Institutional Presentation 3Q11

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Institutional Presentation 3Q11

  1. 1. InstitutionalNovember, 2011 1
  2. 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 quarterly basis – AES Eletropaulo: distribution above the minimum required (25% of net income) on semi-annually basis 2
  3. 3. AES Brasil widely recognized in 2009-2011  Management excellence  Quality and safety  Environmental concern(AES Eletropaulo) (AES Tietê) (AES Tietê) (AES Eletropaulo) (AES Sul) (AES Brasil) (AES Eletropaulo) (AES Eletropaulo) (AES Tietê) (AES Brasil) (AES Tietê) (AES Tietê) (AES Tietê) (AES Eletropaulo) (AES Eletropaulo) 3
  4. 4. 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 71.35% C 76.45% C 99.99% C 99.00% P 32.34% P 7.38%T 99.70% T 99.99% T 99.00% T 52.55% T 34.87% AES AES AES AES AES Sul Infoenergy Uruguaiana Tietê Eletropaulo C = Common Shares P = Preferred Shares T = Total 4
  5. 5. Listed Companies Shareholding Composition ¹ ¹ Free Float Others2 16.1% 19.2% 56.2% 8.5% 24.2% 28.3% 39.5% 8.0%1 – parent companies, AES Corp and BNDES, have equal voting capital on the Companies: 38.2% on AES Eletropaulo and 35.7% on AES Tietê2 – includes Federal Government and Eletrobrás shares in AES Eletropaulo and AES Tietê, respectively 5
  6. 6. AES Brasil is the second largest group in Ebitda1 – 2010 (R$ Billion) electric sector 4.5 4.2 3.4 3.0 2.6 2.0 1.6 1.6 1.5 0.6 CEMIG AES BRASIL CPFL NEOENERGIA TRACTEBEL CESP EDP LIGHT COPEL DUKE Net Income1 – 2010 (R$ Billion) 2.3 2.2 1.8 1.6 1.2 1.0 0.6 0.6 0.2 0.1 CEMIG AES BRASIL NEOENERGIA CPFL TRACTEBEL COPEL EDP LIGHT DUKE CESP 61 – excluding Eletrobrás Source: Companies’ financial reports
  7. 7. AES Tietê is an important player among private energy generators Generation Installed Capacity (MW) - 2011 Privately held companies AES TIETÊ DUKE 2% 2% TRACTEBEL  AES Tietê is the 2nd largest among private 6% generation companies and 10th largest overall COPEL 4%  10 largest gencos correspond to 62% of the total PETROBRÁS Others 37% 5% installed capacity CEMIG 6%  There are three mega hydropower plants under ITAIPU construction in the North region of Brazil with 18 GW 6% in installed capacity CESP 6% – Santo Antonio and Jirau (Madeira River): 7 GW CHESF Eletronorte 9% 8% – Belo Monte (Xingu River): 11 GW FURNAS 8% Total Installed Capacity: 115 GW 7Source: ANEEL (Regulator) – BIG (August, 2011)
  8. 8. AES Brasil is the largest distribution group in BrazilConsumption (GWh) - 2010 13% • 64 discos in Brazil distributing 419 TWh 40% 12% A Brasil AES • AES Brasil is the largest electricity distribution group in Brazil: CPFL Energia 10% – AES Eletropaulo: 43 TWh distributed, Cemig representing 10.3% of the Brazilian 7% 6% 6% market 6% Neo Energia – AES Sul: 9 TWh distributed,Consumers – Dec/2010 Copel representing 2.2% of the Brazilian 12% market 30% Light 12%  There is a limited opportunity for EDP competition in Brazil as discos are restricted to operate within their Outros 12% concession areas 5% 7% 7% 16% 8
  9. 9. AES Tietê OverviewGeneration facilities  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  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  As a pure energy generator, AES Tietê can only invest in its core business  343 employees 101 - Amount of energy allowed to be long term contracted
  10. 10. Energy sector in Brazil: supply perspectivesInstalled Energy Capacity in Brazil1  Total installed capacity is expected to reach 171 GW by 2020  Brazilian energy matrix is not expected to materially change over the next 10 years 2011: 115 GW 2020: 171 GW 2 SHPP: 4% Natural gas: 7% 2 SHPP: 4% Biomass: 5% Natural gas: 8% Biomass: 5% Oil: 5% Oil: 3% Nuclear: 2% Nuclear: 2% Others: 17% Coal: 2% Hydro: 67% Diesel: 1% Others: 10% Hydro: 73% Coal: 2% Diesel: 1% Wind: 7% Wind: 1% Steam: 1% Steam: 0%1- Source: EPE (Energetic Research Company), Ten-year Energy Plan 2020, May/2011 2 - Small Hydro Power Plant 11
  11. 11. Energy sector in Brazil: contracting environment Regulated Market Free Market Auctions Spot Market PPAs1 Trading Trading Distribution Companies Companies Companies Free Clients Free Clients • Main auctions (reverse auctions): – New Energy (A-5): Delivery in 5 years, 15- Distribution Companies 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 121 – Power Purchase Agreement
  12. 12. Billed energy growth due to high availability and bilateral contracts Energy Generation (MW average1) Billed Energy (GWh) 14,706 14,729 117 -3% 13,148 301 130% 125% 129% 126% 1,150 1,340 11,483 331 11,114 118% 2,331 215 1,680 1,980 346 1,135 1,188 1,554 1,535 11,138 11,108 11,108 1,665 1,703 8,578 8,045 1,599 1,512 1,550 2 2008 2009 2010 9M10 9M11 2008 2009 2010 9M10 9M11 3 Generation - Mwavg Generation/Physical guarantee AES Eletropaulo MRE Spot market Other bilateral contracts1- Generated energy divided by the amount of hours 2-Leap year 3- Energy Reallocation Mechanism 13
  13. 13. Investments in the modernization of Nova Avanhandava, Ibitinga and Caconde power plants Investments (R$ million) 9M11 Investments 84% 169 18 +122% 119 14 82 53 4% 12% 56 12 151 13 7 105 70 43 46 Equipment and Modernization 2009 2010 2011 (e) 9M10 9M11 New SHPPs* Investments New SHPPs* IT projects*Small Hydro Power Plants 14
  14. 14. Growth opportunitiesPerspectives • 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 • Updates - Environmental license obtained on October, 20th 2011 (valid for 5 years) - Gas unavailability for A-5 Energy Auction in 2011• Next events - Obtain installation license - Participate in A-3 Auction expected to be realized in March 2012 - Evaluate energy offering in free market 15
  15. 15. Financial highlights* Net Revenue (R$ million) Ebitda (R$ million) +1% +1% 1,254 1,255 1,320 1,035 1,048 9 1,605 1,670 1,754 1,334 1,344 1,309 1,311 (54) 2008 2009 2010 9M10 9M11 2008 2009 2010 9M10 9M11 78% 75% 75% 78% 78% Recurring Non-recurring Ebitda margin(*) 2009 and 2010 numbers in IFRS 16
  16. 16. Practice of total net income distribution on quarterly basis*Net Income and Dividend Pay-out1 (R$ million) 117% 120% 110% 1 6 , 0 % 100% 100% 1 4 , 0 % 12.0% 11.0% 11.0% 1 2 , 0 % 80% 1 0 , 0 % 737 60% 706 8 , 0 % 692 31 +2% 40% 6 , 0 % 570 -5% 582 816 784 4 , 0 % 28 20% 2 , 0 % 542 0% (74) (78) 0 , 0 % (40) (36) 2008 2009 2010 9M10 9M11 Pay-out Yield Pref Recurring Non-recurring IFRS Effect 171 – Gross amount (*) 2009 and 2010 numbers in IFRS
  17. 17. Debt profile Net Debt (R$ billion) Amortization Schedule – Principal (R$ million) 0.3x 0.3x 0.3x 0.4x 0.3x 300 300 300 0.6 0.4 0.4 0.4 0.5 2008 2009 2010 9M10 9M11 2013 2014 2015 Net debt Net debt / EBITDA • 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 181 – Brazilian Interbank Interest Rate
  18. 18. Capital Markets AES Tietê X Ibovespa X IEE Daily Avg. Volume (R$ thousand) YTD2 13,922 12,828110 10,187 +5% 4,239 +2% 8,160 3,370 -2% 2,101 90 2,692 -25% 9,683 9,458 70 8,086 5,468 50 dez-10 mar-11 jun-11 set-11 2008 2009 2010 9M11 AES TIETÊ PF TSR1 IBOVESPA IEE Preferred Common • Common shares and preferred shares listed on BM&FBOVESPA under the tickers GETI3 and GETI4 • ADRs at US OTC Market under the tickers AESAY and AESYY 19 1 – Total Shareholder Return 2 – Index: 12/30/2010 = 100
  19. 19. AES Eletropaulo OverviewConcession Area  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  As a pure energy distributor, AES Eletropaulo can only invest within its concession area  5,647 employees 21
  20. 20. Energy sector in Brazil: regulatory methodologyTariff Reset and Readjustment• Tariff Reset is applied each 4 years for AES Eletropaulo • Parcel A Costs − Base date: Jul/2011 − Non-manageable costs that totally − Parcel A: costs pass trough the tariff Energy pass- through to the tariff Purchase − Losses reduction improve the pass- − Parcel B: costs are set by ANEEL Transmission through effectiveness Sector Charges• Tariff Readjustment: annually − Parcel A costs pass trough the tariff Regulatory • Regulatory Opex: − Parcel B cost are adjusted by IGPM +/- X(1) Factor Opex (PMSO) – Efficient cost structure, determined by ANEEL (National Electricity Agency) X WACC Investment Remuneration • Remuneration Asset Base: Remuneration Asset Base – Applicable investments used to calculate the Investment Remuneration X Depreciation (applying WACC) and Depreciation Depreciation Regulatory Parcel A - Non-Manageable Costs Ebitda Parcel B - Manageable Costs 22 1 – X Factor: index that capture productivity gains
  21. 21. Energy sector in Brazil: demand perspectives Macroeconomic Scenario EPE’s1 Assumptions: GDP - Annual growth 2005-2009 2010 2011-2015 2016-2020 • Emerging markets will grow faster than World 3.4 4.6 4.5 3.9 developed economies, positively affecting Brazil 3.6 7.2 5.0 5.0 industrial sector in Brazil; Brazilian Consumption Evolution (TWh) • Recovery of investment rates, favorable 4.6% p.a credit conditions and labor market growth 659 • Domestic economy growth due to the 4.4% p.a. World Cup and Olympic Games 419 441 • Income elasticity of energy demand (2010- 393 389 358 378 2020): 0.98 331 346 • Households growth: 2.2% p.a 2004 2005 2006 2007 2008 2009 2010 2011 (e) 2020 231 - Source: EPE (Energetic Research Company)
  22. 22. Consumption Evolution Total Market1 (GWh) 9M11 Consumption Share1 (GWh) 36% 6% 14% 43.345 6%45.000 41.243 41.269 36% +5%40.000 7.911 7.383 6.832 33.769 13% 18%35.000 32.198 26%30.000 5.846 6.246 26%25.000 18%20.000 33.860 34.436 35.43415.000 27.523 26.35210.000 Residential 5.000 0 Commercial 2008 2009 2010 9M10 9M11 Free Clients Captive Market Free Clients Industrial Others 24 1 – Net of own consumption
  23. 23. Investments amounted R$ 530 million in 9M11 Investments Breakdown (R$ million) Investments 9M11 (R$ million) 166 744800 682 29 128700 47 28 +38%600 516 530 16 383 16 21500 37 27 125400 22 715 654300 478 513200 362 Maitenance100 Client Service 0 System Expansion 2009 2010 2011(e) 9M10 9M11 Losses Recovery Capex Paid by Customers IT Paid by the Clients Others 25
  24. 24. Action Plan 2011 - 2012:Action Plan 2011 – 2012: Action Details In 2011: R$ 48 million in investiments and R$ 81 million in operational expenses • Addition of 120 emergency teams, totaling 473 teams during summer season Emergency 99 23 122 attendance • Expand capacity on clients attendance: –increase 38% call center positions (150 Preventive positions) maintenance¹ 42 26 68 – contract 300 positions for call center in stand by condition – automated attendance increase from 2 Customer attendance 35 9 43 thousand call / hour to 54 thousand call hour – double SMS capacity to 100 thousand day Tree trimming 7 7 • Deployment of mobile agency and field actions to receive indemnifications requests Other process improvements 2 • Increase on pruning, maintenance and construction teams (580 electricians) Operational expenses Investments 26¹ Equipment purchase, increase in maintenance and construction and prunning teams
  25. 25. SAIDI & SAIFI SAIDI - System Average Interruption Duration Index SAIFI - System Average Interruption Frequency Index 8.41 7.87 7.39 10.92 10.09 9.32 9.20 11.86 10.68 10.30 11.95 6.17 5.43 6.06 5.42 5.20 2008 2009 2010 9M10 9M11 2008 2009 2010 9M10 9M11 5th 8th 7th 1st 7th 3rd SAIDI (hours) SAIDI Aneel Target SAIFI (times) SAIFI Aneel Target 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 27Sources: ANEEL, AES Eletropaulo and ABRADEE
  26. 26. Operational Indexes Losses (%) Collection rate (% over Gross Revenues) 11.6 11.8 11.0 102.4 103.0 10.9 10.6 101.1 100.3 98.5 5.1 5.3 4.4 4.5 4.1 6.5 6.5 6.5 6.5 6.5 2008 2009 2010 9M10 9M11 2008 2009 2010 9M10 9M11 Technical Losses ¹ Commercial Losses 281 – Current technical losses used retroactively as a reference
  27. 27. Financial Highlights* Net Revenues (R$ million) Ebitda (R$ million) 2,413 9,697 - 8%10,000 8,786 426 +5% 1,870 9,000 1,775 1,716 7,530 7,371 1,696 8,000 7,046 87 357 - 89 301 58 7,000 202 245 332 6,000 5,000 4,000 1,607 1,486 1,630 3,000 1,325 1,326 2,000 1,000 0 2008 2009 2010 9M10 9M11 2008 2009 2010 9M10 9M11 Recurring Regulatory assets and liabilities Non-recurring 29(*) 2009 and 2010 numbers in IFRS
  28. 28. Practice of dividend distribution on semi-annually basis* Net Income and Dividend Payout1 (R$ million) 115.4% 120.0% 35.0% 101.5% 93.4% 28.6% 100.0% 30.0% 20.4% 25.0% 80.0% 20.3% 1,348 20.0% 60.0% -15% 15.0% 40.0% 1,156 1,027 350 10.0% 1,037 20.0% 5.0% 374 885 329 162 282 0.0% 0.0% 89 93 214 171 836 698 689 583 582 2008 2009 2010 9M10 9M11 0 Pay-out Yield PN Q 0 Q Net Income - ex one-off and regulatory assets and liabilities Regulatory assets and liabilities One-off (*) 2009 and 2010 numbers in IFRS 301 – Gross amount
  29. 29. Debt ProfileNet Debt (R$ billion) Amortization Schedule – Principal (R$ million) 1.5x 1.4x 1.2x 0.9x 1.0x 1,047 579 2.7 2.9 48 847 2.5 2.4 2.6 360 390 437 346 62 277 55 283 80 45 532 51 58 22 281 301 335 375 226 225 180 2008 2009 2010 9M10 9M11 2011 2012 2013 2014 2015 2016 2017 2018 2019 - 2028 Net Debt/Ebitda Adjusted with Fcesp Local Currency (ex FCesp) Fcesp ² Net Debt (R$ billion) • 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 311 – Brazilian Interbank Interest Rate 2 – Pension Fund
  30. 30. Capital MarketsAES Eletropaulo X Ibovespa X IEE Average Daily Volume (R$ thousand) 9M11 1 28,500 A 29,000.00125 B 25,677115 27,000.00 24,496 + 11% 25,000.00105 + 2% 21,960 23,000.0095 21,000.0085 - 11% 19,000.0075 - 24 % 17,000.0065 Dec-10 Mar-11 May-11 Jul-11 Sep-11 15,000.00 2008 2009 2010 9M11 Ibovespa IEE AES Eletropaulo PN AES Eletropaulo TSR² A Ex dividends: 04/30/2011 B Ex dividends: 08/11/2011 • Common shares and preferred shares listed on BM&FBOVESPA under the tickers ELPL3 and ELPL4 • ADRs at US OTC Market 32 1 – Index: 12/30/2010 = 100 2 – Total Shareholder Return
  31. 31. Social Responsibility
  32. 32. 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$ 17 million in 2010 • 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 • 7 operating units“Centros Educacionais Infantis Luz e Lápis” - Project • 300 benefited children between 1 and 6 years old • Own investments amounting R$ 2.1 million in 2010 • Units: Santo Amaro and Guarapiranga 34
  33. 33. Social Responsibility Volunteering Program Distributing Acting to Energy of Transform Good Specific social mobilization or Opportunities for volunteering in emergency campaign. social organizations, which are partners of AES Brazil Winter clothes, Christmas Co-workers can enroll in campaign, among others. volunteer activities available at AES Brazil volunteering portal since September/09 www.energiadobem.com.br• Launched in December, 2008;• Objective: to get the co-workers committed to the transformation of low income communities and development of non-governmental institutions;• 1,199 volunteers 35
  34. 34. Attachments
  35. 35. Costs and ExpensesCosts and operational expenses1 (R$ million) 433 415 351 187 299 296 201 112 125 115 239 246 214 174 181 2008 2009 2010 9M10 9M11 Energy Purchase, Transmission and Connection Charges, and Water Resources Other Costs and Expenses 21 – Do not include depreciation and amortization 2 - Personnel, Material, Third Party Services and Other Costs and Expenses 37
  36. 36. Costs and Expenses Costs and operational expenses1 (R$ million) PMS and Other Expenses (R$ million) 1,306 1,255 1,193 6,745 254 165 6,431 5,893 970 909 1,255 379 1,306 5,006 5,129 1,193 352 443 202 67 970 909 329 368 308 5,125 5,490 4,700 700 4,036 4,220 647 485 461 475 3 2008 2009 2010 9M10 9M11 2008 2009 2010 9M10 9M11 Energy Supply and Transmission Charges PMS² and Others Expenses Personnel and Payroll Material and Third Party Others1 – Do not include depreciation and amortization2 - 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 38
  37. 37. Action Plan: R$ 242 million with increase of R$ 122 million in emergency teams  availability of 353 emergency teams Concluded in  38% increase in call center positions (150 positions)September 2011  doubling of SMS receipt capacity to 100 thousand / day  training of 276 maintanance and construction electricians  hiring of 30 addicional pruning electricians  training of 240 electricians for emergency attendances in powered grid  begginig of 276 maintanance and constructions electritcians activitiesConcluded until and training conclusion of other 304November 2011  300 addicional stand by positions in call center for emergency situations  increase of call center service capacity by 27 times from 2 thousand to 54 thousand calls/hoursDecember to increase of 120 emergency teams, totaling 473 teams March 39
  38. 38. 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• On July 27th, 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• Popular law action against Federal Government, Aneel, AES Tietê, and Duke – 2008 – In October, defense filed on first instance by AES Tietê; In December, the author replied AES Tietê defense – 2010 – In September, due to the plaintiffs failure to specify the individuals that should be named as Defendants, a favorable decision was rendered by the 1st Instance Court (but there can be appeals)• On September 6th, 2011, the Company was summoned to answer a claim filed by the State of São Paulo requesting AES Tietê to fulfill, within 24 months, the obligation to expand its installed capacity. Due to a a preliminary injunction granted in favor of the State of São Paulo, the Company had to present its plan for the compliance with the Expansion Requirement by December 12th – Against the injunction, AES Tietê filed an appeal to the State of São Paulo Court of Appeals, which, on November 3rd, granted a relief order which suspended the 60-day-period that the company would have to present its plans and stayed the injunction granted by the First Instance Court• Efforts being made by the Company to meet the obligation: – Signing of two long-term energy contracts, from sugar cane biomass, totaling 10 MW – SHPP São Joaquim, which started operating in July, 2011 with 3 MW of installed capacity, in São João da Boa Vista (State of São Paulo) – SHPP São João, with 4 MW of installed capacity, in São João da Boa Vista (State of São Paulo), to be operational in 2011 – Project development of a 550MW gas fired thermal plant, located in Canas (State of São Paulo) 40
  39. 39. Eletrobras Lawsuit State-owned Eletropaulo was spun-off into four Eletrobras, after On July 7, the Next Steps: companies and, winning the judge determined Eletrobras and Eletrobras 1 - The auditing Stated-owned according to our interest Eletropaulo and CTEEP appealed requested the 1st procedure (AP) Eletropaulo understanding calculation CTEEP to present to the Superior level of court is expected toborrowed money based on the discussion, filed their Court of Justice judge to appoint begin by the 1st from Eletrobras spin-off an Execution Suit considerations, (SCJ) an expert half of 2012 agreement, the to collect the due which occurred in discussion was amount August 2 – AP is transferred to expected to be CTEEP concluded in at least 6 months 3 - After AP’s conclusion, a 1st level court decision will be Nov/86 Dec/88 Jan/98 Apr/98 Sep/01 Sep/03 Oct/05 Jun/06 May/09 Dec/10 Jul/11 released 4 - Appealing to the 2nd instance court 5 - Foreclosure starts. Presentation of State-owned The 2nd level of Eletrobras guaranty Eletropaulo and Privatization requested the court excluded The SCJ decided Eletrobras event . State- 6 - Request to AES Eletropaulo to send the beginning of the disagreed on how owned withdraw the from the Execution Suit appraisal to calculate Eletropaulo guaranty discussion based back to the 1st procedure, which is interest over that became AES under 1st. instance 7 - Appeals to on the spin-off level of court loan and a lawsuit Eletropaulo court analysis the 3rd instance agreement was started courts 41
  40. 40. 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/riShareholders can dispose its share at any time, considering the following terms:Right of 1st  Any party with an intention to dispose its shares should first provide the other party the right to buyrefusal that participation at the same price offered by a third partyTag along  In the case of change in Brasiliana’s control, tag along rights are triggered for the followingrights 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 sharesDrag along  Once the offering party exercises the Drag Along clause, offered party is obligated to dispose of allrights its shares at the time, if the Right of 1st Refusal is not exercised by offered party 42
  41. 41. Brazilian Main Taxes AES Tietê AES Eletropaulo• Income Tax / Social Contribution: • Income Tax / Social Contribution: – 34% over taxable income – 34% over taxable income• ICMS (VAT tax) • ICMS: 22% over Revenue (average rate) – deferred tax – Residential: 25%• PIS/Cofins (sales tax): – Industrial and Commercial: 18% – Eletropaulo´s PPA: 3.65% over Revenue – Public Entities: free – Other bilateral contracts: 9.25% over Revenue • PIS/Cofins: minus Costs – 9.25% over Revenue minus Costs 43
  42. 42. Contacts: ri.aeseletropaulo@aes.com ri.aestiete@aes.com + 55 11 2195 7048The 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.

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