3nd Quarter Results. November Economic - Financial Office and Investor Relations Office

Transcription

1 3nd Quarter Results November 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 projections, 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 23.8 million people and sewage services to 20.4 million people Also sells wholesale treated water to 7 municipalities (3.6 million people) Natural monopoly, low operating risk Serves the City of São Paulo and 362 out of 645 municipalities in the State Company Overview Covers 59% of State's urban population Operations in the São Paulo Metropolitan Region* represent 73.7% of our total revenues Main Operational Indicators (1) Water (1) As of September 30, 2011 (2) Treated sewage as percentage of collected sewage Sewage Connections (million) Coverage (%) Treatment (%) (²) Billed Volume (m³ million) 1, ,484.3 *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$ 9,956.5 mn (as of September, 2011) Ownership Structure (1) 22,6 50,3 (1) As of September, ,1 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 Commercial 8% Industrial 2% Public 3% Commercial 10% Residential 73% Whosale 14% Reused Water <0% Residential 82% Industrial 3% Public 3% 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 Concessions Contracts Nº of % of revenue municipalities Renewed/Secured (Program and Service Contract) Metropolitan Region Without Contract Expired/Under Negotiations To be expired: Today to to Total Retail Wholesale Total Sabesp years services agreement between Sabesp, Municipality of São Paulo and State Government (expires in 2040) Investment plan for the Municipality R$ 16.9 billion for 30 years Minimum investment of 13% of the Gross Revenues, net of Cofins and Pasep, approximately R$ 500 million/year Agreement and Contract with the Municipality of São Paulo Transfer of 7.5% of the Gross Revenues, net of Cofins and Pasep to the Municipal Environmental Sanitation and Infrastructure Fund to be recovered in tariff Regulatory agency ARSESP

9 Regulatory Framework Federal Law # 11,445/07 Federal Decree 7,217/10 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 2014 Discussion on Power of Concession Basic discussion: sanitation services are of local interest or common interest Still remains a discussion in the Federal level over the power of concession for sanitation services in Metropolitan regions Law /07 does not address this matter Two Legal proceeding under Supreme Court (STF) appraisal ARSESP s attribution Regulation activities and responsibilities include: Services quality Tariff structure and reviews Planning is a concession holder attribution 9

10 Tariff adjustments Annual Tariffs Adjustments vs. Inflation (%) Sabesp Annual Tariffs Adjustment Inflação (IPCA) Aumento de Tarifa Part A Part B 13,1% 7,4% 7,7% 16,6% 8,2% 18,9% 6,8% 6,8% 6,6% 9,0% 4,0% 6,7% 3,7% 5,1% Tariffs revision - Sabesp formula 6,4% 5,1% 4,5% 4,6% 4,4% 4,1% 6,87% 6,83% Adjustment established by ARSESP Full Pass-Through of Non-Controllable Costs Includes: Electricity Treatment material Taxes Use of water resources Inflation (IPCA) X Controllable Costs 10

11 New Tariff Methodology Volume (M 3 ) BRR T = BRR 0 + (CAPEX+ WC-DEP) BRR 0 CAPEX + OPEX + Taxes + WC P0 IRR = WACC 18-May-2011 ARSESP disclosed WACC at 8.06% 16-Jan Feb-2012 to 14-Mar Mar May May-2012 ARSESP released the Methodology for Sabesp s Tariff Revision Process Public hearings to discuss the Tariff Revision Process Methodology Sabesp presents to ARSESP the BRR Regulatory Remuneration Basis and detailed Business Plan data ARSESP releases final Tariff Methodology Process ARSESP sends the Preliminary Average Tariff Proposal (P0) and Efficiency Gains Factor (X) to Sabesp, and requests Sabesp to prepare a proposal for the Tariff Structure Sabesp presents proposal for the Tariff Structure 13-Jun Jul Aug-2012 Disclosure for public hearing of the Preliminary Average Tariff (P0), Efficiency Gains Factor (X) and Tariff Structure Public hearing to discuss the Preliminary Average Tariff (P0), Efficiency Gains Factor (X) and Tariff Structure Final disclosure of the Preliminary Average Tariff (P0), Efficiency Gains Factor(X) and Tariff Structure 11

12 Evolution of operations Water Connection Evolution (million) Water Coverage (Connections in 000s) 6,6 6,8 6,9 7,1 7,3 7,4 Adding 1.3 million new connections through 2019 to match organic population growth Q11 Sewage Connection Evolution (million) 2009 Real 2010 Real 2011E 2012E 2013E 2014E a 2019E Sewage Coverage (Connections in 000s) Collection: From: 79% in 2009 to 90% in ,0 5,2 5,3 5,5 5,7 5,9 Treatment : From: 72% in 2009 to 93% in 2019 Adding 1.7 million new connections through Q Real 2010 Real 2011E 2012E 2013E 2014E a 2019E 12

13 13 Water Loss Program Water Loss Target (%) Strategy to Reduce Water Loss Physical losses % Goal in December 2013: 20.0% Goal in December 2019: 13.0% Replacement and repair of water pipes and mains Installation of probing and pressureregulating valves Preventive maintenance of existing and newly installed water meters Improvement in the quality of the materials Non-visible leak research Selective change of network and ramifications. R$ 912 million investments in the Water Loss Program forecast for Until 9M11 R$ 592 mn realized Non physical losses Replacement of inaccuracy water meters Expand personnel who work on anti-fraud actions Fraud prevention Control of inactive connections

14 14 Capex plan Total Investment Plan of R$ 8.6 billion for 2009 to 2013 R$ million 1,834 2,194 1,651 1,750 1,753 1,748 1, , Actual 2010Actual 2011 Actual Water Sewage Others Main Programs Metropolitan Water Program Tietê Project Corporate Program for Water Loss Reduction Clean Wave Program Coastal Water Program

15 Capex financing for 2009 to 2013 Funds from Company Cash flow R$ 4 billion = 46.5% Funds from Financing R$ 4.6 billion = 53.5% Company Funds R$ 4.0 bn 46.5% Financing R$ 4.6 bn 53.5% R$ 4.4 billion 94% Contracted R$ 3.9 bn 86% CEF R$ 1.4 bn BNDES R$ 1.3 bn IBRD R$ 100 mn IDB A/B LOAN R$ 1.0 bn JICA R$ 80 mn Under contracting R$ 387 mn Under negotiation R$ 255 mn JICA JICA CEF - BNDES CEF BNDES BIRD IDB JICA Caixa Econômica Federal Banco Nacional de Desenvolvimento Econômico e Social World Bank Interamerican Development Bank Japan International Cooperation Agency 15

16 16 Agenda 1 Our Company 2 Our Operations 3 Our Financial Performance

17 Long term low, cost funding Total Debt Breakdown B Brasil 10,8% JICA 11,2% Total Debt by Currency Iene 11,2% (*) Currency Basket 3,6% BID 12,6% CEF 17,2% Dólar 20,0% Eurobônus 10,9% Local Currency 65,2% BNDES 12,7% Debêntures 24,6% Debt Amortization Profile (*) Index that measures the variations of the world s major currencies type of international currency (IDB 713 agreement) 1.650, , , , ,0 900,0 750,0 600,0 450,0 300,0 150,0 - R$ million Foreign Currenty Local Currency

18 Consistent performance Net Revenues (R$ million) Net Income (R$ million) ,809* 6,132 8,580* 6,541 9,230* 7,099 7,226* 5, * 1,508* 1,630* 730* T11 Net Revenues Net Revenues without Construct * Since 2008 calculated in accordance with CPCs / IFRS, which includes construction Costs M11 *Since 2008 calculated in accordance with CPCs / IFRS, which includes construction Costs EBITDA (R$ million) 3,222* 2,865* ,727* ,7% 45,4% 41,7% 44,3% 45,2% 36,7% 31,8% 34,9% 2,244* 40,0% 31,1% Dividends/Pay Out Dividend Declared 12.2* 9.5* T11 EBITDA EBITDA Margen EBITDA margen without Construct *Since 2008 calculated in accordance with CPCs / IFRS, which includes construction Costs Pay Out % * R$ / 000 shares 18

19 Historical leverage metrics Capital structure has remained consistent with operating cash generation and capitalization Net Debt vs. EBITDA* (R$ million) Net Debt vs. Shareholders Equity (R$ million) ,8x 2,1x 1,9x 2,0x 0.8x 0.7x 0.5x 0.6x M M11 Net Debt EBITDA Net Debt/EBITDA Net Debt Shareholders' Equity Net Debt/SE * EBITDA LTM Calculated in accordance with CPCs/IFRS 19

20 20 Financial Highlights (In R$ million) * 2009* 2010* 3Q11* Net Revenues (R$) 4, , , , , , ,225.7 EBITDA (R$) 2, , , , , , ,244.0 EBITDA Margin (%) Net Income (R$) , , , Net Margin (%) Total Assets (R$) 17, , , , , , ,370.5 Total Debt (R$) 6, , , , , , ,506.5 Short-term Debt (R$) , , , ,029.1 Long-Term Debt (R$) 5, , , , , , ,477.4 Foreign Currency Debt (R$) 1, , , , , , ,962.7 Shareholders' Equity (R$) 8, , , , , , ,343.4 Total Debt/Total Cap. (%) Investments (R$) ,734 2,059 2,194 1,636 Dividend Declared (R$/ share) 12.2** 9.5** Pay Out (%) Dividend Yield (%) Outstanding shares - 227,836,623 * In accordance with CPCs / IFRS, which includes construction Costs. ** R$ / 000 shares

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