 2015 " CTEEP was among the best companies in the yearbook Época Business 360, with the 47th position among the 250 best . The Company stood out in the sector in two dimensions : Innovation Capacity ( 5th place ) and HR Practice ( 4th place ) Awards
38 Financial Results 3Q15
39 Allowed Annual Revenue (RAP) – increase of 16.4%; Increase of 29.2% in Net Revenue; EBITDA of R$ 343.9 million in 3Q15 and EBITDA Margin of 75.2%; Net Income of 3Q15 reached R$ 276.3 million, an increase of 97.1%; Decline of 24.0% in consolidated net debt in 3Q15 in relation to the end of 2014 and amounting to R$ 537.8 million; Dividends of R$ 27.6 million paid by Evrecy, IEJapi and IEMadeira; Holding of a Public Hearing on the issue of Other Transmission Installations (DIT). Confirmation of CTEEP’s Long Term Brazilian Corporate Rating of ‘AA+(bra)’ with stable outlook; Amount and method of payment of RBSE still pending. Settlement now expected as from July/2016. IFRS Highlights 3Q15
40 IFRS - Gross Consolidated Revenue +28,3% 3Q15 504,6 Others 0,1 Assets Concession 72,6 O&M 16,6 Infrastructure 22,1 3Q14 393,2 +23,8% 9M15 1.104,5 9M14 891,9 Infrastructure: increase of 28.7%, largely due to the increase in upgrading projects, substation construction, transmission line reconstruction and the installation of capacitor banks at CTEEP and the controlled subsidiaries of Serra do Japi O&M: increase of 7.7% largely due to the positive variation in IPCA and IGP-M indices used to restate O&M revenue comprising the 14/15 RAP to find the 15/16 RAP Remuneration of Concession Assets: increase of 76.8% due to: (i) average balance of financial assets for expected realization of construction values and indemnification in favor of CTEEP and increased due to monetary restatement and the startup of new investments during the period and (ii) the monetary restatement of financial flows for the 2015/2016 cycle with respect to CAAE (Annual Cost of the Electricity Assets) installment Others: increase of R$ 0.3MM in rents and a decline of R$ 0.2 MM in third party services Aumento de 28,2% (R$ millions) ConsolidatedCompany
41 Regulatory – Consolidated Gross Revenue +9.8% 3Q15 281.0 Others 0.1 The electrical Interconnection Revenues 25.0 3Q14 255.9 +12.6% 9M15 746.0 9M14 662.5 Increase of 9.8% in 3Q15 Company Consolidated Electric Energy Network Uptime: i. monetary restatement of the 2014/2015 RAP cycle as the basis for the 2015/2016 RAP cycle (IPCA 8.47% and IGP-M 4.11%) ii. inclusion of the Annual Cost of Facilities and Assets (CAIMI of R$ 28.7 MM in the 2015/2016 cycle) receivable and iii. startup of operations of new investments, increasing the RAP by R$ 30.8 MM for the 2015/2016 cycle Other Revenues: i. increase of R$ 0.3 MM in rents and a decline of R$ 0.2 MM in third party services (R$ millions)
42 Growth of 29.2% in Net Operating Revenue for 3Q15 IFRS - Consolidated Net Revenue Deductions: in 3Q15, there was an increase of 20.1% compared with 3Q14, due to revenue taxes which match the variation in operating revenue, and offset by the rate established for PIS and COFINS (3.65%) charges levied on the subsidiaries which adopt the presumed profit tax regime Growth of 24.1% in Net Revenue for 9M15 compared with the same period in 2014. Deduction 3Q15 -47,4 Gross Revenue 3Q15 504,6 Net Revenue 3Q15 457,2 9M15 989,9 9M14 797,4 +24,1% Company Subsidiaries (R$ millions)
43 Growth of 29.2% in Consolidated Net Revenue for 3Q15 Regulatory – Consolidated Net Revenue Deductions: in 3Q15 there was an increase of 20.1% compared with 3Q14, due to revenue taxes which match the variation in operating revenue, and offset by the rate established for PIS and COFINS (3.65%) charges levied on the subsidiaries which adopt the presumed profit tax regime Growth of 24.1% in Net Revenue for 9M15 compared with the same period in 2014. Deduction 3Q15 248.6 Net Revenue 3Q15 -32.4 Gross Revenue 3Q15 281.0 9M15 657.1 +12.0% 9M14 586.7 Company Subsidiaries (R$ millions)
44 IFRS - Trend in Consolidated O&M Costs and Expenses 9,4 8,0 7,1 +4.7% 3Q15 126.5 Others Material Services Personnel 3Q14 120.8 +10.9% 9M15 362.9 9M14 327.2 Increase of 4.7% in 3Q15 Personnel: growth of 11.1% due to the collective bargaining agreement resulting in an 8.2% increase granted in August 2015, backdated to June 2015, termination costs with the restructuring of the technical area and the greater use made of company’s medical services during the period Services/Material: increase of 39.2% in services and materials, above all due to the non- recurring recovery of costs in 3Q14 which reduced the comparative base for 3Q15 Others: reduction of 34.7% in contingency expenses, reflecting the work on restatement of amounts and probabilities for success in legal actions which had inflated contingencies in 3Q14. (R$ millions) SubsidiariesCompany
45 Regulatory – Trend in Consolidated O&M Costs and Expenses 5,8 -3.5% 3Q15 134.9 Others -8.6 Material Services -2.1 Personnel 3Q14 139.8 +5.9% 9M15 392.8 9M14 370.8 Personnel: growth of 11.1% due to the collective bargaining agreement resulting in an 8.2% increase granted in August 2015, backdated to June 2015, termination costs with the restructuring of the technical area and the greater use made of company’s medical services during the period Material/Services: reduction of 20.7% and 5.8%, respectively, due to (i) increased use of in- house labor for operations and maintenance services and (ii) redefinition of scope and conditions of work Others: reduction of 34.7% in contingency expenses, reflecting the work on restatement of amounts and probabilities for success in legal actions which had inflated contingencies in 3Q14. Reduction of 3.5% Company Subsidiaries (R$ millions)
46 IFRS - Equity Income Result IEMadeira: in 3Q14, the RTP was booked to the accounts, reducing the RAP for Lot D by 4.5% and Lot F by 3.8%, decreasing the base used for comparison with 3Q15. The adjustment of the RAP 2015/2016 cycle was R$ 110.8million for 3Q15. The adjustment at the other subsidiaries had a net impact of R$ 13.6 million. Increase of 185.8% in 3Q15 25,9 85,6 0,7 7,8 7,34,3 +185.8% 3Q15 102.6 1.9 3Q14 35.9 5.0 IESULIEENEIEGaranhusIEMadeira 54,9 107,0 0,9 3,8 20,2 9M15 +91.0% 137.5 2.6 7.7 9M14 72.0 12.4 (R$ millions)
47 Regulatory – Equity Income Result Increase of 45.9% in 3Q15 -45.9% 3Q15 16.5 -0.5 17.0 3Q14 30.5 -0.2 30.7 54.2 9M15 +71.0% -0.1 -0.6 54.9 9M14 31.7 -0.6 -1.5 33.8 IESULIEENEIEMadeira IEMadeira: Reduction of 44.6% in the result due to the booking of adjustments to the RAP 2015/2016 cycle: (i) booking of the RTP for 2014, impacting the 2015/2016 cycle; (ii) booking of 3/12 of a negative PA. In addition, the result for IEMadeira was negatively affected due to the increase in financial expenses as a result of greater leverage as a result of debenture issues. (R$ millions)
48 IFRS - Consolidated Financial Result -1,6 3Q15 -8.0 Others 2.0 Interest/ expenses on loans 0.5 Monetary (net) Interest Receivable -8.0 3Q14 -0.9 9M15 -5.6 9M14 15.6 Reduction in monetary restatement revenue and from interest in 3Q15 totaling R$ 7.3 million, compared with R$ 16.8 million in 3Q14, reflecting restatement at the IPCA + 5,59% of accounts receivable by reversal – Law 12.783 RBNI receivables flow (R$ millions) Company Subsidiaries
49 Earnings per share were R$ 1.6526 in 3Q15 IFRS - Net Income 442,7 315,8 276,3 140,2 +40.2% +97.1% 9M159M143Q153Q14 (R$ millions)
50 Earnings per share were R$ 0.3777 in 3Q15 Regulatory – Net Income (R$ millions) +6.2% -28.7% 9M15 198.3 9M14 186.8 3Q15 65.2 3Q14 91.5
51 Consolidated EBITDA post ICVM 527 3Q15 3Q14 1H15 1H14 3T15 3T14 9M15 9M14 Net Income 276.3 140.1 442.7 315.8 65.2 91.5 198.3 186.8 Income tax and social contribuition 49.4 21.3 89.4 67.0 47.3 6.2 87.8 36.2 Financial Results 8.0 0.9 5.6 (15.6) 8.0 0.9 5.6 (15.6) Depreciation and Amortization 10.2 10.5 30.7 31.0 21.0 19.6 61.5 57.4 EBITDA ICVM 527/12 343.9 172.7 568.3 398.3 141.4 118.2 353.2 264.8 Ebitda Margin EBITDA Margin 75.2% 48.8% 57.4% 49.9% 56.9% 51.9% 53.7% 45.1% REGULATORYEBITDA (R$ million) IFRS
52 Reduction of 24% in Net Debt Net Debt In June, settlement of the first interest payment for R$ 101.6 million on the 3rd Debenture issue. Monthly settlement of principal and interest in favor of BNDES for R$9.9 MM in 3Q15 3T152014 BNDES - TJLP Debêntures - CDI/IPCA Outros BNDES - TJLP Debêntures - CDI/IPCA Outros Debt 1,080.2 1,191.9 -9.4% Short-term Debt 110.5 215.9 -48.8% Long-term Debt 969.7 976.0 -0.6% Cash 542.5 484.3 12.0% Net Debt 537.8 707.6 -24.0% Debt (R$ million) 3Q15 2014 ∆% 47.9%52.0% 0.2% 45.7% 54.2% 0.1%
53 Cash and Cash Equivalents as at September 30, 2015: R$542.5MM Debt Amortization 2026 a 2030 52.4 4.6 47.8 2021 a 2025 164.8 69.0 95.8 2020 48.3 26.3 22.0 2019 50.4 26.3 24.1 2018 216.7 26.3 190.4 2017 237.1 26.4 210.7 2016 248.0 40.7 207.3 2015 62.5 9.6 52.9 SubsidiariesCompany (R$ millions)
54 CTEEP’s participation Debt of the Jointly Controlled Subsidiaries Total: R$ 1,479.4Total: R$ 1,500.7 59.5% of debt of the jointly controlled subsidiaries in 3Q15 is indexed to the TJLP No additional funding was raised 3Q15 16.0 175.9 1,233.2 54.2 IESulIEGaranhunsIEMadeira IENNE 56.3 17.4 184.8 1,242.2 3T15 2014 (R$ millions)
55 Closing prices of TRPL4 in 3Q15 was R$ 40.80 Capital Markets Performance Principal events: CTEEP’s market cap. at the end of September 2015 was R$ 6.715MM; Average daily traded volume in 9M15 was R$12.5 MM Average daily trades – 1,781 TRPL4 trade on all the days the Exchange was open for business -35 -25 -15 -5 5 15 Jan/15 Fev/15 Mar/15 Abr/15 Mai/15 Jun/15 Jul/15 Ago/15 Set/15 Volume TRPL4 TRPL3 TRPL4 IBOVESPA IEE Volume Médio Diário TRPL4 -5,10% -9,89% -1,69% -2,50% R$ 12,5 Milhões
56 Q&A
57 THANKS Investor Relations Tel: +55 11 3138-7557 ri@cteep.com.br www.cteep.com.br/ Canal Linha Ética canalconfidencial.com.br/linhaeticacteep ou pelo telefone 0800 777 0775
58

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Apimec 2015 ing

  • 1.
    1 APIMEC 2015 PRESENTATION OF3Q15 RESULTS São Paulo, October 27, 2015
  • 2.
  • 3.
    3 Disclaimer The statements inthis report with respect to the outlook for the Company’s businesses, the estimates and result and to the potential for growth, constitute mere forecasts and were based on management’s expectations in relation to the Company’s future. These expectations are highly dependent on changes in the market, the economic performance of Brazil, the sector and international markets, all of which are subject to change.
  • 4.
  • 5.
    Investor Presentation APIMEC 2015 SaoPaulo. October 27, 2015 The IR Recognition granted by the Colombian Securities Exchange (Bolsa de Valores de Colombia S.A) is not a certification of the registered securities or the solvency of the issuer
  • 6.
  • 7.
    Today, ISA isone of the largest company in Latin America… 7 ELECTRIC ENERGY TRANSPORT TOLL ROAD CONCESSIONS TELECOMMUNICATIONS TRANSPORT SMART MANAGEMENT OF REAL TIME SYSTEMS Largest international energy carrier in Latin America. 41,650 kms of high voltage circuit 77.710 MVA of transformation capacity Presence in Colombia, Peru, Bolivia, Brazil, Chile, Panama and Central America. Largest continued terrestrial network of the continent. 26,700 kms of optical fiber Presence: Colombia, Venezuela, Ecuador, Peru, Chile, and Brazil. Equity stake in REDCA (Central America). Largest operator of private roads in Chile. 907 kms of roads in operation in 5 road concessions of the Route in Chile. Over 100 million vehicles. Close to USD 400 million in toll revenue. Operates the National Interconnected System Generation: 64,328 GWh Demand: 63,571 GWh Manages the Wholesale Energy Market Purchase and sale of energy: COP 13.3 trillion
  • 8.
    ISA is recognizedas a company with broad technical experience, carrying out its activities within the framework of corporate sustainability. 8 33 ISA Colombia Intercolombia Transelca XM INTERNEXA Peru REP Transmantaro ISA Perú PDI INTERNEXA Chile INTERCHILE INTERNEXA INTERVIAL CHILE Ruta del Maipo Ruta del Maule Ruta del Bosque Rutla de la Araucania Ruta de los Rios ISA inversiones Chile ISA inversiones Maule Brazil CTEEP IEMG PINHEIROS SERRA DO JAPI EVRECY INTERNEXA ISA Capital do Brasil Others: Ecuador Bolivia Argentina Panama Central America Affiliates and subsidiaries 8 Countries 1 Region: Central America 4 Business ISA has presence in Latin America through …
  • 9.
    Limited growth inColombia led ISA to an evolution in the business model… Leading energy transmitter in COL. Reduced growth opportunities in COL promoted internationalization process. Entering new markets: Peru, Bolivia, Brazil, Central America. ISA Peru, first internationalization achieved. COL-ECU interconnection. Consolidation transmission business, telecommunications. Intervial Chile, first diversification strategy achieved. COL-PAN interconnection. INTERCHILE 1967-1994 1995-1999 2000-2006 2007-2013 Institutional consolidation New ISA Geographic expansion Diversification Consolidation 2014+ 9 Regional systems interconnection and Center-Coast interconnection. CND COL-VEN interconnection. By 2020, ISA will have tripled its profits, by capturing the most profitable growth opportunities in its businesses existing in Latin America, the boost of operational efficiency and the optimization of its business portfolio. Vision 2020
  • 10.
  • 11.
    ISA in Brazilhas a broad history and an diversified investment… 11 In ISA’s consolidated figures (2014), Brazil represents: 25,9% of the revenues 16,0% of the EBITDA 23,9% of the Assets 2007-2012: CTEEP participated in ANEEL’s bidding processes with great success. IEMadeira, IENNE, IEMG, IEPINHEIROS, IESUL, SERRA DO JAPI, IEGAR ISA’s history in Brazil started in 2006 by purchasing 50.1% of CTEEP’s common shares Annually, CTEEP, invests USD 100 million approximately in reinforcement projects. 2007: ISA acquired 39,28% of CTEEP by a tender offer 2013: ISA acquired an information transport network company in Rio de Janeiro. 2012: ISA started operations in the telecommunication s business ISA is the Colombian company that has made the largest investments in Brazil. Between 2006-2015: BRL 11,3 billion ISA reinforced its commitment with Brazil by signing the concession contract renewal in 2012 CTEEP’ s concession contract 059 goes from 2013 to 2042 1 2 3 4 5
  • 12.
  • 13.
    2.528 2.540 2.5572.570 2.589 2.615 2015 2016 2017 2018 2019 2020 COLOMBIA PERU BRAZIL CHILE OTHERS An investment of USD 3.883 million supports ISA’s future growth ... 13 by country COP % Colombia 3.121 31,9 Peru 2.097 21,5 Brazil 1.991 20,3 Chile 2.549 26,2 Others 12 0,1 by business COP % Energy 9.052 92,7 Toll Roads 167 1,7 Telecommunications 392 4,0 SMRTS 159 1,6 COP 9.769.711 million USD 3.883 million Projections: July 2015 Breakdown COP billions 3.509 2.335 818 407 412 2.288 In Brazil, investments are in reinforcement projects for an average of USD 100 million annually. USD/COP
  • 14.
    14 For nearly 50years, ISA has been characterized by the efficient and reliable delivery of its services, within a framework of respect for human rights and environmental protection in order to promote regional competitiveness and sustainability, thanks to a highly qualified and committed team consisting of more than 3,800 workers.
  • 16.
  • 17.
    17 CTEEP: Timeline CTEEP isconstituted with the transmission assets of CESP Incorporation of EPTE with transmission assets of Eletropaulo Extension of Concession Agreement 059/2001 with ANEEL, beginning a new cycle for its businesses Startup of Operations of IE Madeira’s transmission line and conclusion of work ISA Group launches Vision 2020 with focus on profitability and operational efficiency Signs up to Level 1 of BM&FBovespa’s Corporate Governance Privatization, ISA becomes the new controller 2002 2006 2012 2013 2015 Expansion into 16 Brazilian states, the result of participations in auctions and acquisitions Portfolio of businesses with 8 subsidiaries, investments of R$ 6.2 billion and a RAP of R$ 670.2 MM 1999 2001 Start of operations of IE Garanhuns’ transmission line
  • 18.
    18 CTEEP today Active participationin the expansion of the transmission system with investments in excess of R$ 6 billion since 2007 Responsible for the transmission of about 30% of the energy produced in Brazil, 55% of the energy consumed in the Southeast and 98% in the state of São Paulo 9 companies with 18 th. Km of TLs, 112 substations and 60.7 th. MVA of transformation capacity Footprint in the state of São Paulo and 15 other states R$ 10 billion in assets Strategic assets for the wholesale supply of energy: São Paulo and important regional interconnections (IEMadeira) An ANEEL Benchmark Company in Operational Efficiency and Quality Indicators
  • 19.
    19 CTEEP: Shareholding Breakdown CapitalTotal Preferred Shares - TRPL4 (60% of the total) Common Shares - TRPL3 (40% of the total) 0.7% 9.8% 89.5% 52.4% 2.3% 31.2% 6.7% 7.4% 19.0% 4.0% 4.4% 35.4% 37.2% Others Vinci Ltda Governo do Estado de SP Eletrobras ISA Capital do Brasil Base: 30/09/2015
  • 20.
    20 A ‘Multilatina’ companywith a footprint in 8 countries, ISA has consolidated over the course of more than 46 years of activities at its 33 companies, distributed across 4 sectors: electric energy transmission, highway concessions, telecommunications and intelligent management of real time systems ISA Group 1S15 ISA 1H15 EBITDA by country 1S15 EBITDA 9M15 by business Colômbia Chile Peru Brasil Outros 41,1% 28,2% 15,6% 1,4% 13,6% Transporte de Energia Concessões Viárias Telecomunicações Gestão Inteligente de Tempo Real 68% 2,8% 0,8% 28,4%
  • 21.
    21 CTEEP: Investments 539 680 785 623 443 656 957 884 801 288 197 449 369 425306 250 229 285 493 240 1552202 407 683 2010 2011 2.062 1.563 2015E 637 2012 1.976 2014 757 1.674 20132009 1.386 2008 610 2007 CTEEP Sócios nas SubsidiariasCTEEP nas Subsidiarias Investments in excess of R $ 11 billion since 2007 , including investments in subsidiaries , directly or in partnership with partners Participation in 14 of the 19 auctions between 2006 and 2012 , with supply in 48 lots 12 lots in operational phase and 1 lot with operation scheduled for November / 15 Investimentos 2007/2015E (R$ MM corrigidos)
  • 22.
  • 23.
  • 24.
    24 Value Drivers O&M EFFICIENCY Investments RETURN Subsidieries GOVERNANCE Indemnification /DIT FAIR VALUE Contingencies REDUCTION Optimization ofCosts Tax Optimization Optimization of O&M Model CapEx Optimization Inventory Utilization FIN/ADM Centralization of the 100% subs. in CTEEP Control of IEMG and Evrecy via COT RBSE Report Regulatory Affairs Area Strategic Liabilities Management Project
  • 25.
    25 Efficiency Operations and Maintenance Useof all that is most modern in technology – Control Centers, Substations and Transmission Lines Management of Operations and Maintenance by Processes, continuously improved and certified People are valued, highly trained and continuously developed with a focus on the multidisciplinary approach and team spirit ANEEL Benchmark Company CTEEP’s operational strategy is based on excellence in the rendering of services with a focus on the continuous creation of value for the clients CTEEP’s operational strategy is based on excellence in the rendering of services with a focus on the continuous creation of value for the clients
  • 26.
    26 Efficiency Execution of O&Moptimization project: reorganization of the regional offices, optimization of headcount, review of scope and renegotiation of contracts Expected savings of R$ 7.5 million (2%) in PMSO, despite higher inflation (200bps above budget) and unbudgeted extraordinary expenditure (Law 4819 and making a case against the transfer of DITs). PIS/COFINS credit on Inputs and Fixed Assets Collective Bargaining Agreement: 8.2% wage agreement Readjustment of 10% in fixed profit sharing value, food vouchers and basic basket of goods Changes in Profit Sharing values and criteria with respect to meritocracy: inclusion of Ebitda and Variable Parcel indicators, aligned to Company goals (QGI) Operations and Maintenance Rigorous cost control 2012 613 -13,8% 9M15 357 2014 455 2013 472 (*) exclui custos de construção e despesa de depreciação +11.8% 9M15 613.2 2014 740.6 2013 586.6 2012 592.3 O&M Revenue (IFRS) (R$ MM - IFRS) OpEx* (R$ MM - IFRS) Controladas Controladora
  • 27.
    27 In 9M15, wecarried 98,835 GWh of the grid (SIN), or 25% of the entire system’s load Expected energy unsupplied in 9M15 was 286 MWh, just 0.0003% of total transmitted energy Efficiency Operations and Maintenance Transformer Uptime (time)Transmission Line Uptime (time) 2009 99,9339% 2008 99,8134% 2007 99,9961% 9M15 99,9987% 2014 99,9882% 2013 99,9949% 2012 99,9963% 2011 99,9900% 2010 99,9754% 200999,9521%2008 99,9306% 2007 99,9580% 9M15 99,9067% 2014 99,9414% 2013 99,9736% 2012 99,9500% 2011 99,9681% 2010 99,9575% 286 740 1.285 1.057 1.208 1.741 2009 1.230 20082007 1.332 2013 9M152014201220112010 623 Reduction in Expected Energy Unsupplied (MWh)
  • 28.
    28 Return Strategy for supportingglobal returns through inclusion of a cost reduction goal in the 2015 Budget Internalization of inspection and commissioning Prioritization in the use of inventory, improvement in procurement process. Execution with real gain of 5% on budget (goal) Investments Discipline in the allocation of resources CapEx executed (R$ MM - realizado) 688 591 264 225 219 289 132168 299 9M152014 -27,0% 507 2013 815 2012 952 ControladasControladora Requests lodged with ANEEL with immediate effect, begin the administrative process for revising the Price Bank with respect to items included in the Resolutions. issue new Authorization Resolutions (REAs) based on “market prices” quoted by CTEEP and already shown in the administrative processes together with a new schedule for the execution of work Reduced financial execution in the Jan-Sep/15 period
  • 29.
    29 Governance Total investment ofR$ 6.2 bi, CTEEP capital injections of R$ 1.6 bi 15/16 RAP of R$ 682.8 million (45% total RAP total*) 9M15 EBITDA of R$ 403,1 million (margin of 88%) Dividends of R$ 27.6 million paid to CTEEP in 2015 (IEMadeira, IEJapi and Evrecy) IEGaranhuns Schedule for startup in operations of projects in november 2015 Subsidiaries Portfólio totalmente operacional em 2015 E S P BP EA L IEMadeira Conclusion of work in May 2014 Financial–economic rebalancing for Lot D requested of ANEEL Surcharge: R$ 342 million / Loss of R$ 251milhões in RAP / Readjustment of 26.8% in RAP (*) Não ponderado pela participação nas coligadas (**) Ebitda Regulatório total das subsidiárias
  • 30.
    30 Fair Value With thepurpose of reducing tariffs, MP 579 modified the method used to remunerate investments, divided into: (i) sufficient revenue to cover costs plus a profit margin for operations and maintenance; and (ii) indemnification of assets not fully amortized CTEEP’s decision was essential for 100% adherence of the transmission companies and was based on trust in Brazilian institutions and the creation of value through the fair indemnification of the unamortized assets with a view to recovering the Company’s investment capacity and long-term growth Indemnification Extention of Conecession Agreement 40% 60% RAP (R$ million) Indemnification (R$ million) 358 158 495 Pre MP 579 2,150 1,655 -76% Post MP 579 516 36% RBNI 2.891 RBSE 5.186 64%
  • 31.
    31 Fair Value Indemnification Background tothe Process MP 579 Sep/12 Law 12.783 Jan/13 RBNI Jan/13 RBSE ANEEL Resolution 583 Dec/13 Evaluation Report Aug/14 ANEEL Ratification Decision on Criteria (MME) ANEEL Inspection Oct/14 3.6053.7263.742 4.9385.0315.186 121161.196 93155 Post Ins.Rep. Revision Report Filed Inspection Mont. Rep. NT SFF 196/2015 Inspection Monitoring Report -24% Revised Report CTEEP Current Difference ANEEL Timeline of the Indemnification Amount (R$ million)
  • 32.
    32 Fair Value Comparison betweenNew Replacement Values recognized by ANEEL and Transmission Auction Values (Bain&Company) For transmission lines, the recognized values are on average 26% lower than those prevailing at the auctions For substations, ANEEL recognized values on average 29% lower than prevailing at the auctions Indemnification Aneel NRV vs Aneel Auctions 518 777 1.095 380312 384 664 873 314 161 440/500kV Total138kV 230kV 345kV -26% NRV Multiple Report (ANEEL Proposal)NRV Multiple Auctions 218191214184 542 156160110171 315 440/500kV345kV Total138kV 230kV -28% Substations (R$ th / MVA) Transmission Lines (R$ th / KM)
  • 33.
    33 Fair Value Conditions forextension of the concession imply net reduction of 45% in Revenue CTEEP ( RAP after renovation + annuities equivalent to SE compensation at $ 3.7 billion Conditions well below those of the Eletrobras companies ( 17% ) indicate the need to persist in discussions with ANEEL on calculation criteria Indemnification Valor Glosa CTEEP 2.208 522 2.891 3.743 -28% 201 494 1.217 -45% FURNAS 2.308 637 2.878 8.999 -16% 200 1.188 2.026 -12% CHESF 1.401 524 1.587 5.064 -10% 110 669 1.303 -7% Eletronorte 1.115 280 1.682 2.633 -10% 117 348 744 -33% Eletrosul 920 411 1.986 1.007 -5% 138 133 682 -26% Grupo Eletrobras 5.745 1.852 8.133 17.704 -13% 565 2.338 4.755 -17% Total 7.952 2.374 11.024 21.446 -16% 766 2.832 5.972 -25% Concessionárias Base: Dez/2012 Nova RAP NI (B) SE (com IR) (D) Com IR em SE (A+B+D) ∆% Receita Anual Permitida (RAP) NI Pós- renovação (A) Pré- renovação SE Indenizações Anuidades CTEEP indemnity vs other utilities
  • 34.
    34 Fair Value Indemnification Payment ofindemnity by way of electricity energy tariff Payments on a reducing basis in monthly installments Restatement at the IPCA + capital cost as from the baseline date of the Report (12/31/2012) Gross up of applicable direct and indirect taxes Sight payment of the amount corresponding to the period from Jan/2013 to the initial date of payment Initial indemnity payment for each Transmission Company as soon as the respective amount is ratified Report Value Financial Restatement Gross up taxes Indemnity Value in Dec12 + + = Indemnity Value Additional RAP Constant amortization system + Regulatory charges Payment Method: ABRATE Proposal
  • 35.
    35 Considerations Legal Aspects Transfer of morethan 50% of the assets covered by the CTEEP concession Legal insecurity triggered by two regulatory changes in less than three years Possible loss of the concession’s purpose Technical Aspects Transfer of all the DIT Significant part of CTEEP DIT bear no similarity to the traditional distribution networks, the example of the complementary network operated by the ONS (National Grid Operator) DIT cannot be analyzed simply on the basis of voltage but rather on the basis of the systematic function they exercise Indemnificat ion Indemnification for all investments executed post- 2012 based on ANEEL’s Price Bank (R$ 356 million ) According to the Federal Audit Court (TCU), the Price Bank constituted in 2008 has not be updated Does not take into account the tax levy The effective restated cost of R$ 1,398 million (nominal value of R$ 624 million, restated for inflation and regulatory WACC with taxes) Revenue from O&M Decrease of Revenue does not impact economic/financial balance CTEEP’s current RAP includes a 35% quality premium and an O&M margin of 10% pursuant to NT ANEEL 383/2012 Indemnification for the loss of these future results is necessary to ensure that the economic and financial balance of the agreement is maintained. Expected impact amounts to R$ 688 million Decrease in revenue income could trigger early repayment of loans and sureties Others Transmission and Distribution companies decide other aspects Necessary prior definition for equipment replacement; inventory; service agreements signed by the Transmission Companies; Labor Relations and cost, and regularization with transfer of properties Technical Note Summary of CTEEP’s contributions to Public Hearings Transfer of Other Transmission Installations - DIT
  • 36.
    36 Reduction Supplementary Retirement Act4819 Favorable decision of the Supreme Court in April of 4819 / 2015 ( defines the regular courts as competent to proceed to judgment ) Association of Retired CESP Foundation filed an appeal against the decision and obtained injunctive relief (maintenance of leaf payment until evaluation by regular courts ) In 14/10 the Supreme Court ruled on the embargo and confirmed the jurisdiction of the ordinary courts and upheld the injunction of the Association of Retirees Collection Suit 4819 There was judgment of the Collection CTEEP proposed action against the State of São Paulo. The appeal of CTEEP was welcomed defining the jurisdiction of the regular courts , as well as a right to reimbursement of expenses 4,819 . CTEEP will appeal for a better definition of funds entitled to reimbursement in sentencing Process Eletropaulo / Eletrobras Expert report of 16 September 2015 confirmed the Company's thesis Contingencies Status (*) ex provisão de R$ 0,5 MM
  • 37.
    37 Awards and BestPractices CTEEP is the first electricity company to have the Quality Assessment Certification , an international certification granted by The Institute of Internal Auditors (IIA ) , which aims to recognize the quality of the areas of internal audit organizations. A research and development project (R & D ) developed by CTEEP in partnership with the Institute for Energy and Environment ( IEE ) at USP and CESP won recognition in the 1st Innovation and Technology Award Solar Brazil . The study , which focuses on analyzing the impacts of photovoltaics in the electrical system , was awarded in the category " Award for best academic design innovation 2015 " CTEEP was among the best companies in the yearbook Época Business 360, with the 47th position among the 250 best . The Company stood out in the sector in two dimensions : Innovation Capacity ( 5th place ) and HR Practice ( 4th place ) Awards
  • 38.
  • 39.
    39 Allowed Annual Revenue(RAP) – increase of 16.4%; Increase of 29.2% in Net Revenue; EBITDA of R$ 343.9 million in 3Q15 and EBITDA Margin of 75.2%; Net Income of 3Q15 reached R$ 276.3 million, an increase of 97.1%; Decline of 24.0% in consolidated net debt in 3Q15 in relation to the end of 2014 and amounting to R$ 537.8 million; Dividends of R$ 27.6 million paid by Evrecy, IEJapi and IEMadeira; Holding of a Public Hearing on the issue of Other Transmission Installations (DIT). Confirmation of CTEEP’s Long Term Brazilian Corporate Rating of ‘AA+(bra)’ with stable outlook; Amount and method of payment of RBSE still pending. Settlement now expected as from July/2016. IFRS Highlights 3Q15
  • 40.
    40 IFRS - GrossConsolidated Revenue +28,3% 3Q15 504,6 Others 0,1 Assets Concession 72,6 O&M 16,6 Infrastructure 22,1 3Q14 393,2 +23,8% 9M15 1.104,5 9M14 891,9 Infrastructure: increase of 28.7%, largely due to the increase in upgrading projects, substation construction, transmission line reconstruction and the installation of capacitor banks at CTEEP and the controlled subsidiaries of Serra do Japi O&M: increase of 7.7% largely due to the positive variation in IPCA and IGP-M indices used to restate O&M revenue comprising the 14/15 RAP to find the 15/16 RAP Remuneration of Concession Assets: increase of 76.8% due to: (i) average balance of financial assets for expected realization of construction values and indemnification in favor of CTEEP and increased due to monetary restatement and the startup of new investments during the period and (ii) the monetary restatement of financial flows for the 2015/2016 cycle with respect to CAAE (Annual Cost of the Electricity Assets) installment Others: increase of R$ 0.3MM in rents and a decline of R$ 0.2 MM in third party services Aumento de 28,2% (R$ millions) ConsolidatedCompany
  • 41.
    41 Regulatory – ConsolidatedGross Revenue +9.8% 3Q15 281.0 Others 0.1 The electrical Interconnection Revenues 25.0 3Q14 255.9 +12.6% 9M15 746.0 9M14 662.5 Increase of 9.8% in 3Q15 Company Consolidated Electric Energy Network Uptime: i. monetary restatement of the 2014/2015 RAP cycle as the basis for the 2015/2016 RAP cycle (IPCA 8.47% and IGP-M 4.11%) ii. inclusion of the Annual Cost of Facilities and Assets (CAIMI of R$ 28.7 MM in the 2015/2016 cycle) receivable and iii. startup of operations of new investments, increasing the RAP by R$ 30.8 MM for the 2015/2016 cycle Other Revenues: i. increase of R$ 0.3 MM in rents and a decline of R$ 0.2 MM in third party services (R$ millions)
  • 42.
    42 Growth of 29.2%in Net Operating Revenue for 3Q15 IFRS - Consolidated Net Revenue Deductions: in 3Q15, there was an increase of 20.1% compared with 3Q14, due to revenue taxes which match the variation in operating revenue, and offset by the rate established for PIS and COFINS (3.65%) charges levied on the subsidiaries which adopt the presumed profit tax regime Growth of 24.1% in Net Revenue for 9M15 compared with the same period in 2014. Deduction 3Q15 -47,4 Gross Revenue 3Q15 504,6 Net Revenue 3Q15 457,2 9M15 989,9 9M14 797,4 +24,1% Company Subsidiaries (R$ millions)
  • 43.
    43 Growth of 29.2%in Consolidated Net Revenue for 3Q15 Regulatory – Consolidated Net Revenue Deductions: in 3Q15 there was an increase of 20.1% compared with 3Q14, due to revenue taxes which match the variation in operating revenue, and offset by the rate established for PIS and COFINS (3.65%) charges levied on the subsidiaries which adopt the presumed profit tax regime Growth of 24.1% in Net Revenue for 9M15 compared with the same period in 2014. Deduction 3Q15 248.6 Net Revenue 3Q15 -32.4 Gross Revenue 3Q15 281.0 9M15 657.1 +12.0% 9M14 586.7 Company Subsidiaries (R$ millions)
  • 44.
    44 IFRS - Trendin Consolidated O&M Costs and Expenses 9,4 8,0 7,1 +4.7% 3Q15 126.5 Others Material Services Personnel 3Q14 120.8 +10.9% 9M15 362.9 9M14 327.2 Increase of 4.7% in 3Q15 Personnel: growth of 11.1% due to the collective bargaining agreement resulting in an 8.2% increase granted in August 2015, backdated to June 2015, termination costs with the restructuring of the technical area and the greater use made of company’s medical services during the period Services/Material: increase of 39.2% in services and materials, above all due to the non- recurring recovery of costs in 3Q14 which reduced the comparative base for 3Q15 Others: reduction of 34.7% in contingency expenses, reflecting the work on restatement of amounts and probabilities for success in legal actions which had inflated contingencies in 3Q14. (R$ millions) SubsidiariesCompany
  • 45.
    45 Regulatory – Trendin Consolidated O&M Costs and Expenses 5,8 -3.5% 3Q15 134.9 Others -8.6 Material Services -2.1 Personnel 3Q14 139.8 +5.9% 9M15 392.8 9M14 370.8 Personnel: growth of 11.1% due to the collective bargaining agreement resulting in an 8.2% increase granted in August 2015, backdated to June 2015, termination costs with the restructuring of the technical area and the greater use made of company’s medical services during the period Material/Services: reduction of 20.7% and 5.8%, respectively, due to (i) increased use of in- house labor for operations and maintenance services and (ii) redefinition of scope and conditions of work Others: reduction of 34.7% in contingency expenses, reflecting the work on restatement of amounts and probabilities for success in legal actions which had inflated contingencies in 3Q14. Reduction of 3.5% Company Subsidiaries (R$ millions)
  • 46.
    46 IFRS - EquityIncome Result IEMadeira: in 3Q14, the RTP was booked to the accounts, reducing the RAP for Lot D by 4.5% and Lot F by 3.8%, decreasing the base used for comparison with 3Q15. The adjustment of the RAP 2015/2016 cycle was R$ 110.8million for 3Q15. The adjustment at the other subsidiaries had a net impact of R$ 13.6 million. Increase of 185.8% in 3Q15 25,9 85,6 0,7 7,8 7,34,3 +185.8% 3Q15 102.6 1.9 3Q14 35.9 5.0 IESULIEENEIEGaranhusIEMadeira 54,9 107,0 0,9 3,8 20,2 9M15 +91.0% 137.5 2.6 7.7 9M14 72.0 12.4 (R$ millions)
  • 47.
    47 Regulatory – EquityIncome Result Increase of 45.9% in 3Q15 -45.9% 3Q15 16.5 -0.5 17.0 3Q14 30.5 -0.2 30.7 54.2 9M15 +71.0% -0.1 -0.6 54.9 9M14 31.7 -0.6 -1.5 33.8 IESULIEENEIEMadeira IEMadeira: Reduction of 44.6% in the result due to the booking of adjustments to the RAP 2015/2016 cycle: (i) booking of the RTP for 2014, impacting the 2015/2016 cycle; (ii) booking of 3/12 of a negative PA. In addition, the result for IEMadeira was negatively affected due to the increase in financial expenses as a result of greater leverage as a result of debenture issues. (R$ millions)
  • 48.
    48 IFRS - ConsolidatedFinancial Result -1,6 3Q15 -8.0 Others 2.0 Interest/ expenses on loans 0.5 Monetary (net) Interest Receivable -8.0 3Q14 -0.9 9M15 -5.6 9M14 15.6 Reduction in monetary restatement revenue and from interest in 3Q15 totaling R$ 7.3 million, compared with R$ 16.8 million in 3Q14, reflecting restatement at the IPCA + 5,59% of accounts receivable by reversal – Law 12.783 RBNI receivables flow (R$ millions) Company Subsidiaries
  • 49.
    49 Earnings per sharewere R$ 1.6526 in 3Q15 IFRS - Net Income 442,7 315,8 276,3 140,2 +40.2% +97.1% 9M159M143Q153Q14 (R$ millions)
  • 50.
    50 Earnings per sharewere R$ 0.3777 in 3Q15 Regulatory – Net Income (R$ millions) +6.2% -28.7% 9M15 198.3 9M14 186.8 3Q15 65.2 3Q14 91.5
  • 51.
    51 Consolidated EBITDA postICVM 527 3Q15 3Q14 1H15 1H14 3T15 3T14 9M15 9M14 Net Income 276.3 140.1 442.7 315.8 65.2 91.5 198.3 186.8 Income tax and social contribuition 49.4 21.3 89.4 67.0 47.3 6.2 87.8 36.2 Financial Results 8.0 0.9 5.6 (15.6) 8.0 0.9 5.6 (15.6) Depreciation and Amortization 10.2 10.5 30.7 31.0 21.0 19.6 61.5 57.4 EBITDA ICVM 527/12 343.9 172.7 568.3 398.3 141.4 118.2 353.2 264.8 Ebitda Margin EBITDA Margin 75.2% 48.8% 57.4% 49.9% 56.9% 51.9% 53.7% 45.1% REGULATORYEBITDA (R$ million) IFRS
  • 52.
    52 Reduction of 24%in Net Debt Net Debt In June, settlement of the first interest payment for R$ 101.6 million on the 3rd Debenture issue. Monthly settlement of principal and interest in favor of BNDES for R$9.9 MM in 3Q15 3T152014 BNDES - TJLP Debêntures - CDI/IPCA Outros BNDES - TJLP Debêntures - CDI/IPCA Outros Debt 1,080.2 1,191.9 -9.4% Short-term Debt 110.5 215.9 -48.8% Long-term Debt 969.7 976.0 -0.6% Cash 542.5 484.3 12.0% Net Debt 537.8 707.6 -24.0% Debt (R$ million) 3Q15 2014 ∆% 47.9%52.0% 0.2% 45.7% 54.2% 0.1%
  • 53.
    53 Cash and CashEquivalents as at September 30, 2015: R$542.5MM Debt Amortization 2026 a 2030 52.4 4.6 47.8 2021 a 2025 164.8 69.0 95.8 2020 48.3 26.3 22.0 2019 50.4 26.3 24.1 2018 216.7 26.3 190.4 2017 237.1 26.4 210.7 2016 248.0 40.7 207.3 2015 62.5 9.6 52.9 SubsidiariesCompany (R$ millions)
  • 54.
    54 CTEEP’s participation Debt ofthe Jointly Controlled Subsidiaries Total: R$ 1,479.4Total: R$ 1,500.7 59.5% of debt of the jointly controlled subsidiaries in 3Q15 is indexed to the TJLP No additional funding was raised 3Q15 16.0 175.9 1,233.2 54.2 IESulIEGaranhunsIEMadeira IENNE 56.3 17.4 184.8 1,242.2 3T15 2014 (R$ millions)
  • 55.
    55 Closing prices ofTRPL4 in 3Q15 was R$ 40.80 Capital Markets Performance Principal events: CTEEP’s market cap. at the end of September 2015 was R$ 6.715MM; Average daily traded volume in 9M15 was R$12.5 MM Average daily trades – 1,781 TRPL4 trade on all the days the Exchange was open for business -35 -25 -15 -5 5 15 Jan/15 Fev/15 Mar/15 Abr/15 Mai/15 Jun/15 Jul/15 Ago/15 Set/15 Volume TRPL4 TRPL3 TRPL4 IBOVESPA IEE Volume Médio Diário TRPL4 -5,10% -9,89% -1,69% -2,50% R$ 12,5 Milhões
  • 56.
  • 57.
    57 THANKS Investor Relations Tel: +5511 3138-7557 ri@cteep.com.br www.cteep.com.br/ Canal Linha Ética canalconfidencial.com.br/linhaeticacteep ou pelo telefone 0800 777 0775
  • 58.