1Q06 Results

AntAntóónio Martins da Costa nio Martins da Costa

CEOCEO

Antonio JosAntonio Joséé SellareSellare

CFO CFO andand Vice Vice PresidentPresident ofof InvestorInvestor

RelationsRelations

Vasco BarcellosVasco Barcellos

InvestorInvestor RelationsRelations OfficerOfficer

1Q06 Earnings Result 1Q06 Earnings Result –– Conference CallConference CallApril, 2006April, 2006

2

Disclaimer

This presentation may include forwardThis presentation may include forward--looking statements of future events or results according to looking statements of future events or results according to regulations of the Brazilian and international securities and exregulations of the Brazilian and international securities and exchange commissions. These statements are change commissions. These statements are based on certain assumptions and analysis by the company that rebased on certain assumptions and analysis by the company that reflect its experience, the economic flect its experience, the economic environment and future market conditions and expected events, maenvironment and future market conditions and expected events, many of which are beyond the control ny of which are beyond the control of the company. Important factors that may lead to significant of the company. Important factors that may lead to significant differences between the actual results differences between the actual results and the statements of expectations about future events or resultand the statements of expectations about future events or results include the companys include the company’’s business s business strategy, Brazilian and international economic conditions, technstrategy, Brazilian and international economic conditions, technology, financial strategy, public service ology, financial strategy, public service industry developments, hydrological conditions, financial marketindustry developments, hydrological conditions, financial market conditions, uncertainty of the results of conditions, uncertainty of the results of future operations, plans, objectives, expectations and intentionfuture operations, plans, objectives, expectations and intentions, among others. Considering these s, among others. Considering these factors, the actual results of the company may be significantly factors, the actual results of the company may be significantly different from those shown or implicit in different from those shown or implicit in the statement of expectations about future events or results.the statement of expectations about future events or results.

The information and opinions contained in this presentation shouThe information and opinions contained in this presentation should not be understood as a ld not be understood as a recommendation to potential investors and no investment decisionrecommendation to potential investors and no investment decision is to be based on the veracity, is to be based on the veracity, current events or completeness of this information or these opincurrent events or completeness of this information or these opinions. No advisors to the company or ions. No advisors to the company or parties related to them or their representatives shall have any parties related to them or their representatives shall have any responsibility for whatever losses that may responsibility for whatever losses that may result from the use or contents of this presentation.result from the use or contents of this presentation.

This material includes forwardThis material includes forward--looking statements subject to risks and uncertainties, which arelooking statements subject to risks and uncertainties, which are based on based on current expectations and projections about future events and trecurrent expectations and projections about future events and trends that may affect the companynds that may affect the company’’s s business. These statements include projections of economic growtbusiness. These statements include projections of economic growth and energy demand and supply, as h and energy demand and supply, as well as information about the competitive position, the regulatowell as information about the competitive position, the regulatory environment, potential opportunities ry environment, potential opportunities for growth and other matters. Several factors may adversely afffor growth and other matters. Several factors may adversely affect the estimates and assumptions on ect the estimates and assumptions on which these statements are based.which these statements are based.

Operating Performance

4

456

776

1,0711,135

502

654

890 900

462

585

762 769

Bandeirante Escelsa Enersul

1998 2001 2005 1Q06

456

776

1,0711,135

502

654

890 900

462

585

762 769


1998 2001 2005 1Q06

DistributionGrowth with productivity improvement

Energy Distributed (Energy Distributed (GWhGWh)) ProductivityProductivity (Client/Employee)(Client/Employee)

2,998

1,876

795

3,136

2,037

793


2,998

1,876

795

3,136

2,037

793


5,6695,6695,9665,966

5.2%

1Q051Q05 1Q061Q06

149% 79%66%

5

DistributionMigration of final customers to free changes the market profile

Energy Distributed (Energy Distributed (GWhGWh)) Net Net RevenuesRevenues (R$MM)(R$MM)

Final Customers Energy in Transit OthersFinal Customers Energy in Transit Others

5,6695,669 5,9665,966

5.2%

1Q051Q05 1Q061Q06

71%71%

28%

1%1%

64%64%

35%

1%1%

Final Customers Energy in Transit OthersFinal Customers Energy in Transit Others

91%91%

8%

1%1%1%1%

12%

87%87%

1Q051Q05 1Q061Q06

991991 1,0761,076

8.6%

6

DistributionProgram to contain losses

In the 1Q06, Energias do Brasil invested R$9.4 million in prograIn the 1Q06, Energias do Brasil invested R$9.4 million in programs geared to contain ms geared to contain growth in the level of technical and commercial losses. These igrowth in the level of technical and commercial losses. These investments are nvestments are intended to provide a gradual reduction starting in 2006.intended to provide a gradual reduction starting in 2006.

Evolution of commercial losses (% of the electric power distributed in the last 12 months)

2.2 2.4

5.9 6.3

4.14.13.93.9

6.05.2

Jun/05 Mar/06 Jun/05 Mar/06 Jun/05 Mar/06

Jun/05 Mar/06

•• ~ 177 ~ 177 thousandthousand inspectionsinspectionsmademade in in thethe 1Q06 1Q06

•• + + thanthan 600 600 thousandthousand inspectionsinspectionsscheduledscheduled for 2006for 2006

•• TechnicalTechnical lossloss growthgrowth duedue to to thethechangechange in in thethe measuremeasure pointpoint atatEnersulEnersul

8.58.59.39.3

Jun/05 Mar/06

Commercial Technical

7

527

1,043

Total

527

1,043

Total

GenerationInvestments resume: Peixe Angical Power Plant

– 98% of the construction concluded

– April 06 – reservoir flooding conclusion and start of the tests

– May 06 – start up

(Installed Capacity MW)(Installed Capacity MW)

20062006

2006200620062006

100% of contracted energy through PPA

100% contracted in

auctions

– Location: Rio Tocantins

– Installed Capacity: 452 MW

– Assured annual power supply: 2,374 GWh

– Reservoir area: 294 Km2

– Investment: R$1.6 Bi (89% expended)

531

Current

Capacity

531

Current

Capacity

452452

2525

5050

AHE Peixe

Angical

PCH São João 4th

Mascarenhas

engine

AHE Peixe

Angical

PCH São João 4th

Mascarenhas

engine

1

8

34

54

1Q05 1Q06

34

54

1Q05 1Q06

CommercializationReduction of self-dealing offset by the increase of customers

EnergyEnergy CommercializedCommercialized ((GWhGWh)) EnertradeEnertrade –– NumberNumber ofof CustomersCustomers

58.8%

921

683

1,354

303

1Q05 1Q06

Others Energias do Brasil's Discos

921

683

1,354

303

1Q05 1Q06

Others Energias do Brasil's Discos

3.3% 1,6571,6571,6041,604

47.0%

Financial Performance

10

Apr/04-Mar/05 Apr/05-Mar/06

Distribution Generation Commercialization



1Q05 1Q06


1Q05 1Q06


Revenues and EbitdaSustained growth

EbitdaEbitda (R$MM) (R$MM) –– QuarterQuarter

Net Revenues (Net Revenues (R$MM) R$MM) –– QuarterQuarter

4%

1,0941,094 1,1201,1202.4%

2%

89%

9%

86%

10%

1Q05 1Q06


1Q05 1Q06


15%

280280 2822820.7%

5%

87%

8%

79%

6%

Net Revenues (R$MM) Net Revenues (R$MM) –– Last 12 monthsLast 12 months

5%

3,8383,838

4,3474,34713.3%

2%

89%

9%

86%

9%





EbitdaEbitda (R$MM) (R$MM) –– Last 12 monthsLast 12 months

12%

818818

91591511.8%

5%

88%

7%

83%

5%

11

Costs and Expenses Breakdown1

Manageable costs have the potential to be significantly reduced Manageable costs have the potential to be significantly reduced with the recent with the recent corporate restructuring and synergy programscorporate restructuring and synergy programs

Costs and Expenses BreakdownCosts and Expenses Breakdown11 –– 1Q061Q06Costs and Manageable Expenses Breakdown Costs and Manageable Expenses Breakdown ––1Q061Q06

R$839 R$839 millionmillion

NonNon--manageable manageable

costscosts


(78%)(78%)

Manageable Manageable costs costs


(22%)(22%)

Note:

1 Excludes depreciation and amortization

Manageable Expenses

R$ Million 1Q06 1Q05 Var.%

Personnel 71 64 10.3%

Material 8 9 -9.7%

Third-part Services 67 48 39.1%

Provisions 22 18 17.0%

Others 20 22 -10.5%

Total 188 162 15.7%

Accumulated

Third-part Services (Corporate Programs)

- Program to Contain Losses – R$ 6,0 million

- Consultancy and IT: R$ 4,9 million

12

Financial Result

Financial Result Financial Result –– R$MMR$MM

1Q06 1Q05 Var.%

Financial Revenues 55 79 -31.2%

Financial Expenses (84) (103) -19.3%

Net Foreign Exchange Result (9) (32) -77.8%

SWAP - net result (55) (24) 129.6%

Foreign exchange gains (loss) 46 (8) n.a.

TOTAL (39) (56) -30.6%

Accumulated

Efficient management of foreign currency debt contributed to a Efficient management of foreign currency debt contributed to a better financial better financial performanceperformance

SELIC SELIC andand US$ US$ Evolution (jan/05Evolution (jan/05))

12%

14%

16%

18%

20%

22%

jan-05 apr-05 aug-05 dec-05

1.5

1.7

1.9

2.1

2.3

2.5

2.7

2.9

Average SELIC Dollar end period

13

ProfitabilityBetter operational and financial performance

103104

1Q05 1Q06

103104

1Q05 1Q06

31

99

1Q05 1Q06

31

99

1Q05 1Q06

Net Net ProfitProfit (R$MM)(R$MM)Net Net profitprofit beforebefore thethe participationparticipation ofofminorityminority shareholdersshareholders (R$MM)(R$MM)

1.2%216.2%

In 1Q05, it is included theeffect from the Enersul’s RAB

of R$74.8 million

14

3,037

(551)

(754)

1,731 1,710

Gross Debt

Mar.06

(-) Cash &

Marketable

Securities

(-) Regulatory

Assets

Net Debt Mar.06 Net Debt Dec. 05

IndebtednessLow leverage level and low currency exposure

Capital structure was strengthened by the IPO and the capitalizaCapital structure was strengthened by the IPO and the capitalization of tion of EscelsaEscelsa’’sssenior notes creating financial capacity for the companysenior notes creating financial capacity for the company’’s growths growth

IndebtednessIndebtedness –– 1Q061Q06 (R$MM)(R$MM)

(Mar/06)(Mar/06)

Gross Debt Gross Debt –– Index BreakdownIndex Breakdown

4%

32%

4%

60%

US$ TJLP

Fixed rate Floating rates

4%

32%

4%

60%

US$ TJLP

Fixed rate Floating rates

1.9x1.9x**

* * Ratio:Ratio: Net Debt Net Debt / EBITDA 12 / EBITDA 12 monthsmonths

* ** *

** ** IncludesIncludes Selic, CDI, IGPSelic, CDI, IGP--M M andand INPCINPC

1.9x1.9x**

15

551

965

737

301

209168

657

Cash & Mkt.

Securities

Mar-Dec/06 2007 2008 2009 2010 After 2010

Indebtedness Extending maturities at lower costs

Debt Amortization Schedule Debt Amortization Schedule –– Mar/06 (R$MM)Mar/06 (R$MM)

32%32%

24%24%

10%10%7%7% 5%5%

22%22%

Transactions in progressTransactions in progress–– StandStand--byby FacilitiesFacilities (R$700 (R$700 Million)Million)

–– Issuance of debentures:Issuance of debentures:

–– Bandeirante (R$250 Bandeirante (R$250 MillionMillion / / concluded)concluded)

–– EnersulEnersul (R$250 (R$250 MillionMillion / / in progress)in progress)

-- Reduction of shortReduction of short--term debt: from 32% to 9% of the total debtterm debt: from 32% to 9% of the total debt

-- Extension of the Extension of the ““durationduration”” from 3.4 years to 4.3 yearsfrom 3.4 years to 4.3 years

-- Reduction of the debt average cost from 17.4% to 14.9%Reduction of the debt average cost from 17.4% to 14.9%

Benefits from the operations in progress:Benefits from the operations in progress:

16

335

612

125

343

182126

2005 2006E

Distribution Generation Universalization

335

612

125

343

182126

2005 2006E

Distribution Generation Universalization

Current Investment PlanOver R$ 2.5 billion invested last 3 years

Investment Breakdown (Excludes New Generation Projects) Investment Breakdown (Excludes New Generation Projects) –– R$ MMR$ MM

* * PreliminaryPreliminary

*

1,0721,072

651651

504226

1Q06

504226

1Q06

118118

17

90

110

130

150

170

190

210

230

7/12/2005 8/3/2005 8/25/2005 9/19/2005 10/11/2005 11/4/2005 11/29/200512/21/2005 1/13/2006 2/7/2006 3/3/2006 3/27/2006 4/19/2006

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

Volume R$ ENBR3 ENBR3 Ibovespa IEE

Performance of the Shares

Updated until April Updated until April 26,26, 20062006

+71%+71%

+59%+59%

+58%+58%

Volume Volume

R$thR$th

18

Financial Strength / Investment Capacity

Self-sustentability

Competitive Organizational

Structure

Operational Efficiency

Strategic Consistency

Superior Corporate Governance

ConclusionA value focused business model

AntAntóónio Martins da Costa nio Martins da Costa

CEOCEO

Antonio JosAntonio Joséé SellareSellare

CFO CFO andand Vice Vice PresidentPresident ofof InvestorInvestor

RelationsRelations

Vasco BarcellosVasco Barcellos

InvestorInvestor RelationsRelations OfficerOfficer

1Q06 Earnings Result 1Q06 Earnings Result –– Conference CallConference Call

April, 2006April, 2006

1Q06 Results

Economy & Finance

Transcript of 1Q06 Results