2. • History and Shareholding Structure
• Concession Area
• Market and Operational Performance
• Tariff Adjustment
• Financial Results
• Conclusion
3. History
New Model of
Energy Sector Consolidation and
Federal rationalization of the
Government issued shareholding
new law for the structure
Electric Energy
AES Restructuring Sector - the “New
Brasiliana was Model” (2004)
EDF/AES Consolidation established to hold, Incorporation of
AES took over Eletropaulo direct or indirect, AES Elpa debt
EDF took over Light control of and AES
Corporate Restructuring Eletropaulo, Tietê Transgás debt
approved by ANEEL and Uruguaiana by Brasiliana
(February) (December)
CVM approves public offering for
AES ELPA shares
(June)
AES Transgás acquired 64% of
preference shares (January 2000) AES ELPA shares split from
Light shares
CSN and Reliant sold their interests (November)
in Light and Eletropaulo
(December 2000)
Energy Rationing (June 2001)
Privatization of
Eletropaulo
(April)
1998 2000 -2001 2002 2003 2004-2005 Next Steps ...
3
4. Shareholding Structure
AES BNDES
50.01% ON 49.99% ON
100.00% PN
Brasiliana
7.38% PN
100.00% 98.26%
Minorities
Fed. Gov./
1.74% Minorities BNDES
AES Transgás AES Elpa 2.16% ON 20.03% ON
62.85% PN 77.81% ON 29.05% PN 0.73% PN
4
5. Concession Area
• Largest electricity distribution company in Latin America in terms of
revenue
• Net Revenue in 2004 – R$ 7,394 million
• Density of billed energy consumption: 7,220 MWh/Km2
• Attractive concession area in Brazil Brazil Eletropaulo %
• Demographic density
Km² 8,547,403 4,526 0.05%
• Solid economic base
Population 184,434,438 16,062,101 8.71%
Energy Distributed
320,772 35,341 11.02%
(GWh/year)
5
7. Consumption in GWh
4.8% 1.6% 3.4%
8,819 -2.8%
8,417 -11.5% 27,178
26,273
7,064 7,175 24,404
6,490 23,720
5,743 85.0%
-18.5%
3,458
2,433
1,982 1,869
er
SD
l
l
al
ti a
ia
th Market Billed Market Billed
ci
r
TU
en
st
er
O
du
with TUSD
id
m
es
In
om
R
C
9m 2004 9m 2005 9m 2004 9m 2005
NOTE: Charts do not consider own consumption
7
8. Retention of Potentially Free Consumers
Net Revenues with TUSD - R$ million
84
78
54
48
38
30
19
1Q04 2Q04 3Q04 4Q04 1Q05 2Q05 3Q05
Captive Consumers X Free
% total load of concession area of 2005 (e) 36,511 GWh
13.4%
83.5%
3.1%
Captive Consumers Free Consumers Potentially Free Consumers
8
9. Energy Supply
GWh
1% 2%
7%
15%
27% Auction
2%
Other bilateral contracts
60%
21%
51%
Bilateral contract with
19% Tietê
Initial contracts
32% 32% 31% Itaipu
2003 2004 2005
• Initial Contracts end by January 2006
9
10. Loss Reduction – YTD 2005
• 370 thousand inspections
• Revenue recovery of R$ 86.8 million (billed value)
• Annual recovery perspective of 320 GWh (agreements)
Losses
13.53% 13.35%
13.01%
7.93% 7.75%
7.41%
2004 1H05 3Q05
Commercial Total
10
11. Tariff Adjustments
Privatization 1998 Review 2003 Review 2007
Year 0 1 2 3 4 5 6 7 8 9 10
Annual Adjustment
(Factor X = 0 in the first 4 years) 2.12%
Annual Adjustment
(Factor X = 0)
Annual Adjustment Periodic Review
Tariff Adjustment Rate Tariff Repositioning
VPA + VPB (IGPM +/- X) (Required Revenue – Deductions from Required Revenue)
Revenue Actual Revenue
11
13. Completion of Tariff Review 2003
• Authorized increase in adjustment rate from 10.95% to 11.65%
• R$ 42 million added to the remuneration granted for tariff year 2003-2004
Item – R$ thousand Previous Present Variation
Net remuneration base R$5,242 R$ 4,771
Remuneration rate 17.07% 17.07%
Remuneration R$ 895 R$ 814 (R$ 81)
Gross remuneration base R 8,275 R$ 9,885
Depreciation rate 3.95% 4.31%
Depreciation R$ 327 R$ 426 R$ 99
Additional O&M costs - R$ 24 R$ 24
TOTAL R$ 42
R$ 42
• The accrued value amounted R$ 106.9 million, with an impact on 2Q05
results
• Recovery of resources will take place during tariff year 2005-2006
13
14. Results
in R$ million
Gross Revenue Operating Expenses EBITDA
6.391 23%
5.637 5.627
23,5%
9.981 15% 1.398 22,9% 22,6% 22,1%
8.649 1.449 4.564 1.483
555 1,672 10%
7.228 8.314 1,472
336 958 400
1,377
537 1,256
412
375
293 550
52 4.439
3.851 1.272
3.607 1.060 963
3.231 827
2003 2004 9m04 9m05
2003 2004 9m04 9m05 2003 2004 9m04 9m05
Billed Energy Other Revenues
Electricity+Transp. Sector Charges Adjusts
Operating Expenses EBITDA
Adjusted EBITDA Margin
• 18,6% average tariff adjustment in • An allowance for doubtful debts of R$
346.4 million based on an agreement
July 2004 signed with the Municipal Government of
São Paulo
• Conclusion of 2003 Tariff Review,
which generated an additional R$ • 10% raise in cost of energy purchased
due to increase in energy supplied by
106.9 million revenue on 2Q05 AES Tietê and payment of PIS / Cofins
taxes
• Reversal of PIS/PASEP’s allowances
in the amount of R$ 72 million in • Increase of sector charges
2Q05 – accounting impact • 41% CCC
• 46% CDE 14
15. Results
in R$ million
Financial Result Profit / Loss
24 86
6
(12)
48
48
1,616%
(319)
26%
(434) (204)
(453)
2003 2004 9m04 9m05 2003 2004 9m04 9m05
• Reversal of R$ 98 million in 2Q05 due to • Increase in operating expenses mainly due
legal disputes over PIS / Pasep (accounting to extraordinary and non recurring provisions
impact)
• Reversal of R$ 55.2 million in 3T05 resulting • Increase in PIS/Cofins taxes on the bilateral
from the provision of credits from the contract with AES Tietê
Municipal Government of São Paulo
• Appreciation of 16.3% of the Real against • Other impacts (see next slide)
the US dollar in 9m05, versus an appreciation
of 1.1% in 9m04
15
16. Negative Impacts – 3Q05
Provision - Agreement signed with MGSP R$ thousand
MGSP debt balance provision (346,369)
Financial Expenses - Present Value Adjustment Reversal 55,227
Tax Effects (34%) - Credit 98,988
Reversal of Tax Credit (36,143)
Net Effect on the Result (228,297)
increase in Pis/Cofins' taxes - Agreement with AES Tietê R$ thousand
Pis/Cofins payment to AES Tietê (43,692)
Tax Effects (34%) - Credit 14,855
Net Effect on the Result (28,837)
Other impacts - 3Q05 R$ thousand
Allowance for doubtful debts - Other Municipal Governments (23,953)
Present Value Adjustment - Other Municipal Governments (9,102)
IPTU tax – MGSP – Monetary Correction (9,444)
Diferred Amortization - Debt downpayment (15,992)
Tax Effects (34%) - Credit 19,887
Reversal of Tax Credit (14,810)
Net Effect on the Result (53,414)
Total - Net Effect on the Result (310,548)
16
17. CAPEX – YTD 2005
R$ million
Capex – YTD05
Customer Service and
88
System Expansion
33 Maintenance 23
Loss Recovery 12
36
32 370 Personnel 53
297 Others 26
203
186 Total 203
Self Financed 36
Total Recorded 239
2003 2004 YTD 2005 2005
Capex Self Financed
17
20. Amortization Schedule
R$ million
132
Effective
payments
285
158 1,972
99
444 56
474 159
49
905
93
469 43 522 506
144 335 367
70
Downpayments** YTD05 4Q05 2006 2007 2008 2009 2010-17
R$ BNDES US$ *
* Conversion rate on 09/30/2005 US$ 1,00 = R$2,2222
** Amortization of debts with creditors included in the Company’s Debt Reprofile Agreement, paid on 01/12/2005 with the third tranche of the rationing loan
Amortization of debts with creditors included in the Company’s Debt Reprofile Agreement, paid in two installments: R$ 175.9 million on 06/29/2005, plus US$ 25.6 million on
07/28/2005 using 50% of the proceeds from the R$ 474.1 million bond issue
Amortization of debts with creditors included in the Company’s Debt Reprofile Agreement, paid in two installments: R$ 550.1 million paid on 09/27/2005, and US$ 75.2 million paid
on 10/27/2005 using 90% of the proceeds from the R$ 800.0 million issue of debentures.
20
21. 2005 Issues
BONDS (June 2005)
• Principal: R$ 474 million • Down payments made to
creditor banks:
• Tenor: 5 years
• Interest rate: 19.125% p.a.
• Bonds: 50%
R$237,030,000
• Interest and Amortization:
• Debentures: 90%
• bullet R$720,000,000
• semiannual interest
Debentures (September 2005) Basis: September 2005
• Principal: R$ 800 million Private Before After
• Tenor: 5 years Creditors issues issues
debt
• Interest rate: CDI +2.90% p.a.
Average 128% CDI 126% CDI
• Interest and Amortization: Cost
• Semiannual interest
Average 1.58 years 2.75 years
• Grace period: 23 months Life
• Annual payments 21
22. Financial Strategy
Ratings – International Scale
• Successful issues
B
• Estimates of growth in 2005
operating revenues and cash
flow
• Expected decrease in debt
servicing
• Better outlook for the
electric sector B–
2004
D
2003
S&P
Fitch Ratings 22
23. Conclusion
• Affected by extraordinary events, the company had a loss of R$ 204 million on
the 9 months of 2005
• The R$ 474 million bonds and R$ 800 million debentures allowed:
• A down payment of R$ 957 million to private creditors (most expensive
debt), reducing the average cost of debt from 128% CDI to 126% CDI and
increasing the average life of debt from 1.58 years to 2.75 years, as of
September 2005
• A reduction of 36% of the total foreign currency debt from March 2005 to
September 2005
• Fitch Ratings raised Company’s international scale credit rating from “B-” to
“B” and national scale credit rating from “BB” to “BB+
• Tariff Adjustment of 2.12%, effective as of July 4, 2005 and conclusion of Tariff
Review 2003
Financial Strategy:
• Increase duration and decrease costs of debt
23
24. Latin American Small & Mid Cap Forum 2005
November 29 – December 02, 2005
The statements contained in this document relative to the Company’s business
prospects, operating and financial result projections, and growth potential are
mere forecasts based on the expectations of Company Management about the
future. Such expectations are highly dependent on market shifts and on the
performance of Brazil’s economy, the electricity sector and the international
market. They are therefore subject to change.
