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4Q19 RESULTS PRESENTATION
Disclaimer
The statements contained in this report regarding the business outlook of ISA CTEEP (“ISA CTEEP”, “CTEEP”, “Company”), the
projections and their growth potential are based on mere forecasts and were based on management's expectations in
regarding the Company's future. These expectations are highly dependent on changes in the market, in the general economic
performance of the country, the sector and international markets, and are subject to change.
The financial information was prepared in accordance with CVM (Brazilian Securities and Exchange) rules and CPCs, and it is in
compliance with international accounting standards (IFRS) issued by the International Accounting Standard Board (IASB). The
Regulatory Result is presented in accordance with accounting practices adopted in Brazil. The purpose of disclosing the
Regulatory Result is merely to collaborate to understand ISA CTEEP's business. Sums may differ due to rounding. The
Regulatory result is audited only at the end of each fiscal year by the independent auditors.
2
2019 ResultsStrong operating cash generation of BRL1.8 billion in 2019
3
Net Revenue(BRL million)
Adjusted EBITDA¹(BRL million)
Adjusted Net Income2
(BRL million)
Margin
69% 77% 75% 74%
Note: Results in regulatory accounting
Robust results allow the growth strategy to advance with sustainable value generation
Operational HighlightsFocus on efficiency, quality and safety
Availability: 99.9943% in 2019
Non-supplied energy index: 0.001% ISA CTEEP vs 0.002% SIN³ in 2019
IE Madeira has been entitled to receive full revenue since September 2019 (+BRL6 million/quarter)
Operating Cash Generation(BRL million)
1 Excludes equity income and other non recurring effects and includes the proportional EBITDA to its participation in affiliates ² Excludes non-controlling shareholder participation
³ Interconnected National System
690 730
2.767 2.775
4Q18 20194Q19 2018
+5.8%
+0.3%
571 671
2,455 2,451
4Q18 4Q19 2018 2019
+17.6%
-0.2%
447 345
1,276 1,222
20194Q19 20184Q18
-22.8%
-4.3%1,651
1,818
2018 2019
+10.1%
Greenfield GrowthSuccess in the 2019 auction (+3 lots) and progress in the greenfield projects
41 2019/2020 Cycle proportional to ISA CTEEP's participation² Ten Year Energy Plan (PDE) 2029
Opportunity to generate sustainable value with projects that will contribute to the expansion and security of Brazil's electricity transmission system
IE Tibagi
IE Itaquere
Auctions: 12 projects under construction and 1 energized projectIE Itapura (Bauru) started-up 18 months in advance with an efficiency gain of BRL15 million (IFRS)
Aneel Capex of BRL5 billion with revenue (RAP) of BRL567 million¹
Realized capex of ~BRL890 million, of which BRL638 million invested in 2019
2020 estimated Capex: above BRL1 billion
Upcoming auctions~BRL30 billion of investment opportunity in new transmission projects planned by 2029²
BRL11 billion of capex planned for the 2020 auctions
Focus on investment opportunities with synergy
Projects on time and on budget90% of projects with Installation Licenses (IL) issued
97% of hires made
62% of the works concluded in the projects under construction
Forecast to sign the concession contracts for the projects auctioned in 2019 in March 2020. The licensing process is already underway
Expectation to start-up from 4 to 6 projects in 2020
Organic GrowthGrowth through retrofitting projects¹
5
Opportunity to generate sustainable value with projects that will contribute to the expansion and security of Brazil's electricity transmission system
Retrofitting projects: Growth without competitionBRL133 million invested in 2019
Average investment of ~BRL180 million/year with average revenue (RAP) of ~BRL50 million/year (last 5 years)
~BRL500 million already authorized by ANEEL to be executed by ISA CTEEP in the upcoming years
Asset renewal opportunity
Ten Year Energy Plan (PDE) 2029Investment opportunity of ~BRL70 billion estimated until 2029
¹ Retrofitting projects consist in upgrading assets to improve transmission service and investments to ensure higher quality service
Financial StrengthAllows funding at competitive cost
6
Competitive capital structure allows to leverage return on investments
Regulatory Debt Profile on 12/31/2019• Gross Debt: BRL3.2 billion
• Net Debt: BRL2.5 billion
• Average cost of debt: 7.4% p.a
• Average term: 4 years
• Net debt / Adjusted EBITDA: 1.0x
Investment Grade: AAA (bra)
Capital Market - 8th debenture issuanceBRL409 million with a 10-year term (IPCA + 3.5% p.a.)
The lowest-cost issuance in the energy transmission sector and one of the lowest-cost issuance in the market in 2019
2nd green bond issuance by ISA CTEEP
2,02,53,03,54,04,55,05,56,06,57,07,5
- 10 20 30
Rate
(%
p.a
)
Term (years)
Local Bonds¹
Brazilian bond market totals BRL 31 billion¹ in 2019
¹ Considers incentivized local bond issuances over BRL100 million
7.57.06.56.05.55.04.54.03.53.02.52.0
Return to ShareholdersMinimum payout practice of 75% of regulatory net income, limited to leverage of 3x Net Debt / EBITDA
7
Cash generation allows sustainable growth and dividends
Dividends(BRL million)
Regulatory Payout 91% 123% 108% 95% 156% 81%
226335
247
585
1.985
995
2014 2015 2016 2017 2018 2019
DividendYield
3% 5% 2% 5% 17% 7%
8
Existing assets management
▪ Tariff Reset
▪ RBSE (financial component remuneration)
▪ Law 4819 / SEFAZ
Why to invest in ISA CTEEPGrowth strategy with sustainable value generation to be shared with stakeholders
▪ Basic network access – “Conexão Plus”
▪ Real Estate
▪ Biodiversity conservation and climate change mitigation program -1st Jaguar Connection Project in Brazil
▪ Digitalization
▪ Asset Renewal
Operational excellence and
efficiency
New energy businesses
Social and environmental impact
Maximize value creation to share with stakeholders
Growth with sustainable value creation
▪ Auctions / M&A
▪ Retrofitting Projects
