reuniões individuais com analistas sp - mês de maio

35
1 May 2006

Upload: equatorialri

Post on 05-Dec-2014

377 views

Category:

Economy & Finance


1 download

DESCRIPTION

 

TRANSCRIPT

Page 1: Reuniões individuais com analistas   sp - mês de maio

1

May 2006

Page 2: Reuniões individuais com analistas   sp - mês de maio

2

Company Overview

2

Page 3: Reuniões individuais com analistas   sp - mês de maio

3

Electricity Distribution in the State of Maranhão

2nd largest distributor in Brazil’s Northeast in terms of concession area (333,366 km2)4th largest distributor in number of consumers5th largest distributor in Northeast in terms of energy consumption50,000 km of transmission lines and 647,000 poles

RS

SC

PR

SP

MG

GO

MT

AC

AM

RR

ROBA

PI

MAPA

AP

TO

CERN

PEAL

SE

MS

RJ

ES

DF

PB

Note: Data from ABRADEE, CEMAR reports. Data as of 2005.

Volume Breakdown (GWh)

2,793 GWh

23%

17%16%

20%

24%Residential

ResidentialLow Income

Industrial

Commercial

Other

1.3 million consumers

Consumers Breakdown

28%

57%

1%

8%6% Residential

ResidentialLow Income

Industrial

CommercialOther

Page 4: Reuniões individuais com analistas   sp - mês de maio

4

Corporate Structure

Brasil Energia I(3)

Pactual Fund(1) GP Investimentos(2)

Eletrobras Others

New Acquisitions

Total: 34.0%Voting: 33.9%

Total: 0.7%Voting: 0.7%

Total: 65.4%Voting: 65.5%

Total: 40,6%Voting: 62.1%

Total: 56.8%Voting: 36.3%

Total: 46.2% Total: 53.8%

Management

Total: 2.6%Voting: 1.6%

Outstanding Units:

65.558.392

(1) Pactual Latin America Power Fund Ltd., fund managed by Pactual(2) Funds managed by GP Investimentos(3) Includes shares held through Tordezilhas S.A., whole owned subsidiary of Brasil Energia I

Page 5: Reuniões individuais com analistas   sp - mês de maio

5

Corporate Structure (fully diluted)

Corporate Structure Comparison - Before and After Stock Option Programs Full Dilution Effects

Company Shareholders Total Voting Total Voting

Pactual Fund(1) 46.2% - 46.2% -GP Investimentos (2) 53.8% - 53.8% -

Brasil Energia I(3) 40.6% 62.1% 39.2% 60.7%Management 2.6% 1.6% 5.9% 3.8%

Free Float 56.8% 36.3% 54.9% 35.5%

Equatorial Energia 65.4% 65.5% 65.8% 65.9%Eletrobras 34.0% 33.9% 33.5% 33.4%Free Float 0.7% 0.7% 0.7% 0.7%

After

Brasil Energia I(3)

Equatorial Energia

CEMAR

Before

Total Units (Fully Diluted)

65,558,3922,340,128

67,898,520

Outstanding UnitsOutstanding Stock Options

Equatorial Energia

Assumptions:(i) the exercise of options to subscribe 200,201,862,409 additional shares of Cemar by members of the management team underCemar Stock Option Plan,(ii) the exercise of options to subscribe 1,320,407 additional UNITs of Equatorial by members of the management team underEquatorial Stock Option Program 1 and(iii) the exercise of options to subscribe 1,231,114 additional shares of Equatorial by members of the management team underEquatorial Stock Option Program 2

Page 6: Reuniões individuais com analistas   sp - mês de maio

6

Management

Board of DirectorsFirmino Ferreira Sampaio Neto – Chairman of the Board of DirectorsGilberto Sayão da Silva – Vice ChairmanOctavio Côrtes Pereira LopesAlessandro Monteiro Morgado HortaEduardo AlcalayCarlos Augusto Leone PianiPaulo Jerônimo Bandeira de Mello Pedroso – Independent DirectorDarlan Dórea Santos - Independent Director

OfficersOctavio Côrtes Pereira Lopes – CEOCarlos Augusto Leone Piani – Vice President of Equatorial and President of CEMARAugusto Miranda Paes Jr. – Engineering OfficerEduardo Francisco Lobo – HR OfficerLeonardo Dias – CFOMarcelino da Cunha Machado Neto – Commercial OfficerSheilly Contente – Regulatory Affairs Officer

Page 7: Reuniões individuais com analistas   sp - mês de maio

7

Strategy

Consolidation of distributors

located in the North / Northeast /

Center-West

Acquisition of control, independently or jointly

Opportunities for gains through: operational and financial restructuring, reduction of losses, synergy gains and above average market growth

Increased operational efficiency and

reduction of losses

Continuation of CEMAR’s restructuring program, increasing productivity gains, seeking new cost reductions and reducing commercial losses

Selective assessment of investments in

generation

Heavy investments in generation will be necessary over the next few years in Brazil

This scenario could generate attractive investment opportunities that will be analyzed by Equatorial

Page 8: Reuniões individuais com analistas   sp - mês de maio

8

Strengths

Financial strength and solid management team

with turnaround experience

Growth prospects and consolidation opportunities

Result-oriented management model

High level of Corporate Governance

Page 9: Reuniões individuais com analistas   sp - mês de maio

9

Focus on Regions with Higher Electricity Consumption Growth

REAL GDP GROWTH – 90/04Average Growth (p.a.) in Energy Consumption -99/05

ORGANIC GROWTH – MARKET

5.5%

North

4.2%

Center-West

3.0%

Northeast

2.3%

Brazil Brazil Northeast

45.8%56.9%1.24x

CEMAR – ENERGY SOLD (GWh)

2.9% 7.8%

2,5212,593

2,793

2003 2004 20054.0% 8.0%

CEMAR – NUMBER OF CONSUMERS

1,116,3611,161,283

1,254,121

2003 2004 2005

Source: ABRADEE, ANEEL, IBGE, FGV, SUDENE, CEMAR reports

Page 10: Reuniões individuais com analistas   sp - mês de maio

10

Growth Through Acquisitions

Company Control Net Revenues (R$ 000) Energy Sold (GWh) EBITDA (R$ 000) EBITDA Margin (%)

CELPE Neoenergia 1,603,646 7860 388,362 24.2%

COELCE Endesa 1,581,522 6397 344,821 21.8%

CEMAT Grupo Rede 1,233,464 4006 322,201 26.1%

CELPA Grupo Rede 1,124,792 4661 284,398 25.3%

COSERN Neoenergia 619,655 3163 199,931 32.3%

CEMAR Equatorial Energia 665,444 2793 188,578 28.3%

SAELPA Cataguazes 492,552 2227 155,074 31.5%

ENERGIPE Cataguazes 381,159 1647 137,072 36.0%

CELTINS Grupo Rede 265,661 932 104,226 39.2%

CEAL Federal Govt. 468,795 2159 85,795 18.3%

CEB State Govt. 859,050 3799 63,846 7.4%

CERON Federal Govt. 452,418 1439 10,177 2.2%

CELG State Govt. 1,556,176 7050 (3,084) -0.2%

CEPISA Federal Govt. 376,708 1583 (25,908) -6.9%Source: Annual reports of North/Northeast/Center-West regions companies – Dec/2005 data

Page 11: Reuniões individuais com analistas   sp - mês de maio

11

CEMAR Operational Restructuring

Changes

implemented

at CEMAR

following

change in

control

Organizationalrestructuring

Reduction of management layersAttraction and retention of new talent and variable compensation aligned with shareholders’ goals

Financialdiscipline

Centralized expense controlRenegotiation of contractsOutsourcing

Operational improvement

DEC: 67.9 hours in 2003 to 54.6 hours in 2005FEC: 37.3 interruptions to 32.9 interruptions in 2005IT structure revampImprovement in consumer service

Source: CEMAR reports

Page 12: Reuniões individuais com analistas   sp - mês de maio

12

Capitalization of R$155 millionRenegotiation of CEMAR’s debt

Average debt duration of 10 yearsAround 90% of debt is pegged to the IGP-M (same index used to adjust tariffs), of which 22% with 18-year maturity and cost of IGP-M + 4%

CEMAR Financial Restructuring

DEBT AMORTIZATION PROFILE – DEC 2003 DEBT AMORTIZATION PROFILE – DEC 2005

Source: CEMAR reports,in 2003 includes R$ 120 million overdue payables to energy suppliers

32 31 40 45 47

309

ST 2007 2008 2009 2010

R$ MillionR$ Million456

64

185

30 2755

ST 2005 2006 2007 2008 > 2008 > 2011

Total Debt:R$504mn

Total Debt:R$820mn

Page 13: Reuniões individuais com analistas   sp - mês de maio

13

Additional Opportunities for Value Creation

Process reengineering

Further expense reduction

New investments in technology

SAP/R3 ERP system

High commercial losses comparing to region average:Inspection and auditing infrastructure revampingImplementation of electronic meters and telemetry at high-voltage clientsImplementation of electronic meters and reinforced meters at low-voltage clientsAutomated selection of targets for inspection

Additional opportunities

for value

creation

Additional opportunities

for value creation

Reductionof energy losses

Additional productivity gains

Page 14: Reuniões individuais com analistas   sp - mês de maio

14

Energy Losses vs. EBITDA margin (2005)

-10%

0%

10%

20%

30%

40%

50%

0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0%Energy Losses (% LTM)

EBIT

DA

Mar

gin

(% N

et R

even

ues)

CeltinsEnergipe

Cosern

Cemat

Coelce

Celg*

Cepisa*

Ceron*

Ceb

Ceal

CEMARSaelpa

Celpe Celpa

Source: ABRADEE, Distributors from North / Northeast / Center-West regions – 2005 data * Figures refer to 2004 Electricity Losses

Page 15: Reuniões individuais com analistas   sp - mês de maio

15

Outstanding Financial Performance

NET REVENUES (R$ Million)

422.6

665.4

526.1

2003 2004 2005

22.1%16.2%

28.3%

EBITDA marginEBITDA

EBITDA (R$ Million)

93.2

188.6

85.4

2003 2004 2005

NET INCOME (R$ Million)

-57.2

122.9

228.8

2003 2004 2005Source: Equatorial reports

Page 16: Reuniões individuais com analistas   sp - mês de maio

16

Financial Strength

(Pro forma) (Pro forma)

NET DEBT /EBITDA (Last 12 Months)

4.3

8.1

1.81.0

1.9

mar/06*mar/06dez/05dez/04dez/03

NET DEBT (R$ Million)

215.2

391.8350.0368.7

755.4

mar/06*dez/05dez/04dez/03 mar/06

* Including net proceeds of R$176.6 million, received in April, 2006, from the primary portion of the IPO

Page 17: Reuniões individuais com analistas   sp - mês de maio

17

Debt Profile

75% of total debt pegged to the IGP-M and duration over 10 years

MAR/06 - R$514.9MM

FINEL11%

IGP-M75%

RGR6%

US$3%

CDI5%

DEC/05 - R$504.3MM

IGP-M77%

FINEL11%

RGR4%

US$3%

CDI5%

Duration: 10.1 years

Page 18: Reuniões individuais com analistas   sp - mês de maio

18

High Level of Corporate Governance

Level 2 of the Bovespa, 100% tag-along rights

Two independent Directors

Performance-based variable compensation linked to shareholders’ goals

Stock option plan

Page 19: Reuniões individuais com analistas   sp - mês de maio

19

Financial and Operating Results1Q06

Page 20: Reuniões individuais com analistas   sp - mês de maio

20

1Q06 - Highlights

Proceeds of R$185.6 with the primary portion of Equatorial Energia’s IPO

EBITDA of R$67.6 MM, 94.6% higher than 1Q05

EBITDA Margin of 37.1%, compared to 24.5% no 1Q05

Pro Forma* Net Income of R$21.8 MM, 127.4% higher than 1Q05, adjusted by IPO-related expenses

Signed the 2nd contract of the “Light for Everyone” Federal Government Program, worth R$275.4 MM

* Excluding non-recurring IPO-related expenses

Page 21: Reuniões individuais com analistas   sp - mês de maio

21

MarketConsistent growth in spite of isolated events in the industrial class

CLIENTS

1,074,838

1,133,1791,176,108

1,281,118

8.9%3.8%

5.4%

1Q03 1Q04 1Q05 1Q06

MWh SALES

669,484

650,086

618,900 601,271 3.0%

5.0%

2.9%

1Q03 1Q04 1Q05 1Q06

CONSUMPTION BY CONSUMER CLASS (MWh)

1Q03 1Q04 1Q05 1Q06 % 06-05Residential 247,756 254,294 271,076 282,450 4.2%Industrial 102,781 102,036 101,239 85,931 -15.1%Comercial 112,086 119,249 128,932 137,979 7.0%Rural 15,821 18,575 20,305 21,044 3.6%Others 122,826 124,745 128,533 142,080 10.5%Total 601,271 618,900 650,086 669,484 3.0%

Page 22: Reuniões individuais com analistas   sp - mês de maio

22

Productivity Gains

Continued restructuring process

NET REVENUE (R$ THOUSAND) /NR. EMPLOYEES

58.678.4

102.8

152.7

33.8%31.1%

48.6%

1Q03 1Q04 1Q05 1Q06

NR. OF EMPLOYEES1,463 1,444

1,379

1,195

-1.3% -4.5%

-13.3%

1Q03 1Q04 1Q05 1Q06

CLIENTS PER EMPLOYEE

735 785 853

1,072

6.8%8.7%

25.7%

1Q03 1Q04 1Q05 1Q06

MWh SALES / NR. OF EMPLOYEES

412 430 472561

4.3% 10.0%18.8%

1Q03 1Q04 1Q05 1Q06

Page 23: Reuniões individuais com analistas   sp - mês de maio

23

Improvement in all quality indexes, specially in São Luis, Maranhão State capital

Quality of Service

DEC - CEMAR

15.93 15.45

1Q05 1Q06

-3.0%

FEC - CEMAR

9.527.59

1Q05 1Q06

-20.3%

DEC - SÃO LUIS

11.57

6.10

1Q05 1Q06

-47.3%

FEC - SÃO LUIS

9.023.89

1Q05 1Q06

-56.9%

DEC – Average Duration of Interruptions (measured in hours per consumer per year)FEC – Average Frequency of Interruptions (measured in the number of interruptions per consumer per year)

Page 24: Reuniões individuais com analistas   sp - mês de maio

24

Upward trend reverted

Energy Losses

ACCUMULATED ENERGY LOSSES - LAST 12 MONTHS

26.0%

28.6%

30.1% 29.8%

1Q03 1Q04 1Q05 1Q06

Page 25: Reuniões individuais com analistas   sp - mês de maio

25

Continued growth

Net Revenues

NET REVENUES (R$ Thousands)

85,717

113,211

141,721

182,477

1Q03 1Q04 1Q05 1Q06

28.8%25.2%

32.1%

Page 26: Reuniões individuais com analistas   sp - mês de maio

26

Operational Efficiency Gains

Manageable Expenses

1Q05 4Q05 1Q06Personnel (R$ Million) 11.6 16.4 15.2Material (R$ Million) 1.2 2.3 1.4Services (R$ Million) 15.0 16.8 13.4Other (R$ Million) 10.4 21.5 11.2Total (R$ Million) 38.1 57.0 41.2

PMSO (R$) / Consumers 32.4 45.4 32.1PMSO / Net Revenue 26.9% 28.4% 22.6%

Avg.0514.2

1.415.015.345.9

37.430.8%

Page 27: Reuniões individuais com analistas   sp - mês de maio

27

Quarterly EBITDA

Increasing growth in CEMAR’s EBITDA Margin

EBITDA marginEBITDA

6.2%

19.2% 18.1% 19.9%24.6% 24.3%

27.9%34.5%

1st quarter with full impact of ago/05 tariff revision

EBITDA (R$ Million)

7.1

23.6

47.6

69.3

23.1

37.031.5

34.8

1Q04 2Q04 3Q04 4Q04 1Q05 2Q05 3Q05 4Q05

37.1%

67.7

1Q06

Source: CEMAR reports

Page 28: Reuniões individuais com analistas   sp - mês de maio

28

Decreasing negative financial results, excluding non-recurring IPO-related expenses

Financial Results

1Q03 1Q04 1Q05 1Q06Financial Expenses* (55.0) (40.9) (21.6) (21.1)IPO-related Expenses - - - (12.6)Financial Revenues 10.0 11.5 10.8 14.9Net Financial Expenses (45.0) (29.5) (10.7) (18.8)Net Financial Expenses Pro forma* (45.0) (29.5) (10.7) (6.2)

(in Million R$)

*excluding non-recurring IPO-related expenses

Page 29: Reuniões individuais com analistas   sp - mês de maio

29

Profitability growth, excluding non-recurring IPO-related expenses

Net Income

NET INCOME (R$ MM)

21.8

(40.6)

*excluding non-recurring IPO-related expenses

(41.2)

9.6 9.2

1Q03 1Q04 1Q05 1Q06 1Q06*(Pro Forma)

Page 30: Reuniões individuais com analistas   sp - mês de maio

30

Constant investment pace

Investments

Source: CEMAR Reports* excludes Light for Everyone Program related investments

23.425.7

FIRST QUARTER* (R$ Million)

17.310.4

3.13.8

1.4

9.3

3.10.5

1Q061Q05

OthersEquipments

Network Expansion

Network Maintenance

and Systems

ANNUAL* (R$ Million)

3345

121 117

40 5042

2003 2004 2005 2006eInvestments Depreciation

Page 31: Reuniões individuais com analistas   sp - mês de maio

31

Light for Everyone Program

Second Contract signed in March 2006

Light for Everyone Program 2006 contract: R$275.4 millionFunds received in 03/31/06: R$83.6 millionConnections under Contract: 60,000

Subsidized Portion – CDE: R$238.7 millionFinanced Portion – RGR: R$36.7 million

24 months of grace period and 120 months of amortization6% p.a. effective nominal interest rate

DIRECT INVESTMENTS (R$ Million)

113

244

2005 2006e

Page 32: Reuniões individuais com analistas   sp - mês de maio

32

Light for Everyone Program

NEW CONNECTIONS: 1Q05 - 1Q06

10,688

7,028

1Q061Q05

TOTAL CONNECTIONS

50,824

7,02814,956

40,136

25,711

1Q05 2Q05 3Q05 4Q05 1Q06

CDE RGR TOTAL

Initial Amount – 12/31/05 - - 8.9

Transfers – 1Q06 72.6 11.0 83.6

Expenditures – 1Q06 - - (22.0)

Final Amount – 03/31/06 - - 70.5

CASH FLOW(Figures in R$ Million)

10.2

33.4

DIRECT INVESTMENTS (R$MM)

28.9

8.8

1.4

4.5

1Q061Q05

CDE

RGR

Page 33: Reuniões individuais com analistas   sp - mês de maio

33

1Q06 - Highlights

Proceeds of R$185.6 with the primary portion of Equatorial Energia’s IPO

EBITDA of R$67.6 MM, 94.6% higher than 1Q05

EBITDA Margin of 37.1%, compared to 24.5% no 1Q05

Pro Forma* Net Income of R$21.8 MM, 127.4% higher than 1Q05, adjusted by IPO-related expenses

Signed the 2nd contract of the “Light for Everyone” Federal GovernmentProgram, worth R$275.4 MM

* Excluding non-recurring IPO-related expenses

Page 34: Reuniões individuais com analistas   sp - mês de maio

34

Contact

Phone: + 55 98 3217 2245

E-mail: [email protected]

Website: www.equatorialenergia.com.br/ri/

Page 35: Reuniões individuais com analistas   sp - mês de maio

35

Disclaimer

The following material is a presentation of the general information on EQUATORIAL ENERGIA S/A (EQUATORIAL) as of the present date. It consists of summarized information and makes no attempt to be complete, and should not be considered by potential investors as an investment recommendation. This presentation is public and is available at our website equatorialenergia.com.br/ri and at CVM´s IPE System. We make no statements to the effect of nor provide any guarantee as to the accurateness, relevance or scope of the information provided herein, which should not be used to base any investment decisions.

Although EQUATORIAL believes that the expectations and assumptions contained in the forward-looking statements and information are reasonable and based on the data currently available to its management, EQUATORIAL cannot provide any guarantee of results or future events. EQUATORIAL expressly exempts itself from the responsibility of updating any of the forward-looking statements and information.In this document we make forward-looking statements which are subject to risks and uncertainties. Such forward-looking statements are based on our Management’s beliefs and assumptions and information currently available to EQUATORIAL. Forward-looking statements include information on our current intentions, beliefs or expectations, as well as on those of the members of EQUATORIAL Board of Directors and Executive Board. The reservations related to forward-looking statements and information also include information on possible or projected operating results, as well as statements preceded, followed or containing the words “believes”, “may”, “will”, “continues”, “hopes”, “expects”, “intends”, “estimates” or similar expressions.Forward-looking statements and information are not a performance guarantee. Thy involve risks, uncertainties and assumptions because they refer to future events and, therefore, depend on circumstances which may or may not occur. Future results and value creation for shareholders may differ materially from those expressed or suggested by forward-looking statements. Many of the factors determining these results and values are not within EQUATORIAL’s control or prediction capacity of EQUATORIAL.This presentation does not constitute offering, invitation or solicitation to buy any equity instruments issued by EQUATORIAL. This presentation or any information in its content constitute contractual basis or commitments of any kind.