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Apre 2 t07

This document provides an overview of Eletropaulo, the largest electricity distribution company in Latin America. It includes a corporate structure chart and highlights from the first half of 2007. Some key points: - Eletropaulo serves over 5.6 million customers across 24 municipalities in Greater São Paulo. - Adjusted EBITDA for 1H07 was R$1.294 billion, up 3.2% from 1H06. Net profit increased 122.7% to R$505.5 million. - ANEEL authorized an average tariff reduction of 8.43% for Eletropaulo effective July 2007 following a tariff review. - Operating highlights for

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1st HALF 2007
Corporate Structure AES Holdings BNDES Brasil Ltda C 49.99% C 50.01% P 100.00% P 0.00% T 53.84% T 46.15% Cia. Brasiliana de Energia C 71.27% C 100.00% C 100.00% C 98.26% P 32.23% T 100.00% T 100.00% T 98.26% T 52.51% P 7.38% AES Uruguaiana AES ELPA T 4.44% Inc (Cayman) C = Common Shares P = Preferred Shares C 77.81% T = Total C 100.00% P 0.00% T 100.00% T 30.97% AES Uruguaiana AES Infoenergy Eletropaulo AES Tietê S.A. Empreend. S.A. 3
Eletropaulo Overview Concession Area Present in 24 municipalities that make up Greater São Paulo, including the capital 42,359 Km of overhead and underground Sub-transmission lines Distribution Installed Capacity – 12,867 MVA Directly employs about 4,336 people Largest electricity distribution Summary Operating and Financial Data company in Latin America in terms of R$ million 2005 2006 1H07 revenues Total Energy (GWh)( 1 ) 36,499 38,183 19,637 5.6 million of customers Net Revenue 8,321 8,354 3,490 Last four-year net revenue compound Adjusted EBITDA (2 ) 2,145 2,491 1,294 average growth rate (CAGR) – 6.78% Adjusted EBITDA Margin ( 2 ) 25.8% 29.8% 37.1% Total Assets of R$ 12.9 billion Net Profit (155) 373 506 (1) Includes free customers. (2) Adjusted EBITDA = EBITDA plus pension expense plus one-time charges plus RTE amortization. 4
Highlights Adjusted EBITDA of R$ 1,294.3 million, 3.2% higher than 1H06 Net Profit of R$ 505.5 million, 122.7% higher than 1H06 End of contingency with CTEEP regarding CETEMEQ property (02/16/2007) - Agreement's total amount of R$ 125.3 million Rating increase by S&P (04/16/2007) – National Scale from A- to A, keeping the international rating scale in BB- Dividends Payment (05/03/2007) – Distribution of R$ 130.4 million relative to FY 1H07 2006 earnings Renegotiation of R$ 300 million in CCBs (05/12/2007): – average cost from CDI + 1.82% to CDI + 1.20% – maturity extension from 6 to 8 years Pis and Cofins (06/30/2007) – Change in Tiete's taxation system for energy purchase to cumulative (3.65%) applied to the amounts of energy contracted by Eletropaulo since July, 2004 – reimbursement of R$ 192.8 million to Eletropaulo Asset Revaluation (06/30/2007): Increase of R$ 1,537.2 million in total fixed assets ANEEL authorized Eletropaulo a tariff review average index of -8.43%, applicable to the Company’s tariff as from July 4th, 2007 Subsequent Events Approved in 08/10/2007 the intermediary dividends distribution relative to 1H07, no valor de R$ 487.8 million 5
Market Consumption Evolution and Market Share (12 largest) Consumption - TWh R$ Billion AES Sul RGE Piratininga 1.6 1.4 Aes Eletropaulo 2.0 CELPE 8.4 38.2 36.5 2.0 35.4 2.7 4.9 6.5 Bandeirantes 2.1 ELEKTRO 19.6 2.6 32.7 31.6 31.7 3.6 CEMIG 6.3 16.0 COELBA 2.7 LIGHT COPEL 2004 2005 2006 1H07 3.9 CPFL 5.2 4.6 Captive Market Free Consumers Captive Market Evolution (GWh) Total Billed Energy in Brazil Excluding all free consumers from previous periods 2006 – 347,371 GWh AES Sul RGE Piratininga 1.8% Aes Eletropaulo 2.0% 2.2% 9.1% CELPE 16.035,8 2.3% 15.741,1 Bandeirantes 15.379,3 2.3% 15.054,7 ELEKTRO CEMIG 2.8% 5.7% COELBA 3.0% COPEL LIGHT 5.4% 5.2% CPFL 2H05 1H06 2H06 1H07 5.3% 6
Market Consumption Comparison in GWh % Total Market (2Q07) Captive Consumers 18.7% +3.9% 1.1% Free Clients 19,637 80.2% 18,895 Potentially Free Clients +1.9% 15,742 16,045 +5.2% +2.2% 6,222 6,548 +13.9% -4.9% 4,993 5,101 3,310 3,146 +2.6% 3,153 3,591 1,218 1,250 Residential Industrial Commercial Public Sector and Free Clients Captive Market Total Market Others NOTE: Charts do not consider own consumption 1H06 1H07 7
Eletropaulo Energy Supply 100% 80% 1H07 – Energy Supply 60% 2.4% Gas 40% Hydro 0.6% Biomass 96.0% 1.0% Others 20% 0% 2004 2005 2006 1H07 Proinfa (Alternative Sources) Auctions Others Bilateral Contracts Contracting strategy: Bilateral Contract with Tietê – 100% to 103% of total demand Initial Contracts Itaipu 8
Operating Highlights Loss Evolution (%) Collection Rate: % over Gross Revenue +0.67% +0.16% 13.53 99.00 99.10 99.04 99.70 12.91 97.50 11.99 12.16 12.18 7.04 6.42 5.50 5.67 5.69 6.49 6.49 6.49 6.49 6.49 2004 2005 2006 1H06 1H07 2004 2005 2006 1H06 1H07 Technical Losses Commercial Losses Fraud and Clandestine Connections (1H07) Collection Rate (1H07) – 150.0 thousand inspections and 14.0 thousand – Public Sector: 102.9% frauds detected – Private Sector: 99.5% – 35.0 thousand clandestine connections regularized Cuts and Reconnections – monthly average (2Q06 x 2Q07) – Cuts - decrease from 106,000 to 118,000 – Reconnections – increase from 70,000 to 71,000 9
DEC and FEC 12.57 12.79 12.38 11.81 Nov/05 up to Mar/06 11.34 8.95 8.68 8.66 8.61 8.49 8.21 6.91 8.94 6.41 9.08 6.83 7.87 5.52 8.49 5.80 Nov/06 up to Mar/07 2003 2004 2005 2006 1H07 DEC (hours) FEC (times) DEC Aneel Standard* FEC Aneel Standard* DEC e FEC current levels are lower than Aneel limits No penalties in any of 58 electric clusters in 2006 and 1H07 1H07: Storms in Summer and on atypical months (April and May) 2H07 actions: – Speed-up maintenance plan for total implementation before Summer – Reinforce strategy on emergency attendance DEC: Cuts Duration (*) Average of ANEEL Standard established for each one from the 58 clusters FEC: Cuts Frequency Source: ANEEL, Eletropaulo and INPE 10
Investments 1H07: R$ 193.2 million R$ million 7% 404 378 10% 49 36% 330 58 33 18% 193 355 15% 14% 28 319 297 165 Custumer Service and System Expansion Information Technology 2004 2005 2006 1H07 Sefl - Financed Capex Self - Financed Maintenance Loss Recovery Others 11
Tariff Reset 2007 2nd Cycle ANEEL authorized a tariff review index of -8.43%, applicable to the tariff as from July 4th, 2007: R$ million PART A 5,428.99 PART B 2,089.02 NET RAB: WACC (pre-tax): (pre- Remuneration 708.59 4,700.20 15.08% Reference Company 852.50 Bad Debts 49.45 GROSS RAB: Depreciation Rate: Depreciaciation 478.48 11,101.62 4.31% Other Revenues (42.62) Requeried Revenue 7,475.39 X Factor = 2.42% Verified Revenue 8,118.40 Req. Revenue / Ver. Revenue -7.92% Financial Effects (38.44) Financial Effects -0.51% Total Tariff Reset -8.43% 12
Eletropaulo’s Tariff Evolution 30% 25% 18.6% 20% 15% 11.6% 11.5% 10% 2.1% 9.9% 8.0% 5% 16.9% 1.6% 3.6% 4.8% 0% 1.7% 1.6% -4.3% -2.2% -5% -6.2% -10% -8.4% -15% 2003 2004 2005 2006 2007 Part B Part A PIS/COFINS IGPM Average Tariff Variation 1H06 1H07 R$/MWh % RESIDENTIAL 307.3 301.1 -2.0% INDUSTRIAL 240.5 257.4 7.0% COMMERCIAL 278.7 286.0 2.6% OTHERS 229.2 234.0 2.1% TOTAL 278.1 282.5 1.6% 13
Results Gross Revenue Operating Expenses R$ million R$ million +6.1% +3.5% 5,723 2,564 2,654 5,393 342 514 2,233 2,036 +9.2% +1.9% 2,964 1,565 2,714 1,386 1,264 1,289 1,150 295 161 1,004 3,357 3,490 703 664 1,710 1,814 747 664 306 425 1H06 1H07 2Q06 2Q07 1H06 1H07 2Q06 2Q07 Net Revenue Deduction of Operating Revenue Operating Expenses Energy Purchase Transport Increase in the total market (captive + free Revaluation process of judicial deposits concluded in consumers): 06/30/2007: increase of R$ 67.9 million on operating expenses – 1H07 x 1H06: 3.9% – 2Q07 x 2Q06: 5.1% Energy Purchase Expense (2Q07 x 2Q06): – Despite the reversal of R$ 178.2 million expenses in 2Q07, due to Tariff adjustment of 11.45% applied since July 4th, the change in taxation system (PIS and Cofins) the expense 2006 increased R$ 39.1 million mainly explained by the: – Reversal of R$ 145.4 million on extraordinary expenses in 2Q06; – Increase of R$ 72.2 million in energy purchase from Itaipu, Auctions and Proinfa in 2Q07 14
EBITDA R$ million 1H06 X 1H07 2Q06 X 2Q07 EBITDA 947,1 996,2 523,3 605,2 RTE 163,5 162,5 82,2 80,2 Pension Fund 121,1 53,4 60,6 26,7 Provision - RTE 21,9 14,5 5,0 9,2 Judicial Deposits 0,0 67,9 0,0 67,9 Adjusted EBITDA 1.253,5 1.294,3 671,2 789,2 Adjusted EBITDA Margin 37,3% 37,1% 39,3% 43,5% Increase +3.2% Increase +17.6% 15
Results Financial Result Net Profit R$ million R$ million 18.7% 1H06 1H07 2Q06 2Q07 14.5% 11.8% 34.4 6.8% 9.0 505.5 +68.3% +122.7% 340.0 227.0 201.9 (126.1) 1H06 1H07 2Q06 2Q07 (247.8) Net Profit Net Margin Improvement of the financial result due to: Intermediary dividends relative to the – The increase in financial income: accumulated earnings of 1H07, in the value Monetary Variation of R$ 70.6 million related to the accrual of judicial deposits (non-recurring event) of R$ 487.8 million: – The decrease of financial expenses: – R$ 11.00/’000 Voting Shares Reduction of R$ 441.6 million on gross debt and a lower – R$ 12.10/’000 Non-Voting Shares average cost (15.4% p.y. in Jun/06 to 12.6% p.y. in Jun/07) Real Appreciation of 11.0% on last 12 months applied to Ex-Dividends date: 08/27/2007 Overseas II liability of the US$ 580.0 million Dividends Payment date: 09/03/2007 16
Consolidated Debt Short Term x Long Term Gross Debt – 1H07 R$ million -30.0% - 9.9% 4,606 4,877 IGP-DI 4,435 4,256 4,435 21% 21% 53.5% 20% 20% 27% 27% 20% 20% 3,606 Fixed Rate R$ million 2,979 2,979 11.8% 79% 79% 80% 80% 80% 80% CDI/Selic Libor 73% 73% 33.4% 1.3% Pension Fund: R$ 2,373 million 1Q07 2Q07 1H06 1H07 Private Creditors: R$ 2,007 million LP CP Dívida Líquida BNDES: R$ 55 million Debt Highlights – last 12 months Average Cost and Average Life 5.44 5.48 5.46 5.50 Gross Debt: reduction of 9.1% (R$ 441.6 million) % 101.18% 97.27% 104.28% 102.63% 105.30% 5 % 4 Net Debt: reduction of 30.0% (R$ 1.3 billion) 3.90 % 3 Foreign Currency: 1.3% of total (Hedge of 99.7%) % 2 % 1 Amendment of CCB (R$ 300 million) – May, 2007: % 0 – Reduction of average cost from CDI + 1.82% to CDI + 1.20% 2Q06 3Q06 4Q06 1Q07 2Q07 – Increase of average life from 3.5 to 5.5 years Avg. Cost - % CDI* p.y. Avg. Life - years *CDI index at the end of the period 17
Managerial Cash Flow R$ million 2Q06 3Q06 4Q06 1Q07 2Q07 Initial Cash 358 619 767 1,166 1,301 Operating Cash Generation 653 725 741 634 738 Investments (88) (75) (85) (95) (94) Net Financial Expenses (85) (176) (91) (187) (130) Net Amortization (45) (158) (111) (71) (83) Pension Fund Expenses (108) (85) (55) (48) (48) Income Tax (67) (83) - (97) (99) Dividends - - - - (130) Free Cash Flow 261 148 399 135 155 Final Cash 619 767 1,166 1,301 1,457 Operating Cash Flow: increase in the net revenue billed as a result of the 5.9% rise in power consumption over 1Q07 Financial Expenses: semi-annual payments of interest on 9th debenture issuance (R$ 18.2 million) and CCB (R$ 21.1 million) Dividends: payment of R$ 130.0 million on May 3rd, 2007 relative to FY 2006 18
Corporate Governance Corporate Governance Level 2 – Since December 13th, 2004 – Class A Preferred Shares (ELPL5): tag along of 80% – Class B Preferred Shares (ELPL6): tag along of 100% – 20% of Independent Board Members Sustainability – Listed on ISE since December 1st, 2005 – Sustainability Report based on GRI standards for the first time Eletropaulo x Ibovespa x IEE Index 100 = 12/28/06 Daily Average Volume - preferred shares 130 (R$ thousand) +27.0% 125 +22.3% +13.8% 20,510.7 120 +16.4% 18,024.9 115 +14.2% 110 105 ' +331.5% 100 95 4,177.5 90 85 Dec-06 Jan-07 Feb-07 Mar-07 Apr-07 May-07 Jun-07 2005 2006 1H07 ELPL6 ELPL5 Ibovespa IEE 19
Management “Segurança Sempre” Frequency and Seriousness Rate Since Oct/06 the Company adopted BBS (Behavior Based on Safety), program that aims to a security 5.65 behavior change 4.12 1,715 COGE Foundation Award 2006: Safety and Health 3.03 2.91 2.80 Management 801 217 Safety and Health Management System (OHSAS – 44 17 18001) 2003 2004 2005 2006 1S07 Seriousness Rate* Frequency Rate* Safety Committees Frequency Rate Nº. Accidents x 1,000,000 Hours / man Seriousness Rate (Lost Days+ Debited Days) x 1,000,000 Hours / man * NRB Criteria (Brazilian Legislation) 20
Management Social Programs Eletropaulo na Comunidade Project (5th Edition in 2006) – 30 events in public schools – total of 120 thousand participants “Circo das Artes” and “Creches Luz e Lápis” – Social-cultural development of 650 children and teenagers Reading Rooms – 50 reading rooms installed, giving to the poorest communities access to culture. File of 1,000 books. “O Consumidor é Show” (*) – Free shows to 50 thousand people and 3 ton. of food collected Volunteer - Campaigns – “Agasalho” – collected 40 thousand clothes. – Easter - 650 chocolate eggs – Christmas: 615 kits (*) With proceeds of Rouanet’s Law nº 8,313/91 21
Management Environment Scope extension of Management Environment System (SGA) and the Certification ISO14001:2004 (182 to 188 certified sites) Environment License for new projects or repair. The process of environment license to the current infra-structure has already began. PROJETO POMAR: Partnership with State Department for the Environment Urbane Arborization: urbane arborization guide, cutting trees program, 2 R&Ds projects (R$ 630 thousand) related to arborization management and leftovers. Technology Innovation: trees registry with GPS and “palm pilots”. GRI (Global Reporting Initiative): elaboration and publication in 2006 – Sustainability Report with environment indicators World Wide Fund for Nature (WWF) agreement renewed – Funding and Publicity for Amazon’s protection 22
Conclusion Net Profit of R$ 505.5 million in 1H07, 122.7% higher than the net profit in 1H06 Reduction of 30.0% in consolidated net debt in the last 12 months Increase of total debt’s average life from 3.7 to 5.5 years Rating increased by S&P in national scale from A- to A Collection Rate of 99.7% R$ 487.8 million of dividends relative to 1H07 earnings to be distributed on September 3rd, 2007 23
Tietê Overview Concession Area 30 year concession expires in 2029 10 hydro plants on the rivers Tietê, Pardo and Mogi Guaçu Installed Capacity of 2.651 MW, 18% of the energy generated in the State of Oceano São Paulo Atlântico 100% of assured energy is sold under Summary Operating and Financial Data long-term contract PPA with R$ million 2005 2006 1H07 Eletropaulo through December 2015 Generated Energy (GWh) 12,852 12,475 7,091 Price adjusted annually for inflation Net Revenues 1,220 1,387 740 (IGP-M) EBITDA 939 1,097 520 Payout of 100% of the net income EBITDA Margin 77.0% 79.1% 70.2% reported in 2006 Net Income 556 614 303 25
Brazil 10 largest Generator Companies - 2006 Generation in Brazil 2006 – 403,6 TWh R$ Billion 3.1% 4.9% 2.5% 2.1% 12.1% AES Tietê 11.3% 13.6% 12.0% CHESF 2.6% Furnas 4.6% CESP 8.1% Itaipú 9.5% 14.0% Cemig - GT 18.7% Tractebel Copel - GER 13.0% 8.1% 8.1% Eletronorte Duke 8.5% 23.0% 20.1% Tietê represents 2.5% of Brazil’s Total Installed Capacity and also is the 9th largest private generator company in Brazil. The 10 largest generator companies represent 62.3% (65,941 MW) of the total installed capacity in Brazil (105,927 MW). Fonte: ANEEL; Gasnet. 26
Highlights PIS/Cofins – Positive impact of R$ 49.2 million on Net Income in 2Q07 Increase on transmission expense (TUSDgeneration) – Negative effect of R$ 61.1 million on Net Income in 2Q07 1H07 Ebitda of R$ 519.8 million in 1H07, 4.2% lower than 1H06 Net Income of R$ 302.5 million in 1H07, reduction of 1.0% compared to 1H06 On April 10th, Aneel, approved the acquisition of Licenses to build three small hydropower plants in the state of Rio de Janeiro On August 10th, the Board of Directors authorized the payment of R$ 142.1 million in dividends, which correspond to 100% of 2Q07 net earnings: Subsequent Events – R$ 1.42 per 1,000 common shares – R$ 1.56 per 1,000 preferred shares 27
Energy Balance – 1H07 Generation – MW average Billed Energy - GWh +7.3% 7,239 6,749 738 177 128.7% 97.6% 109.2% 106.9% 115.1% 111.7% 914 961 80.7% 1,642 1,467 1,424 1,392 1,363 5,557 5,587 1,258 1,040 2001 2002 2003 2004 2005 2006 1S07 1H06 1H07 Generation - MW Average Generation / Assured Energy Eletropaulo MRE CCEE/Losses Increase of 15.3% in energy generated (1H07 x 1H06) Eletropaulo tariff: July/2006 to May/2007 - R$ 133.87/MWh Generation was 28.7% above the assured energy Since June/2007 – R$ 127.03/MWh (1,275 MW average) MRE tariff – R$ 7.47/MWh Growth of 22.5% in volume sold to CCEE/MRE (1H07 x 1H06) CCEE tariff* – R$ 44.05/MWh * Average 1H07 28
Reliability Failure Index (FI) and Equivalent Average of 8.3 years operating without Availability Factor (EAF) figures exceed accidents that require removal of the requirements established by the personnel from the worksite National Ecectic Energy Agency – ANEEL: 2.9% for (FI) and 92.0% for EAF Period without Failure Index x Availability Accidents Period Without 96.8% 96.1% Plant 94.2% 92.6% 93.0% 92.5% Accidents - Years 90.9% Ibitinga 19.5 3.0 MogiGuaçu 12.9 2.5 Nova Avanhandava 10.0 2.2 2.3 Água Vermelha 9.4 1.6 1.7 Limoeiro 7.3 Barra Bonita 7.3 0.8 Promissão 5.8 Caconde 4.7 2001 2002 2003 2004 2005 2006 1H07 Euclides da Cunha 4.3 Failure Index (FI) Equivalent Availability Factor Bariri 2.0 29
Capex Capex – 1H07: R$ 21.7 million 1H07 – Restoration and upgrade in equipments – R$ 12.0 million – Environment (reforestation) – R$ 5.0 million 2.4% 16.2% Equip. – Small Hydropower Plants – R$ 3.5 million 3.0% 22.9% Hidroway – Others (SAP, Hidroway etc.) – R$ 1.2 million PCH Forecasted Capex - 2007: R$ 75.5 million IT – R$ 22.4 million: Construction of three small hydropower plants located in the interior of São Paulo State. Together, they will Environment boast na installed capacity of 8MW. 55.5% – R$ 36.6 million: Restoration and upgrading of the plants R$ million – R$ 11.7 million: Environment – R$ 4.8 million: SAP 75.5 Investment in Small Hydropower Plants 46.5 – Acquisition of License to build three small hydropower plants in the State of Rio de Janeiro, with a total installed capacity of 52 21.9 27.5 21.7 MW and average 28.97 MW of assured energy, approved by 12.4 ANEEL – forecasted investments of R$ 225 million in 2 years, from which R$ 15.3 million were already invested. 2003 2004 2005 2006 1H07 2007e 30
Expansion Requirement Requirement: increase installed capacity by at least 15% (400 MW), until December 2007: – Increasing the installed capacity in São Paulo State; or – Purchasing 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 resource 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 generation capacity expansion possibilities in the State of São Paulo and in compliance with the “New Model of the Electric Sector” Neither ANEEL nor the São Paulo State Government have sent a formal reply to AES Tietê with regard to this issue so far 31
Results Net Revenues Costs and Operational Expenses R$ million R$ million +6.1% 740.4 698.0 +33.2% 253 190 +9.1% 164 175 +70.8% 380.7 74 348.8 96 132 82 36 45 44 34 33 16 16 16 1H06 1H07 2Q06 2Q07 1H06 1H07 2Q06 2Q07 Power Purchase and sector charges Operational Expenses Depreciation Net Revenues in 1H07 up 6% from 1H06: Increase of 33.2% in costs and operational (i) 0.9% price adjustment granted in July06 for the expenses mainly due to extraordinary items energy sold under the bilateral contract occurred in 1H07: (ii) Higher energy volume sold to Eletropaulo and to (i) Power Purchase – R$ 92.5 million extraordinary CCEE / MRE in 1Q07. expense due to the increase of the transmission (iii) Positive impact of R$ 28.5 million due to charge (TUSDgeneration) – Ratifying Resolution PIS/Cofins taxation system. 497/07 32
Results EBITDA R$ million 77.7% 70.2% 77.1% 542.5 -4,2% 519.8 61.1% -13,5% 268.8 232.6 1H06 1H07 2Q06 2Q07 EBITDA Margin 33
Results Financial Results Net Income R$ million R$ million 43.8% 40.9% 43.8% 37.3% 1H06 1H07 2Q06 2Q07 -1.0% 10.1 305.5 302.5 -6.9% 152.6 142.1 (18.9) (23.7) -59.9% (47.1) 1H06 1H07 2Q06 2Q07 Net Margin Positive impact in 2Q07, explained by Payment of R$ 142.1 million in the accounting of inflation gains on dividends, which correspond to 100% PIS/Cofins tax credits, which totaled R$ of the net earnings obtained in 2Q07 36.6 million – R$ 1.42 per 1,000 common shares – R$ 1.56 per 1,000 preferred shares IGP-M reduction of 50.0% (2Q07 x Ex-Dividends: August 27, 2007 2Q06) Payment: September 3, 2007 34
Debt R$ million Amount Creditor Maturity Cost Collateral Vencimento 1,305.2 Eletrobras May, 2013 IGP-M + 10% p.a. Receivables 4.9 FunCesp III Sep, 2027 IGP-M + 6% p.a. Receivables Net Debt R$ Million 3.2x Net Debt Net Debt / EBITDA 2.0x 1.4x 0.7x 0.6x 0.7x 1,406 1,254 1,096 676 682 661 2002 2003 2004 2005 2006 1S07 Cash availability = R$ 578 million (June, 2007) – Marketable securities with durations lower than 90 days – Average profitability around 100% of CDI 35
Cash Flow R$ million 2Q06 3Q06 4Q06 1Q07 2Q07 Initial Cash 852 777 674 691 687 Operating Cash Flow 308 290 280 288 308 Investments (6) (8) (24) (10) (12) Net Financial Expenses (18) (15) (19) (16) (18) Net Amortization (44) (50) (45) (46) (48) Income Tax (20) (16) (32) (220) (17) Dividends and Interest on Equity (295) (305) (143) - (325) Free Cash Flow (74) (104) 17 (4) (112) Final Cash 777 674 691 687 574 2Q07 free cash flow was negative of R$ 112.3 million, mainly due to payments of R$ 165.1 million and R$ 160.5 million corresponding to dividends on the 4Q06 and 1Q07 net income respectively. 36
Capital Markets Tietê x Ibovespa x IEE - Index 100 = June, 2006 170 Sustainability 160 57.6% – Sustainability Report based on 150 48.5% 44.2% GRI standards for the first time. 140 44.1% 130 120 110 100 90 jun/06 sep/06 dec/06 mar/07 jun/07 GETI3 GETI4 Ibovespa IEE Daily Average Volume Payout (R$ thousand) Dividend Yield 64.0% 9,726 12.0% 100% 2006 11.4% 72.4% 5,930 5,714 GETI3 13.2% 96.9% 2005 3,441 4,232 13.,2% GETI4 1,813 4,012 13.4% 1,628 1,698 95.0% 2004 12.3% 2005 2006 1H07 37
Management Social Programs “Generating Citizenship” Project – Involves the selection and support of cultural, educational and/or human development projects which benefit communities in the interior of the Estate of São Paulo Music for the Environment Project – 9 free outdoor concerts held in different cities. – Total public of 18 thousand people and collection of 2.3 tons of goods donated to several institutions Reading Rooms Project – 25 Reading Rooms with approximately one thousand books Guri Project – Sponsorship of 5 units. More than 700 children from low income families. Opportunity to learn how to play musical instruments and to sing in a coral 38
Management Environment Global Connections – Alignment of the Company’s initiatives to International agreements and summits – Actions from AES Brazil adopted as “Best Practice” actions for AES Corp – Positive repercussion towards Environmental Authorities and NGOs that work in this field. Carbon Credits – Evaluation of ongoing projects Flora Program – Produced 1 million saplings in the Promissão Plant nursery and donated them to rural communities, producers, municipal governments and NGOs Fishery Management Project – Bred and released 2.5 million young fish into 10 reservoirs 39
Conclusion Generation was 29% higher than assured energy in 1S07 Net Income of R$ 302.5 million in 1H07, reduction of 1.0% compared to 1H06. Net margin of 40.9% compared to 43.8% in 1H06 – The reduction on net income is mainly due to the increase of R$ 92.5 million in transmission expenses (TUSDgeneration) - extraordinary event Payment of R$ 302.6 million in dividends, which corresponds to 100% of 1H07* net earnings AES Tietê has been analyzing new opportunities of investments and expansion, aiming at increasing the Company’s results * R$ 160.5 million refer to 1Q07 net earnings distributed in June 06, 2007 and R$ 142.1 million refer to 2Q07 net earnings that will be paid on September 03, 2007 40
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 Company 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 electricity sector and international market, and they are therefore subject to change.
ELETROPAULO METROPOLITANA AES TIETÊ S.A. ELETRICIDADE DE SÃO PAULO S.A. 42

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Apre 2 t07

  • 1.
  • 3.
    Corporate Structure AES Holdings BNDES Brasil Ltda C 49.99% C 50.01% P 100.00% P 0.00% T 53.84% T 46.15% Cia. Brasiliana de Energia C 71.27% C 100.00% C 100.00% C 98.26% P 32.23% T 100.00% T 100.00% T 98.26% T 52.51% P 7.38% AES Uruguaiana AES ELPA T 4.44% Inc (Cayman) C = Common Shares P = Preferred Shares C 77.81% T = Total C 100.00% P 0.00% T 100.00% T 30.97% AES Uruguaiana AES Infoenergy Eletropaulo AES Tietê S.A. Empreend. S.A. 3
  • 4.
    Eletropaulo Overview Concession Area Present in 24 municipalities that make up Greater São Paulo, including the capital 42,359 Km of overhead and underground Sub-transmission lines Distribution Installed Capacity – 12,867 MVA Directly employs about 4,336 people Largest electricity distribution Summary Operating and Financial Data company in Latin America in terms of R$ million 2005 2006 1H07 revenues Total Energy (GWh)( 1 ) 36,499 38,183 19,637 5.6 million of customers Net Revenue 8,321 8,354 3,490 Last four-year net revenue compound Adjusted EBITDA (2 ) 2,145 2,491 1,294 average growth rate (CAGR) – 6.78% Adjusted EBITDA Margin ( 2 ) 25.8% 29.8% 37.1% Total Assets of R$ 12.9 billion Net Profit (155) 373 506 (1) Includes free customers. (2) Adjusted EBITDA = EBITDA plus pension expense plus one-time charges plus RTE amortization. 4
  • 5.
    Highlights Adjusted EBITDA of R$ 1,294.3 million, 3.2% higher than 1H06 Net Profit of R$ 505.5 million, 122.7% higher than 1H06 End of contingency with CTEEP regarding CETEMEQ property (02/16/2007) - Agreement's total amount of R$ 125.3 million Rating increase by S&P (04/16/2007) – National Scale from A- to A, keeping the international rating scale in BB- Dividends Payment (05/03/2007) – Distribution of R$ 130.4 million relative to FY 1H07 2006 earnings Renegotiation of R$ 300 million in CCBs (05/12/2007): – average cost from CDI + 1.82% to CDI + 1.20% – maturity extension from 6 to 8 years Pis and Cofins (06/30/2007) – Change in Tiete's taxation system for energy purchase to cumulative (3.65%) applied to the amounts of energy contracted by Eletropaulo since July, 2004 – reimbursement of R$ 192.8 million to Eletropaulo Asset Revaluation (06/30/2007): Increase of R$ 1,537.2 million in total fixed assets ANEEL authorized Eletropaulo a tariff review average index of -8.43%, applicable to the Company’s tariff as from July 4th, 2007 Subsequent Events Approved in 08/10/2007 the intermediary dividends distribution relative to 1H07, no valor de R$ 487.8 million 5
  • 6.
    Market Consumption Evolution andMarket Share (12 largest) Consumption - TWh R$ Billion AES Sul RGE Piratininga 1.6 1.4 Aes Eletropaulo 2.0 CELPE 8.4 38.2 36.5 2.0 35.4 2.7 4.9 6.5 Bandeirantes 2.1 ELEKTRO 19.6 2.6 32.7 31.6 31.7 3.6 CEMIG 6.3 16.0 COELBA 2.7 LIGHT COPEL 2004 2005 2006 1H07 3.9 CPFL 5.2 4.6 Captive Market Free Consumers Captive Market Evolution (GWh) Total Billed Energy in Brazil Excluding all free consumers from previous periods 2006 – 347,371 GWh AES Sul RGE Piratininga 1.8% Aes Eletropaulo 2.0% 2.2% 9.1% CELPE 16.035,8 2.3% 15.741,1 Bandeirantes 15.379,3 2.3% 15.054,7 ELEKTRO CEMIG 2.8% 5.7% COELBA 3.0% COPEL LIGHT 5.4% 5.2% CPFL 2H05 1H06 2H06 1H07 5.3% 6
  • 7.
    Market ConsumptionComparison in GWh % Total Market (2Q07) Captive Consumers 18.7% +3.9% 1.1% Free Clients 19,637 80.2% 18,895 Potentially Free Clients +1.9% 15,742 16,045 +5.2% +2.2% 6,222 6,548 +13.9% -4.9% 4,993 5,101 3,310 3,146 +2.6% 3,153 3,591 1,218 1,250 Residential Industrial Commercial Public Sector and Free Clients Captive Market Total Market Others NOTE: Charts do not consider own consumption 1H06 1H07 7
  • 8.
    Eletropaulo Energy Supply 100% 80% 1H07 – Energy Supply 60% 2.4% Gas 40% Hydro 0.6% Biomass 96.0% 1.0% Others 20% 0% 2004 2005 2006 1H07 Proinfa (Alternative Sources) Auctions Others Bilateral Contracts Contracting strategy: Bilateral Contract with Tietê – 100% to 103% of total demand Initial Contracts Itaipu 8
  • 9.
    Operating Highlights Loss Evolution (%) Collection Rate: % over Gross Revenue +0.67% +0.16% 13.53 99.00 99.10 99.04 99.70 12.91 97.50 11.99 12.16 12.18 7.04 6.42 5.50 5.67 5.69 6.49 6.49 6.49 6.49 6.49 2004 2005 2006 1H06 1H07 2004 2005 2006 1H06 1H07 Technical Losses Commercial Losses Fraud and Clandestine Connections (1H07) Collection Rate (1H07) – 150.0 thousand inspections and 14.0 thousand – Public Sector: 102.9% frauds detected – Private Sector: 99.5% – 35.0 thousand clandestine connections regularized Cuts and Reconnections – monthly average (2Q06 x 2Q07) – Cuts - decrease from 106,000 to 118,000 – Reconnections – increase from 70,000 to 71,000 9
  • 10.
    DEC and FEC 12.57 12.79 12.38 11.81 Nov/05 up to Mar/06 11.34 8.95 8.68 8.66 8.61 8.49 8.21 6.91 8.94 6.41 9.08 6.83 7.87 5.52 8.49 5.80 Nov/06 up to Mar/07 2003 2004 2005 2006 1H07 DEC (hours) FEC (times) DEC Aneel Standard* FEC Aneel Standard* DEC e FEC current levels are lower than Aneel limits No penalties in any of 58 electric clusters in 2006 and 1H07 1H07: Storms in Summer and on atypical months (April and May) 2H07 actions: – Speed-up maintenance plan for total implementation before Summer – Reinforce strategy on emergency attendance DEC: Cuts Duration (*) Average of ANEEL Standard established for each one from the 58 clusters FEC: Cuts Frequency Source: ANEEL, Eletropaulo and INPE 10
  • 11.
    Investments 1H07: R$ 193.2 million R$ million 7% 404 378 10% 49 36% 330 58 33 18% 193 355 15% 14% 28 319 297 165 Custumer Service and System Expansion Information Technology 2004 2005 2006 1H07 Sefl - Financed Capex Self - Financed Maintenance Loss Recovery Others 11
  • 12.
    Tariff Reset 2007 2ndCycle ANEEL authorized a tariff review index of -8.43%, applicable to the tariff as from July 4th, 2007: R$ million PART A 5,428.99 PART B 2,089.02 NET RAB: WACC (pre-tax): (pre- Remuneration 708.59 4,700.20 15.08% Reference Company 852.50 Bad Debts 49.45 GROSS RAB: Depreciation Rate: Depreciaciation 478.48 11,101.62 4.31% Other Revenues (42.62) Requeried Revenue 7,475.39 X Factor = 2.42% Verified Revenue 8,118.40 Req. Revenue / Ver. Revenue -7.92% Financial Effects (38.44) Financial Effects -0.51% Total Tariff Reset -8.43% 12
  • 13.
    Eletropaulo’s Tariff Evolution 30% 25% 18.6% 20% 15% 11.6% 11.5% 10% 2.1% 9.9% 8.0% 5% 16.9% 1.6% 3.6% 4.8% 0% 1.7% 1.6% -4.3% -2.2% -5% -6.2% -10% -8.4% -15% 2003 2004 2005 2006 2007 Part B Part A PIS/COFINS IGPM Average Tariff Variation 1H06 1H07 R$/MWh % RESIDENTIAL 307.3 301.1 -2.0% INDUSTRIAL 240.5 257.4 7.0% COMMERCIAL 278.7 286.0 2.6% OTHERS 229.2 234.0 2.1% TOTAL 278.1 282.5 1.6% 13
  • 14.
    Results Gross Revenue Operating Expenses R$ million R$ million +6.1% +3.5% 5,723 2,564 2,654 5,393 342 514 2,233 2,036 +9.2% +1.9% 2,964 1,565 2,714 1,386 1,264 1,289 1,150 295 161 1,004 3,357 3,490 703 664 1,710 1,814 747 664 306 425 1H06 1H07 2Q06 2Q07 1H06 1H07 2Q06 2Q07 Net Revenue Deduction of Operating Revenue Operating Expenses Energy Purchase Transport Increase in the total market (captive + free Revaluation process of judicial deposits concluded in consumers): 06/30/2007: increase of R$ 67.9 million on operating expenses – 1H07 x 1H06: 3.9% – 2Q07 x 2Q06: 5.1% Energy Purchase Expense (2Q07 x 2Q06): – Despite the reversal of R$ 178.2 million expenses in 2Q07, due to Tariff adjustment of 11.45% applied since July 4th, the change in taxation system (PIS and Cofins) the expense 2006 increased R$ 39.1 million mainly explained by the: – Reversal of R$ 145.4 million on extraordinary expenses in 2Q06; – Increase of R$ 72.2 million in energy purchase from Itaipu, Auctions and Proinfa in 2Q07 14
  • 15.
    EBITDA R$ million 1H06 X 1H07 2Q06 X 2Q07 EBITDA 947,1 996,2 523,3 605,2 RTE 163,5 162,5 82,2 80,2 Pension Fund 121,1 53,4 60,6 26,7 Provision - RTE 21,9 14,5 5,0 9,2 Judicial Deposits 0,0 67,9 0,0 67,9 Adjusted EBITDA 1.253,5 1.294,3 671,2 789,2 Adjusted EBITDA Margin 37,3% 37,1% 39,3% 43,5% Increase +3.2% Increase +17.6% 15
  • 16.
    Results Financial Result Net Profit R$ million R$ million 18.7% 1H06 1H07 2Q06 2Q07 14.5% 11.8% 34.4 6.8% 9.0 505.5 +68.3% +122.7% 340.0 227.0 201.9 (126.1) 1H06 1H07 2Q06 2Q07 (247.8) Net Profit Net Margin Improvement of the financial result due to: Intermediary dividends relative to the – The increase in financial income: accumulated earnings of 1H07, in the value Monetary Variation of R$ 70.6 million related to the accrual of judicial deposits (non-recurring event) of R$ 487.8 million: – The decrease of financial expenses: – R$ 11.00/’000 Voting Shares Reduction of R$ 441.6 million on gross debt and a lower – R$ 12.10/’000 Non-Voting Shares average cost (15.4% p.y. in Jun/06 to 12.6% p.y. in Jun/07) Real Appreciation of 11.0% on last 12 months applied to Ex-Dividends date: 08/27/2007 Overseas II liability of the US$ 580.0 million Dividends Payment date: 09/03/2007 16
  • 17.
    Consolidated Debt Short Term x Long Term Gross Debt – 1H07 R$ million -30.0% - 9.9% 4,606 4,877 IGP-DI 4,435 4,256 4,435 21% 21% 53.5% 20% 20% 27% 27% 20% 20% 3,606 Fixed Rate R$ million 2,979 2,979 11.8% 79% 79% 80% 80% 80% 80% CDI/Selic Libor 73% 73% 33.4% 1.3% Pension Fund: R$ 2,373 million 1Q07 2Q07 1H06 1H07 Private Creditors: R$ 2,007 million LP CP Dívida Líquida BNDES: R$ 55 million Debt Highlights – last 12 months Average Cost and Average Life 5.44 5.48 5.46 5.50 Gross Debt: reduction of 9.1% (R$ 441.6 million) % 101.18% 97.27% 104.28% 102.63% 105.30% 5 % 4 Net Debt: reduction of 30.0% (R$ 1.3 billion) 3.90 % 3 Foreign Currency: 1.3% of total (Hedge of 99.7%) % 2 % 1 Amendment of CCB (R$ 300 million) – May, 2007: % 0 – Reduction of average cost from CDI + 1.82% to CDI + 1.20% 2Q06 3Q06 4Q06 1Q07 2Q07 – Increase of average life from 3.5 to 5.5 years Avg. Cost - % CDI* p.y. Avg. Life - years *CDI index at the end of the period 17
  • 18.
    Managerial Cash Flow R$ million 2Q06 3Q06 4Q06 1Q07 2Q07 Initial Cash 358 619 767 1,166 1,301 Operating Cash Generation 653 725 741 634 738 Investments (88) (75) (85) (95) (94) Net Financial Expenses (85) (176) (91) (187) (130) Net Amortization (45) (158) (111) (71) (83) Pension Fund Expenses (108) (85) (55) (48) (48) Income Tax (67) (83) - (97) (99) Dividends - - - - (130) Free Cash Flow 261 148 399 135 155 Final Cash 619 767 1,166 1,301 1,457 Operating Cash Flow: increase in the net revenue billed as a result of the 5.9% rise in power consumption over 1Q07 Financial Expenses: semi-annual payments of interest on 9th debenture issuance (R$ 18.2 million) and CCB (R$ 21.1 million) Dividends: payment of R$ 130.0 million on May 3rd, 2007 relative to FY 2006 18
  • 19.
    Corporate Governance Corporate Governance Level 2 – Since December 13th, 2004 – Class A Preferred Shares (ELPL5): tag along of 80% – Class B Preferred Shares (ELPL6): tag along of 100% – 20% of Independent Board Members Sustainability – Listed on ISE since December 1st, 2005 – Sustainability Report based on GRI standards for the first time Eletropaulo x Ibovespa x IEE Index 100 = 12/28/06 Daily Average Volume - preferred shares 130 (R$ thousand) +27.0% 125 +22.3% +13.8% 20,510.7 120 +16.4% 18,024.9 115 +14.2% 110 105 ' +331.5% 100 95 4,177.5 90 85 Dec-06 Jan-07 Feb-07 Mar-07 Apr-07 May-07 Jun-07 2005 2006 1H07 ELPL6 ELPL5 Ibovespa IEE 19
  • 20.
    Management “Segurança Sempre” Frequency and Seriousness Rate Since Oct/06 the Company adopted BBS (Behavior Based on Safety), program that aims to a security 5.65 behavior change 4.12 1,715 COGE Foundation Award 2006: Safety and Health 3.03 2.91 2.80 Management 801 217 Safety and Health Management System (OHSAS – 44 17 18001) 2003 2004 2005 2006 1S07 Seriousness Rate* Frequency Rate* Safety Committees Frequency Rate Nº. Accidents x 1,000,000 Hours / man Seriousness Rate (Lost Days+ Debited Days) x 1,000,000 Hours / man * NRB Criteria (Brazilian Legislation) 20
  • 21.
    Management Social Programs Eletropaulo na Comunidade Project (5th Edition in 2006) – 30 events in public schools – total of 120 thousand participants “Circo das Artes” and “Creches Luz e Lápis” – Social-cultural development of 650 children and teenagers Reading Rooms – 50 reading rooms installed, giving to the poorest communities access to culture. File of 1,000 books. “O Consumidor é Show” (*) – Free shows to 50 thousand people and 3 ton. of food collected Volunteer - Campaigns – “Agasalho” – collected 40 thousand clothes. – Easter - 650 chocolate eggs – Christmas: 615 kits (*) With proceeds of Rouanet’s Law nº 8,313/91 21
  • 22.
    Management Environment Scope extensionof Management Environment System (SGA) and the Certification ISO14001:2004 (182 to 188 certified sites) Environment License for new projects or repair. The process of environment license to the current infra-structure has already began. PROJETO POMAR: Partnership with State Department for the Environment Urbane Arborization: urbane arborization guide, cutting trees program, 2 R&Ds projects (R$ 630 thousand) related to arborization management and leftovers. Technology Innovation: trees registry with GPS and “palm pilots”. GRI (Global Reporting Initiative): elaboration and publication in 2006 – Sustainability Report with environment indicators World Wide Fund for Nature (WWF) agreement renewed – Funding and Publicity for Amazon’s protection 22
  • 23.
    Conclusion Net Profitof R$ 505.5 million in 1H07, 122.7% higher than the net profit in 1H06 Reduction of 30.0% in consolidated net debt in the last 12 months Increase of total debt’s average life from 3.7 to 5.5 years Rating increased by S&P in national scale from A- to A Collection Rate of 99.7% R$ 487.8 million of dividends relative to 1H07 earnings to be distributed on September 3rd, 2007 23
  • 25.
    Tietê Overview Concession Area 30 year concession expires in 2029 10 hydro plants on the rivers Tietê, Pardo and Mogi Guaçu Installed Capacity of 2.651 MW, 18% of the energy generated in the State of Oceano São Paulo Atlântico 100% of assured energy is sold under Summary Operating and Financial Data long-term contract PPA with R$ million 2005 2006 1H07 Eletropaulo through December 2015 Generated Energy (GWh) 12,852 12,475 7,091 Price adjusted annually for inflation Net Revenues 1,220 1,387 740 (IGP-M) EBITDA 939 1,097 520 Payout of 100% of the net income EBITDA Margin 77.0% 79.1% 70.2% reported in 2006 Net Income 556 614 303 25
  • 26.
    Brazil 10 largestGenerator Companies - 2006 Generation in Brazil 2006 – 403,6 TWh R$ Billion 3.1% 4.9% 2.5% 2.1% 12.1% AES Tietê 11.3% 13.6% 12.0% CHESF 2.6% Furnas 4.6% CESP 8.1% Itaipú 9.5% 14.0% Cemig - GT 18.7% Tractebel Copel - GER 13.0% 8.1% 8.1% Eletronorte Duke 8.5% 23.0% 20.1% Tietê represents 2.5% of Brazil’s Total Installed Capacity and also is the 9th largest private generator company in Brazil. The 10 largest generator companies represent 62.3% (65,941 MW) of the total installed capacity in Brazil (105,927 MW). Fonte: ANEEL; Gasnet. 26
  • 27.
    Highlights PIS/Cofins – Positive impact of R$ 49.2 million on Net Income in 2Q07 Increase on transmission expense (TUSDgeneration) – Negative effect of R$ 61.1 million on Net Income in 2Q07 1H07 Ebitda of R$ 519.8 million in 1H07, 4.2% lower than 1H06 Net Income of R$ 302.5 million in 1H07, reduction of 1.0% compared to 1H06 On April 10th, Aneel, approved the acquisition of Licenses to build three small hydropower plants in the state of Rio de Janeiro On August 10th, the Board of Directors authorized the payment of R$ 142.1 million in dividends, which correspond to 100% of 2Q07 net earnings: Subsequent Events – R$ 1.42 per 1,000 common shares – R$ 1.56 per 1,000 preferred shares 27
  • 28.
    Energy Balance –1H07 Generation – MW average Billed Energy - GWh +7.3% 7,239 6,749 738 177 128.7% 97.6% 109.2% 106.9% 115.1% 111.7% 914 961 80.7% 1,642 1,467 1,424 1,392 1,363 5,557 5,587 1,258 1,040 2001 2002 2003 2004 2005 2006 1S07 1H06 1H07 Generation - MW Average Generation / Assured Energy Eletropaulo MRE CCEE/Losses Increase of 15.3% in energy generated (1H07 x 1H06) Eletropaulo tariff: July/2006 to May/2007 - R$ 133.87/MWh Generation was 28.7% above the assured energy Since June/2007 – R$ 127.03/MWh (1,275 MW average) MRE tariff – R$ 7.47/MWh Growth of 22.5% in volume sold to CCEE/MRE (1H07 x 1H06) CCEE tariff* – R$ 44.05/MWh * Average 1H07 28
  • 29.
    Reliability Failure Index (FI)and Equivalent Average of 8.3 years operating without Availability Factor (EAF) figures exceed accidents that require removal of the requirements established by the personnel from the worksite National Ecectic Energy Agency – ANEEL: 2.9% for (FI) and 92.0% for EAF Period without Failure Index x Availability Accidents Period Without 96.8% 96.1% Plant 94.2% 92.6% 93.0% 92.5% Accidents - Years 90.9% Ibitinga 19.5 3.0 MogiGuaçu 12.9 2.5 Nova Avanhandava 10.0 2.2 2.3 Água Vermelha 9.4 1.6 1.7 Limoeiro 7.3 Barra Bonita 7.3 0.8 Promissão 5.8 Caconde 4.7 2001 2002 2003 2004 2005 2006 1H07 Euclides da Cunha 4.3 Failure Index (FI) Equivalent Availability Factor Bariri 2.0 29
  • 30.
    Capex Capex – 1H07:R$ 21.7 million 1H07 – Restoration and upgrade in equipments – R$ 12.0 million – Environment (reforestation) – R$ 5.0 million 2.4% 16.2% Equip. – Small Hydropower Plants – R$ 3.5 million 3.0% 22.9% Hidroway – Others (SAP, Hidroway etc.) – R$ 1.2 million PCH Forecasted Capex - 2007: R$ 75.5 million IT – R$ 22.4 million: Construction of three small hydropower plants located in the interior of São Paulo State. Together, they will Environment boast na installed capacity of 8MW. 55.5% – R$ 36.6 million: Restoration and upgrading of the plants R$ million – R$ 11.7 million: Environment – R$ 4.8 million: SAP 75.5 Investment in Small Hydropower Plants 46.5 – Acquisition of License to build three small hydropower plants in the State of Rio de Janeiro, with a total installed capacity of 52 21.9 27.5 21.7 MW and average 28.97 MW of assured energy, approved by 12.4 ANEEL – forecasted investments of R$ 225 million in 2 years, from which R$ 15.3 million were already invested. 2003 2004 2005 2006 1H07 2007e 30
  • 31.
    Expansion Requirement Requirement:increase installed capacity by at least 15% (400 MW), until December 2007: – Increasing the installed capacity in São Paulo State; or – Purchasing 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 resource 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 generation capacity expansion possibilities in the State of São Paulo and in compliance with the “New Model of the Electric Sector” Neither ANEEL nor the São Paulo State Government have sent a formal reply to AES Tietê with regard to this issue so far 31
  • 32.
    Results Net Revenues Costs and Operational Expenses R$ million R$ million +6.1% 740.4 698.0 +33.2% 253 190 +9.1% 164 175 +70.8% 380.7 74 348.8 96 132 82 36 45 44 34 33 16 16 16 1H06 1H07 2Q06 2Q07 1H06 1H07 2Q06 2Q07 Power Purchase and sector charges Operational Expenses Depreciation Net Revenues in 1H07 up 6% from 1H06: Increase of 33.2% in costs and operational (i) 0.9% price adjustment granted in July06 for the expenses mainly due to extraordinary items energy sold under the bilateral contract occurred in 1H07: (ii) Higher energy volume sold to Eletropaulo and to (i) Power Purchase – R$ 92.5 million extraordinary CCEE / MRE in 1Q07. expense due to the increase of the transmission (iii) Positive impact of R$ 28.5 million due to charge (TUSDgeneration) – Ratifying Resolution PIS/Cofins taxation system. 497/07 32
  • 33.
    Results EBITDA R$ million 77.7% 70.2% 77.1% 542.5 -4,2% 519.8 61.1% -13,5% 268.8 232.6 1H06 1H07 2Q06 2Q07 EBITDA Margin 33
  • 34.
    Results Financial Results Net Income R$ million R$ million 43.8% 40.9% 43.8% 37.3% 1H06 1H07 2Q06 2Q07 -1.0% 10.1 305.5 302.5 -6.9% 152.6 142.1 (18.9) (23.7) -59.9% (47.1) 1H06 1H07 2Q06 2Q07 Net Margin Positive impact in 2Q07, explained by Payment of R$ 142.1 million in the accounting of inflation gains on dividends, which correspond to 100% PIS/Cofins tax credits, which totaled R$ of the net earnings obtained in 2Q07 36.6 million – R$ 1.42 per 1,000 common shares – R$ 1.56 per 1,000 preferred shares IGP-M reduction of 50.0% (2Q07 x Ex-Dividends: August 27, 2007 2Q06) Payment: September 3, 2007 34
  • 35.
    Debt R$ million Amount Creditor Maturity Cost Collateral Vencimento 1,305.2 Eletrobras May, 2013 IGP-M + 10% p.a. Receivables 4.9 FunCesp III Sep, 2027 IGP-M + 6% p.a. Receivables Net Debt R$ Million 3.2x Net Debt Net Debt / EBITDA 2.0x 1.4x 0.7x 0.6x 0.7x 1,406 1,254 1,096 676 682 661 2002 2003 2004 2005 2006 1S07 Cash availability = R$ 578 million (June, 2007) – Marketable securities with durations lower than 90 days – Average profitability around 100% of CDI 35
  • 36.
    Cash Flow R$ million 2Q06 3Q06 4Q06 1Q07 2Q07 Initial Cash 852 777 674 691 687 Operating Cash Flow 308 290 280 288 308 Investments (6) (8) (24) (10) (12) Net Financial Expenses (18) (15) (19) (16) (18) Net Amortization (44) (50) (45) (46) (48) Income Tax (20) (16) (32) (220) (17) Dividends and Interest on Equity (295) (305) (143) - (325) Free Cash Flow (74) (104) 17 (4) (112) Final Cash 777 674 691 687 574 2Q07 free cash flow was negative of R$ 112.3 million, mainly due to payments of R$ 165.1 million and R$ 160.5 million corresponding to dividends on the 4Q06 and 1Q07 net income respectively. 36
  • 37.
    Capital Markets Tietê x Ibovespa x IEE - Index 100 = June, 2006 170 Sustainability 160 57.6% – Sustainability Report based on 150 48.5% 44.2% GRI standards for the first time. 140 44.1% 130 120 110 100 90 jun/06 sep/06 dec/06 mar/07 jun/07 GETI3 GETI4 Ibovespa IEE Daily Average Volume Payout (R$ thousand) Dividend Yield 64.0% 9,726 12.0% 100% 2006 11.4% 72.4% 5,930 5,714 GETI3 13.2% 96.9% 2005 3,441 4,232 13.,2% GETI4 1,813 4,012 13.4% 1,628 1,698 95.0% 2004 12.3% 2005 2006 1H07 37
  • 38.
    Management Social Programs “GeneratingCitizenship” Project – Involves the selection and support of cultural, educational and/or human development projects which benefit communities in the interior of the Estate of São Paulo Music for the Environment Project – 9 free outdoor concerts held in different cities. – Total public of 18 thousand people and collection of 2.3 tons of goods donated to several institutions Reading Rooms Project – 25 Reading Rooms with approximately one thousand books Guri Project – Sponsorship of 5 units. More than 700 children from low income families. Opportunity to learn how to play musical instruments and to sing in a coral 38
  • 39.
    Management Environment Global Connections – Alignment of the Company’s initiatives to International agreements and summits – Actions from AES Brazil adopted as “Best Practice” actions for AES Corp – Positive repercussion towards Environmental Authorities and NGOs that work in this field. Carbon Credits – Evaluation of ongoing projects Flora Program – Produced 1 million saplings in the Promissão Plant nursery and donated them to rural communities, producers, municipal governments and NGOs Fishery Management Project – Bred and released 2.5 million young fish into 10 reservoirs 39
  • 40.
    Conclusion Generation was 29% higher than assured energy in 1S07 Net Income of R$ 302.5 million in 1H07, reduction of 1.0% compared to 1H06. Net margin of 40.9% compared to 43.8% in 1H06 – The reduction on net income is mainly due to the increase of R$ 92.5 million in transmission expenses (TUSDgeneration) - extraordinary event Payment of R$ 302.6 million in dividends, which corresponds to 100% of 1H07* net earnings AES Tietê has been analyzing new opportunities of investments and expansion, aiming at increasing the Company’s results * R$ 160.5 million refer to 1Q07 net earnings distributed in June 06, 2007 and R$ 142.1 million refer to 2Q07 net earnings that will be paid on September 03, 2007 40
  • 41.
    The statements containedin this document with regard to the business prospects, projected operating and financial results, and growth potential are merely forecasts based on the expectations of Company 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 electricity sector and international market, and they are therefore subject to change.
  • 42.
    ELETROPAULO METROPOLITANA AES TIETÊ S.A. ELETRICIDADE DE SÃO PAULO S.A. 42