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1 Light S.A. Corporate Presentation November 2007

Light S.A. Corporate Presentationri.light.com.br/ptb/2235/MicrosoftPowerPointLightroadshowfinal... · 4 Light’s History Aug, 10 2 006 Aug,10 20 06 1905 1979 May 96 Apr 98 Oct 0

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Page 1: Light S.A. Corporate Presentationri.light.com.br/ptb/2235/MicrosoftPowerPointLightroadshowfinal... · 4 Light’s History Aug, 10 2 006 Aug,10 20 06 1905 1979 May 96 Apr 98 Oct 0

1

Light S.A.Corporate Presentation

November 2007

Page 2: Light S.A. Corporate Presentationri.light.com.br/ptb/2235/MicrosoftPowerPointLightroadshowfinal... · 4 Light’s History Aug, 10 2 006 Aug,10 20 06 1905 1979 May 96 Apr 98 Oct 0

2

Light Energia(Geração)

Light Esco Ltda(Comercialização) Outros(**)

Light S.A.

(Holding)

Light S.E.S.A (*)(Distribution)

Light Energia(Generation)

Light Esco Ltda(Trading)

Lightger(New Projects)

Light’s Corporate Structure

� 4th largest integrated Company in the Brazilian electric industry

� 5th largest private Company in hydro-generation

� 3rd largest distribution Company

(*) Includes Light Overseas and Light Energy

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3

�The Capital Stock comprises 203,462,739,012 common shares as of October 31st, with no par value.

Shareholder’s Structure

AGCAndrade Gutierrez

Concessões

LUCELUCE do Brasil

Fundo de Investimento em Participações

PCPPCP Energia Participações

RMERio Minas EnergiaParticipações S.A.

LIGHT S.A.

25% 25% 25% 25%

52.2%BNDESPAR

MARKET

33.7%

14.1%

Free Float: 47.8%

CEMIGCompanhia Energética

de Minas Gerais

Country´sbiggestindividualelectricity distributor.

Andrade Gutierrez Group´s divisionthat invests in

public services concessions.

Brazilian private investors group (includes Braslight).

Private Equity Fund that invests in the Brazilian electric sector.

Page 4: Light S.A. Corporate Presentationri.light.com.br/ptb/2235/MicrosoftPowerPointLightroadshowfinal... · 4 Light’s History Aug, 10 2 006 Aug,10 20 06 1905 1979 May 96 Apr 98 Oct 0

4

Light’s History

Aug,10 2006

Aug,10 2006

1905 1979 May 96 Apr 98 Oct 01 Jan 02 Jul 05 Aug,10 2007

Aug,10 2007

Light’s Privatization

Public Company

Eletropaulo’sPrivatization

Split ofEDF - AES

Acquisition by EDF

Light joined Bovespa´s“Novo Mercado”,

Brazil’s highest level ofcorporate governance

standards.

Acquisition by Eletrobras

Creation of Light,

a private Company

� For the first time in its history, Light is controlled by a Brazilian Private Group.

RME

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5

- 3.8 million clients- Billed Energy in LTM - 18,333 GWh- 72% of the consumption of Rio de Janeiro state

(2nd GDP in Brazil)- Gross Revenue (LTM) - R$8.0 billion- Net Revenue (LTM) - R$5.3 billion

Distribution BusinessLight SESA

� 3rd largest energy distribution Company in Brazil

Page 6: Light S.A. Corporate Presentationri.light.com.br/ptb/2235/MicrosoftPowerPointLightroadshowfinal... · 4 Light’s History Aug, 10 2 006 Aug,10 20 06 1905 1979 May 96 Apr 98 Oct 0

6

Lajes ReservatoryHPP Fontes Nova132 MW

HPP Ilha dos Pombos187 MW

HPP Usina Subterrânea Nilo Peçanha380 MW

HPP Santa Branca56 MW

HPP Pereira Passos100 MW

Generation Installed Capacity855 MW

Generation BusinessLight Energia

� 5th largest private company in hydro-generation in Brazil

Page 7: Light S.A. Corporate Presentationri.light.com.br/ptb/2235/MicrosoftPowerPointLightroadshowfinal... · 4 Light’s History Aug, 10 2 006 Aug,10 20 06 1905 1979 May 96 Apr 98 Oct 0

7

New Generation Projects

New Generation Projects

* Brownfield project, using the existing structure of the Fontes Velha facility

Ribeirão das Lajes (RJ)

Lajes Complex

Paraíba do Sul river

2010

2010

2012

R$100 MM

R$28 MM

R$600 MM

21.5 MW

in study

110 MW

25 MW

18 MW

195 MW

SHPParacambi

SHP Lajes *

HPP Itaocara

Local Start up EstimativeCapexAssued

EnergyInstalled Capacity

Projects

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8

Trading and Services BusinessLight Esco

Energy Trading/Brokerage in Free Market�Trading: 278 GWh as of September 2007 and a portfolio of

over than 20 clients: including Unilever and InBev;�Brokerage: 892 GWh as of September 2007 and a portfolio of

over than 10 clients: including TV Globo and Gerdau Steel

Services and Infrastructure�Energy generators rental for the Pan-American Games;�Quality improvement of electric structures for the

“Sambódromo”;�Management of High Voltage connection for the bottling

industry;�Operation of Rio Office Park’s District Cooling Center

� Intelligent Energy for Sustainable Development

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9

Management Team

PeopleAna Matte

ConcessionDevelopmetPaulo Born

EnergyLeonardo

Lins

ClientsRoberto

Alcoforado

Former CEO of Celpe

Former Senior Executive Officer of Chesf

Former Vice-CEO of Duke Energy

Former Senior Executive Officer of Telsul

CorporatePaulo Pinto

LegalLuiz

Cristofaro Former Senior Executive Officer of MottaFernandes

Former Senior Executive Officer of Eletrobras

CEOJosé Luiz Alquéres

Engineer. - Former Alstom Brasil’s CEO;- Senior Executive Officer of BozanoSimonsen; - Eletrobrás’ CEO;- BNDESPAR Officer; - National Secretary of Energy;- CERJ’s CEO and; - Senior Executive Officer of Light.

Economist. - Former Globopar’s CEO and;- Petrobras’s CFO.

CFO and IRORonnie Vaz Moreira

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10

Mission and Values

“To be a major Brazilian company committed to sustainability, respected and admired for its excellence in services provided to its clients and the community, for the value creation to shareholders and for being an excellent place to work”.

MISSION VALUES

� Focus on Results

� Meritocracy

� Courage and Perseverance

� Ethics and Solidarity

� Happiness

Page 11: Light S.A. Corporate Presentationri.light.com.br/ptb/2235/MicrosoftPowerPointLightroadshowfinal... · 4 Light’s History Aug, 10 2 006 Aug,10 20 06 1905 1979 May 96 Apr 98 Oct 0

11

Corporate Governance

1

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12

GROWTH

EFFICIECYGAINS

RETURN TO SHAREHOLDERS

COMMITMENT TO THE FUTURE

Key Investment Features

- New generation projects- Renew of energy initial contracts- Energy trading activity- Significant investment plan for Rio de Janeiro State- Balanced capital structure

- Cost reduction actions- Loss prevention strategy- Increase in collection rates- Outsourcing of all non-core activities- Sale of non-core assets

- Strong cash flow generation- Stock appreciation- Dividend distribution policy- Listed on BOVESPA’s Novo Mercado

- Improve customer relationship- Recovery of Light’s institutional image- Great place to work- Focus on sustainability

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13

OPERATIONALHIGHLIGHTS

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Energy Distribution Growth

CAGR = 2.6%

Electric Power Consumption (GWh)

21,94423,323 23,006 23,673

30.1% 31.2%31.5%31.0%

15.7% 8.5%9.9%13.5%

23.9% 24.3%24.4%24.3%

13.0% 13.3% 13.5% 13.4%

17.3%17.9% 20.6% 22.6%

2004 2005 2006 LTM07

Residential Industrial Commercial Others Free Market Customers

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15

Investment Program

Main investments (2007-10)- Improvement of Medium Voltage Network;- Control centers update;- Substation and distribution automation;- Tension level standardization;- Fighting losses technology

Investment in aquisitions & improvements on fixed assets(R$ million)

355347

276

199

322

157

1.427

2004 2005 2006 2007 2008-10*

Investments Budget* Does not include investments in new generation projects

Page 16: Light S.A. Corporate Presentationri.light.com.br/ptb/2235/MicrosoftPowerPointLightroadshowfinal... · 4 Light’s History Aug, 10 2 006 Aug,10 20 06 1905 1979 May 96 Apr 98 Oct 0

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96.9%97.2%

98.3%

93.0%

93.8%93.9%94.4%94.5%

93.5%93.6%

95.2%

93.5%

94.5% 94.8% 94.9%

96.9%96.4%

96.0%95.8%96.2%

94.6%

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

2006 2007

Collection Rate Evolution

Collection Rate12-month moving average

3Q06 3Q07 9M06 9M07Billing (R$ MM) 1,841 1,811 5,941 5,935Collection (R$ MM) 1,668 1,790 5,491 5,900% 91% 99% 92% 99%

Page 17: Light S.A. Corporate Presentationri.light.com.br/ptb/2235/MicrosoftPowerPointLightroadshowfinal... · 4 Light’s History Aug, 10 2 006 Aug,10 20 06 1905 1979 May 96 Apr 98 Oct 0

17

Loss Prevention Program

� Program Phase I: R$78 million Capex in new technology (measuring, “shielding”)

� Higher accuracy on measuring medium and low voltage clients

� Application of long distance electronic measurement in about 78,000 low voltage clients

Energy Consumption (monthly basis)(include free clients)

3,800,000 ClientsLV

46,3%

883 GWh398 GWh15 ClientsHV Free

121 GWh23 ClientsHV Captives

506 GWh6,962ClientsMV

26.5%

6.3%

20.9%

4.6%

41.7%

88 GWh22,000 ClientsLV - ST

Low Voltage- Prioritizing on geographical and

economic basis- Individual measurement- Centralized measured system- Telemetric measurement- Multiplexed network

Medium Voltage- Installation of Capsule gauges- Telemetry measurement- “Shielding” of 45% of medium voltageClients representing 79% of that classrevenue

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18

Service Quality Evolution

� IASC AWARD 2006: Light was ranked second best electricity distributor in the Southeastern region

� Electricity Award 2007, promoted by “Eletricidade Moderna” magazine

� ELC and EFC are within ANEEL’s allowed limit and one of the lowest of the Southeastern region

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19

Sustainability

Economic-Financial

Social Environmental

Governance and Sustainability

Committee�SGA - Environmental

Management System�SOS Mata Atlântica

Foundation Accord� NBR ISO 14001

�Light Institute �Voluntary Program �OHSAS 18001

� Transformation Plan� Investment Grade Status� NBR ISO 9001

�ISE (Bovespa’s Sustainability Index)�GRI - Global Reporting Index

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20

FINANCIALRESULTS

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21

Operational CostsR$ million

2,891 2,887

1,643 1,2483,543

4,443 4,5344,268

2004 2005 2006 LTM07

Non-Manageable Manageable

6.4%

Financial Highlights

Inflation index (IGP-M): 4.1%

Net RevenueR$ million

4,084

4,8865,423 5,335

2004 2005 2006 LTM07

9.3%CAGR

CAGR

-24%

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22

Operational Expenses

� Better OPEX distribution between support and core areas after the adoption of “packages” methodology

56% 47% 57% 62%

44% 53% 43% 38%

2004 2005 2006 E2007

Core areas Support

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23

Distribution85.7%

Generation14.0%

Comercializ.0.3%

Financial Highlights

*Does not consider eliminations

EBITDA per segment (9M07):

Net IncomeR$ million

-98

243

-150

942

2004 2005 2006 LTM07

EBITDAR$ million

838 765 738

1,398

2004 2005 2006 LTM07

18.6%CAGR

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24

Debt profile

Rated asInvestment Grade

(S&P)brA-

(1) Net Debt = Total Debt - Cash, excludes Braslight

Short Term8%

Long Term92% Foreign

Currency9%

Brazilian Currency

91%

Net Debt1

R$ million

4,223

3,147

2,540

1,217

2004 2005 2006 Sep-07

-71.2%

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25

Amortization Schedule*

(R$ million)

93 99139 128

299 346 342 303

2008 2009 2010 2011 2012 2013 2014 2015-2024

Amortization Schedule

Average Cost : US$ + 6.55% p.a.R$: 12.3% p.a.

Average Term: 4.8 years

Average Cost : US$ + 6.55% p.a.R$: 12.3% p.a.

Average Term: 4.8 years

• Principal only• Pro-forma, considering the amortization of debt in foreign currency amounting US$ 160 MM and the raising of R$ 450 MM

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26

Return to Shareholders: Turnaround recognition

� R$ 518 million in dividends (a 8.3% yield)

� Minimum 50%dividend policy

Light x Ibovespa x IEE08/10/06 = 100 until 10/31/07

80

100

120

140

160

180

200

220

240

Aug-0

6Sep

-06

Oct-06

Nov-0

6Dec

-06

Jan-

07Feb

-07

Mar-0

7Apr

-07

May-0

7Ju

n-07

Jul-0

7Aug

-07

Sep-0

7Oct-

07

1 year of RME

Light104%

Ibovespa75%IEE50%

R$/share08/10/06 15.7010/31/07 31.95

2007LIGT3 39%IEE 28%IBOV 47%

R$ MMEnterprise Value 7,636Market Capitalization 6,501Trading volume/day 8.6

Page 27: Light S.A. Corporate Presentationri.light.com.br/ptb/2235/MicrosoftPowerPointLightroadshowfinal... · 4 Light’s History Aug, 10 2 006 Aug,10 20 06 1905 1979 May 96 Apr 98 Oct 0

27

Annex

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28

LOYAL CLIENT

EFFICIENT MACHINE

RESULTS

COMMITMENT TO THE FUTURE

Transformation Plan

RESULTADOS

P1 – Clients – get to know to serve better P2 – Selling more and betterP3 – Receiving 100%P4 – No stealing

P5 – Efficiency in processesP6 – Structuring the company of the futureP7 – Aligned suppliersP8 – Prudent investments

P9 – Capital structure review

P10 – Well managed contingencies

P11 – Valorization of the concession

P12 – A great place to work

P13 – Community awareness and interaction

P14 – Risk management

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29

Management Achievements

Transformation Plan� 14 projects divided into 4 sub-groups: Loyal Client, Efficient Machine, Results and Commitment to Future� 63 metrics based on Balanced Score Card� 90% of the projects are on time or finished

Main Results� Receivables Negotiation with the Company’s largest clients of more than R$500 million (the cities, Water Company and Train Company): net cash effect of R$240 million� Approx. R$500 million reversal of provision� Improved relationship with executive and legislative� Better services rendered were recognized by Clients: 2nd position at ANEEL’squality perception award� Possibility of investing in new generation capacity (no investments were made in the last 8 years)� Balanced capital structure and low leverage levels

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Important Notice