Corporate Presentation - May 2014

Corporate Presentation

May 2014

Light Holdings

2

4

5 6

7

Light in numbers

Amazônia Energia

Renova

Guanhães Energia

Generation

Complexo de Lajes

Distribution RJ State Concession

Area %

Population¹ 16 mn 11 mn 68%

Area¹ 44,000 Km² 11,000 Km² 25%

GDP¹ R$ 407 bn R$ 207 bn 51%

# Consumers 7 mn 4 mn 57%

# Municipalities 92 31 34%

5

HPP Ilha dos Pombos

SHP Paracambi

HPP Santa Branca

1

2

3

1 IBGE (2010)

4

6

7

3

Rankings Among the largest players in Brazil

INTEGRATED¹

Net Revenues 2013* – R$ Billion

GENERATION PRIVATE-OWNED COMPANIES¹

Installed Hydro-generation Capacity (MW) – 2013

37,767

25,777 22,926

21,783 20,391 15,634

15.6

10.6 9.2

7.4 7.1

5,560

2,652 2,241 2,219

1,799 896

DISTRIBUTION²

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

1 – Source: Companies reports

2 – Source: Relatório do Sistema de Apoio

a ANEEL

* Construction Revenue Included

** Captive Market

*** Considers the 9 MW of Renova’s SHPs

and 19 MW of Brasil PCH

*** 4

14.6

Shareholders 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

5

Corporate Governance

General Assembly

Fiscal Council

Board of Directors

Auditors

Committee

Governance and

Sustainability

Committee

Human

Resources

Committee

Finances

Committee

Management

Committee

Chief Executive

Officer

Corporate

Management Officer

João B. Zolini Carneiro Ricardo Cesar C. Rocha Evandro L. Vasconcelos Andreia Ribeiro Junqueira

Fernando Antônio F.Reis Paulo Carvalho Filho Evandro L. Vasconcelos*

Paulo Roberto R. Pinto

Chief

Communications

Officer

Luiz Otavio Ziza Valadares

LGSXY ADR-OTC

Interim*

6

Chief Financial and

Investor Relations

Officer

Chief Legal Officer

Chief HR Officer Chief Distribution

Officer Chief Energy Officer

Chief Business

Officer

Energy Consumption Distribution – Quarter

7

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.

TOTAL MARKET (GWh) ¹

Industrial

captive

4.9%

Free

17.1%

Others

captives

13.2%

Commercial

captive

27.6%

Residential

captive

37.3%

+7.8%

6,841 6,180

27.0ºC

28.3ºC

1Q12

6,291 7,374

1Q11

26.9ºC

27.8ºC

+5.4% a.a.

1Q13 1Q14

Market Breakdown

8

RESIDENTIAL INDUSTRIAL COMMERCIAL OTHERS TOTAL

1Q13 1Q14

ELECTRICITY CONSUMPTION (GWh)

TOTAL MARKET – QUARTER

1Q13 1Q14 1Q13 1Q14 1Q13 1Q14 1Q13 1Q14

FREE CAPTIVE

+7.8%

5,572 6,117

6,841

1,269 1,257

7,374

+6.1%

913 970

966

53 55

1,025

+8.3%

2,093

215 233

2,267

359 360

1,359

1,000 970

1,330

+13.6%

2,423

2,752

-2.1%

1,877 2,034

Losses and Colection Encouraging results already appear from an integrated approach

9

LOSS (12 MONTHS)

% Non-technical

losses/ LV Market

Non-technical losses GWh Technical losses GWh

% Non-technical losses /

LV Market - Regulatory

42.2%

43.7%

31.6%

5,738

2,614

8,552

44.2%

Mar/13 Jun/13

42.4%

6,029

2,618

8,748

Dec/13

5,955

2,793

8,352

Mar/13

44.9%

5,953

2,629

8,647

Sep/13

5,905

2,647

8,582

- 2.5%

PCLD/GROSS REVENUE

(BILLED SALES) - 12 MONTHS

Mar/11 Mar/1 3 Mar/12

3.0% 2.8%

1.8%

-1.0 p.p.

COLLECTION RATE

12 MONTHS

99.5% 98.7%

Mar/13 Mar/14

Macro Strategy Revenue shielding through efficient combination of electronic meters and

effective workforce management

Out of Communities

Communities

CLIENTS ENERGY AND STATUS

Retail and residential clients

(Low Voltage)

4,100,000

Low Voltage

Largest Clients

22,000

Large

Clients

(hight and

med voltage)

7,600

11,500 GWh (48%)

100% Concluded

2,700 GWh (11%)

1/3 as of today until 2015

10,000 GWh (41%)

APZ

10

2009 2010 2011 2012 2013

351

2010 2011 2013 2012

30 7

79

102

227 122

432

197 115

272 330

Mar-14

109

467

358

New Technology Program

Technology used in regions in which conventional measures are not effective

Areas that present high levels of non-technical losses

Light aims to reduce losses through investments in new technologies, integration of operational

activities, increase of public awareness and institutional partnerships with interested agents.

Grid shielding projects

Actual grid Shielded grid

Control room

3 m

9 m

Mechanical Meter Display

Centralized meter

11

Low voltage

Medium voltage

Low voltage

Medium voltage

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;

27 units implemented with 446,000

clients (11% of total clients);

Additional 200 thousands clients per year.

Zero Losses Area Project: “Light Legal” (APZ – Zero Losses Area)

12

ELECTRONIC

METERS

WORKFORCE

MANAGEMENT

PARTNERSHIP WITH THE STATE

GOVERNMENT

APZ COLLECTION APZ LOSSES

Evolution of APZs Results Significant loss reduction and increasing collection rate

Início da Operação

Início da Operação

Before

50.2 %

20.7%

89.2%

95.9%

Before

100.7%

98.2% 97.9% 98.3%

24.8% 23.6%

22.5%

21.2%

13

Ma

r/1

4

De

c/1

2

Ma

r/1

3

Ju

n/1

3

Se

p/1

3

Ma

r/1

4

De

c/1

2

Ma

r/1

3

Ju

n/1

3

Se

p/1

3

-29.5%

+6.7%

De

c/1

3

99.5%

De

c/1

3

20.3%

31,80%

40,41% 40,41%

31,27% 30,95% 30,53% 30,11% 29,69%

39,92%

38,33%

34,49%

30,60%29,40%

28,20%27,01% 25,81%

39,13%

36,41%

33,00%

2013 2014 2015 2016 2017 2018

Regulatory NT Losses/LV (Flexible) Regulatory NT Losses/LV (Final)

Real NT Losses/LV (forecast Light, Ref. August) Regulatory NT Losses/LV (AP)

Regulatory NT Losses/LV w/ Penalty

31,37% 30,95% 30,53% 30,11% 29,69%

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)

31,80%

40,41% 40,41%

31,27% 30,95% 30,53% 30,11% 29,69%

39,92%

38,33%

34,49%

30,60%29,40%

28,20%27,01% 25,81%

39,13%

36,41%

33,00%

2013 2014 2015 2016 2017 2018




31,80%

40,41% 40,41%

31,27% 30,95% 30,53% 30,11% 29,69%

39,92%

38,33%

34,49%

30,60%29,40%

28,20%27,01% 25,81%

39,13%

36,41%

33,00%

2013 2014 2015 2016 2017 2018




31,80%

40,41% 40,41%

31,27% 30,95% 30,53% 30,11% 29,69%

39,92%

38,33%

34,49%

30,60%29,40%

28,20%27,01% 25,81%

39,13%

36,41%

33,00%

2013 2014 2015 2016 2017 2018




31,80%

40,41% 40,41%

31,27% 30,95% 30,53% 30,11% 29,69%

39,92%

38,33%

34,49%

30,60%29,40%

28,20%27,01% 25,81%

39,13%

36,41%

33,00%

2013 2014 2015 2016 2017 2018




31,80%

40,41% 40,41%

31,27% 30,95% 30,53% 30,11% 29,69%

39,92%

38,33%

34,49%

30,60%29,40%

28,20%27,01% 25,81%

39,13%

36,41%

33,00%

2013 2014 2015 2016 2017 2018




31,80%

40,41% 40,41%

31,27% 30,95% 30,53% 30,11% 29,69%

39,92%

38,33%

34,49%

30,60%29,40%

28,20%27,01% 25,81%

39,13%

36,41%

33,00%

2013 2014 2015 2016 2017 2018




2013 2014 2015 2016 2017 2018

Regulatory Losses

Target

Regulatory Losses with Penalty

Final Proposal (according to methodology)

Preliminary Proposal (according to methodology)

14

GENERATION

BUSINESS

855 MW Installed Capacity Concessions Expiring Only in 2026

HPP Santa Branca

56 MW HPP Ilha dos

Pombos 187 MW

HPP Fontes Nova

132 MW HPP Underground

Nilo Peçanha - 380 MW HPP Pereira Passos

100 MW

SP

RJ

HPP Santa

Branca

Paraiba do Sul River

HPP Ilha dos

Pombos

100%

100% 100% 100%

Lajes

Complex

100%

16

Re-pricing of existing energy Significant price increase due to replacement of former regulated contracts for new

ones with free clients

Contracted Energy (Free) Hedge Available Energy

CONVENTIONAL ENERGY BALANCE

ASSURED ENERGY (MW average)

17

2014 2015 2016 2017 2018 2019 2020 2021

537

27

511

27 27 27 27 27 27 27

537 537 537 537 537 537 537

468

352 351 309

239 228 228

42

158 159 201

271 282 282

Generation Expansion Growth in renewable generation with experienced partners

Project Installed Capacity

(MW)

Assured Energy

(MWaverage) Operational Start Stake

Paracambi 25 20 2012 51%

Renova 425 (in operation)

1,806 (contracted)

235 (in operation)

921 (contracted)

2008 - 2012

2014 – 2018

21.86%

Belo Monte 11,223 4,571 2015 2.49%

Guanhães 44 25 2014 51%

Lajes 17 16 2015 100%

18

Evolution of Installed Capacity leading to a more

balanced portfolio

(MW)

Installed

Capacity Capacity

After

Expansion

¹ Considering 51% stake

² Considering 21.86% stake

³ Considering 2.49% stake

+ 74.3%

(+) Belo

Monte³

(+) SHP

Paracambi¹ (+) SHP

Lajes (+) Guanhães¹ (+) Renova²

1,675

13 93* 17

395

280

855

(+) Renova² Current

Capacity

* 9 MW SHP + 65 MW Wind Farm (since jul/12)

961

22

19

RESULTS

Net Revenue

21

Industrial (Captive)

5.3%

NET REVENUE (R$MN)

Generation

9.4%

Distribution

77.6%**

NET REVENUE BY SEGMENT (1Q14)*

Commercialization

13.1%

* Eliminations not considered

** Construction revenue not considered

NET REVENUE FROM DISTRIBUTION (1Q14)

Commercial (Captive)

30.0%

Others (Captive) 11.2%

Network Use (TUSD) (Free + Concessionaires)

6.7%

Residential (Captive) 46.8%

Construction Revenue

Revenue w/out construction

revenue

1Q14 1Q13

1,765

+18.8%

2,119

1,922 2,282

157 164

Operating Costs and Expenses

22

Manageable

(distribution): R$ 351

(18.5%)

Generation and

Commercialization: R$ 315

(16.6%)

Non manageable

(distribution**): R$ 1,227

(64.8%)

* Eliminations not considered

** Construction revenue not considered

DISTRIBUTION PMSO COSTS (R$MN) COSTS (R$MN)*

1Q14

R$ MN 1Q13 1Q14 Var.

PMSO (184.0) (187.8) 2.1%

Provisions (45.2) (65.3) 44.3%

PCLD (29.0) (25.3) -12.8%

Contingencies (16.2) (40.0) 146.6%

Depreciation (80.6) (85.4) 6.0%

Other operational/

revenues expenses (7.3) (12.1) 66.3%

Total (317.1) (350.6) 10.6%

184 188

+2.1%

1Q14 1Q13

EBITDA BY SEGMENT (R$ MN)

23

1Q13 1Q14

453

355

+ 27.5%

Generation and Commercialization

Distribution

44.0%

56.0%

36.2%

63.8%

CONSOLIDATED EBITDA 1Q14 1Q13 Var.

Distribution 254.8 228.1 11.7%

EBITDA Margin % 14,6% 14.3% 0.2 p.p.

Generation 182.8 119.3 53.2%

EBITDA Margin % 86.5% 82.1% 4.4 p.p.

Commercialization 17.5 9.9 76.9%

EBITDA Margin % 6.0% 6.3% -0.3 p.p.

Other and Eliminations (2.2) (2.2) 0.4%

TOTAL 452.9 355.1 27.5%

EBITDA Margin % 21.4% 20.1 1.2 p.p.

Adjusted EBITDA

EBITDA

1Q13

EBITDA

1Q14

Net

Revenue

Non-

Manageable

Costs

Manageable

Costs

(PMSO)

Provisions Regulatory

Assets and

Liabilities

Regulatory

Assets and

Liabilities

Adjusted

EBITDA

1Q13

Adjusted

EBITDA

1Q14

1Q13 / 1Q14

(R$ MN)

24

EBITDA Ajustado -

2T11

Ativos e Passivos

Regulatórios

EBITDA -2T11

Receita Líquida

Custos Não Gerenciáveis

Custos Gerenciáveis

(PMSO)

Provisões EBITDA -2T12

Ativos e Passivos

Regulatórios

EBITDA Ajustado -

2T12

101

456

355

354 (217)

(8)

(18)

435

- 4.7%

+ 27.5%

453

(13) (4) (20) (2)

Other

Operacional

Revenues

Equity

Pikup

Adjusted Net Income 1Q13 / 1Q14

(R$ MN)

25

EBITDA Ajustado -

2T11

Ativos e Passivos

Regulatórios

EBITDA -2T11

Receita Líquida

Custos Não Gerenciáveis

Custos Gerenciáveis

(PMSO)

Provisões EBITDA -2T12

Ativos e Passivos

Regulatórios

EBITDA Ajustado -

2T121Q13 1Q14 EBITDA Financial

Result

Taxes Depreciation Regulatory

Assets and

Liabilities

Regulatory

Assets and

Liabilities

Adjusted Net

Income

1Q13

Adjusted Net

Income

1Q14

+129.5%

145

67

79

60 (51) (5)

181

(12)

168

+15.9%

98

Dividends

26

Indebtedness

Average Term: 3.9 years

AMORTIZATION SCHEDULE* (R$ MN)

Nominal Cost Real Cost

NET DEBT

* Principal only

COST OF DEBT

2012 2011 1Q14 2007 2008 2009 set/10

Custo Real Custo Nominal

2013

Net Debt / EBITDA

2009 2010 2011 2012

Custo Nominal Custo Real

2009 2010 2011 2012


2009 2010 2011 2012


Mar/13*

2.24%

8.21%

3.63%

10.01%

4.25%

11.03% 9.68%

3.55%

2014 2015

494

779

1,017

811 899

441 450 450 565

2016 2017 2018 2019 2020 2021 After

2021

*Considering Hedge

TJLP

13.5%

CDI

73.9%

IPCA

10.7%

Others

1.5%

U$/Euro

0.4%

20092010

Custo Real

Custo Real

2.84 2.90

Mar/14 Dec/13*

5,096.8 5,249.5 5,341.8

2.73

20092010

Custo Real

Custo Real

27

*With Pension Fund

Investments

CAPEX (R$ MN) CAPEX BREAKDOWN

(R$ MN)

1Q14

Generation

3.5

Administration

3.3

Others

2.8

Develop. of

Distribution

System

106.6

Losses

Combat

48.9

Investments in Electric Assets (Distribution)

Commerc./

Energy Eficiency

10.5

2010

929

701

2011 2012

797

694

103

519

182

775

154

713

132

845

+7.9%

2013 2014E

163

1Q13 1Q14

36 17

127 158

1,055

176

28

Why invest in Light?

Major upcoming events

Integration of favelas

Pro-business environment

New plants investments

Expansion of the existing ones

Market growth

Economic

Transformation in

the Concession

Area

Progress in the Technology

Program

New network and meters in the

pacified favelas

Smart metering development

“Zero Losses Area” Program

Energy

Losses Reduction

Investment in Renova, Belo Monte

e Guanhães (total of 697 MW)

SHP Lajes under construction

(17MW).

Growth in the

Generation

Business

New PPAs starting in 2014

Revenues increase with no

aditional costs.

Very active trading subsidiary

Repricing of

Existing Energy

Listed in “Novo Mercado” of

Bovespa;

Board Committees very active

Included in the Sustainability

Index (ISE) of Bovespa for the

seventh year.

Best-in-Class

Corporate

Governance

Sound Dividend Policy: minimum

50% of net income;

Average payout since 2007: 90%

Dividend track

Record

29

Important Notice

This presentation may include declarations that represent forward-looking statements according to Brazilian regulations and

international movable values. These declarations 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 Company’s control. Important factors that can lead to significant differences between the real results and the

future declarations of expectations on events or business-oriented results include the Company’s 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, plain, goals,

expectations and intentions, among others. Because of these factors, the Company’s actual results may significantly differ

from those indicated or implicit in the declarations of expectations on events or future results.

The information and opinions herein do not have to be understood as recommendation to potential investors, and no

investment decision must be based on the veracity, the updated or completeness of this information or opinions. None of the

Company’s assessors 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 Company’s 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

João Batista Zolini Carneiro CFO and IRO

Gustavo Werneck Superintendent of Finance and Investor Relations

+55 21 2211 2560

[email protected]

Mariana da Silva Rocha IR Manager

+ 55 21 2211 2814

[email protected]

31

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Documents

Corporate Presentation - May 2014