Citi's 3rd Annual Brazil Equity Conference_Eng
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Citi's 3rd Annual Brazil Equity Conference_Eng Citi's 3rd Annual Brazil Equity Conference_Eng Presentation Transcript

  • Institutional May, 2010
  • 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
  • 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
  • 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
  • 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
  • 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
  • Consumption evolution Total Market (GWh1) 1Q10 Consumption Share (GWh1) 6% R: 1% CAG 14% 41,243 41,269 35% 39,932 7,383 6,832 7,355 18% 9,691 10,344 410 1,573 1,801 27% 32,577 33,860 34,436 8,118 8,544 Residential 2007 2008 2009 1Q09 1Q10 Commercial Captive market Free Clients Free Clients Industrial Others 8 1 – Net of own consumption
  • Main consumption classes Residential (GWh¹) – CAGR 2007-09: 4% Commercial (GWh¹) – CAGR 2007-09: 2% 15,015 10,752 14,427 10,301 13,500 10,072 3,646 2,804 3,494 2,657 2007 2008 2009 1Q09 1Q10 2007 2008 2009 1Q09 1Q10 Industrial (GWh¹) – CAGR 2007-09: -2% Captive Market¹ (GWh¹) – CAGR 2007-09: 2% 34,436 6,475 6,559 33,860 6,032 32,577 1,449 8,544 1,327 8,118 2007 2008 2009 1Q09 1Q10 2007 2008 2009 1Q09 1Q10 9 1 – Net of own consumption
  • Consumption Consumption Evolution (GWh¹) +4.4 % +9.2 % +5.5 % +0.7 % +5.2% +14.4% +6.7% 9,691 10,344 8,118 8,544 3,494 3,646 2,657 2,804 1,573 1,801 1,327 1,449 645 641 Residential Industrial Commercial Public Captive Market Free Clients Total Market Sector and Others 1Q09 1Q10 10 1 – Net of own consumption
  • Investments amounted up to R$ 98 million in 1Q10 Investments Breakdown (R$ million) Investments 1Q10 691 54 2% 2% 516 10% 37 457 433 47 15% 47% 69 101 98 478 9 24% 637 10 410 364 92 88 Customer service / Maintenance System expansion 2007 2008 2009 2010(e) 1Q09 1Q10 Losses recovery Paid by the clients Own resources Paid by customers IT Other 11
  • SAIDI & SAIFI SAIDI - System Average Interruption Duration Index SAIFI - System Average Interruption Frequency Index 8.49 11.34 8.41 10.92 10.09 7.87 8.90 9.20 11.86 10.20 13.50 5.64 5.20 6.17 5.46 6.74 2007 2008 2009 1Q09 1Q10 2007 2008 2009 1T09 1Q10 3o 5o 1o 1o SAIDI (hours) SAIDI Aneel Target SAIFI (times) SAIFI Aneel Target ► 2010 SAIDI ANEEL Target: 9.32 horas ► 2010 SAIFI ANEEL Target: 7.39 times ABRADEE ranking position between 28 distributors with over 500 thousand consumers Source: ABRADEE, ANEEL e AES Eletropaulo 12
  • Operational indexes Collection Rate (% over gross revenue) Losses (%) 1.6 p.p. 0.3 p.p. 102.5 101.1 99.8 99.5 11.6 11.8 11.8 98.5 11.5 11.5 5.0 5.1 5.3 5,3 5.3 5.0 6.5 6.5 6,5 6.5 66,5 6.5 6.5 2007 2008 2009 1Q09 1Q10 2007 2008 2009 1Q09 1Q10 Commercial Losses Technical Losses • Disconnections and Reconnection – Monthly Average (1Q09 X • Fraud and Illegal Connections (1Q10) 1Q10) – 56 thousand inspections e 8 thousand frauds detected – Disconnections: increase from 75 thousand to 92 thousand – 16 thousand illegal connections regularized – Reconnection: increase from 50 thousand to 77 thousand • Past due bill credit report (1Q10 monthly average): 131 thousand 13
  • Net revenue of R$ 2.1 billion in 1Q10 Net Revenue (R$ million) R: 4% CAG 8,050 7,529 7,193 2,131 1,850 2007 2008 2009 1Q09 1Q10 14
  • Operating Costs and expenses Operating Costs and Expenses¹ (R$ million) R: 5% CAG 6,422 5,893 5,537 1,312 1,193 1,747 1,440 1,485 341 288 4,097 4,700 5,110 1,197 1,406 ‘ 2007 2008 2009 1Q09 1Q10 Energy Supply and Transmission Charges PMS² and Other Expenses 1 - Depreciation not included 2 - Personnel, Material and Services 15
  • Ebitda of R$ 341 million in 1Q10 Ebitda (R$ million) : 0.1% CAGR 1,566 1,696 1,573 341 288 2007 2008 2009 1Q09 1Q10 16
  • Net income of R$ 1,1 billion in 2009 Net Income (R$ million) Dividend payout (R$ million) Dividends Pay-out Yield PNB 100.3% 101.5% 101.5% 34.9% 20.3% 20.4% : 14% CAGR 14.4% 1,063 1,080 1,027 1,043 3.2% 713 715 157 147 130 2007 2008 2009 1Q09 1Q10 2006 2007 2008 2009 • 25% of minimum pay-out according to bylaw • Since 2006, practice of 95% payout on semi-annually basis 17
  • R$ 993 million paid as dividends in 2009 Managerial Cash Flow (R$ million) 2007 2008 2009 1Q09 1Q10 Initial Cash 1.166 1.334 1.536 1.536 1.249 Operational Cash Generation 2488 1893 1970 268 572 Investments (407) (374) (378) (104) (135) Net Financial Expenses (501) (161) (118) (80) (81) Net Amortizations (182) (94) (136) (184) (14) Pension Fund (198) (192) (166) (58) (48) Income Tax (418) (295) (189) (119) (73) Free Cash Flow 783 777 706 (278) 221 Dividends (615) (576) (993) - - Final Cash 1.334 1.536 1.249 1.258 1.470 18
  • 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
  • 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
  • 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
  • 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
  • Investments Investments (R$ million) 1Q10 Investments New SHPPs Investments 6%2% 67 18% 9 59 57 51 75% 8 20 13 58 43 44 39 9 8 1 1 8 7 Equip. and Maint. New SHPPs 2007 2008 2009 2010 (e) 1Q09 1Q10 Environment IT 24
  • 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
  • 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
  • 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
  • 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
  • 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
  • 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
  • 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
  • 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
  • Social Responsibility and Environmental Actions
  • 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
  • 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
  • Attachments
  • 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
  • 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
  • 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
  • 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
  • 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
  • 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.