EDP Renewables SA · EURONEXT:EDPR
EDP Renewables SA — EDP Renováveis — Non-Deal Roadshow (November 2011)
43 slides from EDP Renewables SA's roadshow presentation, November 2011
Slide 1: EDP Renováveis Investor Presentation
EDP Renováveis Investor Presentation November 2011 www.edpr.com
Slide 2: EDPR: a global leading company with strong execution capabilities
EDPR: a global leading company with strong execution capabilities… 2010: Top wind players by installed capacity (1) Installed Capacity Historic Growth (GW) (GW) 9M11 16 14 12 6.7 +4.7x 10 5.5 8 7.3 4.4 6 3.0 4 6.7 1.4 2 0 Iberdrola NextEra EDP Longyuan Acciona 2006 (PF) 2007 2008 2009 2010 Renovávei
Slide 3: A sound and diversified portfolio in 11 countries
...with a sound and diversified portfolio in 11 countries Canada - - UK 100 US - Belgium Poland 3,278 - 314 1,448 57 168 18,415 France - - Romania 13 1,444 284 228 Italy 22 57 Spain Brazil Portugal 539 579 - 874 2,194 20 84 20 57 940 - 397 4,018 1,494 9M11 EBITDA MW + ENEOP Installed 7,280 Under con
Slide 4: Quality assets delivering stable top notch load factors
Quality assets delivering stable top notch load factors underlining portfolio’s superior profitability EDPR Load Factor: Historical Evolution Spanish Example: EDPR vs Market Average (%) (%) 9M11 EDPR 2007 2008 2009 2010 40% 9M11 Avg. Spanish Market Historic Avg EDPR (02-10) 35% Historic Avg Spanish
Slide 5: Robust EBITDA and Operating Cash-Flow growth
Investment in quality assets is delivering robust EBITDA and Operating Cash-Flow growth Electricity Generation EBITDA Operating Cash-Flow (TWh) (€ million) (Before Capex) (€ million ) CAGR CAGR CAGR 14.4 713 567 +36% +28% +39% 10.9 543 392 438 7.8 294 2008 2009 2010 2008 2009 2010 2008 2009 2010 Inv
Slide 6: Assets exposed to attractive economic frameworks with long-term visibility
EDPR’s assets are exposed to attractive economic frameworks with long-term visibility EDPR 9M11: Capacity Breakdown 9M11 Selling Price Market Dynamics (MW) (per MWh) Price visibility and stability granted by Regulated €89 Frameworks regulation and long-term 54% contracts with local utilities (1) Lon
Slide 7: Positive price trend since beginning of 2011 and reduced merchant exposure
Positive price trend since the beginning of 2011 and reduced merchant exposure EU Prices US Prices (€/MWh) ($/MWh) 102 102 104 Portugal 94 94 94 98 96 RoE 88 54 50 53 82 84 49 Spain 79 PPA 31 33 30 Merchant 27 Avg. 2010 1Q11 2Q11 3Q11 Avg. 2010 1Q11 2Q11 3Q11 % GWh % GWh Portugal 10% 9% 7% 10% PPA 3
Slide 8: 2011 capacity growth: execution of new quality assets
2011 capacity growth: Execution of new quality assets with strong Cash-Flow visibility 2011E Additions New Projects Metrics vs Current Portfolio (EBITDA MW + Eólicas PT) 800-900 New Current (4Q11) Projects(1) Portfolio 70 99 Load Factor 30% vs 29% 138 604 MW (9M11) 70 €80-90 vs €58 Avg. Price 82 145
Slide 9: Stable and recurrent EBITDA based on core competitive advantages
EDPR is set to deliver stable and recurrent EBITDA based on core competitive advantages... EBITDA per MW (1) Assets’ Average Age and Residual Useful Life (€th) (Years; 9M2011) EDPR Assets Age >130 129 127 Europe 3.8 US 2.6 EDPR 3.2 2009 2010 Long-term view on 0 5 10 15 20 25 current assets ...taking
Slide 10: €12bn of Invested Capital with solid Capital Structure
€12bn of Invested Capital creating a top wind player while keeping a solid Capital Structure 9M11 Invested Capital on Fixed Assets (€ milllion) Capital Structure 11.7 -1.0 10.3 11% Tax Equity -0.3 8.7 41% Net Debt 48% Equity PP&E (Gross) WIP Grants PP&E (Gross) PP&E (Net) Sep-11 Existing Assets Per
Slide 11: Right funding strategy to support growth
Right funding strategy to support growth in a capital intensive industry... 9M11: Debt Profile Debt Maturity @ Sep-11 (%) (€ million) 4,000 78% EUR 57% 3,000 Fixed 91% 2,000 USD 37% 1,000 8% Variable 9% BRL/PLN 7% 3% 3% 2% 2% 2% 2% 0 Type Currency 2011 2012 2013 2014 2015 2016 2017 >2018 Long term f
Slide 12: Financial Debt evolution in line with business growth
...with Financial Debt evolution in line with business growth and at controlled cost Financial Debt Net Interest Costs (€ billion) (€ million) +16% 3.8 3.5 3.6 3.3 3.4 +16% 48.4 46.0 48.9 42.3 44.5 3Q10 4Q10 1Q11 2Q11 3Q11 3Q10 4Q10 1Q11 2Q11 3Q11 Net Cost of Debt 2.9 2.8 3.1 3.3 3.4 Debt 5.0% 5.2%
Slide 13: €0.4bn raised through Multilaterals and Tax Equity in 2011
In 2011 €0.4bn were raised through Multilaterals and Tax Equity agreements Wind Farms Funding Projects’ Characteristics Project • Funding with BNDES at attractive rates Brazil Tramandaí 70 MW R$228m Finance • PROINFA project Pestera 90 MW Project • Funding with EIB/EBRD Romania €188m Cernavoda I & I
Slide 14: Implicit market valuation vs. Net invested capital
Market view: Implicit market valuation vs. Net invested capital on existing fixed assets Market’s implicit view on EDPR existing assets valuation (€ billion, 9M11) Per MW (€m) 1.13 1.20 8.7 8.3 7.9 1.0 0.4 3.4 Share price @ €4.29 0.1 3.7 Market Cap Minorities Net Debt Tax Equity EV Net Debt related
Slide 15: Wind Competitiveness: The European Case
Wind Competitiveness: The European Case
Slide 16: Wind industry entering a new cycle with improved performance
Wind industry is entering a new cycle and showing a remarkable improved performance Higher Longevity, and… …Lower energy cost (years, 9M2011) (per MWh) EDPR Assets Age Lower Capex/MW: -10% Europe 3.8 Manufacturing overcapacity and sellers competition leading to price pressure US 2.6 Higher productiv
Slide 17: EU mandatory targets for 2020 indicate increase of wind capacity
EU mandatory targets for 2020 indicate strong underlying increase of the wind capacity... RES in Energy mix Sector EU Renewable capacity per technology in 2020 (%) (%) (GW) New Capacity +2.4x 172 2010 Capacity 20% 135 Electricity +90 23% +32 84 Heating and 8.5% Cooling 47% 103 +58 44 41 82 +21 Trans
Slide 18: Market questions about wind sustainability
...on which the market has recurrently raised several questions about its sustainability 1 Is wind the most cost competitive renewable technology today? 2 Is wind a cost adequate technology to meet increasing demand? 3 Is wind profitable at current electricity wholesale prices? 4 Is wind tariff gene
Slide 19: Is wind the most cost competitive renewable technology today? Yes
Is wind the most cost competitive renewable technology today? Yes Levelised Cost by technology Weight of renewable generation and premium(1) (€/MWh) (%, by technology) Fuel 2010 2020E O&M Investment 244 225 2% 7% Solar 6% 11% CSP 18% 5% 14% Solar 34% PV 19% 125 Wind 42% 6% offshore 96 82% 69 Wind 61
Slide 20: Is wind a cost adequate technology to meet increasing demand? Yes
Is wind a cost adequate technology to meet increasing demand? Yes Levelised Cost by technology Wind and CCGT Levelised cost (€/MWh) (€/MWh, $/bbl) Dismantling €/MWh CO2 110 Fuel O&M CCGT Cost 100 Investment 90 Wind Cost + Backup 80 78 79 69 72 Wind Cost 70 58 60 50 40 Hydro Wind Nuclear CCGT Coal 40
Slide 21: Is wind profitable at current wholesale prices? No, but...
Is wind profitable at current electricity wholesale prices? No, but... IBERIAN MARKET Electricity CCGT Market Price - Levelised Cost market price Clean Spark Spread CCGT Return Wind Return €/MWh €/MWh €/MWh €/MWh 40 -22 -38 -29 Today 50 -12 -28 -19 60 -2 -18 -9 70 8 -8 1 1Q08 Price 80 18 2 11 …at ma
Slide 22: Is wind tariff generating an over-cost in electricity systems?
Is wind tariff generating an over-cost in the electricity systems? Yes, but... Electricity System with Wind Capacity Electricity System without Wind Capacity (Illustrative simulation, Iberian Market) (Illustrative simulation, Iberian Market) €/MWh €/MWh 90 Wind over-cost ~€2bn Increase in electricit
Slide 23: Case Study: Wind Farm Economics
Case Study: Wind Farm Economics
Slide 24: Wind business: capital intensive in development, cash-cow when operating
Wind business: competitive and capital intensive on development and a cash-cow when operating Development Cons- truction Funding Feed-in Feed-inTariffs tariff / Green Certificates / PPA PPA/ Pool Prices Operating & Maintenance Re-powering Option 0 5 10 15 20 25 years Early phases of project life to
Slide 25: Competitive capex is critical to maximize project profitability
Competitive capex is critical to maximize projects profitability Capex Breakdown (%, € million) Engineering Balance Electrical & Development Procurement & of Plant (BoP) Other Construction 20-30% Civil Works Transport • Optimize costs and select best turbine • Strategically select technology through
Slide 26: Different remuneration frameworks drive different revenue profiles
Different remuneration frameworks drive different revenues and Cash-Flow profiles Feed-inTariff Feed-in Premium with Collars price per MWh price per MWh Cap Floor Premium e.g.: Spain, Portugal, France e.g.: Spain (Market Option) 0 15/20yrs 0 20yrs Green Certificates PPA price per MWh price per MWh P
Slide 27: Wind generation: high EBITDA margin with high fixed cost
Wind electricity generation is a high EBITDA margin business, with a high fixed cost structure Operating Expenses EDPR 2009-10: Operational Efficiency Metrics (%) 100% 2009 2010 G&A Structure and corporate & Other costs Taxes EBITDA margin 75% 75% Linked to revenues Leases & evolution Rents Insuranc
Slide 28: Earnings profile of a generic wind project
Case Study: Earnings profile of a generic wind project ILLUSTRATIVE, NON-EXAUSTIVE Earnings and Free Cash-Flow profile (Net Debt) / Net Cash (€th/MW) (€ million/MW) Deleverage Period Debt paid in 10 years Free Cash-Flow 200 3.0 180 2.5 160 2.0 140 1.5 120 1.0 100 0.5 Initial Leverage 80% 80 0.0 60 -
Slide 29: Valuation model of a generic wind project
Case Study: Valuation model of a generic wind project Main Assumptions Terminal MW NCF Selling Price Capex Opex WACC CPI Value 1 28% €79/MWh €1.3m/MW €45k/MW 7.0% 2% 15% Valuation Model (illustrative, non-exhaustive) Years 0 1 2 3 ... 10 ... 25 26 Production (MWh) 2,365 2,365 2,365 ... 2,365 ... 2,3
Slide 30: 9M11 Operating and Financial Performance
9M11 Operating and Financial Performance
Slide 31: Installed capacity increased 15% YoY to 7.3 GW
Installed capacity increased 15% YoY to 7.3 GW YoY Capacity Increase 2011 Quarterly Additions (EBITDA GW + Eólicas PT (1)) (EBITDA MW + Eólicas PT (1)) % of 2011E Additions +15% 7.3 6.3 800-900 ~75% +118 +298 +604 +188 9M10 9M11 1Q11 2Q11 3Q11 9M11 4Q11E 2011E Additions • Ongoing growth: 953 MW inst
Slide 32: Execution of new 604 MW of quality assets
Execution of new 604 MW of quality assets with strong Cash-Flow visibility 9M11 Additions Remuneration Framework (EBITDA MW + Eólicas PT (1)) 604 70 PPA under the PROINFA program 99 PPA signed in November 2010 Expected Load Factor Two green certificates scheme approved by EU in July and 138 Romanian
Slide 33: Premium load factor of 28%
Top-class assets and portfolio diversification enabled a premium load factor of 28% Load Factor YoY Electricity Output (%) (TWh) 9M10 9M11 +22% 12.0 +0.1 EU 26% 25% +1.5 9.8 +0.6 US 30% 31% BR 27% 34% EDPR 28% 28% 9M10 EU US BR 9M11 •EDPR: average load factor stable at 28%, keeping its position as o
Slide 34: Price evolution impacted by US production weight and Forex
Price evolution unfavorably impacted by higher US production weight and Forex EDPR Price Evolution Impact on (€/MWh) EDPR Price €/MWh • Higher contribution from CEE countries -3% Europe +1.9€ • Recovery of Spanish pool price • Inflation update in Portugal 60 58 • Lower electricity spot prices US -1.
Slide 35: Revenues increased 16% YoY to €769m
Revenues increased 16% YoY to €769m... Revenues Main drivers for Revenues performance (€ million) +16% Strong electricity output increase (YoY) 769 US +28%; EU +14% 662 Stable top-notch load factor of 28% Different portfolio mix and unfavorable US$/€ Forex evolution 9M10 9M11 ...reflecting strong gr
Slide 36: EBITDA grew 16% to €548m and EBIT up 44%
EBITDA grew 16% to €548m and EBIT went up 44% to €239m... EBITDA (1) EBIT (€ million) (€ million) +16% x13 548 +16% +9% 473 (+17% in US$) €14m negative impact from €/$ forex +44% evolution 239 -2 166 +75 Useful life of assets increased to 25y 9M10 EU US BR 9M11 9M10 Δ EBITDA Δ D&A 9M11 EBITDA margin
Slide 37: Interest costs in line with growth, financial expenses hit by Forex
Interest costs in line with business growth but financial expenses penalized by Forex volatility Net Interest Costs 9M11 Net Financial Expenses (€ million) (€ million) €/Zloty YTD -11% 176 4.42 Forex 16 +16% Other 21 3.98 48.4 48.9 44.5 46.0 42.3 31/Dec 30/Sep €/Leu YTD -2% 4.36 Net 4.26 139 Interes
Slide 38: Net Profit of €63m, outpacing operating performance
Net Profit of €63m (x2.8 vs 9M10), outpacing operating performance Net Profit (€ million) YoY % • Strong operational growth EBITDA +16% x2.8 63 • High efficiency levels (EBITDA mg 71%) • Newly installed capacity D&A +1% • Higher useful life (from 20 to 25 years) Financial • Unfavourable Forex diff
Slide 39: Cash-Flow growth of 25% YoY
Quality assets are delivering a continuously solid Cash-Flow growth (+25% YoY) Operating Cash-Flow (Before Capex) Solid Portfolio Metrics (€ million) 9M11 7.0 GW 12.0 TWh +25% Brazil Poland/Romania 491 France/Belgium Portugal Regulated 45% 391 Frameworks Spain NYISO WECC ERCOT 40% Long-Term SPP Cont
Slide 40: Operating Cash-Flow covered 95% of 9M capex
Operating Cash-Flow covered 95% of 9M capex 9M11: Source and Use of Funds (1) (€ million) Source of Funds Use of Funds 26 73 266 307 261 331 185 491 516 Operating Cash Proj. Finance Tax Equity Divestments PP&E Acquisitions & Other Capex Cash-Flow & Equiv. & Corp. Debt & Grants Suppliers Investments
Slide 41: Disclaimer
Disclaimer This presentation has been prepared by EDP Renováveis, S.A. (the "Company") solely for use at the presentation to be made on November 2011. By attending the meeting where this presentation is made, or by reading the presentation slides, you acknowledge and agree to be bound by the followi
Slide 42: IR Contacts
IR Contacts Rui Antunes, Head of IR Francisco Beirão Diogo Cabral E-mail: ir@edpr.com Phone: +34 914 238 402 Fax: +34 914 238 429 Serrano Galvache 56, Edificio Olmo, 7th Floor 28033, Madrid, Spain EDP Renováveis online Next Events Site: www.edpr.com 10-11 Nov.: London Roadshow 14-16 Nov.: Netherland
Slide 43: renovaveis
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