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CPFL Investor In this edition

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Dividends of R$ 363 million in the first half of the year

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CPFL may invest R$ 25 million in electric cars

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Abradee honors Group distributors

INVESTOR RELATIONS | 48 | YEAR 9 | JULY-SEPTEMBER 2013

CPFL Renováveis launches IPO in Novo Mercado listing segment On July 17, CPFL Renováveis launched its Initial Public Offering (IPO) in the Novo Mercado segment of BM&FBovespa, which includes companies with the highest levels of corporate governance. On July 19, CPFL Renováveis listed its shares under the ticker CPRE3, thus underlining its commitment to creating value for stakeholders through sustainable business growth and the adoption of corporate governance best practices. By going public, CPFL Renováveis, which implements power generation projects in the areas of wind power, small hydroelectric plants (SHPP), biomass fired thermoelectric plants and solar power, strengthens its financial structure in order to drive its future growth, significantly contributing to the expansion of renewable, less polluting sources within Brazil’s energy matrix. On August 22, the company announced to the market the conclusion of the public offering, with the primary issue of 29,151,663 common shares and secondary issue of 43,964,828 common shares, at the price of R$12.51 per share, totaling about R$ 915 million. The primary offering resources, around R$ 350 million, were accounted into de Company’s cash and will be used for the expansion of the generation plants. CPFL Renováveis has a portfolio of 532 MW of plants under construction and more than 3,8 GW in development. The graph alongside illustrates the shareholding structure after the public offering in BM&FBovespa:

CPFL Renováveis inicial public offering, in BM&FBovespa

Message from the CEO The second quarter was replete with advances and challenges. Our market continued to grow: energy consumption increased 2.6% in our concession area, especially in the residential and industrial segments. Total energy sales increased 7.7%, while CPFL Brasil, our commercialization arm, brought in 18 new free customers, taking the portfolio to 280 consumers. When we are more productive, we create more value. We maintained our focus on operational efficiency, especially on Zero-Based Budget. Comparing the managerial expenses in the first half of the year, we were able to reduce said expenses by more than R$90 million, in real terms, in two years. Note than in 2012 alone we reduced

our manageable costs by more than R$100 million in relation to the previous year. We also made progress in network modernization with the installation of 25,000 intelligent meters for large clients. The gradual adoption of the smart grid will represent a new paradigm in operating the system, increasing its reliability, while reducing costs, improving our services and improving our operational efficiency. In the second quarter, our EBITDA had an impact of R$ 277 million, due to our risk control improvement. Nevertheless, we have a liquidity position quite comfortable: we have R$ 5.4 billion in cash, which is enough to fulfill our dues until the beginning of 2015. It is also worth noting

that a significant portion of our debt is the result of funding operations carried out by CPFL Renováveis for power generation projects that have not yet started up. But we know that this scenario will change, since these projects will create value in the near future: 278 MW will be added to our capacity by this year-end and another 254 MW will be added in 2016. We are also continuing our cost cutting initiatives, which will increase efficiency and productivity, improve service quality and create value for our shareholders and other stakeholders. Wilson Ferreira Jr. CEO of CPFL Energia


Dividends of R$ 363 million in the first half of the year 2Q13 Highlights Sharing the positive results with all its shareholders is a basic premise of the business model of CPFL Energia, which, despite the challenging first half of the year, has managed to reduce costs, streamline operations and invest in projects whose returns exceed the capital invested. The company declared interim dividend for the first six months of the year, in the amount of R$ 363 million, equivalent to R$ 0.377282126 per share. Holders of shares as on August 22, 2013, were entitled to dividends. Starting from August 23, 2013, the shares were traded ex-dividend at both BM&FBovespa and the New York Stock Exchange. The dividends were paid on October 1.

Net Revenue

EBITDA

IFRS+ProportionalConsolidationofGeneration+ RegulatoryAssets/Liabilities–Non-RecurringItems

IFRS

+ 5.0%

Increase of 7.7% in total energy sales outside the group; Growth of 2.6% in energy sales within the concession area; Conclusion of the 3rd tariff revision cycle of the group distributors; IPO of CPFL Renováveis; Acquisition of the Rosa dos Ventos wind farms (13.7 MW) in June 2013; Financial support of R$ 125 million from CDE, pursuant to decree 7,945/13; Capex of R$ 498 million; Declaration of interim dividends for 1H13, in the amount of R$ 363 million; Maintenance of AA+ rating in national scale, with stable outlook, by Standard & Poor’s, for CPFL Energia; CPFL Brasil was elected the best company in the energy sector in the country by‘Guia Maiores e Melhores’(Biggest and Best Companies Guide) of the Exame magazine; At the Abradee 2013 Awards, RGE was elected the best distributor in Brazil with more than 500,000 customers, while CPFL Leste Paulista was elected the best distributor with up to 500,000 customers; CPFL Energia was recognized by the magazine ISTOÉ Dinheiro as one of the 50 Empresas do Bem (Good Companies), in the Management category.

The dividend yield relating to the first half of 2013, calculated based on the average closing prices in the period (R$ 21.11 per share), is 1.8% (3.9% in the past 12 months). Since its IPO in 2004, the company has distributed almost all its net income to shareholders, well above the amount fixed in its dividend policy, which stipulates that at least 50% of adjusted net income must be distributed semiannualy. On April 30, additional dividends related to the second quarter of 2012, totaling R$ 456 million, equivalent to R$ 0.473778718 per share, were paid. During 2012, the company distributed R$1.096 billion as earnings to shareholders.

+ 7.2%

2Q12

2Q13

2Q12

2Q13

million

million

million

million

R$ 3,181 R$ 3,339 R$ 3,119 R$ 3,343

-35.0% 2Q12

R$ 793 million

Net Income

IFRS+ProportionalConsolidationofGeneration+ RegulatoryAssets/Liabilities–Non-RecurringItems

IFRS 2Q13

R$ 516 million

-10.2% 2Q12

R$ 1,054 million

2Q13

R$ 946 million

IFRS+ProportionalConsolidationofGeneration+ RegulatoryAssets/Liabilities–Non-RecurringItems

IFRS

-29.0%

380 million 2Q12

R$ 246 million

2Q13

2Q12

million

million

-R$ 134 R$ 356

2Q13

R$ 253 million

CapitalMarkets–Performanceinthestockexchange The graph shows the performance of CPFL Energia’s shares in the 9-month period ended in September 2013 at the São Paulo stock exchange BM&FBOVESPA (CPFE3) and the New York Stock Exchange – NYSE (CPL), compared to the main benchmark indexes of both exchanges:

Share Performance Bovespa - 9 months

Share Performance NYSE – 9 months

Analyst Opinion

-5.6%

-6.1% -14.1%

CPFE3 IEE IBOV 12/28/12 20.54 28,792 60,952 09/30/13 19.39 27,037 52,338 Var. -5.6% -6.1% -14.1% Source: Economática Variations adjusted by dividends

2

-14.2% -9.4% CPL

DJBr20

15.5% DJIA

12/31/12 20.10 28,775 13,104 09/30/13 17.25 26,069 15,130 Var. -14.2% -9.4% 15.5%

At the end of September, CPFL Energia stock was covered by 11 financial institutions, of which 91% gave it a buy or hold recommendation.


CPFL may invest R$ 25 million in electric cars Fully aware of its commitment to creating solutions with low carbon impact for the regions where it operates, CPFL Energia, the largest private electricity group in Brazil, has been implementing a series of sustainable initiatives focused on reducing the emission of global pollutants. In 2008, it launched a program to develop electric cars, which should receive greater impetus during the coming years. Currently, CPFL Energia is conducting a study for the development of filling systems for electric cars, in Campinas, São Paulo. The objective of the Electric Mobility Program is to make the use of electric cars in corporate fleets possible in the next five years. Implemented as part of the R&D program of Aneel, the initiative envisages the installation of

100 electric car charging points. A sum of R$6.5 million should be invested in vehicles and infrastructure during the initial phase of the program. A total of R$ 25 million may be invested by the end of the program. The initiative employs two new zero-emission vehicles recently acquired from French carmaker Renault. Apart from Renault, CPFL Energia is also negotiating with other private companies and public sector agents to establish alliances and stimulate technological progress. The Electric Mobility project was one of the showpieces of CPFL Energia at the 9th Latin American Electric Vehicles, Components and New Technologies Fair, held between September 10 and 12 in São Paulo.

Zoe, Renault electric model, acquired by CPFL, in Tanquinho solar plant (Campinas, SP)

First distributed microgeneration connection In July, CPFL Paulista carried out the first distributed microgeneration connection of the CPFL Energia Group. A house in Ribeirão Preto (SP), which chose to install solar photovoltaic panels to generate energy, was connected to the network. Starting from August, energy generated by solar panels and which is not consumed by the houses themselves will also be used in Brazil’s National Interconnected System (SIN), that is, will be supplied to other customers. Distributed microgeneration was instituted last year through Normative

Resolution 482/2012 of Brazil’s National Electricity Regulatory Agency (Aneel). The resolution allows small residential or commercial consumers with surplus energy generated from their own sources, in the form of solar energy, to accumulate credits that could be deducted from their energy bills. In fact, the topic was addressed by Brazilian President Dilma Rousseff in her ‘Café com a Presidenta’ (Breakfast with the President) program in 2012. Apart from the connection made in Ribeirão Preto, CPFL Energia distributors have

Events

To announce its growth strategy, CPFL Energia participates in a series of events in Brazil and abroad: August 20 14th Annual Santander Conference, organized by Santander in São Paulo. September 11 to 13 Deutsche Bank’s 12th annual GEMs one-on-one conference, held in NewYork (USA). September 25 II BTG Pactual Utilities Day, held in São Paulo.

received 13 more requests for distributed micro and minigeneration connections. The projects are being analyzed and validated by the local distributors. To request a distributed micro or minigeneration connection, CPFL customers must visit the website of the distributor through www.cpfl.com.br. Distributors also have an information booklet, which contains the guidelines and the requirements for making a connection. The booklet may be obtained at http://www.cpfl.com.br/ paulista/tabid/2644/Default.aspx.

2nd consecutive year in the Dow Jones Sustainability Index CPFL Energia’s commitment to sustainability was proven once again. For the second consecutive year, the Group has been included in the Dow Jones Sustainability Index Emerging Markets, which elects leaders in sustainability from emerging markets based on a long-term analysis of their economic, environmental and social initiatives. Around 3,300 companies, 800 of them from emerging markets, were invited to participate in the selection process. 3


Abradee honors Group distributors Two distributors of CPFL Energia were honored by the Brazilian Association of Electricity Distributors (Abradee) as the best in Brazil, which underscores the Group’s commitment to excellence in providing services to its consumers. CPFL Leste Paulista, which operates in seven municipalities in upcountry São Paulo, was the winner among concessionaires with up to 500,000 customers, while RGE, whose concession area covers 262 municipalities in Rio Grande do Sul, was the winner among distributors with more than 500,000 customers. CPFL Paulista, with 3.8 million customers, was considered the best distributor in southeast Brazil. The three distributors were honored at the 15th edition of Abradee 2013 awards, held on July 16 in Brasília. The distributors of CPFL Energia also won awards in other categories. Among the

concessionaires with up to 500,000 customers, CPFL Leste Paulista was honored in the Social Responsibility and Customer Rating categories. Among the concessionaires with more than 500,000 consumers, RGE also won in the Customer Rating and Operating Management categories. The award winners obtained the highest scores in a broad analysis and survey conducted by Abradee across the country. The awards are aimed at stimulating cooperation and improving the management of companies by recognizing the best practices at distributors.

CPFL Energia is elected‘Company of theYear’ At a ceremony held on September 12 in São Paulo, CPFL Energia was elected by the Época NEGÓCIOS 360º yearbook as the ‘Company of the Year’ from among 250 companies operating in Brazil. Brazilian Vice President Michel Temer, the Vice President of Organizações Globo, João Roberto Marinho, the Managing Director of Editora Globo, Frederic Kachar, and executives from leading companies across Brazil participated in the event. Based on an analysis of the following six aspects, carried out by Época NEGÓCIOS magazine in technical partnership with Fundação Dom Cabral and with collaboration from Economatica, Boa Vista Serviços and the Brazilian Corporate Communication Association (Aberje), CPFL was elected from among 250 companies in Brazil, divided into 26 sectors of the economy: financial performance, HR practices, innovation, vision of the future, corporate governance, and social and environmental responsibility. “The crisis of 2008 taught us a few lessons. Until then, companies lived under the dictatorship of quarterly balance sheets. This yearbook, which

Note: 4

Wilson Ferreira Jr, CPFL Energia CEO, and Frederic Kachar, Editora Globo general director

evaluates companies on six aspects and not merely on their economic and financial performance, must serve as an important example. We are a century-old company and the merit for this recognition goes to the entire team, as well as to our shareholders, who play an important role in laying down the strategic direction for the company”, said Wilson Ferreira Jr, CEO of CPFL Energia, at the event.

Starting from the next edition, Investidor CPFL will be available in the digital version only. Investors who have not yet registered to receive the newsletter by email may do so at the Investor Relations website: www.cpfl.com.br/ri.

The presidents of CPFL distribution companies receive the the awards in the cerimony in Brasília

CPFL INVESTOR is a publication of the Investor Relations Department of CPFL Energia, published by the Corporate Communication and Institutional Affairs Department, Rodovia Campinas Mogi Mirim, Km 2.5 - Jd. Santana - Campinas/SP, Zipcode 13.088-900. Phone: (19) 3756-8197 Fax: (19) 3756-8040 – Chief Financial and Investor Relations Officer: Gustavo Estrella, IR Officer: Eduardo Atsushi Takeiti, Corporate Communications and Institutional Relations Officer: Augusto Rodrigues, Communications Manager: Carlos Henrique Matos Ramos (MTb 19.163). Content: Rockmann Press. Editing: Cárita Abdal. Design: Produção Coletiva - website: Investor Relations: www.cpfl.com.br/ir e-mail:ri@cpfl.com.br. Phone: (+55 19) 3756-6083 / Fax: (+55 019) 3756-6089.


CPFL Investor Newsletter 48