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Ccr day presentation Ccr day presentation Presentation Transcript

  • Choosing New Paths Winning New Challenges São Paulo, November 18, 2005
  • Agenda Registration and Breakfast 08:30-09:00 am Welcome and Agenda Presentation 09:00-09:10 am Renato Vale – CEO Scenario of the Toll Road Concession Industry 09:10-09:50 am Dario Rais Lopes – Secretary of Transportation for the State of São Paulo José Alexandre N. Resende – General Director of the National Agency for Land Transportation Corporate Positioning 09:50-10:20 am Renato Vale – CEO Coffee break 10:20-10:40 am
  • Agenda (cont.) View on Current Businesses 10:40-11:10 am Italo Roppa – Management Vice-President New Businesses 11:10-11:40 am Marcio Batista – Executive Vice-President Financial Strategy 11:40 am-12:20 pm Ricardo Froes – CFO and IR Officer Questions and Answers 12:20-1:00 pm Closing Lunch 1:00 pm
  • Scenario of the Toll Road Concession Sector Dario Rais Lopes and José Alexandre N. Resende
  • Corporate Positioning
  • CCR System CCR – Strategic Holding of the Corporate System Interest 100% 100% 100% 100% 100% 74.24% Service Companies 100% 100% 38.25%
  • Ownership Breakdown Brisa Novo 17.9% Mercado 28,9% 28.9% Camargo Corrêa 17.9% Andrade Serveng - Gutierrez Civilsan 17.4% 17.9%
  • Corporate Convergence • Partners share objectives and views; • There is not an exclusive controlling shareholder; • Shared management; • Board members are extremely dedicated and have profound knowledge of the business; • The company’s interests are above those of its controlling shareholders; • Permanent guidance towards building capacity and improving results; • Participative style – intense dialogue;
  • Transparency • Because it is a public service concessionaire, CCR is bound to provide all relevant information to the Regulatory Agencies, which publicly disseminate it; • Because its long term debt is funded by multilateral institutions (IFC and BID) and BNDES, in the Project Finance model, the concessionaires are constantly under auditing from these institutions • All information will are treated with great transparency: Financial Statements reconciled to meet US GAAP requirements;
  • Novo Mercado • CCR made its IPO as a Novo Mercado company: Respect for minority shareholders’ rights All shares are common; Tag Along. Information transparency; Responsible accountability; Transparency towards stakeholders.
  • Novo Mercado (cont.) • Direct disclosure of all relevant facts; Open Conference Calls; Publications; Providing requested information: to Minority Shareholders; to Market Analysts; to the Press; Periodic non-deal road shows in Brazil and abroad; Personalized visits to the main minority shareholders; Site on the internet with updated information.
  • Corporate Governance • Creation of CCR Center for Corporate Governance with Fundação Dom Cabral • Discussion of CCR Governance Case in the academic environment
  • Governance Components • Board of Directors Defines strategic guidelines and general objectives; Follows the Company’s performance and results; Sends issues to the Committees; Makes decisions requested by the Executive Officers; Proposes initiatives to Executive Officers.
  • Governance Components (cont.) • Committees Each committee has a specific scope; They do not take executive actions; They make a profound study of the matters within their scope; They issue opinions for the decisions of the Board of Directors. • Executive Officers Manages the Company; Proposes decisions to the Board of Directors; Maintains the Board of Directors informed.
  • Social Responsibility and Policy
  • Social Responsibility EDUCATION Instituto Caminhos para Vida • “Road of Life Institute” Estrada para a Cidadania • “Road to Citizenship” Sou 10 no Trânsito •“ I am a “A” grade driver” Health VidaBAn – “BAnLife” SorrisoBAn “BAnSmile” Rodopac ENVIRONMENT Saúde do Caminhoneiro - “Truckers Health” Environment Parto Humanizado protection projects “Humanized Delivery”
  • Main Highlights • First company to be listed at Novo Mercado • Gross Revenues (LTM) ~ R$ 2 billion • Market value (11/16/2005): ~R$ 6.3 billion • Roads extension: 1,452 km • Total daily users: > 1.5 million • Capital expenditures + conservation expenses since the beginning of the concession: R$ 7.9 billion (base value 2005)
  • CCR System Business To make possible investment solutions and services in Roads Infrastructure, contributing for the social-economic development
  • Corporate Strategy Focus: Growth, profitability and liquidity • To be a key player in the toll roads concession market in Latin America, extending this role to the whole continent • To emphasize correlated businesses that brings advantages and significantly contributes for the CCR’s MVA, without compromising its focus on its core business: toll roads concessions. • To make CCR shares known in the Brazilian and international capital markets through its solid and wide track record of growth, profitability, dividends payment and to be recognized by the quality of managing and services rendered.
  • Business Strategy Focus: Quality Relationship • To be distinguished among the main audiences by the competence of our institutional relationship.
  • Phase 1 Phase 2 Phase 3 2005… CCR Historical 2004 / 2005 Evolution 2003 •New 2002 Aprimora- New Public Chalenges Novos mento 2001 Offering and Desafios Permanente New Novo ViaOeste 2000 Management Posicionamento Acquisition • to effect growth IPO de Gestão Positioning • Oferta • Efetivar 1999 IPO and e Pública • New Crescimento 1998 Re- Reorganiza- Reorganiza -- Reorganiza- Planej. strategic Sócio Sócio Strategic organization integrated plan • Imp. Modelo • Iniciar Novo positioning Seeking for estratégico ção Integrado Gestão Ciclo de Busca sócio estratégico Busca sócio partner Planejamento strategic Growth Project • Consolidação estratégico estratégico Proj. Crescer Início das Início das partner Crescer - Startup Ousar Def. inicial Def.. inicial atividades atividades PDE Startup operações operações Definition “Venture” Proj. Ousar Project Evolução natural na estrutura organizacional e na governança structure Natural evolution of corporate governance and organizational Source: CCR
  • New Strategic Positioning • New CCR evolution phase imposes growth challenges towards 4 strategic paths: value creation in the current portfolio; value creation from new concessions in Brazil and new opportunities in existing contracts; value creation in operations abroad value creation from related businesses
  • Renato Vale Strategic Management CEO Vice – President Officer (*) Marcio Batista Marketing and Institutional Communication Relations Vice-Presidentefor Vice-President de Vice-President Marcio Batista Desenvolvimento Business Business Ítalo Roppa de Negócios Development (**) Management New Business CFO and IRO Planning and Corporate Legal Officer Officer Controlling Development Officer Officer Leonardo Vianna .. Massami Uyeda Ricardo Froes Francisco Mendes Antonio Linhares Other Businesses STP Engelog Concessionaires Actua CEO CEO and Officer CEO Same officer with a double role (*) working as a co-manager in the business strategic management Business Unit (**) Works with focus and responsibility in the development and conquering of businesses
  • Corporate Positioning: Focus on Growth • Leader in the toll road concessions industry in Latin America • Well positioned for a consolidation in the industry • Organizational structure is prepared for quality growth • Resilient to economic fluctuations • Strong cash flow generation • Committed controlling shareholders • Strong commitment to corporate governance standards • Well known in the market
  • Current Portfolio Overview
  • CEO CCR Business Management Process Organizational Leadership Marketing and Structure Institutional Communication Relations Vice-President Process Support Vice-President of Business Business Management Development New CFO and Planning and Corporate Legal Investor Businesses Controlling Development Officer Relations Officer Officer Officer Officer Other Businesses STP Engelog Concessionaires Actua Conquered CEO CEO CEO Officer
  • Concessionaires Role in the Business: • To integrate the many audiences involved in the business, becoming known by the clients and by all related audiences as the best option for transportation of people, assets and benefits generated. Strategy: • To provide security, comfort, fluidity and orientation by means of rendering standardized services to our users, as well as additional services to segments that are sufficiently wide and homogeneous, guaranteeing a favorable cost/benefit relation
  • CCR Concessionaires Limeira Campinas Buzios Apucarana Sorocaba S. José dos Campos Ponta Grossa Current Concessions
  • CCR System Toll Revenues Concessionaires 3Q05 AutoBAn - 317 km 40.4% (Apr / 2018) NovaDutra - 402 km 26.0% (Feb / 2021) ViaOeste - 162 km 17.3% (Apr / 2018) Rodonorte - 488 km 10.8% (Dec / 2021) Current Concessions Ponte - 23 km 3.8% (May / 2015) Via Lagos - 60 km 1.7% (Nov / 2021)
  • Concessionaires – Relevant Information • Roads Extension: 1,452 km • Toll payer vehicles volume: 743,910 vehicle equivalents/day • Number of users assisted Medical assistance: 108 assistances/day Mechanical assistance: 1.150 assistances/day • Death toll reduction: 50% (1st year x 2004) • Accidents reductions: 10% (1st year x 2004) • User satisfaction index (DATAFOLHA): 86% average approval • Job generation (direct + indirect): 10,440 jobs • Taxes paid: R$ 81.8 million / year • Number of bordering cities: 95 cities • Population in the bordering cities 36.4 million people • Region GDP (SP, RJ and PR states) 50% of Brazil’s GDP
  • Concessionaires – Relevant Information • Safer Roads: NovaDutra – 49.7% Death Toll Reduction 600 500 481 400 -49.7% 300 Total 239 annual 200 100 0 1997 1998 1999 2000 2001 2002 2003 2004
  • Concessionaires – Relevant Information • Safer Roads: AutoBAn - 56,6% Death toll decrease 21 19.8 19 Monthly average 17 - 56.6% 15 13 11 9 8.6 Obs. 7 1997 DERSA 5 + DER 1997 1998 1999 2000 2001 2002 2003 2004 2005
  • Concessionaires – Increasing value of current contracts • Reduction of escaping routes Identify and reduce the number of escaping routes from the toll plazas • Increase collecting toll base Broaden coverage areas, with more toll charging justice • Incorporation of adjacent sections Include in contract, sections/closer roads, which if isolated are not economically viable
  • Concessionaires – Increasing value of current contracts • Maximize other revenues Develop and broaden other revenues generation and/or related projects (e.g. weight control, advertisement spaces in domain areas) • To promote traffic Attract and ease the implementation of traffic generating poles in strategic position to the concessionaires • Migration to close/mixed system Reformulate roads to a closed/mixed toll collecting system, reducing escapes and maximizing the toll base
  • Engelog and Actua Business Role • ENGELOG: Add value to business, creating distinguished road engineering solutions • ACTUA: Add value to business, by creating distinguished administrative services.
  • Engelog and Actua Strategy • ENGELOG: Guarantee that services are rendered with standardized quality and with the best cost/benefit relation for CCR companies • ACTUA: Guarantee that services are rendered with patronized quality and with the best cost/benefit relation for CCR companies
  • Engelog and Actua – Growth Drivers • Management Quality Improvement: Results optimization Dissemination of best practices Concessionaires are able to focus in their own businesses • Allows more competitiveness • Ready for growth
  • ENGELOG – Operating Performance 450,000 Contracts 2004 x 2005 – up to 30/September 402,958 (R$ x 1.000 current) 400,000 350,000 300,000 250,000 216,568 2004 200,000 172,672 2005 150,000 89,380 95,186 78,622 85,451 100,000 35,855 37,481 50,000 12,711 12,168 - - AutoBan NovaDutra Rodonorte Viaoeste Ponte/Lagos Total AutoBan Rodonorte Ponte/Lagos
  • ENGELOG – Hired Companies 1,347 1,400 1,114 1,200 1,000 800 661 599 600 400 284 200 0 AutoBAn NovaDutra Ponte/Lagos Rodonorte Via Oeste
  • Summary – Current Businesses Overview • Current Porfolio Great investments made Track record of good results Rigorously following all contractual obligations High user satisfaction levels Recognition from different audiences • Potential contract growth • Potential increase in operation regions • Growth opportunities in related business (e.g. Advertisement)
  • New Businesses
  • CCR System Development and President Process Leadership Organizational Business Growth Structure Communication Institutional and Relations Marketing Business Development Operations Vice- Process Vice-President President Support New CFO and Control and Business Legal Officer Investor Businesses Planning Development Relations Officer Officer Officer Officer Other New STP Engelog Concessionaires Actua Businesses CEO CEO - Officer CEO
  • Strategic Position BRASIL – Road Concession • Main Market Maintain the leadership in road concessions Maintain high user satisfaction levels Maintain the recognition from the several audiences of the benefits generated • Strategic Attitude Focus and pro-activity in the development of qualified contracts
  • Strategic Position BRASIL – Road Concession • Main Opportunities Federal – 2nd Phase – approx. 3,059 Km Federal. – 3rd Phase – approx. 4,747 Km State of São Paulo– 2nd Phase (partial) – 495 km Porto Alegre Metropolitan Pole – 202 km Secondary Market • Expansion of the Road Concession Market in Brazil Urban Concessions:- Large Metropolis São Paulo’s Rodoanel Other State Programs PPP’s
  • CCR System
  • CCR Concessionaires – and Federal Program Programs Extension (km) 2nd phase - Federal 3,059 CCR’s Current Concessions 3rd phase - Federal 4,747 2nd Phase - Federal Porto Alegre’s Pole 202 3rd Phase - Federal Total 8,008 Source: DNER / ARTESP Porto Alegre’s Pole
  • CCR Concessionaires, 2nd phase program Limeira Campinas Sections Programs Extension S. José dos Campos SP (km) Sorocaba Section 01 Dom Pedro I 262.7 Section 02 A. Senna / C. Pinto 127.5 Section 03 Tamoios e Contornos 104.7 Total 494.9 Source: Transportation Secretary / SP
  • Strategic Position BRASIL – Related Businesses • Complementary Market Expand current expertise in highly attractive correlated business which complement CCR’s portfolio Be one of the major players in the market of related businesses Strategic Attitude Act as promoter of businesses by developing strategic partnerships • Main Opportunities ITV – Technical Vehicle Inspection TAG Additional Uses
  • Strategic Position LATIN AMERICA • Focus (short-term) Establish strong presence in Chilean and Mexican markets • Strategic Attitude Focus and pro-activity in the development of opportunities in primary and secondary markets
  • Strategic Position LATIN AMERICA • Main Opportunities Chile: Country with the greatest economic stability in Latin America Regulatory milestone and favorable government position - sharing risks and results EBITDA margins among 60% and 70% in road concessions Urban integrated concessions with 100% automatic toll collection. Traffic Law makes possible to implement the automatic toll collection
  • Strategic Position Chile (cont) Average GDP growth in the last 14 years = 6%, outlook for 5% growth for the next 5 years; Cargo transportation: 83% per road Fleet growth (+/- 80% of GDP in the last 15 years). Inflation under control, with average interest rate of 5% per year One of the 4 investment grade countries in the Americas Risk sharing / results Minimum revenue garanteed Superior revenue Variable term, preserving revenue’s NPV
  • Strategic Position LATIN AMERICA • Main Opportunities Mexico: Potencial to increase private concession penetration beyond the current 10% PPS Reprivatization of the concessions operated by public companies would represent annual revenues of US$2 billion One of the 4 investment grade countries in the Americas
  • Original Program’s Major Problems Main Points Consequences •Shorter concession period • High user rates, leading to the use Bidding as a selection criterion of the toll-free via Process • Very optmistic traffic estimates •Little technical rigor in of the grantor the definition of the executive project and • Construction cost higher than the estimates license obtainment • Delay in the acquisition of the road’s rights and environmental licenses The original compromise the beginning of model had a operations series of • Limited technical and • The control mechanisms necessary to technical Institutional Ambiente administrative experience guarantee the develoment of 50 and Environment institucional of the agencies responsible projects in the short-term were never management for the program appropriately implemented problems • Public agencies with worsened by defficient personnel • structure Use of short-term financing subject to the economic • Low liquidity in the capital economic fluctuations and political market scenario of the mid-90’s • Inflationary pressure • Debt servicing becomes unfeasible Source: SCT, Economic Crise • Sharp increase of the basic • Operating costs beyond what was World Crisis econômica interest rate to control planned Bank, inflation • Disproportionate rate increase Tem • Strong economic • Traffic much lower than expected analysis recession
  • New Concessions Program Main Points • SCT develops and provides a complete project Project Projeto • The project is revised before the bidding and may incorporate the participants’ comments and suggestions • SCT establishes an average maximum rate, which will be Rates Tarifas updated according to the inflation • Concessionaires may distribute rates the best possible way among classes, as long as the average is not higher than the maximum limit establish • Criteria to define the winner in the following order The new Bidding Critérios de concession – Lower demand for public funds criteria licitação program went – Lower construction costs through deep – Higher risk capital inflow changes to • Up to the maximum limit allowed by law: correct the Term Duração – Greenfield Projects – maximum of 30 years mistakes made – Brownfield Projects – maximum of 20 years Proposals lower • Technical/ economic issues are solved by a committee of than 15% of the Conflict Resolução Experts approved by both parties, in case there is no base budgets Solving de conflitos agreement, the parties may appeal to arbitration Source: SCT, • Since the beginning, projects receive finacing from the federal CCR checklist government, bank credit and risk capital Financing Financia- and team analysis mento – Minimum risk inflow of 25% of the total investment
  • Strategic Position NORTH AMERICA • Focus (medium term) Analyze the potential and attractiveness of USA and Canadian markets • Strategic Attitude Development of opportunities in primary and secondary markets
  • Strategic Position NORTH AMERICA • Recent Examples USA: Extensive road network and beginning of a trend towards private concessions, for example: Trans Texas Highway may represent an investment of more than US$ 130 billion in a 30-year period Chicago Skyway – privatization of the existing highway – winning offer US$ 1.8 billion Canada: Government trend towards expanding PPP projects, benefitting the public tender of road concessions ETR-407
  • Summary – New Businesses • Focus on markets with high qualified growth potential: Brazil: Toll Roads Concessions Related Businesses Chile and Mexico; Analisys of US and Canadian markets • Technical, commercial and financial qualification;
  • Financial Strategy
  • Long Term Financial Policy Goals: • maximize cash flows to shareholders (NPV dividends); • Maximize average cost of capital (optimal capital structure); • guarantee comfortable debt coverage ratios and credit quality
  • Long Term Financial Policy Main guidelines: • To finance growth, at first, by means of issuing new debt (Net Debt/EBITDA = 2.5X); • Re-leveraging of current concessions up to the maximum adequate level • Acquisitions made outside Brazil are preferably financed through the local markets (possibility to work in a higher leverage level); • Dividends policy: minimum payout of 50% • Hedge policy (up to 1 year protection)
  • New Projects financing • Modality: Project Finance; • Structure: 60% debt • 20% cash flow generation • 20% capital increase • Access to new long term credit lines; • Preferably in R$ • Correlation between costs and revenues
  • Past, Present and Future Historical consistency in delivering results and cost optimization… Before Reorganization Before Operating and Financial Reorganization EBITDA (R$mm) 310 59.71% 259 r owth DA G 55% EBIT 224 192% 216 218 55% 54% 55% 170 174 161 151 51% 52% 130 53% 128 122 44% 119 108 107 49% 47% 48% 47% 46% 3.2 46% 2.8 2.7 2.5 2.4 2.3 2.1 1.9 Net Debt / EBITDA 1.7 1.4 1.2 1.2 1.1 1.0 0.8 Interest Coverage 4.7 7.7 8.6 1Q02 2Q02 3Q02 4Q02 1Q03 2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05 2Q05 3Q05 … as well as a lower leverage ratio
  • Consolidated debt as of September 30 R$ 1,467.4 million: (in R$ MM) 12/31/01 12/31/02 12/31/03 12/31/04 09/30/05 Short Term 251.7 323.4 304.8 228.0 269.8 % Total 17.9% 21.4% 24.9% 20.1% 18.4% Long Term 1,153.7 1,185.1 919.6 907.8 1,197.6 % Total 82.1% 78.6% 75.1% 79.9% 81.6% Total Debt 1,405.5 1,508.5 1,224.5 1,135.8 1,467.5 In Reais 822.4 730.8 720.4 834.6 1,181.8 % Total 58.5% 48.4% 58.8% 73.5% 80.5% In Foreign Currency 583.0 777.7 504.1 301.2 285.6 % Total 41.5% 51.6% 41.2% 26.5% 19.5% Besides small, its mostly a long term debt
  • Debt repayment schedule 450 406 400 350 282 R$ (milhões) 300 242 246 R$ (million) 250 200 161 150 100 61 67 50 0 2005* 2006 2007 2008 2009 2010 After 2010 *Last quarter of 2005
  • Debt Gross Debt Net Debt 1,600 1,508 1,467 1,405 1,600 1,400 1,224 1,338 1,322 1,400 1,213.6 R$ (million) 1,200 1,136 1,127 R$ (million) 81% 1,200 1,000 1,000 3.03 73% 2.80 800 800 623 59% 59% 600 600 1.97 48% 1.20 400 400 200 0.82 200 0 0 2001 2002 2003 2004 9M05 2001 2002 2003 2004 9M05 Short Term Long Term In R$ Net Consolidated Debt Net Consolidated Debt / EBITDA-LTM
  • Source of Funding Other (102.8% CDI) BID e IFC (Libor + 4.5%) Debentures 13% (105% CDI) 19% 10% 22% 36% Debentures (IGP-M + 9.5% - 11%) BNDES (TJLP + 5.0%)
  • Net Income Evolution A Consequence of efficient management 400 348 300 263 32% 183 200 44% 100 0 (100) 2002 2002 2003 2004 9M05 (200) (120) ... a historical of growing results
  • Investment Analysis - General Overview 0 1 2 3 4 5 6 Analysis 7 8 Project Análise Context of the Hurdle Financial do Competiti Competiv Final Final Initial Preliminary and Scenario Funding impact of Board Analysis rate and impacto eness ve Recome recommen Decision Analysis parameters Definition analysis the new dation evaluation definition Economics do projeto analysis ndation project in Analysis na CCR CCR Initial Understandi Constructi Project Cost of Calculation Financial Analysis of Management Decision is analysis and ng of the on of Finance capital and impact the proposal, approved, elimination project alternate probability estimate, interpretatio study or Competitiv related to revised or of non- context and scenarios, analysis including n of the inclusion of eness commercial rejected attractive studies to using shareholder project the project environme conditions projects define the probability ’s spread indicators, in CCR nt and are taken to important and are portfolio recommen Board’s variables are definition of separated dation for decision carried out the considered improving strategic competitiv alignment eness
  • Requirement level can vary according to the risk of each project Adjustment can be positive or negative, but never higher than WACC Weighted Sharehol Portfolio Hurdle Project or TIR Cost of ders’ rate sharehol Spread adjustme Capital ders’ TIR (WACC/ Spread ts Ke)
  • EV/EBITDA* 14.3 • Abertis 14.3 13.8 • Brisa 13.5 10.8 • ASF 10.9 Despite the strong performance 10.2 CCR is traded with lower • Autostrade multiples, when compared to 9.9 European companies 7.2 • CCR 6.1 • 2005E * Analysts estimates median: Base date: 10/19/2005 • 2006E Source: Analyst research, team analysis
  • Concluding Focus: Keep on creating value to shareholders Keeping: • Tax discipline • Conservative profile • Dividend policy
  • Thank You!