4 q07 financial and operating results presentation
TRANSCRIPT
Operating and Financial Results
4Q07 and 2007
March 4, 2008
2
Highlights
Operating Results
Financial Results
Agenda
Corporate Restructuring
3
Highlights
Operating Results
Financial Results
Agenda
Corporate Restructuring
Highlights
Financial Results
• Net revenue reached R$243.5 million in the 4Q07 and R$879.0 million in 2007, up by 17.9% and
8.5%, respectively, versus 2006
• EBITDA reached R$104.0 million in the 4Q07 and R$379.3 million in 2007, up by 6.0% and 11.3%,
respectively, versus 2006
• Net income reached R$59.4 million in the 4Q07 and R$154.4 million in 2007 up by 3.3% and
23.1%, respectively, versus 2006
Operating Results
• Billed energy came to 874.8 GWh in the 4Q07 and 3,218.8 GWh in 2007, increasing by 8.5% and
10.5%, respectively, over 2006
• In 2007, CEMAR’s DEC and FEC ratios improved by 32.6% and 19.4%, respectively, over 2006
• During the last 12 months, energy losses improved by 1.1 p.p.
5
Highlights
Operating Results
Financial Results
Agenda
Corporate Restructuring
6
Customer Base
• Customer base grew by 6.6% in 2007 against 2006 (89,000 new consumers)
Number of Customers (% per Class)
1,349 1,373 1,398
7.5% 7.2%6.9%
4Q06 1TQ7 2Q07
Customers Annual
Change
1,412
3Q07
6.4%
Number of Customers
1,438
4Q07
6.6%
Residential87%
Industrial1%
Commercial7%
Others5%
Energy Volume
Billed Energy Volume per Segment (MWh)
Energy Load (% Chg. MWh)
Brazil vs. NE vs. CEMAR – 2007 x 2006
Billed Energy (% per Segment) – 2007
Brazil - SIN Northeast CEMAR
4.8% 8.7%4.8%
• Growth of 10.5% in billed energy volume over 2006
• Strong growth in the residential and industrial segments - 16.8% and 12.5%, respectively
Consumption Class (MWh) 4Q06 4Q07 Var. % 2006 2007 Var.%
Residential 327,024 363,501 11.2% 1,202,396 1,353,022 12.5%
Industrial 119,598 127,385 6.5% 396,349 463,058 16.8%
Comercial 159,953 172,179 7.6% 590,311 633,679 7.3%
Others (Ex.own consumption) 199,878 211,782 6.0% 724,185 769,058 6.2%
TOTAL 806,453 874,847 8,5% 2,913,241 3,218,817 10.5%
Others24%
Commercial
20% Industrial14%
Residential42%
8
Energy Balance and Losses
Energy Balance - MWh
Energy Losses (LTM)
4Q06 1Q07 2Q07
29.5%29.8% 29.9%
• CEMAR’s required energy climbed 8.7% in 2007
• Losses fell by 1.1 p.p. in the last 12 months
Results are encouraging, showing the positive impacts of the work
done by the energy recovery team
28.9%
3Q07
28.7%
4Q07
Energy Balance (MWh) 4Q06 4Q07 % Chg. 2006 2007 % Chg.
Required Energy (*) 1,123,620 1,204,443 7.2% 4,160,232 4,520,207 8.7%
Sales (**) 807,809 876,289 8.5% 2,919,643 3,224,116 10.4%
Losses 315,812 327,888 3.8% 1,240,588 1,295,200 4.4%
(*) Includes own generation
(**) Includes energy sales to consumer classes, own consumption and supply to CEPISA
1
DEC and FEC
DEC
Distribution Supplier CEMAR
FEC
Distribution Supplier CEMAR
• DEC and FEC ratios improved substantially during 2007
• CEMAR’S DEC and FEC ratios improved by 32.6% and 19.4%, respectively, in relation to 2006
- 6.2%
38.8
3.8
2006
42.6
24.6
4.1
2007
28.7
20.4
4.2
2006
24.6
15.2
4.6
2007
19.8
- 32.6%- 19,4%
6.77.8
5.9
1.9
0.9
7.6
9.8
6.8
4Q06 1Q07 2Q07
4.6
0.4
3Q07
5.0
6.2
0.9
4Q07
7.10.9
4.3 4.63.9
1.41.2
0.9
5.7 5.9
4.8
4Q06 1Q07 2Q07
3.1
0.4
3.5
3Q07
3.7
2.0
5.7
4Q07
- 1.4%
10
Highlights
Operating Results
Financial Results
Agenda
Corporate Restructuring
11
Net Revenues
Net Revenues (R$ Million)
Net Revenue
Annual Chg.
Adjusted Net Revenue (R$ Million) (Pro-forma: ex. CVA PLPT*)
Adjusted Net Revenue
Annual Chg.
2006
810.1
2007
879.0
8.5%
2006
775.6
2007
878.7
13.3%
* Constitution and amortization of PLPT revenue
4Q06 1Q07 2Q07
206.6 195.1 206.4
7.8%13.6% 12.6%
Net Revenue Annual Chg.
3Q07
233.9
-5.9%
4Q07
243.5
17.9%
206.6 195.1 206.4
7.8% 13.6% 12.6%
4Q06 1Q07 2Q07
Adj. et Revenue Annual Chg.
236.6
3Q07
9.1%
243.5
4Q07
17.9%
• Excluding the impact of regulatory asset “CVA PLPT” ,
annualized net revenue climbed 13.3% between 2006 and 2007
12
Manageable Costs and Expenses
Manageable Costs and Expenses
PMSO (excluding provisions) totaled 14.1% of NOR in 2007, 0.5 p.p. down on 2006.
• Personnel: R$44.7 million in 2007, 19.9% less than in 2006, due to the end of restructuring.
• PDD and Losses represented 1.8% of GOR, slightly higher than in the previous year.
R$ Million 4Q06 4Q07 % Chg. 2006 2007 % Chg.
Personnel 14.3 11.4 -20.1% 55.8 44.7 -19.9%
Material 1.4 2.0 41.7% 4.9 6.2 26.2%
Services 15.2 20.5 34.9% 59.8 71.6 19.8%
Others -2.0 0.8 -139.1% -1.5 1.6 -208.1%
PMSO 28.9 34.7 20.0% 119.1 124.1 4.2%
PMSO (% of Net Revenues) 14.0% 14.2% 0.2 p.p. 14.7% 14.1% -0.5 p.p.
Provisions -7.6 6.4 -184.2% 13.6 29.7 118.5%
Allowance for Doubtful Accounts and Losses 1.5 5.5 278.7% 17.1 22.3 30.4%
% of Gross Revenues 0.5% 1.6% 1.1 p.p. 1.5% 1.8% 0.2 p.p.
Provision for Contingencies and other provisions -9.0 0.9 -109.6% -3.5 7.4 -311.7%
Other Non Recurring Expenses 0.0 0.0 N/A 5.7 0.0 N/A
MANAGEABLE COSTS AND EXPENSES 21.3 41.0 92.3% 138.4 153.8 11.2%
MANAGEABLE COSTS AND EXPENSES (% Net Revenues) 10.3% 16.9% 6.5 p.p. 17.1% 17.5% 0.4 p.p.
13
104.7
EBITDA and EBITDA Margin
EBITDA (R$ million) and EBITDA Margin (% of Net Revenue)
• EBITDA reached R$ 379.3 million in 2007, 11.3% up on 2006
• EBITDA Margin of 42.7% in the 4Q07 and 43.2% in 2007
42.7%
47.5%
39.5%
45.3%
4Q074Q06 1Q07 2Q07
104.098.1 77.0 93.6
6.0%
3Q07
44.8%
EBITDA (R$ million) and EBITDA Margin (Pro-forma: ex. CVA PLPT*)
* R$34.5 million in the 3Q06 and R$0.3 million in the 3Q07
Net Revenue
EBITDA Margin
2006
340.7
2007
379.3
104.4
42.7%47.5%
39.5%
45.3%
4Q074Q06 1Q07 2Q07
104.098.1 77.0 93.6
6.0%
3Q07
44.6%
Net Revenue
EBITDA Margin
2006
306.2
2007
379.0
43.2%42.1%
11.3%
43.1%39.5%
23.8%
14
126.274.4
Profitability
• Improvement on the EBITDA/Customer ratio and stability on the EBITDA/MWh ratio when
comparing 2006 and 2007
4Q074Q06 1Q07 2Q07
72.873.3 56.5 67.3
-0.5%
EBITDA per Customer (R$/Customer)
119.9121.7 106.0 118.2
EBITDA per MWh (R$/MWh)
4Q074Q06 1Q07 2Q073Q07 3Q07
-1.5%
261,8 272,2
20072006
4.0%
117,7 117,8
20072006
1.0%
15
Net Income
47.8 30.9 34.1
23.2%
15.8% 16.5%
4Q06 1Q07 2Q07
Net Income Net Margin
Net Income (R$ million) and Net Margin (%NR)
• Net Income of R$ 154.4 million in 2007, 23.1% up on 2006
40.0
17.1%
3Q07
125.4
15.5%
2006
154.4
17.6%
2007
49.4
4Q07
20.3%
16
Indebtedness
* The FINEL sector index accounts for 20% of the IGP-M
Gross Indebtness – 4Q07
• Gross debt of R$ 784.3 million at the close of the 4Q07, R$ 189.7 million more than in the 4Q06
i) R$28.1 million – RGR/Eletrobras
ii) R$69.1 million – BNB
iii) R$267.3 million – 3rd series of debentures (prepayment of debt)
iv) R$26.4 million –RGR/Eletrobras (PLPT)
v) R$28.5 million – BNDES
vi) R$ 9.6 million – BNB (new headquarters and working capital)
• Debt Profile:
Average cost: 10.86% p.a. (LTM) or 91.9% of the CDI
Average term - 8.1 years
Maturity R$ million% of
TotalReference
Avg. Spread (per
year)
Avg. Due Date
(month/year)
Avg. Maturity
(in years)Part. (%)
Short Term 40.7 5.2% Libor 0.8% Jan-19 10.8 0.6%
Long Term 743.6 94.8% IGP-M 4.0% Dec-23 15.0 17.2%
2009 48.8 6.2% TJLP 4.8% Mar-12 4.0 3.8%
2010 51.9 6.6% Fixed (R$) 9.8% Feb-17 8.5 18.4%
2011 121.1 15.4% RGR 6.3% Nov-16 8.4 12.5%
2012 100.2 12.8% Fixed (US$) 6.7% Sep-20 12.4 0.8%
After 2012 421.6 53.7% FINEL 9.8% Dec-15 7.0 7.8%
TOTAL 784.3 CDI 105.5% May-13 5.2 38.9%
17
Net Debt
784.3
Consolidated Net Debt (R$ million)
Gro
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196.1
276.0
224.9
Ownership Adjusted Net Debt (R$ million)
Gro
ss
De
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20
07
508.7
196.1
179.0
76.8
0.6 x
EBITDA 0.2 x
EBITDA
• Maintenance of high liquidity level and low financial leverage
87.1 56.5
18
Consolidated Net Debt
Net Debt (R$ million and Net Debt / EBITDA (LTM)
105.0 176.0 241.7
0.30.5
0.6
4Q06 1Q07 2Q07
Net Debt Net Debt / EBITDA (LTM)
243.6
0.7
3Q07
224.9
4Q07
0.6
• Maintenance of high liquidity level and low financial leverage
Investments
*Excluding direct investments related to the PLPT
CEMAR’s Investments (R$ million)
2Q071Q074Q06
•CEMAR’s investments* totaled R$199.0 million in 2007, 45.3% up on 2006
• Growth in billed energy volume led to a revision of investment expectations
• CAPEX 2008-2009: R$400-R$450 million
31.5
45.0
56.1
Others
Equipment
and Systems
Network Expansion
Network Maintenance
29.6
8.714.3
16.4
18.1
27.1
9.5
1.9
3.3
0.5
2.9
0.4
3Q07
48.4
12.1
31.9
3.3
1.1
4Q07
74.0
18.7
36.7
10.1
8.5
2006
136.9
69.3
42.6
22.0
3.1
2007
53.9
113.8
18.5
12.8
199.0
20
PLPT (Luz Para Todos – Light For All Program)
Direct Investments in the PLPT (R$ million)
4Q06 1Q07 2Q07
51.3 35.4 41.6
Connected Customers
22,490 8,759 7,763
103,067
111,826 119,589
4Q06 1Q07 2Q07
Quarterly Connections Accumulated Connections
32.4 %
3Q07
49.7
9,405
3Q07
128,994
4Q07
67.9
19,332
4Q07
148,326
169.1 194.6
2006 2007
15.0%
21
Dividends
• On February 28, 2008, the Company’s Board of Directors proposed the payment of R$135.9 million
in dividends, to be approved by Equatorial’s General Shareholders’ Meeting on April
• This is equivalent to a payout ratio of 100% of 2007 adjusted net income when included interest
on equity of R$14.7 million
IOE - Gross (R$ 000) $14,670 Div. Proposal (R$ 000) $135,896
IOE - Net (R$ 000) $12,823 # of shares (current) 316,719,690
# of shares (12/27/07) 200,556,740 # of UNITs 105,573,230
# of UNITs 66,852,247 Dividend/UNIT (R$) $1.2872
IOE Net/UNIT (R$) $0.1918
Div. + IOE Net (R$ 000) $148,719
(Div. + IOE)/UNIT (R$) $1.4790
Price (02/29/08) (R$) 18.65
Dividend Yield 7.9%
Payout 100%
22
Highlights
Operating Results
Financial Results
Agenda
Corporate Restructuring
• Increase in the Controlling Interest of Equatorial
• Merger of PCP Energia by Equatorial
• Listing on the Novo Mercado
23
Corporate Restructuring
24
Ownership Strucuture
Abroad
Brazil
Current Structure
Abroad
Brazil
Structure after listing on the Novo Mercado
25.00% ON
25.00% total
65.31% ON
65.25% total
100% total
Equatorial Energia
Holdings LLC
Brasil Energia I LLC
Equatorial Energia
S.A.
RME – Rio Minas
Energia S.A.
CEMARLight S.A.
52.24% ON
52.24% total
100% total
PCP Latin America
Power Fund Limited
35.53% ON
37.11% PN
36.30% total
35.49% ON
2.33% PN
19.27% total
25.00% ON
25.00% total
65.31% ON
65.25% total
100% total
Equatorial Energia
Holdings LLC
Brasil Energia I LLC
Equatorial Energia
S.A.
RME – Rio Minas
Energia S.A.
CEMARLight S.A.
52.24% ON
52.24% total
19.27% ON
19.27% total
36.30% ON
36.30% total
100% total
PCP Latin America
Power Fund Limited
25
Contact
Carlos Piani
CEO
Leonardo Dias
CFO and IRO
Phone 1: +55 98 3217 2198
Phone 2: +55 98 3217-2123
Email: [email protected]
Website: http://www.equatorialenergia.com.br/ir
26
DISCLAIMER
This document may contain prospective 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 intensions or expectations for our clients; this presentation will also
be available on our website www.equatorialenergia.com.br/ir and also in the IPE system at the Brazilian Security
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 prevented 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 affirmations. Such estimates refer only to the date in which they were expressed, therefore
Company has no obligation to update said statements.
This presentation does not consist of offering, invitation or request of subscription offer or purchase of any
marketable securities. And, this statement or any other information herein, does not consist of a contract base or
commitment of any kind