Slide 1: 9M2006 Results
9M2006 Results November 9, 2006 0
Slide 2: EDP: 25% increase of EBITDA and 84% rise of Net Profit
EDP: 25% increase of EBITDA and 84% rise of Net Profit edp Income Statement € million 9M06 9M05 Change % Change Gross Profit 3,073 2,845 228 8% EBITDA * 1,676 1,337 339 25% EBIT * 1,019 722 297 41% Financial Results (57) (260) 203 78% Net Profit 650 353 296 84% Capex 901 846 Net Debt 9,355 9,463 **
Slide 3: Main Highlights (1/2)
Main Highlights (1/2) edp 1. In 9M06 EDP’s consolidated EBITDA rose 25% YoY (+€339m) and net profit rose 84% YoY (+€296m). 2. In the Iberian electricity market, our liberalized generation and supply business benefited from an increase of installed capacity (Ribatejo CCGT new group of 400MW), higher
Slide 4: Main Highlights (2/2)
Main Highlights (1/2) edp 6. In Spain, RDL 03/06 had a €61m negative impact on 9M06 EBITDA, due to the potential withdraw of the economic value of the CO2 licenses granted for free related to generation sales to the pool between Jan-06 and Feb-06 and the netting of intra-group transactions in the Sp
Slide 5: EDP: 25% increase of EBITDA and 84% rise of Net Profit
EDP: 25% increase of EBITDA and 84% rise of Net Profit edp Income Statement € million 9M06 9M05 Change % Change Gross Profit 3,073 2,845 228 8% EBITDA * 1,676 1,337 339 25% EBIT * 1,019 722 297 41% Financial Results (57) (260) 203 78% Net Profit 650 353 296 84% Capex 901 846 Net Debt 9,355 9,463 **
Slide 6: Gross profit up 8% supported by all the main business areas
Gross profit up 8% supported by all the main business areas edp Gross profit evolution: 9M06 vs. 9M05 € millions • Higher load factors, higher 8% installed capacity and better margin (2) 3,073 19 87 per MWh in 2,845 2,753 91 77 48 Iberian market (92) 320 liberalized 74 business (Forex impact) • Wind
Slide 7: Regulation in Spain: RDL 03/06 had a €61m negative impact
Regulation in Spain: RDL 03/06 had a €61m negative impact on HC Energia accounts in 9M06, system tariff deficit of €2.5bn in 9M06 edp Impact at EBITDA Million euros Assumptions • Provisional impact of RD 3/06 implies a 17% reduction on Total impact -61 HC’s EBITDA. RD 3/06 • Jan-Feb: Value of total
Slide 8: Iberian liberalised activity: higher output and lower supply in 3Q06
Iberian liberalised activity: higher output and lower supply in 3Q06 allowed recovery of long position in 9M06 to volumes in line with 9M05 edp Volumes generated and supplied in the market TWh 9M05 9M06 • Start-up of unit III of Ribatejo CCGT allowing a long generation position in Portugal • Program
Slide 9: Generation and supply in the liberalized market: capacity increase, higher load factors
Generation and supply in the liberalized market: capacity increase, higher load factors, lower CO2 costs and better pricing of sales mix edp Generation and wholesale 9M06 Clients and wholesale 9M06 (energy sources) (energy sold) Volume Unit Cost Load Unit Price Volume TWh € / MWh Factor € / MWh TWh
Slide 10: Generation and supply in the liberalized market: gross margin grew 32%
Generation and supply in the liberalized market: gross margin grew 32% Longer position in Portugal more than compensates shorter in Spain edp Iberian Generation and Supply Gross Profit Change 9M06-9M05 Million euros 9M05 9M06 * -14 Generation +€97m 363 349 338 106 444 -27 -33 Supply (liberalised) -4
Slide 11: Growth in Iberian Renewables supported by capacity increases
Growth in Iberian Renewables supported by capacity increases and higher selling prices in Spain edp MW gross in Iberia * Installed Capacity (wind) MW Spain MW consolidated Portugal MW consolidated NEO Gross Profit 1,237 € million 616 295 85 621 115% 415 681 +99% 210 144 266 116 145 261 9M05 Change 9
Slide 12: Regulated distribution in Portugal: 10% growth of allowed revenues
Regulated distribution in Portugal: 10% growth of allowed revenues but gross margin is penalized by tariff deviation in 9M06 edp 9M2005 EDP Distribuição 9M2006 EDP Distribuição electricity gross profit * electricity gross profit * (€ million) (€ million) 91 (74) (71) (40) (13) (91) Impact of energy
Slide 13: Gas regulated revenues in Spain and Portugal grew by 8.4%
Gas regulated revenues in Spain and Portugal grew by 8.4%, strong recovery of liberalised supply activity in Spain in 3Q06 edp Iberian Gas Gross Profit Million euros 6.4 164.3 7.6 34.6 150.2 Non- 15% Regulated 115.7 85% Regulated 9M05 Consolidation 9M05 Regulated Liberalised 9M06 of Portgás and Acti
Slide 14: Start of operations of Peixe Angical hydro plant in Jun-06
Start of operations of Peixe Angical hydro plant in Jun-06 more than compensated significant tariff deviations in regulated distribution edp Energias do Brasil Installed capacity Electricity Sold (R$ million) MW GWh Start of 1,422 9M05 9M05 1,641 commercial 9M05 531 operation of 107% Peixe Angical 4
Slide 15: EDP: 25% increase of EBITDA and 84% rise of Net Profit
EDP: 25% increase of EBITDA and 84% rise of Net Profit edp Income Statement € million 9M06 9M05 Change % Change Gross Profit 3,073 2,845 228 8% EBITDA * 1,676 1,337 339 25% Supplies & Services 546 604 (58) -10% Personnel Costs & Social Benefits 514 500 14 3% Other Operat. Income/(Costs) (336) (404)
Slide 16: Strong EBITDA growth in all main business areas
Strong EBITDA growth in all main business areas edp YoY change EBITDA by business area € million +9% +€116m +25% Core Iberia +36% 299 (63) €1,440 million = 86% EDP +16% Group’s EBITDA 104 9M2005 provisions of 407 €150 million related +136% the 9M2005 tariff +7% deficit in Spain 105 1,676 824 Generat
Slide 17: EBITDA performance supported by gross profit improvement
EBITDA performance supported by gross profit improvement edp EBITDA evolution between 9M2005 and 9M2006 € million 25% • Supplies & services: program to reduce 320 (34) (29) 65 1,676 distribution grid losses 1,337 in Brazil and BRL/EUR 17 322 appreciation • Personnel Costs: One-off cost with staff re
Slide 18: Supplies & Services: Stable in Iberian activities, growth in Brazil
Supplies & Services: Stable in Iberian activities, growth in Brazil driven by program to reduce distribution grid losses and forex impact edp Supplies & Services performance 9M2006 vs. 9M2005 € million Iberian Core +34 • Regulated distribution Portugal: 604 (92) -Change to bimonthly invoicing and 11
Slide 19: Personnel costs, excluding non-recurrent staff reduction costs and forex
Personnel costs, excluding non-recurrent staff reduction costs and forex, grew at subdued rates, number of employees decreases in all markets edp € million Portugal Employees Spain Employees Brazil Employees Personnel Costs 9M05 350 9,520 86 1,656 64 3,631 Proforma 9M05 * 339 86 64 Change in the (3.
Slide 20: Other net operating costs: main impact comes from provisions on Spanish regulation
3. Other net operating costs: main impact comes from provisions on Spanish regulation edp Other Operating Costs/(Revenues) Excluding capital gains in the disposal of financial stakes in 2005 and 2006 € million 401 7 (150) 61 5 12 336 9M05 Pro- Increase of 2005 RD-L 03/06 Other Other 9M06 forma conce
Slide 21: EDP: 25% increase of EBITDA and 84% rise of Net Profit
EDP: 25% increase of EBITDA and 84% rise of Net Profit edp Income Statement € million 9M06 9M05 Change % Change Gross Profit 3,073 2,845 228 8% EBITDA * 1,676 1,337 339 25% EBIT * 1,019 722 297 41% Financial Results (57) (260) 203 78% Net Profit 650 353 296 84% Capex 901 846 Net Debt 9,355 9,463 **
Slide 22: Revaluation of CMEC's interest rate swap and improvement of REN's equity contribution
Revaluation of CMEC’s interest rate swap and improvement of REN’s equity contribution support positive performance of financial results edp Financial Results evolution € million Main items: • €148m: CMECs interest rate SWAP impact; • Impact breakdown: Main items: • €118m: reversal of provision made
Slide 23: Net profit +84% YoY, supported on operational improvement
Net profit +84% YoY, supported on operational improvement, REN’s net profit and financial swap, penalized by tariff deviations and RDL03/06 edp Net Profit € million 2006: Telecable (€33.1m) and others (€4.4m) 2005: Edinfor (€14.8m), REE (€19.3m), Comunitel (€34.9m), BCP (€12.7m) and others (€13.8m)
Slide 24: Consolidated capex grew 6% YoY, showing a 47% weight of expansion capex
Consolidated capex grew 6% YoY, showing a 47% weight of expansion capex and 74% weight of regulated activities edp Expansion EDP Consolidated Capex Recurring Activity € million 219 23 901 33 137 201 81 484 195 231 90 417 141 Generation Renewables Distribution Gas Brazil Others Total Iberia 9M05 125
Slide 25: Regulatory receivables to be recovered by EDP through tariffs
Regulatory receivables to be recovered by EDP through tariffs over next the years rose €317m in 9M06 amounting to €853m in Set-06 edp Regulatory receivables Million euros +317 853 • Accumulated tariff deviations 761 • Deferred tariff increases 649 277 • Rationing losses and “Parcela A” to be receive
Slide 26: Decline of net debt even under 6% capex growth
Decline of net debt even under 6% capex growth and increase of tariff deficits reflects EDP’s strong free cash flow generation in 9M06 edp Consolidated net debt Sept-06 vs. Dec-05 € million +€576m: sale of 14.3% stake in GALP +€7.8m: sale of 50% of EDP Bioeléctrica +€8.2m: sale of Edinfor -€58.7m: i
Slide 27: EDP signed agreement with Win Reason for the sale of 100% Oni
EDP signed agreement with Win Reason for the sale of 100% Oni for €160m EV edp Steps of the deal agreed today EDP, currently with a 56.6% stake in Oni, signs purchase agreements to acquire the stakes of 1 other shareholders in Oni (BCP, GALP and Brisa) for €1 per stake. 2 EDP will additionally acqui
Slide 28: Higher focus on core activities through divestment of non-strategic businesses
Higher focus on core activities through divestment of non- strategic businesses edp Divestments Observations Sold in July-2006 for €54m 9 Telecable Swapped into 16% of SonaeCom (58.3m shares) 9 Optimus Oni Signed an agreement with Riverside for €160m EV 9 REN EDP will reduce its current 30%
Slide 29: feel our energy
&) edp feel our energy