Corporate Presentation

Bank of America Merrill Lynch

March 2015

Light Holdings
Diversified structure which is comprised of the distribution, generation and commercialization segments.

Light in numbers
RJ State

Concession
Area

16 mn

11 mn

68%

Area

44,000 Km

11,000 Km

25%

GDP

R$ 407 bn

R$ 207 bn

51%

7 mn

4 mn

57%

92

31

34%

Distribution
Population

# Consumers
# Municipalities
1

IBGE (2010)

Generation
1

Amaznia Energia

Renova

Guanhes Energia

Complexo de Lajes

HPP Ilha dos Pombos

HPP Santa Branca

SHP Paracambi

Rankings
Among the largest players in Brazil
INTEGRATED
Net Revenues 2013* R$ Billion

ELECTRICITY DISTRIBUTION
Energy Consumption in Concession Area** (GWh) - 2013

37,767

15.6
14.6
10.6

25,777

9.2

7.4

22,926

7.1

21,783

20,391

15,634

POWER GENERATION PRIVATE-OWNED COMPANIES

Installed Hydro-generation Capacity (MW) 2013
1 Source: Companies reports
2 Source: Relatrio do Sistema de Apoio
a ANEEL
* Construction Revenue Included
** Captive Market
*** Considers the 9 MW of Renovas SHPs
and 19 MW of Brasil PCH

5,560

2,652

2,241

2,219

1,799

896

***

Shareholder Structure
Efficient combination of solid industry and financial players

11 Board members: 8 from the controlling

group, 2 independents e 1 employees
nominated

A qualifying quorum of 7 members to

approve relevant proposals such as: M&A
and dividend policy

Corporate Governance
Decision process assures transparency and value creation
General
General Assembly
Assembly
Fiscal
Fiscal Council
Council
Board
Board of
of Directors
Directors

Finances
Finances
Committee
Committee

Human
Human
Resources
Resources
Committee
Committee

Auditors
Auditors
Committee
Committee
Chief
Chief Executive
Executive
Officer
Officer

Governance
Governance and
and
Sustainability
Sustainability
Committee
Committee

Management
Management
Committee
Committee

Paulo Roberto R. Pinto

Chief
Chief Financial
Financial and
and
Investor
Investor Relations
Relations
Officer
Officer
Joo B. Zolini Carneiro

LGSXY
ADR-OTC

Chief
Chief Distribution
Distribution
Officer
Officer
Ricardo Cesar C. Rocha

Chief
Chief Legal
Legal Officer
Officer

Corporate
Corporate
Management
Management Officer
Officer

Fernando Antnio F.Reis

*Ailton Fernando Dias

Chief
Chief Energy
Energy Officer
Officer
Luis Fernando Guimares

Chief
Chief Business
Business
Officer
Officer
*Cludio Bernardo Moraes

Chief
Chief HR
HR Officer
Officer
Andreia Ribeiro Junqueira

Chief
Chief
Communications
Communications
Officer
Officer
*Luiz Antonio R. Elias

Waiting to take office.*

Energy Consumption
Distribution 9M14

TOTAL MARKET (GWh)

+3.8% p.a.
+3.2%

17,25
9

24.0
C

9M11

17,41
9

24.3C

9M12

19,18
6

23.9
C

9M13

Free
19.8%

19,80
0

Industrial
captive
5.7%

Others
captives
14.6%
Residential
captive
31.5%

24.4
C

9M14

Commercial
captive
28.4%

Note: To preserve comparability in the market approved by Aneel in the tariff adjustment process. the
billed energy of the free customer CSN has been considered back.
1

Market Breakdown
ELECTRICITY CONSUMPTION (GWh)
TOTAL MARKET ACCUMULATED
+3.2%

19,186

+8.6%

6,212

6,747

9M14

RESIDENTIAL

3,978

3,752

15,209

16,04
8

9M13

9M14

+4.5%

5,909

6,175

637

663

5,271

9M13

19,800

9M13

5,512

9M14

COMMERCIAL

-6.1%
+2.5%

4,229

3,970

3,19
0

2,928

1,03
9
9M13

1,042

2,837

2,908

151

161

2,686

2,74
7

9M13

9M14

9M14

OTHERS

INDUSTRIAL

CAPTIVE

TOTAL

FREE
8

Losses and Collection

LOSSES (12 MONTHS)

COLLECTION RATE
12 MONTHS

- 2.4 p.p.

43.7
%

8,552

42.2
%

42.4
%

41.9%

8,352

8,748

8,815

97.9%

102.0%

Sep13

Sep14

41.3
%

8,757

5,905

5,738

5,955

5,972

5,906

2,647

2,614

2,793

2,843

2,851

PBD/GROSS REVENUE
(BILLED SALES) - QUARTER
-0.4 p.p.

1.9%

Sep/13

Dec/13

Non-technical losses
GWh
% Non-technical
losses/ LV Market

Mar/14

Jun/14

2.0%

Sep/14

1.6%

Technical losses GWh

3Q12

3Q13

3Q1 4

Loss Reduction Strategy

Efficient combination between technology and effective management

CUSTOMERS

ENERGY AND STATUS

570
Large
Clients
(hight and
med voltage)
7,600
Low Voltage
Largest Clients
22,000

Retail and residential clients

(Low Voltage)
4,100,000

432
351

11,500 GWh (48%)

100% Concluded

2,700 GWh (11%)

1/3 as of today
until 2015

227
122

30

7
115

197

2010

2011

131

102
79
272

2012

330

2013

439

Sep/14

Communities

10,000 GWh (41%)

APZ

Outisde of
Communities

10

Technology: Centralized Measuring

Use of new technologies in areas with a high level of losses

Mechanic
al Meter

Display

11

Zero Losses Area

Project: Light Legal

Focused in areas with 10,000 to 20,000 clients with high level of losses and
delinquency;
Fully-dedicated teams of technicians and commercial agents;
Results constantly and accurately monitored by Light;
Result-linked remuneration for services provided;
29 units implemented with 511 thousand
clients (12% of total);

ELECTRONIC
METERS

WORKFORCE
MANAGEMENT

200 thousands additional clients per year.

PARTNERSHIP WITH THE STATE

GOVERNMENT
12

Evolution of APZs Results

Significant loss reduction and increasing collection rate

APZ COLLECTION

APZ LOSSES
50.0 %
-29.7%

100.3%
22.3%

22.0%

22.2%

20.3%

19.2%

100.2%
93.9%

89.2%

91.2%

95.5%

98.4%

16.4%

Sep/14

Jun/14

Mar/14

Dec/13

Sep/13

Before

Jun/13

Sep/14

Jun/14

Mar/14

Dec/13

Sep/13

Before

Jun/13

+9.2%

13

Regulatory Allowance for Non-Technical Losses

Higher recognition of losses linked to targets achievement
Additional revenues to be invested in losses combat and booked as
Special Obligations (ex-RAB)

2013

2014

Regulatory Losses
Target (every August)

2015

2016

2017

2018

Final Proposal (according to

methodology)
Regulatory Losses with Penalty

14

Generation

855 MW Installed Capacity

Concessions Expiring Only in 2026
100%
100%
Paraiba do Sul River

HPP Santa Branca

56 MW
RJ

HPP Ilha dos

Pombos

HPP Ilha dos Pombos

187 MW

SP

HPP Santa
Branca

100%

HPP Fontes Nova

132 MW

100%

Underground HPP
Nilo Peanha - 380 MW

ISO 9001 Quality Management

14001 Environmental Management
OHSAS 18001 - Occupational health and Safety Management

100%

HPP Pereira Passos

100 MW

16

Assured Energy: 549 MWaverage

Energy commercialization focused on the free market

549

549

549

549

549

549

549

28
35

28
66

28
41

28
83

28

28

28

274

289

247

232

2020

2021

184

486

456

480

438
337

2015

2016

2017

Contracted Energy (Free)

2018

2019

Available Energy

Hedge

Average selling price in 2015-2021: R$ 169/MWh (base date: January, 2015)

17

Power Generation Expansion

Renewable energy generation projects, mainly through partnerships

Project

Installed Capacity
(MW)

Assured Energy
(MWaverage)

Operational
Start

Stake

Paracambi

25

20

2012

51%

652.3 (in operation)

296 (in operation)

2008 - 2014

Renova

15.87%
1,853.8 (contracted)

914 (contracted)

2015 2019

Belo Monte

11,223

4,571

2016

2.49%

Guanhes

44

25

2015

51%

Lajes

17

15

2016

100%
18

Power Generation Expansion

Installed Capacity (MW)
Light's proportional Participation

3/4/15
3/4/15 3/4/15
3/4/15 3/4/15 3/4/15
3/4/15 3/4/15

1,552
3/4/15

3/4/15

3/4/15

1,421

68.5%
1,208
1,147
1,099
3/4/15
3/4/153/4/15
1,011 3/4/15
3/4/15
3/4/15 3/4/15 3/4/15

1,520

1,273

1,319
3/4/15

3/4/15

3/4/15

3/4/15

3/4/15

3/4/15

3/4/15

3/4/15

3/4/15

3/4/15

3/4/15

3/4/15

3/4/15

3/4/15

3/4/15

3/4/15

3/4/15

3/4/15

3/4/15

3/4/15

3/4/15

3/4/15

3/4/15

3/4/15

3/4/15

3/4/15

3/4/15

3/4/15

3/4/15

3/4
/15

3/4
/15

3/4
/15

3/4
/15

3/4
/15

3/4
/15

3/4
/15

3/4
/15

3/4
/15

3/4
/15

3/4
/15

3/4
/15

3/4/15

3/4/15

3/4/15

3/4/15

3/4/15

3/4/15

51% Light
15.87% Light
3
2.49% Light

19

RESULTS

Net Revenue
NET REVENUE BY SEGMENT (3Q14)*
NET REVENUE (R$MN)

Generation
7.4%

128
+10.8%

5,936
5,356

634

455

1,360

Distribution
79.4%**

227

Commercialization
13.2%

+9.4%
+8.2%

1,679
122
1,557
3Q13

1,838
+1.5%

5,301

** Construction revenue not

considered

4,901

257
1,581
3Q14

* Eliminations not considered

NET REVENUE FROM DISTRIBUTION (3Q14)

9M13

9M14

Commercial
(Captive)
40.9%

Industrial (Captive)

Construction
Revenue
Revenue w/out construction
revenue

6.3%

Others (Captive)
12.6%

Network Use (TUSD)

(Free +
Concessionaires)

Residential
(Captive)
31.9%

21

Operating Costs and Expenses

COSTS (R$MN)*
3Q14
Generation and
Commercialization
(19.6%)

DISTRIBUTION PMSO COSTS (R$MN)

-0.8%

Non manageable
(distribution**)

321

987

979

9M13

9M14

+4.8%

(60.0%)

988

312

327

3T13

3T14

Manageable 327
(distribution)
(20.4%)

COSTS (R$MN)*
9M14

R$ MN

Non manageable
(distribution**)

3,305

(64.3%)

Generation and 827

Commercialization
(16.2%)

* Eliminations not considered

** Construction revenue not considered

979
Manageable
(distribution)

3Q13

3Q14

Var.

PMSO

(311.5)

(326.6)

4.8%

(987.0) (979.4)

-0.8%

Provisions

(19.6)

(37.9)

93.3%

(97.2)

(99.3)

2.2%

PCLD

(3.9)

(20.3)

419.8%

(38.3)

(38.3)

0.1%

Contingencies

(15.7)

(17.6)

12.2%

(58.9)

(61.0)

3.5%

Depreciation

(37.1)

(29.8)

(91.2)

-20.4%

Other operational/
revenues expenses

(86.0)

(91.4)

6.3%

58.2

105.6

81.4%

Total

9M13

-19.6% (114.6)

9M14

(250.5) (263.0)
246.1

296.6

Var.

5.0%
20.5%

(19.5%)

22

EBITDA by segment
(R$ MN)

1,359

Consolidated EBITDA (R$ MN) 3Q14 3Q13

-33.2%

Distribution
EBITDA Margin (%)

25.6%
-74.4%

723

908

Generation
EBITDA Margin
(%)
56.0%

15.8
%
84.2
%
3Q13

Commercialization

42.3%
185

Others and eliminations

57.7%

26.0%
74.0%
3Q14

EBITDA Margin (%)

74.4%

Total
EBITDA Margins (%)

9M13

9M14

Generation and Commercialization

Var.

9M14 9M13

Var.

1,011.
137.1 608.9 -77.5% 524.3
-48.2%
5
-33.7
-11.6
10.1% 43.8%
11.5% 23.1%
p.p.
p.p.
24.5

104.9 -76.7% 295.3 324.4

19.2% 79.0%
23.6

9.3

-59.8
p.p.
155.0%

62.5% 79.1%
88.8

-9.0%
-16.6
p.p.

23.5 277.0%

10.4% 6.0% 4.5 p.p. 13.1% 5.1% 8.0 p.p.

(1.7)

(1.1)

58.4%

(32.5)

(4.3) 649.1%

1,355.
-35.4%
1
-11.1
16.5% 27.6%
p.p.

183.6 722.0 -74.6% 875.8

11.6% 46.4%

-34.8
p.p.

Electricity Distribution

Percentages do not consider eliminations

23

EBITDA
Adjusted EBITDA 9M13 / 9M14 (R$ MN)

- 16.2%
- 35.4%

400
(109
)

(896
)
0,2

1,246

(2)

23

1,35
5

Adjusted Regulatory EBITDA

EBITDA Assets and 9M13
9M13
Liabilities

169

(5)
876

Net
NonManageabl Other
Provisio Equity
Revenu Manageabl e Costs operacion
Pikup
ns
e
e Costs
al
(PMSO)
revenues

1,04
4

EBITDA Regulatory Adjusted

9M14 Assets and EBITDA
Liabilities
9M14

24

Net Income
Adjusted Net Income 9M13 / 9M14 (R$ MN)

- 34.3%

- 68.9%

(72)

387

458

(47
9)

111
(14)
169
8

Adjusted Regulatory 9M13

Net IncomeAssets and
Liabilities
9M13

EBITD
A

Financial
Result

Taxes

(3)
Depreciati
on

254
143

9M14 Regulatory Adjusted

Assets andNet Income
Liabilities
9M14

25

Dividends
Average payout of 86% in the last 5 years

26

Indebtedness
AMORTIZATION SCHEDULE* (R$ MN)

NET DEBT

Average Term: 3.7 years

Custo Real
Real
Custo

Sep/1
3

733

581

261

2010
Custo Real

Sep/1
4

Jun/14

* Principal only

U$/Euro *
0.3%

COST OF DEBT
11.03%
8.21%

2011

721

al
o Re
Cust

Net Debt / EBITDA

4.25%

866

479

2010

2009

2009

791

3.39
5,543.6

2.99
5,229.6

2.68
4,151.6

1,210

1,055

2.24%

2012
Nominal Cost

9.68%
3.55%

2013
Real Cost

11.27%

IPCA
10.8%

TJLP
12.0%
Others
3.5%

4.47%

3T14

CDI
73.3%

*ConsideringHedge

27

Investments
CAPEX BREAKDOWN
(R$ MN)
9M14

CAPEX (R$ MN)

929
154

701

797
103

845
+30.5%

132

630
482

182
775

694

713

54

88

Administrati
Generation
on
Othe
18.1
27.8
rs
7.7
Commerc./
Energy
Eficiency
8.3

575

519519

394

2010

201
1

201
2

201
3

9M1
3

9M1
4

Losses
Combat
227.9

Develop. of
Distributio
n System
339.7

Investments in Electric Assets

(Distribution)

28

Why invest in Light?

Economic
Transformation
in the
Concession Area

Energy
Losses
Reduction

Growth in the
Generation
Business

Rio as a host of major events

Communities pacification
Pro-business environment
Investment projects hub
Energy Market growth

Progress in the Technology

Program (Smart Grid)
New network and electronic meters
in the pacified areas
Zero Losses Area Program

Projects under construction with

partnerships: Renova, Belo Monte and
Guanhes (total of 588 MW)
SHPP Lajes under construction
(17MW).

Energy
Commercialization
focused on the
free market

Best Corporate
Governance
Practices

Dividend track
Record

Expiration of Regulated
Contracts (Dec/2013)
New contracts in 2014
Energy available for
commercialization

Listed in Novo Mercado of

Bovespa
Board Commitees with strong
participation in the decision making
process
Included in the Sustainability
Index (ISE) for the 7th year

Dividend Policy: minimum 50%

of net income;
Average payout since 2009:
86%

29

Disclaimer
This presentation may include forward-looking statements according to Brazilian regulations and
international movable values. These statements are based on certain assumptions and analyses made by the
Company in accordance with its experience, the economic environment, market conditions and future events
expected, many of which are out of the Companys control. Important factors that can lead to significant
differences between the actual results and statements on future events or business-oriented results include
the Companys strategy, the Brazilian and international economic conditions, technology, financial strategy,
developments of the public service industry, hydrological conditions, conditions of the financial market,
uncertainty regarding the results of its future operations, plans, goals, expectations and intentions, among
others. Because of these factors, the Companys actual results may significantly differ from those indicated
or implicit in the statements on events or future results.
The information and opinions herein must not be understood as recommendation to potential investors, and
no investment decision should be based on the veracity, the updated or completeness of this information or
opinions. None of the Companys professionals or parts related to them or its representatives will have any
responsibility for any losses that can elapse from the use or the contents of this presentation.
This material includes declarations on future events submitted to risks and uncertainties, which are based on
current expectations and projections on future events and trends that can affect the Companys businesses.
These declarations include projections of economic growth and demand and supply of energy, in addition to
information on competitive position, regulatory environment, potential growth opportunities and other
subjects. Various factors can adversely affect the estimates and assumptions on which these declarations are
based on.
30

Contacts
Joo Batista Zolini Carneiro
CFO and IRO

Gustavo Werneck
Superintendent of Finance and Investor Relations
+55 21 2211 2560
gustavo.souza@light.com.br

Mariana da Silva Rocha

IR Manager
+ 55 21 2211 2814
mariana.rocha@light.com.br

http://ri.light.com.br/

www.facebook.com/lightri

twitter.com/LightRI
31