Transmissora Alianca De Energia Eletrica S.a. · BMFBOVESPA:TAEE3
Transmissora Alianca De Energia Eletrica — Taesa — Investor Presentation (March 2019)
46 slides from Transmissora Alianca De Energia Eletrica's investor presentation, March 2019
Slide 1: Institutional Presentation
Institutional Presentation March 2019
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 892 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 36 concessions with 12,726 km in 1 transmission lines1 Roraima Amapá R$ 2.7 billion1 contracted Annual Maranhão 2 Permitted Revenues (“RAP”) for 2018-2019 cycle Amazon
Slide 10: Proven growth track-record
Proven growth track-record Taesa’s current footprint Track-record of growth Brownfield Projects Greenfield Projects Transmineiras (25%) Dec-18 RAP: R$ 26 mn Mar-18 Ivaí2 (50%) RAP: R$ 141 mn Nov-17 Sant’Ana4 (100%) Miracema (100%) Apr-17 RAP: R$ 59 mn RAP: R$ 62 mn Oct-16 EDTE3 (50%) Mariana (100%)
Slide 11: Scale and profitability
Scale and profitability Taesa’s operational and financial results stand out amongst its transmission peers 2nd 2018 EBITDA and 1st EBITDA Margin 2nd RAP 2018/2019 Cycle (R$ mn) (R$ mn) 82.6% 3,5661 2,2871 85.5% 1,461 2,663 77.5% (RBSE) 1,589 1,305 1,243 1,279 (RBSE) 2,105 59.2% 698 1st Operational B
Slide 12: Optimized corporate structure
Optimized corporate structure Taesa’s 36 concessions are grouped into 10 concessions at the holding company. In addition, Taesa has 6 concessions in which it holds a 100% stake and 20 other concessions. Operational 54.9% of total RAP 100% 100% 49% 25% 39% 53% 100% 100% 100% 100% 50% 50% 50% São AT
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) 2,896 2,818 2,663 2,157 2,259 1,988 1,850 Consistent growth, 1,223 reflecting financial 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 + Interest on 95% 95% 94% 92% 88% 91% 91% 91% 90% 87% Equity, and Payout Payout IFRS Net Income (R$ mn) 905 909 954 893 852 862 858 Dividends and IoE (R$ mn) 814 825 784 648 589 593 333 495 519 429 (1) 429 288 273
Slide 15: Consistent operational efficiency coupled with strong corporate management has resulted 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% 85.5% EBITDA margin1 Strict cost control and 80.0% high margins 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 (R$ million) Synergy 3.0 3.1 3.2 3
Slide 16: Indebtedness
Indebtedness In 4Q18: • Net debt of R$ 2,446 million, an increase of 1.5% y.o.y. and 9.7% R$ million q.o.q. • 1.7x Net debt / EBITDA* 1.481,0 823.8 Profile of Debt Amortization • Average debt maturity: 3.7 years Corporate Credit Rating 738.5 (nacional scale) 673.6 650.2 TAESA Cash • Fitch: AAA(bra)
Slide 17: Adoption of IFRS 15 (CPC 47)
Adoption of IFRS 15 (CPC 47) Concept based on the Construction Margin Impacts of CPC 47 Adoption: • Contractual Assets as of December 31, 2017: Adjustment accounted in Special Reserve (Shareholders' Equity) for the 2018 Fiscal Year in the amount of R$ 113.4 MM (no cash effect) • Contractual Assets f
Slide 18: Current Projects
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Slide 19: Current projects
Current projects CONCESSION RAP1 CAPEX ANEEL PARTNERSHIP ESTIMATED START (R$ mn) (R$ mn) CONCLUSION Auction Mariana May December 013/13 Lot A 2014 14.7 107 100% Taesa 2019 December 2013 Miracema June December 62.1 276 100% Taesa Lot P 2016 2019 Auction 013/15 25% Taesa April 2016 EDTE December 25% A
Slide 20: 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; • Request to extend conclusion time being analyzed by ANEEL (schedule and economic rebalance).
Slide 21: 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 22: Project – EDTE 1
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 (LP) issued in June 2018; • 2nd Issuance of Debentures in the amount of R$ 315 million in December, 2018 • Installation Licen
Slide 23: 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: The design implementation/topography activities were completed; Preliminary License (LP) issued in September 2018; Environmental licensing in progre
Slide 24: Project – Ivaí 1
Project – Ivaí1 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
Slide 25: Project – Sant'Ana
Project – Sant'Ana Auction 004/18 - December 2018 • Estimated Conclusion: March 2023 • Project Status: • Constitution of the company Sant’Ana Transmissora de Energia S.A. in January, 2019 • Concession Contract signed on March 25, 2019; 25
Slide 26: Growth Opportunities
Growth Opportunities
Slide 27: 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 28: 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 7 lots won by TAESA Discount WACC Higher returns with lower co
Slide 29: Expectation for new auctions
GREENFIELD Expectation for new auctions The Brazilian government will hold new transmission auctions between 2019-2026 estimated in around R$ 36 billion of investments1 Maintaining financial discipline and focused on assets with returns that generate value to the business, TAESA is strategically pos
Slide 30: Taesa's participation in the auction 004/2018
GREENFIELD Taesa's participation in the auction 004/2018 Taesa’s Performance Summary of Auction 004/2018 held on December 20, 2018 Construction Maximum Enrolled Aneel Capex Winner RAP Winner TAESA Studied Lot (R$ million) Period Location RAP (R$ million) Discount Discount Lots Lots (months) (R$ mill
Slide 31: Taesa's participation in the auction 002/2018
GREENFIELD Taesa's participation in the auction 002/2018 Taesa’s Performance Summary of Auction 002/2018 held on June 28, 2018 Construction Maximum Aneel Capex Winner RAP Winner TAESA Lot Period Location RAP Studied (R$ million) (months) (R$ million) (R$ million) Discount Discount Lots 1 641 60 SC 1
Slide 32: 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 December 15, 2017 Construction Maximum Aneel Capex Winner RAP Winner TAESA Lot Period Locat
Slide 33: 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$ MM) 3,750 1,206 4,957 1,135 2,075 3,210 2,020 643 2,663 One of the largest players 573 706 1,279 in the sector and with an 542 473 1,015 extensive capability
Slide 34: Signing of SPA to acquire 4 operating Transmission Assets
Signing of SPA to acquire 4 operating Transmission Assets on Dec. 17, 2018
Slide 35: Transaction Overview
Transaction Overview Acquisition of 4 operating transmission assets in the total amount of R$ 942.5 million Addition of R$ 130.1 million in the Company’s RAP1 Acquisition value2: Ca R$ 942,537,000.00 raj ás Leveraged purchase in the amount of R$ 850 million, 107%-111,5% of CDI, 5 to 7-year term, bul
Slide 36: Summary of Assets
Summary of Assets São João Transmissora de Energia S.A. FIP Caixa Milão 2.08% 97.92% 100% Ca raj ás Acquisition value1: Stake acquired by Taesa: 100% R$ 350,919,000.00 LT 500kV – Gilbués II – São João do Piauí R$ 47.1 million of RAP2 417 Km of extension (500 kV) Net debt3: R$ 144.1 million Location:
Slide 37: Summary of Assets
Summary of Assets São Pedro Transmissora de Energia S.A. FIP Caixa Milão 1.97% 98.03% 100% Ca raj ás Acquisition value1: LT Rio Grande II – Stake acquired by Taesa: 100% Barreiras I-II, Gilbués II R$ 314,520,000.00 – Bom Jesus II – Eliseu Martins (500, 230, 69 and 13.8 kV) R$ 43.7 million of RAP2 41
Slide 38: Summary of Assets
Summary of Assets Triângulo Mineiro Transmissora S.A. FIP Caixa Milão 49.0% 51.0% 51.0% Ca raj ás Acquisition value1: Stake acquired by Taesa: 51% R$ 150,903,000.00 LT Marimbondo II – R$ 20.6 million of RAP2 297 Km of extension Assis (500 kV) Net debt3: R$ 54.7 million Location: States of Minas Gera
Slide 39: Summary of Assets
Summary of Assets Vale do São Bartolomeu Transmissora de Energia S.A. FIP Caixa Milão 10.0% 39.0% 51.0% 51.0% Ca raj ás Acquisition value1: Stake acquired by Taesa: 51% LT Luziânia – Brasília Leste, R$ 126,195,000.00 Samambaia – Brasília Sul, Brasília Sul – Brasília Geral (500, 345 and 230 kV) R$ 18
Slide 40: Acquisition Price and Preceding Conditions
Acquisition Price and Preceding Conditions R$ 942,537,000.00 for all 4 (four) SPEs, based on the balance sheet estimated as of December Base Acquisition Price 31, 2018 Indexation of Base Acquisition Price 100% of CDI from December 31, 2018 until the closing date Acquisition Price / Price Adjustment
Slide 41: Relevant Benefits to TAESA
Relevant Benefits to TAESA 1 Quality operating assets close to TAESA’s lines 2 Operational synergies mainly in G&A and O&M managing Leveraged Purchase (R$ 850 million, 107% - 111,5% CDI, 5 to 7 year- 3 term, bullet) increases the return expected to the acquisition 4 RAP replacement with category-3 a
Slide 42: O&M Synergies
O&M Synergies The 4 assets are close to TAESA’s concessions, allowing operational synergies Near to ATE II concession. Managed by Araguaína regional office. Ca raj ás Near to ATE II and TSN concessions. Managed by Araguaína and Brasília regional offices. Near to NVT concession (Brasília regional off
Slide 43: Corporate Governance
Corporate Governance
Slide 44: Taesa’s Corporate Governance
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 9 votes needed to approve any matter on 63.4% the Board of Direc
Slide 45: 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 46: Investor Relations
Investor Relations e-mail: investor.relations@taesa.com.br phone: +55 21 2212-6060 www.taesa.com.br/ir 46