2. AES Brasil Group
• Presence in Brazil since 1997
• Comprised of seven companies in the sectors
of energy generation, distribution, trade and
telecommunications
• 7.6 thousand AES Brasil People
• Investments 1998-2010: R$ 6.9 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
4. 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
5. 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
6. AES Brasil is the second largest group in
electric sector
Ebitda1 – 2010 (R$ Billion)
4.5
4.2
3.4
3.0
2.6
2.0
1.6
1.6
1.5
0.6
CEMIG
AES BRASIL
CPFL
NEOENERGIA
TRACTEBEL
CESP
EDP
LIGHT
0.6
COPEL
DUKE
0.6
0.2
0.1
DUKE
CESP
1
Net Income – 2010 (R$ Billion)
2.3
2.2
1.8
1.6
1.2
1.0
CEMIG
1 – excluding Eletrobrás
AES BRASIL
NEOENERGIA
CPFL
Source: Companies’ financial reports
TRACTEBEL
COPEL
EDP
LIGHT
6
7. AES Tietê is an important player among private
energy generators
Generation Installed Capacity (MW) - 2010
Privately held companies
2% 2%
6%
4%
AES
5%
36%
Tietê
is
the
2nd
largest
among
private
generation companies and 10th largest overall
6%
10 largest gencos correspond to 64% of the total
6%
7%
9%
8%
114 GW
8%
installed capacity
There are three mega hydropower plants under
construction in the North region of Brazil with 18 GW
in installed capacity
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 (May, 2011)
7
8. AES Brasil is the largest distribution group
in Brazil
Consumption (GWh) - 2010
13%
• 64 discos in Brazil distributing 419 TWh
12%
40%
• AES
Brasil
is
the
largest
electricity
distribution group in Brazil:
10%
– AES Eletropaulo: 43 TWh distributed,
representing 10.3% of the Brazilian
7%
6%
6%
market
6%
– AES
Consumers – Dec/2010
Sul:
9
TWh
distributed,
representing 2.2% of the Brazilian
12%
market
30%
12%
There
is
competition
restricted
12%
a
limited
in
to
Brazil
operate
opportunity
for
as
are
discos
within
their
concession areas
5%
7%
7%
16%
8
9.
10. 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
328 employees
1 - Amount of energy allowed to be long term contracted
10
11. 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, May/2010)
Others; 14%
Nuclear; 2%
Coal; 2%
Diesel; 1%
Wind; 4%
Steam; 0%
167 GW
11
12. 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
13. Billed energy growth due to high availability
and bilateral contracts
Energy Generation (MW average1)
Billed Energy (GWh)
143%
136%
14,729
14,706
130%
125%
13,148
301
117
1,150
331
1,680
118%
1,340
2,331
1,980
11,138
11,108
11,108
4,276
1,979
1,512
1,665
1,612
1,599
52
643
566
3,645
108
424
587
3,015
2008
2009
Generation - MWAvg
2010
1Q10
1Q11
Generation / Physical Guarantee
1- Generated energy divided by the amount of hours
2- Energy Reallocation Mechanism
2008
AES Eletropaulo
2009
MRE
2010
2
Spot market
2,526
1Q10
1Q11
Other bilateral contracts
13
14. Investments in the modernization of Nova
Avanhandava, Ibitinga and Caconde
power plants
Investments1 (R$ million)
2011 Investments
158
89%
6
82
57
12
5% 6%
13
152
70
35
4
8
43
1
30
7
Equipment and Modernization
2009
2010
2011 (e)
Investments
1Q10
1Q11
2
New SHPPs
New SHPPs
IT projects
1 - Do not include capitalization of interests during plants modernization and development of projects
2 - Small Hydro Power Plants
14
15. Expansion of 550 MW of installed capacity
through the Termo SP Project
Plant localization (Canas/SP)
• Project objectives
-
Expansion of installed capacity in the State of São Paulo
Offering competitively energy prices
• Project features
-
Combined cycle using natural gas
2 gas turbines, 2 heat recovery boilers and 1 steam turbine
Estimated investment of R$ 1.1 billion
Natural gas consumption: 2.5 million m3/day
• Expected Timetable
-
May 26, 2011: Public hearing
July/11: Expectation of issuance of environmental license
(expected)
2nd half of 2011: Power auction realization (expected)
Project Website: www.aestiete.com.br/termosaopaulo
15
17. Practice of 100% pay-out
on quarterly basis*
Net Income and Dividend Pay-out1 (R$ million)
100%
110%
117%
12%
11%
11%
692
706
737
220
2008
2009
Net income
1 – Gross amount
(*) 2009 and 2010 numbers in IFRS
2010
Pay-out
193
1Q10
1Q11
Yield PN
17
18. Debt profile
Amortization Schedule – Principal (R$ million)
Net Debt (R$ billion)
0.3x
0.3x
0.3x
0.3x
0.4x
300
0.4
0.4
0.4
0.4
2008
2009
2010
1Q10
Net debt
300
300
2013
2014
2015
0.5
1Q11
Net debt / EBITDA
•
March, 2011:
–
–
Average debt maturity of 3.1 years
–
Net debt: R$ 0.5 billion
–
1 – Brazilian Interbank Interest Rate
Average debt cost in 1Q11 was 114% of CDI1 p.a. or 14% p.a.
Net debt/EBITDA: 0.4x
18
19. Capital Markets
Daily Avg. Volume (R$ thousand)
AES Tietê X Ibovespa X IEE
1Q111
120
110
+10%
100
+3%
-1%
13,922
8,160
10,187
13,253
4,239
3,274
8,086
9,683
9,979
2009
2010
1Q11
2,101
2,692
90
5,468
80
Dec-10
Jan-11
Feb-11
Mar-11
2008
Preferred
•
Common shares and preferred shares listed on BM&FBOVESPA
under the tickers GETI3 and GETI4
•
Common
ADRs at US OTC Market under the tickers AESAY and AESYY
1 – Index: 12/31/2010 = 100
19
20.
21. 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
5,629 employees
21
22. 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
23. 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
33. Social Responsibility
“Casa da Cultura e Cidadania” Project
•
Over 5.2 thousand children, teenagers,
and adults have been benefited
•
Own and incentive investments:
approximately R$ 17 million in 2010
•
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$ 2.1 million in 2010
•
Units: Santo Amaro and Guarapiranga
33
34. 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;
•
1,199 volunteers
34
36. Costs and Expenses
Costs and operational expenses1 (R$ million)
433
415
351
112
187
201
2008
246
214
2009
2010
82
78
34
48
239
29
49
1Q10
1Q11
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
36
37. Costs and Expenses
Costs and operational expenses1 (R$ million)
6,431
5,537
1,306
6,745
1,255
1,440
5,125
5,490
1,665
2009
2010
Energy Supply and Transmission Charges
348
1,323
2008
1,707
342
4,097
1,359
1Q10
1Q11
PMS and Others Expenses²
1 – Do not include depreciation and amortization 2 - Personnel, Material, Third Party Services and Other Costs and Expenses
37
38. 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)
38
39. 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
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
Eletrobras
requested the
beginning of the
appraisal
procedure , which
is under 5th Civil
Court analysis.
AES Eletropaulo
and CTEEP should
be notified during
next months
Next Steps:
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
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
Feb/10
Dec/10
1 - The auditing
procedure will be
concluded in at
least 6 months
2 - After
conclusion of the
expert work, the 1st
level of court
decision will be
released
The SCJ decided
to send the
Execution Suit
back to the 1st
level of court
The Judge
appointed the
expert who will
indicate the amount
and the debtor
3 - Appealing to
the 2nd level of
court
4 - Appealing to
the 3rd level of
court
39
40. 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
40
41. 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
41
42. 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.
