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INSTITUTIONAL
PRESENTATION
March, 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$2.6 billion in
2011.
• Company responsible for implementing
and operating the Tocantinópolis and
Nova Olinda thermoelectric plants in the
State of Maranhão
• Fuel: high-viscosity heavy oil.
• Joint installed capacity of 331 MW
• 240 MW of energy sold at the A-3 auction
in 2007.
• Start-up: January 2010
*Source: ABRADEE
RS
SC
PR
SP
MG
GO
MT
AC
AM
RR
ROBA
PI
MAPA
AP
TO
CE RN
PEAL
SE
MS
RJ
ES
DF
PB
RS
SC
PR
SP
MG
GO
MT
AC
AM
RR
ROBA
PI
MAPA
AP
TO
CE RN
PEAL
SE
MS
RJ
ES
DF
PB
• Electricity trading company and
developer of new products and services
• Broker the purchase and sale of energy
without physical delivery
• Custom of solutions to
satisfy consumers’ specific
needs (consumers and generators)
• Experienced executives and well-
recognized in the trading market
May. 2004 Mar. 2006 Apr. 2006 Dec. 2007 Feb. 2008 Apr. 2008 Oct. 2008Abr. 2010
Dec. 2009 Apr. 2010 Aug. 2011
Equatorial acquires 51% of
Sol Energias,
energy trader
CEMAR’s acquistion
PCP Fund acquires a controlling stake of
Equatorial
Equatorial’s IPO
Control concentratedin PCP Fund
Incorporation of a controlling stake of
Light
Equatorial migrates to the “Novo Mercado”
Acquisition of 25% of Geramar
FIP PCP sells its indirect stake in
Light
Equatorial’s spin off
Equatorial’s History
6
Ownership Structure – Current
• Total no. of shares:
• Share price*:
• Free float:
• ADTV90:
109,226,672
R$ 12.67
46.3% / R$641 MM
R$ 1.805 MM
*On 30/12/11ADTV90 represents the average volume traded in the past 90 days
PCP Latin America Power
Equatorial Energia S.A.
CEMAR GeramarEquatorial Soluções
SOL Energias
Free Float
53.7% 46.3%
65.1% 25% 100%
51%
Other Projects
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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
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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).
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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
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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
341379
416482
287
500
85
470
189
368
2004 2005 2006 2007 2008 2009 2010 (*) 2011
CEMAR Light Geramar
784757
504 24 510
29
2004 2005 2006 2007 2008 2009 2010 (*) 2011
Net Revenue 526 629 810 879 2.346 2.506 1.799 1.981
EBITDA 85 189 341 379 784 757 510 504 % EBITDA 16% 30% 42% 43% 33% 30% 28% 25%
526
810 879999
1,756
1,148
629
1,912
1,347 1,358
2004 2005 2006 2007 2008 2009 2010 (*) 2011
CEMAR Light Geramar
2,346 2,506
36
1,799 1,981
39
12
Distributions to Shareholders/Net IncomeR$ million
Financial Performance
* 2008 figure includes R$82 million in Capital Reduction
(*) The dividends for the fiscal year 2011 were submitted to AEGM to be held on March 19, 2012.
2004 2005 2006 2007 2008 2009 2010 2011
Payout 0% 24% 90% 99% 95% 25% 104% 32%
Dividend Yield N/A N/A 10% 13% 27% 3% 18% 4%
-
108
151
284
197
50
123
229
119
153
207189
160
54 51
300
2004 2005 2006 2007 2008 2009 2010 2011
Dividends Net Income
2004 2005 2006 2007 2008 2009 2010 2011
Consolidated Dividends (R$ 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
CEMAR (31) 234 116 117 148 129 279 248
Geramar - - - - - - 6 11
Light - - - - 130 79 - -
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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.
221 198
402
684
499
77
689
5
2.0
4.0
1.6
0.0 0.3
0.9 1.6 1.5
2004 2005 2006 2007 2008 2009 2010 2011
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Financial Performance
made a longer debt amortization schedule possible…
Debt Amortization Schedule - R$ MM
Short Term 2012 2013 2014 2015 After 2015
CEMAR 282 384 171 148 400 1.385
Geramar 65 - - - 43 107
Total 347 384 171 148 442 1.493
282
171
148
400
43
384
1.385
65107
Gross Debt Short Term 2013 2014 2015 After 2015
CEMAR
Geramar
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Investments
Investments - R$ MM
and a significant increase in investments.
306
394
465
137141
497
399232
419
70
0.4
16
10724
2004 2005 2006 2007 2008 2009 2010 2011
CEMAR Light Geramar
2004 2005 2006 2007 2008 2009 2010 2011
CEMAR 70 232 306 394 465 419 399 497Light - - - - 137 141 - -Geramar - - - - 24 107 16 0.4Total 70 232 306 394 626 667 415 497
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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
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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
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CEMAR: Ownership Structure
CEMAR
OthersEquatorial EnergiaEletrobras
65.1% 1.3%33.6%
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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.
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CEMAR: Distribution
• 1.9 million clients in 217 municipalities, covering
the whole state of Maranhão (total area 333,000
km²)
• Energy sales reached 4,372 GWh in 2011, 5.4%
higher than in 2010.
• In 2011, energy losses represented 21.0% of
required energy, 1.0 p.p. less than the 22.0%
recorded in 2010.
• Service quality has been presenting positive
evolution. Since 2003, DEC and FEC indices
have dropped 66.2% and 70.4%, respectively.
• More than 301 thousand clients connected by
the Light for All Program.
2004 2005 2006 2007 2008 2009 2010 (***) 2011 (***)
Energy Sold GWh 2.593 2.793 2.917 3.223 3.347 3.566 4.146 4.372
Net Revenues R$ MM 495 665 810 879 999 1.148 1.756 1.912
PMSO R$ MM 127 126 129 126 139 171 245 299
PDA + Contingencies R$ MM 47 20 14 30 32 33 68 42
EBITDA R$ MM 93 189 341 379 415 470 500 482
Net Income R$ MM (31) 359 177 222 227 198 279 248
Dividends R$ MM - 85 165 172 140 58 200 94
Net Debt R$ MM 362 305 291 421 673 768 759 919
Net Debt / EBITDA times 3,9 1,6 0,8 1,1 1,6 1,6 1,5 2,0
Clients '000 1.161 1.254 1.349 1.438 1.535 1.688 1.822 1.939
PMSO/Client R$/Client 109 101 95 88 90 101 134 154
EBITDA/Client R$/Client 80 150 253 264 270 278 274 249
DEC (*) Hours/Year/Client 63,4 54,6 42,6 28,7 27,3 23,6 21,8 21,4
FEC (*) Times/Year/Client 39,3 32,9 24,6 19,8 16,8 15,2 14,1 11,6
Total Losses (*) % 29,9% 29,5% 29,8% 28,7% 28,9% 25,2% 22,0% 21,0%
CAPEX R$ MM 45 103 137 199 278 239 197 322
PLPT (**) R$ MM 25 129 169 195 187 180 202 175
(*) Last 12 months
(**) Light For All Program
(***) Values according to IFRS
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CEMAR: Energy Losses
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%
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
Total Losses
23.1%
Regulatory Target
(from Aug-11 until Jul-12)
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%
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
Non-technical Losses
18.9%
Regulatory Target
(from Aug-11 until Jul-12)
23
CEMAR: DEC/FEC 2009 Evolution Comparison
Bet
ter
DEC (hours)
10264
554645
4241
322929
2727
24222121
1715141312
108
CELPACEMAR 2004CEMAR 2005
CELTINSELETROACRE
CEMAR 2006CEPISACERONCEMAT
CEMAR 2007COELBA
CEMAR 2008CEMAR 2009CEMAR 2010
CELGCEAL
CELPECEB
SULGIPECOSERN
CHESPENERSUL
COELCE
FEC (times)
5344
393333
3230
2525
2220
1716
1515
1414
1311
777
6
CELPAELETROACRCEMAR 2004
CELTINSCEMAR 2005
CEPISACERONCHESP
CEMAR 2006CEMAT
CEMAR 2007CEMAR 2008
CELGCEB
CEMAR 2009CEAL
CEMAR 2010SULGIPECOELBA
ENERSULCOSERN
CELPECOELCE
Severity Index
4,591
6473
189
474
599
646
656
693
717
736
959
963
1,069
1,082
1,083
1,123
1,208
1,302
1,372
1,446
1,487
1,540
1,574
1,589
1,843
2,042
2,203
2,489
2,510
2,9183,229
4,010
CPFL PIRATININGAAMAZONASCEBCOELCECEMATCEMAR 2007CELGCEMAR 2008ENERGISA SEELEKTROELETROPAULOCEMIGCEMAR 2005CPFL PAULISTAENERGISA PBRGELIGHTBANDEIRANTECOSERNCELPECEMAR 2009AMPLACOPELCEEECOELBACELESCCELTINSENERSULCEMAR 2004CEMAR 2003ESCELSACELPACEMAR 2006
Frequency Index
20.6
8.7
7.7
7.6
7.6
6.8
6.6
6.2
6.0
5.8
5.8
5.5
5.4
5.3
5.0
4.9
4.5
4.3
4.2
4.2
3.9
3.9
3.1
3.1
2.8
2.6
2.4
1.9
1.8
1.4
1.2
1.1
1.0
19.1
CEMAR 2007CEMAR 2009CEMAR 2008ELEKTROCEMAR 2005CEMAR 2006ELETROPAULOCPFL PIRAT.BANDEIRANTEAMAZONASCOELCECOELBACEEECEMIGCPFL PAUL.CEMAR 2004CELPECELPAAMPLAESCELSALIGHTCOPELENERGISA PBCOSERNCEBRGEENERGISA SEENERSULCELGCEMAR 2003CEPISACELESCCEMATCELTINS
24
CEMAR: Accident Index – Total Workforce 2009
Bet
ter
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$45 million.
SOL Energias – Energy Trader
• In November, Equatorial invested R$ 6.0 million into SOL Energias equity (energy trading anddeveloper of new products and services), thus retaining 51.0% of its total shares.
• The amount invested will be used in the energy trading working capital.
Executives
51% 49%
• Main Executive-Partners: • Paulo Cezar Tavares (former CPFL’s vice-president of Energy Management).• Roberto Wainstok (former CPFL Brasil’s Executive Officer of Energy Purchase and Sales)• Antonio Pinhel (former Neoenergia Energy Market and Commercial Manager)
• Energy Trading Business: • Complex regulation and energy pricing• Potential market:
• Free customers (representing between 25% and 30% of the brazilian energy market), with more than 980 consumers;
• Captive (government auctions);• Fragmented market: more than 90 active tradings.• Intermediation of energy purchase and sale, without physical delivery;• Solutions customizing to supply specific needs from clients (consumers and generators).
SOL Energias – Energy Trader
SOL Energias – Energy Trader
PAULO CEZAR TAVARES (SOL’s CEO)
• Pioneer in this market and main responsible by the development of CPFL Brasil – biggest brazilian trading (aprox. R$200 million in annual net income) and NC Energia (energy trading of the Neoenergia Group);
• Professional with a huge experience in energy trading, active since 2001;
• Brief Resumee:
• CPFL Energia: Vice-president of Energy Management (2002-2011)• Abraceel: Board member of the Brazilian Energy Trading Association since 2003.• NC Energia (former GCS Energia): CEO (2001-2002)• Celpe: CEO (1998-2000)• Grupo Eletrobras: several.
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Agenda
►Financial Performance
►Portfolio Overview
►Value Creation
►Company Profile
31
Financial strength and solid management team with turnaround experience
Growth prospects and consolidation opportunities
Result-oriented management model
High level of
Corporate Governance
Agenda
32
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
33
► 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