Apresentação do PowerPoint

Corporate Presentation
2016
03/02
AES Corporation
Global Company
Natural gas and coal fired
thermal plants
36 GW
installed
capacity
Providing
services to over
10+ million
customers
18.5
thousand
employees
25.6 GW of installed capacity
Over 8.3 GW of
Renewable sources¹
AES Corp is present in 18 countries and 4 continents
Distributed energy
+60MW of solar PV²
projects in operation
World leader in
Energy Storage
Total of 346 MW³
1 – Includes hydro, wind, solar, energy storage, and biomass 2 - PV – Photovoltaic; 3 - Operating and under construction
1
Leading position in the energy
sector in Brazil
Generation1
Market Share
AES Tietê
2,658 MW
Concession ends in 2029
AES Serviços
AES Uruguaiana
640 MW
Distribution2
Market Share
2%
13%
AES Eletropaulo
20m people served
6.9m customers
Concession ends in 2028
AES Sul
3.7m people served
1.3m customers
Concession ends in 2027
87%
98%
AES Brasil
1 – installed capacity as of 2015; 2 – Consumption (GWh) in 2014 (Source: ABRADEE)
Other
2
History in Brazil
Solid participation in distribution and generation businesses
1995
AES Brasil
+20 years
presence in
Brazil
Beginning of
AES
Uruguaiana
construction
1998
AES Corp
acquired AES
Sul through
privatization
process
1997
Privatization
of AES
Eletropaulo
by a
consortium
comprised by
AES Corp and
other local
and
international
companies
2000
Privatization
of AES Tietê
1999
AES
Uruguaiana
beginning of
operation
2003
Incorporation
AES Corp
of Companhia
increases its
Brasiliana de
interest in AES Energia and
Eletropaulo
execution of
and AES Tietê shareholders
agreement
with BNDES
2001
2002
AES Tietê was
merged into
Cia Brasiliana
and the
corporate
name was
changed to AES
Tietê Energia
SA
2016
3
AES Brasil Mission, Vision and Values
Mission
Vision
Values
To promote well being and development
with the safe, sustainable and reliable
provision of energy solutions
To be the leading power company in
Brazil that safely provides sustainable,
reliable and affordable energy
• Put safety first
•Act with integrity
•Honor commitments
•Strive for excellence
•Have fun through work
4
4
AES Brasil environmental responsibility
• Reservoirs repopulation
• Reforesting, border and archeological
management programs
• Water quality monitoring
• Recycling and waste disposal programs
• Programs aiming to reduce CO2 emissions
• Risk Management and identification of
opportunities related to climate change
5
5
AES Brasil social responsibility
• Access to reliable energy through social
development
• Education for efficient and safe use of
electricity
• Program which offer cultural and sports
activities simulating citizenship practices
• Sustainable partnership – commitment with
sustainable development at AES Brasil’s value
chain
6
6
INVESTMENT
PLAN
2015 - 2019
R$ 3.5 billion
R$ 487 million
2015
0.4% 9.4%
90.3%
5.2
billion
2019
Generation
R$ 1.2 billion
R$
Distribution
Services
R$ 19 million
7
AES Brasil widely recognized
AES Eletropaulo
AES Tietê
AES Brasil
AES Sul
8
National Interconnected System
GENERATION
Distribution
Substation
Thermal
Plant
Hydroelectric
and Solar Plant
Renewable
Energy
DISTRIBUTION
Substation
Transformer
Substation
Transformer
TRANSMISSION
COMERCIAL AND
INDUSTRIAL CUSTOMERS
RESIDENTIAL
CUSTOMERS
9
Energy sector in Brazil: businesses segments
Generation¹
Transmission²
Distribution²
• 4,437 power plants
• 104 agents
• 63 distribution companies
• 150 GW of installed capacity
• High voltage transmission (>230 kV)
• 342 TWh energy distributed
• System based on hydro plants (61%)
• 116,767 km lines (National
• 190 million consumers
• Contracting environment: free and
regulated markets
Integrated System)
• Regulated tariff (annually adjusted
by inflation)
Sources: EPE, ANEEL, ONS, ABRADEE and Instituto Acende Brasil
1 – Refers to 2015 data; 2 – Refers to 2014 data
• Annual tariff adjustment
• Tariff reset every four or five years
• Regulated contracting environment
10
Ownership Structure
AES Corp
C 50.00% + 1 share
P 0.00% + 7 shares
T 46.15%
C = Common Share
P = Preferred Share
T = Total
BNDES
C 50.00% - 1 share
P 100.00% - 7 shares
T 53.85%
Brasiliana
Participações
T 99.70%
AES Sul
C 99.99%
T 99.99%
C 99.99%
T 99.70%
AES
Serviços
AES
Uruguaiana
¹
C 0.00%
P 7.38%
T 4.44%
T 98.26%
AES Elpa
¹
C 77.81%
P 0.00%
T 30.97%
AES Corp
BNDES
C 61.55%
P 0.00 %
T 24.25%
C 14.36%
P 37.35%
T 28.29%
AES Tietê
Energia
AES
Eletropaulo
Free Float
Others²
Market Cap³
16.1%
19.2%
56.3%
8.5%
US$ 0.41 bi
24.2%
28.3%
39.5%
8.0%
US$ 1.4 bi
1 – Parent, AES Corp and BNDES, have similar voting capital on each of the companies: approx 35,9% on AES Eletropaulo and 32,9% on AES Tietê; 2 – Includes Federal
Government and Eletrobrás shares in AES Eletropaulo and AES Tietê, respectively; 3 – Base: 02/23/2016. FX rate 3.97 BRL/1 USD
11
● 3rd largest among private generation companies
● Concession expires in 2029
● Market Cap: US$ 1.4 billion1
● 9 hydroelectric plants and 3 SHP³ in São Paulo
● Installed capacity of 2,658 MW, physical guarantee2
of 1,278 MWavg
● Consistent evolution of client portfolio
Brazil
Água Vermelha (1.396 MW)
Nova Avanhandava (347 MW)
Promissão (264 MW)
Ibitinga(132 MW)
Bariri (143 MW)
Barra Bonita (141 MW)
Euclides de Cunha (109 MW)
Caconde (80MW)
Limoeiro (32 MW)
Mogi-Guaçu (7 MW)
São Joaquim (3 MW)
São José (4 MW)
● Investment grade (Moody’s):
- National: Aa2
- International: Ba2
1 – Base: 02/23/2016. FX rate 3.97 BRL/1 USD; 2 - Amount of energy allowed to be contracted in the long term; 3 – SHP – Small hydroelectric plant (installed
capacity<30MW)
12
Brazil
Brazil
São Paulo
●
Largest distribution company in Latin America
●
24 cities attended in São Paulo metropolitan area
●
Concession contract expires in 2028
●
Market Cap: US$ 409 million¹
●
16% of Brazil’s GDP² in its concession area
●
4,526 km2 concession area
●
46 thousand km of distribution and transmission lines
●
6.9 million customers
●
20 million people served
●
44 TWh distributed in 2015
●
7,165 employees as of December 2015
Investment Grade:
West, South, & ABC
North & East
Fitch
S&P
Moody’s
National
A+
A+
A2
International
BB
BB
Ba3
1 – Base: 02/23/2016 FX rate 3.97 BRL/1 USD; 2 - Source: IBGE, 2010.
13
Brazil
Rio Grande
Do Sul
Metropolitan
Southern Border
Valley Region
Central
Northern Border
1 – as of February/2015. 2 – 2010-2015
●
SAIDI of 19.11% (hours) and SAIFI of 8.42% (times)
●
Operating costs 2% below the regulatory levels¹
●
118 cities attended in Rio Grande do Sul state
●
Concession contract expires in 2027
●
1.3 million customers
●
8,870 GWh sold in 2015
●
99,512 km² concession area
●
3.7 million people served
●
2,355 direct employees¹
●
Regional GDP growth of 3.2%²
●
R$ 258 million Ebitda in 2015
●
R$ 214 million invested in 2015
●
National investment grade (S&P): BBB-
14
●
●
Beginning of commercial operations in 2000
Located in the State of Rio Grande do Sul – city of
Uruguaiana
●
●
Operations were suspended in 2008 due to lack of gas supply
Initiated arbitration against YPF in Argentina
– ICC¹ awarded the merits in favor of AES Uruguaiana in 2013
– Next and final phase refers to the damages calculation
●
Emergency operations in 2013, 2014 and 2015 to
support reservoirs recovery in Brazil
Looking for long-term solution
●
Fast Facts
Combined cycle gas turbine (CCGT)
1 – International Chamber of Commerce
Capacity (MW)
640 MW
Authorization expiration
2027
15
•
•
Customer-focused Company, that provides electrical
energy services
Focus on offering integrated and high-added-value
solutions to the electrical energy agents, industrial and
commercial segments, based on AES Brasil strong
capabilities and know-how
•
Main Products
- Commercial technical services
- Consulting in energy efficiency
- Construction and maintenance of substations and
transmission lines
- Commercial service: face-to-face service and debt
collection
- Affinities: insurance
•
•
Over 5 years of operation
3 operational bases – cities of Barueri, São Paulo and
Itapecerica da Serra
92 vehicles
505 employees
•
•
16
Corporate governance
Key for the investment decision
● Operational and Investment Management Committee: robust capital
allocation process
● Corporate policy of Integrated Risk Management¹ monthly assessed by
Companies’ Executive Officers and quarterly by Fiscal committee and
Board of Directors
● Corporate governance
manual; audit
committee installed
● High level of
commitment, with
monthly Board of
Directors meetings
● Listed at BM&FBovespa:
– ELPL3 and ELPL4: level II
– TIET11 (units): level II
● ISE Corporate Sustainability Index portfolio
● Tag along rights
1 – Based on COSO_ERM and Brazilian Corporate Governance Institute models
17
Investment focused on power plants modernization
Investment program totaled R$ 168 million in 2015
206
186
168
155
139
93
77
2012
2013
2014
2015
2015(e)
2016(e)
2017(e)
65
62
2018(e)
2019(e)
Expected
Actual
Power plants modernization process, aiming for continuous improvement in
operational conditions and ensuring availability in its generation plants
19
Investments and Best Practices in Asset Management,
translates into outages reduction
Unscheduled outages (%)
Best practices in asset
management¹:
2.03
1.60
1.59
1.68
●
PAS 55 Certification
●
ISO 55001 Certification
1.04
1.31
1.35
0.79
0.35
0.28
0.25
0.25
2012
2013
2014
2015
Unscheduled Outage Rate
EFOF²
1 - AES Tietê was the first Latin American company to receive the certification from the British Standards Institute 2 – Equivalent Forced outage Factor - EFOF
20
Energy generation decrease reflects
hydrology behavior in the country
●
Generated energy (MW average1)
●
127%
109%
1,629
2012
104%
75
67%
71%
848
905
848
2014
2015
4Q14
1,392
2013
Hydropower plants are dispatched by
ONS²
Dispatch are also related to hydrological
conditions:
 Low hydrology translates into low
generation levels
1,169
Generation/Physical guarantee
4Q15
Generation - MWavg
1 – Generated energy divided by the amount of hours; 2 – National System Operator
21
Critical hydrological scenario over the last 2 years
100
90%
Reservoirs (%) vs. Thermal Dispatch (GW avg²)
Historical Level of Brazilian Reservoirs (%)
80%
75
70%
Max (%)
62
46
43
50
62
4638
43
25
55
39
40
38
3921
25
43
40
75
50
60% 61
55
100
43
61
63
43
42
30
30
23 35
37
38
61
3540
4350%
42
55
49
37
36
32
41
3844
29
Jan
Jan
Fev
Mar
Fev
Abr
2012
Historical data2001
since 2001
Mar
Mai
Jun
2013
2001 2014
Abr
Jul
2015
2012
Mai
Ago
Set
2013
36 60%
50%
41
43
34 40%
30%
29
34
2310%
0
0
70%
30% 40
20%
55 80%
40
40%
23
21
90%
63
61
Jun
29
28
20
22
18
16
49
44
32
14
43
40
12
10
29
29
28
29
23
20%
20
8
6
22
4
10%
2
0
Out
Nov
Dez
0% Nov Jul Dez Ago 0% Set
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Q1
Q2 Q3 Q4
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
2014
2015
Out
2011
2011
Average Annual Inflow:
2001
2012
2013
2014
2015¹
82%
87%
97%
81%
89%
2012
2012
1 – Data base: Jan-Dez/15; 2 – Generated energy divided by the amount of hours.
2013
2013
Thermal dispatch
Thermal dispatch
2014
Reservoirs
2015
2014
2015
Reservoirs
22
Energy Reallocation Mechanism
(ERM) for hydrological risk sharing
●
●
1) Equilibrium (GE1 = PG2)
2A) Deficit (GE1 < PG2)
Buy at MRE3
Buy at MRE3
Buy at Spot
2B) Surplus (GE1 > PG2)
Buy at Spot
Sell at
MRE3
PG2
PG2
PG2
Key drivers for
hydrological risk
●
Generated
Energy
MRE
Assured
Energy
Genco A
- System GSF = 1.0
- PPA = PG
Generated
Energy
MRE
Assured
Energy
Generated
Energy
MRE
Assured
Energy
Genco A
Genco B
- System GSF < 1.0
- PPA = PG
- System GSF < 1.0
- PPA = PG
1 – GE: Generated Energy; 2 – PG: Physical Guarantee; 3 – Enough to cover variable O&M costs
A physical guarantee
(assured energy) is
assigned to support
contracts
Energy dispatch
optimized by
centralized system
operator (ONS) on a
tight pool
●
Generated Energy
(hydro) in the entire
system (MRE) influenced by hydrology
Spot Price - marginal
cost influenced by
hydrology and thermal
dispatch
23
Tight hydrology and lower system storage
capacity requires more flexible generation
Thermo São Paulo (503MW)
and Thermo Araraquara
(579MW)
Storage capacity (months)
6.1
6.1
5.9
5.6
5.1
3.4
2001
2005
2009
Actual
2015
2019
2021
Projection
Current contracted energy is based on renewable (mainly Wind)
and run-of-river hydro projects, which has reduced the energy
storage capacity over the recent years.
Source: ONS and AES
24
AES Brasil growth perspectives
Natural Gas Power Plants
~1.5GW
●
2 natural gas
combined cycle
power plants ready
to go to energy
auctions
●
of dispatchable source
Peak generation:
short-term dispatch
solution
●
Assessing M&A
opportunities
Renewable Energy
Solar and Wind
●
180 MW solar project: ●
São Paulo and Minas
Gerais state (close to HPP
AGV1). To participate in
2016 energy auctions
~150MW solar project:
Under development
●
Assessing M&A
opportunities
1 – Existing AES Tietê hydroelectric power plant on the border of the states of Minas Gerais and São Paulo
25
In 2015, AES Eletropaulo was our main client
2015 (%)
– Clients per net revenue
+2%
Billed
energy (GWh)
+2%
16.728
16.728
15.797
15.123
15,797
15.797
15.123
15,075
14,485
1,932
545
2,069
1,854
11.138
11.108
11.1082,212
4,075
515 305
37
1.942
11,108
3.834
1.519
554
1.141
2011 2013
2014
2012
Eletropaulo
1%
6%
940
227
11,108
11.108
11.108
583
1,671
3,814
544
1
MRE
545
1.932
3,218
2015
2013
4Q14
Spot
2,799
4Q15
Other Bilateral Contracts
1 – Energy Reallocation Mechanism
7%
471
0
11,108
2.212
615
86%
11.138
554
3.834
2.212
1.519
554
1.141
545
1.932
2011
2012
1.942
Eletropaulo
615
2013
MRE
1
Spot
Other Bilateral Contracts
26
Contracting environment
and opportunities
Regulated Market
Existing Energy
Auctions
Free Market
Bilateral
contracts
2016
and
beyond
Spot Market
Non contracted
energy
Via auctions organized
by federal government
Via bilateral
agreements
Exposed to Spot
Market price
Distribution
companies
Free Consumers¹
CCEE Settlement
1 – Free Consumers (Conventional free consumer - demand above 3MW and connected to a line of 69kV – and incentivized/ special free
consumer - demand above 0.5MW)
27
Commercialization strategy
post-2015 leveraging cash flow
Our goal is to sell the major
part of Company’ physical
guarantee in the free market
• Customized energy with global experience
• Focus on long term contracts and off takers with a strong financial
background aiming to ensure Company’s cash flow
• Practices and policies to ensure an adequate risk-profile assessment
• Client relationship actions to promote AES Tietê and identify clients needs
(i.e.: workshops, site visits, satisfaction surveys)
28
Free Market
Dynamic and competitive market
Avg energy price for 2016 (R$/MWh)
Price formation methodology
Price Expectation
Year
2012
2013
Short term
90
110
100
120
Medium Term
230
2014
2015
•Spot price
(hidrology and reservoirs)
170
Sep/15
200 250
• Supply and demand
250
1H15
290
Long Term
•Marginal Expansion Cost
• Regulated Market price
29
Commercialization strategy–
Consistent evolution of client portfolio
Client portfolio1 (MWavg)
Contracting
level
100%
100%
100%
95%
88%
60%
26%
12%
Average price
R$/MWh3
194
206
218
151
152
157
151
149
63
151
498
918
1,268
1,268
1,268
1,181
1,092
1,093
746
326
2013
2014
2015
Energy available for sale2
2016
2017
Own energy already sold
2018
2019
152
2020
AES Eletropaulo PPA
1 – Includes energy contracts firmed until February 23, 2016 ; 2 – Excludes losses and internal consumption; 3 – Average price (based on January/16)
30
Consistent annual results
Net revenue (R$ million)
Ebitda (R$ million)
65%
3,205
29%
53%
-18%
2,626
2,337
1,525
+53%
1,402
918
-28%
887
404
637
2013
2014
2015
4Q14
-37
4Q15
2013
2014
2015
Ebitda Margin
4Q14
4Q15
31
And returns…
Net income (R$ millions)
● Minimum of 25% dividend payout of annual net
income according to bylaws
● Distribution practice: quarterly basis
881
+62%
● Average payout from 2008 to 2015: 99%
726
● Average dividends since 2008: R$ 822 million
per year¹
449
233
● AES Tietê's management decided to propose
the payment of R$ 464 million for 4Q15
● R$ 726 million distributed in divididends in 2015
-76
2013
2014
2015
1 – from 2008 until 2015.
4Q14
4Q15
32
Low leverage level…
Debt amortization schedule³
Net debt (R$ billion)
1.2
399
335
261
235
1.1
161
0.5
0.6
4Q14
4Q15
Net Debt/Adjusted Ebitda
2016
Net Debt
2018
2019
2020
Amortization (R$ million)
Covenants
Debt Cost
●
●
●
●
●
Net debt/Adjusted Ebitda2 < 3.5x
Adjusted Ebitda²/Financial Expenses > 1.75x
2017
Average cost (% CDI)1
Average term (years)
Effective rate
4Q14
4Q15
106%
2.18
13.6%
101%
2.96
16.3%
1 – Brazilian Interbank Interest Rate
2 – Adjusted Ebitda – (i) by the financial expenses/revenues and (ii) by the depreciation and amortization values to improve the reflection of the Company’s operational cash generation
3 – Principal and interest
33
…and consistent
cash flow
R$ Million
Initial Cash
4Q14
4Q15
2014
2015
223
423
457
501
(109)
409
1,187
1,248
Investments
(41)
(42)
(173)
(137)
Net Financial Expenses
(38)
(93)
(94)
(162)
Net Amortization
500
67
499
(233)
Income Tax
(33)
(24)
(483)
(220)
Free Cash Flow
279
317
936
496
-
-
(892)
(257)
501
740
501
740
Operating Cash Flow
Dividends and IoE
FINAL CASH CONSOLIDATED
34
Capital markets
AES Tietê x IEE x Ibovespa¹
130
A
B
C
D
E
F
G
H
I
J
120
A
Mar/2012: 4Q11 results above market
expectations
B
Sept/2012: announcement of the Energy
Reduction Program, through the PM 5794
C
Feb/2013: High thermoelectric dispatch
to conserve water in the reservoirs
increase spot prices
D
Aug/2013: 2Q13 results above consensus
due to higher-than-expected spot prices
E
Nov/2013: weak 3Q13 results affected
by seasonality strategy
110
100
F
90
80
70
G
May/2014: 1Q14 EBITDA above
expectation benefited from seasonality
strategy
H
Jan/2015: Hydrology for rainy season
worse than expected
I
Jun/2015: Corporate Restructuring
announced
J
Dez/2015: Corporate Restructuring
concluded
60
50
40
Jan-12 Mar-12 May-12 Jul-12 Sep-12 Nov-12 Jan-13 Mar-13 May-13 Jul-13 Sep-13 Nov-13 Jan-14 Mar-14 May-14 Jul-14 Sep-14 Nov-14 Jan-15 Mar-15 May-15 Jul-15 Sep-15 Nov-15
GETI4
GETI3
IEE
IBOV
Feb/2014: 4Q13 results slightly below
consensus but market show high
expectations on 2014 commercialization
strategy
TSR
●
Market cap³: US$ 1.4 billion / R$ 5.5 billion
●
BM&FBOVESPA: GETI3 (common shares) and GETI4 (preferred shares)
●
ADRs negotiated in US OTC Market: AESAY (common shares) and AESYY (preferred shares)
1 – Base 100: from 01/01/2012 to 31/12/2015; 2 – Total Shareholders’ Return; 3 – Index: 23/02/2016; 4 – Government program to reduce energy tariffs.
35
We have strong capabilities
and business governance
● Asset Management - ISO 55001
certification, 1st Generation
company in America
● AES Tietê has been included
in the ISE since 2007
● Attractive returns to investors.
Strong cash generation;
Maximization of payout
● Cost efficiency and optimized
capital allocation
● Established risk management
capability
36
2015 investments focused on
system expansion and customer service
Investments (R$ million)
2015 Investments focused on:
3.533
392
831
35
•
R$ 262.3 million in
system expansion for the
addition of new clients
and focus on customer
satisfaction
•
R$ 136.3 million in
operational reliability
through the maintenance
of 7,800 km distribution
and transmission lines
809
165
583
604
73
82
3.141
68%
796
644
510
2012
2013
Recursos de Terceiros
2014
219
522
2015
20152019 (e)
130
15
19
111
204
4T14
4T15
Recursos Próprios¹
1 - System Average Interruption Frequency Index (SAIFI) and System Average Interruption Duration Index (SAIDI)
R$ 303 million additional
investment plan by 2017
seeking the recovery of
the Quality Indexes¹
38
Plan to recover the quality indexes
already in place
 Recovery plan of the quality indicators:
– R$ 303 Million of additional investments by the end of 2017
– Hiring of 554 new people, being 273 electricians, 51 electrical technicians and 230 technicians and supervisors
5.28
6.41
SAIFI¹ (times)
SAIDI² (hours)
-2%
-9%
23.4
6.29
13.3
-17%
2014
2015
Jan/16³
0.70
0.58
Jan/15
Jan/16
Aneel’s Reference - 2014: 6.36 times / 2015: 5.95
2014
-56%
2015
Jan/16³
3.7
1.6
Jan/15
Jan/16
Aneel’s Reference - 2014: 8.29 hours / 2015: 8.06
1 - System Average Interruption Frequency Index; 2 - System Average Interruption Duration Index
3 - Last twelve months (jan/16 to fev/15)
21.4
39
Efficiency in losses reduction
over the last four years
11.5
10.5
10.5
10.2
10.1
10.0
9.7
9.5
9.7
9.4
6.5
6.1
6.1
6.1
5.7
4.0
4.1
3.9
3.6
3.7
2011
2012
2013
2014
2015
Aneel Reference¹
Technical losses²
6.4% reduction in
technical losses
between the 2014
and 2015 and total
losses within
regulatory limits
Non-technical losses
1 – Aneel benchmark with standardized values for the calendar year; 2 - Values estimated by the Company to Aneel reference for non-technical losses of the low voltage market
40
Large concession area
● AES Eletropaulo concession area consists
of a mature market, representing
approx. 16% of national GDP2
Total Market1 (GWh)
-4.7%
45,557
46,216
46,416
7,987
8,742
8,589
37,570
37,474
37,827
36,179
2012
2013
2014
2015
Free Clients
44,237
8,058
● State of São Paulo’s GDP average growth
of 2.0% p.a. for the last 5 years³
Captive Market
1 – Own consumption not included; 2 – Source: IBGE, 2012; 3 – base date: 2010-2014(e)
41
Consumption expansion is mostly in
residential and commercial classes
Consumption by class¹
28%
36%
19%
33%
37%
21%
16%
9%
Brazil
Residential
1 – 2015 (Own consumption not included)
Source: EPE.
AES Eletropaulo
Commercial
Industrial
Other
42
Residential Class
consumption in line with
São Paulo state real income
GWh
R$
4,500
2,400
2,300
2,200
4,000
2,100
2,000
3,500
1,900
1,800
3,000
1,700
1,600
2,500
2007
1,500
2008
2009
2010
Real Income (SP)
1 – base date: 2007-2014
2011
2012
2013
Residential Consumption
2014
9M15
Residential
consumption
per client grew
an average
of 0.9% in the
last 8 years¹
43
Industrial class consumption
tied to the industrial production growth
in the state of São Paulo
Industrial class X Industrial production in SP¹
0,2
Economic
crisis
Economic
recovery
Economic
crisis
0,1
0
Economic crisis
●
Industrial consumption
impacted by lower industrial
production in Brazil
●
Consumption focused on
more resilient segment
(residential and commercial
classes)
-0,1
-0,2
Industrial Production in SP (% 12 months)
Industrial consumption AES Eletropaulo (% 12 months)
1- São Paulo metropolitan area. Information until August 2015.
44
Gross revenue 62% greater in 9M15 mainly due to
tariff readjustment and extraordinary tariff resets
Gross revenue (R$ million)
Costs and
Expenses
(R$ million)
Costs
(R$ million)
+62%
+27%
24,565
2,109
15,314
831
5,355
12,093
611
9,501
8,553
15,158
583 864
12,611
809
3,599
9,128
8,203
2012
2013
10,898
1,670
7,474
2,209
1,621
1,640
3,968
9,884
9,743
10,948
2014¹
2015¹
Regulatory Assets and Liabilities
Deductions to Gross Revenue
Construction Revenue
Net Revenue (ex-construction revenue)
1- Adjusted by regulatory assets and liabilities
6,883
2012
7,880
5,834
2013
Opex (ex-construction costs)
2014
2015
Energy costs and sector charges
45
23% reduction of the Adjusted Ebitda mainly due
to non manageable and non recurrent expenses
Adjusted Ebitda1 (R$ million)
575
780
513
Adjusted Net Income (Loss)2 (R$ million)
964
55
198
1,556
(132)
101
402
1,200
1,138
248
758
49
-96
2012
2013
Adjusted Ebitda
2014
Reported Ebitda
2015
2012
2013
Adjusted Net Income (Loss)
2014
2015
Reported Net Income (Loss)
1 - EBITDA adjusted by expenses related to Pension Plan, regulatory assets and liabilities and possibly inexistent asset. 2 – Net income (loss) adjusted by regulatory assets and liabilities
46
Cost management projects generated R$ 1 billion¹
in savings until 2014
1st wave - 2007-2010
2nd wave – 2010-2012
● Headcount reduction
● Benchmark approach
● Support functions
centralization - shared
services
● Process review and IT
tools to increase
performance
● Overhead reduction management and contracts
renegotiation
● Development of strategic
sourcing capability
● Leadership headcount
reduced by 44% from 2008
to 2013
● Currently operating at the
same PMSO level as in 2007
while every quality
indicators have improved
● Continuous overhead
reduction
● Administrative and
operational activities
centralized in a new site
● Real Estate Plan: sale of
assets and maximization
of occupancy rate
1 –Nominal total from 2007 until 2014 FY. Includes recurring and non-recurring reductions and the avoidance of cost increases
3rd wave – 2013-2015
● Efficiency gains through
process transformation
and IT tools integration
● Cost management and
innovation as part of
the Company’s culture
● Consider the total cost
of ownership for
CAPEX/OPEX allocation
decisions
● Sustainability driving
value (e.g., ABS
initiative with
suppliers)
47
Operational cash flow generation
Cash Flow - R$ Million
2014
2015
Var.
Initial Balance of Cash
974
909
(65)
Operating Cash Flow
752
571
(181)
(501)
(634)
(133)
(53)
(36)
17
Pension Fund Expenses
(210)
(195)
15
Income Tax
(49)
(106)
(57)
Restricted Cash
65
21
(44)
Free Cash
4
(378)
(382)
Dividend and Interest on Own Capital
(69)
-
69
Final Balance of Cash
909
531
(378)
Investments
Net Financial Expenses / Net Amortization
48
Leverage level within financial covenants
Net debt (R$ billion)
3.00
3.7
2.50
3.4
2.70
3.5
3.00
Amortization Schedule (R$ million)
3.40
3.47
4.3
4.4
3,084
Fundação Cesp - FCesp
National currency (w/o Fcesp)
3.8
2,294
1,074
1,084
357
401
1,242
376
859
354
3Q14
4Q14
Net Debt (R$ billion)
1Q15
2Q15
3Q15
Net Debt/Adjusted Ebitda¹
Covenants within the limits:
− Net Debt/Adjusted Ebitda < 3.5x
− Adjusted Ebitda/Financial Expense > 1.75x
4Q15
716
683
2016
2017
865
2018
Debt Cost
 Average cost (CDI +)
 Average term (years)
 Effective rate²
1 – EBITDA adjusted by expenses related to pension plan and regulatory assets and liabilities; 2 – Average rate during the period
505
2019
790
2020-2028
2014
2015
1.43 %
5.36
13.25%
1.80%
4.63
15.25%
49
Capital markets
AES Eletropaulo x IEE x Ibovespa¹
A
120
B
C
D
E
F
G
H I
100
80
A
Apr/2012: Aneel announced 3PTRC
proposal (tariff cut of 8.81%)
B
Jul/2012: Aneel announced official
3PTRC (tariff cut of 9.33%) lowering
dividend payout expectations
C
Dec/2012: Court deems Eletropaulo
liable for Eletrobras lawsuit. Eletropaulo
appealed the decision.
D
Feb/2013: 4Q12 EPS affected by energy
costs and regulatory charges
E
Jul/2013: Low tariff adjustment due to
payment of 2/3 of 3PTRC “Bubble”
F
Aug/2013: 2Q13 results above
expectations. Efficiency in cost reduction.
G
Jul/2014: Tariff readjustment approved by
ANEEL including 50% of “cable” restitution
H
May/15: 4th Tariff Reset Cycle preliminary
numbers released
I
July/15: 4th Tariff Reset Cycle final
numbers released
60
40
20
0
Jan-12Mar-12May-12 Jul-12 Sep-12Nov-12 Jan-13Mar-13May-13 Jul-13 Sep-13Nov-13 Jan-14Mar-14May-14 Jul-14 Sep-14Nov-14 Jan-15Mar-15May-15 Jul-15 Sep-15Nov-15 Jan-16
ELPL4
IEE
IBOV
TSR
●
Market cap³: US$ 0.4 billion/R$ 1.6 billion
●
BM&FBOVESPA: ELPL3 (common shares) and ELPL4 (preferred shares)
●
ADRs at US OTC Market: EPUMY (preferred shares)
1 – Base 100: from 01/01/2012 to 02/24/2016; 2 – Electric Power Index; 3 – Index: 02/24/2016
50
We have strong capabilities
and corporate governance
●
AES Corporation and BNDES as major shareholders:
long-standing reputation in the market
●
Consumption focused on more resilient segment
(residential /commercial market)
●
First power distribution company in the Americas to obtain
ISO 55001 certification of the Asset Management Program
●
2015-2019 investment plan of R$ 3.5 billion mainly
focused on customer services and better quality indicators
●
Efficiency on recognizing investments on the RAB
51
Brazilian Opportunities
and recent events
Brazilian Energy Matrix and perspectives
Brazilian Energy Matrix¹
Governmental Expansion Plan
206
14%
21%
133
65%
2014
Hydro
Renewable³
Thermal
●
Energy matrix based on hydropower plants
●
Thermal source is responsible for system reliability
172
74
140
7
150
17
25
33
39
133
133
133
133
133
133
2015
2016
2017
2018
2019
2024
Additional Capacity by PDE²
●
165
158
Current Installed Capacity
Expansion based mainly on renewable and run-of-river
hydropower plants
1 – ANEEL database (11/16/2015). 2 – Energy development plan (PDE 2014-2024) – numbers are under public consultation; 3 – Includes Biomass, Wind and Solar sources
53
Recents events and in course
in the energy sector
GSF
Generation Scaling Factor
Tariff Flags 3.0
Third Tariff Reset Cycle
18% of red flag reduction
Squeeze Discos’ EBITDA margin
MP 579 / Law 12,783
Fourth Tariff Reset Cycle
18% of tariff reduction encouraged
consumption
Financial sustainability
Hydrological challenges
Extraordinary tariff review
Discos’ cash flow mismatch
23,4% average increase
Government funding mechanism
Tariff Flags 2.0
83% Red Flag increase
Tariff Flags
CDE and CCEE Loan
Assist with cash flow mismatch
54
Appendix
55
Tariff methodology for distributors
●
Energy Purchase
Transmission
Sector Charges
Tariff Reset is applied
each 4-5 years
−
AES Eletropaulo next Tariff Reset:
Jul/2019;
−
AES Sul next Tariff Reset: Apr/2018
−
Parcel A: costs are passed on
Regulatory Opex
(PMSO)
through to the tariff
−
●
Parcel B: costs are set by ANEEL
Annual Tariff Adjustment
−
X WACC
Remuneration
Asset Base
Investment
Remuneration
Parcel A Costs
−
Non-manageable costs passed on through
to the tariff
−
Incentives to reduce costs
●
Regulatory Opex
−
●
X Depreciation
Parcel A: costs are passed on
Parcel B: costs are adjusted
by IGPM +/- X Factor¹
Depreciation
Remuneration on
Special
Obligations
Regulatory
Ebitda
1 – X Factor: index that capture productivity gains
Efficient operating cost determined by
ANEEL
Remuneration Asset Base
−
through to the tariff
−
●
●
Prudent investments used to calculate the
investment remuneration (applying WACC)
and depreciation
Special Obligations
−
Recognition of the opportunity cost of
equity capital over third party investments
Parcel A - Non-Manageable costs
Parcel B - Manageable costs
56
X Factor methodology
X Factor
=
Pd
+
Q
+
T
Definition
Distribution productivity
Quality of service
Operational expenses
trajectory
Objective
Capture productivity
gains
Stimulate improvement
of service quality
Implement operational
expenses trajectory
Application
Defined at Tariff Reset,
considers the average
productivity of the
sector adjusted by
market growth and
consumption variation
Defined at each Tariff
Readjustment, considers
variation of SAIDI and
SAIFI and comparative
performance of discos.
Includes commercial
indexes
Defined at Tariff Reset,
makes the transitions to
operational costs
verified in the last 12
months to the one set in
the benchmarking
models
57
4th Tariff Reset Cycle
Parcel A +
Financial Components
Annual impact
R$ million
13.96%
R$ 1,936m
Parcel B
1.27%
R$ 176m
Tariff Reset Effect
15.23%
R$ 2,112m
 Energy CVA including FX rate variation associated with Itaipu
 CDE charge increase (loans and CDE share)
 Reduction of AES Tietê’s energy participation due to end of
contract in Dec/15
 Involuntary exposure in 2015
 WACC of 8.09%
 Special Obligations remuneration
 Opex adjusted to match the concession area’s reality
58
Breaking down the Parcel B
Remuneration (RAB)
R$ 732m
 Net RAB of R$ 6.0 billion
 WACC of 8.09%
Depreciation
R$ 458m
 Gross RAB of R$ 12.2 billion
 Depreciation Rate of 3.75%
Special Obligations
Annuity (Other Assets)
Operational Expenses
R$ 39m
 Remuneration of 3.34%
R$ 134m
 Remuneration and depreciation of IT, vehicles and administrative assets
R$ 1,373m
 Xt Factor of -2.37%;
 Inclusion of labor liabilities, São Paulo salaries and underground network
Bad Debt
R$ 198m
 0.85% of bad debt, considering Tariff Flag revenues
Other Revenues
- R$ 88m
 ~60% of non-distribution revenues
Productivity Gains
- R$ 33m
 Xp Factor of 1.13%
Parcel B
R$ 2,812m
59
Ranking of distribution
tariffs in Brazil
Tariff excluding tax (R$/KWh)
COELBA
Boa Vista
Ranking (out of 64)
0.389
4
0.407
6
COELCE
0.418
CPFL-Paulista
0.419
ELETROACRE
0.425
11
13
15
ELETROPAULO
0.436
CELESC-DIS
0.444
RGE
0.447
AES-SUL
16
20
22
0.480
36
COPEL-DIS
0.492
BANDEIRANTE
0.500
CEMIG-D
0.509
45
ELEKTRO
0.510
46
CPFL- Piratininga
0.511
CELPA
LIGHT
Source: Aneel website. Tariffs as of January/2016.
0.525
0.543
40
42
47
51
55
60
Abradee’s¹ Ranking
AES Eletropaulo
2007
14º
2008
2009
2010
2011
2012
2013
2014
8º
6º
9º
8º
5º
9º
8º
2008
2009
2010
2011
2012
2013
2014
11º
8º
6º
5º
7º
2º
16º
AES Sul
2007
10º
1 – Association of Brazilian electricity distributors
61
Latin America’s most modern distribution and subtransmission operations center allows efficiency gains
Modern layout maximizes the dispatch
efficiency and decision making during
the outage power restoration
●
Integration of DOC1 and SOC2 technicians
into a modern and collaborative workplace:
−
enabling to rearrange positions at any
time optimizing the use of resources
−
improving operational efficiency
−
encouraging a multifunctional profile
1 – Distribution Operating Center; 2 – Subtransmission Operating Center
62
Modern and integrated systems
contributes to the best allocation of resources
Integrated and automated systems allow the
monitoring of sub-transmission and
distribution grid and the best allocation of
resources for operational efficiency gains
●
State of the art in technologies for management of
events and teams, providing a global vision of emergency
teams location throughout the concession area
●
Service orders transmission through data devices,
dispatching service teams that are closer to the location,
minimizing attendance time
●
Innovative technology for forecasting and monitoring of
summer rains, strategically located in the Company’s
substations anticipating the resources allocation
63
AES Brasil
Investor Relations
Avenue Dr. Marcos Penteado de
Ulhôa Rodrigues, 939 - 7th floor.
ZIP Code 06460-040
Barueri - SP - Brazil
Websites:
http://ri.aeseletropaulo.com.br/
http://ri.aestiete.com.br/
Phone: + 55 11 2195-7048
Fax: + 55 11 2195-1004