presentation credit suisse - v brazil equity ideas conference
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1
InstitutionalJanuary, 2012
2
AES Brasil Group
• Presence in Brazil since 1997
• Comprised of four companies in the sectors ofenergy generation and distribution
• 7.4 thousand AES Brasil People
• Investments 1998-2010: R$ 6.9 billion
• Good corporate governance practices
• Sustainable practices in businesses
• Safety as a main value
• Strong cash generation capacity
• 25% of minimum pay-out according to bylaws
• Differentiated practice of dividend distributionsince 2006:
– AES Tietê: 100% of net income on quarterlybasis
– AES Eletropaulo: distribution above theminimum required (25% of net income) onsemi-annual basis
3
(AES Eletropaulo) (AES Sul)
(AES Eletropaulo)
(AES Eletropaulo)
(AES Brasil)
(AES Tietê)
(AES Tietê)
(AES Eletropaulo)
(AES Tietê)
(AES Tietê)(AES Eletropaulo)
(AES Brasil)
AES Brasil widely recognized in 2009-2011
Quality and safety Management excellence Environmental concern
(AES Tietê) (AES Eletropaulo)
(AES Tietê)
4
AESInfoenergy
AESUruguaiana
AESEletropaulo
AESTietê
AES Corp BNDES
C = Common SharesP = Preferred Shares
T = Total
Shareholding Structure
C 99.99%T 99.99%
C 76.45%P 7.38%T 34.87%
Cia. Brasiliana de Energia
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 99.00%T 99.00%
AES Sul
T 99.70%
5
24.2% 28.3% 39.5% 8.0%
8.5%56.2%19.2%16.1%
Others²Free Float¹ ¹
1 - Parent companies, AES Corp and BNDES, have equal voting capital on the Companies: 38.2% on AES Eletropaulo and 35.7% on AES Tietê 2 - Includes Federal Government and Eletrobrás shares in AES Eletropaulo and AES Tietê, respectively3 - Base: 09/30/2011. Considers preferred shares for AES Eletropaulo and preferred and common shares for AES Tietê
R$ 8.5 bi
R$ 4.8 bi
Market Cap³
Listed Companies Shareholding Composition
6CEMIG AES BRASIL NEOENERGIA CPFL TRACTEBEL COPEL EDP LIGHT DUKE CESP
2.3 2.2
1.81.6
1.21.0
0.6 0.6
0.20.1
AES Brasil is the second largest group in electric sectorEbitda1 – 2010 (R$ Billion)
Net Income1 – 2010 (R$ Billion)
1 – excluding Eletrobrás Source: Companies’ financial reports
CEMIG AES BRASIL CPFL NEOENERGIA TRACTEBEL CESP EDP LIGHT COPEL DUKE
4.54.2
3.43.0 2.6
2.0 1.6 1.6 1.5
0.6
71- Sources: ANEEL – BIG (January, 2012) and Companies websites 2- Source: Merrill Lynch3 – Eletrobrás, totaling 35%
³
AES Tietê is the 2nd largest among
private generation companies and 10th
largest overall
Approximately 78% of country’s
generation installed capacity is state-
owned2
There are three mega hydropower plants
under construction in the North region of
Brazil with 18 GW in installed capacity
– Santo Antonio and Jirau (Madeira River): 7 GW
– Belo Monte (Xingu River): 11 GW
Total Installed Capacity: 117 GW
Main privately held Companies
³
³
³
³
³
³
AES Tietê is an important player among private energy generators
Generation Installed Capacity (MW) - 20121
TRACTEBEL 6,1%
AES TIETÊ 2,3%
CPFL2,3%
DUKE1,9%
EDP1,6%
NEOENERGIA1,2%
ENDESA0,8%
LIGHT0,8%
CHESF 9%
FURNAS 8%
ELETRONORTE 8%
ITAIPU 6%
ELETRONUCLEAR3%
CGTEE1%
ELETROSUL0,5%
CESP 6%
CEMIG6%
PETROBRÁS 5%
COPEL4%
DEMAIS26%
8
AES Brasil is the largest distribution group in Brazil
Consumption (GWh) - 2010
Consumers – Dec/2010
• 63 distribution companies in Brazildistributing 419 TWh
• AES Brasil is the largest electricitydistribution group in Brazil:
– AES Eletropaulo: 43 TWh distributed,
representing 10.3% of the Brazilian
market
– AES Sul: 9 TWh distributed,
representing 2.2% of the Brazilian
market
Distribution companies’ operations arerestricted to their concession areas
Acquisitions must be only performed bythe holdings of economic groups
13%
12%
10%
7%6%6%
6%
40%
12%
12%
12%
16%7%7%
5%
30%
A
AES Brasil
CPFL Energia
Cemig
Neo Energia
Copel
Light
EDP
Outros
Energy Sector in Brazil
¹ Interconected National System
² Small Hydro Power Plants Sources: EPE, Aneel, ONS and Merrill Lynch
• 13 groups controlling 76% of total installed capacity
• 22% private sector
• 1,862 power plants
• 115 GW of installed capacity
• 73% hydroelectric
• 17% thermoelectric
• 5% biomass
• 4% SHPP
• 1% Wind
• Contracting environment –free and regulated markets
• 68 companies
• 68% private sector
• High voltage transmission
(>230 kV)
• 98.648 km in extension
lines (SIN)¹
• Regulated public service
with free access
• Regulated tariff (annually
adjusted by inflation)
• 63 companies
• 415 TWh of energy
distributed in 2010
• 68 million consumers
• 67% private sector
• Annual tariff adjustment
• Tariff reset every four or
five years
• Regulated public service
• Regulated contracting
environment
• Consumption of 105 TWh
(25% of Brazilian total market)
• Conventional sources: above 3000 kW
• Alternative sources: between 500 kW e 3000 kW
• Large consumers can purchase energy directly from generators
• Free contracting environment
GenerationTransmissionDistributionFree Clients
Energy Sector in Brazil: business segments
10
11
Distribution CompaniesTrading
Companies
Distribution Companies
Free Clients
Auctions
Energy sector in Brazil:contracting environment
Regulated Market Free Market
Spot Market PPAs1
1 – Power Purchase Agreement
• Main auctions (reverse auctions):
– New Energy (A-5): Delivery in 5 years, 15-
30 years regulated PPA1
– 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
Trading Companies
Free Clients
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
349 369 380 376408
423444
469493
515
12
4.0% p.a.
5.0% p.a.
EPE’s1 Assumptions:
• Latest EPE’s estimates considers aneconomic activity slowdown in Brazil(industrial stagnation and higherinflation).
• For the next years, the good performanceof domestic market and the perspectivesof higher investments are factorsindicating that the Brazilian economy willrecover the growth path observed beforethe global crisis.
• Brazil will also benefit from the growth ofemerging markets, with impact onexports of primary products.
3.6%
Macroeconomic Scenario
Brazilian Consumption Evolution (TWh)
Energy sector in Brazil:demand perspectives
1 - Source: EPE (Energetic Research Company) / ONS (National System Operator) – Second Review – september/11
2004-2008 2010 2011 2012-2015
3.6 7.2 4.0 5.0
GDP - Annual growth (%)
Total installed capacity is expected to reach 171 GW by 2020
Brazilian energy matrix will present higher diversification, but in the next 10 years hydropower plants willcontinue to prevail
13
Hydro: 73%
SHPP: 4%
Natural gas: 8%
Biomass: 5%
Oil: 3%
Nuclear: 2%
Coal: 2%Diesel: 1%Wind: 1%Steam: 1%
Others: 10% Hydro: 67%
SHPP: 4%Natural gas: 7%
Biomass: 5%
Oil: 5%
Nuclear: 2%Coal: 2%Diesel: 1%
Wind: 7%
Steam: 0%
Others: 17%
1- Source: EPE (Energetic Research Company), Ten-year Energy Plan 2020, May/2011 2 - Small Hydro Power Plant
2020: 171 GW2011: 115 GW
2
2
Energy sector in Brazil:supply perspectives
Installed Energy Capacity in Brazil1
14
Regulatory Opex
(PMSO)
Investment Remuneration
Depreciation
Energy Purchase
TransmissionSector Charges
Tariff Reset and Readjustment
• Tariff Reset is applied each 4 years for AES Eletropaulo − Base date: Jul/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
RemunerationAsset Base
X Depreciation
X WACC
Regulatory Ebitda
Parcel A - Non-Manageable Costs
Parcel B - Manageable Costs
• Remuneration Asset Base:– Prudent investments used to calculate
the investment remuneration (applying WACC) and depreciation
• Regulatory Opex:– Efficient cost structure, determined by
ANEEL (National Electricity Agency)
• Parcel A Costs− Non-manageable costs that are totally
passed through to the tariff− Losses reduction improve the pass-
through effectiveness
1 – X Factor: index that captures productivity gains
Energy sector in Brazil:regulatory methodology
15
3rd Cycle of Tariff Reset – X Factor
Energy sector in Brazil:regulatory methodology
X FACTOR = Pd Q T+ +
Distribution productivity
Quality of service Operational expenses trajectory
To capture productivity gains with distribution
To stimulate the improvement of the
service quality
To implement operational expenses trajectory during
the tariff cycle
Defined at tariff reset, considering market
growth and variation of consumer units
since last reset
Defined at each tariff readjustement, according to the
variation of SAIDI and SAIFI and comparative performance of discos
in the previous year
Defined at tariff reset, considering the limits of expenses established by reference company and
benchmarking methodologies
DEFINITION
OBJECTIVE
APLICATION
17
AES Tietê Overview
17 hydroelectric plants within the states of São Paulo
and Minas Gerais
30-year concession valid until 2029; renewable for
another 30 years
Installed capacity of 2,659 MW, with physical guarantee1
of 1,280 MW average
Almost all the amount of energy that AES Tietê can sell
in the long term is contracted to AES Eletropaulo until
the end of 2015
AES Tietê can invest in generation, its main activity, and
operate in energy trading
343 employees
Generation facilities
1 - Amount of energy allowed to be long term contracted
Generated energy shows high operational availability
Generated energy (MW avarage1)
1 – Generated energy divided by the amount of hours * Caconde, Limoeiro, Mogi and SHPPs
Generated energy by power plant (MW avarage1)
18
118%
130% 125%
2008 2009 2010 9M10 9M11
1,512
1,6651,599
1,703
1,550
Generation - Mwavg
129%126%
Generation/Physical guarantee
58%
6%5%
4%5%
7%
11%4%
Água Vermelha
Bariri
Barra Bonita
Euclides da Cunha
Ibitinga
Nova Avanhandava
Promissão
Other Power Plants*
2008 2009 2010 9M10 9M11
11,138 11,108 11,108 8,578 8,045
1,680 2,331 1,980
1,554 1,535
331 1,150 1,340
1,135 1,188
117 301
215 346
AES Eletropaulo MRE Spot Market Other bilateral contracts2
1
13,148
14,706 14,729
11,483 11,114
-3%
A significant amount of billed energy and net revenues comes from the bilateral contract with
AES EletropauloEnergy Billed (GWh)
1 – Leap Year 2 – Energy Reallocation Mechanism
Net Revenues (%)
19
AES Eletropaulo
Other bilateral contracts
Spot Market
MRE
94%
3%2%
1%
2009 2010 2011 (e) 9M10 9M11
43 70
151
46
105 13
12
18
7
14
56
82
169
53
119
Investments New SHPPs*
20
Investments (R$ million) 9M11 Investments
Investments in the modernization of Nova Avanhandava, Ibitinga and Caconde
power plants
*Small Hydro Power Plants
+122%
84%
12%4%
Equipment and Modernization
New SHPPs*
IT projects
21
Growth opportunities
Perspectives
• Project features- Combined cycle using natural gas
- Estimated investment of R$ 1.1 billion
- Natural gas consumption: 2.5 million m3/day
- 550 MW of installed capacity
• Next events
• Updates
- Environmental license obtained on October, 20th 2011 (valid for 5 years)
- Gas unavailability for A-5 Energy Auction in 2011
- Obtain installation license- Participate in A-3 Auction expected to be realized in
March 2012- Evaluate energy offering in the free market
(54)2008 2009 2010 9M10 9M11
1,309 1,311
9 1,254 1,255 1,320
1,035 1,048
Recurring Non-recurring
22
Ebitda (R$ million)Net Revenue (R$ million)
Financial highlights*
(*) 2009 and 2010 numbers in IFRS
78% 75% 75% 78% 78%
Ebitda margin
+1%+1%
2008 2009 2010 9M10 9M11
1,605 1,670 1,754 1,334 1,344
IFRS Effect
Practice of total net income distribution on quarterly basis*
Net Income and Dividend Pay-out1 (R$ million)
816 784542
31
28
692 706
737
570 582
23
(74)(36)
(78) (40)
-5%+2%
2008 2009 9M10 9M112010
1 – Gross value(*) 2009 and 2010 numbers in IFRS
Pay -out Yield Pref Recurring Non-recurring
100%110% 117%
12%11% 11%
0.3x 0.3x 0.3x 0.3x 0.4x
2008 2009 2010 9M10 9M11
0.4 0.4 0.4 0.5 0.6
24
Debt profile
Net Debt (R$ billion) Amortization Schedule – Principal (R$ million)
• September, 2011:– Average debt cost in 9M11 was 115% of CDI1 p.a. or 15% p.a.– Average debt maturity of 2.8 years– Net debt: R$ 0.6 billion– Net debt/EBITDA: 0.4x
1 – Brazilian Interbank Interest Rate
Net debt / EBITDA
Net debt
2013 2014 2015
300 300 300
2008 2009 2010 9M11
5,4688,086
9,683 9,458
2,692
2,101
4,2393,370
8,160
10,187
13,922 12,828
Preferred Common
50
70
90
110
Dec-10 Mar-11 Jun-11 Sep-11
AES TIETÊ PF TSR IBOVESPA IEE
+5%+2%-2%
-25%
251 – Index: 12/30/2010 = 100 2 – Total Shareholders’ Return
YTD1
Capital Markets
• Market Cap4: R$ 8.5 billion
• BM&FBovespa: GETI3 (common shares) and GETI4 (preferred shares)
• ADRs negotiated in US OTC Market: AESAY (common shares) and AESYY(preferred shares)
4 – Index: 09/30/11
Daily Avg. Volume (R$ thousand)AES Tietê X Ibovespa X IEE
2 3
3 – Electric Energy Index
27
AES Eletropaulo Overview
Largest electricity distribution company in Latin America
Serving 24 municipalities in the São Paulo Metropolitan area
Concession contract valid until 2028; renewable for another 30
years
Concession area with the highest GDP in Brazil
45 thousand kilometers of lines, 1.2 million electricity poles and
6.1 million consumption units in a concession area of 4,526 km2
Total distributed volume of 43 TWh in 2010
AES Eletropaulo, as a distribution company, can only invest in
assets within its concession area
5,647 employees
Concession Area
28
Consumption Evolution
Total Market1 (GWh) 9M11 Consumption by Class (%)
36%
14%
18%
26%
6%
1 – Net of own consumption
+5%
Brazil AES Eletropaulo
2636
17
28
43
26
14 9
Residential Commercial Industrial Others
¹
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
2008 2009 2010 9M10 9M11
33,860 34,436 35,43426,352 27,523
7,383 6,832 7,911
5,846 6,246
41,243 41,26943,345
32,198 33,769
Captive Market Free Clients
29
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
260
220
192 198 198
206 212
217 220 228 228
235
Residential consumption evolution
* *
* Rationing
- Average annual growth (2003 – 2011):
• total residential market: 5.5% y.y.
• consumption per consumer: 2.1% y.y.
- Consumption per consumer is still 9.7% lower than in the period before the rationing
Consumption per consumer (in kWh) – YTD September
- 9.7%
30
Investments amounted R$ 530 million in 9M11
Investments Breakdown (R$ million) Investments 9M11 (R$ million)
+38%
0
100
200
300
400
500
600
700
800
2009 2010 2011(e) 9M10 9M11
478654 715
362513
37
2829
22
16516
682744
383530
Capex Paid by Customers
166
128
125 27
21 16
47
Maitenance
Client Service
System Expansion
Losses Recovery
IT
Paid by the Clients
Others
31
SAIFI - System Average Interruption Frequency Index SAIDI - System Average Interruption Duration Index
SAIDI & SAIFI
8th5th 7th1st7th 3rd
Sources: ANEEL, AES Eletropaulo and ABRADEE
ABRADEE ranking position among the 28 utilities with more than 500 thousand customers
► 2011 SAIDI ANEEL Reference: 8.68 hours ► 2011 SAIFI ANEEL Reference: 6.93 times
2008 2009 2010 9M10 9M11
9.20 11.86 10.68 11.95 10.30
SAIDI (hours)
10.92 10.09
9.32
SAIDI Aneel Reference
2008 2009 2010 9M10 9M11
5.206.17 5.43 6.06 5.42
SAIFI (times)
8.41 7.87
7.39
SAIFI Aneel Reference
From Jul/10 to Jun/11: 12.13%From Jul/09 to Jun/10: 12.32%
32
Losses (%)
1 – Current technical losses used retroactively as a reference
Collection Rate (% over Gross Revenues)
Operational Indexes
2008 2009 2010 9M10 9M11
6.5 6.5 6.5 6.5 6.5
5.1 5.3 4.4 4.5 4.1
11.6 11.810.9 11.0 10.6
2008 2009 2010 9M10 9M11
98.5101.1 102.4 100.3 103.0
Technical Losses ¹ Commercial Losses
ANEEL References:
33
Ebitda (R$ million)Net Revenues (R$ million)
Financial Highlights*
(*) 2009 and 2010 numbers in IFRS
+5%
- 8%
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
2008 2009 2010 9M10 9M11
7,530
8,7869,697
7,046 7,371
2008 2009 2010 9M10 9M11
1,607 1,491 1,6481,325 1,326
-197
339
245 332 89
87
426
301 58 1,696 1,775
2,413
1,870 1,716
RecurringRegulatory assets and liabilitiesNon-recurring
341 – Gross amount
Net Income and Dividend Payout1 (R$ million)
Practice of dividend distributionon semi-annual basis*
(*) 2009 and 2010 numbers in IFRS
-15%
101.5% 93.4%
115.4%
20.3% 20.4%
28.6%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
0.0%
20.0%
40.0%
60.0%
80.0%
100.0%
120.0%
Pay-out Yield PN
2008 2009 2010 9M10 9M11
698 622762
583 582
160
236
171 214
329374
350
282 89
1,027 1,156
1,348
1,037 885
Net Income - ex one-off and regulatory assets and liabilities
Regulatory assets and liabilities
One-off
35
Amortization Schedule – Principal (R$ million)
1 – Brazilian Interbank Interest Rate 2 – Pension Fund
• September, 2011:– Average debt cost in 3Q11 was 112% of CDI1 or 12.6% p.a.– Average debt maturity of 6.9 years– Net debt: R$ 2.9 billion – Net debt/EBITDA of 1.2x adjusted with Pension Fund
Debt ProfileNet Debt (R$ billion)
²
Local Currency (ex FCesp) Fcesp
2008 2009 2010 9M10 9M11
2.5 2.7 2.4 2.6 2.9
Net Debt (R$ billion)
1.5x1.4x
0.9x
Net Debt/Ebitda Adjusted with Fcesp
1.0x 1.2x
2011 2012 2013 2014 2015 2016 2017 2018 2019 -2028
281 301532
226 335 225375
180
80 45
48
5155
5862
847
22
360 346
579
277390
283437
1,047
65
75
85
95
105
115
125
Dec-10 Feb-11 Apr-11 Jun-11 Aug-11
9M11 1
Ibovespa IEE² AES Eletropaulo PN AES Eletropaulo TSR³
+ 2%
- 24 %
- 11%
+ 11%
36
Average Daily Volume (R$ thousand)
Capital MarketsAES Eletropaulo X Ibovespa X IEE
• Market cap4: R$ 4.8 billion• BM&FBOVESPA: ELPL3 (common shares) and ELPL4 (preferred shares)• ADRs at US OTC Market: EPUMY (preferred shares)
1 – Index: 12/30/2010 = 100 2 – Electric Energy Index3 – Total Shareholders’ Return 4 - Index: 09/30/11. Calculation includes only preferred shares.
A Ex dividends: 04/30/2011
A
15,000.00
17,000.00
19,000.00
21,000.00
23,000.00
25,000.00
27,000.00
29,000.00
2008 2009 2010 9M11
25,677
21,960
24,496
28,500
B
B Ex dividends: 08/11/2011
Social Responsibility
Commitment with sustainability
Cross-cutting
themes
– Education for sustainability– Stakeholders active participation– Communication, knowledge and information
SUSTAINABLE ENERGY
GENERATION
EFFICIENCY IN THE USE OF
RESOURCESSAFETY
DEVELOPMENT & VALUATION
OF COWORKERS, SUPPLIERS
AND COMMUNITIES
INNOVATION IN PRODUCTS
AND SERVICES
... means allocating them in such a manner
that balanced and perennial results are
ensured for all stakeholders, abiding by the values practiced by
the company
... means using economic, social and
environmental resources in a balanced fashion, preserving the
present time and ensuring the future
...means knowing, involving in a
transparent form and positively influencing
our coworkers, suppliers and
communities to build a collective agenda that
generates value for everyone
... means providing an environment and
culture that inspire solutions that improve people’s lives, ensuring quality and excellence
in the services rendered to the customer.
... means an attitude of protection of our
employees, suppliers and population.
SUSTAINABLE ENERGY
GENERATION
EFFICIENCY IN THE USE OF
RESOURCESSAFETY
DEVELOPMENT & VALUATION
OF COWORKERS, SUPPLIERS
AND COMMUNITIES
INNOVATION IN PRODUCTS
AND SERVICES
... means allocating them in such a manner
that balanced and perennial results are
ensured for all stakeholders, abiding by the values practiced by
the company
... means using economic, social and
environmental resources in a balanced fashion, preserving the
present time and ensuring the future
...means knowing, involving in a
transparent form and positively influencing
our coworkers, suppliers and
communities to build a collective agenda that
generates value for everyone
... means providing an environment and
culture that inspire solutions that improve people’s lives, ensuring quality and excellence
in the services rendered to the customer.
... means an attitude of protection of our
employees, suppliers and population.
38
“AES Eletropaulo nas Escolas” ProjectEducation about safe and efficient use of energy to 4.5 thousand teachers and 404 thousand students from 900 public schools, between 2010 and 2011. The actions include recreational
activities offered in adapted trucks.
“Casa de Cultura e Cidadania” ProjectIt offers courses and activities in culture and sport for 5.2
thousand children and teenagers in 7 units of AES Brazil. In two AES Eletropaulo’s units the project benefits 1.6 thousand
people in low-income communities.
Social Responsibility: Main Projects
“Centros Educacionais Luz e Lápis” ProjectTwo units in São Paulo attending 320 children from 1 to 5 years old, in social vulnerability.
Children education and development
Development and transformation of communities
Education about Safety and Efficiency in energy consumption
Education, culture
and sport
39
Women inclusion and income generation
Social inclusion and income generation“Empreender com energia” Project
In partnership with the “Aliança Empreendedora” Institution,community residents of Vl. Guacuri neighborhood – SP areempowered to entrepreneurship, in groups or individually, in order toimprove their income and life quality. Starting in 2010, the project nowhas two productive groups and 19 individual entrepreneurs.
Inclusive
and
Social Business
Social Responsibility: Main Projects
“Fornecedor Cidadão” ProjectEmpowerment of female electricians to work onenergy cutting and reconnection. Project started in2010 with 41 women.
40
“Energia do Bem” Project
Active participation of employees to transform low incomecommunities and to work on institutions development. Starting in2008, the program counts on the participation of 12% of AESEletropaulo employees, in activities like winter clothes campaignsand support in several activities institutions.www.energiadobem.com.br
Converting Consumers to ClientsA project developed to work on electrical network regularization.Since 2004, more than 437 thousand families in low incomecommunities were benefited from better energy supply conditionsand social inclusion.
The project has already substituted:880 thousand lamps22 thousand refrigerators and7 thousand showers
for more efficient equipments
Social Responsibility: Main Projects
41
Attachments
43
Costs and Expenses
Costs and operational expenses1 (R$ million)
1 – Do not include depreciation and amortization 2 - Personnel, Material, Third Party Services and Other Costs and Expenses
2
Energy Purchase, Transmission and Connection Charges, and Water Resources
Other Costs and Expenses
2008 2009 2010 9M10 9M11
239 214 246174 181
112 201187
125 115
351
415 433
299 296
2008 2009 2010 9M10 9M11
485700 647
461 475
329
352 443
308 368
379
254 165
202 67
1,193 1,306
1,255
970 909
Personnel and Payroll Material and Third Party Others
44
Costs and Expenses
Costs and operational expenses1 (R$ million)
1 – Do not include depreciation and amortization 2 - Personnel, Material, Third Party Services and Other Costs and Expenses3 – In 2009 expenses with Pension Fund increased due to inflation rate (IGP-M) increase and reversal of R$ 63 million in 4Q08 caused by actuarial liability adjustment
PMS and Other Expenses (R$ million)
32008 2009 2010 9M10 9M11
4,700 5,125 5,4904,036 4,220
1,1931,306
1,255
970 909
5,8936,431
6,745
5,006 5,129
Energy Supply and Transmission Charges PMS² and Others Expenses
Action Plan: R$ 242 million with increase of R$ 122 million in emergency teams
45
Concluded in September 2011
Concluded in November 2011
availability of 353 emergency teams 38% increase in call center positions (150 positions) doubling of SMS receipt capacity to 100 thousand / day training of 276 maintenance and construction electricians hiring of 30 additional pruning electricians
training of 240 electricians for emergency attendances in powered grid beginning of 276 maintenance and construction electricians activitiesand training conclusion of other 304 300 additional stand by positions in call center for emergencysituations increase of call center service capacity by 27 times from 2 thousand to54 thousand calls/hours
December to March increase of 120 emergency teams, totaling 473 teams
46
AES Tiete's expansion obligation
Efforts being made by the Company to meet the
obligation :
• Long-term energy contracts (biomass)
totaling an average of 10 MW
•SHPP São Joaquim -started operating in July,
2011, with 3 MW of installed capacity
•SHPP São José – under construction, with 4 MW
of installed capacity, expected to be
operational in 2012
• Thermo-SP - Project of a 550MW gas fired
thermal plant
1999 Jul/09Out/08Ago/08 Set/11Set/10
Privatization Notice established the
obligation to expand the installed capacity in 15%
(400 MW) until 2007, either in greenfield
projects and/or through long term purchase
agreements with new plants
Aneel informed that the issue is
not related to the concession
agreement and must be
addressed with the State of São
Paulo
Judicial Notice:
The Company was notified by the State of São Paulo
Attorney's Office to present its understanding on the matter, having filed its response on time, the proceedings were
ended, since no other action was taken by the Attorney's
Office
In response to a Popular Action (filed by
individuals against the Federal Government, Aneel, AES Tietê and Duke), the Company presents its defense
before the first instance
Popular Action:Due to the plaintiffs failure to specify the persons that
should be named as Defendants, a favorable
decision was rendered by the first Instance Court
(an appeal has been filed)
AES Tietê was summoned to answer a Lawsuit filed by the
State of São Paulo, which requested the fulfillment of the
obligation in 24 months.
An injunction was granted in order to have a project submitted
within 60 days.
Nov/11
Lawsuit:
The Company appealed to the
State of Sao Paulo State Court
of Appeals and the injunction was
stayed
2007
Company faces restrictions until deadline:
• Insufficiency of hydro resources • Environmental restrictions
• Insufficiency of natural gas supply • New Model of Electric Sector (Law # 10,848/2004), which forbids bilateral agreements between generators and
distributors
47
Next Steps:
1 - The auditing procedure (AP) is expected to
begin by the 1st
half of 2012
2 – AP is expected to be concluded in at least 6 months
3 - After AP’s conclusion, a 1st level court
decision will be released
4 - Appealing to the 2nd instance
court
5 - Foreclosure starts.
Presentation of guaranty
6 - Request to withdraw the
guaranty
7 - Appeals to the 3rd instance
courts
Eletrobras Lawsuit
Nov/86
Stated-owned Eletropaulo
borrowed money from Eletrobras
Dec/88
State-owned Eletropaulo and
Eletrobras disagreed on how
to calculate interest over that
loan and a lawsuit was started
Sep/03
The 2nd level of court excluded
AES Eletropaulo from the
discussion based on the spin-off
agreement
Jun/06
The SCJ decided to send the
Execution Suit back to the 1st
level of court
May/09
Eletrobras requested the 1st
level of court judge to appoint
an expert
Jan/98 Oct/05
Eletrobras and CTEEP appealed
to the Superior Court of Justice
(SCJ)
Dec/10Sep/01
Eletrobras, after winning the
interest calculation
discussion, filed an Execution Suit to collect the due
amount
State-owned Eletropaulo was spun-off into four companies and, according to our understanding based on the
spin-off agreement, the discussion was transferred to
CTEEP
Privatization event . State-
owned Eletropaulo
became AES Eletropaulo
Apr/98
Eletrobras requested the
beginning of the appraisal
procedure, which is under 1st. instance
court analysis
Jul/11
On July 7, the judge determined Eletropaulo and
CTEEP to present their
considerations, which occurred in
August
48
Any party with an intention to dispose its shares should first provide the other party the right to buythat participation at the same price offered by a third party
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
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 shares– AES Tietê: Tag along of 80% in its common shares– AES Elpa: Tag along of 80% in its common shares
Shareholders AgreementOn Dec 2003 AES and BNDES signed a Shareholders’ Agreement to regulate their relationship as shareholders ofBrasiliana and its controlled companies. The Agreement is available at www.aeseletropaulo.com.br/ri
Shareholders can dispose its share at any time, considering the following terms:
Right of 1st refusal
Drag alongrights
Tag alongrights
49
Brazilian Main Taxes
AES Eletropaulo
• Income Tax / Social Contribution:
– 34% over taxable income
• ICMS: 22% over Revenue (average rate)
– Residential: 25%
– Industrial and Commercial: 18%
– Public Entities: free
• PIS/Cofins:
– 9.25% over Revenue minus Costs
AES Tietê
• Income Tax / Social Contribution:
– 34% over taxable income
• ICMS (VAT tax)
– deferred tax
• PIS/Cofins (sales tax):
– Eletropaulo´s PPA: 3.65% over Revenue
– Other bilateral contracts: 9.25% over Revenue
minus Costs
The statements contained in this document with regard to the business prospects, projected operating and financialresults, and growth potential are merely forecasts based on the expectations of the Company’s Management inrelation to its future performance. Such estimates are highly dependent on market behavior and on the conditionsaffecting Brazil’s macroeconomic performance as well as the electric sector and international market, and they aretherefore subject to changes.
Contacts:[email protected]
+ 55 11 2195 7048