UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

 

Form 6-K

 

REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO
RULE 13a-16 OR 15d-16 UNDER THE SECURITIES EXCHANGE
ACT OF 1934

 

For the Month of May 2004

 

 

(Indicate by check mark whether the registrant files or will file annual reports under cover of
Form 20-F or Form 40-F.)

 

Form 20-F ý   Form 40-F o

 

(Indicate by check mark whether the registrant by
furnishing the information contained in this form
is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the
Securities Exchange Act of 1934.)

 

Yes o     No ý

 

 

	Financial Results 1Q2004

 

 

Investor Relations Department
Pedro Pires, Head of IR
Gonçalo Santos
Elisabete Ferreira
Cristina Requicha
Rui Antunes
Tel:  +351 21 001 2834
Fax: +351 21 001 2899
Email: ir@edp.pt
Site:    www.edp.pt
Reuters:	EDPP.IN / EDP.N
Bloomberg:	EDP PL / EDP US

 

 

Lisbon, 29 April 2004
EDP - Electricidade de Portugal, S.A.	Headquarters: Praça Marquês de Pombal, 12	1250-162 Lisboa	Portugal

 

 

Table of Contents
1Q2004 Financial Results - Summary
EBITDA Overview
Capex
Cash Flow & Financial Debt
EDP Produção
Renewables
EDP Distribuição
Hidrocantábrico
Brazil
Telecoms
Information Technology
Consolidated Financial Results & Consolidated Extrordinary Results
Consolidated Income Statement
Consolidated Balance Sheet and Cash Flow Statement
Income Statement by Business Areas
Balance Sheet by Business Areas
Cash Flow by Business Areas

 

 

1Q2004 Financial Results - Summary

 

Financial Results Summary (€ m)		1Q2004		1Q2003		Δ%
Operating Revenues		1,798.6		1,657.1		8.5	%
Operating Costs		1,263.9		1,196.1		5.7	%
EBITDA		534.7		461.0		16.0	%
Operating Results		323.9		234.7		38.0	%
Financial Results		(94.6	)	(71.5	)	-32.3	%
Extraordinary Results		(7.1	)	23.4		—
Net Profit		180.8		132.5		36.5	%
Earnings per share		0.060		0.044		36.5	%
Capex		143.3		178.9		-19.9	%

 

Financial Debt (€ m)		1Q2004		YE2003		Δ
Financial Debt		7,362.5		7,492.7		(130.3	)
Net Debt		7,097.3		7,205.2		(107.9	)

 

General Indicators		1Q2004		1Q2003		Δ%
Number of electricity clients
Portugal		5,751,552		5,671,651		1.4	%
Hidrocantábrico (1)		566,373		553,647		2.3	%
Brazil		2,966,307		2,873,004		3.2	%
Electricity sales (GWh)
Portugal		10,171		9,820		3.6	%
Hidrocantábrico (1)		3,071		2,900		5.9	%
Brazil		4,969		5,115		-2.8	%
No. of employees (core business)
Portugal		8,350		9,106		-8.3	%
Hidrocantábrico (1)		1,564		1,385		12.9	%
Brazil		3,763		3,868		-2.7	%

 

• The EDP Group reported strong growth at the operating level in 1Q2004. EBITDA was up 16.0% while EBIT increased 38.0%.

 

• Consolidated EBITDA went up thanks to:

(i) a €37.7 million contribution from EDP Produção, reflecting TER’s entry into industrial service and the transfer of the energy management activity to EDPP;

(ii) a 6.3% increase in consumption at EDP Distribuição which added €14.3 million; and

(iii) last year’s tariff revisions at Bandeirante and Enersul which led to a further €24.1 million improvement.

 

• Cost control continued to bear fruits. “S&S” were down 5.6%(2), while personnel costs fell 3.8% following the introduction of the HR Restructuring Program.

 

• EBIT was positive influenced by a change in the compensation of subsidised assets’ amortisation. Stripping this out, EBIT was up 30%.

 

• Financial results are not comparable since dividends received are significantly lower, namely BCP (to be received in 2Q2004) and Iberdrola (divested in the 2H2003).

 

• Net profit at €180.8 million was up 36.5% year-on-year. The main contributor was EDP Produção.

 

• Cash-flow generation at the core business enabled EDP Group to reduce its financial debt in €130.3 million.

 

(1) Hidrocantábrico is proportionally consolidated in accordance with EDP’s stake in Hidrocantábrico (40%). Figures presented above correspond to Hidrocantábrico 100%.

(2) Adjusting for Oni’s direct costs which are accounted for as S&S at EDP’s consolidated accounts.

 

Note: The accounts presented in this document are non-audited.

 

1

 

EBITDA Overview

 

EBITDA (€ m)		1Q2004		1Q2003		Δ%
EDP Produção (1)		235.2		197.6		19.1	%
Renewables		4.9		2.4		103.3	%
EDP Distribuição		153.9		139.6		10.3	%
Hidrocantábrico		40.2		31.3		28.3	%
Brazil		64.0		39.9		60.3	%
Oni		8.6		(3.5	)	—
Information Technology		10.2		10.6		-3.9	%
Other & Adjustments		17.7		43.1		-58.9	%
Consolidated		534.7		461.0		16.0	%

 

 

 

(1) Excludes the Special Regime Producers (SRP) Enernova and EDP Bioeléctrica (Renewable Energy)

 

• EDP Produção’s EBITDA was up 19.1% following the beginnig of TER’s operations and the transfer of the energy management activity to EDPP. In addition, EDPP also benefited from an efficient fuel procurement (+€4.4 million) and cost cutting (operating costs were down 3.9%).

 

• EDP Distribuição benefited from a 6.3% increase in electricity consumption, which despite a fall in the UDGr tariffs resulted in a €8.4 million increase in allowed revenues from the UDGr activity. Additionally, the HR Restructuring Program, which started last year, meant a reduction of 500 employees at EDP Distribuição in 2003, already contributing to a 6.4% decrease in personnel costs.

 

• The acquisition of the Basque gas distribution Naturcorp (middle 2003) contributed €24 million or 24% to Hidrocantábrico’s EBITDA.

 

• Tariff revisions in Brazil, Bandeirante (+18.0% in October) and Enersul (+42.26% in April), were instrumental, allowing for a more adequate Return on Invested Capital. Bandeirante and Enersul’s EBITDA increased 122% and 121% year-on-year in local currency, respectively.

 

• ONI’s EBITDA increased by €12.1 million year-on-year, following a 26.2% reduction in operating costs.

 

• All in all, the EDP Group EBITDA posted a 16.0% increase to €534.7 million in the 1Q2004 as a result of increased demand and a tight cost control. The core business was once again the main contributor to this improvement.

 

2

 

Capex

 

CAPEX (€ m)		1Q2004		2003		1Q2003
EDP Produção (1)		8.3		236.1		39.7
Renewables		10.8		39.7		3.1
EDP Distribuição		63.4		343.6		59.0
(-) Edinfor asset transfer		—		12.0		—
(-) Subsidies in cash		16.0		59.7		14.6
(=) EDPD cash investments		47.4		271.9		44.5
Hidrocantábrico (40%)		25.8		71.0		19.5
Brazil		38.5		125.8		48.0
Telecoms		6.3		46.2		9.1
Information Technology		2.9		55.5		12.7
Other		3.3		14.1		2.3
Total		143.3		860.4		178.9

 

Return on Invested Capital (ROIC)

 

Return on Assets (ROA)

 

 

Return on Equity (ROE)

 

 

Capex/Depreciation

 

 

• The EDP Group’s capital expenditure totalled €143.3 million in the 1Q2004, down 20% year-on-year. Note that the figures presented correspond to the EDP Group’s cash out flow on operating investments, considering the consolidation method of each subsidiary.

 

• EDPP’s investment fell 79% year-on-year, following a sharp decrease in the TER investment. However, there is still a further €130 million to be invested in the second group of TER until the end of this year. The first TER unit started industrial service on the 14th February 2004 and the second unit is forecasted to start operations in October 2004.  EDP will build a third 400 MW unit in TER for an extra €197.0 million until 2006 when it should start operations. The investment in this third unit should start by the 2H2004.

 

• Enernova plans to invest €196.0 million in an extra 262 MW by 2006 and a further 300 MW between 2006 and 2008 in wind farms.

 

• Investment at HC increased 32.1% due to €34.1 million of investments made at the Albacete wind farm (124 MW), which is forecasted to start industrial service in the 4Q2004. Total investment in the project is estimated at €125 million, of which €60.3 million were already invested.

 

• The bulk of investment at EDPD was in the distribution network. These investments, aimed at improving the quality of service, enabled a drop in the equivalent interruption time, from 92 min in 1Q2003 to 50 min in the 1Q2004. These investments are remunerated by the regulator at a 9% nominal rate.

 

• Capex in Brazil decreased 19.8% due to lower investments at Fafen and Peixe Angical power plants in the 1Q2004.

 

• ONI’s operating investment fell 29.7% year-on-year, following a decrease in ONI’s investment needs as the major investments required for the expansion of the network have been completed.

 

* Annualised for the 1Q2003 and 1Q2004.

 

3

 

Cash Flow and Financial Debt

 

Cash Flow (€ m)		1Q2004
Net Income		180.8
Operating Cash Flow Before Working Capital and Capex		523.2
Change in Working Capital and Capex		(191.4	)
Net Operating Cash Flow		331.8
Non-Operating Cash Flow		(201.5	)
Decrease / (Increase) in Financial Debt		130.3

 

See page 22 for a detailed cash flow statement

 

Financial Debt (€ m)		1Q2004		YE2003		1Q2003
Holding and EDP Finance BV		5,195.4		5,356.2		5,650.2
EDP Produção (1)		38.0		38.8		52.8
Renewables		18.4		18.7		16.9
EDP Distribuição		—		—		—
Hidrocantábrico (40%)		764.1		786.1		813.8
Brazil (2)		592.4		547.3		574.0
Telecoms		699.8		685.5		673.3
Information Technology		25.8		23.6		23.7
Other		28.6		36.5		16.3
Total Financial Debt		7,362.5		7,492.7		7,821.0
Cash and cash equivalents		265.1		287.5		208.1
Net Debt		7,097.3		7,205.2		7,612.9

 

Debt Ratings

 

 

 

EBITDA financial interest coverage

 

 

Financial Debt / Total Capital

 

 

Financial Debt / EBITDA

 

 

•     At the end of 1Q2004, the EDP Group’s total financial debt amounted to €7,362.5 million. Vis-à-vis the YE2003, the EDP Group’s financial debt decreased €130.3 million following a reduction of €160.8 million at the holding level thanks to the cash flow generated at the operating companies.

 

•      EDP Produção generated €223.2 million of operating cash flow following the start-up of the first group of TER while the 6.3% increase in consumption at EDP Distribuição, resulted in €75.2 million of operating cash flow (see page 27). However, the postponed investment in the second group of TER had a positive impact on quarterly cash flow.

 

•      In the 1Q2004, Oni and the Brazilian subsidiaries, accounted for 18% or €1,292.3 million of the EDP Group’s consolidated debt. In Brazil it is worth mentioning that the electricity utilities are financing regulatory receivables through special loans contracted with BNDES to compensate for the rationing losses and “Parcela A” costs (R$506.4 million). The increase of the Brazilian subsidiaries’ financial debt vis-à-vis YE2003 is partly related to the slight appreciation of the Real against the Euro (3.3% from YE2003 to March 2004) and the start of the financing by BNDES on the investment in the Peixe Angical hydropower plant (R$60.0 million).

 

•             Overall, as a result of a good operating performance credit ratios improved at all levels.

 

(1) Excludes the Special Regime Producers (SRP) Enernova and EDP Bioeléctrica (Renewable Energy)

(2) netted against €297 million of Escelsa’s Senior Notes in 1Q2004

* Annualised for the 1Q2003 and 1Q2004.

 

4

 

EDP Produção (1)

 

Energy emission (GWh)		1Q2004		1Q2003		Δ%
Hydroelectric (PES)		3,427		5,598		-38.8	%
Thermoelectric (PES)		2,678		2,172		23.3	%
Binding Generation		6,106		7,770		-21.4	%
Hydroelectric (NBES)		171		291		-41.3	%
CCGT (NBES)		596		—		—
Non-Binding Generation		767		291		163.7	%
Biomass		15		11		30.1	%
Wind Farms		47		32		46.2	%
Cogeneration		196		164		19.1	%
Small Hydro (2)		58		87		-33.1	%
Special Regime Producers		315		294		7.2	%
Total EDP emission		7,188		8,355		-14.0	%
Pego thermal power station (PES)		931		874		6.5	%
Tapada thermal power station (PES)		1,449		892		62.4	%
Auto-producers (IES)		1,035		909		13.9	%
Import / (Export) net		1,372		311		341.5	%
Direct sales to Ind. Clients (incl. in Cogeneration)		(141	)	(123	)	-14.1	%
Pumping		(75	)	(89	)	15.7	%
Gross demand		11,759		11,129		5.7	%
Synchronous compensation		(10	)	(8	)	-37.3	%
Own consumption - generation		(3	)	(1	)	-259.4	%
Own consumption - transmission grid		(3	)	(3	)	-1.5	%
Losses		(173	)	(316	)	45.1	%
Energy delivered to distribution		11,569		10,802		7.1	%
Hydrolicity Coeficient		0.81		1.36		—

 

Electricity revenues (€ m)		1Q2004		1Q2003		Δ%
PPA Capacity Charge		220.4		219.3		0.5	%
PPA Energy Charge		56.3		39.9		41.2	%
Total CPPE		276.7		259.2		6.8	%
TER / Trading (NBES)		41.8		—		—
Cogeneration (Soporgen & Energin)		9.7		9.9		-1.5	%
Small Hydro (2)		4.5		15.9		-71.8	%
Total EDP Produção		332.7		284.9		16.8	%

 

Fuel costs (€ m)		1Q2004		1Q2003		Δ%
Coal		36.1		27.1		33.1	%
Fuel-oil		9.2		8.0		14.8	%
Natural Gas		4.1		2.3		77.8	%
Diesel		0.2		0.2		29.9	%
CPPE (PES)		49.6		37.6		31.9	%
Natural Gas (TER, Soporgen & Energin)		25.9		8.8		194.7	%
Total EDP Produção		75.5		46.4		62.8	%

 

Electricity Purchases (€ m)		1Q2004		1Q2003		Δ%
Trading, Autoconsumption & Cogeneration		6.7		5.0		34.5	%

 

• In the 1Q2004, EDP’s total emission reached 7,188 GWh, of which 51% was hydro generation (down from 71.5% in the 1Q2003). The first TER CCGT unit, which started industrial service on the 14th February 2004, contributed with 596 GWh to total emissions to the network, of which 367 GWh were test emissions.

 

• EDP’s lower emission was due to lower rainfall in the 1Q2004 (hydro coefficient of 0.81 vs. 1.36 in the 1Q2004).  Given that EDP owns nearly all the hydro capacity in Portugal, its contribution to the total energy delivered to the system fell from 75% in the 1Q2003 to 61% in the 1Q2004.

 

• The PPA energy charge rose 41.2 % due to a higher utilisation of CPPE’s thermal power plants. CPPE was once again able to buy coal and fuel at a lower price than what it receives through the PPA energy charge (€49.6 million vs. €56.3 million), which is based on the EU coal price index and the Platts index.  EDPP’s coal purchases benefited from long-term coal contracts that were negotiated before the rise in coal prices, as well as from the use of coal stocks at lower prices.

 

• The energy management activity, which was transferred from EDP Energia to EDPP, broadened its activity to the dispatch, management of energy sales and fuel procurement of EDPP’s non-binding generators. Electricity sales from the “TER / Trading (NBES)” item mentioned above relate mostly to TER (including test emissions) and EDPP’s hydro power plants in the NBES. This activity also manages the energy supply to the electricity system.

 

(1) The Special Regime Producers (SRP) Enernova and EDP Bioeléctrica (Renewable Energy) were excluded from the EDPP consolidation perimeter from July 2003. For analysis purposes these two companies were excluded from EDPP in both periods.

 

(2) In the 1Q2003 the sales of the Hydro power plants with an installed capacity >10 MW were accounted in this item. In the 1Q2004 only the power plants <10 MW were accounted in this item (>10 MW are dispatch by the trading department).

 

5

 

Operating Income Statement (€ m)		1Q2004		1Q2003		Δ%
Electricity Sales		332.7		284.9		16.8	%
Services Provided		16.2		(2.5	)	—
Other Sales		5.3		4.8		10.8	%
Operating Revenues		354.3		287.3		23.3	%
Electricity		6.7		5.0		34.5	%
Fuel for electricity generation		75.5		46.4		62.8	%
Direct Activity Costs		82.2		51.4		60.0	%
Gross Profit		272.0		235.9		15.3	%
Gross Profit/Revenues		76.8	%	82.1	%	-5.3	p.p.
Sundry materials and goods for resale		0.6		1.4		-56.0	%
Supplies and services - Group		4.7		1.7		171.8	%
Supplies and services - Non-Group		7.3		9.8		-25.5	%
Personnel costs		29.8		29.6		0.8	%
Generation centre rentals		0.2		0.9		-78.9	%
Other operating costs (or revenues)		(2.0	)	(1.1	)	-72.7	%
Own work capitalised		(3.7	)	(3.8	)	2.4	%
Operating Costs		36.8		38.3		-3.9	%
EBITDA		235.2		197.6		19.1	%
EBITDA / Revenues		66.4	%	68.8	%	-2.4	p.p.
Depreciation and amortisation		55.9		57.7		-3.0	%
Compensation of subsidised assets’ deprec.		(1.0	)	—
Provisions		2.8		2.4		18.8	%
EBIT		176.5		137.5		28.3	%
EBIT / Revenues		49.8	%	47.9	%	1.9	p.p.

 

Personnel costs (€ m)		1Q2004		1Q2003		Δ%
Total Personnel Costs		29.8		29.6		0.8	%
Pension Premiums		2.6		2.7		-2.2	%
Early Retirement Correction		3.3		3.3		1.6	%
Social benefits with early retirees		0.3		0.3		1.6	%
Medical care with inactives		0.8		0.5		60.0	%
Adjusted Personnel Costs		22.7		22.8		-0.3	%
Number of employees		1,975		2,098		-5.9	%
MW/Employee		3.92		3.63		7.9	%

 

Operating investment (€ m)		1Q2004		1Q2003		Δ%
Binding Generation		2.2		6.2		-65.3	%
Non-Binding Generation		1.8		30.8		-94.1	%
Other investments		0.7		1.4		-51.2	%
Financial costs (capitalised)		3.7		1.3		187.4	%
Total operating investment		8.3		39.7		-79.0	%

 

 

• The “services provided” line, includes mostly intra-group transactions with EDP Energia related with the supply of electricity to non-binding customers. (The negative value in the 1Q2003 is related to an accounting adjustment)

 

• The implementation of the Human Resources restructuring program at EDPP reflected into a reduction of 109 employees (mostly towards the end of 2003).

 

• Personnel costs increased 0.8% year on year, reflecting the 2004 salary increase of 2.8%. When corrected for all early retirement costs, pension premiums and other costs associated with non-active workers, personnel costs decreased 0.3%.

 

• Supplies & services are not comparable with the same period last year: (i) non-group S&S, namely insurance premiums and maintenance costs, in 1Q2004 were lower due to late invoicing; (ii) the same is true in group S&S in the 1Q2003.

 

• The transfer of the energy management into EDPP, following TER’s operational start-up, in conjunction with an efficient fuel procurement and cost cutting, resulted in a 19.1% improvement in EDPP’s EBITDA to €235.2 million in the 1Q2004.

 

• EDPP’s investment fell 79% year-on-year, following a sharp decrease in the TER investment. However, the remaining investment in the second group of 400 MW of TER is expected to total approximately €130 million until the end of this year (the 2nd group will start operating in October 2004).

 

(1) The Special Regime Producers (SRP) Enernova and EDP Bioeléctrica (Renewable Energy) were excluded from the EDPP consolidation perimeter as from June. For analysis purposes these two companies were excluded from EDPP in the 1Q2003.

 

6

 

Renewables

 

Installed Capacity - MW		1Q2004		1Q2003		Δ%
Wind		65		41		59.1	%
Biomass		9		9		—
Renewables		74		50		48.4	%

 

Generation - GWh		1Q2004		1Q2003		Δ%
EDP Bioeléctrica		47		32		46.2	%
Enernova		15		11		30.1	%
Renewables		62		43		42.0	%

 

Operating Income Statement (€ m)		1Q2004		1Q2003		Δ%
EDP Bioeléctrica		1.1		0.8		36.4	%
Enernova		4.6		2.8		62.3	%
Electricity Sales		5.7		3.6		56.7	%
Direct Activity Costs		0.4		0.6		-25.2	%
Gross Profit		5.2		3.0		72.7	%
Gross Profit/Revenues		92.2	%	83.7	%	8.5	p.p.
Supplies and services		0.3		0.4		-35.8	%
Personnel costs		0.2		0.3		-20.0	%
Generation centre rentals		0.1		0.1		35.7	%
Other operating costs (or revenues)		0.0		0.1		-34.4	%
Own work capitalised		(0.3	)	(0.2	)	-48.9	%
Operating Costs		0.3		0.6		-48.1	%
EBITDA		4.9		2.4		103.3	%
EBITDA / Revenues		86.6	%	66.8	%	19.9	p.p.
Depreciation and amortisation		1.0		1.0		6.8	%
Compensation of subsidised assets’ deprec.		(0.0	)	—		—
Provisions		0.0		0.0		29.6	%
EBIT		3.9		1.4		167.5	%
EBIT / Revenues		68.4	%	40.1	%	28.3	p.p.

 

Number of Employees		1Q2004		1Q2003		Δ%
Number of Employees		13		14		-7.1	%

 

Operating Investment(€ m)		1Q2004		1Q2003		Δ%
Operating Investment		10.8		3.1		250.2	%

 

 

• As from July 2003, Special Regime Producers Enernova and EDP Bioeléctrica were excluded from EDP Produção’s consolidation perimeter.

 

• Installed capacity at Enernova increased by 24 MW year-on-year, following: (i) the beginning of operations, in June 2003, of the Serra do Barroso wind farm (18 MW) and (ii) a capacity increase that was made at the Cabeço da Rainha wind farm (6 MW). As a result renewables’ emission rose 42% year-on-year to 62 GWh in the 1Q2004.

 

• Enernova and EDP Bioeléctrica contributed €4.9 million to the EDP Group’s EBITDA, up from €2.4 million in the 1Q2003.

 

• During the 1Q2004, the bulk of Enernova’s investment was in 3 new wind farms (Alto do Talefe; Fonte da Quelha and Padrela) with a total installed capacity of 31.5 MW. The EDP Group is expecting to invest in 2004 approximately €196 million in an additional 262 MW of wind capacity which will start operating by 2006.

 

7

 

EDP Distribuição

 

Energy Sales (GWh)		1Q2004		1Q2003		Δ%
Energy delivered to Distribution		11,569		10,802		7.1	%
Own consumption - distribution		(7	)	(7	)	0.1	%
Distribution losses		(889	)	(751	)	-18.3	%
Total electricity sales (1)		10,673		10,043		6.3	%
Electricity sales - BES (2)		9,208		9,380		-1.8	%
VHV (Very high voltage)		327		234		39.7	%
HV (High voltage)		980		836		17.2	%
MV (Medium voltage)		1,688		2,414		-30.1	%
SLV (Special low voltage)		781		768		1.7	%
LV (Low voltage)		5,092		4,782		6.5	%
PL (Public lighting)		341		345		-1.3	%
Electricity sales - NBES (3)		1,465		663		120.8	%
EDP		963		441		118.5	%
HV (High voltage)		7		13		-49.0	%
MV (Medium voltage)		956		427		123.8	%
Non-EDP		502		223		125.5	%
HV (High voltage)		9		26		-65.5	%
MV (Medium voltage)		493		197		150.7	%

 

Regulated Revenues		1Q2004		1Q2003
Unit revenue for the UDGr: HV and MV (€ / MWh)		9.48		9.84
Electricity delivered to PES/NBES consumers: HV and MV (GWh)		10,762		10,132
Unit revenue for the UDGr: LV (€ / MWh)		23.87		24.55
Electricity delivered to binding/non-binding consumers: LV (GWh)		6,214		5,789
t-2 tariff adjustment (€ m)		(1.8	)	(3.5	)
URD total allowed revenues (€ m)		248.5		238.4
Allowed revenues for the NS activity: VHV; HV and MV (€ m)		5.4		5.8
Allowed revenues for the NS activity: SLV (€ m)		2.5		2.3
Allowed revenues for the NS activity: LV (€ m)		32.4		31.6
t-2 tariff adjustment (€ m)		0.2		—
CRedes total allowed revenues (€ m)		40.5		39.7
Allowed revenues for the SPS activity: VHV; HV and MV (€ m)		3.9		2.1
Allowed revenues for the SPS activity: SLV (€ m)		1.2		0.6
Allowed revenues for the SPS activity: LV (€ m)		19.6		19.7
t-2 tariff adjustment (€ m)		0.1		5.7
CSEP total allowed revenues (€ m)		24.8		28.1
t-2 tariff adjustment for Energy Acquisition activity (€ m)		16.5		—
t-1 tariff adjustment for Energy Acquisition activity (€ m)		5.3		2.6
Total allowed revenues after tariff adjustment (€ m)		335.6		308.7

 

Electricity Sales & Gross Profit (€ m)		1Q2004		1Q2003		Δ%
VHV (Very High Voltage)		13.3		11.1		19.1	%
HV (High Voltage)		47.0		40.2		17.1	%
MV (Medium Voltage)		124.6		175.1		-28.9	%
SLV (Special Low Voltage)		77.2		74.5		3.5	%
LV (Low Voltage)		611.6		586.3		4.3	%
Public lighting		28.5		28.2		0.9	%
Interruptibility discounts		(6.7	)	(6.1	)	-10.0	%
Tariff correction discounts		(0.1	)	(0.4	)	71.7	%
Invoiced Sales - BES		895.3		909.0		-1.5	%
Invoiced Sales - NBES		26.8		11.1		140.8	%
Distribution 1Q01 Reposition		—		(1.7	)	—
Distribution 1Q02 Reposition		(14.4	)	—		—
Distribution 1Q03		(5.3	)	(21.2	)	—
Distribution 1Q04		(21.4	)	—		—
Tariff Adjustments		(41.1	)	(22.8	)	—
Electricity Revenues		880.9		897.2		-1.8	%
Tariff adjustments’ reposition		(19.7	)	(1.7	)	—
Sales to customers before reposition		900.7		898.9		0.2	%
Electricity purchases		565.1		590.1		-4.2	%
Electricity Gross Profit		335.6		308.8		8.7	%

 

• Total electricity distributed reached 10,673 GWh in the 1Q2004, which represents an annual growth of 6.3%. In the BES, the continued transfer of MV clients to the NBES translated into a 1.8% decrease in energy sales. Between the 1Q2003 and the 1Q2004, EDPD gained 4 industrial clients and 20 HV clients that explain the 39.7% and 17.2% growth in VHV and HV energy sales, respectively.

 

• EDPD’s number of clients in the BES increased 1.4% to 5,749,919. In the NBES, EDP Energia achieved a 65.7% market share selling 963 GWh to 1,633 clients. Since February 2004, the eligibility threshold for the NBES was extended to the SLV clients. By the end of the 1Q2004, the number of clients with non-binding status totalled 2,935, out of which 2,250 were acquiring energy in the NBES.

 

• “Allowed Revenues for Energy Acquisition Activity” relate mostly to the recovery of: (i) the 2002 differences between estimated and real EDPD’s costs with energy acquisition in the non-binding system (€12.5 million); (ii) the 2003 differences between estimated and real fuel costs for the LV segments (€5.0 million) and (iii) costs with the tariff convergence mechanism.

 

• Electricity purchases reflect a decrease in both the energy sales to the binding system and the estimates for fuel costs used by ERSE when calculating 2004 tariffs.

 

(1) Figures presented include Sales to EDP Group.

(2) BES - Binding Electricity System.

(3) NBES - Non-Binding Electricity System.

 

8

 

Operating Income Statement (€ m)		1Q2004		1Q2003		Δ%
Electricity sales - Group		18.7		1.5		—
Electricity sales - Non-Group		862.2		895.8		-3.7	%
Services provided		5.9		5.3		10.9	%
Other sales		0.6		0.4		46.1	%
Operating Revenues		887.5		903.0		-1.7	%
Direct Activity Costs		565.1		590.1		-4.2	%
Gross Profit		322.3		312.9		3.0	%
Gross Profit/Revenues		36.3	%	34.7	%	1.7	p.p.
Sundry materials and goods for resale		23.6		24.6		-4.1	%
Supplies and services - Group		22.9		24.4		-6.1	%
Supplies and services - Non-group		25.0		25.4		-1.6	%
Personnel costs		92.9		99.3		-6.4	%
Concession fees		46.4		42.8		8.4	%
Other operating costs (or revenues)		(2.9	)	(2.2	)	-32.5	%
Own work capitalised		(39.4	)	(40.9	)	3.7	%
Operating Costs		168.4		173.3		-2.8	%
EBITDA		153.9		139.6		10.3	%
EBITDA / Revenues		17.3	%	15.5	%	1.9	p.p.
Depreciation and amortisation		86.6		85.4		1.4	%
Compensation of subsidised assets’ deprec.		(16.7	)	—		—
Provisions		12.5		17.4		-28.1	%
EBIT		71.6		36.7		94.7	%
EBIT/ Revenues		8.1	%	4.1	%	4.0	p.p.

 

Personnel costs (€ m)		1Q2004		1Q2003		Δ%
Total Personnel Costs		92.9		99.3		-6.4	%
Pension premiums		11.5		13.1		-11.7	%
Early retirement correction		15.9		18.8		15.3	%
Social benefits with early retirees		2.5		2.4		3.7	%
Medical care with inactives		3.5		3.4		4.9	%
Adjusted Personnel Costs		59.4		61.7		-3.6	%
Number of employees		6,296		6,930		-9.1	%

 

Investment (€ m)		1Q2004		1Q2003		Δ%
						—
Distribution grid		49.9		47.1		6.0	%
Other investments		10.9		9.6		12.8	%
Operating investment (1)		60.8		56.8		7.2	%
Operating Invest. Excl. Subsidies		47.4		44.5		6.6	%

 

(1) Includes Cash Subsidies.

 

 

• Concession fees, calculated based on the previous year LV sales, reflect a 0.25 p.p. increase in the average rate paid to municipalities to 7.5%, and a 7.4% increase in LV Sales between 2002 and 2003.

 

• Personnel costs decreased 6.4% during the period, reflecting the HR restructuring program started last year. The decrease in Pension Premiums that followed the 2004 actuarial study reflects: (i) the creation of a Regulatory Asset that covers early retirement responsibilities contemplated in the HR Restructuring Program at EDPD; (ii) the anticipation of the legal retirement age of early retirees(1). During the 1Q2004, 208 early retirees at EDPD opted to bring forward their retirement age, which should enable EDPD to capture savings of €5.4 million (NPV). This measure also has a positive impact on the early retirement correction.

 

• Remunerations paid to early retirees within the scope of the HR Restructuring Program amounted to €3.2 million in the 1Q2004. Nevertheless, this cost was compensated with the amortisation of the Deferred Income created in 2003 for this purpose.

 

• During the 1Q2004, EDPD reduced 39 employees, of which 6 were part of the restructuring program (negotiated dismissals). Negotiated dismissals implied an extraordinary cost of €1.3 million and a matching extraordinary gain accounting for the increase of the Regulatory Asset.

 

• The compensation of the amortisation of subsidised assets, which had been considered an extraordinary gain, was accounted for as an operating item.

 

(1) Anticipation of legal retirement age – Early retirees can bring forward their legal retirement age waiving 4.5% of their retirement pension for each year of anticipation. Impact at EDP: (i) The Portuguese social security funds around 80% of early retiree’s pension cost, thus dramatically reducing EDP’s pension fund’s responsibility; (ii) EDP compensates those early retirees through a one-off payment for the 4.5% per annum they gave up and the 20% the company complements to the social security pension until the legal retirement age, in a lump sum.

 

9

 

Hidrocantábrico (100%) - Generation & Supply

 

Spain Energy Balance (GWh)		1Q2004		1Q2003		Δ%
Generation		49,231		46,566		5.7	%
Special Regime		11,755		10,348		13.6	%
Imports		1,884		1,916		-1.7	%
System Demand - Coverage		62,870		58,830		6.9	%
Regulated Distribution		41,907		41,844		0.2	%
Supply		18,171		15,350		18.4	%
Exports		2,792		1,635		70.8	%

 

Source: OMEL

 

Generation - Selling Price & Fuel Costs		1Q2004		1Q2003		Δ%
Average HC Selling Price to the Pool (1) (€/MWh)		31.0		30.5		1.4	%
Average HC Fuel Cost (€/MWh) (2)		20.6		15.1		36.2	%

 

Supply - Electricity Sales to Clients		1Q2004		1Q2003		Δ%
Electricity Supplied (GWh)		1,068		1,004		6.3	%
Sales of the Electricity Supplied (€ m)		61.5		55.4		10.9	%
Number of Clients		3,799		2,431		56.3	%

 

Gross Profit (Generation + Supply)		1Q2004		1Q2003		Δ%
Revenues		201.1		190.3		5.7	%
Direct Activity Costs		131.0		113.6		15.4	%
Gross Profit		70.1		76.7		-8.7	%

 

HC’s Net Electricity Generation (GWh)		1Q2004		1Q2003		Δ%
Hydroelectric		341		387		-11.9	%
Nuclear		330		335		-1.5	%
Aboño		1,706		1,424		19.8	%
Soto de Ribera		837		866		-3.4	%
Coal		2,543		2,290		11.1	%
Castejón CCGT		436		165		163.7	%
Total Generation		3,650		3,177		14.9	%
Pumping		(17	)	(34	)	-49.2	%
Energy delivered to the Pool		3,633		3,143		15.6	%
HC’s market share in wholesale market		7.4	%	6.8	%	6.8	p.p.

 

 

• Demand in the Spanish electricity market grew 4.1% versus 1Q2003, or 3.6% adjusted for working days and temperature effects. Due to a dry first quarter the hydrological coefficient dropped from 1.23 in the 1Q2003 to 0.76.

• Hidrocantábrico was able to increase its net emission by 14.9% in the 1Q2004 not only because of a lower hydrological coefficient, but also due to: i) a higher net emission at the Aboño power plant because of higher availability (in the 1Q2003 Aboño I stopped for maintenance works); and ii) a higher net emission at CCGT Castejón as a result of a lower variable cost in the 1Q2004 vis-à-vis 1Q2003.

 

• To compensate for the low prices, Hidrocantábrico was able to account as a receivable €11.8 million of CTCs.

• The increase of the average fuel costs due to a hike in the imported coal prices following an increase in shipping costs, put pressure on Hidrocantábrico’s generation margins.

• As for the supply activity, Hidrocantábrico was able to increase its average selling price 4.3% to €57.6/MWh in 1Q2004, offsetting the modest increase in the pool price.

 

• Overall, Gross Profit of the Generation and Supply activities decreased 8.7% mostly explained by the increase of the average fuel costs, which had a negative impact of €19.0 million. Nonetheless, this negative impact was partly offset by the increase in net emission (+€8.7 million) and a higher selling price in the generation activity (+€1.6 million).

 

(1) Includes wholesale market, ancillary services and capacity payment.

(2) Excluding hydroelectric emission.

 

10

 

Hidrocantábrico (100%) - Electricity Distribution & Gas Activity

 

Elect. Distribution (GWh)		1Q2004		1Q2003		Δ%
Low Voltage		676		584		15.7	%
Medium Voltage		256		238		7.6	%
High Voltage		1,416		1,356		4.4	%
Electricity Distributed		2,348		2,178		7.8	%
of which: access clients		345		282		22.3	%

 

Elect. Distribution (€ m)		1Q2004		1Q2003		Δ%
Transmission		1.9		1.5		24.2	%
Distribution		23.4		22.7		2.7	%
Commercialisation		1.8		1.9		-6.1	%
Elect. Regulated Revenues		27.1		26.2		3.3	%

 

Clients in Elect. Distribution

 

 

Electricity Distribution

 

• According to the Decree Law (Real Decreto 1802/2003) that sets the revenues for the Spanish regulated electricity activities for 2004, out of the €2,823.4 million attributed to the Spanish electricity distribution activity, €90.1 million or 3.2% were allocated to Hidrocantábrico.

• The rise in the transmission revenue is related with new transmission grid that was put in service.

 

Gas Distribution (GWh)		1Q2004		1Q2003		Δ%
Gas Distributed to direct clients		2,556		572		—
Gas Distributed to access clients		3,789		118		—
Total Gas Distributed		6,345		690		—

 

Gas Supply (GWh)		1Q2004		1Q2003		Δ%
Asturias & Basque Country		2,308		104		—
Rest of Spain		336		648		—
Gas Supplied		2,644		752		—

 

Gas Distribution (€ m)		1Q2004		1Q2003		Δ%
Transmission		2.5		0.5		—
Distribution		24.9		7.9		—
Commercialisation		2.8		1.2		—
Gas Regulated Revenues		30.2		9.5		—

 

Gas Supply (€ m)		1Q2004		1Q2003		Δ%
Asturias & Basque Country		30.9		1.6		—
Rest of Spain		4.8		10.0		—
Gas Sales		35.7		11.7		—

 

Clients in Gas Distribution

 

 

Clients in Gas Supply

 

 

Gas Distribution

• The inclusion of Naturcorp in Hidrocantábrico since the 1st August 2003 had an impact of 5,466 GWh of gas distributed in the 1Q2004. In this period Hidrocantábrico reached a 7.3% market share of gas distributed in Spain.

• According to the Law (Orden Eco/31/2004) that sets the revenues for the Spanish regulated gas activities for 2004, of the €1,091.6 million attributed to the Spanish gas distribution companies, €107.8 or 10% were allocated to Naturcorp and its subsidiaries. In terms of gas transport regulated revenues, €8.9 million were allocated to Naturcorp and its subsidiaries.

 

Gas Supply

• Gas supplied had a strong increase as a result of the inclusion of Naturcorp since the 1st August 2003. In the 1Q2004 Hidrocantábrico was able to achieve a 5.7% share of the liberalised market (excluding supply to the electricity sector). In the total Spanish gas market, both regulated and non-regulated, Hidrocantábrico sold 5,200 GWh of gas, corresponding to a 7.0% market share (excluding supply to the electricity sector).

 

In the 1Q2004 the consumption in the Spanish gas sector increased 16%, explained mostly by the liberalised segment as a result of the increase of the generation of electricity based on CCGT technology. In addition, the low temperatures and the increase of the number of clients, particularly in the liberalised segment, also contributed to this growth.

 

(1) Operating data considers 100% of Naturcorp’s gas distribution subsidiaries’ figures, while all financial data considers the consolidation method.

 

11

 

Hidrocantábrico (100%)

 

Business Areas		Generation & Supply						Electricity Distribution						Gas						Special Regime
Breakdown		1Q2004		1Q2003		Δ%		1Q2004		1Q2003		Δ%		1Q2004		1Q2003		Δ%		1Q2004		1Q2003		Δ%
Revenues		201.1		190.3		5.7	%	103.8		97.0		7.1	%	135.3		19.3		602.6	%	8.6		8.9		-2.8	%
Direct Costs		131.0		113.6		15.4	%	75.4		70.1		7.6	%	92.7		9.8		849.0	%	2.7		5.5		-50.3	%
Gross Profit		70.1		76.7		-8.7	%	28.4		26.8		5.9	%	42.6		9.5		349.0	%	5.9		3.4		73.2	%
Gross Profit/Revenues		34.8	%	40.3	%	-5.5	p.p.	27.4	%	27.7	%	-0.3	p.p.	31.5	%	49.3	%	-17.8	p.p.	68.6	%	38.5	%	30.1	p.p.
Personnel Costs		9.6		8.4		14.0	%	5.0		5.4		-8.9	%	3.8		0.8		402.7	%	1.3		1.0		22.8	%
Other Operating Costs (net)		7.1		9.0		-21.4	%	4.5		5.5		-18.5	%	6.8		1.3		419.1	%	1.1		(0.6	)	—
EBITDA		53.4		59.4		-10.0	%	19.0		15.9		19.4	%	32.1		7.4		331.2	%	3.5		3.0		19.3	%
EBITDA/Revenues		26.6	%	31.2	%	-4.6	p.p.	18.3	%	16.4	%	1.9	p.p.	23.7	%	38.6	%	-14.9	p.p.	40.8	%	33.2	%	7.6	p.p.
Depreciation		23.2		23.2		0.0	%	7.5		7.0		6.0	%	7.3		2.5		188.9	%	2.3		1.3		73.6	%
Provision		0.4		0.5		-31.8	%	0.1		0.4		-77.4	%	0.0		0.0		-53.2	%	(0.3	)	0.2		—
EBIT		29.9		35.6		-16.2	%	11.4		8.4		35.4	%	24.8		4.9		408.2	%	1.6		1.5		7.4	%
EBIT/Revenues		14.9	%	18.7	%	-3.9	p.p.	11.0	%	8.7	%	2.3	p.p.	18.3	%	25.3	%	-7.0	p.p.	18.2	%	16.4	%	1.7.	p.p.
Capex		9.3		6.6		40.8	%	6.1		7.1		-13.1	%	11.2		3.8		198.0	%	40.2		25.7		56.2	%
# of employees		620		590		5.1	%	350		391		-10.5	%	277		65		326.2	%	97		135		-28.1	%

 

 

Generation & Supply

• The electricity generation and supply activity fell 10.0% at the EBITDA level due to higher fuel costs;

• The increase in personnel expenses is related to the transfer of employees to the supply activity following the reorganization of personnel between companies.  The fall in ‘other operating costs’ is mainly related to the cost incurred in the 1Q2003 with the maintenance works at Aboño I (€1.2 million).

 

Electricity Distribution

• The EBITDA of the electricity distribution activity increased 19.4% as a result of: i) 3.3% increase in regulated revenues; ii) a reduction in personnel costs; and iii) a €1.0 million reduction in supplies and services due to lower network implementation costs associated with the markets outside Asturias.

 

Gas

• The full consolidation of Naturcorp, as from August 2003, had an important impact on the gas activity’s results, contributing to the €24.6 million increase on this activity’s EBITDA.

 

Special Regime

• The 2003 net emission of Hidrocantábrico’s special regime generators increased 172% to 112 GWh. The new wind farms of Cantábrico (65 MW) and Arlanzón (only 26.4 MW of the total 34 MW) contributed an extra 53 GWh in net emission and €3.4 million to the gross profit.

• Regarding capex, Hidrocantábrico invested €34.1 million in the Albacete wind farm (124 MW), which should be operational in the 4Q2004.

 

12

 

Income Statement (€ m)		1Q2004		1Q2003		Δ%
Revenues		445.9		339.4		31.4	%
Direct Costs		297.4		222.3		33.8	%
Gross Profit		148.5		117.1		26.8	%
Gross Profit/Revenues		33.3	%	34.5	%	-1.2	p.p.
Supplies and services		22.0		19.5		12.7	%
Personnel costs		23.8		19.9		19.4	%
Other operating costs (or revenues)		3.9		2.2		—
Own work capitalised		(1.6	)	(2.8	)	42.8	%
Operating Costs		48.1		38.8		23.9	%
EBITDA		100.5		78.3		28.3	%
EBITDA/Revenues		22.5	%	23.1	%	-0.5	p.p.
Depreciation		41.3		32.3		28.0	%
Compensation of subsidised assets’ deprec.		(0.8	)	—
Provision		0.1		1.2		-88.6	%
EBIT		59.8		44.9		33.2	%
EBIT/Revenues		13.4	%	13.2	%	0.2	p.p.
Financial Results		(38.5	)	(37.2	)	-3.4	%
Extraordinary Results		0.8		4.9		-83.3	%
Income Before Taxes		22.1		12.6		75.3	%
Income taxes		8.6		(18.7	)	—
Minority interests		4.2		2.2		90.0	%
Net Profit		9.2		29.0		-68.3	%

 

Capex (€ m)		1Q2004		1Q2003		Δ%
Recurring investment		26.2		17.0		54.3	%
Non-recurring investment		41.1		31.9		28.9	%
(-) Subsidies		2.8		4.9		-43.2	%
Capex		64.5		44.0		46.7	%

 

Number of employees		1Q2004		1Q2003		Δ%
Number of employees		1,564		1,385		12.9	%

 

 

• Consolidated EBITDA in 1Q2004 was affected by:

 

i) the inclusion of Naturcorp, which explains the €24.6 million increase at the gas activity’s EBITDA;

 

ii) the increase in generation fuel costs due to a rise of the imported coal prices;

 

iii) the increase in operating costs as a result of the consolidation of Naturcorp;

 

• 1Q2004’s Net Profit is not directly comparable with the 1Q2003 since at the beginning of last year Hidrocantábrico accounted €25 million related to the tax benefit on the investment made in Castejón CCGT. In the 4Q2003, pursuant to IAS rules, the tax benefit accounted in the 1Q2003 was reverted and will be accounted during the Castejón CCGT plant’s useful life. If we exclude the €25 million of tax benefit net profit would have improved by €5 million.

 

Note: Hidrocantábrico was proportionally consolidated in accordance with EDP’s stake in Hidrocantábrico (40%).

 

13

 

Brazil - Distribution

 

		Bandeirante						Escelsa						Enersul
Energy Sales & Gross Profit		1Q2004		1Q2003		Δ%		1Q2004		1Q2003		Δ%		1Q2004		1Q2003		Δ%
Energy Sales (GWh)
Electricity Purchases & Self Generation		2,718		2,804		-3.1	%	1,745		1,864		-6.4	%	929		863		7.6	%
Electricity delivered to distribution		3,239		3,100		4.5	%	2,049		2,085		-1.7	%	946		853		11.0	%
Distribution losses		(254	)	(247	)	3.0	%	(247	)	(247	)	-0.2	%	(181	)	(122	)	48.4	%
Residential		635		560		13.3	%	323		340		-5.1	%	239		238		0.5	%
Industrial		1,128		1,307		-13.7	%	615		675		-8.8	%	136		155		-11.8	%
Commercial		350		319		9.9	%	206		209		-1.5	%	149		145		2.9	%
Other		251		257		-2.1	%	284		290		-2.1	%	201		184		9.6	%
Electricity sales to customers		2,365		2,443		-3.2	%	1,428		1,514		-5.7	%	726		721		0.7	%
Electricity distributed to access clients		620		410		51.0	%	374		324		15.5	%	40		10		298.1	%
Total Electricity Distributed		2,984		2,854		4.6	%	1,802		1,838		-2.0	%	766		731		4.8	%
Gross Profit (R$ m)
Residential		186.0		154.4		20.5	%	95.7		88.2		8.5	%	65.7		51.1		28.6	%
Industrial		177.7		179.2		-0.9	%	76.6		77.2		-0.8	%	23.0		18.6		23.5	%
Commercial		92.9		74.6		24.5	%	50.4		44.6		13.0	%	39.7		29.7		33.5	%
Other		45.8		40.6		12.9	%	41.4		37.3		11.0	%	34.3		20.0		71.7	%
Electricity sales to customers		502.4		448.8		12.0	%	264.1		247.3		6.8	%	162.7		119.4		36.2	%
Electricity distributed to access clients		22.8		5.8		294.0	%	15.6		5.6		177.9	%	1.2		0.3		253.3	%
Other Revenues (1)		(24.6	)	(61.4	)	59.9	%	(11.5	)	(15.3	)	24.4	%	6.9		(11.3	)	—	%
Total Revenues		500.6		393.2		27.3	%	268.3		237.7		12.9	%	170.7		108.4		57.4	%
(-) Direct activity costs		353.4		308.0		14.7	%	174.1		134.2		29.8	%	83.9		57.8		45.0	%
Gross Profit		147.2		85.2		72.8	%	94.1		103.5		-9.1	%	86.8		50.6		71.6	%
Average Tariff to customers (R$/MWh)		212.5		183.7		15.7	%	185.0		163.4		13.2	%	224.2		165.6		35.3	%

 

Total Electricity Distributed by
Brazilian Subsidiaries (GWh)

 

 

• Total electricity distributed by EDP’s subsidiaries in the Brazilian market increased 2.4%, reflecting the increase in demand of almost 5% in Bandeirante and Enersul’s regions, and the drop in consumption in Escelsa’s concession area (especially in the residential segment) due to the mild temperatures this summer.

 

• Regarding electricity sales to customers and gross profit, Bandeirante and Enersul had a remarkable performance on the back of 2003’s tariff revisions.

• Escelsa’s annual tariff adjustment (+17.30%) in August 2003 was not reflected at the gross profit level, which dropped 9.1% as a result of: i) a 2.0% decline in the consumption; and ii) the increase of federal taxes on revenues (PIS and COFINS) from 3.0% to 7.6% for all distribution companies, since February 2004.

 

• On April 8th 2004 ANNEL granted, at Enersul’s annual tariff adjustment, an average tariff increase of 17.02%:

i) 4.60% is the pass through of the non-controllable costs to the final tariff and 1.68% is the adjustment of controllable costs to the IGP-M inflation index;

ii) 2.60% is related to 50% of the deviation between the non-controllable costs settled in April 2002 and the true non-controllable costs incurred until April 2003;

iii) 3.02 % is related to the deviation between the non-controllable costs settled in April 2003 and the true non-controllable costs incurred until April 2004;

ivi) 4.94% is related to the partial amount of the tariff increase that was not granted in the last tariff revision (which is being recovered until 2007); iv) 0.18% is related to past costs incurred during the rationing programme.

 

(1) Includes the Regulatory Tariff Repositions, Taxes over Revenues, Non-Invoiced Electricity and other revenues

 

14

 

Brazil

 

P&L (Statutory Accounts)		Bandeirante						Escelsa						Enersul						Generation & Trading (1)
R$ million		1Q2004		1Q2003		Δ%		1Q2004		1Q2003		Δ%		1Q2004		1Q2003		Δ%		1Q2004		1Q2003		Δ%
Revenues		500.6		393.2		27.3	%	268.3		237.7		12.9	%	170.7		108.4		57.4	%	98.5		53.5		84.2	%
Direct Activity Costs		353.4		308.0		14.7	%	174.1		134.2		29.8	%	83.9		57.8		45.0	%	61.1		32.5		87.9	%
Gross Profit		147.2		85.2		72.8	%	94.1		103.5		-9.1	%	86.8		50.6		71.6	%	37.4		21.0		78.5	%
Gross Profit/Revenues		29.4	%	21.7	%	7.7	p.p.	35.1	%	43.6	%	-8.5	p.p.	50.9	%	46.7	%	4.2	p.p.	38.0	%	39.2	%	-1.2	p.p.
Sundry materials & goods for resale		1.9		1.8		4.6	%	2.2		1.9		13.1	%	3.1		3.2		-3.4	%	3.0		0.1		—
Supplies and services		18.4		19.0		-3.3	%	10.9		12.8		-15.2	%	8.8		8.1		8.9	%	12.3		7.9		55.2	%
Personnel costs		23.6		20.4		15.5	%	18.3		15.8		15.4	%	14.5		12.2		19.0	%	1.4		0.8		66.7	%
Other operating costs (or revenues)		1.6		(1.9	)	—		2.6		1.4		—		1.8		0.6		—		0.2		1.6		-86.6	%
Operating Costs		45.5		39.4		15.4	%	33.9		31.9		6.3	%	28.2		24.0		17.3	%	16.9		10.4		61.9	%
EBITDA		101.8		45.8		122.2	%	60.2		71.6		-15.9	%	58.6		26.5		120.8	%	20.6		10.6		94.8	%
EBITDA/Revenues		20.3	%	11.6	%	8.7	p.p.	22.4	%	30.1	%	-7.7	p.p.	34.3	%	24.5	%	9.9	p.p.	20.9	%	19.7	%	1.1	p.p.
Depreciation		18.4		18.2		1.0	%	15.1		14.6		3.6	%	13.7		14.2		-3.6	%	3.2		2.9		8.6	%
Provision		1.5		7.4		-79.5	%	5.6		4.0		39.5	%	3.5		3.3		4.9	%	—		—		—
EBIT		81.8		20.2		305.7	%	39.5		53.0		-25.5	%	41.5		9.0		359.2	%	17.4		7.6		127.9	%
Capex		28.1		30.1		-6.8	%	11.8		12.3		-4.5	%	9.7		7.2		35.1	%	86.7		125.8		-31.1	%
Financial Debt (Non-Group + Group)		756.6		847.7		-10.7	%	1,703.7		1,907.7		-10.7	%	595.9		580.0		2.7	%	280.3		120.6		132.5	%
# employees		1,248		1,349		-7.5	%	1,305		1,364		-4.3	%	933		934		-0.1	%	234		196		19.4	%

 

 

Bandeirante

• The good performance at Bandeirante’s gross profit level, on the back of the October’s tariff revision and a 4.6% increase in consumption led to a strong increase in EBITDA. Regarding personnel costs, the 15.5% increase versus 1Q2003 is mostly due to a 9% salary increase in June 2003.

 

Escelsa

• The decrease at the EBITDA level is mostly explained by: i) the fall in consumption; and ii) the increase in personnel costs as a result of the salary adjustment of approximately 10% last August.

 

Enersul

• The strong increase in EBITDA is largely explained by the tariff revision of 32.59% (plus 9.67%) occurred last April and a 4.8% increase in consumption. The increase in operating costs is mostly explained by the annual salary adjustment in August of approximately 12%.

 

Generation & Trading

• The generation activity in Brazil was able to increase its net emission 4.3% from 502 GWh to 523 GWh (considering 100% of Fafen and the 27.37% of EDP’s right of energy at UHE Lajeado’s net emission). The trading and supply activity increased the energy sales by 84% to 1,112 GWh. It was the main contributor for the strong gross profit increase. The bulk of the investment in this activity is associated with the construction of the Peixe Angical hydro power plant.

 

(1) This section includes the power stations Lajeado and Fafen, and the trading/supply company Enertrade.

 

15

 

		R$ million						€ million
Income Statement		1Q2004		1Q2003		Δ%		1Q2004		1Q2003		Δ%
Revenues		993.4		774.3		28.3	%	274.5		205.0		33.9	%
Direct Activity Costs		633.0		513.9		23.2	%	174.9		135.5		29.1	%
Gross Profit		360.5		260.4		38.5	%	99.6		69.5		43.4	%
Gross Profit/Revenues		36.3	%	33.6	%	2.7	p.p.	36.3	%	33.9	%	2.4	p.p.
Sundry materials & goods for resale		10.2		7.0		45.6	%	2.8		1.9		51.4	%
Supplies and services		50.4		50.0		0.8	%	13.9		13.4		4.1	%
Personnel costs		62.1		52.8		17.7	%	17.2		13.6		25.8	%
Other operating costs (or revenues)		6.2		2.1		—		1.7		0.7		—
Operating Costs		128.9		111.9		15.2	%	35.6		29.5		20.5	%
EBITDA		231.6		148.5		56.0	%	64.0		39.9		60.3	%
EBITDA/Revenues		23.3	%	19.2	%	4.1	p.p.	23.3	%	19.5	%	3.8	p.p.
Depreciation		50.5		50.4		0.1	%	14.0		13.3		5.1	%
Provision		10.6		14.7		-28.1	%	2.9		3.9		-25.3	%
EBIT		170.5		83.3		104.7	%	47.1		22.7		107.3	%
EBIT/Revenues		17.2	%	10.8	%	6.4	p.p.	17.2	%	11.1	%	6.1	p.p.
Financial Results		(65.4	)	23.2		—		(18.1	)	7.1		—
Extraordinary Results		13.7		(5.8	)	—		3.8		(1.6	)	—
Income Before Taxes		118.8		100.7		18.0	%	32.8		28.2		16.3	%
Income taxes		47.9		35.1		36.7	%	13.2		8.4		57.4	%
Minority Interests		6.6		33.8		-80.5	%	1.8		8.8		-79.2	%
Net Profit		64.3		31.9		101.9	%	17.8		11.1		60.7	%

 

 

 

• The Brazilian operations had a remarkable performance at the EBITDA level following tariff revisions at Bandeirante and Enersul (October and April 2003, respectively), which allowed for a more adequate return on invested capital. The increase in consumption of almost 5% in these companies also contributed positively.

 

• Escelsa will have its next tariff revision in August 2004 and a marked improvement in results is expected from then on.

 

• The 15.2% increase in operating costs, is mostly due to the rise in personnel costs following annual salary adjustments in the second half of 2003.

Note: the compulsory contribution for the Energy Development Account (regulatory contribution for the development of renewable energy, natural gas and national coal fired-power) was accounted for in the direct costs line since January 2004, due to its pass-through nature to the final tariff.

 

• In Euro terms, EBITDA had a stronger improvement due to the slight appreciation of the Real against the Euro compared to the same period last year. Average BRL/€ in the 1Q2003 was 3.78 against 3.60 in the 1Q2004, representing a 5% rise of the Real in average terms.

 

16

 

Telecoms - ONI Group

 

Operating Revenues (€ m)		1Q2004		1Q2003		Δ%
Voice services		55.9		51.2		9.3	%
Data & Internet services		19.8		21.2		-6.8	%
Other services		7.0		8.3		-14.6	%
Telecomunication services		82.8		80.7		2.6	%
Equipment sales		0.8		1.3		-35.5	%
Equipment sales		0.8		1.3		-35.5	%
Operating revenues		83.6		81.9		2.0	%

 

Direct Activity Costs (€ m)		1Q2004		1Q2003		Δ%
Telecommunication services		42.9		41.4		3.6	%
Equipment sales		0.4		1.1		-63.2	%
Direct activity costs		43.3		42.5		1.8	%

 

Gross Profit (€ m)		1Q2004		1Q2003		Δ%
Telecommunication services		39.9		39.3		1.6	%
Equipment sales		0.4		0.2		133.5	%
Gross Profit		40.3		39.4		2.2	%

 

 

 

•  Voice traffic operated by ONI rose 7.7% to 655.6 million minutes, out of which 429.9 million minutes relate to ONI Spain’s activity. Much of this growth was achieved at the Operators’ segment. Gross margin from voice services increased 4.6 p.p. year-on-year to 39.4% in the 1Q2004 due to further decreases in interconnection costs (May 2003 – 10%).

 

•  ISP traffic decreased 27% year on year to 132.7 million minutes, reflecting the undergoing transfer of clients from dial-up to xDSL access. Gross margin from internet services increased 4.2 p.p. year-on-year to 59.3% in the 1Q2004 due to a 6.4 p.p. increase of ONI Portugal’s gross margin from this activity (positive impact of increase in xDSL access).

 

•  Revenues from voice services totalled €55.9 million, up 9.3% year-on-year, mostly due to a 15.2% growth at ONI Spain’s revenues from voice services that benefited from a €4.6 million increase from pre-paid cards.

 

•  Data & Internet services decreased 6.8% year-on-year. This evolution reflects a 36.2% decrease in revenues from rented capacity (termination of some contracts within the Operators’ segment) that was partly offset by an increase in revenues from internet services, up 19.7% year-on-year.

 

•  Gross margin from telecommunication services decreased from 48.7% to 48.2% due to a lower contribution from leased circuits, which has higher margins.

 

 

Important Note: Germinus was consolidated in ONI’s 1Q2004 Financial Statements through the Equity Method, as it is in the process of being sold.

 

17

 

Operating Income Statement (€ m)		1Q2004		1Q2003		Δ%
Revenues from telecommunications service		82.8		80.7		2.6	%
Revenues from equipment sales		0.8		1.3		-35.5	%
Operating revenues		83.6		81.9		2.0	%
Direct activity costs		43.3		42.5		1.8	%
Gross Profit		40.3		39.4		2.2	%
Gross Profit/Revenues		48.2	%	48.1	%	0.1	p.p.
Supplies and services - Group		2.7		0.1		—
Supplies and services - Non-Group		18.7		24.9		-24.9	%
Personnel Costs		11.2		17.4		-35.7	%
Other operating costs (or revenues)		(0.9	)	0.6		—
Own work capitalised		(0.0	)	(0.0	)	90.1	%
Operating costs		31.7		43.0		-26.2	%
EBITDA		8.6		(3.5	)	—
EBITDA/Revenues		10.3	%	(4.3	)%	14.6	p.p.
Depreciation and amortisation		15.5		16.9		-8.5	%
Provisions		0.6		0.5		22.5	%
EBIT		(7.5	)	(21.0	)	64.1	%
EBIT/Revenues		(9.0	)%	(25.6	)%	16.6	p.p.

 

Number of Employees		1Q2004		1Q2003		Δ%
Fixed Line Portugal		569		655		-13.1	%
Fixed Line Spain		535		588		-9.0	%
Comunitel		345		370		-6.8	%
OLA Internet		190		218		-12.8	%
Total		1,104		1,243		-11.2	%

 

Investment (€ m)		1Q2004		1Q2003		Δ%
Fixed line Portugal		2.7		3.3		-19.4	%
Recurring		0.4		0.1		212.0	%
Non-recurring		2.2		3.2		-29.4	%
Fixed line Spain		3.7		5.9		-37.6	%
Recurring		1.3		2.3		-42.4	%
Non-recurring		2.3		3.6		-34.5	%
Total operating investment		6.3		9.1		-31.0	%

 

 

•  EBITDA increased by €12.1 million year-on-year, to €8.6 million in the 1Q2004, as ONI’s improved efficiency enabled the company to achieve a 26.2% decrease in operating costs.  In the 1Q2004, ONI Portugal’s EBITDA amounted to  €5.6 million.

 

•  Supplies and Services fell 14.1% year-on-year. The cost cutting program implemented by ONI continues to bear its fruits. Major savings were achieved in: (i) fixed network expenses; (ii) advertising and (iii) specialised works, namely IT services.

 

•  Personnel Costs reflected the significant reduction of the ONI Group’s headcount.  Between the 1Q2003 and the 1Q2004, ONI reduced its workforce by 139 employees (excluding Germinus – consolidated through the Equity Method in the 1Q2004).

 

•  Depreciation and amortisation deceased 8.5% year-on-year, reflecting ONI’s lower investment needs (investment required for the expansion of the network and acquisition of direct access infrastructures has already been done). EBIT improved €13.5 million year on-year, with ONI Portugal contributing to 72% of this improvement.

 

•  Operating investment at ONI totalled €6.3 million, down 29.7% year-on-year.

 

18

 

Information Technology

 

Operating Income Statement (€ m)		1Q2004		1Q2003		Δ%
Sales		8.8		7.7		15.3	%
Services Provided		45.2		43.8		3.4	%
Operating Revenues		54.1		51.4		5.1	%
Sundry materials and goods for resale		8.7		6.4		35.7	%
Supplies and services - Group		2.6		3.0		-13.2	%
Supplies and services - Non-group		19.4		17.4		11.2	%
Personnel Costs		14.9		18.2		-18.5	%
Other operating costs (or revenues)		(0.6	)	(0.7	)	18.9	%
Own work capitalised		(1.0	)	(3.5	)	70.6	%
Operating Costs		43.9		40.8		7.5	%
EBITDA		10.2		10.6		-3.9	%
EBITDA/Operating Revenues		18.9	%	20.6	%	-1.8	p.p.
Depreciation and amortisation		7.4		5.4		36.5	%
Provisions		0.1		0.1		8.4	%
EBIT		2.7		5.1		-47.1	%
EBIT/Operating Revenues		5.0	%	9.9	%	-4.9	p.p.

 

Number of employees		1Q2004		1Q2003		Δ%
Number of Employees		1,556		1,796		-13.4	%

 

Operating Investment (€ m)		1Q2004		1Q2003		Δ%
Operating Investment		2.9		12.7		-77.2	%

 

 

• Operating revenues at Edinfor totalled €54.1 million, up 5.1% year on year, reflecting a slight recovery of the Portuguese economy and a contract that was made with OMIP (Portuguese Operator for the MIBEL). In the 1Q2004, sales and services provided to non-EDP Group companies accounted for 62.4% of Edinfor’s operating revenues.

 

• Costs with materials and supplies and services increased 35.7% and 7.7% year-on-year, reflecting the recovery of Edinfor’s activities related to finishing, graphics and equipment sales.

 

• Personnel costs decreased 18.5% during the period, following: (i) a reduction of 240 employees due to the on-going restruturing process at Edinfor and (ii) successful wage negotiations.

 

• Last year’s investment in the acquisition of equipment for the data processing centre (leasing contract) resulted in a 36.5% increase in depreciation and amortisation, which led to a 47.1% drop in EBIT in 1Q2004.

 

• Edinfor’s Operating Investment decreased sharply to a mere €2.7 million reflecting the company’s efforts into reducing the levels of investment. However, reducing investments at this rate is not feasible for the whole year.

 

19

 

Consolidated Financial Results & Extraordinary Results

 

Financial Results (€ m)		1Q2004		1Q2003		Δ%
Income from group & associated companies		6.1		6.3		-3.2	%
Investment income		0.0		17.2		-100.0	%
Goodwill amortisation		(23.4	)	(20.0	)	-17.5	%
Financial Investments Gains/(Losses)		(17.3	)	3.5		—
Net Financial Interest paid		(84.8	)	(84.0	)	-1.0	%
Net foreign exchange differences		5.0		12.0		-58.5	%
Selic on rationing losses and ‘Parcela A’		8.8		11.8		-25.5	%
Other		(6.2	)	(14.8	)	—
Financing Gains/(Losses)		(77.3	)	(75.0	)	-3.0	%
Financial results		(94.6	)	(71.5	)	-32.3	%
Income from Equity Method (€ m)		1Q2004		1Q2003		Δ%
REN (30%)		4.7		5.5		-14.1	%
CEM (22%)		1.0		—		—
Hidrocantábrico Subsidiaries		0.9		0.8		11.4	%
Other		(0.5	)	0.1		—
Total		6.1		6.3		-3.2	%
Goodwill amortisation (€ m)		1Q2004		1Q2003		Δ%
Hidrocantábrico		9.8		8.6		13.4	%
EBE		2.1		2.1		0.0	%
IVEN		5.4		4.6		17.3	%
ACE Holding		1.1		1.1		3.4	%
Comunitel		3.1		2.1		44.3	%
Other		2.0		1.4		39.6	%
Total		23.4		20.0		17.5	%
Extraordinary Results (€ m)		1Q2004		1Q2003		Δ%
Fixed assets gains / (losses)		(3.4	)	1.0		—
(Increase)/decrease in deprec. and provisions		2.8		8.1		-66.0	%
Prior year adjustment (net)		(1.2	)	(0.4	)	-195.4	%
Hydrological correction		—		—		—
Compensation of subsidised assets’ deprec.		—		18.5		—
Bad debts		(1.8	)	(0.3	)	-521.3	%
Inventory gains / (losses)		(0.5	)	(0.4	)	-43.0	%
Other gains / (losses)		(3.0	)	(3.1	)	5.0	%
Extraordinary Results		(7.1	)	23.4		—

 

 

The fall of €23.1 million on the Financial results is mostly due to:

 

•  A drop in Investment Income explained by: i) the €7.0 million received in dividends, in 1Q2003, from our 3% stake in Iberdrola that we sold in the 2H2003; and ii) last year’s €10.1 million received in dividends from BCP (4.36% stake) which this year will be received in the second quarter (€7.2 million).

 

•  In January 2003 EDP received €16.9 million from the semi-annual coupon of the 83% of Escelsa Senior Notes acquired by the end of 2002. Adjusting for this one-off receivable, and the fact that EDP did not accrue in February and March the coupon received in July 2003, net financial interests would have decreased 9%. The coupons are currently being accrued monthly as an interest receivable.

 

•  Net forex differences were €7.0 million lower mainly due to a stronger Real appreciation against the US Dollar in the 1Q2003 than in the 1Q2004, affecting the dollar denominated debt of the Brazilian subsidiaries (note: Escelsa’s Senior Notes forex differences are offset in Group consolidation).

 

• The €8.6 million improvement in “Other” is related to lower losses recorded in Bandeirante’s financing contracts linked to the IGP-M price index (32.5% in March 2003 and 5.1% in March 2004).

 

Extraordinary Results amounted to a €7.1 million loss in the 1Q2004, compared to a €23.4 million gain in the 1Q2003:

 

•  The €18 million compensation of the amortisation of subsidised assets, which had been considered an extraordinary gain last year, was accounted for as an operating item;

 

•  “Other extraordinary gains/(losses)” include a €9.0 million cost with compensations paid to early retirees that accepted the anticipation of the legal retirement age (see page 9 – EDP Distribuição). This was partly offset by a €6.2 million tax recovery at Brazil.

 

20

 

Consolidated Income Statement

 

Consolidated Income Statement (€ m)		1Q2004		1Q2003		Δ%
Electricity Sales		1,584.9		1,531.9		3.5	%
Other Sales		69.6		16.4		324.5	%
Services Provided		144.1		108.8		32.4	%
Operating Revenues		1,798.6		1,657.1		8.5	%
Electricity		796.5		783.8		1.6	%
Fuel		101.0		47.0		115.0	%
Sundry materials and goods for resale		55.4		56.7		-2.2	%
Supplies and services		146.7		151.4		-3.1	%
Personnel costs		160.2		166.4		-3.8	%
Concession fees		46.7		44.0		6.2	%
Other operating costs (or revenues)		2.7		(2.1	)	—
Own work capitalised		(45.2	)	(51.0	)	11.3	%
Operating costs		1,263.9		1,196.1		5.7	%
EBITDA		534.7		461.0		16.0	%
EBITDA/Revenues		29.7	%	27.8	%	1.9	p.p.
Depreciation		209.0		199.0		5.0	%
Compensation of subsidised assets’ deprec.		(18.1	)	—		—
Provisions		19.9		27.3		-27.2	%
EBIT		323.9		234.7		38.0	%
EBIT/Revenues		18.0	%	14.2	%	3.8	p.p.
Financial Results		(94.6	)	(71.5	)	-32.3	%
Extraordinary Results		(7.1	)	23.4		—
Pre-tax profit		222.2		186.6		19.1	%
Income Taxes		76.9		67.4		14.0	%
Defered Taxes		(28.1	)	(6.4	)	-337.3	%
Minorities		(7.3	)	(6.9	)	-6.4	%
Net Profit		180.8		132.5		36.5	%

 

Changes in EBITDA 1Q2003 - 1Q2004 (€ m)

 

 

Note: In the 1Q2004, ‘Other Operating Revenues’ identified in the above chart include ‘Services Provided’ and ‘Other Sales’ which were formerly accounted as Eletricity Sales

 

Consolidated EBITDA build-up 1Q2004 (€ m)

 

 

21

 

Consolidated Balance Sheet and Cash Flow Statement

 

Assets (€ m)		1Q2004		YE2003
Fixed assets		15,055.2		15,084.1
Intangible assets, net		1,821.2		1,849.7
Tangible assets, net		11,649.9		11,651.6
Financial Investments, net		1,584.1		1,582.8
Currents assets		2,594.6		2,334.8
Inventories		152.3		159.2
Accounts receivable - trade, net		972.7		921.5
Accounts receivable - other, net		1,204.4		966.6
Cash and cash equivalents		265.1		287.5
Accruals and Deferals		737.0		622.4
Deferred Tax		602.0		609.3
Total assets		18,988.8		18,650.7
Shareholders’ equity (€ m)		1Q2004		YE2003
Share capital		3,000.0		3,000.0
Own shares		(49.5	)	(49.0	)
Retained earnings and other reserves		2,064.9		1,965.9
Net profit for the year		180.8		381.1
Shareholders’ equity		5,196.3		5,298.0
Minority interest		233.3		236.5
Hydrolicity correction account		378.4		387.5
Liabilities (€ m)		1Q2004		YE2003
Provisions		801.2		819.6
Financial Debt		7,362.5		7,492.7
Short-term debt & current portion of long-term debt		1,342.0		1,457.5
Long-term debt		6,020.4		6,035.3
Current liabilities		2,179.2		1,781.9
Accounts payable - trade, net		681.5		782.6
Accounts payable - other, net		1,497.7		999.3
Accruals and Deferals		2,233.5		2,018.4
Deferred Tax		604.5		616.1
Total liabilities		13,180.8		12,728.7
Total liabilities and shareholders’ equity		18,988.8		18,650.7

 

Cash Flow (€ m)		1Q2004
Net Profit		180.8
Tariff Adjustment		45.0
Depreciations		209.0
Compensation of subsidised assets depreciation		(18.1	)
Goodwill Amortization		23.4
Net Provisions		(6.4	)
Interests Hydraulicity Account		2.5
Other Adjustments (Equity Method, Forex Differences and Other)		0.3
Add back: Net Financial Interests and other financial costs (or revenues)		86.7
Operating Cash Flow before Working Capital		523.2
Change in Operating Working Capital		(48.2	)
Operating Cash Flow		475.0
Capex		(143.3	)
Net Operating Cash Flow		331.8
Divestments of Fixed Assets		3.9
Net Financial Investments		(3.6	)
Net Financial Interests and other financial costs (or revenues)		(86.7	)
Dividends Paid and Results Distributed to Employees		—
Other Canges in Non-Operating Working Capital		(115.1	)
Decrease/(Increase) in Financial Debt		130.3

 

•  The EDP’s Group net operating cash-flow in the 1Q2004 amounted to €331.8 million.

 

•  The core business is still the main contributor with EDP Produção and EDP Distribuição accounting for 90% of total cash-flow (see page 27).

 

•  The postponed investment at TER CCGT’s second unit had a positive impact on the 1Q2004 cash-flow.

 

•  The cash-flow generation at the core business enabled the EDP Group to reduce its financial debt in €130.3 million from €7,493.7 million in 2003 to €7,362.5 million in the 1Q2004.

 

22

 

Income Statement by Business Areas

 

1Q2004 (€ m)		EDP Produção (1)		Renewables		EDP Distribuição		HC (2)		Brazil (3)		ONI		Information Technology		EDP Consolidated
Electricity Sales		332.7		5.7		880.9		163.8		257.2		—		—		1,584.9
Other Sales		5.3		—		0.6		11.0		—		2.0		8.8		69.6
Services Provided		16.2		—		5.9		5.2		17.4		83.3		45.2		144.1
Operating Revenues		354.3		5.7		887.5		180.0		274.5		85.2		54.1		1,798.6
Electricity & Gas		6.7		—		565.1		75.9		174.9		—		—		796.5
Fuel		75.5		0.4		—		25.0		0.1		—		—		101.0
Sundry materials and goods for resale		0.6		—		23.6		18.0		2.8		1.5		8.7		55.4
Supplies and services		12.0		0.3		47.8		8.8		13.9		64.4		21.9		146.7
Personnel costs		29.8		0.2		92.9		9.5		17.2		11.7		14.9		160.2
Concession fees		0.2		0.1		46.4		—		—		—		—		46.7
Other operating costs (or revenues)		(2.0	)	0.0		(2.9	)	3.3		1.7		(0.9	)	(0.6	)	2.7
Own work capitalised		(3.7	)	(0.3	)	(39.4	)	(0.7	)	—		(0.0	)	(1.0	)	(45.2	)
Operating costs		119.0		0.8		733.5		139.9		210.5		76.7		43.9		1,263.9
EBITDA		235.2		4.9		153.9		40.2		64.0		8.6		10.2		534.7
EBITDA/Revenues		66.4	%	86.6	%	17.3	%	22.3	%	23.3	%	10.0	%	18.9	%	29.7	%
Depreciation		55.9		1.0		86.6		16.5		14.0		15.6		7.4		209.0
Compensation of subsidised assets’ depreciation		(1.0	)	(0.0	)	(16.7	)	(0.3	)	—		—		—		(18.1	)
Provisions		2.8		0.0		12.5		0.1		2.9		0.6		0.1		19.9
EBIT		177.5		3.9		71.6		23.9		47.1		(7.7	)	2.7		323.9
EBIT/Revenues		50.1	%	69.2	%	8.1	%	13.3	%	17.2	%	-9.0	%	5.0	%	18.0	%
Financial Results		(25.2	)	(0.3	)	(8.3	)	(15.4	)	(17.1	)	(12.8	)	(2.7	)	(94.6	)
Extraordinary Results		(2.4	)	(0.1	)	0.6		0.3		3.8		(1.8	)	(0.7	)	(7.1	)
Pre-tax profit		149.8		3.5		63.9		8.8		33.8		(22.2	)	(0.7	)	222.2
Income taxes		41.1		1.0		28.3		3.5		13.2		(2.1	)	0.7		48.8
Minority interests		(0.1	)	—		—		1.7		2.3		(0.0	)	(0.6	)	(7.3	)
Net Profit		108.8		2.5		35.6		3.7		18.3		(20.1	)	(0.8	)	180.8

 

Note: Business segment accounts not audited

(1)          The Special Regime Producers (SRP) Enernova and EDP Bioeléctrica (Renewable Energy) were excluded from the EDPP consolidation perimeter

(2)          40% Consolidation; When consolidated into EDP, the accounting item “Variation in Production” of Hidrocantábrico’s Special Regime Activity is accounted as “Other operating costs” (in page 12 and 13 Hidrocantábrico accounts as revenues)

(3)          The accounts presented above do not correspond to the statutory accounts presented in the Brazil section (page 16), and are used for consolidation purposes in the EDP Group. The main difference is the asset revaluation on Bandeirante, Escelsa and Enersul taken only into consideration for accounting purposes in Portugal.

 

23

 

1Q2003 (€ m)		EDP Produção (1)		Renewables		EDP Distribuição		HC (2)		Brazil (3)		ONI		Information Technology		EDP Consolidated
Electricity Sales		284.9		3.6		897.2		135.4		205.0		—		—		1,531.9
Other Sales		4.8		—		0.4		—		—		1.3		7.7		16.4
Services Provided		(2.5	)	—		5.3		—		—		80.7		43.8		108.8
Operating Revenues		287.3		3.6		903.0		135.4		205.0		81.9		51.4		1,657.1
Electricity		5.0		—		590.1		69.5		135.5		—		—		783.8
Fuel		46.4		0.6		—		18.8		—		—		—		47.0
Sundry materials and goods for resale		1.4		—		24.6		0.6		1.9		42.5		6.4		56.7
Supplies and services		11.5		0.4		49.7		7.8		13.4		25.0		20.3		151.4
Personnel costs		29.6		0.3		99.3		8.0		13.6		17.4		18.2		166.4
Concession fees		0.9		0.1		42.8		—		—		—		—		44.0
Other operating costs (or revenues)		(1.1	)	0.1		(2.2	)	0.5		0.7		0.6		(0.7	)	(2.1	)
Own work capitalised		(3.8	)	(0.2	)	(40.9	)	(1.1	)	—		(0.0	)	(3.5	)	(51.0	)
Operating costs		89.7		1.2		763.4		104.1		165.1		85.5		40.8		1,196.1
EBITDA		197.6		2.4		139.6		31.3		39.9		(3.5	)	10.6		461.0
EBITDA/Revenues		68.8	%	66.8	%	15.5	%	23.1	%	19.5	%	-4.3	%	20.6	%	27.8	%
Depreciation		57.7		1.0		85.4		12.9		15.9		16.9		5.4		199.0
Provisions		2.4		0.0		17.4		0.5		3.9		0.5		0.1		27.3
EBIT		137.5		1.4		36.7		17.9		20.1		(21.0	)	5.1		234.7
EBIT/Revenues		47.9	%	40.1	%	4.1	%	13.3	%	9.8	%	-25.6	%	9.9	%	14.2	%
Financial Results		(21.7	)	(0.2	)	(8.3	)	(14.9	)	7.1		(11.7	)	(2.5	)	(71.5	)
Extraordinary Results		2.3		0.1		24.4		2.0		(1.6	)	(3.4	)	0.1		23.4
Pre-tax profit		118.2		1.4		52.8		5.0		25.6		(36.1	)	2.6		186.6
Income taxes		49.7		0.5		16.9		(7.5	)	9.4		(2.9	)	1.7		61.0
Minority interests		(0.2	)	—		—		0.9		8.8		(0.1	)	(0.0	)	(6.4	)
Net Profit		68.7		0.9		35.9		11.6		7.5		(33.2	)	1.0		132.1

 

Note: Business segment accounts not audited

(1)          The Special Regime Producers (SRP) Enernova and EDP Bioeléctrica (Renewable Energy) were excluded from the EDPP consolidation perimeter

(2)          40% Consolidation; When consolidated into EDP, the accounting item “Variation in Production” of Hidrocantábrico’s Special Regime Activity is accounted as “Other operating costs” (in page 12 and 13 Hidrocantábrico accounts as revenues)

(3)          The accounts presented above do not correspond to the statutory accounts presented in the Brazil section (page 16), and are used for consolidation purposes in the EDP Group. The main difference is the asset revaluation on Bandeirante, Escelsa and Enersul taken only into consideration for accounting purposes in Portugal.

 

24

 

Balance Sheet by Business Areas

 

1Q2004 (€ m)		EDP Produção (1)		Renewables		EDP Distribuição		HC (2)		Brazil (3)		ONI		Information Technology		EDP Consolidated
Intangible assets		6.3		0.0		0.9		597.1		47.9		259.9		68.5		1,821.2
Fixed assets		4,194.3		135.9		4,376.6		1,098.2		1,316.5		226.5		88.1		11,649.9
Financial Investments		36.5		0.0		0.2		38.9		15.0		1.7		0.6		1,584.1
Other assets		1,080.4		12.7		987.1		127.1		573.9		231.3		98.5		2,329.4
Cash and Equivalents		6.4		0.0		39.8		28.1		85.6		2.1		3.3		265.1
Accruals and deferrals		35.1		4.2		12.6		21.4		361.6		125.0		35.6		1,338.9
Total assets		5,359.1		152.8		5,417.1		1,910.8		2,400.6		846.6		294.6		18,988.8
Provisions		94.7		0.2		347.2		33.1		172.7		32.2		2.4		801.2
Financial debt		2,408.4		51.9		778.1		764.1		889.0		716.8		97.5		7,362.5
Other liabilities		741.1		60.9		1,050.0		147.0		445.6		215.5		118.1		2,179.2
Accruals and deferrals		100.0		4.7		1,639.3		109.3		259.5		51.7		22.1		2,838.0
Total liabilities		3,344.1		117.7		3,814.6		1,053.4		1,766.8		1,016.2		240.1		13,180.8
Hydrolicity correction account		—		—		—		—		—		—		—		378.4
Minority interests		0.1		—		—		177.5		101.4		0.0		2.6		233.3
Shareholders’ equity		2,014.9		35.1		1,602.5		679.9		532.3		(169.7	)	51.9		5,196.3
Total liabilities + equity		5,359.1		152.8		5,417.1		1,910.8		2,400.6		846.6		294.6		18,988.8

 

Note: Business segment accounts not audited

(1)          The Special Regime Producers (SRP) Enernova and EDP Bioeléctrica (Renewable Energy) were excluded from the EDPP consolidation perimeter

(2)          40% Consolidation

(3)          The accounts presented above do not correspond to the statutory accounts presented in the Brazil section (page 16), and are used for consolidation purposes in the EDP Group. The main difference is the asset revaluation on Bandeirante, Escelsa and Enersul taken only into consideration for accounting purposes in Portugal.

 

25

 

2003		EDP Produção				EDP								Information		EDP
(€ m)		(1)		Renewables		Distribuição		HC (2)		Brazil (3)		ONI		Technology		Consolidated
Intangible assets		6.7		0.0		0.8		607.7		44.2		283.6		70.8		1,849.7
Fixed assets		4,241.6		126.1		4,389.2		1,088.4		1,255.1		230.0		95.4		11,651.6
Financial Investments		7.7		0.0		0.2		40.7		53.5		1.4		0.5		1,582.8
Other assets		1,015.8		10.5		1,009.5		108.8		617.1		193.6		82.6		2,047.3
Cash and Equivalents		10.1		0.1		30.3		42.3		83.9		6.2		2.4		287.5
Accruals and deferrals		68.5		4.2		12.7		14.3		346.5		118.7		27.1		1,231.8
Total assets		5,350.4		140.9		5,442.6		1,902.0		2,400.2		833.5		278.8		18,650.7
Provisions		92.8		0.2		341.1		39.2		164.1		37.2		2.3		819.6
Financial debt		2,487.7		52.2		778.1		786.1		829.5		682.9		89.2		7,492.7
Other liabilities		754.7		51.5		1,187.6		131.2		519.9		199.7		114.8		1,781.9
Accruals and deferrals		138.0		4.4		1,568.8		94.0		259.3		46.4		15.3		2,634.5
Total liabilities		3,473.2		108.3		3,875.6		1,050.5		1,772.8		966.2		221.6		12,728.7
Hydrolicity correction account		—		—		—		—		—		—		—		387.5
Minority interests		0.2		—		—		175.3		96.2		0.1		3.3		236.5
Shareholders’ equity		1,877.1		32.6		1,566.9		676.2		531.2		(132.8	)	53.8		5,298.0
Total liabilities + equity		5,350.4		140.9		5,442.6		1,902.0		2,400.2		833.5		278.8		18,650.7

 

Note: Business segment accounts not audited

 

(1)   The Special Regime Producers (SRP) Enernova and EDP Bioeléctrica (Renewable Energy) were excluded from the EDPP consolidation perimeter

 

(2)   40% Consolidation

 

(3)   The accounts presented above do not correspond to the statutory accounts presented in the Brazil section (page 16), and are used for consolidation purposes in the EDP Group. The main difference is the asset revaluation on Bandeirante, Escelsa and Enersul taken only into consideration for accounting purposes in Portugal.

 

26

 

Cash Flow by Business Areas

 

1Q2004						EDP								Information		EDP
(€ m)		EDP Produção		Renewables		Distribuição		HC (1)		Brazil		ONI		Technology		Consolidated
Net Profit		108.8		2.5		35.6		3.7		18.3		(20.1	)	(0.8	)	180.8
Tariff Adjustment		—		—		41.1		—		3.9		—		—		45.0
Depreciation		55.9		1.0		86.6		16.5		21.9		15.6		7.4		209.0
Compensation of subsidised assets depreciation		(1.0	)	(0.0	)	(16.7	)	(0.3	)	—		—		—		(18.1	)
Goodwill Amortisation		—		—		—		8.3		0.1		3.9		1.3		23.4
Net Provisions		2.1		0.0		7.5		0.1		2.7		(0.5	)	0.1		(6.4	)
Interests Hydraulicity Account		—		—		—		—		—		—		—		2.5
Other Adjustments (Equity Method, Forex Differences and Other)		(0.1	)	—		0.6		0.4		(3.2	)	(0.0	)	0.8		0.3
Add back: Net Financial Interests and other financial costs (or revenues)		25.4		0.3		12.8		7.9		23.7		8.3		1.5		86.7
Operating Cash Flow before Working Capital		191.1		3.9		167.4		36.6		67.4		7.3		10.4		523.2
Investment in Operating Working Capital		40.4		(4.7	)	(44.9	)	4.8		(20.2	)	2.6		2.3		(48.2	)
Operating Cash Flow		231.6		(0.8	)	122.6		41.3		47.2		9.8		12.7		475.0
Capex		(8.3	)	(10.8	)	(47.4	)	(25.8	)	(38.5	)	(6.3	)	(2.9	)	(143.3	)
Net Operating Cash Flow		223.2		(11.6	)	75.2		15.5		8.7		3.5		9.8		331.8

 

(1)   40% Consolidation

 

27

 

SIGNATURES

 

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

Dated May 3, 2004

 

 

	EDP- Electricidadé de Portugal
	By:	/s/ João Ramalho Talone
	Name: João Ramalho Talone
	Title: Chief Executive Officer

 

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