EDP Investor Day. 5 years of IPO EDP in Brasil

Transcription

1 EDP Investor Day 5 years of IPO EDP in Brasil

2 Disclaimer This presentation may include forward-looking statements of future events or results according to regulations of the Brazilian and international securities and exchange commissions. These statements are based on certain assumptions and analysis by the company that reflect its experience, the economic environment and future market conditions and expected events, many of which are beyond the control of the company. Important factors that may lead to significant differences between the actual results and the statements of expectations about future events or results include the company s business strategy, Brazilian and international economic conditions, technology, financial strategy, public service industry developments, hydrological conditions, financial market conditions, uncertainty of the results of future operations, plans, objectives, expectations and intentions, among others. Considering these factors, the actual results of the company may be significantly different from those shown or implicit in the statement of expectations about future events or results. The information and opinions contained in this presentation should not be understood as a recommendation to potential investors and no investment decision is to be based on the veracity, current events or completeness of this information or these opinions. No advisors to the company or parties related to them or their representatives shall have any responsibility for whatever losses that may result from the use or contents of this presentation. This material includes forward-looking statements subject to risks and uncertainties, which are based on current expectations and projections about future events and trends that may affect the company s business. These statements include projections of economic growth and energy demand and supply, as well as information about the competitive position, the regulatory environment, potential opportunities for growth and other matters. Several factors may adversely affect the estimates and assumptions on which these statements are based..

3 Miguel Amaro CFO of EDP in Brasil 5 years of IPO EDP in Brasil

4 Adoption of IFRS

5 Overview IFRS is the world s standard in accounting practices, with full adoption in certain countries since 2005 Approach to susbstance over form and a judgemental character about the criteria of bookkeeping In Brazilappearedin 2005 throughaccounting Pronouncements Committees(CPC), whosegoalis to issuepronouncementsthatlead to convergenceofaccountingto international standards 4

6 Overview In 2007/2008, 15 Pronouncements and 2 Orientations were published to be applicable in 2008 In 2009, 27 Statements, 10 Interpretations and a Guideline for implementation in 2010, with effect retroactive to January 1, 2009 The Ibracon, CVM, and several companies of the Electric Power Sector are still in the discussion on the applications of ICPC01 and registration of regulatory assets and liabilities EDP-Energias do Brasil reports under IFRS for its controller since 2005

7 Application Method in EDP -Energias do Brasil Conceptual analysis of CPC Study the applicability Preparation of memorandum of application and test model Implementation of CPC Policies definitions and disclosure Internal Trainings Discussion forums Discussion of each CPC with external consultant Internal Work Groups Individual plans of applicability Creation of specific work groups Fieldwork (reading all contracts, discussion with business areas, etc...) Definition of application forms and implementation Documentation in memos Preparation of Test models After test and acceptance of models Designed the implementation in SAP or other auditable systems The memos and models are discussed with auditors Policies of application of CPCs will be written and disclosed Disclosure through internal regulatory system, intranet, portal of services and workshops

8 CPC 00 CPC 01 CPC 02 CPC 03 CPC 04 CPC 05 CPC 06 CPC 07 CPC 08 CPC 09 CPC 10 CPC 11 CPC 12 Framework for the Preparation and Presentation of Financial Statements Impairment of Assets Effects of Changes in Foreign Exchange Rates and Conversion of Financial Statements Statement of Cash Flows Intangible Assets Related Party Disclosures Leases Grants and Government Assistance Pronouncements, Interpretations and published Orientations Implemented in 2009 Transaction Costs and Premiums on Issuance of Securities (IAS 39 - parts) Value Added Statement (VAS) Share-Based Payment Insurance Contracts Present Value Adjustment CPC 13 Initial Adoption of Law no /07 and the Provisional no. 449/08 CPC 14 Financial Instruments: Recognition, Measurement and Disclosure (Phase I) OCPC 01 Real estate entities OCPC 02 Explanations of the 2008 Financial Statements 7

9 Pronouncements, Interpretations and published Orientations CPC 15 CPC 16 CPC 17 CPC 18 CPC 19 CPC 20 CPC 21 CPC 22 CPC 23 CPC 24 CPC 25 CPC 26 CPC 27 CPC 28 CPC 29 CPC 30 CPC 31 To be implemented in 2010 Business Combination Inventory Construction Contracts Investments in Affiliates and Controlled Investment in Joint Venture Borrowing Costs Interim Statements Informations per Segment Accounting Policies, Changes in Accounting Estimates and Rectification of Errors Subsequent Events Provision for Liabilities and Contingent Assets Presentation of Financial Statements Permanent assets Investment Property Biological Assets and Agricultural Product Revenues Asset Held for Sale and Discontinued Operations 8

10 CPC 32 CPC 33 CPC 34 CPC 35 CPC 36 CPC 37 CPC 38, 39, 40 Income Taxes Employee Benefits Pronouncements, Interpretations and published Orientations To be implemented in 2010 Exploration and Evaluation of Mineral Resources Separate Statements Consolidated statements Initial Adoption of IFRS Financial Instruments CPC 43 Initial Adoption of CPCs 15 to 40 ICPC 01 ICPC 02 ICPC 03 ICPC 04 ICPC 05 ICPC 08 Concession Contracts Construction Contract Real Estate Sector Leases Share-Based Payment Transactions in Shares of the Group and held in Treasury Accounting for Proposed Dividend Payment ICPC 09 ICPC 10 ICPC 11 ICPC 12 OCPC 03 Individual Statements, Consolidated and Separate and Application of Equity Method Initial Application of Fixed Assets and Investment Property Receipt of Customer Asset Transfer Changes in Liability for Decommissioning, Restoration and Similar Liabilities Financial Instruments: Recognition, Measurement and Disclosure 9

11 Summary of CPCs Effects CPC Effect Balance Sheet Income Statement CPC 04 Reversal of deferred and Deferred - disappear / Intangible reclassified intangibles CPC 12 Present value adjustments Customers / Suppliers CPC 15 Business Combination Investment / Goodwill / Assets / Depreciation / Deferred Tax CPC 20 Capitalization financial charges Financial charges / Fixed Assets / Intangible Assets / Amortization / Accounts Receivable (ICPC01) CPC 25 Contingencies Investment / Goodwill / Provisions for risks and charges / Tax Deferred / Provisions for contingent assets and liabilities CPC 27 Initial revaluation of fixed assets Fixed Assets / Amortization/ Equity Amortization / Deferred Tax Financial charges /Amortizations Provisions for risks and charges / Tax Deferred Amortization CPC 38, 39 e 40 / OCPC 30 ICPC 01 / CPC 17 Recognition, measurement and disclosure of financial instruments Concessions Registration and Margin of Construction Balance and results according to the nature of each financial instrument of hedging or trading Fixed Assets/ Intangible Assets / Accounts receivable / financial costs / Special Duties Revenues/ Construction Costs /financial charges ICPC 03 Leasing Possible recognition or non-recognition of assets ICPC 08 Proposed dividend payment Liabilities - Payable / Equity - Undistributed earnings 10

12 Impact of CPCs per segment EDP -Energias do Brasil Group Generation Transmission Distribution Commercialization Others CPC 27 CPC 27 CPC 27 on s and es CPC s with impact financial statements explanatory note CPC 38/39/40 / OCPC 03 ICPC 01 / CPC 20 / CPC 17 CPC 04 CPC 06 / CPC 25 / CPC 26/ CPC 32 / CPC 33 / ICPC 03 / ICPC 08 / ICPC 09 CPC 38/39/40 / OCPC 03 CPC 15 11

13 Effects on Financial Statements for the Controller Group (do not include CPCs under discussion) 06/30/ /30/2010 Balance Sheet (R$MM) DRE (R$MM) IFRS BR GAAP IFRS BR GAAP Current Assets 2,013 2, Sales 2,422 2, ,475 Other Non-Current Assets Sales Costs 1,246 1, ,358 Non-Current Taxes Gross Margin 1,176 1, ,116 Intangible assets 2,992 1,137 1,855 Opex Tangible assets 4,982 6,562-1,580 Other costs Total Asset 11,721 11, Total Opex Current Liabilities 2,121 2, EBITDA Other Non-Current Liabilities Amortization and Provisions Loans MLT 2,134 2, EBIT Diferred Taxes Financials Total Liability 5,304 4, RBT Equity 4,586 4, Taxes Minority Interests 1,832 1, Minorities Total Liability + E+ MI 11,721 11, Net Income There are differences between local IFRS and IFRS for the controller, due to the timing of adoption; On the date of initial adoption is where there are larger impacts by adjustments of asset / liability or harmonization of concepts; The record of regulatory assets and liabilities (still under discussion) should bring more volatility to the results of such companies 12

14 Important Messages The International practices IFRS do not alter: The relationship with clients; The companies strategy; The companies operational management; The companies financial management; The cash flow generation; 13

15 Financial Perfomance (BR GAAP)

16 WhatdidthemarketsayaboutEDP - Energias do Brasil! Energiasdo Brasil ENBR3 - the company has to deliver more growth and improve its current distribution operations... March 12 th 2008 EdB s low payout ratio combined with group s limited project pipeline and its delay in reducing discos manageable costs were our main points of concern with the stock March 6th 2008 The portuguese accent complicated the understanding sometimes...he has a softer accentbutheneedsto beawareofthisandtalk slowerandlouder. He needsto answerthe questions asked. PCA 1Q09 15

17 Growth Consolidated Net revenue (R$ MM) Consolidated EBITDA (R$ MM) +8% 4,323 3,985 4,513 4,610 4, , % 1,123 1,364 1, Net RevenueBreakdown 1 (%) EBITDA Breakdown 1 (%) 100% 100% 87% 79% 77% 72% 67% 84% 75% 58% 56% 49% 14% 19% 4% 10% 11% 9% 11% 12% 14% 15% % 40% 48% 11% 25% 6% 0% 4% 4% 2% Distribution Generation Commercialization 1) Do not contemplate intercompany eliminations and holding s results. 2) Includes Enersul s EBITDA before the asset swap. 16

18 Efficiency R$ 952 MM R$ 827 MM R$ 746 MM R$ 364 MM R$ 372 MM H2009 1H2010 Personnel Material Third Party Services Others Provisions 10 quarters of operational costs evolution below inflation Focus in increasing productivity, improving proccess and grabing the systems potential Simplification of organizational and societary structures

19 Investiments and Credit Lines Capex(R$ millions) Distribution 409 Generation Others (Millions) Approved Credit Lines Period Instrument Total Amount Used Available Date to be used Term BNDES - CALC R$900 R$190 R$ years BNDES Porto do Pecém I (1) R$705 R$350 R$ years IDB Porto do Pecém I (1) (4) US$163.5 US$130 US$ years / 13 years EIB (2) years BNDES (PCH Santa Fé) R$76 R$76 R$ years Agricultural Credit Line (Escelsa) R$135 R$135 R$0 n.a. 05 years Issuances Total Amount Used Cost Follow-On ENBR3 (3) R$441 R$255 n.a. n.a. n.a. Debentures (Bandeirante) R$390 R$0 CDI + 1.5% n.a. 06 years (2) (3) (4) (1) Refers to EDP Energias do Brasil s stake (2) Credit Line of 90 Millions ( 45 Millions for each disco) (3) Amount used to pay immediately the credit line used to pay for the withdrawal s right (4) US$ 327 Millions: a) US$ 147 Millions "A Loan" - 17 years; b) US$ 180 Millions "B Loan" - 13 years 18

20 Debt Profile R$ 2,782 MM R$ 3,097 MM R$ 3,138 MM R$ 2,838 MM R$ 2782 MM R$ 3097 MM R$ 3138 MM R$ 2838 MM 11% 35% 25% 20% 38% 38% 51% 54% 89% 65% 75% 80% 55% 50% 45% 41% H H2010 Long Term Short Term Fixed Rate Floating Rates Dollar TJLP Stable evolution of gross debt with longer tenors and less exposure to floating rates Financial flexibility allows the exercise of growth options Little exposure to foreign currencies Redução de custos financeiros 19

21 Net Debt, Rating and Amortization Net Debt (R$ millions) and Net Debt/EBITDA* (x) Ratings Company Global Update outlook 2,402 2,403 2, x 1.8x 1.8x 1, x 1, x 2, x Moody s Bandeirante Baa3 Abr/10 Stable Moody s Escelsa Baa3 Abr/10 Stable Moody s ENBR Ba1 Abr/10 Stable Mar/09 Jun/09 * Last 12 months EBITDA Sep/09 Dec/09 Mar/10 Jun/10 Average Term in 06/30/10: 5,2 years AverageCostofDebtin06/30/10:8,1% Debt Amortization Schedule* (R$ millions) Short Term Debt(R$ millions) , Cash (Jun/10) After 2013 Bandeirante Escelsa Energest Enerpeixe Investco Pecém 2010 * Consider principal + interest + hedge operations 20

22 Cash Circulation... Dividends Received by the Holding per Segment(%) 100% % 78% 81% 68% 75% 3% 16% 27% 20% 11% 19% 6% 8% 5% 5% Total in R$ MM Distribution Generation Commercialization Operational Start-up Suíça s Repowering Enerpeixeand 4ª Machine of Mascarenhas SHP São João Asset Swap with Rede Group SHP Santa Fé 21

23 ...and its limitations... Main indicators of a generator Age of the Plant 250 Operational Start-up Gross Revenue EBITDA EXAMPLE HYDRO PLANT (% of installed capacity) 2% Accumulated Debt 150 Cash Effective Period of Construction 12 Average EBITDA margin 75-80% 30 Years 55% Reduced Cash-flow during debt payment From 0 to 5 years From 6 to 10 years From 11 to 50 years More than 50 years In the generation segment, 84% of the actual installed capacity started operations less than 10 years ago; The available cash flow for shareholders is still limited by the debt service; In general, the plants have covenants that limit dividend payments until the financing discharge

24 Dividend Per Share (R$) of Utility Companies Listed in Novo Mercado... Do not prevent differenciated shareholders remuneration , Company A Company B Company C ENBR3 Company D ENBR3 Performance R$ 45 R$ 40 R$ 35 R$ 30 R$ 25 R$ 20 R$ 15 jul-05 jan-06 jul-06 jan-07 jul-07 jan-08 jul-08 jan-09 jul-09 jan-10 jul-10 TSR ENBR3 +142% Goal: Continue to remunerate shareholders in a consistent way! ** Appreciation until 09/21/

25 with manageable expenses that have been under control since 1Q08., consolidating the company as a benchmark in cost control. July 2010 What do the market say about EDP-Energias do Brasil! ENBR3: waiting more energy from Brazil ii) increasingly active capital structure management, iv) responsible / prudent investment policy and vi) future expansion projects. July 2010 with reasonable cost control slightly lower energy losses at 12.7%. July 2010 IR Activity Last 52 Weeks 1 Deal Road-Show (follow-on) 160 one-on-ones 3 ND Road-Shows 8 Conferences I felt a great change especially in the accessibility of top management and the communication with the market improved significantly. PCA 3Q09