Institutional
May, 2013

1
AES Brasil Group

 I B il since 1997
In Brazil i
 Operational Figures:
- Customers units: 7.7 million
-P
Population serv...
AES Brasil widely recognized in 2009-2013
Management Excellence

Quality and Safety

Sustainability

(AES Tietê)
(AES Sul)...
Mission & visions
Mission
Improving lives and promoting development by providing safe
safe,
reliable and sustainable energ...
Sustainability - Corporate Social Responsibility:
annual investments of R$ 148 million
Development and transformation of c...
Shareholding structure

BNDES

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

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

Cia. Bras...
AES Tietê and AES Eletropaulo are listed
in BM&FBovespa
i BM&FB

¹

¹ Free Float

Others²

Market Cap³

16.1%

19.2%

56.2...
AES Brasil among the top five in
the electric sector

Ebitda – 2012 (R$ billion)
3.9

3.6
3.1
2.6
26

2.5
25
2.1

1.6

1.5...
AES Tietê is the 3rd largest private
generator in Brazil

Generation installed capacity (MW) - 20121
Main privately held C...
AES Brasil is among the top 3 largest
distribution players in Brazil
p y

Consumers – D /2011
C
Dec/2011
13%
30%
12%

AES
...
AES Tietê overview

 12 hydroelectric plants in São Paulo
 30-year concession expiring in 2029
 Installed capacity of 2...
Generated energy shows high
operational availability
p
y
1Q13 Generated energy by power plant (MW average1)

Generated ene...
Hydrological conditions improving
and rationing is unlikely
g
y
Brazilian reservoir levels1 (%)

AES Tietê reservoirs leve...
System physical guarantee reduction resulted in
spot market exposure since September/2012
Allocation of physical guarantee...
89% of net revenues and 73% of billed energy
came from the bilateral contract with AES
Eletropaulo in 1Q13
Billed energy (...
Investments in power plants
modernization
Investments (R$ million)

213
175

2013
139

major

investments

in

Nova

Avanh...
Growth projects
“Thermal São Paulo” Project (550 MW)


Natural
N t l gas combined cycle th
bi d
l thermal plant
l l t


...
Contracting strategy: driven to free market
Clients portfolio evolution in 1Q13

265%

Assured Energy (1,278 MW avg)

Cons...
Financial highlights
Ebitda (R$ million)

Net revenue (R$ million)

1,754

1,886

2,112
2 112
11%

1,311

540
2010

2011

...
Steady earnings distribution on a
quarterly basis
Net income and dividend pay-out (R$ million)
117%

109%

108%

11%

11%
...
Debt profile
Amortization schedule – 1st Debenture Issuance (R$ million)

Net debt (R$ billion)
1.0
0.7

0.3

0.6
06

0.4
...
Capital markets
Daily avg volume (R$ thousand)

AES Tietê X Ibovespa

2005 ‐ May 2013¹

400

1,387
703

350

546

739
21,1...
AES Eletropaulo overview
Concession area
 Largest distribution company in Brazil in terms of energy
distribution
 Servin...
Consumption evolution
Total market1 (GWh)

Consumption by class1 – 1Q13 (%)
9

15

23

43,345
7,911

45,102

45,567

8,284...
Industrial class
Consumption of industrial class by activity1 –
AES Eletropaulo

Industrial class X Industrial production ...
Residential class
Residential class X A erage income in São Paulo Metropolitan Area
Average
Pa lo
2,200 
2,100 
2,000 
1,9...
Investments focused on grid automation,
operational reliability and
p
y
system expansion
Investments breakdown (R$ million...
SAIDI below regulatory reference
and in its lowest level since 2006
SAIDI¹ (last 12 months)

SAIDI1 (YTD)

8.67
9.32

8.68...
SAIFI below regulatory reference
SAIFI¹ (last 12 months)
7.39

6.93

SAIFI1 (YTD)

6.87

6.87

6.64

-5%

5.46

5.45

4.65...
Losses level within regulatory threshold
Losses (last 12 months)

10.9

6.5

Regulatory Reference² - Total Losses (last 12...
Financial highlights
Net revenues (R$ million)

14,714

Ebitda (R$ million)

2,848

15,314

15,240

831

739

2,413
5,017
...
Average payout of 74% p.a. since 2006
Net income and dividend payout1 (R$ million)
114.4%
54.4%

25.0%

17.1%

28.6%

2.8%...
Cost management excellence
Efficiency programs and results



PMSO¹ per customer (R$)

Started in 2007 and evolved from c...
Debt refinancing conclusion of R$ 1 billion
with more flexible covenants
 Decrease in debt amortization volume for 2013-1...
Covenants change
FROM

TO
Net d bt Adj t d Ebitda 3.5
N t debt / Adjusted Ebitd < 3 5

Financial Index

Gross debt / Adjus...
Covenants limits amended due to tariff
reset delay and higher energy costs

Accounting
impacts due to
tariff reset
postpon...
Debt profile
Net debt

Average cost

4.9x
0.9x

6.7

6.4

4.4x
0.8x
1.1x

3.0
2.4

2.3
23

2010

2011

Net Debt (R$ billio...
Debt profile
Debt amortization schedule (financial liabilities as of March, 2013)
2,624
677

56
142

73
50

123
2013

39
1...
AES Eletropaulo: challenges

“Criando
Valor”
(Creating
Value) project
launch

2010

Filling of
administrative
appeals at
A...
Capital markets
AES Eletropaulo X Ibovespa

Daily avg volume (R$ thousand)

2005 ‐ May 2013¹

28,254
23,606

360

14,824

...
Attachment
AES Sul and AES Uruguaiana Overview
AES Sul overview
Overview and Business Drivers
Overview
 Serving 118 Municipalities in the State of Rio Grande do Sul
 C...
AES Sul financial highlights

Ebitda (R$ million)

Net revenues (R$ million)

2,341
2 341
1,866

490

-7%

2,027

Net inco...
AES Uruguaiana overview
Overview and Business Drivers

Overview


Independent natural gas-fired thermal power generation ...
Attachment
Energy Sector in Brazil
Energy sector in Brazil: business segments
Free Clients

Distribution

Transmission

Consumption 14.770 MWavg
 Cons mptio...
Energy sector in Brazil:
contracting environment
g
Regulated market

Free market

Generators,
Generators Independent Power...
Electric sector in Brazil:
generation market overview
Installed capacity (GW)

Growth by source - new auctions (GW)
Total:...
Attachment
Regulatory Environment
Distribution companies:
tariff methodology
Tariff reset and adjustment
• Tariff Reset is applied each 4 years for AES Elet...
Distribution companies:
tariff methodology
3rd Cycle of tariff reset – X factor

X FACTOR

=

Pd

+

Q

+

T

DEFINITION

...
3rd Cycle of Tariff Reset
for AES Eletropaulo
 Gross Regulatory Asset Base: R$ 10,748.8 million

Tariff Review

 Net Reg...
Discussions with the Regulator
Discussion

 E l i
Exclusion R$ 1 260 million f
1,260 illi
from shielded
hi ld d
RAB:

Shi...
3rd Cycle of Tariff Reset
for AES Sul
 Gross Regulatory Asset Base: R$ 2,503.0 million
g
y

Parcel B: R$ 542.2 million
No...
Regulatory pressure to lower tariffs…
 “Energy Cost Reduction Program” established by Provisional Measure 579 and Law 12....
… combined with poor hydrological conditions
impacted discos cash position…
p
p
Out-of-merit-order: higher EES¹
Out of mer...
… resulted in a measure to preserve discos
financial stability
y
After
C
t
Component

Energy Purchase
(within-the-merit-or...
Spot price new methodology
Previous
Regulation

CNPE Resolution # 3/2013

Transitory regulation
(April to July, 2013)
Char...
Attachment
AES Tietê: Expansion Obligation
AES Eletropaulo: Eletrobrás Lawsuit
AES Tietê's expansion obligation
Efforts being made
Judicial Notice:

Privatization Notice
established the
obligation to e...
Eletrobrás lawsuit
State-owned
Eletropaulo was spunoff into four companies
and, according to our
understanding based
g
on ...
Eletrobrás lawsuit
In accordance to the
procedure that was
stipulated by 2nd
Instance Court after
an appeal from AES
Eletr...
Attachment
AES Eletropaulo: Pension p
p
plan
Pension plan expenses and disbursements
g
p
are calculated using different assumptions
ACCOUNTING
EXPENSE
Regulatory Agenc...
Main amendments on accounting rules
Until 12.31.2012
(Res. CVM 600)
600)¹
Expected return on
plan assets

Actuarial Gains
...
Impact on the income statement due to
changes imposed by CVM
g
p
y
2012

2013

R$ million

R$ milllion

Service cost

16 3...
Cash impacts with the plan
 Amendments set forth by CVM 695 has no influence on assumptions and on the calculation
method...
Attachment
Other subjects
Shareholders agreement
On Dec-2003 AES and BNDES executed a Shareholders’ Agreement to regulate their relationship as shar...
Costs and expenses
Costs and operational expenses1 (R$ million)
570

433

419

187

174

198

126%

264
41
372

246

117

...
Energy costs pushed the costs and
operating expenses in the 1Q13
Operating costs and expenses¹ (R$ million)
2

8

282

271...
Costs and expenses
Costs and operational expenses1 (R$ million)

PMS2 and other expenses (R$ million)
1,551
1 551

6,927

...
Manageable PMSO¹ items
below the inflation in 1Q13

PMS and other expenses¹ – 1Q13 (R$ million)

-1.4%

88

(65)
(60)

(3)...
Brazilian main taxes

AES Eletropaulo

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

• ICMS (VA...
Contacts:
ri.aeseletropaulo@aes.com
ri.aestiete@aes.com
+ 55 11 2195 7048
The statements contained in this document with r...
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Institucional presentationl 1 q13
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Institucional presentationl 1 q13

  1. 1. Institutional May, 2013 1
  2. 2. AES Brasil Group  I B il since 1997 In Brazil i  Operational Figures: - Customers units: 7.7 million -P Population served: 20 2 million l ti d 20.2 illi - Distributed Energy: 54.4 TWh - Generation Capacity: 3.298 MW - Generated Energy : 14 270 GWh 14.270  7.6 thousand AES Brasil People  Investments 1997-2012: R$ 14.7 billion  Solid corporate governance and sustainability practices  Safety our #1 Value Disco Genco Service Provider 2
  3. 3. AES Brasil widely recognized in 2009-2013 Management Excellence Quality and Safety Sustainability (AES Tietê) (AES Sul) (AES ( S Eletropaulo) ) (AES Ti tê) Tietê) (AES Brasil) (AES Tietê) (AES El t Eletropaulo) l ) (AES Eletropaulo) (AES Tietê) (AES Brasil) (AES Eletropaulo) (AES Tietê) (AES Tietê) (AES Eletropaulo) (AES Eletropaulo/ Tietê) (AES Tietê) (2011- AES Tietê; 2012 – AES Eletropaulo) (2009 - AES Eletropaulo) (AES Eletropaulo) 3
  4. 4. Mission & visions Mission Improving lives and promoting development by providing safe safe, reliable and sustainable energy solutions Visions Be a leader in operational and financial management in the Brazilian energy generation sector and expand installed capacity Be the best distributors in Brazil 4
  5. 5. Sustainability - Corporate Social Responsibility: annual investments of R$ 148 million Development and transformation of communities “Casa de Cultura e Cidadania” Project - Offers courses and activities in culture and sports. Directly benefits approximately 5 6 tho sand appro imatel 5.6 thousand children and teenagers and indirectly 292 tho sand people in 7 units located within indirectl thousand nits ithin AES Brazil companies’ areas of operation Children educational development “Centros Educacionais Luz e Lápis” Project - Two units in São Paulo attending 300 children from 1 to 6 years old in condition of social vulnerability Education on safety and efficiency in energy consumption “AES Eletropaulo nas Escolas” Project - Education about safe and efficient use of energy to 4.5 thousand teachers and 404 thousand students from 900 public schools. The actions include recreational activities offered in adapted trucks. Converting consumers to clients Developed for grid connection regularization. Between 2004 and 2012, more than 500 thousand families in low income communities were benefited from better energy supply conditions and social inclusion. 5
  6. 6. Shareholding structure BNDES AES Corp 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 Serviços TC C 99.99% T 99.99% C 71.35% P 32.34% T 52.55% AES Uruguaiana AES Tietê C 76.45% P 7.38% T 34.87% AES Eletropaulo C = Common Shares P = Preferred Shares T = Total 6
  7. 7. AES Tietê and AES Eletropaulo are listed in BM&FBovespa i BM&FB ¹ ¹ Free Float Others² Market Cap³ 16.1% 19.2% 56.2% 8.5% US$ 0.6 bi 24.2% 24 2% 28.3% 28 3% 39.5% 39 5% 8.0% 8 0% US$ 3 9 bi 3.9 1 - Parent companies, AES Corp and BNDES, have similar voting capital on each of the Companies: approx 35.9% on AES Eletropaulo and 32.9% on AES Tietê 2 - Includes Federal Government and Eletrobrás shares in AES Eletropaulo and AES Tietê, respectively 3 - Base: 05/08/2013. Considers preferred shares for AES Eletropaulo and preferred and common shares for AES Tietê 7
  8. 8. AES Brasil among the top five in the electric sector Ebitda – 2012 (R$ billion) 3.9 3.6 3.1 2.6 26 2.5 25 2.1 1.6 1.5 1.3 0.8 CPFL Cemig Tractebel AES Brasil Neoenergia Cesp Copel Light EDP 0.7 Duke 0.6 Coelce -0.3 Equatorial Celesc Net income – 2012 (R$ billion) ( ) 3.8 1.6 Cemig CPFL 1.5 1.3 1.1 Tractebel Neoenergia AES Brasil Source: Companies’ financial reports 0.7 Copel 0.4 0.4 0.3 0.3 0.1 0.1 -0.3 Light Coelce EDP Duke Cesp Equatorial Celesc 8
  9. 9. AES Tietê is the 3rd largest private generator in Brazil Generation installed capacity (MW) - 20121 Main privately held Companies CPFL 2,4% AES Tietê 2,2% ENDESA S Eletronuclear 0,8% Eletrosul 2,8% 0,5% Light DUKE CGTEE 1,7% 0,8% 0,7% EDP 1,5% Neoenergia 1,2%  AES Tietê: 3rd largest among private generation companies Tractebel 6% Petrobrás 5% Demais 28,9% Copel 4%  Approximately 78% of country’s generation installed capacity is state-owned2 Cemig 6%  18 GW of hydro capacity under construction: Itaipu 6% CESP 6% CHESF 9% Eletronorte 7% Furnas 8% – S t A t i and Ji Santo Antonio d Jirau (M d i Ri ) 7 GW (Madeira River): – Belo Monte (Xingu River): 11 GW Total Installed Capacity: 123 GW Sources: ANEEL – Generation Data Source “BIG” (March, 2012) and Companies websites 2- Source: Banks’ reports 9
  10. 10. AES Brasil is among the top 3 largest distribution players in Brazil p y Consumers – D /2011 C Dec/2011 13% 30% 12% AES A Brasil 12% 5% CPFL Energia Cemig 7%  63 distribution companies in Brazil distributing 430 TWh in 2011  AES Brasil is one of the largest electricity distribution group in Brazil: 16% 7% Consumption (GWh) - 2011 Energy distributed (TWh) % of the Brazilian market AES Eletropaulo 45 10.5 AES Sul 8.6 2.0 Neo Energia 13% Copel 12% Light 52% EDP 11% Outros 7%  AES Eletropaulo is the largest distribution company in Brazil in terms of energy distributed 6% 6% 6% Source: Brazilian Association of Electricity Distributors (ABRADEE), 2011 and EPE (Energetic Research Company) 10
  11. 11. AES Tietê overview  12 hydroelectric plants in São Paulo  30-year concession expiring in 2029  Installed capacity of 2,658 MW, with physical guarantee1 of 1,278 MW average  Physical guarantee contracted with AES Eletropaulo (11GWh) through Dec 2015(~R$183/MWh/~US$91/MWh Dec,2015(~R$183/MWh/~US$91/MWh, annually adjusted by inflation)  369 employees as of March, 2013  Company listed at BM&Fbovespa  Rating: Moody's 1 - Amount of energy allowed to be long term contracted National Aa1 International Baa3 12
  12. 12. Generated energy shows high operational availability p y 1Q13 Generated energy by power plant (MW average1) Generated energy (MW avarage1) 125% 124% 127% 130% Agua Vermelha 5% 3% 102% Nova A N Avanhandava h d 6% 8% 44% Ibitinga 5% 1,753 1,599 1,582 1,629 Promissão Bariri 1,480 12% Barra Bonita Euclides da Cunha 2010 2011 Generation - Mwavg 2012 1Q12 1Q13 17% Other Power Plants * Generation/Physical guarantee In D I December 2012, AES Ti tê was th fi t L ti A b 2012 Tietê the first Latin American company t receive th PASS 55 certification of th i to i the PASS-55 tifi ti f the British Standards Institute, for its reliability and sustainability of assets 1 – Generated energy divided by the amount of hours * Caconde, Limoeiro, Mogi and SHPPs 13
  13. 13. Hydrological conditions improving and rationing is unlikely g y Brazilian reservoir levels1 (%) AES Tietê reservoirs levels (%) 100 93% 90 97% 80% 80 Max (%) 70 100% 91% 80% 62 55 60 46 50 40 100% 90% 38 30 20 10 0 Jan Feb Mar Apr May Jun Historical Data Since 2001 Jul Aug 2001 Sep Oct 2012 Nov Dec Caconde A. Vermelha 2013 Apr-12 B. Bonita Promissão Apr-13  Thermal capacity available for dispatch: 14 GW vs. 4 GW in 2001  AES Ti tê Q1 13 i Tietê impact of R$ 115 million d t h d l i l risk sharing t f illi due to hydrological i k h i - 2013 estimated impact ranges from R$ 231 million to R$ 441 million 1 – Average reservoir levels of the National System (percent of maximum storage capacity) 14
  14. 14. System physical guarantee reduction resulted in spot market exposure since September/2012 Allocation of physical guarantee for AES Tietê (MWm) Monthly evolution of the spot price (R$/MWh) 414  375 376  340  320  161 89 77 76 280  72 260  215  -21 -42 -31 -32 -85 -108 108 -308 125  48 29 jan Physical guarantee reduction 118  118 119  119 91  23  Secondary energy 183  181  193  feb 51  26 12 17 mar apr may 2011 32 23 20 jun jul aug sep 37 21 2012 46 44 oct nov dec 2013 15
  15. 15. 89% of net revenues and 73% of billed energy came from the bilateral contract with AES Eletropaulo in 1Q13 Billed energy (GWh) Net revenues (%) 2% 1% 16,728 15,122 14,729 , 554 1,519 301 1,340 1,980 1,942 8% % 615 1,141 AES Eletropaulo 3,834 -14% Spot Market 4,869 11,108 11,138 11,108 1,256 1 256 Bilateral contracts 4,182 163 571 600 2,879 2010 2011 AES Eletropaulo 2012 ERM 1 – Energy Reallocation Mechanism 1 Spot Market 482 42 89% 3,058 1Q12 ERM¹ 1Q13 Bilateral Contracts 16
  16. 16. Investments in power plants modernization Investments (R$ million) 213 175 2013 139 major investments in Nova Avanhandava, Ibitinga and Agua Vermelha 19 power plants, that represent 71% of AES 4 Tietê capacity 213 156 13% 135 21 3 17 2011 2012 Investments 1- Small Hydro Power Plants 2013 (e) 27 1Q12 1Q13 New SHPPs SHPPs¹ 17
  17. 17. Growth projects “Thermal São Paulo” Project (550 MW)  Natural N t l gas combined cycle th bi d l thermal plant l l t  Previous license granted in Oct, 2011 valid for 5 years  Pending gas supply  Next steps: Obtain installation license “Thermal Araraquara” Project (579 MW)  Natural gas combined cycle thermal plant  Purchase option acquired in March, 2012  Pending gas supply  Next steps: Obtain installation license 18
  18. 18. Contracting strategy: driven to free market Clients portfolio evolution in 1Q13 265% Assured Energy (1,278 MW avg) Consolidated portfolio New client p portfolio 307 84 2012 2016 2020 1Q12 1Q13 MWavg  Strategy post-2015: contract energy in the free market with large unregulated customers - Currently serving 45 customers (307 MW) with 3-5 year contracts - C Current prices f delivery in 2016: US$52-US$57/MWh1 ( for S$ S$ / (annually adjusted for inflation) – driven by f f ) supply/demand - 143 MWavg sold from 2016 onwards 1 - AES analysis 19
  19. 19. Financial highlights Ebitda (R$ million) Net revenue (R$ million) 1,754 1,886 2,112 2 112 11% 1,311 540 2010 2011 2012 1Q13 1,542 598 1Q12 1,466 -21% 423 334 2010 2011 2012 1Q12 1Q13 75% 75% 81% 78% 56% Net Revenue Ebitda Ebitda Margin 20
  20. 20. Steady earnings distribution on a quarterly basis Net income and dividend pay-out (R$ million) 117% 109% 108% 11% 11% 10%   737 742 901 2011 Net Income pay out pay-out Average dividends since 2006: g R$ 741 million per year -24% 706 246 2010 Average payout since 2006: 105%  845 25% of minimum according to bylaws 2012 186 Q 1Q12 1Q13 Q Yield PN Payout 21
  21. 21. Debt profile Amortization schedule – 1st Debenture Issuance (R$ million) Net debt (R$ billion) 1.0 0.7 0.3 0.6 06 0.4 0.6 06 0.6 06 0.5 0.5 0.3 300 0.4 2010 0.4 2011 0.5 2012 300 300 2013 0.76 2014 2015 0.5 1Q12 Debt D bt amortization flow ti ti fl 1Q13 Net Debt/Adjusted Ebitda  Average Cost (%CDI)¹ 1Q13 121%  Average Term (Years) 2,0 20 0,8 08 11.3% 9.8% Gross Debt/ Adjusted Ebitda  Gross Debt/Adjusted Ebitda <= 2.5 Covenants Average Cost  Net Debt/Adjusted Ebitda <= 3.5 1 – Brazilian Interbank Interest Rate 1Q12 115%  Interest Rate Net Debt 22
  22. 22. Capital markets Daily avg volume (R$ thousand) AES Tietê X Ibovespa 2005 ‐ May 2013¹ 400 1,387 703 350 546 739 21,113 20,246 300 5,269 182.1% 250 8,529 13,922 12,584 12 584 200 4,239 69.6% 66.8% 54.3% 150 3,269 15,844 9,683 2010 2011 11,717 9,315 , 100 50 Dec-05 Dec-06 Dec-07 Ibovespa Dec-08 AES Tietê PN Dec-09 Dec-10 Dec-11 AES Tietê TSR² Dec-12 Preferred Common 2012 YTD Mar/12 Shares negotiated (thousand) AES TIetê ON 3  Market Cap: US$ 3.9 billion / R$ 7.8 billion  BM&FBovespa: GETI3 (common shares) and GETI4 (preferred shares)  ADRs negotiated in US OTC Market: AESAY (common shares) and AESYY (preferred shares) 1 – Information until 05/08/2013. Index: 12/29/2005 = 100 2 – Total Shareholders’ Return 3 – Index: 05/08/2013 23
  23. 23. AES Eletropaulo overview Concession area  Largest distribution company in Brazil in terms of energy distribution  Serving 24 municipalities in the São Paulo Metropolitan area  Concession contract expire in 2028 p  Concession area with the highest GDP in Brazil (16,8% of Brazilian GDP¹)  46 thousand kilometers of lines and 6 5 million consumption 6.5 units in a concession area of 4,526 km2  46 TWh distributed in 2012  6,168 employees as of March, 2013  Company listed at BM&FBovespa  Investment grade: Fitch S&P Moody’s National AA AA- Aa1 BBB- BB Baa3 International 1 – Source: IBGE, 2010. 25
  24. 24. Consumption evolution Total market1 (GWh) Consumption by class1 – 1Q13 (%) 9 15 23 43,345 7,911 45,102 45,567 8,284 7,987 38 31 19 2% 35,434 36,817 37,570 46% 11,401 11,156 9,250 2011 Captive Market 2012 37 2,092 1,906 2010 68% 9,309 1Q12 28 1Q13 Free Clients Brasil Residential Commercial AES Eletropaulo Industrial Others  State of São Paulo GDP growth 3.3% (5-year average) - Expectation for 2013 3.0%, grows to 3.5% in 2014-2015 1 – Net of own consumption 26
  25. 25. Industrial class Consumption of industrial class by activity1 – AES Eletropaulo Industrial class X Industrial production in São Paulo state 15% 10% 5% 0% Other industries 51% -5% 5% -10% Economic crisis Economic crisis Economic  recovery Vehicles, Chemical, Rubber, Plastics and Metal Products 49% Industrial production SP (% 12 months) 1 – As of March, 2013. Ma ar-13 No ov-12 Ju ul-12 Ma ar-12 No ov-11 Ju ul-11 Ma ar-11 No ov-10 Ju ul-10 Ma ar-10 No ov-09 Ju ul-09 Ma ar-09 No ov-08 Ju ul-08 Ma ar-08 No ov-07 Ju ul-07 -15% Industrial (% 12 months) 27
  26. 26. Residential class Residential class X A erage income in São Paulo Metropolitan Area Average Pa lo 2,200  2,100  2,000  1,900  1,800  1,700  1,600  1,500  1,400  1 400 1,300  1,200  4,800  4,300  3,800  3,300  Residential ‐ GWh Avg Real I Income R$ ‐ SP (Q Q ‐2*) 1 Residential  Consumption x  Real Income ‐ São Paulo (Q‐2*)  Residential consumption reflects p p growth GDP per capita g 2,800  2 800  Average growth of the residential class (aggregate) in the last 5 years: 4.8% 2,300  1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2007 2008 2009 2010 2011 2012 2013 Consumption per consumer (i kWh) C ti (in  Consumption per residential consumer: average growth of 1.5% in the last 5 years - 8.5% 258 Rationing 213 220 199 203 2005 228 229 2009 2010 234 236 2011 2012 207 2004 219 223 192 2000 2001 2002 2003 2006 2007 2008 1 - Two quarters of delay in relation to consumption 28
  27. 27. Investments focused on grid automation, operational reliability and p y system expansion Investments breakdown (R$ million) 831 2013 investments plan: 35 739 22 p g, g  substation repowering, adding 133 MVA 647 capacity to the system 26  29.7 km of new transmission lines  maintenance in over 5,200 km of , 717 796 distribution grid 621 -21%  regularization of 75,000 illegal 184 7 177 2011 2012 Own Resources 2013(e) 1Q12 connections and replacement of 125,000 145 11 134 obsolete meters. 1Q13 Funded by the clients 29
  28. 28. SAIDI below regulatory reference and in its lowest level since 2006 SAIDI¹ (last 12 months) SAIDI1 (YTD) 8.67 9.32 8.68 8.49 86 8.67 -9% 10.60 10.36 8.35 9.57 8.32 3.36 2010 2011 2012 7th 6th 1Q12 1Q13 3.06 p Jan-Apr 12 Jan-Apr 13 p 4th SAIDI (hours) SAIDI Aneel Reference ABRADEE ranking position among the 28 utilities with more than 500 thousand customers 1 - System Average Interruption Duration Index Sources: ANEEL and AES Eletropaulo 30
  29. 29. SAIFI below regulatory reference SAIFI¹ (last 12 months) 7.39 6.93 SAIFI1 (YTD) 6.87 6.87 6.64 -5% 5.46 5.45 4.65 5.09 4.60 1.76 2010 2011 2012 3rd 4th 1Q12 1Q13 1.68 p Jan-Apr 12 Jan-Apr 13 p 3rd SAIFI (times) SAIFI Aneel Reference ABRADEE ranking position among the 28 utilities with more than 500 thousand customers 1 - System Average Interruption Duration Index Sources: Aneel and AES Eletropaulo 31
  30. 30. Losses level within regulatory threshold Losses (last 12 months) 10.9 6.5 Regulatory Reference² - Total Losses (last 12 months) 10.5 10.4 10.4 10.1 6.5 6.1 6.4 6.1 10.6 4.4 4.0 4.1 4.0 2011 2012 1Q12 1Q13 9.8 98 9.4 94 2011/2012 2012/2013 2013/2014 2014/2015 4.0 2010 10.3 Non Technical Losses Technical Losses ¹ 1 – In January 2012, the Company improved the assessment of the technical losses. 2 – Values estimated by the Company to make them comparable to the reference for non-technical losses determined by the Aneel 32
  31. 31. Financial highlights Net revenues (R$ million) 14,714 Ebitda (R$ million) 2,848 15,314 15,240 831 739 2,413 5,017 5,405 5 405 442 339 5,354 5 354 426 933 -14% 9,697 9,097 9,128 3,835 186 -57% 1,362 2011 2012 993 2,286 2010 1,648 3,283 1Q13 636 179 2,146 1Q12 145 1,473 298 206 92 476 2010 Net revenue ex-construction revenue Deduction to Gross Revenue Construction revenues 1 – Non recurring 2011 : Includes sale of AES Eletropaulo Telecom with a R$ 707 million impact on Ebitda. 2011 2012 1Q12 128 6 122 1Q13 Adjusted Ebitda Non-recurring¹ Regulatory assets and liabilities 33
  32. 32. Average payout of 74% p.a. since 2006 Net income and dividend payout1 (R$ million) 114.4% 54.4% 25.0% 17.1% 28.6% 2.8%  1,572 1,348 25% of minimum pay-out according to b l di bylaws 365  Average payout 74% per year  Average dividends since 2006: R$ 890 million per year 358 621 350 2010 2011 97 218 (121) 586 108 229 640 (121) 2012 1Q12 since 2006: Adjusted N t I Adj t d Net Income Non-recurring² Regulatory assets and liabilities 29 (1) (30) 1Q13 Yield Yi ld PN Pay-out 1 – Gross amount 2– Non recurring 2011 :Includes sale of AES Eletropaulo Telecom with a R$ 467 million impact on net income 34
  33. 33. Cost management excellence Efficiency programs and results  PMSO¹ per customer (R$) Started in 2007 and evolved from cost cutting to 207 business process transformation - Strategic sourcing 178 - Shared services - Process redesign - IT tools implementation  2010-2012 cumulative P&L savings of R$ 331 million  Reducing manageable costs estimated at R$ 100 million from 2013 onwards  AES Eletropaulo among the lowest cost operators in AES Eletropaulo Comparable peers² the country y 1 - Personnel, Material, Third Party Services and Other Costs and Expenses 2 - Eletropaulo peers: CPFL Paulista, Light, Cemig. EDP Bandeirante. Sul Peers: Elektro, RGE, CPFL Piratininga. Eletropaulo metric excludes SIRP (one timer R$29) 35
  34. 34. Debt refinancing conclusion of R$ 1 billion with more flexible covenants  Decrease in debt amortization volume for 2013-15 by R$ 750 million Benefits  Increase in the a erage debt mat rit from 6 6 years to 7 2 years average maturity 6.6 ears 7.2 ears  Debt average costs decrease from CDI+1.29% to CDI+1.27%  More flexible covenants Debt amortization schedule Before restructuring (as of September, 2012) B f i After restructuring (as of October, 2012) R$ 319 million R$ 1,063 million 436 337 302 228 321 226 478 400 323 53 2013 2014 688 589 533 2015 2016 2017 2018 Market debt in R$ (ex-pension plan debt ) 2019 2020 - 2028 2013 85 2014 180 2015 2016 2017 2018 2019 221 180 2020 2021 - 2028 Market debt in R$ (ex-pension plan debt ) 36
  35. 35. Covenants change FROM TO Net d bt Adj t d Ebitda 3.5 N t debt / Adjusted Ebitd < 3 5 Financial Index Gross debt / Adjusted Ebitda < 3.5 Default If the limit is exceeded in any quarter Regulatory assets and liabilities (equivalent to 4.5x Gross Debt / Adjusted Ebitda) If the limit is exceeded for two consecutive quarters Not considered in the calculation Considered in the calculation (same as before IFRS adoption) Debt recognized in liabilities excluding the Pension plan debt Total debt recognized in liabilities Compulsory loans Considered in the calculation of debt “corridor” concept Out of debt calculation 37
  36. 36. Covenants limits amended due to tariff reset delay and higher energy costs Accounting impacts due to tariff reset postponement  Covenants consider Ebitda adjusted by regulatory assets/liabilities  Jun/12: tariff reset regulatory liability final release (R$ 287 million)  Amendment of covenants limits completed in March/2013: Net Debt / Adjusted Ebitda: - 5 5x in 1Q13; 5.5x - 3.75x in 2Q13; - 3.5x from 3Q13 onwards  Covenants breach is not expected to repeat since: Higher net d bt t debt  Higher cost of energy since Sep/12 lowered cash position l d h iti - no impact on LTM Ebitda after May/13 related to regulatory liability (Jul11/Jun2012); - higher cost of energy funded by CDE or reflected in tariff adjustment 38
  37. 37. Debt profile Net debt Average cost 4.9x 0.9x 6.7 6.4 4.4x 0.8x 1.1x 3.0 2.4 2.3 23 2010 2011 Net Debt (R$ billion) Covenants C 112.2% 109.8% 1Q12 3.1 1Q13 2.4 24 2012 1Q12 1Q13 Net Debt/Ebitda Adjusted¹ 12.0% Interest Rate 11.7% Average Time - years  Net Debt/Adjusted Ebitda <= 3.5x - Q1 13: limit amended to 5.5x - Q2 13: limit amended to 3.75x % of CDI  Adjusted Ebitda/Financial Expenses >= 1.75x 1 – According the new covenants 2 – Brazilian Interbank Interest Rate 3 – Inflation Index 39
  38. 38. Debt profile Debt amortization schedule (financial liabilities as of March, 2013) 2,624 677 56 142 73 50 123 2013 39 125 87 250 53 133 788 60 151 368 590 690 480 63 161 913 690 2015 Local Currency 2016 2017 67 171 562 473 71 182 325 182 2014 1,766 2018 FCesp (without Corridor) 221 180 2019 2020 2021 - 2028 FCesp (Corridor)  Due to the ICVM 695, the corridor (accumulated gains and losses) became fully recognized in the Company balance sheet from January, 2013 on 40
  39. 39. AES Eletropaulo: challenges “Criando Valor” (Creating Value) project launch 2010 Filling of administrative appeals at Aneel Jul/12 3rd Tariff Reset Cycle and 2012 Tariff Adjustment 1 – CDE: Energy Development Account Beginning of out-of-the-merit thermals dispatch, affecting discos cash flows Sep/12 Debt restructuring (R$ 1 billion) Pension plan accounting changes imposed by CVM Resolution 695 Dec/12 Sale of real estate property “Cambuci” (R$ 160 million), subject to Aneel’s approval Covenants limits amendment Jan/13 Mar/13 Extraordinary Tariff Adjustment due to Energy Cost Reduction Program, with 20% average tariff reduction d ti Starting to receive y monthly 1 funding CDE to cover higher energy costs Apr/13 2013 Tariff Adjustment Jul/13 Expected events: Decision by Aneel regarding administrative appeals and regulatory liabilities start to be returned through tariffs, due to the postponement of the 3rd Tariff Reset Cycle 41
  40. 40. Capital markets AES Eletropaulo X Ibovespa Daily avg volume (R$ thousand) 2005 ‐ May 2013¹ 28,254 23,606 360 14,824 19,589 310 260 210 66.8% 160 66.7% 24,496 26,897 23,057 22,895 2012 YTD Mar 13 110 60 -69.1% 2010 10 Dec-05 Dec-06 Ibovespa Dec-07 Dec-08 Dec-09 Dec-10 AES Eletropaulo PN Dec-11 Dec-12 Preferred 2011 n Shares negotiated (thousand) AES Eletropaulo TSR² • Market cap³: US$ 0.6 billion/R$ 1.3 billion • BM&FBOVESPA: ELPL3 (common shares) and ELPL4 (preferred shares) • ADRs at US OTC Market: EPUMY (preferred shares) 1 – Information until 05/08/2013. Index: 12/29/2005 = 100 2 – Total Shareholders’ Return 3 – Index: 05/08/2013 42
  41. 41. Attachment AES Sul and AES Uruguaiana Overview
  42. 42. AES Sul overview Overview and Business Drivers Overview  Serving 118 Municipalities in the State of Rio Grande do Sul  Concession area: 99,512 km2  1.2 million consumption units  1 308 directed employees 1,308  Concession valid until November, 2027 Business drivers  Regional GDP growth 2.5% (5-year average) - Expectation for 2013 3.6%, grows to 4.3% in 2014-2015  2013 tariff reset concluded in April – in-line with our expectations  Quality of services: SADI/SAIFI ~30% better than 2009 levels  Consolidation of efficiency programs, leading to operating costs below regulatory levels (~2%)  Dividend payout of 63% in 2012 2011 clearing of regulatory restrictions allowed distribution of dividends) 44
  43. 43. AES Sul financial highlights Ebitda (R$ million) Net revenues (R$ million) 2,341 2 341 1,866 490 -7% 2,027 Net income (R$ million) -64% 373 281 586 2010 2011 2012 1Q13 60 49 2010 2011 2012 2% 255 137 543 1Q12 246 199 1Q12 1Q13 2010 2011 2012 61 1Q12 1Q13 45
  44. 44. AES Uruguaiana overview Overview and Business Drivers Overview  Independent natural gas-fired thermal power generation Company with commercial operations achieved in 2000  Authorization expiration in 2027  Installed capacity of 640 MW  Located in the State of Rio Grande do Sul – city of Uruguaiana  Suspended operations in 2008 due to lack of gas supply from YPF in Argentina (pending arbitration) Business Drivers  Emergency operation from February 2013 to March 2013 to support reservoir recovery  Working to return the plant to long-term service  Leveraging on AES Brazil-Argentina relationship 46
  45. 45. Attachment Energy Sector in Brazil
  46. 46. Energy sector in Brazil: business segments Free Clients Distribution Transmission Consumption 14.770 MWavg  Cons mption of 14 770 MWa g  64 companies  68 companies  (26% of Brazilian total market)  448 TWh of energy  68% private sector  Conventional sources: above 3,000 kW  Alternative sources: between 500 kW and 3,000 kW  Large consumers can purchase energy directly from generators  Free contracting environment distributed in 2012  72 million consumers  67% private sector  Annual tariff adjustment  Tariff reset every four or five  High voltage transmission (>230 kV)  103,362 km in extension lines (SIN¹)  Regulated public service with  13 groups controlling 76% of total installed capacity  22% private sector  2,809 power plants  121 GW of installed capacity³  66% hydroelectric  27% thermoelectric free access years  Regulated public service  Regulated contracting  Regulated tariff (annually adjusted by inflation) environment  3% SHPP²  2% wind  2% nuclear and others  Contracting environment – free 1 - Interconnected National System, as of 2011 and regulated markets 2 - Small Hydro Power Plants 3 - Aneel Fiscalization Report Generation Sources: EPE, Aneel, ONS and Banks’ reports 48
  47. 47. Energy sector in Brazil: contracting environment g Regulated market Free market Generators, Generators Independent Power Producers (IPPs), Trading companies and Auto producers Generators and Independent Power Producers (IPPs) Auctions: New Energy and Existing Energy Distribution companies  Bilateral contracts (PPAs1) Free clients 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 (A-3): years, 15-30 – Existing Energy (A-1): Delivery in 1 year, 5-15 years regulated PPA – Extraordinary (A-0): Delivery at the same year, 1-yearr regulated PPA 1 – Power Purchase Agreement 49
  48. 48. Electric sector in Brazil: generation market overview Installed capacity (GW) Growth by source - new auctions (GW) Total: 25 GW 182 121 5 130 14 138 22 144 27 37 33 40 Thermal 41 5 GW 41 2 25 17 11 6 4 2 1 163 157 151 174 168 41 Hydro 10 GW 116 116 116 116 116 116 116 116 116 116 2012 2013 2014 2015 2016 2017 2018 2019 2020 Wind 2021 Current installed capacity Auctioned 10 GW Upcoming Auctions  ~ 3% annual GDP growth over the last 5 years  ~ 4% annual demand growth through 2021, implying 60 GW of additional capacity needed (~6 GW/year) – 35 GW already auctioned  Gas-fired thermal to leverage on the dispatchability benefit and on the hydrology risk Sources: EPE (Energetic Research Company): Ten-year Energy Plan 2021; AES analysis 50
  49. 49. Attachment Regulatory Environment
  50. 50. Distribution companies: tariff methodology Tariff reset and adjustment • Tariff Reset is applied each 4 years for AES Eletropaulo − Next tariff reset: Jul/2015 • Parcel A Costs − Parcel A: costs are largely passed through to the tariff − Parcel B: costs are set by ANEEL • Tariff Adjustment: annually − Parcel A : costs are largely passed through to the tariff − Parcel B: cost are adjusted by IGPM +/- X(1) Factor X WACC Energy Purchase Transmission Sector Charges Regulatory Opex (PMSO) Investment Remuneration Remuneration R ti Asset Base X Depreciation Depreciation Regulatory Ebitda 1 – X Factor: index that captures productivity gains − Non-manageable costs that are largely passed through to the tariff − Incentives to reduces costs • Regulatory Opex: – Efficient operating cost determined by ANEEL (National Electricity Agency) • Remuneration Asset Base: – Prudent investments used to calculate the investment remuneration (applying WACC) and depreciation Parcel A - Non-Manageable Costs Parcel B - Manageable Costs 52
  51. 51. Distribution companies: tariff methodology 3rd Cycle of tariff reset – X factor X FACTOR = Pd + Q + T DEFINITION Distribution productivity Quality of service Operational expenses trajectory OBJECTIVE Capture productivity gains Stimulate Sti l t improvement of service quality Implement operational expenses trajectory APPLICATION Defined at tariff reset, considers the average productivity of sector adjusted by market growth and consumption variation Defined at each tariff readjustment, considers variation of SAIDI and SAIFI and comparative performance of discos Defined at tariff reset, considers reference company and benchmarking methodologies 53
  52. 52. 3rd Cycle of Tariff Reset for AES Eletropaulo  Gross Regulatory Asset Base: R$ 10,748.8 million Tariff Review  Net Regulatory Asset Base: R$ 4 445 1 million 4,445.1  Parcel B: R$ 2,007.1 million  Non Technical Losses (referenced in the low voltage market): start point at 11.56% and get to 8,56%, by the end of the cycle  Average effect to be perceived by the consumer: -9.33%  Economical Effect: -5.60% Tariff Adjustment Tariff Review + T iff R i  A Average effect t b perceived b th consumer : +5.51% ff t to be i d by the 5 51%  Economical Effect: +4.45%  Average effect to be perceived by the consumer : -2.26% Adjustment Administrative Appeal  In 17th July Company filed as administrative appeal at Aneel about the Regulatory Asset Base and July, the non-technical losses trajectory. Aneel’s decision expected to be rendered by July, 2013 54
  53. 53. Discussions with the Regulator Discussion  E l i Exclusion R$ 1 260 million f 1,260 illi from shielded hi ld d RAB: Shielded RAB - Exclusion of cables: R$ 728 million Arguments  Shielded RAB approved pp in 2003, , reconfirmed in 2007, based on global consistency criteria - Reclassification/equipment volume: R$ 533 million Investments Losses  R$ 446 million investments not recognize, related to Minor Components and Additional Costs (“CA”)  Adequacy of regulatory standards versus  Changed the benchmark in Public Hearing (regulatory losses reduction from 0 49% to 0.49% 1%)  Benchmark company is an outlier, previous actual spending number of 0 49% shall be restored 0.49% 55
  54. 54. 3rd Cycle of Tariff Reset for AES Sul  Gross Regulatory Asset Base: R$ 2,503.0 million g y Parcel B: R$ 542.2 million Non Technical Losses (referenced in the low voltage market): start point at 4.91% will be kept during the entire tariff cycle (no trajectory)  Average effect to be perceived by the consumer: 3.92%  appeal Net Regulatory Asset Base: R$ 1,488.5 million  Administrative   Tariff Review Economical Effect: 4.49%  The Company will file an administrative appeal at Aneel about Regulatory Technical Losses, that were not adequately calculated by the methodology 56
  55. 55. Regulatory pressure to lower tariffs…  “Energy Cost Reduction Program” established by Provisional Measure 579 and Law 12.783 Overview - Valid for concessions granted before 1995 - 20% average reduction in electricity costs, funded by: - Generation and transmission concessions expiring 2015-2017: -13% 7% - Lower sector charges: -7% -Minimal impact on AES Brasil businesses – concessions expire between 2027-2029 Generation & Transmission Concessions  Extension for 30 years with effects anticipated for 2013: Distribution  Extension for 30 years, as per contract Concessions  Rules for renewal has not been defined - Evaluation of assets using new replacement value methodology  Concession renewal will be based on O&M costs, industry charges, fees and network usage 57
  56. 56. … combined with poor hydrological conditions impacted discos cash position… p p Out-of-merit-order: higher EES¹ Out of merit order: EES Low affluence impacting reservoirs level Thermals dispatch of 12 GW since Sep, 2012 Within-the-merit-order: Within the merit order: rising energy costs Energy Cost Reduction Program2 Hydrological risk transferred to discos through quotas allocation Exposure to the spot market (~ 2 GWavg) Non-renewal of some generation concessions Impact on cash position of discos since Sep/2012 1 - ESS (Service System Charges), which pays for the dispatch of thermals that are out-of-merit 2 – Provisional Measure 579 and Law 12.783 58
  57. 57. … resulted in a measure to preserve discos financial stability y After C t Component Energy Purchase (within-the-merit-orderthermal-dispatch) Decree #7.945 Tariff Adjustment ESS (out of the ESS¹ (out-of-themerit-order thermal dispatch) Hydrological risk¹ CDE funding via CCEE settlement l Involuntary Exposure¹ 1 – Before Decree # 7.945, such costs would be passed-through via Tariff Adjustment. 59
  58. 58. Spot price new methodology Previous Regulation CNPE Resolution # 3/2013 Transitory regulation (April to July, 2013) Charged from: • Discos • Free cust. Spot Price Other 50% for: • Agents with exposure to spot prices Resolution CNPE #3/2013: Charged from all market agents:1 • Discos • Free cust. • Generators • Traders ESS Spot Price Methodology for adequacy of risk aversion mechanisms for spot prices formation - Risk Aversion Curve (“CAR”) of 5 years (starting from Aug/2013) System Service Charges (“ESS”): prorated among all market players (including generators)  ESS   ESS ESS² From August, 2013 on August Uptrend in spot p p p prices, which should influence , prices in energy contracts representing an opportunity to AES Tietê Spot Price Includes out-of-themerit-order thermal dispatch 1 - Proportional to average commercialized energy of the last 12 months. 2 - ESS (System Service Charges), which pays for the dispatch of thermals that are out-of-merit 3 – Risk Aversion Curve 60
  59. 59. Attachment AES Tietê: Expansion Obligation AES Eletropaulo: Eletrobrás Lawsuit
  60. 60. AES Tietê's expansion obligation Efforts being made Judicial Notice: Privatization Notice established the obligation to expand the installed capacity in 15% (400 MW) until 2007, 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 The Company was notified by the State of São Paulo Attorney's Office to present its understanding on the matter, matter having filed its response on time, the proceedings were ended, since no other action was taken by the Attorney's Office 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. 19th In March, the Company’s appeal was denied. Thus, on April, 26th AES Tietê presented “Thermo São Paulo” Thermo Paulo project as the plan to fullfill the obligation to expand the installed capacity. 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 1999 2007 Aug/08 Oct/08 Jul/09 Sep/10 Sep/11 Nov/11 Apr/12 Dec/12 • SHPP São José started operating in March, 2012, with 4 MW of installed Company faces restrictions until deadline: • Insufficiency of hydro resources • Environmental restrictions • Insufficiency of natural gas supply •N New M d l of El t i S t Model f Electric Sector (Law # 10,848/2004), which forbids bilateral agreements between generators and distributors In response to a p Popular Action (filed by individuals against the Federal Government, Aneel, AES Tietê and Duke), the Company ), p y 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) 6th Lawsuit: The Company appealed to the State of Sao Paulo State Court of Appeals and the injunction was kept In December was joined to the process a manifestation of the State of São Paulo over the Expansion Plan Capacity presented by AES Tietê Next Steps: shortly, the Company shall be intimated to pronounce on the manifestation capacity • Thermal SP - Project of a 550MW gas fired thermo plant • Thermal Araraquara - Acquisition of a purchase option 62
  61. 61. Eletrobrás lawsuit State-owned Eletropaulo was spunoff into four companies and, according to our understanding based g on the spin-off agreement, the discussion was transferred to CTEEP Stated-owned Eletropaulo borrowed money from Eletrobrás Nov/86 Dec/88 State-owned Eletropaulo and Eletrobrás disagreed on how to calculate interest over that loan and two lawsuits, which were later merged into one, were initiated Jan/98 Eletrobrás, after winning the interest calculation discussion, filed an Execution Suit aiming the collection of the amounts that were in default Apr/98 p Privatization event . State-owned Eletropaulo became AES Eletropaulo Sep/01 p Eletrobrás and CTEEP appealed to the Superior Court of Justice (SCJ) Sep/03 p Based on the spin-off protocol, the 2nd Instance Court excluded AES Eletropaulo f El l from the h lawsuit Oct/05 Jun/06 The SCJ annulled the d 2nd Instance Court decision and sent the Execution Suit back to the 1st Instance Court, with the determination to identify the amount to be paid and who should be liable for such payment, which should be done through an appraisal procedure. 63
  62. 62. Eletrobrás lawsuit In accordance to the procedure that was stipulated by 2nd Instance Court after an appeal from AES Eletropaulo, Eletrobrás requested the 1st Instance Court to appoint an expert The 1st Instance Court determined AES Eletropaulo and CTEEP to present their arguments, which occurred in August The 1st instance Court dismissed the parties’ requests of producing evidences and rendered a decision stating AES Eletropaulo’s responsibility for the debt pursuant to the Spin-Off Protocol The Rio de Janeiro State Court of Appeals, granted on 15th a preliminary injunction that suspended the effects of the December 2012 decision Next Steps: 1 - The appraisal procedure (AP) is expected to begin in the 1st half of p g 2013 and is expected to last over 6 months 2 – AP is not expected to be concluded in a period shorter than 6 months from its beginning 3 - After AP’s conclusion, a 1st Instance Court decision will be issued > In case of an unfavorable decision: May/09 y Dec/10 Eletrobrás requested the beginning of the appraisal procedure before the 1st Instance Court Jul/11 Eletrobrás requested the ithd th withdrawal of the l f th judicial deposit made by state-owned Eletropaulo in 1988, which now amounts for R$ 95 MM (principal of the loan ( f taken in 1986), as a direct consequence of Eletrobrás’ victory on the merits Dec/12 Jan/12 AES Eletropaulo filed an appeal on Jan 7th arguing that the decision is invalid, because the procedure preceding such decision should encompass full discovery, pursuant to Superior Courts determination Also, determination. Also the Company requested a preliminary injunction to stay the execution proceedings until the ruling of the appeal Feb/12 On 21st, AES Eletropaulo became aware of the favorable decision granted by the TJRJ, which fully annulled the first instance decision and determined the return of the case to the 1st instance 4 – Appeal to the 2nd Instance Court and file an injunction to stay the execution proceedings 5 – If the injunction is not granted, the execution proceeding can be resumed and Eletropaulo will have to post a guarantee 6 – Eletrobrás can request the seizure of the guarantee 7 - Appeals to the Superior Courts and file an injunction to stay the execution proceedings 64
  63. 63. Attachment AES Eletropaulo: Pension p p plan
  64. 64. Pension plan expenses and disbursements g p are calculated using different assumptions ACCOUNTING EXPENSE Regulatory Agency CASH DISBURSEMENT CVM (Brazilian SEC) PREVIC (Pension plans regulator) Difference between interest on actuarial Determination liabilities and assets Calculated in accordance to market Discount rate value (National Treasury Notes/NTN-B) Notes/NTN B) on 12/31/2012: 3.75% p.a. Recognition Company Financial Statements Result of the FCesp actuarial valuation Calculated in accordance to a study performed by FCesp (Resolution CNPC No. 9): 5.5% p.a. FCesp Financial Statements 66
  65. 65. Main amendments on accounting rules Until 12.31.2012 (Res. CVM 600) 600)¹ Expected return on plan assets Actuarial Gains and losses Corridor over 10% of plan liabilities From 01.01.2013 (Res. CVM 695) Determined by a study of a specialized Corresponds to the actuarial liabilities company (6.79% for 2012) discount rate (3.75% for 2013) Accrued over the years in the "corridor" (10% excess of actuarial liabilities recognized in the income statement) Amortized over the average future service period of active participants and recognized in income statement 1 – Revoked by CVM Resolution 695, on December 13, 2012 Fully recognized in the Company's balance sheet (Liabilities and Shareholders‘ Equity) There is no impact (fully recognized in the balance sheet of the Company) 67
  66. 66. Impact on the income statement due to changes imposed by CVM g p y 2012 2013 R$ million R$ milllion Service cost 16 3 16.3 Discount rate decreases from 5 5% to 3 75% 5.5% 3.75% 29 3 29.3 Rate costs 916.6 Discount rate decreases from 5.5% to 3.75% 1,018.1 Expected return on plan assets (788.6) Rate of return decreases from 6.79% to 3.75% (696.5) Amortization of actuarial gains and losses 15.3 Extinction of the corridor method - Total expenditure 159.7 350.9  Increase on expense shall be reversed through equity in the coming years due a grater expected p g q y g y g p profitability of the plan compared to the expected return on plan assets used in the calculation  Average return over the last five years on 16% (above the actuarial target period) 68
  67. 67. Cash impacts with the plan  Amendments set forth by CVM 695 has no influence on assumptions and on the calculation method of the pension plan cash disbursement 2012 +4.4% R$ million Cash disbursement before and after CVM 695 271.7 2013 R$ million IGP DI IGP-DI discount rate decreases from +6% to +5.5%, 6% 5.5%, offset by marking securities to market 283.6  For 2014 is not expected a significant increase on cash disbursement, since the actuarial assumptions were maintened 69
  68. 68. Attachment Other subjects
  69. 69. Shareholders agreement On Dec-2003 AES and BNDES executed 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, http://ri.aestiete.com.br/ and http://www.aeselpa.com.br/. 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 Tag along rights  In the case of change in Brasiliana’s control, tag along rights are triggered for the following Drag along rights g  Once the offering party exercises the Drag Along clause, offered party is obligated to dispose of all the corporate interest at the same price offered by a third party companies (only if AES is no longer controlling shareholder): – AES Eletropaulo: Tag along of 100% on its common and preferred shares – AES Tietê: Tag along of 80% on its common shares – AES Elpa: Tag along of 80% on its common shares its shares at the time, if the Right of 1st Refusal is not exercised by offered party time 71
  70. 70. Costs and expenses Costs and operational expenses1 (R$ million) 570 433 419 187 174 198 126% 264 41 372 246 117 245 51 224 66 2010 2011 2012 1Q12 1Q13 Energy Purchase, Transmission,Connection Charges and Water Resources Other Costs and Expenses ² 1 – Do not include depreciation and amortization 2 - Personnel, Material, Third Party Services and Other Costs and Expenses 72
  71. 71. Energy costs pushed the costs and operating expenses in the 1Q13 Operating costs and expenses¹ (R$ million) 2 8 282 271 4 3 165 117 electric energy purchased for resale 264 117 1Q12 267 1 - Not including depreciation and amortization operat. Provisions and personnel, material and Other Exp. third party services transmission and Conection financ. comp. for use of wat. resources 1Q13 73
  72. 72. Costs and expenses Costs and operational expenses1 (R$ million) PMS2 and other expenses (R$ million) 1,551 1 551 6,927 261 1,255 5,609 5,715 1,255 165 1,551 1,251 192 1,251 565 443 15% 7% 513 421 4,464 1,632 421 450 1,211 2010 2011 2012 1Q13 725 546 1,422 1Q12 647 2010 2011 2012 99 106 134 190 1,872 450 132 5,376 4,354 211 1Q12 1Q13 Energy Supply and Transmission Charges¹ PMS² and Others Expenses 1 – Do not include depreciation and amortization 2 - Personnel, Material, Third Party Services and Other Costs and Expenses Personnel and Payroll Material and Third Party Others 74
  73. 73. Manageable PMSO¹ items below the inflation in 1Q13 PMS and other expenses¹ – 1Q13 (R$ million) -1.4% 88 (65) (60) (3) 1 69 (3) 450 421 362 356 297 1Q12 FCesp 297 Contingencies, 1Q12 ADA and Manageable Write-Offs 294 292 Personal 1 - Personnel, Material, Third Party Services and Other Costs and Expenses Materials Others and Third Party Services 292 292 1Q13 Contingencies, Manageable ADA and Write-Offs FCesp 1Q13 75
  74. 74. Brazilian main taxes AES Eletropaulo 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 9.25% minus Costs • Income Tax / Social Contribution: – 34% over taxable income • ICMS: 22% over Revenue (average rate) – Residential: 25% – I d t i l and commercial: 18% Industrial d i l – Public entities: free • PIS/Cofins: – 9.25% over revenue minus Costs 76
  75. 75. 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 f lt d th t ti l l forecasts b t based on th expectations of th C d the t ti f the Company’s M ’ Management i t 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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