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InstitutionalAugust, 2010
2
AES Brasil Group
85.4%
14.6%Discos
97.0%
3.0%Gencos
Market Share¹
1 -
Source: Abradee
(Discos) and
Aneel
(Gencos) -
Data as of
December
2008
7 million clients6 thousand AES People
2009 Results:• Ebtida
-
R$ 3.2 bi• Net Income
-
R$ 1.9 bi
Investments 1998-2009: R$ 5.8 bi after privatization
3
AES EletropauloTelecom
AESTietê
AESEletropaulo
Shareholding structure
C 99.99 %T 99.99 %
C 99.99%T 99.99%
AESCom Rio
C = Common SharesP = Preferred Shares
T = Total
C 76.45%P 7.38%T 34.87%
Cia. Brasiliana de Energia
AES Corp BNDES
C 50.00% - 1 shareP 100%T 53.85%
C 50.00% + 1 shareP 0.00%T 46.15%
C 71.35%P 32.34%T 52.55%
C 98.25%T 98.25%
AESSul
T 99.70%
AESUruguaiana
AESInfoenergy
C 99.00%T 99.00%
4
24.2% 28.3% 39.5%
16.1% 19.2% 56.2%
8.0%
8.5%
Others¹Free Float
Shareholding composition
1 –
includes Federal Government and Eletrobrás
shares in AES Eletropaulo and AES Tietê, respectively
6
AES Eletropaulo overview
Largest electricity distribution company in Latin America
Serving 24 municipalities in the São Paulo Metropolitan area
Concession area with the highest GDP in Brazil:
17.3% of the Brazilian GDP and 50.9% of São Paulo’s state GDP (2007)
46 thousand kilometers of lines
4,526 km2 of concession area
1.1 million electricity poles
4,557 employees
6.0 million of consumption units
Total distributed volume of 41 TWh in 2009
Concession contract valid until 2028
Concession Area
7
0200400600800
1,0001,2001,4001,6001,800
AES ELETROPAULO
COELBALIGHT
CEMIG
CPFL PAULISTAELEKTROCELPE
AMPLA
COELCECEMAR
BANDEIRANTECOPEL
RGE
CEMAT
01,0002,0003,0004,0005,0006,0007,0008,0009,000
AES ELETROPAULO
CEMIG
LIGHT
CPFL PAULISTACOPEL
COELBACELESCAMPLA
ELEKTROCELPE
COELCEBANDEIRANTECPFL PIRATININGA
RGERanking for energy distributors
Net Revenue – R$ Million2008 2009
Ebitda – R$ Million
1st
1st
1st
1st
Source: Abradee
(Brazilian Association of Energy Distributors); research among 29 energy distributors in Brazil
8
Consumption evolution
Total Market (GWh1) 1H10 Consumption Share (GWh1)
Free ClientsCaptive market
2007 2008
410
39,93241,243
32,577
7,355
33,860
7,383
34,436
6,832
41,269
2009 1H09 1H10
Free Clients
Commercial
Residential
Others
Industrial
37%14%
17%
26%
6%CAGR: 1%
1 –
Net of own consumption
3,8113,293
16,611
19,904
17,437
21,248
9
Residential (GWh¹) – CAGR 2007-09: 4% Commercial (GWh¹) – CAGR 2007-09: 2%
Industrial (GWh¹) – CAGR 2007-09: -2% Captive Market¹ (GWh¹) – CAGR 2007-09: 2%
Main consumption classes
10,301
5,282
6,559 33,86034,436
6,032
15,015
13,50014,427
6,475 32,577
10,0727,564
7,236 5,556
2,792 2,98916,611
17,437
10,752
2007 2008 1H102009 1H09 2007 2008 1H102009 1H09
2007 2008 1H102009 1H09 2007 2008 1H102009 1H09
1 –
Net of own consumption
10
Consumption
Free Clients
3,293 3,451
Captive Market
16,611 17,437
Residential Industrial Commercial Public Sector and
Others
Total Market
Consumption Evolution (GWh¹)
1,3015,282
2,7927,236
1,328
7,564
2,9895,556
1H101H09
+4.5 % +5.2 % +2.1 % +5.0%
1 –
Net of own consumption
+7.1 % +4.8%
19,904 21,248
+6.7%
11
Investments amounted R$ 229 million in 1H10
Investments Breakdown (R$ million) Investments 1H10
Paid by customers
2007 2008
364410
69
433457
Own resources
47
195
21318
1H09
213
22916
1H102009
516
478
37
2010(e)
637
54691
Customer service / System expansion
Paid by the clientsLosses recovery
Maintenance
IT Other
51%14%
22%
7%3%3%
12
SAIFI - System Average Interruption Frequency Index SAIDI - System Average Interruption Duration Index
SAIDI & SAIFI
Source: ABRADEE, ANEEL e AES Eletropaulo
ABRADEE ranking position between 28 distributors with over 500 thousand consumers
9.208.90
2007 2008
SAIDI (hours) SAIDI Aneel Target
13.39
1H10
11.34 10.92
2009
3o
1H09
►
2010 SAIDI ANEEL Target: 9.32 horas
5o
11.86
10.09
10.47
2007 2009 1H09
SAIFI (times) SAIFI Aneel Target
7.878.49 8.41
1o
1H10
►
2010 SAIFI ANEEL Target: 7.39 times
1o
5.64 5.20 5.48
2008
6.17 6.73
13
Losses (%)Collection Rate (% over gross revenue)
Operational indexes
•
Disconnections and Reconnections – Monthly Average (1H09 X 1H10)
–
Disconnections: increase from 84 thousand to 97 thousand
–
Reconnection: increase from 55 thousand to 88 thousand
•
Past due bill credit report (1H10 monthly average): 154 thousand
•
Fraud and Illegal Connections (1H10)
–
139 thousand inspections e 21 thousand frauds detected
–
30 thousand illegal connections regularized
1.6 p.p. 0.3 p.p.
98.5
20092008 1H09
101.5
1H10
102.0101.199.5
2007
5,3
6
20082007 1H10
5.1
6.5
11.6
5.0
6.5
11.5
Commercial Losses Technical Losses
2009
5.3
6,5
11.8
6.5
4.8
6.5
11.3
1H09
6,56.5
5.5
12.0
14
Net revenues of R$ 4.3 billion in 1H10
Net Revenue (R$ million)
2007 2008
7,5297,193
1H09
3,743
8,050
1H10
4,339
2009
CAGR: 4%
15
Operating costs and expenses
Operating Costs and Expenses¹ (R$ million)
PMS² and Other ExpensesEnergy Supply and Transmission Charges
1H09 1H10
1 -
Depreciation not included
2 -
Personnel, Material and Services
2007 2008 2009
1,193
4,700
5,893
1,312
5,110
6,4225,537
1,440
CAGR: 5%
655
2,371
3,026667
2,806
3,473
4,097
16
Ebitda of R$ 1.1 billion in 1H10
Ebitda (R$ million)
2007 2008 1H09
697
1,6961,566
2009
1,573
1H10
1,102
CAGR: 0.1%
17
Net Income (R$ million)
Dividends Pay-out Yield PNB
Net income of R$ 622 million in 1H10
Dividend payout (R$ million)
2007 2008
1,027
713
2009
1,063
•
25% of minimum pay-out according to bylaws •
Since 2006, practice of 95% payout on semi-annually basis
1H10
622
1H09
302
CAGR: 14%
2008 20092007 1H09
625715
1,0431,080
1H10
323
106.7%100.3% 101.5%
14.4%20.3% 20.4%
101.6% 100.5%
6.6%10.8%
18
R$ 489 million paid as dividends in 1H10
Managerial Cash Flow (R$ million)
Operational Cash Generation
1H10
Inicial CashOperating Cash FlowInvestmentsNet Financial Expenses
Net Amortizations
CESP FoundationIncome Tax
DividendsFree Cash Flow
Final Cash
EP Telecom sell
2008 20092007
1,2491,156
(250)(166)251
(91)
(182)
804
1,786
(489)
308
1,5361,893 1,970
(374) (378)(161) (118)(94) (136)
(192) (166)
(295) (189)
777 706
(576) (993)
1,536 1,249
1,3342,488
(407)(501)(182)
(198)
(418)
783
(615)
1,334
1,166
- - -
19
Local Currency (ex Pension Fund)
Debt profile
1 –
Includes 12th and 13th bonds 2 -
Brazil’s Interbank Interest Rate
Amortization Schedule¹ (R$ million)
•
June, 2010:–
Average debt cost in 1H10 was 106% of CDI²
per year or 13.9% per year–
Average debt maturity of 7 years
Net Debt
2007
3.0
2008
2.5
1.8x1.5x
1.8x
2.9
1.7x
1H10
3.0
1H09
1.3x
2009
3.2
Net Debt (R$ billion)
Net Debt / EBITDA Adjusted with Pension Fund
Pension Fund
2010 2011 2012 2013 2014 2015 From 2018 to 2028
20172016
524 251 277 296 525223
553
56
1,361
6539
322 342 365599
301
1,914
312
332
416
71 6974
7984 89
22339
20
Capital market
AES Eletropaulo X Ibovespa X IEE Average Daily Volume (R$ thousand)
2007 2008
26,066 25,677
2009
21,960
1H10
25,165
Jun-09 Sep-09 Dec-09 Mar-09 Jun-10
Last 12 months1
4%18%18%
8090
100110120130140
•
Common shares and preferred shares class A and B listed on BM&FBOVESPA under the tickers ELPL3, ELPL5 and ELPL6.
•
ADRs at US OTC Market under the tickers EPUMY and ELPSY.
1 –
Index: 06/30/2009 = 100
IEE IBOVELPL6
22
AES Tietê overview
•
30 year concession, valid until 2029, renewable for
another 30 years
•
10 hydroelectric plants in the state of São Paulo at Tietê,
Pardo, Grande, and Mogi Guaçu rivers
•
6 small hydro power plants in the state of Minas Gerais
•
Installed capacity of 2,657 MW, with physical guarantee1
of 1,280 MW
•
100% of physical guarantee contracted with AES
Eletropaulo until the end of 2015
•
339 employees
Concession Area
1 -
Amount of energy allowed to be long term contracted
23
Energy Generation (MW average1) Billed Energy (GWh)
Operational Performance
Generation – MW Avg. Generation / Physical Guarantee
130%
1,545 1,512
121%118%
1,665
2007 2008 2009 1H09 1H10
1, 809
1,664
131%138%
1-
Generated energy divided by the amount of hours
MRE
AES Eletropaulo Spot Market
Other Bilateral Contracts
2007 2008 2009 1H09
7,135
1,105
5,534
33
13,42113,148
330
1,680
14,704116
1,740
573
11,108 11,138 11,108
2,331
1,149
1H10
7,880
949
5,653
132
1,146463
24
Investments (R$ million)
Investments
New SHPPsInvestments
1H10 Investments
Equip. and Maint.
Environment IT
New SHPPs
2007 2008
8
5159
3943
20
2009
13
57
44
2010 (e)
58
67
2
1H09 1H10
9
19
13
6
24
22
85%
11%3%
1%
25
Concluded(PPA1)Concluded(PPA1)
AES Tietê has been seeking opportunities to increase its installed capacity to comply with the 15% increase requirement in the State of São Paulo
UnderConstructionUnderConstruction
UnderDevelopmentUnderDevelopment
1 –
Power Purchase Agreement 2 –
Small Hydro Power Plants
Projects - expansion requirement
6 MW of co-generation through biomass, contracted for 15 years beginning in
2010
7 MW of hydro generation through SHPPs2
in Jaguari
Mirim River–
São José
SHPP (4 MW) has an estimated start-up in 1H11–
São Joaquim
SHPP (3 MW) has an estimated start-up in 1H11
550 MW of thermo generation through natural gas–
Location has been defined in Nov/2009–
Environmental licensing process initiated in March 2010–
Technical feasibility study in advanced stage
22 MW of hydro generation through one SHPP, in stage of technical and economic feasibility studies
26
Net Revenues (R$ million)
Net revenues of R$ 862 million in 1H10
2007 2008
1,6051,449
2009
1,670
1H10 Average Prices (R$ / MWh)
AES Eletropaulo 152.00MRE 8.51Spot 40.70
1H09
832
1H10
862
CAGR: 20%
27
Operating Costs and Expenses1 (R$ million)
Energy Purchase, Transmission and Connection Charges, and Water Resources
Other Costs and Expenses2
Operational Provisions
1H101H0920092008
351
410
109 141
239 214
3
2007
350
281
28
CAGR: 5%
103
67
165186
16
108
57
97
55
1 –
Depreciation and amortization not included 2 -
Personnel, Material, Third Party Services and Other Costs and Expenses
Operating costs and expenses
28
Ebitda (R$ million)
Ebitda of R$ 677 million in 1H10
1,254
1,099
2007 2008
1,260
2009 1H09 1H10
677667
CAGR: 5%
29
Net Income (R$ million) Dividend Payout1 (R$ million)
1
-
Gross amount
100 % 100 %
10% 12%
609692
Dividends Pay-out Yield PN
2007 2008
•
25% of minimum pay-out according to bylaws •
Since 2006, practice of 100% payout on quarterly basis
Sustainable profitability and dividend payment
2009
780
11%
100 %
609692
2007 2008 2009
780
414
1H09
411
1H10 1H09 1H10
100 % 100 %
CAGR: 9%
414 411
6% 6%
30
Consolidated Managerial Cash Flow (R$ million)
R$ 379 million paid as dividends in 1H10
Initial CashOperational Cash GenerationInvestmentsNet Financial ExpensesNet AmortizationIncome TaxFree Cash FlowDividends and Interest on EquityFinal Cash
2008 2009
6381.222
(55)(49)
(194)(66)
858(656)
840
8401.243
(58)(48)
(224)(309)
604(829)
615
2007
6881.120
(46)(72)
(197)(247)
558(608)
638
1H10
615714(24)(15)(95)
(361)
218(379)455
31
Debt
Net Debt / EbitdaNet Debt
1H102008 2009
0.40.4
0.3x0.3x
1H09
0.40.4
0.4x0.3x•
R$ 900 million
•
5 years term
•
CDI + 1.20% a.a.
•
Payment on semiannual basis
•
Fixed amortization on the 3rd, 4th, and 5th years
•
Objective: pre-payment of Eletrobras debt
Net Debt (R$ billion) Overlook on 1st Debenture Issuance
2007
0.7
0.6x
321 –
Index: 06/30/09= 100
AES Tietê X Ibovespa X IEE Daily Avg. Volume - R$ thousand
12 months1
+ 18%
+ 18%
+ 2%
8090
100110120130140
Jun-091 Sep-09 Dec-09 Mar-09 Jun-10
Preferred Common
Capital Market
2,101
10,187
8,160
13,974
2,692
5,468
4,606
8,0869,668
9,096
3,566
5, 531
2007 2008 2009 1H10
•
Common shares and preferred shares listed on BM&FBOVESPA under the tickers GETI3 and GETI4.
•
ADRs at US OTC Market under the tickers AESAY and AESYY.
IBOVIEEGETI4
Social Responsibility and
Environmental Actions
34
Social responsibility
•
Launched in December, 2008;•
Objective: to get the co-workers committed to the transformation of low income communities and development of non-governmental institutions;
•
1,137 volunteers
Volunteering Program
Acting to Transform
Distributing Energy of
Good
Specific social mobilization or emergency campaign.
Winter clothes, Christmas campaign, among others.
Opportunities for volunteering in social organizations, which are
partners of AES Brazil
Co-workers can enroll in volunteer activities available at AES Brazil volunteering portal
since September/09www.energiadobem.com.br
35
•
300 benefited children between 1 and 6 years old
•
Own investments amounting R$ 1.5 million in 2009
•
Units: Santo Amaro and Guarapiranga
•
Over 6.7 thousand children, teenagers,
and adults have been benefited
•
Own and incentive investments:
approximately R$ 15 million in 2009
•
Activities of acting, dancing, circus arts, visual arts, music, gymnastics, courses of income generation, and education of safe use of electrical power and the right use of natural resources
•
6 operating units
“Casa da Cultura e Cidadania” Project
“Centros Educacionais Infantis Luz e Lápis” - Project
Social responsibility
Attachments
37
Shareholders Agreement
Main Highlights
Shareholders can dispose its share at any time, considering the following terms:
•
Right of 1st Refusal
-
Any party with an intention to dispose its shares, should first
provide the other party the right to buy that participation at the same price offered by a third party
•
Tag Along Rights
-
In the case of change in Brasiliana’s
control, tag along rights are triggered for the following companies (only if AES is no longer controlling shareholder):
-
AES Eletropaulo: Tag along of 100% in its common and preferred B shares and 80%
in its preferred A shares-
AES Tietê: Tag along of 80% in its common shares-
AES Elpa: Tag along of 80% in its common shares
•
Drag Along Right for Brasiliana
-
Once the offering party exercises the Drag Along clause, offered party is obligated to dispose of all its shares at the time, if the Right of 1st
Refusal is not exercised by offered party
On December 22, 2003 AES and BNDES signed a Shareholders’ Agreement to regulate their relationship asshareholders of Brasiliana and its controlled companies. The Agreement is available at www.aeseletropaulo.com.br/ri
38
Energy sector agents in Brazil
Ministry of Mines and Energy (MME)
National Council of Energy Policy (CNPE)
Electric Energy Commercialization Chamber (CCEE)Pricing and clearing of
energy transactions
Electricity Sector Surveillance
Committee (CMSE)
Brazilian Electricity Regulatory Agency
(ANEEL)
Energy Research Enterprise (EPE)
Generation companies
Transmission companies
Distribution companies
Trading companies
System Operator (ONS)
Generator resources scheduling and dispatch
(Monitors energy supply) (Ruling, Inspection & Auditing, Monitoring, and Mediation)
(Generation & Transmission Planning)
(Set Guidelines and Policies)
(Formulates Policies)
39
Energy sector in Brazil (Contracting Environment)
Trading Companies
Free Clients
Spot Market
•
Main auctions (reverse auctions):
–
New Energy (A-5): Delivery in 5 years, 15-30
years regulated PPA
–
New Energy (A-3): Delivery in 3 years, 15-30
years regulated PPA
–
Existing Energy (A-1): Delivery in 1 year, 5-15
years PPA
Regulated Market Free Market
Distribution Companies
PPAs1
Trading Companies
Free Clients
Distribution Companies
Auctions
1 –
Power Purchase Agreement
40
Tariff Reset and Readjustment
•
Tariff Reset is applied each 3 to 5 years −
AES Eletropaulo: each 4 years (next 2011)−
AES Sul: each 5 years (next 2011)−
Parcel A: costs pass trough the tariff−
Parcel B: costs are set by ANEEL
•
Tariff Readjustment: annually −
Parcel A costs pass trough the tariff−
Parcel B cost are adjusted by IGPM +/-
X(1)
Factor
Energy Purchase
TransmissionSector Charges
Investment Remuneration
Depreciation
Reference Company(PMSO)
RemunerationAssetBase
X Depreciation
X WACC
Regulatory Ebitda
Parcel A - Non-Manageable Costs
Parcel B - Manageable Costs
•
Remuneration Asset Base:–
Applicable investments used to calculate the Investment Remuneration (applying WACC) and Depreciation
•
Reference Company:–
Efficient cost structure, determined by ANEEL (National Electricity Agency)
•
Parcel A Costs−
Non-manageable costs that totally pass-
through to the tariff−
Losses reduction improve the pass-
through effectiveness
(1) X Factor: index that capture productivity gains
Discos regulatory methodology (Tariff Reset and Readjustment)
41
Expansion requirement of 15%
Increase installed capacity in Sao Paulo State by 15% (400 MW), either in greenfield
projects or through long term
purchase agreement with new plants
The obligation was supposed to be accomplished by December 2007,
however AES Tietê was not able to comply with this
requirement due to the following restrictions:
–
Insufficient remaining hydro resources within the State of São Paulo
–
Environmental restrictions
–
Insufficiency of gas supply / timing issue
–
More restricted regulation on energy sale established by the New
Model of Electric Sector (Law # 10,848/2004)
which eliminated the self dealing
•
In August 2008, Aneel
informed that the issue is not linked to the concession
•
Popular law action against Federal Government, Aneel, AES Tietê, and Duke
–
Status: Defense filed on first instance in October 2008 by AES Tietê. In December, 2008, the author replied AES
Tietê defense and, since this, both parties are waiting judge movement about the necessity of proves production
•
On July 27, 2009, AES Tietê was notified by the State Government
Attorney’s Office to present arguments on compliance
with the expansion obligation
–
The Company filed a response on July, 29th, which exhausts the procedure for notification. Possible deployment
depends on new manifestation of the Prosecution
The statements contained in this document with regard to the business prospects, projected operating and financial results, and growth potential are merely forecasts based on the expectations of the Company’s Management in relation to its future performance. Such estimates are highly dependent on market behavior and on the conditions affecting Brazil’s macroeconomic performance as well as the electric sector and international market, and they are therefore subject to changes.
Contacts:
+ 55 11 2195 7048
