2014 Results. March Economic - Financial Office and Investor Relations Office

Transcription

1 2014 Results March Economic - Financial Office and Investor Relations Office

2 Disclaimer This presentation may contain forward-looking statements referring to SABESP s business outlook, operating and financial results estimates, and growth prospects. These are only forecasts, and as such, they are exclusively based on SABESP s management expectation in relation to the future of business and its continuous access to capital to finance the Company s business plan. These forward-looking statements largely depend on changes in market conditions, governmental rules, industry performance and the Brazilian economy, among other factors, in addition to risks exhibited in disclosure documents filed by SABESP. Therefore, they are subject to changes without prior notice.

3 Agenda 1 Company Overview 2 Our Operations 3 Our Financial Performance

4 One of the largest water and sewage service providers in the world Sabesp is one of the largest water and sewage service providers in the world based on the number of Customers Provides water to 25.3 million people and sewage services to 22.4 million people Also sells wholesale treated water to 5 municipalities (3.1 million people) Natural monopoly, low operating risk Serves the City of São Paulo and 363 out of 645 municipalities in the State Company Overview Covers around 60% of State's urban population Operations in the São Paulo Metropolitan Region* represent 70.0% of our total revenues Main Operational Indicators (1) Water (1) As of December 31, 2014 (2) Treated sewage as percentage of collected sewage Sewage Connections (million) Coverage (%) Treatment (%) (²) Billed Volume (m³ million) 2, ,562.2 *The Metropolitan Region we consider for this estimate, includes 8 municipalities outside the legal boundaries of the São Paulo Metropolitan Region and represents the municipalities served by the Company s Metropolitan Division São Paulo Regional Systems Metropolitan Region 4

5 with strong corporate governance We are a mixed capital company, majority-owned by the State of São Paulo, with significant private ownership State law requires the State of São Paulo to own at least 50% + 1 voting shares at all times Currently the Government of São Paulo has 50.3% share 100% common shares Market Cap: R$ 11.6 billion (as of December, 2014) Ownership Structure (1) 24,8% 50,3% (1) As of December, ,9% 5

6 6 Agenda 1 Our Company 2 Our Operations 3 Our Financial Performance

7 7 Diversified customer base Water Billed Volume by Type of Customer Sewage Billed Volume by Type of Customer Commercial 8% Residential 75% Industrial 2% Public 3% Residential 83% Commercial 10% Whosale 12% Industrial 3% Public 3% Whosale 1% Over 80% of water volume comes from residential, commercial and industrial customer Over 90% of sewage volume comes from residential, commercial and industrial customer

8 8 Broad coverage of municipalities Contracts 30-year-service agreement between Sabesp, Municipality of São Paulo and State Government (expires in 2040) Minimum investment of 13% of the Gross Revenue, net of Cofins and Pasep, approximately R$ 600 million/year - R$ 16.9 billion in 30 years Nº of contracts Contract with the Municipality of São Paulo % of revenue Renewed/Secured (Program and Service Contract) % Metropolitan Region Without Contract % Expired/Under Negotiations % To be expired: Today to % 2024 to % Total Retail % Wholesale 5 1.4% Total Sabesp % Transfer of 7.5% of the Gross Revenue, net of Cofins and Pasep, to the Municipal Environmental Sanitation and Infrastructure Fund to be recovered in tariff Diadema From wholesale to retail Full operation of water supply and sewage services 30-year contract Contract signed in March 2014 Population of 386, % of water and 96% sewage coverage

9 Regulatory Framework Federal Law # 11,445/07 Federal Decree 7,217/10 and Federal Decree 8,211/14 Obligatory creation of a Regulatory Agency Municipal or State level Clarifies the payment conditions of non-amortized investments up to 4 years Disbursement of federal funds conditioned to the existence of a sanitation plan Deadline 2015 Concession Power in Metropolitan Regions Legal proceedings related to this matter under Supreme Court (STF) appraisal were ruled in February 2013 Final decision released in September 2013: Sanitation services in metro regions are subject to shared responsibility between State and Municipality State Legislative has two years to adjust the legislation, create entities and mechanisms to implement the ruling ARSESP s attribution Regulation activities and responsibilities include: Service quality Tariff structure and reviews Planning is a concession holder attribution 9

10 Tariff Revision Volume (M 3 ) RAB T = RAB 0 + (CAPEX+ CG-DEP) RAB 0 CAPEX + OPEX + IRCS + CG P0 TIR = WACC May 18, 2011 Apr 17, 2014 May 17, 2014 ARSESP discloses WACC of 8.06% (RTS/01/2011) Resolution nº 484: ARSESP discloses First Tariff Revision of Sabesp - calculation of P0, P1, and X Factor (RTS/004/2014) repositioning index = % X Factor = % Future annual tariff adjustments = April 11 of 2015 and 2016 Next tariff revision = April 11, 2017 Resolution nº 488: ARSESP maintains the suspension of the effectiveness of Resolution nº 407 postponing the authorization of the pass through to the service bill the 7.5% Nov 27, 2014 Resolution nº 520: ARSESP authorizes SABESP to apply a % repositioning index as of December 27, 2014 Dec 19, 2014 Dec 29, 2014 Jan 7, 2015 Resolution nº 536: ARSESP authorizes Sabesp to extend the validity of the Water Consumption Reduction Incentive Program until the end of 2015, or until reservoir levels are normalized, whichever occurs first Public Hearing: inclusion of contingency tariff mechanisms into Sabesp's water consumption reduction incentive program ARSESP aproves Contingency Tariff 40% increase on the tariff amount, applicable to the exceeded consumption by up to 20% 100% increase on the tariff amount, applicable to the exceeded consumption by more than 20% Mar 6, 2015 Sabesp files at ARSESP an Extraordinary Tariff Revision Request 10

11 Annual Tariff Adjustment Annual tariff adjustment formula New Average Tariff = 1 + Inflation (IPCA) Productivity Factor x Previous Average Tariff - Quality Factor October 31st, 2013 ARSESP authorizes a tariff adjustment of % as of December 11, 2013 November 27, 2014 ARSESP authorizes a tariff adjustment of % as of December 27, 2014 Annual tariffs adjustments vs. Inflation (%) 19.0% 15,1% 11.9% 13.1% 9.7% 8.2% 7.2% 6.8% 9,0% 6.0% 6,7% 3.8% 4.4% 4.0% 6.3% 4.3% 4.7% 5.1% 4.4% 4.1% 7.3% 6.8% 5.3% 5.2% 8.0% 3.1% 2.4% 6.5% 6.5% Sabesp Formula Adjustment established by ARSESP Annual Adjustment April 22 Dec 11 IPCA Tariff Revision 11

12 Water and Sewage Operations Evolvement Water Connection Evolution (million) Water Coverage (Connections in 000s) Add 1.0 million new connections by Sewage Connection Evolution (million) Sewage Coverage (Connections in 000s) Add 1.4 million new connections by Collection: 95% in 2020 Treatment: 95% in

13 Capex plan Capex Plan of R$ 13.5 billion from 2014 to 2018 R$ million 2, ,900 2, ,726 2, ,255 1,255 1,427 1,518 1, Water Suply Sewage collection Collected sewage treatment Main Programs Metropolitan Water Program Tietê Project Corporate Program for Reduction of Water Loss Clean Stream Program Clean Wave Program 13

14 Capex financing 2015 to 2019 R$ 13.5 billion Company Funds R$ 7.3 bi 54.3 % Financing R$ 6.2 bi 45.7 % Contracted R$ 42 bi 68.3% CAIXA R$ 1,2 bi BNDES R$ 1,7 bi BID R$ 700 mi JICA R$ 500 mi BIRD R$ 100 mi Under negotiation R$ 2.0 bi 31.7% CAIXA BNDES 14

15 15 Agenda 1 Our Company 2 Our Operations 3 Our Financial Performance

16 Long term and low cost funding Total debt breakdown Total debt by currency CEF 14.7% IRDB 1.1% Others 4.5% JICA 10.0% Yen 9.7% Currency Basket* 1.9% IDB 17.1% BNDES 12.5% Eurobonus 12.1% US Dollar 28,5% Local Currency 59,7% 1,650 1,500 1,350 1,200 1, ,207 Debentures 28.0% 1,099 1, Debt amortization profile 1,018 1,646 R$ million 836 (*) IDB 713 agreement Local Currency Foreign Currency ,147 16

17 Consistent performance Net Revenues (R$ million) Net Income (R$ million) 5,527 5,971 7,809* 6,132 8,580* 9,231* 6,540 7,099 9,927* 10,738* 11,316* 11,213* 8,273 8,871 8,295 7, , * 1,508* 1,631* 1,223* 1,912* 1,924* 903* Net Renevues Net Renevues Without Construction *Since 2008 calculated in accordance with CPCs / IFRS, which includes construction Costs Adjusted EBITDA (R$ million) *Since 2008 calculated in accordance with CPCs / IFRS, which includes construction Costs Dividends/Pay Out 2,865 2,727 4,007* 3,222* 3,371* 3,605* 44.7% 43.2% 43.0% 44.6% 36.7% 31.8% 34.9% 34.0% 33.6% 35.4% 2,919* 34.4% 26.0% Dividend Declared ,37 Pay Out % , Adjusted EBITDA * Since 2008 calculated in accordance with CPCs / IFRS, which includes construction Costs 17

18 Historical leverage metrics (R$ million) Adjusted Total Debt vs. Adjusted EBITDA* ,64x ,40x 1,98x 2,55x 2,50x 2,46x 2,36x Adjusted Total Debt Adjusted EBITDA Total Debt/Adjusted EBITDA Adjusted Total Debt = Total Debt - Interest Net Debt vs. Adjusted EBITDA* 9,063 7, x 6,959 6,221 6,281 5,787 5,220 3,222 3,371 2,865 2, x 1.82x 1.93x 1.86x 4,007 3,605 2, x 1.91x Adjusted EBITDA* vs. Financial Expenses** ,605 3,371 3,222 2,865 2,919 2, x 3.56x 4.08x 4.80x 6.23x 4.10x 6.39x Adjusted EBITDA Financial Expenses Adjusted EBITDA/Financial Expenses Net Debt vs. Equity 13,304 12,931 11,256 10,546 9,682 9,063 8,439 7,668 6,758 6,959 6,221 6,281 5,220 5, x 0.64x 0.68x 0.77x 0.60x 0.62x 0.59x Net Debt Adjusted EBITDA Net Debt/Adjusted EBITDA Net Debt Equity Net Debt/SE * Adjusted EBITDA LTM ** Financial Explosures - LTM Calculated in accordance with CPCs/IFRS 18

19 19 Financial Highlights (R$ million) * 2009* 2010* 2011* 2012* 2013* 2014* Net Revenues (R$) 3, , , , , , , , , , , , ,213.2 Adjusted EBITDA (R$) 1, , , , , , , , , , , , ,918.7 Adjusted EBITDA Margin (%) Net Income (R$) , , , , , , Net Margin (%) Total Assets (R$) 16, , , , , , , , , , , , ,355.4 Total Debt (R$) 7, , , , , , , , , , , , ,785.8 Short-term Debt (R$) 1, , , , , , , ,207.1 Long-Term Debt (R$) 6, , , , , , , , , , , , ,578.7 Foreign Currency Debt (R$) 3, , , , , , , , , , , , ,346.2 Shareholders' Equity (R$) 4, , , , , , , , , , , , ,304.4 Total Debt/Total Cap. (%) Investments (R$) , , , , , , ,210.6 Dividend Declared (R$/ share) ** 5.4** 12.2** 9.5** Pay Out (%) Dividend Yield (%) Outstanding shares (million) * In accordance with CPCs / IFRS, which includes Construction Costs. ** R$ / 000 shares

20 Extra Slides

21 jan/14 fev/14 mar/14 abr/14 mai/14 jun/14 jul/14 ago/14 set/14 out/14 nov/14 dez/14 jan/15 fev/15 mar/15 vazão produzida em m³/s Reservoir vs. Production Reservoires Level (%) Million people served Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Cantareira: * 20.6* 15.4* 12.9* 6.9* 12.4* 8.8* 7.2* 5.1* 11.4* 18.9* Guarapiranga: Alto Tietê: Rio Claro: Rio Grande: Alto Cotia : Water production (m 3 /s) 37,0 System February 2014 February 2015 Difference Cantareira ,0 Alto Tietê ,0 Guarapiranga Rio Grande ,0 Rio Claro ,0 Alto Cotia Baixo Cotia ,0 Ribeirão Estiva Total Water Produced SPMR (m 3 /s) * Considering also the Technical Reserve Up to March, 30,

22 Cantareira System Rainfall (in mm) 350,0 300,0 156% Year total Avg.: 1,582 mm Low: 362 mm 2014: 905 mm 250,0 200,0 150,0 93% 84% 73% 56% 112% 105% 100,0 50,0 32% 59% 28% 33% 35% 96% 45% 28% 81% 61% 72% 0,0 OCT OUT NOV DEC DEZ JAN FEB FEV MAR MAR APR ABR MAY MAI JUN JUN JUL JUL AUG AGO SEP SET Média Historical Histórica avg ,8 161, , , , , , , , , , ,9 Minima Histórica Historical low 21, , , , , , , , , , , , /14 123,4 97,0 62,9 87,8 73,0 193,3 85,7 37,3 15,8 40,4 22,6 66,0 2013/ /15 42,5 135,0 165,5 148,2 322,4 206,3 2014/ Up to March 30,

23 Cantareira System Water inflow (m 3 /s) 80,0 70,0 60,0 50,0 40,0 30,0 20,0 10,0 Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep 0,0 outubro novembro dezembro janeiro fevereiro março abril maio junho julho agosto setembro Historical Média Histórica Avg , , , , , , , ,4 35, , , , Historical Mínima Histórica low , , , , , , , ,9 16, , , , ,5 26,0 31,5 26,9 34,5 29,8 34,6 23,8 20,7 17,6 16,3 16, / ,1 22,1 22,5 15,4 10,5 18,9 17,2 10,1 10,0 6,4 8,2 9,0 2014/ / , , , , , , / Water inflow 2014/15 (Oct to Mar): 38% of the historical average 95% of the historical low Up to March 30,

24 Measures taken due to lower water volume withdrawal from the Cantareira System -6,267-0,631-3,440-7,454 VRP BÔNUS Transferências Guarulhos/SCS Bonus Program Water transfered between systems Operational maneuvers/water loss Reduction of transfered water to Guarulhos and São Caetano do Sul 4

25 IR Contacts Mario Azevedo de Arruda Sampaio Angela Beatriz Airoldi (55 11) (55 11)