1Q06 Consolidated Results

Transcription

1 Q06 Consolidated Results Flavio Cattaneo Chief Executive Officer Fabio Todeschini Chief Financial Officer May 0th,

2 Agenda Highlights & Recent Developments Q2006 Results Closing Remarks Annexes

3 Highlights & Recent Developments First Quarter Results MACRO Continued volume growth: electricity demand up 2.9% vs Q05; 3.4% vs Q04 Ongoing appreciation of BRL$ (average Q06 vs average Q05 +26%) RESULTS Significant contribution from TSO activities and Brazilian assets Revenues, EBITDA and EBIT up >9% vs Q05 Enhanced profitability: Net Income +29% vs Q05 Sound results and growing margins 2

4 Highlights & Recent Developments Italian Operations Investment Plan March 3 st : Development Plan for the National Transmission Grid approved by the Ministry of Productive Activities (MAP) SAPEI and Matera-S. Sofia projects kicked-off M&A April 3 th : Authority published incentive mechanisms for Grid Consolidation (AEEG resolution 73/2006) Ongoing contacts with other Grid owners to complete the acquisitions of their networks Other March 0 th : TERNA confirmed in the FTSE4Good Europe Index April 27 th : joined Confindustria (Confederation of Italian Industry) 3

5 Highlights & Recent Developments Brazilian IPO 3 January 3 March Announcement of the intention of listing Brazilian activities Munirah acquisition effective Munirah merged into TSN 00% Terna Participações S.A. 27 April BoD approval of: - Reorganization of Brazilian activities under TERNA Participações S.A. - Filing of documentation for the IPO - Preliminary offering structure 00% 00%* * Including Munirah 2-3 May Filing with CVM and BOVESPA Rationalization of structure + roadmap for the IPO 4

6 Highlights & Recent Developments Capital Structure and Funding Rating New Funding Issues LT Debt S&P AA- affirmed Moody s Aa3 affirmed Fitch AA new Approved up to 2bn Euro EMTN Program Renegotiated syndicated bank facility From Euro 500 to 750 million Reduction of margins and fees Strong credit ratings and competitive LT financing capacity make TERNA secure and financially sound 5

7 Agenda Highlights & Recent Developments Q2006 Results Closing Remarks Annexes 6

8 Q 2006 Results Operational data and Quality of Service OPERATIONAL GWh Q06 Q05 % Total Net Production 78,9 69, % Net Import/(Export) 7,409 3, % Total Italian Demand 85,600 83,8 2.9% Availability of the System (%) Average Interruption Time AIT (Min/year) QUALITY Target 99% Target ~.0 Q05 Q06 Q05 Q06 Favourable demand evolution combined with good quality standards (I Target for the full year 7

9 Q 2006 Results Income Statement In mn Euro Consolidated Change Q06 Q05 mm % Operating Revenues % Grid Utilization Fee % Other Energy Items % Regulated Activities in Brazil % Other Activities % Operating Expenses % EBITDA % Italy % Brazil % EBITDA Margin (%) 7% 72% 8

10 Q 2006 Results Revenues Breakdown In mn Euro Regulated Revenues Other Revenues Grid Utilization Fee RTL GRTN TERNA Q Q06 Brazil Q Q06 Volume and tariff effect (+24mn) Exchange rate effect (+3mn) Other Energy Items Change in perimeter (+9mn) Q05 Q06 Dispatching (8mn) Measure (2mn) Other Activities Q05 8 Unregulated revenues 7 Other revenues Q06 One off reversal of Grid Revenues in Q05 (-6 m.ni ) 9

11 Q 2006 Results Operating Costs Breakdown In mn Euro Operating Costs Personnel Evolution Other () Final Headcount 3,442 3, Average Headcount 3,455 Services 25 Personnel % Brazi ) Italy 3,389 3,376 Q05 Q06 FY05 Q06 Q06 Change in perimeter: + 2mn euro Stable headcount (+2): 3,442 Italy: -3 rightsizing programmes Brazil: +5 reorganization (I Includes Raw Materials, Rental and Lease Expenses and Miscellaneous, net of Capitalized Costs 0

12 Q 2006 Results Income Statement In mn Euro Consolidated Change Q06 Q05 mm % EBITDA % D&A % EBIT % Net Interest Expense % Taxes % Tax rate (%) 39.8% 39.8% Net Income %

13 Q 2006 Results Capex Breakdown In mn Euro Q06 Q05 Main Projects 8.7% Remuneration- Development % Remuneration 5 Turbigo - Rho - Maintenance Other 5 2 TOTAL ITALY TOTAL BRAZIL TOTAL CAPEX SARCO (Sardinia Corsica) SAPEI (Sardinia Mainland) Matera S.Sofia Laino- Rizziconi Work in progress Completion 2

14 Q 2006 Results Key Balance Sheet Items In mn Euro Q06 FY05 Change Assets PP&E 4,697 4,646 5 Intangible asset, net Financial Inv. And Other Total Fixed Assets 5,023 4, Net WC (87) (79) (8) Funds (628) (66) (2) Net Invested Capital 4,208 4,7 37 Financed by: Net Debt 2,94 2, Shareholder's Equity 2,04,902 2 D/E ratio

15 Q 2006 Results Cash Flow In mn Euro Consolidated Q06 Q05 Net Income Depreciation Net Change in Funds 2 3 Operating Cash Flows 5 24 Change in WC 8 (35) Cash Flow from Operating Activities Capital expenditures (43) (28) Other fixed asset changes (38) (9) Free Cash Flow Dividends - - Change in Capital - - Change in Financial Position () Net of assets disposals (2) Not including /$R exchange rates and fair value on Bonds () (2) (2) 4

16 Q 2006 Results Consolidated Net Financial Position 0 2, ,94 In mn Euro, Brazil Italy 427 () EIB Loans+Banks ST (2) Brazilian Debt Terna SpA Bonds Ias Effect Consolidated Gross Debt Cash & Cash Equivalents Italy Cash & Cash Equivalents Brazil Consolidated Net Debt Change in Net Financial Position Net Debt 3/2/05 Fair value on Bonds and Derivatives Change in Financial Position Exchange Rates 2,269 (2) (78) 5 LT Debt Ratings S&P s: AA- Moody s: Aa3 Net Debt 3/03/06 2,94 Fitch: AA Change in Net Debt +74 () EIB (European Investment Bank) Loans (2) No recourse project finance debt 5

17 Q 2006 Results Gross Debt Structure- IAS Debt by Instruments ( mn) 2, Currency % 2% Debt Breakdown Fixed/Floating mix In mn Euro,399 79% Q06 3/03/2006 Terna SpA Bonds EIB Loans Euro Real USD Italian Debt Floating 39% Fixed 6% Terna SpA ST Banks Loans Brazilian Debt Cons. Debt 50% 50% Average Maturity Average Cost of Debt Bond 2024 Bond 204 Eib Loans ST Banks Loans Terna SPA Debt 3.3 Italy 3.3% Brazil.6% Real Loans Dollar Loans Total B razilian Debt 0.5 Terna Group 4.8% Total Terna Debt Years 6

18 Agenda Highlights & Recent Developments Q2006 Results Closing Remarks Annexes 7

19 Closing Remarks Looking ahead, we are focused on: Successful completion of Brazilian IPO Unification of the Italian Grid Investments and development of the Grid Exploiting operational synergies On track with our targets 8

20 Agenda Highlights & Recent Developments Q2006 Results Closing Remarks Annexes 9

21 Italian Electricity Market Evolution Energy Demand TWh , Monthly Trend jan. feb. march 2006 vs ,9% 2006 vs ,4% Cumulated Trend Source: Terna monthly reports jan feb march

22 Q 2006 Results Brazilian Subsidiaries (ITA Gaap) In mn Euro Revenues Q Q Change +6 Q Q Change + 7 Total Q Operating Expenses () EBITDA EBIT Net Interest Expense (2) Taxes Net Income Net Invested Capital Financed by: Net Debt Shareholders Equity () Net of capitalized costs (2) Of which Interest on Equity Euro 8 mn Note: 2005 Balance Sheet figures are as of December

23 Q 2006 Results Exchange Rates Q06 Q05 FY05 Closing Rate Euro/BRL$ Average Rate for the Period IGPM 0.70%.54%.2% 22

24 Disclaimer THIS DOCUMENT HAS BEEN PREPARED BY TERNA S.P.A. (THE COMPANY ) FOR THE SOLE PURPOSE DESCRIBED HEREIN. IN NO CASE MAY IT BE INTERPRETED AS AN OFFER OR INVITATION TO SELL OR PURCHASE ANY SECURITY ISSUED BY THE COMPANY OR ITS SUBSIDIARIES. THE CONTENT OF THIS DOCUMENT HAS A MERELY INFORMATIVE AND PROVISIONAL NATURE AND THE STATEMENTS CONTAINED HEREIN HAVE NOT BEEN INDEPENDENTLY VERIFIED. NEITHER THE COMPANY NOR ANY OF ITS REPRESENTATIVES SHALL ACCEPT ANY LIABILITY WHATSOEVER (WHETHER IN NEGLIGENCE OR OTHERWISE) ARISING IN ANY WAY FROM THE USE OF THIS DOCUMENT. THIS DOCUMENT MAY NOT BE REPRODUCED OR REDISTRIBUTED, IN WHOLE OR IN PART, TO ANY OTHER PERSON. THE INFORMATION CONTAINED HEREIN AND OTHER MATERIAL DISCUSSED AT THE CONFERENCE CALL MAY INCLUDE FORWARD-LOOKING STATEMENTS THAT ARE NOT HISTORICAL FACTS, INCLUDING STATEMENTS ABOUT THE COMPANY S BELIEFS AND EXPECTATIONS. THESE STATEMENTS ARE BASED ON CURRENT PLANS, ESTIMATES AND PROJECTIONS, AND PROJECTS. HOWEVER, FORWARD-LOOKING STATEMENTS INVOLVE INHERENT RISKS AND UNCERTAINTIES. WE CAUTION YOU THAT A NUMBER OF FACTORS COULD CAUSE THE COMPANY S ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE CONTAINED IN ANY FORWARD-LOOKING STATEMENT. SUCH FACTORS INCLUDE, BUT ARE NOT LIMITED TO: TRENDS IN COMPANY S BUSINESS, ITS ABILITY TO IMPLEMENT COST-CUTTING PLANS, CHANGES IN THE REGULATORY ENVIRONMENT, ITS ABILITY TO SUCCESSFULLY DIVERSIFY AND THE EXPECTED LEVEL OF FUTURE CAPITAL EXPENDITURES. THEREFORE, YOU SHOULD NOT PLACE UNDUE RELIANCE ON SUCH FORWARD-LOOKING STATEMENTS. 23

25 Contact Us Investor Relations Team: Elisabetta Colacchia: Antonio Russi: Federica Perugini Catherine Clara Visit our website at: (Investor Relations) 24