Institutional Presentation. August 2017

Transcription

1 Institutional Presentation August 2017

2 TAESA at a glance Largest platform of operating transmission assets in Brazil 1 34 concessions: - Cat II: R$2.2bi RAP / 8.6 mil km - Cat III: R$0.6bi RAP / 3.3 mil km Geographic Footprint Roraima Amapá 2 3 R$2.85 billion yearly contracted Annual Permitted Revenue ( RAP ) for 2017/2018 cycle EBITDA¹ of R$ 780 million with an EBITDA Margin of 89.4% for 1H17 Acre Amazonas Rondônia Pará Tocantins Maranhão Piauí Ceará Rio Grande do Norte Paraíba Pernambuco Alagoas Sergipe 4 5 IFRS Net Income of R$ 273 million for 1H17 R$ 8.2 billion of market capitalization² (1) Managerial EBITDA Regulatory considers proportionally the jointly-controlled subsidiaries and associated companies (ETAU, Brasnorte and TBE), totaled R$ 1.0 billion in 1H17 (89.9% of margin). (2) August 09, 2017 (Sourc: Bloomberg) Mato Grosso Mato Grosso do Sul Paraná Goiás Minas Gerais São Paulo Santa Catarina Rio Grande do Sul Bahia Espírito Santo Rio de Janeiro Operational Non-Operational 2

3 Stable and positive regulatory framework 3 4 No Volume Risk Payments based on line availability, regardless of energy volume transported Minimal Credit Risk RAP paid directly by generators, distributors and free consumers with a solid guarantee mechanism Over 660 counterparties. Largest user represents only 7.3% of revenues (1) 2 5 Predictable Revenues 30-year contracts with RAPs adjusted by inflation Lowest Risks Within Sector Reduced environmental and construction risks 1 Stable Regulation Federally regulated with proven track record 6 R$ 45 bn CAPEX until 2022 Electric transmission needs to continue growing to support system s expansion and maintain its reliability 3 Source: Company s Filings. (1) As of July 2017

4 TAESA: scale and profitability Taesa s operational and financial results stand out amongst its transmission peers 1 st RAP 2017/2018 Cycle 1 st 1H17 EBITDA and EBITDA Margin (R$ mn) (R$ mn) 2, % 80.8% 1, % 1, st Operational Brazilian RAP 1 Market Share 2 nd (%) State Grid Others (State Owned) 12% 3% Others (Private) 10% Copel 2% Chesf 6% Eletronorte 7% Eletrosul 6% R$ 9.8 bilhões 17% Furnas 23% 5% CTEEP 6% 3% Alupar Abengoa (%) Total Brazilian RAP 1 Others (State Owned) Others (Private) State Grid 4% 26% 15% Copel R$ 21.0 bilhões Market Share 14% CTEEP 5% 6% 6% Alupar 3% 9% 4% Furnas 5% 4% Eletrosul Chesf Eletronorte Abengoa 4 Source: Company s Filings, Company s Financial Statements and ANEEL. (1) RAP considers 2017/2018 Cycle and only categories II and III.

5 Proven growth track-record Taesa s current footprint Track-record of growth Brownfield Projects Greenfield Projects Janaúba (100%) RAP: R$ 175 mn Paraguaçu (50%) RAP: R$ 53 mn Apr-17 Aimorés (50%) RAP: R$ 36 mn ESTE (EATE) RAP: R$ 50 mn Apr-16 Oct-16 Mariana (100%) RAP: R$ 14 mn Oct-13 Dec-13 ERB 1 (50%) RAP: R$ 134 mn Transmineiras (5%) RAP: R$ 5 mn TBE (~49%) RAP: R$ 481 mn Value: R$ 1.69 bi Jul-12 Jun-12 May-12 Mar-12 Miracema (100%) RAP: R$ 61 mn IPO R$ 1.76 bi Gtesa and Patesa ETEO (100%) São Gotardo (100%) Miracema Mariana São Gotardo Aimorés RAP: R$ 113 mm ETAU (52.6%) RAP: R$ 22 mn May-08 Jun-11 NTE + UNISA 100% RAP: R$ 717mm RAP: R$ 5 mn Capex + M&A: R$ 4.8 bi 1 TSN and Novatrans TBE Transmineiras ETEO Paraguaçu Janaúba IPO R$ 627 mm Dec-07 Nov-07 BRASNORTE (38.7%) GTESA/PATESA (100%) Dividendos: R$ 5.9 bi 1 NTE + Unisa ETAU Brasnorte Munirah ESTE Lote 1 Mar-06 Nov-06 RAP: R$ 10 mn RAP: R$ 33 mn (1) Capex and dividends between 2006 and 2Q17. MUNIRAH (100%) 5 Source: Company. RAP: R$ 36 mn

6 Business model results in high growth with solid cash generation Combination of growth, profitability increase, dividend distribution and deleveraging EBITDA and EBITDA margin 1 (R$ million, %) 87.6% 1, % 1, % 1, % 1, % 1, % 999 Strong operating performance and focus on operating efficiency Dividend and payout (R$ million) Net debt and net debt/ EBITDA 2 (R$ million) H % 91.0% 94.1% 90.7% 90.9% ,858 3, ,205 2, ,721 Strong cash generation and expansion of Taesa resulted in maximum dividends payout Track record of rapid deleveraging Source: Company. Notes: (1) EBITDA reflects regulatory EBITDA of all subsidiaries, including co-controlled and associated companies (ETAU, Brasnorte and TBE). (2) Net debt and EBITDA figures include proportional stakes at subsidiaries ETAU and Brasnorte H17 6

7 Consistent operational efficiency coupled with strong corporate management has resulted in high earnings margins EBITDA margin % 88.7% 90.0% 87.6% 87.6% 89.4% 89.7% 89.5% 89.9% Strict cost control and high margins H17 EBITDA per employee 2 (R$ mn) Synergy maximization and high scalability Personnel costs represent approximately 60% of TAESA s costs Lines availability 99.99% 99.99% 99.98% 99.97% 99.98% 99.97% 99.98% 99.96% 99.98% Consistent operational performance H17 Source: Company s Filings, Company s Financial Statements, National Electric Energy Agency (ANEEL). (1) EBITDA reflects regulatory EBITDA of all subsidiaries, including co-controlled and associated companies (ETAU, Brasnorte and TBE). (2) Regulatory EBITDA. 7

8 Optimized corporate structure Taesa s 34 concessions are grouped into 10 concessions at the holding company. In addition, Taesa has 5 concessions in which it holds a 100% stake and 19 other concessions. Operational 60.4% of total RAP 100% 100% 48% 53% 39% 100% 100% 100% 50% 50% 50% ATE III 1 São Gotardo(2) TBE 34 ETAU Branorte Janaúba Miracema Mariana ERB1 Paraguaçu Aimorés Operational Operational Operational Operational Operational Under construction Under construction Under construction Under construction Under construction Under construction 4.1% 0.2% 16.9 % 0.9% 0.4% 6.4% 2.2% 0.5% 4.9% 1.9% 1.3% Leverage Capacity and Financial Flexibility Source: Company s Filings (1) TAESA does not incorporate ATE III due to fiscal benefits. (2) TAESA does not incorporate São Gotardo due to Presumed Profit ( Lucro Presumido ) taxation regimen. (3) TBE is a fantasy name to represent a group of 14 concessions. (4) ESTE is the only concession of the TBE group that is under construction and represents 1.8% of the total RAP. 8

9 9 Auction 005/2016

10 Auction participation Consortium Columbia (Taesa 50% and CTEEP 50%) Lots Enrolled Lots 1, 2, 3, 4, 9, 13, 14, 15, 16, 18, 23 and 30 Lots 1, 3, 18 and 30 Lots with Bids Consortium Alta (Taesa 33.33%, Alupar 33.33% and EATE 33.34%) Lots Enrolled Lots with Bids Lot 21 Lot 21 TBE Group (EATE or STC) Lots Enrolled Lots with Bids Lots 11, 12, 22, 33 and 34 Lots 22 and 34 10

11 Auction 005/2016 Information about Lot 1 Information Lot 1 Maximum RAP Winner RAP R$ mn R$ mn Discount 33.24% CAPEX (ANEEL) Construction Period (ANEEL) Signature Contract Consortium Extension Location Development R$ 1.9 bi 60 Months August % Taesa 50% CTEEP 600 Km Double circuit, totaling 1,200 km Paraná TL 525 kv Guaíra - Sarandi - DC, C1 and C2, with km TL 525 kv Foz do Iguaçu - Guaíra - DC, C1 and C2, with 173 km TL 525 kv Londrina - Sarandi, DC, C1 and C2, with 75.5 km TL 230 kv Sarandi - Paranavaí Norte, DC, with 85 km SS 525/230 kv Guaíra (new area 525 kv) - (6+1 Res) x 224 MVA SS 525/230/138 kv Sarandi (new area 525 kv) - 525/230 kv (6+1 Res) x 224 MVA SS 230/138 kv Paranavaí Norte - (6+1 Res) x 50 MVA TAESA Lot 1 11

12 Assumptions Capex Suppliers Strong engineering performance allowing project optimization and consequently Capex reduction between 5% and 20% in relation to ANEEL Capex. Capex disbursement curve: 15% from 2017 to 2019 and 85% from 2020 to EPC contractor with large experience in the transmission sector and specialized in transmission lines and substations constructions. Pre-contracts were signed in the full turn key model for the lots of Columbia Consortium. The pre-contracts state that EPC contractor is responsible for the main construction risks and also have a robust guarantee package. Schedule Possibility of anticipating the operation start-up with bonus for the EPC contractor. Financing 70% of the financed project considers resources from BNDES funds (FINAME and FINEM) with issuance of infrastructure debentures in order to complement and considering market conditions. The project does not consider the possibility of leveraging equity in Taesa Holding, which could be a potential upside. The project does not compromise any covenant and dividends payout of Taesa. 12

13 13 Future Transmission Auctions

14 Sector with significant room for growth Transmission system is currently the bottleneck for the sector Significant need to invest in new transmission lines Generation Focus: HPP (Eg.:Jirau, Belo Monte, and Santo Antônio) Transmission grid will continue to grow EPE Estimates R$ billion Transmission 25.9 Power Substations 12.9 Total 38.8 ( 000 km) 144 Main consumption areas Generation Focus: Wind and Solar % Brazil Regional Consumption (2015) Electricity Consumption (TWh) Northeast 16% North 9% South 17% 59% Southeast and Center West % CAGR Actual Transmission Expansion Program (PET) 14 Source: Brazilian Statistics Bureau (IBGE), Aneel, National System Operator (ONS), Brazilian Ministry of Energy, ACENDE, Energetic Research Enterprise (EPE) and Wall Street research.

15 Improvement in auctions conditions Trend of higher returns, decreasing presence of State Owned Companies and return of private sector participants to auctions provide evidence of renewed opportunities for organic growth Discount 23.1% 6.6% RAP/Capex 33.7% 6.0% WACC 25.1% 5.6% 19.3% 5.0% 12.3% 4.6% 5.6% 11.7% 8.4% 4.7% 10.3% 4.6% 10.0% 12.0% 10.1% 36.5% 13% 12% 12% 11% 11% 15% 18% 21% 21% 21% 2009 (results by auction) Lots without bid Construction Companies 2012 State Grid 2013 Private owners 2014 State owners part part Private Players Returning Years TAESA won lots in auctions % 5% 13% 38% 25% 14% 5% 53% 52% 58% 23 4% 4% 30% 17% 4% 43% % 48% 45% 12% 5% 3% 12% 21% 28% 21 67% 19% 5% 5% 5% 24 54% 17% 4% 25% % 11% 29% 86% 58% 3% part part Recent regulatory changes resulted in a better risk/return equation for greenfield electric transmission projects in Brazil Source: ANEEL, Company s Filings. WACC show as real rate of return. 15

16 Future auctions The Brazilian Government is expected to auction more than R$ 25 billion in transmission lines by 2018 TAESA is strategically positioned to capture synergies from future auctions and consolidate its transmission lines all over Brazil 2016 Auctions 2017 Auction Investment (R$) (R&) Date 10 billion 1 2nd half of 2017 ABENGOA (1) Foreseen 8.8 billion 1st half of billion 2nd half of 2018 There are additional projects which exceed R$ 20 billion, as foreseen in the Investment Program in Electrical Energy PIEE Taesa Abengoa 2 Auction 02/2017 (Estimate) 16 Source: ANEEL, EPE and Company Presentations. (1) Capex Estimate for the Auction of the 2nd half of (2) Abengoa s lines currently not operational. Figures represent conditions in Abengoa s original concession. Lines will be reauctioned and figures are subject to change.

17 17 M&A Market

18 BROWNFIELD Uniquely positioned to capture M&A opportunities Brazilian Total RAP 1 (Concession Category II and III) Short-term M&A Opportunities (R& bn) 3,488 1, As the largest participant in the 1,137 1, sector and given its extensive M&A capability, Taesa is strategically 2, positioned to capture opportunities: i) national presence; ii) scalability and iii) low leverage with an estimated R& 4.1 billion RAP RAP Grupo R$ 0.3 bi R$ 3.5 bi R$ 0.4 bi Outras Privadas 647 1, Transmineiras R$ 0.02 bi Outras Estatais Source: ANEEL, Company s Presentations and Company s Filings. (1) 2017/2018 Cycle RAP, category II e III.

19 Corporate Governance Solid Corporate Governance Practices and Skilled Management Balanced Decision-Making Structure Among Controlling Shareholders Superior Governance Practices Control Block Forums 1 Shareholders Agreement 32% Cemig Control Block 1 15% ISA 2 Minorities 53% Market CEO and CFO/IR must be: i) professionals with proven experience in the power/financial sector and ii) appointed by professional recruiting agency Right of first refusal (ROFR) Tag along rights (TAR) Human Resources Committee Board of Directors 11 members General Assembly Management Committee Management CEO Finance Committee Fiscal Board 5 members Audit Committee Two independent Board Directors and one independent Fiscal Board member Company Listing Awards BDO CFO and IRO CTO Legal and Regulatory Premio Valor Transparency Prize (1) The control block has a 68.8% stake of Taesa s common shares. (2) ISA Investimentos e Participações do Brasil S.A. 20