The year 2012 was a particularly challenging period, primarily due to the changes in the Brazilian electric power sector. As such, CTEEP Management exerted considerable efforts in assessing the effects from provisional executive orders 579 and 591, in addition to preparing studies and evaluation reports aimed to support the deliberation to be taken at the Shareholders’ Meeting, regarding the extension of the concession agreement 059/2001, while at the same time striving to ensure and enhance both the creation of value and the preservation of business sustainability.

The Brazilian government proposed the extension of the concession agreements scheduled to expire between 2015 and 2017, with a view to bolstering competitiveness within the domestic manufacturing industry and benefiting the population through the cut in electric energy costs. This measure ended up triggering a complex process that brought about a severe financial impact on share prices on the equity market. During the second half, CTEEP’s preferred shares (TRPL4) showed historically atypical oscillations and closed the year priced at R$ 32.99, representing a 43.11% decline year-over-year.

The new rules recently set out by the government, effective as of 2013, has laid down a new regulatory framework for the electric power industry, with a significant impact on our operations. This new arrangement will enable the Company to remain in charge of managing its transmission assets for a further 30-year term, thus giving way to a broader scope for our operations, in the light of new paradigms, while maintaining our search for operational efficiency and service excellence, as well as our commitment to all stakeholders.

The Company`s economic and financial performance results reflect the success of our management geared towards the creation of sustainable value, which is grounded on financial discipline and compliance with our operational strategy. In 2012, our net operating revenue remained stable and amounted to R$ 2,819.0 million, versus R$ 2,900.8 million in 2011. EBITDA also remained flat at R$ 1,471.9 million in 2012, with a 52.2% EBITDA margin, versus R$ 1,454.6 million in 2011, with a 50.1% margin.

Consistent operational performance is one of CTEEP’s remarkable features. In this regard, we may highlight the maintenance of the best index of non-supplied energy in 2012, as well as the higher additional Allowed Annual Revenue (RAP) granted by the Brazilian Electric Power Agency (ANEEL) to companies recording the highest asset availability.

In 2012, consolidated capital expenditures amounted to R$ 952.2 million, mainly in reinforcement, modernization and improvement in existing assets, as well as in investments in both workforce and subsidiaries. We have also started up 60 new business ventures, consisting in projects that evidence CTEEP`s endeavor to strengthen its operations, while maintaining the credibility and high quality of its electric power transmission services.

Moreover, CTEEP`s acquisition of Evrecy has enabled our stronger presence in Minas Gerais State and broadened our footprint to 16 Brazilian states, following our start-up operations in Espírito Santo State.

Notwithstanding the scenario marked by uncertainties in 2012, we have reiterated our belief that the human capital is a determining factor in the achievement of success in an organization, on account of the determination and competence of our team of professionals, who have supported and contributed to our decision-making processes. In the technical area alone, in 2012, CTEEP invested nearly R$ 1.3 million in training and development of its employees, through programs intended to technical and behavioral development.

Sustainability also consists in a concept embedded amidst the Company’s core values, and thus we also place emphasis in investments and long-term initiatives related to social-environmental issues. In 2012, we implemented the environmental management system in all substations, and we consider the ISO 26000 standard guidelines as one of our relationship directives towards the stakeholders. We have also reaffirmed our commitment to the Global Compact, of which we have been signatories since 2011, by promoting practical initiatives in support of Human Rights, Labor Rights, Environmental protection and Anti-Corruption measures.

In 2013, CTEEP shall embark in a new path within the Brazilian electric power transmission industry. We are convinced that our discipline in carrying out investments; our continuous quest for productivity improvement coupled with excellence and steady progress in operational performance; plus our focus on human capital and on financial soundness; should jointly enable us to mitigate the effects from the changes in the sector environment. Thus, we will be able to move forward with our plans for the future growth of the Company, always excelling in our commitment to our stakeholders, with particular emphasis on sustainability at all times, which will pave the way for the perpetuity of our business, along with the attainment of long-term positive results.

The Company Management would like to reiterate its sincere gratitude to all customers and suppliers, for their continuous contribution to the quest for excellence; to our employees, for their dedication and competence, essential attributes to allow for the achievement of positive results; to our shareholders and investors, for their trust in our management of operations, in every instance based on the principles of transparency, and to the society in general, for their trust in the public utility services that we provide.