Itaú BBA 14 th Annual Latam CEO Conference N e w Y o r k | M a y , 2 0 1 9
Visão ISA CTEEP geral Why Invest in ISA CTEEP?
ISA CTEEP IE Garanhuns 51% Revenue: BRL 2,538 million Revenue: BRL 44 million IE Pinheiros 100% IENNE 100% Largest publicly traded pure transmission Revenue: BRL 55 million utility in Brazil Revenue: BRL 42 million IE Serra do Japi 100% ▪ Transmission of ~ 25% of Brazil’s Revenue: BRL 58 million IE Madeira IEMG power generation 51% 100% Revenue: BRL 214 million Revenue: BRL 17 million ▪ Transmission of ~ 100% of the power generated in the State of São Paulo ▪ Benchmark player in cost and quality 18,600 km of transmission lines Evrecy 100% 126 substations Revenue: BRL 9 million 65,900 MVA of transformation capacity ▪ Regulatory Net Revenue¹: BRL 3.0 billion ▪ Regulatory EBITDA¹: IE Sul BRL 2.4 billion (margin of 79%) 100% Revenue: BRL 10 million Notes: ¹ Last 12 months ending on 03/31/2019. Figures consider IE Madeira and IE Garanhuns proportional results to ISA CTEEP’s participation
IE Itaquerê 100% IE Paraguaçu 50% Revenue: BRL 46 million Revenue: BRL 54 million IE Itapura Lorena 100% Revenue: BRL 10 million Largest publicly traded pure transmission IE Ivaí IE Itapura Bauru utility in Brazil 100% 50% Revenue: BRL 11 million Revenue: BRL 134 million ▪ Sustainable growth IE Aguapeí IE Tibagi 100% 100% Organic growth: CapEx of around Revenue: BRL 54 million BRL 190 million/year Revenue: BRL 18 million Greenfield Projects¹: CapEx of BRL 2.9 billion and revenue (RAP) of BRL 448 million/year IE Aimorés 50% + 2,000 km of transmission lines ² Revenue: BRL 36 million + 8,000 MVA of transformation capacity² IE Itaúnas 100% Revenue: BRL 47 million IE Biguaçú 100% Revenue: BRL 38 million Notes: ¹ ISA CTEEP’s investments in 10 projects acquired in 2016, 2017 and 2018 auctions. CAPEX and revenue adjusted to ISA CTEEP’s participation ² Figures consider 100% of the projects
A successful story of growth, resilience and performance Winner bid for 5 lots in April auction ISA acquires CTEEP and Extension of Main becomes the Concession Winner bid for controlling CESP spin off creates Contract (059/2001) 2 lots in June shareholder Transmissão Paulista for 30 years auction Transmissão Set up of RBSE Paulista merger compensation Expansion to 17 with EPTE ( Ordinance 120 Brazilian states through Ministry of Mining greenfield projects and and Energy ) acquisitions Winner bid for 3 lots in October auction 1999 2001 2006 2007 2012 2013 2016 2017 2018 2019³ ‘000 km¹ of 18.6 18.6 17.7 15.4 12.3 18.6 11.5 transmission lines Consolidated regulatory EBITDA² 2.4 ICVM 527 in 2.5 1.6 BRL billion 0.1 0.7 1.1 1.6 0.2 0.7 Note: ¹ Information considers 100% of the projects ² Figures c onsider JV’s proportional results to ISA CTEEP’s participation ³ Last 12 months ending on 03/31/2019
IS THE PURE TRANSMISSION COMPANY IN THE SECTOR IN BRAZIL 2018 Mark et Share Transmission Revenues ¹ (tho us a nd km o f lines ) (2018/ 2019 cycle) 65 Eletrobras Total: BRL 36 billion 32% 37% 19 ISA CTEEP 13 TAESA 4% 7 Alupar 9% 10% 8% 6 State Grid Eletrobras ISA CTEEP TAESA State Grid Alupar Others Source: ANEEL SIN² is composed of 135 The transmission sector is regulated and Transmission companies are Transmission companies are monitored by ANEEL ³ and coordinated thousand km of transmission remunerated by the availability of its remunerated by the availability of its assets lines and serves 98% of the and controlled by ONS 4 assets. There is no demand risk and market no default risk. Notes: ¹ Considers auctions held until December of 2018 | ² Interconnected National System| ³ National Electric Energy Agency | 4 National Operator of the Electric System
STRATEGY BASED ON Brownfield Operation and Regulation Affiliates Legal Growth Projects Maintenance Revenue¹ RBSE Receivables Pension Fund Revenue¹ 10 projects in Revenue¹ ~BRL 449 million ~BRL 1,486 million Lawsuit receivables ~BRL 761 million execution with capex ~BRL 295 million 86% Margin² 100% Margin² ~BRL 2,000 million 36% Margin² of ~BRL 2,900 million 92% Margin² Note: ¹ Regulatory results of the last 12 months ending on 03/31/2019 ² EBITDA Margin
ISA CTEEP A ISA Why Invest CTEEP no in ISA Setor de CTEEP? transmissão
BASED ON RBSE RECEIVABLES, ORGANIC CAPEX, GREENFIELD PROJECTS AND O&M REVENUES Strong Cash Cash Generation Generation with (BRL million) 1,845 Predictable Flow 1,721 + Greenfield projects + Organic Growth 732 + Inflation 389 347 2015 2016 2017 2018 LTM
IE Paraguaçu (50%)² 10 PROJECTS TL: 338 km Substation: none CAPEX ANEEL: BRL 510 million UNDER Revenue: BRL 108 million Deadline ANEEL: Feb/22 CONSTRUCTION WILL ADD BRL 448 IE Aimorés (50%)² TL: 208 km Substation: none MILLION OF CAPEX ANEEL: BRL 342 million Revenue: BRL 72 million REVENUE Deadline ANEEL: Feb/22 IE Itaúnas (100%) IE Aguapeí (100%) TL: 79 km Substation: 1,197 MVA TL: 111 km ▪ CapEx ISA CTEEP: BRL 2.9 billion¹ 1 Static Component Substation: 1,400 MVA CAPEX ANEEL: BRL 298 million CAPEX ANEEL: BRL 602 million Revenue: BRL 47 million Revenue: BRL 54 million Deadline ANEEL: Aug/21 Deadline ANEEL: Feb/22 ▪ Extension of lines: +2,000 km² IE Itaquerê (100%) IE Tibagi (100%) 3 Synchronous Components TL: 36 km (Araraquara Substation) ▪ Capacity: +8,000 MVA² Substation: 1000 MVA CAPEX ANEEL: BRL 398 million CAPEX ANEEL: BRL 135 million Revenue: BRL 46 million Revenue: BRL 18 million Deadline ANEEL: Aug/21 Deadline ANEEL: Aug/21 IE Itapura - Lorena (100%) IE Biguaçú (100%) TL: 6 km Substation : 1,200 MVA TL: 57 km CAPEX ANEEL: BRL 238 million Substation: 300 MVA Revenue: BRL 10 million CAPEX ANEEL: BRL 641 million Deadline ANEEL : Sep/22 Revenue: BRL 38 million IE Ivaí (50%)² Deadline ANEEL : Sep/23 IE Itapura – Bauru (100%) Note: TL: 1,200 km (230/500 kV) 1 Static Component ¹ Total CapEx ANEEL of BRL 5.2 billion; ² Considers information Transmission Substation: 2,988 MVA of the project (100%) (Bauru Substation) Lines (TL) CAPEX ANEEL: BRL 1,937 million CAPEX ANEEL: BRL 126 million Substation Revenue: BRL 268 million Revenue: BRL 11 million Under construction Deadline ANEEL: Aug/22 Line Entrance Deadline ANEEL : Feb/21
(BRL million) 1,985 585 335 247 230 226 Strong cash generation allows higher dividends 2013 2014 2015 2016 2017 2018+ N.A.¹ 91% 136% 101% 92% Regulatory 154% Payout ▪ 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 ▪ Dividend yield of 17% Note: ¹ The Company registered net loss due to the provision for losses related to Law 4,819/58
Debt Profile on 03/31/2019 SOLID DEBT PROFILE WITH ▪ Gross Debt: BRL 3.1 billion ▪ Average cost: 8.2% p.a ▪ Average term: 3.8 years Investment Grade by Fitch: ▪ Net Debt / EBITDA: 0.9x AAA(bra) ▪ Debt Amortization Schedule (BRL million) Debt Breakdown 1,094 903 34% 47% 19% 380 283 234 Local bonds - CDI/IPCA BNDES - TJLP Others 81 75 47 2019 2020 2021 2022 2023 2024 2025-2029 2030+ Note: Net Debt/ EBITDA considering IE Madeira and IE Garanhuns figures reaches 1.3x Average term considering IE Madeira and IE Garanhuns figures reaches 4.7 years
WHY INVEST IN ISA CTEEP? Strong Cash Growth Generation Opportunities in reinforcement and No demand improvement risk and no projects, greenfield default risk and M&A Profitability Dividends Sustainable value Minimum payout of 75% (regulatory net income) Investment Grade Fitch: AAA(bra) Benchmark Reference Company in quality and O&M Valuation Attractive valuation
RBSE Greenfield Organic Projects Growth Additional Upside in Upside in returns revenue with no receivables CUSTOS OPERACIONAIS competition (WACC) REGULATÓRIOS Risk of reduction Risk of lower Execution risk of the amount returns established in RES ANEEL 762/2017 Valuation Opportunities Law 4,819 IE Madeira Tariff Reset End of payment & Fair Value for No discount on reimbursement O&M, WACC & revenue RAB Risk of postponing Risk of unfavorable Regulatory risk the solution for the decision in Court impeditive pending issues
Investor Relations www.isacteep.com.br/ir ri@isacteep.com.br +55 (11) 3138 -7557
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