2Q11 Consolidated Results

Transcription

1 High EBITDA Margin, Dividend Payment and Relevant Acquisition Rio de Janeiro August 9, 2011 Transmissora Aliança de Energia Elétrica S.A. TAESA (BM&FBovespa: TRNA11), one of the largest electric power transmission groups in Brazil, announces today its results for the second quarter (2Q11). The Company s consolidated financial statements are prepared in accordance with the accounting principles adopted in Brazil (BR GAAP), in line with the pronouncements, instructions and interpretations issued by the Accounting Pronouncements Committee(CPC) and the regulations of the Securities and Exchange Commission of Brazil(CVM). José Aloíse Ragone Filho Domingos Sávio Castro Horta Paulo Ferreira Anna Luisa Bacellar IR Contact Chief Executive Officer Chief Financial and Investor Relations Officer IR Manager IR Analyst investor.relations@taesa.com.br

2 Conference Call in English August 10, 2011 Wednesday BR TIME 2:00 PM NY TIME 1:00 PM Dialin: Code: TAESA Replay: Code: In this release, Transmissora Aliança de Energia Elétrica S.A., TAESA, presents the financial and operating results, accompanied by the main highlights of the second quarter of In addition, the Company will also present an institutional overview of the business. In compliance with the new accounting practices prevailing in Brazil, the effects of the application of the IFRS principles will be reflected in the financial statements. The results will be presented in both IFRS and former formats in order to permit comparisons with other periods. 2

3 High EBITDA Margin, Dividend Payment and Relevant Acquisition Last year TAESA had to face three important challenges to match up with the expectations of the shareholders. On the operational front, the challenge was to enhance the EBITDA Margin; on the financial front, the challenge was to refinance the outstanding debt; whilst on the corporate front; the issue was to merge the wholly owned subsidiaries into the holding company. One by one, these three issues were successfully tackled and in 2011 the challenge is to keep improving the results via operational efficiency, financial discipline and value-accretive growth. In 2011, TAESA is once again presenting a consistent outcome. For the second consecutive quarter, TAESA s non-adjusted EBITDA Margin has overcome 91% showing that the Company is still focused on delivering results based upon its operational competence. The YTD Net Income adjusted for the IFRS reached R$ 146MM,or,R$73MMinthesecondquarter.TheYTDnon-adjustedNetIncomereachedR$162MM,or,R$ 82MMinthesecondquarter,up11%onaYoYbasis. TAESA s strong cash flow has been supporting its dividend policy throughout the years. In 2011, the Company will distribute approximately R$ 740MM as dividends. On May 30, 2011, the Company has paid thefirst dividendtrancheofr$ 407MM and, byoctober31,taesawillpaytheoutstandingamountof R$ 333MM. In addition to the above mentioned events, the Company has announced a R$ 1.1 billion deal with ABENGOA toacquireoneconcession(nte)and50%ofotherfourconcessions(ate,ateii,ateiiiandste). The deal is expected to be closed in the upcoming months, after the approval of ANEEL, BNDES, IDB and COFIDES. In order to meet the requirements of the level 2 of corporate governance, TAESA has requested to BM&FBovespa an extension of the deadline to recompose the free float up to 25%. In July, TAESA received a waiver from BM&FBovespa authorizing the Company to reach the minimum percentage of 25% until June 30, Hereafter, TAESA proudly presents the results of the second quarter of

4 Getting Acquainted with TAESA Page 5 to 11 This section contains an institutional overview, presenting the main aspects of the Company s business, contextualizing TAESA within the transmission sector. Those already acquaintedwiththebusinessandwiththesectormayskipdirectlytopage12. Highlights Page 12 to 13 This section contains the highlights of the 2Q11: Acquisition of R$ 1.1 billion; Dividend payment of R$ 407 MM; Waiver conceded by BM&FBovespa, extending the deadline for reaching 25% of free float to June 30, 2012; RAP cycle 11/12 published by ANEEL; Approval of 2 new reinforcement projects to be implemented until Q11Results Page14to25 This section contains thorough information on the 2Q11 results, detailing Net Revenues, Costs and Expenses, Financial Expenses, Taxes, Net Income, Indebtedness and Cash Flow. Financial Statements Page 26 to 29 This section contains the main financial statements of the 2Q11. In the end of the section, a financial summary with TAESA s main figures since 2007 is also presented. Unit Performance Page 30 This section contains information about the performance of TAESA s unit TRNA11 since

5 Getting acquainted with TAESA Pure Transco Strategically Positioned TAESA, a publicly listed company controlled by CEMIG GT and FIP COLISEU, considers itself one of the largest electric power transmission companies in Brazil in terms of RAP. The Company currently has 246 employees, most of them dedicated to the operation and maintenance. The Company is exclusively dedicated to the construction, operation and maintenance of transmission lines and their associated substations. TAESA operates km of transmission lines (2.447 km at 500kV, 502 km at 440kV, 763 km at 230kV) and 28 substations, spread over the Brazilian territory. TAESA currently holds 8 transmission concessions, of which6are100%ownedbythe Company. NVT 1.278km TSN 1.069km MUN 107 km GTE 51 km PAT 135 km ETE 502 km ETA 188 km BRA 382 km Stable Regulatory Environment The National Interconnected System ( Sistema Interligado Nacional ), or SIN, is a largescale electricity generation and transmission system operated by private, publicly held and state owned companies, managed by the National System Operator(ONS). According to ONS, the SIN supplies electricity to approximately 98% of the Brazilian market and the extension of its grid amounts to approximately 100 thousand km of lines with voltages of 230kv or higher. The transmission assets that form this grid are operated under the regulation of the Brazilian National Electric Energy Agency (ANEEL). ANEEL regulates the transmission market through a revenue cap model, by which the companies that operate the assets receive revenues (RAP Annual Permitted Revenue) based on the availability of the lineandnotbasedonthevolumeofenergytransmitted inthesystem. TAESA s concessions are all inserted into the SIN. The company has never incurred in losses due to payment default from its customers, thus, in the company s point of view, the Brazilian regulatory environment is stable and trustworthy. 5

6 Getting acquainted with TAESA Top Quality Concessions The concessions within the Brazilian transmission grid are entitled to receive revenues (RAP) based on the availability of the line, therefore not exposed to volume risk. These concessions can be divided into three major categories, as described below. Categories Description Prior to 1998 From 1999 to Nov-2006 In 1998, ANEEL set the RAP for the existing transmission assets. According to regulation, the RAP of these concessions is adjusted annually by the IGPM and these concessions will expire in Some of these concessions are subject to tariff review. Greenfield projects auctioned between 1999 and November, The RAP of these concessions was set in a reverse auction process and are either adjusted annually by the IGPM (up to 2004) or adjusted annually by the IPCA. In the 16 th year of operation these concessions will have their RAP reduced by half. On the other hand they do not suffer tariff review along the concession period. These concessions were granted for 30 years, starting from the date of the signature of the concession contract. From Nov-2006 Onwards Greenfield projects auctioned from November, 2006 onwards. The RAP oftheseconcessions is set in a reverse auction process, it is adjusted annually by the IPCA and will periodically suffer a restrict tariff review. These concessions are granted for 30 years, starting from the date of the signature of the concession contract. TAESA s concessions are mainly concentrated on category below. 2, as shown in the table 6 TAESA RAP By Category Signature of RAP Tariff Concession Category End Index the Contract Reduction Review NVT Jul/18 Dec/30 IGPM NO TSN Jun/18 Dec/30 IGPM NO ETEO Oct/16 May/30 IGPM NO ETAU Jul/20 Dec/32 IGPM NO PATESA Jun/19 Dec/32 IGPM NO GTESA Jun/19 Jan/32 IGPM NO MUNIRAH Oct/19 Feb/34 IGPM NO BRASNORTE NO Feb/34 IPCA YES

7 Getting acquainted with TAESA Efficient on the Operational Front The Company constantly aims to provide high quality public services for the end-users of its infrastructure (including electricity generators and distributors). In order to guarantee a high service level, TAESA has chosen to operate and maintain the assets with its own personnel. TAESA s operational team is divided into 3 main activities: Engineering Engineering projects and management of the availability of the lines. Maintenance Maintenance of 28 substations and lines that extend to more than 3.7 thousand km spread over the country. Operation Operation of TAESA s grid through a remote control center located in Brasília. TAESA has presented a consistent operational performance throughout the years, as the company regularly kept the availability of the lines above 99%. In the last 12 months, TAESA registered an average consolidated availability of 99.97%, as shown in the chart below % 99.99% 99.92% % % LTM Line Availability is a measure of time and is strictly an operating indicator. It is calculated by dividing the number of hours during which the line isavailable bythe numberofhoursin a year(8,760 hours)per 100 km stretch. / ,670 /100 The line availability, as presented in the chart above, is a key operational indicator, but itisameasureoftime. Theindicatorthatshowstheimpactoftheunavailabilityonthe Income Statement of the company is the Variable Portion(PV) % % % % % YTD DuetotherandombehaviorofthePV in the short term, the best way to understand the Company s performance in terms of PV is to analyze the yearly value of the PV dividedbytheyearlyrap,asshown in the chart on the left. As of June 2011, the PV represented 0.9% of the RAP in the same period.

8 Getting acquainted with TAESA Natural Hedge Against Inflation As the Revenues are adjusted annually by the IGPM or the IPCA, TAESA s business is naturally hedged against inflation hikes. Cycle IPCA IGP-M 2007/ % 4.4% 2008/ % 11.5% 2009/ % 3.6% 2010/ % 4.2% 2011/ % 9.8% RAP is adjusted annually every July, 1 st, by the 12 month inflation index (IGPM or IPCA) from June of the previous year to May of the current year. The table on the left shows the yearly adjustment of RAP since InJune,2011ANEELhaspublishedtheRAPCyclefor2011/2012.Thedetailisshownon page 13. SoundandStableCashFlow One of the most important aspects of TAESA s business is the stability of its operating cash flow. Ontopofbeingstable,theoperatingcash flowofthecompanyisalsoeasily predicted, as the Company s revenue is defined by a concession contract and margins are also stable. An accurate way to understand TAESA s capacity of generating cash is to analyze the evolution of the EBITDA not adjusted for the IFRS. CAGR % EBITDA not adjusted for the IFRS is a key financial indicator, due to its adherence to the Company s operating cash flow The chart above, on the right, shows the evolution of the non-adjusted EBITDA from 2007 to 2010, which has presented a compound annual growth of 18%. The stability and strength of the operating cash flow sets the ground for the dividend policy of the Company. Cash Flow Summary (R$ MM) Initial Cash Flow Cash Flow Cash Before Dividends Dividends Final Cash

9 Getting acquainted with TAESA Dividend History According to its bylaws TAESA must distribute at least 50% of the Net Income. The Table below shows the Net Income and the Dividend payments since 2006: In 2009, the company distributed the outstanding dividends from the previous years PRIOR TO IFRS IFRS R$ MM YTD Net Income Max Dividends (95% payout) Declared Dividens Payout 95% 75% 50% 58% 95% Dividend Payment Cumulative Net Income ,286 1,448 Cumulative Max Dividends ,222 1,356 Cumulative Dividends Payment ,222 Max Dividends(95% payout) is the maximum amount that the Company can declare. Dividend Payment is the amount that the company actually paid. In 2011, TAESA will distribute 95% of the Net Income of 2010 that amounts to R$ 407,2MM and also an Accrued Profit Reserve of R$ 333,4MM, formed as a consequence of the migration to IFRS. The dividend payment schedule for 2011 is detailed on page

10 Getting acquainted with TAESA Growth History with Added Value Since TAESA has become a public listed Company in October, 2006, the Company has pursued growth through the acquisition of existing assets (secondary market) as well as through the auction of greenfield projects(primary market). Between 2007 and 2008, the Company has acquired 4 concessions in the secondary market and won 1 greenfield project, totaling 5 new concessions. Dec,07 ETAU Stake 52,6% RAP R$28MM Nov,07 GTESA/PATESA Stake 100% RAP R$19MM May,08 ETEO Stake 100% RAP R$114MM Nov,07 BRASNORTE Stake 38,7% RAP R$17MM In June, 2011, TAESA has announced a R$ 1.1 billion deal, according to which the Company will acquire 1 concession (NTE) and 50% of 4 other concessions ((ATE, ATE II,ATEIIIandSTE). The closing of the deal still depends on the approval of ANEEL, BNDES, IDB and COFIDES. June 2, 2011 BoD Approval ABENGOA ANEEL Approval Jun,11 NTE Stake 100% RAP R$99MM BNDES Jun,11 Approval TAESA Secondary Market STE Stake 50% RAP RS50MM Jun, 11 ATE Stake 50% RAP R$94MM Greenfield Jun,11 IDB/COFIDES Approval ATEII Stake 50% RAP R$143MM 100% TAESA 50% TAESA Jun,11 Closing ATE III Stake 50% RAP R$68MM The expected corporate structure after the closing of the deal is as shown in the chart on the left. The dealisdetailedonpage12. 50% SUB-HOLDING 50% NTE ETAU BRASNORTE 100% 52,6% 38,7% 10 ATE I ATEII ATE III STE 100% 100% 100% 100%

11 Getting acquainted with TAESA Shareholder Base CEMIG GT and FIP COLISEU own together 98% of the voting capital. The Total Capital breakdown is shown in thechartontheright. 56.7% 38.6 % 4.7 % CEMIG GT FIP COLISEU TAESA FREE FLOAT Currently, the Company has 4,148,824 Units traded in the Brazilian Stock Exchange Market(BMF&Bovespa).OneTRNA11Unitiscomposedof1commonshare(ON)and2 preferred shares (PN). The Company is registered under Level 2 of corporate governance and grants 100% Tag Along to every shareholder despite of the class. Corporate Governance The Controlling Shareholders provide an interesting combination of technical expertise and financial discipline. CEMIG GT is one of the most important players in the Brazilian energy sector and is recognized as a top electric sector asset operator. On the other hand, FIP COLISEU represents fund managers with strong financial background. The Company s top management has significant experience in the sector and is closely monitored by the Controlling Shareholders, the Board of Directors and the Fiscal Board, through the active presence of 3 committees: management, financial and auditing committee. The main role of these committees is to filter and analyze the subjects that will be submitted to Board s approval. Corporate Governance 11 5 Board of Directors Fiscal Board 4 Management 5 Financial 4 Auditing 3 Board of Executives CEMIG FIP Independent Board of Directors Fiscal Board Management Committee Financial Committee Auditing Committee Board of Executives 3 - -

12 Highlights Relevant Acquisition In June, 2011 TAESA has announced a R$ 1,1 billion deal to acquire one concession (NTE) and 50% of other four concessions (ATE, ATEII,ATEIIIandSTE). The deal is expected to be closed in the forthcoming months, after the approval of ANEEL, BNDES, IDB and COFIDES. The announced deal is aligned with the company s growth strategy based upon top quality assets and financial discipline, as the acquired assets have many aspects in common with TAESA s current asset base: Theconcessionsareallwithinthecategory2,asdescribedonpage6. TAESA s Concessions Acquired Concessions NTE ATE II Most of the concessions have an interesting geographic synergy with TAESA s currentassets,asshowninthemapaboveontheright. The deal will increase TAESA s RAP by 30% (considering the cycle 10/11) as well as increase the non-adjusted EBITDA by 29%(considering 2010 figures). TAESA s market share will advance from 6.48% to 8.61% in terms of RAP (cycle 10/11). Signature of the RAP Tariff Concession Category End Index Contract Reduction Review NTE Jan-19 Jan-32 IGP-M NO STE Jul-19 Dec-32 IGP-M NO ATE I Feb-21 Feb-34 IGP-M NO ATE II Nov-21 Mar-35 IGP-M NO ATE III Apr-23 Apr-36 IPCA NO ATE III ATE I STE 12

13 Highlights Dividend Payment In May 30, 2011 TAESA has paid the first tranche of R$ 407MM and, as of October 31, 2011, TAESA will pay the outstanding amount of R$ 333MM. May 11 Oct 11 Total DPS (R$) DPU (R$) Approval of 2 New Reinforcement Projects In June 7, 2011, ANEEL has published the Resolution 2946 authorizing TAESA to implement 2 new reinforcement projects in TSN. The table below shows the approved figures for both projects. Reinforcements SVC Sapeaçu(230 KV) Ibicoara(500 KV) Deadline 24 months 18 months RAP R$ 7.50MM R$ 1.73MM CAPEX R$ 55.63MM R$12.96MM NewRAPCyclePublishedbyANEEL ANEELhaspublishedinJune28,2011theresolution1171,establishingtheRAPforthe transmission concessions, valid from July, 2011 until June, 2012 (cycle 11/12). The concession contracts indexed by the IGPM will be adjusted by 9.8%, whereas the concession contracts indexed by the IPCA will be adjusted by 6.6%. RAP (R$ MM) 2007/ / / / /2012 Cycle Cycle Cycle Cycle Cycle IGP-M Adjustment 4.4% 11.5% 3.6% 4.2% 9.8% Novatrans TSN* TSN LT Camaçari II/Sapeaçu (Munirah) TSN LT Goianinha/Mussuré (GTESA) TSN LT Paraíso/Açu (PATESA) ETAU 1 ** ETEO IPCA Adjustment 3.2% 5.6% 5.2% 5.2% 6.6% Brasnorte Total *Including reinforcement project of BomJesus da Lapa, Serra da Mesa and Serra da Mesa II ** Including DIT to RGE 1 TAESA'S stake The RAP of the concessions Munirah, Patesa, ETAU and Brasnorte had an increase on top of the annual inflation adjustment to compensate for thergrofthefirsthalfof Waiver from BOVESPA In July 1, 2011 TAESA received a waiver from BM&FBovespa approving the request for additional time to reach the minimum free float of 25%, as required by the Level 2 of Corporate Governance. As determined by BM&FBovespa, the company must recomposeitsfreefloattoatleast25%untiljune30,2012.

14 High EBITDA Margin, Dividend Payment and Relevant Acquisition IFRS In the second quarter of 2011 TAESA once again presented a consistent result. Former R$ MM 2Q11 2Q11 2Q10 Var. Var. % EBITDA* % EBITDA Margin 87.3% 91.2% 89.4% 1.8 bps Net Income % TRNA11 (June, 30) % Market Cap 3,074 3,074 2, % * EBITDA figures are presented considering the reclassification of the tax subsidy Non-Adjusted EBITDA reached R$ 186.5MM, up 4.4% YoY, as the Company continued to improve its operating performance. Non-Adjusted EBITDA Margin, for the second consecutive quarter remained ontopof 91%. Non-Adjusted Net Income reached R$ 82.0MM up 10.7% YoY and the Net Income adjusted for the IFRS totaled R$ 72.7MM in the second quarter. Cumulative Net Income adjusted for the IFRS amounted to R$ 145.6MM. Onthefollowingpages,theresultsofthe2Q11willbedetailedasfollows: IFRS: Most Relevant Changes Breakdown of the IFRS Revenues Net Revenues Costs, Operating Expenses and Depreciation/Amortization Net Financial Expenses Taxes Indebtedness CashFlow In compliance with the new accounting practices prevailing in Brazil, the effects of the application of the IFRS principles will be reflected in the financial statements. The results will be presented in both the IFRS and the former formats in order to permit comparisons with other periods. Thefirstpartofeachsectionwillshowtheresultsofthe2Q11,comparingIFRStotheformerformat.The second part of each section will present the comparison between 2Q11 and 2Q10 in the former format. 14

15 2Q11 Results IFRS: Accounting Changes, Fundamentals Do Not Whereas the way of presenting the financial statements has changed, these changes have no impacts on the basic fundamentals of the Company: Stable regulatory environment Top quality concessions High operational performance Naturally hedged against inflation Stablecashflow Consistent dividend distribution Good corporate governance IFRS: Most Relevant Changes The most relevant changes on the accounting principles are: The constitution of a financial asset, replacing the existing fixed asset The new method for accounting the Revenues, replacing the RAP for 3 other revenue items: Construction Revenue, Operation and Maintenance (energy transmission service) and Financial Income(on Receivables) According to IFRS principles the company is not the owner of the concession asset, indeed the company is a concessionaire who has the right to construct, operate and maintain the assets until the concession expires. Based on this concept, the company mustreallocatetheraptobereceivedalong30yearsofconcessioninto3newitems: TOTAL RAP OF THE CONCESSION (30 YEARS) Booked during the period of Construction Construction Booked during the Period of Operation and Maintenance O&M Financial Income Construction Revenue equals the Capex spent on the construction. This amount has to be booked while the concession is under construction. Therefore the only concession in TAESA group that is still booking Construction Revenue is Brasnorte. O&M Revenue is a fixed amount throughout the concession and is updated by inflation, in the same way as the RAP. The Financial Income (on Receivables) is the rate of return multiplied by the outstanding amount of the Financial Asset. 15

16 2Q11 Results Breakdown of the IFRS Revenues As previously mentioned, due to the adoption of the IFRS, the former Service Revenue (RAP PV) was replaced by 3 new Items: Construction Revenues, O&M Revenues and Financial Income (on Receivables). TAESA s Revenues are mainly concentrated on O&M Revenues and Financial Income, as only Brasnorte is still booking Construction Revenues. The breakdown of each part of the IFRS Revenue will be presented in the following tables of this section. O&M Revenues The O&M Revenue of each concession is described in the second column of the table below. O&M Revenues will be yearly adjusted by inflation (IGPM or IPCA), in the same wayastherap. R$ MM 2Q11 Concession O&M PV O&M (P&L) NVT TSN MUN GTE PAT ETE ETA BRA Consolidated The Consolidated amount is the sum of each concession weighted by Taesa sstake Financial Income(on Receivables) In the Income Statement, the O&M Revenues are booked net of thepv,asshowninthe area. The Financial Income of each concession is described in the second column of the table below. The Financial Income is the outcome of a return rate multiplied to the outstanding Financial Asset. In the Income Statement, the Financial Income is booked together with other items as described in the area. R$ MM 2Q11 Concession Financial Income Construction Other Financial Income (P&L) 16 NVT TSN MUN GTE PAT ETE ETA BRA Consolidated The Consolidated amount is the sum of each concession weighted by Taesa sstake

17 2Q11 Results Financial Income(on Receivables) vs Financial Asset The Financial Income is the outcome of a rate of return multiplied by the outstanding Financial Asset. The variation of the Financial Asset can be calculated as shown in the table below. R$ MM 1Q11 2Q11 2Q11 2Q11 2Q11 2Q11 Concession Financial Asset Financial Income O&M Construction RAP Concessions Financial Asset NVT 1, ,440.4 TSN MUN GTE PAT ETE ETA BRA Consolidated 3, ,191.1 Consolidated value considering the stake of Brasnorte and ETAU Total Financial asset value is net of indemnity of concessions and goodwill of ETAU Asset BoP Fin Income O&M Const. RAP Asset EoP HowtofindtheFinancialAssetintheBalanceSheet The Financial Asset is booked within the account Customers and Concession Receivables. The total amount of Customers and Concession Receivables is the sum of the Financial Asset, the Indemnity value of the concessions and the Goodwill of ETAU. R$ MM 2Q11 Customers and Financial Good Will Indemnity Concession Asset of Etau Receivables 1, , , ,229.0 The Consolidated amount is the sum of each concession weighted by Taesa sstake The table on the left shows the breakdown of Customers and Concession Receivables. The amount booked in the Balance sheetisasinthe area. 17

18 2Q11 Results Net Revenues Net Revenues of R$162.4MM, negative IFRS adjustment of R$42.2MM andrapisup4.2%yoy. Revenues2Q11:AdjustedfortheIFRSvsNotAdjustedfortheIFRS The table below presents the Net Revenues of the 2Q11, comparing the results adjusted for the IFRS to the non-adjusted results. R$ MM IFRS Net Revenues 2Q11 2Q11 Adj RAP Concessions PV Service Revenues Tax Subsidies Other Revenues Total Other Revenues Operation and Maintenance Financial Income (on Receivables) Construction Other* Total IFRS Revenues Total Gross Revenues Deductions Total Net Revenues *Indemnity, Accounting Adjustments, other Former Net Revenues reached R$ 162.4MM, R$ 42.2MM (-21%) lower than the non-adjusted value. YoY Comparison: Not adjusted for the IFRS The table below presents the Net Revenues of the 2Q11, comparing the non-adjusted valuesofthe2q11tothe2q10. R$ MM Former Net Revenues 2Q11 2Q10 Var. Var (%) RAP Concessions % PV % Service Revenues % Tax Subsidies % Other Revenues % Total Other Revenues % Operation and Maintenance Financial Income (on Receivables) Construction Other* Total IFRS Revenues Net Revenues not adjusted for the IFRS totaled R$204.6MM, up 2.4% YoY. Rap has increased 4.2% due to the cycle adjustment in the second half of Tax subsidies from ADA/ADENE decreased 20.7% YoY. 18 Total Gross Revenues % Deductions % Total Net Revenues % *Indemnity, Accounting Adjustments, other

19 2Q11 Results 2Q11 RAP breakdown by concession R$ MM 2Q11 Concession RAP PV Service Revenues The amount of Service Revenues In the Income Statement (not adjusted for the IFRS) istherapplusthepvoftheperiod. NVT TSN MUN GTE PAT ETE ETA BRA Consolidated The Consolidated amount is the sum of each concession weighted by Taesa sstake The table on the left shows the breakdown of the Service Revenue by concession in the 2Q11 The PV of the quarter is positive due to the reversal of an event of TSN that was canceled by ONS. Comparison of the adjusted to the non-adjusted Net Revenues QoQ Q10 2Q10 3Q10 4Q10 1Q11 2Q11 Net Revenues not adjusted for the IFRS Net Revenues adjusted for the IFRS In the Income Statement adjusted for the IFRS, the monetary variation caused by the inflation adjustment on the RAP is fully booked on the third quarter. 19

20 2Q11 Results Costs, Expenses, Depreciation and Amortization Costs and Dep/Amort of R$ 20.9MM, positive IFRS adjustment of R$ 28.0MM concentrated on the Dep/Amort line. The non-adjusted values amountedtor$48.9mmwithareductionof12%yoy. Costs, Expenses, Dep/Amort 2Q11: Adjusted for the IFRS vs Not Adjusted for the IFRS The table below presents the amount of Costs, Operating Expenses, Dep/Amort of the 2Q11, comparing the results adjusted for the IFRS to the non-adjusted results. R$ MM IFRS Former Costs and Opex 2Q11 2Q11 Adj Personnel Material Third Party Services G&A and Other Total Dep/Amort Total YoY Comparison: Not adjusted for the IFRS Costs totaled R$20.5MM, R$2.4MM (14%) higher than the non-adjusted amount. The adjustment of R$ 2,4MM refers to the amount of Capex that is reclassified according to IFRS principles. Dep/Amort amounted to R$ 0.4MM, R$30.4MM lower than the non-adjusted value. The adjustment is a consequence of the replacement of the Fixed Asset by the Financial Asset. The amount of Dep/Amort booked in the Income Statement refers to the administrative assets. The table below presents the Costs of the 2Q11, comparing the non-adjusted values of the2q11tothe2q10. R$ MM Former Costs and Opex 2Q11 2Q10 Var. Var. % Personnel % Material % Third Party Services % G&A and Other % Total % Dep/Amort % Total % Costs and Expenses amounted to R$18.1MM, down R$3.1MM (-14.7%) YoY. Dep/Amort amounted to R$30.8MM, down R$3.8MM(-11.1%) YoY. The combined reduction of Costs and Dep/Amort totaled R$6.9MM (-12.4%) YoY. ThetotalamountofCosts anddep/amortdecreased 12.4%toR$48.9MM.Themainvariationsare: PersonnelandMaterial:Theseitemsarealignedwiththeamountofthe2Q10, down2% YoY Third Party, G&A and Other: These items combined present a 28% reduction YoY as the Company continues to improve its operational efficiency. In 1Q11 some activities had to be slowed down due to the corporate restructuring, but in the 2Q11 the Company began to recover its normal course of action. 20 Dep/Amort: The portion related to the goodwill of the Acquisition of TAESA was reclassified and is being booked within the deferred taxes account.

21 2Q11 Results EBITDA/ EBITDA Margin EBITDA adjusted for the IFRS of R$141.8MM with an EBITDA Margin of 87.3%. Non-adjusted EBITDA amounted to R$186.5MM, increasing 4.4% YoY,withanEBITDAMarginof91.2%. EBITDA2Q11:AdjustedfortheIFRSvsNotAdjustedfortheIFRS It is important to mention that in the energy transmission market, EBITDA not adjusted for the IFRS is a key financial indicator, due to its adherence to the Company s operating cash flow. The adoption of IFRS caused a significant deviation between P&L andcf,thereforeebitdaadjustedfortheifrsisnotagaugethatreflectstheoperating cash flow of the Company. The table below presents the EBITDA of the 2Q11, comparing the results adjusted for the IFRS to the non-adjusted results. R$ MM IFRS Former EBITDA* 2Q11 2Q11 Adj Net Revenues Costs and Expenses EBITDA EBITDA margin 87.3% 91.2% -3.8 bps EBITDA totaled R$141.8MM with an EBITDA Margin of 87.3%. The adjusted value was R$45MM (24%) lower than the non-adjusted value and the margin 3,8bps below. YoY Comparison: Not adjusted for the IFRS The table below presents the EBITDA of the 2Q11, comparing the non-adjusted values ofthe2q11tothe2q10. R$ MM Former EBITDA* 2Q11 2Q10 Var. Var. % Net Revenues % Costs and Expenses % EBITDA % EBITDA margin 91.2% 89.4% 1.8 bps EBITDA not adjusted for the IFRS amounted to R$186.5MM with an EBITDAMarginof91.2%,up4.4%YoY. 88,8% 90,6% 91,5% 91,2% 79,8% 89,4% 89,5% The chart on the left shows the evolution of the quarterly EBITDA Margin not adjusted for the IFRS 21 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11

22 2Q11 Results Net Financial Expenses Net Financial Expenses of R$38.9MM, up 22.8% YoY. YoY Comparison: Not adjusted for the IFRS There is no difference between the adjusted and the non-adjusted amount of Net Financial Expenses. The following table presents a comparison between the 2Q11 and the 2Q10. R$ MM IFRS Former Net Financial Expenses 2Q11 2Q11 2Q10 Var. Var. % Financial Revenues Revenues from financial investments % Financial Expenses Interest expenses % Monetary variation and Exchange gain/loss % Other financial expenses % Total % Financial Revenue: higher cash balance and increase in the Brazilian DI rate. Interest Expenses: Higher interests expenses due to increase of the debt cost. Currently most of the company s debt is CDI linked whereas last year thedebtwasmostlybasedontjlp. Monetary Variation: Approximately 19% of the Company s debt is indexed to IPCA, the amount of R$5.8MM refers to this debt issue. Taxes Taxes of R$ 29.8MM, positive IFRS adjustment of R$ 5.0MM. The nonadjusted values amounted to R$ 24.8MM, presenting a 9.1% YoY reduction. Since the last quarter of 2010 the tax subsidies of TSN and NVT began to be booked within the Other Revenues line. The chart below shows that adjusting the consolidated tax rate by these tax subsidies, the figures of the 2Q11 are aligned with the figures of the 2Q10. 29% 30% 34% 18% 20% 21% 2Q11 IFRS 2Q11 FORMER 2Q10 FORMER Tax Rate Tax Rate considering the Tax Subsidy 22

23 2Q11 Results Net Income Net Income amounted to R$ 73MM, negative IFRS adjustment of R$9.3 MM.Thenon-adjustedvaluesamountedtoR$82MM,up11%YoY. NetIncome2Q11:AdjustedfortheIFRSvsNotAdjustedfortheIFRS The chart below presents the Net Income of the 2Q11, comparing the results adjusted fortheifrstothenonadjustedresults % (-9) NET INCOME FORMER REVENUES COSTS & DEP/AMORT TAXES NET INCOME IFRS YoY Comparison: Not adjusted for the IFRS The chart below presents the Net Income of the 2Q11, comparing the non-adjusted valuesofthe2q11tothe2q % (+8) NET INCOME 2Q10 EBITDA DEP/AMORT FINANCIAL EXPENSES TAXES NET INCOME 2Q11 23

24 2Q11 Results Indebtedness Outstanding debt amounted to R$1,583MM, Cash and Equivalents amounted to R$358MM, hence Net Debt amounted to R$1,225.5MM and NFP/EBITDA(non-adjusted) closed at 1.7x. Net Financial Position: Breakdown by term R$ MM Net Debt 2Q11 2Q10 Short Term TJLP Basket of Currencies CDI IPCA Long Term 1, TJLP Basket of Currencies CDI 1, IPCA Total Debt 1, ,561.2 (-) Cash and cash equivalents (=) Net Debt 1, ,181.6 Debt Profile in 2Q11 Debt Profile in 2Q10 Outstanding Debt: Breakdown by creditor Creditor Index Outstanding Debt Cost Issue Rating Last Date Amort Coupons per Year CEF CDI 21 CDI + 6.6% - Jun Monthly 12 BNDES 1st Debentures 2nd Debentures US$ 3 US$ + 4% - Jan Monthly 12 TJLP 20 TJLP + 4% - Jan Monthly 12 1st Series 386 CDI + 1.3% Aa1.br Jul /14/15 1 2nd Series 293 IPCA % Aa1.br Jul /14/15 1 1st Series 427 CDI + 1.4% Aa1.br Dec /15 2 2nd Series 246 CDI + 1.6% Aa1.br Dec /17 2 4th Series 146 CDI + 1.6% Aa2.br Dec /17 2 Syndicate CDI 41 CDI + 0.9% - Dec Monthly 12 Total Theamount of outstandingdebt of R$ 1,576.7 MM booked inthebalancesheet isnet ofissuingcosts,thereforer$6.7mmbelowthevalueshowninthetableabove. 24

25 2Q11 Results Cash Flow Final Cash Balance amounted to R$ 358MM. In 2011, the operating cash flow remained robust. Cumulative non-adjusted EBITDAtotaledR$366MM,otheritemsamountedto -R$11MM. The financial cash flow can be divided into: -R$ 56.8MM of Interests, -R$11.9MM ofamortizationand R$1.7MMofotherItems. Thefirst dividend tranche of R$ 407MM was paid in May, 30. The second tranche ofr$333mmwillbepaidbyoctober, (-25%) Cash Balance Dec 2010 Operating Cash Flow Financial Cash Flow Dividends Cash Balance June

26 Financial Statements Income Statement 2Q11 R$ 000 IFRS Former Income Statement 2Q11 Adjustment 2Q11 2Q10 Var Var% Service revenues - (208,484) 208, ,767 9, % Operation and Maintenance 63,157 63, Financial income on receivables 102, , Other Revenues 11,853-11,853 14,915 (3,062) -20.5% TOTAL GROSS REVENUES 177,383 (42,954) 220, ,682 6, % Revenue deductions (15,018) 753 (15,771) (13,898) (1,873) NET REVENUES 162,365-42, , ,784 4, % Costs and Operating Expenses (20,918) 27,963 (48,881) (55,822) 6, % GROSS PROFIT 141,447 (14,238) 155, ,961 11, % Financial Revenues (Expenses) (38,917) (0) (38,917) (31,684) (7,232) 22.8% OPERATING RESULT 102,530 (14,238) 116, ,277 4, % NET INCOME BEFORE INCOME TAXES 102,530 (14,238) 116, ,277 4, % Income taxes and social contribution (29,784) 4,963 (34,747) (38,216) 3, % NET INCOME 72,746 (9,275) 82,021 74,061 7, % EBITDA 141,820 (44,648) 186, ,574 7, % EBITDA Margin 87.3% -3.8 bps 91.2% 89.4% 1.8 bps YTD Results R$ 000 IFRS Former Income Statement 1H11 Adjustment 1H11 1H10 Var Var% Service revenues - (412,818) 412, ,747 16, % Operation and Maintenance 122, , Financial income on receivables 207, , Other Revenues 19,575-19,575 29,506 (9,931) -33.7% Total Gross Revenues 349,438 (82,955) 432, ,253 6, % Revenue deductions (29,127) 2,441 (31,568) (27,770) (3,798) 13.7% NET REVENUES 320,311 (80,514) 400, ,483 2, % Costs and Operating Expenses (40,093) 55,572 (95,665) (112,272) 16, % GROSS PROFIT 280,218 (24,942) 305, ,211 18, % Financial Revenues (Expenses) (74,686) - (74,686) (65,340) (9,346) 14.3% OPERATING RESULT 205,532 (24,942) 230, ,871 9, % NET INCOME BEFORE INCOME TAXES 205,532 (24,942) 230, ,871 9, % Income taxes and social contribution (59,952) 8,384 (68,336) (74,977) 6, % NET INCOME 145,580 (16,558) 162, ,894 16, % EBITDA 280,964 (85,017) 365, ,055 10, % EBITDA Margin 87.7% -3.6 bps 91.3% 89.1% 2.2 bps 26

27 Financial Statements Balance Sheet R$ 000 IFRS Former Balance Sheet 2Q11 Adjustment 2Q11 Assets Cash and equivalent 356, ,012 Customers and Concession Receivables 634, ,701 92,295 Taxes e Social Contributions 19, ,248 Inventory Related Part Other receivables 4, ,448 Total Current Assets 1,015, , ,806 Other Investments 1, ,926 Judicial deposits 3, ,582 Deferred Income Tax and Social Contribution 600,984 1, ,095 Deferred Other Taxes 1,414 1,414 0 Related Part Concession Receivables 2,686,422 2,686,422 0 PP&E 12,622-2,310,760 2,323,382 Intangible Assets 4, , ,877 Deferred assets Total Non Current Assets 3,311,004 84,110 3,226,894 Total Assets 4,326, ,810 3,699,700 Liabilities Suppliers 5, ,017 Debt 24, ,169 Debentures 64, ,504 Regulatory taxes 15, ,124 Taxes and social contributions 4, ,680 Dividends 333, ,661-53,243 Other Liabilities 10, ,837 Total Current Liabilities 457, ,661 71,088 Debt 60, ,245 Debentures 1,427, ,427,807 Taxes and social contributions 162, ,105 0 Deferred Taxes 91,624 91,624 0 Related Part Contingency provisions Deferred Revenues Other 8, ,892 Total Non Current Liabilities 1,751, ,729 1,498,112 Shareholders's Equity Share Capital 1,312, ,312,536 Capital Reserve 594, ,507 Profit reserve 64,297 2,978 61,319 Dividends Results carried Forward 145,580-16, ,138 Total Shareholder's Equity 2,116, ,580 2,130,500 Total Liabilities 4,326, ,810 3,699,700 27

28 Financial Statements Financial Summary Not Adjusted for the IFRS Income Statement (R$ MM) YTD 2011 Net Revenues Gross Revenues Revenues Deductions (23) (50) (56) (56) (32) Other Revenues Costs (66) (94) (152) (85) (35) EBITDA Ebitda Margin (%) 86.9% 85.0% 81.2% 89.6% 91.3% Dep/Amort (68) (126) (123) (136) (61) Non-Operating Result EBIT Net Financial Expenses (65) (167) (107) (124) (75) IoE (30) EBT Taxes (96) (51) (138) (100) (68) Tax Rate (%) 34% 21% 32% 21% 30% Net Income Net Income after IoE Simpliflied BS (R$ MM) YTD 2011 Assets 2,716 3,235 3,514 3,926 3,752 Cash and Cash Equivalents Other Assets Permanent Assets 2,320 2,810 3,200 2,655 2,622 Liabilities 1,336 1,759 1,640 1,782 1,622 Other Liabilities Dividends/IoE Outstanding Debt 1,231 1,670 1,566 1,549 1,583 Shareholder Equity 1,381 1,476 1,874 2,144 2,131 Leverage Metrics YTD 2011 Net Financial Position (NFP) 914 1,368 1,388 1,071 1,225 NFP / EBITDA NFP to Equity 66% 93% 74% 50% 58% 28

29 Financial Statements Financial Summary Not Adjusted for the IFRS Stockwatch YTD 2011 UNIT (R$) Market Cap (R$ MM) 2,720 1,931 3,281 2,680 3,074 ADTV (R$ MM) Free Float (R$ MM) , Free Float / Total Capital (%) 34.1% 34.1% 34.1% 4.7% 4.7% Value to Shareholders YTD 2011 EPS (R$) EPU (R$) Net Income - Holding Declared Dividends (R$ MM) Dividend Payout (%) 75% 50% 58% 95% - DPS (R$) DPU (R$) Dividend Yield (%) 7.0% 4.9% 5.1% 15.2% - ROI(%) 9.2% 6.7% 9.0% 13.9% - ROE (%) 15.5% 12.7% 15.4% 17.2% - Multiples YTD 2011 EV / EBITDA PE CAPEX YTD 2011 TOTAL CAPEX EBITDA O&M Capex/EBITDA 2.1% 2.4% 2.9% 1.0% 1.0% 29

30 Unit Performance TRNA Opening Price Closing Price Maximum Minimum AV (R$ MM) Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec TRNA11 IBOVESPA IEE AV (R$ MM) TRNA Opening Price Closing Price Maximum Minimum AV (R$ MM) Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec TRNA11 IBOVESPA IEE AV (R$ MM) TRNA Opening Price Closing Price Maximum Minimum AV (R$ MM) Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec TRNA11 IBOVESPA IEE AV (R$ MM) TRNA Opening Price Closing Price Maximum Minimum AV (R$ MM) Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec TRNA11 IBOVESPA IEE AV (R$ MM) TRNA Opening Price Closing Price Maximum Minimum AV (R$ MM) Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec AV (R$ MM) TRNA11

31 Disclaimer The stand-alone and consolidated financial statements were prepared in accordance with the accounting principles adopted in Brazil, which include corporation law, the pronouncements, instructions and interpretations issued by the Accounting Pronouncements Committee(CPC) and the regulations of the Securities and Exchange Commission of Brazil (CVM), combined with specific legislation issued by the National Electric Power Agency (ANEEL). As the industry regulator, ANEEL has powers to regulate the concessions, which includes the issue of accounting rules. The forward-looking statements contained in this document relating to the business outlook, projections of operational and financial results and the growth prospects of TAESA are merely projections, and as such are based exclusively on management s expectations for the future of the business. These expectations depend materially on changes in market conditions and the performance of the Brazilian economy, the sector and international markets and therefore are subject to change without prior notice. 31