EDP Energias do Brasil S A : Institutional Presentation - September 2020

EDP Group

EDP Group

51.2%

Stake in EDP Brasil

EDP Brasil

EDP Brazil	48.8%
	Free Float +
	Treasury stocks

Leading the		Accelerated growth and focused
	Continuous portfolio optimization
energy transition
	Solid balance sheet and low-risk profile
to create
	Efficient and digital
superior value
	Attractive shareholder remuneration

2022

Market Cap¹

R$ 11.3 bi

Market Cap

R$ 3.0 bi

2005

¹ Share price on August 31, 2020 (R$ 18.69) / ²Presented at the Strategic Update on March 12, 2019

2

Generation	Transmission
2.2 GW	1,441 Km
Hydro Generation	316 km in operation
0.7 GW	1,125 km under
construction
Thermal Generation

Distribution Final

Consumer

3 states (SP, ES, SC)

25.6 TWh/year

distributed energy (SP+ ES)

3.5 million clients (SP+ ES)

28.77% stake

in an integrated asset (Celesc)

Commercialization

14.1	+ 350
TWh/year
clients
of traded
energy
B2B
and B2C

Services Energy Efficiency

Innovation

Center for	Electric	EDP Ventures
Excellence in
Mobility
Robotization
R$ 50 million
	R$ 30 million
	through R&D	in start-ups

Solar PV

37 MWp

Contracted

projects

3

•	Solar PV	Pioneering in
•	Electric Mobility	Innovation
•	Exponential Technologies	R&D

• Smart Grids

•	Transmission	Strategic regions - South and Southeast
•	Distribution	Higher income per capita
•	Commercialization	Market growth
		Favorable macroeconomic conditions

•	Hydro	Long-term agreements		Fixed Revenues
•	Thermal
Indexed to inflation		Hydrological risk mitigation
•	Distribution

4

• Value added in the cycle
• Benchmark in asset management
• Benchmark in losses reduction

• Economies of scope
• Distinctive management model
• Benchmark in execution

• Benchmark in operations
• Turnaround at Pecém
• Effective mitigation of the hydrological risk

Profitable contracted	Robust portfolio of	Benchmark in efficiency	Financial function as
factor of value
growth options	and digital
growth	aggregation

5

• Value added in the cycle
• Benchmark in asset management
• Benchmark in losses reduction

• Economies of scope
• Distinctive management model
• Benchmark in execution

• Benchmark in operations
• Turnaround at Pecém
• Effective mitigation of the hydrological risk

Profitable contracted	Robust portfolio of	Benchmark in efficiency	Financial function as
factor of value
growth options	and digital
growth	aggregation

6

1

Capital

Remuneration

Regulatory Reint.

Quota

• Invest. in the period: R$ 1.8 bi
•	2X RRQ
• Growth of Net RAB: + 36%
•	Gains in EBITDA
• Greater efficiency in costs vs

2	Compared to the
ANEEL benchmark

3

	the Regulatory target
•	Gains in EBITDA
• Growth in volume of
	distributed energy
•	Gains in EBITDA

7

(R$ million)			2,423	~2x
		1,667		Capex/
	1,544		RRQ¹
1,221			1,029
480	543	671

2nd PTRC	3rd PTRC	4th PTRC	5th PTRC	Next
2007	2011	2015	2019	Cycle
			Investments

19.0%

15.0%

			3.4%		0.6%
Ist PTRC	2nd PTRC	3rd PTRC	4th PTRC
2007	2011	2015		2019

¹ Regulatory Reintegration Quota

(R$ million)			2,581	~2x
		2,015		Capex/
			RRQ¹
	1,591
1,297
		1,050
554	460	582
5th PTRC	6th PTRC	7th PTRC	8th PTRC	Next
2010	2013	2016	2019	Cycle
		Investments
	15.0%	14.0%
			1.3%	0.3%
	5th PTRC	6th PTRC	7th PTRC	8th PTRC
	2010	2013	2016	2019	8

15.0

(%)

10.0

4.04.04.6

2.0

0.30.40.6

EDP ES

DisCo 1

EDP SP

DisCo 2

DisCo 3

DisCo 4

DisCo 5

DisCo 6

DisCo 7

•

•

•

•

•

¹ Regulatory Reintegration Quota

9

• Value added in the cycle
• Benchmark in asset management
• Benchmark in losses reduction

• Economies of scope
• Distinctive management model
• Benchmark in execution

• Benchmark in operations
• Turnaround at Pecém
• Effective mitigation of the hydrological risk

Profitable contracted	Robust portfolio of	Benchmark in efficiency	Financial function as
factor of value
growth options	and digital
growth	aggregation

10

Lot 24

Lot 11

Lot 7

Lot 18

Lot 21

Lot Q

Espírito Santo

113 Km and 1 substation Operational start-up: Dec/18

Maranhão

203 Km and 1 substation Operational start-up: Aug/20

Maranhão

123 Km and 1 substation Under construction (69%)

São Paulo - Minas Gerais

375 Km

Under construction (65%)

Santa Catarina*

484.5 Km and 1 substation Under construction (73%)

Santa Catarina/Rio Grande do Sul 142 Km and 2 substations Under construction (16%)

*Celesc stake: 10% / ¹Base July 2020

11

• Value added in the cycle
• Benchmark in asset management
• Benchmark in losses reduction

• Economies of scope
• Distinctive management model
• Benchmark in execution

• Benchmark in operations
• Turnaround at Pecém
• Effective mitigation of the hydrological risk

Profitable contracted	Robust portfolio of	Benchmark in efficiency	Financial function as
factor of value
growth options	and digital
growth	aggregation

12

Peixe

Angical

Considered by ANEEL the best plant in Brazil

¹ Monitoring of the Performance Inspection Campaign for HPPs with Centralized Dispatch by the ONS - 2020	13

88.5	92.3	95.2			596
	80.3	504	467	515

2016

2017

2018

2019

2016

2017

2018

2019

•

•

•

•

14

• Value added in the cycle
• Benchmark in asset management
• Benchmark in losses reduction

• Economies of scope
• Distinctive management model
• Benchmark in execution

• Benchmark in operations
• Turnaround at Pecém
• Effective mitigation of the hydrological risk

	Robust portfolio of	Benchmark in efficiency	Financial function as
Profitable contracted	factor of value
growth options	and digital
growth	aggregation

15

CapEx Evolution

Transmission

Distribution

Generation

Others

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

1 Source Bloomberg, Adjustad for Component A Offsetting Account - CVA and Book Value

16

	4%	9%
	20%
37%		Networks

46%

2019

real gains of + 35-45%

982 +40% +35% +25%

30%

EBITDA

CAGR¹ 2019-23: ≈ 10-12%

6%

36%22%

2023

Thermal Ger.

Hydro Ger.

Distribution

Comm./Services

Transmission

Networks

57%

2019

Tariff Revision

Market

Efficiency

2023

	520	642
117
2020e	2021e	2022e
Lots 11 and 21 start	Lots 07, 18 and Q

21%15%

¹ Nominal CAGR / ² Real RAP 12/31/2019

of operations

start of operations

17

• Value added in the cycle
• Benchmark in asset management
• Benchmark in losses reduction

• Economies of scope
• Distinctive management model
• Benchmark in execution

• Benchmark in operations
• Turnaround at Pecém
• Effective mitigation of the hydrological risk

Profitable contracted	Robust portfolio of	Benchmark in efficiency	Financial function as
factor of value
and digital
growth	growth options	aggregation

18

	•
Acquisition	•
of Assets	•

Upcoming

Auctions

•

•

•

•

Secondary

Market

Auction Dec/20 Estimated Capex of R$ 7.4 billion¹

¹ Estimated amounts based on the Ten-Year Plan 2020 published by EPE	19

TURN-KEY

BOT¹

PERFORMANCE

1.4 MWp	28 MWp	+31 MWp
Installed Capacity	Current Installed Capacity	Contracted Capacity
in 2018		Pipeline

Smart Monitoring

Automation and Control

Consumption Management

Analytics

¹ Build, Operate, Transfer

Air Conditioning Compressed air

Cogeneration Refrigeration

Industrial Steam Lighting

20

Mobility platforms and		Infrastructure		Infrastructure/
operations		services		Energy Supply
Digital mobility		Infrastructure management		Public
Shared mobility
	& integration services		B2C and B2B infrastructure
Delivery service
			solutions
Public transport operations

1	Source: EPE, BCG Analysis	21

SP-RJ electric corridor

• 6 charging stations between São Paulo and Rio de Janeiro, inaugurated in 2018

Ultra fast charger network

• Installation of 30 ultra fast charging stations on the main highways of the state
• Largest network of ultrafast chargers for electric vehicles in South America

E-lounges - Airports

• Installation of 2 e-Loungeswith recharge infrastructure for shared mobility operators

Electric Bus Fleet

• Implementation of a project with 1 electric bus in operation with Águia Branca for intercity and charter routes

22

• Value added in the cycle
• Benchmark in asset management
• Benchmark in losses reduction

• Economies of scope
• Distinctive management model
• Benchmark in execution

• Benchmark in operations
• Turnaround at Pecém
• Effective mitigation of the hydrological risk

Profitable contracted	Robust portfolio of	Benchmark in efficiency	Financial function as
factor of value
growth options
growth	and digital	aggregation

23

		•
		•
		•
		•
•	•	•
•

•	•
•	•

• 159 cross-cutting

efficiency initiatives

• 200 Robots

• ~96 thousand working
  hours robotized

24

33.3% 31.8% 29.9% 28.1%

2016

2017

2018

2019

1 Gains in efficiency 2019 vs 2014 vis a vis growth in inflation for the period. Disregarding Ipueiras, Cachoeira, APS and Pantanal. Regarding Pecém 100% (Pro-forma)

² OPEX disregards VNR report from the tariff revision processes

25

• Value added in the cycle
• Benchmark in asset management
• Benchmark in losses reduction

• Economies of scope
• Distinctive management model
• Benchmark in execution

• Benchmark in operations
• Turnaround at Pecém
• Effective mitigation of the hydrological risk

Profitable contracted	Robust portfolio of	Benchmark in efficiency	Financial function as
factor of value
growth options	and digital
growth	aggregation

26

5,558 5,751

4,455 4,396

3,553

2016	2017	2018	2019	6M20

14					Average Cost	20
12
14.5%				Average Term (Years)	15
10
	11.2%
8
		8.6%	8.4%			10
6			7.0%
			4.1
4	3.0	2.9	3.7	3.9		5
2
0								0
2016	2017	2018	2019	6M20

¹ Debt issuances via capital markets; ² Pre-payment of APS' debt with BNDES

1,196

864

549 495 500

2016

2017

2018

2019

6M20

•

•

27

EBITDA

R$ million

2,960	2,768	2,914

1,915

2,298	2,187

1,285

2014

2015

2016

2017

2018

2019

6M20

Net Earnings

R$ million

1,266	1,273	1,338

744	667	612
	508

2014

2015

2016

2017

2018

2019

6M20

28

Dividend	Payment of IOE¹ +	Management Commitment:
Policy	dividends	Minimum payment of 50% of adjusted net income²

Dividend Distribution				+79%
R$ million
								476
					303	330	367		353
				197
				2014	2015	2016	2017	2018	2019
Dividend Yield:	4.6%	5.3%	4.0%	4.4%	5.3%	2.6%
Closing Price³ (R$):	8.97	12.04	13.40	14.00	14.75	22.10

1 Interest on Equity / 2 Adjusted for non-cash effects / ³ Disregarding dividend adjustments

29

1

2

▪

▪

▪

▪

▪

▪

▪

*

1 Adjusted for Earnings from Long-Term Cash realization, such as the EBITDA of Transmission Companies, VNR of the Distribution Companies, M&A Operations, Contingencies, and Post-Employment Benefits 2 Details on the Dividend Police at IR website.

30

					3.0 x
					2.5 x
1.7	1.9	1.8	2.0	2.0 x
1.3	1.2

26%	24%	50%	60%	37%	26%
2014	2015	2016	2017	2018	2019	2020	2021	2022 on

Payout

31

Maximize shareholder value generation, given the righ levels of profitability obtained with the current share price range

Eighteen (18) months from August 28, 2020.

24,863,880 shares

32

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

Dividend Policy and Share Repurchase Plan

33

• Acceleration of investments in solar PV
• B2C position reinforcement
• Positioning for the energy market liberalization
• Secondary market and transmission auctions
• Antecipation of transmission projects
• Digital transformation
• Continuity of distribution investment
• Continuity of capital recycling

• Digital ZBB	34