Apimec 2005, August

Statement of Results for the First Semester 2005Statement of Results for the First Semester 2005

August, 2005

Disclaimer

This presentation may include forward-looking statements of future events or results according to regulations of the Brazilian and international securities and exchange commissions. These statements are based on certain assumptions and analysis by the company that reflect its experience, the economic environment and future market conditions and expected events, many of which are beyond the control of the company. Important factors that may lead to significant differences between the actual results and the statements of expectations about future events or results include the company’s business strategy, Brazilian and international economic conditions, technology, financial strategy, public service industry developments, hydrological conditions, financial market conditions, uncertainty of the results of future operations, plans, objectives, expectations and intentions, among others. Considering these factors, the actual results of the company may be significantly different from those shown or implicit in the statement of expectations about future events or results.

The information and opinions contained in this presentation should not be understood as a recommendation to potential

2

The information and opinions contained in this presentation should not be understood as a recommendation to potential investors and no investment decision is to be based on the veracity, current events or completeness of this information or these opinions. No advisors to the company or parties related to them or their representatives shall have any responsibility for whatever losses that may result from the use or contents of this presentation.

This material includes forward-looking statements subject to risks and uncertainties, which are based on current expectations and projections about future events and trends that may affect the company’s business. These statements include projections of economic growth and energy demand and supply, as well as information about the competitive position, the regulatory environment, potential opportunities for growth and other matters. Several factors may adversely affect the estimates and assumptions on which these statements are based.

Management Presenters

• Joined Energias do Brasil in 2000

• Previously worked for several Brazilian financial institutions such as Banco Axial, Banco BMD, and Guilder (ING brokerage house)

Antonio José SellareCFO


• Previously was CEO of Eureko Polska, Vice-President of PZU (Poland) and director of Banco Comercial Português (Millenium BCP) and Director of Eureko BV (Netherlands)

• Graduated in civil engineering and holds a MBA from Universidade do Porto. Attended executive programs at INSEAD, AESE and the Wharton School

António Martins da CostaCEO and Vice-Chairman of the Board

CurriculumPresenters

3


• Previous experience as investor relations officer / manager at companies such as Aracruz Celulose, Braskem and Light. Also worked for several financial institutions

• Graduated in industrial engineering at UFRJ and holds an MBA from PUC-RJ

• Experience of over 10 years in the capital market

Vasco BarcellosInvestor Relations Officer

BMD, and Guilder (ING brokerage house)

• Experience in various areas, including treasury, asset management, accounting, IT, human resources

• Graduated in business administration at PUC-SP

CFO

Energias do Brasil: Restructuring

Following a comprehensive restructuring process that started towards the end of 2003, Energias do Brasil implemented a set of operations in the first months of this year for the purpose of:

• Adjusting its capital structure to provide for a self-sustained growth of its portfolio

• Simplifying its corporate structure making it more transparent to the financial community

4

• Controlling the Group’s three distributors with a 100 percent stake to concentrate the liquidity of the shares on a single vehicle and to exploit the synergies among them

• Establishing a long-term partnership with the capital market

• Removing fiscal inefficiencies that existed in the previous structure

Energias do Brasil: Restructuring (cont’d)

The following projects were developed to meet strategic objectives:

• Migration of the distributors’ shareholders:– Independent valuation of the companies;– Migration occurred on April 29, 2005;– Only 0.02% of shareholders pre-emptive rights.

5

• Deverticalization:– Operation completed on June 30, 2005;– Establishment of an optimized corporate structure, because ENBR already owned 100% of the

distributors’ shares.

• IPO

Offering Summary

On August 10, 2005, Energias do Brasil successfully completed its R$ 1.2 bi equity offer

Offering Structure

• Initial Public Offering in Brazil with international sales efforts under Reg S and rule 144ª• Listed in Bovespa’s New Market (ENBR3 code)

Offering Size

• Total offering volume reached R$1,184.7 billion (includes green shoe) with the issuance of 65,816,818 common shares (price of R$18.00 per share)

• Credit capitalization of R$ 670.0 million (37,222,222 shares)

• Total primary offering reached R$500.1 million (27,785,150 shares)� Main use of proceeds: finance generation projects

• Secondary offering: The offering structure allowed the participation of minority shareholders

6

• Secondary offering: The offering structure allowed the participation of minority shareholders (they exchanged their shares for ENBR3 at the subsidiaries) who sold 809,446 shares (R$14.6 million)

Lock up period • 180 days for the controlling shareholder, the company and some directors and officers of the company

Retail• Sales efforts to retail investors and employees

• Retail demand of R$14.4 million from 474 investors• Demand of R$1.3 million from 613 employees

Demand• The book of orders exceeded the offer by 2.5 times• Demand split 60 / 40 between foreign and local investors• About 140 investors were contacted during international road shows (USA and Europe)

Hit Ratio – Road shows

About 140 investors contacted in Brazil, the USA and Europe with “Hit Ratios” of up to 52%

Cities: BostonWashingtonSan Diego

Investors visited: 51One-on-ones 38Group meetings 13

Hit ratio: 51%

Cities: RotterdamMilan


Hit ratio: 28%

Cities: São PauloRio de Janeiro


Hit ratio: 52%

New YorkLos AngelesSan Francisco

LondonFrankfurt

7

Financial Volume per Country/Region

USA45%

Europe14%

Brazil38%

Retail Brazill3%

Offering Summary

A total of 1,473 investors have been attracted, 1,084 of them are individuals. This will provide a higher liquidity ratio to the negotiations of our shares

R$ 26.00

9,48831,583

IPO of ENBR3 at R$ 18.00

Announcement of 2Q05 Results –R$ 21.85

Share PerformanceBase 100: 7/13/05

125.00

135.00

145.00

155.00

8Source: Economática

• Daily negotiation average from the listing: R$ 5.5 million• Share Performance since the listing: +44.4%• Share Performance in September: +5.3%

9,488R$ 21.85

85.00

95.00

105.00

115.00

ENBR3 Ibovespa IEE

Energias do Brasil: Post-IPO and Capitalization Structure

New corporate structure allows for transparency, competitiveness and potential for synergy earnings, contemplating the deverticalization concluded in July, 2005 ...

EDP Group

63.7% 36.3%

100.0%100.0%27.65% 1 60.0% 100.0%100.0%

Market

9

Legend

% of the Total Capital

…with a 36.3% free float of the total capital

Notes:

1 Voting capital, also represents the percentage of installed capacity allocated to Energias do Brasil. Energias do Brasil holds 16.3% of its total capital

2 Includes Escelsa’s generation assets

3 Includes Enersul’s generation assets

DistributionCommercializationGeneration

Peixe Angical Enersul

Escelsa

Enertrade BandeiranteLajeado

100.0%100.0%27.65% 1

100.0%

60.0% 100.0%

Energest2

100.0%

Costa Rica

51.0%

Pantanal Energética3

100.0%

CESA2

100.0%

Energias do Brasil

10

Energias do Brasil

Energias do Brasil

♦ Installed capacity: 250 MW(adjusted for Energias do Brasil’s stake)

♦ Installed capacity: 452 MW

♦ Conclusion: 2006


♦ Under construction: 75 MW

♦ Customers: 651 thousand

LAJEADO PLANTPEIXE ANGICAL PLANT

CESA e ENERGEST

Energias do Brasil operates in four Brazilian states with an installed capacity of 530 MW. Its power distribution volume in 2004 reached 22 thousand GWh to 2.9 million consumers

ENERSUL

PANTANAL ENERGÉTICA

11

Generation

Distribution

Legend

♦ Customers: 1,274 thousand ♦ Customers: 1,001 thousand



BANDEIRANTE ESCELSA

PANTANAL ENERGÉTICA

COSTA RICA

3,000

3,500

4,000

4,500

600

700

800

900

Energias do Brasil: Growth and Profitability

In 2004, Energias do Brasil posted net revenues of R$3.7 billion with a 21% EBITDA margin. In 1S05, its net revenues reached R$2.2 billion with a 24% EBITDA margin.

Net Revenues by Business EBITDA per Business

2,891

3,364

3,703

2%

3%5%

8%

575

775

7%

5%

12

0

500

1,000

1,500

2,000

2,500

3,000

2002 2003 2004 1S04 1S05

(R$ MM)

Distribution Generation Commercialization

0

100

200

300

400

500

600

2002 2003 2004 1S04 1S05

(R$ MM)

2,891

1,842

2,182

93%

89%

518

420

399

575

92%

7%

1%

87%

97%

2%1%

90%

2%8%

89%

2%9%

95%

5%

94%

2%4%

90%

3%7%

• The participation percentages of the segments in the revenue do not include the eliminations.

Distribution Generation Commercialization

Energias do Brasil: Profitability

In 2004, net profit of Energias do Brasil reached R$107 million. Considering net profit before the participation of minority shareholders, the figure was R$279 million.

Net profit before the participation of minority shareholders Net profit

107

229

100

150

200

250

279

231

200

300

400

13

1S04 1S05

95%

(68)

(169)

71

(200)

(150)

(100)

(50)

-

50

100

2002 2003 2004

(R$ million)

(249)

(49)

48

(300)

(200)

(100)

-

100

2002 2003 2004 1S04 1S05

(R$ million)

15.000

20.000

25.000

Distribution Business

Our operating efficiency is demonstrated by our strong increase in productivity, which will be further improved by the growth in demand for electricity

Distributed Energy (GWh)

20,17121,426

22,396

3.4%

14%13%

34%

14%

32%

Productivity (customer / employee)

132.4%

59.1%

54.2%

776

1,059

799

712800

1,000

1,200

14

0

5.000

10.000

15.000

2002 2003 2004 1S04 1S05

Bandeirante Escelsa Enersul

11,48811,112

3.4%32%

54%

34%

53%54%

14%

32%

54%

14%

33%

53%

54.2%

456502

462

654

585

712

0

200

400

600

Bandeirante Escelsa Enersul

1998 2001 2004

Strategy - Distribution

Concessionaire Status Comments

Tariff Revision Process: ANEEL has been defining the RAB of our concessionaires

ENERSUL DEFINITIVE . In April/05 - increase from 43.59% to 50.81%

15

ESCELSA DEFINITIVE . In August/05 - increase from 6.33% to 8.58%

BANDEIRANTE PROVISIONAL . Definition in October 05. In October 04 -decreased from 18.08% to 10.51%

1S05

- 151 thousand inspections made

- 12,3 thousand frauds detected

1S05

- 59.6 thousand inspections made

- 1.6 thousand frauds detected

1S05



1S05



25

30

35 technical commercial

Distribution Business

In 2005, Energias do Brasil is investing R$ 21.5 million in programs geared to contain growth in the level of technical and commercial losses. These investments are intended to provide a gradual reduction starting in 2006.

Evolution of total losses (% of the electric power distributed in the last 12 months)

16

detected

- Total of 504 thousand inspections scheduled for 2005

ENERGIAS DO BRASIL

detected


ENERSUL

detected


ESCELSA

detected


BANDEIRANTE

7.5 7.8 7.4 7.810.1

13.0

7.9 8.5

1.7 2.25.7 6.0

6.0

5.9

3.64.1

0

5

10

15

20

2004 jun/05 2004 jun/05 2004 jun/05 2004 jun/05

% last 12 months

Generation Business

Energias do Brasil currently has an installed capacity of 530 MW, 100% long-term contracts...

Existing Generation Assets Nwe Generation Capacity

194

4526

16 530

400

500

600

(Installed Capacity MW)

452

25

50 1,057

800

1,000

1,200


20062006

100% of contracted energy through PPAs

527

17

... and this capacity is to double till 2006 as part of its expansion strategy for the generation segment

Note:

1 Adjusted for Energias do Brasil’s stake

2501

0

100

200

300

Lajeado Escelsa Pantanal CESA CostaRica

Total


Geração Energética

Expected start of operationsLegend:

530

0

200

400

600

CurrentCapacity

AHE PeixeAngical

PCH São João 4th Mascarenhasplant

Total


2006

530

Generation: Peixe Angical Plant

• Location: Rio Tocantins• Installed Capacity: 452 MW• Assured annual power supply: 2,374 GWh • Reservoir area: 294 Km2

• Investment: R$1.5 Bi

• 4,780 employees, 3,873 of them on the job site, 278 with the transmission lines and 629 involved in complementary civil works.

• Expected revenue service start-up dates:

1st engine: May 20062nd engine: July 20063rd engine: October 2006

• Until June/05, 93.90% of the project is already implemented. About 86% of the civil works and 50% of the manufacturing and supply of electric and mechanical parts have been completed.

18

Commercialization Business

Energy Volumes Free Customer Market – Expected Growth

Enertrade is the second largest private commercialization company in Brazil characterized by high growth rates...

3,1793,179

2,336

1,101

1,360

520

2,000

2,500

3,000

3,500

(GW

h) 6.94

7.74

8.63

9.62

8.0

10.0

12.0

19

... and is well-positioned to exploit growth opportunities in the free customer market

Source: Abracel

1,235

1,819

2,659

1,101

0

500

1,000

1,500

Sales 1S04 Sales 1S05 Purchases 1S05

(GW

h)

Others Energias do Brasil’s Discos Lajeado

0.0

2.0

4.0

6.0

2005E 2006E 2007E 2008E(GWm)

Financial Performance

20

Financial Performance

420

518

400

500

600

Revenue, EBITDA & EBITDA Margin

Strong growth in revenues, EBITDA and EBITDA margin...

Net Revenues (R$ million) EBITDA and EBITDA margin

30

1,842

2,182

1,500

2,000

2,500

21

183

236

-

100

200

300

2T04 2T05 1S04 1S05

(R$ MM)

... which will be further improved by the expansion of our generation business

21%

22%

23%

24%

EBITDA Margin

%

25

20

893

1,085

-

500

1,000

1,500

2T04 2T05 1S04 1S05

(R$ MM)

Distributed and Sold Electric Power

Consistent growth in the electric power market of our concessionaires in 2005 ...

Eletricity Distributed (GWh) Commercialized Energy (GWh)

11,11211,488

10,000

12,000

14,000

3,179

2,3362,500

3,000

3,500

22

... With an even higher expansion of our commercialization volumes

5,558 5,794

0

2,000

4,000

6,000

8,000

2T04 2T05 1S04 1S05

GWh

1,576

1,224

0

500

1,000

1,500

2,000

2T04 2T05 1S04 1S05

GWh

Distribution – Market Breakdown

Migration of captive customers to the free customer status has been changing the market profile

Eletricity Distributed (GWh) Net Operating Revenues (R$ million)

21% 28%

1%1%

11,11211,488

9%

2%1,815

2,057

23

2T04 2T05 1S04 1S05

Captive Power in transit Others

2T04 2T05 1S04 1S05

Captive Power in transit Others

76% 70%

78% 71%

94%

94%

89%

89%

23% 29%

5%

1% 1%

5,7945,558

9%

5%

9%

1%

2%

1%

896

1,049

Costs and Expenses Breakdown 1

Costs and Expenses Breakdown1 – 1S05

Manageable costs have the potential to be significantly reduced with the recent corporate restructuring and synergy programs

Costs and Manageable Expenses Breakdown – 1S05

Personnel

R$134 million

(37%)

Materials

R$19 million

(5%)

Non-manageable costs Manageable costs

24

Provision

R$43 million

(12%)

Third Parties’ Services

R$98 million

(27%)

R$1,664 million R$360 million

costs

R$1,304 million

(78%)

Manageable costsR$360 million

(22%)

Note:

1 Excludes depreciation and amortization

Others

R$66 million

(18%)

3.9x

3.4x

2.7x

2.0x

3.0x

4.0x

5.0x

Indebtedness – Total Position

Indebtedness – 1S05 (R$ million) Net Debt / EBITDA1

Current capital structure will be strengthened by the IPO and the capitalization of Escelsa’s senior notes...

(479)

(923)

71%

Long Term

43%

Foreign Currency

3,756

(670)

2,354

(500)1,184

25

1.4x

0.0x

1.0x

2.0x

2003 2004 1S05 After Capit. andIPO

…creating financial capacity for the company’s growth

29%

Gross

Indebtednes

s

Cash

Regulatory Assetsos

Short Term

57%

Local Currency

Net Debt

before the IPO and

Capitalization

Capitalization

of Senior Notes

1,184

Net Debt after

capitalization

and IPO

IPO Proceeds

Notes:

1 Based on the EBITDA of the last 12 months

2 Base June 31, 2005

2

Indebtedness – Foreign Currency

The significant reduction in the exposure to the exchange risk after the IPO and capitalization will provide lower volatility

Financial liabilities – effective exposure to foreign currency – 1S05 (R$ million)

(548 )

(118)1,200

1,400

1,600

1,800

26

390

1,060

1,726

(118)

(670)

0

200

400

600

800

1,000

1,200

Gross debt in

foreign currency

Swap / Hedge Cash & equivalentsin foreign currency

Adjusted gross debt

in foreign currency

Capitalization

(Senior Notes)

Adjusted gross debt

in foreign currency

after capitalization

(R$ million)

Indebtedness Management: Strategy

• Reduce exposure to foreign currency by hedging, amortization of debt denominated in foreign currencies and new long term debts in local currency

• Based on the new, less leveraged, capital structure, reduce the indebtedness cost

27

• Reduce the exposure to short-term indebtedness

• Minimize the holding company’s liabilities and raise debt leverage in operating companies in line with their respective capacities of cash generation

Current Investment Plan

We invested R$515 million in the 1S05 and our investment plan for this year is fully equalized. The IPO/capitalization will contribute to the development of new projects

Investment Breakdown (Excludes New Generation Projects)

1,0521,049

1,000

1,200

1,400

28

Generation

65148 105

254238

333

286

204

746

571

162

552

459

0

200

400

600

800

2003 2004 2005E 2006E

(R$ million )

Distribution Universalization

Dividend Policy

Dividend Policy

• Minimum dividend pay-out: 40.0% of annual adjusted net income

• Rationale: the dividend pay-out should be compatible with

The strong cash flow generated will allow Energias do Brasil to implement an attractive dividend policy in compliance with the company’s investment plan

29

Dividend Policy • Rationale: the dividend pay-out should be compatible with Energias do Brasil’s investment requirements and target leverage

Energias do Brasil’s Strategy

30

Energias do Brasil’s Strategy

Key Elements of our Strategy

To be a leading company in the electric power industry, focused on creating value to our shareholders

STRATEGY

OBJECTIVE

31

Benefit from coming growth opportunities, with an emphasis on generation, following strict

investment criteria

Focus on operating efficiency and synergy gains, mainly in the distribution segment

Leverage management skills with the support of an international group that has a proven

track-record in competitive markets

STRATEGY

Maintain a solid financial structure with liquidity and scale to sustain the expansion plan

The impact of the new regulatory framework on a highly fragmented market, where the players have distinct strategies, financial capacity and growth potential

Distribution - Market Share1

Fragmented Market

Generation - Market Share2

Endesa

Others

25% AES

14%

Energias do Brasil

6%

CESP

8%

Tractebel

7%

CEMIG

7%

Copel

5%AES

32

Source: ANEELNote:1 Market share in December 2004

Endesa

5%

CPFL

12%

CEMIG

11%Copel

6%

Elektro

3%

Light

6%

Neoenergia

7%

Celesc

5%

Source: ANEELNote:2 Based on the installed capacity

Eletrobrás

42%

Others

20%

5%AES

4% CPFL

2%

Duke

3%

Energias do Brasil1%

Petrobras

1%

Strategy - Generation

The main drive for short-term growth is the development of hydroelectric generation projects

Why invest in hydroelectric generation projects?

• Clear perspective of return on future investments

• Low regulatory risk, as regulatory model emphasizes hydroelectric production

• Ability to leverage on Group’s expertise

• Balancing our portfolio (generation versus distribution)

• Thermoelectric projects do not yet meet Energias do Brasil’s risk and return criteria

33

• Thermoelectric projects do not yet meet Energias do Brasil’s risk and return criteria

Opportunities

• New energy auctions

• Acquisition of existing assets:

- with potential for improvement and further expansion, and / or

- assets belonging to investors that do not have a long-term commitment to

Brazil or are willing to monetize the generation assets

• Partnership with experienced players

Strategy - Distribution

Focus on operating efficiency and synergy gains

Sources of Synergies

“Best Practices”• Efficiency Program

– already achieved recurring synergies of R$15 million / year

34

Strategic Integration

• Corporate restructuring

• Integrated management of asset portfolio

– competitive capital structure

– achieve higher fiscal efficiency

Operational Integration

• Project “Vanguarda”

– virtual platforms

– standardize policies and procedures

Vanguard Project

Mission: identify and capture synergies within companies of Energias do Brasil, consolidating its reference position in the Brazilian energy sector

1st phase of implementation

� Mapping followed by the optimization and process redesign

35

� Teams made up of employees from all the companiesof Energias do Brasil will work in the survey of thecurrent processes and redesign of the new processes

� The results of each stage of the Process Redesign areclearly defined for the teams

Strategy - Commercialization

Maintain Energias do Brasil’s customer base and expand into new markets

• Explore the free customer market within our existing concession areas

Among the leading players in the sector Commercialization strategy

Market Share1 - 2004

Enertrade

9%

CPFL

18%

Others

47%

36

• Explore the high growth potential of markets outside our concession areas

• Ability to sell generation in the free market

The existing platform already supports the implementation of our commercialization strategy

Source: CCEE

Notes:

1 Excludes Eletrobrás and free customers without commercialization company

2 Includes Petrobras and CIEN

Own business operators

26%2

47%

Conclusion: An Excellent Investment Opportunity

• Brazil’s positive economic outlook should translate into higher energy consumption, creating a need for new investments in generation

Attractive Market Outlook

• New regulatory framework provides a more stable business environment and should lead to the repositioning of the sector participants

New Regulatory Framework

• Expansion strategy with emphasis on generationGrowth Strategy

37

• New corporate structure provides higher efficiency and will create additional synergies, specially in distributionOperational Efficiency

• Strong financial position with sufficient liquidity and scale to finance expansion in Brazil

Financial Strength

• Novo Mercado Listing (100% tag along rights for all shareholders, providing the highest standard of Corporate Governance in Brazil)

Superior Corporate Governance

Statement of Results for the First Semester 2005Statement of Results for the First Semester 2005

August, 2005

Visit our websitewww.energiasdobrasil.com.br

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