2. 3Q12 Highlights
Operational
Decrease of 12% in SAIDI and 10% in SAIFI
- Both below the regulatory limits, as a result of the Action Plan
0.4% decrease in energy consumption
Investments of R$ 225 million, a 10% increase
Financial
Gross revenues totaled R$ 3,757 million, a 5% decrease
Reorganization and restructuring costs of R$ 34 million in the quarter
Ebitda of R$ 108 million in the 3Q12, a reduction of 83%
Net income of R$ 14 million, a 96% decrease
Debt
Restructuring of all Company’s debts with the flexibility of covenants, increase maturity from 6.6 years to
7.2 years and reduction of average costs from CDI + 1.29% p.a. to CDI + 1.27% p.a.
Regulatory
On July 4th, 2012, it was applied the index of tariff review (economic effect: – 5.60%) and tariff adjustment
.
(economic effect: +4.45%), with average combined effect of -3.25%
On September, 11th 2012, the Energy Costs Reduction Program was announced; through the Provisional
Measure 579, that does not directly affect the Company, since its concession was granted after 1995
2
3. MP 579: Context
AES Eletropaulo is not covered by MP 579 rules and has a concession valid until 2028
Goal
Opportunities
Aims to reduce tariffs by 20% (Residential: 16.2% and industrial from 20% to 28%), as from February
2013, through:
- Decreasing sector charges (RGR, CCC e CDE): - 7%
- Renewal of Generation and Transmission Concessions: - 13%
Marginal benefits in collection and potential decrease in delinquency, since energy costs will be reduced
Increase in energy consumption, as a potential result of the drop in tariffs
Exchange rate variation of the price of energy purchased from Itaipu will no longer be suportted by
distribution companies, but by Eletrobras
Risks
Financial impact between tariff adjustments of hydrological risks due to the allocation of energy quotas
3
4. Tariff review: discussions with Aneel
Discussion
Arguments
Shielded RAB was approved by Aneel in 2003
Shielded RAB
Aneel excluded R$ 728 million from
shielded RAB, due to the decrease in
the amount of cables between the
accounting records and the shielded
RAB, between cycles
and was confirmed in 2007, considering a global
consistency criteria
If the exclusion of the amount of cables is
maintained, an addition of R$ 660 million of
assets in operation (2003 BRR) should be
considered
Investments
Losses
Aneel did not recognize a R$ 427 million
investment performed in the incremental
period on Minor Components to Main
Equipments (“COM”) and Additional
Costs (“CA”)
Aneel changed the benchmark company
proposed in the Public Hearing,
modifying the regulatory losses from
0.49% to 1%
Adequacy of the regulatory standards applied by
Aneel for the valuation of real costs incurred in
execution of works and recorded in accounting
books
Benchmark company is an outlier
Regulatory losses shall be restored to the
previous number of 0.49%
4
5. Consumption impacted by industrial production slowdown
and migration of commercial clients to free market
Consumption evolution (GWh)¹
+1.7%
-2.7%
-0.1%
+3.2%
+0.6%
-4.7%
-0.4%
11,404 11,357
9,307 9,360
4,257
4,331
2,811
2,809
2,097 1,998
1,531 1,489
708
Residential
Industrial
Commercial
Public Sector
and Others
3Q11
1 – Own consumption not considered
731
Captive Market
Free Clientes
Total Market
3Q12
5
6. Best SAIDI since 2006 and
within regulatory limits
SAIDI¹ (YTD)
SAIDI¹ (last 12 months)
9.32
11.86
10.60
8.68
10.36
7.80
10.30
8.67
2009
2010
2011
SAIDI Aneel Reference
►
-22%
- 16%
10.09
3Q11
3Q12
SAIDI (hours)
6.11
Jan-Sep/11 Jan-Sep/12
SAIDI (hours)
ANEEL Reference for 2012 SAIDI: 8.67 hours
1 - System Average Interruption Duration Index
Source: ANEEL and AES Eletropaulo
6
7. SAIFI remains below the regulatory limits
SAIFI ¹ (last 12 months)
7.87
7.39
SAIFI¹ (YTD)
6.93
-16%
-12%
6.17
5.46
5.45
5.42
4.05
4.79
2009
2010
2011
SAIFI Aneel Reference
►
3Q11
3Q12
SAIFI (times)
Jan-Sep/11
3.38
Jan-Sep/12
SAIFI (times)
ANEEL Reference for 2012 SAIFI: 6.87 times
1- System Average Interruption Frequency Index
Source: ANEEL and AES Eletropaulo
7
8. Losses level close to the regulatory
reference for the 3rd Cycle of Tariff Reset
Regulatory Reference² - Total Losses (last 12 months)
Losses (last 12 months)
11.8
10.9
10.5
10.6
10.4
5.3
4.4
4.0
4.1
6.5
6.5
6.5
2010
2011
3Q11
3Q12
9.8
9.4
2013/2014
2014/2015
6.2
2009
10.3
4.2
6.5
10.7
Technical Losses ¹
2011/2012
2012/2013
Non Technical Losses
1 – In January 2012, the Company improved the assessment of the technical losses, which were decreased to a level of 6.1%. The number for the last twelve months ended in 3Q12 is 6.2%
2 – Values estimated by the Company to make them comparable with the reference for non-technical losses determined by the Aneel
8
9. Investments mainly focused on system expansion,
maintenance and quality of client services
Investments (R$ million)
3Q12 Investments (R$ million)
3T12
800
700
739
682
R$ 225 million
841
46
9M12
R$ 579 million
56
22
10
11
28
600
20
25
26
137
49
500
37
400
654
717
794
+10%
205
225
200
6
11
100
198
213
1Q11
1Q12
300
154
9
0
2010
2011
2012(e)
53
75
141
Maintenance¹
Client Service
System Expansion
Losses Recovery
Own Resources
Paid by the clients
IT
Paid by the Clients
1 – Maintenance capex is the investment s made for the grid modernization and improvement in quality of service
Others
9
10. Revenues variation reflects the new tariff
and industrial activity slowdown
Gross Revenues (R$ million)
11,429
11,403
+0.2%
4,032
532
4,046
579
3,937
6,839
6,804
-5%
3,757
1,298
227
2,348
9M11
1,380
208
2,232
9M12
3Q11
3Q12
Net revenue ex-construction revenue
Construction revenues
Deduction to Gross Revenue
10
11. Higher average cost of energy purchased due to
energy from auctions and exchange rate
Operating Costs and Expenses ¹ (R$ million)
+19%
5,113
6,068
1,133
893
+23%
4,936
4,220
2,107
1,706
186
358
1,520
9M11
9M12
1,749
3Q11
3Q12
Energy Supply and Transmission Charges
1 - Depreciation and other operating income and expenses are not included
PMS² and Others Expenses
2 - Personnel, Material and Services
11
12. Manageable PMSO items below the inflation
PMS and other expenses (R$ million)
15
34
9
12
90
11
277
186
Non recurring
3Q11¹
289
3Q11: ex non
recurring
Pension
plan
Collective
bargaining
308
308
308
Vehicles
mainten. and
others²
3Q12
Costs of
reorganization
and
restructuring
358
186
3Q11
277
343
1 – Reversal of tax and labor contingencies and changes in accounting criteria for ADA
2 – Change in PMSO, excluding Pension Fund, collective bargaining and fleet maintenance
3 – Public lighting points (PMSP agreement) with reversion expected for 4Q12 and IT costs
Non recurring
3Q12³
3Q12: ex non
recurring
12
13. Ebitda reduction due to the tariff review and
costs with reorganization and restructuring
Ebitda (R$ million)
(264)
(105)
(63)
642
(36)
(34)
378
272
3Q11
Market and
tariff review
and adjustment
at Parcel B
Non recurring
3Q11 and 3Q12
210
Parcel A
(32)
174
Others
revenues and
expenses
108
Costs with
reorganization
and
restructuring
1 – PMSO variation, excluding costs with reorganization and restructuring and non-recurring costs related to the 3Q11 and 3Q12
PMSO¹
3Q12
13
14. Recurring financial results benefited by
exchange rate and lower interest rate
Financial Results (R$ million) - ex non-recurring¹
Financial Results (R$ million)
- 33%
12
0
8
(11)
(43)
(50)
(54)
(69)
9M11
9M12
3Q11
3Q12
9M11
9M12
- 19%
3Q11
3Q12
¹ Non-recurring items: R$ 54,3 million corresponding to the Finsocial recorded in 3Q11and recognition of R$ 18,5 million due to inflation adjustment of lawsuit involving
PIS credit
14
15. Net income variation due to tariff review and
costs with reorganization and restructuring
Net Income (R$ million)
885
-80%
182
181
142
561
348
699
182
-96%
269
(258)
(103)
14
51
(17)
(20)
(260)
9M11
9M12
3Q11
3Q12
Net Income - Adjusted
Regulatory assets and liabilities variation
Tariff review postponement effect
15
16. Lower cash generation due to tariff review and
higher cost of energy purchased and charges
Operational Cash Generation (R$ million)
Final Cash Balance (R$ million)
+6%
-51%
878
735
932
3Q11
3Q12
363
3Q11
3Q12
13
17. Debt refinancing conclusion of R$ 1 billion
resulting in more flexible covenants
• Increase in the average debt maturity from 6.6 years to 7.2 years
Benefits
• Debt average costs decrease from 1.29% to 1.27%
• More flexible covenants
Debt amortization schedule
Before restructuring
After restructuring
1.133
1.133
R$ 491 million
R$ 1,241 million
744
578
388
494
44
387
275
86
533
302
2013
51
47
228
2014
51
2015
58
280
54
337
2016
Debt in R$ (ex-pension plan debt )
M
436
2017
2018
321
2019
530
54
383
62
226
732
58
637
732
225
400
2020 2028
Pension plan debt
138
128
86
52
44
83
2014
2015
62
476
178
2013
587
47
383
686
321
2016
Debt in R$ (ex-pension plan debt )
M
2017
2018
2019
400
2020 2028
Pension plan debt
17
18. More flexible covenants and
considering IFRS changes
FROM
Financial Index
Net debt / Adjusted Ebitda < 3.5
Gross debt / Adjusted Ebitda < 3.5
Default
If the limit is exceeded in any quarter
Regulatory
assets and liabilities
Not considered in the calculation
Pension plan
debt
Compulsory
loans
TO
(equivalent to 4.5x Gross Debt / Adjusted Ebitda)
If the limit is exceeded for two consecutive
quarters
Considered in the calculation (concept before
IFRS adoption)
Debt recognized in liabilities excluding the
Total debt recognized in liabilities
Considered in the calculation of debt
“corridor” concept
Out of debt calculation
19. 3Q12 Results
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.