Transmissora Alianca De Energia Eletrica S.a. · BMFBOVESPA:TAEE3
Transmissora Alianca De Energia Eletrica — Taesa — Investor Presentation (October 2018)
34 slides from Transmissora Alianca De Energia Eletrica's investor presentation, October 2018
Slide 1: Institutional Presentation
Institutional Presentation October 2018
Slide 2: Disclaimer
Disclaimer Disclaimer The statements contained in this document are public and available on the Company's website (www.taesa.com.br/ri). Additional information about Transmissora Aliança de Energia Elétrica S.A. (“Taesa” or “Company”) can also be obtained from this same website. The forward-looking
Slide 3: Energy Transmission Sector
Energy Transmission Sector
Slide 4: The Brazilian Electric Sector
The Brazilian Electric Sector Brazilian electric energy sector is divided in Generation, Transmission and Market (Distribution + Free Consumers + Traders). Fundamental Principles Safe electric energy supply Economic and financial balance among agents Social inclusion - universalization Generat
Slide 5: National Interconnected System (SIN)
National Interconnected System (SIN) Transmission grid has 144 thousand Km of extension SIN transport 98% of national energy volume Regulated and supervised by ANEEL (National Agency of Electrical Energy) and operated by ONS (National System Operator) 30-year contracts have fixed revenues adjust
Slide 6: Stable and positive regulatory framework
Stable and positive regulatory framework 3 4 Minimal Credit Risk RAP paid directly by generators, No Volume Risk distributors and free consumers with a Payments based on line availability, solid guarantee mechanism regardless of energy volume transported Over 864 counterparties. Largest user repre
Slide 7: Transmission sector divided into categories
Transmission sector divided into 3 categories • Assets granted before 1999 Category 1 • Concessions renewed in 2012 for 30 years, after MP579 • Annual Permitted Revenues ("RAP") annually adjusted by IPCA since 2013 • Subject to tariff reviews every five years • Assets auctioned between 1999 and Nove
Slide 8: TAESA Transmissora Aliança de Energia Elétrica S.A.
TAESA Transmissora Aliança de Energia Elétrica S.A.
Slide 9: Taesa at a glance
Taesa at a glance The largest private player of transmission operating assets in Brazil (Categories II and III) Geographic Footprint 35 concessions with 12,135 km in 1 transmission lines Roraima Amapá R$ 2.6 billion contracted Annual Maranhão 2 Permitted Revenues (“RAP”) for 2018/2019 cycle Amazonas
Slide 10: Proven growth track-record
Proven growth track-record Taesa’s current footprint Track-record of growth Brownfield Projects Greenfield Projects Transmineiras (25%) RAP: R$ 26 mn Mar-18 ERB1 (50%) RAP: R$ 141 mn Nov-17 Miracema (100%) Apr-17 RAP: R$ 62 mn EDTE(2)(50%) Oct-16 RAP: R$ 33 mn Mariana (100%) Apr-16 RAP: R$ 15 mn Jan
Slide 11: Scale and profitability
Scale and profitability Taesa’s operational and financial results stand out amongst its transmission peers 2nd 9M18 EBITDA and 1st EBITDA Margin 2nd RAP 2018/2019 Cycle (R$ mn) (R$ mn) 84.8% 3,5661 87.5% 1,7621 80.5% 1,461 2,604 (RBSE) 1,045 978 1,388 1,279 (RBSE) 2,105 54.2% 373 1st Operational Bra
Slide 12: Optimized corporate structure
Optimized corporate structure Taesa’s 35 concessions are grouped into 10 concessions at the holding company. In addition, Taesa has 5 concessions in which it holds a 100% stake and 20 other concessions. Operational 56.1% of total RAP 100% 100% 49% 25% 53% 39% 100% 100% 100% 50% 50% 50% São ATE III
Slide 13: Business model focused on growth with solid cash generation
Business model focused on growth with solid cash generation … Combination of growth, cash generation and deleveraging Total RAP (R$ million) 2,902 2,818 2,604 2,157 2,259 1,988 1,850 Consistent growth, reflecting financial 1,094 794 831 discipline Cycle Cycle Cycle Cycle Cycle Cycle Cycle Cycle Cycl
Slide 14: … creating value to shareholders.
… creating value to shareholders. High dividend payout with attractive yield Dividends + 95% 95% 91% 94% 91% 91% 92% 87% 88% Interest on Equity, and Payout Payout IFRS Net Income (R$ mn) 905 909 893 852 862 Dividends and IoE (R$ mn) 814 825 784 744 648 663 589 593 333 495 519 429 (1) 429 288 273 407
Slide 15: Consistent operational efficiency resulting in high margins
Consistent operational efficiency coupled with strong corporate management has resulted in high margins 89.6% 90.0% 89.7% 89.6% 89.2% 87.7% 87.5% 88.5% 87.5% EBITDA margin1 Strict cost control and 80.0% high margins 2009 2010 2011 2012 2013 2014 2015 2016 2017 9M18 (R$ million) Synergy 3.0 3.1 3.2 3
Slide 16: Indebtedness
Indebtedness In 3Q18: • Net debt of R$ 2,230 million, a decrease of 8.5% y.o.y. and 3.5% Profile of Debt Amortization q.o.q. • 1.5x Net debt / EBITDA* R$ million Corporate Credit • Average debt maturity: 3.2 years Rating 736.3 (nacional scale) 671.4 649.7 • Fitch: AAA(bra) 380.3 383.7 256.6 257.0 26
Slide 17: Current Projects
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Slide 18: Current projects
Current projects CONCESSION RAP1 CAPEX ANEEL ESTIMATED (R$ mn) (R$ mn) PARTNERSHIP START CONCLUSION Auction May December 013/13 Mariana 2014 14.7 107 100% Taesa 2019 Lot A December 2013 Miracema June December 62.1 276 100% Taesa Auction Lot P 2016 2019 013/15 April 2016 25% Taesa EDTE3 December 65.9
Slide 19: Project - Mariana
Project - Mariana Auction 013/13 - December 2013 • Estimated Conclusion: December 2019 • Project Status: • Preliminary license (LP) issued in March 2017; • The construction of substations already started; • Environmental licensing in progress; • Request to extend conclusion time being analyzed by AN
Slide 20: Project - Miracema
Project - Miracema Auction 013/15 - April 2016 • Estimated Conclusion: December 2019 • Project Status: • The project is in progress, as all environmental licenses have been obtained: Installation and Preliminary Licenses of LT 500kV, LT 230Kv, SE Palmas, SE Lajeado, and SE Miracema; • The Lajeado an
Slide 21: Projects - Janaúba, Aimorés, Paraguaçu and ESTE
Projects - Janaúba, Aimorés, Paraguaçu and ESTE Auction 013/15 2nd Part - October 2016 Janaúba: • Estimated Conclusion: February 2022 • Project Status: Basic project was approved by ANEEL/ONS for substations and under review for transmission lines; The design implementation/topography activities wer
Slide 22: Project - ERB1
Project - ERB1 Auction 005/16 - April 2017 • Estimated Conclusion: August 2022 • Project Status: • Basic project in progress; • EIA/RIMA registered at IAP; • Preliminary License (LP) for the 230 kV installations issued in September 2018; • Environment Licensing in progress. • Performed Capex until D
Slide 23: Project – EDTE1
Project – EDTE1 Auction 013/15 - April 2016 - Lot M acquired by Taesa and ENTE on March 26, 2018 • Estimated Conclusion: December 2019 • Project Status: • Preliminary License issued in June 2018; • Environmental licensing in progress. • Performed Capex until Dec/2017: R$ 2.5 million • Estimate Capex
Slide 24: Growth Opportunities
Growth Opportunities
Slide 25: Sector with significant room for growth
GREENFIELD Sector with significant room for growth Transmission system is currently the bottleneck for the sector Significant need to invest in new transmission lines Transmission grid will continue to grow Generation Focus: HPP Estimated (Eg.:Jirau, Belo Monte, Capex R$ billion and Santo Antônio) 2
Slide 26: Historical trends in auctions' conditions
GREENFIELD Historical trends 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 TAESA won lots when returns Discount WACC were attractive 55.3
Slide 27: Expectation for new auctions in 2018
GREENFIELD Expectation for new auctions in 2018 The Brazilian government should hold an additional transmission auction by the end of 2018 estimated with around R$ 13.5 billion in investments Maintaining financial discipline and focused on assets with returns that generate value to the business, TAE
Slide 28: Taesa's participation in the auction 002/2018
GREENFIELD Taesa's participation in the auction 002/2018 Summary of Auction 002/2018 held on Jun 28, 2018 Taesa’s Performance Lot Aneel Capex Construction Period Location Maximum RAP Winner RAP Winner TAESA (R$ million) (R$ million) Discount Discount (months) (R$ million) Studied Enrolled 1 641 60 S
Slide 29: Taesa's participation in the auction 002/2017
GREENFIELD Taesa's participation in the auction 002/2017 Studied Enrolled Acquired Lots with Bids Lots Lots Lots 2, 3, 4, 5, 6, 2, 3, 4, 5, 6, All 11 lots - 7 and 9 7 and 9 Summary of Auction 002/2017 held on Dec 15, 2017 Construction Maximum Aneel Capex Winner RAP Winner TAESA Lot Period Location R
Slide 30: Uniquely positioned to capture M&A opportunities with attractive returns
BROWNFIELD Uniquely positioned to capture M&A opportunities with attractive returns Brazilian Total RAP1 (Concession Category II and III) (R& mn) 3.750 1.206 4,957 1.135 2.075 3,210 2,604 2.020 584 One of the largest players 573 706 1,279 in the sector and with an 0 931 1,247 extensive capability in
Slide 31: Corporate Governance
Corporate Governance
Slide 32: Taesa's Corporate Governance Practices
Taesa’s Corporate Solid Corporate Governance Governance Practices and Skilled Management Balanced Decision-Making Structure Among Controlling Superior Governance Practices Shareholders Shareholders Agreement Control Block1 Free Float CEO and CFO/IR must be: i) professionals 21.7% 14.9% 63.4% with
Slide 33: Compliance, Risk Management and Audit
Compliance, Risk Management and Audit In line with the best market practices, TAESA aims to meet additional criteria than those required by Level 2 of B3’s Corporate Governance standards. Always concerned about the continuity and maintenance of its business, the Company has implemented the following
Slide 34: Investor Relations
Investor Relations e-mail: investor.relations@taesa.com.br phone: +55 21 2212-6060 www.taesa.com.br/ir 34