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INSTITUTIONAL
PRESENTATION
June, 2012
2
Agenda
►Financial Performance
►Portfolio Overview
►Value Creation
►Company Profile
3
►Financial Performance
►Portfolio Overview
►Value Creation
►Company Profile
Agenda
4
Equatorial Overview
� Holding company with investments in the energy sector, focused on distribution and generation
� Differentiated experience in operating and financial restructuring of companies in the Brazilian energy
sector
� Controlled by PCP Fund, investment vehicle owned by former partners of Banco Pactual
and managed by Vinci Partners.
� Current investments:
• Distribution company in the State of
Maranhão
• 2nd largest distribution company in the
Northeast of Brazil, in terms of
concession area*
• 4th largest distribution company in the
Northeast of Brazil, in terms of billed
energy*
• Annual gross revenues of R$2.6 billion in
2011.
• Company responsible for implementing
and operating the Tocantinópolis and
Nova Olinda thermoelectric plants in the
State of Maranhão
• Fuel: high-viscosity heavy oil.
• Joint installed capacity of 331 MW
• 240 MW of energy sold at the A-3 auction
in 2007.
• Start-up: January 2010
*Source: ABRADEE
RS
SC
PR
SP
MG
GO
MT
AC
AM
RR
ROBA
PI
MAPA
AP
TO
CE RN
PEAL
SE
MS
RJ
ES
DF
PB
RS
SC
PR
SP
MG
GO
MT
AC
AM
RR
ROBA
PI
MAPA
AP
TO
CE RN
PEAL
SE
MS
RJ
ES
DF
PB
• Electricity trading company and
developer of new products and services
• Broker the purchase and sale of energy
without physical delivery
• Custom of solutions to
satisfy consumers’ specific
needs (consumers and generators)
• Experienced executives and well-
recognized in the trading market
Aug. 2011
Equatorial acquires 51% of
Sol Energias,
energy trader
CEMAR’s acquistion
PCP Fund acquires a controlling stake of
Equatorial
Equatorial’s IPO
Control concentratedin PCP Fund
Incorporation of a controlling stake of
Light
Equatorial migrates to the “Novo Mercado”
Acquisition of 25% of Geramar
FIP PCP sells its indirect stake in
Light
Equatorial’s spin off
Equatorial’s History
May. 2004 Mar. 2006 Abr. 2008 Out. 2008Abr. 2010
Dez. 2009 Abr. 2010 Ago. 2011Apr. 2006 Dec. 2007 Feb. 2008 Abr. 2008 Oct. 2008 Dec. 2009 Apr. 2010 Aug. 2011 Feb. 2012
Equatorial acquires 50% of
Vila Velha
Termoelétricas, a
pre-operationalcompany
6
Ownership Structure – Current
• Total no. of shares:
• Share price*:
• Free float:
• ADTV90:
109,611,778
R$ 15.00
46.5% / R$764 MM
R$ 3.579 MM
*On 30/06/12ADTV90 represents the average volume traded in the past 90 days
Vila Velha Termoelétricas
EquatorialEnergia
Other ProjectsGeramarCEMAR
PCP Latin America Power
53.5%
65.1% 25%
Equatorial Soluções
Minorities
46.5%
100%
51%
Sol Energias
50%
7
Corporate Strategy
CEMAR
� Increased returns through outstanding financial andoperating performance
Consolidation ofdistributors in Brazil and
Latin America
� Acquistion of full or shared control
� Added value through financial and operational restructuring, synergygains and loss reduction
Geramar and otherinvestments in generation
� Brazil’s investment needs in generation over the next few years willcreate growth opportunities for Equatorial.
� Geramar thermal plants present an above average rate of return
8
Firmino Sampaio
CEO
• CEO of Eletrobrás (1996-2001), CEO and CFO of COELBA (1984-1996)
• Former member of the boards of directors of Furnas, Itaipu Binacional, CHESF, Eletrosul, Gerasul, CEMIG, ENERSUL, CEMAT and Light
• Degree in Economics at the Federal University of Bahia and postgraduate degree in Industrial Planning at SUDENE/IPEA/FGV
Management
• CEO of Equatorial from March, 2007 until April, 2010. CFO of CEMAR (2004-2006) and CEO of CEMAR (2007-2010). Currently, he is a partner of Vinci Partners.
• Worked for 6 years at Banco Pactual in the Principal Investments and Corporate Finance divisions
• Degree in Computer Science at PUC-RJ and in Business Administration at IBMEC. CFA chartered by CFA Institute in 2003. Concluded the Owner andPresident Management Program of Harvard Business School in 2008
Carlos Piani
Chairman of the Board ofDirectors
Eduardo Haiama
CFO & IRO
Tinn Amado
Regulatory AffairsOfficer
Management is composed by professionals with substantial experience in the financial, operational and regulatory areas
• CFO and IRO of Equatorial since 2008. IRO of CEMAR since 2008.
• Between 2004 and 2008, Mr. Haiama worked at Banco UBS Pactual on the equities’ research team as senior analyst of the utilities segment.
• Degree in Electric Engineering at USP – University of São Paulo (Escola Politécnica) and MBA at Duke University. CFA chartered by CFA Institute in 2004
• Regulatory Affairs Officer of Equatorial since April 2008 and of CEMAR since August 2006
• Consulting partner of Amado Consultoria, providing advisory services in economic regulation, also worked at ANEEL for 3 years as an analyst for the Distribution Service Regulation Department
• Degree in Electrical Engineering at the Federal University of Itajubá (UNIFEI) and a Master’s degree in Regulation and Protection of Fair Trading at Brasília University (UnB)
Ana Marta Horta Veloso
Officer
• Officer of Equatorial since November 2008.
• Worked as an executive at Banco UBS Pactual S.A., from 2006 untill 2008 . Before joining Pactual, she worked for 12 years at the Brazilian Development
Bank (BNDES), where she held several executive positions, mostly in the capital market area.
• Degree in Economics at the Federal University of Minas Gerais (UFMG) and Master’s degree in Industrial Economics at the Federal University of Rio de Janeiro (UFRJ).
9
Vinci Partners
PRIVATE EQUITY PUBLIC EQUITIES MULTIMARKET
• In 2001, Banco Pactual created a Principal Investment Unit to manage the partnership’s excess capital and diversify its investments;
• In 2006, with the sale of Banco Pactual to UBS, part of the proceeds from the sale was reinvested in the Principal Investment Unit, which was renamed PCP;
• In 2009, with the sale of Pactual to BTG, Vinci Partners was created, an independent asset management, composed by Pactual’s ex-partners;
• Today, Vinci has almost US$ 3.0 billion under management (75% own capital), investing in Private Equity, Public Equities and Multimarket Funds.
History
PCP Fund
LONG TERM MEDIUM TERM SHORT TERM
10
Agenda
►Financial Performance
►Portfolio Overview
►Value Creation
►Company Profile
11
Since 2004, Equatorial has been presenting an excellent financial performance.
Net Operating RevenuesR$ million
EBITDA (R$ million)
Financial Performance
(*) As from 2010, all values are according to IFRS
526 629810 879 999 1,148
1,756 1,912
524 545
1,358 1,347
2004 2005 2006 2007 2008 2009 2010 (*) 2011 1Q12 2Q12
CEMAR Light Geramar Equatorial Soluções
2,346 2,506
36
1,799
1,981
39
571
11-S10-G 10-G
16-S
546
85189
341 379 416 470 500 482
130 119
287368
2004 2005 2006 2007 2008 2009 2010 (*) 2011 1Q12 2Q12
CEMAR Light Geramar
784 757
504 24
510 29
1333 7 125
2004 2005 2006 2007 2008 2009 2010 (*) 2011 1Q12 2Q12
Net Revenue 526 629 810 879 2,346 2,506 1,799 1,981 546 571
EBITDA 85 189 341 379 784 757 510 504 133 125 % EBITDA 16% 30% 42% 43% 33% 30% 28% 25% 24% 22%
12
Distributions to Shareholders/Net IncomeR$ million
Financial Performance
* 2008 figure includes R$82 million in Capital Reduction
(*) The dividends for the fiscal year 2011 were submitted to AEGM to be held on March 19, 2012.
2004 2005 2006 2007 2008 2009 2010 2011
Payout 0% 24% 90% 99% 95% 25% 104% 32%
Dividend Yield N/A N/A 10% 13% 27% 3% 18% 4%
-
108
151
50 - -
123
229
119
153
189160
48 48
284
197
54
51
207
300
2004 2005 2006 2007 2008 2009 2010 2011 1T12 2T12
Dividends Net Income
51
2004 2005 2006 2007 2008 2009 2010 2011 1Q12 2Q12
Consolidated Dividends (R$ MM) - 54 108 151 284 51 197 50 - -
CEMAR - 54 108 112 91 58 200 94 (*) - -
Light - - - 27 111 56 - - - -
Capital Reduction (holding) - - - - 82 - - - - -
Net Income (R$ MM) 123 229 119 153 300 207 189 160 48 48
CEMAR (31) 234 116 117 148 129 279 248 48 43
Geramar - - - - - - 6 11 0.1 3.5
Equatorial Soluções - - - - - - (1) - - 1
Light - - - - 130 79 - - - -
13
Consolidated Net Debt and Net Debt/EBITDA (*)R$ million / Times
Improved operating performance and financial restructuring led to a significant reduction in leverage,
Financial Performance
(*) Consolidated (65.1% CEMAR, 25.0% Geramar and 13.03% Light). Light is no longer consolidated as from 2010.
751
5
749684
499689
77
402
198221
2.12.1
1.41.51.6
0.90.30.0
1.6
4.0
2004 2005 2006 2007 2008 2009 2010 2011 1Q12 2Q12
14
Financial Performance
made a longer debt amortization schedule possible…
Debt Amortization Schedule - R$ MM
1,538.5
401.6
118.2
165.5
158.7
141.1
553.2
103.3
-
-
-
-
103.3
Gross Debt Shor t Term 2013 2014 2015 2016 After 2016
CEMAR
Geramar
Short Term 2013 2014 2015 2016 After 2016 Total
CEMAR 1,539 402 118 166 159 141 2,524
Geramar 103 - - - - 103 207
Total 1,642 402 118 166 159 244 2,730
15
Investments
Investments - R$ MM
and a significant increase in investments.
2004 2005 2006 2007 2008 2009 2010 2011 1Q12
CEMAR 70 232 306 394 465 419 399 497 118
Light - - - - 137 141 - - -Geramar - - - - 24 107 16 0.4 0.2
Total 70 232 306 394 626 667 415 497 119
306
394
465
118 138
137141
232
419
399497
70
24 107
16
0.4
0.2
2004 2005 2006 2007 2008 2009 2010 2011 1Q12 2Q12
CEMAR Light Geramar
16
Agenda
►Financial Performance
►Portfolio Overview
►Value Creation
►Company Profile
17
47%
20%
23%
10%
88%
5%
7%
0.5%
Residential Commercial Industrial Others
CEMAR: Highlights
MA
� Distribution company in the State of Maranhão
� 1.9 million clients (4th largest in the Northeast region)*
� Billed energy (2011): 4,372 GWh (5th largest in the
Northeast)*
� Annual gross revenues of R$ 2.6 billion in 2011.
Energy Sales (2011)
Clients (2011)
1.9 million
4,372 GWh
*Source: ABRADEE
RS
SC
PR
SP
MG
GO
MT
AC
AM
RR
ROBA
PI
MAPA
AP
TO
CERN
PE
ALSE
MS
RJ
ES
DF
PB
RS
SC
PR
SP
MG
GO
MT
AC
AM
RR
ROBA
PI
MAPA
AP
TO
CERN
PE
ALSE
MS
RJ
ES
DF
PB
18
CEMAR: History
CEMAR under control ofEquatorial
1958-Jun. 2000
Aug.2000-Aug.2002
Aug.2002-May2004
May 2004-Present
State owned
CEMAR under PPL Global’scontrol
ANEEL’s intervention
CEMAR under control ofEquatorial
19
CEMAR: Ownership Structure
CEMAR
OthersEquatorial EnergiaEletrobras
65.1% 1.3%33.6%
20
Tariff Review Results
CEMAR 2005 2009
Gross RAB 1,756 2,247
Net RAB 836 1,121
Reference Company 217 265
Regu latory Depreciation 68 102
Regu latory EBITDA 157 271
Regu latory Losses 28.0% 25.6%
Deliquency Rate 0.5% 0.9%
X Factor 1.19% 1.06%
*All values are nominal and in R$ million.
21
CEMAR: Distribution
• 1.9 million clients in 217 municipalities, covering
the whole state of Maranhão (total area 333,000
km²)
• Energy sales reached 1,201 GWh in 2Q12,
12.5% higher than in 2Q11.
• In 2Q12, energy losses represented 20.4% of
required energy, 0.3 p.p. less than the 20.7%
recorded in 1Q12.
• Service quality has been presenting positive
evolution. Since 2004, DEC and FEC indices
have dropped 65.8% and 70.5%, respectively.
• More than 307.3 thousand clients connected by
the Light for All Program.
2004 2005 2006 2007 2008 2009 2010 (***) 2011 (***) 1Q12 2Q12
Energy Sold GWh 2,593 2,793 2,917 3,223 3,347 3,566 4,146 4,372 1,119 1,201
Net Revenues R$ MM 495 665 810 879 999 1,148 1,756 1,912 524 545
PMSO R$ MM 127 126 129 126 139 171 245 299 78 80
PDA + Contingencies R$ MM 47 20 14 30 32 33 68 42 14 15
EBITDA R$ MM 93 189 341 379 415 470 500 482 130 119
Net Income R$ MM (31) 359 177 222 227 198 279 248 79 66
Dividends R$ MM - 85 165 172 140 58 200 94 - -
Net Debt R$ MM 362 305 291 421 673 768 759 919 996 1,024
Net Debt / EBITDA times 3.9 1.6 0.8 1.1 1.6 1.6 1.5 2.0 2.0 2.0
Clients '000 1,161 1,254 1,349 1,438 1,535 1,688 1,822 1,939 1,968 1,985
PMSO/Client R$/Client 109 101 95 88 90 101 134 154 40 40
EBITDA/Client R$/Client 80 150 253 264 270 278 274 249 66 60
DEC (*) Hours/Year/Client 63.4 54.6 42.6 28.7 27.3 23.6 21.8 21.4 23.7 21.7
FEC (*) Times/Year/Client 39.3 32.9 24.6 19.8 16.8 15.2 14.1 11.6 12.1 11.6
Total Losses (*) % 29.9% 29.5% 29.8% 28.7% 28.9% 25.2% 22.0% 21.0% 20.7% 20.4%
CAPEX R$ MM 45 103 137 199 278 239 197 322 74 138
PLPT (**) R$ MM 25 129 169 195 187 180 202 175 45 37
(*) Last 12 months
(**) Light For All Program
(***) Values according to IFRS
22
CEMAR: Energy Losses
Non-technical Losses over Low-Voltage Market
(last 12 months)
30.4%29.0%
30.6% 29.9% 30.0%28.7%
27.3%
15.7% 15.2% 15.4% 15.3% 15.3% 15.2% 14.9%
23.7%
21.5%
19.5%
15.7%15.9%
4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
Non-technical Losses
18.9%
Regulatory Target
(from Aug-11 until Jul-12)
Total Losses over Required Energy
(last 12 months)
28.7%28.1%
28.9% 28.6% 28.9% 28.5% 28.1%
22.2% 22.0%21.6% 21.4% 21.2% 21.0% 20.7% 20.4%
26.4%
25.2%24.2%
22.2%
4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
Total Losses
23.1%
Regulatory Target
(from Aug-11 until Jul-12)
23
CEMAR: DEC/FEC 2011 Evolution Comparison
Bet
ter
DEC (hours)
10064
5546
424242
382929
27242323222221
1716161515
129
CELPACEMAR 2004CEMAR 2005ELETROACRCEMAR 2006
CELTINSCEPISACERONCEMAT
CEMAR 2007CEMAR 2008CEMAR 2009
COELBACEALCELG
CEMAR 2010CEMAR 2011
CELPECEB
CHESPSULGIPECOSERN
ENERSULCOELCE
FEC (times)
5345
4039
3330
2926
2521
2019
1717
151414
1312
109
87
6
CELPAELETROACR
CHESPCEMAR 2004CEMAR 2005
CEPISACERON
CELTINSCEMAR 2006
CEMATCEMAR 2007
CELGCEMAR 2008
CEALCEMAR 2009
SULGIPECEMAR 2010
CEBCEMAR 2011
COELBACOSERN
ENERSULCELPE
COELCE
24
CEMAR: Accident Index – Total Workforce 2010
Bet
ter
Severity Index
35
46
53
65126
153
159
189
322
635
646
693
703
894
1.010
1.069
1.230
1.343
1.487
1.698
1.842
1.985
2.065
2.086
2.099
2.159
2.204
2.207
2.510
2.5342.794
2.918
3.329
3.379
4.591
ENERGISA SECOELCEAMPLAELEKTROCEBRGECOSERNCEEEELETROPAULOCELGCEMAR 2007CEMAR 2008LIGHTCEMIGESCELSACEMAR 2005COELBACPFLCEMAR 2009BANDEIRANTECOPELCPFLCELESCENERGISA PBAMAZONASCEMATENERSULCEMAR 2010CEMAR 2004CEPISACELPECEMAR 2003CELTINSCELPACEMAR 2006
Frequency Index
1,0
1,1
1,2
1,2
1,4
1,8
1,9
2,0
2,1
2,2
2,5
2,8
2,9
3,5
3,9
4,2
4,3
4,3
4,4
4,6
4,7
4,7
5,0
5,0
5,6
5,7
6,0
6,2
7,3
7,6
8,0
9,1
12,2
12,6
15,7
CEMAR 2007CEMAR 2009CEMAR 2008ELEKTROCEMAR 2010CEMAR 2005CEMAR 2006AMPLACPFL PIRAT.CEEEELETROPAULOCEMIGCOELBAESCELSALIGHTBANDEIRANTECOELCECEMAR 2004COPELCPFL PAUL.AMAZONASCEPISACEBRGECELPEENERGISA SEENERSULCELGCOSERNCEMAR 2003ENERGISA PBCELESCCELPACELTINSCEMAT
25
Geramar: Ownership Structure
GNP
Geramar
Ligna
50%
25%
Servtech
EquatorialEnergia
Fundo de Investimento em
Participações Brasil
50%
25%50%
26
Geramar: Highlights
• Two thermoelectric power plants fueled by high-viscosity heavy oil.
• Location: Miranda do Norte, Maranhão.
• Joint installed capacity of 331 MW.
• 240 MW of energy sold at the A-3 auction in 2007.
• Total fixed annual revenue (for both plants) of R$ 136 million* (in R$ of 2007), during 15 years.*Revenues adjusted by inflation (IPCA)
• Start-up: January of 2010
• Total CAPEX: R$ 550 million.
• Equatorial’s share of CAPEX (25%): R$137 million. Equity = approximately R$45 million.
27
Agenda
►Financial Performance
►Portfolio Overview
►Value Creation
►Company Profile
28
Financial strength and solid management team with turnaround experience
Growth prospects and consolidation opportunities
Result-oriented management model
High level of
Corporate Governance
Agenda
29
Firmino SampaioCEO
Eduardo HaiamaCFO and IRO
Thomas NewlandsIR Analyst
Phone 1: 55 21 3206-6635Phone 2: 55 21 3206-6607
E-mail: [email protected]
Website: http://www.equatorialenergia.com.br/ir
Contacts
30
► This presentation may contain forward-looking statements, which are subject to risks and uncertainties, as they were based on the expectations of Company’s management and on available information. These prospects include statements concerning the Company’s current intensions or expectations for our clients.
► Forward-looking statements refer to future events which may or may not occur. Our future financial situation, operating results, market share and competitive positioning may differ substantially from those expressed or suggested by said forward-looking statements. Many factors and values that can establish these results are outside Company’s control or expectation. The reader/investor is prevented not to completely rely on the information above.
► The words “believe", “can", “predict", “estimate", “continue", “anticipate", “intend", “forecast" and similar words, are intended to identify estimates. Such estimates refer only to the date in which they were expressed, therefore the Company has no obligation to update said statements.
► This presentation does not consist of offering, invitation or request of subscription offer or purchase of any marketable securities. And, this statement or any other information herein, does not consist of a contract base or commitment of any kind.
Disclaimer