CEO Conference N e w Y o r k | M a y , 2 0 1 9 Viso ISA CTEEP - - PowerPoint PPT Presentation

Itaú BBA 14th Annual Latam CEO Conference

N e w Y o r k | M a y , 2 0 1 9

Visão geral Why Invest in ISA CTEEP? ISA CTEEP

51%

IE Madeira

Revenue: BRL 214 million

100%

IENNE

Revenue: BRL 42 million

ISA CTEEP

Revenue: BRL 2,538 million

IE Serra do Japi

100%

Revenue: BRL 58 million

100%

IE Pinheiros

Revenue: BRL 55 million

100%

Evrecy

Revenue: BRL 9 million

100%

IE Sul

Revenue: BRL 10 million

51%

IE Garanhuns

Revenue: BRL 44 million

100%

IEMG

Revenue: BRL 17 million

Largest publicly traded pure transmission utility in Brazil

▪

Transmission of ~25% of Brazil’s power generation

▪

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 126 substations 65,900 MVA of transformation capacity

▪

Regulatory Net Revenue¹: BRL 3.0 billion

▪

Regulatory EBITDA¹:

BRL 2.4 billion (margin of 79%)

Notes: ¹ Last 12 months ending on 03/31/2019. Figures consider IE Madeira and IE Garanhuns proportional results to ISA CTEEP’s participation

100%

IE Itaúnas

Revenue: BRL 47 million

100%

IE Biguaçú

Revenue: BRL 38 million

50%

IE Paraguaçu

Revenue: BRL 54 million

Largest publicly traded pure transmission utility in Brazil

▪

Sustainable growth

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

Organic growth: CapEx of around BRL 190 million/year Greenfield Projects¹: CapEx of BRL 2.9 billion and revenue (RAP) of BRL 448 million/year +2,000 km of transmission lines² +8,000 MVA of transformation capacity²

50%

IE Aimorés

Revenue: BRL 36 million

50%

IE Ivaí

Revenue: BRL 134 million

100%

IE Tibagi

Revenue: BRL 18 million

100%

IE Itapura Lorena

Revenue: BRL 10 million

100%

IE Itapura Bauru

100%

IE Aguapeí

Revenue: BRL 11 million

100%

IE Itaquerê

Revenue: BRL 46 million Revenue: BRL 54 million

A successful story of growth, resilience and performance

1999 2013 2001 2012 2006 2007 2017 2016

‘000 km¹ of transmission lines Consolidated regulatory EBITDA² ICVM 527 in BRL billion

0.1 0.7 1.1 1.6 0.2 0.7 1.6 11.5 12.3 15.4 17.7 18.6

Transmissão Paulista merger with EPTE CESP spin off creates Transmissão Paulista Set up of RBSE compensation (Ordinance 120 Ministry of Mining and Energy) Winner bid for 3 lots in October auction Expansion to 17 Brazilian states through greenfield projects and acquisitions ISA acquires CTEEP and becomes the controlling shareholder Winner bid for 5 lots in April auction Extension of Main Concession Contract (059/2001) for 30 years Winner bid for 2 lots in June auction

2018

18.6 2.5 2.4 18.6

2019³

Note: ¹ Information considers 100% of the projects ² Figures consider JV’s proportional results to ISA CTEEP’s participation ³ Last 12 months ending on 03/31/2019

6 7 13 19 65

State Grid Alupar TAESA ISA CTEEP Eletrobras

2018 Mark et Share (tho us a nd km o f lines ) Transmission Revenues ¹ (2018/ 2019 cycle)

Total: BRL 36 billion

IS THE PURE TRANSMISSION COMPANY IN THE SECTOR IN BRAZIL

Transmission companies are remunerated by the availability of its assets

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

SIN² is composed of 135 thousand km of transmission lines and serves 98% of the market The transmission sector is regulated and monitored by ANEEL³ and coordinated and controlled by ONS4 Transmission companies are remunerated by the availability of its

• assets. There is no demand risk and

no default risk.

37% 10% 8% 9% 32% 4%

State Grid Eletrobras Alupar TAESA ISA CTEEP Others

Source: ANEEL

STRATEGY BASED ON

Regulation

RBSE Receivables ~BRL 1,486 million 100% Margin²

Legal

Pension Fund Lawsuit receivables ~BRL 2,000 million

Growth

10 projects in execution with capex

• f ~BRL 2,900 million

Affiliates

Revenue¹ ~BRL 449 million 86% Margin²

Brownfield Projects

Revenue¹ ~BRL 295 million 92% Margin²

Operation and Maintenance

Revenue¹ ~BRL 761 million 36% Margin²

Note: ¹ Regulatory results of the last 12 months ending on 03/31/2019

² EBITDA Margin

A ISA CTEEP no Setor de transmissão Why Invest in ISA CTEEP? ISA CTEEP

Strong Cash Generation with Predictable Flow

347 389 732

2015

1,721

2016 2017 2018 LTM

1,845 Cash Generation

(BRL million)

BASED ON RBSE RECEIVABLES, ORGANIC CAPEX, GREENFIELD PROJECTS AND O&M REVENUES

+ Greenfield projects + Organic Growth + Inflation

10 PROJECTS UNDER CONSTRUCTION WILL ADD BRL 448 MILLION OF REVENUE

▪ CapEx ISA CTEEP: BRL 2.9 billion¹ ▪ Extension of lines: +2,000 km² ▪ Capacity: +8,000 MVA²

Note:

¹ Total CapEx ANEEL of BRL 5.2 billion; ² Considers information

• f the project (100%)

IE Itaquerê (100%)

3 Synchronous Components (Araraquara Substation) CAPEX ANEEL: BRL 398 million Revenue: BRL 46 million Deadline ANEEL: Aug/21

IE Aguapeí (100%)

TL: 111 km Substation: 1,400 MVA CAPEX ANEEL: BRL 602 million Revenue: BRL 54 million Deadline ANEEL: Aug/21

IE Paraguaçu (50%)²

TL: 338 km Substation: none CAPEX ANEEL: BRL 510 million Revenue: BRL 108 million Deadline ANEEL: Feb/22

IE Itaúnas (100%)

TL: 79 km Substation: 1,197 MVA 1 Static Component CAPEX ANEEL: BRL 298 million Revenue: BRL 47 million Deadline ANEEL: Feb/22

IE Aimorés (50%)²

TL: 208 km Substation: none CAPEX ANEEL: BRL 342 million Revenue: BRL 72 million Deadline ANEEL: Feb/22

IE Itapura – Bauru (100%)

1 Static Component (Bauru Substation) CAPEX ANEEL: BRL 126 million Revenue: BRL 11 million Deadline ANEEL : Feb/21

IE Tibagi (100%)

TL: 36 km Substation: 1000 MVA CAPEX ANEEL: BRL 135 million Revenue: BRL 18 million Deadline ANEEL: Aug/21

IE Ivaí (50%)²

TL: 1,200 km (230/500 kV) Substation: 2,988 MVA CAPEX ANEEL: BRL 1,937 million Revenue: BRL 268 million Deadline ANEEL: Aug/22

Substation Line Entrance Transmission Lines (TL) Under construction

IE Itapura - Lorena (100%)

TL: 6 km Substation : 1,200 MVA CAPEX ANEEL: BRL 238 million Revenue: BRL 10 million Deadline ANEEL : Sep/22

IE Biguaçú (100%)

TL: 57 km Substation: 300 MVA CAPEX ANEEL: BRL 641 million Revenue: BRL 38 million Deadline ANEEL : Sep/23

230 226 335 247

2016

585

2014 2018+ 2015 2017 2013

Note: ¹ The Company registered net loss due to the provision for losses related to Law 4,819/58

Strong cash generation allows higher dividends

(BRL million) Regulatory Payout N.A.¹ 91% 136% 101% 92%

▪ 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%

1,985 154%

SOLID DEBT PROFILE WITH

▪ Debt Amortization Schedule (BRL million)

Debt Breakdown

47% 19% 34%

Local bonds - CDI/IPCA BNDES - TJLP Others

Debt Profile

• n 03/31/2019

▪

Gross Debt: BRL 3.1 billion

▪

Average cost: 8.2% p.a

▪

Average term: 3.8 years

▪

Net Debt / EBITDA: 0.9x

Investment Grade by Fitch: AAA(bra)

283 234 81 75 380 903 47 2019 2030+ 2024 2020 2023 2021 2022 2025-2029 1,094 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?

No demand risk and no default risk

Strong Cash Generation

Minimum payout of 75% (regulatory net income)

Dividends

Reference Company in quality and O&M

Benchmark Valuation

Attractive valuation Fitch: AAA(bra)

Investment Grade

Sustainable value

Profitability

Opportunities in reinforcement and improvement projects, greenfield and M&A

Growth

CUSTOS OPERACIONAIS REGULATÓRIOS

Valuation Opportunities

Execution risk Risk of lower returns

Greenfield Projects

Upside in returns

Risk of reduction

• f the amount

established in RES ANEEL 762/2017

RBSE

Upside in receivables (WACC)

Organic Growth

Additional revenue with no competition

IE Madeira

Regulatory risk Risk of postponing the solution for the impeditive pending issues

No discount on revenue

Tariff Reset

Fair Value for O&M, WACC & RAB

Risk of unfavorable decision in Court

Law 4,819

End of payment & reimbursement

Investor Relations

www.isacteep.com.br/ir ri@isacteep.com.br +55 (11) 3138 -7557