Edp Renewables Sa · EURONEXT:EDPR
Edp Renewables Sa — EDP Renováveis — Non-Deal Roadshow (December 2012)
48 slides from Edp Renewables Sa's roadshow presentation, December 2012
Slide 1: EDP Renováveis Investor Presentation
EDP Renováveis Investor Presentation December, 2012 www.edpr.com 1
Slide 2: Disclaimer
Disclaimer This presentation has been prepared by EDP Renováveis, S.A. (the "Company") solely for use at the presentation to be made on December 2012. By attending the meeting where this presentation is made, or by reading the presentation slides, you acknowledge and agree to be bound by the followi
Slide 3: Agenda
Agenda I EDPR: a global leading company II Existing portfolio III Quality growth IV Asset rotation V 2012 Execution VI 2015 Targets VII Final remarks 3
Slide 4: EDPR: a global leading company
EDPR: a global leading company
Slide 5: EDPR is worldwide market leader with a top quality portfolio of 7.7 GW
EDPR is worldwide market leader with a top quality portfolio of 7.7 GW in 9M12 Wind / Farms MW Installed Capacity 9M12 Canada Developing the first wind farm Belgium UK 2/2,400 3/57 Poland #1 #3 US 2/190 30/3,567 France 28/306 Romania #2 Italy 5/285 Brazil #1 Portugal Spain #3 2/40 >30/965 >90/2,284
Slide 6: Leadership position achieved through focused growth and seamless execution
This leadership position was achieved through a focused growth and seamless execution Installed Capacity Evolution (GW) 9M12 Anticipating market trends and new attractive wind markets +4.5 GW in 4 years 7.7 +0.8 Local presence provides knowledge to succeed through development +3.6 3.0 7.5 Strong eng
Slide 7: EDPR Strategic Agenda: Quality projects and self-funding growth
EDPR Strategic Agenda: Quality projects and self-funding growth 1 >90% • Young asset base LT PPA & Existing Portfolio Regulatory • Stable & recurrent Cash-Flow streams • Superior O&M strategy frameworks 2 >70% • Strong foothold in attractive markets through 2015 Quality Growth outside • Diversified
Slide 8: A distinctive investment case based on visible key value drivers
A distinctive investment case based on visible key value drivers Strategic Indicators (2015E vs. 2011) 2015E EBITDA Target 2015E (€ billion) Selective 1.35 - 1.5 Growth +30% 9.8 GW (MW) 0.8 Higher Profitability +25% €145-155k (EBITDA/avg.MW) 2011 2015E Controlled Risk +2p.p. >90% (% MW covered) Net
Slide 9: Existing portfolio
& renovaveis Existing portfolio
Slide 10: EDPR today has €10.9bn invested in a very young asset base
EDPR today has €10.9bn invested in a very young asset base... Assets’ Average Age and Residual Useful Life Asset Base Invested Capital (Years; weighted average) (MW) (€ million) EDPR Assets Age Spain 5.1 2,284 Portugal 4.3 965 Property, Plant and Equipment France 3.4 306 (-) PP&E, assets under const
Slide 11: Premium performance based on a distinctive expertise
...achieving premium performance based on a distinctive expertise Spanish Load Factor: EDPR vs. Market Average Energy Assessment & Engineering 28% 26% 27% 25% 25% Spanish Market Wind assessment is knowledge-based and difficult to replicate Provides site selection criteria 2007 2008 2009 2010 2011 Lo
Slide 12: Revenues highly linked to inflation and fixed escalators
Revenues highly linked to inflation and fixed escalators Revenues’ Levers Sensitivity to Inflation and Power Prices (€ million; 2012E) (% of revenues) Escalators Fixed -0.5% 16% 26% Inflation ± 100 bps +0.5% 8% Power Price -0.4% Power 49% Prices Inflation ± 5% +0.4% EDPR’s selling price with high re
Slide 13: 90% of the capacity under stable & supportive price conditions
90% of the capacity under stable & supportive price conditions for the long-term Capacity under Regulated Frameworks & PPA/LT Hedges (MW; 2011) Spot Maturity Portfolio exposed to a diversified set of 43% economic regimes 50% 38% 52% 88% of PPA/Regulated Frameworks with a long-term maturity beyond 20
Slide 14: Operational excellence is at the core of EDPR throughout the projects' life cycle
Operational excellence is at the core of EDPR throughout the projects’ life cycle 1. Performance Optimisation Innovative product enhancements Continuous improvement Remote control system and Power-enhancing retrofits performance management Systematic review of pioneered by EDPR to boost underperform
Slide 15: EDPR O&M strategy is successfully implemented resulting in lower O&M costs
EDPR O&M strategy is successfully implemented resulting in lower O&M costs Breakdown by O&M Contracts 2011 O&M Service Tenders (GW; 2011) (€k per MW) 7.5 GW M3 Contracts -20% Full scope Expiration Date contracts >2015 -15% 60% Initial warranty 14% 15% Adequate for wind farms with 2014 11% 2012 very
Slide 16: Quality growth
& renovaveis Quality growth
Slide 17: New attractive wind markets are expected to emerge through 2015-2020
New attractive wind markets are expected to emerge through 2015-2020 Original wind markets Early wind markets Emerging wind markets Future wind markets Reached 2 GW of Reached 2 GW of installed Expected to reach 2 GW Expected to reach 2 GW installed capacity before capacity between 2005 of installed
Slide 18: Other renewables like solar are starting to show greater cost-competitiveness
Other renewables like solar are starting to show a greater cost-competitiveness Evolution of Investment Cost Solar PV (PV technology, Capex/MW, €m) Technology Solar PV is the technology with the fastest cost Cost decline among renewable energy sources Permitting Easier process vs. wind given the low
Slide 19: It is key for EDPR to anticipate new emerging trends
It is key for EDPR to anticipate the new emerging trends on the renewable energy market New wind markets and More renewable technologies to growth avenues are emerging become part of energy mix Onshore wind capacity by market Renewable market evolution (GW) (GW, %) 266 341 RoW Other 44% 17% 70% Sola
Slide 20: EDPR to shift its growth into early and emerging wind markets
EDPR to shift its growth into early and emerging wind markets EDPR Growth Breakdown (MW; %) Creating Options 12% New Markets/Techs 20% Current Growth Platforms 60% Core Markets 80% Core Markets 28% 2008-2012 2013-2015E 72% of the plan through the execution of current growth options and the addition
Slide 21: Investment priorities: Quality growth focused on highly profitable projects
Investment priorities: Quality growth focused on highly profitable projects 2012-15 Capacity Additions (GW) New Markets/Techs (2014-15) 2.3 Pursuing 0.2 GW to execute 0.2 post-2014 0.4 1.3 US (2014-15) 0.4 GW subject to PTC extension & PPA contracts (no additions in 2013) Current Markets 1.0 New add
Slide 22: 2013-15 additions by market
2013-15 additions by market 2013-15 additions Iberia 5% • Portugal through ENEOP; Spain’s moratorium halting new investments Core Markets 28% US 23% • Subject to PTC extension and/or PPA contracts; zero capacity in 2013 Poland 20% • New RES Act applicable to future capacity is in the drafting phase
Slide 23: Asset rotation strategy
& renovaveis Asset rotation strategy
Slide 24: Current portfolio is ready for asset rotation and value crystallisation
Current portfolio is ready for asset rotation and value crystallisation Cost of Capital throughout the life cycle of a wind farm (WACC; %) Identify mature projects operationally optimised and with a low risk profile Enter into transactions to sell non-controlling stakes to crystallise future cash fl
Slide 25: Partnering with CTG for the sale of minority stakes in wind farms
Partnering with CTG for the sale of minority stakes in wind farms CTG Investments in EDPR Wind farms Transaction Scope (€ million) Capacity • CTG to acquire minority stakes equivalent to 1,500 MW (net) 2,000 • The acquisition of minority stakes will materialise upon 900 MW of operating capacity and
Slide 26: Minority stakes' transactions have clear pre-agreed valuation criteria and rules
Minority stakes’ transactions have clear pre-agreed valuation criteria and rules Structure Under Analysis Transaction Framework Discounted Cash-Flow (DCF) valuation methodology based on fairness opinion 51%-66% 34%-49% No asset will be sold below book value Dividends Dividends SPVs Pre-agreed minimu
Slide 27: 2012 Execution
& renovaveis 2012 Execution
Slide 28: 2012 execution: transition year in line with best expectations
2012 execution: “transition year” in line with EDPR’s best expectations 2012 Guidance 9M12 status Installed 8 GW of installed capacity 255 MW installed Capacity +500 MW in 2012 395 MW under construction Load Keep delivering a 29% load factor Factor top-sector load factor Wind index 102% Electricity
Slide 29: EDPR: delivering the strategic agenda
EDPR: delivering the strategic agenda 1 • Low risk profile with stable & recurrent Cash-Flow streams Existing Portfolio • Improved visibility in core markets 2 • Shifting growth towards new attractive markets Quality Growth • Exploring opportunistic investments in the Solar PV market 3 • First asset
Slide 30: Stable & recurrent Cash-Flow streams: improved visibility in core markets
1 Stable & recurrent Cash-Flow streams: improved visibility in core markets Low Risk Portfolio Portugal (old regime, 8% of EDPR MW) Regulated & LT Contracted Remuneration • +7 years (MW, %) Framework • Floor €74/MWh | Cap €98MWh (1) extended • Capex €3.6m/year (2013-2020) Spain (29% of EDPR MW) • 7%
Slide 31: Expansion focused in emerging wind markets and exploring Solar PV
2 Expansion focused in emerging wind markets and increasingly exploring Solar PV technology 9M12 Capacity Under Construction (MW) Selectively diversifying into new renewable technologies 0.4 GW (initially expected for 2014-15) New Techs 10% • 39 MW of Solar PV under construction in Romania • Monitor
Slide 32: EDPR already started the construction of its first Solar PV projects
2 EDPR already started the construction of its first Solar PV projects First 39 MW of Solar PV are currently under Regulatory Framework construction in Romania (€/MWh) • EDPR to take advantage of its resources and know- • For 15 years (Cap/Floor at €56/€28 Pool + 6 GC updated annually with euro zone
Slide 33: First asset rotation transaction executed
3 First asset rotation transaction executed EDPR sold to Borealis a 49% interest Implied Portfolio Value in a 599 MW US wind portfolio for US$230m ($ million) per MW $2.4m Prairie Star Cash-Flow value already 101 MW captured by EDPR and 1,446 Elkhorn Valley Minnesota Tax Equity Investors 101 MW Oreg
Slide 34: CTG minority stake transaction for Portuguese assets expected before YE2012
3 CTG minority stake transaction for Portuguese assets expected to be signed before YE2012 EDPR PT Assets KPIs Duration of Wind Farms’ Remuneration (MW) Current tariff duration Transaction Scope 7 years remuneration extension 615 (MW) Pool prices + GC (if applicable) Average Age/Useful Life 5.8/19.2
Slide 35: 2015 Targets
& renovaveis 2015 Targets
Slide 36: Focused on premium assets to deliver above-average load factors
Continuously focused on premium assets to deliver above-average load factors Load Factor 2015 Key Metric : Load Factor (%) % 9M11 9M12 29% 29% EU 25% 26% US 31% 32% BR 34% 30% EDPR 28% 29% 2011 2015 Structural competitive advantage 36
Slide 37: Sustained increase of the selling price
Sustained increase of the selling price driven by strict investment policy and country's selection Selling Price 2015 Key Metric: Selling Price (per MWh) €/MWh 9M12 ∆% YoY >€70 EU €95 +7% €64 €58 US $47 +3% BR $285 +3% EDPR €64 +11% 2011 9M12 2015 New investments with above average selling prices 37
Slide 38: Strict investment criteria will lead to improvement in key value drivers
Strict investment criteria will lead to an ongoing improvement in EDPR key value drivers EBITDA per Average MW in Operation EDPR’s key metrics through 2015 (€ thousand) Load +25% Distinctive expertise delivering Factor structural competitive advantages 145-155 (%) +14% YoY 120 Over 90% of installed
Slide 39: EBITDA's strong performance based on quality investments and diversification
EBITDA’s strong performance based on quality investments and diversification strategy 2011-15E EBITDA Evolution (€ billion) 1.35-1.5 New Markets/Techs 2012-15 investments with Growth Markets higher EBITDA per average MW Core Markets EDPR diversification strategy to represent 65% of EBITDA growth in
Slide 40: Operating Cash-Flow to exceed Capex in the 2012-15 period
Operating Cash-Flow to exceed Capex in the 2012-15 period, reaching over €1bn in 2015 Operating Cash-Flow 2012-15: Operating Cash-Flow vs. Capex (€ billion) (€ billion, accumulated) 3.8 1.1-1.2 3.2 New Markets/ Techs & US 1.0 2014-15 (€0.8bn) 0.6 0.5 0.0 (1) 2011 2012E 2013E 2014E 2015E Op. Cash-Flo
Slide 41: Robust Balance Sheet allows for stable cost of capital
Robust Balance Sheet allows for stable cost of capital for the long-term Net Debt/EBITDA Cost of Debt (x) (%) 4.2x 5.4% ~5.5% >90% of debt at long-term fixed rates 2.0-2.2x 2011 2015E 2011 2015E c80% of Financial Debt maturities starting in 2018 matching Cash-Flow profile with business model 41
Slide 42: Right funding strategy adjusted to a capital intensive industry
Right funding strategy adjusted to the investment profile of a capital intensive industry 9M12: Debt Profile Debt Maturity @ Sep-12 (%) (€ million) 4,000 80% EUR 55% 3,000 Fixed 92% 2,000 USD 40% 1,000 4% 8% Variable 2% 2% 2% 2% 8% BRL/PLN 6% 0 Type Currency 2012 2013 2014 2015 2016 2017 ≥2018 Long-
Slide 43: EDPR to keep executing alternative funding options
EDPR to keep executing alternative funding options on the back of quality assets Project Finance CTG Investment & Tax Credits Status CTG Investment CTG to invest €2bn Spain • Already closed for 125 MW until 2015 in 1.5 GW (net) (minority stakes) €800m to be disbursed • ENEOP: 2nd portfolio of Projec
Slide 44: EDPR to present a robust cash surplus in 2012-15
EDPR to present a robust cash surplus in 2012-15 2012-15: Source and Use of Funds (€ billion, accumulated) Source of Funds Use of Funds 0.5 >1.0 3.2 >2.0 1.5 0.3 3.8 2.3 Operating Asset Project Cash & Capex Debt, Other Cash Cash-Flow Rotation Finance Equivalents Interests Available & TEI (Dec-11) &
Slide 45: Competitive options to increase shareholders' value
EDPR with competitive options to increase shareholders’ value 1 Shareholder remuneration 25% to 35% payout from 2013 (2012 results) Cash available 2012-15E Cumulative 2 Paydown Corporate Debt €2.3bn Start to pay most-expensive debt 3 Pursue and execute new-growth options Value accretive to current B
Slide 46: Final Remarks
& renovaveis Final Remarks
Slide 47: EDPR to focus on returns to bring value growth to shareholders
EDPR to focus on returns to bring value growth to shareholders Operating quality assets Premium load factors, low risk approach and operational excellence Executing profitable growth EBITDA per average MW to increase 25% through 2015 Anticipating market trends >70% of the plan based on current growt
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