Company Overview Institutional Presentation

Transcription

1 Company Overview Institutional Presentation

2 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. The results are usually presented in both IFRS and Regulatory (Non-IFRS) in order to permit comparisons with other periods. However, the results presented in Regulatory (Non-IFRS) format are not audited. TAESA uses the audited results based on the IFRS principles to declare dividends. 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. EBITDA consists of net income before taxes, net financial expenses, and expenses with depreciation and amortization, and revenues. EBITDA is not recognized by generally accepted accounting principles in Brazil or by the IFRS, it does not represent a cash flow for the periods presented, it should not be considered as an alternative to net income. The EBITDA presented is used by TAESA to measure its own performance. TAESA understands that some investors and financial analysts use EBITDA as an indicator of its operating performance. Net Debt is not recognized by generally accepted accounting principles in Brazil or by the IFRS, it does not represent a cash flow for the periods presented. The Net Debt presented is used by TAESA to measure its own performance. TAESA understands that some investors and financial analysts use Net Debt as an indicator of financial performance. 2

3 Transmission Sector 3

4 The Brazilian Electric Sector Brazilian Electric Sector is divided in Generation, Transmission and Market (Distribution + Free Consumers + Traders). Fundamental Principles Security at the electric energy supply Economic and financial balance between the service provider agents Social inclusion - universalization Generation Transmission Market 144 GW of installed capacity 10 groups control 71% of the installed capacity 64% State Owned 4,526 generation sites 65% Hydroelectrically 27% Thermoelectrically 8% Other sources 77 Companies 130 thousand km of high voltage (>230 kv) 45% State Owned Regulated tariff (annually adjusted) Distribution 63 Companies 78 MM Clients 32% State owned Consumers Captive 349 TWh Free 115 TWh Source: EPE/ONS/ANEEL 4

5 National Interconnected System (SIN) Transmission grid has 130 thousand Km of extension SIN Transport 99% of the National Energy Volume Regulated and supervised by ANEEL and operated by ONS (Electric System National Operator) 30 years contracts have fixed revenues adjusted by inflation: regardless of energy volume traded Directly paid by Generation and Distribution Companies and Free Consumers Source: ONS 5

6 Transmission Sector Entails Lower Risks The transmission segment is less exposed to the inherent risks of the sector Segments Generation Transmission Distribution Volume Risks Environmental Risks Construction Risks Operation Risks Counterparty Credit Risks Regulatory Risks Higher Risks Lower Risks No Risks Lower risks provide predictability and stability of cash flows Source: Company 6

7 Low Risk of Client Default The guarantees structure reinforces the predictability and stability of TransCos revenues Client Base Diversification Mitigates the Default Risk* Guarantee of Payments DisCos Free Consumers 5% DisCos Represents the TransCos for the use of the system (SIN) Forces users to make payments to TransCos due to the use of SIN SIN 34% Transmission Service Provider Contract CPST Transmission System Use Contract CUST Free Consumers GenCos 61% GenCos TransCos ONS SIN Users Electric System National Operator TransCos # clients: 598 Representative Based on Total Revenue % Largest User Average % per User Standard Deviation 6.72% 0.17% 0.64% Default Risk ONS represents the users in the guarantee provision contract, which guarantees the payment of the unpaid values As of February/2016 Source: ONS and Company 7

8 Who We Are

9 Who We Are Why Invest in TAESA? Premium Assets A Pure Play Transmission Company 29 concessions, lines of 9.9 thousand km, revenues of R$ 2.5 billion Dividends Highly Predictable and Stable Cash Flow Highly predictable revenues, high EBITDA margins and robust dividend policy Growth M&A, Greenfield and Reinforcement Successful business model 2 to 29 concessions between Source: Company 9

10 Pure Play Transmission Company 29 long term concessions, more than R$ 2.5 billion of contractual Revenues (RAP) and... Source: Company 10

11 Highly Predictable and Stable Cash Flow Category 1 Category 2 Category 3...contracts without tariff review guarantee a sound and stable cash flow generation. TAESA s concessions expire after 2030 Assets built before 1999 Concessions renewed in 2012 for 30 years, after the PM 579 Allowed Revenues ("RAP") annually adjusted by the IPCA since 2013 Subject to tariff reviews every five years % 5% % Assets auctioned between 1999 and November, % 48% 2030 RAP annually adjusted by IGPM (until 2006) or IPCA (from 2006 onwards) RAP reduced by 50% in the 16 th year of the operation No tariff review % 30-year concession term 10% Assets auctioned from November, 2006 onwards 2031 RAP annually adjusted by IPCA Subject to tariff reviews in the 5 th, 10 th, 15 th year of the contract 30-year concession term TAESA s concessions are mainly concentrated on Category 2 Source: Company 11

12 Robust Dividend Policy Sound and stable cash flow generation supports robust dividend policy... 95% 95% 95% 95% 95% 100% 87% 88% 91% 94% 91% Minimum Dividend Policy: 50% of Net Income Extra (*) Payout Net Income (R$ mm) Dividends and Interest on Equity (R$ mm) TAESA has a dividend policy focused on maximizing the dividend payments, guaranteeing at least the distribution of 50% of its Net Income (*) Earnings reserve created due to the adoption of IFRS accounting in 2010 Source: Company 12

13 Growth via M&A, Greenfield and Reinforcement... and a solid business model delivers dividends and value-accretive growth. Cash Flow Stability = Yield Growth Long term concession contracts Strong dividend policy Leverage capacity Predictable, inflation-adjusted cash flows Sustainable growth Efficient operation Financial optimization Nationwide footprint Business model focused on growth and shareholder s return Source: Company 13

14 Unparalleled Growth History Successful track record: From 2 to 29 concessions from 2006 to % RAP (R$ MM) , % ,154 TSN/NVT MUN GTE/PAT ETAU ETEO BRA Subtotal UNISA +NTE TBE SGT TRANS Mariana Total Source: Company 14

15 1Q16 Results

16 Key Highlights 1Q16 result was in line with the annual adjustment of RAP (Annual Permitted Revenue). The Regulatory EBITDA Margin was 90,3%. RAP R$ MM EBITDA (Non IFRS) R$ MM EBITDA Margin 90.3% 1Q16 Managerial Result R$ MM +4,7% ,5% ,6% Annual Permited Revenue EBITDA (Regulatory) Net Income (IFRS) Source: Company. 1Q15 1Q16 16

17 1Q16 IFRS Net Revenues Managerial Net Revenues increased 18%, due to inflation accounting adjustment. Consolidated Managerial +19% R$ mn +18% Consolidated 1Q15 chg Consolidated 1Q16 TBE Etau Bras Managerial 1Q16 chg Managerial 1Q15 Source: Company. 17

18 1Q16 Regulatory EBITDA (Non IFRS) Managerial Regulatory EBITDA grew 6.7%, with an EBITDA margin of 90.3%. Consolidated Managerial R$ mn +6.5% % Consolidated 1Q15 chg Consolidated 1Q16 TBE Etau Bras Managerial 1Q16 chg Managerial 1Q15 Source: Company. 18

19 EBITDA Margin Managerial Regulatory (Non-IFRS) Managerial EBITDA Margin of 90.5% testifies the company's commitment with the reduction of costs. 92.0% 89.8% 89.3% 90.0% 89.9% 89.9% 88.2% 88.1% 88.2% 87.0% 88.0% 87.3% 88.6% 86.7% 90.5% R$ MM Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 EBITDA Non IFRS adjusted EBITDA Margin Source: Company. 19

20 IFRS 1Q16 Net Income 1Q16 Net Income increased 26% influenced for the monthly inflation adjustment R$ MM % Q15 Net Income Δ EBITDA Δ Dep/Amort Δ Equity Method Δ Net Financial Result Δ Taxes Tax Incentive 1Q16 Net Income Source: Company. 20

21 Indebtedness Taesa s net debt of R$ 3,000 MM with no exposure to Fx risk, long term profile and balanced capital structure. R$ mn 869 Debt Maturity Profile Debt Profile¹ Debt Term¹ Capital Structure(BV) 56% 61% 18% 2% 0% 0% 82% 42% 39% CDI Basket of Currencies IPCA TJLP Pré-Fixado Long Term Short Term Net Debt Equity (Book Value) Source: Company. 21

22 Financial Highlights Net Revenues Non-IFRS (R$ MM)* Costs & Expenses Non-IFRS (R$MM) +18% 1,618 1,891 1, , Q Q16 Adjusted EBITDA and Margin EBITDA Non-IFRS (R$ MM)* Net Income IFRS 79.8% % % % 1, % 1, % 1, % 90.5% 1, % Q Q16 * The figures presented in the charts above include Taesa, Etau, Brasnorte and TBE Source: Company 22

23 Growth Strategy

24 What s Next There are 3 growth avenues within the transmission market M&A M&A Opportunities R$ 4.2 Bn in Annual Revenues still on the hands of other private companies Greenfield Brazilian Grid Must be Expanded Expansion happens close to TAESA s asset base Reinforcements Smaller Value-Accretive Capex Projects TAESA is currently developing 4 projects Source: Company 24

25 Strong and Predominant Position in All Concessions Categories Leadership in the Transmission Market All Concession Categories - R$ 20.4 Bn % Brazilian Total Allowed Revenues ("RAP") Concession Category II and III Only - R$ 16.8 Bn % Brazilian Total Allowed Revenues ("RAP") Abengoa 31% 6% 19% CTEEP Others - Private Alupar 9% 17% 6% Alupar State Grid 4% 9% Abengoa 34% 7% 21% Others - Private 12% 15% 8% State Grid 15% 5% 14% Alupar 13% 9% 6% Outros CTEEP 18% State Grid 18% 31% 8% Eletrobrás 40% Others - State Eletrobrás Eletrobrás 26% 20% 3% 5% CTEEP Others - State Source: ANEEL/Company 25

26 M&A Opportunities Significant opportunities may come from Construction Companies, the main winners of last auctions Operational Future M&A Approximately R$ 1.3 bi RAP with Private Companies Under Construction (R$ MM) Total RAP : R$ 7,304 MM 37% Outros STATE GRID Categoria II Categoria III 63% TAESA s been more effective on the M&A Front Since 2006 TAESA passed from 2 to 28 concessions, of which 23 were acquired via M&A Construction Companies Feed the M&A Market M&A deals consist on a construction company selling the transmission asset once it becomes operational to a long term operator Federal Companies Don t Participate Federal State-Owned companies neither sell nor buy assets on the secondary market (1) Potential M&A Market: Construction Companies, Investment Funds and Other Private Companies Source: Company Brookfield LITRAN 112 FIP CX MILÃO 142 CYMI 359 ISOLUX COPEL 492 Potential Market¹ for M&A: Up R$ 3.3 bi in 3-4 Years ABENGOA 860 Outros ABENGOA CYMI ISOLUX 245 Eletrobrás LITRAN 112 FIP CX MILÃO 95 BRAXENERGY 60 ELECNOR 387 Brookfield 26

27 Greenfield Grid Must Be Expanded In the Last 10 years the Brazilian Grid has Grown Slowly and must be expanded not to become a bottleneck on the country s development EPE estimated an investment of R$ 69 billion for the coming years, of which R$ 49.7 billion in transmission lines and R$ 19.7 billion in power substations 000 Km PDE % % Actual Estimative PDE 2024 Brazilian power plants are far from the energy consumption centers Huge power plants are currently under construction (Madeira Complex, Teles Pires, Belo Monte) Construction Companies need to divest in order to continue bidding over the next auctions Source: ANEEL, ONS and EPE 27

28 Auction 13/ nd part + empty 1 st part Auction 013/2015 TAESA and Stakes Infomation Auction 013/15 part 2 Date RAP Extension(km) CAPEX Period September, 2 nd R$ 2.0 bi 6.6 thousand km R$11.8 bi 60 months 28 28

29 Reinforcements and New Projects TAESA is investing R$ 420 MM in Reinforcements and New Projects Project Concession Operation Start Expected Capex (R$) RAP (R$) RAP/CAPEX LT Açu II-Lagoa Nova II e LT Lagoa Nova II-Paraiso - Replacement for OPGW cables at 230 kv SE Lagoa Vermelha II - Installation of the 2nd autotransformer bank 3x50 MVA LT Mariana - Transmission Line 500 kv - Itabirito 2 / Vespasiano 2 LT Miracema -2 Transmission Lines 500 Kv Miracema/Lajeado and 230 Kv Lajeado/Palmas and 2 substations PATESA Oct/17 16 MM ND(*) - ETAU Dec/16 24 MM 2.4 MM 10.0% MARIANA May/ MM 11.5 MM 11.5% MIRACEMA Dec/ MM 56 MM 20% Total 420 MM 69.9 MM ¹ Type IV Reinforcement: The RAP will be defined after being energized and costs approved by ANEEL Source: Company 29

30 Backup

31 Asset Summary Premium asset base concentrated on category 2. Concession Contracts Concession Contract Length Ssubstation RAP Tariff RAP/Km Stake Expiration Reduction (km) nº 16/17 Review (MM/km) Novatrans 100% Dec-30 Jun-18 1, No 0.40 TSN 100% Dec-30 Jun-18 1, No 0.46 TSN Munirah 100% Feb-34 Oct No 0.34 TSN GTESA 100% Jan-32 Aug No 0.18 TSN PATESA 100% Dec-32 Sep No 0.16 ETEO 100% May-30 Oct No 0.22 ETAU 53% Dec-32 Apr No 0.12 Brasnorte 39% Mar-38 No Yes 0.02 NTE 100% Jan-32 Jan No 0,39 STE 100% Dec-32 Jul No 0.21 ATE I 100% Feb-34 Dec No 0.40 ATE II 100% Mar-35 Jan-22 PREMIUM ASSET BASE No 0.24 ATE III 100% Apr-36 Mar No 0.25 EATE 50% Jun-31 Mar No 0.23 ETEP 50% Jun-31 Aug No 0.15 ENTE 50% Dec-32 Feb No 0.24 ECTE 19% Nov-30 Mar No 0.06 ERTE 50% Dec-32 Sep No 0.16 STC 40% Apr-36 Nov No 0.07 Lumitrans 40% Feb-34 Oct No 0.26 EBTE 74% Oct-38 No Yes 0.04 ESDE 50% Nov-39 No Yes - ETSE 19% May-42 No Yes - Transleste 5% Feb-34 Dec No 0.01 after % % RAP (MM) CAT II CAT III 4% 96% 50% Reduction % 3% 2017 Transirapé 5% Mar-35 Feb No 0.02 Transudeste 5% Mar-35 May No 0.01 São Gotardo 100% Sep-42 No Yes - Mariana² 100% May-44 Miracema² 100% Jun-46 No No Yes Yes 0.68 Total (# 29 Concessions) 9,978 74¹ % 2018 ¹ The substations which belong to more than one concession were counted only one time. ²Mariana and Miracema concessions are under contruction. TBE Source: Company %

32 Taesa Corporate Structure We are constantly simplifying the structure Leverage Capacity Financial Flexibility - Higher Efficiency FIP Coliseu CEMIG 22% 43% 35% Free Float TAESA 10 concessions Brasnorte ETAU ATE III São Gotardo Mariana Miracema TBE* 38.7% 52.6% 100% 100% 100% 100% 48% * TBE is a fantasy name for a group of 13 concessions Source: Company 32

33 TBE Corporate Structure TBE consists in 13 concessions. Taesa 50%* 48% TBE 74%* 38% 18% ENTE ERTE EATE EBTE 50% 22% 50% 49% 19% 50% 51% ECTE ETEP 19% 62% 80% 10% 10% 10% STC Lumitrans Transirapé Transudeste Transleste ETSE 100% 100% ESDE 40%* 40%* 5%* 5%* 5%* 19%* 50%* * Indirect Stake Source: Company 33

34 Dividends and Interest on Equity Payment TAESA paid an expressive amount of dividends since IFRS Reserve Dividends and IoE DPU Dividends and IoE per UNIT Source: Company 34

35 Corporate Governance Financial discipline is the corner stone of a well-balanced corporate governance. M&A and Technical Division Executive Directors Financial Committee Board of Directors M&A prepares the financial analysis together with an independent financial advisor Tech department prepares the technical assessment Both departments submit to the approval of Executive Directors If the financial analysis meets the return requirement and If the technical assessment is compliant with the Company s procedures Executive Directors submit to the approval of the Financial Committee The Financial Committee is composed of 5 members: 3 from FIP COLISEU and 2 from CEMIG ( all of them members of the board of directors) The Committee s role is to assess the project, then reject or recommend it to the approval of the Board of Directors The BoD is composed of 11 members: 4 from FIP COLISEU, 5 from CEMIG and 2 independent members The BoD is the ultimate approver for any project Source: Company 35

36 Controlling Shareholders Ideal mix of technical and financial expertise. Blue Chip Local Sponsorship from CEMIG Proven Financial Investors CEMIG is one of the largest utility companies in LATAM, with a significant footprint in generation, transmission, distribution and commercialization of electricity in Brazil Industry consolidator through a solid and well succeeded growth strategy M&A deal of more then R4 9.3 billion since 2004 FIP Coliseu is an equity investment fund managed by Banco Modal, a private equity firm with over R$ 3bn AuM focused at energy and oil and gas Main shareholders are: EletroCEEE (33.33% ), Forluz (30.08%),Banco do Brasil (20.05%), Others (16.54%) Strategy oriented for the sector specialization, value accretive and construction of long term partnership Solid corporate governance practices Large market cap., listed in New York and São Paulo Stock Exchange and high liquidity Source: Company 36

37 Capital Breakdown TAESA is registered under LEVEL II. Common Shares Preferred Shares Total 9% 3% 24% 28% 16% 6% 15% 7% 34% 19% 12% 61% 11% 21% 35% FIP Coliseu FIP Desv FF CEMIG CEMIG Garantia CEMIG Desv FIP Coliseu CEMIG Garantia FF FIP Desv CEMIG Desv FF Common Preferred Total CEMIG CEMIG Garantia CEMIG Desv FIP Coliseu 228,775, ,775,790 CEMIG 293,072, ,050, ,122,873 Free Float 118,866, ,732, ,598,058 TOTAL 640,714, ,782,652 1,033,496,721 Source: Company 37

38 João Procópio Marcus Pereira Aucélio Leonardo Bonorino Rafaela Gunzburger Contact: CEO CFO and IRO IR Manager IR Coordinator