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1Q06 Results
1. 1Q06 Earnings Result – Conference Call
April, 2006
António Martins da Costa
Antó
CEO
Antonio José Sellare
José
CFO and Vice President of Investor
Relations
Vasco Barcellos
Investor Relations Officer
2. Disclaimer
This presentation may include forward-looking statements of future events or results according to
forward-
regulations of the Brazilian and international securities and exchange commissions. These statements are
exchange
based on certain assumptions and analysis by the company that reflect its experience, the economic
reflect
environment and future market conditions and expected events, many of which are beyond the control
many
of the company. Important factors that may lead to significant differences between the actual results
company’
and the statements of expectations about future events or results include the company’s business
results
strategy, Brazilian and international economic conditions, technology, financial strategy, public service
technology,
industry developments, hydrological conditions, financial market conditions, uncertainty of the results of
future operations, plans, objectives, expectations and intentions, among others. Considering these
intentions,
factors, the actual results of the company may be significantly different from those shown or implicit in
the statement of expectations about future events or results.
The information and opinions contained in this presentation should not be understood as a
should
recommendation to potential investors and no investment decision is to be based on the veracity,
current events or completeness of this information or these opinions. No advisors to the company or
opinions.
parties related to them or their representatives shall have any responsibility for whatever losses that may
result from the use or contents of this presentation.
This material includes forward-looking statements subject to risks and uncertainties, which are based on
forward-
company’
current expectations and projections about future events and trends that may affect the company’s
trends
business. These statements include projections of economic growth and energy demand and supply, as
growt h
well as information about the competitive position, the regulatory environment, potential opportunities
regulatory
for growth and other matters. Several factors may adversely affect the estimates and assumptions on
affect
which these statements are based.
2
5. Distribution
Migration of final customers to free changes the market profile
Energy Distributed (GWh)
(GWh) Net Revenues (R$MM)
5.2%
8.6%
5,669 5,966
991 1,076
1% 1%
1%
1%
28% 35% 12%
8%
71% 91% 87%
64%
1Q05 1Q06 1Q05 1Q06
Final Customers Energy in Transit Others Final Customers Energy in Transit Others
5
6. Distribution
Program to contain losses
In the 1Q06, Energias do Brasil invested R$9.4 million in programs geared to contain
growth in the level of technical and commercial losses. These investments are
intended to provide a gradual reduction starting in 2006.
Evolution of commercial losses (% of the electric power distributed in the last 12 months)
6.0 5.9 6.3
5.2
2.2 2.4
Jun/05 Mar/06 Jun/05 Mar/06 Jun/05 Mar/06
Commercial Technical
4.1
3.9 • ~ 177 thousand inspections 9.3
made in the 1Q06 8.5
• + than 600 thousand inspections
scheduled for 2006
• Technical loss growth due to the
change in the measure point at
Enersul
Jun/05 Mar/06 Jun/05 Mar/06
6
7. Generation
Investments resume: Peixe Angical Power Plant
100%
– Location: Rio Tocantins 100% of contracted
contracted in
energy through PPA
auctions
– Installed Capacity: 452 MW
– Assured annual power supply: 2,374 GWh (Installed Capacity MW) 50 1,043
1
– Reservoir area: 294 Km2 25
2006
– Investment: R$1.6 Bi (89% expended) 2006
452 527
2006
531
Current
Current AHE Peixe
AHE Peixe PCH São João
PCH São João 4th
4th Total
Total
Capacity
Capacity Angical
Angical Mascarenhas
Mascarenhas
engine
engine
– 98% of the construction concluded
– April 06 – reservoir flooding
conclusion and start of the tests
– May 06 – start up
7
8. Commercialization
Reduction of self-dealing offset by the increase of customers
Energy Commercialized (GWh)
GWh) Enertrade – Number of Customers
3.3% 1,657 58.8% 54
1,604
303
683 34
1,354
47.0%
921
1Q05 1Q06 1Q05 1Q06
Others Energias do Brasil's Discos
8
10. Revenues and Ebitda
Sustained growth
Net Revenues (R$MM) – Quarter
(R$MM) Net Revenues (R$MM) – Last 12 months
2.4% 1,120 13.3% 4,347
1,094
3,838
9% 10%
9%
2% 4% 9% 5%
2%
89% 86% 86%
89%
1Q05
1Q05 1Q06
1Q06 Apr/04-Mar/05
Apr/04-Mar/05 Apr/05-Mar/06
Apr/05-Mar/06
Distribution
Distribution Generation
Generation Commercialization
Commercialization Distribution Generation Commercialization
Ebitda (R$MM) – Quarter Ebitda (R$MM) – Last 12 months
11.8% 915
280 0.7% 282 5%
818
8% 6% 7% 12%
5% 15% 5%
87% 88% 83%
79%
1Q05
1Q05 1Q06
1Q06 Apr/04-Mar/05
Apr/04-Mar/05 Apr/05-Mar/06
Apr/05-Mar/06
Distribution Generation Commercialization Distribution Generation Commercialization
10
11. Costs and Expenses Breakdown1
Manageable costs have the potential to be significantly reduced with the recent
corporate restructuring and synergy programs
Costs and Manageable Expenses Breakdown –
Costs and Expenses Breakdown1 – 1Q06 1Q06
Manageable Expenses Accumulated
R$ Million 1Q06 1Q05 Var.%
Personnel 71 64 10.3%
Non-
Non-
Manageable Material 8 9 -9.7%
manageable
costs
costs Third-part Services 67 48 39.1%
R$188 million
R$651 million
(22%) Provisions 22 18 17.0%
(78%)
Others 20 22 -10.5%
Total 188 162 15.7%
R$839 million
Third-part Services (Corporate Programs)
- Program to Contain Losses – R$ 6,0 million
- Consultancy and IT: R$ 4,9 million
Note:
1 Excludes depreciation and amortization 11
12. Financial Result
Efficient management of foreign currency debt contributed to a better financial
performance
Financial Result – R$MM
Accumulated
1Q06 1Q05 Var.%
Financial Revenues 55 79 -31.2%
Financial Expenses (84) (103) -19.3%
SELIC and US$ Evolution (jan/05)
(jan/05)
Net Foreign Exchange Result (9) (32) -77.8%
SWAP - net result (55) (24) 129.6%
22% 2.9
Foreign exchange gains (loss) 46 (8) n.a. 2.7
20%
TOTAL (39) (56) -30.6% 2.5
18% 2.3
16% 2.1
1.9
14%
1.7
12% 1.5
jan-05 apr-05 aug-05 dec-05
Average SELIC Dollar end period
12
13. Profitability
Better operational and financial performance
Net profit before the participation of
minority shareholders (R$MM) Net Profit (R$MM)
In 1Q05, it is included the
effect from the Enersul’s RAB
of R$74.8 million
104
103 99
1.2%
216.2%
31
1Q05 1Q06 1Q05 1Q06
13
14. Indebtedness
Low leverage level and low currency exposure
Capital structure was strengthened by the IPO and the capitalization of Escelsa’s
senior notes creating financial capacity for the company’s growth
Indebtedness – 1Q06 (R$MM) Gross Debt – Index Breakdown
(Mar/06)
4%
(551)
32%
(754)
1.9x* 1.9x*
3,037 60%
4%
1,731 1,710 US$ TJLP
**
Fixed rate Floating rates
Gross Debt (-) Cash & (-) Regulatory Net Debt Mar.06 Net Debt Dec. 05
Mar.06 Marketable Assets
Securities
* Ratio: Net Debt / EBITDA 12 months ** Includes Selic, CDI, IGP-M and INPC
IGP- 14
15. Indebtedness
Extending maturities at lower costs
Debt Amortization Schedule – Mar/06 (R$MM)
Transactions in progress
– Stand-by Facilities (R$700 Million)
Stand-
– Issuance of debentures:
965
– Bandeirante (R$250 Million / concluded)
– Enersul (R$250 Million / in progress)
737
657
551
32%
24% 301
22%
209
168
10%
7% 5%
Cash & Mkt. Mar-Dec/06 2007 2008 2009 2010 After 2010
Securities
Benefits from the operations in progress:
- Reduction of short-term debt: from 32% to 9% of the total debt
short-
- Extension of the “duration” from 3.4 years to 4.3 years
duration”
- Reduction of the debt average cost from 17.4% to 14.9%
15
16. Current Investment Plan
Over R$ 2.5 billion invested last 3 years
Investment Breakdown (Excludes New Generation Projects) – R$ MM
1,072
125
651
612 126*
182 118
26
335 343 42
50
2005 2006E 1Q06
Distribution Generation Universalization
* Preliminary 16
18. Conclusion
A value focused business model
Superior
Strategic
Corporate
Consistency
Governance
Competitive
Operational
Organizational
Efficiency
Structure
Financial
Strength /
Self-sustentability
Investment
Capacity
18
19. 1Q06 Earnings Result – Conference Call
April, 2006
António Martins da Costa
Antó
CEO
Antonio José Sellare
José
CFO and Vice President of Investor
Relations
Vasco Barcellos
Investor Relations Officer
