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Rio de Janeiro, March 6, 2015.

Consumption grows by 3.0%


Quality indicators improve by 33.4% (DEC) and
21.1% (FEC)

Total energy consumption grew by 3.0% year-on-year, totaling 6,694 in 4Q14, 2.5%
higher than in 4Q13, driven by the growth of 4.9% in the residential segment and 6.0% in the
commercial segment.
In 2014, net revenue, excluding construction revenue, was R$8,289.9 million, an upturn
of 25.6% in relation to 2013. In the quarter, also excluding construction revenue, net revenue
totaled R$2,988.6 million, 75.7% above the figure recorded in 4Q13, primarily explained by the
recognition of the regulatory asset or liability (CVA) balance in the distributors net revenue. Net
revenue, excluding construction revenue and the booking of CVA, would have come to R$7,270.0
million in 2014, a 10.1% increase in relation to 2014, and R$1,968.8 million in 4Q14, a 15.7%
increase in relation to 4Q13.
Consolidated EBITDA1 closed the year at R$1,809.7 million, moving up by 6.7% over
2013. In 4Q14, consolidated EBITDA was R$933.9 million, up 173.3% from 4Q13, chiefly due to
the recognition of CVA balance in Light SESA and equity income gain from the dilution of the
generation companys stake in Renova Energia. Excluding these effects, EBITDA would have
totaled R$1,332.4 million in 2014, down 14.1% on the adjusted EBITDA recorded in 2013, and
R$288.0 million in 4Q14, a 5.5% decrease in relation to 4Q13.
In 2014, net income was
R$662.8 million, a 12.9% increase
over 2013. In 4Q14, net income
totaled R$520.1 million, moving up by
303.2% in relation to 4Q13. Excluding
the recognition of CVA balance and
equity income gain, net income came
to R$299.1 million in 2014, a 39.1%
reduction in relation to 2013, and
R$45.1 million in 4Q14, a 56.8%
decrease from the adjusted income
recorded in 4Q13 .
Non-technical energy losses in
the last 12 months, calculated as a percentage of billed energy in the low-voltage market (ANEEL
criterion), posted a reduction of 0.4 p.p. from 3Q14, reaching 40.9% in December 2014.
The Operating Quality Indicators DEC (equivalent length of interruption indicator) and
FEC (equivalent frequency of interruption indicator) came to 12.25 hours and 6.56 times,
respectively, an improvement of 33.4% and 21.1% in relation to the same period last year.
Collections totaled 98.6% of billed consumption in 2014, down 2.0 p.p. from 2013.
Provisions for Past Due Accounts (PCLD) represented 1.3% of the distribution companys
gross billed energy in 2014.
1
EBITDA is not a recognized measure under BRGAAP or IFRS. It is used by the Company as an additional measure of
performance of its operations, and it should not be considered individually or as an alternative to net income or
operating income, as a measure of operating performance, or as an indicator of liquidity. The EBITDA presented is
calculated in accordance with CVM Instruction 527/2012 and represents net income +income and social contribution tax
+ net financial expenses + depreciation and amortization. The reconciliation is shown on Exhibit II.

The Company closed December with net debt of R$6,076.5 million, an increase of 9.6%
over September 2014. The net debt/EBITDA ratio stood at 3.70x.

On March 6, 2015, the Board of Directors proposed the distribution of R$157.4 million,
R$0.7719 per share, as dividends, referring to the results of fiscal year ended December 31,
2014. This proposal is subject to approval by the Annual Shareholders Meeting to be called.

BM&FBOVESPA: LIGT3

Conference Call:

IR Contacts:

OTC: LGSXY

Date: 03/09/2015

Phone: +55 (21) 22117392/2828/2660

Total shares: 203,934,060 shares

Time: 3:00 p.m. Brazil // 2:00 p.m. US ET

Fax: +55 (21) 2211-2787

Free Float Total: 97,629,475 shares (47.87%)

Phone: +55 (11) 2188 0155 // +1 (646) 843 6054

Email: ri@light.com.br

Market Cap (03/05/15): R$ 2.712 milhes

Webcast: ri.light.com.br

Website: ri.light.com.br

Presentation of 4Q13 results (comparative


period)
Management reassessed the criterion for the presentation of contractual debt amortization with the
pension plan in the cash flow statement, which led to a reclassification of the 2013 period for
comparison purposes.

For more information, see Exhibit VI of this report.

Table of Contents
1. The Company4
2.1 Distribution....................................................................................................... 5
Energy Balance..............................................................................................7
Operating Quality.......................................................................................13
2.2 Generation...................................................................................................... 14
2.3 Commercialization and Services.....................................................................15
3. Financial Performance....................................................................................16
3.1 Net Revenue................................................................................................... 16
Consolidated...................................................................................................... 16
Distribution........................................................................................................ 17
Generation......................................................................................................... 18
Commercialization and Services........................................................................18
3.2 Costs and Expenses........................................................................................19
Consolidated...................................................................................................... 19
Distribution........................................................................................................ 19
Generation......................................................................................................... 23
Commercialization and Services........................................................................23
3.3 EBITDA............................................................................................................ 24
Consolidated................................................................................................ 24
Distribution.................................................................................................. 25
Generation................................................................................................... 26
Commercialization and Services...............................................................26
3.4 Consolidated Financial Result.........................................................................27
3.5 Debt................................................................................................................ 28
3.6 Net Income..................................................................................................... 31
3.7 Investments.................................................................................................... 33
Generation Capacity Expansion Projects................................................34
4. Cash Flow............................................................................................................ 38
6. Capital Markets.................................................................................................... 40
7. Recent Events...................................................................................................... 43
8. Disclosure Program.............................................................................................. 45
EXHIBIT I.................................................................................................................. 46
EXHIBIT II................................................................................................................. 47
EXHIBIT III................................................................................................................ 47
EXHIBIT IV................................................................................................................ 49
EXHIBIT V................................................................................................................. 50
EXHIBIT VI................................................................................................................ 51

1. The Company
Light S.A. is a holding company that controls subsidiaries and affiliated companies in three
main business segments: energy distribution, generation and commercialization/services. In
order to increase the transparency of its results and provide investors with a better basis for
evaluation, Light also presents its results by business segment. The Companys corporate
structure on December 31, 2014 is shown below:

2.
Operating Performance
2.1 Distribution

Total energy consumption in Light SESAs concession area (captive clients + transport of free
clients) came to 6,694 GWh in 4Q14, 2.5% up from the same period in 2013, due to an
increase in all classes, except for the industrial segment, which posted a 7.9% decrease,
reflecting the lower consumption by electro-intensive industries (steel and aluminum
producers and chemical companies).
In the residential segment, consumption reached 2,203 GWh in the quarter, accounting for
32.9% of the total market, a growth of 4.9% in relation of 4Q13. In 4Q14, the average
temperature was 1.1C higher than in 4Q13.
5

Commercial clients consumed 2,153 GWh in the quarter, representing 32.2% of the total,
6.0% up from 4Q13. The commercial segments constant growth in recent years has been
fueled by the expansion of the consumer base and the increasing use and ownership of
refrigeration equipment in commercial establishments, especially retailers.
Industrial consumption amounted to 1,326 GWh in 4Q14, equivalent to 19.8% of the total
market, 7.9% down from the same period last year. The industrial segments captive clients
maintained their consumption in line with 4Q13, while free clients posted a decrease of 10.3%
in relation to the same period last year.
The other consumption segments, which accounted for 15.1% of the total market, recorded an
increase of 5.3% in consumption in relation to the fourth quarter of 2013. The rural and public
utility categories reported respective increases of 9.3% and 3.1%, while the government
category posted a reduction of 1.4% in relation to 4Q13.

Total energy consumption in Light SESAs concession area (captive clients + transport of free
clients2) came to 26,493 GWh in 2014, 3.0% up in relation to 2013.
Residential consumption accounted for 33.8% of the total market and totaled 8,950 GWh in
2014, 7.7% up over 2013, reflecting the upturn in consumption in all quarters of the year, led
by the first quarter (+13.6%), due to the high temperatures in the summer of 2014.
2
In view of ANEELs market ratification during the tariff revision process, consumption by the free client CSN has been
reincluded as of 4Q13.

Commercial clients consumed 8,328 GWh in the year, 4.9% up over 2013. As with residential
consumption, commercial consumption recorded growth in all quarters of 2014.
In 2014, industrial consumption amounted to 5,296 GWh, 6.6% less than in 2013, due to
reduced consumption in the steel/aluminum and chemical sectors. Excluding this effect,
industrial consumption would have recorded a growth of 1.0% in relation to 2013. The
industrial segments captive clients maintained their consumption in line with 2013, while free
clients recorded a decrease of 8.7% over 2013.
The other consumption segments, which accounted for 14.8% of the total market, recorded an
increase of 3.2% over 2013. The rural, government and public utility categories reported
increases of 26.8%, 1.5% and 2.8%, respectively, in relation to 2013. This higher consumption
in the rural category is explained by the reclassification of some clients, who were previously
treated as industrial, as a result of Aneel Resolution 414.

Energy Balance

1,7%

16,9%

25,3%

20,4%

9,0%

24,0%

2,9%

Energy Losses
In the last 12 months, non-technical energy losses totaled 5,927 GWh, accounting for 40.9%
of billed energy in the low-voltage market (ANEEL criterion), 0.4 p.p. less than in the 12
months ended September 2014. In comparison with the 12 months ended December 2013,
when non-technical energy losses totaled 42.2% of the low-voltage market, there was a
reduction of 1.3 p.p.
Light SESAs total energy losses amounted to 8,847 GWh, or 23.3% of the grid load, in the 12
months through December 2014.

In order to continue reducing non-technical energy losses, Light is investing in initiatives that
include conventional fraud inspection procedures, the upgrading of network and measurement
systems, and the Zero Loss Area program (APZ). Among these initiatives, the following stand
out:
8

Consumer unit regularizations: The Company conducted 61,219 regularization


procedures in the low, medium, and high-voltage segments in 2014, 5.6% up from 57,962 in
2013. Energy incorporation totaled 279.1 GWh in 2014, 13.7% up from the 245.6 GWh
reported in 2013. Recovered energy increased by 16.6% to 179.7 GWh in 2014, versus 154.1
GWh in 2013.

Installation

of

remote

electronic

metering devices: SMC (centralized metering


system) devices are installed in areas with high
loss rates, with or without the support of Pacifying
Police Units (UPPs). The UPPs give Light more room
for maneuver in regard to combating default or
energy theft. The Company installed 10,141 such
devices in UPP-protected areas in 4Q14, resulting in
the incorporation of 15.0 GWh. In areas outside the
sphere of the UPPs, Light installed 41,195 devices,
with the incorporation of 26.9 GWh. As a result, the
Company closed 2014 with 622,000 installed electronic meters, 190,000 units (+44.0%) more
than at the end of December 2013. In May 2014, the Company announced that Landis+Gyr
Equipamentos de Medio Ltda (Landis+Gyr) was chosen as the supplier of equipment and
services for the automation of overhead and underground networks for an Integrated System
using smart grids and devices in the distribution system (Smart Grid Project). After the work
statement phase, the contract was signed in September 2014, encompassing the supply of
approximately 1 million metering devices in the next five years for R$750 million. Currently,
Light and Landis+Gyr are adjusting the information technology environment in order to
receive this new communications solution.

Zero Loss Areas: In August 2012, the Company created the APZ Project, based on a
combination of electronic metering and a shielded network, supported by dedicated teams of
technicians and commercial relations personnel with clearly defined targets, whose
compensation is tied to improving loss and default indicators in their respective areas. A
typical APZ has around 17,000 clients. The project, known commercially as "Light Legal",
which receives support from SEBRAE in regard to the training of partnering microentrepreneurs, has 37 operational APZs and 624,000 clients in the Baixada Fluminense region
and the citys south, west and north sides.
In 4Q14, 113,000 electronic metering devices have been installed in the communities
and the APZs in place for more than 12 months have resulted in an average 29.0 p.p.
reduction in non-technical energy losses over the grid load and an average collection
increase of 7.0 p.p. The table below shows the results through December 2014 in the 20
areas where the results have been determined:

10

The other APZs in areas where the results have been determined, but in place for less
than 12 months, have resulted in an average 26.0 p.p. reduction in non-technical
energy losses over the grid load and an average collection increase of 4.0 p.p., as
shown in the table below.

Complementing the 26 areas where the results have already been determined, the
table below shows the 11 APZs in the implementation phase, without recorded results,
totaling 37 operating areas. The total of clients still with no results is approximately
155,000.

11

12

Collection
The 4Q14 collection rate stood at 95.7% of billed consumption, 3.6 p.p. lower than in the
same period last year, primarily due to
the

mathematical

effect

from

time

displacement of collection in relation to


billed consumption, the average tariff
adjustment of 19.23% in November
2014

and

collection

the
from

23.0
the

p.p.

drop

in

government

in

relation to 4Q13, when there was an


atypical collection rate of 121.0% due
to the settlement of debt from a major client.
In 2014, collection rate was 98.6%,
down 2.0 p.p. from 2013, due to the two
reasons mentioned above.
In

4Q14,

provisions

for

past

due

accounts (PCLD) totaled R$36.3 million,


representing

1.3%

energy3,

million

7.5

of

gross

less

billed

than

the

R$43.8 million provisioned in 4Q13. In


2014, PCLD represented 1.3% of gross
billed energy, totaling R$127.5 million,
a reduction of R$30.8 million over 2013.

3
The calculation of PCLD considers captive markets gross revenue + TUSD + unbilled energy.

13

Operating Quality
In 4Q14, in the overhead distribution network, 98 medium-voltage distribution circuits were
inspected/maintained, 1,206 transformers were replaced and 33,169 trees were pruned. In the
underground distribution network, 5,957 transformer vaults and 13,959 manholes were
inspected. In addition, 98 transformers, 78 switches and 290 protectors were maintained.
In the last 12 months, the moving average of the equivalent length of interruption indicator
(DEC), expressed in time, registered 12.25 hours, 33.42% down from the same period last
year, while that of the equivalent frequency of interruption indicator (FEC), expressed in
occurrences, stood at 6.56 times, a drop of 21.06% in relation to the same period last year.

All indicators in 4Q14 reflect the improved performance of the network thanks to the
reorganization of processes in the distribution area and the initiatives implemented through
14

the action plan initiated in June 2013. More intensive tree pruning and energy network
preventive maintenance measures are having a positive impact on results, ensuring an
improved DEC and FEC performance.

The improvement in the quality indicators in 2014

reflected in the reduction of 30.1% of expenses with DIC/FIC when compared with 2013.

2.2 Generation

Light Energia sold 1,119.1 GWh in 4Q14, net of energy purchases, 10.1% down year-on-year.
No energy was sold on the captive market (ACR) in 2014, due to the expiration of the last
existing captive energy sale contracts in December 2013. These contracts were renegotiated
on the free market (ACL), whose 4Q14 energy sales moved up by 34.4% as a result.
Net spot market purchases came to 41.4 GWh in 4Q14, versus total sales net of purchases of
113.0 GWh in 4Q13. This result was due to the low GSF (Generation Scaling Factors), in turn
caused by the national systems exceptionally poor hydrological conditions, impacted by low
average rainfall and the consequent period depletion of hydro plant reservoirs.
The GSF in October, November and December 2014 came to 87.67%, 87.73% and 87.84%,
respectively, versus 103.31%, 103.36% and 107.97% in the same months in 2013. The
average GSF in 4Q14 was 87.24%, 17.64 p.p. lower than the figure recorded in the same
period in 2013. The average GSF in 2014 stood at 90.61%, 6.6 p.p. below the average GSF
reported in 2013.
In 2014, energy sales on the free market (ACL) increased by 25.6% over 2013, while spot
market sales (net of purchases) recorded a sharp reduction between the periods.

15

2.3 Commercialization and Services


In the fourth quarter in 2014, direct energy
sales by Light Com and Light Esco from
conventional

and

subsidized

sources

totaled 1,357.7 GWh, 32.8% more than the


1,022.0 GWh recorded in the same period
last year. In 2014, a energy sales amounted
to 5,338.4

GWh, 28.5% higher than the

4,154.7 GWh reported in 2013.


In the services segment, the Company
entered into four contracts in 4Q14. In 2014, of the twelve (12) service projects that were
ongoing, six (6) were completed and delivered to clients. These include the Light Esco
Cogeneration Plant, for the Rio de Janeiro Refrescos factory.

16

3. Financial Performance
3.1 Net Revenue
Consolidated

Consolidated net operating revenue totaled 3,294.7 million in 4Q14, 59.5% more than in
4Q13. Excluding revenue from construction, which has a neutral effect on net income,
consolidated net revenue totaled 2,988.6 million in 4Q14, moving up by 75.7%, due to market
growth and the booking of CVA in the revenue. Excluding revenue from construction and the
booking of CVA, net revenue came to R$1,968.8 million in the quarter, an increase of 15.7% in
relation to 4Q13.
The distribution and commercialization/service segments recorded respective upturns of
82.2% and 62.6%, while net operating revenue from the generation segment fell by 13.0%.
17

In 2014, net revenue moved up by 24.4%. Excluding revenue from construction, consolidated
net revenue totaled grew by 25.6% in relation to 2013, due to market growth and the booking
of CVA in the revenue.
In 2014, , excluding revenue from construction and the booking of CVA, net revenue came to
R$7,270.0 million in 2014, 10.1% higher than in 2013.

Distribution
Net revenue from distribution totaled R$3,078.7 million in 4Q14, an increase of 63.2% in
relation to 4Q13. Excluding revenue from construction, net revenue came to R$2,772.6 million
in 4Q14, 82.2% up on the same period last year. This result can be explained by: (i) the
R$1,019.8 million recognition of CVA balance in the distributors net revenue as of December
20144 (excluding this effect, net revenue grew 15.2% in the quarter); (ii) the 257.2% increase
in unbilled energy, provisioned for in accordance with the billing scale, due to high
temperatures in December 2014; (iii) the average tariff adjustment of 19.23% as of November
7, 2014; (iv) the 2.5% upturn in energy in the quarter.
Revenue from demand surplus and exceeding reactive energy totaled R$13.0 million this
quarter and revenue from the tariff difference related to the special treatment of non-technical
losses in the concession area amounted to R$66.4 million, both of which treated as special
obligations. Although they are billed, they have not been included in net revenue since the
last tariff revision in November 2013.

The distribution market consists mostly of the

residential and commercial segments, which together accounted for 61.8% of 4Q14 energy
consumption and 73.6% of sales revenue.

4
On December 10, 2014, a fourth amendment was signed to the concession contract for distribution by
the subsidiary Light SESA, which ensured the right and duty that the remaining balances of any
insufficiency or reimbursement of the tariff at the end of the concession will be added or deducted from
the compensation amount, which allowed for the recognition of the balances of these regulatory assets
and liabilities.

18

Excluding revenue from construction, net revenue from distribution came to R$7,317.8 million
in 2014, an increase of 24.1% over 2013 explained by: (i) the recognition of CVA balance in
the distributors net revenue as of December (excluding this effect, net revenue grew 6.8% in
2014); (ii) the increase in unbilled energy; (iii) the annual tariff adjustment as of November 7,
2014; (iv) the 3.0% upturn in energy consumption in the year. In 2014, revenue from surplus
demand and excess reactive energy totaled R$50.2 million, while revenue from the tariff
difference related to the special treatment of non-technical losses in the concession area
amounted to R$186.5 million.

Generation
Net revenue from generation totaled R$129.2 million in 4Q14, 13.0% lower than the R$148.5
million recorded in 4Q13. This reduction is explained by the decreased availability of energy
for sale, in view of a larger deficit in GSF in relation to the same period in 2013. As a result,
41.4 GWh had to be purchased on the spot market in order to fulfill the contracts entered into
in 4Q14, while in 4Q13 the generator recorded sales, net of purchases, of 113.4 GWh.
The average sale price on the free market, net of taxes, was R$109.2/MWh in 4Q14, 3.2%
higher than the R$106.1/MWh recorded in 4Q13 (weighted by the free and captive markets).
After the termination of contracts in the regulated market in December 2013, the trading
company became responsible for the sale to end clients.
In 2014, net revenue from generation totaled R$601.6 million, an upturn of 7.7% over 2013,
explained by the higher availability of energy sold on the spot market in the first quarter of
2014 for an average price of R$658.3/MWh.

19

Commercialization and Services


Net revenue from commercialization and services stood at R$221.1 million in 4Q14, 62.6% up
from 4Q13.
In 4Q14, net revenue from energy resales increased by 76.3% over 4Q13, fueled by the 32.8%
year-on-year upturn in sales volume in 4Q14 versus 4Q13, due to the reallocation of Light
Energias terminated contracts, as the sale to end clients started to be performed by the
trading company. The average sale price, net of taxes, was R$158.1/MWh in 4Q14, versus
R$118.8/MWh in 4Q13.
2014 net revenue totaled 899.2 million, 49.5% higher than in 2013, due to the substantial
period increase in energy sales volume.

3.2 Costs and Expenses


Consolidated

In the fourth quarter of 2014, operating costs and expenses totaled R$2,611.6 million, 43.5%
up year-on-year. Excluding construction costs, consolidated costs and expenses climbed by
58.5% in relation to 4Q13, mainly due to the higher volume of energy purchased by the
distribution, generation and trading companies.
In 2014, consolidated operating costs and expenses, excluding construction costs, came to
R$7,029.6 million, 32.9% more than in 2013.

20

Distribution
In 4Q14, distribution costs and expenses moved up by 40.2% over 4Q13. Excluding
construction costs, total costs and expenses grew by 55.0% from 4Q13. In 2014, distribution
costs and expenses moved up by 26.7%, while total costs and expenses, excluding
construction costs, increased by 28.6%.

Non-Manageable Costs and Expenses


In 4Q14, non-manageable costs and expenses came to R$1,747.6 million, 55.1% higher than
in the same period in 2013, chiefly due to the increases of 57.9% in costs with energy
purchases and 12.4% in expenses related to charges and transmission.

21

The increase in purchased energy costs in 4Q14 was a


reflection of: (i) higher costs associated with hydrological
risk resulting from quotas, due to larger deficit in GSF;
(ii) contracting through the A-1 Auction, in December
2013, and the A-0 Auction, in April 2014, at R$
177.22/MWh and R$ 268.33/MWh, respectively, higher
than the prices covered by the tariff; (iii) annual
contractual adjustments; (iv) the increase in the average
difference settlement price (PLD) from R$333.3/MWh in
4Q13 to R$727.5/MWh in 4Q14, which resulted in higher
expenses with Availability Contracts, due to thermal
plant dispatch by the National System Operator (ONS) as
a result of depleted hydro plant reservoirs.

Due to

adverse hydrological conditions, in April 2014, ContaACR (Captive Market Account) was created, aiming to
coverpartially or fullythe costs incurred by energy
distribution companies in the period from February to
December 2014 arising from involuntary exposure to the
spot market and thermal power acquisition linked to
Availabilities Contract for Sale of Electricity in the
Regulated

Environment

(CCEAR-D). Since

the

funds

provided under the Account were sufficient for settlements only until October 2014,
settlements related to the November and December 2014, which in Light SESAs case total
R$471 million, were postponed until March 31, 2015. A new disbursement of funds under the
Account is being negotiated by the Government.

Costs with charges and transmission climbed by 12.4% in 4Q14, mainly due to the 63.1%
upturn in energy transmission expenses as a result of higher volumes contracted with the
basic network, together with the increase in the network usage charge.
The average purchased energy cost, excluding spot market purchases, amounted to
R$163.4/MWh in 4Q14, 29.6% more than the R$126.0/MWh recorded in 4Q13. Including spot
market purchases, the average purchased energy cost came to R$239.7/MWh in 4Q14, higher
than the 4Q13 average of R$131.7/MWh. The following table gives a breakdown of nonmanageable costs:

22

In

2014, the 27.1% increase in purchased energy costs resulted from: (i) higher costs associated
with hydrological risk resulting from quotas; (ii) contracting at auctions for higher amounts
than the prices covered by the tariff; (iii) annual contractual adjustments; (iv) the increase in
the average difference settlement price (PLD) from R$272.3/MWh in 2013 to R$690.0/MWh in
2014.
Costs with charges and transmission climbed by 5.5% in 2014, primarily due to the 44.8%
surge in energy transmission expenses as a result of higher volumes contracted with the basic
network, together with the increase in the network usage charge.
Manageable Costs and Expenses
In 4Q14, manageable operating costs and expenses, comprising personnel, materials,
outsourced services, provisions, depreciation, other operating revenue/expenses and others,
totaled R$392.6 million, 54.7% up from 4Q13.
Costs and expenses from personnel, materials, outsourced services and others (PMSO) totaled
R$191.2 million in 4Q14, 10.7% less than in the same period last year, mainly due to the
29.4% reduction in the personnel line, partially offset by the 25.6% in the others line. This
29.4% reduction in the personnel line was primarily due to: (i) the higher volume invested in
23

labor capitalization in the quarter, and (ii) recognition of bonus payments to the management
in December 2013. In 4Q14, costs and expenses from materials and outsourced services
remained in line with 4Q13. The 25.6% upturn in the others line can be explained by higher
own electricity consumption, expenses with advertising campaigns to raise awareness about
efficient energy use and with cultural projects.
The provisions line totaled R$50.0 million in 4Q14, 260.6% higher than in 4Q13, mainly driven
by provisions for risks related to civil lawsuits amounting to R$39.0 million, partially offset by
the 22.1% reduction in provisions for past due accounts (PCLD), from R$43.3 million in 4Q13
to R$33.8 million in this quarter.
The depreciation and amortization line increased by 10.4% in 4Q14 over 4Q13, due to higher
investments as a result of the incorporation of more assets into the network in 2014.
In 4Q14, the other operating revenue/expenses line totaled expenses of R$24.0 million, versus
revenue of R$102.2 million in 4Q13, reflecting the recognition of R$124.8 million related to the
New Repositioning Value (VNR) which took place in the 2013 Tariff Revision.

24

Generation

Light Energias 4Q14 costs and expenses amounted to R$90.8 million, 119.8% above the
figure recorded in 4Q13, due to the higher volume of spot market energy purchases as a result
of the low GSF values in the quarter.
In 4Q14, costs and expenses were broken down as follows: personnel (6.9%), materials and
outsourced services (6.1%), CUSD/CUST/purchased energy (63.7%), and depreciation and
others (23.3%). PMSO per MWh generated by Light Energias plants in the quarter came to
R$15.7/MWh, versus R$16.8/MWh in 4Q13.
In 2014, costs and expenses were broken down as follows: personnel (8.0%), materials and
outsourced services (6.0%), CUSD/CUST/ purchased energy (58.7%), and depreciation and
others (27.3%). PMSO per MWh generated by Light Energias plants came to R$14.6/MWh,
versus R$15.4/MWh in 2013.

Commercialization and Services

Costs and expenses totaled R$205.3 million in 4Q14, 54.2% higher than in the fourth quarter
of 2013, as a result of the increase in the materials and outsourced services line, due to
purchase of energy and carbon dioxide for co-generation project, and the 49.4% upturn in
costs from energy purchased for resale, due to the higher volume of energy traded and
purchase prices in 4Q14.

25

In 2014, costs and expenses increased by 42.7% over 2013, mainly due to the increase in
energy purchased for sale.

26

3.3 EBITDA5
Consolidated

Consolidated EBITDA totaled R$933.9 million in 4Q14, 173.3% above the consolidated EBITDA
reported in 4Q13. This upturn was mainly driven by the distribution and generation segments,
with respective increases of 221.0% and 63.7%. The EBITDA margin expanded from 20.1% in
4Q13 to 31.2% in 4Q14.
The 4Q14 EBITDA can be primarily explained by the booking of CVA in the distribution
companys revenue and the equity income gain of R$143.2 million in the generation company,
due to the dilution of Light Energias stake in Renova Energia, from 21.9% to 15.9% of the
total capital stock.
Adjusting the 4Q14 EBITDA (i) for the R$502.8 million CVA balance until September 30, 2014,
and (ii) the equity income gain of R$143.2 million, adjusted EBITDA would total R$288.0
million in 4Q14, a decrease of 5.5% in comparison with the 4Q13 EBITDA of R$304.7 million,
also adjusted for (i) CVA, and (ii) the recognition totaling R$124.8 million related to the New
Repositioning Value (VNR) in 2013.

Adjusting
the

2014

EBITDA (i) for the R$334.2 million CVA balance until December 31, 2014, and (ii) the equity
5
EBITDA is not a recognized measure under BRGAAP or IFRS. It is used by the Company as an additional measure of
performance of its operations, and it should not be considered individually or as an alternative to net income or
operating income, as a measure of operating performance, or as an indicator of liquidity. The EBITDA presented is
calculated in accordance with CVM Instruction 527/2012 and represents net income +income and social contribution tax
+ net financial expenses + depreciation and amortization. The reconciliation is shown on Exhibit II. .

27

income gain of R$143.2 million, adjusted EBITDA would total R$1332.4 million in 2014, a
decrease of 14.1% in comparison with the 2013 EBITDA of R$1.551,1 million, also adjusted for
(i) CVA, and (ii) the recognition totaling R$124.8 million related to the New Repositioning Value
(VNR) in 2013.
This decrease in the EBITDA can be explained by the water crisis, which impacted the
generation company, as well as by the third tariff revision cycle, with a reduction in the
distribution companys regulatory WACC.

Distribution
The distribution companys EBITDA totaled R$725.9 million in 4Q14, 221.0% up year-on-year,

mainly due to the booking of CVA in the net revenue.


In 2014, the distribution companys EBITDA was R$1,250.2 million, moving up by 1.0% in
relation to 2013, impacted by the booking of CVA. The EBITDA margin stood at 21.8% in 2014,
3.9 p.p. down from 2013.

28

Adjusting the distribution companys EBITDA for the R$502.8 million CVA balance until
September 30, 2014, and the R$334.2 million CVA balance until December 31, 2014, Light
SESAs EBITDA would come to R$223.2 million in 4Q14 and R$916.0 million in 2014, posting
an increase of 18.0% in relation to the R$189.2 million recorded in 4Q13 and a reduction of
16.1% in relation to the R$1,091.9 million recorded in 2013, adjusted for the CVA and the
booking of R$124.8 million referring to the New Positioning Value (VNR) in 2013. The upturn in
the 4Q14 EBITDA can be explained by the reduction in Light SESAs costs and expenses from
personnel, materials, outsourced services and others (PMSO) in relation to 4Q13, while the
downturn in the 2014 EBITDA can be chiefly explained by the third tariff revision cycle, with a
reduction in the regulatory WACC.

Generation
In 4Q14, Light Energias EBITDA totaled R$196.0 million, climbing by 63.7% from the same
quarter in 2013, due to the equity income gain of R$143.2 million from the dilution of Light
Energias stake in Renova Energia. In 4Q14, the EBITDA margin stood at 151.7%, 71.0 p.p.
higher than in 4Q13.
When adjusted for the equity income gain from the dilution in Renova Energia, the generation
companys EBITDA came to R$52.1 million in 4Q14, a decrease of 56.5% from 4Q13, primarily
explained by the lower GSF values in the period.
In 2014, EBITDA totaled R$491.3 million, 10.6% up on 2013, accompanied by an EBITDA
margin of 81.7%, 2.2 p.p. up in relation to 2013.
When adjusted for the equity income gain, the generation companys EBITDA came to
R$353.7 million in 2014, a reduction of 20.4% over 2013, which can also be explained by the
lower GSF values in the period.

Commercialization and Services


EBITDA from commercialization and services totaled R$17.0 million in 4Q14, a surge of 518.0% in

relation to 4Q13, driven by the growth of 32.8% in energy sales volume and higher prices in
4Q14.
In 2014, EBITDA came to R$82.1 million, 212.3% higher than in 2013.
EBITDA margin stood at 7.7% in 4Q14, 5.7 p.p. up from 4Q13, while the 2014 EBITDA margin
stood at 9.1%, 4.8 p.p. above the margin recorded in 2013.
29

3.4 Consolidated Financial Result

The 4Q14 financial result was a negative R$112.3 million, a 14.6% deterioration over the
negative R$98.0 million reported in the fourth quarter of 2013.
Financial revenue totaled R$167.6 million in 4Q14, 38.1% above the figure reported in the
same period in 2013, mainly driven by other financial revenues, which totaled R$77.1 million
in 4Q14, an increase of 175.5% when compared to 4Q13, mainly explained by the restatement
of the distribution companys asset base, in the amount of R$68.4 milion, in line with the IGPM inflation index, which serves as the basis for the New Repositioning Value (VNR), and the
restatement of R$37,0 million related to judicial deposits fully redeemed in December 2014.
Fourth-quarter financial expenses came to R$279.9 million, 27.6% higher than in 4Q13,
primarily explained by the increase in the benchmark interest rate, whose impact reflected on:
(i) the 68.0% upturn in the currency and foreign exchange variation line due to the
devaluation of the Real against the Dollar, offset by the positive swap result, and (ii) the
42.1% increase in debt charges.
In 2014, the financial result was a negative R$459.8 million, a 1.3% deterioration over 2013.

30

3.5 Debt

31

The Company closed 4Q14 with gross debt of R$6,582.3 million, 4.7% less than at
the end of the previous quarter. In relation to
December 2013, gross debt increased by 13.2%,
or R$767.6 million, due to period funding as
follows: (i) the disbursement of R$418.0 million
from the BNDES to Light SESA in the last 12
months; (ii) a foreign-currency loan of R$235.8
million from Citibank to Light SESA, hedged by a
Real swap transaction (February 2014); (iii) the
disbursement

of

FINEP

resources

totaling

R$136.0 million in May 2014, at 4% p.a.; (iv)


Light

SESAs

10th

debenture

issue,

totaling

R$750.0 million, with Banco do Brasil, Ita, and Bradesco, at 115% of the CDI
interbank rate, in May 2014; (v) a foreign-currency loan of R$156 million from BNP
Paribas to Light Energia, hedged by a
Real swap transaction (October 2014);
(vi) a foreign-currency loan of R$51
million from Bank Tokyo-Mitsubishi to
Light SESA, hedged by a Real swap
transaction (November 2014); (vii) a
foreign-currency loan of R$200 million
from Banco Ita, of which R$68 million
to Light SESA and R$132 million to Light
Energia,

hedged

by

Real

swap

transaction (December 2014). These funds were used for investments and,
especially, working capital needs. In 4Q14, there was also the settlement of the 1 st
debenture issue of Light Energia and 7 th debenture issue of Light SESA, totaling
R$832 million.
The net debt/EBITDA ratio moved up from 3.39x in September 2014 to 3.70x in
December 2014, while the EBITDA/interest expense ratio stood at 2,69x in December
2014. The Company has covenants for these indicators of 3.75x and 2.5x,
respectively, although non-compliance is only deemed to occur if the limits
determined for the indicators are not respected for two consecutive or four alternate
quarters.

32

The Companys debt has an average


term to maturity of 4.4 years and the
average

cost

of

Real-denominated

debt was 11.2% p.a. At the close of


4Q14,

22.2%

of

total

debt

was

denominated in foreign currency, but,


considering the FX hedge horizon, only
0.45% of this total was exposed to
foreign currency risk. Lights FX hedge policy consists of protecting cash flow from
foreign-currency-denominated debt falling due within the next 24 months (principal
and interest) through the use of non-cash swap instruments with premier financial
institutions. Funding via Central Bank Resolution 4131, from Merrill Lynch, BNP,
Citibank, Bank Tokyo-Mitsubishi and Ita, was contracted with swaps for the entire
term of the debt.

33

3.6 Net Income


Light reported a net income of R$520.1 million in 4Q14, 303.2% up over the R$129.0 million
reported in 4Q13. This result was mainly due to the recognition of CVA balance in Light SESA
and the dilution of Light Energias stake in Renova Energia.

In 2014, net income was R$662.8 million, 12.9% up over 2013.


Adjusting the 4Q14 net income (i) for the R$331.8 million CVA balance until September 30,
2014, after taxes, and (ii) the equity income gain of R$143.2 million, net income would total
R$45.1 million in 4Q14, a decrease of 56.8% when compared to the 4Q13 net income of
R$104.6 million, also adjusted for (i) CVA, and (ii)

the recognition totaling R$82.3 million

related to the New Repositioning Value (VNR) in 2013.

Adjusting the 2014 net income (i) for the R$220.5 million CVA balance until December 31,
2014, after taxes, and (ii) the equity income gain of R$143.2 million, net income would total
R$299.1 million in 2014, a decrease of 39.1% when compared to the 2013 net income of

34

R$491.1 million, also adjusted for (i) CVA, and (ii)

the recognition totaling R$82.3 million

related to the New Repositioning Value (VNR) in 2013.

35

3.7 Investments

In

2014, Light invested R$1,054.0 million, 24.7% more than in 2013.


The distribution segment absorbed the lions share of R$932.1 million (representing 88.4% of
the total), 30.8% up on 2013. Of this total: (i) R$548.9 million went to the development and
expansion of distribution networks in order to keep pace with market growth, strengthen the
network and improve quality, including R$71.9 million for specific investments in the World
Cup and the Olympic Games; (ii) R$359.7 million went to the energy loss project (network
protection, electronic meters, and fraud regularization).
Commercialization and energy efficiency investments fell by 74.1% over 2013 to R$15.8
million in 2014, due to the completion of a major co-generation project in April 2014.

Generation Capacity Expansion Projects


One of the pillars of Lights Strategic Plan is to increase the share of energy generation in its
results. With this in mind, the Company has announced several projects to boost installed

36

generating capacity, which now totals 971 MW. With the incorporation of the scheduled
expansion projects, the position on December 31 was as follows:

The
2014

fourth
was

quarter

of

marked by the

following events related to projects for expanding Lights generating capacity:

37

Lajes SHP
This project comprises the construction of the Lajes SHP, with an installed generating
capacity of 17 MW, in the old powerhouse of the Fontes Velha power plant, which was
decommissioned in 1989. A Special Purpose Entity (SPE), called Lajes Energia S.A., a closelyheld company and wholly-owned subsidiary of Light Energia S.A., was created to implement,
construct, operate, and maintain the SHP. The project will not involve substantial works related
to dams, but the construction of a water main from the valve house and adjustments to the
power house. In addition to generating electric power, the SHP will directly benefit water
supply in the Metropolitan Region of Rio de Janeiro by significantly improving the reliability
and operational flexibility of the Lajes Complex.
The basic project has already been approved by Aneel. In June 2013, Aneel altered the public
service exploration regime to independent energy producer. As a result, the SHP obtained a
50% reduction in TUSD and TUST fees. The E.P.C. (Engineering, Procurement, Construction)
contract was signed in August 2014, triggering the beginning of the field activities.
Operational start-up is scheduled for the first half of 2016, given that the project has already
been granted an installation license.

Guanhes Energia
In February 2012, Light Energia acquired a 51% interest on Guanhes Energia S.A. and
Cemig acquired the other 49%. Guanhes is responsible for the implementation and
exploration of the following SHPs: Dores de Guanhes (14 MW), Senhora do Porto (12 MW),
Fortuna II (9 MW) and Jacar (9 MW), all of which located on the Guanhes and Corrente
Grande Rivers, in the state of Minas Gerais, with a joint installed capacity of 44 MW.
The project has been impacted by geological and environmental problems which have
postponed the start-up date.

Belo Monte Hydroelectric Power Plant


In October 2011, Amaznia Energia, owned by Light (25.5%) and Cemig (74.5%), acquired
9.77% of Norte Energia, the consortium responsible for building and operating the Belo Monte
Hydroelectric Power Plant. Located on the Xingu River in the state of Par, Belo Monte is the
largest 100% Brazilian hydro plant and the fourth largest in the world. It has an installed
capacity of 11,233 MW and assured energy of 4,571 MW, sufficient to supply around 18 million
homes. The energy generated by the Pimental and Belo Monte sites will supply the National
38

Integrated System through a 2,100-kilometer transmission Line to be constructed between the


states of Para and Minas Gerais. The concession for the construction of this line is held by a
consortium comprising Furnas, State Grid Brazil Holding and Eletronorte.
In November, Norte Energia concluded the concreting of the columns at the Pimental site. At
the Belo Monte site, the efforts are currently focused on the civil works required for the
descent of the turbines pre-distributor.
In December, the National Water Agency (ANA) issued the Resolution 2,046 allowing the filling
of the reservoir in any month of 2015, provided that the recommendations are observed, an
important landmark for the beginning of generation at the Complementary Power House in
November 2015. By December 2014, 70% of the civil works had been concluded.
Additionally, with respect to the reports in the press in late 2014 pointing to a potential delay
in the plants entry into operation, Norte Energia released two official press releases stating
that:
i. The generation in the Main Powerhouse of the power plant and Belo Monte, responsible for
97% of all of the energy from the hydroelectric power plant, will begin in March 2016, which is
the date set in the concession contract;
ii. The Complementary Powerhouse (233MW), at the Pimental site, responsible for 3% of the
power generation of the Belo Monte Hydroelectric Power Plant, will begin operating in
November 2015;
iii. The Company is taking and will take all reasonable steps to not be burdened by acts
outside of its governance, as they are a matter of law, which the administration cannot forgo.
iv. Independent of the request made to ANEEL to consider the facts to be without
responsibility, Norte Energia has worked tirelessly to minimize the impact of third parties on
the scheduled work, in order to minimize any adverse effects for the country and its
shareholders.

Renova Energia (Renova)


In July 2014, the wind farms which won Energy Reserve Auction 2009 (LER 2009), with
294.4 MW of installed capacity, began commercial operations. Since then, their energy output
has been booked in accordance with the provisions set forth in the commercial contract
entered into between Renova and the Electric Energy Commercialization Chamber (CCEE). It is
worth emphasizing that, pursuant to the contract, since the wind farms had been ready in

39

June 2012, they had already received the revenue from the amount of energy sold at the
auction.
In September 2014, the 1st issue of non-share-convertible debentures, with security interest
and an additional personal guarantee, in two series, for public distribution with restricted
placement efforts, by Renovas indirect subsidiary, Renova Wind Participaes SA, totaling
R$146.0 million, was approved. These debentures will complement long-term financing and
will be issued as infrastructure debentures, since the projects were prioritized by the decrees
published by the Ministry of Mines and Energy (MME). The funds will be allocated to the Alto
Serto II Complex, comprising LER 2010 LEN and A-3 2011, totaling 386.1 MW of installed
capacity.
On October 27, 2014, Renovas Board of Directors held a meeting to approve Renovas partial
capital increase totaling one billion, five hundred and fifty million, two hundred and sixty-four
thousand, nine hundred and eighty-three reais and nineteen centavos (R$1,550,264,983.19)
through the issue of eighty-seven million, one hundred and ninety-six thousand, nine hundred
and one (87,196,901) non-par registered common shares, at an issue price of R$17.7789 per
share. As a result, Light Energias interest in Renova was reduced from 21.9% to 15.9% of the
total capital stock and from 32.2% to 21.2% of the total common stock, with all shares in the
controlling block being maintained.
On October 31, 2014, Renova Energia, a subsidiary of Light Energia S.A., traded at the 2014
Reserve Energy Auction (LER 2014) 150.4 MW of installed capacity, corresponding to
average 42.7 MW wind and solar energy. The agreements will have 20-year duration, and
energy will start to be supplied in October 2017. 43.5 MW of installed capacity were traded,
with 20.9 MW average wind energy to be generated by three wind parks, located in the state
of Bahia, by the average amount of R$138.90/MWh (reference date of October 2014). In
addition, 106.9 MW of installed capacity were traded, with 21.8 MW average solar energy to
be generated by four solar parks, also located in the state of Bahia, by the average amount of
R$220.30/MWh (reference date of October 2014).

40

41

4. Cash Flow
The Company closed 4Q14 with a cash position of R$401.1 million, 26.6% down year-on-year.
This quarter, cash from operating activities fell by 80.2%, chiefly due to the impact from the
higher cost of energy purchases of the distribution and generation companies. In addition,
there was redemption of financial investments and new funding operations for early
settlement of debentures, investments and payment of debts and dividends.

5.

Corporate Governance
42

On December 31, 2014, the capital stock of Light S.A. comprised 203,934,060 common
shares, 97,629,475 of which outstanding.
The following chart shows Lights current shareholding structure:

On October 30, 2014, the Companys Management elected Oscar Rodrguez Herrero as a
sitting member of the Board of Directors following the resignation of Luiz Carlos da Silva Jnior
Cantdio, to complete the remainder of the Boards mandate, i.e. until the Annual
Shareholders Meeting to resolve on the financial statements for the fiscal year ended
December 31, 2015.

43

6. Capital Markets
Lights shares have been listed in the BM&FBovespas Novo Mercado trading segment since
July 2005, therefore adhering to best corporate governance practices and the principles of
transparency and equity, in addition to granting special rights to minority shareholders. Light
S.A.s shares are included in the following indices: Ibovespa, IGC (Corporate Governance
Index), IEE (Electric Power Index), IBrX (Brazil Index), ISE (Corporate Sustainability Index), ITAG
(Special Tag Along Stock Index) and IDIV (Dividend Index). They are also traded on the U.S.
over-the-counter (OTC) market as Level 1 ADRs under the ticker LGSXY.
At the end of December 2014, Light S.A.s shares (LIGT3) were priced at R$17.02. The
Companys market cap (no. of shares x share price) closed the quarter at approximately

R$3,471 million.

On November 26, 2014, Light S.A. was included, for the eighth consecutive year, in the
portfolio of the Corporate Sustainability Index (ISE) of BM&FBovespa.
The charts below give a breakdown of the Companys free float in December 2014.

44

The chart below shows the performance of Lights stock from December 30, 2013 to March 5,
2015.

Dividends
On December 17, 2014, the dividends approved at the Annual Shareholders Meeting held on
April 24, 2014 were paid, in the amount of three hundred sixty-four million, eight hundred
thirty-eight thousand, thirty-three reais and thirty-four centavos (R$364,838,033.34), with
thirty-two million, eighteen thousand, seven hundred ninety-three reais and fifty-three
centavos (R$32,018,793.53) corresponding to the mandatory minimum dividends, and three
hundred thirty-two million, eight hundred nineteen thousand, two hundred thirty-nine reais
and eighty-one centavos (R$332,819,239.81) related to net income for fiscal year 2013. The
net amount per share is R$1.789, without the retention of withholding tax, pursuant to Article
10 of Law 9249/95. Shares have been traded ex-dividends as of April 25, 2014.
On

March

6,

2015,

the

Board

of

Directors

approved

the

proposal

to

distribute

R$157,422,432.59, R$0.7719 per share, in dividends, related to the results from the fiscal
year ended December 31, 2014. This amount represents a dividend yield of 5,8% and
45

corresponds to a payout equivalent to the mandatory minimum of 25% of the net income for
the year adjusted for the legal reserve. In accordance with the Companys Board of Directors
criterion, such distribution is consistent with the lack of predictability of the hydrological
situation and the current condition of the Brazilian electric sector. The proposal will be
submitted for approval by the Annual Shareholders Meeting.

Dividends paid, dividend yield and payout

7. Recent Events

On February 5, 2015, the Extraordinary Shareholders Meeting and the Board of


Directors Meeting of the Company resolved on the election of members for the Board of
Directors and Board of Executive Officers of Light S.A., which are now composed as follows:
Board of Directors
Sitting members
Alternate members
Nelson Jos Hubner Moreira
Samy Kopit Moscovitch
Giles Carriconde Azevedo
Csar Vaz de Melo Fernandes
Fernando Henrique Schffner Neto
Fabiano Maia Pereira
Marcello Lignani Siqueira
Eduardo Lima Andrade Ferreira
Marco Antnio de Rezende Teixeira
Rogrio Sobreira Bezerra
Ana Marta Horta Veloso
Jos Augusto Gomes Campos
46

Fabiano Macanhan Fontes


Oscar Rodrguez Herrero
Guilherme Narciso de Lacerda
Silvio Artur Meira Starling
Carlos Alberto da Cruz

Carlos Antonio Decezaro


Marcelo Pedreira Oliveira
Jlisson Lage Maciel
Eduardo Maculan Vincentini
Magno dos Santos Filho

Board of Executive Officers


Paulo Roberto Ribeiro Pinto
Chief Executive Officer
Joo Batista Zolini Carneiro
CFO and Investor Relations Officer
Andreia Ribeiro Junqueira e Souza
Human Resources Officer
Ailton Fernando Dias
Corporate Management Officer
Luis Fernando de Almeida Guimares Energy Officer
Cludio Bernardo Guimares de
Business Development Officer
Moraes
Ricardo Cesar Costa Rocha
Distribution Officer
Fernando Antnio Fagundes Reis
Legal Office
Luiz Antnio Rodrigues Elias
Communication Officer

At a public meeting held on February 27, the Brazilian Electricity Regulatory


Agency (Aneel) approved the extraordinary average tariff increase of 22.48%, for the
subsidiary Light SESA, in force as of March 2, 2015. It is worth mentioning that the
residential consumers will notice a lower than the average increase, of 21.06%. The
Extraordinary Tariff Revision (RTE) is envisaged in the distributors concession
agreements, allowing Aneel to review their tariffs when there is a financial imbalance in the
agreements resulting from changes in the concessions non-manageable costs, such as
charges and energy purchase costs. The items taken into consideration for the
extraordinary readjustment of 22.48% were as follows: (i) new CDE Quotas (18.19%), and
(ii) Itaipu Tariff and other Energy Contracts (4.29%).

At the Board of Directors Meeting held on March 6, 2014, the Annual Shareholder
Meeting was called, to be held on April 10, 2015, to resolve on the following matters: (i) to
take the Managements accounts, to examine, discuss and vote on the financial statements
referring to the fiscal year ended December 31, 2014; (ii) to resolve on the allocation of net
income for fiscal year 2014; (iii) to elect and install the Fiscal Councils members; (iv) to
establish the overall annual compensation for the Management and Fiscal Council; and (v)
the election of members for the Board of Directors.

47

8. Disclosure Program

Forward-looking statements
The information on the Companys operations and its Managements expectations regarding its future
performance has not been reviewed by the independent auditors.
Statements about future events are subject to risks and uncertainties. These statements are based on
beliefs and assumptions of our Management, and on information currently available to the Company.
Statements about future events include information about our intentions, beliefs or current
expectations, as well as of the Company's Board of Directors and Officers. Exceptions related to
statements and information about the future also include information about operating results, likely or
presumed, as well as statements that are preceded by, followed by, or including words such as
"believes", "might", "will", "continues", "expects", "estimates", "intends", "anticipates", or similar
expressions. Statements and information about the future are not a guarantee of performance. They
involve risks, uncertainties and assumptions because they refer to future events, thus depending on
circumstances that might or might not occur.

Future results and creation of value to shareholders

might significantly differ from the ones expressed or suggested by forward-looking statements. Many of
the factors that will determine these results and values are beyond LIGHT S.A.'s control or forecast
capacity.

48

EXHIBIT I
Selected Financial Information - R$ million

49

EXHIBIT II
Selected Consolidated Financial Information6 - R$

million
(*) EBITDA is not a recognized measure under BRGAAP or IFRS. It is used by the Company as
an additional measure of performance of its operations, and it should not considered
individually or as an alternative to net income or operating income, as a measure of
operating performance, or as an indicator of liquidity. The table below presents the
reconciliation in accordance with CVM Instruction 527/2012:

6
The consolidated financial statements include Light S.A. and its subsidiaries and affiliates. In
these financial statements, the balances of receivables and payables, revenues and expenses
between the companies were eliminated.

50

EXHIBIT III
Consolidated Balance Sheet - R$ million

51

EXHIBIT IV

Regulatory Assets and Liabilities

On December 10, 2014, a fourth amendment was signed to the concession contract for distribution by the subsidiary
Light SESA, which ensured the right and duty that the remaining balances of any insufficiency or reimbursement of the

52

tariff at the end of the concession will be added or deducted from the compensation amount, which allowed for the
recognition of the balances of these regulatory assets and liabilities.

53

EXHIBIT V
Complementary Information Consolidated Financial
Information on a Proportional Interest Basis
This information is complementary and is exclusively for comparative purposes, since it is not
in accordance with Brazilian accounting practices.

54

EXHIBIT VI
The Management reassessed the criterion for presenting the amortization of the contractual
debt with the pension plan in the cash flow statement. The purpose of this reclassification was
to align this presentation criterion with best corporate practices in the same sector.
The consolidated financial information for the fourth quarter of 2014 is in accordance with the
new practice. However, for comparison purposes, the adjustments are presented below:

55

56