Apre 3 t07

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Apre 3 t07

  1. 1. 3rd QUARTER 2007 1
  2. 2. 2
  3. 3. Highlights Adjusted EBITDA of R$ 558.9 million, 15.2% lower than 3Q06 (R$ 1,452.9 million in 9M07) Net Profit of R$ 197.6 million, R$ 150.3 million higher than 3Q06 (R$ 703.1 million in 9M07) PIS/COFINS: reduction of approximately R$ 79.0 million per year of expenses on energy purchase due to the change in the taxation system by AES Tietê 3Q07 2nd of Tariff Reset: average index of -8.43% applicable to the Company’s tariff since July 4th, 2007 Amendment of the 9th issue of debentures (R$ 250.0 million) – August/07: CDI + 1.75% p.a., average life of 9.4 years and maturity of 11.0 years ANEEL did not approve the amendment to the bilateral contract with Tiete, that extended its maturity to 2028 Dividends Payment (September/07): R$ 487.8 million relative to 1H07 earnings 10th Issue of Debentures (R$ 600.0 million) – October/07: CDI + 0.90% p.a., Subsequent average life of 5.0 years and maturity of 6.0 years. Resources were used to pay in advance the balance of the 8th Issue of Debentures Events Cost reduction plan: Voluntary Dismissal Program announced in October 3
  4. 4. Market Consumption Evolution (GWh) and Average Tariff % Total Market (3Q07) Average Tariff R$/MWh Captive Consumers 3Q06 3Q07 V% Residencial 304.0 280.1 - 7.9% 80.1% 18.7% Free Clients Industrial 260.1 240.0 - 5.4% Commercial 292.3 275.3 - 5.8% Potentially Free Clients* 1.2% Others 236.3 223.6 - 5.4% TOTAL 286.1 267.3 - 6.6% Consumption Evolution (GWh)** 6.1% 10,020 4.6% 9,448 7,790 8,150 8.1% 1.4% 3,195 3,455 1.4% 12.8% 2,371 2,506 7.4% 1,632 1,655 1,658 1,870 592 636 Residencial Industrial Commercial Public Sector and Free Clients Captive Market Total Market Others (*) Aneel Resolution 247/07 (conventional sources) (**) Charts do not consider own consumption 3Q06 3Q07 4
  5. 5. Operating Highlights Collection Rate (% over Gross Revenue) Loss Reduction (%) 160 b.p. 150 b.p. 40 b.p. 99.0 99.1 99.2 99.2 13.5 97.5 12.9 12.0 12.2 11.8 7.0 6.4 5.5 5.8 5.3 6.5 6.5 6.5 6.5 6.5 2004 2005 2006 9M06 9M07 2004 2005 2006 3Q06 3Q07 Technical Losses Commercial Losses Collection Rate (9M07) Fraud and Clandestine Connections (9M07) − Public Sector: 100.7% − 223,000 inspections and 20,000 frauds detected − Private Sector: 99.0% − 58,000 clandestine connections regularized Cuts and Reconnections – Monthly average (3Q06 X 3Q07) − Cuts – decrease from 126,000 to 115,000 Net growth of clients in 12 months: − Reconnections - increase from 80,000 to 86,000 172.7 thousand (*) Current Technical Losses used retroactively as reference 5
  6. 6. Investments Investments (R$ Million) 3Q07: R$ 104.8 Million 9% 459.8 11% 403.6 43.3 38% 377.7 48.8 58.4 13% 298.0 41.4 416.5 14% 354.8 15% 319.3 256.6 Costumer Service and System Expansion Information Technology Maintenance Self - Financed 2005 2006 9M07 2007 (e) Others Capex Self - Financed Loss Recovery 6
  7. 7. Eletropaulo’s Tariff Evolution Tariff Evolution 30% PIS/COFINS 25% Part A 18.6% 20% Part B 15% 11.6% 11.5% IGPM 10% 2.1% 9.9% 8.0% 5% 16.9% 1.6% 3.6% 4.8% 0% 1.7% 1.6% -2.2% -4.3% -5% -6.2% -10% -8.4% -15% 2003 2004 2005 2006 2007 Pending Issues – Tariff Reset Provisory Reference Company Administrative Appeal: − Exclude all assets fully depreciated from the Gross RAB − Depreciation between Oct/06 and Jun/07 by Replacement Value – increased accumulated depreciation and consequently reduced Net RAB − X Factor – adjustment may change it from 2.42% to 1.57% 7
  8. 8. Results Gross Revenue (R$ Million) Operating Expenses* (R$ Million) 1.8% 0.6% 8,299.0 8,448.7 3,829.9 3,805.3 3,138.9 3,190.5 687.7 544.0 7.7% 6.2% 2,906.4 2,725.4 2,269.2 2,431.2 1,420.4 1,311.1 5,160.1 5,258.2 1,102.9 957.5 173.5 201.8 883.6 866.5 1,803.5 1,767.9 873.0 830.1 363.3 242.8 9M06 9M07 3Q06 3Q07 9M06 9M07 3Q06 3Q07 Net Revenue Deduction of Operating Revenue Other Operating Expenses Energy Purchase Transport 9M06 x 9M07: Energy Purchase Expense (3Q06 x 3Q07): − Increase of 1.1% − Total market increased (captive + free − Amortization of Liability CVA’s Basic Grid in 3Q06, reverting consumers): 4.6% R$ 20.3 million of transmission charges − However, there was a reduction of R$ 11.5 million related to 3Q06 x 3QT07: energy purchase through Bilateral Contract with AES Tietê − Increase of 6.1% in the total market Other Operating Expenses (3Q06 x 3Q07): − Tariff reset of -8.43% applied since July 4th, 2007 − Reduction of 33.2% − Extraordinary provision of R$ 120.9 million due to the final review of legal and administrative procedures in 3Q06 − Reduction of 51.7% of Private Pension Fund expenses (*) Does not include depreciation motivated by actuarial surplus 8
  9. 9. EBITDA Adjusted EBITDA* (R$ Million) 37.1% 35.2% 1,912.4 3.1% 1,853.1 582.2 400.3 36.5% 31.6% 1,452.9 658.9 1,330.2 15.2% 558.9 275.7 102.2 383.2 456.7 9M06 9M07 3Q06 3Q07 EBITDA Adjusts Adjusted EBITDA Margin EBITDA − 9M06 x 9M07: 9.2% − 3Q06 x 3Q07: 19.2% (*) Adjusted EBITDA = EBITDA + Pension Fund + RTE + Contingency Provisions + Judicial Deposits 9
  10. 10. Results Financial Result (R$ Million) Net Profit (R$ Million) 9M06 9M07 3Q06 3Q07 703.1 27.2 (36.2) 156.3% (52.9) 274.4 317.6% 31.6% 197.6 47.3 (300.7) 9M06 9M07 3Q06 3Q07 Improvement of financial result: Market increase – Decrease in Financial Expenses: − 3Q06 x 3Q07: 6.1% - Reduction of R$ 695.2 million on gross debt − 9M06 x 9M07: 4.6% - Lower average cost (14.2 % p.a. in Sep/06 to Reduction of operational costs and 12.7 % p.a. in Sep/07) expenses - Reduction of Selic rate from 14.6% in 3Q06 to 11.5% in 3Q07 End of the recognition in the balance sheet of the debt with the Pension Fund 10
  11. 11. Consolidated Debt Short Term x Long Term (R$ Million) Quarterly Highlights - Debt - 18.7% +10.0% Gross Debt: 4,800 4,435 4,105 1,023 4,030 4,105 − Reduction of 14.5% (R$ 695.2 million) 597 523 523 2,979 3,276 3,276 Net Debt: − Reduction of 18.7% (R$ 754.5 million) 3,838 3,582 3,777 3,582 Amendment of the 9th Issue of Debentures Subsequent Events: 2Q07 3Q07 3Q06 3Q07 − 10th and 11th Issues of Debentures replacing the 8th Long Term Short Term Net Debt Issue New terms and conditions 9th Issue 10th Issue 11th Issue* Date 20/8/2007 23/10/2007 23/10/2007 Amount (R$ million) 250.0 600.0 200.0 Interest Rate CDI + 1.75% CDI + 0.90% CDI + 1.75% Maturity (years) 11.0 6.0 11.0 Average Life (years) 9.4 5.0 10.0 (*) Approved by Board of Directors and being registered at CVM 11
  12. 12. Consolidated Debt Average Cost and Average Life Gross Debt – 3Q07 5.9 6.4 5.4 5.5 5.5 5.5 IGP-DI 113.0% Fixed 109.9% 57.3% 105.3% 104.3% 102.6% 97.3% Rate 12.1% CDI/Selic Libor 3Q06 4Q06 1Q07 2Q07 3Q07 3Q07* 29.3% 1.3% CDI Avg. Life - years CDI Evolution** Pension Fund R$ 2,351 million 15.2% 14.2% 11.9% Private Creditors R$ 1,754 million 11.1% TOTAL R$ 4,105 million 30-Jun-06 30-Sep-06 30-Jun-07 30-Sep-07 CDI *Including the 10th Issue of Debentures ** Daily CDI 12
  13. 13. Managerial Cash Flow R$ million 3Q06 4Q06 1Q07 2Q07 3Q07 Initial Cash 619 767 1.166 1.301 1.457 Operating Cash Flow 725 741 634 738 519 Investments (75) (85) (95) (94) (93) Net Financial Expenses (176) (91) (187) (130) (133) Net Amortization (158) (111) (71) (83) (225) Pension Fund Expenses (85) (55) (48) (48) (49) Income Tax (83) - (97) (99) (161) Dividends - - - (130) (485) Free Cash Flow 148 399 135 155 (627) Final Cash 767 1.166 1.301 1.457 830 Operating Cash Flow: reduction in the 3Q07 is due to the average tariff review index of -8.43% applicable since July 4th, 2007 Financial Expenses: semi-annual payments of interest of the 8th issue of debentures (R$ 59.0 million) and the Bond denominated in Reais (R$ 45.3 million) Net amortization: R$ 200.0 million regarding the 8th issue of debentures Dividends: payment of R$ 487.8 million on September 3rd, 2007 relative to 1H07 results Income Tax: increase due to net profit of R$ 340.0 million in 2Q07 13
  14. 14. Conclusion Total Market increased 6.1% compared to 3Q06, amounting 10,020.1 GWh Net Profit of R$ 197.6 million in 3Q07 and R$ 703.1 million in 9M07, compared to R$ 274.4 million in 9M06 Reduction of 18.7% in the consolidated net debt in the last 12 months Extension of total debt’s average life from 5.4 years in 3Q06 to 6.4 years in 3Q07, considering the new issues of debentures R$ 487.8 million of dividends paid on September 3rd, 2007 relative to 1H07 results 14
  15. 15. 15
  16. 16. Highlights EBITDA of R$ 276.7 million in the 3Q07, stable when compared to 3Q06 (R$ 796.5 million in 9M07) Net profit of R$ 141.1 million in the 3Q07, 1.6% lower than 3Q06 (R$ 443.7 million in 9M07) 3Q07 Aneel did not approve the Amendment to the bilateral contract with Eletropaulo, that extended its expiration to 2028 Incorporation of Tietê Participações S.A. by AES Tietê effective as of September 30th, 2007 On November 12th, the Board of Directors approved the payment of R$ 141.1 million in dividends, which correspond to 100% of 3Q07 net earnings − R$ 1.41 per 1,000 common shares Subsequent − R$ 1.55 per 1,000 preferred shares Events Approval from the United Nations of its Clean Development Methodology (CDM) - the proposal will allow reforesting 5,700 km of bordering lands 16
  17. 17. Energy Balance Generation – MW Average Billed Energy – GWh 10,520 9,818 641 126% 198 115% 109% 112% 1,308 1,583 107% 98% 81% 1,392 1,467 1,424 1,606 8,311 8,296 1,258 1,363 1,040 2001 2002 2003 2004 2005 2006 9M07 9M06 9M07 Generation - MW Average Generation / Assured Energy Eletropaulo MRE CCEE/Losses Increase of 7.2% in energy generated (9M07 x Current Price – Bilateral Contract with 9M06) Eletropaulo: R$ 131.98/MWh − July/07 - adjustment of 3.89% based on Generation was 25.9% higher than the IGP-M’s variation assured energy (1,275 MW average) Tariff MRE – R$ 7.47/MWh Growth of 47.7% in the volume sold through CCEE Tariff* – R$ 103.80/MWh CCEE/MRE * Average 3Q07 17
  18. 18. Capex Capex – 9M07: R$ 31.0 million 9M07 − Restoration and upgrade in equipments – R$ 19.2 million 2.4% − Environment (reforestation) – R$ 6.7 million 2.3% 11.6% − Small Hydropower Plants – R$ 3.6 million − Others (SAP, Hidroway etc.) – R$ 15 million 21.4% 62.3% 2007 Capex estimate was revised to R$ 52.5 million − Postponement of investments in construction of three SHPPs located on the Jaguari Mirim River in the interior of the state Equip. Environment. Hidroway IT SHPPs of São Paulo, which together total 8MW of installed capacity R$ Million Investment in Small Hydropower Plants 52.5 − Acquisition of License to build three small hydropower plants 46.5 in the State of Rio de Janeiro, with a total installed capacity of 31.0 52 MW and average 28.97 MW of assured energy, approved 21.9 27.5 by ANEEL – forecasted investments of R$ 257 million in 2 12.4 years, from which R$ 18.2 million were already invested − Environmental licenses already obtained 2003 2004 2005 2006 9M07 2007 (E) 18
  19. 19. Expansion Requirement Requirement: increase installed capacity by at least 15% (400 MW), until December 2007: − Increase the installed capacity in São Paulo State; or − Purchase energy from new plants, located in São Paulo, through long term agreements (at least 5 years) Restrictions to increase the capacity: − State of São Paulo – no hydro resources and environmental restrictions to thermal plants − Gas supply − “New Model of the Electric Sector” (Law # 10,848/04) Proposal from AES Tietê to the State Government of São Paulo: − To be supported by a specialized consulting company to produce a report in 12 months regarding technical, financial, regulatory and environmental aspects of the expansion possibilities in the State of São Paulo and in compliance with the “New Model of the Electric Sector” Neither ANEEL nor the State Government of São Paulo have sent a formal reply to AES Tietê with regard to this issue so far 19
  20. 20. Results Net Revenues Costs and Operation Expenses R$ Million R$ Million +6.1% +31.1% 356.8 1,104.5 1,040.6 272.1 +6.3% 231.9 108.1 +25.8% 364.1 103.6 342.6 82.4 113.4 76.1 56.4 33.9 50.6 48.8 32,3 31.0 16.2 16.2 9M06 9M07 3Q06 3Q07 9M06 9M07 3Q06 3Q07 Power Purchase and sector charges Depreciation Operational Expenses 3.9% price adjustment granted in July/07 for Sector Charges - increase of the transmission the energy sold under the bilateral contract charge (TUSDgeneration) for the 2007/2008 Higher energy volume sold to CCEE / MRE cycle, since July/07, approximately R$ 11.0 Reversal of the provision taken for COFINS million per quarter litigations in the amount of R$ 5.4 million – 3Q07 20
  21. 21. Results EBITDA – R$ Million 78.7% 80.7% 72.1% 76.0% - 2.7% 818.9 796.5 +0.1% 276.4 276.7 9M06 9M07 3Q06 3Q07 EBITDA Margin 21
  22. 22. Results Financial Results – R$ Million Net Income – R$ Million 9M06 9M07 3Q06 3Q07 43.1% 40.2% -1.2% 41.9% 38.8% (28.9) 449.0 443.7 -1.6% (47.1) +63.0% (66.0) 143.5 141.1 (76.0) -13.2% 9M06 9M07 3Q06 3Q07 Net income Net Margin 9M06 x 9M07 Payment of R$ 141.1 million in dividends, − Positive impact, explained by the monetary gains which correspond to 100% of 3Q07 net accounting on PIS/Cofins, which totaled R$ 36.6 earnings million in 2Q07 − R$ 1.41 per 1,000 common shares 3Q06 x 3Q07 − R$ 1.55 per 1,000 preferred shares − Increase in the average IGP-M from 0.84% in Ex-Dividends: November 22nd, 2007 3Q06 to 2.57% in 3Q07 Payment: November 30th, 2007 22
  23. 23. Debt in R million $ Amount Creditor Maturity Cost Collateral 1,296.2 Eletrobrás May, 2013 IGP-M + 10% p.a. Receivables 3.7 FunCesp III Sep, 2027 IGP-DI + 6% p.a. Receivables Net Debt – R$ Million 3.2x 2.0x 1,405.8 1.4x 1,253.5 0.7x 0.6x 0.7x 1,096.3 676.5 681.9 703.6 2002 2003 2004 2005 2006 9M07 Net Debt (R $ million) Net Debt / EBITDA Cash availability = R$ 596.3 million (September, 2007) − Marketable securities with maturities lower than 90 days − Average rates around 100% of CDI 23
  24. 24. Managerial Cash Flow* R$ Million 3Q06 4Q06 1Q07 2Q07 3Q07 Initial cash 777.2 673.6 691.0 686.6 574.3 Operating Cash Flow 289.9 279.6 287.9 307.9 248.9 Investments (7.7) (23.6) (9.7) (11.9) (9.3) Net Financial Expenses (14.6) (18.8) (16.1) (18.0) (19.3) Net Amortization (50.1) (44.8) (46.4) (48.3) (50.8) Income Tax (15.9) (31.7) (220.1) (16.6) (9.8) Dividends and Interests on Equity (305.3) (143.4) - (325.4) (141.9) Free Cash Flow (103.6) 17.4 (4.4) (112.3) 17.8 Final Cash 673.6 691.0 686.6 574.3 592.1 (*) Parent Company 24
  25. 25. Conclusion Generation was 26% higher than assured energy in 9M07 Accumulated Net Revenues of R$ 1,104.5 million in 2007, 6.1% lower than those of the same period of 2006 (R$ 364.1 million in the 3Q07) EBITDA of R$ 796.5 million in 9M07, decrease of 2.7% compared to 9M06 (R$ 276.7 million in 3Q07) Net Income of R$ 443.7 million accumulated in 2007, reduction of 1.2% when compared to 9M06 (R$ 141.1 million in 3Q07) Dividends payment of R$ 443.7 million, corresponding to 100% of 9M07* net earnings – R$ 141.1 million, refer to 3Q07, to be paid on November 30th, 2007 * R$ 160.5 million refer to 1Q07 net earnings distributed in June, 2007 and R$ 142.1 million refer to 2Q07 net earnings distributed in September, 2007 25
  26. 26. 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. 26

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