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Apre 2 t05

Eletropaulo reported strong financial results in the 2nd quarter of 2005. Net income increased significantly to R$136.8 million compared to a loss in the previous quarter, due to higher operating revenue and lower net financial expenses. Revenue grew due to a tariff adjustment and the completion of a tariff review from 2003. The company also issued bonds of R$474 million in the international market and had its credit rating upgraded.

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2nd quarter 2005 Results August 11, 2005
• Market • Operating Performance • Tariff Adjustment • Financial Performance • Financial and Operating Performance • Debt Profile Conclusion
Highlights of the quarter • Eletropaulo reported a net income of R$ 136.8 million in 2Q05, reversing the loss of R$ 16.7 million posted in 1Q05 • Issue of bonds in the amount of R$ 474 million in the international market • FITCH Ratings raised the Company's local and foreign credit rating from “B-” to “B” • Subsequent Event : • Tariff Adjustment of 2.12%, effective as of July 4, 2005 4
Revenue Consumption Perfil do Mercado Consumidor 2Q04 - GWh 2Q05 - GWh 7,2% 12,9% 9,9% 31,8% 7,4% 32,3% Residencial Industrial Comercial Outros 26,3% 26,6% TUSD 20,8% 24,8% 2Q04 – R$ 2Q05 – R$ 1,4% 3,5% 8,0% 6,5% Residencial 40,9% 41,1% Industrial 29,5% Comercial Outros 30,0% TUSD 20,2% 18,9% 5
Comparison of Consumption in GWh 4.7% 4.4% 3.3% 2.952 2.819 -13.2% 9.150 2.331 2.434 8.858 2.191 1.902 84.5% -3.0% -22.4% 1.182 876 8.217 680 641 7.968 er SD l l al tia ia Market Billed Market Billed th ci r TU en st er O with TUSD du id m es In om R C 2Q04* 2Q05 2Q04* 2Q05 NOTE: Charts do not consider own consumption *These amounts do not include the fraud recovery agreements of April 2004, which produced an additional revenue of 213,611 MWh 6
Comparison of Consumption 2Q04 x 2Q05 in GWh 84,5% 4,7% 4,4% -22,4% 3,3% -13,2% Residential Industrial Commercial Other TUSD Total NOTE: Charts do not consider own consumption *These amounts do not include the fraud recovery agreements of April 2004, which produced an additional revenue of 213,611 MWh 7
Retention of Potentially Free Consumers Net Revenues with TUSD* R$ million 78 54 48 38 30 19 1Q04 2Q04 3Q04 4Q04 1Q05 2Q05 Captives Consumers X Free % total load of concession area in 2004 (35.341GWh) 13,3% 81,1% 5,6% Captive Consumers Free Consumers Pontially Free Consumers * TUSD – Tariff for the Use of the Distribution System 8
Tariff Evolution 20% 18.6% 17.6% 13.8% 14.3% 15% 11.1% 11.6% 10% 7,6% 12,1% 16,9% 11,8% 6.4% 7,5% 7,3% 7,1% 5% 1,6% 6,3% 4,5% 4,8% Adjustment 3,7% 2,5% 3,6% 1,7% 0% 2.12% -4,3% -5% -10% 1999 2000 2001 2002 2003 2004 2005 Parcel B Parcel A PIS/COFINS IGPM Factor X = 2.43% 9
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 Base of the net remuneration R$5.24 R$ 4.77 Remuneration rate 17.07% 17.07% Remuneration R$ 895 R$ 814 (R$ 81) Gross basis 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 • Restated amounted totals R$ 106.9 million, with an impact on 2Q05 R$ 106.9 results • Recovery of resources will take place during tariff year 2005-2006 10
Results – 2Q04 x 2Q05 R$ million 2Q04 2Q05 Average tariff adjustment of 18.6% in 2004 Completion of Tariff Adjustment 2003, which Net Revenue 1,714.6 2,275.5 32.7% produced a R$ 106,9 million revenue in 2Q05 Accounting reversion of R$ 72.0 million in 2Q05, related to court disputes of PIS/PASEP payment Increase in expenses related to items of Parcel A (Tariff Adjustment of 2004) Operating Expenses (1,463.9) (1,777.8) 21.4% Start of accounting deferred CVA of tariff year 2002- 2003, as of 3Q04 Beginning of accounting CVA energy in 1Q05 EBITDA * 317.6 571.6 79.9% Growth in operating revenue, offset by increased operating expenses Financial Income (155.3) (77.9) -49.9% 24.4% appreciation of the Brazilian Real against the US dollar, producing a positive impact on the (Expenses) ** currency variation account Reversal of R$ 98.,0 million in 2Q05, relative to court disputes involving the payment of PIS/ PASEP taxes Extraordinary Items Net (85.3) (85.0) -0.4% of Tax Effects Net Income (Loss) 8.1 136.8 1,597.0% Operating income increase and net financial expenses reduction (*) Without adjustments (**) Considering consolidated results 11
Results – 1Q05 x 2Q05 R$ million 1Q05 2Q05 Increase in energy consumption of classes: residential (4.1%) commercial (0.6%) Completion of Tariff Adjustment 2003, which Net Revenue 1,979.6 2,275.5 14.9% produced a R$ 106,9 million revenue in 2Q05 Accounting reversion of R$ 72.0 million in 2Q05, related to court disputes of PIS/PASEP payment Increase in personnel expenses (11.7%) and materials and third-party services (9.1%) Operating Expenses (1,769.9) (1,777.8) 0.4% Acquisition of a larger volume of energy because of seasonal changes in the following contracts (i) bilateral, with AES Tietê, (ii) Itaipu and (iii) bilateral, with biomass power plants EBITDA * 282.,7 571.6 102.2% Increase in operating revenue Financial Revenue (105.,0) (77.9) 24.4% appreciation of the Brazilian Real against the -25.8% US dollar, producing a positive impact on the (Expenses)** currency variation account Reversal of R$ 98.,0 million in 2Q05 Extraordinary Items Net (85.,8) (85.0) -0.9% of Tax Effects Operating revenue increase and net finance Net Profit (Loss) (16.8) 136.8 N.M. expenses reduction (*) Without adjustments (**) Considering consolidated results 12
Adjusted EBITDA R$ million 1st quarter 2005 2nd quarter 2005 R$ 282.7 EBITDA without R$ 571.6 EBITDA without adjustments adjustments R$ 82.0 RTE R$ 84.0 RTE R$ 12.9 Debt Confession IIa R$ 15.7 Debt Confession IIa R$ 0 PIS – accounting R$ 72.0 PIS – accounting reversal reversal R$ 377.6 ADJUSTED EBITDA R$ 599.3 ADJUSTED EBITDA 58.7% Increase 13
Capex in 2Q05 R$ million Capex- 2Q05 Customer Service and 31 System Expansion 33 Maintenance 8 Loss Recovery 5 32 360-390 Personnel 18 297 15 Others 10 186 Total 72 144 Self Financed 8 Total Recorded 80 2003 2004 1H05 2005(e) Capex Self Financed 14
Consolidated Indebtedness R$ million Short Term vs. Long Term Debt Evolution 5.278 5.284 5.256 5.278 5.284 5.256 100% 29% 2.402,7 2.242,5 3.090,8 77% 73% 50% 1.097,0 1.102,0 71% 762,5 1.778,8 1.916,9 27% 1.424,5 23% 0% 2003 2004 2Q05 2003 2004 2Q05 ST LT FCESP CVA/RTE Private Creditors 15
Hedging Strategy million R$3,473 R$4,490 R$5,902 R$5,278 R$5,284 R$5,256 100% 90% 12% 18% 14% 42% 35% 17% 80% 70% 3% 60% 41% 100% of foreign 61% 4% currencies debt is 50% hedged, 40% considering the financial costs 30% 20% 41% 25% 54% 62% 83% 88% 10% 0% 2000 2001 2002 2003 2004 2Q05 Local currency Hedged Foreign currencies 16
Amortization Schedule R$ million Effective payments 198 485 103 133 101 159 83 270 102 300 627 510 493 458 99 319 289 193 158 payment** 1H05 2H05 2006 2007 2008 2009 2010 Pre R$ BNDES US$ * *Exchange rate on 6/30/2005 US$/R$=2.3504 ** Amortization of debts with creditors included in the Company’s Debt Profile Adjustment Program, paid on: 01/12/2005 with the third tranche of a loan in the amount of R$ 185 million to cover the losses from the energy rationing period. 06/29/2005 of R$ 175.9 million and 07/28/2005 of US$ 25.6 million, with 50% of the resources coming from the issue of bonds 17
Financial Strategy • Bonds issue in 06-28-2005 • Principal: R$ 474,060,000.00 Ratings Increase • Term: 5 years • Interest rate: 19.125% p.a. • Interest rate and amortization: B • half-yearly interests 2005 • amortization at maturity B– 2004 • Successful Bonds issue • Estimates of growth in operating revenues and cash flow D • Expected decrease in debt servicing 2003 • Better outlook for the electric sector 18
19
Highlights for the Quarter Secondary Public Offer In June 2005, a secondary public offer of shares was concluded by a group of minority shareholders, namely Banco Banespa, Banco Santander e Banco Nossa Caixa. The offer represented 45.1% of AES Tietê’s preferred shares and 12.8% of the common shares (28.4% of total capital) After the Public Offering Shareholders Common Preferred Total AES Tietê Empreendimentos 61,7% 14,3% 38,9% Energia Paulista 0,0% 18,0% 8,7% AES Tietê Participações 9,6% 0,0% 5,0% Banespa 0,0% 0,0% 0,0% Banco Nossa Caixa 0,0% 0,0% 0,0% Eletrobras 0,0% 16,4% 7,9% Others 28,7% 51,3% 39,6% TOTAL 100,0% 100,0% 100,0% “Platinum List 2004“ – Forbes Magazine Award AES Tietê was placed 8th in the overall classification of Forbes Brasil Magazine’s Platinum List 2004, which ranks the 200 better Brazilian public companies “Maiores e Melhores” (The Biggest and the Best) – Exame Magazine Award AES Tietê was considered by Exame Magazine’s “Maiores e Melhores” annual listing as the company with the best performance in the public service area during 2004 20
Tariff Adjustment The Initial Contracts are readjusted on a yearly basis according to the following pre-established formula : Rate for Tariff Adjustment = VPA + VPB x IGP-M Revenue Tariff adjustments in 2005: • February: Bragantina = 12.4%, the new tariff is R$ 65.3 / MWh Nacional = 12.4%, the new tariff is R$ 69.4 / MWh April: CPFL = 10.6%, the new tariff is R$ 73.8 / MWh July: Eletropaulo = 9.1%, the new tariff is R$ 76.0 / MWh The Bilateral Contract with Eletropaulo is adjusted in July of each year, according to the IGP-M (general price index - market) In 2005, the tariff was adjusted in 7.1%, to R$ 132.7 / MWh 21
Energy Balance – 1H05 Caconde 213,607 CPFL Euclides Energy Generation x Billed Energy 279,373 301,477 in MWh Bandeirante Limoeiro 149,.223 88,836 Eletropaulo - CI Água Vermelha 451,752 3,958,255 Barra Bonita Elektro TOTAL BILLED 232,356 286,067 Bariri 6,783,237 5,391,027 Bragantina 314,.265 73,453 Ibitinga 352,748 Promissão = Nacional 46,447 527,559 Piratininga Nova Avanhandava MRE* 151,947 719,573 Eletropaulo - Bilateral Mogi Guaçu AES Tietê generated 27.9% over 4,006,477 20,850 its assured energy *After deducing own consumption and transmission losses, the difference is addressed to the Energy Reallocation Market – MRE 22
Stored Energy Southeast Region Reservoirs 80 % of Max Stored Energy 60 40 20 0 Oct Nov Apr Jun Aug Jul May Dec Mar Jan Feb Sep 2005 Risk Aversion Curve* - 2005 Risk Aversion Curve* - 2006 * Risk aversion curve in the Southeast region - ONS Source: “Operador Nacional do Sistema” – ONS (National System Operator) 23
Income Statement Tariff adjustments and de-contracting in R$ million 1H04 1H05 of 25% of volume from initial contracts, which were transferred to the bilateral 9.0% contract Net Revenues 493.3 537.5 Increase in the Financial Compensation Operating Costs (138.4) (142.1) 2.6% for Use of Water Resources and from the operating provisions Increase in EBITDA Margin from 78.3% Ebitda 386.7 427.4 10.5% in 1H04 to 79.5% in 1H05 Lower variation of the IGP-M index, Financial Income (142.4) (75.0) -47.3% from 6.8% in 1H04 to 1.7% in 1H05 (Expenses) Increase in financial income, due to a greater cash balance and increased interest rates Income before 212.5 318.8 taxes and shareholders Net income increase due to better operating and financial performance Net Income 140.3 210.3 50.0% 24
Operating Costs and Expenses in R$ million 1H04 1H05 Personnel 13.5 14.8 Third Parties Services 10.2 10.4 Increase in the Updated Reference Tariff – TAR (R$ 52,67MW/h )in 1Q05 (TAR x 6.75% x Generated Energy) and Financial Compensation 18.0 24.0 in the volume of generated energy Connection and Distribution 26.2 23.4 Decrease in connection charges established by Aneel Network Charges Transmission – increase due to greater volume of energy sold under the bilateral contract Purchased Power 21.1 12.5 End of purchases from Itaipu R$ 7.3 million relative to "Financial Surplus" MAE expense, Depreciation and which was accounted in 1Q04 Amortization 31.,8 32.0 Provision for the financial investments that the Company Operating Provisions held in Banco Santos 0 16.4 Others End of the obligation for payment of the Public Asset Tax 17.6 8.5 (UBP) in 2004 Insurances Waterways Total 138.5 142.1 R&D 25
Financial Investments • Financial investments are distributed as shown in the graphic below: Títulos Estrangeiros - US$ - Aa1 Private Bonds - A3 7% 1% Foreign Bonds - US$ - Aa3 8% BR Federal Bonds - Ba3 84% Rating: Moody´s Rating - Local Curreny (long term) 26
Capital Expenditures • Capex during the 1H05 amounted to R$ 7.2 million and were destined mainly for equipments modernization and waterway improvement • Main Capex destination: Bariri - re-equipping and modernization of the Generating Unit 2 Água Vermelha - equipment modernization Reforestation of boarders – Ibitinga, Bariri, Barra Bonita and Promissão 10% 40% 31% 19% Equipment Waterway Environmental Others 27
Capital Markets • In 1H05, AES Tietê’s common shares (GETI3) appreciated by 10.9% and the preferred shares (GETI4) appreciated by 21.7%, while the Bovespa Index posted a decline of 4.4%. • During the 1S05, GETI3 presented a daily average volume of R$ 1.5 million, being traded in 98% of Bovespa’s trading sessions. GETI4 posted a daily average volume of R$ 1.3 million, traded in 72% of the trading sessions. When compared to the same period of previous year, the average daily value increased by 33% (GETI3) and 145% (GETI4). • In July, after the offer expired, Tietê’s shares were traded in all Bovespa trading sessions and the daily average values were R$ 3.7 million (GETI3) and R$ 1.8 million (GETI4). AES TIETÊ vs IBOVESPA End of Secondary Offer (Base 100 = 30/06/04) 250 212 200 189 150 118 100 50 Jun Jul Aug Aep Oct Nov Dec Jan Feb Mar Apr May Jun GETI3 GETI4 Ibovespa 28
Dividends • On August 9 the Board of Directors approved dividend in the total amount of R$ 199.8 million, representing 95% of the 1st half 2005* net income Dividend Yield** - % Dividend Payout - % 10,9% 2005 2005 1 95,0% 1 10,2% 13,4% 2004 2004 95,0% 12,3% 11,4% 2003 2003 95,0% 6,6% 23,6% 2002 17,4% 2002 2 N.A. 2 Common Preferred * Date and basis date of payment to shareholders to be defined by the Management ** Based in average market price in 1H05 1- 1H05 proposed dividends annualized 2- Values paid in 2002 related to capital reduction 29
Conclusion • Eletropaulo closed the 2nd quarter with increases of • AES Tietê ended up the first half of 2005 with highly 33% in net revenue and 80% in EBITDA, resulting positive results, highlighting: mainly from the completion of the Tariff Review Process of 2003, which produced an additional revenue of R$ 106.9 million, coupled with the • Ebitda of R$ 427.4 million, 10.5% above the 1H04, and reversal of the amount of R$ 72 million relative to Ebitda margin of 79.5%. court disputes related to the payment of PIS/COFINS taxes, based on a legal opinion that considers the statute of decadence • Net profit amounted to R$ 210.3 million, with a 50.0% increase due to the better operating and financial • Other positive issues in the 2nd quarter 2005: results. • FITCH Ratings increased the international evaluation of the Company’s local and foreign credit from “B-” to “B” • Issuing of R$ 474 million bonds in the international • Net margin increased from 28.4% in 1H04 to 39.1% in market 1H05. • Positive perspectives for the 3rd quarter 2005: • Dividends payment of R$ 199.8 million, related to 1H05 earnings results. • Completion of the Tariff Adjustment Process • Exclusion of PIS/COFINS from Parcel B
2nd quarter 2005 Results August 11, 2005 All statements contained in this presentation related to the outlook of the Companies’ business, projections of operational and financial results, and potential growth represent mere provisions and were based on managements expectations in relation to the future of the Companies. These expectations are highly dependent of market changes, Brazil’s economic outcome, the energy sector and the international markets behavior, being thus subject to change.

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Apre 2 t05

  • 1.
    2nd quarter 2005Results August 11, 2005
  • 2.
    • Market • Operating Performance • Tariff Adjustment • Financial Performance • Financial and Operating Performance • Debt Profile Conclusion
  • 4.
    Highlights of thequarter • Eletropaulo reported a net income of R$ 136.8 million in 2Q05, reversing the loss of R$ 16.7 million posted in 1Q05 • Issue of bonds in the amount of R$ 474 million in the international market • FITCH Ratings raised the Company's local and foreign credit rating from “B-” to “B” • Subsequent Event : • Tariff Adjustment of 2.12%, effective as of July 4, 2005 4
  • 5.
    Revenue Consumption Perfil do Mercado Consumidor 2Q04 - GWh 2Q05 - GWh 7,2% 12,9% 9,9% 31,8% 7,4% 32,3% Residencial Industrial Comercial Outros 26,3% 26,6% TUSD 20,8% 24,8% 2Q04 – R$ 2Q05 – R$ 1,4% 3,5% 8,0% 6,5% Residencial 40,9% 41,1% Industrial 29,5% Comercial Outros 30,0% TUSD 20,2% 18,9% 5
  • 6.
    Comparison of Consumptionin GWh 4.7% 4.4% 3.3% 2.952 2.819 -13.2% 9.150 2.331 2.434 8.858 2.191 1.902 84.5% -3.0% -22.4% 1.182 876 8.217 680 641 7.968 er SD l l al tia ia Market Billed Market Billed th ci r TU en st er O with TUSD du id m es In om R C 2Q04* 2Q05 2Q04* 2Q05 NOTE: Charts do not consider own consumption *These amounts do not include the fraud recovery agreements of April 2004, which produced an additional revenue of 213,611 MWh 6
  • 7.
    Comparison of Consumption2Q04 x 2Q05 in GWh 84,5% 4,7% 4,4% -22,4% 3,3% -13,2% Residential Industrial Commercial Other TUSD Total NOTE: Charts do not consider own consumption *These amounts do not include the fraud recovery agreements of April 2004, which produced an additional revenue of 213,611 MWh 7
  • 8.
    Retention of PotentiallyFree Consumers Net Revenues with TUSD* R$ million 78 54 48 38 30 19 1Q04 2Q04 3Q04 4Q04 1Q05 2Q05 Captives Consumers X Free % total load of concession area in 2004 (35.341GWh) 13,3% 81,1% 5,6% Captive Consumers Free Consumers Pontially Free Consumers * TUSD – Tariff for the Use of the Distribution System 8
  • 9.
    Tariff Evolution 20% 18.6% 17.6% 13.8% 14.3% 15% 11.1% 11.6% 10% 7,6% 12,1% 16,9% 11,8% 6.4% 7,5% 7,3% 7,1% 5% 1,6% 6,3% 4,5% 4,8% Adjustment 3,7% 2,5% 3,6% 1,7% 0% 2.12% -4,3% -5% -10% 1999 2000 2001 2002 2003 2004 2005 Parcel B Parcel A PIS/COFINS IGPM Factor X = 2.43% 9
  • 10.
    Completion of TariffReview 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 Base of the net remuneration R$5.24 R$ 4.77 Remuneration rate 17.07% 17.07% Remuneration R$ 895 R$ 814 (R$ 81) Gross basis 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 • Restated amounted totals R$ 106.9 million, with an impact on 2Q05 R$ 106.9 results • Recovery of resources will take place during tariff year 2005-2006 10
  • 11.
    Results – 2Q04x 2Q05 R$ million 2Q04 2Q05 Average tariff adjustment of 18.6% in 2004 Completion of Tariff Adjustment 2003, which Net Revenue 1,714.6 2,275.5 32.7% produced a R$ 106,9 million revenue in 2Q05 Accounting reversion of R$ 72.0 million in 2Q05, related to court disputes of PIS/PASEP payment Increase in expenses related to items of Parcel A (Tariff Adjustment of 2004) Operating Expenses (1,463.9) (1,777.8) 21.4% Start of accounting deferred CVA of tariff year 2002- 2003, as of 3Q04 Beginning of accounting CVA energy in 1Q05 EBITDA * 317.6 571.6 79.9% Growth in operating revenue, offset by increased operating expenses Financial Income (155.3) (77.9) -49.9% 24.4% appreciation of the Brazilian Real against the US dollar, producing a positive impact on the (Expenses) ** currency variation account Reversal of R$ 98.,0 million in 2Q05, relative to court disputes involving the payment of PIS/ PASEP taxes Extraordinary Items Net (85.3) (85.0) -0.4% of Tax Effects Net Income (Loss) 8.1 136.8 1,597.0% Operating income increase and net financial expenses reduction (*) Without adjustments (**) Considering consolidated results 11
  • 12.
    Results – 1Q05x 2Q05 R$ million 1Q05 2Q05 Increase in energy consumption of classes: residential (4.1%) commercial (0.6%) Completion of Tariff Adjustment 2003, which Net Revenue 1,979.6 2,275.5 14.9% produced a R$ 106,9 million revenue in 2Q05 Accounting reversion of R$ 72.0 million in 2Q05, related to court disputes of PIS/PASEP payment Increase in personnel expenses (11.7%) and materials and third-party services (9.1%) Operating Expenses (1,769.9) (1,777.8) 0.4% Acquisition of a larger volume of energy because of seasonal changes in the following contracts (i) bilateral, with AES Tietê, (ii) Itaipu and (iii) bilateral, with biomass power plants EBITDA * 282.,7 571.6 102.2% Increase in operating revenue Financial Revenue (105.,0) (77.9) 24.4% appreciation of the Brazilian Real against the -25.8% US dollar, producing a positive impact on the (Expenses)** currency variation account Reversal of R$ 98.,0 million in 2Q05 Extraordinary Items Net (85.,8) (85.0) -0.9% of Tax Effects Operating revenue increase and net finance Net Profit (Loss) (16.8) 136.8 N.M. expenses reduction (*) Without adjustments (**) Considering consolidated results 12
  • 13.
    Adjusted EBITDA R$ million 1st quarter 2005 2nd quarter 2005 R$ 282.7 EBITDA without R$ 571.6 EBITDA without adjustments adjustments R$ 82.0 RTE R$ 84.0 RTE R$ 12.9 Debt Confession IIa R$ 15.7 Debt Confession IIa R$ 0 PIS – accounting R$ 72.0 PIS – accounting reversal reversal R$ 377.6 ADJUSTED EBITDA R$ 599.3 ADJUSTED EBITDA 58.7% Increase 13
  • 14.
    Capex in 2Q05 R$ million Capex- 2Q05 Customer Service and 31 System Expansion 33 Maintenance 8 Loss Recovery 5 32 360-390 Personnel 18 297 15 Others 10 186 Total 72 144 Self Financed 8 Total Recorded 80 2003 2004 1H05 2005(e) Capex Self Financed 14
  • 15.
    Consolidated Indebtedness R$ million Short Term vs. Long Term Debt Evolution 5.278 5.284 5.256 5.278 5.284 5.256 100% 29% 2.402,7 2.242,5 3.090,8 77% 73% 50% 1.097,0 1.102,0 71% 762,5 1.778,8 1.916,9 27% 1.424,5 23% 0% 2003 2004 2Q05 2003 2004 2Q05 ST LT FCESP CVA/RTE Private Creditors 15
  • 16.
    Hedging Strategy million R$3,473 R$4,490 R$5,902 R$5,278 R$5,284 R$5,256 100% 90% 12% 18% 14% 42% 35% 17% 80% 70% 3% 60% 41% 100% of foreign 61% 4% currencies debt is 50% hedged, 40% considering the financial costs 30% 20% 41% 25% 54% 62% 83% 88% 10% 0% 2000 2001 2002 2003 2004 2Q05 Local currency Hedged Foreign currencies 16
  • 17.
    Amortization Schedule R$ million Effective payments 198 485 103 133 101 159 83 270 102 300 627 510 493 458 99 319 289 193 158 payment** 1H05 2H05 2006 2007 2008 2009 2010 Pre R$ BNDES US$ * *Exchange rate on 6/30/2005 US$/R$=2.3504 ** Amortization of debts with creditors included in the Company’s Debt Profile Adjustment Program, paid on: 01/12/2005 with the third tranche of a loan in the amount of R$ 185 million to cover the losses from the energy rationing period. 06/29/2005 of R$ 175.9 million and 07/28/2005 of US$ 25.6 million, with 50% of the resources coming from the issue of bonds 17
  • 18.
    Financial Strategy • Bonds issue in 06-28-2005 • Principal: R$ 474,060,000.00 Ratings Increase • Term: 5 years • Interest rate: 19.125% p.a. • Interest rate and amortization: B • half-yearly interests 2005 • amortization at maturity B– 2004 • Successful Bonds issue • Estimates of growth in operating revenues and cash flow D • Expected decrease in debt servicing 2003 • Better outlook for the electric sector 18
  • 19.
  • 20.
    Highlights for theQuarter Secondary Public Offer In June 2005, a secondary public offer of shares was concluded by a group of minority shareholders, namely Banco Banespa, Banco Santander e Banco Nossa Caixa. The offer represented 45.1% of AES Tietê’s preferred shares and 12.8% of the common shares (28.4% of total capital) After the Public Offering Shareholders Common Preferred Total AES Tietê Empreendimentos 61,7% 14,3% 38,9% Energia Paulista 0,0% 18,0% 8,7% AES Tietê Participações 9,6% 0,0% 5,0% Banespa 0,0% 0,0% 0,0% Banco Nossa Caixa 0,0% 0,0% 0,0% Eletrobras 0,0% 16,4% 7,9% Others 28,7% 51,3% 39,6% TOTAL 100,0% 100,0% 100,0% “Platinum List 2004“ – Forbes Magazine Award AES Tietê was placed 8th in the overall classification of Forbes Brasil Magazine’s Platinum List 2004, which ranks the 200 better Brazilian public companies “Maiores e Melhores” (The Biggest and the Best) – Exame Magazine Award AES Tietê was considered by Exame Magazine’s “Maiores e Melhores” annual listing as the company with the best performance in the public service area during 2004 20
  • 21.
    Tariff Adjustment The InitialContracts are readjusted on a yearly basis according to the following pre-established formula : Rate for Tariff Adjustment = VPA + VPB x IGP-M Revenue Tariff adjustments in 2005: • February: Bragantina = 12.4%, the new tariff is R$ 65.3 / MWh Nacional = 12.4%, the new tariff is R$ 69.4 / MWh April: CPFL = 10.6%, the new tariff is R$ 73.8 / MWh July: Eletropaulo = 9.1%, the new tariff is R$ 76.0 / MWh The Bilateral Contract with Eletropaulo is adjusted in July of each year, according to the IGP-M (general price index - market) In 2005, the tariff was adjusted in 7.1%, to R$ 132.7 / MWh 21
  • 22.
    Energy Balance –1H05 Caconde 213,607 CPFL Euclides Energy Generation x Billed Energy 279,373 301,477 in MWh Bandeirante Limoeiro 149,.223 88,836 Eletropaulo - CI Água Vermelha 451,752 3,958,255 Barra Bonita Elektro TOTAL BILLED 232,356 286,067 Bariri 6,783,237 5,391,027 Bragantina 314,.265 73,453 Ibitinga 352,748 Promissão = Nacional 46,447 527,559 Piratininga Nova Avanhandava MRE* 151,947 719,573 Eletropaulo - Bilateral Mogi Guaçu AES Tietê generated 27.9% over 4,006,477 20,850 its assured energy *After deducing own consumption and transmission losses, the difference is addressed to the Energy Reallocation Market – MRE 22
  • 23.
    Stored Energy Southeast Region Reservoirs 80 % of Max Stored Energy 60 40 20 0 Oct Nov Apr Jun Aug Jul May Dec Mar Jan Feb Sep 2005 Risk Aversion Curve* - 2005 Risk Aversion Curve* - 2006 * Risk aversion curve in the Southeast region - ONS Source: “Operador Nacional do Sistema” – ONS (National System Operator) 23
  • 24.
    Income Statement Tariff adjustments and de-contracting in R$ million 1H04 1H05 of 25% of volume from initial contracts, which were transferred to the bilateral 9.0% contract Net Revenues 493.3 537.5 Increase in the Financial Compensation Operating Costs (138.4) (142.1) 2.6% for Use of Water Resources and from the operating provisions Increase in EBITDA Margin from 78.3% Ebitda 386.7 427.4 10.5% in 1H04 to 79.5% in 1H05 Lower variation of the IGP-M index, Financial Income (142.4) (75.0) -47.3% from 6.8% in 1H04 to 1.7% in 1H05 (Expenses) Increase in financial income, due to a greater cash balance and increased interest rates Income before 212.5 318.8 taxes and shareholders Net income increase due to better operating and financial performance Net Income 140.3 210.3 50.0% 24
  • 25.
    Operating Costs andExpenses in R$ million 1H04 1H05 Personnel 13.5 14.8 Third Parties Services 10.2 10.4 Increase in the Updated Reference Tariff – TAR (R$ 52,67MW/h )in 1Q05 (TAR x 6.75% x Generated Energy) and Financial Compensation 18.0 24.0 in the volume of generated energy Connection and Distribution 26.2 23.4 Decrease in connection charges established by Aneel Network Charges Transmission – increase due to greater volume of energy sold under the bilateral contract Purchased Power 21.1 12.5 End of purchases from Itaipu R$ 7.3 million relative to "Financial Surplus" MAE expense, Depreciation and which was accounted in 1Q04 Amortization 31.,8 32.0 Provision for the financial investments that the Company Operating Provisions held in Banco Santos 0 16.4 Others End of the obligation for payment of the Public Asset Tax 17.6 8.5 (UBP) in 2004 Insurances Waterways Total 138.5 142.1 R&D 25
  • 26.
    Financial Investments • Financial investments are distributed as shown in the graphic below: Títulos Estrangeiros - US$ - Aa1 Private Bonds - A3 7% 1% Foreign Bonds - US$ - Aa3 8% BR Federal Bonds - Ba3 84% Rating: Moody´s Rating - Local Curreny (long term) 26
  • 27.
    Capital Expenditures • Capexduring the 1H05 amounted to R$ 7.2 million and were destined mainly for equipments modernization and waterway improvement • Main Capex destination: Bariri - re-equipping and modernization of the Generating Unit 2 Água Vermelha - equipment modernization Reforestation of boarders – Ibitinga, Bariri, Barra Bonita and Promissão 10% 40% 31% 19% Equipment Waterway Environmental Others 27
  • 28.
    Capital Markets • In1H05, AES Tietê’s common shares (GETI3) appreciated by 10.9% and the preferred shares (GETI4) appreciated by 21.7%, while the Bovespa Index posted a decline of 4.4%. • During the 1S05, GETI3 presented a daily average volume of R$ 1.5 million, being traded in 98% of Bovespa’s trading sessions. GETI4 posted a daily average volume of R$ 1.3 million, traded in 72% of the trading sessions. When compared to the same period of previous year, the average daily value increased by 33% (GETI3) and 145% (GETI4). • In July, after the offer expired, Tietê’s shares were traded in all Bovespa trading sessions and the daily average values were R$ 3.7 million (GETI3) and R$ 1.8 million (GETI4). AES TIETÊ vs IBOVESPA End of Secondary Offer (Base 100 = 30/06/04) 250 212 200 189 150 118 100 50 Jun Jul Aug Aep Oct Nov Dec Jan Feb Mar Apr May Jun GETI3 GETI4 Ibovespa 28
  • 29.
    Dividends • On August9 the Board of Directors approved dividend in the total amount of R$ 199.8 million, representing 95% of the 1st half 2005* net income Dividend Yield** - % Dividend Payout - % 10,9% 2005 2005 1 95,0% 1 10,2% 13,4% 2004 2004 95,0% 12,3% 11,4% 2003 2003 95,0% 6,6% 23,6% 2002 17,4% 2002 2 N.A. 2 Common Preferred * Date and basis date of payment to shareholders to be defined by the Management ** Based in average market price in 1H05 1- 1H05 proposed dividends annualized 2- Values paid in 2002 related to capital reduction 29
  • 30.
    Conclusion • Eletropaulo closed the 2nd quarter with increases of • AES Tietê ended up the first half of 2005 with highly 33% in net revenue and 80% in EBITDA, resulting positive results, highlighting: mainly from the completion of the Tariff Review Process of 2003, which produced an additional revenue of R$ 106.9 million, coupled with the • Ebitda of R$ 427.4 million, 10.5% above the 1H04, and reversal of the amount of R$ 72 million relative to Ebitda margin of 79.5%. court disputes related to the payment of PIS/COFINS taxes, based on a legal opinion that considers the statute of decadence • Net profit amounted to R$ 210.3 million, with a 50.0% increase due to the better operating and financial • Other positive issues in the 2nd quarter 2005: results. • FITCH Ratings increased the international evaluation of the Company’s local and foreign credit from “B-” to “B” • Issuing of R$ 474 million bonds in the international • Net margin increased from 28.4% in 1H04 to 39.1% in market 1H05. • Positive perspectives for the 3rd quarter 2005: • Dividends payment of R$ 199.8 million, related to 1H05 earnings results. • Completion of the Tariff Adjustment Process • Exclusion of PIS/COFINS from Parcel B
  • 31.
    2nd quarter 2005Results August 11, 2005 All statements contained in this presentation related to the outlook of the Companies’ business, projections of operational and financial results, and potential growth represent mere provisions and were based on managements expectations in relation to the future of the Companies. These expectations are highly dependent of market changes, Brazil’s economic outcome, the energy sector and the international markets behavior, being thus subject to change.