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  • 1. INSTITUTIONAL PRESENTATION March, 2014
  • 2. 2 Agenda ►Financial Performance ►Portfolio Overview ►Value Creation ►Company Profile
  • 3. 3 ►Financial Performance ►Portfolio Overview ►Value Creation ►Company Profile Agenda
  • 4. 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 Sponsored 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$2.5 billion in 2013. • 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 • 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 PA MA CELPA • Distribution company in the State of Pará. • Annual gross revenues of R$3.4 billion in 2013.
  • 5. Aug. 2011 Equatorial acquires 51% of Sol Energias, energy trader CEMAR’s acquistion PCP Fund acquires a controlling stake of Equatorial Equatorial’s IPO Control concentrated in PCP Fund Incorporation of a controlling stake of Light Equatorial migrates to “Novo Mercado” Acquisition of 25% of Geramar FIP PCP sells its indirect stake in Light Equatorial’s Spin Off Equatorial’s History May. 2004 Mar. 2006 Abr. 2008 Out. 2008 Abr. 2010 Ago. 2011Apr. 2006 Dec. 2007 Feb. 2008 Abr. 2008 Oct. 2008 Dec. 2009 Apr. 2010 Aug. 2011 Feb. 2012 Equatorial acquires 50% of Vila Velha Termoelétricas, a pre-operational company Nov. 2012 Equatorial acquires 63.1% of CELPA, energy distributor company Dec. 2012 Equatorial’s Follow On
  • 6. 6 Ownership Structure – Current • Total no. of shares: • Share price**: • Free float: • ADTV90: 198,447,352 R$ 23.15 77.1% / R$3,540 MM R$ 13.119 MM **On 30/12/13 ADTV90 represents the average volume traded in the past 90 days
  • 7. 7 Corporate Strategy CEMAR Increased returns through outstanding financial and operating performance Consolidation of distributors in Brazil and Latin America Acquistion of full or shared control Added value through financial and operational restructuring, synergy gains and loss reduction Geramar and other investments in generation Brazil’s investment needs in generation over the next few years will create growth opportunities for Equatorial. Geramar thermal plants present an above average rate of return Celpa Increased returns through operational and financial turnaround strategy
  • 8. Felipe Borges Officer • Officer of Equatorial since January 2013. • Previously worked (2009-2012) at Banco Original Bank as Chief Legal Officer. From 1999 to 2011 worked at law offices such as Ulhôa Canto Advogados, from 2004 to 2007 at Mattos Filho Advogados and, from 2001 to 2003, at Velloza Advogados performing multiple functions. • Degree in Law at University of São Paulo (USP) and Master’s degree in Tax Law at PUC-SP since 2007. Management Management is composed by professionals with substantial experience in the financial, operational and regulatory areas Carlos Piani Chairman of the Board of Directors • 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 and President Management Program of Harvard Business School in 2008 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 Eduardo Haiama CFO & IRO Tinn Amado Regulatory Affairs Officer • 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). Luis Otávio Laydner Officer Augusto Miranda Officer • Officer of Equatorial since May 2013. • Previously worked (2010-2013) as a partner at Vinci Partners. From 2000 to 2009 he worked in the areas of analysis of companies and private equity of Banco Pactual (subsequently UBS Pactual), and between 1992-1999 served in the Planning and Finance Department of Esso Brasileira de Petróleo Ltda. • Officer of Equatorial since May 2013. • Experienced executive with over 20 years in the electricity sector. • Currently is CEMAR’Cs EO since April 2010. From 2007 to 2010 he was Vice President of Operations and previously was Engeneering Director at CEMAR since July 2004. Before joining CEMAR, he held various positions in management of power system maintenance in COELBA. • Is an electrical engineer graduated from the Federal University of Bahia, specialized in Maintenance Management promoted by Eletrobras in partnership with PUC/RJ and the Federal School of Engineering Itajubá/MG and an MBA in Management of Electric Energy Companies at FGV/SP.
  • 9. 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. 10 Agenda ►Financial Performance ►Portfolio Overview ►Value Creation ►Company Profile
  • 11. 11 Since 2004, Equatorial has been presenting an excellent financial performance. Net Operating Revenues R$ million EBITDA (R$ million) Financial Performance (*) As from 2010, all values are according to IFRS (**) In 2012, CELPA’s consolidation started as from November. 2004 2005 2006 2007 2008 2009 2010 (*) 2011 2012 2013 Net Revenue 526 629 810 879 2,346 2,506 1,799 1,981 2,987 4,715 EBITDA 85 189 341 379 784 757 510 504 567 586 % EBITDA 16% 30% 42% 43% 33% 30% 28% 25% 19% 12%
  • 12. 12 Distributions to Shareholders/Net Income R$ million Financial Performance * 2008 figure includes R$82 million in Capital Reduction 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Consolidated Dividends (R$ MM) - 54 108 151 284 51 197 50 37 18 CEMAR - 54 108 112 91 58 200 94 76 38 Light - - - 27 111 56 - - - - Capital Reduction (holding) - - - - 82 - - - - - Net Income (R$ MM) 123 229 119 153 300 207 189 160 141 69 CEMAR (31) 234 116 117 148 129 279 248 385 192 Celpa - - - - - - - - (160) (229) Geramar - - - - - - 6 11 18 - Equatorial Soluções - - - - - - - - 3 7 Light - - - - 130 79 - - - - The Consolidated dividends incorporate 100% of CEMAR 2004 2005 2006 2007 2008* 2009 2010 2011 2012 2013 Payout 0% 24% 90% 99% 95% 25% 104% 32% 26% 26% Dividend Yield N/A N/A 10% 13% 27% 3% 18% 4% 2% 0%
  • 13. 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, 96.2% Celpa). Light is no longer consolidated as from 2010. Geramar’s debt is no longer consolidated as from 2013.
  • 14. 14 Financial Performance made a longer debt amortization schedule possible… Debt Amortization Schedule - R$ MM Short Term 2015 2016 2017 2018 After 2018 Total CEMAR 165 489 201 183 211 443 1,692 Celpa 11 387 7 8 8 1,113 1,534 Total 176 876 208 191 219 1,556 3,226
  • 15. 15 Investments Investments - R$ MM and a significant increase in investments. 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 CEMAR 70 232 306 394 465 419 399 497 619 325 Celpa - - - - - - - - 42 421 Light - - - - 137 141 - - - - Geramar - - - - 24 107 16 0.4 0.4 0.1 Total 70 232 306 394 626 667 415 497 661 746
  • 16. 16 Agenda ►Financial Performance ►Portfolio Overview ►Value Creation ►Company Profile
  • 17. 17 CEMAR: Highlights MA Distribution company in the State of Maranhão 2.1 million clients (4th largest in the Northeast region)* Billed energy (4Q13): 1,440 GWh Annual gross revenues of R$ 2.5 billion in 2013. Energy Sales (4Q13) Clients (2013) 2.1 million 1,440 GWh *Source: ABRADEE RS SC PR SP MG GO MT AC AM RR RO BA PI MA PA AP TO CE RN PE AL SE MS RJ ES DF PB RS SC PR SP MG GO MT AC AM RR RO BA PI MA PA AP TO CE RN PE AL SE MS RJ ES DF PB 47.9% 22.2% 19.9% 9.9% Residential Industrial Commercial Others 89.1% 4.2%6.3% 0.4% Residential Industrial Commercial Others
  • 18. 18 CEMAR: History CEMAR under control of Equatorial 1958- Jun. 2000 Aug.2000- Aug.2002 Aug.2002-May 2004 May 2004- Present State owned CEMAR under PPL Global’s control ANEEL’s intervention CEMAR under control of Equatorial
  • 19. 19 CEMAR: Ownership Structure CEMAR OthersEquatorial EnergiaEletrobras 65.1% 1.3%33.6%
  • 20. 20 Tariff Review Results *All values are nominal and in R$ million. CEMAR 2005 2009 2013 Gross RAB 1,756 2,247 3,309 Net RAB 836 1,121 2,069 Operating Costs 218 278 428 Regulatory Depreciation 68 102 125 Regulatory EBITDA 157 271 216 CAIMI - - 45 Regulatory Losses (1 year) 28.0% 25.6% 19.6% Deliquency Rate 0.5% 0.9% 0.94% X Factor (ex-ante) 1.19% 1.06% 2.76%
  • 21. 21 CEMAR: Distribution • 2.1 million clients in 217 municipalities, covering the whole state of Maranhão (total area 333,000 km²) • Energy sales reached 5,288 GWh in 2013, 10.1% higher than in 2012. • In 4Q12, energy losses from the last 12 months represented 19.2% of required energy, 1.5 p.p. less than the 20.7% recorded in 4Q12. • Service quality has been presenting positive evolution. Since 2004, DEC and FEC indices have dropped 70.2% and 72.3%, respectively. • More than 324 thousand clients connected by the Light for All Program. 2004 2005 2006 2007 2008 2009 2010 (***) 2011 (***) 2012 2013 Energy Sold GWh 2,593 2,793 2,917 3,223 3,347 3,566 4,146 4,379 4,804 5,288 Net Revenues R$ MM 495 665 810 879 999 1,148 1,756 1,912 2,348 1,969 PMSO R$ MM 127 126 129 126 139 171 245 291 321 367 PDA + Contingencies R$ MM 47 20 14 30 32 33 68 46 69 59 Net Income R$ MM (31) 359 177 222 227 198 279 248 385 192 Dividends R$ MM - 85 165 172 140 58 200 94 76 38 Net Debt / EBITDA times 3.9 1.6 0.8 1.1 1.6 1.6 1.5 1.9 2.1 1.8 Clients '000 1,161 1,254 1,349 1,438 1,535 1,688 1,822 1,939 2,037 2,126 PMSO/Client R$/Client 109 101 95 88 90 101 134 150 158 173 DEC (*) Hours/Year/Client 63.4 54.6 42.6 28.7 27.3 23.6 21.8 21.4 21.7 18.9 FEC (*) Times/Year/Client 39.3 32.9 24.6 19.8 16.8 15.2 14.1 11.6 11.0 10.9 Total Losses (*) % 29.9% 29.5% 29.8% 28.7% 28.9% 25.2% 22.0% 21.0% 20.7% 19.2% CAPEX R$ MM 45 103 137 199 278 239 197 322 441 296 PLPT (**) R$ MM 25 129 169 195 187 180 202 175 178 29 (*) Last 12 months (**) Light For All Program (***) Values according to IFRS
  • 22. 22 CEMAR: Energy Losses The non-technical losses index on the low-voltage market increased in the quarter due to the revision of the technical losses index of the Company. Note that this does not impact the percentage of total losses.
  • 23. 23 Celpa: Highlights Distribution company in the State of Pará 2.0 million clients Billed energy (4Q13): 1,985 GWh Annual gross revenues of R$ 3.4 billion in 2013. Energy Sales (4Q13) Clients (2013) 2.0 million 1,985 GWh RS SC PR SP MG GO MT AC AM RR RO BA PI MA PA AP TO CE RN PE AL SE MS RJ ES DF PB RS SC PR SP MG GO MT AC AM RR RO BA PI MA PA AP TO CE RN PE AL SE MS RJ ES DF PB PA PA 85.4% 6.9% 7.6% 0.2% Residential Industrial Commercial Others 40.0% 17.3% 23.5% 19.2% Residential Industrial Commercial Others
  • 24. 24 Celpa: History Celpa under Equatorial’s control 1962-Jul.1998 Jul.1998- Oct.2012 Nov.2012- Present State owned Celpa under Grupo Rede’s control Celpa’s Judicial Recovery Filing Feb. 2012
  • 25. 25 Celpa: Ownership Structure CELPA Others Equatorial Energia 3.8%96.2%
  • 26. 26 Tariff Review Results All values are nominal and in R$ million. CELPA 2011 Gross RAB 2,338 Net RAB 1,472 Operating Costs (starting point) 429 Operating Costs (upper limit) 352 Regulatory Depreciation 95 Regulatory EBITDA 253 Deliquency Rate (% GOR) 1.0% X Factor (ex-ante) 2.42% Regulatory Losses* 41.55% - 34.00% * Non-technical over low-voltage market
  • 27. 27 • 2.0 million clients in 144 municipalities, covering the whole state of Pará (total area 1,247,955 km²) • Energy sales reached 7,250 GWh in 2013, 13.6% higher than 2012’s figures. • In 4Q13, energy losses from the last 12 months represented 35.5% of required energy, 0.5 p.p. more than the 35.0% recorded in 4Q12. • In 4Q13, DEC and FEC for Celpa (accumulated over the last 12 mo nths) were 73.5 hours, down 27.7%, and 38.0 times, a 25.3% decrease when compared to indices observed at the end of 4Q12. • More than 344 thousand clients connected through the Light for All Program. CELPA: Distribution 2011 2012 2013 Energy Sold GWh 6,288 6,383 7,250 Net Revenues R$ MM 2,434 2,350 2,495 Manageable Costs (*) R$ MM 525 1,069 769 Non-Manageable Costs R$ MM 965 1,233 1,049 EBITDA R$ MM 256 (355) 113 Net Income R$ MM (391) (697) (229) Net Debt R$ MM 1,552 1,219 961 Net Debt / EBITDA times 6.1 N/A 8.5 Clients '000 1,836 1,931 2,031 EBITDA/Client R$/Client 139 N/A 56 DEC (**) Hours/Year/Clients 99.7 101.6 73.5 FEC (**) Hours/Year/Clients 55.9 50.9 38.0 Total Losses (**) % 31.6% 35.0% 35.5% CAPEX R$ MM 487 433 361 PLPT (***) R$ MM 165 46 61 (*) Includes Construction Costs/Revenues (**) Last 12 months (***) Light For All Program All values are in accordance with IFRS
  • 28. 28 Celpa: Energy Losses
  • 29. 102 73 72 64 55 42 40 39 39 31 30 30 29 28 27 24 23 22 22 22 21 19 18 14 12 12 9 CELPA 2012 CELPA 2013 ELETROACRE CEMAR 2004 CEMAR 2005 CEMAR 2006 CELG CERON CELTINS CEAL CEMAT CEPISA CEMAR 2007 CHESP CEMAR 2008 CEMAR 2009 COELBA CELPE CEMAR 2010 CEMAR 2012 CEMAR 2011 CEMAR 2013 CEB COSERN ENERSUL SULGIPE COELCE DEC (hours) 51 47 39 38 37 33 32 26 25 23 23 20 18 17 16 16 15 14 12 11 11 9 9 9 8 8 5 CELPA 2012 ELETROACRE CEMAR 2004 CELPA 2013 CHESP CEMAR 2005 CERON CELG CEMAR 2006 CEMAT CEPISA CEMAR 2007 CELTINS CEMAR 2008 CEAL CEB CEMAR 2009 CEMAR 2010 CEMAR 2011 CEMAR 2012 CEMAR 2013 SULGIPE COELBA COSERN CELPE ENERSUL COELCE FEC (times) 29 CEMAR and CELPA: DEC/FEC 2013 Evolution Comparison BETTER
  • 30. 30 Geramar: Ownership Structure GNP Geramar Ligna 50% 25% Servtech Equatorial Energia Fundo de Investimento em Participações Brasil 50% 25%50%
  • 31. 31 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.
  • 32. 32 Agenda ►Financial Performance ►Portfolio Overview ►Value Creation ►Company Profile
  • 33. 33 Financial strength and solid management team with turnaround experience Growth prospects and consolidation opportunities Result-oriented management model High level of Corporate Governance Agenda
  • 34. 34 Firmino Sampaio CEO Eduardo Haiama CFO and IRO Thomas Newlands Investor Relations Renato Parentoni Investor Relations Phone 1: 55 21 3206-6635 Phone 2: 55 21 3206-6607 E-mail: ir@equatorialenergia.com.br Website: http://www.equatorialenergia.com.br/ir Contacts
  • 35. 35 ► 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