13 th Itaú BBA LatAm CEO Conference M A Y

Transcription

1 13 th Itaú BBA LatAm CEO Conference M A Y

2 Who we are Sustainable Value Financial Highlights

3 Largest publicly traded pure transmission utility in Brazil Transmission Lines (TL) In operation Substation Line Entrance Responsible for the transmission of 24% of Brazil s power generation Present in 17 Brazilian States Responsible for >90% of the power load in the State of São Paulo Benchmark player in operational efficiency and indicators of quality 18,600 km of transmission lines 126 substations 65,100 MVA of transformation capacity Regulatory Net Revenue¹: BRL 2.2 billion Regulatory EBITDA¹: BRL 1.8 billion (margin of 82%) Nota: ¹ Last 12 months ended on 03/31/ ,300 km of transmission lines 110 substations

4 Largest publicly traded company in Brazil s transmission sector Transmission Lines (TL) In operation Under construction Substation Line Entrance Current investments Organic growth: Average CapEx of BRL 205 million/year and average revenue (RAP) of BRL 35 million/year Auctions¹: CapEx of BRL 2.5 billion and revenue (RAP) of BRL 400 million/year +1,200 km of transmission lines +6,000 MVA of transformation capacity Note: ¹ ISA CTEEP s investments in 8 projects acquired in 2016 and 2017 auctions

5 A successful story of resilience and increase in operational assets and financial results Origin from CESP spin off and creation of Transmissão Paulista ISA acquires CTEEP and becomes the controlling shareholder Main Concession Contract (059/2001) extended for 30 years Winner bid for 5 lots in April auction Transmissão Paulista merger with EPTE Expansion to 17 Brazilian states through greenfield projects and acquisitions Set up of RBSE compensation (Ordinance 120 Ministry of Mines and Energy) Winner bid for 3 lots in October auction Km of transmission lines Consolidated regulatory EBITDA in BRL millions 11,548 12,317 15,388 17,688 18, , , ,350.8

6 Shareholder Structure on 03/31/2018 Tickers: TRPL3¹ and TRPL4² Common shares: 64,484,433 Preferred shares: 100,236,393 Total: 164,720,826 Average daily volume in 1Q18: BRL 18 million Market cap³: BRL 10.5 billion ISA CTEEP CONTROLLED BY ISA FREE FLOAT OF 64% 35.8% ISA Capital do Brasil Common shares: 89.5% Preferred shares: 1.3% 64.2% Free Float Common shares: 10.5% Preferred shares: 98.7% Free Float: 77% of Brazilian investors 23% of foreign investors American Depositary Receipt ( ADR ): CTPTY and CTPZY 35.4% Eletrobras Common shares: 9.8% Preferred shares: 51.9% 46.8% Others Common shares: 0.7% Preferred shares: 16.8% Coverage of 15 institutions: 60% recommend Buy 40% recommend Hold Notes: ¹ Common share l ² Preferred share l ³On 03/31/2017

7 ISA INTERCONEXIÓN ELÉTRICA, S.A.E.S.P. Solid Presence in Latin America: 8 countries, 4 sectors, 40 companies ISA CTEEP represents 31% of ISA s¹ net income 2017 Net Income Breakdown: Central America Transmission Telecom Ecuador Transmission Colombia 25% of net income Transmission Telecom Highway concessions Real Time Systems Transmission: 77.2% The largest energy transmission company in Colombia and Peru, with 70% of capacity in each market 2 nd largest player in Chile with 18% of market share 2 nd largest player in Brazil with investments in ISA CTEEP and TAESA Peru 21% of net income Transmission Telecom Highway concessions: 22.0% Real Time Systems: 0.7% Telecom: 0.1% Chile 18% of net income Transmission Telecom Highway concessions Argentina Telecom Brazil 34% of net income Transmission Telecom Bolivia Transmission Benchmark player in sector 44,200 km of transmission lines 87,100 MVA of transformation capacity 907 km of highways Controlled by the Colombian government Recognition in Corporate Governance Market Cap: USD 5.3 billion² Notes: ¹ Considers 2017 IFRS Results adjusted by participation l ² On 03/31/2018

8 Corporate Governance Structure Remuneration Committee Board of Directors 8 effective members, of which 2 are independent and one is elected by the employees Audit Committee Board of Auditors 5 effective members and 5 substitute members Ethics and Transparency recognized at ISA and at ISA CTEEP levels CEO Reynaldo Passanezi Filho CFO and IRO Rinaldo Pecchio Project Director Weberson Abreu Institutional Relations Department Rafael Noda COO Carlos Ribeiro

9 Who we are Sustainable Value Financial Highlights

10 STRATEGY BASED ON Operation and Maintenance Cost efficiency, Service quality, Operational safety Projects Value Accretiveness on Reinforcements and Improvements Subsidiaries Corporate Governance Regulation Fair Value of Rights Legal Contingencies Reduction Growth Value Accretiveness on Greenfield and Brownfield Projects P E O P L E

11 EXECUTION OF STRATEGY GENERATES SOLID & SUSTAINABLE RESULTS Operação e Manutenção Eficiência, Qualidade, Segurança LAST 12 MONTHS¹ (BRL million) Adjusted Net Revenue OPERATIONAL HOLDING S UBSIDIARIES Total Projetos Integração Regulação Jurídico Crescimento O&M NI Subsidiárias RBSE Valor Controlled Justo Shared Gestão Orgânico de Litígios Control , ,490.7 Crescimento Disciplina de Capital Adjusted EBITDA P E S S O A S , ,046.4 Note: ¹ Regulatory results of the last 12 months ending on 03/31/2018

12 PV Composition of Annual Allowed Revenue (RAP) NO DEMAND AND DEFAULT RISKS ON REVENUES PV 6 RBSE¹ (CAEE) O&M² (AOM) Annual Costs of Electric Assets (CAAE) Net Investment x Regulatory WACC + Gross Investment x Depreciation Rate NI³ (CAEE & AOM) O&M Revenue (AOM) Gross Investment x %O&M OTHERS 4 Note: ¹ RBSE receivables related to the non depreciated assets in operation in May/2000 ² O&M revenues related to the operation and maintenance services ³ NI organic growth (new investments) 4 Other revenue considers bilateral and sharing contracts 5 PA compensates excess or deficit of revenues in the previews tariff cycle 6 PV revenue reduction due to unavailability PA 5

13 FREQ (times) Equivalent Frequency of Interruption DREQ (minutes) Equivalent Duration of Interruption IENS (%) Index of Non Supplied Energy ISA CTEEP ISA CTEEP 1.86 ISA CTEEP % South 0.1 Southeast/ Midwest 3.83 Southeast/ Midwest % Southeast/ Midwest 0.11 South 6.7 South % SIN 0.26 SIN SIN % Northeast 0.4 Northeast Northeast % North 1.44 North North % 2017 Numbers Focus in cost efficiency, service quality and operational safety to maximize results Focus in efficiency results in reduction of 41% of PMSO, excluding contingencies, going from BRL 915 million in 2006 to BRL 542 million in Note: ¹ Considers controlled and affiliates weighted by the Company s share DREQ/FREQ indicators, in March/18, suggest that for every 10 years and 9 months, there would be 1 total shutdown of ISA CTEEP s system of approximately 20 minutes In the city of São Paulo, ISA CTEEP is responsible for 3 minutes of every 16 hours of interruption

14 ORGANIC FROM REINFORCEMENTS & IMPROVEMENTS Reinforcements and Improvements CapEx (BRL million) Average: BRL 205 million/year Opportunity for organic growth (transmission capacity increase) Execution and project selection to guarantee proper profitability e Reinforcements and Improvements RAP (BRL million) Average: BRL 35 million/year / / / / /2018

15 MANAGEMENT OF SUBSIDIARIES WITH GOVERNANCE AND INTEGRATION IENNE (100%) TL: 710 km (500 kv) Substation: none RAP: BRL 43 million 8 subsidiaries fully in operation 14 concession contracts 4.5 thousand km of transmission lines 17 substations 16 thousand MVA of power transformation capacity RAP of ~BRL 508 million¹ IE Madeira (51%) TL: 2,375 km (±600 kvcc) Substation: 6,100 MVA RAP: BRL 263 million IE SUL 2 (100%) TL: 175 km (230kV) Substation: 750 MVA RAP: BRL 18 million IE Pinheiros (100%) TL: 1.8 km (345 kv) Substation: 4,200 MVA RAP: BRL 56 million IE Garanhuns (51%) TL: 842 km (230/500 kv) Substation: 2,100 MVA RAP: BRL 42 million Evrecy (100%) TL: 154 km (230 kv) Substation: 450 MVA RAP: BRL 13 million IEMG (100%) TL: 172 km (500 kv) Substation: none RAP: BRL 17 million Notes: ¹ RAP weighted by ISA CTEEP s participation ² Celebration of Purchase Agreement to acquirë 50% of Share Capital in April/18. The closing of the deal is subject to approvals. Transmission Line (TL) Substation IE Serra do Japi (100%) TL: 137 km (230 kv) Substation: 2,000 MVA RAP: BRL 56 million In operation Line Entrance

16 RBSE (BASIC NETWORK OF EXISTING SERVICE) CASH FLOW BOOSTS CASH GENERATION FOR THE NEXT YEARS RBSE: receivables related to the non depreciated assets in operation in May/2000 BRL 12 billion to be received of which approximately BRL 1.1 billion was paid between August/17 and March/18 April of 2017 injunction determined temporary exclusion of Ke ANEEL recalculated the RAP for 2017/2018 cycle, excluding Ke¹ Bill for the restructuring of the electric sector proposes change from Ke to WACC from the financial component RBSE Receivables Schedule² (BRL million) Financial Component 1,771 1,722 1,673 1,624 1,575 1, , / / / / / / / /2025 Economic Component Financial Component ex-ke Ke Notes: ¹ Technical Note 170/17 ² Net of PIS/COFINS in June of 2017 Assumptions pursuant to RES ANEEL 762/2017 IPCA (Dec/12-Jun/17): 34.45% WACC: 6.64% p.a. Cost of Equity (Ke): 10.74% p.a. (1H13) and 10.44% p.a. (Jul/13 to Jun/17) Estimated amounts. WACC will be defined in tariff reset and asset base is subject to write-offs.

17 TO GUARANTEE FAIR TARIFF RESET Transmission concession contracts renewed in 2013 are subject to periodic tariff reset ( RTP ) every five years ANEEL opened public hearing 41/2017 to discuss and improve 2018 RTP rules ANEEL still has not disclosed the results of the analysis of the contributions Possibility to postpone RTP from 2018 to 2019, with retroactive effects Regulatory Operational Costs (O&M) Cost of Capital (WACC) Regulatory Asset Base & Regulatory Price Reference

18 EXTENSION OF LINES (KM) 4,504 1,352 5,856 CAPACITY (MVA) +30% 15,750 6,585 22, % SUCCESS IN AUCTIONS ALLOWS GROWTH OF UP TO 40% IN ASSET BASE AND 80% IN RAP UNTIL 2022 Operational Auctions¹ Total CAPEX (BRL MILLION) 2,508 8,883 Operational Auctions¹ Total RAP (BRL MILLION) , % % Operational Auctions¹ Total Operational Auctions¹ Total Note: ¹ 8 projects acquired in 2016 and 2017 auctions

19 GROWTH OPPORTUNITIES TO CREATE VALUE AUCTIONS New auctions expected until 2022 amount to BRL 30 billion of total investments and RAP³ of BRL 5 billion 2 transmission auctions expected for 2018 Preliminary list of projects: 31 lots for the construction of 5.8 thousand km of transmission lines and 20 thousand MVA of capacity ANEEL capex estimated at BRL 15 billion, with RAP of BRL 2 billion June/2018 Auction 24 lots divided into 74 projects: 47 projects of 3.9 thousand km of transmission lines and 27 substations for the installation of 14 thousand MVA ANEEL capex of BRL 8.8 billion, with RAP of BRL 1.5 billion Average weighted deadline of 55 months Average Regulatory WACC of 7.91% Maximum RAP/ANEEL investment of 17.2% ACQUISITIONS Always studying market opportunities Active player in the consolidation of the sector IE Sul Acquisition Purchase Agreement with CYMI to acquire 50% of share capital for BRL 20 million¹in April of 2018 After the closing of the acquisition, ISA CTEEP will hold 100% of the shares² IENNE Acquisition Acquisition of 50% of shares from ISOLUX and 25% of shares from CYMI for BRL 101 million ISA CTEEP holds 100% of IENNE as of 3Q17 Note: ¹ To be updated by IPCA (Source: IBGE) on the closing of the deal l ² The closings is subject to approvals l ³ Source: PET/PELP, MME Study consolidating the expansion constructions

20 C R E A T E C O N N E C T I O N S T O G E N E R A T E S U S T A I N A B L E V A L U E Digitalization Operational reliability and safety optimization with cost reduction Energy Storage Ancillary business and new business models Leadership in transmission sector transformation in Brazil Proactivity in regulatory, legal and technological affairs Real Estate Development of real estate ventures

21 CONNECTIONS THAT CREATE VALUE THROUGH ACTIONS JAGUAR CONNECTION: Carbon neutral until 2020 Forest projects that reduce the impact of greenhouse gases Climate change mitigation Conservation of biodiversity in jaguar s habitat SOCIAL RESPONSIBILITY: Barretos Cancer Hospital GRAACC Support group of teenagers and children with cancer 32 nd Bienal of Art in São Paulo CONEXIONS THAT INSPIRE

22 Who we are Sustainable Value Financial Highlights

23 NET REVENUE (BRL MILLION) O&M COSTS ex-depreciation (BRL MILLION) STRONG CASH GENERATION BOOSTED BY RBSE REGULATORY RESULTS HIGHLIGHTS EBITDA 2,242 1, LTM¹ EBITDA (BRL MILLION) Margin 46.2% 51.3% 76.0% 81.6% 1,351 1, LTM¹ NET INCOME (BRL MILLION) , Note: ¹ Last twelve months ended on 03/31/2018 RBSE Net Revenue and EBITDA include only 100% owned subsidiaries. Shared control companies are accounted as equity shareholder LTM¹ LTM¹

24 SOLID DEBT PROFILE WITH Low leverage allows growth cycle financing Investment Grade by Fitch: AAA(bra) Debt Profile on 3/31/2018 Gross Debt: BRL 1.9 billion Net Debt / Adjusted EBITDA: 0.7x Average cost: 7.9% per year Average term: 3.6 years Debt Amortization Schedule (BRL million) Debt Breakdown 18% % 51% Debentures - CDI/IPCA BNDES - TJLP Others

25 GROWING ACCORDING TO CASH GENERATION Dividend Payment (BRL million) 585 Strong cash generation allows higher dividends for the next years Regulatory Payout N.A. 91% 123% 108% 95% Note: The Company registered net loss due to the provision for losses related to Law 4,819/58

26 DOES NOT REFLECT ISA CTEEP S CASH GENERATION COVERAGE TARGET PRICE RATING DATE OF UPDATE TARGET PRICE (BRL) Banco do Brasil BRL Hold 02/27/18 84 Eleven Financial BofA-Merrill Lynch BRL Hold 10/31/17 Bradesco BRL Hold 11/17/17 Brasil Plural BRL Buy 02/27/ Bradesco Brasil Plural HSBC BTG Pactual BRL Buy 02/27/18 Citi BRL Neutral 05/13/18 Credit Suisse BRL Hold 12/31/17 Eleven Financial BRL Buy 02/27/18 Goldman Sachs BRL Buy 02/28/ Itaú BBA Credit Suisse Merrill Lynch Goldman Sachs HSBC BRL Buy 01/16/18 Itaú BBA BRL Hold 04/20/18 JP Morgan BRL Hold 04/04/ Safra JP Morgan Citi Santander UBS BTG Pactual Safra BRL Hold 02/20/18 Santander BRL Buy 02/27/18 UBS BRL Buy 04/2418 Average Target Price BRL TRPL4 1Q18 Average BRL Sell Hold Buy

27 WHY INVEST IN ISA CTEEP? Strong Cash Generation No demand and no default risks Growth Organic growth, Greenfield & M&A Dividends Fair remuneration of capital, according to cash generation Benchmark Most efficient company Profitability Sustainable value Investment Grade Fitch: AAA(bra) Valuation Attractive valuation 11

28 INVESTOR RELATIONS phone: