A New Red Eléctrica February 2003

Transcription

1 RED ELÉCTRICA DE ESPAÑA A New Red Eléctrica February 2003

2 Red Eléctrica at a Glance Core Business: Electricity Transmission in Spain Main owner of Spain s transmission grid Grid Manager and System Operator Manager of international electricity exchanges Telecoms Provider of capacity services to carriers and telecommunication infrastructure services Electricity Transmission Abroad Investments to-date: REDESUR-Peru and Transportadora de Electricidad (TDE)-Bolivia Specialised consulting services TICKER: REE REE in the Stock Exchange Free-float: 31.5%or 42,610,050 shares Market Capitalization: 1,304 mn (as of Dec. 31, 2002) 2

3 Highlights of 2002

4 Highlights of 2002 Outperformed its Spanish and European utilities peers by 13.8% and 26.5% respectively IBEX 35 Energy Sector REE DJ EuroStoxx Utilities 4

5 Highlights of 2002 Continued to Deliver Strong Financial Results Adjusted Turnover* EBITDA million million +8.1% CAGR % CAGR % % *Net of energy purchases EPS Debt / Gearing* 0,51 0, % CAGR 0,61 0,67 0, % Net debt Gearing 0, , ,42 0, , * Net debt / equity Figures from 2000, 2001 and 2002 are Consolidated figures 5

6 Highlights of 2002 Reached an Investment Record Assets Commissioned Change Lines 710 km 245 km km Positions 88 units 48 units + 40 units Transformation Capacity 2,250 MVA 600 MVA + 1,650 MVA Investments in the transmission network reached 203 mn 6

7 Highlights of 2002 Acquired transmission assets from Endesa and Unión Fenosa km 400 kv , Accretive from day 1 11,186 Total Price: 1,345 mn km 220 kv % debt financing Positions 808 1, mn in transmission revenues Transformation Capacity (MVA) , mn in EBITDA + 70 mn in EBIT REE Endesa + U. Fenosa 7

8 Highlights of 2002 Set the Basis to Become the Spanish TSO Allocation of transmission Revenues in 2002 U. Fenosa 8% Endesa 18% Iberdrola 15% Other 2% REE 57% Agreement with CVC 25% stake in Redalta: 14.9 million Operation and maintenance services from the 4th year onwards can be provided by REE Call option to acquire Iberdrola s transmission assets in the medium term At present, REE owns 84% of the transmission network 8

9 Highlights of 2002 Optimised Capital Structure Capital Structure REE Pretransaction (1) New REE (2) EBITDA / Interest New REE 5,3x (2) Net debt 711 mn 2,066 mn National Grid (A2/A) 3,7x Net debt / (Net debt + Equity) 47% 71% Iberdrola (A2/A+) Endesa (A2/A) 2,9x 2,8x (1) Based on the results of the first 9 months of 2002 (2) 2003 Forecast Anglian Water (A3/A-) 2,4x Reduced WACC due to higher gearing Strong credit rating (Moody s: A2) 9

10 Highlights of 2002 Strategic Repositioning: Improving Quality of Earnings Increase in Core Business Optimised leverage Synergies on acquired assets Capex: up from 760 mn to 1,000 mn Reduction in Telecoms expectation EBITDA > 0 in Net income > 0 in Capex: down from 400 mn to 150 mn International investments assumed EPS neutral in plans, therefore a source of further upside 2006 EPS Breakdown International 4% Telecoms 4% 92% Transmission & System Operation 10

11 Positive Future Developments

12 Positive Future Developments Modification to Law 54/97: Shareholders Structure Current Capital Structure Law 53/2002 (December 30) SEPI 28.5% Endesa 10.0% U. Fenosa 10.0% Iberdrola 10.0% Free-float 31.5% H. Cantábrico 10.0% No shareholder, other than SEPI, can hold a stake or voting rights of more than 3% of REE Other than SEPI, voting rights in excess of 3% may not be exercised The reduction to 3% must be carried out during 2003 SEPI is to hold at least 25% stake in REE until 31 Dec and thereafter to hold, in any case, 10% 12

13 Positive Future Developments Capturing the Growth in Network Expansion The Spanish Energy Infrastructure Plan estimates investment requirements for the transmission sector of 2.7 billion (RAB) over Electricity Demand: Growth Forecast for Scenario High Base Low Growth (CAGR) 3.5% 3.3% 3.0% Investments needs in the Spanish transmission network Strengthening of the transmission network Connection of new wind generation and CCGT capacity Supply to new high speed train connections International interconnections REE plans to invest 1.0 billion during

14 Positive Future Developments Synergies in Operations and Benefits of Scale Efficiencies in procurement Minimum impact on overhead costs Ability to adopt O&M industry best practices Installations / equipment standardization Technological intensity Efficiencies in engineering and construction Potential increase of 2% in EBITDA margin in the short term; additional margin gains in the medium/long term 14

15 Positive Future Developments Attractive Earnings Growth and Dividend Pay-out Policy Target EPS for : 13-15% (CAGR) Target dividend pay-out ratio: 65%-70% Dividend per Share Pay-out Euros 0,308 0,365 0,415 0,455 65,7% 67,4% 67,8% +13.9% CAGR 60,0% +7.8 pp REE is a premier yield stock in the European utilities sector: 2002E dividend yield = 4.9%* * Based on First Call Consensus and REE stock price as of December,

16 Positive Future Developments Large Scale in an Evolving Market Comparable Networks Medium/long term Perspective RTE (France) National Grid (England & Wales) New REE Elia (Belgium) Terna (Italy) REE Pre- Transaction REN (Portugal) Svenska Kraftnett (Sweden) Statnett (Norway) Tennet (Holland) Estimated enterprise value, in million 0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 TSO Without TSO Potential to be an European leader as TSO becomes the dominant model in Europe Comparable European Networks. Networks already sold or potentially for sale in the forthcoming years. Source: CSFB Transition Transmission, June 10th, 2002, except for RAB in National Grid and Elia ; and New REE 16

17 Summary A New Red Eléctrica Strategic repositioning Positioned as pure TSO Limited exposure to non-core assets Positioned to be European leader Financially attractive Optimised capital structure Improved quality of earnings Synergies and domestic CAPEX enhance EPS growth Attractive dividend growth Creation of shareholder value 17

18 This document has been prepared by Red Eléctrica de España, S.A. for the sole purpose described therein. In no case may it be interpreted as an offer made by any entity mentioned therein to sell, exchange or purchase, nor may it represent an invitation to make any type of offer, particularly, to acquire or purchase any security issued by said companies. Its content has a merely informative and provisional nature and all statements contained therein respond to intentions, expectations and forecasts made by Red Eléctrica de España, S.A. or the management thereof. Said content has not been necessarily independently verified and is, in any case, subject to negotiation, changes and modifications. In this regard, neither Red Eléctrica de España, S.A. nor any of its advisors shall be liable for the accuracy, correctness or completeness of the information or statements included in the document, and in no event may its content be construed as any type of explicit or implicit representation or warranty made by Red Eléctrica de España, S.A. Likewise, neither Red Eléctrica de España, S.A. nor any of its advisors shall be liable in any way whatsoever (including negligence) for any loss or damage that may arise from the use of this document or of any content therein. Furthermore, Red Eléctrica de España, S.A. does not undertake to publish any possible modifications or revisions of the information, data or statements contained herein, should there be a change of strategy or intentions, or unforeseeable facts or events were to occur that affected the same. This disclaimer must be taken into account by any persons or entities to which the present document is addressed, as well as by those who consider as necessary to adopt decisions or issue or broadcast opinions on the securities issued by Red Eléctrica de España, S.A. and, in particular, by the analysts handling the same, without prejudice to the possibility of consulting the documentation and public information that has been notified or recorded at the Spanish Securities Market Commission (Comisión Nacional del Mercado de Valores), a consultation which Red Eléctrica de España, S.A. recommends. 18

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