2. AES Brasil Group
7 million clients 2009 results:
Market Share¹ 6 thousand AES People
R$ 3.2 billion (Ebitda)
R$ 1.9 billion (net income)
Discos
14.6%
85.4%
Gencos
3.0%
Investments 1998-2009:
97.0%
R$ 5.8 billion after privatization
Disco Genco
Trading Co. Telecom
1 - Source: Abradee (Discos) and Aneel (Gencos) - Data as of December 2008 2
3. Shareholding structure
AES Corp BNDES
C 50.00% + 1 share C 50.00% - 1 share
P 0.00% P 100%
T 46.15% T 53.85%
Cia. Brasiliana de
Energia
C 76.45% C 71.35%
C 99.99% C 99.00% C 98.25% P 7.38% P 32.34% C 99.99 %
T 99.70% T 99.99% T 99.00% T 98.25% T 34.87% T 52.55% T 99.99 %
AES AES AES AES AES AES AES Eletropaulo
Sul Infoenergy Uruguaiana Com Rio Eletropaulo Tietê Telecom
C = Common Shares
P = Preferred Shares
T = Total
3
4. Shareholding composition
Free Float Others¹
16.1% 19.2% 56.2% 8.5%
24.2% 28.3% 39.5% 8.0%
4
1 – includes Federal Government and Eletrobrás shares in AES Eletropaulo and AES Tietê, respectively
5.
6. AES Eletropaulo overview
Concession Area
• Largest electricity distribution company in Latin America
• Serving 24 municipalities in the São Paulo Metropolitan area
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
• 4,491 employees
Regional West Regional North • 5.9 million of consumption units
Regional South Regional ABC
• Total distributed volume of 41 TWh in 2009
Regional East
• Concession contract valid until 2028
6
7. Ranking for energy distributors
8.000
7.000 Net Revenue - R$ million
6.000
5.000
2007 2008 4.000
3.000
2.000
Net Revenue 1st 1st 1.000
CPFL PAULISTA
BANDEIRANTE
PIRATININGA
ELETROPAULO
AMPLA
COELBA
ELEKTRO
COELCE
CELESC
COPEL
CELPE
CEMIG
CELG
LIGHT
CPFL
AES
1.800
1.600
Ebitda - R$ million
1.400
1.200
1.000
800
Ebitda 2nd 1st 600
400
200
CPFL PAULISTA
ELETROPAULO
PIRATININGA
AMAZONAS
COELBA
ELEKTRO
AMPLA
CEMAR
COELCE
COPEL
CEMIG
CELPE
LIGHT
RGE
CPFL
AES
7
Source: Abradee (Brazilian Association of Energy Distributors); research among 48 energy distributors in Brazil
19. Debt profile
Net Debt Amortization Schedule¹ (R$ million)
1,919
1.8x 1.8x 1.7x
1.5x 1.6x
3.2 1,365
3.0 2.9
2.7
2.5
580 602
56 341 368 74 417 313
316 302
65 70 84 89
66 554
524 528 79
250 276 298 223 333 224
2007 2008 2009 1Q09 1Q10 2010 2011 2012 2013 2014 2015 2016 2017 From 2018
to 2028
Net Debt (R$ billion) Local Currency (ex Pension Fund) Pension Fund
Net Debt / EBITDA Adjusted with Pension Fund
• March, 2010:
– Average debt cost in 1Q10 was 121% of CDI² per year or 14.5% per year
– Average debt maturity of 7 years
1 – Includes 12th and 13th bonds 2 - Brazil’s Interbank Interest Rate 19
20. Capital market
AES Eletropaulo X Ibovespa X IEE Average Daily Volume (R$ thousand)
12 month
180 72,0%
160 26,066
44,7% 25,677 24,538
140 21,960
19,4%
120
100
80
60
Mar-09 Jun-09 Sep-09 Dec-09 Mar-10
1Q10 2007 2008 2009 1Q10
120
13,0%
110
2,6%
100 -0,4%
AES Eletropaulo PFB
IEE – Electric Power Index
90 Ibovespa
Dec-09 Jan-10 Feb-10 Mar-10
20
21.
22. AES Tietê overview
Concession Area
• 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
Atlantic Ocean
• Installed capacity of 2,657 MW, with physical guarantee1
AES Tietê’s Power Plants:
of 1,280 MW
Água Vermelha (1,396 MW) Ibitinga (132 MW)
Nova Avanhandava (347 MW) Euclides da Cunha (109 MW) • 100% of physical guarantee contracted with AES
Promissão (264 MW) Caconde (80 MW)
Eletropaulo until the end of 2015
Bariri (143 MW) Limoeiro (32 MW)
Barra Bonita (141 MW) Mogi-Guaçu (7 MW) • 315 employees
22
1 - Amount of energy allowed to be long term contracted
23. Operational Performance
Energy Generation (MW average1) Billed Energy (GWh²)
155%
137%
130%
121% 1,979
118%
1,753
14,523
1,662 13,421 103
13,148
1,543 1,510 573 330 2,357
1,740 1,680
955
4,164
3,705 49
19
511
563
11,108 11,138 11,108 589
335
2,787 3,015
2007 2008 2009 1Q09 1Q10 2007 2008 2009 1Q09 1Q10
AES Eletropaulo Spot Market2
Generation – MW Avg. Generation / Physical Guarantee
MRE2 Other Bilateral Contracts
1- Generated energy divided by the amount of period hours 2 - Including energy purchased 3 – Considers the difference between the sale
and purchase volume 23
25. Projects - expansion requirement
AES Tietê has been seeking opportunities to increase its installed capacity to comply with the 15%
increase requirement in the State of São Paulo
Concluded
Concluded • 6MW of co-generation by biomass contracted for 15 years (initiating in 2010)
• 7 MW of hydropower generation through SHPPs1 in Jaguari Mirim river
In Progress
In Progress – SHPP São José (4 MW) is expected to begin the operation in 2H10
– SHPP São Joaquim (3 MW) is expected to begin the operation in 2H10
Under
Under • 550 MW of thermo generation through natural gas
Evaluation
Evaluation – Location has been defined in Nov/2009
– Initiation of the environmental licensing process, with entry on CETESB in March/2010
• 22 MW of hydro generation through SHPP, in stage of technical and economic feasibility studies
25
1 - Small Hydro Power Plants
26. Net revenue of
R$ 460 million in 1Q10
Net Revenue (R$ million)
1Q10 Average Prices (R$ / MWh)
AES Eletropaulo 152.00
: 20% MRE 8.51
C AGR
1,670 Spot 18.20
1,605
1,449
460
417
2007 2008 2009 1Q09 1Q10
26
27. Costs and expenses
Costs and Expenses (R$ million)
R: 5%
CAG
475
Depreciation and Amortization 415 416
65
Operational Provisions 65 65 55
3 98
97 92 16
Other Costs and Expenses1 109 141
16 5
Energy Purchase, Transmission 27 30
and Connection Charges,
281 239 214
and Water Resources 48 48
28
2007 2008 2009 1Q09 1Q10
1 - Personnel, Material, Third Party Services and Other Costs and Expenses 27
28. Ebitda of
R$ 378 million in 1Q10
Ebitda (R$ million)
R: 5%
CAG
1,260
1,254
1,099
378
342
2007 2008 2009 1Q09 1Q10
28
29. Sustainable profitability and dividend payment
Net Income (R$ million) Dividend Payout1 (R$ million)
Dividends Pay-out Yield PN
100 % 100 % 100 % 100 % 100 %
11%
9% 10% 12%
R:
CAG
780 780
692 692
609 609
215 239 239
215
2007 2008 2009 1Q09 1Q10 2007 2008 2009 1Q09 1Q10
• 25% of minimum pay-out according to bylaw
• Since 2006, practice of 100% payout on quarterly basis
1 - Gross amount 29
30. R$ 829 million paid as dividends in 2009
Consolidated Managerial Cash Flow (R$ million)
2007 2008 2009 1Q09 1Q10
Initial Cash 688 638 840 840 615
Operational Cash Generation 1.120 1.222 1.243 297 368
Investments (46) (55) (58) (11) (8)
Net Financial Expenses (72) (49) (48) (6) (12)
Net Amortization (197) (194) (224) (53) (60)
Income Tax (247) (66) (309) (253) (328)
Free Cash Flow 558 858 604 (25) (41)
Dividends and Interest on Equity (608) (656) (829) 0 0
Final Cash 638 840 615 814 574
30
31. Debt
Net Debt (R$ billion) Overlook on the 1st Debenture Issue
0.6x
• R$ 900 million
0.3x 0.3x 0.3x 0.3x
• 5 years term
• CDI + 1.20% a.a.
0.7
• Payment on semiannual basis
0.4 0.4 0.4
0.3
• Fixed amortization on the 3rd, 4th, and 5th years
• Objective: pre-payment of Eletrobras debt
2007 2008 2009 1Q09 1Q10
Net Debt Net Debt / Ebitda
31
32. Capital market
AES Tietê X Ibovespa X IEE Daily Avg. Volume (R$ thousand)
13,708
Last 12 Months 10,187
190 8,160
+ 72% 8,086 9,756
170
150 + 45% 5,468
130 + 10%
110 2,692 3,952
2,101
90
Mar-09 Jun-09 Sep-09 Dec-09 Mar-10 2008 2009 1Q10
Preferred Common
1Q10
110
+ 3%
100 0%
AES Tietê PF
- 3%
IEE – Eletric Power Index
90
Ibovespa
Dec-09 Jan-10 Feb -10 Mar-10
32
34. Social responsibility
Volunteering Program
Distributing Acting to Enterprising in
Energy of Transform the Community
Good
Specific social mobilization or Opportunities for volunteering in Acknowledgement and
emergency campaign. social organizations, which are support of projects for the
partners of AES Brazil development of social
organizations.
Winter clothes, Christmas Co-workers can enroll in
campaign, among others. volunteer activities available at Volunteers may submit
AES Brazil volunteering portal projects to help other
since September/09 organizations to develop.
www.energiadobem.com.br Launch scheduled for 1half of
• Launched in December, 2008; 2010.
• Objective: to get the co-workers committed to the transformation of low income communities and development of
non-governmental institutions;
• 1,137 volunteers 34
35. Social responsibility
“Casa da Cultura e Cidadania” Project
• Over 5.2 thousand children, teenagers,
and adults have been benefited
• Own and incentive investments:
approximately R$ 14 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
“Centros Educacionais Infantis Luz e Lápis” - Project
• 302 benefited children between 1 and 6 years old
• Own investments amounting R$ 1.5 million in 2009
• Units: Santo Amaro and Guarapiranga
35
37. Shareholders Agreement
On December 22, 2003 AES and BNDES signed a Shareholders’ Agreement to regulate their relationship as
shareholders of Brasiliana and its controlled companies. The Agreement is available at www.aeseletropaulo.com.br/ri
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
37
38. Energy sector agents in Brazil
Ministry of Mines and
Energy (MME)
(Set Guidelines and Policies)
National Council of
Energy Policy (CNPE)
(Formulates Policies)
Electricity Sector Brazilian Electricity
Energy Research
Surveillance Regulatory Agency
Enterprise (EPE)
Committee (CMSE) (ANEEL)
(Monitors energy supply) (Ruling, Inspection & Auditing, (Generation & Transmission
Monitoring, and Mediation) Planning)
Distribution
companies
Electric Energy Transmission System Operator
Commercialization companies (ONS)
Chamber (CCEE)
Generation Generator resources
Pricing and clearing of scheduling and dispatch
energy transactions companies
Trading
companies
38
39. Energy sector in Brazil
(Contracting Environment)
Regulated Market Free Market
Auctions Spot Market PPAs1
Distribution Companies Trading Companies Trading Companies
Free Clients Free Clients
• Main auctions (reverse auctions):
Distribution
– New Energy (A-5): Delivery in 5 years, 15-30 Companies
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
39
1 – Power Purchase Agreement
40. Discos regulatory methodology
(Tariff Reset and Readjustment)
Tariff Reset and Readjustment
• Tariff Reset is applied each 3 to 5 years • Parcel A Costs
− AES Eletropaulo: each 4 years (next 2011) − Non-manageable costs that totally
Energy pass- through to the tariff
− AES Sul: each 5 years (next 2011)
Purchase − Losses reduction improve the pass-
− Parcel A: costs pass trough the tariff
Transmission through effectiveness
− Parcel B: costs are set by ANEEL Sector Charges
• Tariff Readjustment: annually Reference • Reference Company:
− Parcel A costs pass trough the tariff Company
– Efficient cost structure, determined by
(PMSO)
− Parcel B cost are adjusted by IGPM +/- X(1) Factor ANEEL (National Electricity Agency)
X WACC Investment
Remuneration
• Remuneration Asset Base:
Remuneration
Asset – Applicable investments used to
Base calculate the Investment Remuneration
X Depreciation Depreciation
(applying WACC) and Depreciation
Regulatory Parcel A - Non-Manageable Costs
Ebitda
(1) X Factor: index that capture productivity gains Parcel B - Manageable Costs 40
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 41
42. Contacts:
ri.eletropaulo@aes.com
ri.aestiete@aes.com
+ 55 11 2195 7048
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.
