CTEEP Results Presentation 2T15

1

Presentation of Results 2Q15

São Paulo, 31 July 2015

2

Increase of 27.8% in Net Revenue;

Decline of 4.7 % in costs and expenses of O & M manageable (excluding expenses

contingencies ) ;

EBITDA of R$ 113.3 million in 2Q15 equivalent of an EBITDA margin of 40.6%;

Net Income of 2Q15 reached R$ 79.9 million;

Decline of 10.2% in gross consolidated debt in 2Q15 compared to the end of 2014

amounting to R$ 1,070.8 million;

Distribution to shareholders as dividends (R$ 141.4 million);

Opening of a Public Hearing on transfer of Other Transmission Installations (DIT’s).

Readjustment in Annual Revenue Allowance (RAP);

Highlights 2Q15

3

Gross Operating Revenue - Consolidated

Increase of 27.5%

Construction: Growth of 75.1%, reflecting an increase in upgrading projects, reconstruction of transmission lines and the installation of capacitor banks at CTEEP and a reactor and transformer bank at the IEPinheiros subsidiary;

O&M: Increase of 15.6%:i. surplus in income from the system of R$ 12.8 million,

accounting for 7.7% of the variation;

ii. positive variation of 6.5% of the IPCA for the 2013/2014 RAP cycle amounting to R$ 10.8 MM factored into the 2014/2015 cycle;

iii. startup of operations of new investments amounting to R$ 2.4 MM, representing the remaining 1.4% of the variation;

Financial: Increase of 33%, reflecting the increase in financial assets set aside for the realization of construction and indemnifications (balance of financial assets in 2Q15: R$1,056.5 MM and in 2Q14: R$773.6 MM, excluding the balance of the reversible asset – Law 12.783).

(R$ millions)

246.4

30+4

25.9

11.4

314.1

2Q14

Construction

O&M

Financial

2Q15

27.5%

498.7

599.8

1H14

1H15

Company Subsidiaries

4

Growth of 27.8% in Net Operating Revenue in 2Q15

Operating Deductions and Revenue - Consolidated

Deductions: increase of 25% in 2Q15, principally due to the increase of 32.9% in revenue taxes but in line with the variation in operating revenue

Growth of 20.1% in Net Revenue in 1H15, compared with the same period in 2014.

(R$ millions)

246.4

-28.0

218.4

314.1

-35.0

279.0

Gross Revenue

Deduction2Q14

Net Revenue

Gross Revenue

Deduction2Q15

Net Revenue

Controladora Controladas

498.7

599.8

1H14

1H15

Company Consolidated

498.7

599.8

1H14

1H15


25.0%

5

Increase of 13.4% in 2Q15

Breakdown of Costs and Expenses - Consolidated

Material: Decline of 33.4%, due to the reduction in the use and optimization of costs of materials for maintenance and repair.

Third party services: Decline of 10.8% due to the insourcing of some activities and a reduction in services rendered due to renewal of agreements.

Others: The most significant increase in the period was contingency expenses mainly due to:

i. the increase in labor action contingencies of R$ 13.1 million in 2Q15, CTEEP being co-defendant in actions against delinquent and/or insolvent companies providing outsourced labor to the Company;

ii. increase of tax contingencies for R$ 5.7 million in 2Q15 due to litigation involving an IPTU

(R$ millions)

106.9

0.5

-1.6

-2.9

18.2

121.2

2Q14

Personnel

Material

Services

Others

2Q15

207.4

237.3

1H14

1H15


13.4%

498.7

599.8

1H14

1H15


6

Equity Income - Consolidated

Madeira: reduction of R$4.9 MM in 2Q15 relative to 2Q14, due to (i) increase in financial expenses from a debenture issue; and (ii) the impact from the adoption of the RTT in 2015 with the revision of the SUDAM benefit through an Income Tax reduction.

Garanhuns: growth of R$2.0 MM in 2T15 compared to 2Q14 due to the increase in the financial assets forecasted for the realization of amounts required for construction and indemnity.

IENNE: the negative result in 2Q14 reflects principally the impact of the first periodical tariff revision under Ratifying Resolution 1.540 of June 2013, which reduced the subsidiary’s RAP by 8.9% for the 2013/2014 cycle.

Decline of 9.7% in 2Q15(R$ millions)

16.711.8

28.9

21.4

4.6

6.6

8.1

12.9

-0.5 -1.1 0.0

0.10.4

0.20.7

2Q14 2Q15 1H14 1H15

IEMadeira IEGaranhuns IENNE IESUL

20,918,8

35,036,0

16.711.8

28.9

21.4

4.6

6.6

8.1

12.9

-0.5 -1.1 0.0

0.10.4

0.20.7

2Q14 2Q15 1H14 1H15


20,918,8

35,036,0

16.711.8

28.9

21.4

4.6

6.6

8.1

12.9

-0.5 -1.1 0.0

0.10.4

0.20.7

2Q14 2Q15 1H14 1H15


20,918,8

35,036,0

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Decline of 161.2% in 2Q15

Financial Result - Consolidated

Reduction of income from monetary restatement and interest in 2Q15 amounting to R$ 17.2 million compared with R$ 24.5 million in 2Q14 with respect to restatement at the IPCA + 5.59% of the accounts receivable by reversal (NI) –Law 12.783. (Installments received up to June 30, 2015 amounted to approximately 88.0% of the total amount receivable) and

Reduction in income from financial applications due to lower cash balances in June 2015 (average of R$ 357.9 million) in relation to the same period in 2014 (an average of R$ 509.5 million).

(R$ millions)

6.7

(1.5)

(8.9)

(0.3)

(0.1)

(4.1)

2Q14

Interest Receivable

Monetary (net)

Interest and expenseson loans

Others

2Q15

16.5

2.4

1H14

1H15


498.7

599.8

1H14

1H15


8

Earnings per share were R$ 0.4955 in 2Q15

Breakdown of Net Income

(R$ millions)

175.7 166.5

90.179.9

2Q14 2Q15 1H14 1H15

9

EBITDA Margin in 2Q15 of 40.6%

EBITDA ICVM 527 - Consolidated

Financial Result: Increase of R$10.8 MM, due to the:

i. reduction in revenue from net monetary restatement reflecting the decline in average balance of accounts receivable for indemnification of New Investments from R$ 744.5 MM in June 2014 to R$ 435.5 MM in June 2015 and,

ii. reduction in income from financial investments due to the decline in volumes applied in the financial markets in the period (average balance of financial investments R$393.6 MM in 2Q2015 and R$542.5 MM in 2Q2014);

(R$ millions)

225.5

224.5

1H14

1H15


498.7

599.8

1H14

1H15


119.8

(10.2)

(7.0)

10.8

(0.1)

113.3

2Q14

Net Income

(+/-) Income Tax andsocial contribuition

(+/-)Financial Result

(+) Depreciation andAmortization

2Q15

10

Reduction of 10.2% in Gross Debt

Net Debt - Consolidated

Settlement in June of the first installment of interest for the 3rd Debenture issue for R$ 101.6 million.

Monthly settlement of principal and interest of R$ 47.3 MM on BNDES line in 2Q15

2Q15 2014

47.3% 52.6%

0.1%

BNDES - TJLP

Debêntures - CDI/IPCA

Others

47.3% 52.6%

0.1%

BNDES - TJLP


Others

Debt 1,070.9 1,191.9 -10.2%

Short-term Debt 89.7 215.9 -58.5%

Long-term Debt 981.2 976.0 0.5%

Cash* 396.7 484.3 -18.1%

Net Debt 674.2 707.6 -4.7%

Debt(R$ million)

2T15 2013 Δ%

47.3% 52.6%

0.1%

BNDES - TJLP


Others

47.9% 52.0%

0.2%

BNDES - TJLP


Others

11

Cash and cash equivalents on June 30, 2015: R$396.7MM

Debt Amortization - Consolidated

(R$ millions)

38.2

211.43 210.4 190.3

24.1 21.9

95.747.7

19.4

32.6 26.4 26.4

26.4

69.0

4.7 57.6

244.0 236.8216.7

50.4 48.3

164.7

2015 2016 2017 2018 2019 2020 2021 a 2025 2026 a 2030


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CTEEP’s participation

Aggregate Debt at the Subsidiaries

Total: R$ 1,500.7 Total: R$ 1,493.2

60.0% of the debt of the jointly held subsidiaries in 2Q15 is indexed to the TJLP

No further funding was raised in 2Q15

20152Q15

(R$ millions)

1,242.2

184.8

56.3 17.4

1,242.7

179.6

54.5 16.5

1,242.2

184.8

56.3 17.4

1,242.7

179.6

54.5 16.5


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Consolidated

Regulatory

(R$ millions)

316.9 355.0

1H14 1H15

Net Revenue

42.153.4

408.4359.1

209.5 235.2

21.5 22.7

1H14 1H15

Costs and expenses231.0 257.9

-

50.0

100.0

150.0

200.0

250.0

300.0

350.0

400.0

1H14 1H15


123.9 189.6

22.7 22.1

1H14 1H15

EBITDA

146.6

211.7

95.3 133.1

1H14 1H15

Net Income

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TRPL4 closed 2Q15 at R$ 39.14

Capital Markets Performance

Principal events:

At the end of June 2015, CTEEP’s market cap stood at R$ 6,425MM;

Average trading volume in 1H15 of R$13.3 MM

A daily average of 1,760 transactions was conducted in the first half of 2015.

Share traded on all the days Bovespa was open for business

R$ 13,3 Million -

20

40

60

80

100

120

140

-40%

-20%

0%

20%

Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15

TRPL4 Volume TRPL3 TRPL4 IBOVESPA IEE Avarage Daily Volume TRPL4

11.38%

6.15%

-5.69%

-7.05%

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Disclaimer

The statements in this report with respect to the outlook for the

Company’s businesses, the projections and results and potential

for growth constitute mere forecasts and were based on

management’s expectations in relation to the future of the

Company. These expectations are highly contingent on changes

in the market, on the general economic performance of the

country, the sector and the international markets, being subject

to change.

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Investor RelationsTel: +55 11 3138-7557

[email protected]/ri

Engineering

CTEEP Results Presentation 2T15