Institutional
May, 2011

1
AES Brasil Group
• Presence in Brazil since 1997
• Comprised of seven companies in the sectors
of energy generation, distr...
AES Brasil widely recognized in 2009-2010

 Quality and safety
(AES Eletropaulo)

(AES Sul)

(AES Eletropaulo)

(AES Elet...
Shareholding Structure

AES Corp

BNDES

C 50.00% + 1 share
P 0.00%
T 46.15%

C 50.00% - 1 share
P 100%
T 53.85%

Cia. Bra...
Listed Companies Shareholding Composition

Free Float

Others¹

16.1%

19.2%

56.2%

8.5%

24.2%

28.3%

39.5%

8.0%

1 – ...
AES Brasil is the second largest group in
electric sector

Ebitda1 – 2010 (R$ Billion)
4.5

4.2
3.4

3.0

2.6
2.0

1.6

1....
AES Tietê is an important player among private
energy generators

Generation Installed Capacity (MW) - 2010
Privately held...
AES Brasil is the largest distribution group
in Brazil

Consumption (GWh) - 2010
13%

• 64 discos in Brazil distributing 4...
AES Tietê Overview
Concession Area

 16 hydroelectric plants within the states of São Paulo and
Minas Gerais
 30-year co...
Energy sector in Brazil:
supply perspectives
Installed Energy Capacity in Brazil


Total installed capacity is expected t...
Energy sector in Brazil:
contracting environment
Regulated Market

Free Market

Auctions

Spot Market

PPAs1

Distribution...
Billed energy growth due to high availability
and bilateral contracts
Energy Generation (MW average1)

Billed Energy (GWh)...
Investments in the modernization of Nova
Avanhandava, Ibitinga and Caconde
power plants
Investments1 (R$ million)

2011 In...
Expansion of 550 MW of installed capacity
through the Termo SP Project
Plant localization (Canas/SP)
• Project objectives
...
Financial highlights*
Ebitda (R$ million)

Net Revenue (R$ million)

: 3%
CAGR

: 5%
CAGR

1,605

1,670

1,254

1,754

460...
Practice of 100% pay-out
on quarterly basis*
Net Income and Dividend Pay-out1 (R$ million)

100%

110%

117%

12%

11%

11...
Debt profile
Amortization Schedule – Principal (R$ million)

Net Debt (R$ billion)

0.3x

0.3x

0.3x

0.3x

0.4x

300

0.4...
Capital Markets
Daily Avg. Volume (R$ thousand)

AES Tietê X Ibovespa X IEE

1Q111

120
110

+10%

100

+3%
-1%

13,922
8,...
AES Eletropaulo Overview
Concession Area

 Largest electricity distribution company in Latin America
 Serving 24 municip...
Energy sector in Brazil:
demand perspectives
Macroeconomic Scenario
EPE’s1 Assumptions:

GDP - Annual growth
2004-2008

20...
Energy sector in Brazil:
regulatory methodology
Tariff Reset and Readjustment
• Tariff Reset is applied each 4 years for A...
Consumption Evolution
Total Market1 (GWh)

1Q11 Consumption Share1 (GWh)

CAGR: 3%

6%
45,000 

39,932

40,000 
35,000 

7...
Investments amounted
R$ 156 million in 1Q11
Investments 1Q11

Investments Breakdown (R$ million)

800 

682

700 

28

720...
SAIDI & SAIFI
SAIDI - System Average Interruption Duration Index

SAIFI - System Average Interruption Frequency Index
8.49...
Operational Indexes
Losses (%)

Collection rate (% over Gross Revenues)

11.6

11.8

5.1

5.3

4.4

5.0

6.5

6.5

6.5

6....
Financial Highlights*
Net Revenues (R$ million)

0%
R: 1
CAG

Ebitda (R$ million)

5
R: 1
CAG

9,697

2,413

2,500 

8,786...
Practice of 95% pay-out
on semi-annually basis*
Net Income and Dividend Payout1 (R$ million)
114.4%
101.5%
93.4%

100.0%
8...
Debt Profile
Amortization Schedule – Principal (R$ million)

Net Debt (R$ billion)
1.8x
1.4x

1.1x
0.9x

0.9x

1,105

3.0
...
Capital Markets
Average Daily Volume (R$ thousand)

AES Eletropaulo X Ibovespa X IEE
1Q11 1

115

0

+12%
110

25,677
24,4...
Social Responsibility
Social Responsibility
“Casa da Cultura e Cidadania” Project
•

Over 5.2 thousand children, teenagers,
and adults have been...
Social Responsibility
Volunteering Program

Distributing
Energy of
Good

Acting to
Transform

Specific social mobilization...
Attachments
Costs and Expenses
Costs and operational expenses1 (R$ million)

433

415
351

112

187

201

2008

246

214

2009

2010

...
Costs and Expenses
Costs and operational expenses1 (R$ million)

6,431
5,537
1,306

6,745
1,255

1,440

5,125

5,490
1,665...
Expansion Requirement of 15%


Increase installed capacity in Sao Paulo State by 15% (400 MW), either in greenfield proje...
Eletrobras Lawsuit
State-owned
Eletropaulo was
spun-off into four
companies and,
according to our
understanding
based on t...
Shareholders Agreement
On Dec 2003 AES and BNDES signed a Shareholders’ Agreement to regulate their relationship as shareh...
Brazilian Main Taxes

AES Tietê
• Income Tax / Social Contribution:
– 34% over taxable income

• ICMS (VAT tax)
– deferred...
Contacts:
ri.aeseletropaulo@aes.com
ri.aestiete@aes.com
+ 55 11 2195 7048
The statements contained in this document with r...
Nd roadshow santander e conferência itaú ny eng
Nd roadshow santander e conferência itaú ny eng
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Nd roadshow santander e conferência itaú ny eng

  1. 1. Institutional May, 2011 1
  2. 2. AES Brasil Group • Presence in Brazil since 1997 • Comprised of seven companies in the sectors of energy generation, distribution, trade and telecommunications • 7.6 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 dividend practice since 2006: – AES Tietê: 100% pay-out on quarterly basis – AES Eletropaulo: 95% pay-out on semiannually basis 2
  3. 3. AES Brasil widely recognized in 2009-2010  Quality and safety (AES Eletropaulo) (AES Sul) (AES Eletropaulo) (AES Eletropaulo)  Management excellence (AES Eletropaulo) (AES Tietê) (AES Eletropaulo) (AES Tietê) (AES Tietê)  Environmental concern (AES Brasil) (AES Tietê) 3
  4. 4. Shareholding Structure AES Corp BNDES C 50.00% + 1 share P 0.00% T 46.15% C 50.00% - 1 share P 100% T 53.85% Cia. Brasiliana de Energia T 99.70% AES Sul C 99.99% T 99.99% AES Infoenergy C 99.00% T 99.00% AES Uruguaiana C 71.35% P 32.34% T 52.55% AES Tietê C 76.45% P 7.38% T 34.87% AES Eletropaulo C 98.25% T 98.25% AES Com Rio¹ C 99.99 % T 99.99 % AES Eletropaulo Telecom¹ C = Common Shares P = Preferred Shares T = Total 1 – AES Atimus 4
  5. 5. Listed Companies Shareholding Composition Free Float Others¹ 16.1% 19.2% 56.2% 8.5% 24.2% 28.3% 39.5% 8.0% 1 – includes Federal Government and Eletrobrás shares in AES Eletropaulo and AES Tietê, respectively 5
  6. 6. AES Brasil is the second largest group in electric sector Ebitda1 – 2010 (R$ Billion) 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 0.6 COPEL DUKE 0.6 0.2 0.1 DUKE CESP 1 Net Income – 2010 (R$ Billion) 2.3 2.2 1.8 1.6 1.2 1.0 CEMIG 1 – excluding Eletrobrás AES BRASIL NEOENERGIA CPFL Source: Companies’ financial reports TRACTEBEL COPEL EDP LIGHT 6
  7. 7. AES Tietê is an important player among private energy generators Generation Installed Capacity (MW) - 2010 Privately held companies 2% 2% 6% 4%  AES 5% 36% Tietê is the 2nd largest among private generation companies and 10th largest overall 6%  10 largest gencos correspond to 64% of the total 6% 7% 9% 8% 114 GW 8% installed capacity  There are three mega hydropower plants under construction in the North region of Brazil with 18 GW in installed capacity AES TIETÊ DUKE TRACTEBEL COPEL PETROBRÁS CEMIG ITAIPU CESP ELETRONORTE FURNAS CHESF OTHERS – Santo Antonio and Jirau (Madeira River): 7GW – Belo Monte (Xingu River): 11GW Source: ANEEL (Regulator) – BIG (May, 2011) 7
  8. 8. AES Brasil is the largest distribution group in Brazil Consumption (GWh) - 2010 13% • 64 discos in Brazil distributing 419 TWh 12% 40% • AES Brasil is the largest electricity distribution group in Brazil: 10% – AES Eletropaulo: 43 TWh distributed, representing 10.3% of the Brazilian 7% 6% 6% market 6% – AES Consumers – Dec/2010 Sul: 9 TWh distributed, representing 2.2% of the Brazilian 12% market 30% 12%  There is competition restricted 12% a limited in to Brazil operate opportunity for as are discos within their concession areas 5% 7% 7% 16% 8
  9. 9. AES Tietê Overview Concession Area  16 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 2,657 MW, with physical guarantee1 of 1,280 MW  All 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  328 employees 1 - Amount of energy allowed to be long term contracted 10
  10. 10. Energy sector in Brazil: supply perspectives Installed Energy Capacity in Brazil  Total installed capacity is expected to reach 167 GW by 2019  Brazilian energy matrix is not expected to materially change over the next 10 years 2010 2019 Natural gas; 7% Natural gas; 8% Biomass; 5% Biomass; 5% SHPP; 4% SHPP; 4% Oil; 3% Oil; 5% Nuclear; 2% Hydro; 74% Others; 9% 112 GW* 1 - Small Hydro Power Plant Coal; 1% Diesel; 1% Wind; 1% Steam; 1% Hydro; 70% Annual Growth: 4.5% p.a. * Source: EPE (Energetic Research Company, May/2010) Others; 14% Nuclear; 2% Coal; 2% Diesel; 1% Wind; 4% Steam; 0% 167 GW 11
  11. 11. 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): – New Energy (A-5): Delivery in 5 years, 15- Distribution Companies 30 years regulated PPA1 – New Energy (A-3): Delivery in 3 years, 1530 years regulated PPA – Existing Energy (A-1): Delivery in 1 year, 5-15 years PPA 1 – Power Purchase Agreement 12
  12. 12. Billed energy growth due to high availability and bilateral contracts Energy Generation (MW average1) Billed Energy (GWh) 143% 136% 14,729 14,706 130% 125% 13,148 301 117 1,150 331 1,680 118% 1,340 2,331 1,980 11,138 11,108 11,108 4,276 1,979 1,512 1,665 1,612 1,599 52 643 566 3,645 108 424 587 3,015 2008 2009 Generation - MWAvg 2010 1Q10 1Q11 Generation / Physical Guarantee 1- Generated energy divided by the amount of hours 2- Energy Reallocation Mechanism 2008 AES Eletropaulo 2009 MRE 2010 2 Spot market 2,526 1Q10 1Q11 Other bilateral contracts 13
  13. 13. Investments in the modernization of Nova Avanhandava, Ibitinga and Caconde power plants Investments1 (R$ million) 2011 Investments 158 89% 6 82 57 12 5% 6% 13 152 70 35 4 8 43 1 30 7 Equipment and Modernization 2009 2010 2011 (e) Investments 1Q10 1Q11 2 New SHPPs New SHPPs IT projects 1 - Do not include capitalization of interests during plants modernization and development of projects 2 - Small Hydro Power Plants 14
  14. 14. Expansion of 550 MW of installed capacity through the Termo SP Project Plant localization (Canas/SP) • Project objectives - Expansion of installed capacity in the State of São Paulo Offering competitively energy prices • Project features - Combined cycle using natural gas 2 gas turbines, 2 heat recovery boilers and 1 steam turbine Estimated investment of R$ 1.1 billion Natural gas consumption: 2.5 million m3/day • Expected Timetable - May 26, 2011: Public hearing July/11: Expectation of issuance of environmental license (expected) 2nd half of 2011: Power auction realization (expected) Project Website: www.aestiete.com.br/termosaopaulo 15
  15. 15. Financial highlights* Ebitda (R$ million) Net Revenue (R$ million) : 3% CAGR : 5% CAGR 1,605 1,670 1,254 1,754 460 2008 2009 (*) 2009 and 2010 numbers in IFRS 2010 1Q10 1,255 1,320 416 1Q11 378 2008 2009 2010 338 1Q10 1Q11 16
  16. 16. Practice of 100% pay-out on quarterly basis* Net Income and Dividend Pay-out1 (R$ million) 100% 110% 117% 12% 11% 11% 692 706 737 220 2008 2009 Net income 1 – Gross amount (*) 2009 and 2010 numbers in IFRS 2010 Pay-out 193 1Q10 1Q11 Yield PN 17
  17. 17. Debt profile Amortization Schedule – Principal (R$ million) Net Debt (R$ billion) 0.3x 0.3x 0.3x 0.3x 0.4x 300 0.4 0.4 0.4 0.4 2008 2009 2010 1Q10 Net debt 300 300 2013 2014 2015 0.5 1Q11 Net debt / EBITDA • March, 2011: – – Average debt maturity of 3.1 years – Net debt: R$ 0.5 billion – 1 – Brazilian Interbank Interest Rate Average debt cost in 1Q11 was 114% of CDI1 p.a. or 14% p.a. Net debt/EBITDA: 0.4x 18
  18. 18. Capital Markets Daily Avg. Volume (R$ thousand) AES Tietê X Ibovespa X IEE 1Q111 120 110 +10% 100 +3% -1% 13,922 8,160 10,187 13,253 4,239 3,274 8,086 9,683 9,979 2009 2010 1Q11 2,101 2,692 90 5,468 80 Dec-10 Jan-11 Feb-11 Mar-11 2008 Preferred • Common shares and preferred shares listed on BM&FBOVESPA under the tickers GETI3 and GETI4 • Common ADRs at US OTC Market under the tickers AESAY and AESYY 1 – Index: 12/31/2010 = 100 19
  19. 19. AES Eletropaulo Overview Concession Area  Largest electricity distribution company in Latin America  Serving 24 municipalities in the São Paulo Metropolitan area  Concession contract valid until 2028  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  5,629 employees 21
  20. 20. Energy sector in Brazil: demand perspectives Macroeconomic Scenario EPE’s1 Assumptions: GDP - Annual growth 2004-2008 2010-2014 2015-2019 World 4.6 4.2 4.0 Brazil 4.7 5.2 5.0 • Global financial sector recovery will not take longer; • Brazilian economic growth will outpace global Brazilian Consumption Evolution (TWh) international 5.0% p.a 633 331 346 • 393 context even of in an moderate Emerging markets – especially China – will 378 growth, expansion; 4.4% p.a. 358 average grow faster than developed economies, positively affecting industrial 420 388 sector in Brazil; • Income elasticity of energy demand (20102019): 1.04 • Households growth: 2.2% p.a 2004 2005 2006 2007 2008 1 - Source: EPE (Energetic Research Company) 2009 2010 2019 22
  21. 21. Energy sector in Brazil: regulatory methodology Tariff Reset and Readjustment • Tariff Reset is applied each 4 years for AES Eletropaulo • Parcel A Costs − Next 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 X WACC Energy Purchase Transmission Sector Charges Reference Company (PMSO) Investment Remuneration Remuneration Asset Base X Depreciation Depreciation Regulatory Ebitda (1) X Factor: index that capture productivity gains − Non-manageable costs that totally pass- through to the tariff − Losses reduction improve the passthrough effectiveness • Reference Company: – Efficient cost structure, determined by ANEEL (National Electricity Agency) • Remuneration Asset Base: – Applicable investments used to calculate the Investment Remuneration (applying WACC) and Depreciation Parcel A - Non-Manageable Costs Parcel B - Manageable Costs 23
  22. 22. Consumption Evolution Total Market1 (GWh) 1Q11 Consumption Share1 (GWh) CAGR: 3% 6% 45,000  39,932 40,000  35,000  7,355 41,243 7,383 43,345 14% 36% 36% 7,911 6% 18% 30,000  13% 25,000  20,000  15,000  32,577 33,860 35,434 10,000  10,357 1,813 5,000  8,544 11,119 26% 27% 18% 2,041 9,078 Residential 0  2008 2009 Free Clients 2010 1Q10 Captive Market 1Q11 Commercial Free Clients Industrial Others 1 – Net of own consumption 24
  23. 23. Investments amounted R$ 156 million in 1Q11 Investments 1Q11 Investments Breakdown (R$ million) 800  682 700  28 720 36 57 3 5 8 600  500  457 47 9 400  654 300  200  37 684 37 156 410 98 10 88 100  5 152 Maitenance 0  2009 2010 2011(e) 1Q10 1Q11 Customer Service System Expansion Capex Paid by Customers Losses Recovery IT Paid by the Clients Others 25
  24. 24. SAIDI & SAIFI SAIDI - System Average Interruption Duration Index SAIFI - System Average Interruption Frequency Index 8.49 10.92 7.87 10.09 7.39 9.32 9.20 11.86 2008 2009 2010 5th 12.66 10.68 8th SAIDI (hours) ► 9.91 1Q11 6.17 5.43 6.29 5.44 2008 2009 2010 1Q10 1Q11 1st 1Q10 5.64 7th SAIDI Aneel Reference 2011 SAIDI ANEEL Reference: 8.68 hours SAIFI (times) ► SAIFI Aneel Reference 2011 SAIFI ANEEL Reference: 6.93 times ABRADEE ranking position among the 28 utilities with more than 500 thousand customers Sources: ANEEL, AES Eletropaulo and ABRADEE 26
  25. 25. Operational Indexes Losses (%) Collection rate (% over Gross Revenues) 11.6 11.8 5.1 5.3 4.4 5.0 6.5 6.5 6.5 6.5 2009 2010 1Q10 1Q11 102.5 2010 1Q10 99.6 6.5 2008 102.4 4.3 10.9 Technical Losses ¹ 11.5 10.8 98.5 101.1 2008 2009 1Q11 Commercial Losses 1 – Current technical losses used retroactively as a reference 27
  26. 26. Financial Highlights* Net Revenues (R$ million) 0% R: 1 CAG Ebitda (R$ million) 5 R: 1 CAG 9,697 2,413 2,500  8,786 10,000  % 9,000  8,000  7,193 1,775 2,000  1,566 7,000  1,500  6,000  5,000  4,000  2,260 3,000  2,423 1,000  498 549 1Q10 1Q11 500  2,000  1,000  0  0  2008 2009 (*) 2009 and 2010 numbers in IFRS 2010 1Q10 1Q11 2008 2009 2010 28
  27. 27. Practice of 95% pay-out on semi-annually basis* Net Income and Dividend Payout1 (R$ million) 114.4% 101.5% 93.4% 100.0% 80.0% 35.0% 28.6% 120.0% 30.0% 25.0% 20.3% 20.4% 20.0% 60.0% 15.0% 40.0% 10.0% 20.0% 1,027 1,348 1,156 0.0% 5.0% 0.0% 223 2008 2009 2010 282 1Q10 1Q11 Net Income Pay-out 1 – Gross amount (*) 2009 and 2010 numbers in IFRS Yield PN 29
  28. 28. Debt Profile Amortization Schedule – Principal (R$ million) Net Debt (R$ billion) 1.8x 1.4x 1.1x 0.9x 0.9x 1,105 3.0 2.7 2.4 2.4 2.4 64 244 319 46 273 343 49 294 2011 2012 2013 309 2008 2009 2010 1Q10 1Q11 578 53 526 2014 391 60 442 277 56 221 331 286 64 222 2015 2016 2017 Net Debt/Ebitda Adjusted with Fcesp Net Debt (R$ billion) • Local Currency (ex FCesp) 69 373 2018 179 from 2019 to 2028 March, 2011: – Average debt cost in 1Q11 was 108% of CDI1 or 13.9% p.a. – Average debt maturity of 6.9 years – Net debt: R$ 2.4 billion – ¹ Brazilian Interbank Interest Rate Fcesp² 926 Net debt/EBITDA of 0.9x adjusted with Pension Fund ² Pension Fund 30
  29. 29. Capital Markets Average Daily Volume (R$ thousand) AES Eletropaulo X Ibovespa X IEE 1Q11 1 115 0 +12% 110 25,677 24,496 0 23,009 + 10% 21,960 0 105 0 100 - 1,0% 95 0 0 0 90 Dec-10 Jan-11 Ibovespa Feb-11 IEE Mar-11 2008 2009 2010 1Q11 AES Eletropaulo PN • Common shares and preferred shares listed on BM&FBOVESPA under the tickers ELPL3 and ELPL4 • ADRs at US OTC Market under the tickers EPUMY and ELPSY 1 – Index: 12/31/2010 = 100 31
  30. 30. Social Responsibility
  31. 31. 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 33
  32. 32. Social Responsibility Volunteering Program Distributing Energy of Good Acting to Transform Specific social mobilization or emergency campaign. Opportunities for volunteering in social organizations, which are partners of AES Brazil Winter clothes, Christmas campaign, among others. Co-workers can enroll in 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 34
  33. 33. Attachments
  34. 34. Costs and Expenses Costs and operational expenses1 (R$ million) 433 415 351 112 187 201 2008 246 214 2009 2010 82 78 34 48 239 29 49 1Q10 1Q11 Energy Purchase, Transmission and Connection Charges, and Water Resources 2 Other Costs and Expenses 1 – Do not include depreciation and amortization 2 - Personnel, Material, Third Party Services and Other Costs and Expenses 36
  35. 35. Costs and Expenses Costs and operational expenses1 (R$ million) 6,431 5,537 1,306 6,745 1,255 1,440 5,125 5,490 1,665 2009 2010 Energy Supply and Transmission Charges 348 1,323 2008 1,707 342 4,097 1,359 1Q10 1Q11 PMS and Others Expenses² 1 – Do not include depreciation and amortization 2 - Personnel, Material, Third Party Services and Other Costs and Expenses 37
  36. 36. 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 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 • 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) 38
  37. 37. Eletrobras Lawsuit 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 Stated-owned Eletropaulo borrowed money from Eletrobras Eletrobras, after winning the interest calculation discussion, filed an Execution Suit to collect the due amount Eletrobras and CTEEP appealed to the Superior Court of Justice (SCJ) Eletrobras requested the 1st level of court judge to appoint an expert Eletrobras requested the beginning of the appraisal procedure , which is under 5th Civil Court analysis. AES Eletropaulo and CTEEP should be notified during next months Next Steps: Nov/86 Dec/88 State-owned Eletropaulo and Eletrobras disagreed on how to calculate interest over that loan and a lawsuit was started Jan/98 Apr/98 Privatization event . Stateowned Eletropaulo became AES Eletropaulo Sep/01 Sep/03 The 2nd level of court excluded AES Eletropaulo from the discussion based on the spin-off agreement Oct/05 Jun/06 May/09 Feb/10 Dec/10 1 - The auditing procedure will be concluded in at least 6 months 2 - After conclusion of the expert work, the 1st level of court decision will be released The SCJ decided to send the Execution Suit back to the 1st level of court The Judge appointed the expert who will indicate the amount and the debtor 3 - Appealing to the 2nd level of court 4 - Appealing to the 3rd level of court 39
  38. 38. Shareholders Agreement On Dec 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 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 Drag along rights  Once the offering party exercises the Drag Along clause, offered party is obligated to dispose of all 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 its shares at the time, if the Right of 1st Refusal is not exercised by offered party 40
  39. 39. Brazilian Main Taxes 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 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 41
  40. 40. Contacts: ri.aeseletropaulo@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.
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