History31872: The British company San Paulo Gas receivesauthorization to explore the concession of public services ofilumination in São Paulo;1912: The Canadian company Light assumes ownership;1959: The company is nationalized and renamed CompanhiaPaulista de Serviços de Gás (Comgás);1968: The joint-stock company is incorporated under the control of the city governmentand is named Comgás;1984: Comgás is taken over by Companhia Energética de São Paulo (CESP), the state-owned power utility;1996: The company goes public and is traded on the São Paulo Stock Exchange (Bovespa)beginning in 1997;1999: PRIVATIZATION: The consortium formed by British Gas and Shell obtain a controlling stake in Comgás;2010: Comgás is consolidated as Brazil’s largest natural gas distributor responsible for more than 30% of the sales ofnatural gas in the country;2011: Comgás reached customer 1,000,000.
A Comgás é uma Companhia Regulada ...Comgás Highlights4Premium asset locatedin a strategic concessionareaSubstantial growth in theresidential segmentDiversified client baseImpressive track record:Significant growth withprofibility and soundcapital structureSolid regulatory frameworkand transparent concessionschemeFavorable prospectsfor natural gas inBrazil
Comgás’ main shareholder is Integral Investments, in which BG Group and Shell Group hold 83.5% and16.5% of shares respectively:Comgás: uma combinação de competências e princípiosComgás: Combination of Strength and PrinciplesSHELL BRAZILHOLDING BV6.34%INTEGRALINVESTMENTS BV71.91%SHELL GAS BV16.49%BG SÃO PAULOINVESTMENTS BV83.51%OTHERS(free float)21.75%6Operating in Brazil since 1994:Operations in more than 20countries. Experience in Exploration& Production, Liquefied Natural Gas,Transmission & Distribution andPower Generation.Operating in Brazil since 1913:Experiencie in Distribution ofPetroleum Components, Operationsin the Gas Sector, Power &Exploration and Offshore Production.
Regulated framework7Note: With the opening trading, in 2011, the users with consumption over 300,000 m3/month are considered potentially free.Market CustomersResidential and Commercial(small volumes)Trading and distribution during the concession periodOther Markets Customers(large volumes)Trading up to 12 years (starting on contract subscriptiondate) and distribution for the entire concession periodProduction and Transportation:ANP (Federal Parts)..................Distribution:ARSESP (Government Parts)www.arsesp.sp.gov.brAs a public service provider, Comgás’ activitiesare regulated by ARSESP, a governmentinstitution of São Paulo State, which delegatedto Comgás a 30-year term, starting in May 1999for public service exploration with a one-timerenewal possibility for 20 more years.REGULATED PRICES AND TARIFFS RULES
Tariff Settlement Process8Maximum Margin Review•Considering the WACC overthe Regulatory Asset Base +Investments•Operational Costs•Depreciation•Sales VolumeMaximum Pre-definedTariffs(discounts may be applied)• Initial Tariff Structureincludes:Tariffs Readjustments•Annual Margin adjustmentby inflation index (IGPM)excluding the X Factor andthe K Factor:•Gas Costs pass through(comoddity & transport)every May 31st (oreventually before, asdefined by the regulator).In Tariff Reviews, The XFactor and The K Factorare also Defined• X Factor: Fixed efficiency factorto be considered in the PO annualupdate. In this 3rd tariff cycle, theX Factor was set at 0.82 per year.•K Factor: Adjustment factor thatcompensates deviations from themaximum margin earnedregarding the maximum marginpermitted. The K Factor was setat 0.006453 R$/m3 in the 2nd yearof the 3rd cycle.The Concession Agreement foresees tariff reviews every 5 yearsP gas + P transport +Maximum Margin Average (P0)= TariffP0 * (IGPM – X Factor) + K FactorTariff review for the 3rd Cycle (2009-2014):P0 established in 0.3052 R$/m3Commercialization Margin set at 1.9%
Firm GSA: The daily quantity of Bolivian gas contracted is 8.75 million m³/day. This quantity will reduce periodically until the volume of 8.10 million m3/day isreached in August 2012.Interruptible Agreement: The daily quantity contracted is of 4.27 million m³/day. This quantity will raise periodically until the volume of 5.22 million m³/dayis reached in August 2012.Firm Flexible Agreement: Under this type of agreement, Petrobras supplies natural gas or indemnifies clients for the additional costs incurred due to theconsumption of an alternative fuel. Petrobras may decide to interrupt gas supply, but without any risk of there not being an alternative fuel available forComgás clients. All financial impacts incurred to Comgás and to clients due to this sort of operation will be covered by Petrobras.Fornecimento de Gás Natural: CONTRATOSNatural Gas Supply: Contracts9
1999 2011 CAGR(1999 - 2011)R$ 341mm Net Revenue R$ 4,102mm 23%1.3 bi m3 Volume 4.8 bi m3 11%R$ 50mm CAPEX R$ 510mm 21%2,500 km Network 8,000 km 10%17 # Municipalities 70 12%314,034 # Meters 836,222 8%10Growth since Privatization
Industrial SegmentComgás 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 complexprocesses;Many advantages compared to other fuels:No storage requirementsEnvironmental issuesGuarantee of supplyLow operational costsGrowth Strategy:Maintain a strong consumer base with future growth in line with growth in GDP / industrialproductionApproach small and medium enterprises (SMEs) to anchor expansion projectsBring new industrial corporate clients into the concession areaDescription11
Residential SegmentKey growth strategy for Comgás:Geographic expansion, capturing the existing potential and maintaining the connection levelaround 100,000 clients per yearIncrease average unit consumption by optimizing and expanding customer baseHigh potential market, with growth driven by:New real estate developmentsGas conversions in residencesLarge customer base with more than 1 million residential clients;Alternative for LPG and electricityDescription12
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 ethanolStrong economic benefit for heavy usersComgás is currently working with the government to implement public policies that shouldbenefit the sector:Fiscal incentives (IPVA reduction)Public transportation policyGrowth Strategy:Project in development: use of NGV in public transportation and other heavy usersDescriptionNatural Gas Vehicle (NGV) Segment13
Other MarketsMore than 10.3 thousand clients;Focus on medium and large establishments;Growth platform integrated with the expansion ofthe residential segment;New applications have a high developmentpotential:Emerging market with high consumptionpotentialStructure dedicated in developing nonconventional application development:acclimatization, commercial cogenerationand generation during peak hoursCommercial Thermal Generation and CogenerationThermal Generation:Demand depends on the level of thermaldispatch (determined by the government)Back to back gas contractsCogeneration:Industrial strategic decision aimingefficiency and energy security in themedium and long termSustainable growth depends on firm gassupply and price visibility vis-a-viselectricityMarket with a high potential development14
16SegmentsVolume (in millions of m3)CAGR10.1%Industrial Segment: Diversified Portfolio (2011)1,676 2,243 2,952 3,418 3,812 4,342 4,761 5,069 5,253 4,261 4,910 4,835
17Financial Graphics (in millions of R$)NOTE: The Calculation of the CAGR is Based on the Use of Previous Accountability1.6762.2432.9523.4183.8124.3424.7615.0695.2534.2614.9104.7792000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011VolumeIFRSPrevious AccountabilityCAGR23.7%107 177347 330549668860 9251,0358389281,1071,3631,1827162000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011EBITDA
18Financial Graphics (in millions of R$)NOTE: The Calculation of the CAGR is Based on the Use of Previous Accountability1.6762.2432.9523.4183.8124.3424.7615.0695.2534.2614.9104.7792000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011VolumeIFRSPrevious AccountabilityIFRSPrevious AccountabilityCAGR24.2%107177347 3305496688609251.0358389281.1071.3631.1827162000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011LAJIDA
19Highlights – December 2011Record Expansion: More than 1.1 thousand kilometers of network installed during the period;Strong growth in Comgás client base, more than 69 thousand meters connected in 2011;Record investments of R$ 510 million during the year;R$ 450 million were declared throughout the year in the form of dividends and interest on equity;The rating agency, Moody’s, confirmed a Baa3 issuer rating in local currency on the global scale andAa1.br issuer rating on the national scale;Possibility of migration to Bovespas Novo Mercado, corporate governance highest, which wasannounced by the Company at the end of the year through a Relevant Fact;Extraordinary Readjustment: ARSESP (Regulatory Agency), readjusted Comgás’ tariff’s from 3.27% to11.20% according to the segment and consumed volume. There was no tariff readjustment forresidential costumers.
Operational Performance20 Continuous growth in the residential segment,more than 109 thousand householdersconnected this year; Bigger diversification of natural gas applicationsin the commercial segment (acclimitization); Sales volume reached an average distributionof 13 million m³/day; Total volume grew 3.8% without consideringthe thermal generation segment (back to backcontracts).3.8%2.1%Volume withoutThermal Generation(in millions of m3)4Q10 4Q11 2010 2011
25Financial Indicators10.4 10.4 11.5 10.4 11.51.2 1.3 4.3 2.0 4.81.5 1.3 1.0 1.5 1.03.9 2.2 1.3 2.6 1.10.2 0.2 0.3 0.2 0.30.6 0.7 0.7 0.6 0.722.0% 25.8% 35.5% 27.0% 37.1%3.3% 3.7% 12.1% 5.8% 14.2%10.9% 17.0% 25.6% 17.5% 28.9%3.3% 3.8% 13.2% 5.5% 15.1%11.3% 13.0% 37.0% 18.9% 42.1%Normalized by Current Account (unaudited figures)39.8% 40.3% 31.8% 39.6% 33.1%14.1% 12.0% 8.3% 12.9% 10.7%27.7% 30.8% 21.0% 29.3% 24.2%Equity per Share ($)Net Debt over Equity (x)2011 2010Net Margin (%)Current Ratio (x)EBITDA Margin (%)Net Debt over EBITDA (x)Earnings per Share ($)4Q11 3Q11Short Term Debt over Total Debt (x)EBITDA Margin (%)Gross Margin (%)Net Margin (%)4Q10Return on Equity (%)Return on Assets (%)Gross Margin (%)
26Regulatory Current Account Balance EvolutionBalance of Gas Recoverable/ To be Passed On: Cash-EffectR$million
Estrutura de EndividamentoDebt Structure27Debt (1)(R$ thousand) 2011 2010Debt Composition: Short Term/Long Term Debt Composition(1) Includes Debentures and Derivatives421513343168429Debt denominatedin foreign currency isfully hedged
InvestimentosMain Projects:EXTENSÃO DE REDE (Em Mil Km):TaubatéCampinasSão Bernardo do CampoGuarulhosSantosMogi das CruzesNew Projects:JundiaíSanto AndréPiracicabaHortolândiaInvestments28+16%NETWORK EXTENSIONS (In thousands of Km):R$ million +26%* Values are in IFRS since 2009Over R$ 4.0 billion invested during the period
29Shareholder Remuneration (in millions of R$)PAY OUTPreviousAccountingPAY OUT IFRSNOTE: Payout calculated based on remuneration declared by the Company during the period.11 1627 25303 330 334275 268427 4502001 2002 2003 2004 2005 2006 2007 2008 2009 2010 201117% 15%26%10%95%77% 75%53%73%104%92%74%190%
31The forward-looking statements in this report related tothe outlook for the business, estimated financial andoperating results and growth prospects of COMGAS aremerely projections and, as such, are based exclusively onmanagement expectations regarding future performance.These expectations depend substantially on marketconditions and the performance of the Brazilian economy,the business sector and the international markets, andare therefore subject to change without prior notice.
Investor Relationsinvestidores@comgas.com.brwww.comgas.com.br/en/investorsROBERTO LAGECFO andIROPAULO POLEZITreasury andInvestor RelationsRENATA OLIVAInvestor RelationsRua Olimpíadas, nº 205, 10º floor - Vila Olímpia - CEP 04551-000 / São Paulo - SP - Brazil32