InstitutionalNovember, 2009
2
7 million clients6 thousand AES People
AES Brasil Group
85,4%
14,6%
Others
AES Brasil
97,0%
3,0%
Discos
Gencos
Market Share ... with a 2008 result:
R$ 3.2 billion (Ebitda)R$ 1.7 billion (net income)
Investments 1998-2008:
R$ 5 billion after privatization
DiscoTrading Co. Telecom
Genco
3
Shareholding structure
C 99.99 %T 99.99 %
C 99.99%T 99.99%
AESCom RJ
O = Common SharesP = Preferred Shares
T = Total
C 76.46%P 7.43%T 34.80%
AESEletropaulo
AESTietê
Cia. Brasiliana de Energia
AES Corp BNDES
C 50.00% - 1 shareC 50.00% + 1 shareP 0.00%T 46.15%
C 71.35%P 32.34%T 52.55%
AES EPTelecom
C 98.26%T 98.26%
AESSul
T 99.76%
AESUruguaiana
AESInfoenergy
C 100.00%T 100.00%
4
24.2% 28.3% 39.5%
16.1% 19.7% 56.2%
7.9%
8.0%
Free FloatFederal
Government or Eletrobras1
Shareholding composition
1 –
Federal Government and Eletrobrás
correspond to AES Eletropaulo and AES Tietê, respectively
5
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)
6
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
7
Tariff Readjustment and Reset
•
Tariff Reset is applied each 3 to 5 years −
AES Eletropaulo: each 4 years−
AES Sul: each 5 years−
Parcel A costs pass trough the tariff−
Parcel B costs are set by ANEEL
•
Tariff Adjustment: 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 Adjustment)
9
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:
–
17.1% of the Brazilian GDP and 50.3% of São Paulo’s state GDP
•
46 thousand kilometers of lines
•
4,526 km2 of concession area
•
1.1 million electricity poles
•
4,143 employees
•
5.9 million of consumption units
•
Total distributed volume of 41 TWh in 2008
Concession Area
São Paulo Metropolitan Area
Regional West
Regional East
Regional South Regional ABC
Regional North
Note –
Data as of Sept. 2009, except GDP which is 2006
10
Ranking¹ for energy distributors
Net Revenue
2007 2008
Ebitda
1st
2nd
1st
1st
1 –
Source: ABRADEE (Brazilian Association of Energy Distributors);
research among 48 energy distributors in Brazil.
Net Revenue - R$ MM
1.000
2.000
3.000
4.000
5.000
6.000
7.000
8.000
AES
ELET
RO
PAU
LO
CEM
IG
LIG
HT
CPF
L PA
ULI
STA
CO
PEL
CO
ELB
A
CEL
ESC
ELEK
TRO
AMPL
A
CEL
PE
BAN
DEI
RAN
TE
CPF
LPI
RAT
ININ
GA
CO
ELC
E
CEL
G
Ebitda - R$ MM
200
400
600
800
1.000
1.200
1.400
1.600
1.800
AES
ELET
RO
PAU
LO
CEM
IG
LIG
HT
CO
ELB
A
CPF
L PA
ULI
STA
CO
PEL
ELEK
TRO
AMPL
A
CEL
PE
CO
ELC
E
AMAZ
ON
AS
CPF
LPI
RAT
ININ
GA
CEM
AR
RG
E
11
Consumption evolution
Free Clients
Commercial
Total Market - (GWh)1 9M09 Consumption Share - (GWh)1
Residential
Others
Industrial
Free Clients
2006 2007 2008
410
38,18339,932
41,243
Captive market
31,656
6,527
32,577
7,355
33,860
7,383
+ 8%
25,105
5,625
25,353
5,024
30,730 30,377
9M08 9M09
8%
37%
14%
17%
26%
6%
1 –
Own consumption not considered
CAGR 2006-08+7%
+2%
+6%
+0%
+2%
121 –
Own consumption not considered
Residential - (GWh)
1Q09
3,494
2Q09
3,742
3Q09
3,978
9M08
10,70811,214
9M09
Commercial - (GWh)
Industrial - (GWh)
1Q09
1,327
2Q09
1,465
3Q09
1,546
9M08
4,8784,337
9M09
1Q09
2,657
2Q09
2,625
3Q09
2,567
9M08
7,6037,850
9M09Captive Market¹ - (GWh)
1Q09
8,118
2Q09
8,493
3Q09
8,742
9M08
25,10425,353
9M09
+ 5% + 3%
+ 1%- 11%
Most important consumption classes
13
Investments amounted up to R$ 324 million in 9M09
Paid by customers
Investments Breakdown – R$ million Investments 9M09
Capex
Maintenance
IT
Others
27%
45%
22%
16%
4%4%
8%
2006 2007 2008 2009e
301364
410
69378
433457
77
47
468
55
523
269
305
36
9M08
298
324
26
9M09
Customer Service and System Expansion
Customer Financed
Loss Recovery
14
SAIDI - System Average Interruption Duration Index
3rd 1st 1st3rd
SAIDI & SAIFI
1 –
Last twelve months
Source: ABRADEE, ANEEL e AES Eletropaulo
9.208.907.87
2006 2007 2008
11.81 11.34 10.92
11.01
9M09¹ 2006 2007 2008
5.64 5.205.52
8.618.49 8.41
5.78
9M09¹
3rd 5th
SAIFI - System Average Interruption Frequency Index
SAIDI (hours) SAIFI (times)SAIDI Aneel Target SAIFI Aneel Target
ABRADEE ranking position between 28 distributors with over 500 thousand consumers
15
Operational indexes
•
Disconnections and Reconnection – Monthly Average (9M08 X 9M09)
–
Disconnections: increase from 233 thousand to 733 thousand
–
Reconnection: increase from 248 thousand to 488 thousand
•
Past due bill credit report (9M09 average): 190 thousand
•
Fraud and Illegal Connections (9M09)
–
271,000 inspections e 32,000 frauds detected
–
57,000 illegal connections regularized
1 –
Last 12 months
2 -
Current Technical Losses used retroactively as reference
97.899.599.1
200820072006
5.5 5.1
6.5 6.5
11.612.0
5.0
6.5
11.5
- 1.3 b.p. - 0.4 b.p.
101.497.7
9M0919M081
5.2
6.5
11.6
5.3
6.5
11.8
Commercial Losses Technical Losses²200820072006 9M099M08
Collection Rate – % over gross revenue Losses – %
16
Regulatory WACC (%)
2007 20082006
1,766 1,6961,566
17.115.1
20072003
EMBI+ BR 4.63% 2.21%
Selic target 16.50% 11.25%
2007 2008
7,5297,193
2006
6,852
9M08 9M09
5,8555,540
9M08 9M09
1,1431,140
Net revenue of R$ 5.9 billion in 9M09
Net Revenue – R$ million Ebitda – R$ million
+ 10%
171 –
Gross amount
2 –
Considered 1st semester data
2007 2008
1,027
713
2006
373
+ 175%
9M08 9M09
538496
34.9%
100.3% 101.5%
3.2%
14.4% 20.3%
130
715
1,043
Dividends Pay-out Yield2 PNB
2007 20082006
323
9M09
Net income of R$ 538 million in 9M09
Net Income – R$ million Dividend payout1 – R$ million
•
25% of minimum pay-out according to bylaw•
Practice on semi-annual basis of maximum permitted dividend distribution, since 2006 results
•
Yield2 of 6.3% and pay-out² of 106.7%
18
R$ 663 million paid as dividends in 2009
3Q08 4Q08 1Q09
Initial Cash 1,454 1,373 1,536
613 491 301
(107) (126) (104)
(107) (37) (113)
(21) (40) (184)
(32) (46) (58)
(68) (80) (119)
(359) -
(81) 162 (278)
Final Cash 1,373 1,536 1,258
Managerial Cash Flow – R$ million
-
2Q09
1,258
448
(113)
(45)
(54)
(56)
(83)
(269)
989
(366)
3Q09
989
798
(116)
(98)
(35)
(53)
(45)
155
1,143
(297)
Operating Cash FlowInvestmentsNet Financial ExpensesNet AmortizationsCESP FoundationIncome TaxDividendsFree Cash Flow
19
Debt profile
1 -
Last 12 months of adjusted Ebitda 2 –
Exchange rate in 09/30/2009 –
US$ 1.00 = R$ 1.7781
3 -
Brazil’s Interbank Interest Rate
Net Debt Amortization Schedule – R$ million
3.73.0 2.5
2.1x1.3x 1.2x
2007 20082006
2.7
9M09
1.4x
10
2009
341
524250 250 250
50 125375
78
62 66 7075 80
1,532
2010 2011 2012 2013 2014 2015 2016-2028
Local Currency (w/out Pension Fund)
Net Debt / Adjusted Ebitda1
Net Debt (R$ billion) Pension Fund Foreign Currency2
•
September, 2009:–
Average debt cost is 116.5% of CDI3
per year which means an effective rate of 13.9% per year–
Average debt maturity is 7.3 years
20
Capital market
2006 2007 2008
7,508
26,066 25,677
AES Eletropaulo1 X Ibovespa X IEE
9M09
21,187
IBOVIEEELPL6
90
110
130
150
170
dec-082 feb-09 apr-09 sep-09
64%64%
46%
•
A) 25/02/2009 –
Finsocial
and São Paulo municipality agreement
•
B) 16/04/2009 -
Public Consultation of Tariff Reset
•
C) 16/06/2009 –
Conclusion of Second Periodic Tariff Reset
mar-09 may-09jan-09
AA
BBCC
jun-09 jul-09 aug-09
YTD ’09
Average Daily Volume3 - R$ thousand
1 –
Shares were adjusted by declared dividend of the period under analysis
2 –
Data Base: 12/28/07 = 100
22
AES Tietê overview
•
30 year concession, expires in 2029, renewable for
another 30 years
•
10 hydroelectric plants in the State of São Paulo at Tietê,
Pardo and Mogi Guaçu rivers
•
Installed capacity of 2,657 MW, with assured energy1 of
1,280 MW
•
100% of assured energy contracted with AES
Eletropaulo until the end of 2015
•
310 employees
Concession Area
Água
Vermelha
(1,396 MW)
Nova Avanhandava
(347 MW)
Ibitinga
(132 MW)
Barra
Bonita (141 MW)
Promissão
(264 MW)
Bariri
(143 MW) Mogi-Guaçu
(7 MW)
Euclides
da
Cunha (109 MW)
Caconde
(80 MW)
Limoeiro
(32 MW)
Name and Installed Capacity of AES Tietê’s Plants:
1 -
Amount of energy allowed to be long term contracted
Atlantic Ocean
23
Energy Generation – MW average
Generation – MW average Generation / Assured Energy2
2006 2007 2008
1,424 1,543 1,510
Billed Energy – GWh2
AES Eletropaulo MRE1 Spot Market
13,421
1,740
11,108
13,148330
1,680
11,138
2006 2007 2008
12,774
5361,130
11,108
573
Operational Performance
112%112%121%121% 118%118%
129%129%
1,646
9M09 9M08 9M09
10,336327
1,663
8,346 8,550
10,728607
1,571
September ’09 Prices (R$ / MWh)
AES Eletropaulo 152.00MRE 8.18Spot (9M09 avg.) 39.68
1 -
Energy Reallocation Mechanism 2 -
Amount of energy allowed to be long term contracted
24
Investments – R$ million 9M09 Investments
New SHPP’s1
Investments
1-
Small Hydro Power Plant Jaguari
Mirim and Piabanha
Investments
2006 2007 2008 2009(e)
4912
847
51
5963
3935
43
20
9M09
14
22
33
11
33%
3%
19%45%
Equip. and Maint.
EnvironmentIT
New SHPPs
•
9M09 x 9M08: higher reforestation expending, due to Carbon Credit Project, partially offset by lower investments on Piabanha
SHPP
25
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
26
Concluded(PPA1)Concluded(PPA1)
1 -
Power Purchase Agreement 2 -
Small Hydro Power Plant
AES Tietê has been seeking opportunities to increase its installed capacity to comply with the 15% increase requirement in the State of São Paulo
In ProgressIn Progress
Under EvaluationUnder Evaluation
•
6MW of co-generation by biomass contracted for 15 years (initiating in 2010)
•
7 MW of hydropower generation through SHPPs2
in Jaguari
Mirim
river–
SHPP São José
(4 MW) is expected to begin the operation in 1H10–
SHPP São Joaquim
(3 MW) is expected to begin the operation in 1H10
Projects expansion requirement
•
500 MW of natural gas fired thermo plant–
In stage of defining plant location
•
32 MW of hydropower generation through SHPPs
under technical and economic viability study
27
Net Revenue – R$ million Ebitda – R$ million
2007 2008
1,6211,464
2006
1,387
+ 17%
1,254
1,0991,097
+ 14%
2007 20082006
Net revenue of R$ 1.3 billion in 9M09
1,1861,277
9M08 9M09 9M08 9M09
9361,028
28
Net Income – R$ million Dividend Payout1 – R$ million
1
-
Gross amount 2 -
Average Weighted Price during the Period
100 % 100 % 100 %
12% 10% 12%
614 609692
Dividends Pay-out Yield PN2
2007 20082006
609692
614
+ 13%
2007 20082006
•
25% of minimum pay-out according to bylaw •
Practice on quarterly basis of maximum permitted dividend distribution, since 2006 results
•
Yield2 of 9.4% and pay-out of 100% in 9M09
Sustainable profitability and dividend payment
9M08 9M09
495
636
9M09
636
29
Managerial Cash Flow – R$ million
Strong cash flow
Initial CashOperating Cash FlowInvestmentsNet Financial ExpensesNet AmortizationIncome TaxDividends and IoEFree Cash FlowFinal Cash – Parent CompanyFinal Cash of Subs. And Assoc. CompFinal Cash
3T08 4T08 1T09
812673 783 836332340 337 297(8)(14) (22) (9)
(13)(13) (7) (6)(55)(50) (52) (53)(20)(19) (17) (252)
(409)(134) (188) 0(173)110 53 (24)
639783 836 81225 5 2
641788 840 814
2T09
639316(14)(15)(58)(19)
(199)12
6511
652
3T09
30
Net Debt
2006 2007 2008
0.7
0.4
0.7
0.3x0.6x0.6x
9M09
0.4
0.3x •
Eletrobras Debt
–
Balance: R$ 1,029 million
–
Monthly amortization
–
Maturity: May 15, 2013
–
Interest of 10% p.a. and monetary adjustment of IGP-M
Net Debt (R$ billion)
Net Debt / Ebitda
Debt
31
Daily Average Volume - R$ thousand
Capital market
Preferred Common
5,760
9,067
2006 2007 2008 9M09
2,0031,5722,692
10,109
8,160
5,468
8,106
3,5664,188
5,531
AES Tietê1 X Ibovespa X IEE
1 –
Shares were adjusted by declared dividend of the period under analysis 2
–
Data Base: 12/30/08 =100
IBOV IEEGETI4
9M092
70
100
130
160
190
Dec-08 Mar-09 Jun-09 Sep-09
+ 40%+ 46%+ 64%
Social Responsibility and Environmental Actions
33
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
•
1,100 volunteers
Volunteering Program
Acting to Transform
Enterprising in the Community
\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
Acknowledgement and support of projects for the
development of social organizations.
Volunteers may submit projects to help other
organizations develop. Launch scheduled for January/10.
34
•
302 benefited children between 1 and 6 years old
•
Own investments amounting R$ 1.5 million in 2009
•
Units: Santo Amaro and Guarapiranga
•
Over 6 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
•
5 units operating and another one to be launched in the municipality of Osasco in November, 2009
“Casa da Cultura e Cidadania” Project
“Centros Educacionais Infantis Luz e Lápis” - Project
Social Responsibility
35
•
Carbon Credit–
Clean Development Methodology (CDM) approved by United Nations Framework Convention on Climate Change (UNFCCC), allows up to 10,000 hectare reforestation on reservoir
borders–
AES Tietê
is seeking for good business opportunities, and has not transacted credits so far
•
Reforestation–
One million of seedlings production in seed-plot of Promissão hydroelectric power plant–
Donation of seedlings to the society, rural producers, city halls, and non-governmental organizations
•
Fish Farming–
Reproduction of 2.5 million fishes in 10 reservoirs of AES Tiete's plants
•
Archeological Park–
Community involvement into archeological artifacts conservation and better understanding of its scientific importance
–
Social access to the archeological history of the reservoir area
Environmental actions
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
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