UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO
RULE 13a-16 OR 15d-16 UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the Month of May 2007
EDP- Energias de Portugal, S.A.
Praça Marquês de Pombal, 12
1250-162 Lisbon, Portugal
(Address of principal executive offices)
(Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.)
Form 20-F X Form 40-F
(Indicate by check mark whether the registrant by furnishing the information contained in this form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.)
Yes No X
edp
Financial Results 1Q2007
Investor Relations Department
Miguel Viana, Head of IR
Elisabete Ferreira
Ricardo Farinha
Phone: +351 21 001 2834 Fax: +351 21 001 2899 Email: ir@edp.pt Site: www.edp.pt
Reuters: EDP.LS / EDP.N Bloomberg: EDP PL / EDP US
Lisbon, 3 May 2007
EDP - Energias de Portugal, S.A. Headquarters: Praça Marquês de Pombal,12 1250-162 Lisboa Portugal
2
Table of contents
1Q2007 Performance
- 3 -
EDP Share Performance
- 4 -
Consolidated Financial Statements
- 5 -
EBITDA Overview
- 6 -
Capital Expenditures
- 7 -
Cash Flow
- 8 -
Financial Debt and Provisions for Social Benefits
- 9 -
Financial Income/(Expense) & Minority Interests
- 10 -
Business Areas
Iberian Electricity Market
- 12 -
Iberian Generation & Supply
- 13 -
Wind Europe (NEO)
- 16 -
Distribution in Portugal
- 17 -
Distribution in Spain
- 18 -
Regulated Gas
- 19 -
Liberalized Gas
- 20 -
Brazil: Energias do Brasil
- 21 -
Financial Statements & Annex
- 24 -
3
1Q2007 Performance
Results Summary (€ m)
1Q2007
1Q2006
D07/06
Operating Data
1Q2007
1Q2006
D07/06
Gross Profit
1,141.7
1,011.9
12.8%
Electricity:
Installed Capacity (MW)
13,579
12,660
+920 MW
Operating Costs
436.9
437.3
-0.1%
14,182
12,153
16.7%
Generation (GWh)
Distribution (GWh)
20,681
20,509
0.8%
EBITDA
704.8
574.6
22.7%
20,881
20,764
0.6%
Retail (GWh)
Clients (thousand)
9,706
9,555
+150 th
EBIT
461.4
340.2
35.6%
Gas:
Net Profit
241.4
237.1
1.8%
7,071
7,474
-5.4%
Distribution (GWh)
Retail (GWh)
7,171
6,873
4.3%
Clients (thousand)
766
798
-33 th
Net Debt
8,756.6
9,283.1
-5.7%
Employees (Group)
13,244
14,333
-1,089
Consolidated EBITDA of €705m in 1Q07, a 23% YoY growth. This sound growth was firstly supported on the improvement of market activities in Iberia, which highlights EDP’s successful hedging strategy over its market operations, and secondly on the EBITDA and cash flow improvements from our regulated distribution activities in Portugal, Brazil and Spain following lower energy costs and higher tariffs to enable the recovery of higher costs incurred in past periods. Consolidated net profit amounted to €241.4m in 1Q07, a 1.8% growth YoY, without any material non recurrent items in 1Q07. Note that 1Q06 net profit included €103m of non-recurrent financial gains with an interest rate SWAP which was linked to the CMECs.
In a period of adverse market environment, EDP managed to improve significantly the profitability of its liberalized generation & supply activities in the Iberian market.
Generation & supply EBITDA showed a 20% growth to €303m, due to a successful natural hedging strategy between liberalized generation and supply activities and a 26% increase, to €56.9/MWh in 1Q07, of our average supply price in Iberian markets. This impressive performance highlights the focus of EDP on the preservation of the low risk profile of its business portfolio and of the high quality of EDP’s commercial platform in the Iberian energy retail market.
The output of our liberalized electricity plants in the Iberian market fell just by 6% YoY, reflecting the maintenance of high load factors in our coal plants and the reduction of load factors in our CCGT plants. For the remaining 9 months of 2007, EDP has already contracted and hedged 80% of its expected liberalized generation output at an average price above €50/MWh. For 2008, EDP has already contracted 15% of the expected liberalized generation output at an average price above €55/MWh.
Regulated distribution activities in Portugal, Brazil and Spain benefited from tariff increases, to enable the recovery of higher electricity costs incurred in previous periods, and from lower electricity procurement costs in 1Q07. These issues provided a strong improvement of cash flow levels from these activities and allowed EDP to reduce the amount of regulatory receivables in the three regulated systems from €613m in Dec-06 to €583m in Mar-07.
EDP’s wind gross installed capacity in Europe increased to 1,616MW in Mar-07, in line with the delivery schedule of our wind farms development pipeline. EBITDA grew by 40% YoY to €55m, following a 61% increase of installed capacity, a 26% decline in average wind power selling tariffs in Spain and an increase of our average wind load factor in Spain from 30% to 35%, which reflects the high quality in terms of wind resources, of the wind farms that EDP put into operation over the last 12 months.
Energias do Brasil contributed with an EBITDA of €159m, which represents a 50% YoY growth supported essentially on the recovery through tariffs of higher electricity procurement costs incurred in past periods—a trend that is expected to continue over 2007—and on the increase of hydro generation capacity, which doubled to 1,018MW in Mar-07.
Operating costs at consolidated level remained under control, benefiting from the fist time deconsolidation of ONI telecom business, and with positive prospects on improvement, following the ongoing implementation of the efficiency corporate-wide OPEX program.
Net debt fell 6% QoQ to €8,756m in Mar-07, reflecting the strong growth of EDP’s core business free cash flow generation. Consolidated capex rose 8% YoY to €210m, with expansion investments representing 60%. Consolidated capex is expected to increase even more significantly over the next quarters, following our 2007-2010 capex plan of €7.6bn (weight close to 50% of wind and hydro power investments) and also the expected acquisition of US wind operator Horizon. - 3 -
4
EDP Share Performance
YTD EDP Stock Performance on Euronext Lisbon
4.60 4.40 4.20 4.00 3.80 3.60 3.40
3.20 Dez-06
Jan-07 Fev-07 Mar-07 Abr-07
EDP
Iberian Electricity & Gas DJ Euro Stoxx Utilities
EDP Stock Market Performance
YTD
52W
2006
(03-05-2007)
EDP Share Price (Euronext Lisbon - €)
Close
3.99
3.99
3.84
Max
4.41
4.41
3.86
Min
3.79
2.80
2.58
Average
4.06
3.59
3.14
EDP’s Liquidity in Euronext Lisbon
Turnover (€ m)
7,886.0
16,284.0
12,971.6
Average Daily Turnover (€ m)
89.6
62.4
49.9
Traded Volume (million shares)
1,941.6
4,529.8
4,128.0
Avg. Daily Volume (million shares)
22.1
17.4
15.9
EDP Market Value
Market Capitalisation (€ million)
14,589.6
—
14,041.1
Enterprise Value (€ million)
24,317.5
—
24,269.9
EDP’s Main Events - 1Q2007
Jan-17 - EDP informs about preliminary conversations with Sonatrach in relation to the natural gas business activities
Feb-15 - EDP and Caja Madrid reinforce cooperation for renewable energies in spain
Feb-16 - The Portuguese Government announced the approval of a legislative package for the electric system and presented a set of measures to be adopted in areas of relevance for EDP’s power generation activities
Feb-19 - UBS AG notifies EDP of a 2.36% ownership in EDP’s share capital
Feb-21 - UBS AG notifies EDP of a 1.83% ownership in EDP’s share capital
Feb-23 - Pictet Asset Management notifies EDP of a 2.86% ownership in EDP’s share capital
Feb-28 - CGD changed imputation of the qualified holding in EDP’s share capital
Mar-06 - EDP sells a 5% stake in REN
Mar-27 - Acquisition of Horizon Wind Energy (leading developer, owner and operator of wind power generation in the United States) by EDP
Apr-02 - Sonatrach acquires a 2.035% ownership interest in EDP’s share capital
Apr-04 - ANEEL approves an 8.05% tariff increase at enersul’s annual tariff readjustment process
Apr-11 - EDP and Sonatrach sign a potential partnership
Apr-13 - EDP’s Annual General Shareholders Meeting
Apr-13 - Resignation and appointment of Chairman and Vice-chairman of Shareholders’ General Meeting
Apr-13 - Appointment of Sonatrach as a Member of the General and Supervisory Board
May-04 - EDP pays a €0.11 gross dividend per share (financial year 2006) - 4 -
5
Consolidated Financial Statements
The financial statements presented in this document are non-audited.
Consolidated Income Statement (€ m)
1Q2007
1Q2006
D07/06
Electricity Sales
2,425.8
2,421.8
0.2%
Other Sales
410.6
259.6
58.2%
Services Provided
34.9
78.6
-55.6%
Operating Revenues
2,871.3
2,760.1
4.0%
Electricity & Gas
1,144.5
1,243.5
-8.0%
Fuel
239.6
292.6
-18.1%
Materials and goods for resale
345.4
212.1
62.8%
Direct Activity Costs
1,729.5
1,748.2
-1.1%
Gross Profit
1,141.7
1,011.9
12.8%
Gross Profit/Revenues
39.8%
36.7%
3.1 pp
Supplies and services
155.3
167.8
-7.5%
Personnel costs
144.1
141.9
1.5%
Costs with social benefits
24.1
18.1
32.7%
Concession fees
55.0
53.0
3.8%
Other operating costs (or revenues)
58.5
56.5
3.6%
Operating costs
436.9
437.3
-0.1%
EBITDA
704.8
574.6
22.7%
EBITDA/Revenues
24.5%
20.8%
3.7 pp
Provisions for risks and contingencies
14.3
8.3
72.0%
Depreciation and amortisation
254.6
250.8
1.5%
Comp.of subsidised assets’ depreciation
(25.4)
(24.7)
-2.9%
EBIT
461.4
340.2
35.6%
EBIT/Revenues
16.1%
12.3%
3.7 pp
Capital gains/(losses)
(0.0)
2.7
—
Financial income/(expense)
(86.1)
(9.1)
-848.7%
Income/(losses) from group and associated companies
6.9
34.9
-80.1%
Pre-tax profit
382.2
368.7
3.7%
Income taxes
106.1
107.9
-1.7%
Discontinued Activities
—
—
—
Minority interests
34.7
23.7
46.5%
Net Profit
241.4
237.1
1.8%
Assets (€ m)
1Q2007
2006
Tangible assets, net
15,154
15,082
Intangible assets, net
3,956
3,722
Financial Investments, net
1,021
1,024
Inventories
199
229
Accounts receivable - trade, net
1,592
1,593
Accounts receivable - other, net
1,811
2,051
Financial assets available for trading
121
116
Cash and cash equivalents
630
753
Deferred Tax (asset)
919
898
Total assets
25,403
25,469
Shareholders’ equity (€ m)
1Q2007
2006
Share capital
3,657
3,657
Own shares and share premium
480
487
Earnings and other reserves
1,698
1,445
Minority interest
971
946
Shareholders’ equity
6,806
6,535
Liabilities (€ m)
1Q2007
2006
Long-term debt & current portion of long-term debt
8,599
1,528
Short-term debt
908
8,625
Provisions
2,157
2,159
Hydrological correction account
209
199
Accounts payable - net
6,158
5,866
Deferred Tax (liability)
565
557
Total liabilities
18,597
18,934
Total liabilities and shareholders’ equity
25,403
25,469
- 5 -
6
EBITDA Overview: Consolidated EBITDA up 22.7%
EBITDA (€ m)
1Q2007
1Q2006
%D
Abs.D
IBERIAN MARKET *
565.7
475.4
19.0%
90.3
Generation & Supply
302.5
253.0
19.6%
49.5
Wind Europe (NEO)
55.1
39.4
39.8%
15.7
Distribution
173.8
163.2
6.5%
10.6
Gas
52.5
23.7
121.8%
28.8
Brazil
159.2
106.1
50.1%
53.1
Other & Adjustments
(38.2)
(10.8)
- 253.8%
(27.4)
Consolidated
704.8
574.6
22.7%
130.3
EBITDA 1Q2007
Generation & Supply (Iberia)
Wind Europe (NEO) 7% 42%
23%
Distribution (Iberia)
7% 21% Brazil Gas (Iberia)
Consolidated EBITDA by Quarters 1Q06 - 1Q07
€ m
705 636 575 576 492
1Q2006 2Q2006 3Q2006 4Q2006 1Q2007
*Includes “Other & Adjustments” in the Iberian Market
Iberian market generation & supply: EBITDA grew 19.6% YoY. Liberalized generation and supply activity showed a 177% increase of EBITDA to €104m in 1Q07, reflecting a decline of energy sourcing costs, a 6% decline of generation output and a 26% YoY increase of average supply price to €56.9/MWh. Contracted generation activity, which includes PPAs and special regime generation (excluding wind) showed a 9% YoY decline of EBITDA to 196m, reflecting a one-off decline of PPAs energy margin which fell from €8m positive in 1Q06 to €9m negative in 1Q07, due to existing inventories of fuel-oil purchased at high market prices over the 2H06, but consumed in 1Q07, a period of significantly lower fuel-oil market prices.
Wind Europe (NEO): EBITDA grew by 39.8% reflecting the 61% increase of consolidated installed capacity to 1,229MW, the increase of average load factor from 29% to 32%, the decrease of the average tariff by 19.6% to €78/MWh, and a 6.2% decline of operating costs.
Regulated Electricity Distribution in Iberian Markets: Regulated electricity distribution in Portugal showed a 3.2% YoY decrease to €150m, reflecting a €15m tariff deviation to be returned and an increase of operating costs related to the grid’s O&M. In regulated distribution in Spain, EBITDA grew 143% to €21m, reflecting the end of the RD 03/2006 negative impact in the activity and the 26% increase of distribution regulated revenues in 2007.
Gas Regulated and Liberalized Activities: Gas distribution and transmission regulated activities showed a 23% increase of EBITDA to €41m reflecting the full consolidation of Portgás and Gasnalsa in 1Q07, the 6% increase of the number of supply points and the 5% growth of the gas network extension. In the liberalized gas procurement and supply business EBITDA improved from €4m negative in 1Q06 (including a €15m negative impact from non recurrent gas purchases in the spot market) to €12m in 1Q07, reflecting the increase both in terms of volumes and gross margin per MWh.
Brazil: Energias do Brazil EBITDA contribution rose by 50% to €159m in 1Q07. The 5% YoY devaluation of the Brazilian Real against the Euro, had a negative impact of €9m at the EBITDA level. Per business area, EBITDA in electricity distribution rose by 48% YoY to €126m, reflecting essentially the recovery through tariffs in 1Q07 of €50m of regulatory receivables accumulated in previous years due to higher than expected electricity procurement costs. EBITDA in generation rose by 102% YoY to €34m, reflecting the 2x growth of installed capacity to 1,018MW in Mar-07.
Other & Adjustments: The increase of the negative contribution to the EBITDA line for “other & adjustments” is related to one-off adjustments which should be diluted in the next quarters.
Consolidated EBITDA: Overall, EDP reported a consolidated EBITDA of €705m in 1Q07, a 23% growth YoY and a 22% increase QoQ. Note that 1Q07 EBITDA represents an historical-high quarterly EBITDA for EDP, without any material non-recurrent impact.
- 6 -
7
Capital Expenditures
CAPEX (€m)
1Q2007
1Q2006
D07/06
Existing Plants
4.9
1.9
153.3%
New Plants
3.8
12.0
-68.7%
Environmental
0.8
7.4
-89.6%
Supply
0.1
0.0
254.8%
Portugal
9.6
21.4
-55.0%
Existing Plants
2.0
3.5
-43.1%
New Plants
10.6
13.3
-20.3%
Environmental
7.4
18.0
-59.1%
Supply
0.0
0.0
-12.9%
Spain
20.0
34.9
-42.6%
Iberian Generation & Supply
29.6
56.3
-47.3%
Wind Europe
91.7
15.2
504.5%
Distribution grid
53.6
70.8
-24.3%
Other
8.7
6.9
26.1%
(-) Investment subsidies
16.7
27.8
-39.8%
Portugal
45.5
49.8
-8.6%
Distribution grid
8.4
9.0
-6.3%
(-) Investment subsidies
6.5
1.6
298.5%
Spain
1.9
7.3
-73.9%
Iberian Distribution
47.4
57.2
-17.0%
Distribution network
1.7
1.4
24.0%
Other
1.8
0.5
283.7%
Portugal
3.6
1.9
89.6%
Distribution network
4.7
2.9
60.3%
Other
0.5
1.1
-51.0%
Spain
5.2
4.0
30.3%
Iberian Gas
8.8
5.9
49.2%
Iberian Core Business
177.6
134.5
32.0%
Generation
8.1
24.0
-66.4%
Distribution
23.5
29.2
-19.7%
Supply & Other
0.0
0.1
-89.6%
Brazil
31.5
53.3
-40.8%
Other
1.0
7.6
-87.5%
EDP Group
210.1
195.4
7.5%
• Consolidated capex amounted to €210m in the 1Q07, up 7.5% YoY, reflecting a 32% increase in capex at our Iberian Core Business. In the 1Q07, about 63% of EDP Group’s capex was invested in the expansion of our intalled capacity, namely in new wind farms and in new CCGTs in Spain ad Portugal (Castejón 2, Soto 4 and Lares 1). These investments will enable the medium term growth of our business. It is also worth mentioning that about 80% of EDP Group’s capex was related to regulated businesses, which present a low risk of return on investments, such as renewable energies, Iberian electricity and gas distribution and generation under PPA.
• Iberian Generation and Supply – Capex at our generation business in Portugal for the 1Q07 is related to: a) the beginning of construction works at Lares I CCGT (400 MW) – expected to start operations by the end of 2009; and b) the repowering of hydro plants Bemposta II (231 MW) and Picote II (178 MW) – expected to start operations in 2011. In Spain, EDP continued the construction of the Castejón 2 CCGT (400 MW) – expected to start operations by Dec-07 - and Soto 4 CCGT (400 MW) – expected to start operations in the 3Q08. Note that there have been some delays in the invoicing of these investments in both Portugal and Spain and even though investment in new power plants only amounts to €14.4m in the 1Q07, for the full year, investment at Lares I, Picote II and Bemposta II is expected to amount to some €130m and investment at Castejón 2 and Soto 4 CCGTs is expected to amount to €165m. Regarding environmental investments, the decrease in capex for the reduction of SO2 and NOx emissions also reflects some delays in the invoicing of such investments. Until the end of 2007, environmental investments should total some 120m.
• NEO – Wind Europe – In the 1Q07, NEO’s capex in wind capacity amounted to €91.7m, most of which was invested in the construction of wind farms that are expected to enter into operations this year. It is worth mentioning that capex in wind capacity tends to be concentrated in the 3Q and 4Q of the year. NEO is forecasting total capex in wind capacity of about €730m for year 2007. Currently, NEO has 532 MW under construction, out of which 466 MW are expected to enter into operations until the end of 2007 and 66 MW in 2008. As of Mar-07, works in progress at NEO amounted to €647m.
• Iberian Distribution – In the 1Q07, capex at our Iberian distribution business amounted to €47.4m, mostly targeting the improvement of quality of service at our distribution networks. In Portugal, following the significant investments made in recent years at the distribution grid to improve service quality and favourable weather conditions, Equivalent Interruption Time (EIT) stood at 29 min in 1Q07, which compares with 36 min. in the 1Q06 (adjusted for non-recurring effects). In Spain, EIT stood at 31 min in the 1Q07 (only 2 min. above 1Q06 figure).
• Iberian Gas – In the 1Q07, capex amounted to €8.8m, up €2.9m YoY, out of which 73% was spent in the expansion of the gas distribution network (+335 Km). The balance is related to the transmission network in Spain, marketing campaigns, new customers meter readings and revamping of facilities from LPG to NG.
• Brazil – Energias do Brasil capex in euro terms decreased 40.8% YoY, mostly due to the conclusion of the construction works at Peixe angical hydro Plant, which last unit started industrial service in the 3Q06. In 2007, with the start of operations of São João Hydro Plant, Energias do Brasil will increase its installed capacity by another 25 MW. Furthermore, the company already announced the future construction of Santa Fé hydro plant (29 MW), which is expected to start operations in 2009. Capex at distribution activity, which accounted for 74% of Energias do Brasil total capex, relates to the extension and improvement the distribution network in the concession areas of Bandeirante, Escelsa and Enersul. - 7 -
8
Cash Flow
Operat. Cash Flow by Business Area (€ m)
1Q2007
1Q2006
D07/06
IBERIAN MARKET
Generation & Supply
268.3
258.7
3.7%
NEO - Renewable Energy
(32.7)
31.4
—
Distribution
259.7
(75.2)
—
Gas
75.1
20.5
266.8%
Brazil
119.1
82.0
45.2%
Hydro Correction Account
8.9
(49.1)
—
Other
(43.7)
(16.7)
-162.4%
EDP Group Operating Cash Flow
654.8
251.6
153%
Consolidated Cash Flow (€ m)
1Q2007
1Q2006
Net Profit
241.4
237.1
Depreciation
244.3
241.6
Compensation of subsidised assets’ depreciation
(25.4)
(24.7)
Concession rights’ amortisation
10.5
9.1
Net provisions
54.1
4.7
Interest hydro account
2.0
1.0
Forex differences
(5.0)
(7.7)
Net Income from Associates and other Investments
(6.9)
(34.9)
Deferred taxes
(3.8)
28.5
Minority interests
34.7
23.7
Other adjustments
(3.8)
(62.1)
Net financial interest
99.4
99.0
Operat. Cash Flow before Working Capital
641.4
515.4
Change in operating working capital
4.4
(215.8)
Hydro correction
8.9
(49.1)
Operating Cash Flow
654.8
250.5
Capex
(210.0)
(196.0)
Net Operating Cash Flow
444.8
54.5
Divestments of fixed assets
235.0
583.7
Net financial investments
—
(4.1)
Financing of 6.08% of Spanish Tariff Deficit
(14.9)
(71.0)
Tariff Deficit of EDP Distribuição
(12.3)
—
Net financial interest paid
(93.8)
(99.0)
Dividends received from Associates and other Investments
—
—
Dividends paid
0.0
—
Other non-operating changes
(32.3)
(130.9)
Decrease/(Increase) in Net Debt
526.5
333.2
Net Financial Investments (€ m)
1Q2007
1Q2006
FINANCIAL INVESTMENTS
—
4.1
Renewables
—
4.1
FINANCIAL DIVESTMENTS
235.0
583.7
ONI (100%)
80.3
—
REN (5%)
53.4
—
Desa (20%)
97.1
—
Galp
—
576.4
Others
4.2
7.3
Net Financial Investments
(235.0)
(579.6)
EDP Group’s cash flow in the period enabled a €526.5m reduction in net debt vis-à-vis the YE2006. Such reduction is explained by:
a) an increase in operating cash flow to €654.8m;
b) the €8.9m hydro correction receivement from REN during 2007 following a dry period (hydro coefficient of 0.89 in the 1Q2007);
c) financial divestments of €235.0m as showed above; which was partly offset by:
d) the financing by HC Energia of 6.08% from the 2007 tariff deficit in the Spanish regulated system (€14.9m);
e) the financing by EDP Distribuição of the 2007 tariff deficit in the Portuguese regulated system (€12.3m);
- 8 -
9
Financial Debt and Provisions for Social Benefits
Financial Debt Allocation by Business Area (€ m)
1Q2007 YE2006 IBERIA
Generation & Supply
2,659.1 2,139.9 NEO - Renewable Energy 2,114.9 2,107.3 Distribution 1,785.0 2,169.8 Gas (420.5)
(360.0) Brazil 1,128.5 1,102.9 EDP SA & Adjustments 2,262.3 2,988.1 Sub-Total 9,529.3 10,147.9
Fair Value on Hedged Debt (21.8) 5.1 Total Financial Debt 9,507.5 10,153.0 Cash and cash equivalents
751.0 869.9 EDP Consolidated Net Debt 8,756.6 9,283.1 Regulatory Receivables (€ m) 1Q2007 YE2006
Portugal (1) 217.6 212.3 Spain 169.0 154.0 Brazil (1) 196.2 246.5 Regulatory Receivables 582.7
612.8 Nominal Financial Debt by Company (€ m) 1Q2007 YE2006 EDP S.A. and EDP Finance BV 7,447.2
8,044.2 EDP Produção 23.0 23.6 EDP Comercial — — NEO Energía 558.9 579.3 EDP Distribuição
— — Portgás 108.3 113.0 HC Energia 200.0 213.3 Energias do Brasil 1,055.0 1,018.7 Other
30.7 21.3 Nominal Financial Debt 9,423.0 10,013.3 Accrued Interests on Debt 106.3 134.7 Nominal Financial Debt + Accrued Interests 9,529.3 10,147.9 Provisions for Social Benefits (€ m) 1Q2007 2006 Pensions (2) 974.0
1,010.3 Medical Care 767.4 760.7 Total Debt Ratings S&P Moody’s Fitch EDP SA & EDP Finance BV
A/CW-/A1 A2/CW-/P1 A/CW-/F1 HC Energia A3/CW-/P2 A-/CW-/F2 Bandeirante brA-/Stab Ba3/A3.br/Stab
Escelsa BB-/brA-/Stab Ba3/A3.br/Stab Enersul brA/Stab Ba3/A2.br/Stab 1,741.4 1,771.0
(1) Tariff deficits and tariff deviations to be recovered in the following years through tariffs
(2) Pension include the Provision for the HR Restructuring Program costs of EDP Distribuição, which are being recovered through the tariffs (3) Nominal Value Med./Long term Debt (3) Debt by Currency (3) Variable Hedged BRL 0.1% USD
Fixed 8% 11% 35% 1% 56% 88.9% Short Term Euro Variable Un-Hedged Debt Maturity (€ m) (3) 2,000
EDP SA & EDP Finance BV Other 1,800 1,600 1,400 1,200 1,000 800 600 400 200 0 2007 2008 2009 2010 2011 2012 2013 2014
2015 > 2015 - 9 -
10
Financial Income/(Expense) & Minority Interests
Financial Results (€ m)
1Q2007
1Q2006
D07/06
Investment income
0.0
0.0
—
Financial Investments Gains/(Losses)
0.0
0.0
—
Net financial interest paid
(106.2)
(92.6)
-14.7%
Net foreign exchange differences
5.0
7.7
-34.5%
Other Financials
15.1
75.8
-80.1%
Financing Gains/(Losses)
(86.1)
(9.1)
-847.8%
Financial results
(86.1)
(9.1)
-848.7%
Income from Equity Method (€ m)
1Q2007
1Q2006
D07/06
REN (30%)
—
26.3
—
Edinfor (40%)
(1.8)
1.5
—
Setgás (19.8%)
0.9
0.2
243.5%
CEM (22%)
1.7
1.5
10.7%
Turbogás (40%)
3.3
3.2
1.7%
HC’s subsidiaries
0.1
0.7
-92.7%
NEO’s subsidiaries
0.8
1.0
-15.8%
Other
2.9
2.1
37.3%
Income from group & associated companies
6.9
34.9
-80.1%
Financial Results
1Q2006 Net Interest Paid Net Forex Differences Fair Value on Derivatives €m Other 1Q2007
-9.1
| -13.6 +6.6 |
(1) |
-86.1 -102.8 +32.8
• Financial results at EDP Group reflect:
a) a 14.7% increase in net financial interests paid on the back of a 80 bp increase in EDP Group’s average cost of debt (5.0% in the 1Q07 vs. 4.2% in the 1Q06), following the increase of interest rates in the period;
b) a sharp decrease of other financials. The 1Q06 includes two significant items with opposite effects: i) following the increase in interest rates, the €118m negative impact of the mark-to-market recorded at YE2005 related to the fair value of the derivative contracted to hedge the effect of interest rate changes on the NPV calculation of value of the CMEC was almost fully reverted, in the amount of €103.5m; and ii) EDP booked a €44.2m provision related to guarantees EDP gave for Electra’s financing, in which EDP assumed 60% of the total amount of the responsibility. Excluding these impacts from the 1Q06, other financials would have decreased by a mere €1.5m YoY. Other financials also include a €17m gain in the 1Q207, vs. €5m in the 1Q06, related to hedging operations in energy markets associated to the liberalised generation and supply activity.
• Income from group and associated companies amounted to €6.9m in the 1Q07, down from €34.9m in the 1Q06. EDP recently agreed the disposal of a 20% stake in REN and as a consequence, our stake in the company is no longer consolidated through the Equity Method. Note that the conclusion of this operation is pending REN’s IPO as the value of each block of shares to be sold will be based on the price of the IPO and on the evolution of the market price of these shares during the first trading months.
(1) Net Forex Differences in chart were adjusted for hedge instruments accounted in “Other Financials” - 10 -
11
edp
Business Areas
12
2/3Iberian Electricity Market
Energy Balance
Portugal
Spain
(GWh)
1Q2007
1Q2006
D07/06
1Q2007
1Q2006
D07/06
Hydro
3,871
2,297
68.6%
8,857
5,705
55.3%
Nuclear
—
—
—
15,743
16,070
-2.0%
Coal
2,919
3,495
-16.5%
16,798
18,506
-9.2%
CCGT
1,912
2,721
-29.7%
13,965
16,066
-13.1%
Fuel/Gas/Diesel
594
878
-32.3%
553
1,832
-69.8%
Own consumption
—
—
—
(2,097)
(2,364)
11.3%
(-)Pumping
(160)
(137)
-16.8%
(1,229)
(1,463)
16.0%
Conventional Regime
9,136
9,254
-1.3%
52,590
54,352
-3.2%
Wind
1,076
635
69.4%
7,474
5,339
40.0%
Other
1,843
1,549
19.0%
7,833
8,354
-6.2%
Special Regime
2,919
2,184
33.6%
15,307
13,693
11.8%
Import / (Export) net
1,189
1,777
-33.1%
(407)
(1,748)
76.7%
Gross demand (before grid losses)
13,244
13,215
0.2%
67,491
66,297
1.8%
Adjusted to temperature and working days
2.6%
5.0%
Regulated System
11,887
10,529
12.9%
52,680
48,131
9.5%
Liberalized Market
1,231
2,665
-53.8%
14,811
18,156
-18.4%
In 1Q07 electricity demand in the Iberian market showed a moderated growth of 1.5% YoY, penalized by warm temperatures in the period. Adjusted to working days and temperature, gross electricity demand grew by 5% in Spain and 2.6% in Portugal. On the supply side, hydro production rose by 59% YoY following a rainy 1Q07, although still below the historical average. The installed capacity in the Iberian market rose by 7% YoY in the period, supported by the 17% YoY increase of wind power capacity and the 28% YoY growth of CCGT capacity. The wind power output rose by 43%, driven both by the referred increase of wind installed capacity but also the increase in average wind load factors in the period. The moderate demand growth and strong increase in hydro and wind production led to a significant decline of thermal generation output, and namely a strong decline of load factors in fueloil plants and CCGTs. The lower use of the generation technologies with higher marginal costs, together with the decline of oil, gas and CO2 prices led to a 43% YoY decline of weighted average realized price in the spot market in the period.
Over the 1Q07, prices in the Iberian electricity forward market (OMIP) for the rest of 2007 recorded a significant decline, while prices for 2008, the first year of the 2008-2012 period CO2 Emissions Trading Scheme (ETS) continue to indicate price levels above €50/MWh.
Volumes of electricity sold to retail customers in the market fell by 54% in Portugal and by 18% in Spain, reflecting the significant transfer over 2006 of electricity consumers from the liberalized market to the regulated supply tariff systems, due to lower retail tariffs vs. electricity retail prices. This volume decline was higher in Portugal than in Spain given that the more efficient Portuguese tariff system does not give much room to liberalized suppliers to make competitive offers to their customers when competing with the regulated tariff.
Over the next quarters the market should be marked by the increase of wind and CCGTs installed capacity and by the transfer of a significant part of regulated electricity purchases from the spot market (in Spain) into a new quarterly auctions system, with the first one taking place on June 20th.
Installed Capacity Iberian Market
Iberian Peninsula
(MW)
1Q2007
1Q2006
D07/06
Hydro
17,880
17,880
—
Nuclear
7,438
7,438
—
Coal
12,093
12,290
-1.6%
CCGT
20,338
15,874
28.1%
Fuel/Gas/Diesel
5,777
6,952
-16.9%
Wind
13,483
11,571
16.5%
Other Special Regime
11,662
11,196
4.2%
Total
88,671
83,200
6.6%
Weighted Average Realized Price in Spot Market (OMEL)
€ / MWh 100 76.9 75 44.0 50 25
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar 2006 2007
Price Curve Evolution Iberian Forward Market (OMIP) € / MWh 50 50
46.4 50.2 38.8 46.8 40 40 33.3 34.0 38.8 30 30
1 Week Ahead 1 Month Ahead 3 Months 3Q2007 2008 Ahead 2Q2007 4Q2007 29-Dec-2006 29-Mar-2007
Hydro Coeficient 3 3 PORTUGAL SPAIN 2 2 1 1 0.89 0.73 0.57 0.60 0 0 2006 2007 2006 2007 - 12 - 3 3
13
Contracted Generation in the Iberian Market: PPAs and Special Regime
Gross Profit (€ m)
1Q2007
1Q2006
D07/06
PPA Capacity Charge
231.1
231.6
-0.2%
PPA Energy Charge
81.5
114.9
-29.1%
1.1
1.7
-35.7%
Steam (Barreiro) & Ashes revenues Coal
51.7
45.8
12.7%
Fuel oil
36.2
57.1
-36.5%
Natural Gas
0.2
0.1
25.5%
Gas Oil
0.1
0.1
-5.0%
Electricity Autoconsumption & Materials
3.4
5.1
-34.6%
(-) Direct Costs
91.5
108.3
-15.5%
PPA Energy Margin
(8.9)
8.3
—
Gross Profit PPAs
222.2
239.9
-7.4%
Cogeneration
5.1
5.8
-12.3%
Mini-Hydro
5.4
4.5
22.1%
Biomass
0.4
0.4
—
Gross Profit Special Regime
11.0
10.7
2.5%
Operating Costs
37.4
35.5
5.5%
EBITDA
195.7
215.1
-9.0%
Depreciation & Provisions
53.5
47.6
12.4%
EBIT
142.3
167.6
-15.1%
Real/Contracted Availability Factor (Km)
1Q2007
1Q2006
D07/06
Hydro Plants
1.03
1.04
-0.5%
Thermal Plants
1.08
1.06
1.9%
Electricity Generation Output (GWh)
1Q2007
1Q2006
D07/06
Hydro Plants
3,680
2,160
70.4%
Thermal Plants
2,996
3,249
-7.8%
Sines
2,402
2,371
1.3%
Setúbal
454
771
-41.2%
Carregado
99
72
37.9%
Barreiro
41
34
20.2%
Tunes
0
0
-71.5%
Total PPAs
6,676
5,409
23.4%
Cogeneration Portugal
195
194
0.5%
Cogeneration Spain
181
141
28.4%
Mini-Hydro Portugal
72
56
28.6%
Biomass Portugal
7
7
-4.1%
Total Special Regime
455
398
14.3%
Special Regime Tariffs (€/MWh)
1Q2007
1Q2006
D07/06
Cogeneration Portugal
90
84
7.4%
Cogeneration Spain
72
95
-24.1%
Mini-Hydro Portugal
82
84
-2.3%
Biomass Portugal
102
97
4.9%
Our power plants contracted under long term Power Purchase Agreements (PPA) with REN (Portuguese electricity regulated system), grant to EDP a stable 8.5% ROA real before taxes over the lifetime of the contracts. Following an announcement by the Portuguese government on 16-Feb 07, after the term of the PPAs EDP should continue to operate its hydro plants in the market until the end of the plants’ useful life.
In 1Q07, PPA capacity charge remained flat due to a delay in recurrent inflation update, which is expected to take place in 2Q07 with retroactive impact. The availability factor of our PPA plants in the period continued clearly above levels contracted with REN, a fact that continued to contribute positively to our PPA capacity charge.
PPA energy margin fell from €8m positive in 1Q06 to €9m negative in 1Q07. PPAs establish that the pass-through of fuel costs should be done at reference market prices in the moment of fuel consumption. As a result, in 1Q07 EDP was penalized by existing inventories of fuel-oil purchased at high market prices over the 2H06, but consumed in 1Q07, a period of significantly lower fuel-oil market prices.
Our Sines coal PPA plant will have in 2Q07 a major contracted and programmed stoppage for large maintenance works and desulphurization investments. These investments should amount to aproximately €100m and according to Sines’ PPA contract will be also remunerated at a 8.5% ROA and fully depreciated over the lifetime of the contract.
Under the future CMECs system, which is expected to be in place in 2H07, EDP should sell in the market the electricity produced by its PPA plants. Nevertheless, this will not affect the economics of the plants which will retain a 8.5% ROA and a stable contracted gross profit until 2017, to be assured by the CMECs revisibility mechanism of the Portuguese tariff system.
Fuel Cost Diagram
1Q2006 / €MWh 1Q2007 / €MWh
80 70 66 69
70 60 60 50 50 40 14% 40 21%
30 22 30 19
20 20 10 91% 10 92% 24% 41%
0 0 0% 20% 40% 60% 80% 100% 0% 20% 40% 60% 80% 100%
- Hydro - Coal - Fuel/Diesel Load Factor (1)
(1) Load Factor: number of equivalent hours to the output of a power plant relative to the total number of hours in the period - 13 -
14
Liberalised Electricity Generation and Supply in the Iberian Market
Financial Highlights (€ m)
1Q2007
1Q2006
D07/06
Gross Profit - Liberalized Generation and Supply
140.1
100.8
39.0%
Generation in the market
136.3
186.9
-27.0%
Portugal
28.7
28.5
0.6%
Spain
107.7
158.4
-32.0%
Supply
3.8
(86.0)
—
Portugal
(1.0)
(20.0)
95.2%
Spain
4.8
(66.0)
—
Operating costs
36.5
63.5
-42.5%
EBITDA
103.6
37.4
177.4%
Depreciation and amortization
32.8
34.2
-4.0%
EBIT
70.8
3.2
2120.4%
Market Performance
1Q2007
1Q2006
07/06
1Q2007
1Q2006
07/06
Output (GWh)
Variable Cost (€/MWh)
Generation Output
4,823
5,133
-6.0%
24.6
24.9
-1.0%
CCGT
1,403
1,732
-19.0%
43.1
41.6
3.7%
Coal
2,619
2,638
-0.7%
21.9
20.7
5.5%
Hydro
467
434
7.6%
—
—
—
Nuclear
333
329
1.4%
3.0
3.0
-0.0%
Electricity Purchases & Other
339
1,038
-67.4%
29.4
75.3
-61.0%
—
—
Electricity Sources
5,161
6,171
-16.4%
25.0
34.2
-27.0%
Volume Sold (GWh)
Average Price (€/MWh)
Grid Losses & Other
109
147
—
Portugal
439
1,401
-68.7%
50.2
41.4
21.3%
Spain
2,272
2,342
-3.0%
58.2
47.6
22.2%
Retail
2,711
3,743
-27.6%
56.9
45.3
25.7%
Wholesale Spot Market
1,402
1,595
-12.1%
51.1
71.2
-28.2%
Wholesale Forward Market
939
686
37.0%
43.8
64.3
-31.8%
Total Volume
5,161
6,170
-16.4%
52.6
54.3
-3.0%
Load Factor
1Q2007
1Q2006
D07/06
CCGT
41%
51%
-9.6 pp
Coal
79%
79%
-0.6 pp
Hydro
32%
30%
2.2 pp
Nuclear
98%
97%
1.3 pp
Number of Supply Clients
1Q2007
1Q2006
07/06
Number of Clients (th)
137.9
89.9
53%
Portugal
43.6
7.9
450%
Spain
94.2
81.9
15%
Our liberalized electricity generation and supply activities in the Iberian market, showed a 39% growth in integrated gross profit and a 1.8 times increase of integrated EBITDA, reflecting the successful generation & supply hedging strategy implemented over 2H06.
Liberalized generation output fell 6% YoY. Our Aboño and Soto imported coal fired plants maintained a high 80% load factor benefiting from the significant decline of costs with CO2 emissions. Load factors of our coal plants are expected to decrease in 2Q07, due to the programmed stoppage over 7 weeks of our 361MW 3rd group of our Soto plant for desulphurization upgrade. Our CCGT plants showed a significant decline of average load factor in 1Q07. In this period the electricity output from our CCGT plants was sold essentially in peak hours, at prices clearly above average baseload prices, allowing the maintenance of our CCGT realized gross profit per MWh at profitable levels. In 2Q07, following the seasonal decrease of hydro production in Portugal and the programmed stoppage of our Sines coal plant (operated under PPA) we expect an increase of the load factor our Ribatejo CCGT in Portugal (which represents 75% of our CCGT installed capacity in the Iberian market). Electricity sourcing costs fell by 27% YoY due to lower volumes and prices of purchases in the spot market.
Regarding electricity sales, in liberalized retail supply a successful repricing policy of the supply portfolio implemented over the 2H06, allowed EDP to increase its average net selling price by 26% YoY and to reduce its supply retail volume by 28% YoY. In Spain, the existence of significant levels of cross subsidisation in the tariff system allowed a 22% increase of net supply price to €58/MWh without any major impact on volumes sold. In Portugal, the existence of a more efficient tariff system than in Spain made more difficult to present attractive electricity supply offers in the market to our customers. Even though, EDP’s net supply price in Portugal increased by 21% to €50/MWh, essentially due to the reduction of volumes sold through the older and less attractive contracts.
The number of supply customers rose by 53% in the period to 137,900 reflecting the full liberalization of the residential segment in Portugal from Sep-06 onwards and the successful dual-fuel offer of HC/Naturgas commercial platforms in the Spanish residential market.
Going forward, EDP has already contracted and hedged with retail customers or through forward markets 75% of the expected output of its liberalized generation plants in the Iberian market for the remaining 3 quarters of 2007 at an average price above 50/MWh. For 2008, EDP has already contracted 15% of the expected generation output in the market at an average price above €55/MWh. In Dec-07, a new 400MW CCGT plant, Castejón II, is expected to enter into operation. - 14 -
15
Iberian Electricity Generation and Supply
Electricity Genaration
Electricity Supply
Generation & Supply
Income Statement (€ m)
Portugal
Spain
Portugal
Spain
Total
1Q2007
1Q2006
D07/06
1Q2007
1Q2006
D07/06
1Q2007
1Q2006
D07/06
1Q2007
1Q2006
D07/06
1Q2007
1Q2006
D07/06
Operating Revenues
468.8
515.8
-9.1%
186.7
270.9
-31.1%
66.5
119.0
-44.1%
158.7
183.2
-13.4%
—
—
—
Direct Activity Costs
207.0
236.7
-12.6%
79.0
112.6
-29.8%
67.5
139.1
-51.5%
153.9
249.2
-38.2%
—
—
—
Gross Profit
261.8
279.1
-6.2%
107.7
158.4
-32.0%
(1.0)
(20.0)
95.2%
4.8
(66.0)
—
376.4
351.4
7.1%
Gross Profit/Revenues
55.8%
54.1%
1.7 pp
57.7%
58.5%
-0.8 pp
-1.5%
-16.8%
15.4 pp
3.0%
-36.0%
39.0 pp
Supplies and services
21.2
19.2
10.3%
10.0
10.9
-7.9%
3.8
2.3
70.2%
7.0
5.3
31.4%
43.1
37.6
14.5%
Personnel costs
21.8
19.1
14.4%
7.2
7.1
2.5%
1.3
1.6
-16.6%
1.4
1.3
3.5%
32.1
29.0
10.4%
Costs with social benefits
4.6
3.8
22.6%
0.3
0.3
-4.3%
0.1
0.1
-45.9%
0.0
0.0
6.3%
5.0
4.2
18.8%
Generation centre rentals
1.0
0.9
6.7%
—
0.0
0.0
-5.1%
—
—
—
1.0
0.9
6.7%
Other operating costs / (revenues)
(4.1)
(7.4)
44.2%
2.4
28.6
—
(0.0)
10.2
—
(4.6)
(4.3)
—
(7.2)
27.1
—
Operating Costs
44.5
35.6
25.0%
20.0
46.9
-57.5%
5.2
14.1
-63.3%
3.8
2.3
59.8%
73.9
98.9
-25.3%
EBITDA
217.3
243.5
-10.7%
87.7
111.5
-21.3%
(6.1)
(34.1)
82.0%
1.0
(68.3)
—
302.5
252.5
19.8%
EBITDA / Revenues
46.4%
47.2%
-0.8 pp
47.0%
41.1%
5.8 pp
-9.2%
-28.7%
19.4 pp
0.6%
-37.3%
37.9 pp
Provisions for risks and contingencies
5.3
—
—
—
0.2
—
0.6
4.4
-85.9%
(1.3)
—
—
4.7
4.6
2.1%
Depreciation and amortization
55.7
54.5
2.2%
23.2
21.7
6.8%
1.2
1.2
5.7%
0.6
0.7
-20.2%
82.6
78.1
5.8%
Comp. of subsidised assets’ depr.
(0.9)
(0.9)
4.5%
(0.0)
(0.0)
6.9%
—
—
—
—
—
—
(1.0)
(1.0)
-2.6%
EBIT
157.2
189.9
-17.2%
64.6
89.6
-28.0%
(8.0)
(39.7)
79.9%
1.7
(69.1)
—
216.2
170.8
26.6%
EBIT / Revenues
33.5%
36.8%
-3.3 pp
34.6%
33.1%
1.5 pp
-12.0%
-33.4%
21.3 pp
1.1%
-37.7%
38.8 pp
Employees
1,608
1,670
-3.7%
596
618
-3.6%
88
91
-3.3%
91
82
11.0%
2,383
2,461
-3.2%
Overall, our integrated generation and supply business, including contracted generation and liberalized operations, showed a 7% growth of gross profit and a 20% increase of EBITDA
Per business segment, the strong improvement of gross profit in our supply activity more than compensated the decline reported by our generation operations. Per country, the 6.2% decline of gross profit in generation Portugal is concentrated in the contracted generation business, namely due to the negative energy margin in our PPA activity.
Operating costs for the integrated generation and supply activities fell 25.3% YoY, driven essentially by the sharp reduction of costs with CO2 emissions in our generation activity in Spain. Note that the Royal Decree Law 3/2006, establishes the partial devolution of CO2 emissions free allowances at market prices until the end of 2007. In 1Q06, EDP had other operating costs related to this issue of 29m while in 1Q07, these costs amounted to €1m, following the sharp decline of the market price of CO2 emission allowances.
Excluding the RD 03/2006 impact, generation & supply operating costs would have remained flat YoY. Per country division, operating costs in generation in Portugal rose by 25%, boosted by maintenance works at our Ribatejo CCGT in the period. In the supply activity in Portugal, supplies & services increased significantly reflecting the costs associated with the activity growth in the residential supply segment, while other operating costs in 1Q06 were penalized by costs with consumption deviations accumulated in previous years and provisions for bad debtors. The increasing activity of our supply operations in Spain, namely in the residential segment, has also implied a significant increase of supplies & services, namely the ones related to the commercial activity.
Below the EBITDA line, our generation activity in Portugal reported provisions of €5.3m in 1Q07, which are associated to the acceleration of depreciation rate of some net fixed assets of our thermal plants under PPA contracts, which will be fully depreciated at the term date of the PPA contracts. Higher depreciation level in generation in Spain, is explained by the transfer in Dec-06 of the cogeneration waste and biomass activities in Spain into this business area. In 1Q06 the supply activity in Portugal was penalized by €4.4m provisions for commercial losses with supply contracts. - 15 -
16
Wind Europe (NEO)
Income Statement (€ m)
1Q2007
1Q2006
D07/06
Operating Revenues
71.5
63.0
13.4%
Direct Activity Costs
3.7
10.1
-63.6%
Gross Profit
67.8
52.9
28.1%
Gross Profit/Revenues
94.9%
84.0%
10.8 pp
Supplies and services
7.8
8.4
-6.8%
Personnel costs
3.8
2.6
49.0%
Generation centre rentals
0.5
0.2
102.8%
Other operating costs / (revenues)
0.6
2.3
—
Operating Costs
12.7
13.5
-6.2%
EBITDA
55.1
39.4
39.8%
EBITDA / Revenues
77.1%
62.6%
14.5 pp
Provisions for risks and contingencies
(0.1)
(0.0)
—
Depreciation and amortization
22.5
16.7
35.0%
Compensation of subsidised assets’ depreciation
(0.1)
(0.1)
19.8%
EBIT
32.7
22.8
43.2%
EBIT / Revenues
45.8%
36.2%
9.5 pp
Number of Employees
1Q2007
1Q2006
D07/06
Number of employees
239
214
+25
• In December 2006, EDP reinforced the visibility of its European wind generation pipeline trough the acquisition of a group of companies designated as Agrupación Eólica (“AE”), which operates in the renewable energies sector in the French and Spanish markets and has a portfolio of 1,199 MW of wind capacity, out of which 155 MW were fully operational by the time of the acquisition. Currently AE has a total of 197 MW in operation, out of which 21 MW in France and 176 MW in Spain. More recently, and taking a quick look outside Europe, EDP announced the acquisition of Horizon, a leading developer, owner and operator of wind power generation in the United States with 559 MW of operating wind capacity and 997 MW of projects under construction. This acquisition is a natural fit to edp’s strategy, positioning the company in one of the most attractive renewables markets both in terms of growth and profitability.
• As of March 2007, NEO consolidated wind installed capacity in Europe totalled 1,229 MW, up 466 MW YoY, both through acquisitions (+130 MW) and organic growth (+336 MW).
• NEO’s electricity emissions from wind capacity in Europe totalled 778 GWh in the 1Q07, up 60.5% YoY, on the back of the additional capacity that was brought on stream, but also as a result of an increase in the number of equivalent service hours: i) in Spain, the number of equivalent service hours increased 15% from 648 hours in the 1Q06 to 746 hours in 1Q07; ii) in Portugal, the number of equivalent service hours decreased 4% from 606 hours in the 1Q06 to 580 hours in the 1Q07, but Portuguese regulation allows for gross profit stability in wind generation activity, as unit tariffs per MWh decrease with higher annual service hours; and iii) in France equivalent service hours reached 643 hours in the 1Q07.
Note: MW are referred to in terms of Gross Installed Capacity, except when otherwise stated
Consolidated Installed Capacity (MW)
1Q2007
1Q2006
D07/06
Portugal
319
201
+118
Spain
869
561
+308
France
41
—
+41
Wind Europe
1,229
763
+466
Electricity Generation (GWh)
1Q2007
1Q2006
D07/06
Portugal
183
121
51.8%
Spain
576
364
58.3%
France
18
—
—
Total
778
485
60.5%
Avg. Load Factors (%)
1Q2007
1Q2006
D07/06
Portugal
27%
28%
(1 pp)
Spain
35%
30%
5 pp
France
30%
—
—
Total
32%
29%
3 pp
Wind Average Tariffs (%)
1Q2007
1Q2006
D07/06
Portugal
97
96
1.1%
Spain
71
97
-26.3%
France
82
—
—
Total
78
96
-19.6%
Gross Profit (€ m)
1Q2007
1Q2006
D07/06
Portugal
17.9
11.6
54.6%
Spain
44.3
34.7
27.6%
France
1.5
—
—
Wind
63.7
46.3
37.6%
Other & Adjustments
4.1
6.7
-38.0%
Total
67.8
52.9
28.1%
• Gross Profit increased 28.1% YoY: i) in Spain, despite a 26.3% decrease in average tariffs, due to the recent fall in pool prices, gross profit benefited from the increase in both installed capacity and load factors; ii) in Portugal, gross profit benefited not only from higher wind capacity but also from a slight improvement of the average tariffs.
• The decrease in supplies and services reflects the de-consolidation of waste and biomass activities transferred to HC Energia (-€2.1m), which more than compensated the impact from the first time consolidation of AE (+€1.4m). The increase in personnel costs is due to both salary increases and an increase in the number of employees (39 from AE).
• Depreciations rose 35% YoY due to the mentioned increase in NEO’s wind installed capacity, both through acquisitions and organic growth.
- 16 -
17
Distribution in Portugal
Electricity Consumers (thousand)
1Q2007
1Q2006
D07/06
Regulated
5,948
5,912
36
Non-regulated
47
12
35
Total Electricity Consumers
5,995
5,924
71
Electricity Distributed (GWh)
1Q2007
1Q2006
D07/06
Very High Voltage
395
355
11.2%
High Voltage
1,515
1,389
9.1%
Medium Voltage
3,577
3,575
0.1%
Low Voltage
6,548
6,810
-3.9%
Electricity Distributed
12,034
12,129
-0.8%
o/w Third-Party Access
1,128
2,448
-53.9%
Electricity Sales & Gross Profit (€ m)
1Q2007
1Q2006
D07/06
Electricity Revenues
1,201.0
1,102.5
8.9%
Electricity Purchases
865.4
784.3
10.3%
Electricity Gross Profit
335.7
318.2
5.5%
Total Allowed Revenues
321.1
349.7
-8.2%
Tariff Difference to Recover/(Return)
(14.6)
31.5
—
Equivalent Interruption Time (min.)
1Q2007
1Q2006
D07/06
Equivalent Interruption Time
29
57
-28
• In the 1Q07, electricity distributed in Portugal decreased 0.8% YoY, on the back of a 3.9% decrease from LV segments. Excluding the impact from co-generators consumption as well as the temperature and working days effects, electricity distribution would have increased 2.3% YoY. In the liberalised market, despite an increase of the number of LV clients, electricity distributed fell 53.9% YoY as industrial clients prefer the regulated system lower tariffs.
• Electricity revenues for the 1Q07 include € 12.3m from the 49m 2007 tariff deficit attributed to EDP Distribuição (DL 237-B/2006 recognizes the recovery of this tariff deficit, with interests, in a 10 years period starting in 2008).
• Allowed revenues decreased 8.2% YoY reflecting lower revenues from the recovery of previous years’ costs. Excluding previous years adjustments, allowed revenues would have increased 1.9% YoY. The Use of the Distribution Grid (UDGr) activity represented about 80% of total allowed revenues and despite a lower electricity-flow at our distribution network and a 2.0% decrease of the UDGr average unit revenues, allowed revenues for this activity only decreased €4.5m YoY, as the fixed component of the UDGr allowed revenues, which increased 2.2% in the period, reduces the risk exposure to deviations of electricity demand in Portugal (see page 29 of the Annex).
• In the 1Q07, electricity gross profit came €14.6m above allowed revenues. This tariff deviation will be returned to the tariffs in 2009.
Income Statement (€ m)
1Q2007
1Q2006
D07/06
Gross Profit
338.4
320.8
5.5%
Gross Profit/Revenues
28.0%
28.9%
-0.9 pp
Supplies and services
65.3
55.3
18.2%
Personnel costs
49.0
44.5
10.2%
Costs with social benefits
18.7
14.7
27.2%
Concession fees
52.0
50.9
2.2%
Other operating costs / (revenues)
3.6
0.8
356.3%
Operating Costs
188.7
166.2
13.5%
EBITDA (1)
149.7
154.6
-3.2%
EBITDA / Revenues
12.4%
13.9%
-1.5 pp
Provisions for risks and contingencies
3.8
—
—
Depreciation and amortization
83.4
83.3
0.2%
Compensation of subsidised assets’ depreciation
(21.0)
(20.4)
-3.0%
EBIT
83.5
91.7
-9.0%
EBIT / Revenues
6.9%
8.3%
-1.4 pp
Number of Employees
1Q2007
1Q2006
D07/06
Number of Employees
5,143
5,285
-142
Employee/TWh (2)
107
109
-1.9%
Clients / Employee
1,156
1,119
3.4%
• Supplies and services increased 18.2% YoY following an increase in O&M costs, which more than compensated the successful control achieved over commercial costs.
• Personnel costs increased 10.2% YoY (or 5.1% excluding personnel costs capitalization and severance payments) following a 2.8% average salary increase in 2007 and the accounting in the 1Q07 of a €3.3m one-off cost not accounted for in the 1Q06. These more than compensated the positive impacts of savings achieved through personnel reduction. Costs with social benefits increased €4.0m YoY on the back of an increase in pension premiums and provisions for medical care (up €3.3m YoY).
• The reduction in the number of employees was mostly achieved through the Human Resources Restructuring Program (HRRP) started in 2006 – which is part of the announced 2006-2010 efficiency program – and translated until now into 103 retirements and early retirements achieved during the 4Q06. EDP Distribuição’s recurring efforts to improve its efficiency levels is allowing an improvement of its efficiency ratios, with Employee/TWh decreasing 2% YoY to 107 (annualised), narrowing the gap to Iberian best practices.
(1) Normalized EBITDA (i.e. excluding tariff differences, t-2 and t-1 tariff adjustments and HR restructuring costs recovery) is €128.9m for the 1Q07and €149.2m for the 1Q06 (2) Annualized - 17 -
18
Distribution in Spain
Electricity Consumers (thousand)
1Q2007
1Q2006
D07/06
Regulated
551
527
4.6%
Non-regulated
55
64
-14.6%
Total Electricity Consumers
606
592
2.5%
Electricity Distribution (GWh)
1Q2007
1Q2006
D07/06
High Voltage
1,491
1,411
5.7%
Medium Voltage
305
290
5.2%
Low Voltage
708
713
-0.7%
Electricity Distributed
2,504
2,414
3.7%
o/w Third-Party Access
352
385
-8.6%
Regulated Revenues (€ m)
1Q2007
1Q2006
D07/06
Transmission
1.5
2.0
-24.2%
Distribution
32.0
24.3
31.4%
Supply
1.9
1.9
2.1%
Electricity Regulated
35.4
28.2
25.5%
Equivalent Interruption Time - Asturias (min.)
1Q2007
1Q2006
D07/06
Equivalent Interruption Time
31
29
2
• In the 1Q07, electricity distributed in Spain increased 3.7% YoY, on the back of a growth in consumption from HV and MV segments.
• Spanish distribution activity gross profit increased 34.1% YoY to €34.8m in the 1Q07, reflecting: i) a €7.2m increase in the remuneration of the regulated activities recognised in the 2007 tariff; ii) the impact from the accounting in the 1Q06 of a €3.9m cost related to the application of the RD 03/2006; and iii) a 2.3m decrease in revenues from services rendered and other operating revenues:
a) Regulated revenues increased by 25.5% in accordance to what is recognised in RD 1634/2006, which sets the revenues for the Spanish regulated electricity activities. Out of the €3,571.1m attributed to the electricity distribution activity, €123.1m or 3.45% were allocated to our Spanish Distribution activity (up from 3.2% in 2006);
b) In the 1Q06, our Spanish distribution activity recorded a€ 3.9m negative impact from the application of the RD 03/2006, approved in February 24, 2006, which considered that the generation sales and the distribution purchases of electricity made simultaneously and within the same group had to be netted of and priced at a provisional €42.35/MWh.
Income Statement (€ m)
1Q2007
1Q2006
D07/06
Gross Profit
34.8
26.0
34.1%
Gross Profit/Revenues
98.7%
57.6%
41.1 pp
Supplies and services
12.7
12.6
0.8%
Personnel costs
6.0
6.0
-1.1%
Costs with social benefits
0.2
0.2
20.9%
Other operating costs / (revenues)
(5.1)
(1.5)
-238.6%
Operating Costs
13.9
17.4
-20.2%
EBITDA
21.0
8.6
143.0%
EBITDA / Revenues
59.4%
19.1%
40.3 pp
Provisions for risks and contingencies
—
—
—
Depreciation and amortization
6.6
6.3
4.8%
Compensation of subsidised assets’ depreciation
(0.6)
(0.5)
-15.1%
EBIT
15.0
2.9
420.0%
EBIT / Revenues
42.5%
6.4%
36.1 pp
Number of Employees
1Q2007
1Q2006
D07/06
Number of Employees
394
409
-15
Employee/TWh (1)
39
42
-7.1%
Consumers / Employee
1,539
1,447
6.4%
In the 1Q06, the HC Energias’ distribution purchases that were netted against its own generation amounted to 339 GWh. The impact of this measure was accounted in the distribution business gross profit as the difference between the acquisition price of this electricity and the €42.35/MWh. The RD 03/2006 is no longer applicable and therefore no such costs were accounted for in the 1Q07.
• Operating costs decreased 20.2% YoY due to an increase in own work capitalized expenses accounted under “other operating revenues” in the 1Q07.
• All in all, EBITDA improved €12.4m YoY to €21m in the 1Q07, which represents an EBITDA margin of 59.4% (up 40.3 pp).
• The company’s continued efforts to improve efficiency levels translated into a strong improvement of efficiency ratios such as Employee/TWh, which improved 7.1% YoY and Consumers/Employee, which also improved 6.4% in the period, allowing the company to keep up with Iberian best practices.
(1) Annualized -18 -
19
Gas - Regulated Activity
Income Statement (€ m)
Portugal (100%)
Spain
Total
Regulated Activity
1Q07
1Q06
%
Abs.
1Q07
1Q06
07/06
1Q07
1Q06
07/06
1Q07
1Q06
07/06
Number of supply points (th)
815.4
770.8
5.8%
+45
Operating Revenues
31.6
32.6
-3.3%
109.1
74.3
46.9%
140.7
106.9
31.5%
Portugal
167.6
152.1
10.2%
+16
Spain
647.8
618.8
4.7%
+29
Direct Activity Costs
15.7
17.2
-8.9%
68.4
42.9
59.6%
84.1
60.1
40.0%
Final Clients
315.0
398.3
-20.9%
-83
Acess Clients
332.8
220.5
50.9%
+112
Gross Profit
15.9
15.4
2.9%
40.7
31.4
29.5%
56.5
46.8
20.7%
Gross Profit/Revenues
50.2%
47.2%
3.0 pp
37.3%
42.3%
-5.0 pp
40.2%
43.8%
-3.6 pp
Gas Distributed (GWh)
7,071
7,474
-5.4%
-403
Portugal
780
741
5.4%
+40
Supplies and services
2.1
1.5
35.3%
6.0
6.0
0.7%
8.1
7.5
7.7%
Spain
6,290
6,733
-6.6%
-443
Personnel costs
1.3
1.0
20.7%
4.4
4.0
11.8%
5.7
5.0
13.6%
Final Clients
2,377
2,544
-6.6%
-168
Costs with social benefits
0.0
0.0
250.3%
0.1
0.1
17.2%
0.1
0.1
26.2%
Acess Clients
3,914
4,189
-6.6%
-275
Other operating costs / (revenues
0.6
0.0
—
1.4
1.1
—
2.0
1.1
—
Operating Costs
3.9
2.6
51.6%
11.9
11.1
7.1%
15.9
13.7
15.5%
Regulated Revenues (€ m)
55.0
52.0
5.8%
+3.0
Portugal
15.9
15.4
2.9%
+0.5
EBITDA
11.9
12.8
-6.9%
28.7
20.3
41.8%
40.7
33.1
22.9%
Spain
39.1
36.6
7.0%
+2.6
EBITDA / Gross Profit
75.2%
83.1%
-8.0 pp
70.6%
64.5%
6.1 pp
71.9%
70.6%
1.3 pp
Transmission
4.2
3.1
36.1%
+1.1
Distribution
30.7
29.1
5.8%
+1.7
Provisions risks and contingencies
0.1
—
—
—
—
—
0.1
—
—
Regulated Supply
4.2
4.4
-5.0%
-0.2
Depreciation and amortization
2.0
1.9
7.1%
7.9
7.2
9.1%
9.9
9.1
8.7%
Comp. of subsidised assets’ depr.
(0.3)
(0.4)
4.0%
(0.4)
(0.4)
-6.1%
(0.7)
(0.7)
-1.0%
Network (Km)
7,765
7,362
5.5%
+403
Portugal - Distribution
2,669
2,469
8.1%
+200
EBIT
10.2
11.3
-9.8%
21.2
13.4
58.4%
31.4
24.7
27.2%
Spain - Distribution
4,782
4,647
2.9%
+135
EBIT / Gross Profit
64.1%
73.2%
-9.1 pp
52.2%
42.7%
9.5 pp
55.6%
52.7%
2.8 pp
Spain - Transmission
314
246
27.8%
+68
Our gas regulated activity, includes the Portgás regional gas distribution concession in Portugal (72% owned by EDP), and Naturgas gas distribution and transmission networks in Spain, which are present essentially in the Basque and Asturias regions. Overall, our gas regulated activity showed a 22.9% YoY growth of EBITDA to €40.7m, reflecting the 5.8% increase in the number of supply points to 815,000 customers (+45,000 customers connected) and a 5.5% increase in the extension of our networks to 7,765 Kms. Efficiency ratios showed a significant improvement with the EBIT/Gross Profit ratio improving from 52.7% in 1Q06 to 55.6% in 1Q07.
In Spain, our gas regulated revenues grew by 7.0% YoY to €39m in 1Q07:
• Gas distribution regulated revenues grew by 5.8% YoY to €30.7m, reflecting a 4.7% YoY increase in the number of supply points in our distribution network to 648,000 customers
(29,000 additional customers connected), and a 2.9% YoY increase in the extension of our gas distribution network to 4,782kms. The volume of gas distributed fell 6.6% YoY, penalized by the disconnection of a large electricity generation facility (Santutzi fuel-oil plant) from our gas distribution network. However, the Spanish gas regulated market was penalised by a 5% decline of conventional gas demand. Note that the YoY comparison of our gas distribution activity has a positive contribution from the acquisition of the remaining 50% equity stake in gas distributor Gasnalsa (full consolidated since Nov-06).
• Gas transmission regulated revenues grew by 36% YoY to €4.2m, following the 28% increase of our gas transmission network to 314 kms (entrance into service of part of the Euskadur Spain/France international gas transmission pipeline and of the pipeline between Soria and Agreda) and the regulatory reclassification of the Septentrional transmission pipeline from a secondary to a primary gas infrastructure.
• Regulated supply revenues fell 5% YoY to €4.2m. Note that regulated gas supply tariffs in Spain are expected to end in Dec-07. Nevertheless, this eventual measure should have no major impact on Naturgás results, given that more 50% of our supply points are already acess clients and Natugás expects to retain part of its current regulated supply customers in liberalized market.
In Portugal, our gas regulated revenues grew by 2.9% YoY to €15.9m, reflecting a 10% YoY increase in the number of supply points to 167,600, the 5.4% growth of gas volumes distributed and a 8.1% increase of the extension of our network to 2,669 kms. In September 2006, the Portuguese Regulator (“ERSE”) approved the new regulatory framework for the gas sector in order to prepare it to the liberalization process. The gas distribution activity will be remunerated under a regulated asset base (“RAB”) times return on assets (“ROA”) methodology. However, the parameters (RAB and ROA) associated to this new regulation are not yet defined and will only be released during 2007, to be implemented in 2H2008.
- 19 -
20
Gas - Liberalised Activity
Income Statement (€ m)
1Q07
1Q06
D07/06
Revenues
315.9
171.6
84.0%
Direct Activity Costs
298.7
170.7
75.0%
Gross Profit
17.1
1.0
—
Gross Profit/Revenues
5.4%
0.6%
4.9 pp
Supplies and services
2.6
3.0
-13.9%
Personnel costs
0.5
0.4
27.2%
Costs with social benefits
0.0
0.0
54.2%
Other operating costs / (revenues)
2.0
1.8
16.0%
Operating Costs
5.2
5.2
-0.3%
EBITDA
11.9
(4.2)
—
EBITDA / Revenues
3.8%
-2.5%
6.2 pp
Provisions for risks and contigencies
—
—
—
Depreciation and amortization
0.1
0.1
164.5%
Compensation of subsidised assets’ depreciation
—
—
—
EBIT
11.8
(4.3)
—
EBIT / Revenues
3.7%
-2.5%
6.2 pp
Supply Activity
1Q07
1Q06
D07/06
Number of Clients
283.2
182.0
55.6%
Gas Supplied (GWh)
4,014
3,691
8.7%
Industrial
3,021
2,900
4.1%
Residencial/Commercial
993
791
25.6%
Net selling Price ( € / MWh)
18.53
21.69
-14.6%
Liberalised Supply - Volumes & Clients
Supplied GWh Clients (th) —
283 248 222 197 182
3,691
3,059 3,588 4,014 3,417
1Q2006 2Q2006 3Q2006 4Q2006 1Q2007
Our gas liberalised activity includes our gas supply business in Spain, developed through our commercial platforms Naturgas and HC Energia, and our wholesale gas procurement activities. EBITDA from our gas liberalized activities showed a strong improvement from 4m negative in 1Q06 to 12m positive in 1Q07.
Our gas procurement activity is currently based on our 1bcm/year long term contract with Trinidad & Tobago, on which EDP has a gas swap agreement with Gas Natural, and the 0.5bcm/year contract with ENI. Furthermore, EDP has also a 1.2bcm/year contract with Galp for the procurement of its liberalized 1200 MW CCGT plant in Portugal and a 0.35bcm/contract with Gas Natural for the procurement of its 400MW CCGT plant in Spain.
In 1Q06, our gas procurement costs in the liberalized market showed a non-recurrent sharp increase, explained by a stronger than expected growth of gas demand from our liberalized customers, which had to be satisfied with gas purchases in the spot market at abnormally high prices. The extra-cost of this operation vs. the recurrent procurement cost with our long term gas procurement contracts was 15m in 1Q06.
The volume of gas sold by EDP in the liberalized Spanish gas market rose 8.7% YoY, vs. a 1% YoY decline of conventional gas demand in the Spanish gas liberalized market. Moreover, the number of liberalized gas clients increased from 182,000 to in Mar-06 to 283,000 in Mar-07, following the the success attained by Naturgas and HC Energia to secure clients that switched from the regulated system to the liberalised market and on their dual-fuel offer in the Spanish residential market. This increase of market share both in terms of volumes and number of customers reflects our competitive gas procurement portfolio and the strong commercial capabilities of our Naturgas/HC Energia energy supply platforms in Spain.
In the beginning of April, EDP has reached an agreement with Sonatrach to enter into a memorandum of understanding in relation to the potential creation of a business partnership in certain gas and power generation businesses. This partnership of a non-exclusive nature is intended to comprise three basic business components: (i) the provision by Sonatrach, for a long term period, of up to 2 bcm/year of natural gas to be made available in part to the EDP Group and in part for the operation of certain new CCGT’s projects in partnership between EDP and Sonatrach; (ii) the incorporation of a joint venture for the marketing of natural gas, under the joint control of the parties; and (iii) the participation of Sonatrach, as minority shareholder with, at least, a 25% interest, in certain power generation companies for the development of new CCGT’s projects to be supplied with natural gas made available by Sonatrach.
- 20 -
21
Brazil: Energias do Brasil
R$ million
€million
Income Statement
Distribution
Generation
Supply
Consolidated
Consolidated
1Q07
1Q06
D07/06
1Q07
1Q06
D07/06
1Q07
1Q06
D07/06
1Q07
1Q06
D07/06
1Q07
1Q06
D07/06
Operating Revenues
1,234.3
1,079.9
14.3%
137.6
88.5
55.6%
132.7
118.7
11.7%
1,349.5
1,186.2
13.8%
488.5
452.7
7.9%
Direct Activity Costs
659.3
697.5
-5.5%
14.9
21.9
-32.2%
120.0
98.9
21.4%
639.8
715.8
-10.6%
231.6
273.2
-15.2%
Gross Profit
575.0
382.5
50.3%
122.8
66.5
84.5%
12.7
19.8
-36.2%
709.8
470.4
50.9%
256.9
179.5
43.1%
Gross Profit/Revenues
0.5
35.4%
11.2p.p.
89.2%
75.2%
14.0p.p.
9.5%
16.7%
-7.2p.p.
52.6%
39.7%
12.9p.p.
52.6%
39.7%
12.9p.p.
Supplies and services
73.1
70.5
3.6%
12.9
17.0
-24.1%
1.1
1.1
1.2%
90.2
93.0
-3.1%
32.6
35.5
-8.0%
Personnel costs and social benefit
58.0
64.6
-10.2%
5.8
2.2
158.7%
1.6
1.1
46.6%
69.9
71.0
-1.5%
25.3
27.1
-6.6%
Other operating costs / (revenues
96.3
24.6
290.9%
8.9
2.6
244.9%
3.3
0.0
—
110.1
28.5
286.5%
39.8
10.9
266.7%
Operating Costs
227.4
159.8
42.3%
27.6
21.8
26.5%
6.0
2.2
171.5%
270.1
192.4
40.4%
97.8
73.4
33.1%
EBITDA
347.6
222.7
56.1%
95.2
44.7
112.7%
6.7
17.6
-62.3%
439.7
277.9
58.2%
159.2
106.1
50.1%
EBITDA / Revenues
28.2%
20.6%
7.5p.p.
69.2%
50.6%
18.6p.p.
5.0%
14.9%
-9.8p.p.
32.6%
23.4%
9.1p.p.
32.6%
23.4%
9.1p.p.
Provisions for risks and contigencie
12.9
3.1
317.8%
—
(0.7)
—
—
—
—
12.9
2.4
446.3%
4.7
0.9
418.1%
Depreciation and amortization
54.6
56.5
-3.4%
16.3
6.4
154.7%
0.1
0.2
-57.2%
74.8
66.7
12.0%
27.1
25.5
6.3%
Comp. of subsidised assets’ depre
(5.6)
(5.7)
2.4%
—
—
—
—
—
—
(5.6)
(5.7)
2.4%
(2.0)
(2.2)
7.4%
EBIT
285.6
168.8
69.2%
78.9
39.1
101.9%
6.6
17.5
-62.3%
357.6
214.5
66.7%
129.4
81.9
58.1%
EBIT / Revenues
23.1%
15.6%
7.5p.p.
57.3%
44.2%
13.2p.p.
5.0%
14.7%
-9.7p.p.
26.5%
18.1%
8.4p.p.
26.5%
18.1%
8.4p.p.
Employees
2,918
3,213
-295
240
281
-41
14
15
-1
3,222
3,609
-387
Contribution to EBITDA
R$ m
1Q06 277,9
Generation +50,4
Supply -11,0
Distribution +124,9
Other -2,6
1Q07 439,7
EDP’s activities in Brazil, through Energias do Brasil (owned 62.4% by EDP), were impacted in 1Q07 by the start-up of Peixe Angical hydro power plant (452 MW) and 4th unit of Mascarenhas hydro plant (50 MW) in the last months of 2006. In 1Q07, Energias do Brasil contribution to EDP’s EBITDA is penalized by the 5% depreciation of the Real against the Euro, from an average BRL/Euro rate of 2.62 in 1Q06 to 2.76 in 1Q07 (- €9m impact at the EBITDA level).
In 1Q07, EBITDA of Energias do Brasil increased 58.2% following the positive contribution of the distribution and generation activity, which was partially offset by the decrease of the EBITDA in the supply activity. The EBITDA of generation activity improved by the start-up of Peixe Angical and the forth unit of Mascarenhas hydro plant. In distribution EBITDA growth was driven essentially by the positive impact from the tariff readjustments process in ours distribution companies and consequent receivement through tariffs of regulatory assets accumulated in previous years. EBITDA of liberalized supply decreased 62.3% following regulatory restrictions on intragroup supply contracts.
Operating costs of Energias do Brasil increased 40.4% explained by:
i) supplies and services fell by 3.1%, essentially due to lower than normal level of suplies & services in 1Q06. On a comparable base, supplies and services YoY comparison should be less favourable over the following quarters due to programs to improve commercial and grid maintenance efficiency levels and, in generation, the start-up of Peixe Angical. ii) 1.5% decline of personnel costs, reflecting the staff reduction by 387 employees savings associated to the implementation of the Redundancy Plan (PDV), one of the steps in the “Vanguard Project” (R$11.7m) iii) the sharp rise in “Other operating costs” is explained by one-off regulatory costs which in 1Q07 are compensated in the revenues line at the gross profit level.
- 21 -
22
Brazil: Distribution
R$ million
€million
Income Statement
Distribution
Generation
Supply
Consolidated
Consolidated
1Q07
1Q06
D07/06
1Q07
1Q06
D07/06
1Q07
1Q06
D07/06
1Q07
1Q06
D07/06
1Q07
1Q06
D07/06
Operating Revenues
1,234.3
1,079.9
14.3%
137.6
88.5
55.6%
132.7
118.7
11.7%
1,349.5
1,186.2
13.8%
488.5
452.7
7.9%
Direct Activity Costs
659.3
697.5
-5.5%
14.9
21.9
-32.2%
120.0
98.9
21.4%
639.8
715.8
-10.6%
231.6
273.2
-15.2%
Gross Profit
575.0
382.5
50.3%
122.8
66.5
84.5%
12.7
19.8
-36.2%
709.8
470.4
50.9%
256.9
179.5
43.1%
Gross Profit/Revenues
0.5
35.4%
11.2p.p.
89.2%
75.2%
14.0p.p.
9.5%
16.7%
-7.2p.p.
52.6%
39.7%
12.9p.p.
52.6%
39.7%
12.9p.p.
Supplies and services
73.1
70.5
3.6%
12.9
17.0
-24.1%
1.1
1.1
1.2%
90.2
93.0
-3.1%
32.6
35.5
-8.0%
Personnel costs and social benefit
58.0
64.6
-10.2%
5.8
2.2
158.7%
1.6
1.1
46.6%
69.9
71.0
-1.5%
25.3
27.1
-6.6%
Other operating costs / (revenues
96.3
24.6
290.9%
8.9
2.6
244.9%
3.3
0.0
—
110.1
28.5
286.5%
39.8
10.9
266.7%
Operating Costs
227.4
159.8
42.3%
27.6
21.8
26.5%
6.0
2.2
171.5%
270.1
192.4
40.4%
97.8
73.4
33.1%
EBITDA
347.6
222.7
56.1%
95.2
44.7
112.7%
6.7
17.6
-62.3%
439.7
277.9
58.2%
159.2
106.1
50.1%
EBITDA / Revenues
28.2%
20.6%
7.5p.p.
69.2%
50.6%
18.6p.p.
5.0%
14.9%
-9.8p.p.
32.6%
23.4%
9.1p.p.
32.6%
23.4%
9.1p.p.
Provisions for risks and contigencie
12.9
3.1
317.8%
—
(0.7)
—
—
—
—
12.9
2.4
446.3%
4.7
0.9
418.1%
Depreciation and amortization
54.6
56.5
-3.4%
16.3
6.4
154.7%
0.1
0.2
-57.2%
74.8
66.7
12.0%
27.1
25.5
6.3%
Comp. of subsidised assets’ depre
(5.6)
(5.7)
2.4%
—
—
—
—
—
—
(5.6)
(5.7)
2.4%
(2.0)
(2.2)
7.4%
EBIT
285.6
168.8
69.2%
78.9
39.1
101.9%
6.6
17.5
-62.3%
357.6
214.5
66.7%
129.4
81.9
58.1%
EBIT / Revenues
23.1%
15.6%
7.5p.p.
57.3%
44.2%
13.2p.p.
5.0%
14.7%
-9.7p.p.
26.5%
18.1%
8.4p.p.
26.5%
18.1%
8.4p.p.
Employees
2,918
3,213
-295
240
281
-41
14
15
-1
3,222
3,609
-387
Number of Clients (Th)
+2,0%
| 3.111 |
3.049 |
695 662 +4,9%
Enersul 1,071 1,039 +3,1%
Escelsa
Bandeirante
1,345 1,348 -0,2%
1Q07 1Q06
R$ million
€million
Income Statement
Distribution
Generation
Supply
Consolidated
Consolidated
1Q07
1Q06
D07/06
1Q07
1Q06
D07/06
1Q07
1Q06
D07/06
1Q07
1Q06
D07/06
1Q07
1Q06
D07/06
Operating Revenues
1,234.3
1,079.9
14.3%
137.6
88.5
55.6%
132.7
118.7
11.7%
1,349.5
1,186.2
13.8%
488.5
452.7
7.9%
Direct Activity Costs
659.3
697.5
-5.5%
14.9
21.9
-32.2%
120.0
98.9
21.4%
639.8
715.8
-10.6%
231.6
273.2
-15.2%
Gross Profit
575.0
382.5
50.3%
122.8
66.5
84.5%
12.7
19.8
-36.2%
709.8
470.4
50.9%
256.9
179.5
43.1%
Gross Profit/Revenues
0.5
35.4%
11.2p.p.
89.2%
75.2%
14.0p.p.
9.5%
16.7%
-7.2p.p.
52.6%
39.7%
12.9p.p.
52.6%
39.7%
12.9p.p.
Supplies and services
73.1
70.5
3.6%
12.9
17.0
-24.1%
1.1
1.1
1.2%
90.2
93.0
-3.1%
32.6
35.5
-8.0%
Personnel costs and social benefit
58.0
64.6
-10.2%
5.8
2.2
158.7%
1.6
1.1
46.6%
69.9
71.0
-1.5%
25.3
27.1
-6.6%
Other operating costs / (revenues
96.3
24.6
290.9%
8.9
2.6
244.9%
3.3
0.0
—
110.1
28.5
286.5%
39.8
10.9
266.7%
Operating Costs
227.4
159.8
42.3%
27.6
21.8
26.5%
6.0
2.2
171.5%
270.1
192.4
40.4%
97.8
73.4
33.1%
EBITDA
347.6
222.7
56.1%
95.2
44.7
112.7%
6.7
17.6
-62.3%
439.7
277.9
58.2%
159.2
106.1
50.1%
EBITDA / Revenues
28.2%
20.6%
7.5p.p.
69.2%
50.6%
18.6p.p.
5.0%
14.9%
-9.8p.p.
32.6%
23.4%
9.1p.p.
32.6%
23.4%
9.1p.p.
Provisions for risks and contigencie
12.9
3.1
317.8%
—
(0.7)
—
—
—
—
12.9
2.4
446.3%
4.7
0.9
418.1%
Depreciation and amortization
54.6
56.5
-3.4%
16.3
6.4
154.7%
0.1
0.2
-57.2%
74.8
66.7
12.0%
27.1
25.5
6.3%
Comp. of subsidised assets’ depre
(5.6)
(5.7)
2.4%
—
—
—
—
—
—
(5.6)
(5.7)
2.4%
(2.0)
(2.2)
7.4%
EBIT
285.6
168.8
69.2%
78.9
39.1
101.9%
6.6
17.5
-62.3%
357.6
214.5
66.7%
129.4
81.9
58.1%
EBIT / Revenues
23.1%
15.6%
7.5p.p.
57.3%
44.2%
13.2p.p.
5.0%
14.7%
-9.7p.p.
26.5%
18.1%
8.4p.p.
26.5%
18.1%
8.4p.p.
Employees
2,918
3,213
-295
240
281
-41
14
15
-1
3,222
3,609
-387
R$ million
€million
Income Statement
Distribution
Generation
Supply
Consolidated
Consolidated
1Q07
1Q06
D07/06
1Q07
1Q06
D07/06
1Q07
1Q06
D07/06
1Q07
1Q06
D07/06
1Q07
1Q06
D07/06
Operating Revenues
1,234.3
1,079.9
14.3%
137.6
88.5
55.6%
132.7
118.7
11.7%
1,349.5
1,186.2
13.8%
488.5
452.7
7.9%
Direct Activity Costs
659.3
697.5
-5.5%
14.9
21.9
-32.2%
120.0
98.9
21.4%
639.8
715.8
-10.6%
231.6
273.2
-15.2%
Gross Profit
575.0
382.5
50.3%
122.8
66.5
84.5%
12.7
19.8
-36.2%
709.8
470.4
50.9%
256.9
179.5
43.1%
Gross Profit/Revenues
0.5
35.4%
11.2p.p.
89.2%
75.2%
14.0p.p.
9.5%
16.7%
-7.2p.p.
52.6%
39.7%
12.9p.p.
52.6%
39.7%
12.9p.p.
Supplies and services
73.1
70.5
3.6%
12.9
17.0
-24.1%
1.1
1.1
1.2%
90.2
93.0
-3.1%
32.6
35.5
-8.0%
Personnel costs and social benefit
58.0
64.6
-10.2%
5.8
2.2
158.7%
1.6
1.1
46.6%
69.9
71.0
-1.5%
25.3
27.1
-6.6%
Other operating costs / (revenues
96.3
24.6
290.9%
8.9
2.6
244.9%
3.3
0.0
—
110.1
28.5
286.5%
39.8
10.9
266.7%
Operating Costs
227.4
159.8
42.3%
27.6
21.8
26.5%
6.0
2.2
171.5%
270.1
192.4
40.4%
97.8
73.4
33.1%
EBITDA
347.6
222.7
56.1%
95.2
44.7
112.7%
6.7
17.6
-62.3%
439.7
277.9
58.2%
159.2
106.1
50.1%
EBITDA / Revenues
28.2%
20.6%
7.5p.p.
69.2%
50.6%
18.6p.p.
5.0%
14.9%
-9.8p.p.
32.6%
23.4%
9.1p.p.
32.6%
23.4%
9.1p.p.
Provisions for risks and contigencie
12.9
3.1
317.8%
—
(0.7)
—
—
—
—
12.9
2.4
446.3%
4.7
0.9
418.1%
Depreciation and amortization
54.6
56.5
-3.4%
16.3
6.4
154.7%
0.1
0.2
-57.2%
74.8
66.7
12.0%
27.1
25.5
6.3%
Comp. of subsidised assets’ depre
(5.6)
(5.7)
2.4%
—
—
—
—
—
—
(5.6)
(5.7)
2.4%
(2.0)
(2.2)
7.4%
EBIT
285.6
168.8
69.2%
78.9
39.1
101.9%
6.6
17.5
-62.3%
357.6
214.5
66.7%
129.4
81.9
58.1%
EBIT / Revenues
23.1%
15.6%
7.5p.p.
57.3%
44.2%
13.2p.p.
5.0%
14.7%
-9.7p.p.
26.5%
18.1%
8.4p.p.
26.5%
18.1%
8.4p.p.
Employees
2,918
3,213
-295
240
281
-41
14
15
-1
3,222
3,609
-387
Last Tariff Revisions and Readjustments
Bandeirante
Escelsa
Enersul
Out-06
Ago-06
Abr-06
Readjust.
Readjust.
Readjust.
Part A
8.99%
7.98%
4.17%
Part B
0.52%
0.25%
7.29%
Readjust. Index
9.51%
8.23%
11.46%
Past Costs
2.54%
8.83%
0.97%
Other
1.39%
-0.39%
4.32%
Financial Items
3.92%
8.44%
5.29%
Total Index
13.43%
16.67%
16.75%
Notes:
Part A: Non-controllable costs, which is a pass-through to the tariff
Part B: Controllable costs, depreciation and return on invested capital, which are updated to inflation (IGP-M) and adjusted by an X factor.
Readjustment Index: Gives the total increase to be applied to electricity base revenues Financial Items: Recovery (or return) of past costs (or revenues) for a period of 12 months.
The gross profit of the DisCos in 1Q07 increased 50.3% positively impacted by an increase in total electricity distributed and by tariff readjustments occurred after the first quarter of 2006. Nevertheless, 1Q07 benefited from a positive tariff deviations of R$29m (vs. R$68m negative in 1Q06), although these will be return in the next tariff annual adjustments which mean that adjusted by these deviations, gross profit would increase in a normalized base by 27%.
Total electricity distributed by Energias do Brasil increased 3.0% YoY. Bandeirante showed a 3.3% consumption growth benefiting from a higher consumption from access clients. Escelsa 3.3% consumption growth was mainly supported on the good economic growth in the region which implied a higher number of clients. Regarding Enersul, the rural local economy looks to overtake the foot and mouth disease that affected the region and presented a recovery in electricity consumption growing 3.8% YoY and 1.2% comparing 1Q07 with 4Q06. In 1Q07 universalization investments started to produce effects in the number of clients and in consumption.
Total electricity losses decreased in distribution activity due to the decrease in technical losses. The commercial losses increased despite our investment in the programme to reduce commercial and technical losses in the distribution grid, mainly due to the effects of the “Light for All” Universalization programme.
As expected the regulatory assets to be recovered through tariffs in the followoing quarters decreased YoY due to the adjustments occurred in tariff readjustment process (increase in tariff deviation in recuperation), a trend that should continued over 2007.
In April 4, the Brazilian electricity regulator, ANEEL, approved a 8.05% annual tariff readjustment index for Enersul, for the period from April 2007 to March 2008.
Escelsa and Bandeirante will start new regulatory period respectively in Aug-07 and Oct-07. It’s important to highlight that ANEEL has fixed the regulatory WACC for the next regulatory periods at 9.95% (after tax).
- 22 -
23
Brazil: Generation and Supply
Generation
Hydro Installed Capacity (MW)
1Q07
1Q06
07/06
Lajeado (27.65%)
250
250
—
Peixe Angical
452
—
+452
Energest (12 Hydro plants)
317
266
+50
Total
1,018
516
+503
Electricity Sold (GWh)
1Q07
1Q06
07/06
Lajeado (27.65%)
278
278
-0.2%
Enerpeixe
590
196
—
Energest (12 Hydro plants)
485
392
23.7%
Total
1,352
866
56%
Gross Profit (R$ million)
1Q07
1Q06
07/06
Lajeado (27.65%)
22,707
34,010
-33.2%
Enerpeixe
65,428
4,148
—
Energest (12 Hydro plants)
34,623
28,375
22.0%
Total
122,758
66,533
85%
Average Selling Price (R$/GWh)
1Q07
1Q06
07/06
Lajeado
85.8
83.4
2.9%
Peixe Angical
125.6
0.0
—
Energest (12 Hydro plants)
81.1
71.2
13.9%
Trading and Supply
Financial and Operating Data
1Q07
1Q06
07/06
Number of clients
73
54
35.2%
Electricity Sales (GWh)
1,697
1,657
2.4%
Gross Profit / MWh
7.5
12.0
-37.7%
In Mar-07 Energias do Brasil had an installed capacity of 1.043 MW, with the announcement, in the middle of February 2007, that São João mini hydro plant (25 MW) received operation license. The start of the commercial operation occurred in the end of April.
The high increase of generation volumes is explained by the duplication of the installed capacity.
The strong gross profit growth had a contribution of R$ 61m from the start of Peixe Angical and R$6m from Energest due to the start of the fourth engine of Mascarenhas and an increase in the average selling price. Lajeado contribution is penalized by quarterly specialization issues, which should be diluted over the next quarters.
Energias do Brasil is carrying out feasibility studies with Eletronorte for new hydro projects. The studies focus in the state of Tocantins, encompassing projects that total around 235 MW of installed capacity: Novo Acordo, with 160 MW and Brejão, with 75 MW. In addition, Energias do Brasil is studying the viability of 10 new mini hydro plants with a total potential installed capacity of 330.5MW in the states of de Goiás, Minas Gerais, Espírito Santo and Mato Grosso do Sul.
In the beginning of April, Energias do Brasil acquired the rights to construct a coal-based thermal plant (imported mineral coal) with an installed capacity of 350MW, to be located in the, Maranhão State (Maranhão power plant).
The next auctions of new installed capacity are schedule to May and June of 2007. In May 24, Brazil will have the auction of renewables new installed capacity (mini-hydro, biomass, wind power) and in June 26, Brazil will have the auction of new energy (conventional installed capacity generation).
• Electricity volumes sold to liberalized customers showed a growth (+2.4%), capturing customers that are switching from the regulated market to the liberalised market.
• Overall, despite the increase in volumes sold, gross profit of Enertrade decreased 36.2% as a result of the end of some self-dealing contracts (the new regulatory framework does not allow the trading of electricity through “self-dealing”—companies within the same group), which was not completely offset by the new contracts with final clients at a lower margin.
- 23 –
24
edp
Income Statements
25
Income Statement by Business Area
1Q2007
Generation
Supply
NEO -
Distribution
Gas
Energias do
Other &
EDP Group
(€ m)
Iberia
Iberia
Renewables
Iberia
Iberia
Brasil
Adjustments
Electricity Sales
634.6
209.3
63.4
1,228.2
26.5
484.5
(220.7)
2,425.8
Other Sales
9.7
6.3
7.1
1.9
391.7
0.0
(6.0)
410.6
Services Provided
18.7
9.6
1.0
13.7
18.0
4.0
(30.1)
34.9
Operating Revenues
663.1
225.2
71.5
1,243.7
436.2
488.5
(256.8)
2,871.3
Electricity & Gas
61.6
209.2
0.0
865.4
26.3
228.1
(246.1)
1,144.5
Fuel
221.2
4.6
—
—
6.4
—
7.4
239.6
Materials and goods for resale
7.6
7.6
3.6
5.1
329.8
3.5
(11.8)
345.4
Direct Activity Costs
290.4
221.4
3.7
870.5
362.5
231.6
(250.5)
1,729.5
Gross Profit
372.6
3.8
67.8
373.2
73.6
256.9
(6.3)
1,141.7
Gross Profit/Revenues
56.2%
1.7%
94.9%
30.0%
16.9%
52.6%
2.5%
39.8%
Supplies and services
32.3
10.8
7.8
74.7
10.8
32.6
(13.8)
155.3
Personnel costs
29.4
2.7
3.8
55.5
6.2
23.1
23.4
144.1
Costs with social benefits
4.9
0.1
0.0
19.0
0.1
2.2
(2.2)
24.1
Concession fees
1.0
0.0
—
52.0
—
2.0
—
55.0
Other operating costs (or revenues)
(2.6)
(4.7)
1.1
(1.7)
4.0
37.9
24.5
58.5
Operating costs
65.0
8.9
12.7
199.5
21.2
97.8
31.9
436.9
EBITDA
307.6
(5.1)
55.1
173.8
52.5
159.2
(38.2)
704.8
EBITDA/Revenues
46.4%
-2.3%
77.1%
14.0%
12.0%
32.6%
14.9%
24.5%
Provisions for risks and contigencies
5.3
(0.6)
-0.1
3.8
0.1
4.7
1.1
14.3
Depreciation and amortisation
80.8
1.8
22.5
90.0
10.1
27.1
22.4
254.6
Comp.of subsidised assets’ depreciation
(1.0)
—
(0.1)
(21.6)
(0.7)
(2.0)
(0.1)
(25.4)
EBIT
222.5
(6.3)
32.7
101.6
43.1
129.4
(60.5)
461.4
EBIT/Revenues
33.6%
-2.8%
45.8%
8.2%
9.9%
26.5%
23.6%
16.1%
Capital gains/(losses)
—
—
5.8
—
—
—
(5.9)
(0.0)
Financial income/(expense)
4.8
(4.1)
(23.2)
(17.9)
5.1
(24.3)
(26.6)
(86.1)
Income/(losses) from group and associated companies
3.4
—
0.8
—
0.9
(0.0)
1.8
6.9
Pre-tax profit
230.8
(10.4)
16.2
83.7
49.1
105.1
(91.2)
382.2
Income Taxes & Deferred Taxes
57.3
(2.6)
3.7
22.2
5.3
34.4
(14.1)
106.1
Discontinued Activities
—
—
—
—
—
—
—
—
Minority interests
1.8
0.0
3.3
0.3
17.3
3.5
8.4
34.7
Net Profit
171.7
(7.8)
9.2
61.2
26.6
67.2
(85.5)
241.4
- 25 -
26
Income Statement by Business Area
1Q2006
Generation
Supply
NEO -
Distribution
Gas
Energias do
Other &
EDP Group
(€ m)
Iberia
Iberia
Renewables
Iberia
Iberia
Brasil
Adjustments
Electricity Sales
797.1
278.5
53.1
1,137.1
26.6
446.4
(317.0)
2,421.8
Other Sales
10.3
5.8
8.2
0.9
220.8
0.0
13.7
259.6
Services Provided
(10.8)
17.9
1.8
16.4
18.0
6.2
29.1
78.6
Operating Revenues
796.7
302.2
63.0
1,154.4
265.4
452.7
(274.2)
2,760.1
Electricity & Gas
75.0
379.5
0.0
803.4
30.3
268.8
(313.6)
1,243.5
Fuel
275.3
—
5.5
0.2
—
—
11.6
292.6
Materials and goods for resale
4.6
8.7
4.6
3.8
193.5
4.3
(7.3)
212.1
Direct Activity Costs
354.9
388.2
10.1
807.4
223.8
273.2
(309.4)
1,748.2
Gross Profit
441.8
(86.0)
52.9
346.9
41.5
179.5
35.2
1,011.9
Gross Profit/Revenues
55.5%
-28.5%
84.0%
30.1%
15.7%
39.7%
-12.8%
36.7%
Supplies and services
32.5
7.6
8.4
67.9
9.9
35.5
6.1
167.8
Personnel costs
26.5
2.9
2.5
50.8
5.0
27.1
27.1
141.9
Costs with social benefits
4.1
0.1
0.0
14.9
0.1
0.0
-1.1
18.1
Concession fees
0.9
0.0
0.2
50.9
—
0.9
—
53.0
Other operating costs (or revenues)
22.3
5.9
2.3
(0.7)
2.9
10.0
13.9
56.5
Operating costs
86.3
16.4
13.5
183.8
17.9
73.4
46.0
437.3
EBITDA
355.5
(102.5)
39.4
163.2
23.7
106.1
(10.8)
574.6
EBITDA/Revenues
44.6%
-33.9%
62.6%
14.1%
8.9%
23.4%
3.9%
20.8%
Provisions for risks and contigencies
0.2
4.4
(0.0)
—
—
0.9
2.8
8.3
Depreciation and amortisation
77.7
1.9
16.7
89.5
8.4
25.5
31.0
250.8
Comp.of subsidised assets’ depreciation
(1.0)
—
(0.1)
(20.9)
(0.6)
(2.2)
0.0
(24.7)
EBIT
278.6
(108.8)
22.8
94.5
15.8
81.9
(41.9)
340.2
EBIT/Revenues
35.0%
-36.0%
36.2%
8.2%
6.0%
18.1%
15.3%
12.3%
—
—
—
0.3
0.0
—
2.4
2.7
Capital gains/(losses) Financial income/(expense)
(11.5)
(3.9)
(14.4)
(12.2)
0.5
(20.9)
53.3
(9.1)
Income/(losses) from group and associated companies
3.6
—
1.2
—
0.4
(0.0)
29.7
34.9
Pre-tax profit
270.7
(112.7)
9.7
82.7
16.7
60.9
43.5
368.7
Income Taxes & Deferred Taxes
75.7
(33.0)
4.9
15.6
5.1
25.4
14.2
107.9
Discontinued Activities
—
—
—
—
—
—
—
—
Minority interests
2.4
—
2.5
0.0
6.6
1.8
10.4
23.7
Net Profit
192.6
(79.7)
2.2
67.1
5.0
33.7
19.0
237.1
- 26 -
27
edp
Annex
28
EDP Iberian installed capacity & electricity generation
Installed Capacity - MW
1Q2007
1Q2006
DMW
PORTUGAL
9,082
8,972
111
Conventional Regime
8,584
8,584
-0
Binding Generation
7,164
7,164
-0
Hydroelectric (PES)
4,094
4,095
-0
Thermoelectric (PES)
3,070
3,070
—
Coal
Sines
1,192
1,192
—
Fuel oil / Natural Gas
Setúbal
946
946
—
Carregado
710
710
—
Barreiro
56
56
—
Diesel
Tunes
165
165
—
Non-Binding Generation
1,420
1,420
—
Small-Hydro (NBES)
244
244
—
CCGT
Ribatejo
1,176
1,176
—
Special Regime
498
387
111
Small-Hydro
66
66
—
Cogeneration
111
111
—
Wind (1)
319
201
118
Biomass
2
9
-7
SPAIN
3,479
3,171
308
Conventional Regime
2,492
2,492
—
Hydroelectric
426
426
—
Thermoelectric
1,910
1,910
—
Coal
Aboño
878
878
—
Soto de Ribera
645
645
—
CCGT
Castejón
387
387
—
Nuclear
Electricity Generation
1Q2007
1Q2006
DGWh
PORTUGAL
8,384
7,430
954
Conventional Regime
7,927
7,052
875
Binding Generation
6,676
5,409
1,267
Hydroelectric (PES)
3,680
2,160
1,520
Thermoelectric (PES)
2,996
3,249
-253
Coal
Sines
2,402
2,371
31
Fuel oil / Natural Gas
Setúbal
454
771
-318
Carregado
99
72
27
Barreiro
41
34
7
Diesel
Tunes
0
0
-0
Non-Binding Generation
1,251
1,643
-392
Small-Hydro (NBES)
148
110
39
CCGT
Ribatejo
1,103
1,533
-431
Special Regime
457
378
79
Small-Hydro
72
56
16
Cogeneration
195
194
1
Wind (1)
183
121
63
Biomass
7
7
-0
SPAIN
4,329
4,003
327
Conventional Regime
3,572
3,490
82
Hydroelectric
319
324
-6
Thermoelectric
2,920
2,837
83
Coal
Aboño
1,673
1,658
15
Soto de Ribera
947
981
-34
CCGT
Castejón
300
198
102
Nuclear
Trillo
333
329
4
Special Regime
758
513
245
Small-Hydro
n.d.
1
—
Cogeneration
81
61
20
Wind
576
364
212
Waste
97
84
13
Biomass
3
3
1
Trillo
156
156
—
Special Regime
987
680
308
Small-Hydro
3
3
—
Cogeneration
42
42
-0
Wind (1)
869
561
308
Waste
69
69
—
Biomass
4
4
—
(1) Installed capacity that contributed to the revenues in the period. - 28 -
29
Electricity Distribution and Supply in Portugal
Electricity Distributed (GWh)
1Q2007
1Q2006
07/06
Energy Delivered to Distribution
13,089
12,987
0.8%
Sales to EDP power plants
(9)
(5)
-91.0%
Own consumption - distribution
(0)
(5)
98.3%
Distribution losses
(1,045)
(848)
-23.3%
Total Electricity Sales (1)
12,034
12,129
-0.8%
Electricity Sales - Regulated Syst.
10,906
9,680
12.7%
VHV (Very high voltage)
394
343
14.9%
HV (High voltage)
1,511
1,345
12.4%
MV (Medium voltage)
2,703
1,581
70.9%
SLV (Special low voltage)
670
546
22.7%
LV (Low voltage)
5,210
5,459
-4.6%
PL (Public lighting)
417
407
2.6%
Electricity Sales - Non-regulated Syst.
1,128
2,448
-53.9%
EDP
426
1,585
-73.1%
Non-EDP
702
864
-18.7%
Electricity Consumers (2)
1Q2007
1Q2006
07/06
Electricity Sales - Regulated Syst.
5,947,528
5,911,989
35,539
VHV (Very high voltage)
25
13
12
HV (High voltage)
199
162
37
MV (Medium voltage)
19,868
17,451
2,417
SLV (Special low voltage)
25,298
22,710
2,588
LV (Low voltage)
5,854,744
5,825,634
29,110
PL (Public lighting)
47,394
46,019
1,375
Electricity Sales - Non-regulated Syst.
47,291
11,995
35,296
EDP
43,612
7,947
35,665
Non-EDP
3,679
4,048
-369
Total Electricity Consumers
5,994,819
5,923,984
70,835
Electricity Sales (€ m)
1Q2007
1Q2006
07/06
VHV (Very high voltage)
20.0
16.1
24.4%
HV (High voltage)
84.6
72.5
16.7%
MV (Medium voltage)
236.0
135.5
74.2%
SLV (Special low voltage)
79.3
62.6
26.8%
LV (Low voltage)
714.1
729.8
-2.1%
PL (Public lighting)
32.3
30.9
4.8%
Interruptibility Discounts
-9.3
-9.6
3.1%
Tariff Correction Discounts
-
-
-
2006 Tariff Deficit Recognition
12.3
-
-
Invoiced Sales - Regulated Syst.
1,169.2
1,037.6
12.7%
Invoiced Sales - Non-regulated Syst.
31.8
64.9
-51.0%
Electricity Revenues
1,201.0
1,102.5
8.9%
Regulated Revenues (€ m)
1Q2007
1Q2006
07/06
Fixed component of the UDGr: HV and MV (€ m)
34.9
34.1
2.2%
Unit revenue for the UDGr: HV and MV € / MWh)
5.5
5.6
-1.8%
Electricity delivered to BES/NBES: HV and MV (GWh)
12,063
12,212
-1.2%
Fixed component of the UDGr: LV (€ m)
68.0
66.6
2.2%
Unit revenue for the UDGr: LV (€ / MWh)
13.4
13.6
-1.2%
Electricity delivered to BES/NBES: LV (GWh)
6,548
6,810
-3.9%
UDGr allowed revenues
257.2
261.7
-1.7%
Average assets of the NS activity (net of amortisations)
248.9
246.2
1.1%
Annual Return on average assets of NS activity (%)
8.0
8.0
-
Assets’ amortisation of NS activity
10.7
10.9
-1.5%
Annual structural comercial costs of NS activity
20.0
17.8
12.2%
Network Supply allowed revenues
35.6
33.6
6.1%
Average assets of SPS activity (net of amortisations)
18.2
15.9
14.6%
Annual Return on average assets of SPS activity (%)
8.0
8.0
-
Assets’ amortisation of SPS activity
0.6
0.5
15.1%
Annual structural comercial costs of SPS activity
21.1
16.8
25.3%
Supply in Public System allowed revenues
22.0
17.6
24.8%
Incentives
-
-
-
t-2 tariff adjust. for UDGr, SPS and NS
21.0
9.2
128.8%
t-1 & t-2 tariff adjust. for Energy Aquisition
-25.0
21.6
-
HR Restructuring Costs Recovery
10.3
6.0
70.3%
Total Allowed Revenues
321.1
349.7
-8.2%
% Change YoY
1.2%
(1) Figures presented include sales to EDP Group for final consumption(2) Figures presented include EDP Group companies - 29 -
30
EDP Wind Capacity in Europe
Wind Farms in 1Q2007
Installed Capacity
100%
% Held (1)
Consol.
PORTUGAL
332
324
319
Enernova
332
324
319
SPAIN
1,243
854
869
Genesa
734
470
478
Desa
332
279
282
Agrupación Eólica / Ceasa
176
105
109
TOTAL IBERIA
1,575
1,179
1,188
FRANCE
41
41
41
NEO
20
20
20
Agrupación Eólcia
21
21
21
TOTAL EUROPE
1,616
1,219
1,229
(1) MW not adjusted for the fact that Neo has an 80% stake in Genesa and Desa. - 30 -
31
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Dated: May 11, 2007
| EDP- Energias de Portugal, S.A. | ||
| By: | /s/ António Luís Guerra Nunes Mexia | |
| Name: | António Luís Guerra Nunes Mexia | |
| Title: | Chief Executive Officer | |