Institutional presentation 2 q13

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Institutional presentation 2 q13

  1. 1. 1 INSTITUTIONAL PRESENTATION Financial and Operational Results June 30th, 2013
  2. 2. Disclaimer The statements contained in this report regarding the outlook on business, estimations on financial and operational results and growth prospects for COMGÁS are merely estimations and, as such, are based exclusively on management expectations regarding future events and tendencies, that affect or may affect the business. These estimations are subject to many risks and uncertainties and are made considering the information currently available, and depend, substancially on market conditions, the Brazilian economys performance, the business sector and international markets, and are therefore subject to change without pior notice. Because of these uncertainties, the investor should not make any investment decisions based on these estimations and declarations on future operations.
  3. 3. Company Overview
  4. 4. 4 History The Company’s Course– Over 100 years of history The British company San Paulo Gas receives authorization to explore the concession of public services of ilumination in São Paulo; Cosan aquires 60.1% of Comgás’ social capital from British Gas (BG) 2012 2011 Comgás reached customer 1,000,000; 1996 The company goes public and is traded on the São Paulo Stock Exchange (Bovespa) beginning in 1997; 1959 The company is nationalized and renamed Companhia Paulista de Serviços de Gás (Comgás); 1872 1912 The Canadian company Light assumes ownership; 1999 Privatization: The consortium formed by British Gas and Shell obtain a controlling stake in Comgás; Comgás is consolidated as Brazil’s largest natural gas distributor responsible for more than 30% of the sales of natural gas in the country; 2010
  5. 5. Regulada ... 5 Comgás’ Highlights Diversified client base Impressive track record: Significant growth with profibility and sound capital structure Solid regulatory framework and transparent concession scheme Favorable prospects for natural gas in Brazil Premium asset located in a strategic concession area Substantial growth in the residential segment
  6. 6. 314,034 899,789 1999 2012 #Meters 17 71 1999 2012 #Municipalities 2,500 9,308 1999 2012 Network 1.3 5.3 1999 2012 Volumebi m³ 341 5,280 1999 2012 Net RevenueR$ mm 6 Growth since Privatization 50 616 1999 2012 CAPEX R$ mm
  7. 7. Comgás: uma combinação de competências e princípios 7 Note: On November 5th, 2012, Cosan concluded the acquisition of a 60,05% of participation in Comgás from the BG Group for the sum amount of R$ 3.4 billion. Comgás’ Shareholder Structure Current Shareholder Structure Listing of Comgás’ shares in the Stock Exchange: As inserted in the Edict of Privatisation and reflected in the Company’s Bylaws, Comgás is a publicly traded company with its shares negotiated in the Stock Exchange, condition which must be maintained during the entire concession period. SHELL BRAZIL HOLDING BV 6.34% INTEGRAL INVESTMENTS BV 11.86% SHELL GAS BV 100% OTHER SHAREHOLDERS (free float) 21.75%60.05%
  8. 8. 177 Cities 27% of Brazil’s GDP Área de concessão Segments (June 2013)  Residential: 1,262 thousand householders  Commercial: 11.8 thousand meters  Industrial: 1,012 meters  Cogeneration : 25 meters  Thermal Generation : 2 plants  NGV: 311 gas stations Gas Brasiliano PresidentePresidente PrudentePrudente AraçatubaAraçatuba S.J. RioS.J. RioPretoPreto MaríliaMarília BauruBauru CentralCentral (Araraquara)(Araraquara) RibeirãoRibeirãoPretoPreto FrancaFrancaBarretosBarretos Natural Gas SPS RegistroRegistro SorocabaSorocaba COMGÁS 8 Concession Area Advantages  Pipeline intersection (GASBOL, GASAN, GASPAL)  Short distance to supply (Santos Basin)  High demographic density Population 29.6 Mi Homes 9.2 Mi Vehicles 10.0 Mi POTENTIAL (approximate data) Concession Area
  9. 9. 9 Note: With the opening trading, in 2011, the users with consumption over 300,000 m3/month are considered potentially free. Market Customers Residential and Commercial (small volumes) Trading and distribution during the concession period Other Markets Customers (large volumes) Trading up to 12 years (starting on contract subscription date) and distribution for the entire concession period Production and Transportation: ANP (Federal Parts) .................. Distribution: ARSESP (Government Parts) www.arsesp.sp.gov.br As a public service provider, Comgás’ activities are regulated by ARSESP, a government institution of São Paulo State, which delegated to Comgás a 30-year term, starting in May 1999 for public service exploration with a one- time renewal possibility for 20 more years. REGULATED PRICES AND TARIFFS RULES Regulated Framework Comgás is a Regulated Company
  10. 10. The Concession Agreement forcees tariff reviews every 5 years 10 Maximum Margin Review •Considering the WACC over the Regulatory Asset Base + Investments •Operational Costs •Depreciation •Sales Volume Maximum Pre- defined Tariffs (discounts may be applied) •Initial Tariff Structure includes: Tariffs Readjustments • Annual Margin adjustment by inflation index (IGPM) excluding the X Factor and the K Factor: • Gas Costs pass through (comoddity & transport) every May 31st (or eventually before, as defined by the regulator). In Tariff Reviews, The X Factor and The K Factor are also Defined • X Factor: Fixed efficiency factor to be considered in the PO annual update. In this 3rd tariff cycle, the X Factor was set at 0.82% per year. • K Factor: Adjustment factor that compensates deviations from the maximum margin earned regarding the maximum margin permitted. The K Factor was set at 0.009991 R$/m3 in the 4th year of the 3rd cycle. P gas + P transport + Maximum Margin Average (P0) = Tariff P0 * (IGPM – X Factor) + K Factor Tariff review for the 3rd Cycle (2009-2014): P0 established in 0.3052 R$/m3 Commercialization Margin set at 1.9% = + + Tariff Settlement Process
  11. 11. Santos Basin Pre-Salt Current Expansion Comgás’ Concession Area Expansion activities simultaneously progressing in the cities inside the concession area  Targets for 2009-2014 period:  5,000km of network to be established  282km of network renewal  500k+ clients to be connected  15 working fronts simultaneously  1,000 direct employees and more than 4,000 indirect working on the expansion  Aims for excellence in operational safety and integrity of the distribution network  Extensive field analysis and selection of the best opportunities considering:  Distance from existing network  Demographic density  Economic profile and propensity for consumption  Perspective of future development  Potential for integration of various market segments 11 Business Plan Geographic Expansion
  12. 12. 67% 6% 4% 4% 2% 17% 60% 2% 28% 8% 2% 2Q12 2Q13 +6% 12 Volume in million of m3 1,348 1,431 423.6 mi R$ 1.4 bi m³ Margin Volume 72,0% 6,8% 5,2% 3,8% 2,1% 10,0% Industrial Cogeneration NGV Residential Commercial Thermal Generation
  13. 13. 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Industrial Segment: Sector Composition CAGR (00-12) 10.0% 1,676 2,243 2,952 3,418 3,812 4,342 4,761 5,069 4,261 5,253 5,259 4,8354,910 +8.8% 13 Volume in million of m3 72,0% 6,8% 5,2% 3,8% 2,1% 10,0% Industrial Cogeneration NGV Residential Commercial Thermal Generation 22.7% 19.0% 14.4% 12.3% 10.1% 7.6% 6.4% 3.4% 2.2% 1.0% 0.7% 0.2% CHEMICAL / PETROCHEMICAL CERAMICS PAPER AND CELLULOSE METALS / FOUNDRY AND NON FERROUS GLASS / CRYSTALS DRINKS / FOOD AUTOMOTIVE / PNEUMATIC TEXTILE / LAUNDRY / DRY CLEANING OTHERS STEEL SECTOR PHARMACEUTICAL ELECTRO / ELECTRONIC
  14. 14. Fornecimento de Gás Natural: CONTRATOS 14 Daily quantity contracted: approximately 13.3 millions of m³/day, besides auction contracts. Daily quantity demanded: approximately 12.9 millions of m³. Contracts Natural Gas Supply Contract TCQ Firm Auction UTE - Fernando Gasparian Corn GBD (Tambaú) Model Firm Firme Firme Curto Prazo Back to Back Back to Back Firme Gas Source Bolivian National Surplus of PB's contracts with other distributors / thermal power plants Undetermined Undetermined Undetermined End of Contract jul/19 dec/13 sep/13 dec/13 mar/23 nov/13 Transportation: anual readjustment according to american inflation: CPI Fixed Charge: anual readjustment by IGP-M Commodity: quarterly correction based on Oil Basket + Exchange Rate Variable Charge: quarterly correction based on Oil Basket Commodity + Transportation: monthly correction according to the American dollar 1.5 MMm³/month ARSESP OrdinancePrice Commodity + Transporte Fixed Charge + Variable Charge According to bid made by the Auction Winner PPI + IGPM and exchange variation according to the American dollar Commodity + Transportation ( PPI + exchange variation according to the American dollar) DQC 8.10 MMm³/day 5.22 MMm3 /day according to bids 2.76 MMm3 /day 0.3 MM m³/day
  15. 15.  Key growth strategy for Comgás:  Geographic expansion, capturing the existing potential and connecting around 100.000 clients per year  Increase average unit consumption by optimizing and expanding customer base  High potential market, with growth driven by:  New real estate developments  Gas conversions in built residences  Large customer base with more than 1 million residential clients  Alternative for LPG and electricity Concession Area Potential(1) 15 + 47 thousand new buildings (launches/developments) to be captured Residential Description Note(1): MM of households Casas 7.5 Apart. 1.7 31.2% 65.5% 3.3% 87.8% 10.9% 1.3% customers to be captured market to be studied already connected to NG
  16. 16. 16 Industrial Description Comgás is present in all of the relevant industries in the concession area; A diversified customer base with more than 1,000 corporate clients; A multi-use product: from the production of heat and low-pressure steam to more complex processes; Many advantages compared to other fuels:  No storage requirements  Environmental issues  Guarantee of supply  Low operational costs Growth Strategy:  Maintain a strong consumer base with future growth in line with growth in GDP / industrial production  Approach small and medium enterprises (SMEs) to anchor expansion projects  Bring new industrial corporate clients into the concession area
  17. 17. Natural gas vehicle (NGV) may be used as fuel for both individual and mass transportation; Stands out for savings and environmental benefits:  Currently, it is more cost competitive than gasoline and ethanol  Strong economic benefit for heavy users Comgás is currently working with the government to implement public policies that should benefit the sector:  Fiscal incentives (IPVA reduction)  Public transportation policy Growth Strategy:  Project in development: use of NGV in public transportation and other heavy users 17 Natural Gas Vehicle- NGV Description
  18. 18. Over 11.1 thousand clients; Focus on medium and large establishments; Growth platform integrated with the expansion of the residential segment; New applications have a high development potential:  Emerging market with high consumption potential  Structure dedicated in developing non conventional application development: acclimatization, commercial cogeneration and generation during peak hours 18 Commercial Description
  19. 19. Cogeneration: Industrial strategic decision aiming efficiency and energy security in the medium and long term Sustainable growth depends on firm gas supply and price visibility vis-a-vis electricity Market with a high potential development Thermal Generation: Demand depends on the level of thermal dispatch (determined by the government) Back to back gas contracts 19 Cogeneration and Thermal Generation Description
  20. 20. Financial and Operational Highlights
  21. 21. 21 Highlights 2Q13  EBITDA of R$ 380mm during 2Q13, 123% above that of 2Q12, with an impact of R$ 65mm due to the sale of Mooca’s former operational site;  R$ 30mm growth in the current account balance, due to the appreciation of the dollar compared to the real;  10% growth of the total number of clients compared to June 2012;  Growth of 50% in investments compared to 2Q12, totaling R$ 220mm during the quarter;  Construction of 380 km of network extension during the quarter, 30% above that of 2Q12.
  22. 22. Meters 22 Total per Segment *UDA’s (Unidade Domiciliar Autônoma) 916,418 897,974 855,988 2.1% 7.1% 1,261,587 1,229,713 1,147,384 2.6% 10.0% 11,778 11,435 10,855 3.0% 8.5% 1,012 1,011 1,006 0.1% 0.6% 2 2 2 0.0% 0.0% 25 25 23 0.0% 8.7% 311 318 338 -2.2% -8.0% 929,546 910,765 868,212 2.1% 7.1% 1,274,715 1,242,504 1,159,608 2.6% 9.9% COMMERCIAL AUTOMOTIVE TOTAL METERS TOTAL CUSTOMERS INDUSTRIAL THERMAL GENERATION COGENERATION jun/13 mar/13 jun/12 RESIDENTIAL NUMBER OF UDA's* jun/13 X mar/13 jun/13 X jun/12
  23. 23. 23 Volume per Segment in thousands of m3 *Excluding Thermal Generation 58,729 41,815 50,732 40.4% 15.8% 100,544 91,614 9.7% 30,142 25,793 27,899 16.9% 8.0% 55,935 54,095 3.4% 958,996 928,145 946,683 3.3% 1.3% 1,887,141 1,881,221 0.3% 85,401 82,659 89,712 3.3% -4.8% 168,060 175,746 -4.4% 63,135 59,961 70,290 5.3% -10.2% 123,096 137,969 -10.8% 1,196,403 1,138,373 1,185,316 5.1% 0.9% 2,334,776 2,340,645 -0.25% 13.1 12.6 13.0 12.9 12.9 1,431,346 1,367,015 1,347,966 4.7% 6.2% 2,798,361 2,535,513 10.37% THERMAL GENERATION TOTAL AUTOMOTIVE TOTAL MMm³/day 2Q12 228,642 162,650 2Q13 1Q13 234,943 2Q13 x 1Q13 2Q13 x 2Q12 2.8% 44.4% INDUSTRIAL COGENERATION RESIDENTIAL COMMERCIAL 1S13 1S12 1S13 x 1S12 463,585 194,868 137.9%
  24. 24. 170 314 380 2Q12 1Q13 2Q13 140 92 188 2Q12 1Q13 2Q13 319 262 396 2Q12 1Q13 2Q13 38 122 168 2Q12 1Q13 2Q13 21% 123% 342% +24% +34% EBITDA in million of R$ Normalized IFRS Net Income Financial Performance 24 +51% +104% +38%
  25. 25. 25 Financial Performance in thousand of R$ 1,605,652 1,447,744 1,278,522 10.9% 25.6% 3,053,396 2,398,878 27.3% -1,179,424 -1,032,376 -1,007,191 14.2% 17.1% -2,211,800 -1,808,606 22.3% 426,228 415,368 271,331 2.6% 57.1% 841,596 590,272 42.6% -106,794 -99,656 -99,929 7.2% 6.9% -206,450 -194,178 6.3% 60,167 -1,358 -1,197 -4530.6% -5126.5% 58,809 -5,713 -1129.4% 379,601 314,354 170,205 20.8% 123.0% 693,955 390,381 77.8% -81,145 -79,702 -72,153 1.8% 12.5% -160,847 -139,277 15.5% -44,014 -50,023 -47,632 -12.0% -7.6% -94,037 -87,381 7.6% 254,442 184,629 50,420 37.8% 404.6% 439,071 163,723 168.2% 167,850 121,591 37,689 38.0% 345.4% 289,441 112,198 158.0% Normalized by Current Account (unaudited figures) 29,377 -46,420 155,369 -163.3% -81.1% -17,043 209,285 -108.1% 396,165 262,013 318,874 51.2% 24.2% 658,179 587,609 12.0% 188,178 91,893 140,216 104.8% 34.2% 280,071 250,293 11.9% CURRENT ACCOUNT EBITDA NET INCOME Cost of Assets and / or Services Rendered GROSS REVENUE Expenditures with Sales, General and Adm. Other Operational Results EBITDA Depreciation and Amortization Financial Results OPERATIONAL RESULT NET SALES 1S13 1S12 NET INCOME 1S13 x 1S122Q13 1Q13 2Q12 2Q13 x 2Q122Q13 x 1Q13
  26. 26. 26 Financial Indicators Annualized figures 20.55 19.15 11.32 20.55 11.32 2.80 2.03 0.63 4.83 1.87 0.89 0.99 1.53 0.89 1.53 1.44 1.81 3.05 0.79 1.33 0.38 0.40 0.37 0.38 0.37 0.73 0.68 0.56 0.73 0.56 26.5% 28.7% 21.2% 27.6% 24.6% 23.6% 21.7% 13.3% 22.7% 16.3% 10.5% 8.4% 2.9% 9.5% 4.7% 5.1% 3.9% 1.6% 8.8% 4.7% 13.6% 10.6% 5.6% 23.5% 16.5% Normalized by Current Account (unaudited figures) 30.9% 27.6% 35.9% 29.3% 35.6%0 27.7% 19.9% 27.1% 24.0% 26.5%0 13.1% 7.0% 11.9% 10.2% 11.3% 2Q13 Return on Equity (%) Gross Revenue (%) EBITDA Margin (%) Net Margin (%) Equity per share ($) Earnings per share ($) Net Debt over Equity (x) Net Debt over EBITDA (x) Short Term Debt over Total Debt (x) Current Ratio (x) 1Q13 2Q12 1S13 1S12 Gross Revenue (%) EBITDA Margin (%) Net Margin (%) Return on Assets (%)
  27. 27. -230 -198 -128 -5 150 204 360 362 381 334 364 dec.10 mar.11 jun.11 sep.11 dec.11 mar-12 jun.12 sep.12 dec.12 mar.13 jun.13 27 Current Account in million of R$ (2Q12) = +156 (2Q13) = +30
  28. 28. Debt Structure 709 201 197 204 91 214 258 73 103 102 184 212 2013 2014 2015 2016 2017 2018 forward Local Currency ForeignCurrency in thousands of R$ Debt Amortization Schedule (R$ mm) Debt Composition – Jun/13 *EBITDA considering the last 12 months Short Term 38%Long Term 62% EIB 22% BNDES 42% Others 36% 274 300 306 275 426 967 Debt jun/13 jun/12 Short Term Debt 967,040 803,541 Long Term Debt 1,581,266 1,350,924 Total Debt 2,548,306 2,154,465 (-) Cash 359,285 79,543 (=) Net Debt 2,189,021 2,074,921 EBITDA(*) 1,268,229 693,207 Net Debt/ EBITDA 1.73 2.99 Short Term Debt / Total Debt 0.38 0.37
  29. 29. Investments in million of R$ 29 Network Extension (in thousands of km) Projects Network Taubaté 44 Km Osasco 2 31 Km Hortolândia, Monte Mor & Capivari 30 Km São João da Boa Vista 25 Km Piracicaba 19 Km RETAP (Aço) 16 Km Rio Claro 9 Km 293 380 555 680 jun/12 jun/13 +30% 2Q 2Q 147 220 268 394 jun/12 jun/13 +50% 2Q 2Q
  30. 30. 2.6 2.9 3.3 3.6 3.9 4.5 4.9 5.1 5.7 6.2 6.9 8.0 9.3 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 100 229 200 230 276 474 426 397 403 406 405 510 616 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Investimentos Main Projects:Network Extension (in thousand of km): Mogi das Cruzes Taubaté Osasco II Guarulhos São José dos Campos Itaquera São Bernardo do Campo Rio Claro Jabaquara II Hortolândia Campinas II Piracicaba New Projects: SJBV / Aguaí Taboão da Serra Santo André Santos Noroeste 30 71 municipalities connected Investments in million of R$ +21%
  31. 31. 31 PAY OUT Previous Accountability PAY OUT IFRS Shareholder Remuneration in million of R$ Nota: Payout calculated based on remuneration deliberated by the Company during the period 11 16 27 25 303 330 334 275 268 427 450 200 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 17% 15% 26% 10% 95% 77% 75% 53% 73% 105% 92% 38% 74% 190% 55%
  32. 32. 32 Market Performance (Jan – Jun 2013) 0 50000 100000 150000 200000 250000 0 20 40 60 80 100 120 Volume CGAS5 IBOV CGAS5 Dec 12 = R$ 58.50 Jun 13 = R$ 48.47 Var = -17.15% IBOV Dec 12 = 60,952 Jun 13 = 47,457 Var = -22.14% Base 100 Vol CGAS5 (R$ thousand)
  33. 33. INVESTOR RELATIONS investidores@comgas.com.br ri.comgas.com.br ROBERTO LAGE CFO and IRO ANDRÉ SALGUEIRO Investor Relations Rua Olimpíadas, nº 205, 10º floor - Vila Olímpia - CEP 04551-000 / São Paulo - SP - Brazil 33

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