1 q10 presentation
DESCRIPTION
TRANSCRIPT
1
1Q10
Resultados
Operacionais
e Financeiros
1T08
Operating and Financial
Results
1Q10
May 18, 2010
2
1Q10
► Highlights
► Operating Results
Agenda
► Introduction
► Financial Results
► Spin-Off
3
1Q10
► Highlights
► Operating Results
Agenda
► Financial Results
► Spin-Off
► Introduction
4
1Q10
Introduction
Presentation of Operating and Financial Information
► The financial and operating information contained herein is presented in consolidated figures, pursuant to Brazilian Corporate Law, based on revised financial information. The consolidated financial information represents 100% of CEMAR’s results, excluding 34.86% related to minority interests, 13.03% of Light’s results, and not 25% as we used to present, and 25% of Geramar (previously known as Geranorte)
► The consolidated operating information represents 100% of CEMAR’s and 13.03% of Light’s results.
► In order to facilitate comparisons with 1Q09, the financial information is presented on a pro forma basis considering the same interest held by Equatorial in RME and by RME in Light at the end of 1Q10.
► Equatorial’s pro forma results for 1Q09 are based on Light’s pro forma results for the same period, which were adjusted to reflect the changes introduced by Law 11,638/07, pursuant to CVM Instruction 565/08, together with Profit Sharing, which is no longer recorded as personnel costs/expenses and is now recognized after the Income Tax line.
► The following information was not reviewed by the independent auditors: i) non-financial information relating to CEMAR, Light and the PLPT (Programa Luz para Todos - Light for All Program); ii) pro forma information and its comparison with the results presented in the period; and iii) management expectations regarding the future performance of the Companies.
5
1Q10
► Highlights
► Operating Results
Agenda
► Introduction
► Financial Results
► Spin-off
6
1Q10
Operating Highlights
► CEMAR’s and Light SESA’s total energy volume amounted to 1,753 GWh in 1Q10, 13.8% more than in1Q09. CEMAR’s quarterly volume grew by 17.5%, while Light’s increased by 9.5% (considering bothcaptive and free markets).
► CEMAR’s last-12-month energy losses totaled 24.2% of required energy by the end of 1Q10, 4.3 p.p.less than in 1Q09 and thereby lower than the Regulatory Target of 25.6% for the period betweenAugust/09 and July/10. Light’s last-12-month losses came to 22.1%, 1.3 p.p. up compared with 1Q09.
► CEMAR’s last-12-month 1Q10 DEC index improved 21.8%, to 21.9 hours, while last-12-month FECindex improved 17.7%, to 14.4 times, in comparison to 1Q09. Light’s last-12-month DEC increased by14.4%, to 11.1 hours whereas FEC stayed at the same level as 1Q09, at 6.2 times.
► On April 29, 2010, the Annual and Extraordinary General Meeting approved the proposal for the partialspin-off of Equatorial, transferring its indirect stake in Light (by means of RME) to a new companycalled Redentor. This company is currently under constitution and will be further listed in theBM&FBovespa’s Novo Mercado segment. We expect the listing process to take up to 90 days to beconcluded.
7
1Q10
► Net operating revenues (NOR) reached R$483.5 million in 1Q10, 7.3% up over 1Q09,reflecting a 1.6% increase by CEMAR and a 10.9% upturn by Light.
► Adjusting for non-recurring effects, 1Q10 EBITDA reached R$125.3 million, up by 16.7% over1Q09.
► Adjusted net income came to R$42.4 million in 1Q10, reflecting a 33.0% decrease over 1Q09.
► In 1Q10, Equatorial’s consolidated investments totaled R$91.1 million, 6.4% lower incomparison to 1Q09. CEMAR’s investments (excluding direct investments in the PLPT program)totaled R$36.7 million in 1Q10, while Light’s investments came to R$15.0 million in the period,up by 44.3% over 1Q09. Geramar’s investments reached R$6.3 million in 1Q10.
Financial Highlights
8
1Q10
► Highlights
► Operating Results
Agenda
► Introduction
► Financial Results
► Spin-off
9
1Q10
Consolidated
► CEMAR: 1Q10 energy sales moved up by 17.5%, fueled by the 17.3% increase of the residential consumption and 18.0% increase of the commercial consumption.
► Light: Consumption at Light’s concession area (captive + free clients*) increased 9.5% on the 1Q10, reaching 793.1 GWh, largely due to the residential (11.7%) class.
Distribution – Electricity Market
Electricity Consumption (GWh) Electricity Consumption per Segment (GWh)
*To preserve comparability with the market approved by Aneel in the Tariff Review process, the energy and demand measured
of free customers Valesul, CSN and CSA were excluded as the exit of these customers to the core network is planned.
724
816959
793
1Q09 1Q10
CEMAR Light
17.5%
9.5%
13.8%
1,753
1,541
1Q09 4Q09 1Q10 Chg.
Residential 664.9 728.3 764.2 14.9%
Industrial 147.0 169.8 155.9 6.1%
Commercial 367.5 399.6 412.2 12.2%
Others 289.0 349.7 335.1 16.0%
Free Clients 72.4 82.9 85.6 18.2%
Total 1,540.8 1,730.2 1,753.1 13.8%
CONSUMPTION CLASS AND
FREE CLIENTS (GWh)
10
1Q10
Distribution – Energy Losses in CEMAR
Total Losses over Required Energy
(last 12 months)
28.7%28.1%
28.9% 28.6% 28.9%28.5%
28.1%
26.4%
24.2%25.2%
4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1T10
Série1
25.6%
Regulatory Target
(from Aug-09 until Jul-10)
Non-technical Losses over Low-Voltage Market
(last 12 months)
30.4%29.0%
30.6%29.9% 30.0%
28.7%27.3%
19.8%
23.7% 21.5%
17.0%
19.8%
22.5%
25.3%
28.0%
30.8%
33.5%
4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1T10
Non-technical Losses
24.2%
Regulatory Target
(from Aug-09 until Jul-10)
11
1Q10
Energy Balance
(*) Includes sales to the market, own consumption and sales to CEPISA.
(**) Does not include network losses
(*) required energy + free clients
Total Losses over Wire Load (*) - Light Non-technical Losses over Low Voltage Market - Light
Distribution – Energy Balance and Losses
20.8%21.8%21.5%21.2%
22.1%
1Q09 2Q09 3Q09 4Q09 1Q10
41.8%
42.4%42.3%41.8%
43.1%
1Q09 2Q09 3Q09 4Q09 1Q10
ENERGY BALANCE (GWh) 1Q09 4Q09 1Q10 Chg.
Required Energy 1,115 1,295 1,240 11.2%
Sales (*) 818 987 960 17.3%
Losses 297 308 280 -5.6%
Energia Requerida 7,148 7,160 7,750 8.4%
Energia Vendida 5,002 5,080 5,430 8.6%
Perdas (**) 2,146 2,080 2,320 8.1%
LIG
HT
CE
MA
R
12
1Q10
DEC (hours)
FEC (times)
CEMAR LIGHT
Distribution – DEC and FEC (Last 12 months)
► CEMAR: The DEC index improved 21.8% compared to the 1Q09 and the FEC index fell 17.7% on the same period.
► LIGHT: The DEC increased 14.1% whereas FEC remained at the same level.
21.9
28.0
1Q09 1Q10
-21.8%
9.711.1
1Q09 1Q10
14.4%
17.5
14.4
1Q09 1Q10
-17.7%
6.2 6.2
1Q09 1Q10
0.0%
13
1Q10
Light Energia
Light Esco
Generation and Trading
► The volume of electricity sold on the 1Q10 was 26.7% greater in comparison to the 1Q09 figure.
► The 1Q10 sales, on Trading and Broker totaled 120 GWh, 159.3% more than in the 1Q09.
GENERATION - Light Energia (GWh) 1Q09 4Q09 1Q10 Chg.
Regulated Market Sales 136 143 136 0.5%
Free Market Sales 11 21 11 0.0%
Spot Sales (CCEE) 18 15 61 242.3%
Total 165 180 208 26.7%
Volume - GWh 1Q09 4Q09 1Q10 Chg.
Trading 15 32 27 84.8%
Broker 32 36 93 193.4%
Total 46 68 120 159.3%
14
1Q10
► Highlights
► Operating Results
Agenda
► Introduction
► Financial Results
► Spin-off
15
1Q10
Consolidated Performance
Net Operating Revenues* EBITDA* Net Income*
*As from this quarter, only operating companies are considered in these graphs.
58.4% 55.4%
41.6% 43.0%
1.6%
1Q09 1Q10
CEMAR Light Geramar
7.3%450.5
483.5
66.7%68.2%
30.3%31.8% 2.9%
1Q09 1Q10
CEM AR Light Geramar
- 17.5%150.5
124.2
66.0%62.5%
32.5%
37.5%1.4%
1Q09 1Q10
CEMAR Light Geramar
-33.8%63.0
41.7
16
1Q10
Net Operating Revenues EBITDA Net Income
Breakdown by Segment
Consolidated Performance
95.6%
0.9%3.6%
Distribuition Generation
Trading
92.1%
0.2%7.6%
Distribuition Generation
Trading
92.8%
0.5%6.6%
Distribuition Generation
Trading
17
1Q10
Pro-forma EBITDA
Pro-forma EBITDA
► In 1Q10, there was a non-recurring expense due to Light’s Legal Settlement Provision with the municipality of Barra do Piraíover the dredging of the Piraí River, which affected Equatorial’s EBITDA by R$1.1 million.
The main factors that affected the EBITDA are:
• Low Income Grant: change in the accounting standards relating to the Low Income Grant as from 3Q09. This changenegatively affected the EBITDA by R$10 million.
• Recognition of extraordinary costs incurred with the Company’s Stock Options Plan, which totaled R$6.2 million in1Q10.
• Increase of CEMAR operational costs due to a strong growth in the number of consumers, improvements in the qualityof the service and a change in the accounting standards relating to personnel costs arising from the Normative Law396/2010.
150.5 124.2
10.01.1
135.3
1Q09 EBITDA 1Q10 Pro-forma
EBITDA
Low Income Legal Settlement
Provision
1Q10 EBITDA
-10.1%
18
1Q10
Consolidated Performance
Adjusted Net Income
► Legal Settlement Provision with the municipality of Barra do Piraí over the dredging of the Piraí River negatively affected the NetIncome by R$0.7 million.
The other main factors that affected the Net Income are:
► Low Income Grant: net impact of R$5.9 million due to changes in the accounting standards relating to this subsidy as from 3Q09.
► Company’s Stock Options Plan: net impact of R$6.2 million due to recognition of extraordinary costs incurred with the plan.
63.0
41.7
5.90.7
48.3
1Q09 Pro-forma
Net Income
1Q10 Pro-forma
Net Income
Low Income Legal Settlement
Provision
1Q10 Net Income
-23.3%
19
1Q10
Debt: Schedule of Gross Debt Maturities
Consolidated Gross Debt
(100% CEMAR + 13.3% Light + 25% Geramar)
185.6
167.0
278.3
102.3
367.0
86.2
1,186.4
317.7
39.6
57.2
50.9
59.6
65.1
45.3
42.8
108.5151.3
Debt Short Term 2011 2012 2013 2014 After 2014
CEMAR
Light
Geramar
(ex-Geranorte)
20
1Q10
(*) Not considering debt with Braslight
100% CEMAR + 13.03% Light + 25% Geramar
Net Debt - Consolidated
Net Debt (R$MM)(*) and Net Debt/ EBITDA
(Last 12 months)
Net Debt Reconciliation (R$MM)
954.6
680.2
956.7965.11,035.8
1.41.51.6 1.6
0.9
1Q09 2Q09 3Q09 4Q09 1Q10
643.1
954.6
1,655.4
57.8
Debt Regulatory
Assets
Cash and
Equivalents
Net Debt
21
1Q10
(*) Not considering debt with Braslight
Net Debt (R$MM)(*) and Net Debt/ EBITDA
(Last 12 months)
Net Debt Reconciliation (R$MM)
Net Debt – Pro-Rata
65.12% CEMAR + 13.03% Light + 25% Geramar
719.9 680.0 688.7
425.4
695.0
1.6
0.9
1.61.61.5
1Q09 2Q09 3Q09 4Q09 1Q10
509.9
695.0
1,241.8
36.9
Debt Regulatory
Assets
Cash and
Equivalents
Net Debt
22
1Q10
► CEMAR: In the 1Q10, total capex reached R$69.8 million, of which R$36.7 million are own capex and R$33.1 million regarding the Light for All Program (PLPT).
► In the 1Q10, Light invested R$15.0 million, amount 44.3% higher when compared to the 1Q09 figure.
► Geramar invested R$6.3 million in the final steps of its plants’ construction.
Capex - Equatorial
CAPEX (R$MM) 1Q09 4Q09 1Q10 Chg.
CEMAR
Own (*) 43.3 63.6 36.7 -15.1%
PLPT 35.8 69.2 33.1 -7.7%
Total 79.1 132.8 69.8 -11.7%
Light
Distribution 9.4 19.6 12.6 34.7%
Generation 0.6 4.0 2.1 267.4%
Energy Trading 0.1 0.2 0.0 0.0%
Administration 0.3 3.7 0.3 0.0%
Total 10.4 27.5 15.0 44.3%
Geramar
Generation 7.9 13.5 6.3 -20.1%
TOTAL EQUATORIAL 97.3 173.8 91.1 -6.4%
* Includes indirect PLPT investments.
23
1Q10
► Highlights
► Operating Results
Agenda
► Introduction
► Financial Results
► Spin-off
24
1Q10
Spin-off
► Since the Equatorial’s partial spin-off approved by the Annual and Extraordinary General Meeting, held on04/29/2010, the company’s corporate structure is as presented bellow:
Equatorial
Energia S.A.
Equatorial
SoluçõesGeramarCEMAR
RME
Rio Minas Energia
Light S.A.
65.1%100%
13.03%
25%
Redentor
Energia S.A.
PCP Latin America
Power S.A.
100%
Minorities54.1% 45.9%
25
1Q10
After spin-off – Pro-forma Income Statement and Net Debt
► We adjusted the Income Statement and the Net Debt to reflect the effect of the partial spin-off.
Equatorial
(without RME)RME
Equatorial
Consolidated
Debt 1,337.7 317.7 1,655.4
Cash 426.7 119.3 546.0
Cash - Holdings 92.8 0.4 93.2
Cash - Equatorial Soluções 4.0 - 4.0
Net Reg. Assets 59.9 (2.1) 57.8
Net Debt 754.4 200.2 954.6
Equatorial
(without RME)RME
Equatorial
Consolidated
Net Operating Revenue 275.7 207.8 483.5
Non-manageable costs (122.3) (132.3) (254.6)
PMSO + Provisions (68.7) (36.0) (104.7)
EBITDA 84.7 39.5 124.2
Depreciation / Others Expenses (25.2) (8.8) (34.0)
Equity Income (0.9) 1.2 0.3
Financial Income (6.7) (12.8) (19.4)
Income Taxes and Social Contritbution (6.9) (1.9) (8.8)
Profit Sharing (3.1) (0.3) (3.4)
Minority Interests (17.1) - (17.1)
Net Income 24.9 16.8 41.7
26
1Q10
Eduardo Haiama
CFO and IRO
Thomas Newlands
Investor Relations
Telephone 1: +0 55 (21) 3206-6635
Telephone 2: +0 55 (21) 3217-6607
Email: [email protected]
Website: http://www.equatorialenergia.com.br/ir
Contacts
27
1Q10
• This presentation may contain forward-looking statements, which are subject to risks and uncertainties, as they were based on the
expectations of Company’s management and on available information. These prospects include statements concerning the Company’s
current intentions or expectations for our clients; this presentation will also be available at our website www.equatorialenergia.com.br/ir and
in the IPE system of the Brazilian Securities and Exchange Commission (CVM).
• Forward-looking statements refer to future events which may or may not occur. Our future financial situation, operating results, market share
and competitive positioning may differ substantially from those expressed or suggested by said forward-looking statements. Many factors
and values that can establish these results are outside Company’s control or expectation. The reader/investor is advised not to completely
rely on the information above.
• The words “believe", “can", “predict", “estimate", “continue", “anticipate", “intend", “forecast" and similar words, are intended to identify
estimates, which refer only to the date on which they were expressed. Hence, the Company has no obligation to update said statements.
• This presentation does not constitute any offering, invitation or request of subscription offer or purchase of any marketable securities. And,
this statement or any other information herein, does not constitute the basis for any contract or commitment of any kind.
Disclaimer