Edp S.a. · EURONEXT:EDP
Edp — Energias de Portugal — FY2005 Earnings Presentation
35 slides from Edp's earnings presentation, Mar 8, 2006
Slide 1: 2005 Year End Results
energias de portugal 2005 Year End Results March 8, 2006 1
Slide 2: Milestones
Milestones Completion of Ribatejo CCGT – capacity up by 392MW to 1,176MW Focus on Iberian Stake in Turbogás (990MW CCGT) raised to 40% from 20% energy Conclusion of Frades - additional 192 MW of hydro capacity Strong investment in renewables - wind capacity up 1,793 MW Control of Portgás,
Slide 3: Independent auditor certified €26.8m from first year integration of EDP and HC Energia
Independent auditor certified €26.8m from first year integration of EDP and HC Energia Cost synergies Investment synergies Synergies achieved in 2005 €m Total synergies for 2005-2007 €m 0.3 2.4 18.2 4.2 7.1 26.8 35.6 95.0 5.2 26.8 14.4 9.7 7.5 17.0 Trading Generation Other Total 2005 2006/ Delayed T
Slide 4: EnBR solid growth strategy and Brazil's improved economic outlook boost share price
EnBR solid growth strategy and Brazil’s improved economic outlook boost share price IPO – July 2005 Energias do Brasil – Share Performance • Ring-fence operations and achieve self- R$32 sustainability • Strengthen capital structure through capital increase (R$500m) and debt restructuring • Ability t
Slide 5: EDP results' main drivers
EDP results’ main drivers • Improved balance of Iberian integrated portfolio + Hedging on Iberian electricity market with acquisition of HC • EDP’s long position in generation benefited from high wholesale prices - Distribution in Portugal penalised by • Energy acquisition costs to be recovered betw
Slide 6: Gross profit influenced by growth of Iberian energy portfolio and sale of non-core activities
Gross profit influenced by growth of Iberian energy portfolio and sale of non-core activities Gross Profit Contribution ‘2005/2004 € million 15% 5% - 57 + 21 3,864 3,679 3,367 + 348 Reported 2004 60% HC Edinfor Portgás 60% GP 2004* GP 2005 6
Slide 7: Main gross profit drivers
Main gross profit drivers Gross Profit Contribution ‘2005/2004 € million 5% 105 - 17 R$/€ effect +8 + 43 90 + 27 + 15 + 234 - 126 ∆ tariff 3,864 adjustments 3,679 +€185m GP 2004* PPA Liberalised NEO Distribution Gas Brazil Other GP 2005 Gen&Sup Portugal 2005 GP 937 370 110 1,173 189 632 453 3,864 Ib
Slide 8: 2005 Iberian market: increased pressure on generation costs …
2005 Iberian market: increased pressure on generation costs … Fuel Costs Hydro availability Brent $/bbl 73.9 2.0 CO2 €/t Zeebruge Natgas GBP/therm 30.0 57.6 1.0 27.9 0.80 21.7 12.6 0.44 0.0 2004 2005 2004 2005 • International gas prices influenced by • Approximately 40% of Portugal and 25% of upsurg
Slide 9: 2005 Iberian Market: strong demand growth and surge in wholesale electricity prices
2005 Iberian Market: strong demand growth and surge in wholesale electricity prices Electricity Demand GWh Pool price 2004/2005 €/MWh Spain Portugal 277 289 +4.5% 62.18 +4.3% 235 245 36.21 +6.0% 41 44 2004 2005 2004 2005 • Demand propelled by economic growth in • Trend in electricity wholesale price
Slide 10: Main gross profit drivers
Main gross profit drivers Gross Profit Contribution ‘2005/2004 € million 5% - 17 105 +8 + 43 90 + 27 + 15 + 234 - 126 3,864 3,679 +€185m GP 2004* PPA Liberalised NEO Distribution Gas Brazil Other GP 2005 Gen&Sup Portugal 2005 GP 937 370 110 1,173 189 632 453 3,864 PPA bound generation in Portugal re
Slide 11: PPAs ensure gross profit immunity to 1,650 GWh decrease in output and hike in fuel costs
PPAs(1) ensure gross profit immunity to 1,650 GWh decrease in output and hike in fuel costs Coal Hydro Fuel oil Installed capacity(2) MW Gross Profit in PES ‘2005/2004 €m 7,052 +113MW 7,164 2004 910 1,957 1,878 3,903 4,095 Capacity +17 Charge 1,192 1,192 2004 2005 Energy + 194 Charge Electricity gen
Slide 12: Main gross profit drivers
Main gross profit drivers Gross Profit Contribution ‘2005/2004 € million 5% 105 - 17 +8 + 43 90 + 27 + 15 + 234 - 126 3,864 +€185m 3,679 GP 2004* PPA Liberalised NEO Distribution Gas Brazil Other GP 2005 Gen&Sup Portugal 2005 GP 937 370 110 1,173 189 632 453 3,864 Liberalised Generation and Supply g
Slide 13: … achieved following the acquisition of 60% of HC Energia
… achieved following the acquisition of 60% of HC Energia Impact on Gross Profit from HC Energia integration € million Iberian Gen&Sup Iberian Gen&Sup (HC@40%) + 60% of HC = (HC@100%) 2004 206 156 362 -40.9% 59.2% 2.2% 2005 122 248 370 13
Slide 14: Portfolio complementarity with HC Energia beneficial to EDP Group in 2005…
Portfolio complementarity with HC Energia beneficial to EDP Group in 2005… Portugal Spain Iberian Integrated portfolio TWh Generation 5.3 Generation 15.2 Generation 20.4 Supply 7.6 Supply 5.9 Supply 13.6 Short in Long in Long in 2.4 9.3 6.9 Generation Generation Generation Greater balance of integra
Slide 15: … in the context of hiking wholesale prices and the commitment to contract obligations
… in the context of hiking wholesale prices and the commitment to contract obligations Generation selling conditions in the Supply electricity purchase conditions in the wholesale market €/MWh wholesale market €/MWh Pool Price Avg. Selling Price Avg. generation costs Pool Price Avg. spread (€/MWh) A
Slide 16: Strong contribution from Iberian generation to liberalised activity Gross Profit
Strong contribution from Iberian generation to liberalised activity Gross Profit Portugal Spain Iberian Integrated portfolio € million Generation 112 Generation 567 Generation 679 Supply -156 Supply -154 Supply -310 GP GP GP -44 413 370 Portugal Spain Iberia • The Group’s long generation position an
Slide 17: Main gross profit drivers
Main gross profit drivers Gross Profit Contribution ‘2005/2004 € million 5% 105 - 17 +8 + 43 90 + 27 + 15 + 234 - 126 3,864 +€185m 3,679 GP 2004* PPA Liberalised NEO Distribution Gas Brazil Other GP 2005 Gen&Sup Portugal 2005 GP 937 370 110 1,173 189 632 453 3,864 Renewables propelled by new capacit
Slide 18: NEO gross profit driven by higher organic growth and selling prices
NEO gross profit driven by higher organic growth and selling prices NEO Gross Profit €m Wind installed capacity MW Other Spain 64% 110.4 + 16% 418 Wind Portugal 359 15 44 39.0 266 67.3 223 +59MW 30.1 136 151 71.4 2004 Portugal Spain 2005 GWh 510 +72% 878 37.3 2004 2005 Iberian average sale price €/M
Slide 19: NEO mission: sustainable growth and profitable development of clean renewable energies
NEO mission: sustainable growth and profitable development of clean renewable energies NEO operating capacity and pipeline (1) MW Other Enernova Genesa Desa NEO Group Wind 464 950 155 155 Operational 213 619 274 1,105 01 Jan. 06 Pipeline 397 814 1.192 2,548(2) 01 Jan. 06 Total 610 1,433 1,466 3,653
Slide 20: Main gross profit drivers
Main gross profit drivers Gross Profit Contribution ‘2005/2004 € million 5% 105 - 17 +8 + 43 90 + 27 + 15 + 234 - 126 ∆ tariff 3,864 adjustments +€185m 3,679 GP 2004* PPA Liberalised NEO Distribution Gas Brazil Other GP 2005 Gen&Sup Portugal 2005 GP 937 370 110 1,173 189 632 453 3,864 Despite strong
Slide 21: Distribution gross profit penalised by tariff revision and higher fuel costs in 2005
Distribution gross profit penalised by tariff revision and higher fuel costs in 2005 41,315 GWh Electricity Consumption •Allowed revenues in 2005 down 3%: – UDGr: 6% consumption growth 2004 2,324 -13 compensated a 4% cut in unit revenues – NS and SPS: 50 bp reduction in regulated 3,610 1,286 1,273 r
Slide 22: Main gross profit drivers
Main gross profit drivers Gross Profit Contribution ‘2005/2004 € million 5% 105 - 17 +8 + 43 90 + 27 + 15 + 234 - 126 ∆ tariff 3,864 adjustments +€185m 3,679 GP 2004* PPA Liberalised NEO Distribution Gas Brazil Other GP 2005 Gen&Sup Portugal 2005 GP 937 370 110 1,173 189 632 453 3,864 Gas profit up
Slide 23: Iberian gas business driven by higher regulated revenues in Spain and consolidation of Portgás
Iberian gas business driven by higher regulated revenues in Spain and consolidation of Portgás Gross Profit: Naturgas and Portgás Portfolio evolution in the liberalised market Spain Portugal €m GWh sold 94,493 Clients Gross Profit 152 21 173 Success of a dual-fuel 2004* 47,964 offer launched in mid
Slide 24: Main gross profit drivers
Main gross profit drivers Gross Profit Contribution ‘2005/2004 € million 5% 105 - 17 R$/€ effect +8 + 43 90 + 27 + 15 + 234 -126 3,864 +€185m 3,679 GP 2004* PPA Liberalised NEO Distribution Gas Brazil Other GP 2005 Gen&Sup Portugal 2005 GP 937 370 110 1,173 189 632 453 3,864 Brazil Gross Profit up o
Slide 25: Energias do Brasil performance driven by distribution business
Energias do Brasil performance driven by distribution business Gross Profit ‘05/04 R$ m Generating & Trading R$ m • Transfer of generation assets (280MW) +52% 258 from EnBR Discos following 2004 1,444 unbundling/restructuring 170 • Generation tariffs at Lajeado (903MW) +89 updated to inflation 2004
Slide 26: EBITDA up on cost control and capital gains
EBITDA up on cost control and capital gains EBITDA changes by item ‘2005/2004 € million 44% 2,482 +483 1,729 +185 -149 +234 +€753m 1,077 Reported EBITDA Increase Increase Decrease Decrease Other EBITDA 2004 2004* Gross Profit S&S Personnel Opex& 2005 Costs Cap. Gains * Adjusted by: consolidation eff
Slide 27: S&S up driven by start of outsourcing contract following Edinfor sale
S&S up driven by start of outsourcing contract following Edinfor sale Supplies and Services by company € million 22% 817 +24 661 668 +106 +20 +€149m Reported S&S Brazilian Services Provided Other S&S 2004 2004* Forex Effect by Edinfor Activities 2005 • IT outsourcing contract replaces Edinfor’s full
Slide 28: Personnel costs down on 2004 extraordinary restructuring costs
Personnel costs down on 2004 extraordinary restructuring costs Number of employees Personnel Costs € million 24% -2,008 16.243 968 980 -244 337 337 -72% 746 14.479 93 14.235 123 124 -8% 114 507 520 4% 539 2004 2004* 2005 2004 2004 * 2005 Headcount falls steaply on: • Personnel Costs before impact of
Slide 29: Asset gains drove other revenues up
Asset gains drove other revenues up Other Costs / (Revenues) € million 662 303 +19 -430 -72 -181 Report Other Other Costs/ Change in Asset gains Other Costs/ Cost/(Rev) (Revenues) Concession w/ Galp, REE, Other (Revenues) 2004 2004* Rents BCP & other 2005 • Asset Gains: – Galp – Sale of the 14,27% s
Slide 30: Strong net income growth on healthy operations and capital gains
Strong net income growth on healthy operations and capital gains Net Profit Contribution ‘2005/2004 € million 146% -29 -48 -27 430 -13 1,071 Capital Gains +€635m 436 +753 43 Report. Net Profit EBITDA Increase Increase Increase Increase Net Profit Net Profit 2004* “Other” costs Fin. Costs Taxes Minor
Slide 31: EDP 2005 main figures
EDP 2005 main figures Gross Profit EBITDA Net Profit 2004 2004 2004 3,367 1,077 43 Reported Reported Reported 2004* 3,679 2004* 1,729 2004* 436 5% 44% 146% 2005 3,864 2005 2,482 2005 1,071 * Adjusted by: consolidation effects of 100% of HC, 60% of Portgás and excluding Edinfor; a provision to cover
Slide 32: Additional capex of 39% driven by wind farms in Spain and Brazilian activities
Additional capex of 39% driven by wind farms in Spain and Brazilian activities Capex in the period ‘2005 € million Iberian core: €925m=65% 51 419 34 1,429 62 369 10 \ 227 257 Ordinary Special Distribution Supply Gas Brazil ONI Other EDP Group Regime Regime • Ordinary Regime: Completion of Ribatejo C
Slide 33: Improving risk profile despite higher debt
Improving risk profile despite higher debt EDP Group Net Debt ‘2005 € million - Cash Flow before capex • Stable at €1,635m but affected by hydro payment to 10.9% REN (€200m) - Capex 9,463 • Up 39% to €1,429m (65% in the core business) 8,535 -576 - Financial Investments • Financial investments of €75
Slide 34: Sustained dividend growth policy in line with announcement in Strategic Plan presentation
Sustained dividend growth policy in line with announcement in Strategic Plan presentation Dividend’s proposal € million Dividend per share (€) 0.09000 0.09000 0.09243 0.10000 366 338 268 268 2002 2003 2004 2005 8.2% growth 34
Slide 35: 2005 Year End Results
energias de portugal 2005 Year End Results March 8, 2006 35
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