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Apresentação institucional 4_t10_eng

The document provides an overview of AES Brasil Group, which operates in the energy generation, distribution, trade and telecommunications sectors in Brazil. Some key points: - AES Brasil is the second largest group in the Brazilian electric sector based on 2009 EBITDA and net income. - It has a presence in Brazil since 1997 and is comprised of seven companies with over 7,700 employees. - AES Tietê is the group's main generation company and AES Eletropaulo is the largest distribution company in Latin America, serving the São Paulo metropolitan region. - Both AES Tietê and AES Eletropaulo have long-term concessions and contracts in place and have been

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Institutional March, 2011 1
AES Brasil Group • Presence in Brazil since 1997 • Comprised of seven companies in the sectors of energy generation, distribution, trade and telecommunications • 7.7 thousand AES Brasil People • Investments 1998-2009: R$ 5.8 billion • Good corporate governance practices • Sustainable practices in businesses • Safety as a main value • Strong cash generation capacity • 25% of minimum pay-out according to bylaws • Differentiated dividend practice since 2006: – AES Tietê: 100% pay-out on quarterly basis – AES Eletropaulo: 95% pay-out on semiannually basis 2
AES Brasil widely recognized in 2009-2010  Quality and safety (AES Eletropaulo) (AES Sul) (AES Eletropaulo) (AES Eletropaulo)  Management excellence (AES Eletropaulo) (AES Tietê) (AES Eletropaulo) (AES Tietê) (AES Tietê)  Environmental concern (AES Brasil) (AES Tietê) 3
Shareholding Structure AES Corp BNDES C 50.00% + 1 share P 0.00% T 46.15% C 50.00% - 1 share P 100% T 53.85% Cia. Brasiliana de Energia T 99.70% AES Sul C 99.99% T 99.99% AES Infoenergy C 99.00% T 99.00% AES Uruguaiana C 71.35% P 32.34% T 52.55% AES Tietê C 76.45% P 7.38% T 34.87% AES Eletropaulo C 98.25% T 98.25% AES Com Rio¹ C 99.99 % T 99.99 % AES Eletropaulo Telecom¹ C = Common Shares P = Preferred Shares T = Total 1 – AES Atimus 4
Listed Companies Shareholding Composition Free Float Others¹ 16.1% 19.2% 56.2% 8.5% 24.2% 28.3% 39.5% 8.0% 1 – includes Federal Government and Eletrobrás shares in AES Eletropaulo and AES Tietê, respectively 5
AES Brasil is the second largest group in electric sector Ebitda1 – 2009 (R$ Billion) 4.0 3.2 2.8 2.6 2.2 1.8 1.7 1.4 1.2 0.5 CEMIG AES BRASIL CPFL NEOENERGIA TRACTEBEL CESP COPEL EDP LIGHT DUKE Net Income1 – 2009 (R$ Billion) 1.9 1.8 1.6 1.3 1.1 1.0 0.8 0.6 0.6 0.2 CEMIG 1 – excluding Eletrobrás AES BRASIL NEOENERGIA CPFL Source: Companies’ financial reports TRACTEBEL COPEL CESP EDP LIGHT DUKE 6
AES Tietê is an important player among private energy generators Generation Installed Capacity (MW) - 2010 Privately held companies 2% 2% 6% 4%  AES 5% 35% Tietê is the 2nd largest among private generation companies and 10th largest overall 6%  10 largest gencos correspond to 63% of the total 6% 7% installed capacity  There are three mega hydropower plants under 10% 9% 8% construction in the North region of Brazil with 18 GW in installed capacity 112 GW AES TIETÊ DUKE TRACTEBEL COPEL PETROBRÁS CEMIG ITAIPU CESP ELETRONORTE FURNAS CHESF OTHERS – Santo Antonio and Jirau (Madeira River): 7GW – Belo Monte (Xingu River): 11GW Source: ANEEL (Regulator) – BIG (October, 2010) 7
AES Brasil is the largest distribution group in Brazil Consumption (GWh) - 2009 13% • 64 discos in Brazil distributing 388 TWh 13% 40% • AES Brasil is the largest electricity distribution group in Brazil: 10% – AES Eletropaulo: 41 TWh distributed, representing 10.6% of the Brazilian 7% 5% 6% market 6% – AES Consumers – Dec/2009 Sul: 8 TWh distributed, representing 1.9% of the Brazilian 13% market 30% 12%  There is competition restricted 12% 5% 7% 6% 16% a limited in to Brazil operate opportunity for as are discos within their concession areas 8
AES Tietê Overview Concession Area  16 hydroelectric plants within the states of São Paulo and Minas Gerais  30-year concession valid until 2029; renewable for another 30 years  Installed capacity of 2,657 MW, with physical guarantee1 of 1,280 MW  All amount of energy that AES Tietê can sell in the long term is contracted to AES Eletropaulo until the end of 2015  As a pure energy generator, AES Tietê can only invest in its core business  313 employees 1 - Amount of energy allowed to be long term contracted 10
Energy sector in Brazil: supply perspectives Installed Energy Capacity in Brazil  Total installed capacity is expected to reach 167 GW by 2019  Brazilian energy matrix is not expected to materially change over the next 10 years 2010 2019 Natural gas; 7% Natural gas; 8% Biomass; 5% Biomass; 5% SHPP; 4% SHPP; 4% Oil; 3% Oil; 5% Nuclear; 2% Hydro; 74% Others; 9% 112 GW 1 - Small Hydro Power Plant Coal; 1% Diesel; 1% Wind; 1% Steam; 1% Hydro; 70% Annual Growth: 4.5% p.a. Source: EPE (Energetic Research Company) Others; 14% Nuclear; 2% Coal; 2% Diesel; 1% Wind; 4% Steam; 0% 167 GW 11
Energy sector in Brazil: contracting environment Regulated Market Free Market Auctions Spot Market PPAs1 Distribution Companies Trading Companies Trading Companies Free Clients Free Clients • Main auctions (reverse auctions): – New Energy (A-5): Delivery in 5 years, 15- Distribution Companies 30 years regulated PPA1 – New Energy (A-3): Delivery in 3 years, 1530 years regulated PPA – Existing Energy (A-1): Delivery in 1 year, 5-15 years PPA 1 – Power Purchase Agreement 12
Operational Performance: billed energy growth due to high availability and bilateral contracts Energy Generation (MW average1) Billed Energy (GWh) 130% 14,729 14,706 125% 13,421 118% 573 13,148 301 117 1,150 1340 2,331 1,980 1,740 121% 331 1,680 11,108 11,138 11,108 11,108 2007 2008 2009 2010 1,665 1,599 1,545 2007 Generation - MWAvg 1,512 2008 2009 2010 Generation/Physical guarantee 1- Generated energy divided by the amount of hours AES Eletropaulo 2- Energy Reallocation Mechanism 2 MRE Spot market Other bilateral contracts 13
Planned modernization at Nova Avanhandava, Ibitinga and Caconde power plants in 2010 and 2011 Investments Breakdown1 (R$ million) 2010 Investments 158 1% 6 6% 82 14% 12 59 20 57 152 79% 13 70 39 43 Equipment and Maintenance 2008 2009 Investments 2010 2011 (e) 2 New SHPPs 1 - Do not include capitalization of interests during the plants modernization and development of projects 2 - Small Hydro Power Plants New SHPPs IT projects Environment 14
Thermo SP: Expansion of 550MW in installed capacity Expected timeline • Preparation of basic project • Land acquisition Instalation license Environmental license issuance 2010 2011 JAN Start of the EIA/RIMA filed at CETESB Operational license FEB MAR APR Beginning of the project presentation to the community MAY JUN JUL 2012 AUG Environmental Public license hearing issuance SEP OCT NOV 2015 Commercial operation date 2016 DEC New energy auction date 15
Financial highlights* Ebitda (R$ million) Net Revenue (R$ million) CAGR: 7 1,449 2007 % CAGR: 6% 1,605 1,670 1,754 2008 2009 2010 (*) 2009 and 2010 numbers in IFRS 1,099 2007 1,254 1,255 1,320 2008 2009 2010 16
Net income of R$ 737 million, with a pay-out of 117%, in 2010* Net Income and Dividend Pay-out1 (R$ million) 117% 110% 100% 100% 14% 100% 12% 12% 80% 11% 11% 10% 10% 8% 60% 6% 40% 4% 20% 609 706 692 737 2% 0% 0% 2007 Pay-out 1 – Gross amount (*) 2009 and 2010 numbers in IFRS 2008 2009 Yield PN 2010 Net income 17
Debt profile Amortization Schedule – Principal (R$ million) Net Debt (R$ billion) 0.6 0.3 0.3 0.3 0.7 297 0.4 2007 0.4 2009 2010 300 2014 2015 0.4 2008 299 Net debt Net debt / EBITDA • 2013 December, 2010: – – Average debt maturity of 3.3 years – Net debt: R$ 0.4 billion – 1 – Brazilian Interbank Interest Rate Average debt cost in 2010 was 114% of CDI1 p.a. or 14% p.a. Net debt/EBITDA: 0.3x 18
Capital Markets Daily Avg. Volume (R$ thousand) AES Tietê X Ibovespa X IEE X TSR² 2010 1 140 130 120 + 20% 110 + 12% 100 + 1% 13,922 + 30% 10,187 9,096 8,160 3,566 2,101 2,692 90 8,086 5,531 80 Dec-09 Mar-10 GETI4 Jun-10 IEE Sep-10 IBOV 4,239 5,468 2007 2008 9,683 Dec-10 TSR 2 Preferred • 2010 Common Common shares and preferred shares listed on BM&FBOVESPA under the tickers GETI3 and GETI4 • 2009 ADRs at US OTC Market under the tickers AESAY and AESYY 1 – Index: 12/30/2009= 100 2 – Total Shareholder Return – considers preferred shares price variation and dividends declared in the period 19
AES Eletropaulo Overview Concession Area  Largest electricity distribution company in Latin America  Serving 24 municipalities in the São Paulo Metropolitan area  Concession contract valid until 2028  Concession area with the highest GDP in Brazil  45 thousand kilometers of lines, 1.2 million electricity poles and 6.1 million consumption units in a concession area of 4,526 km2  Total distributed volume of 43 TWh in 2010  As a pure energy distributor, AES Eletropaulo can only invest within its concession area  5,663 employees 21
Energy sector in Brazil: demand perspectives Macroeconomic Scenario EPE’s1 Assumptions: GDP - Annual growth 2004-2008 2010-2014 2015-2019 World 4.6 4.2 4.0 Brazil 4.7 5.2 5.0 • Global financial sector recovery will not take longer; • Brazilian economic growth will outpace global Brazilian Consumption Evolution (TWh) international 5.0% p.a 633 331 346 • 393 context even of in an moderate Emerging markets – especially China – will 378 growth, expansion; 4.4% p.a. 358 average grow faster than developed economies, positively affecting industrial 420 388 sector in Brazil; • Income elasticity of energy demand (20102019): 1.04 • Households growth: 2.2% p.a 2004 2005 2006 2007 2008 1 - Source: EPE (Energetic Research Company) 2009 2010 2019 22
Energy sector in Brazil: regulatory methodology Tariff Reset and Readjustment • Tariff Reset is applied each 4 years for AES Eletropaulo • Parcel A Costs − Next Jul/2011 − Parcel A: costs pass trough the tariff − Parcel B: costs are set by ANEEL • Tariff Readjustment: annually − Parcel A costs pass trough the tariff − Parcel B cost are adjusted by IGPM +/- X(1) Factor X WACC Energy Purchase Transmission Sector Charges Reference Company (PMSO) Investment Remuneration Remuneration Asset Base X Depreciation Depreciation Regulatory Ebitda (1) X Factor: index that capture productivity gains − Non-manageable costs that totally pass- through to the tariff − Losses reduction improve the passthrough effectiveness • Reference Company: – Efficient cost structure, determined by ANEEL (National Electricity Agency) • Remuneration Asset Base: – Applicable investments used to calculate the Investment Remuneration (applying WACC) and Depreciation Parcel A - Non-Manageable Costs Parcel B - Manageable Costs 23
Consumption Evolution Total Market (GWh1) 2010 Consumption Share (GWh1) 6%6% CAGR: 2% 39,932 7,355 41,243 41,269 7,383 6,832 43,345 14% 15% 36% 36% 7,911 17% 18% 26% 26% 32,577 33,860 34,436 35,434 Residential Commercial 2007 2008 Captive Market 2009 Free Clients 2010 Free Clients Industrial Others 1 – Net of own consumption 24
Investments amounted R$ 682 million in 2010 Investments 2010 Investments Breakdown (R$ million) 682 516 28 4%4% 4% 720 9% 36 32% 457 19% 37 47 654 410 27% 684 478 System Expansion Customer Service 2008 2009 Capex 2010 Paid by Customers 2011(e) Maintenance Losses Recovery Others IT Paid by the Clients 25
SAIDI & SAIFI SAIDI - System Average Interruption Duration Index 15.00  SAIFI - System Average Interruption Frequency Index 9.00  8.49 8.41 7.87 13.00  11.34 8.00  7.39 10.92 11.00  7.00  6.00 10.09 9.32 6.00  5.00 9.00  4.00 5.00  7.00  11.86 8.90 9.20 10.68 5.00  3.00 4.00  6.17 5.64 5.20 2007 2008 2009 1st 1st 7th 5.43 2.00 3.00  1.00 3.00  2.00  1.00  1.00  0.00 2007 2008 2009 3rd 5th 8th SAIDI (hours) ► 2010 SAIFI (times) SAIDI Aneel Target 2011 SAIDI ANEEL Target: 8.68 hours ► 2010 SAIFI Aneel Target 2011 SAIFI ANEEL Target: 6.93 times ABRADEE ranking position among the 28 utilities with more than 500 thousand customers Sources: ANEEL, AES Eletropaulo and ABRADEE 26
Operational Indexes Losses (%) Collection Rate (% over gross revenue) -0.6 p.p. 2.9 p.p. 2007 11.6 11.8 10.9 5.1 5.3 4.4 6.5 99.5 11.5 5.0 102.4 6.5 6.5 6.5 2007 2008 2009 2010 101.1 98.5 2008 2009 2010 Technical Losses¹ • Disconnections and Reconnections – Monthly Average (2009 X 2010) Commercial Losses • Fraud and Illegal Connections (2010) – Disconnections: increase from 80 thousand to 96 thousand – 287 thousand inspections e 41 thousand frauds detected – Reconnection: increase from 56 thousand to 86 thousand – 56 thousand illegal connections regularized • Past due bill credit report (2010 monthly average): 343 thousand 1 – The previous calculation methodology 2 - Current technical losses used retroactively as reference 27
Financial Highlights* Net Revenues (R$ million) CAGR: 7,193 7,530 2007 2008 (*) 2009 and 2010 numbers in IFRS Ebitda (R$ million) 8% CAGR: 8,786 11% 2.413 9,697 1.566 2009 2010 1.696 1.775 2007 2008 2009 2010 28
Practice of 95% pay-out on semi-annually basis* Net Income and Dividend Payout1 (R$ million) 1 40 .0 % 114.4% 1 20 .0 % 100.3% 101.5% 101.6% 1 00 .0 % 28.6% 8 0.0% 20.3% 6 0.0% 20.4% 14.4% 4 0.0% 2 0.0% 0 .0 % 1,027 1,156 50.0% 45.0% 40.0% 35.0% 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% 1,348 713 2007 Net Income 1 – Gross amount (*) 2009 and 2010 numbers in IFRS 2008 Pay-out¹ 2009 2010 Dividend Yield 29
Debt Profile Amortization Schedule – Principal (R$ million) Net Debt (R$ billion) 1.8x 1.5x 1.4x 0.9x 1,082 3.0 2.5 2.7 2.4 336 83 253 2007 2008 2009 2010 323 45 278 342 48 294 2011 2012 2013 Net Debt/Ebitda Adjusted with Fcesp Net Debt (R$ billion) • 577 51 526 2014 276 55 221 62 222 67 373 2015 2016 2017 2018 Local Currency (ex FCesp) 285 903 179 20192028 Fcesp¹ December, 2010: – Average debt cost in 2010 was 110% of CDI1 or 12.9% p.a. – Average debt maturity of 7.2 years – Net debt: R$ 2.4 billion – 1- Brazilian Interbank Interest Rate 440 390 58 331 Net debt/EBITDA of 0.9x adjusted with Pension Fund 30
Capital Markets Average Daily Volume (R$ thousand) AES Eletropaulo X Ibovespa X IEEX TSR² 2010 1 B A 125 27,000.00 26,066 25,677 24,496 + 18% 25,000.00 115 + 12% 21,960 23,000.00 105 + 1% 21,000.00 95 - 7% 19,000.00 85 17,000.00 75 15,000.00 Dec-09 Feb-10 Ibovespa A Apr-10 IEE Jun-10 Aug-10 AES Eletropaulo PN Ex dividends: 05/01/2010 B Oct-10 Dec-10 2007 2008 2009 2010 AES Eletropaulo TSR³ Ex dividends: 08/06/2010 • Common shares and preferred shares listed on BM&FBOVESPA under the tickers ELPL3 and ELPL4 • ADRs at US OTC Market under the tickers EPUMY and ELPSY 1 – Index: 12/30/2009 = 100 2 – Total Shareholder Return - considers preferred shares price variation and dividends declared in the period 31
Social Responsibility
Social Responsibility “Casa da Cultura e Cidadania” Project • Over 6.7 thousand children, teenagers, and adults have been benefited • Own and incentive investments: approximately R$ 15 million in 2009 • Activities of acting, dancing, circus arts, visual arts, music, gymnastics, courses of income generation, and education of safe use of electrical power and the right use of natural resources • 7 operating units “Centros Educacionais Infantis Luz e Lápis” - Project • 300 benefited children between 1 and 6 years old • Own investments amounting R$ 1.5 million in 2009 • Units: Santo Amaro and Guarapiranga 33
Social Responsibility Volunteering Program Distributing Energy of Good Acting to Transform Specific social mobilization or emergency campaign. Opportunities for volunteering in social organizations, which are partners of AES Brazil Winter clothes, Christmas campaign, among others. Co-workers can enroll in volunteer activities available at AES Brazil volunteering portal since September/09 www.energiadobem.com.br • Launched in December, 2008; • Objective: to get the co-workers committed to the transformation of low income communities and development of non-governmental institutions; • 1,137 volunteers 34
Attachments
Brazilian Economy: good performance, fast recovery after financial crisis Brazil - GDP and Investment - Annual growth - % (IBGE) 25.6 • Strong growth was interrupted 13.9 13.6 6.1 by the financial crisis 7.5 5.2 • The GDP for 2009 was mainly (0.6) affected (10.3) 2007 2008 GDP 2009 5.3 investment (reversal of expectations) Investment (Gross Fixed Capital Formation) • Brazil´s economic performance 7.5 5.2 lower 2010 GDP growth - Brazil x Other countries (IBGE, BCB, IMF and OECD) 6.1 5.7 by during crisis was better than other countries 5.6 3.6 3.9 • Strong recovery in GDP for 3.1 -0.6 2010, specially investments -2.2 -2.2 2007 Brazil 2008 2009 Emerging markets (ex Brazil, India and China) 2010 1 OECD 1- OECD (Organization for Economic Co-operation and Development) – international organization of 31 developed countries. 36
Brazilian Economy: industry recovery and recent foreign trade expansion Brazil – Industrial production - Annual growth - % (IBGE) 10.4 6.0 3.1 • Brazilian industry has reached 3.1 2.8 pre-crisis level since mar/10 • In 2010, industry grew 10.4% • Exports limited the recovery in (7.4) 2005 2006 2007 2008 2009 2010 2009 Brazil – Trade Balance – US$ billion (Funcex) 25 20 15 10 5 0 -5 -10 -15 -20 • 2010: growth of exports (world economy recovery) and imports Exports Imports Trade Balance Jan-11 Oct-10 Jul-10 Apr-10 Jan-10 Oct-09 Jul-09 Apr-09 Jan-09 Oct-08 Jul-08 Apr-08 Jan-08 Oct-07 Jul-07 Apr-07 Jan-07 (capital goods) 37
Domestic market is responsible for the good performance Unemployment rate - % (IBGE) 14 13 12 11 10 9 8 7 6 5 • Brazilian´s good performance was driven by the expansion of the domestic market – Unemployment rate has been Jan-11 Jul-10 Jan-10 Jul-09 Jan-09 Jul-08 Jan-08 Jul-07 Jan-07 Jul-06 Jan-06 Jul-05 Jan-05 Jul-04 Jan-04 6.4 decreasing over the years Real average income (R$) and income inequality (IBGE and IPEA) 1.600 0,59 0.583 1.500 0.572 0,58 0.569 0,57 0.563 1.400 1.550 0.548 1.485 1.450 1.395 1.348 2004 1.291 1.261 2003 1.100 1.259 1.200 persistently since 2005 0,56 0.556 1.300 – Real income has been growing 0,55 – There was an improvement in 0.543 0,54 income distribution 0,53 1.000 0,52 2005 2006 Real average income 2007 2008 2009 2010 1 Gini Index 1- It measures the degree of income inequality. It may vary from 0 (complete equality) to 1 (complete inequality). 38
Domestic market is responsible for the good performance Brazil – Loans to individuals – R$ million (BCB) 600 537 470 500 • Besides the improvement on 394 400 318 300 labor market, credit expansion 238 191 was also responsible for the 200 good performance 100 2005 2006 2007 2008 2009 Oct* Brazil – Retail Sales – seasonally adjusted – 2003 = 100 (IBGE) • Retail sales is growing fast: 180 – 6.0% in 2009 despite the crisis 170 160 – 7.2% p. a. between 2005 and 2009 150 140 130 – 10.9% in 2010 120 110 Jul-10 Jan-10 Jul-09 Jan-09 Jul-08 Jan-08 Jul-07 Jan-07 Jul-06 Jan-06 Jul-05 Jan-05 100 39
Costs and Expenses Costs and operational expenses1 (R$ million) 415 365 434 351 187 84 112 281 201 239 246 2008 2007 214 2009 2010 Energy Purchase, Transmission and Connection Charges, and Water Resources 2 Other Costs and Expenses 1 – Do not include depreciation and amortization 2 - Personnel, Material, Third Party Services and Other Costs and Expenses 40
Costs and Expenses Costs and operational expenses1 (R$ million) 6,745 5,537 5,893 6,431 1,306 1,255 1,193 1,440 4,097 2007 4,700 5,125 5,490 2008 2009 2010 Energy Supply and Transmission Charges 1 – Do not include depreciation and amortization PMS² and Others Expenses 2 - Personnel, Material, Third Party Services and Other Costs and Expenses 41
Expansion Requirement of 15%  Increase installed capacity in Sao Paulo State by 15% (400 MW), either in greenfield projects or through long term purchase agreement with new plants  The obligation was supposed to be accomplished by December 2007, however AES Tietê was not able to comply with this requirement due to the following restrictions: – Insufficient remaining hydro resources within the State of São Paulo – Environmental restrictions – Insufficiency of gas supply / timing issue – More restricted regulation on energy sale established by the New Model of Electric Sector (Law # 10,848/2004) which eliminated the self dealing • In August 2008, Aneel informed that the issue is not linked to the concession • On July 27, 2009, AES Tietê was notified by the State Government Attorney’s Office to present arguments on compliance with the expansion obligation – The Company filed a response on July, 29th, which exhausts the procedure for notification. Possible deployment depends on new manifestation of the Prosecution • Popular law action against Federal Government, Aneel, AES Tietê, and Duke – 2008 – In October, defense filed on first instance by AES Tietê; In December, the author replied AES Tietê defense – 2010 – In September, due to the plaintiffs failure to specify the individuals that should be named as Defendants, a favorable decision was rendered by the 1st Instance Court (but there can be appeals) 42
Eletrobras Lawsuit State-owned Eletropaulo was spun-off into four companies and, according to our understanding based on the spin-off agreement, the discussion was transferred to CTEEP Stated-owned Eletropaulo borrowed money from Eletrobras Nov/86 Dec/88 State-owned Eletropaulo and Eletrobras disagreed on how to calculate interest over that loan and a lawsuit was started Jan/98 Eletrobras, after winning the interest calculation discussion, filed an Execution Suit to collect the due amount Eletrobras and CTEEP appealed to the Superior Court of Justice (SCJ) Eletrobras requested the 1st level of court judge to appoint an expert Next Steps: 1- Eletrobras will request the auditing process 2 - The auditing procedure will be concluded at least in 6 months Apr/98 Privatization event . Stateowned Eletropaulo became AES Eletropaulo Sep/01 Sep/03 The 2nd level of court excluded AES Eletropaulo from the discussion based on the spin-off agreement Oct/05 Jun/06 May/09 The SCJ decided to send the Execution Suit back to the 1st level of court Feb/10 The Judge appointed the expert who will indicate the amount and the debtor 3 - After conclusion of the expert work, the 1st level of court decision will be released 4 - Appealing to the 2nd level of court 5 - Appealing to the 3rd level of court Due to a paperwork issue, Eletrobras will request the expert selection again 43
Shareholders Agreement On Dec 2003 AES and BNDES signed a Shareholders’ Agreement to regulate their relationship as shareholders of Brasiliana and its controlled companies. The Agreement is available at www.aeseletropaulo.com.br/ri Shareholders can dispose its share at any time, considering the following terms: Right of 1st refusal  Any party with an intention to dispose its shares should first provide the other party the right to buy that participation at the same price offered by a third party Tag along rights  In the case of change in Brasiliana’s control, tag along rights are triggered for the following Drag along rights  Once the offering party exercises the Drag Along clause, offered party is obligated to dispose of all companies (only if AES is no longer controlling shareholder): – AES Eletropaulo: Tag along of 100% in its common and preferred shares – AES Tietê: Tag along of 80% in its common shares – AES Elpa: Tag along of 80% in its common shares its shares at the time, if the Right of 1st Refusal is not exercised by offered party 44
Brazilian Main Taxes AES Tietê • Income Tax / Social Contribution: – 34% over taxable income • ICMS (VAT tax) – deferred tax • PIS/Cofins (sales tax): – Eletropaulo´s PPA: 3.65% over Revenue – Other bilateral contracts: 9.25% over Revenue minus Costs AES Eletropaulo • Income Tax / Social Contribution: – 34% over taxable income • ICMS: 22% over Revenue (average rate) – Residential: 25% – Industrial and Commercial: 18% – Public Entities: free • PIS/Cofins: – 9.25% over Revenue minus Costs 45
Contacts: ri.aeseletropaulo@aes.com ri.aestiete@aes.com + 55 11 2195 7048 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.

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Apresentação institucional 4_t10_eng

  • 1.
  • 2.
    AES Brasil Group •Presence in Brazil since 1997 • Comprised of seven companies in the sectors of energy generation, distribution, trade and telecommunications • 7.7 thousand AES Brasil People • Investments 1998-2009: R$ 5.8 billion • Good corporate governance practices • Sustainable practices in businesses • Safety as a main value • Strong cash generation capacity • 25% of minimum pay-out according to bylaws • Differentiated dividend practice since 2006: – AES Tietê: 100% pay-out on quarterly basis – AES Eletropaulo: 95% pay-out on semiannually basis 2
  • 3.
    AES Brasil widelyrecognized in 2009-2010  Quality and safety (AES Eletropaulo) (AES Sul) (AES Eletropaulo) (AES Eletropaulo)  Management excellence (AES Eletropaulo) (AES Tietê) (AES Eletropaulo) (AES Tietê) (AES Tietê)  Environmental concern (AES Brasil) (AES Tietê) 3
  • 4.
    Shareholding Structure AES Corp BNDES C50.00% + 1 share P 0.00% T 46.15% C 50.00% - 1 share P 100% T 53.85% Cia. Brasiliana de Energia T 99.70% AES Sul C 99.99% T 99.99% AES Infoenergy C 99.00% T 99.00% AES Uruguaiana C 71.35% P 32.34% T 52.55% AES Tietê C 76.45% P 7.38% T 34.87% AES Eletropaulo C 98.25% T 98.25% AES Com Rio¹ C 99.99 % T 99.99 % AES Eletropaulo Telecom¹ C = Common Shares P = Preferred Shares T = Total 1 – AES Atimus 4
  • 5.
    Listed Companies ShareholdingComposition Free Float Others¹ 16.1% 19.2% 56.2% 8.5% 24.2% 28.3% 39.5% 8.0% 1 – includes Federal Government and Eletrobrás shares in AES Eletropaulo and AES Tietê, respectively 5
  • 6.
    AES Brasil isthe second largest group in electric sector Ebitda1 – 2009 (R$ Billion) 4.0 3.2 2.8 2.6 2.2 1.8 1.7 1.4 1.2 0.5 CEMIG AES BRASIL CPFL NEOENERGIA TRACTEBEL CESP COPEL EDP LIGHT DUKE Net Income1 – 2009 (R$ Billion) 1.9 1.8 1.6 1.3 1.1 1.0 0.8 0.6 0.6 0.2 CEMIG 1 – excluding Eletrobrás AES BRASIL NEOENERGIA CPFL Source: Companies’ financial reports TRACTEBEL COPEL CESP EDP LIGHT DUKE 6
  • 7.
    AES Tietê isan important player among private energy generators Generation Installed Capacity (MW) - 2010 Privately held companies 2% 2% 6% 4%  AES 5% 35% Tietê is the 2nd largest among private generation companies and 10th largest overall 6%  10 largest gencos correspond to 63% of the total 6% 7% installed capacity  There are three mega hydropower plants under 10% 9% 8% construction in the North region of Brazil with 18 GW in installed capacity 112 GW AES TIETÊ DUKE TRACTEBEL COPEL PETROBRÁS CEMIG ITAIPU CESP ELETRONORTE FURNAS CHESF OTHERS – Santo Antonio and Jirau (Madeira River): 7GW – Belo Monte (Xingu River): 11GW Source: ANEEL (Regulator) – BIG (October, 2010) 7
  • 8.
    AES Brasil isthe largest distribution group in Brazil Consumption (GWh) - 2009 13% • 64 discos in Brazil distributing 388 TWh 13% 40% • AES Brasil is the largest electricity distribution group in Brazil: 10% – AES Eletropaulo: 41 TWh distributed, representing 10.6% of the Brazilian 7% 5% 6% market 6% – AES Consumers – Dec/2009 Sul: 8 TWh distributed, representing 1.9% of the Brazilian 13% market 30% 12%  There is competition restricted 12% 5% 7% 6% 16% a limited in to Brazil operate opportunity for as are discos within their concession areas 8
  • 10.
    AES Tietê Overview ConcessionArea  16 hydroelectric plants within the states of São Paulo and Minas Gerais  30-year concession valid until 2029; renewable for another 30 years  Installed capacity of 2,657 MW, with physical guarantee1 of 1,280 MW  All amount of energy that AES Tietê can sell in the long term is contracted to AES Eletropaulo until the end of 2015  As a pure energy generator, AES Tietê can only invest in its core business  313 employees 1 - Amount of energy allowed to be long term contracted 10
  • 11.
    Energy sector inBrazil: supply perspectives Installed Energy Capacity in Brazil  Total installed capacity is expected to reach 167 GW by 2019  Brazilian energy matrix is not expected to materially change over the next 10 years 2010 2019 Natural gas; 7% Natural gas; 8% Biomass; 5% Biomass; 5% SHPP; 4% SHPP; 4% Oil; 3% Oil; 5% Nuclear; 2% Hydro; 74% Others; 9% 112 GW 1 - Small Hydro Power Plant Coal; 1% Diesel; 1% Wind; 1% Steam; 1% Hydro; 70% Annual Growth: 4.5% p.a. Source: EPE (Energetic Research Company) Others; 14% Nuclear; 2% Coal; 2% Diesel; 1% Wind; 4% Steam; 0% 167 GW 11
  • 12.
    Energy sector inBrazil: contracting environment Regulated Market Free Market Auctions Spot Market PPAs1 Distribution Companies Trading Companies Trading Companies Free Clients Free Clients • Main auctions (reverse auctions): – New Energy (A-5): Delivery in 5 years, 15- Distribution Companies 30 years regulated PPA1 – New Energy (A-3): Delivery in 3 years, 1530 years regulated PPA – Existing Energy (A-1): Delivery in 1 year, 5-15 years PPA 1 – Power Purchase Agreement 12
  • 13.
    Operational Performance: billedenergy growth due to high availability and bilateral contracts Energy Generation (MW average1) Billed Energy (GWh) 130% 14,729 14,706 125% 13,421 118% 573 13,148 301 117 1,150 1340 2,331 1,980 1,740 121% 331 1,680 11,108 11,138 11,108 11,108 2007 2008 2009 2010 1,665 1,599 1,545 2007 Generation - MWAvg 1,512 2008 2009 2010 Generation/Physical guarantee 1- Generated energy divided by the amount of hours AES Eletropaulo 2- Energy Reallocation Mechanism 2 MRE Spot market Other bilateral contracts 13
  • 14.
    Planned modernization atNova Avanhandava, Ibitinga and Caconde power plants in 2010 and 2011 Investments Breakdown1 (R$ million) 2010 Investments 158 1% 6 6% 82 14% 12 59 20 57 152 79% 13 70 39 43 Equipment and Maintenance 2008 2009 Investments 2010 2011 (e) 2 New SHPPs 1 - Do not include capitalization of interests during the plants modernization and development of projects 2 - Small Hydro Power Plants New SHPPs IT projects Environment 14
  • 15.
    Thermo SP: Expansionof 550MW in installed capacity Expected timeline • Preparation of basic project • Land acquisition Instalation license Environmental license issuance 2010 2011 JAN Start of the EIA/RIMA filed at CETESB Operational license FEB MAR APR Beginning of the project presentation to the community MAY JUN JUL 2012 AUG Environmental Public license hearing issuance SEP OCT NOV 2015 Commercial operation date 2016 DEC New energy auction date 15
  • 16.
    Financial highlights* Ebitda (R$million) Net Revenue (R$ million) CAGR: 7 1,449 2007 % CAGR: 6% 1,605 1,670 1,754 2008 2009 2010 (*) 2009 and 2010 numbers in IFRS 1,099 2007 1,254 1,255 1,320 2008 2009 2010 16
  • 17.
    Net income ofR$ 737 million, with a pay-out of 117%, in 2010* Net Income and Dividend Pay-out1 (R$ million) 117% 110% 100% 100% 14% 100% 12% 12% 80% 11% 11% 10% 10% 8% 60% 6% 40% 4% 20% 609 706 692 737 2% 0% 0% 2007 Pay-out 1 – Gross amount (*) 2009 and 2010 numbers in IFRS 2008 2009 Yield PN 2010 Net income 17
  • 18.
    Debt profile Amortization Schedule– Principal (R$ million) Net Debt (R$ billion) 0.6 0.3 0.3 0.3 0.7 297 0.4 2007 0.4 2009 2010 300 2014 2015 0.4 2008 299 Net debt Net debt / EBITDA • 2013 December, 2010: – – Average debt maturity of 3.3 years – Net debt: R$ 0.4 billion – 1 – Brazilian Interbank Interest Rate Average debt cost in 2010 was 114% of CDI1 p.a. or 14% p.a. Net debt/EBITDA: 0.3x 18
  • 19.
    Capital Markets Daily Avg.Volume (R$ thousand) AES Tietê X Ibovespa X IEE X TSR² 2010 1 140 130 120 + 20% 110 + 12% 100 + 1% 13,922 + 30% 10,187 9,096 8,160 3,566 2,101 2,692 90 8,086 5,531 80 Dec-09 Mar-10 GETI4 Jun-10 IEE Sep-10 IBOV 4,239 5,468 2007 2008 9,683 Dec-10 TSR 2 Preferred • 2010 Common Common shares and preferred shares listed on BM&FBOVESPA under the tickers GETI3 and GETI4 • 2009 ADRs at US OTC Market under the tickers AESAY and AESYY 1 – Index: 12/30/2009= 100 2 – Total Shareholder Return – considers preferred shares price variation and dividends declared in the period 19
  • 21.
    AES Eletropaulo Overview ConcessionArea  Largest electricity distribution company in Latin America  Serving 24 municipalities in the São Paulo Metropolitan area  Concession contract valid until 2028  Concession area with the highest GDP in Brazil  45 thousand kilometers of lines, 1.2 million electricity poles and 6.1 million consumption units in a concession area of 4,526 km2  Total distributed volume of 43 TWh in 2010  As a pure energy distributor, AES Eletropaulo can only invest within its concession area  5,663 employees 21
  • 22.
    Energy sector inBrazil: demand perspectives Macroeconomic Scenario EPE’s1 Assumptions: GDP - Annual growth 2004-2008 2010-2014 2015-2019 World 4.6 4.2 4.0 Brazil 4.7 5.2 5.0 • Global financial sector recovery will not take longer; • Brazilian economic growth will outpace global Brazilian Consumption Evolution (TWh) international 5.0% p.a 633 331 346 • 393 context even of in an moderate Emerging markets – especially China – will 378 growth, expansion; 4.4% p.a. 358 average grow faster than developed economies, positively affecting industrial 420 388 sector in Brazil; • Income elasticity of energy demand (20102019): 1.04 • Households growth: 2.2% p.a 2004 2005 2006 2007 2008 1 - Source: EPE (Energetic Research Company) 2009 2010 2019 22
  • 23.
    Energy sector inBrazil: regulatory methodology Tariff Reset and Readjustment • Tariff Reset is applied each 4 years for AES Eletropaulo • Parcel A Costs − Next Jul/2011 − Parcel A: costs pass trough the tariff − Parcel B: costs are set by ANEEL • Tariff Readjustment: annually − Parcel A costs pass trough the tariff − Parcel B cost are adjusted by IGPM +/- X(1) Factor X WACC Energy Purchase Transmission Sector Charges Reference Company (PMSO) Investment Remuneration Remuneration Asset Base X Depreciation Depreciation Regulatory Ebitda (1) X Factor: index that capture productivity gains − Non-manageable costs that totally pass- through to the tariff − Losses reduction improve the passthrough effectiveness • Reference Company: – Efficient cost structure, determined by ANEEL (National Electricity Agency) • Remuneration Asset Base: – Applicable investments used to calculate the Investment Remuneration (applying WACC) and Depreciation Parcel A - Non-Manageable Costs Parcel B - Manageable Costs 23
  • 24.
    Consumption Evolution Total Market(GWh1) 2010 Consumption Share (GWh1) 6%6% CAGR: 2% 39,932 7,355 41,243 41,269 7,383 6,832 43,345 14% 15% 36% 36% 7,911 17% 18% 26% 26% 32,577 33,860 34,436 35,434 Residential Commercial 2007 2008 Captive Market 2009 Free Clients 2010 Free Clients Industrial Others 1 – Net of own consumption 24
  • 25.
    Investments amounted R$ 682million in 2010 Investments 2010 Investments Breakdown (R$ million) 682 516 28 4%4% 4% 720 9% 36 32% 457 19% 37 47 654 410 27% 684 478 System Expansion Customer Service 2008 2009 Capex 2010 Paid by Customers 2011(e) Maintenance Losses Recovery Others IT Paid by the Clients 25
  • 26.
    SAIDI & SAIFI SAIDI- System Average Interruption Duration Index 15.00  SAIFI - System Average Interruption Frequency Index 9.00  8.49 8.41 7.87 13.00  11.34 8.00  7.39 10.92 11.00  7.00  6.00 10.09 9.32 6.00  5.00 9.00  4.00 5.00  7.00  11.86 8.90 9.20 10.68 5.00  3.00 4.00  6.17 5.64 5.20 2007 2008 2009 1st 1st 7th 5.43 2.00 3.00  1.00 3.00  2.00  1.00  1.00  0.00 2007 2008 2009 3rd 5th 8th SAIDI (hours) ► 2010 SAIFI (times) SAIDI Aneel Target 2011 SAIDI ANEEL Target: 8.68 hours ► 2010 SAIFI Aneel Target 2011 SAIFI ANEEL Target: 6.93 times ABRADEE ranking position among the 28 utilities with more than 500 thousand customers Sources: ANEEL, AES Eletropaulo and ABRADEE 26
  • 27.
    Operational Indexes Losses (%) CollectionRate (% over gross revenue) -0.6 p.p. 2.9 p.p. 2007 11.6 11.8 10.9 5.1 5.3 4.4 6.5 99.5 11.5 5.0 102.4 6.5 6.5 6.5 2007 2008 2009 2010 101.1 98.5 2008 2009 2010 Technical Losses¹ • Disconnections and Reconnections – Monthly Average (2009 X 2010) Commercial Losses • Fraud and Illegal Connections (2010) – Disconnections: increase from 80 thousand to 96 thousand – 287 thousand inspections e 41 thousand frauds detected – Reconnection: increase from 56 thousand to 86 thousand – 56 thousand illegal connections regularized • Past due bill credit report (2010 monthly average): 343 thousand 1 – The previous calculation methodology 2 - Current technical losses used retroactively as reference 27
  • 28.
    Financial Highlights* Net Revenues(R$ million) CAGR: 7,193 7,530 2007 2008 (*) 2009 and 2010 numbers in IFRS Ebitda (R$ million) 8% CAGR: 8,786 11% 2.413 9,697 1.566 2009 2010 1.696 1.775 2007 2008 2009 2010 28
  • 29.
    Practice of 95%pay-out on semi-annually basis* Net Income and Dividend Payout1 (R$ million) 1 40 .0 % 114.4% 1 20 .0 % 100.3% 101.5% 101.6% 1 00 .0 % 28.6% 8 0.0% 20.3% 6 0.0% 20.4% 14.4% 4 0.0% 2 0.0% 0 .0 % 1,027 1,156 50.0% 45.0% 40.0% 35.0% 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% 1,348 713 2007 Net Income 1 – Gross amount (*) 2009 and 2010 numbers in IFRS 2008 Pay-out¹ 2009 2010 Dividend Yield 29
  • 30.
    Debt Profile Amortization Schedule– Principal (R$ million) Net Debt (R$ billion) 1.8x 1.5x 1.4x 0.9x 1,082 3.0 2.5 2.7 2.4 336 83 253 2007 2008 2009 2010 323 45 278 342 48 294 2011 2012 2013 Net Debt/Ebitda Adjusted with Fcesp Net Debt (R$ billion) • 577 51 526 2014 276 55 221 62 222 67 373 2015 2016 2017 2018 Local Currency (ex FCesp) 285 903 179 20192028 Fcesp¹ December, 2010: – Average debt cost in 2010 was 110% of CDI1 or 12.9% p.a. – Average debt maturity of 7.2 years – Net debt: R$ 2.4 billion – 1- Brazilian Interbank Interest Rate 440 390 58 331 Net debt/EBITDA of 0.9x adjusted with Pension Fund 30
  • 31.
    Capital Markets Average DailyVolume (R$ thousand) AES Eletropaulo X Ibovespa X IEEX TSR² 2010 1 B A 125 27,000.00 26,066 25,677 24,496 + 18% 25,000.00 115 + 12% 21,960 23,000.00 105 + 1% 21,000.00 95 - 7% 19,000.00 85 17,000.00 75 15,000.00 Dec-09 Feb-10 Ibovespa A Apr-10 IEE Jun-10 Aug-10 AES Eletropaulo PN Ex dividends: 05/01/2010 B Oct-10 Dec-10 2007 2008 2009 2010 AES Eletropaulo TSR³ Ex dividends: 08/06/2010 • Common shares and preferred shares listed on BM&FBOVESPA under the tickers ELPL3 and ELPL4 • ADRs at US OTC Market under the tickers EPUMY and ELPSY 1 – Index: 12/30/2009 = 100 2 – Total Shareholder Return - considers preferred shares price variation and dividends declared in the period 31
  • 32.
  • 33.
    Social Responsibility “Casa daCultura e Cidadania” Project • Over 6.7 thousand children, teenagers, and adults have been benefited • Own and incentive investments: approximately R$ 15 million in 2009 • Activities of acting, dancing, circus arts, visual arts, music, gymnastics, courses of income generation, and education of safe use of electrical power and the right use of natural resources • 7 operating units “Centros Educacionais Infantis Luz e Lápis” - Project • 300 benefited children between 1 and 6 years old • Own investments amounting R$ 1.5 million in 2009 • Units: Santo Amaro and Guarapiranga 33
  • 34.
    Social Responsibility Volunteering Program Distributing Energyof Good Acting to Transform Specific social mobilization or emergency campaign. Opportunities for volunteering in social organizations, which are partners of AES Brazil Winter clothes, Christmas campaign, among others. Co-workers can enroll in volunteer activities available at AES Brazil volunteering portal since September/09 www.energiadobem.com.br • Launched in December, 2008; • Objective: to get the co-workers committed to the transformation of low income communities and development of non-governmental institutions; • 1,137 volunteers 34
  • 35.
  • 36.
    Brazilian Economy: goodperformance, fast recovery after financial crisis Brazil - GDP and Investment - Annual growth - % (IBGE) 25.6 • Strong growth was interrupted 13.9 13.6 6.1 by the financial crisis 7.5 5.2 • The GDP for 2009 was mainly (0.6) affected (10.3) 2007 2008 GDP 2009 5.3 investment (reversal of expectations) Investment (Gross Fixed Capital Formation) • Brazil´s economic performance 7.5 5.2 lower 2010 GDP growth - Brazil x Other countries (IBGE, BCB, IMF and OECD) 6.1 5.7 by during crisis was better than other countries 5.6 3.6 3.9 • Strong recovery in GDP for 3.1 -0.6 2010, specially investments -2.2 -2.2 2007 Brazil 2008 2009 Emerging markets (ex Brazil, India and China) 2010 1 OECD 1- OECD (Organization for Economic Co-operation and Development) – international organization of 31 developed countries. 36
  • 37.
    Brazilian Economy: industryrecovery and recent foreign trade expansion Brazil – Industrial production - Annual growth - % (IBGE) 10.4 6.0 3.1 • Brazilian industry has reached 3.1 2.8 pre-crisis level since mar/10 • In 2010, industry grew 10.4% • Exports limited the recovery in (7.4) 2005 2006 2007 2008 2009 2010 2009 Brazil – Trade Balance – US$ billion (Funcex) 25 20 15 10 5 0 -5 -10 -15 -20 • 2010: growth of exports (world economy recovery) and imports Exports Imports Trade Balance Jan-11 Oct-10 Jul-10 Apr-10 Jan-10 Oct-09 Jul-09 Apr-09 Jan-09 Oct-08 Jul-08 Apr-08 Jan-08 Oct-07 Jul-07 Apr-07 Jan-07 (capital goods) 37
  • 38.
    Domestic market isresponsible for the good performance Unemployment rate - % (IBGE) 14 13 12 11 10 9 8 7 6 5 • Brazilian´s good performance was driven by the expansion of the domestic market – Unemployment rate has been Jan-11 Jul-10 Jan-10 Jul-09 Jan-09 Jul-08 Jan-08 Jul-07 Jan-07 Jul-06 Jan-06 Jul-05 Jan-05 Jul-04 Jan-04 6.4 decreasing over the years Real average income (R$) and income inequality (IBGE and IPEA) 1.600 0,59 0.583 1.500 0.572 0,58 0.569 0,57 0.563 1.400 1.550 0.548 1.485 1.450 1.395 1.348 2004 1.291 1.261 2003 1.100 1.259 1.200 persistently since 2005 0,56 0.556 1.300 – Real income has been growing 0,55 – There was an improvement in 0.543 0,54 income distribution 0,53 1.000 0,52 2005 2006 Real average income 2007 2008 2009 2010 1 Gini Index 1- It measures the degree of income inequality. It may vary from 0 (complete equality) to 1 (complete inequality). 38
  • 39.
    Domestic market isresponsible for the good performance Brazil – Loans to individuals – R$ million (BCB) 600 537 470 500 • Besides the improvement on 394 400 318 300 labor market, credit expansion 238 191 was also responsible for the 200 good performance 100 2005 2006 2007 2008 2009 Oct* Brazil – Retail Sales – seasonally adjusted – 2003 = 100 (IBGE) • Retail sales is growing fast: 180 – 6.0% in 2009 despite the crisis 170 160 – 7.2% p. a. between 2005 and 2009 150 140 130 – 10.9% in 2010 120 110 Jul-10 Jan-10 Jul-09 Jan-09 Jul-08 Jan-08 Jul-07 Jan-07 Jul-06 Jan-06 Jul-05 Jan-05 100 39
  • 40.
    Costs and Expenses Costsand operational expenses1 (R$ million) 415 365 434 351 187 84 112 281 201 239 246 2008 2007 214 2009 2010 Energy Purchase, Transmission and Connection Charges, and Water Resources 2 Other Costs and Expenses 1 – Do not include depreciation and amortization 2 - Personnel, Material, Third Party Services and Other Costs and Expenses 40
  • 41.
    Costs and Expenses Costsand operational expenses1 (R$ million) 6,745 5,537 5,893 6,431 1,306 1,255 1,193 1,440 4,097 2007 4,700 5,125 5,490 2008 2009 2010 Energy Supply and Transmission Charges 1 – Do not include depreciation and amortization PMS² and Others Expenses 2 - Personnel, Material, Third Party Services and Other Costs and Expenses 41
  • 42.
    Expansion Requirement of15%  Increase installed capacity in Sao Paulo State by 15% (400 MW), either in greenfield projects or through long term purchase agreement with new plants  The obligation was supposed to be accomplished by December 2007, however AES Tietê was not able to comply with this requirement due to the following restrictions: – Insufficient remaining hydro resources within the State of São Paulo – Environmental restrictions – Insufficiency of gas supply / timing issue – More restricted regulation on energy sale established by the New Model of Electric Sector (Law # 10,848/2004) which eliminated the self dealing • In August 2008, Aneel informed that the issue is not linked to the concession • On July 27, 2009, AES Tietê was notified by the State Government Attorney’s Office to present arguments on compliance with the expansion obligation – The Company filed a response on July, 29th, which exhausts the procedure for notification. Possible deployment depends on new manifestation of the Prosecution • Popular law action against Federal Government, Aneel, AES Tietê, and Duke – 2008 – In October, defense filed on first instance by AES Tietê; In December, the author replied AES Tietê defense – 2010 – In September, due to the plaintiffs failure to specify the individuals that should be named as Defendants, a favorable decision was rendered by the 1st Instance Court (but there can be appeals) 42
  • 43.
    Eletrobras Lawsuit State-owned Eletropaulo was spun-offinto four companies and, according to our understanding based on the spin-off agreement, the discussion was transferred to CTEEP Stated-owned Eletropaulo borrowed money from Eletrobras Nov/86 Dec/88 State-owned Eletropaulo and Eletrobras disagreed on how to calculate interest over that loan and a lawsuit was started Jan/98 Eletrobras, after winning the interest calculation discussion, filed an Execution Suit to collect the due amount Eletrobras and CTEEP appealed to the Superior Court of Justice (SCJ) Eletrobras requested the 1st level of court judge to appoint an expert Next Steps: 1- Eletrobras will request the auditing process 2 - The auditing procedure will be concluded at least in 6 months Apr/98 Privatization event . Stateowned Eletropaulo became AES Eletropaulo Sep/01 Sep/03 The 2nd level of court excluded AES Eletropaulo from the discussion based on the spin-off agreement Oct/05 Jun/06 May/09 The SCJ decided to send the Execution Suit back to the 1st level of court Feb/10 The Judge appointed the expert who will indicate the amount and the debtor 3 - After conclusion of the expert work, the 1st level of court decision will be released 4 - Appealing to the 2nd level of court 5 - Appealing to the 3rd level of court Due to a paperwork issue, Eletrobras will request the expert selection again 43
  • 44.
    Shareholders Agreement On Dec2003 AES and BNDES signed a Shareholders’ Agreement to regulate their relationship as shareholders of Brasiliana and its controlled companies. The Agreement is available at www.aeseletropaulo.com.br/ri Shareholders can dispose its share at any time, considering the following terms: Right of 1st refusal  Any party with an intention to dispose its shares should first provide the other party the right to buy that participation at the same price offered by a third party Tag along rights  In the case of change in Brasiliana’s control, tag along rights are triggered for the following Drag along rights  Once the offering party exercises the Drag Along clause, offered party is obligated to dispose of all companies (only if AES is no longer controlling shareholder): – AES Eletropaulo: Tag along of 100% in its common and preferred shares – AES Tietê: Tag along of 80% in its common shares – AES Elpa: Tag along of 80% in its common shares its shares at the time, if the Right of 1st Refusal is not exercised by offered party 44
  • 45.
    Brazilian Main Taxes AESTietê • Income Tax / Social Contribution: – 34% over taxable income • ICMS (VAT tax) – deferred tax • PIS/Cofins (sales tax): – Eletropaulo´s PPA: 3.65% over Revenue – Other bilateral contracts: 9.25% over Revenue minus Costs AES Eletropaulo • Income Tax / Social Contribution: – 34% over taxable income • ICMS: 22% over Revenue (average rate) – Residential: 25% – Industrial and Commercial: 18% – Public Entities: free • PIS/Cofins: – 9.25% over Revenue minus Costs 45
  • 46.
    Contacts: ri.aeseletropaulo@aes.com ri.aestiete@aes.com + 55 112195 7048 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.