Gas Natural SDG — H1 2009 Earnings Presentation
41 slides from Gas Natural SDG's earnings presentation, Jul 29, 2009
Slide 1: First Half 2009 Results
First Half 2009 Results July 29, 2009
Slide 2: Disclaimer
Disclaimer This document may contain market assumptions, different sourced information and forward- looking statements with respect to the financial condition, results of operations, business, strategy and the plans of Gas Natural SDG, S.A. and its subsidiaries. Such assumptions, information and for
Slide 3: Agenda
Agenda 1. Latest Developments in Unión Fenosa Integration 2. Summary of 1H09 Results 3. Analysis of Results (Pro-forma) 4. Conclusions
Slide 4: Latest Developments in Unión Fenosa Integration
Latest Developments in Unión Fenosa Integration
Slide 5: Unión Fenosa acquisition completed
Unión Fenosa acquisition completed ● GAS NATURAL has reached 95.22% of Unión Fenosa’s capital ● 34.75% of capital acquired in tender offer ● Additional acquisitions through equity swaps and deferred purchases ● Remaining minority holdings of 4.78% to be converted into GAS NATURAL’s shares ● €3.5 bn
Slide 6: Successful refinancing efforts
Successful refinancing efforts ● Recent issuance of €2.5 bn under GAS NATURAL’s EMTN program1 ● €2,000m maturing in 5 years with a 5.250% coupon ● €500m maturing in 10 years with a 6.375% coupon ● Bond issue 3.6 times oversubscribed evidencing strong appetite for GAS NATURAL debt ● Proceeds applied
Slide 7: Asset disposals (I)
Asset disposals (I) Financial assets ● Gross cash from financial asset disposals totals €1,084m ● Sale of 5% in CEPSA for €529m1 ● Sale of 1% in Red Eléctrica for €43m ● Sale of 5% in Enagas for €155m ● Sale of 13% in Indra for €320m1 ● Sale of 3% in Isagen (Colombia) for €37m One-third of total dis
Slide 8: Asset disposals (II)
Asset disposals (II) Commitments with CNC; other assets ● Sale of gas distribution assets and customer contracts to Naturgas ● 248,000 gas connection points plus 209,900 gas and 4,000 electricity customer contracts ● Net proceeds of €330m (13.2 x EBITDA ’08), with gross capital gain of €50m ● Transa
Slide 9: Acquisition Loan
Acquisition Loan Uses and maturities August Estimate August Estimate 2008 July 09 2008 July 09 Sources (€m) (€m) Maturity Uses (€m) (€m) 2 Term Loan A1 6,000 - Feb. 2010 UNF acquisition 16,754 7,784 3 Term Loan A2 6,000 3,998 Feb. 20111 Refinancing UNF debt 1,600 1,100 3 Term Loan B 3,500 2,706 Aug.
Slide 10: Merger calendar
Merger calendar 23/24 April ● Boards of GAS NATURAL and Unión Fenosa approved merger project with exchange ratio of 3 GAS NATURAL ✔ for every 5 Unión Fenosa shares 18 May ● Report from independent appraiser obtained ✔ 22/26 May ● AGMs called for GAS NATURAL and Unión Fenosa ✔ 26/29 June ● AGMs of bo
Slide 11: Integration of management structure
Integration of management structure ● New management structure designed to compete successfully in a global and integrated energy market ● Management organization has been defined up to the third level ● Integration process of both companies to ensure transfer of best practices between business and
Slide 12: Significant operating synergies from Gas Natural-Unión Fenosa integration
Significant operating synergies resulting from Gas Natural-Unión Fenosa integration Operating synergies: full impact expected in 2011 90 350 +21% Cost savings 290 • Bottom-up synergies 65 identification finished 260 • Higher synergies potential 90 identified in all dimensions (€m) • Integration team
Slide 13: Summary of 1H09 Results
=f hs: Summary of 1H09 Results — on <2 io
Slide 14: Highlights for 1H09
Highlights for 1H09 Economic slump results in lower domestic consumption levels in the quarter both for electricity (-6.4% YoY) and gas (-15.0%) Regulated businesses continue to provide stability at the operating level Acquisition of Unión Fenosa completed Dividend growth: total dividend of
Slide 15: 1H09 Results snapshot
1H09 Results snapshot1 (€ million) 1H09 1H08 Change Net Sales 6,480 6,416 1.0% EBITDA 1,641 1,297 26.5% Operating Income 1,083 928 16.7% Net Income 622 563 10.5% Investments: 14,035 421 - Tangible & Intangible 599 419 43.0% Financial & Other 13,436 2 - Net Debt (as of 30/06) 22,063 2,969 - Note: 1 U
Slide 16: Income statement
Income statement1 (€ million) 1H09 1H08 Change % Net Sales 6,480 6,416 1.0 Purchases (4,070) (4,507) (9.7) Gross Margin 2,410 1,909 26.2 Personnel, net (249) (180) 38.3 Other Expenses, net (520) (432) 20.4 EBITDA 1,641 1,297 26.5 Depreciation (521) (358) 45.5 Provisions (37) (11) - Operating Income
Slide 17: EBITDA by Activity
EBITDA by Activity (€ million) 1,641 +26.5% 351 27 1.7% 21.4% 132 249 8.0% 55 15.2% 101 235 6.1% 3.3% 492 14.3% 30.0% Gas Gas Electricity Electricity Electricity Electricity Gas Other TOTAL Distribution Distribution Distribution Distribution Spain International Europe LatAm Europe LatAm 17
Slide 18: Investments
Investments Tangible and intangible (€ million) 1H09 1H08 Gas: 21 14 Up + Midstream 15 11 By Activity Wholesale & Retail 6 3 UF Gas - - Other Electricity: 277 141 Gas 2.9% Distribution Spain 243 118 3.5% 47.4% International 34 23 Gas Distribution: 214 241 Spain 152 169 International 62 72 Electricit
Slide 19: Net Debt Evolution
Net Debt Evolution (€ million) 22,063 (921) (844) 20,298 Tariff deficit1 Equivalent cash from asset disposals executed in July2 Leverage Leverage 64.1% 62.1% 30/06/09 Estimate after executed actions Aiming at ~€18bn net debt for year-end 2009 Notes: 1 €750 million for 2008 and previous years 2 Equiv
Slide 20: Gross Debt Breakdown
Gross Debt Breakdown Debt by Financial Instruments As of 30 June Estimate1 Capital Commercial Markets Commercial Banks 11% Banks Capital 83% 69% Markets Institutional 24% Banks 6% Institutional Banks 7% Interest Rate Structure As of 30 June Estimate1 Floating Floating 58% Fixed 42% Fixed 42% 58% Not
Slide 21: Gross debt maturity profile
Gross debt maturity profile Gross debt (€21,000m1) maturity schedule estimated at 30 July 2009 (€ million) 6,860 4,933 99 2,624 1,663 1,403 1,522 1,017 879 2009 2010 2011 2012 2013 Post 2013 Acquisition facility Levelling maturity profile and leaving a comfortable margin to maximize efficiency of re
Slide 22: Credit ratings
Credit ratings Long-term credit ratings in line with our estimates S&P Fitch Moody’s BBB+ A- Baa2 (Outlook: Negative) (Outlook: Negative) (Outlook: Stable) Rating agencies recognize the strategic and industrial rationale of the acquisition of Unión Fenosa Aiming to recover “A” rating in the medium t
Slide 23: Pro-forma quarterly EBITDA
Pro-forma quarterly EBITDA1 GAS NATURAL + Unión Fenosa (€ million) +1.1% EBITDA pro-forma 2008: €4,844m1 1,326 1,341 -2.1% 1,193 1,219 1,106 1,083 1Q 2Q 3Q 4Q 2008 2009 Pro-forma 1H EBITDA remains stable (-0.3%) despite difficult market environment Note: 1 Pro-forma figures from 1 January. Unión Fen
Slide 24: Analysis of Results (Pro-forma)
Analysis of Results (Pro-forma)
Slide 25: Pro-forma EBITDA breakdown
Pro-forma EBITDA breakdown1 Pro-forma Pro-forma Change (€ million) 1H091 1H081 €m % Gas: 443 462 (19) (4.1) Up + Midstream 94 78 16 20.5 Wholesale & Retail 232 216 16 7.4 UF Gas 117 168 (51) (30.4) Electricity: 743 785 (42) (5.4) Spain 503 564 (61) (10.8) International 240 221 19 8.5 Gas distributio
Slide 26: Gas: Up + Midstream
Gas: Up + Midstream Lower gas demand in Spain and Portugal with 30% lower use of Maghreb pipeline, EBITDA (€ million) offset by capacity charge +20.5% 94 LNG fleet increases utilization ratio to 97% 78 Exploration projects under development in northern Africa (Gassi Chergui , Tangiers- Larache
Slide 27: Gas: Wholesale & Retail (I)
Gas: Wholesale & Retail (I) GAS NATURAL’s sales in Spanish liberalized market (GWh) 103.9 -3.7% 100.1 111,769 -12.1% 98,265 Gas sales in the Spanish liberalized market drop 12% after lower CCGT- 16,373 based generation and a drop in +29.7% 21,231 economic activity 90% of gas sold under contracts
Slide 28: Gas: Wholesale & Retail (II)
Gas: Wholesale & Retail (II) GAS NATURAL’s international sales (GWh) +17.4% 25,813 21,993 Own flexible LNG portfolio and +129.5% transportation infrastructure allows 8,106 expansion of international markets 3,532 to South America -4.1% Customer portfolio in France grows 18,461 17,707 +238% to re
Slide 29: Gas: UF Gas
Gas: UF Gas EBITDA (€ million) UF Gas sales (GWh) -30.4% 40,206 -10.9% 35,829 12,734 -25.1% 9,538 -4.3% 27,472 26,291 1H08 1H09 1H08 1H09 Pro-forma2 Pro-forma2 Pro-forma1 Pro-forma1 Spain International Gas sales in Spain drop after 10.5% lower industrial sales and despite 22.4% higher sales to the
Slide 30: Electricity (I): Spanish market
Electricity (I): Spanish market Total production (GWh) -23.7% 25,125 949 Average pool price of €40.96/MWh in 1,374 +20.9% 19,172 1H09 (vs. €62.73/MWh in 1H08) after 3,555 lower demand and higher production +39.1% 1,147 1,965 from special regime -54.2% 1,911 1,625 1,800 -8.4% CCGTs load factor of
Slide 31: Electricity (II): International
Electricity (II): International Total production (GWh) 15,380 +1.0% 15,531 Mexican CCGTs increase production after higher demand from CFE, allowing -11.4% 3,571 for a 73.9% load factor with an 4,032 availability of 95.8% +5.4% New Durango 450 MW CCGT expected 11,348 11,960 to be commissioned in
Slide 32: Electricity (III): Operating performance
Electricity (III): Operating performance EBITDA (€ million) -5.5% 785 742 Despite lower production figures (-24% -0.8% vs 1H08) and pool prices (-35% vs 1H08) EBITDA in Spain drops only 10.8% +22.5% thanks to the coverage given by commercialisation and CCGT gas supply contracts -10.8% Higher out
Slide 33: Gas Distribution in Spain
Gas Distribution in Spain Operating figures +2.1% 5,896 Former regulated residential customers 5,777 transferred to liberalized market from 1 July 2008 141,486 -16.7% 117,923 Connection points grow by 119,000 YoY despite slowdown in residential construction -6.4% Distribution network grows to
Slide 34: Gas Distribution in Italy
Gas Distribution in Italy Operating figures EBITDA (€ million) +9.8% 405 369 +54.5% 34 2,224 22 +25.3% 1,775 +139.3% +16.9% 1H08 1H09 1H08 1H09 Tariff Sales (GWh) TPA Sales (GWh) Connections (thousands) as of 30/06 EBITDA growth in the period favoured by higher gas sales after colder winter Achiev
Slide 35: Gas Distribution in Latin America
Gas Distribution in Latin America Operating figures EBITDA contribution and +3.3% 5,329 growth by country 5,161 (Total €234 million, +0.9%) 99,650 -12.7% 87,000 Mexico Argentina +5.0% €36 million €15 million (+0.0%) (+0.0%) -21.0% Colombia Brazil €73 million €110 million (+1.4%) (+0.9%) 1H08 1H09 Ta
Slide 36: Electricity Distribution in Spain
Electricity Distribution in Spain Operating figures 3,533 3,492 +1.2% 18,337 -9.8% 16,541 Lower electricity sales as a result of the decrease in consumption in the country +42.1% Distribution network grows to a total of 48,982 km (+5.7%) -30.7% 9,070 TIEPI down 20.5% to 29.4 minutes2 evidences
Slide 37: Electricity Distribution in Latin America
Electricity Distribution in Latin America Operating figures EBITDA contribution and +12.5% 5,003 growth by country 4,448 (Total €151 million, +16.2%)1 10,185 +1.4% 10,326 Guatemala Nicaragua +1.2% €25 million €18 million (+13.2%) (+1,700%) 3,639 3,681 Panama €31 million +1.5% (+9.3%) 6,546 6,645 Col
Slide 38: Conclusions
i Conclusions —©
Slide 39: Conclusions
Conclusions ● Operating performance maintained in spite of a challenging environment ● High weighting of regulated activities and business and geographical mix provide stability in earnings ● Unión Fenosa acquisition successfully completed ● Timing of execution better than initial estimates ● Optimi
Slide 40: A strategy to create value for shareholders
A strategy to create value for shareholders ● Integration in progress ensuring smooth transition Focus on ● Annual operating synergies of €350m and CAPEX integration synergies of ~€200m beat initial estimates ● €800m tax synergies identified ● Delevering through €3.5 billion capital increase and €3
Slide 41: Thank you
Thank you INVESTOR RELATIONS telf. 34 934 025 891 fax 34 934 025 896 e-mail: relinversor@gasnatural.com website: www.gasnatural.com