Corporate Presentation

UBS Global Emerging Markets

December 2014

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

25,777

10.6

22,926

9.2

7.4

21,783

7.1

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 Assembly
Fiscal Council
Board of Directors

Finances
Committee

Human
Resources
Committee

Governance and
Sustainability
Committee

Auditors
Committee

Management
Committee

Chief Executive
Officer
Paulo Roberto R. Pinto

LGSXY
ADR-OTC

Chief Financial and

Investor Relations
Officer

Chief Distribution
Officer

Chief Energy Officer

Joo B. Zolini Carneiro

Ricardo Cesar C. Rocha

Evandro L. Vasconcelos

Chief Legal Officer

Corporate
Management Officer

Chief Business
Officer

Fernando Antnio F.Reis

Paulo Carvalho Filho

Evandro L. Vasconcelos*

Chief HR Officer
Andreia Ribeiro Junqueira

Chief
Communications
Officer
Luiz Otavio Ziza Valadares

Interim*

Energy Consumption
Distribution 9M14

TOTAL MARKET (GWh)

+3.8% p.a.
+3.2%

17,259

17,419

19,186

Free
19.8%

19,800

Industrial
captive
5.7%

Others
captives
14.6%
24.0C

9M11

24.3C

9M12

23.9C

9M13

24.4C

9M14

Residential
captive
31.5%
Commercial
captive
28.4%

1Note:

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.

Market Breakdown
ELECTRICITY CONSUMPTION (GWh)

TOTAL MARKET ACCUMULATED

+3.2%

19,186

+8.6%

6,212

3,978

3,752

15,209

16,048

9M13

9M14

+4.5%

6,747

5,909

6,175

637

663

5,271

9M13

19,800

9M14

RESIDENTIAL

9M13

5,512

9M14

COMMERCIAL

-6.1%

+2.5%

4,229

3,970

3,190

2,928

1,039

1,042

9M13

9M14

2,908

151

161

2,686

2,747

9M13

9M14

OTHERS

INDUSTRIAL

CAPTIVE

2,837

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%

8,352

8,748

41.9%

8,815

5,905

5,738

5,955

5,972

2,647

2,614

2,793

2,843

97.9%

102.0%

Sep-13

Sep-14

41.3%

8,757

5,906

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

2,851
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

2,700 GWh (11%)

1/3 as of today
until 2015

131

351

11,500 GWh (48%)

100% Concluded

227
122

30

7
115

197

2010

2011

102
79
272

2012

439

330

2013

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

Mechanical
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

Incio da
Before
Operao

Jun/13

Sep/14

Jun/14

Mar/14

Dec/13

Sep/13

Before
Incio da
Operao

Jun/13

+9.2%

13

Regulatory Allowance for Non-Technical Losses

Higher recognition of losses linked to targets achievement

40,41%
Additional revenues to be invested in losses combat
and booked as39,92%
40,41%
40,41%
40,41%
40,41%
39,92%
40,41%
Special 39,92%
Obligations
(ex-RAB)
40,41%
39,92%
40,41%

39,92%

39,13%

39,13%

38,33%

39,13%
39,13%

38,33%

36,41%

36,41%
31,80%

31,80%
31,80% 31,80% 31,27%
31,27%

31,80%

30,60%
30,60%

2013

2014

31,27%
31,27%
30,95%
30,95%
30,60%
30,60%
29,40%
29,40%

2015

30,95%
30,95%
30,53%
30,53%
29,40%
29,40%
28,20%
28,20%

2013

2016

38,33%
38,33%

36,41%
36,41%

34,49%
31,27%

34,49%

33,00%

33,00%

40,41%
39,13%

34,49%
34,49%
30,95%
33,00%
33,00%

30,53%
30,60% 30,11%
30,53%
30,11%
30,11%29,69%
30,11%

29,69%
29,69%
29,69%
29,40%

28,20%
28,20%
27,01%
27,01%

2017

2014

27,01% 25,81%
27,01% 25,81%

2018

2015

2014
2015
2016
2017
2018
2013
2014
2015
2017
Regulatory2016
NT Losses/LV
2017 (Flexible)
2013 2014
2014 2015
2015 2016
2016
2017 2018
Regulatory
NT
Losses/LV
(Flexible)
Regulatory
NT
(Final)
Regulatory
Losses
Final
Proposal
(according
toNT
methodology)
NT
Losses/LV
Regulatory
Losses/LV
(Final)
Regulatory
NTRegulatory
Losses/LV
(Flexible)
Regulatory
NTLosses/LV
Losses/LV
(Final)
Real
NT
Losses/LV
(forecast
Light,
Ref. August)
Regulatory
NT
Losses/LV (Flexible)
(Flexible)
Regulatory
NT
Losses/LV
(Final)
Real
NT
Losses/LV
(forecast
Light,
Ref.
August)
Regulatory
NT
Losses/LV
(AP)
Real
NT
Losses/LV
(forecast
Light,
Ref.
August)
Regulatory
NT
Losses/LV
(AP)
Real NT Losses/LV
(forecast
Ref. August)
(AP)
Losses/LV
w/
RegulatoryNT
Losses
with Penalty
Target
(every Light,
August)
Real
NT Losses/LV
(forecast
Light, Ref. August) Regulatory
Regulatory
NT Penalty
Losses/LV (AP)
2013
2013

25,
25,

2018
2018

RegulatoryRegulatory
NT Losses/LV
w/ Penalty w/ Penalty
Regulatory
NTRegulatory
Losses/LV NT
w/
Penalty
NT Losses/LV
Losses/LV w/ Penalty

14

Tariff Readjustment of 2014

After November 7th Discos customers will observe an average increase of
19.23% in their electricity bills. Residential customers will notice a lower-thanaverage increase of 17.76%
Transfer of variation in
Parcel A and B
+14.54%

Variation in financial
accounts
+8.64%

23.18%

1.31%
-3.95%

19.23%

7.33%
0.58%
11.07%

2.89%

Energy Transmission
Purchase and Sector
Charges

Parcel B

CVA Balance

Other
Tariff
2013
Financial Readjustment Financial
Items
Additions

Voltage Level
(Consumption
segment)

Average
Increase

A2

20.25%

A3a

19.39%

A4

19.15%

AS

19.83%

B1 (Residential)

17.76%

B2 (Rural)

21.74%

B3 (Commercial)

21.50%

B4 (Il. Public)

22.65%

High Voltage

19.46%

Low Voltage
Average
Readjustment

19.11%
19.23%

Average
Customer
tariff
increase

From the average customer increase of 19.23%, Parcel A costs accounted for 18.65% and Parcel B for only 0.58%.

15

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

17

Assured Energy: 549 MWaverage

Energy commercialization focused on the free market

549
39

549
28
42

549
28
88

549
28
61

549
28

549
28

480

434

2015

2016

Contracted Energy (Free)

280

290

242

232

28

103

461
418

2014

549

28

205

510

549

2017

2018

Available Energy

317

2019

2020

2021

Hedge

Average selling price in 2014-2021: R$ 163/MWh (base date: January, 2014)

18

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%

592.7 (in operation)

213 (in operation)

2008 - 2014

1,648.3 (contracted)

908 (contracted)

2015 2019

Belo Monte

11,223

4,571

2015

2.49%

Guanhes

44

25

2015

51%

Lajes

17

15

2015

100%

Renova

15.87%

19

Power Generation Expansion

Installed Capacity (MW)
Light's proportional Participation

921
13 53

945
77
13

971

855

855

2H13

1H14

1,011

1,147
17
22 36

1,552
17

265

280

22

22

1,421

68.5%

1,099
22 9

1,520

1,208
82

1,273
22

1,319

219

128
22

173
22

22

255

255

312

365

365

143
13

200

204

236

13

13

13

13

13

13

13

13

855

855

855

855

855

855

855

855

855

855

2H14

1H15

2H15

1H16

2H16

1H17

2H17

1H18

2H18

1H19

104

13

SHPP Lajes

Guanhes

SHPP Paracambi

Belo Monte

Renova

Light Energia

51% Light
15.87% Light
3 2.49% Light

20

RESULTS

Net Revenue
NET REVENUE BY SEGMENT (3Q14)*
Generation

NET REVENUE (R$MN)

128
+10.8%

5,936
5,356

634

455

1,360

Distribution
79.4%**

227

7.4%

Commercialization
13.2%

+9.4%
+8.2%

1,679
122
1,557
3Q13

1,838
+1.5%

4,901

5,301

* Eliminations not considered

** Construction revenue not considered

257
1,581
3Q14

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)
8.3%

Residential (Captive)
31.9%

22

Operating Costs and Expenses

COSTS (R$MN)*
3Q14

DISTRIBUTION PMSO COSTS (R$MN)

-0.8%

Generation and
Commercialization
(19.6%)

Non manageable
(distribution**)

321

979

9M13

9M14

+4.8%

(60.0%)

988
Manageable
(distribution)

987

312

327

3T13

3T14

327

(20.4%)

COSTS (R$MN)*
9M14

R$ MN

3Q13

3Q14

Var.

(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%

PMSO

3,305

Non manageable
(distribution**)
(64.3%)

Generation and
Commercialization
(16.2%)

* Eliminations not considered

** Construction revenue not considered

827
979

Manageable
(distribution)

Total

9M13

-19.6% (114.6)

9M14

(250.5) (263.0)
246.1

296.6

Var.

5.0%
20.5%

(19.5%)

23

Tariff Deficit in distribution

The exposure to the spot Market and its high prices, which reflect the low levels of hydro
plant reservoirs and the dispatch of thermal plants, resulted in an expressive deficit for
distributors

Decrees 8.203
(Jan/14) and
8.221 (Apr/14)
SPOT market Involuntary Exposure

1,082.2

Availability contracts with thermal plants

416.3

Hydrological Risk

167.5

A-1 Auction Contract

43.4

A-0 Auction Contract

71.2

TOTAL

ACR Account Funds -9M14 (R$ MN)

1,780.6

87.4% of
deficit
covered

1,556
(1,781)

(225)

Tariff Deficit

CDE Fund
Total

Balance

The remaining balance of R$ 225 MN refers to the portion of items not covered by the decrees, with emphasis on (i)
availability contracts from January; (ii) energy contracted at the A-1 auction; (iii) part of the energy contracted at the A-0
auction, hydrological risk, revenue from hydrological risk deducted from the January and February transfers and from the
cut in the April transfer.
24

EBITDA by segment
(R$ MN)

1,359

-33.2%

Consolidated EBITDA (R$ MN) 3Q14 3Q13

Distribution
EBITDA Margin (%)

25.6%
-74.4%

723

908

Generation
EBITDA Margin56.0%
(%)

15.8%
84.2%

3Q13

42.3%
74.4%

185

3Q14

9M13

9M14

608.9

10.1%
24.5
19.2%

-77.5%

9M14 9M13

Var.

524.3

1,011.5

43.8% -33.7 p.p.

11.5%

23.1% -11.6 p.p.

104.9

295.3

324.4

62.5%

79.1% -16.6 p.p.

-76.7%

79.0% -59.8 p.p.

-48.2%

-9.0%

23.6

9.3

155.0%

88.8

23.5

277.0%

10.4%

6.0%

4.5 p.p.

13.1%

5.1%

8.0 p.p.

Others and eliminations

(1.7)

(1.1)

58.4%

(32.5)

(4.3)

649.1%

Total

183.6

722.0

-74.6%

875.8

1,355.1

-35.4%

11.6%

46.4% -34.8 p.p.

16.5%

27.6% -11.1 p.p.

EBITDA Margin (%)

57.7%

26.0%
74.0%

Commercialization

137.1

Var.

EBITDA Margins (%)

Generation and Commercialization 1

Electricity Distribution

1Percentages

do not consider eliminations

25

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

- 16.2%

- 35.4%

400
(109)

(896)

0,2

23

169

(5)

1,355

1,246

Adjusted
EBITDA
9M13

(2)

1,044

876

Regulatory
Assets and
Liabilities

EBITDA
9M13

Net
Revenue

NonManageable
Other
Provisions
Manageable
Costs
operacional
Costs
(PMSO)
revenues

Equity
Pikup

EBITDA
9M14

Regulatory
Assets and
Liabilities

Adjusted
EBITDA
9M14

26

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

- 34.3%

- 68.9%

(72)

387

458

(479)

111
(14)
254
169
(3)

8
Adjusted Net Regulatory
Income
Assets and
9M13
Liabilities

9M13

EBITDA

Financial
Result

Taxes

Depreciation

143

9M14

Regulatory Adjusted Net

Assets and
Income
Liabilities
9M14

27

Dividends
Average payout of 86% in the last 5 years

28

Indebtedness
NET DEBT
al

usto Re
Custo Real C

5,229.6

AMORTIZATION SCHEDULE* (R$ MN)

5,543.6

Average Term: 3.7 years

4,151.6

ea
Custo R

2010

Jun/14

* Principal only

2011

U$/Euro *
0.3%

2012

COST OF DEBT
Custo Real

8.21%

2011
2007

581

Sep/14

Custo Nominal
11.03%

4.25%

733

Net Debt / EBITDA

2009

721

261

2010

Custo Real

Sep/13

866

479

20
09
2 010

2009

791

3.39

2.99

2.68

1,210

1,055

2.24%

2012
2008

2009

11.27%

9.68%

2013
2009

3T14
set/10

Real Cost
2010

Others
3.5%

4.47%

3.55%

Nominal Cost

IPCA
10.8%

TJLP
12.0%

2011

CDI
73.3%
*ConsideringHedge

2012

29

Investments
CAPEX BREAKDOWN
(R$ MN)
9M14

CAPEX (R$ MN)

929
701

154

797
103

845
+30.5%

132
482

182
775

694

713

519 519

2010

630

88
394

2011

2012

2013

54

9M13

Generation
18.1

Administration
27.8
Others
7.7

Commerc./
Energy
Eficiency
8.3

575

9M14

Losses
Combat
227.9

Develop. of
Distribution
System
339.7

Investments in Electric Assets (Distribution)

30

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%

31

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.

32

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
33