Santander Latin American Conference. C a n c u n J a n u a r y

Transcription

1 Santander Latin American Conference C a n c u n J a n u a r y

2 ISA CTEEP Financial Highlights Growth Opportunities & Valuation

3 WHY TO INVEST AT ISA CTEEP? Strong Cash Generation No demand risk and no default risk Dividends Minimum payout of 75% (regulatory net income) Benchmark Reference Company for quality and O&M Growth Opportunities in grid reinforcements, greenfield projects and M&A Profitability Sustainable value Investment Grade Fitch: AAA(bra) Valuation Attractive valuation

4 Largest listed transmission utility in Brazil A successful story of growth, resilience and performance Origin from CESP spin off and creation of Transmissão Paulista Transmissão Paulista merger with EPTE ISA acquires CTEEP and becomes the controlling shareholder Extension of Main Concession Contract (059/2001) for 30 years Expansion to 17 Brazilian states through greenfield projects and acquisitions Set up of RBSE compensation (Ordinance 120 Ministry of Mining and Energy) Winner bid for 3 lots in October auction Winner bid for 5 lots in April auction Winner bid for 2 lots in June auction ¹ 000 km of transmission lines Consolidated regulatory EBITDA in BRL billion Note: ¹ Last twelve months ending on September 30, 2018

5 IE Garanhuns 51% Revenue: BRL 87 million³ ISA CTEEP Revenue: BRL million Largest listed transmission utility in Brazil Transmission of 24% of Brazil s power generation IE Madeira 51% IENNE Revenue: BRL 44 million IEMG IE Pinheiros Revenue: BRL 54 million IE Serra do Japi Revenue: BRL 60 million Transmission of 90% of the power load in the State of São Paulo Revenue: BRL 497 million³ Revenue: BRL 18 million Benchmark player in cost and quality 18,600 km of transmission lines 126 substations Evrecy 65,500 MVA of transformation capacity Revenue: BRL 7 million IENS¹: 2.26 x 10-6 Availability Discount/Revenue: 0.68% Regulatory Net Revenue²: BRL 2,800 million IE Sul Revenue: BRL 18 million Regulatory EBITDA ² : BRL 2,300 million (margin of 84%) Nota: ¹ Index of Non-Supplied Energy on 09/30/2018 ² Last 12 months ended on 09/30/2018 ³ Total revenue of the asset

6 IE Paraguaçu 50% Revenue: BRL 107 million³ IE Itaquerê Revenue: BRL 46 million IE Itapura Lorena Largest listed transmission utility in Brazil IE Ivaí 50% Revenue: BRL 10 million IE Itapura Bauru Sustainable growth Organic growth: capex of around BRL 200 million/year and revenue (RAP) of BRL 40 million/year¹ Revenue: BRL 267 million³ IE Tibagi Revenue: BRL 18 million Revenue: BRL 11 million IE Aguapeí Revenue: BRL 54 million Greenfield Projects²: CapEx of BRL 2,900 million and revenue (RAP) of BRL 448 million/year IE Aimorés 50% +2,000 km of transmission lines Revenue: BRL 71 million³ +8,000 MVA of transformation capacity IE Itaúnas Revenue: BRL 47 million IE Biguaçú ² Revenue: BRL 38 million Nota: ¹ Average of last 5 revenue cycles ² ISA CTEEP s investments in 10 projects acquired in 2016, 2017 and 2018 auctions ³ Total revenue of the project

7 Shareholder Structure on 12/31/2018 Tickers: TRPL3¹ and TRPL4² Common shares: 64,484,433 Preferred shares: 100,236,393 Total: 164,720,826 Corporate Governance: Level 1 at B3 Average daily volume in 2018: BRL 27.0 million ISA CTEEP CONTROLLED BY ISA FREE FLOAT OF 64% 35.8% ISA Common shares: 89.5% Preferred shares: 1.3% 64.2% Free Float Common shares: 10.5% Preferred shares: 98.7% Market cap³: BRL 11,400 million Free Float: 77% of Brazilian investors 23% of foreign investors ADR: CTPTY and CTPZY 35.4% Eletrobras Common shares: 9.8% Preferred shares: 51.9% 28.8% Others Common shares: 0.7% Preferred shares: 46.8% Coverage of 15 institutions: 60% Buy 40% Hold Notes: ¹ Common share l ² Preferred share l ³ On 12/31/2018

8 ISA INTERCONEXIÓN ELÉTRICA, S.A.E.S.P. A multilatina company focused in transmission, telecom, highway concession and real time systems with growth opportunities in Brazil ISA CTEEP represents 31% of ISA s¹ net income 2017 Net Income Breakdown: Central America Transmission Telecom Ecuador Telecom 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 the sector 44,200 km of transmission lines 87,100 MVA of transformation capacity 907 km of highways Controlled by the Colombian government (51.4% of shares) Market Cap: USD 4,800 million² Notes: ¹ Considers 2017 IFRS Results adjusted by participation l ² On 12/31/2018 ³ ALAS20 - Sustainability Leaders Agenda 2020 Solid Presence in Latin America: 8 countries, 4 sectors, 40 companies Alas20 Award³ - Recognition in Corporate Governance

9 IS THE PURE TRANSMISSION COMPANY IN THE SECTOR IN BRAZIL M a r k e t S h a r e ( t h o u s a n d k m o f l i n e s ) T r a n s m i s s i o n R e v e n u e s ¹ ( / c y c l e ) Eletrobras ISA CTEEP % 38% Total: BRL 37,000 million TAESA 11 Alupar State Grid 7 6 4% 9% 8% 10% Eletrobras ISA CTEEP TAESA State Grid Alupar Others Source: ANEEL SIN² is composed of 135,000 km of transmission lines and serves 98% of the market The transmission sector is regulated and monitored by ANEEL ³ and coordinated and controlled by ONS 4 Transmission companies are remunerated by by the availability of of its its assets. There is no demand risk and no default risk. Notes: ¹ Considers auctions held until June of 2018 ² Interconnected National System ³ National Electric Energy Agency 4 National Operator of the Electric System

10 STRATEGY BASED ON Operation and Maintenance EBITDA: BRL 350 million (40% margin) Brownfield Projects EBITDA: BRL 150 million (85% margin) Affiliates EBITDA: BRL 400 million (87%margin) Regulation RBSE Receivables of ~BRL 9,200 million Legal Pension Fund Lawsuit receivables ~BRL 2,000 million Growth 10 projects in execution with capex of ~BRL 2,900 million

11 SOLID & SUSTAINABLE RESULTS Operação e Manutenção Eficiência, Qualidade, Segurança LAST 12 MONTHS¹ (BRL million) Adjusted Net Revenue OPERATIONAL HOLDING S UBSIDIARIES Total Projetos O&M Crescimento Orgânico Integração Reinforcement Projects Subsidiárias RBSE Receivables Regulação Valor Justo JV Jurídico Gestão de Litígios , ,031 Crescimento Disciplina de Capital Adjusted EBITDA P E S S O A S , ,501 Note: ¹ Regulatory results of the last 12 months ending on 09/30/2018

12 ISA CTEEP Financial Highlights Growth Opportunities & Valuation

13 O&M RBSE New Investments Others Subsidiaries NET REVENUE (BRL MILLION) 212% 2, O&M COSTS² (BRL MILLION) 21% ,778 STRONG CASH GENERATION BOOSTED BY RBSE REGULATORY RESULTS HIGHLIGHTS EBITDA EBITDA (BRL MILLION) 694 1, LTM¹ 46.2% 51.3% 76.0% 85.3% Margin 465% 2, NET INCOME (BRL MILLION) 9 335% LTM¹ 1,075 1, , Note: ¹ Last twelve months ended on 09/30/2018 ² Costs do not consider depreciation and contingencies Net Revenue and EBITDA include only owned subsidiaries. Shared control companies are accounted as equity shareholder LTM¹ LTM¹

14 SOLID DEBT PROFILE WITH Investment Grade by Fitch: AAA(bra) Debt Profile on 9/30/2018 Gross Debt: BRL 2,992 million Average cost: 8.3% p.a Average term: 3.3 years Net Debt / Adjusted EBITDA: 0.6x Debt Amortization Schedule (BRL million) 1,035 Debt Breakdown % % 55% Local bonds - CDI/IPCA BNDES - TJLP Others - CDI 4Q

15 (BRL million) 1, Strong cash generation allows higher dividends Regulatory Payout N.A.¹ 91% 123% 108% 95% Minimum payout of 75% of regulatory net income limited to the financial covenant of 3.0x Net Debt/EBITDA Proceeds via interest on capital and dividends payments BRL 1,985 million dividend payment in 2018 (BRL 12.05/share) Note: ¹ The Company registered net loss due to the provision for losses related to Law 4,819/58

16 ISA CTEEP Financial Highlights Growth Opportunities & Valuation

17 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 Energy Storage Ancillary Services Distributed Energy Resources Real Estate Opportunities Operational safety optimization with cost reduction through substation teleassistance and substations retrofitting EFFICIENCY NEW BUSINESSES

18 GROWTH OPPORTUNITIES TO CREATE VALUE GREENFIELD PROJECTS AND GRID REINFORCEMENTS 2027 Decennial Energy Plan Increase of around 55,000 km of new transmission lines Total investment in transmission of BRL 108,000 million BRL 38,000 million in auctions Reinforcements and improvements in the grid amount from BRL 70,000 million to BRL 110,000 million ACQUISITIONS Always studying market opportunities Recent acquisitions IE Sul Acquisition of 50% of shares from CYMI for BRL 20 million ISA CTEEP holds of IESUL as of 3Q18 IENNE Acquisition of 50% of shares from ISOLUX and 25% of shares from CYMI for BRL 101 million ISA CTEEP holds of IENNE as of 3Q17 Note: ¹ RAP based on RAP / Investment of 17.1% observed in the Auction 002/2018 l ² Source: PET/PELP, MME Study consolidating the expansion constructions

19 RISKS & OPPORTUNITIES Operação e Manutenção Eficiência, Qualidade, Segurança Tariff Reset Projetos Crescimento Orgânico O&M, WACC & RAB Pension Fund Lawsuit Integração Subsidiárias Receivables of BRL 2,500 million Regulação Valor Justo RBSE Receivables Ke ~BRL 1,500 million Jurídico Gestão de Litígios Crescimento Disciplina de Capital P E S S O A S

20 DOES NOT REFLECT ISA CTEEP S CASH GENERATION TRPL4 TARGET PRICE (BRL/share) Eleven Financial Bradesco Bradesco Itaú BBA Brasil Plural Itaú BBA Goldman Brasil Plural Sachs HSBC Goldman Sachs JP Morgan Credit Suisse Merrill XP Lynch Merrill Lynch Banco do Brasil Safra Citi Safra Citi JP Morgan HSBC Santander Santander BTG UBS Pactual BTG Pactual UBS Sell Hold Buy

21 INVESTOR RELATIONS Rinaldo Pecchio Michelle Corda Lúcia Cesari Gabriela Bussotti Yuri Utino phone: