2013 results - sabesp€¦ · nov 13, 2012 arsesp discloses the proposed pr eliminary initial...
TRANSCRIPT
2013 Results
March 2013- Economic - Financial Office and Investor Relations OfficeMarch 2013- Economic - Financial Office and Investor Relations Office
This presentation may contain forward-looking statements referring toSABESP’s business outlook, operating and financial results estimates, and growthprospects. These are only forecasts, and as such, they are exclusively based onSABESP’s management expectation in relation to the future of business and itscontinuous access to capital to finance the Company’s business plan. Theseforward-looking statements largely depend on changes in market conditions,governmental rules, industry performance and the Brazilian economy, amongother factors, in addition to risks exhibited in disclosure documents filed bySABESP. Therefore, they are subject to changes without prior notice.
Disclaimer
Agenda
Company Overview1
Our Operations2
Our Financial Performance3
Sabesp is one of the largest water and sewage service providers in the world based on the number of Customers
Provides water to 24.6 million people and sewage services to 21.5 million people
Also sells wholesale treated water to 6 municipalities (3.5 million people)
Natural monopoly, low operating risk
Serves the City of São Paulo and 362 out of 645 municipalities in the State
Covers 59% of State's urban population
Operations in the São Paulo Metropolitan Region* represent 73.2% of our total revenues
(1) As of December 31, 2013(2) Treated sewage as percentage of collected sewage
São PauloRegional SystemsMetropolitan Region
One of the largest water and sewage service providersin the world…
*The Metropolitan Region we consider for this estimate, includes 8municipalities outside the legal boundaries of the São PauloMetropolitan Region and represent the total cities served by theCompany’s Metropolitan Division
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Main Operational Indicators(1)Company OverviewWater Sewage
Connections (million) 7.9 6.3
Coverage (%) 100 84
Treatment (%) 100 78(²)
Billed Volume (m³ million) 2,149,1 1,579,1
We are a mixed capital company, majority-owned by the State of São Paulo, with significant private ownership
State law requires the State of São Paulo to own at least 50% + 1 voting shares at all times
Currently the Government of São Paulo has 50.3% share
Listed on the “Novo Mercado” and NYSE, to the highest corporate governance standards. We are also part of BM&FBovespa’s Sustainability Index – ISE
100% common shares
Market Cap: R$ 18.1 billion (as of December, 2013)
(1) As of December, 2013
…with strong corporate governance
5
Ownership Structure(1)
25,5%
24,2%
50,3%
Agenda
6
3
Our Operations2
Our Company1
Our Financial Performance
Diversified customer base
7
Water Volume by Type of Customer Sewage Volume by Type of Customer
Over 80% of water volume comes from residential, commercial and industrial customer
Over 90% of sewage volume comes from residential, commercial and industrial customer
Residential 73%
Commercial 8%
Industrial 2%
Public 3%
Whosale 14%
Reused Water<1%
Residential81%
Commercial10%
Industrial 3%
Public 3%Whosale 2%
Efluents <1%
Broad coverage of municipalities
8
Contracts
30-year-service agreement between Sabesp, Municipality of São Paulo and State Government (expires in 2040)
Minimum investment of 13% of the Gross Revenue, net of Cofins and Pasep, approximately R$ 600 million/year -R$ 16.9 billion in 30 years
Transfer of 7.5% of the Gross Revenue, net of Cofins and Pasep, to the Municipal Environmental Sanitation and Infrastructure Fund – to be recovered in tariff
Contract with the Municipality of São Paulo
Diadema – From wholesale to retail Full operation of water supply and sewage services – 30-year contract
Contract signed in March 2014
386,000 population - 100% water and 96% sewage coverage
Nº of municipalities
% of revenue
Renewed/Secured (Program and Service Contract) 265 72,9%Metropolitan Region Without Contract 21 11,1%Expired/Under Negotiations 40 5,0%To be expired: Today to 2023 10 1,8% 2024 to 2034 27 7,2%Total Retail 363 98,0%Wholesale 6 2,0%Total Sabesp 369 100,0%
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Regulatory Framework
Concession Power in Metropolitan Regions Legal proceedings related to this matter under Supreme Court (STF) appraisal were ruled in
February 2013 Final decision released in September 2013:
• Sanitation services in metro regions are subject to shared responsibility between State and Municipality
• State Legislative has two years to adjust the legislation, create entities and mechanisms to implement the ruling
Obligatory creation of a Regulatory Agency Municipal or State level Clarifies the payment conditions of non-amortized investments up to 4 years Disbursement of federal funds conditioned to the existence of a sanitation plan Deadline 2015
Federal Law # 11,445/07 Federal Decree 7,217/10 and Federal Decree 8,211/14
Regulation activities and responsibilities include:• Service quality• Tariff structure and reviews
Planning is a concession holder attribution
ARSESP´s attribution
May 18, 2011 ARSESP discloses WACC of 8.06% (RTS/01/2011)Apr 16, 2012 ARSESP’s discloses detailed Tariff Methodology (RTS/ 01/2012)Aug 30, 2012 Sabesp submits to ARSESP the Regulatory Asset Base (RAB) and the detailed Business PlanNov 13, 2012 ARSESP discloses the proposed preliminary Initial Maximum Average Tariff (P0) and Efficiency Gain Factor (X Factor)Mar 22, 2013 ARSESP discloses Tariff Review Results relating to preliminary P0 and X Factor (RTS/01/2013)Apr 30, 2013 SABESP requests postponement of its Tariff Structure to April /14 – Accepted by ARSESP in June /13Ago 2, 2013 ARSESP discloses Resolution nº 427 alleging that found inconsistencies in the RAB and maintained tariff revision suspendedAgo 16, 2013 SABESP files request for tariff adjustment by 6.27% (IPCA index) - 2.35% = 3.83%Sep 2, 2013 SABESP requests ARSESP three months to revise the RAB – Accepted in September 6
Nov 1, 2013Resolution nº 435 : ARSESP authorizes a tariff adjustment of 3.1451% as of December 11, 2013 (NT/F/007/2013)Resolution nº 434 :ARSESP fixes the date of March 10, 2014 for the publication of the definitive Initial Maximum Tariff Price (P0) and the Efficiency Factor (X Factor)
Dec 4, 2013 SABESP delivers the RAB revised
Jan 9, 2014
Resolution nº 463: ARSESP postpones to April 10, 2014, the publication of the definitive Initial Maximum Tariff Price (P0) and the Efficiency Factor (X Factor) and establishes the following steps for the completion of the first Tariff Review: Stage D2 – ARSESP publishes its proposals for the P0 and X Factor, initiation of a Public Consultation and call for a Public Hearing (2/11/2014); Stage D3 – Public Hearing held and Public Consultation concluded (3/12/2014);Stage D4 – Publication of results related to the P0 and the X Factor, report on Public Consultation contributions (4/10/2014); andStage D5 – ARSESP publishes SABESP’s new Tariff Structure definition and implementation schedule (4/10/2014).
Feb 11, 2014 ARSESP discloses First Tariff Revision of Sabesp - Calculation of P0, P1, and X Factor (RTS/001/2014)
New Tariff Methodology
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RAB0 CAPEX + OPEX + IRCS + ∆ CG
RABT = RAB0 + ∑(CAPEX+∆ CG‐DEP)Volume (M3)
P0 TIR = WACC
Tariff adjustments
11
Annual Tariffs Adjustments vs. Inflation (%)
Sabesp Annual Tariffs Adjustment
Productivity Factor
New Average Tariff = 1
Inflation(IPCA)
100x
Previous Average Tariff
Quality Factor-
-+
November 1, 2013 ARSESP authorizes a tariff adjustment of 3.1451% as of December 11, 2013
13,05%
8,22%
18,95%
6,78%
9,00%
6,71%
4,12% 5,10% 4,43% 4,05%6,83%
5,15%2,35%
3,15%
13,74%
7,66%
15,43%
6,81% 6,57%
3,97% 3,74%
6,37%
4,50% 4,60%
6,87%
5,20%6,27%
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Adjustment established by ARSESPSabesp Formula
Apr/22/13
Dec/11/13
Annual Adjustment IPCA
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Water Connection Evolution (million) Water Coverage (Connections in ´000s)
Evolution of operations
Sewage Connection Evolution (million) Sewage Coverage (Connections in ´000s)
Add 1.7 million new connections by 2020
Collection: 95% in 2020
Treatment: 95% in 2020
Add 1.2 million new connections by 2020
6,6 6,8 6,97,1 7,3 7,5 7,7 7,9
2006 2007 2008 2009 2010 2011 2012 2013
5,0 5,2 5,3
5,5 5,7
5,9 6,1 6,3
2006 2007 2008 2009 2010 2011 2012 2013
175 226 180 177 172
644
2.013 2013R 2.014 2.015 2.016 2017 - 2020
217 237 235 246 243
928
2.013 2013R 2.014 2.015 2.016 2017 - 2020
Capex plan
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Total Investment Plan of R$ 12.8 billion from 2014 to 2018
Metropolitan Water Program
Tietê Project
Corporate Program for Water Loss Reduction
Clean Wave Program
Coastal Water Program
Main Programs
R$ million
1.139 1.129 1.087 956 974
1.092 1.069 889 893 1.107
411 478 553 647 339
2.642 2.676 2.529 2.496 2.420
2014 2015 2016 2017 2018
Water Suply Sewage collection Collected sewage treatment
Capex financing
14
2014 to 2018 – R$ 12.8 billion
CAIXA R$ 1.86 bnBNDES R$ 1.39 bnIDB R$ 871 mnJICA R$ 728 mnIBRD R$ 127 mn
CAIXA and BNDES
Company FundsR$ 6.4 bi50.2 %
ContratedR$ 5.0 bi78.4%
Under NegociationR$ 1.4 bi21.6%
FinancingR$ 6.4 bi49.8 %
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Our Company1
Our Operations2
Our Financial Performance3
Agenda
JICA 9,9%
IDB 16,2%
Eurobônus 12,2%
Debêntures 27,6%
BNDES 11,8%
CEF 16,4%BIRD 0,9%
B Brasil 1,1%
Others 4,0%
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Long term and low cost funding
R$ million
Total Debt Breakdown Total Debt by Currency
Debt Amortization Profile
(*) IDB 713 agreement
Local Currency
60,9%
US Dollar 26,8%
Yen 9,9%
Currency Basket* 2,5%
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Net Revenues (R$ million)
Adjusted EBITDA (R$ million)
Consistent performance
Net Income (R$ million)
2007 2008 2009 2010 2011 2012 2013
Dividend Declared 1.32 1.30 1.73 2.00 2.54 2.35 0.78
Pay Out % 28.5 34.3 26.1 27.9 47.3 27.9 27.9
Dividends/Pay Out
* R$ / 000 shares
5.527 5.9717.809* 8.580* 9.230* 9.927*
10.738* 11.316*
6.132 6.541 7.0998.305
8.927 8.871
2006 2007 2008 2009 2010 2011 2012 2013
*Since 2008 calculated in accordance with CPCs / IFRS, which includes construction Costs
Net Renevues Net Renevues Without Construction
789 1.055863*
1,508* 1,630* 1,223*
1.912* 1.924*
2006 2007 2008 2009 2010 2011 2012 2013*Since 2008 calculated in accordance with CPCs / IFRS, which includes
construction Costs
2.446 2.699 2.865* 2.727*3.222* 3.213*
3.605* 4.007*
44,3% 45,2%36,7% 31,8% 34,9% 32,4% 33,6% 35,4%
46,7%41,2% 44,7%
41,1% 43,0% 44,6%
2006 2007 2008 2009 2010 2011 2012 2013
* Since 2008 calculated in accordance with CPCs / IFRS, which includes construction Costs
Adjusted EBITDA Adjusted EBITDA Margin Adjusted EBITDA Margin Without Constrution
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* Adjusted EBITDA – LTM
Calculated in accordance with CPCs/IFRS
Capital structure has remained consistent with operating cash generation and capitalization
Historical leverage metrics
Net Debt vs. Adjusted EBITDA* (R$ million) Net Debt vs. Shareholders’ Equity (R$ million)
5.220 5.787 6.220 6.2816.959
7.668
2.865 2.727 3.222 3.2133.605 4.007
1,8x2,1x
1,9x
2,0x1,9x 1,9x
2008 2009 2010 2011 2012 2013Net Debt Adjusted EBITDA Net Debt/Adjusted EBITDA
5.220 5.7876.220 6.281
6.9597.668
6.7588.439
9.68210.544
11.256
13.130
0,8x0,7x 0,6x 0,6x 0,6x 0,6x
2008 2009 2010 2011 2012 2013
Net Debt Shareholders' Equity Net Debt/SE
Financial Highlights
19
* In accordance with CPCs / IFRS, which includes Construction Costs.
(In R$ million)
** R$ / 000 shares
2002 2003 2004 2005 2006 2007 2008* 2009* 2010* 2011* 2012* 2013*Net Revenues (R$) 3.767,1 4.130,8 4.397,1 4.953,4 5.527,3 5.970,8 7.809,3 8.579,5 9.230,4 9.927,4 10.737,6 11.315,6 Adjusted EBITDA (R$) 1.860,0 2.076,5 1.927,0 2.285,6 2.446,1 2.698,9 2.865,1 2.727,3 3.222,5 3.213,4 3.605,0 4.006,6 Adjusted EBITDA Margin (%) 49,4 50,3 43,8 46,1 44,3 45,2 36,7 31,8 34,9 32,4 33,6 35,4 Net Income (R$) (651,0) 833,3 513,1 865,6 789,4 1.055,3 862,9 1.507,7 1.630,4 1.223,4 1.911,9 1.923,6 Net Margin (%) 20,2 11,7 17,5 14,3 17,7 11,0 17,6 17,7 12,3 17,8 17,0
Total Assets (R$) 16.331,9 16.590,1 16.783,8 17.431,1 17.999,9 18.659,9 17.206,0 20.242,9 23.293,1 24.983,2 26.476,1 28.274,3 Total Debt (R$) 7.925,1 7.264,3 7.050,7 6.664,2 6.326,7 5.685,2 6.865,0 6.558,0 8.209,3 8.423,3 8.875,3 9.450,1 Short-term Debt (R$) 1.132,4 997,0 1.496,8 759,0 852,5 742,1 1.449,0 1.009,9 1.242,1 1.629,2 1.342,6 640,9 Long-Term Debt (R$) 6.592,6 6.267,3 5.553,8 5.905,2 5.474,2 4.943,1 5.416,0 5.548,0 7.022,5 6.794,1 7.532,7 8.809,2 Foreign Currency Debt (R$) 3.708,0 3.012,7 2.680,9 1.575,9 1.472,2 1.242,3 2.281,0 1.745,6 2.249,9 3.053,4 3.215,8 3.698,6 Shareholders' Equity (R$) 4.217,1 7.576,9 7.951,6 8.482,5 9.018,5 9.780,5 6.758,0 8.439,0 9.682,0 10.544,0 11.256,8 12.930,8 Total Debt/Total Cap. (%) 65,3 48,9 47,0 44,0 41,2 36,8 50,4 43,7 45,9 44,4 44,1 42,2 Investments (R$) 619 594 601 678 905 921 1.734 2.059 2.194 2.440 2.536 2.716
Dividend Declared (R$/ share) 17,7 5,4 12,2 9,5 1,3 1,3 1,7 2,0 2,5 2,35 0,78 Pay Out (%) 60,5 29,8 40,2 34,7 28,5 34,3 26,1 28,0 47,3 27,9 27,9 Dividend Yield (%) 10,8 3,4 7,8 3,2 3,2 4,7 5,0 4,7 4,9 2,7 2,9 Outstanding shares - 683,509,869
www.sabesp.com.br
IR Contacts
Mario Azevedo de Arruda Sampaio Angela Beatriz [email protected] [email protected](55 11) 3388 8664 (55 11) 3388 8793