Investor Presentation February 2012 0
Investor PresentationFebruary 2012
0
Business Portfolio
Wind Power
20% of EBITDA
Listed subsidiary: EDP Renováveis (EDP has 77.5%)
IPO in Jun-08
Wind Power: 7.0GW
# 3 wind operator worldwide (present in 11 countries)
1Note: Data as of 9M2011
Brasil
SpainPortugal
20% of EBITDA
Listed subsidiary: EDP Brasil (EDP has 51%)
Presence since 1996
Hydro Power: 1.8 GW
2 electricity distribution concessions
41% of EBITDA
Privatisation in 1997 (IPO)
Single electricity distributor
Power generation: 9.9 GW (ex-wind)
(from which 4.7GW is hydro)
19% of EBITDA
Presence since 2001
Power generation 3.9 GW (ex-wind)
# 2 in gas distribution
Sustainability: Ranked Best Electric Utility Worldwide in 2010-11
Results of Sustainability Assessment(Absolute points 0-100)
6568
74 75 82
8486
7679
7781
83 84
EDP Best Score
Maximum score (100 out of 100)
in the following categories:
-Risk Management
-Climate Strategy
-Stakeholder Engagement
-Social Reporting
2
49
2004 2005 2006 2007 2008 2009 2010 2011
-Social Reporting
-Human Capital Development
-Biodiversity
EDP was rated as #1 worldwide for the second year in a row among 102 utilities evaluated
Partnership with China
Three GorgesThree Gorges
EDP established strategic partnership with China Three Gorges
CTG as new
shareholder
� China Three Gorges (“CTG”) to acquire a 21.35% equity stake in EDP for €3.45 per share (€2.7bn)
� CTG to have an adequate representation at the General and Supervisory Board; commitment to a 4 year lock-
up & standstill period
� EDP and CTG to combine efforts to become worldwide leaders in renewable energy, through joint
development and ownership of selected renewable projects
� In 2012-2015, CTG to invest €2bn in 34-49% equity stakes in operational and ready-to-build projects,
Key Highlights of the Strategic Partnership
4
CTG as new
partner
� In 2012-2015, CTG to invest €2bn in 34-49% equity stakes in operational and ready-to-build projects,
representing 1.5 GW (net), from which €800m to be invested in the first 12 months after closing of the deal
� Committed credit facility of up to €2bn provided by a Chinese financial institution to EDP at corporate level for
a maturity up to 20 years
� Positive impact on EDP’s credit profile:
� Stronger financial liquidity: Coverage of financing needs extended from mid-2013 to mid-2015
� Net debt/EBITDA 2015E < 3.0x
� Partnership EPS enhancing to EDP shareholders from 2012 onwards
Long term partnership enhances visibility of the high quality of EDP’s portfolio of assets
China Three Gorges: Company Overview
� 100% owned and fully supported by
Chinese Government (Moody’s: Aa3 /
S&P: AA-)
� Clean energy development strategy and
international development aspiration:
� Develop hydropower projects
5
� Develop hydropower projects
� New-type clean energy projects
� 50.8 GW capacity under construction of
which 48.9 GW of hydro
� 2020 target: 90 GW (70 GW in hydro and
20 GW in wind)
� Credit rating: AAA (Chinese rating)
(1) Installed capacity consider 3GW from minority shareholding
China’s largest clean energy group with an ambitious renewable energy expansion plan
EBITDA 2.5 Installed Capacity (GW) (1) 25.4
Net Income 1.2 Hydro 25.2
Net Debt 5.7 Wind 0.2
Net Debt/EBITDA 2.2x Electricity Generation (TWh) 101
2010 Financial Figures (€ billion) 2010 Operational Figures
EDP-CTG Strategic Partnership: Key Principles
vEDP’s Leadership
Markets
vCTG’s Leadership
Markets
Investments identified by EDP
• If EDP wishes to co-invest, JV
• If EDP does not seek investment
and direct competition applies,
waiver required
• CTG allowed to invest on wholly
owned basis
• If CTG wishes to invite 3rd party
- EDP Preferred Partner
• If CTG wishes to co-invest, JV
• If CTG does not seek investment
and direct competition applies,
waiver required
Key Markets
• Europe (1)
• US and Canada
• Selected South America
assets
• EDP allowed to invest on wholly
owned basis
• If EDP wishes to invite 3rd party -
CTG Preferred Partner
• Asia (2)
Investments identified by CTG
6
vOther Markets
• Right of First Offer
• Proposal for Partnership
Committee
• If EDP wishes to invite 3rd party
- CTG Preferred Partner
• Right of First Offer
• Proposal for Partnership
Committee
• If CTG wishes to invite 3rd party
- EDP Preferred Partner
(1) Countries where EDP is present (2) Countries where CTG is present and/or it has technological or industrial advantages
Worldwide leadership through diversification of growth opportunities and shared access to new markets
• Other South American
Markets
• Africa: focused primarily in
South Africa, Angola and
Mozambique
Partnership Committee: Consultation committee to discuss potential co-investment opportunities in renewable
technologies, with equal representation and annual rotation of chairman
Partnership in Existing and Future Renewable Projects
� CTG to invest €2bn until 2015 (including co-
funding capex) from which €800m in the first
12 months after closing:
― Stakes between 34% - 49% in projects
equivalent to c.1.5GW (net), including
900MW (net) in operation and 600MW
(net) of ready-to-build projects
Transaction Structure for Minority Investments
(1)
7
(net) of ready-to-build projects
― Full consolidation and operation by EDP
� Joint development and ownership of selected
renewable projects
� Key valuation/investment criteria pre-agreed
Status quo 51-66% 49-34%
Partnership to maximize value extraction from worldwide growth platform in renewables
Other Assets
(1) EDP or its subsidiaries to maintain a minimum of 51-66% shareholding in specific renewable asset to be agreed
CTG stake of Specific Renewable Asset
to be agreed:
� 600 – 800 MW in Europe
� 600 – 800 MW in US
� 0 – 200 MW in South America
CTG adds Financial and Liquidity Strength to EDP
Expected Impact on EDP’s Financial Liquidity
(€bn)
4.02.8
1.2
4.0
6.0
8.0
� CTG Investment
� €0.8bn CTG investment� €2bn facility from Chinese
financial institution
EDP debt maturity profile 2012-15
(€bn)
4.0
6.0
8.08.0
8
Strong improvement of EDP’s credit profile:
Financing needs coverage extended from mid-2013 to mid-2015; Net Debt/EBITDA 2015E < 3.0x
0.0
2.0
Total Liquidity (Sep-11)
First 12 months
2013-15 Adjusted Liquidity Position
0.0
2.0
2012 2013 2014 2015
� EPS accretive for EDP from 2012 onwards
� Access to new and competitive long-term funding
Partnership with CTG: Corporate Governance
� Commitment to a 4-year lock-up and standstill
period, promoting shareholder stability
� Limitation on voting rights to be increased to
25.0%(1)
EDP New Shareholder Structure (Proforma)(Considering EDP shareholder structure as of 14-Sep-2011 as starting point)
CTG, 21.35%
PARPÚBLICA (Portuguese State), 3.70%
CGD (100% owned by
Portuguese State), 0.61%
FREE FLOAT, 40.28%
9
� CTG not to be considered as competitor as long as
strategic partnership remains in place(1)
� Appropriate representation of CTG in General and
Supervisory Board(1)
Alignment of CTG’s and other EDP shareholders’ interests
(1) Proposal to be presented by EDP Shareholders represented in the General and Supervisory Board, and still subject to approval by EDP General Shareholders’ Meeting
BCP Pension Fund, 3.37%
QATAR, 2.02%
IBERDROLA, 6.79%
CAJASTUR, 5.01%
JOSÈ DE MELLO, 4.82%
BES, 2.12%
SONATRACH, 2.23%
SENFORA, 4.06%
NORGES BANK, 2.76%
OWN SHARES, 0.87%
A Value Enhancing Partnership
� Maintenance of EDP’s identity: Iberia, Brazil and Renewable as part of EDP’s core business
� Minimize conflicts of interest: No current overlap and eventual future conflicts regulated as
part of the Strategic Partnership
� Reinforced shareholder structure: Committed long-term shareholder with interests aligned
with EDP; stable shareholder structure and transparent corporate governance
Strategic &
Corporate
Governance
�
�
�
�
10
Value creation for shareholders based on additional sustainable growth and stronger credit profile
� Value accretive for EDP’s shareholders: Diversification of growth opportunities; strong
financial support and lower risk
� EDP with a stronger credit profile: Net Debt/EBITDA <3.0x by 2015E and significant
improvement of EDP’s liquidity
� EPS accretive for EDP from 2012 onwards
Financial �
�
�
Business Profile,
RegulationRegulation
EBITDA: ~50% generation;~50% distribution
� Generation: LT contracts (inflation updated prices)
� Distribution: regulated return on RAB with efficiency incentives
EBITDA: 35% USA, 64% Europe, 1% Brazil
� ~90% of capacity sold at fixed tariffs or PPAs lasting ~15 Years
Power generation + power & gas supply in free market
� Generation: 7.1GW; ~50% Spain, ~50% Portugal; ~50% CCGT, ~20% Coal
� FW contracting: 30TWh of sales to clients; ~100% of expected output contracted at
clean thermal spread(1) >€10/MWh
21%
19%
10%
Brazil
Wind Power
Liberalized Activities
Iberia
Re
gu
late
d o
r Lo
ng
Te
rm C
on
tra
cte
d
2011E EDP EBITDA Breakdown:
Highly regulated low risk profile company
12
>85% of EBITDA from regulated and LT contracted activities
Power plants with fixed RoA / tariffs: No material volume/price risk
� PPA/CMEC Portugal: 8.5% RoA real before taxes, mostly hydro plants
� ~6 Years average maturity of contracts, hydro in free market afterwards
Electricity and gas distribution in Portugal and Spain
� Regulated return on RAB with stable regulation
� Electricity Distribution Portugal: 74% of 2011E Regulated Revenues
� ~90% of capacity sold at fixed tariffs or PPAs lasting ~15 Years
� 522MW capacity added in 9M11: avg. load factor ~30%; above-the-portfolio avg. price
21%
28%Iberian Regulated
Energy Networks
LT Contracted
Generation Iberia
EBITDA
2011E
Re
gu
late
d o
r Lo
ng
Te
rm C
on
tra
cte
d
(1) Average of clean spark spreads and clean dark spreads contracted; includes proportional CO2 free allowances; excludes Spanish coal-based contracted output
Predictability of EDP’s financial performance: Delivery of Targets
EPS10: Actual data versus consensus on Jan-09 (1)
(%)
10%
INT POWER
EON
IBERDROLA
ENEL
EDP
CENTRICA
SSE
FORTUM
EPS11E Consensus: Change from Jan-09 to Date (2)
(%)
-8%
INT POWER
IBERDROLA
ENEL
ENDESA
EDP
CENTRICA
SSE
FORTUM
13(1) Bloomberg data: EPS adjusted for abnormal items versus EPS consensus as of Jan 1st, 2009; (2) Bloomberg data. EPS Consensus on January 24th, 2012 vs. Dec 31st, 2008
Business model based on LT contracted & regulated activities: low sensitivity to energy markets
Current market consensus for EDP’s EPS 2011E slightly below latest EDP’s guidance
-60% -50% -40% -30% -20% -10% 0% 10% 20%
VERBUND
GAS NAT
EDF
IBERDROLA
GDF-SUEZ
RWE
ENDESA
-89%
-55% -45% -35% -25% -15% -5% 5%
VERBUND
GAS NAT
EDF
INT POWER
EON
GDF-SUEZ
RWE
-64%
-57%
-56%
9M11 EDP EBITDA Breakdown: 55% outside of Portugal
9M11 EBITDA Breakdown(%)
55% Regulated
Networks
Wind Power
Liberalised
39%
7%
6%
Electricity Distribution (91% of Reg. Networks EBITDA):
Improved visibility – ERSE’s disclosed tariffs on December 15th
Liberalised Generation and Supply:
2.5GW power generation (~80% CCGT ~20% Hydro)
Electricity & gas supply in free market
Wind Power: Feed-in tariffs indexed to Inflation
599MW licensed before Feb-2006 (tariff of €94/MWh)
321MW awarded in 2006 (tariff of €74/MWh) (1)
14
Regulation: key driver of Portugal’s operations; improved visibility following 4Q11 update
9M11
45% 48%
PPA/CMEC: Improved visibility
Government’s decision on November 14th implied 1 year
deferral (from 2012 to 2013) of €141m receivable; No change
in earnings/value
Improved visibility – ERSE’s disclosed tariffs on December 15th
brought clarity on regulation for 2012-14 period, and
improvement of 2012 regulated revenues.
9M11
LT Contracted
Generation
(1) Capacity attributable to EDP referent to 40% of the total installed capacity of ENEOP consortium (equity consolidated by EDP)
PPA/CMEC: 8.5% return on assets; no volume/margin risk until Dec-16
CONTRACTED GROSS PROFIT
=Contracted Net Assets (Inflation updated)
x
8.5% Return on Assets (Real pre-taxes)+
Annual Depreciation+
Contracted costs with efficiency incentives:
Remuneration scheme
(until earlier between PPA-end and 2017)PPA/CMECs dynamics in 2010-16
19%
2%
Setúbal plant (946MW)
� PPA End in Dec-12
� EBIT(1): -€61m
Coal
Fuel Oil
Sines plant (1,180MW)
� PPA End in Dec-17
� DeNox, fully operation Dec-12: 8.5% ROA and full deterioration until Dec-17
� EBIT(2): +€23m
15
CMEC supported by sound legal framework; term of current CMEC scheme: Dec-16 (5-year maturity)
(1) Last full year of operation (2) First full year of operation of DeNOx facilities (4) Impact on EBT calculated based on a market price of €55/MWh in 2014E , including ancillary services(5) Present value of contracted gross profit as of 1/1/2012, assuming an annual inflation of 2%. This does not include the value of hydro beyond the end of PPA (‘extension of hydro domain’)
(3) Based on average hydro year
Contracted costs with efficiency incentives:
� Fuel (pass through at benchmark costs)
� Contracted O&M (inflation updated)
� Contracted programmed plant availability
Full pass-through of post 1994 new costs of operation for power generation plants such as:
� EU/Portuguese legislation on CO2, SOx, Nox
� Social tariff, Water taxes, Municipal rents, G-charge
79%
PPA/CMEC PV(5)
Jan-12
Hydro Hydro (4,094MW)
� Dec-13: PPA term for 804MW (3plants)
• Output (3): 2.5 TWh
• PPA Price (3): €25/MWh
• Impact on EBT(4): +c€80m
� Dec-15: PPA term for 627MW
• Output (3): 1.8 TWh
• PPA Price (3): €49/MWh
• Impact on EBT(4): +c€10m
Improved Visibility on Regulation in Portugal:
2012 Regulated Revenues & Key Parameters 2012-2014
Regulated Revenues 2012E (1)
(€ million)Return on RAB: Calculation Methodology
(%; bp)
Portuguese 8.0%
9.5%
10.25%
0.25
0.25
0.1875
RoR
0.1875
11.0% 2011E 2012E ∆ Abs. ∆ %
Distribution Activity 1.204 1.286 +82 7%
Last Resort Supply Activity (2) 105 94 -11 -10%
Regulated Revenues 1.309 1.380 +71 5%
16(1) 2011: in accordance with 2011 Tariffs set by ERSE (assuming 49TWh consumption for 2011); 2012: in accordance with 2012 Tariffs set by ERSE (assuming 47.6GWh of consumption for 2012) (2) Including allowed revenues from operating costs of energy purchase and sale activities (3) Date: January 18th, 2012
� RoR increases from 8.56% in 2011 to a preliminary 9.5% for
2012 (based on scenario of avg. Portugal 5Y CDS of 780bps);
� RoR for year t (over 2012-2014): indexed to avg. Portuguese
Republic 5Y CDS between October of year t-1 and
September of year t; RoR floor at 8.0% and cap at 11.0%;
� Average CDS Portuguese Republic Oct-11 to date(3): 1,089bps
� Regulated Revenues 2012 of €1,380m (+€71m YoY; based on
preliminary 9.5% RoR);
� CPI-X update on parts of 2013-2014 revenues:
1. CPI factor: Portuguese GDP deflator by June of year t-1
2. X factor: set at 3.5% for 2013-2014
Portuguese
Republic CDS
780bp 1080bp 1480bp80bp
Regulated Revenues 1.309 1.380 +71 5%
Lower sensitivity of regulated revenues to GWh distributed
Electricity Distribution and Last Resort Supply in Portugal: Breakdown of 2011 and 2012 Regulated Revenues (1)
(%)
Variable Component:
� Depending on GWh distributed and injected into the grid;
� Unit tariff updated at ‘CPI – X’
€1.31bn
40%
€1.38bn
12%
“Quasi-Fixed” Component:
17(1) 2011: in accordance with 2011 Tariffs set by the ERSE (assuming 49.0TWh consumption for 2011); 2012: in accordance with 2012 Tariffs set by ERSE (assuming 47.6GWh consumption for 2012)
EBITDA sensitivity to ±1% deviation in volumes distributed is ±€2m in 2012E tariffs (vs. ±€6m in 2011 tariffs)
Regulator assumption on electricity demand for 2012: -3% YoY vs. assumption made in 2011 tariffs’ calculation
2011E 2012E
60%
88% � 12% depending on number of consumers connected/supplied, volume of customer service processes; Unit tariff updated at CPI–X
� 12% updated only at CPI-X
� 64% Fixed
Funding, Liquidity position
& Growth& Growth
Change in Net debt
Change in Net Debt: Dec-10 vs. Sep-11
(€ billion)
1.4
1.60.5
0.70.7 0.1
1.416.3 16.6
RegulatoryReceivables
RegulatoryReceivables
Adjusted (5) Net Debt /EBITDA
19
Net debt of €16.6bn (-€0.3bn vs. Jun-11; +€0.2bn vs. Dec-10)
Financial Divestments: €353m from disposal of 13.8% stake in EDP Brasil
Financial Investments: €231m for 20% stake in Genesa (exercise of put option by Caja Madrid)
(1) EBITDA - Income taxes - Maintenance capex - interest paid (2) Includes change in working capital from equipment suppliers (3) Expansion capex and net financial investments (4) Impact from mark-to-market of reported net debt due to forex and interest rate market conditions; (5) Excluding Regulatory Receivables
14.9
Net Debt Dec-10
Free Cash Flow (1) Chg. in Working Capital (2)
Expansion Capex & Fin. Investments (3)
Dividends Paid Forex & Fair Value (4) Net Debt Sep-11
15.2
4.1x 4.1x
9M11 EBITDA Breakdown
(%)S&P Fitch Moody's
AAA AAA Aaa
AA+ AA+ Aa1
AA AA Aa2
AA- AA- Aa3
A+ A+ A1
A A A2
A- A- A3
Credit ratings EDP vs. Sovereigns
19%
20%
20%
7% of total EBITDA
from USA
(1)
20
EDP’s rating above the Portuguese Republic: 3 notch by S&P, 2 notches by Moody’s and 3 notches by Fitch
Strong credit profile supported by markets diversification and low sensitivity to economic cycle
BBB+ BBB+ Baa1
BBB BBB Baa2
BBB- BBB- Baa3
BB+ BB+ Ba1
BB BB Ba2
BB- BB- Ba3
(1) Rating in local currency which differs from the rating in foreign currency (BBB)
19%
41%
Access to diversified portfolio of funding sources allows flexibility and
active management of pricing, liquidity, maturities and currency risk
28%
19%
4%2%
Securitizations
Portugal & Spain
Public Bond
Issues
EDP Brasil TEIs in US
EDP Group - Sources of New Funding Raised in 9M11
(%)
21
11%
9%9%
9%
9%Commercial
Paper
Bank Loans
Project
Finance EIB
9M11: €3.3bn raised through diversified funding sources and €2.2bn cash payments on debt maturities
4Q11: €200m 3 years retail bond issue at 6% (1.4x demand) and USD124m of Institutional
Equity Financing (Wind US: 99MW)
Private Bond
Issues
Financial liquidity position and debt maturity profile as of Sep-11
InstrumentMaximum
Amount MaturityAvailable
Sources of liquidity (Sep-11)
(€ million)
Number of
counterparties
Revolving Credit Facility 2,000 03-11-20151,50021
Underwritten CP
Programmes 650 Renewable6503
Domestic Credit Lines 190 18410 Renewable
EDP consolidated debt maturity profile (Sep-11 )
(€ million)
2,500
3,000
3,500
Commercial paper
Other subsidiaries(1)
EDP SA + BVBrazil: € 45 M
Project Finance: € 35 M
€0.1bn Loans: 2011
22(1) Includes essentially EDP Brasil and project finance at EDPR level.
Total Credit Lines 2,840 2,334
Programmes 650 Renewable6503
Cash and Equivalents:
Total Liquidity Available 4,080
1,746
Average Debt Maturity by Sept-11: 5 years
Financial Liquidity of €4.0 bn (Sep-11) doubles to €8.0 bn with the Partnership with CTG
0
500
1,000
1,500
2,000
2,500
2011 2012 2013 2014 2015 2016 2017 2018 > 2018
� Cash & Equivalents (Sep-11):
� Refinancing needs in 2011-2012:
Loans maturing in 2011:
Bond maturing in Jun-12:
Bond maturing in Aug-12:
Sources of funds Use of funds
€1.7bn
€0.5bn
€0.15bn
Main sources and uses of funds
€0.35bn
23
Comfortable liquidity position
Partnership with CTG extends coverage of funding needs until 1H15
� Available Credit Lines (Sep-11): Bond maturing in Nov-12:
Loans maturing in 2012:
Total: €2.2bnTotal:€4.0bn
€2.3bn€0.7bn
€0.5bn
€0.35bn
Financial Leverage:
Consistent with low operating risk and long asset maturityEuropean Utilities: 2010 Net Debt/EBITDA vs. Business Mix (1)
(x;%)
3.0
4.0
5.0
6.0
VerbundFortum
Int. Power
SSEEnel
REN/REE
National Grid
Terna
Iberdrola
Gas Natural
A2A
De
bt/
EB
ITD
A 2
01
0
Snam/ Enagas
2015E
24
More than 80% of EBITDA from long term contracted or regulated activities
Longer residual useful life + relevant works in progress + Low CO2 exposure
(1) Source: Bloomberg and Company Reports
0.0
1.0
2.0
3.0
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Centrica RWE
E.ON
Int. Power
GDF Suez EDF
% of 2010 EBITDA from Regulated Networks + PPA’s
Ne
t D
eb
t
2015E
Capex 2011-2012: €2.1bn/year, 80% of which in expansion
Avg. Capex 2011-12E: ~€2.1bn/year
(€ bn)
Hydro 28%
Brazil 7%Other 1%
Expansion ~1.6
~2.1
Expansion 2.0
2.7
25
Capex 2010 Capex 2011-12E Expansion Breakdown
Wind 64%Maintenance
~0.6
~1.6
Maintenance~0.7
Expansion capex: >90% in CO2-free technologies
Hydro capacity under construction
76.4%
23.6%
New Plant
Repowering
Hydro Investments Portugal: 2,147MW under construction;
EBITDA delivery as from Jan-12
Hydro Plants MW To enter in operation GWh/Year(1) (2) Type
Picote II 246 Dec-11 244 Repowering
Bemposta II 191 Dec-11 134 Repowering
Alqueva II 256 3Q12 381 Repowering w/ Pumping
Ribeiradio & Ermida 77 1Q14 134 New plant
Baixo Sabor 171 3Q14 405 New plant w/ Pumping
26(1) Total output in average years; (2) Net output on plants with pumping: Alqueva II 30GWh, Baixo Sabor 230GWh, Foz Tua 275GWh, Venda Nova III 18GWh, Salamonde II 81GWh;
(3) Expected EBITDA for 2016.
� 76% of new MWs in repowering: Lower capex; extends the useful life of existing plants by ~25 years
� 76% of new MW are pumping capacity: improves water management of all plants; enhances projects IRRs
� Capex: €2.1bn in total, €737m invested until 9M11
76.1%
23.9%
With Pumping
No Pumping
Baixo Sabor 171 3Q14 405 New plant w/ Pumping
Venda Nova III 740 3Q15 1,337 Repowering w/ Pumping
Salamonde II 207 3Q15 274 Repowering w/ Pumping
Foz Tua 259 4Q15 585 New plant w/ Pumping
Total 2,147 3,235
2011/12 Wind Investments:
Strong visibility on value creation
Iberia
Western
Europe
2011-12E Additions by Region
(%)
2011-12E Additions by Country
(%)
France
Belgium
Spain 15%
Portugal 19%
Italy 5%
5%
34%
• Feed-in tariff (15 years)
• Green certificate markets
• Feed-in tariff (15 years)
• Feed-in tariff or
variable regime with collars (20 years)
27
Central and Eastern
Europe
Americas
Italy 5%
Romania 6%
Poland 22%
US 24%
Brazil 4%
10%
29%
28%
• PPA (20 years)
• Long-term contracts + Tax incentives
(mandatory green quotas)
• Green certificate markets
(mandatory green quotas)
• Green certificate markets
(mandatory green quotas)
� Generation portfolio: +78% in 2005-10, +9% in 2010-12; 2/3 is Wind & Hydro
� €2.8bn of works in progress to be materialised in EBITDA over the next years
� #1 Hydro developer in Europe (firm pipeline of 3.5GW), #3 wind player worldwide
� High exposure to Brazil: 20% capacity increase due in 1Q12; preliminary works for 17% further
increase
Focused
Growth
� Longer remaining life of generation fleet: low replacement needs, O&M, CO2 costs
EDP: a Distinctive Story
28
Superior
Efficiency
Controlled
Risk
� Longer remaining life of generation fleet: low replacement needs, O&M, CO2 costs
� Flexible expansion capex, focused on attractive return/risk combination
� Opex/Gross profit: 27% in 9M11, reinforcing leading position on efficiency
� Low-risk profile: >85% of 2012E EBITDA from regulated & LT contracted activities
� Diversification: ~45% of EBITDA coming from Portugal
� Sustainability: Ranked as Best Electric Utility Worldwide in 2010 and 2011
� Funding needs covered until mid-2015
AnnexesAnnexes
9M11 EBITDA: 89% from Regulated and LT Contracted Activities
% Chg. YoY
€2,651m €2,775m
+5%
Brazil
Liberalized Activities
Iberia
11%
20%
20%
19%
15%-23%
+12%
EBITDA Breakdown by Activity (1)
(€ million)
30
No material Forex impact (-€3m at EBITDA level from which +€11m from Brazil and -€14m from USA)
9M10 9M11
Wind Power
Regulated Networks
Iberia(2)
LT Contracted Generation Iberia
89%
20%
28%
22%24%
25%
18% +16%
+16%
-4%
(1) As of Sep-11, EDP changed its accounting policy as to the interest cost and estimated return of the fund assets: the respective amounts, so far accounted as operational expenses, are now accounted at financial results level. Only 9M11 income statements comply with this change, implying a positive impact on EBITDA of €66m in 9M11. (2) Includes regulated networks and other.
Spain represents 26% of EDP’s EBITDA in 9M11
9M11 EBITDA Breakdown(%)
74%
Thermal Generation &
Supply (3)
Generation: Nuclear
18%
Regulated Networks (Gas and Electricity): stable regulation
Regulated Revenues updated annually, namely with inflation,
efficiency factors and demand (based on Return on RAB
methodologies)
25%
3%2%
Generation: Hydro
Electricity Networks
Generation & Supply: reduced exposure to hydro and nuclear
3.9GW of generation capacity (3% Special Regime (1), 4%
Nuclear, 11% Hydro, 38% Coal, 44% CCGT)
Electricity and gas supply in free market
31
Wind power, gas & electricity networks represent c70% of EDP's EBITDA in Spain
Spanish generation activity with low exposure to hydro and nuclear (c5% of EBITDA Spain)
9M11
26% 29%
Wind Power: feed-in tariffs or variable regime with collars
� 1,153MW under Transitory Regime (‘pool price + €38/MWh
premium’ with collars)
� 1,042MW under RD661/2007 (‘pool + €20/MW premium’
with ‘cap & floor’ or €79/MWh feed-in tariff; c92% of
capacity under fixed tariff option) (2)
methodologies)
9M11
(1) Excluding wind capacity. (2) €20/MWh premium reflects a temporary 35% reduction until Dec-12. (3) Including HC Energia (holding company).
22% Gas Networks
Wind Power
181 207
200217
Operating costs (1) : 9M11 vs. 9M10
(€m)
Operating costs in 9M11:
Efficiency improvements with Opex/Gross Profit(2) at 27%
+3.0%
9-Month average YoY Inflation: Sep-11
(%)
9.6%1,0841,116
Brazil EDPR Iberia
+9%
+14%
% Chg. YoY
32
703 692
9M10 9M11
(1) OPEX=Supplies & Services + Personnel costs + Costs with social benefits excluding restructuring costs and adjusting the impact of the change in accounting policy related to the interest cost and estimated return of the pension fund assets (2) Gross profit adjusted for PTC revenues.
Portugal Spain Brazil (IGP-M)
3.6%3.3%
-2%
� Iberia: Operating costs -2% (excluding €6m of restructuring costs in 9M11)
� Brazil: Operating costs +9% (+6% in local currency, below inflation in the period)
� EDPR: Operating costs +14% essentially due to O&M (+13% increase of installed capacity)
Net Profit up 6% YoY in 9M11
cost of debt: 4.0% in 9M11 vs. 3.5% in 9M10
Impact from longer useful life in wind farms
(from 20 to 25 years)
(€ million) 9M10 9M11 ∆ % ∆ Abs.
EBITDA 2,651 2,775 +5% +124
Net Depreciations and
Provisions1,148 1,055 -8% -93
EBIT 1,503 1,720 +14% +218
Financial Results &
Excluding reclassification of cost of carry with
employee responsibilities (€66m), pro-forma
EBITDA increased 2% YoY in 9M11
33
cost of debt: 4.0% in 9M11 vs. 3.5% in 9M10
€49m impairment on financial stake in BCP;
9M11 includes costs of carry with employee
responsibilities (+€66m)
Increase of listed subsidiaries’ net profit
(EDP Renováveis and EDP Brasil) and
reduction of EDP stake in EDP Brasil in Jul-11
Financial Results &
Associated Companies(330) (529) -60% -199
Capital Gains/(Losses) 3 10 +299% +8
Income Taxes 306 242 -21% -63
Non-controlling
interests96 136 +42% +40
Net Profit 774 824 +6% +49
One-off fiscal impacts in 9M11
Installed capacity: +94% between 2005 and 2012E
Average Residual Useful Life of
EDP’s Generation Portfolio (Years)EDP Group Capacity by Technology: 2005-2012E(GW; %)
Hydro Wind
CCGT Other
22.0
23.99%
19%22%
78%
16
24
94%
% Chg.
34
Installed capacity growth driven by greenfield wind & hydro power capacity additions
Wind & Hydro: 47% weight in 2005, growing to 65% weight by 2012E
2005 2010 2012E
31%
34%
16%
29%
17%
22%
32%
65%
44%
13%
40%
12.3
3%
Dec-2005 Dec-2011
8
21
22
37
7.0
EDP: Portfolio of assets with a long average residual life
Average Residual Useful Life of EDP’s Generation Portfolio by Technology Dec-2011(1)
(Years)
Hydro (33%)
CCGT (17%)
Wind (32%)
Coal (12%)
7.2
3.7
2.6
GWTechnology ConcessionEnd Dates
25 years total asset life
3.6Y avg. Ageof portfolio
30-40 years
35
24
17
1
8
0 5 10 15 20 25 30 35 40
0.2
(1) Reference Date: Dec-11 except for Wind (as of Sep-11); Excluding Special Regime Capacity (Mini-hydro, Cogeneration and Biomass), Tunes and Carregado plants.
Hydro concessions extended up to 2047: EDP paid €759m in 2008 for hydro rights in Portugal
Average age of EDP’s wind farms: 3.6 years
Nuclear (1%)
Coal (12%)
Fuel Oil (4%)
Avg. EDP (100%)
2.6
0.9
21.7(1)
30-40 years total asset life
16% of Trillo plant in Spain; end date of
concession
PPA termination date
US
UK
France
Belgium Poland
314
-3,278
-
57 168
Canada
-
-
100
1,448
Wind power generation: EDP is the 3rd largest operator
worldwide, present in 11 countries
36
MW capacity by Sep-11MW capacity by Sep-11
PortugalSpain
Brazil
France
Italy
Romania
Under construction
-20 57
22
-
20
-
57
84874 2,194
284
-
228
Installed
Pipeline
4,0183971,494
18,415
539
13
940
1,444
579
490
7,280
29,385
Porto Pecém
360 MW
Under construction
Sto. Antônio do Jari
373 MW
Construction Started: 3Q11
Concession: 2044
Hydro Generation Thermal Generation Distribution
Hydro Concessions
in Operation
1734.9 MW
Concessions Ending:
2025 - 2036 51% 49%
Free FloatEDP Group
Generation
100%
Distribution
EDP Energias
do Brasil
60%
Brazil: #5 in generation and #4 in distribution in Brazil:
Sustainable growth with sound regulatory framework
37
Bandeirante
SP - 1st state in GDP:
~33% of national total
1.5MM clients in 9.6 K Km2
Concession: 2028
Escelsa
11th state in GDP: 2.3% of
national total
1.2 MM clients in 41.2 K km²
Concession: 2025
EDP Escelsa
100%
100%
EDP
Bandeirante
Peixe
Angical
Lajeado
Energest
EDPR Brasil
Pecém I100%
Enertrade
Commercialization
60%
73%
100%
45%
50%
EDP Energy Regulated Networks Iberia:
Geographical footprint2011E Regulated Revenues(1)
3%
13%
74%
9%
Gas Portugal
Gas Spain
Electricity
Spain
Electricity
Gas
Electricity & Gas
Basque CountryAsturias
Oportonorth coast
Geographical Presence
Cantábria
38(1) Electricity Portugal: €1.3bn in accordance with ERSE’s consumption forecast; Gas Portugal: regulated revenues set for the year going from Jul-10 to Jun-11; Electricity Spain: regulated revenues exclude €7m from transmission activity , sold to REE in 3Q10.
Distribution of electricity in Portugal represents more than 2/3 of the portfolio
Diversified portfolio Portugal/Spain, Electricity/Gas
2011 regulated revenues set by regulators: ~€1.8bn
74%
Electricity
Portugal
Murcia
Value added tax and tariff increases in 4Q11/2012 in Portugal
expected impact per segment
Demand
Weight (%)# Clients
Average Bill
(€/month)Tariff Increase 2012
(% and €/month)
VAT increase
from 6% to 23%
(% and €/month)
Residential(Normal Low Voltage)
~38% 5.4 million €41 (1) +4%+€1.4
+17%+€7.0
Low Income Families
Social Tariff(Normal Low Voltage)
~2% 0.7 million €21+2%
+€0.5State benefit:
~0%
39(1) For Normal Low Voltage (NLV) clients with contracted power < 20.7 kVA (~4.7 million clients); (2) Public administration, defence, social benefit entities, and public lighting.
Corporates / SMEs(Very High/High/Medium and Special Low Voltage)
~50%Liberalized supply:
2012 wholesale price + access tariffs
~No impact: VAT deducted
passed through
State Entities (2) ~10%2012 Tariffs/prices
dependent on voltage level
+17%
Impact on State Budget in 4Q11 + 2012: VAT revenues of €500m, expenses with social tariff benefits €30m
Significant pricing incentive for stronger energy efficient behaviour by Portuguese electricity consumers
~25,000
~85,000
Average electricity prices in Portugal vs. European Peers
Residential (1) Prices 1H11: Portugal vs. EU average
(€c/KWh)
Ireland
Portugal (VAT 23%)
Spain
Austria
Italy
Belgium
Germany
Denmark
Portugal
25%
19%
21%
10%
20%
16%
23%
13%
VAT% CAGR
2001-11 (2)
3.5%
4.4%
0.0%
4.1%
6.4%
2.6%
7.7%
4.0%
40
Residential electricity prices in Portugal continue in line with EU average even with VAT increase in 4Q11
Source: Eurostat (1) 1H11 Electricity Prices for residential usage = Dc – Consumption 2,500 -5,000KWh/year; including VAT and all other taxes, except when otherwise mentioned. (2) Excluding VAT; Considering 1H01 Electricity Prices for residential usage = Dc – Consumption 3 500 kWh/year of which night 1 300 (3) CAGR 2005-11
0 5 10 15 20 25 30
Greece
France
Slovenia
Portugal (VAT 6%)
Hungary
EU 27
Euro 16
Ireland
EU 27
Euro 17
Portugal
13%
25%
6%
20%
17%
13%
7.7%
7.8%
2.6%
3.7%
1.7%
7.0%
16%
17%
4.8%
3.9%(3)
(3)
Net Regulatory Receivables by Sep-11
689
883 898 900
Regulatory Receivables Portugal: €900m (+€211m vs. Dec-10)
� Last resort supply: €573m (+€306m vs. Dec-10); €249m
generated in 9M11 due to higher than expected power
procurement prices (€59/MWh in 9M11 vs. €47/MWh ERSE)
� CMECs: €336m (-€152m vs. Dec-10) €265m received in 9M11;
€114m increase in 9M11.
� Distribution: -€28m (+€50m vs. Dec-10); €39m generated in
9M11 due to differences in tariff mix; -€185m vs. Jun-11 due to
securitization of annuities to be recovered in 2012-13
Regulatory Receivables
(€ million)
1,410
Portugal
1,4431,400 1,449
41
759
531 532 549
-5 -16 -200
securitization of annuities to be recovered in 2012-13
Regulatory receivables stable over 9M11 at €1.4bn
Decline in Spain following securitizations, increase in Portugal due to higher than expected power prices
Tariff Deficit Spain: €549m (-€210m vs. Dec-10):
� -€435m received from 5 securitization deals in 9M11
� +€225m from new tariff deficit created in 9M11 and previous
years adjustments
Brazil
Spain
Sep-11Dec-10 Mar-11 Jun-11
PPA/CMEC: Deviations between return in merchant market and 8.5%
ROA are received/paid through access tariffs in years t+1 and t+2
CMEC Regulatory Receivables: Evolution in 9M11
(€ million)
488 -265
152 -38
9M11 Deviation vs. CMEC Reference
�Volume: ~-30% �Avg. unit margin: ~-30%
9M11 Deviation vs. CMEC Reference
�Volume: +7% �Avg. Realized Price: +4%
336
Calendar of collection: 25% in
4Q11; 27% in 2012; 48% in 2013
� CMEC financial system in place since
2007: to provide liquidity to Iberian
electricity market and at the same
time preserve risk/return profile of
EDP’s 1994 PPA contracts
� PPA/CMEC plants do not benefit
from windfall profits in case of power
price increases in the market
� Positive/negative deviations
42(1) Can be securitized
Exceptional postponement from 2012 to 2013 of €141m(1) recovery related to CMEC 2010 deviation
Dec-10 Previous Years Recovery
Thermal Deviation
Hydro Deviation
Sep-11
� Positive/negative deviations
between contracted gross profit and
gross profit in the market: recovered
or paid back through tariffs in years
t+1 and t+2
� CMEC deviations in 9M11: Hydro
plants better in the market vs. CMEC;
coal plant in market below CMEC,
but improving
Sep-11 Dec-11E ∆ 2012E Dec-12E
-564
+939
-87
+100313CMEC 336 300
700545Distribution and Last Resort
Supply1.075
Improved Visibility on Regulation in Portugal:
Expected Evolution of EDP’s Regulatory Receivables
EDP Regulatory Receivables Electricity Portugal (1)
(€ million)� Regulatory Receivables in Portugal
expected to increase ~€390m in
2012 (excluding impact from
eventual future securitisations)
� Assumption of a €59/MWh (2)
procurement price for 2012 and
increasing liberalisation, reduce
risks of adverse tariff deviations
3
2
41
43
TOTAL 881 1.000 +389 1.389
(1) Does not include Gas Business in Portugal (€18m in Sep-11); (2) ERSE Tariffs: €59/MWh in 2012 vs. €47/MWh in 2011; (3) 5.5% set by ERSE on a preliminary base; Definitive rate of 6.3% considering market data from Jul. 1st, 2011 until Dec. 31st, 2011 (definitive rate results from the formula presented in the Government Instruction nº279/2011, published on October 17)
• Includes €141m with respect to 2010 CMEC deviation, which collection through tariffs was exceptionally deferred from2012
to 2013; to be remunerated at ~4.0% (can be securitised);
• +€939m from deferral of 2012E Special Regime Premium, to be supported by EDP and to be recovered in 2013-2016;
remunerated at 6.3%(3) (can be securitised);
• -€564m from net recovery of 2010/2011 negative deviations from electricity distribution and last resort supply activities;
• -€87m from the recovery through 2012 tariffs of the 2011 estimated CMEC deviation; +€100m from estimated CMEC
deviation to be generated in 2012.
risks of adverse tariff deviations
1
2
3
4
1.6
3.0
Portuguese Electricity System: Sound Financial Sustainability
Regulatory receivables in the Portuguese Electricity System
(€ billions)
Regulatory receivables already securitized by Sep-11
Regulatory receivables owed to EDP
Key assumptions for 2011-2020:
� Brent: USD109/bbl in 2011 +2.6% CAGR to USD138/bbl in 2020
� Electricity Consumption Portugal: CAGR of +0.3%(1)
� Interest cost for new regulatory receivables: ~6%
� Tariff increases: +1.75% CAGR in real terms (+3.75% CAGR nominal)
44
1.4
0.5
2012E 2020E
(1) 2011 electricity consumption in Portugal in line with ERSE’s assumption for 2011 Tariffs: 49.0TWh; Forecast for electricity consumption in Portugal in 2020: 50.3TWh
Portuguese electricity system is sustainable based on conservative assumptions for input costs and demand
and assuming a 1.75% real CAGR for tariff increases in 2012-2020 period
-3.2%
-2.1%
-6.8%
0.6%
-2.3%
-1.2%
-0.7%
Decrease of electricity consumption in Portugal in line with situation in
several countries across Europe
Evolution of electricity consumption: Portugal vs. other European countries – 2011 vs. 2010 (1)
(%)
Spain
France
Italy
Portugal
2011 vs. 2010 Real
2011 vs. 2010 Adjusted (2)
45
-0.9%
-2.8%
-4.5%
-3.7%
(1) Including import/export balance and net of pumping; Figures presented are not adjusted for temperature and working days. Source: websites from mentioned electricity operators. (2) Adjusted for temperature and/or working days. (3) Including only the areas of Amprion and 50Hertz (excludes EnBW and Tennet).
Ireland
UK
Germany
Greece
Electricity consumption is decreasing in several European countries
2011 electricity consumption in Portugal: -3.2% YoY
(3)
Brazil Iberian Market
Electricity & Gas Demand in EDP’s Key Markets
Electricity Electricity Demand Gas Demand
11M11 vs. 11M10 (YoY)
+3.8%
% Weight on Iberia
100% 17% 83%
Iberian
Market Portugal Spain
100% 13% 87%
Iberian
Market Portugal Spain
2011 vs. 2010 (YoY) 2011 vs. 2010 (YoY)
46Source: REN, REE, Enagás and EPE. Figures of electricity correspond to gross demand (before grid losses).
� Brazil: Steady consumption growth prompted by new clients connected and higher industrial production
� Iberian Electricity Market : Weaker demand on residential and SMEs segments
� Gas Iberia: penalised by lower demand for electricity production (CCGTs), stable industrial/residential demand
-2.3%
-3.2%
-2.1%
Market Portugal Spain
-6.2%
-0.6%
-7.0%
Market Portugal Spain
Commercial Activity Portugal: Control over bills collection
Overdue Debt from Customers (1)
(€m; %)Average Collecting Period
(Days)
222
200215
196 209
5%4% 4% 4% 4%
Overdue Debt from Customers
Overdue Debt from Customers/Annual Sales
32 32 3230
28
47
� No material impact on customers collecting cycle, even considering low economic growth
� Decreasing weight on bi-monthly invoicing led to slight improvement in avg. collecting period
4% 4% 4%
2007 2008 2009 2010 9M11 2007 2008 2009 2010 9M11
(1) Includes electricity and gas sales in Portugal in the regulated system and liberalized market; Excludes grid operator (EDP Distribuição) debt from customers (essentially other liberalized suppliers and municipalities current account)
PARPÚBLICA (Portuguese
State), 25.05%
CGD (100% owned by
Portuguese State), 0.61%
BCP Pension Fund, 3.37%
QATAR, 2.02%
NORGES BANK,
OWN SHARES, 0.87%
FREE FLOAT, 40.28%
EDP: Shareholder structure & Corporate Governance
Corporate GovernanceShareholder Structure as of 14-Sep-2011
General and Supervisory Board:
� Oversees management activity and guarantees permanent
monitoring and supervision of the administration,
cooperating with the Executive Board of Directors and all
other corporate bodies in the pursuit of the corporate
interests;
� Elected by the shareholders in the General Meeting;
The appointment of a representative of a shareholder that
48
IBERDROLA, 6.79%
CAJASTUR, 5.01%
JOSÈ DE MELLO, 4.82%
BES, 2.12%SONATRACH,
2.23%
SENFORA, 4.06%
NORGES BANK, 2.76%
(1) Including the stake of Caixa Geral de Depósitos, a 100% Portuguese State-owned bank.
� Dec 7th, 2007: Portuguese State issues exchangeable bond over 4.1%of EDP share capital, maturing Dec-14, strike price €6.70. Investorput exercisable on 5th anniversary of closing (Dec-12) at 100% ofPrincipal Amount.
� 2011 to Date: Aug 24th - Qatar Holding announces stake above 2%
Sep-14th - MFS decreases its ownership interest below 2%
can be considered a competitor needs the approval of >2/3
of shareholders’ meeting present voting rights;
� Composed of 17 members, 9 of whom are independent.
Executive Board of Directors:
� Responsible for the management of the company’s business
activities and for representing the Company;
� Elected by the shareholders at the General Meeting;
� Management team in the company since 2006;
� 7 executive board members: mandate 2009-2011
Partnership with China Three Gorges: Next Steps
Calendar
Jan
2012
1. Notice for Shareholder Meeting
2. Shareholder Meeting
(approval of the waiver and the Supervisory Board
member lists)
Feb Mar Apr May JunExpected Dates
49
Signing of agreement with CTG occurred on December 30th, 2011
Closing expected by the second quarter of 2012
3. Regulatory approvals (Portugal, Spain, US)
4. Closing
First Quarter 2012
Second Quarter 2012
IR Contacts
Miguel Viana, Head of IR
Sónia Pimpão
Elisabete Ferreira
Ricardo Farinha
Pedro Coelhas
Noélia Rocha
E-mail: [email protected]
Phone: +351 210012834
Visit EDP Website
Site: www.edp.pt
Phone: +351 210012834
Link Results & Presentations:
http://www.edp.pt/EDPI/Internet/EN/Group/Investor
s/Publications/default.htm
Next Events
February 1st – Santander Iberian Conference
February 3rd / 10th – Roadshows in Singapore & Hong Kong
February 20th – EDP’s Extraordinary Shareholders’ Meeting
March 8th – YE2011 Results