Edison Spa · MIL:EDNR
Edison Spa — Debt Investor Presentation (November 2003)
32 slides from Edison Spa's debt investor presentation, November 2003
Slide 1: A presentation to fixed income investors
A presentation to fixed income investors November 2003
Slide 2: EDISON team
EDISON team n UMBERTO QUADRINO – CHAIRMAN n FRANCO BALSAMO – HEAD OF FINANCE AND RISK MANAGEMENT n MASSIMO QUAGLINI – HEAD OF PLANNING AND CONTROL n STEFANO GIUSSANI – HEAD OF INVESTOR RELATIONS n ALBERTO PISANTI – HEAD OF CAPITAL MARKETS 2
Slide 3: Agenda
Agenda n From Montedison to Edison: a refocusing strategy n Business overview and industrial Plan n Financial overview n Offering details and key investment considerations 3
Slide 4: Edison strategy - refocusing on the core business
Edison strategy - refocusing on the core business Revenues 2001 September 2003 (*) Engineering 2% Water 1% Water&Telecoms 1% Engineering 12% Chemicals 6% Energy 25% Agribusiness 66% Energy 87% * Pro-forma net of disposals Pro forma balance sheet end 2001 (€bn) Consolidated balance sheet 30.09.2003 (
Slide 5: Edison strategy - refocusing on the core business
Edison strategy - refocusing on the core business Edisontel 59 Achieved Disposal Target : High Speed Rail 39 (E.V.) € 9 billion by end 2003 WDDM 1,770 Antibioticos 155 Beghin-Say 1,230 24 Cereol Fibrowatt 7 price TO BE DONE : Provimi 664 supplement € 9.0 - Tecnimont Intermarine 9 bn - IWH Epiclink 2
Slide 6: Edison financial restructuring
Edison financial restructuring Debt evolution 13.3 13.5 Disposals Disposals 0.7 0.9 5.5 5.5 Acquisition Operations Acquisition 6.3 Finance (*) Finance Capital Increase 6.5 0.4 Disposals (€ bn) 1.5 Eurogen 0.4 1.7 Acq. Capital (now Edipower) 2.0 Increase Operations Finance (*) 0.4 0.6 4.1 Edipower 7.
Slide 7: Agenda
Agenda n From Montedison to Edison: a refocusing strategy n Business overview and industrial plan n Financial overview n Offering details and key investment considerations 7
Slide 8: Edison today - the core activities and their size
Edison today - the core activities and their size Generation Transmission Distribution ELECTRICITY Customer Energy care & Asset-based Sales (Dual Value Trading Fuel Offers) Added Services E&P LNG Transport GAS and and and Import Storage Distribution Electricity Power sales (TWh) Natural Gas sales (b
Slide 9: Edison today - the competitive position
Edison today - the competitive position The first private player in both the electricity and gas markets in Italy Electricity Installed Capacity – Gw Gas Supply (production and import) – Bcm (2003) (2003E) 54.0 41.0 10.1 (b) 13.0 11.8 (b) 3.7 5.4 5.0 2.6 1.0 6.4 9.0 7.0 Enel Edison + Endesa Tirreno
Slide 10: Business overview - dynamics in the electricity market
Business overview - dynamics in the electricity market A fast growing liberalising market Black out risk 350 Twh GW – 2002/2003 1.8/2.3 53.1 54.9 TOTAL MARKET 52.6 300 48.9 6.0 CAGR 2.4% 250 Available peak capacity Mass 200 Market Peak demand 150 EU council Letta Decree Nov 2002 Import 100 Reserve m
Slide 11: Business overview - Edison industrial plan in the electricity sector
Business overview - Edison industrial plan in the electricity sector 12.000 Edison - MW Total 11,100 Available capacity 10.000 8.000 Others 6.000 Total CAPEX: €1.6 bn (2003-2007) 4.000 2,000 800 Torviscosa 2.000 Edison 4,600 400 Candela 800 Altomonte 0 2002 2003 2004 2005 2006 2007 Authorized greenf
Slide 12: Business overview - dynamics in the gas market
Business overview - dynamics in the gas market A fast growing liberalised market Supply is matching demand 100 Bcm TOTAL MARKET 100 90 CAGR 3.9% Demand 90 80 80 70 70 60 60 50 50 40 NET ELIGIBLE MARKET 40 90% TOP contracts 30 CAGR 11.9% 30 20 20 10 10 Domestic production 0 0 2002 2003 2004 2005 2006
Slide 13: Business overview - Edison industrial plan in the gas sector
Business overview - Edison industrial plan in the gas sector Additional gas import infrastructures in Italy Edison Gas sources of supply - 2007 (Bcm) 18.0-20.0 4.6 - 6.0 Russia 22 bcm Holland 6.1 bcm (pipeline) (pipeline) Nigeria 2.2 bcm 4.6 (swap GdF) Qatar Russia +6 bcm 11.4 4.0 LNG 8 bcm Algeria
Slide 14: Business overview - electricity and gas market segmentation
Business overview - electricity and gas market segmentation Electricity Gas 2003 Market Figures 262*TWh 75 Bcm 66 28 83 20 41 72 27 Electricity Market Gas Market Residential Small/Very small SME Large Industrial Commercial Industrial Thermoelectric * Net of self-production, grid losses and other non
Slide 15: Business overview - commercial strategy and channel mix
Business overview - commercial strategy and channel mix Large Industrial SME Small / Very Small Electricity vol. (GWh) over 10 1 - 10 0.1 - 1 over over under Gas vol. (c.m.) 200,000 200,000 200,000 Extension Indirect presence of through alliances / • Consortia : Edison “branded” j.v. in specific GAS
Slide 16: Geographical distribution of Edison mass market customers
Geographical distribution of Edison mass market customers Total customers n° 780,000 Total sales volumes nine months 2003 Direct 208 mln c.m. Indirect 1,545 mln c.m. Estgas UD INE GORIZIA Customers n° 205,000 COMO TRIESTE MILANO PADOVA VEN EZIA Edison share 22% Blumet PAVIA MANTOVA Customers n° 239,
Slide 17: Business overview - commercial targets
Business overview - commercial targets 2003 Electricity 2007/2008 Edison share 13% of total Italian market 262TWh* 163TWh 17TWh – Edison Share 10% 290TWh* 207TWh* 37TWh and 18% of the market excluding residential customers Residential Opening segment in 2003-04 Small / Very small SME Large Industria
Slide 18: Agenda
Agenda n From Montedison to Edison: a refocusing strategy n Business overview and industrial plan n Financial overview n Offering details and key investment considerations 18
Slide 19: Financial highlights - nine months 2003
Financial highlights - nine months 2003 9 Months normalized Core business income statement 2002 2003 2002 2003 pro-forma (1) 9 months full year Net revenues 3,729 3,061 3,729 4,418 EBITDA 801 677 801 1,002 % on revenues 21.5 22.1 21.5 22.7 EBIT 315 138 315 321 ( € mln) % on revenues 8.4 4.5 8.4 7.3
Slide 20: Electric power & natural gas financial highlights - nine months 2003
Electric power & natural gas financial highlights - nine months 2003 Electric Power Natural Gas 2002 2003 2002 2002 2003 2002 full year Mln € 9 months 9 months ∆ full year Mln € 9 months 9 months ∆ 3,523 Net revenues 2,837 2,491 13.9 1,424 Net revenues 1,513 984 53.8 812 EBITDA 605 545 11.0 304 EBIT
Slide 21: Credit ratios
Credit ratios* FFO interest cover RCF/net adjusted debt 4,0 20 3,5 18 3,0 BBB range 16 14 2,5 12 2,0 10 1,5 8 6 1,0 4 0,5 2 0,0 0 2001 2002 2003 2001 2002 2003 Net adjusted debt - Net adjusted debt/EBITDA FFO/net adjusted debt 12000 12 20 10000 10 18 16 8000 8 14 BBB range 6000 6 12 10 4000 4 8 2000
Slide 22: Sound liquidity position - Debt Maturity Profile
Sound liquidity position Debt Maturity Profile 2.500 Debt Repayments € Million 2.250 2.000 1.750 1.500 1.250 Debt Average Life: 3.35 years 1.000 750 Floating/Fixed: 66%/34% 500 250 - 2004 2005 2006 2007 2008 2009 2010 Pre bond issue Post bond issue 47% 35% Capital Markets Capital Markets Bank debt 5
Slide 23: Financial targets - core business
Financial targets - core business EDISON – 2002 EDISON – 2007 Bln € 7.4 4.4 ++68% 68% Revenues 1.7* ++70% 70% 1.0 EBITDA 6.2 Assuming Assumingcomplete complete conversion conversionof ofthe the warrants warrants 30.06.2003 4.3 * 4.0 3.2 Net Debt * Including 50% of Edipower EBITDA and Net Debt accord
Slide 24: EBITDA breakdown
EBITDA breakdown Market activities CIP 6 and other stable/regulated activities Interest expenses GROWTH Eligible Market 85% 39% VALUE CIP 6 Hydro Italian gas production 2002 2003 2004 2005 2006 2007 • Interest expenses comfortably covered (2x until 2005) by the EBITDA generated by the CIP6 generatio
Slide 25: A fully funded investment programme
A fully funded investment programme CAPEX vs EBITDA (2003-2007) FREE CASH FLOW (2003-2007) 2003 2004 2005 2006 2007 Onwards 2003 2004 2005 2006 2007 Total EBITDA Funds from Operations Net Interest EBITDA from CIP6 contracts Working capital changes Changes in other assets/liabilities Capex Capex (inc
Slide 26: Coping with the liberalisation of the electricity markets
Coping with the liberalisation of the electricity markets Power price projections Improving sales mix 45 40 Today 35 € 55/MWh Strategic 30 mitigants 25 TWh 20 15 10 5 2003 2004 2005 2006 2007 0 2003 2007 Operational Large Industrial SME Small/Very small Economic mitigants mitigants Leverage on predi
Slide 27: Shareholding structure
Shareholding structure 24.6% 18.0% 14.2% 12.5% 10.7% 20.0% FIAT EDF Capitalia IMI B. Intesa Tassara Italenergia bis 1.6% 2.4% 1.8% 61.9% 1.6% 1.4% 15.3% EDISON 14.0% Market A very supportive shareholding structure with a proven commitment to maintain investment grade ratings 27
Slide 28: Financial strategy
Financial strategy n Maintain a solid financial structure during the investment period and improve it significantly from 2006 when higher available cash flow is used to repay debt n Rely on internal growth to assure financial flexibility n Maintain an adequate level of committed facilities to cover
Slide 29: Agenda
Agenda n From Montedison to Edison: a refocusing strategy n Business overview and industrial Plan n Financial overview n Offering details and key investment considerations 29
Slide 30: Offering details
Offering details n Issuer: Edison SpA n Ratings: BBB stable / Baa3 neg n Amount: Benchmark size n Maturity: Intermediate n Use of Proceeds: General corporate purposes including refinancing of existing debt n Documentation: EMTN Programme listed on Nov 2003 n Listing: Luxemburg Stock Exchange n Gover
Slide 31: Key investment considerations
Key investment considerations n A pure player within the domestic energy market n The first private player in both the electricity and gas markets in Italy n An excellent competitive positioning in a highly concentrated market n Stable and predictable cash flow during the bulk of the investment peri
Slide 32: Disclaimer
Disclaimer This document/presentation contains certain forward-looking statements particularly with respect to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions. These forward-looking statements reflect EDISON’s current views and as