1Q14 Results. May Economic - Financial Office and Investor Relations Office

Transcription

1 1Q14 Results May 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 24.6 million people and sewage services to 21.6 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 59% of State's urban population Operations in the São Paulo Metropolitan Region* represent 70,7% of our total revenues Main Operational Indicators (1) Water (1) As of March 31, 2014 (2) Treated sewage as percentage of collected sewage Sewage Connections (million) Coverage (%) Treatment (%) (²) Billed Volume (m³ million) *The Metropolitan Region we consider for this estimate, includes 8 municipalities outside the legal boundaries of the São Paulo Metropolitan Region and represent the total cities 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 Listed on the Novo Mercado and NYSE, to the highest corporate governance standards. We are also part of BM&FBovespa s Sustainability Index ISE 100% common shares Market Cap: R$ 14.4 billion (as of March, 2014) Ownership Structure (1) 25.5% 50.3% (1) As of March, % 5

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

7 7 Diversified customer base Water Volume by Type of Customer Sewage Volume by Type of Customer Residential 74% Commercial 8% Industrial 2% Public 2% Whosale 14% Residential 83% Commercial 10% Industrial 3% Public 2% Whosale 2% 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 municipalities 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 0.6% 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 ,000 population - 100% 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 ARSESP discloses WACC of 8.06% (RTS/01/2011) Apr 16, 2012 ARSESP s discloses detailed Tariff Methodology (RTS/ 01/2012) Aug 30, 2012 Sabesp submits to ARSESP the Regulatory Asset Base (RAB) and the detailed Business Plan Nov 13, 2012 ARSESP discloses the proposed preliminary Initial Maximum Average Tariff (P0) and Efficiency Gain Factor (X Factor) Mar 22, 2013 ARSESP discloses Tariff Review Results relating to preliminary P0 and X Factor (RTS/01/2013) Apr 30, 2013 SABESP requests postponement of its Tariff Structure to April /14 Accepted by ARSESP in June /13 Ago 2, 2013 ARSESP discloses Resolution nº 427 alleging that found inconsistencies in the RAB and maintained tariff revision suspended Ago 16, 2013 SABESP files request for tariff adjustment by 6.27% (IPCA index) % = 3.83% Sep 2, 2013 SABESP requests ARSESP three months to revise the RAB Accepted in September 6 Nov 1, 2013 Dec 4, 2013 Feb 11, 2014 Mar 12,, 2014 Apr 17, 2014 Resolution nº 435 : ARSESP authorizes a tariff adjustment of % as of December 11, 2013 (NT/F/007/2013) Resolution nº 434 : ARSESP fixes the date of March 10, 2014 for the publication of the definitive Initial Maximum Tariff Price (P0) and the Efficiency Factor (X Factor) SABESP delivers the RAB revised ARSESP discloses proposal of First Tariff Revision of Sabesp - calculation of P0, P1, and X Factor (RTS/001/2014) Public Hearing and related to calculation of P0, P1, and X Factor (RTS/001/2014) 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,

11 Tariff adjustments Sabesp Annual Tariffs Adjustment New Average Tariff = 1 + Inflation (IPCA) Productivity Factor x Previous Average Tariff - Quality Factor November 1, 2013 ARSESP authorizes a tariff adjustment of % as of December 11, 2013 Annual Tariffs Adjustments vs. Inflation (%) 18.95% 13.74% 15.43% 13.05% 7.66% 8.22% 6.78% 9.00% 6.81% 6.57% 6.71% 6.37% 4.50% 4.60% 3.97% 3.74% 4.12% 5.10% 4.43% 4.05% 6.87% 5.20% 6.83% 5.15% 6.27% 3.15% 2.35% Apr/22/13 Dec/11/ Sabesp Formula Annual Adjustment Adjustment established by ARSESP IPCA 11

12 Evolution of operations Water Connection Evolution (million) Water Coverage (Connections in 000s) Add 1.2 million new connections by Q Sewage Connection Evolution (million) Sewage Coverage (Connections in 000s) Add 1.7 million new connections by Collection: 95% in 2020 Treatment: 95% in Q

13 13 Capex plan Total Investment Plan of R$ 12.8 billion from 2014 to 2018 R$ million 2,642 2, ,529 2,496 2, ,092 1, ,107 1, ,129 1, Real Water Suply Sewage collection Collected sewage treatment Main Programs Metropolitan Water Program Tietê Project Corporate Program for Water Loss Reduction Clean Wave Program Coastal Water Program

14 Capex financing 2014 to 2018 R$ 12.8 billion Company Funds R$ 6.4 bi 50.2 % Financing R$ 6.4 bi 49.8 % Contrated R$ 5.0 bi 78.4% CAIXA R$ 1.86 bn BNDES R$ 1.39 bn IDB R$ 871 mn JICA R$ 728 mn IBRD R$ 127 mn Under Negociation R$ 1.4 bi 21.6% CAIXA and BNDES 14

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

16 CEF 16.8% Long term and low cost funding Total Debt Breakdown BIRD 1.0% Others 4.3% JICA 10.2% Total Debt by Currency Yen 10.2% Currency Basket* 2.4% IDB 16.2% BNDES 13.5% Eurobônus 12.1% US Dollar 26.9% Local Currency 60.5% Debêntures 25.8% (*) IDB 713 agreement Debt Amortization Profile 1,650 1,500 1,350 1,200 1, R$ million Local Currency Foreign Currency 1,416 1,335 1,

17 17 Consistent performance Net Revenues (R$ million) Net Income (R$ million) 5,527 5,971 7,809* 8,580* 9,230* 6,541 7,099 6,132 9,927* 10,738* 8,305 8,927 2,792* 1, * 1,508* 1,630* 1,223* 478* 2, Q14 Net Renevues Net Renevues Without Construction *Since 2008 calculated in accordance with CPCs / IFRS, which includes construction Costs Adjusted EBITDA (R$ million) Q14 *Since 2008 calculated in accordance with CPCs / IFRS, which includes construction Costs Dividends/Pay Out 4,101* 3,605* 3,222* 3,213* 2,865 2, % 41.1% 43.0% 44.5% 36.7% 31.8% 34.9% 32.4% 33.6% 36.4% Q14 Adjusted EBITDA Adjusted EBITDA Margin Adjusted EBITDA Margin Without Constrution Dividend Declared Pay Out % * R$ / 000 shares * Since 2008 calculated in accordance with CPCs / IFRS, which includes construction Costs

18 18 Historical leverage metrics Capital structure has remained consistent with operating cash generation and capitalization Net Debt vs. Adjusted EBITDA* (R$ million) Net Debt vs. Shareholders Equity (R$ million) 7,668 7,391 6,959 6,220 6,281 5,787 5,220 4,007 4,101 3,605 3,222 3,213 2,865 2, x 1.9x 1.9x 2.1x 1.8x 2.0x 1.8x Q14 Net Debt Adjusted EBITDA Net Debt/Adjusted EBITDA * Adjusted EBITDA LTM 13,130 13,408 11,256 10,544 9,682 8,439 7,668 6,959 7,391 6,758 6,220 6,281 5,220 5, x 0.7x 0.6x 0.6x 0.6x 0.6x 0.6x Q14 Net Debt Shareholders' Equity Net Debt/SE Calculated in accordance with CPCs/IFRS

19 19 Financial Highlights (In R$ million) * 2009* 2010* 2011* 2012* 2013* 1Q14 Net Revenues (R$) 3, , , , , , , , , , , , ,792.0 Adjusted EBITDA (R$) 1, , , , , , , , , , , , ,015.8 Adjusted EBITDA Margin (%) Net Income (R$) (651.0) , , , , , , Net Margin (%) Total Assets (R$) 16, , , , , , , , , , , , ,790.5 Total Debt (R$) 7, , , , , , , , , , , , ,373.9 Short-term Debt (R$) 1, , , , , , , Long-Term Debt (R$) 6, , , , , , , , , , , , ,753.2 Foreign Currency Debt (R$) 3, , , , , , , , , , , , ,707.2 Shareholders' Equity (R$) 4, , , , , , , , , , , , ,408.0 Total Debt/Total Cap. (%) Investments (R$) ,734 2,059 2,194 2,440 2,536 2, Dividend Declared (R$/ share) Pay Out (%) Dividend Yield (%) Outstanding shares - 683,509,869 * In accordance with CPCs / IFRS, which includes Construction Costs. ** R$ / 000 shares

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