apre 4 t04
TRANSCRIPT
March 3rd, 2005March 3rd, 2005
Results of 2004Results of 2004
• Market
• Finance and OperatingPerformance
• Debt Profile
• Operating Performance
• Finance Performance
Conclusion
Consumers’ Market Share Consumers’ Market Share -- EletropauloEletropaulo
32,7%
28,7%
28,0%
10,6%
2003 - GWh 2004 - GWh
34,5%
26,5%
28,9%
10,1%
40,4%
21,6%
29,9%
8,0%
41,1%
20,8%
30,3%
7,8%
2003 2004
ResidentialIndustrialCommercialOthers
ResidentialIndustrialCommercialOthers
cons
umpt
ion
reve
nue
Comparison of Consumption in Comparison of Consumption in GWhGWh
Ps: the graphics do not consider own consumption
3.473 3.304
10.7279.401 9.174
11.258
8.6709.435
Residential Industrial Commercial Others
2003 2004
32.774 32.668
2003 2004
5,0%
-7,8% 2,9%
-4,8%
-0,3%
Comparison of Consumption in Comparison of Consumption in GWhGWh
10.374
3.473
11.109
9.206 9.579
3.395
Industrial w/ Free Commercial w/ Free Others w/ Free
2003 2004
7,1%4,0%
32.774 33.77932.66835.341
Total w/ outFree
Total w/ Free
2003 2004
4,6%-0,3%
-2,2%
Free Clients
Ps: the graphics do not consider own consumption
Actual Situation
Migration of 44Consumers
40Consumers renewed
contracts
Jan-Dec 2004
4,0%
4,1%
% Total load of the concession area in 2004
(35, 341 GWh)
Total of 68Free Clients 8,7%
Retention of PotentiallyRetention of PotentiallyFree ConsumersFree Consumers
• 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)
9.8% increase on expenses with electric energy purchased and 42.4% increase on transmission chargesIncrease of 24.1% and 200.3% on CCC and CDE expense, respectively:
Stipulated quotasstart of the amortization of the regulatory asset
Results Results –– 20042004
(*) Without adjustments(**) Consolidated Result Values
2003 2004
Net Revenue 6,431.9 15.0%
Operating Expenses (5,636.7)
EBITDA * 1,059.8
Financial Revenue(Expenses)**
23.8
Extraordinary Items Netof Tax Effects
(345.9) -1.4%
Net Profit (Loss) 86.3 5.6 Increase on operating expensesFinancial expense
R$ 546.8 million loss on income from Foreign Currency Monetary Variation, due to the lower rate of appreciation of the Real against the US dollar in 2004In dec/03, 7.5% of the debts were “hedged”, versus 100% in dec/04In dec/03, 38% of the debts were denominated in US$, versus 17% in 2004Negative Adjustments of R$ 207.7 million on hedge contracts
7,394.1
(6,391.3)
1,271.5
(453.1)
(341.0)
The average rate adjustment of 17.9% on July 4, further increased by 0.7% on September 21, 2004Deferred increases in PIS/Cofins taxes with an impact of R$ 154.2 million on the operating result o
Increase in operating revenues, although partially offset by increases in operating expenses
R$ Million
13.4%
20.0%
N.M.
-93.5%
3Q 04 4Q 04
Net Revenue 2,050.3
Operating Expenses (1,735.3)
EBITDA * 382.2
Financial Revenue**Expense
(186.9)
Extraordinary ItemsNet of Tax Effects
(85.0)
Net Profit (Loss) (6.4) 17.5
2,050.3
(1,788.4)
329.6
(23.2)
(85.1)
Results Results –– 4Q 04 x 3Q 044Q 04 x 3Q 04
0.0%
3.1%
2.3% growth in billed consumption14.6% increase on deductions from the operating revenues, due to the stronger impact on the deferral of the PIS/Cofins increases in the 3Q04, of R$ 117.7 million, compared to an impact of R$ 36.5 million in the 4Q04
Increase in operating expenses (2.4%), personnel expenses (31.2%) and materials and third parties services (47.9%)
Increase in operating expenses
198.6% increase of financial income, due to the negative impacts occurred in 3Q04:
Signing of the SP municipality agreement, that generated a reversion of R$ 62.3 million on the monetary variation Reversion of fine provisions
Reduction of Financial expenses
0.1%
-13.8%
-87.6%
N.M
(*) Without adjustments(**) Consolidated Result Values
R$ Million
Adjusted EBITDA Adjusted EBITDA -- R$ MillionR$ Million
R$ 1,271.5 EBITDA without adjustments
R$ 88.2
R$ 1,671.9 Adjusted EBITDA
Debt Confession IIa
2003 2004
13.6% Increase
R$ 1,059.8
R$ 284.2 RTE
R$ 81.7
R$ 46.4
R$ 1,472.1 Adjusted EBITDA
R$ 312.1 RTE
R$ 0.0 Cetemeq Provision
EBITDA without adjustments
Debt Confession IIa
Cetemeq Provision
EBITDA without adjustments
Adjusted EBITDA
Debt Confession IIa
3rd Quarter 2004 4th Quarter 2004
10.6% Decrease
EBITDA without adjustments
RTE
Debt Confession IIa
Adjusted EBITDA
RTE
R$ 382.2
R$ 82.9
R$ 23.9
R$ 489.0
R$ 329.6
R$ 21.5
R$ 437.3
R$ 86.2
Adjusted EBITDA Adjusted EBITDA -- R$ MillionR$ Million
Total 297
Total Recorded 330
186
297
400 - 450
33
32
2003 2004 2005 (e)
Capex Self-Paid
Investments’ Trend Investments’ Trend -- R$ millionR$ million
2004 Investments
125
33
Losses Recovery 8
Personnel 78
Others 54
Customer Service and System Expansion
Maintenance
Self-Paid 33
LossesLosses
5,6 5,6
7,2 6,7
2003 2004
Technical Losses(1) Commercial Losses(2)
• Intensification of loss recovery plan:
• Regularization of 18 thousand illegal connections
• 320 inspection teams • Advertisement Campaigns to teach
citizens about fraud problems:• Energy theft is crime -
association with police• Dishonest concealment -
association with finance secretary
• Distresses the society, through increases on the tariff – lack of return on part of the investments
(1) Losses resulting from the company’s operations in the transmission and distribution systems. They occur due to the points of overload in the transmission and distribution lines.
(2) Losses resulting from illegal connections, frauds and mistakes in the meter reading.
12,84 12,34
- 4%
ST vs. LT Consolidated IndebtednessST vs. LT Consolidated Indebtedness
53%68% 71%
23%
47%32% 29%
77%
0%
50%
100%
2001 2002 2003 2004
ST LT
R$ 5,278 R$ 5,284R$ 4,490 R$ 5,902
million
Hedging StrategyHedging Strategy
0%10%20%30%40%50%60%70%80%90%
100%
2000 2001 2002 2003 2004
Local Currency Hedged Foreign Currency
41%
41%
18% 14%
61%
25%
42%
4%
54%
3%
35%
62%
17%
83%
Currently 100% of foreign currency debt is hedged
R$3,473 R$4,490 R$5,902 R$5,278 R$5,284
million
Amortization ScheduleAmortization Schedule
143
611
299
130 166 196 225 227 230 246 222 224 226 251 225 227 231
107 82 80 77
107112 116
12678 83
41 78
5279
167
51
144149
101
12118
4024
24 40
24 45
149
4216 80
16
3418
33
4583
Dow
npay
men
t **
Capi
taliz
atio
nP
rogr
am**
*
1Q05
2Q05
3Q05
4Q05
1Q06
2Q06
3Q06
4Q06
1Q07
2Q07
3Q07
4Q07
1Q08
2Q08
3Q08
4Q08
1Q09
2Q09
3Q09
4Q09
R$ BNDES US$ *
* Exchange rate conversion on 12/30/2004 US$/R$=2.6544** “Capitalization Support to Electric Power Distribution Companies Program”, according to which Eletropaulo would be eligible to receive up to R$ 771 million
Amortization made on 01/12/05 with funds from the third trancheof the rationing loan
R$ million
Corporate Corporate GovernanceGovernance
• In Dec. 13, 2004 AES Eletropaulo took the commitment to have closer relations with its various publics, including shareholders and the capital markets
• By the time a company adheres to Bovespa Level II, it is certified with a Corporative Governance Seal which promotes:
• A higher commitment of the Company with their stockholders (minority and controllers)
• Higher transparency on the information given to the Capital Markets
• 25% Free Float of total shares
• Maintenance of a Fiscal Council
• Higher rights to the preferred share holders
19
Tariff AdjustmentTariff AdjustmentTariff AdjustmentThe Initial Contracts are readjusted on a yearly basis according to the following formula as established in the concession contract: :
The Bilateral Contract is readjusted in July of each year according to the variation in the IGP-M index
Tariff readjustment in 2004:
Rate for Tariff Adjustment = VPA + VPB x IGP-MRevenue
Tariff after adjustment(R$ / MWh)
Initial ContractsBragantina February 7.17% 58.10Nacional February 7.17% 61.76CPFL April 6.30% 66.69AES Eletropaulo July 7.14% 69.62Elektro August 7.95% 58.59Bandeirante Energia October 8.36% 71.75Piratininga October 8.36% 71.75Bilateral ContractsAES Eletropaulo July 9.61% 117.59
Company Month of Adjustment % of adjustment
Average Tariff (4Q04):R$ 76.8 / MWh
20
Energy Balance - 2004Energy BalanceEnergy Balance -- 20042004
MRE
=
Energy Generation x Billed Energyin MWh
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
Total energy production was 6.7% over assured
Caconde282,182*Euclides565,161
Limoeiro164,082
Ibitinga718,722
Bariri646,416
Barra Bonita566,091
Água Vermelha6,525,785
Promissão1,056,810
Nova Avanhandava1,385,178
Mogi Guaçu32,545
Bandeirante548,306
Nacional155,728
Bragantina239,566
Elektro920,384
Eletropaulo - CI1,985,427
Piratininga559,739
CPFL1,134,791
Eletropaulo - Bilateral5,618,771
TOTAL
11,942,972
BILLED
11,162,711
21
Stored EnergyStored EnergyStored Energy
Source: Operador Nacional do Sistema – ONS; December/04
Southeast Reservoirs
10
30
50
70
90
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2000 2001 2002 2003 2004
% o
f Max
. Sto
red
Ener
gy
22
Income Statement – 4Q04Income Statement Income Statement –– 4Q044Q04
Net Revenues 10%
Costs 3%
Ebitda 12%
Financial Income (Expenses)
44%
Income Before Taxes and Participations
Net Income
Higher IGP-M index, 1.5 % in 4Q03 to 2.0% in 4Q04 Financial expenses of R$ 15 million do to investments in Banco Santos
Higher EBITDA due to better operational performance
Operational expenses increased less than inflation
Tariff readjustment and the transfer of 25% of energy from initial contracts to bilateral contract Impacted by the increase in PIS and Cofins rates
4Q03R$ million
21.3
(64.3)
169.0
(50.2)
78.9
67.9 20%
Increase due to better operational performance
4Q04
239.8
(66.2)
189.5
(72.2)
101.5
81.6
23
Higher IGP-M index, 8.7% in 2003 to 12.4% in 2004 Financial expenses of R$ 15 million do to investments in Banco Santos
Increase in transmission costs, power purchase, provision of energy purchase from Itaipu, and operational provisions (details in the next slide)
Net Revenues
Costs
Ebitda
Financial Income (Expenses)
Income Before Taxes and Participations
Net Income
779.0 980.8
(231.4) (267.9)
611.8 766.5
(251.2) (293.2)
272.7 419.7
2003R$ million
195.4 291.5
2004
570.1
(194.3)
439.1
(379.9)
(2.5)
2002
(3.8)
Tariff readjustment and the transfer of 25% of energy from initial contracts to bilateral contract 26%
16%
27%
17%
49%
Income Statement – 2004Income Statement Income Statement –– 20042004
Higher EBITDA due to better operational performance
Increase due to better operational performance
24
Costs and Operating ExpensesCosts and Operating ExpensesCosts and Operating Expenses
Payroll
Outsourced Services
Financial Compensationfor Use of Water Resources
Electricity DistributionNetwork
Power Purchased
Depreciation and Amortiz.
Others
Total
em R$ milhões
25.4
17.5
32.4
34.2
23.8
64.2
34.0
231.4
2004
25.7
24.0
35.5
41.7
36.1
63.6
41.3
267.9
2003
Biannual restoration of locks Environment consultingMaintenance of generation equipment
Connection fees Transmissions – increase due to higher volume of energy sold under the bilateral contract
Provision of cost of energy purchased from ItaipuFinancial Exceeds – feb/04 (“Excedente Financeiro”)Power purchase to replace energy from Itaipu
Regulatory feesInsurancesWaterwayR&DOperational provisions
25
Facts Occurred in the 4Q04Facts Occurred in the 4Q04Facts Occurred in the 4Q04
PIS and Cofins
• Increase in PIS and Cofins rates that moved up from 0.65% to 1.65% and 3.0% to 7.6% respectively
• The legislation established that new rates would not apply to long-term, pre-fixed priced contracts signed before October 31, 2003; AES Tietê, as well as all energy-related companies, understood that these new rates would not apply to their contracts
• In November the Brazilian IRS (Receita Federal) clarified that the new rates would apply if the prices of such contracts were adjusted by inflation
• In the 4Q04, AES Tietê booked retroactive PIS and Cofins
Banco Santos
• From a total of R$35.5 millions invested at BancoSantos, R$ 15,0 million refers to Bank Certificate Deposits through an exclusive investment fund and were written off as financial expenses. The remaingR$ 20.5 million invested directed in Bank Certificate Deposits were booked as long term asset and, were considered as loss provision of R$ 4.1 million
• AES Tietê joined to the group of creditors led by KPMG who looking for solutions that would minimize financial expenses
Market Security (accrued)
R$ 15 million
Bank Certificate Deposits (accrued)
R$ 4,1 million
Bank Certificate Deposits
R$ 16,4 million
26
Financial InvestmentsFinancial InvestmentsFinancial Investments
* Rating before the Brazilian Central Bank intervention
Credit Risk: Moody´s Rating – Local Currency (long term)
• Financial investments are allocated as shown bellow:
BRL Federal T Bonds (Ba3) - 76%
Banco Santos (B1*)3%
Foreign Bonds - US$ - (Aa3)
11%
Foreign Bonds - US$ - (Aa1))
9%
Private Bonds (A3) - 1%
27
Capital ExpedituresCapital Capital ExpedituresExpeditures
• Capex in 2004, amounted R$ 21.9 million*, mostly in modernization andmaintenance of equipment
2004 – R$21.9 million2003 – R$12.4 million
EquipmentTelemetryWaterwayEnvironmentalOthers
* Consolidated
28%
6%27%
20%
19%41%
10%18%
20%
11%
28
Capital MarketsCapital MarketsCapital Markets
186 195
292277
95%95%
2003 2004
Dividends Net Income Pay-Out
• In 2004, the common shares had an appreciation of 118% and the preferred shares of 205%. Ibovespa increased 18%
• AES Tietê’s stocks were traded in 98% of all Bovespa’s trading sessions in 2004
• In 2004, R$ 199 million were paid as dividends remaining R$ 77,5 million referring to 4Q04 net income, shall be paid after Annual Shareholders Meeting approval
Dividends – R$ millions
218
305
100
118
-
50
100
150
200
250
300
350
dec jan feb mar apr may jun jul aug sep oct nov dec
GETI3 GETI4 Ibovespa
• Eletropaulo’s R$ 5.6 million net profits in 2004 offset the R$ 11.9 million loss accumulated on the first nine months of the year
• The 15% increase on net revenues and 20% increase on EBITDA, reflect a strong cash generation capacity
• The 0.3% reduction on the billed market, due to the loss of free clients, and the further decrease on revenues, is smoothened by the billing of TUSD and by the proportional reduction on energy purchased
• The company has constantly sought operational and commercial excellence, in order to offer increasing quality in the service provided to customers
• Net income for 2004 was R$ 291.5 million and net margin was 29,7%
• Net income, although impacted by higher financial expenses, increased 49% year over year.
• AES Tietê enforces its commitment to its shareholders and investor increasing, year by year, its operational performance on return the investments made
ConclusionConclusion
March 3rd, 2005March 3rd, 2005
Results of 2004Results of 2004
All statements contained in this declaration related to the outlook of the company’s business, projections of operational and financial results, and growth potential represent mere provisions and were based on management expectations in relation to the future of the company. These expectations are highly dependent on market changes, Brazil’s economic outcome, the energy sector, international markets, being thus subject to change