Edison Spa · MIL:EDNR
Edison Spa — Investor Day (January 2006)
35 slides from Edison Spa's investor day presentation, Jan 17, 2006
Slide 1: Edison Business Plan and Strategic Update
EDISON BUSINESS PLAN AND STRATEGIC UPDATE Milano, January 17th 2006 1
Slide 2: Agenda
AGENDA Shareholders structure and corporate governance Edison today: competitive position and organisation Electricity and Gas : Italian market evolution and Edison growth strategy Economic and financial overview 2
Slide 3: Shareholders Structure and Corporate Governance
SHAREHOLDERS STRUCTURE AND CORPORATE GOVERNANCE 3
Slide 4: Capital and Shareholding Structure
CAPITAL AND SHAREHOLDING STRUCTURE As of 17 January 2006 Fully diluted Dolomiti Financial DELMI WGRM AEM Spa Enia Spa SEL Spa EDF Energia Spa Investors 51% 15% 10% 10% 14% 100% 50% 50% Transalpina di DELMI WGRM Energia 61.3% 50% 50% 19.4% Transalpina di EDISON Energia 4.63% 17.33% 19.3% 71.23% JP Mo
Slide 5: Edison's Corporate Governance
EDISON’S CORPORATE GOVERNANCE Board of Edison TdE Strategic Int. Control Compensation Directors Board Board Committee Committee Committee Giuliano Zuccoli Chairman CEO Chairman Mario Mauri 9 9 9 Chairman Renato Ravanelli 9 9 Uris Cantarelli 9 9 9 Klaus Stocker 9 9 9 Umberto Quadrino CEO 9 9 Pierre G
Slide 6: Edison Today: Competitive Position and Organisation
EDISON TODAY: COMPETITIVE POSITION AND ORGANISATION 6
Slide 7: Financial Highlights 2001-2005
FINANCIAL HIGHLIGHTS 2001 - 2005 30.09.04 (*) 30.09.05 (*) Consolidated IAS (mln €) 2001 2002 2003 2004 Compliant CORE BUSINESS REVENUES 4,058 4,418 5,141 5,668 4,364 4,805 CORE BUSINESS EBITDA 1,015 1,002 1,087 1,226 1,037 949 CONSOLIDATED NFP 13,330 6,461 4,143 3,855 5,186 4,838 (*) Includes 50% o
Slide 8: Edison Position in the Electric Power Market
EDISON POSITION IN THE ELECTRIC POWER MARKET Net electric power produced in Italy at Edison Group installed capacity at Dec. Sept. 30th, 2005 (TWh) 31sth, 2005 (GW) 39% Edipower Total Edison Edison % standalone (Edison %) 31/12/2005 27% Gas 4.9 1.6 6.5 15% Fuel oil 0 1.2 1.2 83.4 32.2 Coal 0 0.3 0.3
Slide 9: Edison Position in the Gas Market
EDISON POSITION IN THE GAS MARKET Major gas suppliers in Italy at September Edison domestic gas supply in FY 2005 (bcm) 30th, 2005 (bcm) 5.7 13.3 Edison share of total Italian gas sales 16% purchases from domestic sources 6.7 Spot 0.9 38.6 Libya 2.9 11.5 9.4 8.3 Russia 1.8 4.5 3.7 0.9 Norway 1.0 7.0
Slide 10: Group Business Structure
GROUP BUSINESS STRUCTURE ELECTRICITY REGULATED MARKET (CIP6) Electricity Gas ELECTRICITY AND GAS SINGLE BUYER IPEX WHOLESALE MARKET B.U. B.U. POWER B.U. ENERGY MARKETING & ASSETS MANAGEMENT SALES FINAL • Power production. CUSTOMERS: • CIP6 sales. • Gas and fuels supply. • Marketing and Business • Po
Slide 11: Risk Management
RISK MANAGEMENT Risk limit Risk Exposure Financial Net Hedging Exposure Edison Operating Group Companies PaR The Risk Management area is part of the Corporate structure and it reports directly to the Chief Financial Officer; it manages and controls the risk exposure of all Group companies through th
Slide 12: Electricity and Gas: Italian Market Evolution and Edison Growth Strategy
ELECTRICITY AND GAS: ITALIAN MARKET EVOLUTION AND EDISON GROWTH STRATEGY 12
Slide 13: Business Overview – Dynamics in the Electricity Market
BUSINESS OVERVIEW – DYNAMICS IN THE ELECTRICITY MARKET A fast growing liberalising market Twh Total demand 400 CAGR 2005-2011 350 2.5% Due to the 2002-2011 investment 300 program, the system ensures as of Free market 2 5 0 200 today a proper reserve margin and Eligible for free 15 0 market it is evo
Slide 14: Evolution of Installed Capacity in Europe
EVOLUTION OF INSTALLED CAPACITY IN EUROPE Net Additional Capacity GW (2002-2011) 21 10 6 3 1 (Source: Edison estimates) Italy is by far the European country that has scheduled the highest increase of production capacity for the current decade 14
Slide 15: Price Comparison with European Power Exchanges
PRICE COMPARISON WITH EUROPEAN POWER EXCHANGES Power prices December 2005, average €/MWh Power prices in 2005, average €/MWh Net Italian imports (TWh) (source Terna/GME) 7 3 ,2 0 5 8 ,6 5 3 ,7 4 ,8 6 9 ,5 0 4 6 ,7 46 3 ,9 6 5 ,6 0 2 ,7 6 2 ,6 0 ∆ vs 1 ,0 +23% -11% -36% 2004 -55% Pow er next OM EL IP
Slide 16: Expected Evolution of Power Prices
EXPECTED EVOLUTION OF POWER PRICES €/TWh €/bbl 70 70 Time weighted average 60 60 50 50 Average Enel offered price for electricity sales in 2006 40 40 PUN (Prezzo Unico Nazionale - Average National Price) Full cost of new entrant 30 30 Brent scenario (right axis) 20 20 10 10 0 0 2004 2005 2006 2007 2
Slide 17: Progress in Electricity Investment Program
PROGRESS IN ELECTRICITY IN INVESTMENT PROGRAM PROJECTS NOT YET COMMITTED FY2005 FY2007 INCLUDED IN THE INDUSTRIAL PLAN 2011 200 MW Wind farms ~ 10.0 GW 9.0 GW 150 MW Merchant line 800 MW 800 MW Altomonte (CS) OPERATING 800 MW Torviscosa (UD) 2Q 2006 Planned projects EDISON 6.6 GW 800 MW Simeri Crich
Slide 18: Evolution of Edison Installed Capacity by Market and Fuel
EVOLUTION OF EDISON INSTALLED CAPACITY BY MARKET AND FUEL 15.000 Merchant lines Gas fired capacity Hydroelectric and wind power plants 10.000 Coal and oil CIP 6 installed capacity with incentive CIP 6 installed capacity without incentive (only fuel 5.000 component, O&M component and investment compo
Slide 19: CO2 Emission Trading and Green Certificates
CO2 EMISSION TRADING AND GREEN CERTIFICATES EMISSION TRADING GREEN CERTIFICATES - Total cumulated CO2 needs for - Requirements gradually increase Edison for the period 2005-2011: from 2.70% in 2005 to 4.1% in 2009 around 11 million tons, of which around 2 in the 1st regulatory period - Gross Edison
Slide 20: European Gas Perspective and Italian Gas Market
EUROPEAN GAS PERSPECTIVE AND ITALIAN GAS MARKET Gas demand in Europe (*) Gas demand in Italy CAGR ’05-’20 : +2.5% CAGR ’05-’20 : 1.7% 900 110 800 100 Residential 0.4% 700 +2.0% 90 Industrial 80 600 Losses and 70 0.7% (Bcm) 500 self consuption 60 +1.7% 400 50 Power generation 40 300 30 3.5% 200 20 (*
Slide 21: Import Existing Infrastructures and New Projects
IMPORT EXISTING INFRASTRUCTURES AND NEW PROJECTS Gas existing infrastructures (bcm 83.5) Projects under study (bcm 88-95) and committed projects in Italy (bcm 14.5) Russia (bcm) Russia Netherlands / 30 +3.2 (start up 2009) +3.3 Norway Gas Natural 15 1.5 Slovenia 8 8-10 Endesa 8 North Adriatic off-sh
Slide 22: Edison Position in the Italian Gas Market
EDISON POSITION IN THE ITALIAN GAS MARKET Edison gas supply mix FY 2005 Edison gas supply mix at 2011 (Bcm) (Bcm) ~18.0 5.7 13.3 4.4 Qatar 6.4 6.7 Spot 0.9 6.0 Libya 2.9 Libya 4.0 Russia 1.8 0.9 Norway 1.0 1.0 Russia 2.0 Domestic Import via Purchases Total Domestic Existing long LNG New TOP Total pr
Slide 23: North Adriatic LNG Terminal
NORTH ADRIATIC LNG TERMINAL RasGas II Terminal 6.4 bcm for 25 years LNG shipping Edison SpA 45% Exxon Mobil (EDISON LNG) 45% TERMINAL Qatar COMPANY Petroleum 10% Gas Edison transport GAS MARKET - Regassification capacity of 8 bcm/year - 10% stake in the project company North Adriatic LNG Terminal an
Slide 24: Development of Edison Gas Supplies and Sales
DEVELOPMENT OF EDISON GAS SUPPLIES AND SALES SUPPLIES SALES (bcm) ~19.0 ~19.0 20 20 18 +40% 18 +40% 16 16 13.6 13.6 14 14 12 12 10 10 8 8 6 6 4 4 2 2 0 0 2005 2011 2005 2011 SUPPLIES SALES Purchases from third parties and LNG imports Sales to the free market other suppliers Own production (including
Slide 25: Edison Commercial Strategy
EDISON COMMERCIAL STRATEGY Customer segmentation Target Target areas areas forfor alliances alliances BLUMET Customers nr. 253,000 Edison share 26% ESTGAS Alliances with Customers nr. 130,000 Edison share 33% Edison municipal Strengthen utilities alliances with PROMETEO municipal Customers nr. 125,0
Slide 26: Economic and Financial Overview
ECONOMIC AND FINANCIAL OVERVIEW 26
Slide 27: Main Economic and Financial Targets
MAIN ECONOMIC AND FINANCIAL TARGETS 2004 Target (mln €) IAS 9M05 2006-11 EBITDA 1,475 949 7-9% CAGR EBIT 815 528 9-11% CAGR CAPEX 633 370 ~3,800 mln € 31.12.04 Target 2011 (mln €) IAS 30.09.05 (*) NFP 4,906 4,838 ~3,500 NFP bearing interest debt ~2,750 R.O.I. 7.1% 6.4% ~10% (*) Assuming a dividend p
Slide 28: EBITDA by Business Segment
EBITDA BY BUSINESS SEGMENT 2006 2011 13% 24% 30% 14% 57% 62% Gas assets CIP6 and other regulated activities Supply and market activities 28
Slide 29: Capex 2006-2011: Breakdown
CAPEX 2006 – 2011 : breakdown 40% Electricity 60% Hydrocarbons Electricity Hydrocarbons 19% 22% 23% 30% Committed Uncommitted 47% 59% Maintenance (and exploration for hydrocarbons) 29
Slide 30: Areas with Potential Upside
AREAS WITH POTENTIAL UPSIDE GROWTH OPPORTUNITIES SYNERGIES WITH SHAREHOLDERS Integrated electricity and gas projects - Leveraging Edison for gas (Mediterranean and Balcans) procurement - Converging sales organization in the Italian market PERFORMANCE CONTINUOUS IMPROVEMENT - Cost synergies (IT, proc
Slide 31: Appendix
APPENDIX 31
Slide 32: IGI Project
IGI PROJECT The Italian and Greek Governments have signed an agreement which represents the starting point for Edison and Depa (Greek gas utility) to develop the last tranche of a gas pipeline between Italy and Greece that will allow the transportation, through Turkey, of 8 – 10 bcm of gas. IGI pipe
Slide 33: Galsi Project
GALSI PROJECT Project status: VENEZIA Capacity: 9-10 bn mc/y I T A L Y E Minerbio Algeria – Sardinia: C Gas Storage AN GENOVA 1 x 24”, approx. 300 km, depth 2100-2700 m. La Spezia FR Onshore Sardinia NIZZA Livorno Marseille 42”, approx. 330 km. Piombino 1000m Sardinia – Italy (Mainland) Bastia 1
Slide 34: Rosignano Project
ROSIGNANO PROJECT Project features: Location: industrial area Solvay at Rosignano (inside the factory) Storage Capacity: 2 x 160.000 mc Regasification Capacity: 8 bn mc/y Development status: 1. Technical and economic feasibility study ended 2. Fee to Solvay under negotiation for the use of the exist
Slide 35: Disclaimer
DISCLAIMER This document has been prepared by EDISON solely for the use at investors and analysts meetings. This document does not constitute an offer or invitation to purchase or subscribe any shares and neither it nor any part of it shall form the basis of or be relied upon in connection with any