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Latin Energy 2005
   December, 2005




                    1
Index


I.   Concession

II. Overview

III. Operational Performance

IV. Financial Performance

V. Conclusion




        ...
Concession
Concession            30 years, assures the right of operating the assets, but not their property
Agreement:

A...
Historical
                                                                                             Secondary Public O...
Corporate Structure

                                            AES                         BNDES
                       ...
Assured Energy

During the last 20 years, AES Tietê has generated, in average, 18% above the
Assured Energy


The Assured ...
Reliability

  Failure Index and Equivalent Availability                          Average of 7.2 years with no LTA (Lost
 ...
Stored Energy
The energy storage levels in the Southeast region are comfortable in comparison of
the risk aversion curve
 ...
Energy Balance – 9M05

           Caconde                3.1%
            305.2                                           ...
Contract Portfolio


100%

                                    Piratininga

75%                                 Nacional
 ...
Tariff Adjustment

     The Initial Contracts are readjusted annually according to the following pre-
     established for...
Income Statement

in R$ million         9M04      9M05
                                                 Initial Contracts ...
Costs and Expenses
in R$ million             9M04    9M05

                           21.0    23.7 12.9%     8.25% in payr...
Financial Highlights – 9M05
R$ million

                    Gross Revenue                                         EBITDA x...
Capital Expenditures
       Capex 9M05: R$ 13.9 million for equipments modernization, enviromental and
       waterway imp...
Debt

                                          Amount -
                     Creditor                                    ...
Dividends
   On September 27, payment of dividends was made in the amount of R$ 199.8 million,
   representing a pay-out o...
Stock Market
In the last 12 months GETI4 (non-voting) shares rose 89.8%, while the GETI3 (voting) shares
appreciated by 65...
Capital Markets
      Current Market Capitalization – R$ 4.5 billion (as 30th of November, 2005)

6,000


                ...
Conclusion
AES Tietê ended up the 9M05 with highly positive results, highlighting:


   Ebitda of R$ 734.1 million, 25.1% ...
December, 2005

   Representations contained herein relating to perspective of Company business,
  projections of operatin...
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12/08/2005 - Bear Stearns

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Transcript of "12/08/2005 - Bear Stearns"

  1. 1. Latin Energy 2005 December, 2005 1
  2. 2. Index I. Concession II. Overview III. Operational Performance IV. Financial Performance V. Conclusion 2
  3. 3. Concession Concession 30 years, assures the right of operating the assets, but not their property Agreement: Assets: 10 hydroelectric power plants Location: Rivers Tietê, Grande, Pardo and Mogi Guaçu, located in the State of São Paulo Operation historical: Power plants started up operation between 1958 and 1997 Installed Capacity: 2,651 MW UHE Água Vermelha Rio Grande Capacity sold under 100% of assured energy Fernandópolis long-term contracts (1,275 MW Average) 65km Votuporanga 95km SP Rio Pardo (PPAs): UHE Nova Avanhandava Buritama 11km Mococa UHE Limoeiro 23km UHE Euclides da Cunha UHE Promissão Caconde 3km MS Promissão 38km Ibitinga UHE Ibitinga 25km S.J. do Rio Pardo Limoeiro: 28km UHE Caconde E.Cunha: 14km MG Bariri 11km Rio Mogi Guaçu UHE Bariri AM Mogi Guaçu Bauru S. Paulo: 340km B. Bonita: 100km Bariri:50km Barra Bonita 4km Mogi Guaçu 3km RJ Rio Paraíba do Sul UHE Barra Bonita Rio Tietê São Paulo Rio Parapanema Rio Itataré PR Atlantic SP Ocean 3
  4. 4. Historical Secondary Public Offering (Jun) • Secondary Public Offering was concluded by a group of minority shareholders (28.4% of total capital) New Model for Energy Sector (Jul) •Federal Government issued new law for the Electric Energy Sector - the “New Model” AES Restructuring (Dec) • Brasiliana was incorporated to hold, direct or indirect, the control of Eletropaulo, Tietê and Uruguaiana Energia Paulista (Aug) •Energia Paulista acquired 9.6% of Tietê’s capital in a public offering Tietê Privatization (Oct) • AES Tietê Empreendimentos acquired Tietê’s control (38% of total capital) • AES Tietê Participações acquired another 5% of Tietê’s capital from former employees 1999 2001 2003 2004 2005 4
  5. 5. Corporate Structure AES BNDES V: 50.01% V: 49.99% NV: 0.00% NV: 100.00% T: 46.15% T: 53.84% Brasiliana Energia T: 100% AES Tietê Holdings T: 100% AES Tietê Holdings II T: 100% T: 100% T: 100% AES Tietê AES Tietê Energia Minority Empreendimentos Participações Paulista Shareholders V: 61.73% V: 9.62% V: 0.00% V: 28.65% NV: 14.32% NV: 0.00% NV: 18.02% NV: 67.66% T: 38.87% T: 4.98% T: 8.69% T: 47.46% T: 100% IHB Ltd Minas PCH Companies in Cayman 5
  6. 6. Assured Energy During the last 20 years, AES Tietê has generated, in average, 18% above the Assured Energy The Assured Energy was expected to be revised in 2004, but this revision was postponed to 2014 by the Ministry of Mines and Energy Generation – MW Average 2,000 123% 120% 123% 117% 120% 109% 107% 1,500 98% 81% 1,275 1,000 500 0 1997 1998 1999 2000 2001 2002 2003 2004 9M05 Generation – MW Average Generation/Assured Energy 6
  7. 7. Reliability Failure Index and Equivalent Availability Average of 7.2 years with no LTA (Lost Factor much better than the maximum Time Accident) ratios established by Aneel due to the preventive maintenance program Failure Index x Equivalent Availability Factor Period without Accidents 97.2% 96.8% 96.1% 94.2% 93.8% Period without 90.9% Power plant 3.0% accidents - Years 2.8% 2.5% Ibitinga 17.4 2.2% 2.3% MogiGuaçu 10.8 Bariri 9.4 1.1% Nova Avanhandava 7.9 Água Vermelha 7.3 Limoeiro 5.3 Barra Bonita 5.2 2000 2001 2002 2003 2004 9M05 Promissão 3.7 Caconde 2.6 Failure Index Equivalent Availability Factor Euclides da Cunha 2.3 7
  8. 8. Stored Energy The energy storage levels in the Southeast region are comfortable in comparison of the risk aversion curve Historical Risk-Aversion Curve 80 % of Max Stored Energy 80 % of Max Stored Energy 60 60 40 40 20 20 0 0 Nov Oct Apr Jun Aug Jul Sept May Dec Mar Jan Feb Nov Oct Jul Dec Jan Feb Jun Aug Apr May Sept Mar 2005 2005 2004 2003 Risk-aversion curve - 2005 2002 2001 2000 Risk-aversion curve - 2006 Source: Operador Nacional do Sistema – Nov/05 Source: Operador Nacional do Sistema – Nov/05 Supply x Demand – GW Average 63.9 64.2 64.2 60.4 61.7 60.4 60.8 58.5 54.5 56.6 53.4 56.5 52.8 55.4 54.2 56.5 57.4 56.5 56.5 50.8 51.6 46.3 48.6 47.1 50.4 49.3 2005* 2006* 2007* 2008* 2009* 2010* 2011* 2005* 2006* 2007* 2008* 2009* 2010* Demand Supply Demand Supply *Forecast - Source: Apine *Forecast - Source: IBP – Instituto Brasileiro do Petróleo 8
  9. 9. Energy Balance – 9M05 Caconde 3.1% 305.2 5.1% CPFL Euclides 4.2% Energy Generation x Billed Energy 421.0 410.2 in MWh 2.7% Bandeirante Limoeiro 1.2% 222.6 119.8 4.4% Elektro Água Vermelha 59.5% 360.8 5,870.1 Barra Bonita 4.1% 1.3% Bragantina TOTAL BILLED 110.4 399.6 Bariri 4.5% 9,864.5 8,231.3 0.9% Nacional 442.3 71.6 Ibitinga 5.0% 1,633.3* 2.7% Piratininga 492.4 218.1 Promissão 7.8% 764.6 8.3% Eletropaulo - CI Nova Avanhandava 10.5% MRE / CCEE 686.1 1,031.4 Eletropaulo - Bilateral 74.6% Mogi Guaçu 0.3% Tietê generated 19.5% above its 6,140.7 27.9 assured energy *After deducting own consumption and transmission losses, the difference is directed to the Energy Reallocation Mechanism – MRE and Chamber of Energy Marketing – CCEE. 9
  10. 10. Contract Portfolio 100% Piratininga 75% Nacional Bragantina Bandeirante 50% Elektro CPFL 25% Eletropaulo Eletropaulo - BI 0% 2003 2004 2005 2006 10
  11. 11. Tariff Adjustment The Initial Contracts are readjusted annually according to the following pre- established formula: Tariff Readjustment Ratio = VPA + VPB x IGP-M Revenue The Bilateral Contract with Eletropaulo is adjusted each July according to the IGP-M (general price index - market) variation Average Tariff – R$/ MWh Month of % of Tariff after adjustment 140 Company Adjustment adjustment (R$ / MWh) 119.2 120 Initial Contracts Bragantina February 12,4% 65,30 100 94.4 Nacional February 12,4% 69,42 80 73.6 CPFL April 10,6% 73,76 AES Eletropaulo July 9,0% 75,99 60 54.0 Elektro August 5,3% 61,68 Bandeirante October 1,4% 72,77 40 Piratininga October 1,5% 72,81 20 Bilateral 2002 2003 2004 9M05 AES Eletropaulo July 7,1% 132,73 11
  12. 12. Income Statement in R$ million 9M04 9M05 Initial Contracts were adjusted in 8.1%, in average Increase from 4,0 GWh to 6.1 GWh of energy sold Net Revenue 740.9 899.4 21.4% through the bilateral contract R$ 50.5 mi reversal of the provision regarding Pis/Cofins rate increase on the bilateral and initial contracts 5.8% Increase in the Financial Compensation for Use of Operating Expenses (201.6) (213.3) Water Resources in 29.5% Operating provisions – R$ 18.3 mi Ebitda 587.0 734.1 25.1% Ebitda Margin 79.2% 81.6% Lower IGP-M index (10.3% in 9M04 versus 0.2% in Financial Expenses (221.1) (68.9) - 68.8% 9M05) impact on the Eletrobras Debt Increase in financial income due to a greater cash balance and increased interest rates Net Income 209.9 411.1 95.8% Net income increase due to better operating and Net Margin 28.3% 45.7% financial performance 12
  13. 13. Costs and Expenses in R$ million 9M04 9M05 21.0 23.7 12.9% 8.25% in payroll increase resulting from the collective Personnel bargain Outsourced Services 15.5 16.8 Increase of Reference Tariff – TAR, to R$ 52,67MW/h in 1Q05 (TAR x 6.75% x Generated Energy) Increase in the Financial Compensation 27.0 34.9 29.3% volume of energy generated 34.0 37.9 11.5% Decrease in connection charges established by Aneel Connection and Distrib. Increase in transmission costs due to greater volume of Network Charges energy sold under the bilateral contract Purchased Power 29.8 18.1 - 39.3% End of energy purchase from Itaipu R$ 7.3 million relative to "Financial Surplus" MAE expense, which was accounted in 1Q04 Depreciation and 47.7 48.0 Amortization Provision for loss of financial investments held at Banco Operating Provisions 0 18.3 n.a Santos ( R$16.9 mi recorded in 1Q05) End of the obligation of payment of the Public Asset Tax Others 26.8 15.5 - 42.0% (UBP) in 2004 Insurance Total Waterway 201.6 213.3 R&D 13
  14. 14. Financial Highlights – 9M05 R$ million Gross Revenue EBITDA x EBITDA Margin 1,050 992 777 734 815 770 612 587 25% 29% 29% 596 37% 33% 439 39% 82% 79% 79% 79% 77% 2002 2003 2004 9M04 9M05 2002 2003 2004 9M04 9M05 Net Profit x Net Margin Net Debt 46% 1,406 411 1,254 25% 30% 28% 1,096 1,046 -11% 860 292 -12% 195 210 96% -18% 49% (3) 2002 2003 2004 9M04 9M05 2002 2003 2004 9M04 9M05 14
  15. 15. Capital Expenditures Capex 9M05: R$ 13.9 million for equipments modernization, enviromental and waterway improvement Main Capex destination: Bariri - re-equipping and modernization of the Generating Unit 2 Reforestation of boarders – Ibitinga, Bariri, Barra Bonita and Promissão Improvement of the waterway Capex – R$ million Capex – 9M05 37.5 30.5 8% 25.0 21.9 14% 17.7 12.4 13.9 57% 2000 2001 2002 2003 2004 9M05 2005 21% Forecast Revised Equipment Waterway Environmental Others 15
  16. 16. Debt Amount - Creditor Maturity Terms Collateral R$ million Eletrobras 1,472.7 May/13 IGP-M + 10% p.a. Receivables FunCesp II 0.9 Nov/05 TR + 8% p.a. Receivables FunCesp III 19.8 Nov/17 IGP-DI + 6% p.a. Receivables Eletrobrás Debt – Flow of Payment – R$ million Net Debt – R$ billion 300 1.4 1.3 250 49 25 91 71 -11% 1.1 1.0 125 109 -12% 200 139 -18% 0.9 150 250 3 100 205 226 168 185 137 152 50 25 112 39 0 4Q05 2006 2007 2008 2009 2010 2011 2012 2013 2002 2003 2004 9M04 9M05 Principal Interest 16
  17. 17. Dividends On September 27, payment of dividends was made in the amount of R$ 199.8 million, representing a pay-out of 95.0% on net income for the first half of 2005. Dividend Yield* - % Dividend Payout - % 11.0% 20051 2005 1 R$ 199.8 million 95.0% 10.5% 13.4% 2004 2004 R$ 276.9 million 95.0% 12.3% 11.4% 2003 2003 R$ 185.6 million 95.0% 6.6% 2 23.6% 2002 17.4% 2002 2 NA voting non-voting * Based on average quotation for the period 1- Annualized dividends proposed during 1H05 2- Values distributed in 2002 refer to capital reduction 17
  18. 18. Stock Market In the last 12 months GETI4 (non-voting) shares rose 89.8%, while the GETI3 (voting) shares appreciated by 65.5% and the Bovespa Index rose 29.7% in the same period. After the secondary public offer: GETI4 – average daily trading volume increased 562% (R$ 336 thousand in 3Q04 to R$ 2.223 million in 3Q05) GETI3 – average daily trading volume increased 103% (R$ 959 thousand in 3Q04, to R$ 1.949 million in 3Q05) AES Tietê vs. Ibovespa - Oct/04 a Oct/05 (Base 100 = 10/29/04) Secondary Offering 190 190 170 166 150 130 130 110 90 O c t- 0 4 J a n -0 5 A pr-0 5 J u l- 0 5 O c t- 0 5 GETI3 GETI4 Ibovespa 18
  19. 19. Capital Markets Current Market Capitalization – R$ 4.5 billion (as 30th of November, 2005) 6,000 R$ 546 million R$ 2.1 billion 5,000 Cesp spin-off – New Model Law was Tietê was R$ 1.4 billion published created Brasiliana was 4,000 created as part of AES and BNDES R$ 846 million agreement AES acquired 3,000 Tietê at Privatization Auction 2,000 R$ 3.6 billion Secondary Offering 1,000 Santander/Banespa e Nossa Caixa sold their interest in Tietê - Jun-99 Jun-00 Jun-01 Jun-02 Jun-03 Jun-04 Jun-05 Dec-99 Dec-00 Dec-01 Dec-02 Dec-03 Dec-04 19
  20. 20. Conclusion AES Tietê ended up the 9M05 with highly positive results, highlighting: Ebitda of R$ 734.1 million, 25.1% above the 9M04, and Ebitda margin of 81.6%. Net profit amounted to R$ 411.1 million, with a 95.8% increase due to the better operating, financial results and the reversion of Pis/Cofins provision. Net margin increased from 28.3% in 9M4 to 45.7% in 9M05. 20
  21. 21. December, 2005 Representations contained herein relating to perspective of Company business, projections of operating and financial income, as well as those relating potential growth of the Company constitute mere projections and were based on Management expectations in regard to the future of the Company. Those expectations are highly dependent on market changes, overall economic performance of Brazil, in the Segment, International Markets, being thus subject to change. 21
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