apimec 2015 ing
TRANSCRIPT
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.
Investor PresentationAPIMEC 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
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 corporat e sustainability.
8
33
ISA
ColombiaIntercolombia
TranselcaXM
INTERNEXA
PeruREP
TransmantaroISA Perú
PDIINTERNEXA
ChileINTERCHILEINTERNEXA
INTERVIAL CHILERuta del MaipoRuta del Maule
Ruta del BosqueRutla de la Araucania
Ruta de los RiosISA inversiones ChileISA inversiones Maule
BrazilCTEEPIEMG
PINHEIROSSERRA DO JAPI
EVRECYINTERNEXA
ISA Capital do Brasil
Others:
Ecuador
Bolivia
Argentina
Panama
Central America
Affiliates and subsidiaries 8 Countries 1 Region:
Central America4 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.
CNDCOL-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
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
telecommunications 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
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 21,5Brazil 1.991 20,3Chile 2.549 26,2Others 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 millionUSD 3.883 million
Projections: July 2015
BreakdownCOP billions
3.509
2.335
818407 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.
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 acquisitionsPortfolio 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 bycountry
1S15 EBITDA 9M15 bybusiness
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 785623
443656
957 884
801
288197
449
369
425 306
250
229285
493240 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)
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
� CapExOptimization
� 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 continuou s creation of value for the clients
CTEEP’s operational strategy is based on excellence in the rendering of services with a focus on the continuou s 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
99,9
339%
2008
99,8
134%
2007
99,9
961%
9M15
99,9
987%
2014
99,9
882%
2013
99,9
949%
2012
99,9
963%
2011
99,9
900%
2010
99,9
754%
200999
,952
1%2008
99,9
306%
2007
99,9
580%
9M15
99,9
067%
2014
99,9
414%
2013
99,9
736%
2012
99,9
500%
2011
99,9
681%
2010
99,9
575%
286
740
1.2851.057
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
264225
219289 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
ES
PBPEA
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)
358158
495
Pre MP 579
2,150
1,655
-76%
Post MP 579
516
36%
RBNI2.891
RBSE5.186
64%
31
Fair Value
Indemnification
Background to the Process
MP 579Sep/12
Law 12.783Jan/13
RBNIJan/13
RBSE
ANEEL Resolution
583Dec/13
EvaluationReportAug/14
ANEEL Ratification
Decision onCriteria(MME)
ANEELInspection
Oct/14
3.6053.7263.7424.9385.0315.186
121161.19693155
Post Ins.Rep. Revision
Report Filed
InspectionMont. Rep.
NT SFF196/2015
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
518777
1.095
380312 384664
873
314161
440/500kV Total138kV 230kV 345kV
-26%
NRV Multiple Report (ANEEL Proposal)NRV Multiple Auctions
218191214184
542
156160110171315
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)
NIPós-
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
ReportValue
Financial Restatement
Gross uptaxes
IndemnityValue in Dec12
+
+ =
IndemnityValue
AdditionalRAP
Constant amortization
system
+
Regulatorycharges
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 traditionaldistribution 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
Indemnification
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
OthersTransmission 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 Hearing s
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
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 incr ease of 97.1%;
� Decline of 24.0% in consolidated net debt in 3Q15 i n relation to the end of 2014 and amounting to R$ 537.8 million;
� Dividends of R$ 27.6 million paid by Evrecy, IEJapi a nd IEMadeira;
� Holding of a Public Hearing on the issue of Other T ransmission Installations (DIT).
� Confirmation of CTEEP’s Long Term Brazilian Corpora te 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
AssetsConcession
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
Theelectrical
InterconnectionRevenues
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.
Deduction3Q15
-47,4
GrossRevenue
3Q15504,6
Net Revenue
3Q15457,2
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.
Deduction3Q15
248.6Net
Revenue3Q15
-32.4
GrossRevenue
3Q15281.0
9M15 657.1
+12.0%
9M14 586.7
Company Subsidiaries
(R$ millions)
44
IFRS - Trend in Consolidated O&M Costsand Expenses
9,4
8,0
7,1
+4.7%
3Q15 126.5
Others
MaterialServices
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
MaterialServices
-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 7,87,34,3
+185.8%
3Q15
102.6
1.9
3Q14
35.9
5.0
IESULIEENEIEGaranhusIEMadeira
54,9
107,0
0,93,8 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)
InterestReceivable
-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 .2 264.8Ebitda 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$9.9 MM in3Q15
3T152014
BNDES - TJLP
Debêntures - CDI/IPCA
Outros
BNDES - TJLP
Debêntures - CDI/IPCA
Outros
Debt 1,080.2 1,191.9 -9.4%
Short-term Debt 110.5 215.9 -48.8%
Long-term Debt 969.7 976.0 -0.6%
Cash 542.5 484.3 12.0%
Net Debt 537.8 707.6 -24.0%
Debt(R$ 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$542.5MM
Debt Amortization
2026 a 2030
52.4
4.647.8
2021 a 2025
164.8
69.0
95.8
2020
48.3
26.3
22.0
2019
50.4
26.3
24.1
2018
216.7
26.3
190.4
2017
237.1
26.4
210.7
2016
248.0
40.7
207.3
2015
62.5
9.6
52.9
SubsidiariesCompany
(R$ 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
16.0175.9
1,233.2
54.2
IESulIEGaranhunsIEMadeira IENNE
56.317.4
184.8
1,242.2
3T152014
(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
57
THANKS
Investor Relations
� Tel: +55 11 3138-7557
� www.cteep.com.br/
Canal Linha Ética
� canalconfidencial.com.br/linhaeticacteep ou pelo telefone 0800 777 0775