CPFL Energia’s credit rating unchanged after new acquisition and joint venture
Wilson FerreiraJr., CEO of the CPFL Energia, opens smart grid seminar
The AR2010 Blog is avaliable
INVESTOR RELATIONS | 38 | YEAR 7 | MAY/JUNE 2011 Arquivo PM
In this issue
CPFL’s next step
Futura Channel series shows ways forward for energy in Brazil AKPE/Marina Bandeira Klink
CPFL Energia is working to transform its electricity grid into a set of more intelligent assets in order to guarantee better quality of the services that it offers its 6.8 million clients. The investments forthischallengeareontheorderofR$215million, and include projects in the fields of automation, distance meter reading, mobility and operations. The expectation is that the innovations will contribute to speedier identification of fraud, breakdowns and power outages, a reduction in the number of grid failures, reduction in average service response time and the capacity for realtime knowledge of consumption and the load profile of each client. This concern began taking shape in 2009 when CPFL Energia joined the Global Intelligent Utility Network Coalition (GIUNC), headed up by IBM, which represents 150 million power consumers around the world. The only Latin American company in GIUNC, CPFL Energia hosted an international seminar during the last
week of June entitled “Working Towards the Transformation of the Smart Grid in Brazil.” In the distance metering project for large customers, CPFL plans to install 25,000 intelligent readers by the end of 2012. The equipment will act as sensors, identifying eventual grid failures and also making it possible to conduct preventive maintenance at a distance. Another important initiative is with regard to the mobility of the field teams. Today, service orders are sent by voice; in the future they will be sent as data packages, leading to speedier responses and more precise communication. In order to improve its network operations, the company will install automated switches that, besides being used for protection and reconnection purposes, also will be connected to the operations centers, permitting quicker reestablishment in the event of power outages. Through the end of last year, 1,000 of these switches were installed and 5,000 were to be hooked up by 2013.
Message from the CEO
The Smart Grid revolution For CPFL Energia, the Smart Grid already is reality. In the near future, we will have an electric system structured on a more intelligent, more modern and more agile platform to service our clients. I am referring to automated grids that will permit supervision from a distance and adjustments via telecommunication commands. This transformation is within our reach. Here’s an example: in 2012, it will be possible to conduct remote meter reading of the consumption of the large customers served by CPFL. And more than this, we will know every 15 minutes how
this market is behaving with regard to demand and real consumption. The intelligent grid solutions certainly will permit improvements in the quality of services rendered to consumers, such as a reduction in service interruptions and failures, thus making it possible to manage the use of power, minimizing losses and waste. This is a revolution. Our new world imposes a series of challenges. And CPFL is gearing up to confront them. Wilson Ferreira Jr. CEO of the CPFL Energia
Capital Market - Our Market Performance You can see in the chart below the performance of CPFL Energia’s shares for the 12 months ending June 2011, both in the Bovespa (CPFE3) as well as the New York Stock Exchange (CPL), compared to the main benchmark indices for both of the exchanges.
Share Performance Bovespa – 12 months
Share Performance NYSE – 12 months
06.30.10 06.30.11 Var.
CPFE3 18.58 22.30 20.0%
IBOV 60,935 62,403 2.4%
IEE 24,080 30,073 24.9%
37.4% 23.8% 06.30.10 06.30.11 Var.
63.23 86.90 37.4%
29,172 36,118 23.8%
9,774 12,414 27.0%
CPFL Energia’s shares closed the month of June 2011 covered by 27 financial institutions. With regard to the assessments of these institutions, 67% recommended the purchase or holding of CPFL’s securities.
Source: Economática Variations adjusted for dividend payouts
The AR2010 Blog is avaliable You can access the blog for CPFL Energia’s 2010 Annual Report on the Internet. The content has just been made available to investors and stakeholders at the following address: www.cpfl.com. br/relatorioanual2010. Last year, CPFL Energia innovated by publishing its accountability to society in this format, and was the winner of the 12th ABRASCA Prize. The publication is presented in Portuguese and English and was prepared according to the Global Reporting Initiative (GRI), including a supplement on the electricity sector itself.
Most sustainable electric vehicle CPFL Energia develops first lithium battery in Brazil using NMC chemistry CPFL Energia presented the first lithium battery for electric vehicles in Brazil developed using NMC (Nickel, Manganese and Cobalt) chemical technology. The introduction was made during the Brazilian seminar on Technologies for Electric Vehicles held in Brasília (DF) in June. The work is part of a partnership between CPFL, Edra – manufacturer of the Aris vehicle, CEGASA – the company that owns the lithium technology and is responsible for the cells that will be used to build the battery – and Electrocell – responsible for assembling the components and building the battery’s electronic management system. The first of the five models to be assembled in Brazil will
be ready in July 2011. After laboratory tests, the batteries will be installed in one of the Aris vehicles — developed by Edra in partnership with CPFL – which will be the first to begin the series of tests with a battery of this type of technology that was fully assembled in Brazil. CPFL Energia is in the vanguard of the initiatives in the electric vehicle segment. Since 2008, the company has been investing in research and development into this technology, based on the search for solutions to lower carbon emissions and the use of alternative energy. This type of vehicle makes it possible to reduce emissions by 10 times current levels.
CPFL Energia’s credit rating unchanged after new acquisition and joint venture Reports recently disclosed by the Standard & Poor’s (S&P) ratings agency concluded that the recent announcements by CPFL Energia of acquisitions and partnerships during this year would not immediately change the credit ratings assigned to the company, classified as ‘brAA+Stable.’ The evaluation took into account the purchase of Siif Énergies Brasil and the association with Ersa Energias Renováveis, which led to the creation of CPFL Renováveis. S&P evaluated that the additional debt involved in these acquisitions does not change expectations regarding the group’s financial metrics because its constant striving for expansion will continue to be through both natural growth as well as acquisitions
of new companies and generation projects. According to the agency, this would leave very little room for a reduction of the debt, due to the requirements for additional investments in these new businesses. The agency also stated it expects the disbursements for these projects to be well distributed over the next few years, therefore not putting immediate pressure on the group’s cash flow. sxc.hu
Share price reduction due to stock split and access of new investors On June 28, the company conducted a reverse split and simultaneous split of its stock on BM&FBOVESPA, doubling the quantity of shares and changing the individual price from approximately R$ 44.00 to R$ 22.00. The measure contributed to adjusting the individual price of CPFL’s shares on the Brazilian stock exchange, which had been higher than the majority of the prices seen in the market. Therefore, it has facilitated access of new shareholders and promotes higher share liquidity. It also gives the company a more streamlined shareholder base, with better management and cost optimizations. The fractions resulting from the share split process will be added up and the amount
will be auctioned off in August, at a date yet to be announced. Shareholders who own fractions shall receive their respective amounts subsequent to the holding of the auction, through a payout similar to that received for dividends. Simultaneously, the process for changing the exchange ratio between common shares and the ADRs, which are traded on the New York Stock Exchange (NYSE) was conducted. This ratio, which was 1 ADR for each 3 shares, became 1 ADR for each 2 shares. As a result of these measures, the value of the ADR was reduced to 1/3
of the previous price, also designed to adjust the quotation to facilitate access to a greater number of investors and to boost liquidity.
AKPE/Marina Bandeira Klink
FuturaChannel seriesshows waysforwardfor energyinBrazil The program is supported by CPFL Energia and navigator Amyr Klink is the host A major report about electric power in Brazil. That could be the summary of“Caminhos da Energia”(Energy Paths), a new series of programs on the Future Channel produced in partnership with CPFL and presented by Amyr Klink. In the format of a documentary, the series shows how energy is present in our day-to-day lives and reflects on the possibilities of its use in an efficient and sustainable manner to guarantee the welfare of people on the planet. Produced by the Giros production company and directed by Belisário Franca, the program presents the many different forms of energy used since the beginning of time until technological discoveries speeded up the development of countries and offered more comfort to societies. The series also shows how the growing concern about finite resources of energy sources has led to a search for the use of renewable sources, less damaging to the environment. Equally an attraction in the series is navigator Amir Klink, who links together the various contents of this issue relating personal experiences and reflections on the topic. “A boat is a type of thinking spot about the efficient use of energy,” he says. He adds that he has already noticed signs of climate change during his trips to Antarctica.
Caminhos da Energia focuses on Brazil, surveying the current Brazilian energy matrix and discussing the possibilities for energy generation, distribution and consumption. Presented by Klink, the series is punctuated by interviews with more than 50 specialists, who offer historical context, show numbers and give their opinion regarding the different paths that Brazil could take to diminish the impact on the environment of the generation and consumption of energy.
TECH SPECS Caminhos da Energia Debut: June 1 Time: Wednesday, 8:30 p.m. Reprise: Saturday, 4:30 p.m. and Sunday, 6:30 a.m. Length: 10 episodes of 30 minutes each Age bracket: Free classification
Most sustainable company in Latin America CPFL Energia was elected for the third consecutive year as the most sustainable energy company in Latin America, according to a survey by Spanish consulting firm Management & Excellence (M&E) together with Latin Finance magazine. Among the energy sector companies, CPFL Energia had the
best rating, 82.8%. The company’s internal policies and guidelines for sustainability led CPFL to also be the winner in the Best Compliance category, with an index of more than 90%. The survey evaluated attributes such as social responsibility, corporate governance and environmental and financial practices.
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