apre 3 t04
DESCRIPTION
TRANSCRIPT
November 12, 2004November 12, 2004
Results of 3rd quarter 2004Results of 3rd quarter 2004
• Tariff Adjustment and Market
• Finance and Operational Performance
• Debt Profile
• Operating Performance
• Financial Performance
Conclusion
3
4
Tariff Adjustment
1,08%Xa
0,71%Xc
9,61%IGP-M (Jun/30/04)
2,37%Xe
Parcel B multiplying factor (IGPM – X)
X Factor
1,05182
4,43%
18,62%TOTAL ADJUSTMENT + CVA3,39%Total CVA 2003-2004
4,12%50% CVA Deferred 2002-2003
7,51%Total CVA11,11%Total Adjustment
1,70%Total Parcel B9,42%Total Parcel A3,15%National Supply4,70%RGR/CCC/CDE/Other1,57%Itaipu
A
%ParcelsTARIFF ADJUSTMENT 2004
5
858700
2.718
2.238 2.153
2.896
2.204 2.281
Residential Industrial Commercial Other
3Q03 3 Q04
7.966
8.081
3 Q03 3 Q04
6,5%
-1,5%6,0%
-18,4%
1,4%
Comparison of Consumption in GWh
Obs: the graphics do not consider own consumption
6
Comparison of Consumption in GWhFree Clients
2.544
858
2.887
2.1592.320
724
Industrial w/ Free Commercial w/ Free Others w/ Free
3 Q03 3 Q04
13,5%
-15,6%
7,5%
7.966
8.279
8.081
8.828
Total w/ out Free Total w/ Free
3 Q03 3 Q04
6,6%
Obs: the graphics do not consider own consumption
1,4%
7
Actual Situation
Migration of 41Consumers
38Consumers renewed
Contracts
Jan- Sep 2004
4,1%
4,3%
% marketBilled in 2003
Total of 65Free Clients 9,1%
Retention of PotentiallyFree Consumer
• Intensification of visits to consumers
• Value adding to the captive supply through:• The selling of “ Interruptive Energy”• Payments of Bills with Credits of ICMS (Merchandise and Service Circulation Tax)• Energy Efficiency Projects• Benefit Plans (Load Management and Preventive Maintenance)
1 consumer unit which had opted for free client status, decided to return to the captive market
8
2 Q04 3 Q04
Net Revenue 1.714,6
Operating Expense (1.474,9)
EBITDA * 306,6
Financial Revenue(Expense)**
(144,3)
Extraordinary ItemsNet of Tax Effects
(85,4) -0,5%
Net Profit (Loss) 8,1 (6,4)
2.050,3
(1.735,3)
382,2
(164,2)
(85,0)
Results – 3Q 2004 x 2Q 2004
19,6%
17,7%
24,7%
13,8%
-178,9%
10% Growth in Eletropaulo’s billed consumption due to the tariff adjustment (18,62%)Deferment of PIS/COFINS in the amount of R$117,7 million
19% increase on expenses with Electric Energy Purchased for Resale and Transmission Charges82% increase on sector charges
Increase in the Net Operating Revenue
R$ 111,8 million loss in the translation of accounting statements of controlled party, due to the Real appreciation of 8% in the quarter
Increase in the financial expense
(*) Without adjustments(**) Consolidated Result Values
In R$ Million
9
3 Q03 3 Q04
Net Revenue
Operating Expense
EBITDA *
Financial Revenue(Expense)**
Extraordinary ItemsNet of Tax Effects
Net Profit (Loss)
Results – 3Q 2004 x 3Q 2003
20% Growth in Eletropaulo’s billed consumption due to the tariff adjustment (18,62%)1.4% market growthDeferment of PIS/COFINS in the amount of R$117,7 million
18% increase on expenses with Electric Energy Purchased for Resale and Transmission Chargesthe start of amortization of 50% of deferred CVA for the tariff year 2002-2003 and 100% of CVA accumulated in the year 2003-2004increase of 245.1% in Other Operational Expenses
Increase in the Net Operating Revenue
R$ 111,8 million loss in the translation of accounting statements of controlled party, due to the Real appreciation of 8% in the quarter
Increase in the financial and operational expenses
(*) Without adjustments(**) Consolidated Result Values
In R$ Million
1,682.2
(1,358.9)
323.3
(117.1)
7.0 (6.4)
2,050.3
(1,668.1)
382.2
(164.2)
21.9%
22.8%
18.2%
40.2%
-191.2%
(86.0) (85.0) -1.2%
10
R$ 382,2 MM
R$ 23,9 MM
R$ 489 MM
2nd Quarter 2004
R$ 306,6 MM
R$ 74,1 MM RTE
R$ 23,6 MM
R$ 404 MM
R$ 82,9 MM RTE
Adjusted EBITDA
3rd Quarter 2004
EBITDA
Debt Confession IIa
ADJUSTED EBITDA
EBITDA
Debt Confession IIa
ADJUSTED EBITDA
21,0% Increase
11
Investment Trend
321 287361
289
180 217 193289
1998 1999 2000 2001 2002 2003 3Q04 2004E
R$ mn
2004 Investments - R$ million
103
34
Recovery of Losses 14
Personnel 89
Total 289
2004E
Others 49
Customer Service and System Expansion
Maintenance
12
53%68% 71%
22%
47%32% 29%
78%
0%
50%
100%
2001 2002 2003 3Q04
ST LT
ST vs. LT Indebtedness
R$ 5,277 R$ 5,504R$ 5,522 R$ 5,910Million
13
Hedging Strategy
0%
20%
40%
60%
80%
100%
2000 2001 2002 2003 3Q04
Local Currency Hedged Foreign Currency
41%
41%
18% 14%
61%
25%
42%
4%
54%
3%
35%
62%
2%
19%
79% Currently 100% of foreign
currency is hedged
91.9% of foreign currency
exposure is hedged and only
1,6% of total debt remains
unhedged as of Sep 2004
R$3,501 R$5,522 R$5,910 R$5,277 R$5,504
Million
14
Amortization ScheduleR$ million
95 93143 151
100
611
159 140 159 161 196 189 192 194 217 188 220 223 257 224 228 23234 36
75113
129 134139 145
151 157110 104
66
7469 42
83 42 61
45 61
143
44
149
14 31 14 877732
933
149
5
1Q04
2Q04
Dow
n Pa
ymen
t
3Q04
4Q04
Out
stan
ding
Dow
npay
men
t
Pre
Paym
ent**
1Q05
2Q05
3Q05
4Q05
1Q06
2Q06
3Q06
4Q06
1Q07
2Q07
3Q07
4Q07
1Q08
2Q08
3Q08
4Q08
R$ BNDES US$ *
* Conversion rate at Sep. 30, 2004 = US$/R$=2.8586** Relates to the “Capitalization Support to Electric Power Distribution Companies Program”. According to the calculation made by the Company, Eletropaulo would be eligible to receive up to R$ 770 million from this program. We have assumed, in the amortization schedule above, that the Company has received the total amount and made proportional pre-payment of tranches C and D, as agreed with creditor banks.
15
Ratings
Escala International
2000 2001 2002 2003 2004
Moeda Local Fitch
MoedaLocal S&P
Moeda Estrangeira Fitch
Moeda Estrangeira S&P
Escala Nacional
2000 2001 2002 2003 2004
Fitch
S&P
Investment Grade
Non-Investment Grade
Investment Grade
Non-Investment Grade
BBB-
BB
DDD
D
brAA
brA
brDDDbrD
brBB
B
brBB+brA-
B-
16
Corporate Governance
• Implementation of Internal Controls
Obtain the Certification of the internal controls with relation to the Sarbanes Oxley Law by the external audit
Settle procedures and drivers for a better performance of the Company
Facilitate and optimize the employees performances at the Company
Avoid Company’s fraud creating a higher transparency of the information
• By the time the Company adheres to Bovespa Level II, it will be certified with a Corporative Governance Seal which will promote
A higher commitment of the Company with their stockholders (minority and controllers)
Higher transparency on the information given to the Capital Markets
Free Float maintenance of 25% of the total shares
Creation of a Fiscal Council
Higher rights to the preferred share holders
Sarbanes Oxley Law (SOX) BOVESPA Level II
17
18
Contracts PortfolioContracts Portfolio
0%
25%
50%
75%
100%
2003 2004 2005 2006
Piratininga
Nacional
Bragantina
Bandeirante
Elektro
CPFL
Eletropaulo - CI
Eletropaulo - CB
19
• The tariffs of initial Contracts are adjusted annually in accordance with the calculation formula provided for in the Concession Contract:
• The tariff of Bilateral Contracts with Eletropaulo is readjust by IGP Variation
• Along the 3rd, the follows contracts were adjusted:July
Bilateral Contract with Eletropaulo = 9,61%Initial Contracts with Eletropaulo = 6,99%
AugustInitial Contracts with Elektro = 7,95%
• Subsequent Events In October
The Initial Contracts with Bandeirantes and Piratininga were adjusted in 8,36%
Tariff Adjustment Index = VPA + VPB x IGP-MRevenue
Tariff AdjustmentTariff Adjustment
20
Energy Balance Energy Balance –– 9 months9 months
TOTAL
9.075.083
MRE
=
Gross Generation x Billed Energyin MWh
AES Tietê generated more than 8,6% of its assured energy
Caconde234.265*Euclides416.469
Limoeiro121.127
Ibitinga544.989
Bariri495.846
Barra Bonita451.046
Água Vermelha4.860.635
Promissão846.028
Nova Avanhandava1.081.207
Mogi Guaçu23.471
Bandeirante290.732
Nacional103.167
Bragantina169.407
Elektro686.732
Eletropaulo - CI1.458.765
Piratininga427.063
CPFL555.199
Eletropaulo - Bilateral4.137.149
BILLED
8.232.656
*Caconde plant didn't generate energy during the 3rd Quarter because of it's maintenance program.**After deducing own consumption and transmission losses, the difference is addressed to the Energy Reallocation Market - MRE
21
Stored EnergyStored Energy
Source: National System Operator – ONS: October/04
Southeast Reservoirs
10
30
50
70
90
Jan
Feb
Mar
Apr
May Jun
Jul
Aug Sep
Oct
Nov
Dec
GW
- m
onth
2000 2001 2002 2003 2004
22
Statement of Earnings Statement of Earnings –– 33rdrd QuarterQuarter
Net Revenue 15,9%
Operating Expense -5,6%
Ebitda 22,6%
Financial Revenue(Expense)
110,1%
Result before Taxation
Net profit
Increase in IGP-M, occurred mainly in July and August on the debt with Eletrobrás
In addition to the revenue increase, EBIDTA reflects the reduction in operating expenses
Adjustments of MAE’s accounts that occurred in the 3rd quarter of 2003
213,7 247,6
(66,3) (62,6)
163,9 200,9
(37,4) (78,6)
109,8 105,7
Tariff adjustment of three contracts: one bilateral and two initial contracts
3Q03In R$ million 9 months 03
561,4
(166,5)
442,7
(200,9)
193,6
127,5 -3,3%The improvement of operating revenue
was compensated for the increase in financial expenses
72,01 69,7
9 months 04
3Q04
740,9
(200,7)
587,8
(221,1)
318,2
209,9
Conclusion
• Eletropaulo ended the 3rd quarter with increases of 20% in its net revenue and of 25% in its EBITDA, as a result of the tariff adjustment of 18.62% and of the deferral of PIS/COFINS – R$117.7 million
• Eletropaulo has been successful in its program for retention of potentially free customers, reducing its potential loss
• The company has constantly sought operational and commercial excellence, in order to offer increasing quality in the service provided to customers
• Tietê ended the 3rd quarter of 2004 with a profit of 69 million
• The net profit, although impacted by the financial expenses that grew due to the IGP-M, was kept in line with that of the previous quarters
• Tietê will soon make another distribution of dividends to its shareholders, in the amount of R$132.8 million, reinforcing its commitment with both investors and shareholders
24November 12, 2004November 12, 2004
Results of 3rd quarter 2004Results of 3rd quarter 2004